Allahabad High Court
Faraz Hameed Ansari vs Life Insurance Corporation Of India ... on 17 May, 2017
Author: Devendra Kumar Upadhyaya
Bench: Devendra Kumar Upadhyaya
HIGH COURT OF JUDICATURE AT ALLAHABAD, LUCKNOW BENCH A.F.R. Court No. - 4 Reserved 1. Case :- SERVICE SINGLE No. - 16948 of 2016 Petitioner :- Faraz Hameed Ansari Respondent :- Life Insurance Corporation Of India Thru Chairmann & Others Counsel for Petitioner :- Abhinav Trivedi Counsel for Respondent :- P.K. Khare along with 2. Case :- SERVICE SINGLE No. - 17306 of 2016 Petitioner :- Amit Kumar Dixit Respondent :- Life Insurance Corp.Of India Thru. Its Chairman & 2 Others Counsel for Petitioner :- Abhinav Trivedi Counsel for Respondent :- P.K. Khare along with 3. Case :- SERVICE SINGLE No. - 17307 of 2016 Petitioner :- Parmendra Singh Chauhan Respondent :- Life Insurance Corp.Of India Thru. Its Chairman & 2 Others Counsel for Petitioner :- Abhinav Trivedi Counsel for Respondent :- P.K. Khare along with 4. Case :- SERVICE SINGLE No. - 17308 of 2016 Petitioner :- Alok Singh Yadav Respondent :- Life Insurance Corp.Of India Thru. Its Chairman & 2 Others Counsel for Petitioner :- Abhinav Trivedi Counsel for Respondent :- P.K. Khare along with 5. Case :- SERVICE SINGLE No. - 17309 of 2016 Petitioner :- Virendra Kumar Tandon Respondent :- Life Insurance Corp.Of India Thru. Its Chairman & 2 Others Counsel for Petitioner :- Abhinav Trivedi Counsel for Respondent :- P.K. Khare along with 6. Case :- SERVICE SINGLE No. - 17310 of 2016 Petitioner :- Satyendra Kumar Respondent :- Life Insurance Corp.Of India Thru. Its Chairman & 2 Others Counsel for Petitioner :- Abhinav Trivedi Counsel for Respondent :- P.K. Khare along with 7. Case :- SERVICE SINGLE No. - 17311 of 2016 Petitioner :- Jamal Ajaz Respondent :- Life Insurance Corp.Of India Thru. Its Chairman & 2 Others Counsel for Petitioner :- Abhinav Trivedi Counsel for Respondent :- P.K. Khare Hon'ble Devendra Kumar Upadhyaya,J.
This bunch of writ petitions involves determination of common questions of fact and law, hence, with the consent of learned counsel for the parties, writ petitions are being decided by a common judgment which follows:
Heard Shri Abhinav Trivedi, learned counsel for the petitioners and Shri P. K. Khare, learned counsel representing the respondent-Corporation, namely, Life Insurance Corporation of India.
All the petitioners herein were engaged as Financial Services Executive in Life Insurance Corporation of India (herein after referred to as "the Corporation"). They have instituted these proceedings under Article 226 of the Constitution of India assailing the validity of the order passed by the competent authority, whereby their services as Financial Services Executive have been terminated purportedly in terms of Clause 23 of L.I.C. of India (Financial Services Executive Scheme) 2000 read with Clause 8 of the Contract of Appointment under which they were initially engaged.
Primary submission made by learned counsel for the petitioners challenging the impugned order terminating petitioners' services is that though their appointment was contractual and as such they do not have any right to continue on the post, however, the impugned termination order is stigmatic in nature and, thus, has adversely affected them in view of Clause 24 of the Scheme, 2007, which entails permanent disqualification for being enrolled as Financial Services Executive or even as a direct agent in case employment of contract is terminated on the ground of misconduct. Submission is that the impugned order being stigmatic in nature ought to have preceded an enquiry into the allegations levelled against the petitioners and the same could have been passed only after observing the principles of natural justice by giving notice and after conducting an enquiry and not in derogation thereof.
