Central Administrative Tribunal - Delhi
G. P. Sewalia vs Union Of India Through The on 27 August, 2008
CENTRAL ADMINISTRATIVE TRIBUNAL PRINCIPAL BENCH NEW DELHI O.A. NO.2210/2006 This the 27th day of August, 2008 HONBLE SHRI JUSTICE V. K. BALI, CHAIRMAN HONBLE DR. RAMESH CHANDRA PANDA, MEMBER (A) G. P. Sewalia, C-II/215, Satya Marg, Chanakyapuri, New Delhi-110021. Applicant ( By Shri C. Hari Shanker, Shri C. M. Jaya Kumar, Shri Jagdish N. and Shri P. K. Singh, Advocates ) Versus 1. Union of India through the Secretary, Ministry of Home Affairs, North Block, New Delhi-110001. 2. Union Public Service Commission through Secretary, Dholpur House, Shahjahan Road, New Delhi. Respondents ( By Ms. Jyoti Singh with Shri Ankur Chhibber and Shri Aditya Chhibber, Advocates ) O R D E R Justice V. K. Bali, Chairman:
G. P. Sewalia, the applicant herein, while functioning as Chairman and Managing Director (CMD) of Delhi Scheduled Castes Financial and Development Corporation Limited (DSCFDCL), during the year 1992 ordered investment of Rs.11 crores, Rs.1.50 crores and Rs.3.75 crores respectively with the Syndicate Bank under Portfolio Management Scheme (PMS). He received a memorandum dated 23.8.1999 (Annexure A-2) proposing to hold departmental enquiry against him under rule 8 of the All India Services (Discipline & Appeal) Rules, 1969. Annexed with the memorandum aforesaid as Annexures-I and II were the article of charge and the statement of imputation of misconduct against him.
2. Briefly put, the applicant was departmentally tried on the allegations that he was not authorised to invest the surplus funds of DSCFDCL in scheme like PMS without guaranteeing a pre-determined return, and inasmuch as, he had made a fluctuating investment for long term (one year) for a yield of 16.25% per annum, whereas the State Bank of India had initially offered a rate of 15.5% per annum for any period, and the fluctuating investment resulted into lesser yield, he had committed gross misconduct by exhibiting lack of devotion to duty and by acting in a manner unbecoming of a member of the Service and prejudicial to the interest of DSCFDCL thereby contravening rule 3(1) of the All India Services (Conduct) Rules, 1968.
3. The pertinent and somewhat significant question that arises for adjudication in the present case is as to whether, assuming the facts said to be constituting the misconduct to be true, would it be a case where the applicant may not have maintained absolute integrity and devotion to duty or done something which is unbecoming of a member of the Service. The applicant, through his learned counsel, would canvass that de hors the merits of the charges against him, the entire proceedings are markedly perverse and amount to gross abuse of the disciplinary proceeding mechanism itself, and that if, on grounds such as on which the applicant was departmentally tried, the exercise of discretion by him as CMD of DSCFDCL as to how the funds of organisation should be invested, is to be made subject matter of disciplinary proceedings, it would become well neigh impossible for any CMD or high officer to take decisions for the benefit of his organisation. The applicant, it is urged, acted in the best interests of the organisation, and no ulterior or corrupt motives are imputed to him, and that being so, it would be a travesty of justice if the disciplinary authority is allowed to sit in appeal over the decision of the applicant and judge whether he should have invested the money of DSCFDCL in one bank or the other, or for that matter, he should have opted for a fixed yield which was admittedly lesser than the fluctuating yield for which the investment was made. The respondents, through their learned counsel, would, however, join issues with the learned counsel representing the applicant on the issues as mentioned above and would contend that the allegations subject matter of charge do amount to misconduct and, therefore, the applicant has been rightly punished and inasmuch as there was no mala fide intention involved, the applicant has been inflicted only with a minor penalty, and that there would be no occasion for this Tribunal to interfere with the well reasoned orders passed by the concerned authorities.
