Full Judgment Text
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PETITIONER:
PYARE LAL SHARMA
Vs.
RESPONDENT:
MANAGING DIRECTOR, JAMMU & KASHMIRINDUSTRIES LTD. & ORS. & V
DATE OF JUDGMENT19/07/1989
BENCH:
KULDIP SINGH (J)
BENCH:
KULDIP SINGH (J)
DUTT, M.M. (J)
CITATION:
1989 AIR 1854 1989 SCR (3) 428
1989 SCC (3) 448 JT 1989 (3) 133
1989 SCALE (2)59
ACT:
Jammu & Kashmir Industries Employees Service Rules &
Regulations--R. 16.14---Termination of service--Provision of
show cause notice sufficient safeguard against arbitrary
action--Held regulation not arbitrary.
Regulation 16.14--Termination of service--Ground (a) &
(b)Three months notice or pay in lieu thereof. Amended
Regulation-grounds (c) & (d) unauthorised absence and taking
part in politics--15 days notice required--No requirement of
any other notice or pay in lieu thereof. Show cause for the
period prior to amendment--Held amended regulation not
operative retrospectively and the notice served on the
employee was illegal and the order of termination had to be
set aside. Also held termination on the basis of taking part
in politics not maintainable as no show cause given.
Constitution of India 1950--Article 311(1) Employees of
the company not civil servants--Cannot claim protection of
Art. 311(1) of the Constitution of India nor the extension
of that guarantee on parity-Employees governed by the provi-
sions of Articles of Association and Regulations of the
Company.
Natural Justice-- Principle--No one can be penalised for
the action which was not penal on the day it was committed.
Delegated authority, acquires the power of appointing
authority-Held M.D. who had been delegated the powers of the
Board of Directors was legally competent to terminate the
services of the employee.
HEADNOTE:
According to the Regulation 16.14 of the Jammu & Kashmir
Industries Employees Service Rules & Regulations the serv-
ices of the permanent employee could be terminated if the
post is abolished or he is declared medically unfit after
giving three month’s notice or pay in lieu thereof and in
case of temporary employee one month’s notice or pay in
429
lieu thereof.
This regulation was amended on April 20, 1983 by adding
two more grounds namely, if the employee remains on an
unauthorised absence or if he takes part in active politics,
in such cases the services shall be terminated if he fails
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to explain his conduct satisfactorily within 15 days from
the date of issue of notice and the management shall be
empowered to take a decision without resorting to further
enquiries.
Pyare Lal Sharma was employed as a Chemical Engineer by
the Jammu & Kashmir Industries Ltd. hereinafter called
’Company’. The Company issued a show cause notice on 21.4.83
in terms of the added clauses for his unauthorised absence
from duty. As no reply was submitted, the M.D. terminated
his services by an order dated 14.6.1983. Sharma challenged
the order of termination by way of a writ petition before
the J & K High Court. Learned Single Judge allowed the Writ
Petition on three grounds namely, violation of Rules of
Natural Justice, that the Board of Directors having appoint-
ed Sharma, the M.D. who is subordinate authority could not
terminate his services and that the regulation 16.14 was
arbitrary and violative of Art. 14 of the Constitution of
India. The Letters Patent Bench of the High Court dismissed
the appeal of the Company but denied backwages to Sharma.
Aggrieved by that order both the Company as well as Sharma
came up in appeals before this court. While allowing the
appeal of Sharma partially and dismissing the appeal of the
Company, this Court,
HELD: That Regulation 16.14 was not arbitrary. The
provision of show cause notice is a sufficient safeguard
against arbitrary action. Under grounds (a) & (b) of the
Regulations three months notice or pay in lieu thereof is
required. Regarding grounds (c) & (d) the regulations pro-
vide for 15 days notice to explain the conduct satisfactori-
ly and there is no requirement of any other notice or pay in
lieu thereof. [437C-D]
There is no provision in the Articles of Association or
the regulations of the company giving same protection to the
employees of the company as is given to the civil servants
under Art. 311(1) of the Constitution of India. An employee
of the Company cannot, therefore, claim that he cannot be
dismissed or removed by an authority subordinate to that by
which he was appointed. Since on the date of termination of
Sharma’s services the M.D. had the powers of the appointing
authority he was legally competent to terminate Sharma’s
services. [437F-G]
430
Grounds (c) & (d) in regulation 16.14 exclusively and
individually are sufficient to terminate the services of an
employee. Once it is established that an employee remains on
an unauthorised absence from duty the only action which can
be taken is termination of his services. Similar is the case
when an employee takes part in active politics. The finding
in the termination order cannot be sustained because no
notice in this respect was given to Sharma but the order of
termination can be supported on the ground of his remaining
on unauthorised absence from duty. [437H; 438A-B]
State of Orissa v. Vidyabhushan Mohapatra, [1963] 1
Supp. SCR 648 and Railway Board v. Niranjan Singh, [1969] 1
SCR 548, relied
upon.
