Full Judgment Text
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IN THE HIGH COURT OF JUDICATURE AT BOMBAY,
NAGPUR BENCH, NAGPUR.
WRIT PETITION NO.1463 OF 2017
Rajendraprasad Shukla s/o Sureshwar Shukla,
Aged about 55 Years,
Working as Chief Manager (Finance),
Western Coalfields Limited, Coal Estate,
Civil Lines, Nagpur, R/o B3/03, Rachna
Sayantara PhaseI, Hazari Pahad,
PETITIONER
Seminary Hills, Nagpur 400007. ….
VERSUS
1) Chairman,
Coal India Limited, Coal Bhawan,
New Town, Rajarhat, Kolkatta,
(West Bengal).
2) Chairman & Managing Director,
Western Coalfields Limited,
Coal Estate, Civil Lines, Nagpur400001.
3) Shri Prabir Kumar Bose,
Enquiry Officer,
Retd. General Manager (Finance),
SECL, Flat No.502, Swapnil Shrava,
61, Shivaji Nagar, Nagpur. …. RESPONDENTS
______________________________________________________________
Shri M.M. Sudame, Counsel for the petitioner,
Shri A.M. Ghare, Counsel for respondent 2,
None for respondents 2 and 3.
______________________________________________________________
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CORAM : P.N. DESHMUKH AND
ROHIT B. DEO, JJ.
th
DATED : 6 FEBRUARY, 2019
ORAL JUDGMENT : (PER : ROHIT B. DEO, J.)
The petitioner, who is working as Chief Manager (Finance)
at the Western Coalfields Limited (WCL) at Nagpur, is assailing the
order dated 0252016 of the Chairman and Managing Director, WCL
(Disciplinary Authority) of reduction to one stage lower in time scale
for one year and the appellate order dated 1912017 of the Chairman
and Managing Director, Coal India Limited dismissing the appeal.
2. The petitioner contends that he served with Coal India
Limited and its subsidiary company WCL from June 1986 to February
2015 with distinction. The petitioner was appointed as Accounts
Officer E2 Grade in 1986 and was lastly promoted as Chief Manager
(Finance) E7 Grade in 2012.
3. The petitioner was served with memorandum of charge
sheet dated 0532015. The challenge to the disciplinary action is
predicated on the assertion that no misconduct is made out on the face
of the record. In the context of the challenge, we may note the
gravamen of the allegations. ArticleI alleges that the petitioner, while
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functioning as Area Finance Manager, Wani North Area, WCL during
201213, committed gross misconduct by abusing his official position
and showed undue favour to Shri Sandeep Singh Arora, Director of
M/s. BNS. Infrastructure Private Limited, Nagpur by accepting forged
bank guarantee against the retention money and not following the
guidelines as per the CMC Manual with regard to acceptance of bank
guarantee against retention money. ArticleI further reads thus :
“That a note was put up by Shri P.K. Mishra, the then Staff
Officer (Mining) on 18012013 to Area General Manager,
Wani North Area through Area Finance Manager Shri R.P.
Shukla, Wani North Area for adjusting the excess 5%
amount received through B.G. towards nondeduction of
Retention Money which was against Clause 3.07, subclause
30.3 of CMC Manual.
That Shri R.P. Shukla, AFM had accepted the
irregular proposal and simply forwarded the note without
raising any objection regarding acceptance of Bank
Guarantee against the Retention Money. As per the CMC
Manual 3.07 (Clause 30.3) it is clearly mentioned that
“Retention Money should be deducted at 5% from running
bills. Total of Performance Security and Retention Money
should not exceed 10% of annualized value of contract
amount or lesser sum indicated in the bid document.”
That, Shri R.P. Shukla, failed to raise any query with
regards to deduction of Retention Money @ 5% from the
Running Bills and irregularly allowed acceptance of BG
against retention money. However, deduction of 5% from
the running bill was mandatory for retention money and the
CMC Manual does not mention acceptance of Bank
Guarantee against nondeduction of Retention Money.”
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ArticleII reads thus :
“That, the said Shri R.P. Shukla, Chief Manager (Finance),
Wani North Area, WCL while functioning as Area Finance
Manager, Wani North Area, WCL during 201213,
committed gross misconduct by abusing his official position
and showed undue favour to Shri Sandeep Singh Arora,
Director of M/s. BNS Infrastructure Pvt. Ltd., Nagpur by
accepting a forged Bank Guarantee against Performance
Security and Retention Money due to which the total extent
and nature of actual wrongful loss caused to the WCL on
account of cancellation of Work Order arising out of
submission of forged Bank Guarantee comes to
Rs.2,41,13,928.95 (Actual Loss for nondeduction of
retention money @ 5% from running bills = 22,53,606.95
+ Liquidated damage = 72,86,774.00 + Total Penalty @
10% of the contract value claimed = 1,45,73,548 i.e. total
Rs. 2,41,13,928.95)”
4. It is discernible from the statement of imputation as
regards charge ArticleI, that the fake bank guarantee dated
28122012 was submitted by the contractor in the Wani North Area
Office vide a letter addressed to the General Manager, Wani North
Area, WCL signed by one Rishi as Authorised Signatory. On 1812013
a note was put up by Shri P.K. Mishra, Staff Officer (Mining) to Area
General Manager, Shri K.B. Majhi through the petitionerArea Finance
Manager for adjusting the excess amount received through the bank
guarantee towards nondeduction of retention money. The note
records that the bank guarantee is given towards performance security
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and retention money and that confirmations have been received from
the concerned bank with regard to the bank guarantee and extension
thereof till 3112014 vide confirmation letter dated 1612013. Shri
P.K. Mishra mentions in the note that the bank guarantee against the
performance security and retention money deposited may be accepted
so that the work order can be issued and agreements executed. The
note was put up to the Area General Manager, Wani North Area
through the petitionerArea Finance Manager, Wani North Area. Of
some relevance is the part of the statement of imputation as regards
charge ArticleI which is reproduced below :
“The Finance manual, VolI, PartII issued by Coal India Ltd.
The relevant Clause 13(1), it is the duty of the executive
authority to verify and accept the Bank Guarantee. The
Clause 13(1) of the Finance manual speaks as under :
The Executive authorities concern shall after examination
and acceptance send the documents (BG) to the concerned
Accounts Officer. The security relating to the Area should be
sent Area Accounts Officer/AFM concerned , those pertaining
to Headquarters to the Accounts Officer (Cash) and those
pertaining to the sales office to the sales accounts
department, for record and custody of the security.
That, the letter given by the authorized signatory of M/s.
BNS Infra – KBS JV Shri Rishi has not mentioned any details
regarding nondeduction of Retention Money from the
running bills.
That Shri R.P. Shukla, AFM had simply forwarded the note
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dated 19012013 without raising objection regarding
acceptance of Bank Guarantee against the deduction of
Retention money from the running bills. As per CMC
Manual 3.07 (Clause 30.3) it is clearly mentioned that
“Retention Money should be deducted at 5% from running
bills. Total of Performance Security & Retention Money
should not exceed 10% of annualized value of contract
amount or lesser sum indicated in the bid document.
That, Shri R.P. Shukla also failed to raise any query, on the
note of Staff Office (Mining) why M/s. MNS Infra submitting
BG for Rs.1,45,73,548/ instead of Rs.72,86,774/ as
demanded in the LOA which ultimately resulted in irregular
acceptance and approval of this forged BG by Area General
Manager, Wani North Area.”
It is an admitted position that under the Finance Manual
and particularly Clause 13(1), the duty to verify and accept the bank
guarantee is that of the Executive Authority. It is not in dispute that
the petitioner was not the Executive Authority and was not responsible
to verify and accept the bank guarantee. The petitioner is blamed for
simply forwarding the note put up by Shri P.K. Mishra without raising
objection regarding the acceptance of bank guarantee against the
deduction of retention money from the running bills. The statement of
imputation proceeds on the premise that the petitioner had reason to
believe that there is some irregularity in the acceptance of the bank
guarantee and was duty bound to raise an objection. Irrefutably, the
petitioner was neither the authority to verify and accept the bank
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guarantee nor was authorized to take decision on the note put up by
Shri P.K. Mishra to the Area General Manager, Shri K.B. Majhi.
The statement of imputation as regards charge ArticleII
reads thus :
“That during the period 16012013 to 31052013, M/s.