4. The facts of the case, before we may evaluate, comment and determine the controversy as reflected above, would need necessary mention. The proceedings culminating into the impugned order emanated from memorandum dated 23.8.1999, whereby it was proposed to hold departmental enquiry against the applicant under rule 8 of the Rules of 1969. The chargesheet alleged that the applicant had committed gross misconduct by exhibiting lack of devotion to duty and by acting in a manner unbecoming of a member of the Service and had thereby contravened rule 3(1) of the Conduct Rules of 1968. The substratum of the charge as mentioned above was that the applicant while functioning as CMD of DSCFDCL had, with ulterior motive, on 17.1.1992, 31.3.1992 and 10.5.1992 ordered investment of Rs.11 crores, Rs.1.50 crores and Rs.3.75 crores respectively with Syndicate Bank under PMS ignoring the higher offer of State Bank of India. It was further stated in the chargesheet that the Corporation eventually earned interest of 14% per annum only on the aforesaid investments as against the indicative rate of 16.25% offered by Syndicate Bank. The article of charge annexed with memorandum dated 23.8.1999 reads as follows:
Shri G. P. Sewalia while functioning as Chairman and Managing Director, Delhi Scheduled Castes Financial and Development Corporation Limited [DSCFDCL], Delhi during the year 1992 committed gross misconduct, failed to maintain absolute devotion to duty and acted prejudicial to the interest of DSCFDCL inasmuch as he with ulterior motive on 17/1/92, 31/3/92 and 10/5/92 ordered investment of Rs.11 crores, Rs.1.50 and Rs.3.75 crores respectively with the Syndicate Bank under Portfolio Management Scheme ignoring the higher offer of the State Bank of India, Kasturba Gandhi Marg, New Delhi.
2. Shri G. P. Sewalia has thus committed gross misconduct by exhibiting lack of devotion to duty and by acting in a manner unbecoming of a member of the Service and has thereby contravened Rules 3(1) of the All India Services (Conduct) Rules, 1968. The statement of imputation of misconduct also annexed with the memorandum aforesaid reads, thus:
Shri G. P. Sewalia was functioning as Chairman & Managing Director, Delhi Scheduled Castes Financial and Development Corporation Ltd. (DSFDCL) during the year 1992 and was in-charge of overall activities of DSFDCL. The Memorandum of Association of the Corporation provided for, inter alia, investment of surplus funds of the Company in Government securities or in such other manners as the Board may decide, and the Board of Directors in its meeting dated 25th April, 1999 had resolved for adoption of the financial and administrative rules governing the Delhi State Mineral Development Corporation Ltd. to the extent applicable to DSFDC Ltd. which empowered the CMD of the Corporation to invest in short-term deposits, leaving other investments to be decided by the Board of Directors. In his capacity as CMD, Shri Sewalias authority extended to making short-term investments on behalf of the Corporation and to safeguard the interests of the Corporation and to secure maximum yield on the investments. He was not authorised to invest the surplus funds of the Corporation in long term investment like Portfolio Management Scheme (PMS) the services under which are provided at the customers risk, without guaranteeing a pre-determined return.
2. Shri G. P. Sewalia, however, ordered investment of Rs.11.00 crores for a period of one year with M/s Syndicate Bank Ltd. under Portfolio Management Scheme (PMS) of 17th January, 1992 which was followed by another investment of Rs.1.50 crores ordered on 31st March, 1992 and Rs.3.75 crores on 10th May, 1992. This was irregular on at least two grounds. Firstly, the investment under PMS is allowed to be made only on long term basis (for a minimum period of one year under the RBIs guidelines) whereas he was empowered to make only short-term deposits. Secondly, the investment thus made exposed the funds of the Corporation to unnecessary risk as the services under this scheme are provided at the customers risk without guaranteeing any pre-determined return. This was in itself clear from the offer made by M/s Syndicate Bank in which they had mentioned that the offered yield of 16.25% per annum was only an indicative rate and the final yield was subject to fluctuation in the securities, capital and money market. In fact the Corporation eventually earned the interest of 14% per annum only on the aforesaid investments as against the indicative rate of 16.25% offered by M/s Syndicate Bank.
3. The State Bank of India, Old Secretariat Branch, Delhi had vide their letter dated the 3rd December, 1991 initially offered a rate of 15.5% per annum for any period on the investments to be made by the Corporation. The Bank had later vide their letter dated the 2nd January, 1992 offered a revised rate of 16% per annum for any period. It was further clarified by the Bank in their communication was further clarified by the Bank in their communication dated the 2nd January, 1992 that the offer would enable the Corporation to earn 18.50% simple rate of interest. This was as against the offer made by the Syndicate Bank Ltd. for a yield of 16.25% per annum only and that too subject to the condition that it was only an indicative rate and the final yield was subject to fluctuation in the securities, capital and money market.