It is a basic principle of natural justice that no one
can be penalised on the ground of a conduct which was not
penal on the day it was committed. The date of show cause
notice being April 21, 1983 the unauthorised absence from
duty which has been taken into consideration is from Decem-
ber 20, 1982 to April 20, 1983. Whole of this period being
prior to the date of amendment of regulation 16.14, the same
could not be made as a ground for proceeding under ground
(c) of Regulation 16.14. The Notice served on the appellant
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was thus illegal and as a consequence the order of termina-
tion can not be sustained and has to be set aside. [438F-G]
When the termination order is set aside by the courts
normally the employee becomes entitled to backwages and all
other consequential benefits. In view of the facts and
circumstances of this case the court ordered that only sixty
percent of the backwages be paid to Sharma. Moneys already
received by Sharma under orders of either this Court or High
Court shall be adjusted and the balance paid to him. If the
money already paid to Sharma is more than what has been
ordered to be paid now then there shall be no recovery from
him. [439A-C]
JUDGMENT:
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 3 1543
155 of 1985.
From the Judgment and Order dated 26.3. 1985 of the
Jammu & Kashmir High Court in L.P.A. (W) No. 59 of 1984.
For the Appellant In-Person in Civil Appeal No. 3 154/85
M.N. Tiku, Rakesh Tiku and Pandey Associates for the
Respondents.
431
M.N. Tiku, Rakesh Tiku and Pandey Associates for the
Appellants.
For the Respondent In-Person in Civil Appeal No. 3155/85.
The Judgment of the Court was delivered by
KULDIP SINGH, J. Jammu & Kashmir Industries Limited
(hereinafter called ’company’) is a company registered under
the Indian Companies Act, 1956 and is wholly owned and
managed by the State of Jammu & Kashmir. Pyare Lal Sharma
was employed by the company as Chemical Engineer. His serv-
ices were terminated by the Managing Director of the company
on June 14, 1983. Sharma’s writ petition was allowed by a
learned Single Judge of the Jammu & Kashmir High Court. On
appeal by the company the Letters Patent Bench upheld the
judgment but denied back-wages to Sharma. This is how these
two appeals, one by the.company and the other by Sharma, are
before us.
We may briefly notice the necessary facts. Pyare Lal
Sharma joined the company as Assistant Chemical Engineer on
July 12, 1972. In 1974 he was sent to England as management
trainee but he returned back without completing the train-
ing. Sharma’s conflict with the company started in 1976 when
he filed a suit against the company in Jammu & Kashmir High
Court with various reliefs including a direction that he be
again sent to England on company’s expense. The suit was
dismissed and further appeal to the Division Bench was also
dismissed. He then filed another suit in the Delhi High
Court claiming Rs.50 lakhs as damages from the company but
the same did not proceed on technical grounds. Thereafter,
it seems, Sharma started suspecting mala-fide in every
action of the company and resorted to court proceedings even
on slight pretext. He challenged the order of transfer from
Baramulla to the headquarters by way of suit in the Jammu &
Kashmir High Court. Interim stay, initially granted, was
vacated by the High Court. In December, 1979 he applied for
leave on medical grounds without disclosing the ailment. He
remained absent from December 7, 1979 to March 7, 1980
without any sanctioned leave. Disciplinary proceedings were
initiated against him on the charge of unauthorised absence
and he was placed under suspension on March 8, 1980. He
filed Writ Petition No. 58/80 in the Jammu & Kashmir High
Court against suspension. Ultimately Sharma expressed re-
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grets and he was reinstated into service by an order dated
May 15, 1980. In April, 1981 he was transferred from head-
quarters to one of
432
the units. He again filed a writ petition in the Jammu &
Kashmir High Court challenging the order of transfer but the
same was dismissed. Thereafter he filed Writ Petition No.
4086 of 1982 in this Court which was heard by Chinnappa
Reddy, J. (Vacation Judge) on 1st of June, 1982. The learned
Judge passed the following order:
"Issue notice returnable on June 15, 1982.
Notice be also served on the counsel for the
State of Jammu & Kashmir Mr. Altar Ahmad. Mr.