BNS InfraKBS has raised around 20 bills for payment
towards their work completed from time to time. WCL
Ghonsa OCM has paid an amount totaling to
Rs.4,50,72,139/ (Gross Amount) and after deduction the
net payment made to the party comes around
Rs.4,13,84,173/. The retention Money @5% was to be
deducted from the running bills as per the CMC Manual
Clause 30.3. Thus due to nondeduction of the retention
money from the running bills @ 5% comes to
Rs.22,53,606.95. It is evident from the fact mentioned
above that WCL had to incur a loss of Rs.22,53,606.95 due
to nondeduction of the Retention Money, which was
mandatory.
That as per Show Cause Notice issued to Shri Sandeep Singh
Arora, Director of M/s. Baba Nanak Sars Infrastructure Pvt.
Ltd. the WCL has raised a claim/penalty of
Rs.1,45,73,548/. A maximum penalty of 10% of the total
Contract value as per clause 6.2 of General Terms and
Conditions of Notice Inviting Tender (NIT) is imposed on the
contractor. As per the Show Cause Notice the WCL has also
claimed liquidated damage equivalent to 5% of the contract
value or the amount of security deposit/performance bank
guarantee whichever is higher as per clause 2 of Section 4
Integrity Pact. The amount calculated for the liquidated
damage is Rs.72,86,774/ @ 5% of the contract value.
That the total extent and nature of actual wrongful loss
caused to the WCL in acceptance of forged BG and the
notional loss caused to WCL on account of cancellation of the
work order arising out of submission of the forged BG comes
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to Rs.2,41,13,928.95 (Actual Loss for nondeduction of
retention money @ 5% from running bills = 22,53,606.95
+ Liquidated damage = 72,86,774.00 + Total Penalty @
10% of the contract value claimed = 1,45,73,548 i.e. total
Rs.2,41,13,928.95).”
5. The petitioner denied the charges vide reply dated
1632015. The petitioner pointed out that he merely forwarded the
note put up by Shri P.K. Mishra, Staff Officer (Mining) to the Area
General Manager, Wani North Area, for administrative decision as per
the existing procedure. The petitioner contended that the bank
guarantee was duly verified for its acceptance by the Staff Officer
(Mining) and the Finance Manual mandates that the Executing Officer
i.e. the Area and Contract Management Cell headed by the Staff Officer
(Mining) is obligated to verify the bank guarantee and to forward the
bank guarantee to the Finance Department only for its safe custody.
The petitioner highlighted the irregularities and deviation from
procedure in the finalization of tender and dealt with the allegation
that he did not raise an objection to the note put up by Shri P.K. Mishra
thus :
“Regarding forwarding note sheet to the Area General
Manager, without any query my submissions are as
follows :
a. It is purely administrative matter.
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b. The note sheet was for acceptance of Bank Guarantee
and the relevant clause 13(1) of the Finance Manual,
VolI, PartII it is the duty of the executive authority to
verify and accept the bank guarantee and manual
speaks as under “The Executive authorities concerned
shall after examination and acceptance send the
document (BG) to the concerned Accounts Officer.
The security relating to the Area should be sent to
Area Accounts Officer/AFM concerned, those
pertaining to Headquarters to the Accounts Officer
(Cash) and those pertaining to the sales office to the
sales accounts department for record and custody of
the security.
Hence, AFM is only the custodian of the Bank
Guarantee and has no role in its examination and
acceptance. The responsibility of examination and
acceptance of Bank Guarantee is vested with the
executive authority which in this case is Staff Officer
(Mining). It is his responsibility to examine and
accept whether Bank Guarantee is as per CMC
manual or not. In this regard duties and
responsibilities of Area General Manager, Area
Finance Manager, Staff Officer (Mining) sought by
Inspector of Police CBI/ACB, Nagpur vides
PEO2820130001/1316 dt. 13032014 is enclosed
for ready reference.
C. There is no procedure prescribed in CMC Manual to
process such note sheet before issue of work order and
to the best of my knowledge no such system exists in
any of the areas including HQ. Even in the case of
Wani North Area in case of E&M, Civil etc., the work
order is directly issued after verification of BG by the
concerned department. Presently, the processing of
such note sheet is dispensed with as it is not prescribed
procedure. Hence, the cognizance of the said note
sheet should not have been taken.
D. On the question of irregular acceptance and approval
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of this BG by AGM, WNA, I would like to state that
Shri K.B. Majhi before taking charge as Area General
Manager, two and a half months back was working as
GM (Opm)/Staff Officer (Mining), WNA for the last 2
years (approx) and was supposed to be familiar with
CMC Manual thoroughly and well conversant and had
signed the note sheet with full consciousness. It is very
much surprising to note that his name appears in the
management witness and has been exonerated,
although he has signed the same note sheet along with
the undersigned. It appears to be discriminatory. I
also deserve the same immunity as extended to Shri
K.B. Majhi.
e. Moreover, in course of conducting transaction audit
for said period in respect of Wani North Area by
Comptroller and Auditor General of India (C&AG)
who are known to be expert in the field, had not
raised any adverse remark regarding adjustment of
five percent retention money against bank guarantee
Para No.I of PartIB (Extract of Same Enclosed)
Hence, the allegations leveled are not correct and
totally false and frivolous.”
6. The reply of the petitioner to the statement of imputation
as regards charge ArticleII reads thus :
“ In respect of above the undersigned is in a constraint to
submit the following few lines for your perusal, since it is felt
that the undersigned has been implicated to save the helm of
affairs and other higher officials :
1. As per Finance Manual clause (13)1 the area Finance
Manager is the only custodian of Bank Guarantee and
not the accepting authority. So, above charges that I
have accepted forged bank guarantee does not arise
and completely baseless and fabricated.
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2. Performance security is taken from the contractor to
ensure the performance, similarly retention money is
deducted from the running bill and is returned to the
contractor after completion of work. So, both the
performance guarantee and retention money relates to
the performance of the contractor and these are not
the source of income to the company. The work order
has not been cancelled on account of non
performance. It has been cancelled due to fake papers
like experience, BG etc., as mentioned by GM (CMC),
WCLHQ vide his letter no. WCL/GM
(CMC)/2013/1229 dt. 19102013 (Copy enclosed).
So, there is no actual loss to the company, as
mentioned in the ArticleII.
3. Measurement and payment as per Clause 8.8 of the
CMC Manual stipulates that the company can recover
any over payment from the subsequent bills under the
contract, failing that from the contractors claim under
any other contract with the company or from the
contractor security deposit or the contractors shall pay
the amount of over payment on demand. So, the
retention money amounting to Rs.22,53,606.95/ can
be easily adjusted from the pending bills due to the
contractor which is Rs.35 Lakhs (approx.) so, there is
no question of loss to the company on account of
retention money. Further, the liquidated damages
and penalty does not fall under the ambit of loss.
4. Further in course of conducting Transaction Audit by
C&AG, the auditor has pointed out serious lapses in
scrutiny and finalization of tender documents as
detailed below :
a. Seeking clarification of about the experience
before the floating of NIT.
b. Disqualifying the qualified and reputed
contractor on the minor ground by setting aside
legal opinion given by company’s panel
advocate.
c. Not taking TDS certificates as per NIT.
d. False hiring agreement signed by the same
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person both as hirer and hiree.
e. Ignoring the adverse legal opinion about the
documents submitted by M/s. BNSKBS (JV).
f. Non submission of details of ongoing/completed
work in CIL/WCL.
g. Violating the natural justice by giving only 3
days time to M/s Avatar & Co., Nagpur and 7
days time to M/s BNS Infrastructure Pvt. Ltd.,
Nagpur for clarification. Both the tenderers are
Nagpur based.
The concluding remark of C&AG is quoted below :
Quote :
“Thus the bidder M/s BNSKBS(JV), despite of many
deficiencies and doubts of genuineness of the documents
was awarded the contract. The incidents like obtaining
confirmation of experience much ahead of floating of
tenders, calling for hiring agreement from M/s. Avtar &
Co. after one month for the decision to disqualify the
bidder M/s, Avtar & Co., just as formality without
giving him sufficient time to respond, considering the
bidder M/s. BNSKBS(JV) as eligible despite of legal
opinion, it appears that the tender committee had
favoured and awarded the contract to M/s. BNS
KBS(JV). All the doubts of genuineness were proved
correct when the BG had resulted as fake.”