It has further been argued by the learned counsel appearing for the petitioners that L.I.C of India is State within the meaning of Article 12 of the Constitution of India having been created under an Act of Parliament, namely, Life Insurance Corporation Act, 1956 and is charged the duty to carry on Life Insurance Business in exercise of its powers under the said Act. It has, thus, been argued that since L.I.C. of India is a statutory Corporation and is a State, all its actions should conform to the provisions of Constitution of India and that even in its administrative actions, the Corporation is bound to act in a fair and reasonable manner and thus, all its actions are to be tested on the touchstone of Articles 14 and 16 of Constitution of India, even in the matter of contractual appointments. It has further been submitted on behalf of the petitioners that the impugned order though apparently is an order of termination simpliciter having been purportedly passed in terms of Clause 23 of the Scheme, two Show Cause Notices, which preceded the impugned order of termination form the foundation of the impugned order and hence, the impugned order is penal in nature, which could have been passed only after conducing an enquiry.
Resisting the very maintainability of the writ petitions, a short counter affidavit has been filed by the respondent-Corporation. It has been argued on behalf of the respondent-Corporation by Shri P.K. Khare that the petitioners are not employees of the Corporation and are not governed by the service rules framed by it which are called Staff Regulations. It has been stated further that the engagement of petitioners was made by virtue of a contract appointment and the Scheme under which they were engaged itself provides that the Scheme and the employment given thereunder, have not been created under the service rules or the Staff Regulations and further that the engagement is contractual in nature. Shri Khare has further argued that initial engagement/appointment letter issued to the petitioners also stipulates that right of termination of services vests with the authority, who had engaged the petitioners and since the Scheme under which the petitioners were appointed was not framed under any Act or Statute, the same does not have any statutory force. Shri Khare has also submitted that in view of contractual nature of appointment, even if any breach has been committed by the respondent-Corporation, it shall lie outside the ambit of powers of judicial review by this Court under Article 226 of the Constitution of India Learned counsel appearing for the respondent-Corporation has relied upon the judgment of Hon'ble Supreme Court in the case of Vidya Ram Misra vs. the Managing Committee, Shri Jai Narain College and another, [AIR (1972) SC 1450]. He has also relied upon a judgment dated 17.11.2014 rendered by Hon'ble High Court of Kerala, delivered by Hon'ble Single Judge of the said Court in WP (C) No.9608 of 2014(A), Financial Service Executives Welfare Association and another vs. Life Insurance Corporation of India and others. Shri Khare has stated that writ appeal filed against the said judgment dated 17.11.2014, namely, WA No.1707 of 2014 has also been dismissed by a Division Bench of Hon'ble Kerala High Court, vide its judgment dated 09.03.2015 and the SLP against the said two judgments of Hon'ble Kerala High Court has also been dismissed by Hon'ble Supreme Court on 09.03.2016 [SLP (C) No.14641/2015]. Shri Khare has also relied on a judgment dated 13.05.2016, passed by Hon'ble Single Judge of this Court in Writ Petition No.8876 (S/S) of 2016, Sadeep Pratap Singh and another vs. Life Insurance Corporation of India and others. He has further placed reliance on two judgments, the one delivered on 14.07.2016 by Hon'ble High Court of Delhi in W.P.(C) 4668/2016, Jyoti vs. Life Insurance Corporation of India and others and the other delivered on 29.04.2016 by Hon'ble High Court of Punjab and Haryana in the case of Bikram Singh Kohli vs. Life Insurance Corporation of India and others, CWP No.6754 of 2016 (O & M). Reliance has also been placed by the learned counsel for the respondent-Corporation on yet another judgment dated 18.08.2016 of a Division Bench of Hon'ble High Court of Judicature at Bombay in the case of Shri Tushar Gajanan Savlajkar and others vs. Life Insurance Corporation of India.
