Compulsory retirement cannot be used as a punitive measure to bypass mandatory departmental inquiry for alleged misconduct.

The appellants, primarily working as In-charge Branch Managers or Assistant Accountants at the District Central Cooperative Bank, Gwalior, were issued show-cause notices in December 2021 alleging misconduct, including failure to achieve loan recovery targets and negligence in duties.

Despite submitting replies denying the allegations, the respondents passed orders in June 2022 compulsorily retiring the appellants under Rule 71.2 of the Service Rules.

The appellants challenged these orders via writ petitions. The learned Single Judge dismissed the petitions, holding that the orders were not punitive and fell within the scope of administrative assessment.

The appellants filed these Writ Appeals contending that the retirement was a "stigma" and a shortcut to avoid a full-fledged departmental inquiry.

1. Whether the order of compulsory retirement was passed as a result of a bona fide administrative reassessment of performance or as a punitive measure for alleged misconduct.

2. Whether the respondents could bypass the requirement of a departmental inquiry as mandated under Article 311(2) of the Constitution when the order is founded on specific allegations.

Rule 71.2 of the Bank's Rules, which allows compulsory retirement after 20 years of service or age 50 based on an evaluation of the Annual Confidential Reports (ACRs).

The principle established in State of Gujarat v. Umedbhai M. Patel (2001) that compulsory retirement must not be used as a shortcut to avoid departmental inquiry nor as a punitive measure, and must be based on the entire service record.

Article 311(2) of the Constitution and the principles of natural justice (audi alteram partem) as interpreted in Union of India v. Tulsiram Patel (1985), requiring reasons to be recorded in writing if a departmental inquiry is dispensed with.

The Court observed that Rule 71.2 requires an assessment of "deadwood" based on ACRs; however, the appellants’ ACRs were "excellent" with no adverse remarks.

The Court found that the show-cause notice and the final order were explicitly grounded in allegations of "misconduct" as defined under Clause 47 of the Bank's Rules, such as habitual negligence and failure to recover loans.

Since the order was based on unproven factual allegations rather than a general review of the service record, the Court determined it was "punitive in nature".

Under the Tulsiram Patel doctrine, if an order is punitive, an inquiry is mandatory unless specific reasons for dispensing with it are recorded, which the respondents failed to do.

The Court concluded that the Bank adopted a "shortcut" to terminate the employees without the procedural safeguards of a disciplinary trial.

The High Court allowed the appeals, set aside the judgment of the learned Single Judge, quashed the retirement orders, and directed the respondents to issue fresh charge-sheets and complete departmental inquiries within five months, granting the Bank liberty to place the appellants under suspension in the interim.