Major penalty is unsustainable without oral enquiry and witness examination if the delinquent denies the charges.

The appellant, an employee of the U.P. Cooperative Federation Limited, was serving as the in-charge of a paddy procurement centre

He was served with a charge-sheet and a supplementary charge-sheet alleging short delivery of paddy to a processing mill and embezzlement of Rs. 2,00,850

Despite the appellant denying the charges in his replies, the Enquiry Officer concluded the enquiry without examining any witnesses or holding an oral enquiry

Based on the enquiry report, the appellant was dismissed from service, and a recovery of Rs. 9,53,433 was ordered

The High Court of Judicature at Allahabad dismissed the appellant’s writ petition, reasoning that the appellant had not specifically requested an oral hearing or defense witnesses in his initial replies

The appellant subsequently challenged this dismissal before the Supreme Court

1. Whether the disciplinary proceedings were vitiated by the failure to hold an oral enquiry and examine witnesses despite the appellant’s denial of the charges

2. Whether an allegedly "evasive reply" to a departmental charge-sheet can be treated as an admission of guilt, thereby dispensing with the requirement of proving the charges through evidence

The Court primarily applied Rule 84 of the Service Rules, 1980, and Regulation 85 of the U.P. Cooperative Societies Employees Service Regulations, 1975, which mandate that disciplinary proceedings observe the principles of natural justice, including the right to cross-examine witnesses and the right to a personal hearing

It relied on the precedent in Chamoli District Co-operative Bank Limited v. Raghunath Singh Rana, which established that an oral enquiry is a mandatory requirement when charges are refuted

The Court further applied principles from Sur Enamel and Stamping Works Ltd. v. Workmen and State of Uttaranchal v. Kharak Singh, which dictate that the employer must first lead evidence to prove the charges before the delinquent is called upon for their defense

Finally, the Court clarified that Section 58 of the Evidence Act, regarding admitted facts, does not apply to "evasive" replies in departmental proceedings

The Court observed that the appellant had categorically denied the charges, yet the respondent-Federation admitted that no witnesses were examined during the enquiry

The Court rejected the respondent's argument that the appellant’s reply was "evasive" and thus constituted an admission of guilt, clarifying that a departmental charge-sheet is not equivalent to a civil plaint where evasive denials may be treated as admissions

The Court emphasized that in departmental enquiries, the burden of proof rests on the employer unless the charge is admitted in clear terms

Even in cases based on documentary evidence, witnesses must be produced to prove such documents and offered for cross-examination if the documents are not admitted

Since the Federation failed to produce any witnesses or hold an oral enquiry despite the appellant's denial, the Court held that the mandatory procedural requirements and principles of natural justice were violated, rendering the enquiry report and the subsequent dismissal order legally unsustainable

It quashed the order of dismissal and the direction for recovery

The Court granted the Federation liberty to conduct a de novo enquiry within six months

If the Federation chooses to hold an enquiry, it must reinstate the appellant and place him under suspension with the appropriate allowance; if no enquiry is held, the appellant is entitled to reinstatement with full continuity of service and arrears of salary

Any further service benefits or arrears shall depend on the outcome of the de novo enquiry, should the Federation elect to proceed with one