4. The then General manager of the Corporation while processing the case had in his note dated the 17th January, 1992, in fact, mentioned that the Corporation had received higher offers as compared to the offer made by M/s Syndicate Bank Ltd. Shri G. P. Sewalia, however, overruled him and directed to deposit the surplus funds under Syndicate Bank for investment @ 16.25% for one year. While passing this direction, he had claimed that the Corporation did not receive any offer beyond 16% till date which assertion was factually incorrect.
5. Shri G. P. Sewalia, CMD, DSFDC Ltd., has thus committed gross misconduct by exhibiting lack of devotion to duty and by acting in a manner unbecoming of a member of the service and prejudicial to the interest of DSFDC Ltd. and has thereby contravened Rule 3 (1) of the All India Services (Conduct) Rules, 1968. During the course of enquiry the applicant submitted his written statement broadly pleading that he had not overstepped his jurisdiction in making the investment in issue, and the two prosecution witnesses had admitted that he was empowered to do so, and that his predecessor too had made an investment of one year with Indian Bank. He further pleaded that the Board of Directors had been informed of the decision at the earliest, and it had ratified the same; the investment offer was personally brought by the Chief General Manager, Syndicate Bank, which was like any other interest earning scheme, and the Bank had accepted funds from other government organisations as well. He further urged that the assertion of State Bank of India that its investment would earn interest at the rate of 16% which would become 18.5%, was absurd, and that no prejudice had been caused to the DSCFDCL as a result of his action, and rather, the organisation had gained to the tune of Rs.88 lakhs. The enquiry officer returned the following findings vide his report dated 1.2.2001:
Allegation Finding Comments
1. Partly proved only to the extent that the CO Exceeded his powers by investing in Syndicate Bank for a period of one year. The CO had powers under the extant delegation for short term investment. Short term investment as defined by RBI is for a period of less than one year. Since the CO had invested for one year, it would fall under the category long term. Hence he exceeded his powers as per extant delegation. The enquiry officer in para 3.1.3.1 of his report made a mention of the submissions made by the applicant in the following manner:
3.1.3.1 The CO denied that there was any violation or overstepping jurisdiction. He has mentioned that the Board of directors empowered him to make investment of surplus funds for short term. In this connection he has referred to the prosecution witnesses (SW-1 and SW-2) who had admitted during deposition that the CMD was empowered to make such investments. In reply to Q.No.30 one of the prosecution witnesses (SW-2) had categorically stated that the CMD was competent to make short term investment i.e. for a period of one year. The CO has drawn attention to File No.F2(1)/87-88/DS/DSFDC wherein his predecessor had ordered investment of Rs.45 lacs on 15.1.91 with Indian Bank for a period of one year. He has submitted that at no stage it was ever pointed out by the office that investment up to one year was not within the delegated power of CMD. He has added that the Board of Directors was informed at the earliest opportunity and the decision was ratified. Therefore he has submitted that it was very much within his powers to place the funds for one year with Syndicate Bank. The CO has pointed out that the offer for investments in PMS was personally brought by Chief General Manager, Syndicate Bank. He had explained at that time that it was like any other interest earning scheme. Accordingly the office processed the offer of investments. It would be seen that Syndicate Bank had accepted funds from other Govt. organizations also [pg.2 FIR No. RC 2(BFC)/93-BOM] (Ex.D-1). He has further argued that he cannot be made responsible for receipt of only 14% rate of interest since the offer was accepted by the Board of Directors, DSCFDC and was also approved by Delhi Administration. In this connection he has referred to the detailed agenda placed before Board of Directors in their 51st meeting held on 20.8.93. Therefore he has submitted that he cannot be singled out for investment which yielded 14%. The enquiry officer returned his findings in para 3.1.4.1 after discussing the evidence led before him and came to the following conclusion:
3.1.4.1 It is alleged that the CO exceeded his powers by investing surplus funds of the corporation with Syndicate Bank for one year under PMS scheme. It is an admitted fact that the surplus funds were placed with Syndicate Bank under PMS scheme. From Ex.S-1 (a) pg.14-15/N it would be seen that the CO had taken the decision to do so. From the document Ex.S-9 it is clear that the CO had powers to invest only in short term deposits. Therefore the only question to be answered is the definition of short-term and long-term. Perusal of Ex.S-6 and S-7 RBI Circular would indicate that PMS is normally a medium/long-term investment and should not be accepted by banks for a period of less than one year. In other words this would mean that a one year period is not considered short term by RBI. This point has been clarified in para 2(i) of Ex.S-7 wherein it