“Thus improper of contract by improperly eliminating
the other bidder (M/s. Avatar Singh) who was
performing well in WCL and favouring the fraudulent
tenderer had resulted in financial loss of Rs.1.49 crore
and avoidable litigation to company. This not only
needs to be investigated but adherence of strict principle
in finalization of tender needs to be adopted in WCL.”
Unquote :
From the C&AG report, it is amply clear that
unreasonable favour has been extended by the Permanent
Tender Committee subverting the laid down procedures of
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the Company and the Tender Committee comprises of AGM,
WNA, GM (Prodn), GM (CMC), GM(Finance) and DT(OP)
and subsequent approving authority.
Sir, undersigned joined WCL in June 2012 after being
transferred from SECL. In the SECL twice I have been
awarded as the Best Area Finance Manager for my
performance. Even in the WCL: while working as AFM a lot
of improvement has been made in the working of finance
and accounts and same has been appreciated vide letter Dt.
27052013 GM(F), WCL (copy enclosed). I have always
tried to protect the interest of the company.
In fine, had the fraudster Contractor would have
been nipped in the bud itself, knowing well about his
ineligibility not only with the documents submitted but
also through the legal opinion submitted by the Panel
Advocate and had the Area General Manager would
have exercised within the power delegated to him and
forwarded the proposal moved by Staff Officer (Mining)
for approval by Competent Authority, the alleged
incidents would have been averted. To my conscience, & to
make prevail the truth, natural justice with liberty and
equity, in a constraint to state that to save the helm the
undersigned is implicated and legally to divert the case and
save the helm even after filing FIR with State Police, the case
was forwarded to CBI, who could not proceed when the case
is dealt by State Police and till date the helm is not making
necessary arrangement for booking the fraudster under the
rule or laws of the land.”
7. The Enquiry Officer returned finding of guilt on both
charges and the reasons recorded are thus :
“After analyzing the defence brief the undersigned has come
to the following conclusion :
1. It is a fact that forged Bank Guarantee has been
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submitted the verification of which was the duty of the
executing authority.
2. It is also a fact that a note was moved by the
SO(M), Wani North Area, Shri P.K. Mishra, giving the
details of the Bank Guarantee and stating that BG of
Rs.1,45,73,548 which is exactly double the amount and
also stating the BG be accepted in lieu of retention money
being deducted. The note was duly vetted by AFM, Wani
North Area without any comments and forwarded to
AGM, Wani North Area for approval. Thereafter work
order was issued and retention money was not deducted
by the SubArea concerned.
The Charged Officer is according to my opinion is guilty
of the both the Article of Charges against him because of
the following reasons :
1. As finance head of the Area he vetted the irregular
note moved by SO(M), Wani North Area without
objecting, examining or returning the note.
2. He is also guilty of the Article of ChargeII
regarding the loss incurred by the company to the
following extent –
(a) Due to accepting and forwarding the irregular
note (D5) resulted in nondeduction of retention
money @5% amounting to Rs.22,53,606.95.
(b) The Charged Officer by vetting the irregular
note put by SO(M), Shri P.K. Mishra became a party
to the following losses:
(1) 10% penalty as per Clause 6.2
Rs.1,45,73,54800
(2) LD as per integrity pact. Rs.
72,86,77400
(3) Total loss to the company
Rs.2,41,13,92895
In my opinion as the Finance head of the Area and
associate Finance of AGM, Wani North Area had the
Charged Officer exercised due care in dealing with the note
submitted by SO(M), Wani North Area by raising questions
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and returning the note sheet the entire episode may have
been avoided. The entire matter was dealt by the Charged
Officer in a very casual manner which resulted in this fraud
taking place.”
8. The Enquiry Officer concurred with the submission of the
petitioner that the verification of the bank guarantee was the duty of
the Executing Authority, which the petitioner admittedly was not. The
Enquiry Officer records that the note moved by the Staff Officer
(Mining) Shri P.K. Mishra was duly vetted by the petitioner “without
any comment” and forwarded to the Assistant General Manager, Wani
North Area for approval. The petitioner is held guilty on the premise
that as the finance head of the area he vetted the irregular note moved
by the Staff Officer (Mining) without any objection or examination.
This is also the basis for the finding of guilt as regards charge ArticleII.
9. The short submission of the learned Counsel for the
petitioner Shri Mohan Sudame is that the record of the enquiry, on the
face of it, does not make out a case of misconduct. The submission is,
and on facts there does not appear to be in dispute, that the petitioner
was neither the Executing Authority charged with the responsibility to
verify or accept the bank guarantee nor was the petitioner a member of
the Tender Committee nor was the petitioner authorized to take any
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decision on the note forwarded by Shri P.K. Mishra, the Staff Officer
(Mining). The note was put up by Shri P.K. Mishra and was forwarded
by the petitioner without any comment to the decision making
authority Assistant General Manager, Wani North Area. Shri Mohan
Sudame, learned Counsel would submit that in the factual matrix, there
is no error of judgment or negligence inasmuch as there was no reason
for the petitioner to believe that the bank guarantee was fake nor was
the decision making on the note or any part thereof in the domain of
the authority of the petitioner. Shri Mohan Sudame, learned Counsel
would submit that even if it is assumed arguendo that the petitioner
committed an error of judgment, the error would not be a misconduct.
Shri Mohan Sudame, learned Counsel would emphasize that there is no
material on record to suggest that the petitioner had any reason to
believe that the bank guarantee submitted is fake or that note put up by
the Staff Officer (Mining) is suggesting a course of action which is
fraught with risk to the employer or which is ex facie irregular or
fraudulent and that the petitioner was expected, by the nature of the
assignment which he was holding, or in view of any service rule or
regulation or manual or duty list, to make any further or probing
enquiry or to return the note, decision upon which was in the exclusive
domain of the Assistance General Manager to whom the note was
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addressed. Shri Mohan Sudame would submit that even if the bar is
raised infinitely and the standard of efficiency is stretched to the extent
of expecting an employee in the Finance Department to instinctively
smell something fishy, the failure to meet the bar would hardly be a
misconduct. Shri Mohan Sudame, learned Counsel would invite my
attention to the decision of the Hon’ble Apex Court in State of Punjab
and others v. Ram Singh ExConstable, (1992) 4 SCC 54 and in
particular to the following observations.
“6. Thus it could be seen that the word ‘misconduct’
though not capable of precise definition, on reflection
receives its connotation from the context, the delinquency in
its performance and its effect on the discipline and the
nature of the duty. It may involve moral turpitude, it must
be improper or wrong behavior, unlawful behavior, willful in
character, forbidden act, a transgression of established and
definite rule of action or code of conduct but not mere error
of judgment, carelessness or negligence in performance of the
duty; the act complained of bears forbidden quality or
character. Its ambit has to be construed with reference to the
subject matter and the context wherein the term occurs,
regard being had to the scope of the statute and the public
purpose it seeks to serve. The police service is a disciplined
service and it requires to maintain strict discipline. Laxity in
this behalf erodes discipline in the service causing serious
effect in the maintenance of law and order.”
10. We have heard the learned Counsel Shri A.M. Ghare for
the Western Coalfields, at length. We noticed from the record that
while the petitioner is punished for allegedly not raising objection to
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the note moved by Shri P.K. Mishra, the Staff Officer (Mining), the
Assistant General Manager Shri K.B. Majhi to whom the note was
addressed and who apparently took the decision thereupon has not
been proceeded against departmentally. In response to our query, Shri
A.M. Ghare, learned Counsel states that as a fact no departmental
action is initiated against the decision making authority who acted on
the note put up by Shri P.K. Mishra. We asked Shri A.M. Ghare,
learned Counsel to explain the logic or rational, if any, in proceedings
against the petitioner who simply forwarded the note without any
comment to the decision making authority, the Assistant General
Manager and not initiating any action whatsoever against the decision
making authority who acted on the note. Shri A.M. Ghare, learned
Counsel states that the rational is that the first vetting officer has a
higher degree of responsibility. We are not impressed by the
explanation. Perusal of the record of the enquiry proceedings has left
us with the disturbing feeling and impression that the petitioner is
made a scape goat. Concededly, the petitioner was not the authority to
verify or accept the bank guarantee nor was a member of the Tender
Committee, nor was the authority to take the decision on the note put
up by Shri P.K. Mishra. The fact that no action is initiated against the
decision making authority who acted on the note put up by Shri P.K.