Based on the aforementioned judgments of various Courts, it has vehemently been argued by Shri P.K. Khare, learned counsel appearing for respondent-Corporation that though it is not in dispute that L.I.C. of India is a State within the meaning of Article 12 of the Constitution of India having been created under an Act of Parliament as held by Hon'ble Supreme Court in the case of Sukhdev Singh and others vs. Bhagat Ram Sardar Singh Raghuvanshi and another, [(1975) 1 SCC 421, however, its functions are two folds, namely, (i) statutory and (ii) administrative. Since the employment/appointment/engagement of the petitioners in the instant case was not given under any statutory scheme; rather it was only on contractual basis hence, the impugned order will be outside the ambit of the powers of judicial review of this Court under Article 226 of the Constitution of India.
I have given my thoughtful consideration to the competing arguments advanced by the learned counsel appearing for the respective parties.
There is no quarrel that the scheme under which the petitioners were initially appointed, namely, L.I.C. of India (Financial Services Executive) Scheme, 2007 has not been framed under any statutory provision; neither under Life Insurance Corporation Act nor under the Staff Regulations regulating the conditions of service of the employees of the Corporation which have been framed under the said Act. It is also not in dispute that the scheme clearly stipulates that the terms and conditions of the engagement shall be governed by the Scheme itself and that engagement shall be governed by the terms of the contract of appointment. The Scheme further prescribes that contract of appointment can be extended subject to performance and suitability. The instructions for implementation of the Scheme as modified as on 01.07.2013, after incorporating all the changes in the Scheme from its inception, has been annexed as annexure no.4 to the Writ Petition No.16948 (S/S) of 2016. These instructions further contain a prescription that selection as a Financial Services Executive shall not confer any right to claim or seek employment with the Corporation. The contract of appointment clearly provides that the provisions of L.I.C. of India (Staff) Regulations, 1960 will not be applicable and that the selection shall be governed by such rules as may be framed from time to time. It clearly states that selection being contractual in nature, the candidates so selected shall not be entitled to the benefits, such as gratuity, bonus, medial benefits and pension etc. as provided by the Corporation to its employees in regular cadre.
From what has been stipulated in the Scheme, 2007 and in the instructions issued for implementation of the Scheme as modified as on 01.07.2013, it is not in doubt, rather is unambiguously clear, that the appointment of the petitioners as Financial Services Executive has been made on contractual basis and, therefore, the same is not supported by any statutory prescription. However, since, undoubtedly, L.I.C. of India is a State within the meaning of Article 12 of the Constitution of India, there cannot be any doubt that any function or act of the Corporation, be it a statutory function or non-statutory function, has to necessarily conform to the Constitution of India, including Articles 14 and 16 thereof.
In the background of the aforesaid discussion, what emerges for consideration of the Court is as to whether the impugned order terminating the services of the petitioners is an order of termination simpliciter referable to Clause 23 of the Scheme or the same is stigmatic and penal in nature and, thus, the same is to be tested on the touchstone of non-arbitrariness as mandated by Article 14 of the Constitution of India. Further question for consideration of this Court in this case is as to whether the impugned action falls within the ambit of powers of judicial review of this Court in exercise of its jurisdiction under Article 226 of the Constitution of India or this Court's jurisdiction is ousted merely because the engagement/appointment of the petitioners was on contractual basis and not in exercise of any statutory function of the respondent-Corporation.