is stated that short-term would mean a period of less than one year. RBI is the agency for defining such banking and monetary terms and the documents Ex.S-6 are RBI circulars to banks. Therefore the definition of short-term provided therein is authoritative. There is no dispute that the CO had placed funds for one year, which in terms of the above definition of RBI would fall under long-term. Ex.S-9 did not delegate powers to CMD for long-term investments and hence the allegation that the CO placed funds with Syndicate Bank on long-term basis and thereby exceeded his powers is substantiated. The enquiry report was referred to Central Vigilance Commission (CVC) which tendered its advice thereon vide memorandum dated 22.6.2001. Pursuant thereto, the first respondent addressed memorandum dated 1.5.2002 to the applicant proposing to disagree with the findings of the enquiry officer to the extent he had been exonerated. Following reasons for disagreement were recorded in the note appended to the said memorandum:
(a) Though the claim of SBI that the rate of interest of 16% per annum offered by it actually amounted to 18.5% was indeed confusing, the applicant ought to have asked SBI to clarify the matter and not summarily rejected the offer. The IO should have noticed that the banking scam of the early nineties which crippled the stock market was perpetuated mainly through public sector banks. It was the applicants responsibility to invest in such a manner as to ensure the highest possible return and, if he failed to do so, his lapse was not condonable.
(b) Syndicate Bank had clarified that the interest yield of 16.25% p.a. offered by it was indicative in nature. It was, therefore, merely speculative, and the final yield of interest proved to be less than 16.25%. The applicant, therefore, erred in holding that the offer of SBI was lower than that of Syndicate Bank. The applicant responded to the memorandum dated 1.5.2002 pleading therein that decision to transfer the funds to the high yielding PMS deposit was taken by him considering the higher gains therein, and following long established precedents; prosecution evidence which had been elicited during the course of enquiry bore out the authority of the applicant to take decision to make the investments in issue; rule 18(a) of the Delhi State Mineral Development Corporation Ltd. (Delegation of Financial Powers) Rules, which had been adopted by the DSFDC, empowered the applicant, as CMD, to make one year investments in the interests of the Corporation; the RBI circulars/guidelines on which the enquiry officer had relied, were never intended to apply to CEOs of State Government corporations; the authority of the applicant to act as he did also stood borne out by the evidence of SW-1 and SW-2; his decision to invest in Syndicate Bank moreover stood ratified by the Board of Directors and the Delhi Administration, and holding the applicant responsible therefor was, therefore, unjustified; the RBI guidelines, which were relied upon, did not go to show that one-year investments were long-term in nature; the finding against the applicant that he should have sought clarification from State Bank of India, whose note was admittedly ambiguous, was beyond the scope of the chargesheet issued to him; the enquiry officer had never considered such an issue, and examining such a vague issue at a belated stage could result in considerable confusion, as seeking any clarification from SBI in the situation in which the applicant was placed at the time, would merely have been wastage of time and effort; it was mathematically impossible to achieve a year-end interest rate of 18.5% against the rate of 16% at the beginning of the year, and even at quarterly rates of interest the maximum interest yield at the end of the year could be at the rate of 17.2673% per annum; the CVC too in its advice had stated that it would not be correct to say that SBIs offer of 16% was decidedly better than the Syndicate Banks offer of 16.25%, and, therefore, he could not be blamed for the market fluctuations having resulted in achievement of an interest yield of only 14% per annum; the applicants action in fact resulted in gain to the DSCFDCL to the tune of Rs.72 lakhs; and the banking scam of the early nineties, to which the disciplinary authority in its disagreement note had referred, was irrelevant, as the SBI and Syndicate Bank were both public sector banks, and moreover, the investment decisions were taken on 17.1.1992, 31.3.1992 and 10.5.1992, when the said scam had not even come to light, and that the scam, in any event, was with regard to fabrication of security stamps, which had no relevance to the charge levelled against the applicant. The case was then referred to UPSC on 27.4.2004, which gave its advice reiterating the contents of the disagreement note. The view of UPSC that it was a case of major penalty was not, however, agreed to by the disciplinary authority, and vide order dated 22.8.2006 the applicant was imposed the penalty of reduction of pay by three stages for a period of one year without cumulative effect. It is this order that has been challenged in the present Original Application filed under Section 19 of the Administrative Tribunals Act, 1985. The applicant also seeks setting aside and quashing of disciplinary proceedings against him commencing with the memorandum dated 23.8.1999.