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Mishra and the petitioner is punished for the alleged failure to raise an
objection to the note is glaringly arbitrary, particularly since we have
not come across any material to show that the petitioner had any
reason to believe that the course suggested in the note was grossly
irregular or that the petitioner was otherwise required to do more
elaborate and searching enquiry into the factual foundation for the
note.
11. Shri A.M. Ghare, learned Counsel would rely on the
decision of the Hon’ble Supreme Court in Union of India and others v.
J. Ahmed, (1979)2 SCC 286 and in particular to the observations in
paragraphs 9,10,11 and 12:
“9. The five charges listed above at a glance would convey the
impression that the respondent was not a very efficient officer.
Some negligence is being attributed to him and some lack of
qualities expected of an officer of the rank of Deputy
Commissioner are listed as charges. To wit, charge 2 refers to
the quality of lack of leadership and charge 5 enumerates
ineptitude, lack of foresight, lack of firmness and indecisiveness.
These are qualities undoubtedly expected of a superior officer
and they may be very relevant while considering whether a
person should be promoted to the higher post or not or having
been promoted, whether he should be retained in the higher post
or not or they may be relevant for deciding the competence of
the person to hold the post, but they cannot be elevated to the
level of acts of omission or commission as contemplated by Rule
4 of the Discipline and Appeal Rules so as to incur penalty under
Rule 3. Competence for the post, capability to hold the same,
efficiency requisite for a post, ability to discharge function
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attached to the post, are things different from some act or
omission of the holder of the post which may be styled as
misconduct so as to incur the penalty under the rules. The words
'acts and omission' contemplated by Rule 4 of the Discipline and
Appeal Rules have to be understood in the context of the All
India Services (Conduct) Rules, 1954 ('Conduct Rules' for
short). The Government has prescribed by Conduct Rules a code
of conduct for the members of All India Services. Rule 3 is of a
general nature which provides that every member of the service
shall at all times maintain absolute integrity and devotion to
duty. Lack of integrity, if proved, would undoubtedly entail
penalty. Failure to come up to the highest expectations of an
officer holding a responsible post or lack of aptitude or qualities
of leadership would not constitute failure to maintain devotion
to duty. The expression 'devotion to duty' appears to have been
used as something opposed to indifference to duty or easygoing
or lighthearted approach to duty. If Rule 3 were the only rule
in the Conduct Rules it would have been rather difficult to
ascertain what constitutes misconduct in a given situation. But
Rules 4 to 18 of the Conduct Rules prescribe code of conduct for
members of service and it can safely stated that an act or
omission contrary to or in breach of prescribed rules of conduct
would constitute misconduct for disciplinary proceedings. This
code of conduct being not exhaustive it would not be prudent to
say that only that act or omission would constitute misconduct
for the purpose of Discipline and Appeal Rules which is contrary
to the various provisions in the Conduct Rules. The inhibitions
in the Conduct Rules clearly provide that an act or omission
contrary thereto as to run counter to the expected code of
conduct would certainly constitute misconduct. Some other act
or omission may as well constitute misconduct. Allegations in
the various charges do not specify any act or omission in
derogation of or contrary to Conduct Rules save the general Rule
3 prescribing devotion to duty. It is, however, difficult to believe
that lack of efficiency, failure to attain the highest standard of
administrative ability while holding a high post would
themselves constitute misconduct. If it is so, every officer rated
average would be guilty of misconduct. Charges in this case as
stated earlier clearly indicate lack of efficiency, lack of foresight
and indecisiveness as serious lapses on the part of the
respondent. These deficiencies in personal character of personal
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ability would not constitute misconduct for the purpose of
disciplinary proceedings.
10. It would be appropriate at this stage to ascertain what
generally constitutes misconduct, especially in the context of
disciplinary proceedings entailing penalty.
11. Code of conduct as set out in the Conduct Rules clearly
indicates the conduct expected of a member of the service. It
would follow that conduct which is blameworthy for the
Government servant in the context of Conduct Rules would be
misconduct. If a servant conducts himself in a way inconsistent
with due and faithful discharge of his duty in service, it is
misconduct [see Pierce v. Foster]. A disregard of an essential
condition of the contract of service may constitute misconduct
[see Laws v. London Chronicle (Indicator Newspapers)]. This
view was adopted in Shardaprasad Onkarprasad Tiwari v.
Divisional Superintendent, Central Railway, Nagpur Division ,
Nagpur, and Satubha K. Vaghela v. Moosa Raza . The High
Court has noted the definition of misconduct in Stroud's Judicial
Dictionary which runs as under:
"Misconduct means, misconduct arising from ill
motive; acts of negligence, errors of judgment, or
innocent mistake, do not constitute such misconduct".
In industrial jurisprudence amongst others, habitual or gross
negligence constitute misconduct but in Utkal Machinery Ltd. v.
Workmen, Miss Shanti Patnaik , in the absence of standing
orders governing the employee's undertaking, unsatisfactory
work was treated as misconduct in the context of discharge being
assailed as punitive. In S. Govinda Menon v. Union of India, the
manner in which a member of the service discharged his quasi
judicial function disclosing abuse of power was treated as
constituting misconduct for initiating disciplinary proceedings. A
single act of omission or error of judgment would ordinarily not
constitute misconduct though if such error or omission results in
serious or atrocious consequences the same may amount to
misconduct as was held by this Court in P.H. Kalyani v. Air France,
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Calcutta , wherein it was found that the two mistakes committed
by the employee while checking the loadsheets and balance
charts would involve possible accident to the aircraft and
possible loss of human life and, therefore, the negligence in work
in the context of serious consequences was treated as misconduct.
It is, however, difficult to believe that lack of efficiency or
attainment of highest standards in discharge of duty attached to
public office would ipso facto constitute misconduct. There may
be negligence in performance of duty and a lapse in performance
of duty or error of judgment in evaluating the developing
situation may be negligence in discharge of duty but would not
constitute misconduct unless the consequences directly
attributable to negligence would be such as to be irreparable or
the resultant damage would be so heavy that the degree of
culpability would be very high. An error can be indicative of
negligence and the degree of culpability may indicate the
grossness of the negligence. Carelessness can often be productive
of more harm than deliberate wickedness or malevolence.
Leaving aside the classic example of the sentry who sleeps at his
post and allows the enemy to slip through, there are other more
familiar instances of which a railway cabinman signals in a
train on the same track where there is a stationary train causing
headlong collision; a nurse giving intravenous injection which
ought to be given intramuscular causing instantaneous death; a
pilot overlooking an instrument showing snag in engine and the
aircraft crashes causing heavy loss of life. Misplaced sympathy
can be a great evil [see Navinchandra Shakerchand Shah v.
Manager, Ahmedabad Coop. Department Stores Ltd.]. But in
any case, failure to attain the highest standard of efficiency in
performance of duty permitting an inference of negligence would
not constitute misconduct nor for the purpose of Rule 3 of the
Conduct Rules as would indicate lack of devotion to duty.
12. The High Court was of the opinion that misconduct in the
context of disciplinary proceeding means misbehaviour involving
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some form of guilty mind or mens rea. We find it difficult to
subscribe to this view because gross or habitual negligence in
performance of duty may not involve mens rea but may still
constitute misconduct for disciplinary proceedings.”
The reliance on the said decision is in view of the
observation in paragraph 12 that the misconduct may not necessarily
involved mens rea and that gross or habitual negligence in performance
of duty may not involve mens rea and may still constitute misconduct
for disciplinary proceedings. The decision cited takes the case of the
employer no further. No case of gross or habitual negligence in
performance of duty is made out. Au contraire , the said decision
reaffirms the settled position of law that lack of efficiency or attainment
of highest standard in discharge of duty attached to the office would
not ipso facto constitute misconduct.
12. We are satisfied that on the face of the record no case of
misconduct is made out.
13. The punitive order dated 0252016 in proceedings
WCL/CMD/VIG/16/835 passed by the ChairmanCumManaging
Director, Disciplinary Authority and the order dated 1912017 in
Appeal CIL/C5A(iv)/RPS/347/AA/42 passed by the Chairmancum
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Managing Director, Coal India Limited and Appellate Authority are
quashed and set aside.