Altar Ahmad will take instructions from his
clients and assist this Court to know the
precise facts of the case which it is impossi-
ble to find from the petitioner. 1 have sug-
gested to the petitioner that he may engage a
counsel but he does not appear to be inclined
to do so. Nor is he willing to be assisted by
the counsel engaged by the court."
The writ petition was, however, dismissed as withdrawn
on June 15, 1982. Sharma filed two more writ petitions being
293 of 1982 and 410 of 1982 in the Jammu & Kashmir High
Court challenging the promotions of some other officers.
Sharma absented from duty on September 8, 1982. He was
asked to explain his absence. A para out of his reply is as
under:
"I have been submitting charge sheet against
you since last one year to authorities about
your corrupt practices, communal character,
and illegal financial advancement you have
made but no action has been taken against you
since you utilise political pressure and
bribed the chairman."
Sharma was served with a charge-sheet dated September
24, 1982 and he was placed under suspension. Use of deroga-
tory language in various communications was one of the
charges against him. He submitted his reply to the charge-
sheet on October 7, 1982. Part of the opening paragraph is
as under:
"You have become frustrated, lost balance of
mind and to cover the various irregularities
committed by you for example ..... You will
be prosecuted for levelling false charge sheet
and false charges against me. Coming to the
charge sheet with above reverence I have to
say as under."
On October 22, 1982 an enquiry officer was appointed to
enquire
433
into the charges against Sharma. He challenged the order of
suspension by way of Civil Writ Petition 661 of 1982 in the
Jammu & Kashmir High Court. The High Court stayed the sus-
pension by its order dated December 20, 1982. The order of
suspension having been stayed by the High Court it was
incumbent on Sharma to have joined duty. But inspite of
company’s letters asking him to do so he remained absent.
Sharma filed Writ Petition 471/82, Writ Petition 129/83
and Letters Patent Appeal 24/83 for payment of his salary
and allowances for various periods which were granted by the
High Court.
It is also on record that while in service Sharma unsuc-
cessfully fought assembly elections on two occasions. He
filed his nomination papers for contesting elections to the
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Lok Sabha from Baramulla constituency. But the nomination
papers were rejected.
Regulation 16.14 of Jammu & Kashmir Industries Employees
Service Rules and Regulations before amendment was as under:
"The service of the permanent employee shall
be terminated by the company, if (a) his post
is abolished or (b) he is declared on medical
grounds to be unfit for further service after
giving three months’ notice or pay in lieu
thereof. For similar reasons the service of a
temporary employee also be dispensed with
after giving him one month’s notice or pay in
lieu thereof."
The above quoted regulation 16.14 was amended on April
20, 1983. Amended regulation is as under:
"16.14. the services of an employee shall be
terminated by the Company if:
(a) his post is abolished, or
(b) he is declared on medical grounds to be
unfit for further service, or
(c) if he remains on un-authorised absence,
or(d) if he takes part in active politics.
In the case of (a) and (b) above the services
shall be terminated after giving three months
notice to a permanent
434
employee and one month’s notice to a temporary
employee or pay in lieu thereof.
In the case of (c) and (d) above the
services of an employee shall be terminated if
he fails to explain his conduct satisfactorily
within 15 days from the date of issue of
notice. The management shall be empowered to
take a decision without resorting to further
enquiries.
By order of the Board of Directors."
The company issued a show cause notice dated April 21,
1983 in terms of clause (c) of amended regulation 16. 14.
The notice was in the following terms:
"In compliance to the orders of the Hon’ble
High Court Your suspension was stayed till
further orders vide Order No. JKI/319/82 dated
21.12.82 issued vide endorsement No. Adm.(P)
80-65/4866 dated 21.12.82. From that date also
you have continuously remained absent unautho-
risedly from your duties. You are, therefore,
served this notice to show cause within a
period of 15 days as to why your services
should not be terminated under rules of the
Corporation."
No reply to the show cause notice was submitted by
Sharma. By an order dated June 14, 1983 the Managing Direc-
tor of the company terminated his service,. The termination
order is reproduced as under:
"Shri Pyare Lal Sharma Chemical Engineer,
Jammu and Kashmir Industries Limited has
remained on unauthorised absence continuously
from 21.12.82 (since the date of his suspen-
sion was stayed as per orders from the Hon’ble
High Court). Shri Sharma was served with a
notice under Jammu & Kashmir Industries Limit-
ed Employees Service Rules to show cause
within a period of 15 days as to why his
services should not be terminated. This notice
was served to him under registered post but
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the same was received back in this office and
later on delivered to him in person on 7.5.83
as per his request. Shri Sharma has failed to
explain his position.