5. Pursuant to notice issued by this Tribunal, the respondents have entered appearance and by filing their counter reply contested the cause of the applicant. After giving brief facts of the case culminating into the impugned order, it has inter alia been pleaded that short term investment as defined by RBI is for a period of less than one year, and since the applicant had invested for one year, it would fall under the category long term, and, therefore, he exceeded his powers as per extant delegation, and the enquiry officer accordingly held the charge as partly proved to the extent that the applicant had exceeded his powers by investing in Syndicate Bank for a period of one year. The report of the enquiry officer, it is pleaded, was examined by the disciplinary authority and it was tentatively decided to disagree with the findings of the enquiry officer to the effect that the ingredient of the charge that the applicant made the said investment with Syndicate Bank after ignoring the higher offer made by State Bank of India was not established, on the following grounds:
(a) It is on record that the SBI had in their letter ( Ex.S-2) claimed that the rate of 16% per annum offered by it actually amounted to 18.5% simple rate of interest. This was indeed on the face of it a confusing statement. However, Shri Sewalia should have as a responsible officer asked the SBI to clarify the matter and not summarily rejected the offer. The Inquiry Officer had held that the omission to do so did not indicate any ulterior motive on the part of Shri Sewalia as the investment was in any case made in a public sector bank and the Corporation in the past had been investing its surplus funds in fixed deposits at the rate of 10% per annum for one year. He has, however, ignored that the Banking Scam of early ninetees which crippled the Stock Market was perpetuated mainly through the public sector banks. Again, the rate at which the deposits were earlier being made by the Corporation is not relevant to the present charge. The point in any case is that it was the responsibility of Sh. Sewalia to make the investment in such a manner so as to ensure the highest possible return and if he failed to ensure this, the lapse cannot be condoned merely on the ground that the investment was made with a public sector bank; and
(b) M/s Syndicate Bank with whom the investment was made had offered a yield of 16.25% per annum but had clarified that this was only an indicative rate and the final yield was subject to fluctuations in the securities, capital and money market. The offer made by the Syndicate Bank was, therefore, speculative in nature and the final yield could have been less than 16.25% as it eventually proved to be. It was, therefore, wrong on the part of Shri Sewalia to hold that the offer even at the rate of 16% made by the SBI was lower than the offer of M/s Syndidate Bank. In fact, the two offers could not have been compared as the rate offered by M/s Syndicate Bank was only indicative in nature and not firm, unlike that of the SBI. The matter was referred to CVC for their advice, which observed that that the lapses on the part of the applicant were that he ordered investment of funds in a long term scheme for which he was not authorized, and did not seek clarification from SBI regarding their actual rate of interest, and that he did not weigh the pros and cons of investing the Corporations funds in a scheme which did not offer a firm rate of interest and was subject to fluctuations. The Commission, therefore, held the charge framed against the applicant as proved only to that extent and advised for imposition of a suitable minor penalty. The points raised by the applicant in the Application, as mentioned above, have been refuted and the impugned order has been supported.
6. Shri C. Harishanker, learned senior counsel representing the applicant, vehemently contends that the entire disciplinary proceedings commencing with the memo dated 23.8.1999 culminating into orders of punishment are travesty of justice, and the policy decision taken by the applicant as CMD in the best interest of the organisation could not be styled as misconduct or a conduct unbecoming of an officer, and that it is not the case of the respondents that the applicant invested the money for a year with fluctuating interest with ulterior motive, and once, ulterior motive stood ruled out, the decision of the applicant could not be made subject matter of disciplinary proceedings, and further that if such acts done by a government servant in the discharge of his duties are converted into charges, no administrator would ever be able to take a decision for fear of being mulcted with disciplinary proceedings. It is further urged by the learned counsel that investment made by the applicant for one year with Syndicate Bank was not in excess of his authority, and he had pointed towards evidence which would clearly demonstrate that he was authorised to make such investment, and that even the predecessor of the applicant had made such investment, and further that the investments made by him were ratified by the board of directors and also the Delhi Administration. He further contends that the finding recorded by the disciplinary authority that the offer of SBI was better than the one offered by Syndicate Bank is contrary to the evidence on record. Ms. Jyoti Singh, learned counsel representing the respondents, would, however, contend that the issues raised by the applicant have been thoroughly examined in the departmental proceedings and rightly rejected, and that there is no occasion for reversing the findings of fact recorded by the disciplinary authority as that would not be within the scope of judicial review by this Tribunal.