14. Rule is made absolute in the aforestated terms.
JUDGE JUDGE
adgokar
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IN THE HIGH COURT OF JUDICATURE AT BOMBAY,
NAGPUR BENCH, NAGPUR.
WRIT PETITION NO.1463 OF 2017
Rajendraprasad Shukla s/o Sureshwar Shukla,
Aged about 55 Years,
Working as Chief Manager (Finance),
Western Coalfields Limited, Coal Estate,
Civil Lines, Nagpur, R/o B3/03, Rachna
Sayantara PhaseI, Hazari Pahad,
PETITIONER
Seminary Hills, Nagpur 400007. ….
VERSUS
1) Chairman,
Coal India Limited, Coal Bhawan,
New Town, Rajarhat, Kolkatta,
(West Bengal).
2) Chairman & Managing Director,
Western Coalfields Limited,
Coal Estate, Civil Lines, Nagpur400001.
3) Shri Prabir Kumar Bose,
Enquiry Officer,
Retd. General Manager (Finance),
SECL, Flat No.502, Swapnil Shrava,
61, Shivaji Nagar, Nagpur. …. RESPONDENTS
______________________________________________________________
Shri M.M. Sudame, Counsel for the petitioner,
Shri A.M. Ghare, Counsel for respondent 2,
None for respondents 2 and 3.
______________________________________________________________
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CORAM : P.N. DESHMUKH AND
ROHIT B. DEO, JJ.
th
DATED : 6 FEBRUARY, 2019
ORAL JUDGMENT : (PER : ROHIT B. DEO, J.)
The petitioner, who is working as Chief Manager (Finance)
at the Western Coalfields Limited (WCL) at Nagpur, is assailing the
order dated 0252016 of the Chairman and Managing Director, WCL
(Disciplinary Authority) of reduction to one stage lower in time scale
for one year and the appellate order dated 1912017 of the Chairman
and Managing Director, Coal India Limited dismissing the appeal.
2. The petitioner contends that he served with Coal India
Limited and its subsidiary company WCL from June 1986 to February
2015 with distinction. The petitioner was appointed as Accounts
Officer E2 Grade in 1986 and was lastly promoted as Chief Manager
(Finance) E7 Grade in 2012.
3. The petitioner was served with memorandum of charge
sheet dated 0532015. The challenge to the disciplinary action is
predicated on the assertion that no misconduct is made out on the face
of the record. In the context of the challenge, we may note the
gravamen of the allegations. ArticleI alleges that the petitioner, while
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functioning as Area Finance Manager, Wani North Area, WCL during
201213, committed gross misconduct by abusing his official position
and showed undue favour to Shri Sandeep Singh Arora, Director of
M/s. BNS. Infrastructure Private Limited, Nagpur by accepting forged
bank guarantee against the retention money and not following the
guidelines as per the CMC Manual with regard to acceptance of bank
guarantee against retention money. ArticleI further reads thus :
“That a note was put up by Shri P.K. Mishra, the then Staff
Officer (Mining) on 18012013 to Area General Manager,
Wani North Area through Area Finance Manager Shri R.P.
Shukla, Wani North Area for adjusting the excess 5%
amount received through B.G. towards nondeduction of
Retention Money which was against Clause 3.07, subclause
30.3 of CMC Manual.
That Shri R.P. Shukla, AFM had accepted the
irregular proposal and simply forwarded the note without
raising any objection regarding acceptance of Bank
Guarantee against the Retention Money. As per the CMC
Manual 3.07 (Clause 30.3) it is clearly mentioned that
“Retention Money should be deducted at 5% from running
bills. Total of Performance Security and Retention Money
should not exceed 10% of annualized value of contract
amount or lesser sum indicated in the bid document.”
That, Shri R.P. Shukla, failed to raise any query with
regards to deduction of Retention Money @ 5% from the
Running Bills and irregularly allowed acceptance of BG
against retention money. However, deduction of 5% from
the running bill was mandatory for retention money and the
CMC Manual does not mention acceptance of Bank
Guarantee against nondeduction of Retention Money.”
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ArticleII reads thus :
“That, the said Shri R.P. Shukla, Chief Manager (Finance),
Wani North Area, WCL while functioning as Area Finance
Manager, Wani North Area, WCL during 201213,
committed gross misconduct by abusing his official position
and showed undue favour to Shri Sandeep Singh Arora,
Director of M/s. BNS Infrastructure Pvt. Ltd., Nagpur by
accepting a forged Bank Guarantee against Performance
Security and Retention Money due to which the total extent
and nature of actual wrongful loss caused to the WCL on
account of cancellation of Work Order arising out of
submission of forged Bank Guarantee comes to
Rs.2,41,13,928.95 (Actual Loss for nondeduction of
retention money @ 5% from running bills = 22,53,606.95
+ Liquidated damage = 72,86,774.00 + Total Penalty @
10% of the contract value claimed = 1,45,73,548 i.e. total
Rs. 2,41,13,928.95)”
4. It is discernible from the statement of imputation as
regards charge ArticleI, that the fake bank guarantee dated
28122012 was submitted by the contractor in the Wani North Area
Office vide a letter addressed to the General Manager, Wani North
Area, WCL signed by one Rishi as Authorised Signatory. On 1812013
a note was put up by Shri P.K. Mishra, Staff Officer (Mining) to Area
General Manager, Shri K.B. Majhi through the petitionerArea Finance
Manager for adjusting the excess amount received through the bank
guarantee towards nondeduction of retention money. The note
records that the bank guarantee is given towards performance security
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and retention money and that confirmations have been received from
the concerned bank with regard to the bank guarantee and extension
thereof till 3112014 vide confirmation letter dated 1612013. Shri
P.K. Mishra mentions in the note that the bank guarantee against the
performance security and retention money deposited may be accepted
so that the work order can be issued and agreements executed. The
note was put up to the Area General Manager, Wani North Area
through the petitionerArea Finance Manager, Wani North Area. Of
some relevance is the part of the statement of imputation as regards
charge ArticleI which is reproduced below :
“The Finance manual, VolI, PartII issued by Coal India Ltd.
The relevant Clause 13(1), it is the duty of the executive
authority to verify and accept the Bank Guarantee. The
Clause 13(1) of the Finance manual speaks as under :
The Executive authorities concern shall after examination
and acceptance send the documents (BG) to the concerned
Accounts Officer. The security relating to the Area should be
sent Area Accounts Officer/AFM concerned , those pertaining
to Headquarters to the Accounts Officer (Cash) and those
pertaining to the sales office to the sales accounts
department, for record and custody of the security.
That, the letter given by the authorized signatory of M/s.
BNS Infra – KBS JV Shri Rishi has not mentioned any details
regarding nondeduction of Retention Money from the
running bills.
That Shri R.P. Shukla, AFM had simply forwarded the note
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dated 19012013 without raising objection regarding
acceptance of Bank Guarantee against the deduction of
Retention money from the running bills. As per CMC
Manual 3.07 (Clause 30.3) it is clearly mentioned that
“Retention Money should be deducted at 5% from running
bills. Total of Performance Security & Retention Money
should not exceed 10% of annualized value of contract
amount or lesser sum indicated in the bid document.
That, Shri R.P. Shukla also failed to raise any query, on the
note of Staff Office (Mining) why M/s. MNS Infra submitting
BG for Rs.1,45,73,548/ instead of Rs.72,86,774/ as
demanded in the LOA which ultimately resulted in irregular
acceptance and approval of this forged BG by Area General
Manager, Wani North Area.”
It is an admitted position that under the Finance Manual
and particularly Clause 13(1), the duty to verify and accept the bank
guarantee is that of the Executive Authority. It is not in dispute that
the petitioner was not the Executive Authority and was not responsible
to verify and accept the bank guarantee. The petitioner is blamed for
simply forwarding the note put up by Shri P.K. Mishra without raising
objection regarding the acceptance of bank guarantee against the
deduction of retention money from the running bills. The statement of
imputation proceeds on the premise that the petitioner had reason to
believe that there is some irregularity in the acceptance of the bank
guarantee and was duty bound to raise an objection. Irrefutably, the
petitioner was neither the authority to verify and accept the bank
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guarantee nor was authorized to take decision on the note put up by
Shri P.K. Mishra to the Area General Manager, Shri K.B. Majhi.
The statement of imputation as regards charge ArticleII
reads thus :
“That during the period 16012013 to 31052013, M/s.