It has now also been established that Shri
Sharma was
435
taking part in active politics during the
period of his un-authorised absence and has
filed nomination papers for contesting elec-
tion from 1-Baramulla Parliamentary Con-
stituency. Now that his unauthorised absence
as well as his taking part in the active
politics has been established, and in exercise
of the powers vested in the management under
Jammu & Kashmir Industries Employees Services
Regulations the services of said Shri Pyare
Lal Sharma Chemical Engineer J & K Industries
Limited are hereby terminated."
Sharma challenged the order of termination by way of
Writ Petition No. 70 of 1984 before the Jammu & Kashmir High
Court. Learned Single Judge by his judgment dated October
16, 1984 allowed the writ petition on three grounds.
The learned Judge found the impugned order violative of
Rules of Natural Justice as no opportunity to show cause was
afforded to Sharma in respect of the ground of taking part
in active politics. It was also held that the Board of
Directors having appointed Sharma, The Managing Director who
is subordinate authority could not terminate his services.
Finally, the learned Judge held regulation 16.14 to be
arbitrary and as such violative of Article 14 of the Consti-
tution of India.
The Letters Patent Bench of the High Court dismissed the
appeal of the company but denied back-wages to Sharma. The
Bench held that Sharma’s services could not be terminated by
an authority subordinate to the authority which appointed
him. The Bench also found that either three months notice or
salary in lieu thereof under regulation 16.14 was mandatory.
The Division Bench did not agree with the other reasons
given by the learned Single Judge in support of his judg-
ment.
Mr. Pyare Lal Sharma appeared in person and argued his
case. He has been of no assistant to us. During the course
of arguments we suggested to Mr. Sharma to engage a counsel
which de declined. We also repeatedly offered to him to have
the services of a counsel engaged by the Court but he did
not agree and insisted on arguing the case himself.
From the pleadings of the parties, documents on the
record, the judgment of the learned Single Judge and of the
Letters Patent Bench
436
and from Sharma’s arguments the following points arise for
our consideration:
1. Whether Regulation 16.14 is arbitrary
and as such ultra vires Article 14 of the
Constitution of India.
2. Whether three months’ notice or pay in
lieu of the notice period was required to be
given under Regulation 16.14.
3. The termination order having been
passed by the Managing Director who was an
authority subordinate to the Board of Direc-
tors which appointed Sharma, the order was bad
on that ground.
4. Whether the impugned order is viola-
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tive of rules of natural justice so much so
that the ground of taking part in active
politics was not mentioned in the show cause
notice whereas it was relied upon in the
termination order.
5. Whether the period of absence, which
was prior to the date of coming into force of
the amended Regulation 16.14, could be taken
into consideration for invoking ground (c) of
the Regulation.
We see no arbitrariness in Regulation 16.14. The Regula-
tion has been framed to meet four different eventualities
which may arise during the service of a company employee.
Under this regulation services of an employee may be termi-
nated (a) if his post is abolished or (b) if he is declared
on medical grounds to be unfit for further service or (c) he
remains on unauthorised absence or (d) if he takes part in
active politics. In the case of (a) and (b) three months
notice to a permanent employee and one month notice to
temporary employee or pay in lieu thereof is to be given. In
case of (c) and (d) a show cause notice, to explain his
conduct satisfactorily, is to be given. So far as grounds
(a) and (b) are concerned there cannot be any objection.
When a post is abolished or an employee is declared medical-
ly unfit for further service the termination is the obvious
consequence. In the case of abolition of post the employee
may be adjusted in some other post if legally permitted.
Ground (c) has also a specific purpose. "Remains on un-
authorised absence" means an employee who has no respect for
discipline and absents himself repeatedly and without any
justification
437
or the one who remains absents for a sufficiently long
period. The object and purport of the regulation is to
maintain efficiency in the service of the company. The
provision of show cause notice is a sufficient safe-guard
against arbitrary action. Regarding ground (d) "acting
politics" means almost whole time in politics. Company job
and active politics cannot go together. The position of the
civil servants who are governed by Article 311 is entirely
different but a provision like grounds (c) and (d) in Regu-
lation 16.14 concerning the employees of companies/corpora-
tions/public undertakings is within the competence of the
management.