Taking up the second issue first, which has emanated from the discussion made above, I may refer to the case of GRIDCO Ltd. And another vs. Sadananda Doloi and others, [(2011) 15 SCC 16], wherein it has clearly been laid down by Hon'ble Supreme Court that a writ Court can judicially review any action and determine whether there has been any illegality, perversity, unreasonableness, unfairness or irrationality that would vitiate the action impugned, even if the action is in the realm of contract. Hon'ble Supreme Court has, however, put a word of caution for exercise of the power of judicial review in such matters and has clearly mandated that judicial review cannot extend to the Court acting as an appellate authority sitting in judgment over the decision under challenge and further that it cannot decide whether a more reasonable decision or course of action could have been taken in the circumstances. Hon'ble Supreme Court has further held that if the action taken by the authority concerned is not established to be vitiated and so long as the impugned action is not found in outrageous defiance of logic, the writ Court would better not upset the same and it will do well to respect the decision under challenge. Para 39 of the judgment of Hon'ble Supreme Court in the case of GRIDCO Ltd. and another (supra) is quoted herein below:
"39. A writ court is entitled to judicially review the action and determine whether there was any illegality, perversity, unreasonableness, unfairness or irrationality that would vitiate the action, no matter the action is in the realm of contract. Having said that we must add that judicial review cannot extend to the Court acting as an appellate authority sitting in judgment over the decision. The court cannot sit in the armchair of the Administrator to decide whether a more reasonable decision or course of action could have been taken in the circumstances. So long as the action taken by the authority is not shown to be vitiated by the infirmities referred to above and so long as the action is not demonstrably in outrageous defiance of logic, the writ court would do well to respect the decision under challenge."
Thus, the aforesaid authority of Hon'ble Supreme Court in the case of GRIDCO Ltd. and another (supra) clearly lays down the law that the action impugned, even though may fall in the domain of contract, can be interfered with and can be subjected to judicial review by this Court and while doing so this Court will be within its powers of judicial review if it determines whether the action under challenge before it, suffers from illegality, perversity, unreasonableness, unfairness or irrationality having the potential of vitiating the impugned action. However, having observed that even if the action impugned is in the realm of contract, the power of judicial review can be exercised, but with circumspection.
As has been held by Hon'ble Supreme Court in the case of Sukhdev Singh and others (supra) reiterated in the case of Life Insurance Corporation of India vs. Prof. Manu Bhai D. Shah, [(1992)3 SCC 637], the respondent-Corporation is a State within the meaning of Article 12 of the Constitution of India and exercises certain statutory functions, having been created under an Act of Parliament. It is trite law that the State and its instrumentalities are to conform to the provisions of the Constitution of India in their actions and their actions can be tested on the touchstone of Articles 14 and 16 of the Constitution of India. Having examined the Scheme under which the petitioners were offered appointment, I have no reason not to agree with the submissions made by Shri P. K. Khare, learned counsel appearing for the respondent-Corporation that the Scheme is not statutory hence, the nature of employment/appointment of the petitioners is also not statutory. The employment of the petitioners was neither offered nor given by the respondent-Corporation in exercise of its statutory functions, however, the Corporation being a State has to conform to the provisions of Constitution of India and it is bound to act in a fair and reasonable manner. The reference, at this juncture, can be made to certain observations made by the Division Bench of Hon'ble High Court of Kerala in the case of Financial Services Executive Welfare Association (supra). Referring to the Apex Court's judgment in the case of Jayantilal Amratlal vs. F. N. Bana and others, [AIR (1964) SC 648], the Division Bench of Hon'ble Kerala High Court in paragraph 18 of its judgment dated 17.11.2014 has formed an opinion that the Scheme, 2007 whether statutory or non-statutory does not make much difference and further that when the Corporation floated a Scheme, it has to be reasonable, fair and conforming to the mandate of Articles 14 and 16 of the Constitution of India. In para 19 of this judgment, it has further been held that the Scheme, 2007 framed by the Corporation has to conform to various constitutional obligations on the corporation. The relevant extract of para 18 of the said Division Bench judgment of Hon'ble Kerala High Court is quoted as under:
"The Corporation is empowered to make regulations under section 49 of Life Insurance Corporation Act, 1956, which is in the nature of subordinate legislation. From the above judgment of Hon'ble Supreme Court it is clear that the Scheme, 2007 cannot be held to be subordinate legislation. But, as observed above, the Corporation being a State within the meaning of Article 12 of the Constitution of India, it has to conform with the provisions of Constitution of India. Even in its administrative action the Corporation is bound to act in a fair and reasonable manner and any scheme framed by it for enactment of staff has to be tested on the touchstone of Articles 14 and 16 of the Constitution of India. Thus, the fact that the Scheme, 2007 whether a statutory Scheme or non-statutory Scheme does not make much difference and when the Corporation has floated a Scheme exercising statutory power, the scheme has to be reasonable, fair and conforming to the mandate of Articles 14 and 16 of the Constitution of India."