BNS InfraKBS has raised around 20 bills for payment
towards their work completed from time to time. WCL
Ghonsa OCM has paid an amount totaling to
Rs.4,50,72,139/ (Gross Amount) and after deduction the
net payment made to the party comes around
Rs.4,13,84,173/. The retention Money @5% was to be
deducted from the running bills as per the CMC Manual
Clause 30.3. Thus due to nondeduction of the retention
money from the running bills @ 5% comes to
Rs.22,53,606.95. It is evident from the fact mentioned
above that WCL had to incur a loss of Rs.22,53,606.95 due
to nondeduction of the Retention Money, which was
mandatory.
That as per Show Cause Notice issued to Shri Sandeep Singh
Arora, Director of M/s. Baba Nanak Sars Infrastructure Pvt.
Ltd. the WCL has raised a claim/penalty of
Rs.1,45,73,548/. A maximum penalty of 10% of the total
Contract value as per clause 6.2 of General Terms and
Conditions of Notice Inviting Tender (NIT) is imposed on the
contractor. As per the Show Cause Notice the WCL has also
claimed liquidated damage equivalent to 5% of the contract
value or the amount of security deposit/performance bank
guarantee whichever is higher as per clause 2 of Section 4
Integrity Pact. The amount calculated for the liquidated
damage is Rs.72,86,774/ @ 5% of the contract value.
That the total extent and nature of actual wrongful loss
caused to the WCL in acceptance of forged BG and the
notional loss caused to WCL on account of cancellation of the
work order arising out of submission of the forged BG comes
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to Rs.2,41,13,928.95 (Actual Loss for nondeduction of
retention money @ 5% from running bills = 22,53,606.95
+ Liquidated damage = 72,86,774.00 + Total Penalty @
10% of the contract value claimed = 1,45,73,548 i.e. total
Rs.2,41,13,928.95).”
5. The petitioner denied the charges vide reply dated
1632015. The petitioner pointed out that he merely forwarded the
note put up by Shri P.K. Mishra, Staff Officer (Mining) to the Area
General Manager, Wani North Area, for administrative decision as per
the existing procedure. The petitioner contended that the bank
guarantee was duly verified for its acceptance by the Staff Officer
(Mining) and the Finance Manual mandates that the Executing Officer
i.e. the Area and Contract Management Cell headed by the Staff Officer
(Mining) is obligated to verify the bank guarantee and to forward the
bank guarantee to the Finance Department only for its safe custody.
The petitioner highlighted the irregularities and deviation from
procedure in the finalization of tender and dealt with the allegation
that he did not raise an objection to the note put up by Shri P.K. Mishra
thus :
“Regarding forwarding note sheet to the Area General
Manager, without any query my submissions are as
follows :
a. It is purely administrative matter.
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b. The note sheet was for acceptance of Bank Guarantee
and the relevant clause 13(1) of the Finance Manual,
VolI, PartII it is the duty of the executive authority to
verify and accept the bank guarantee and manual
speaks as under “The Executive authorities concerned
shall after examination and acceptance send the
document (BG) to the concerned Accounts Officer.
The security relating to the Area should be sent to
Area Accounts Officer/AFM concerned, those
pertaining to Headquarters to the Accounts Officer
(Cash) and those pertaining to the sales office to the
sales accounts department for record and custody of
the security.
Hence, AFM is only the custodian of the Bank
Guarantee and has no role in its examination and
acceptance. The responsibility of examination and
acceptance of Bank Guarantee is vested with the
executive authority which in this case is Staff Officer
(Mining). It is his responsibility to examine and
accept whether Bank Guarantee is as per CMC
manual or not. In this regard duties and
responsibilities of Area General Manager, Area
Finance Manager, Staff Officer (Mining) sought by
Inspector of Police CBI/ACB, Nagpur vides
PEO2820130001/1316 dt. 13032014 is enclosed
for ready reference.
C. There is no procedure prescribed in CMC Manual to
process such note sheet before issue of work order and
to the best of my knowledge no such system exists in
any of the areas including HQ. Even in the case of
Wani North Area in case of E&M, Civil etc., the work
order is directly issued after verification of BG by the
concerned department. Presently, the processing of
such note sheet is dispensed with as it is not prescribed
procedure. Hence, the cognizance of the said note
sheet should not have been taken.
D. On the question of irregular acceptance and approval
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of this BG by AGM, WNA, I would like to state that
Shri K.B. Majhi before taking charge as Area General
Manager, two and a half months back was working as
GM (Opm)/Staff Officer (Mining), WNA for the last 2
years (approx) and was supposed to be familiar with
CMC Manual thoroughly and well conversant and had
signed the note sheet with full consciousness. It is very
much surprising to note that his name appears in the
management witness and has been exonerated,
although he has signed the same note sheet along with
the undersigned. It appears to be discriminatory. I
also deserve the same immunity as extended to Shri
K.B. Majhi.
e. Moreover, in course of conducting transaction audit
for said period in respect of Wani North Area by
Comptroller and Auditor General of India (C&AG)
who are known to be expert in the field, had not
raised any adverse remark regarding adjustment of
five percent retention money against bank guarantee
Para No.I of PartIB (Extract of Same Enclosed)
Hence, the allegations leveled are not correct and
totally false and frivolous.”
6. The reply of the petitioner to the statement of imputation
as regards charge ArticleII reads thus :
“ In respect of above the undersigned is in a constraint to
submit the following few lines for your perusal, since it is felt
that the undersigned has been implicated to save the helm of
affairs and other higher officials :
1. As per Finance Manual clause (13)1 the area Finance
Manager is the only custodian of Bank Guarantee and
not the accepting authority. So, above charges that I
have accepted forged bank guarantee does not arise
and completely baseless and fabricated.
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2. Performance security is taken from the contractor to
ensure the performance, similarly retention money is
deducted from the running bill and is returned to the
contractor after completion of work. So, both the
performance guarantee and retention money relates to
the performance of the contractor and these are not
the source of income to the company. The work order
has not been cancelled on account of non
performance. It has been cancelled due to fake papers
like experience, BG etc., as mentioned by GM (CMC),
WCLHQ vide his letter no. WCL/GM
(CMC)/2013/1229 dt. 19102013 (Copy enclosed).
So, there is no actual loss to the company, as
mentioned in the ArticleII.
3. Measurement and payment as per Clause 8.8 of the
CMC Manual stipulates that the company can recover
any over payment from the subsequent bills under the
contract, failing that from the contractors claim under
any other contract with the company or from the
contractor security deposit or the contractors shall pay
the amount of over payment on demand. So, the
retention money amounting to Rs.22,53,606.95/ can
be easily adjusted from the pending bills due to the
contractor which is Rs.35 Lakhs (approx.) so, there is
no question of loss to the company on account of
retention money. Further, the liquidated damages
and penalty does not fall under the ambit of loss.
4. Further in course of conducting Transaction Audit by
C&AG, the auditor has pointed out serious lapses in
scrutiny and finalization of tender documents as
detailed below :
a. Seeking clarification of about the experience
before the floating of NIT.
b. Disqualifying the qualified and reputed
contractor on the minor ground by setting aside
legal opinion given by company’s panel
advocate.
c. Not taking TDS certificates as per NIT.
d. False hiring agreement signed by the same
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person both as hirer and hiree.
e. Ignoring the adverse legal opinion about the
documents submitted by M/s. BNSKBS (JV).
f. Non submission of details of ongoing/completed
work in CIL/WCL.
g. Violating the natural justice by giving only 3
days time to M/s Avatar & Co., Nagpur and 7
days time to M/s BNS Infrastructure Pvt. Ltd.,
Nagpur for clarification. Both the tenderers are
Nagpur based.
The concluding remark of C&AG is quoted below :
Quote :
“Thus the bidder M/s BNSKBS(JV), despite of many
deficiencies and doubts of genuineness of the documents
was awarded the contract. The incidents like obtaining
confirmation of experience much ahead of floating of
tenders, calling for hiring agreement from M/s. Avtar &
Co. after one month for the decision to disqualify the
bidder M/s, Avtar & Co., just as formality without
giving him sufficient time to respond, considering the
bidder M/s. BNSKBS(JV) as eligible despite of legal
opinion, it appears that the tender committee had
favoured and awarded the contract to M/s. BNS
KBS(JV). All the doubts of genuineness were proved
correct when the BG had resulted as fake.”