7. We have heard the learned counsel representing the parties and with their assistance examined the records of the case. Before we may evaluate, comment upon and determine the issues involved in the case in the light of submissions made by the learned counsel representing the parties, it would be appropriate to refer to rule 3 of the All India Services (Conduct) Rules, 1968. The same reads as follows:
3. General (1) Every member of the service shall at all times maintain absolute integrity and devotion to duty and shall do nothing which is unbecoming of a member of the service. It would be interesting to note that even though in the article of charge accompanying memorandum dated 23.8.1999 it has been mentioned that the applicant committed gross misconduct, failed to maintain devotion to duty and acted prejudicially to the interest of DSCFDCL with an ulterior motive, the finding that came to be ultimately recorded by the disciplinary authority was only that he had exceeded his delegated power of making deposits for periods less than a year, and further that he did not carry the offer made by SBI to its logical conclusion by exhaustively examining the same on merits after seeking clarification from SBI, as was necessary, and, therefore, ignored the higher rate of interest offered by SBI. The disciplinary authority in its order dated 22.8.2006 after giving backdrop of the case, concluded as follows:
12. AND WHEREAS the President, after going through the case record, findings of the Inquiring Authority, the representation of the said Sh.G.P.sewalia, the advice of Central Vigilance Commission and Union Public Service Commission and all other relevant factors, material to the case observed that the investment for a period of one year and above, in terms of guidelines issued by the Reserve Bank of India, was termed as a medium/long term investment. The investment of the Delhi Scheduled Castes Financial and Development Corporation Ltd.s funds to the tune of Rs.16.25 crores in the Portfolio Management Scheme of Syndicate Bank for a period of one year, which was as per the Reserve Bank of Indias guidelines termed as a medium/long term investment, was outside the delegated powers of the Chairman and the Managing Director of the Corporation, who was empowered to make short term deposits only. Sh.G.P.Sewalia thus clearly exceeded his delegated powers. Further the offer made by Syndicate Bank of a yield of 16.25% per annum was only an indicative rate, subject to speculative vagaries of the capital market. The final return of the investment was at the rate of 14% PER ANNUM ONLY. THE State Bank of India, on the other hand, offered a 16% per annum, which would have yielded 18.5% simple rate of interest. The Charged Officer, however, did not carry the offer made by the State Bank of India to its logical conclusion by exhaustively examining the same on merits after seeking such clarification from State Bank of India, as were necessary. Sh.G.P.Sewalia, therefore, ignored the higher rate of interest offered by State Bank of India which could have been beneficial. However, since Sh. Sewalia ordered the investment to be made in the public sector bank, no ulterior motive could be attributed to his said action. In view of the finding as recorded above, the applicant, as mentioned above, was visited with the penalty of reduction of pay by three stages for a period of one year without cumulative effect. It is pertinent to note that no finding of misconduct, failing to maintain absolute devotion to duty with ulterior motive, as was the charge, has been returned by the enquiry officer. The disciplinary authority has not observed that the allegations that stood proved against the applicant would be misconduct or failing to maintain absolute devotion to duty. Assuming that the said finding has to be read or presumed simply on proof of the allegation subject matter of charge, the pertinent question that would arise is as to whether the said allegation would constitute misconduct or failing to maintain absolute devotion to duty. There cannot be any exhaustive definition of misconduct. However, the same as defined in Blacks Law Dictionary, Sixth Edition at page 999 would mean, thus:
A transgression of some established and definite rule of action, a forbidden act, a dereliction from duty, unlawful behaviour, wilful in character, improper or wrong behaviour, its synonyms are misdemeanor, misdeed, misbehavior, delinquency, impropriety, mismanagement, offense, but not negligence or carelessness. Misconduct in office has been defined as:
Any unlawful behaviour by a public officer in relation to the duties of his office, willful in character. Term embraces acts which the office holder had no right to perform, acts performed improperly, and failure to act in the face of an affirmative duty to act. In P. Ramanatha Aiyars Law Lexicon, 3rd edition, at page 3027, the term misconduct has been defined as under:
The term misconduct implies, a wrongful intention, and not involving error of judgment.