We do not agree with the Division Bench of the High
Court that three months’ notice or pay in lieu thereof was
to be given to Sharma under Regulation 16.14. It is clear
from the plain language of the regulation that three months
notice or pay in lieu, is only required when termination is
under ground (a) or (b). Regarding (c) and (d), the regula-
tion provides for a 15 days notice to explain the conduct
satisfactorily and there is no requirement of any other
notice or pay in lieu thereof.
We may now take-up the third point. Sharma was appointed
as Chemical Engineer by the Board of Directors. The powers
of the Board of Directors to appoint officers of Sharma’s
category were delegated to the Managing Director on Septem-
ber 12, 1974 and as such from that date the Managing Direc-
tor or became the appointing authority. Needless to say that
employees of the company are not civil servants and as such
they can neither claim the protection of Article 311(1) of
the Constitution of India nor the extension of that guaran-
tee on parity. There is no provision in the Articles of
Association or the regulations of the company giving same
protection to the employees of the company as is given to
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the civil servants under Article 311(1) of the Constitution
of India. An employee of the company cannot, therefore,
claim that he cannot be dismissed or removed by an authority
subordinate to that by which he was appointed. Since on the
date of termination of Sharma’s services the Managing Direc-
tor had the powers of appointing authority, he was legally
competent to terminate Sharma’s services.
The learned Single Judge allowed the writ Petition on
the fourth point though the same did not find favour with
the Division Bench. Grounds (c) and (d) in regulation 16.14,
exclusively and individually, are sufficient to terminate
the services of an employee. Once it is established to the
satisfaction of the authority that an employee
438
remains on unauthorised absence from duty, the only action
which can be taken is the termination of his services.
Similar is the case when an employee takes part in active
politics. The finding in the termination order regarding
taking part in active politics cannot be sustained because
no notice in this respect was given to Sharma but the order
of termination can be supported on the ground of remaining
unauthorised absence from duty. This Court in State of
Orissa v. Vidyabhushan Mohapatra, [1963] 1 Supp. SCR 648 and
Railway Board v. Niranjan Singh, [1969] 1 SCR 548 has held
that if the order can be supported on one ground for which
the punishment can lawfully be imposed it is not for the
courts to consider whether that ground alone would have
weighed with the authority punishing the public servant.
Thus there is no force in this argument.
This takes us to the last point which we have discovered
from the facts. Regulation 16.14 before amendment consisted
of only clauses (a) and (b) relating to abolition of post
and unfitness on medical ground. The company had no authori-
ty to terminate the services of an employee on the ground of
unauthorised absence without holding disciplinary proceed-
ings against him. The regulation was amended on April 20,
1983 and grounds (c) and (d) were added. Amended regulation
could not operate retrospectively but only from the date of
amendment. Ground (c) under which action was taken came into
existence only on April 20, 1983 and as such the period of
unauthorised absence which could come within the mischief of
ground (c) has to be the period posterior to April 20, 1983
and not anterior to that date. The show cause notice was
issued to Sharma on April 21, 1983. The period of absence
indicated in the show cause notice is obviously prior to
April 20, 1983. The period of absence prior to the date of
amendment cannot be taken into consideration. When prior to
April 20, 1983 the services of person could not be terminat-
ed on the ground of unauthorised absence from duty under
Regulation 16.14 then it is wholly illegal to make the
absence during that period as a ground for terminating the
services of Sharma. It is basic principle of natural justice
that no one can be penalised on the ground of a conduct
which was not penal on the day it was committed. The date of
show cause notice being April 21, 1983 the unauthorised
absence from duty which has been taken into consideration is
from December 20, 1982 to April 20, 1983. Whole of this
period being prior to the date of amendment of regulation
16.14 the same could not be made as a ground for proceeding
under ground (c) of Regulation 16.14. The notice served on
the appellant was thus illegal and as a consequence the
order of termination cannot be sustained and has to be set
aside.
439
When the termination order is set aside by the courts
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normally the servant becomes entitled to back-wages and
other consequential benefits. This case has a chequered
history. From 1976 onwards there has been continuous litiga-
tion and mistrust between the parties. The facts which we
have narrated above go to show that Sharma has equally
contributed to this unfortunate situation. In view of the
facts and circumstances of this case we order that sixty per
cent of the back-wages be paid to Sharma. Money already
received by Sharma under orders of this Court or the High
Court shall be adjusted and the balance paid to him. If the
money already paid to Sharma is more than what we have
ordered then there shall be no recovery from him.
Civil Appeal 3154/85 is allowed to the extent indicated
above, Civil Appeal 3155/85 filed by the company is dis-
missed. C.M.P. 1213/ 88 is dismissed as infructuous. There
shall be no order as to costs.
R.N.J.
440