“Thus improper of contract by improperly eliminating
the other bidder (M/s. Avatar Singh) who was
performing well in WCL and favouring the fraudulent
tenderer had resulted in financial loss of Rs.1.49 crore
and avoidable litigation to company. This not only
needs to be investigated but adherence of strict principle
in finalization of tender needs to be adopted in WCL.”
Unquote :
From the C&AG report, it is amply clear that
unreasonable favour has been extended by the Permanent
Tender Committee subverting the laid down procedures of
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the Company and the Tender Committee comprises of AGM,
WNA, GM (Prodn), GM (CMC), GM(Finance) and DT(OP)
and subsequent approving authority.
Sir, undersigned joined WCL in June 2012 after being
transferred from SECL. In the SECL twice I have been
awarded as the Best Area Finance Manager for my
performance. Even in the WCL: while working as AFM a lot
of improvement has been made in the working of finance
and accounts and same has been appreciated vide letter Dt.
27052013 GM(F), WCL (copy enclosed). I have always
tried to protect the interest of the company.
In fine, had the fraudster Contractor would have
been nipped in the bud itself, knowing well about his
ineligibility not only with the documents submitted but
also through the legal opinion submitted by the Panel
Advocate and had the Area General Manager would
have exercised within the power delegated to him and
forwarded the proposal moved by Staff Officer (Mining)
for approval by Competent Authority, the alleged
incidents would have been averted. To my conscience, & to
make prevail the truth, natural justice with liberty and
equity, in a constraint to state that to save the helm the
undersigned is implicated and legally to divert the case and
save the helm even after filing FIR with State Police, the case
was forwarded to CBI, who could not proceed when the case
is dealt by State Police and till date the helm is not making
necessary arrangement for booking the fraudster under the
rule or laws of the land.”
7. The Enquiry Officer returned finding of guilt on both
charges and the reasons recorded are thus :
“After analyzing the defence brief the undersigned has come
to the following conclusion :
1. It is a fact that forged Bank Guarantee has been
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submitted the verification of which was the duty of the
executing authority.
2. It is also a fact that a note was moved by the
SO(M), Wani North Area, Shri P.K. Mishra, giving the
details of the Bank Guarantee and stating that BG of
Rs.1,45,73,548 which is exactly double the amount and
also stating the BG be accepted in lieu of retention money
being deducted. The note was duly vetted by AFM, Wani
North Area without any comments and forwarded to
AGM, Wani North Area for approval. Thereafter work
order was issued and retention money was not deducted
by the SubArea concerned.
The Charged Officer is according to my opinion is guilty
of the both the Article of Charges against him because of
the following reasons :
1. As finance head of the Area he vetted the irregular
note moved by SO(M), Wani North Area without
objecting, examining or returning the note.
2. He is also guilty of the Article of ChargeII
regarding the loss incurred by the company to the
following extent –
(a) Due to accepting and forwarding the irregular
note (D5) resulted in nondeduction of retention
money @5% amounting to Rs.22,53,606.95.
(b) The Charged Officer by vetting the irregular
note put by SO(M), Shri P.K. Mishra became a party
to the following losses:
(1) 10% penalty as per Clause 6.2
Rs.1,45,73,54800
(2) LD as per integrity pact. Rs.
72,86,77400
(3) Total loss to the company
Rs.2,41,13,92895
In my opinion as the Finance head of the Area and
associate Finance of AGM, Wani North Area had the
Charged Officer exercised due care in dealing with the note
submitted by SO(M), Wani North Area by raising questions
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and returning the note sheet the entire episode may have
been avoided. The entire matter was dealt by the Charged
Officer in a very casual manner which resulted in this fraud
taking place.”
8. The Enquiry Officer concurred with the submission of the
petitioner that the verification of the bank guarantee was the duty of
the Executing Authority, which the petitioner admittedly was not. The
Enquiry Officer records that the note moved by the Staff Officer
(Mining) Shri P.K. Mishra was duly vetted by the petitioner “without
any comment” and forwarded to the Assistant General Manager, Wani
North Area for approval. The petitioner is held guilty on the premise
that as the finance head of the area he vetted the irregular note moved
by the Staff Officer (Mining) without any objection or examination.
This is also the basis for the finding of guilt as regards charge ArticleII.
9. The short submission of the learned Counsel for the
petitioner Shri Mohan Sudame is that the record of the enquiry, on the
face of it, does not make out a case of misconduct. The submission is,
and on facts there does not appear to be in dispute, that the petitioner
was neither the Executing Authority charged with the responsibility to
verify or accept the bank guarantee nor was the petitioner a member of
the Tender Committee nor was the petitioner authorized to take any
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decision on the note forwarded by Shri P.K. Mishra, the Staff Officer
(Mining). The note was put up by Shri P.K. Mishra and was forwarded
by the petitioner without any comment to the decision making
authority Assistant General Manager, Wani North Area. Shri Mohan
Sudame, learned Counsel would submit that in the factual matrix, there
is no error of judgment or negligence inasmuch as there was no reason
for the petitioner to believe that the bank guarantee was fake nor was
the decision making on the note or any part thereof in the domain of
the authority of the petitioner. Shri Mohan Sudame, learned Counsel
would submit that even if it is assumed arguendo that the petitioner
committed an error of judgment, the error would not be a misconduct.
Shri Mohan Sudame, learned Counsel would emphasize that there is no
material on record to suggest that the petitioner had any reason to
believe that the bank guarantee submitted is fake or that note put up by
the Staff Officer (Mining) is suggesting a course of action which is
fraught with risk to the employer or which is ex facie irregular or
fraudulent and that the petitioner was expected, by the nature of the
assignment which he was holding, or in view of any service rule or
regulation or manual or duty list, to make any further or probing
enquiry or to return the note, decision upon which was in the exclusive
domain of the Assistance General Manager to whom the note was
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addressed. Shri Mohan Sudame would submit that even if the bar is
raised infinitely and the standard of efficiency is stretched to the extent
of expecting an employee in the Finance Department to instinctively
smell something fishy, the failure to meet the bar would hardly be a
misconduct. Shri Mohan Sudame, learned Counsel would invite my
attention to the decision of the Hon’ble Apex Court in State of Punjab
and others v. Ram Singh ExConstable, (1992) 4 SCC 54 and in
particular to the following observations.
“6. Thus it could be seen that the word ‘misconduct’
though not capable of precise definition, on reflection
receives its connotation from the context, the delinquency in
its performance and its effect on the discipline and the
nature of the duty. It may involve moral turpitude, it must
be improper or wrong behavior, unlawful behavior, willful in
character, forbidden act, a transgression of established and
definite rule of action or code of conduct but not mere error
of judgment, carelessness or negligence in performance of the
duty; the act complained of bears forbidden quality or
character. Its ambit has to be construed with reference to the
subject matter and the context wherein the term occurs,
regard being had to the scope of the statute and the public
purpose it seeks to serve. The police service is a disciplined
service and it requires to maintain strict discipline. Laxity in
this behalf erodes discipline in the service causing serious
effect in the maintenance of law and order.”
10. We have heard the learned Counsel Shri A.M. Ghare for
the Western Coalfields, at length. We noticed from the record that
while the petitioner is punished for allegedly not raising objection to
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the note moved by Shri P.K. Mishra, the Staff Officer (Mining), the
Assistant General Manager Shri K.B. Majhi to whom the note was
addressed and who apparently took the decision thereupon has not
been proceeded against departmentally. In response to our query, Shri
A.M. Ghare, learned Counsel states that as a fact no departmental
action is initiated against the decision making authority who acted on
the note put up by Shri P.K. Mishra. We asked Shri A.M. Ghare,
learned Counsel to explain the logic or rational, if any, in proceedings
against the petitioner who simply forwarded the note without any
comment to the decision making authority, the Assistant General
Manager and not initiating any action whatsoever against the decision
making authority who acted on the note. Shri A.M. Ghare, learned
Counsel states that the rational is that the first vetting officer has a
higher degree of responsibility. We are not impressed by the
explanation. Perusal of the record of the enquiry proceedings has left
us with the disturbing feeling and impression that the petitioner is
made a scape goat. Concededly, the petitioner was not the authority to
verify or accept the bank guarantee nor was a member of the Tender
Committee, nor was the authority to take the decision on the note put
up by Shri P.K. Mishra. The fact that no action is initiated against the
decision making authority who acted on the note put up by Shri P.K.