Misconduct is not necessarily the same thing as conduct involving moral turpitude.
The word misconduct is a relative term, and has to be construed with reference to the subject matter and the context wherein the term occurs, having regard to the scope of the Act or statute which is being construed. Misconduct literally means wrong conduct or improper conduct.
8. Having given our anxious thoughts, we have come to a firm conclusion that there is distinction between misconduct and not performing the duties as efficiently as another person similarly situate may be able to perform. Misconduct has to have some element of delinquency, may be, even gross negligence. It is only when the allegations subject matter of charge may tantamount to misconduct that a person can be proceeded for inflicting any of the punishments prescribed in the rules. Non-performance of duties, which may have no element of unlawful behaviour, wilful in character, improper or wrong behaviour, misdemeanor, misdeed, impropriety or a forbidden act, may some time amount to not carrying out the duties efficiently, but the same cannot be construed to be misconduct. If decisions that may ultimately prove to be less beneficial to an organisation for which a person is working are to be termed as misconduct liable for punishment under rules, no person discharging his duties would be able to take any major decision. The administrative work, if may not come to a grinding halt, would, in any case, slow down so much that it may cause more harm and loss to the concerned institution. From our experience from several hundred cases that we have dealt, we find that a negative and indecisive attitude is developing amongst the government officers, primarily for the reason that any decision taken which may be even in good faith, or favourably interpreting rules benefiting even a deserving government employee, may not become subject matter of disciplinary action against them. Surely, if government servants are to be tried departmentally for bona fide actions taken by them in discharge of their official duties, which may have absolutely no undertones or overtones of delinquency, the situation as prevails today is bound to aggravate.
9. In the context of our observations as made above, the question that arises for determination is as to whether assuming that the applicant as CMD of DSCFDCL invested money on fluctuating rate of interest instead of fixed rate, by which the yield ultimately became lesser, and further that he deposited the amount for a year and not less than a year, did he commit any misconduct? In our considered view, even if both the allegations, as mentioned above, were to be held proved, it was not a case of misconduct at all. At the most it would be a case of some inefficiency, for which there are adequate measures to be adopted. Such acts that the applicant is said to have committed may, in other words, at the most, result into recording of some remarks as may be deemed appropriate in his ACRs, but the same, in any case, cannot be made subject matter of an enquiry and punishment major or minor. The approach of the respondents appears to be vitiated in wrongly thinking and concluding that by depositing the amount for a year and for fluctuating rate of interest the applicant indulged in misconduct. The explanation furnished by the applicant apart, we are of the considered view that the applicant for alleged acts done by him, ought not to have been proceeded departmentally.
10. The Honble Supreme Court in Union of India & Others v J.Ahmed [(1979) 2 SCC 286] held that deficiencies in personal character or personal ability would not constitute misconduct for taking disciplinary proceedings. It was further held that negligence in performance of duty or inefficiency in discharge of duty are not acts of commission or omission under rule 4 of the Discipline and Appeal Rules. The facts of the case aforesaid reveal that the respondent, an IAS officer, was posted as Deputy Commissioner and District Magistrate in Nowgong District, Assam, when in June 1960 there were large scale disturbances leading to considerable damage to property. He was suspended after preliminary enquiry and the following charges came to be framed against him:
(i) Completely failed to take any effective preventive measures against widespread disturbances breaking out in Nowgong District in spite of adequate warning being conveyed;
(ii) Showed complete lack of leadership when the disturbances actually did break out and failed to give proper direction to your subordinate Magistrates and coordinate co-operations with the police to restore Law and Order;
(iii) Did not personally visit the scenes of disturbances within the town or in the Rural areas, in time to take personal control of the situation and to exercise necessary supervision;
(iv) Did not keep Government informed of the actual picture and extent of the disturbances;
(v) Showed complete inaptitude, lack of foresight, lack of firmness and capacity to take quick and firm decision and were, thus largely responsible for complete break down of Law and Order in Nowgong town as well as the rural areas of Nowgong District.
