Negligence or error of judgment without ill motive does not constitute "misconduct" in disciplinary proceedings.

The Applicant, a General Manager at Rourkela Steel Plant (SAIL), was subjected to major penalty proceedings under Rule 25 of the SAIL (CDA) Rules, 1977

The charges alleged that during 2012–2013, while serving as a Deputy General Manager/Indentor, he violated the Purchase Contract Procedure (PCP-2009) by processing a procurement requisition for "VVVF Drives" based on a scanned budgetary offer from a local trader (M/s Pradeep Trading Co.) rather than obtaining it directly from the Original Equipment Manufacturer (OEM)

A CBI investigation suggested this resulted in a loss of Rs. 14.20 lakh

The Inquiry Officer (IO) concluded that while "negligence in performance of duty" was established, the more serious charges of "failure to maintain devotion to duty" and "acting in a manner prejudicial to the interest of the Company" were not established

Despite this, the Disciplinary Authority (DA)—the Executive Director (Works)—imposed a penalty of reduction of basic pay by one stage for one year with cumulative effect

The Appellate Authority (AA)—the CEO—upheld this order

The Applicant challenged these orders, arguing that the DA and AA were biased as they had personally approved the procurement process in question

1. Whether the Disciplinary and Appellate Authorities were disqualified from adjudication due to a conflict of interest/bias, having previously approved the procurement transactions for which the Applicant was charged.

2. Whether "negligence simpliciter" in the performance of duty, in the absence of ill-motive or gross consequences, constitutes "misconduct" warranting a major penalty under the SAIL (CDA) Rules, 1977.

3. Whether the impugned orders were legally sustainable as "reasoned and speaking orders" under the principles of natural justice.

The Tribunal applied the principles of Natural Justice, specifically the rule against bias (nemo judex in causa sua), noting that an authority involved in a transaction cannot later act as the DA for that same transaction

The court relied on Rule 5 of the SAIL (CDA) Rules, 1977 and the Supreme Court precedents in Union of India v. J. Ahmed (1979) and Insp. Prem Chand v. Govt. of NCT of Delhi (2007), which establish that negligence, errors of judgment, or innocent mistakes do not constitute misconduct unless they arise from ill-motive or result in atrocious consequences

The Tribunal cited Kems Services Private Limited v. State of Bihar (2014) to emphasize that administrative orders must be "speaking orders" that display an application of mind to the defense raised

The Tribunal found that the DA (Executive Director) and AA (CEO) were the very authorities who had approved the procurement reports of the Screening Committee and the final purchase orders; therefore, they were "judges of their own cause," which violated administrative fairness

On the merits, the Tribunal observed that the IO had explicitly cleared the Applicant of acting against the company's interest or failing in devotion to duty

Applying the J. Ahmed doctrine, the Tribunal reasoned that since there was no finding of dishonest purpose or "gross" negligence leading to irreparable damage, the Applicant's technical lapse in following the PCP-2009 did not legally amount to "misconduct"

The Tribunal scrutinized the DA and AA's orders, finding them to be "unreasoned" because they merely stated they had "carefully considered" the facts without actually addressing the Applicant's specific contentions or the IO's partial exoneration

It quashed the DA's order dated 04.12.2019 and the AA's order dated 31.07.2020 and directed the Respondents to issue consequential orders restoring the Applicant’s pay and paying all arrears within 90 days of the receipt of the order