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Mishra and the petitioner is punished for the alleged failure to raise an
objection to the note is glaringly arbitrary, particularly since we have
not come across any material to show that the petitioner had any
reason to believe that the course suggested in the note was grossly
irregular or that the petitioner was otherwise required to do more
elaborate and searching enquiry into the factual foundation for the
note.
11. Shri A.M. Ghare, learned Counsel would rely on the
decision of the Hon’ble Supreme Court in Union of India and others v.
J. Ahmed, (1979)2 SCC 286 and in particular to the observations in
paragraphs 9,10,11 and 12:
“9. The five charges listed above at a glance would convey the
impression that the respondent was not a very efficient officer.
Some negligence is being attributed to him and some lack of
qualities expected of an officer of the rank of Deputy
Commissioner are listed as charges. To wit, charge 2 refers to
the quality of lack of leadership and charge 5 enumerates
ineptitude, lack of foresight, lack of firmness and indecisiveness.
These are qualities undoubtedly expected of a superior officer
and they may be very relevant while considering whether a
person should be promoted to the higher post or not or having
been promoted, whether he should be retained in the higher post
or not or they may be relevant for deciding the competence of
the person to hold the post, but they cannot be elevated to the
level of acts of omission or commission as contemplated by Rule
4 of the Discipline and Appeal Rules so as to incur penalty under
Rule 3. Competence for the post, capability to hold the same,
efficiency requisite for a post, ability to discharge function
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attached to the post, are things different from some act or
omission of the holder of the post which may be styled as
misconduct so as to incur the penalty under the rules. The words
'acts and omission' contemplated by Rule 4 of the Discipline and
Appeal Rules have to be understood in the context of the All
India Services (Conduct) Rules, 1954 ('Conduct Rules' for
short). The Government has prescribed by Conduct Rules a code
of conduct for the members of All India Services. Rule 3 is of a
general nature which provides that every member of the service
shall at all times maintain absolute integrity and devotion to
duty. Lack of integrity, if proved, would undoubtedly entail
penalty. Failure to come up to the highest expectations of an
officer holding a responsible post or lack of aptitude or qualities
of leadership would not constitute failure to maintain devotion
to duty. The expression 'devotion to duty' appears to have been
used as something opposed to indifference to duty or easygoing
or lighthearted approach to duty. If Rule 3 were the only rule
in the Conduct Rules it would have been rather difficult to
ascertain what constitutes misconduct in a given situation. But
Rules 4 to 18 of the Conduct Rules prescribe code of conduct for
members of service and it can safely stated that an act or
omission contrary to or in breach of prescribed rules of conduct
would constitute misconduct for disciplinary proceedings. This
code of conduct being not exhaustive it would not be prudent to
say that only that act or omission would constitute misconduct
for the purpose of Discipline and Appeal Rules which is contrary
to the various provisions in the Conduct Rules. The inhibitions
in the Conduct Rules clearly provide that an act or omission
contrary thereto as to run counter to the expected code of
conduct would certainly constitute misconduct. Some other act
or omission may as well constitute misconduct. Allegations in
the various charges do not specify any act or omission in
derogation of or contrary to Conduct Rules save the general Rule
3 prescribing devotion to duty. It is, however, difficult to believe
that lack of efficiency, failure to attain the highest standard of
administrative ability while holding a high post would
themselves constitute misconduct. If it is so, every officer rated
average would be guilty of misconduct. Charges in this case as
stated earlier clearly indicate lack of efficiency, lack of foresight
and indecisiveness as serious lapses on the part of the
respondent. These deficiencies in personal character of personal
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ability would not constitute misconduct for the purpose of
disciplinary proceedings.
10. It would be appropriate at this stage to ascertain what
generally constitutes misconduct, especially in the context of
disciplinary proceedings entailing penalty.
11. Code of conduct as set out in the Conduct Rules clearly
indicates the conduct expected of a member of the service. It
would follow that conduct which is blameworthy for the
Government servant in the context of Conduct Rules would be
misconduct. If a servant conducts himself in a way inconsistent
with due and faithful discharge of his duty in service, it is
misconduct [see Pierce v. Foster]. A disregard of an essential
condition of the contract of service may constitute misconduct
[see Laws v. London Chronicle (Indicator Newspapers)]. This
view was adopted in Shardaprasad Onkarprasad Tiwari v.
Divisional Superintendent, Central Railway, Nagpur Division ,
Nagpur, and Satubha K. Vaghela v. Moosa Raza . The High
Court has noted the definition of misconduct in Stroud's Judicial
Dictionary which runs as under:
"Misconduct means, misconduct arising from ill
motive; acts of negligence, errors of judgment, or
innocent mistake, do not constitute such misconduct".
In industrial jurisprudence amongst others, habitual or gross
negligence constitute misconduct but in Utkal Machinery Ltd. v.
Workmen, Miss Shanti Patnaik , in the absence of standing
orders governing the employee's undertaking, unsatisfactory
work was treated as misconduct in the context of discharge being
assailed as punitive. In S. Govinda Menon v. Union of India, the
manner in which a member of the service discharged his quasi
judicial function disclosing abuse of power was treated as
constituting misconduct for initiating disciplinary proceedings. A
single act of omission or error of judgment would ordinarily not
constitute misconduct though if such error or omission results in
serious or atrocious consequences the same may amount to
misconduct as was held by this Court in P.H. Kalyani v. Air France,
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Calcutta , wherein it was found that the two mistakes committed
by the employee while checking the loadsheets and balance
charts would involve possible accident to the aircraft and
possible loss of human life and, therefore, the negligence in work
in the context of serious consequences was treated as misconduct.
It is, however, difficult to believe that lack of efficiency or
attainment of highest standards in discharge of duty attached to
public office would ipso facto constitute misconduct. There may
be negligence in performance of duty and a lapse in performance
of duty or error of judgment in evaluating the developing
situation may be negligence in discharge of duty but would not
constitute misconduct unless the consequences directly
attributable to negligence would be such as to be irreparable or
the resultant damage would be so heavy that the degree of
culpability would be very high. An error can be indicative of
negligence and the degree of culpability may indicate the
grossness of the negligence. Carelessness can often be productive
of more harm than deliberate wickedness or malevolence.
Leaving aside the classic example of the sentry who sleeps at his
post and allows the enemy to slip through, there are other more
familiar instances of which a railway cabinman signals in a
train on the same track where there is a stationary train causing
headlong collision; a nurse giving intravenous injection which
ought to be given intramuscular causing instantaneous death; a
pilot overlooking an instrument showing snag in engine and the
aircraft crashes causing heavy loss of life. Misplaced sympathy
can be a great evil [see Navinchandra Shakerchand Shah v.
Manager, Ahmedabad Coop. Department Stores Ltd.]. But in
any case, failure to attain the highest standard of efficiency in
performance of duty permitting an inference of negligence would
not constitute misconduct nor for the purpose of Rule 3 of the
Conduct Rules as would indicate lack of devotion to duty.
12. The High Court was of the opinion that misconduct in the
context of disciplinary proceeding means misbehaviour involving
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some form of guilty mind or mens rea. We find it difficult to
subscribe to this view because gross or habitual negligence in
performance of duty may not involve mens rea but may still
constitute misconduct for disciplinary proceedings.”
The reliance on the said decision is in view of the
observation in paragraph 12 that the misconduct may not necessarily
involved mens rea and that gross or habitual negligence in performance
of duty may not involve mens rea and may still constitute misconduct
for disciplinary proceedings. The decision cited takes the case of the
employer no further. No case of gross or habitual negligence in
performance of duty is made out. Au contraire , the said decision
reaffirms the settled position of law that lack of efficiency or attainment
of highest standard in discharge of duty attached to the office would
not ipso facto constitute misconduct.
12. We are satisfied that on the face of the record no case of
misconduct is made out.
13. The punitive order dated 0252016 in proceedings
WCL/CMD/VIG/16/835 passed by the ChairmanCumManaging
Director, Disciplinary Authority and the order dated 1912017 in
Appeal CIL/C5A(iv)/RPS/347/AA/42 passed by the Chairmancum
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Managing Director, Coal India Limited and Appellate Authority are
quashed and set aside.
14. Rule is made absolute in the aforestated terms.
JUDGE JUDGE
adgokar
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