Thus you proved yourself completely unfit to hold any responsible position. While commenting upon the charges as framed against the respondent, it was observed that the same related to his efficiency as an officer, and besides negligence the charges referred to lack of qualities of leadership, foresight, firmness and indecisiveness, but competence for the post, capability to hold the same, efficiency requisite for a post, ability to discharge functions 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 rules. It is relevant to mention that the Honble Supreme Court was dealing with rule 4 of the Discipline and Appeal Rules which were to be understood in the context of All India Services (Conduct) Rules, 1954. Rule 3 of the Rules of 1954 required maintenance of, at all times, absolute integrity and devotion to duty. It was held that lack of integrity, if proved, would undoubtedly entail penalty, and 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 as failure to maintain devotion to duty, and that the expression devotion to duty, had been used as something opposed to indifference to duty or easy-going or light-hearted approach to duty. An act or omission which runs counter to the expected code of conduct was also held to constitute misconduct. In a recent decision in the matter of Inspector Prem Chand v Government of NCT of Delhi & Others [(2007) 4 SCC 566], after discussing the case law it has been held that error of judgment or negligence simpliciter would not be misconduct.
11. Coming now to the explanation furnished by the applicant, while defending the charge framed against him, it may be recalled, that the applicant had throughout been stating, and this fact is not disputed as well, that he had an offer of 16.25% of interest from Syndicate Bank, whereas the offer of SBI was 16%. He preferred to deposit the money with Syndicate Bank from where he was to get higher rate of interest. The charge against the applicant that 16% interest offered by SBI would have amounted to 18.5% has not been accepted. In fact, the disciplinary authority itself mentions that the same is confusing. There is no material whatsoever on record to show as to by what mathematical calculations 16% interest would become 18.5%. That being so, all that could be proved against the applicant was that he chose to deposit money for a higher yield which was speculative, and not a lesser rate of interest at the rate of 16% which was for a fixed period. This, in our considered view, can, at the most, be only an error of judgment. It is the case of the applicant that as per prevailing market situation he was right in securing a higher yield, even though unfortunately, it came out to be only 14%. In the matter of making fixed deposits, it is always the view of an individual based upon his reading of the market that he may prefer a fluctuating interest, whereas another person equally situate may go for a fixed rate. If in ultimate analysis the judgment of the one may prove more beneficial, the one who had taken a decision which resulted into lesser yield cannot be said to have indulged in misconduct. Insofar as, the charge with regard to depositing the amount for a lesser period than a year is concerned, no authority appears to have even noted the defence of the applicant. It may be recalled that the applicant has been pleading before the concerned authorities and has also brought to our notice that he had jurisdiction for making the investment, and the two prosecution witnesses examined as SW-1 and SW-2 had admitted that he was empowered to do so. He also urged that his predecessor too had made investment of one year with Indian Bank, which fact was also proved by admission of the witnesses. He also pleaded and proved that the board of directors had been informed of his decision at the earliest and it was ratified also. The decision taken by him was accepted by the Delhi Administration as well. At no given time, the instructions of the RBI that short term deposit would mean less than a year, were ever brought to the notice of the applicant. The mere fact that the applicant was not in the knowledge that as per circulars of RBI short term would mean less than a year, would not mean that for that reason only he had misconducted himself. That apart, this was not even an allegation against the applicant that because of deposit of the amount for a year with syndicate Bank, the Corporation suffered any financial loss.
12. Looked from any angle, we are of the view that it is a case of wholly unjustified enquiry against the applicant. We have no hesitation whatsoever in terming the same to be an outcome of total non-application of mind resulting into wholly unnecessary predicament of the applicant spanned over a period of almost a decade.
13. Resultantly, we allow this application and set aside the very charge memo dated 23.8.1999 as also the order dated 22.8.2006 passed by the disciplinary authority. The applicant in his ordeal lasting almost a decade must have suffered a great deal. Tension apart, his reputation must have been lowered in the eyes of his colleagues and public, which is an irreparable loss to any government servant. We are of the firm view that this Application needs to be allowed with costs which we quantify at Rupees ten thousand.
( Ramesh Chandra Panda ) ( V. K. Bali )
Member (A) Chairman
/as/