Emphasis supplied Para 19 of the said judgment is extracted herein below:
"19. We, thus, are of the view that the Scheme, 2007 framed by the Corporation has to conform to various constitutional obligations on the Corporation. The first issue is answered accordingly."
Emphasis supplied Thus, even if the impugned action terminating the services of the petitioners is in the realm of a contract, the same would not be precluded from scrutiny in exercise of its powers of judicial review by this Court available to it under Article 226 of the Constitution of India. I am of the considered opinion that every action of the Corporation, whether statutory or non-statutory or administrative in nature, has to be necessarily in consonance with the constitutional mandate and the impugned order, thus, can be tested on the touchstone of Article 14 of the Constitution of India. In case, the impugned action is found to be unreasonable, irrational, illegal, perverse or unfair, the same can be interfered with in view of the law laid down by Hon'ble Supreme Court in the case of GRIDCO Ltd. (supra).
As far as the judgment rendered by Hon'ble High Court of Punjab and Haryana in the case of Bikram Singh Kohli (supra) is concerned, the subject matter of the said case was different from the subject matter of the instant writ petition. In the case of Bikram Singh Kohli (supra) what was under challenge was an order by which the petitioner therein was communicated that his contractual appointment as Financial Service Executive will be liable for termination after completion of 8th year from the date of initial engagement. Hon'ble High Court of Punjab and Haryana placing reliance on the judgment of Hon'ble Supreme Court in the case of Secretary, State of Karnataka and others vs. Uma Devi and others, [(2006) 4 SCC 1) has held that extension of contract appointment is dependent upon capability, efficiency and suitability to be adjudged by the employer and under the Scheme, extension of employment can not be claimed as a matter of right. It is in the background of the said facts that the writ petition filed by the petitioner-Bikram Singh Kohli was dismissed. The subject matter of the said writ petition decided by Hon'ble High Court of Punjab and Haryana was thus, right of extension of employment/appointment and not termination of appointment as is the case in the present writ petition. In this view, the judgment of Hon'ble High Court of Punjab and Haryana in the case of Bikram Singh Kohli (supra) will have no application.
Similarly, the issue which engaged attention of Hon'ble High Court at Delhi in the case of Jyoti vs. Life Insurance Corporation of India & others (supra) also did not relate to termination of appointment, rather the said writ petition concerned itself with the extension of the term of appointment. The submissions advanced on behalf of the petitioner in the said case was that since the work being taken by the Corporation is of perennial in nature and hence, the petitioner therein should be granted extension. The issue, thus, related to grievance of the petitioner in the said writ petition before Hon'ble High Court of Delhi in relation to non-extension of engagement or appointment as per the Scheme. It is in this background that relying on the judgement of Hon'ble High Court of Kerala in W.A. No. 1707 of 2014, which was upheld by Hon'ble Supreme Court in SLP No.1464/2015 on 09.03.2016, Hon'ble High Court of Delhi dismissed the writ petition. It is also worthwhile to notice that so far as the judgment rendered by Hon'ble High Court of Kerala is concerned, the subject matter of the said writ petition related to prayer made by the members of the petitioner-association seeking a direction for regularization in service. It is in the background of the grievance raised in respect of either regularization of service being demanded by the Financial Services Executives or in relation to extension of term of appointment being demanded by the Financial Services Executives that the writ petition and writ appeal by Hon'ble High Court of Kerala were dismissed and the judgments so rendered by Hon'ble Kerala High Court has been upheld by Hon'ble Supreme Court.
As observed above, the present case is not a case where the petitioners are seeking regularization in service under the respondent-Corporation or they are seeking extension of their services. They are aggrieved by the order of terminating their contract of appointment in terms of Clause 23 of the Scheme, 2007. Accordingly, the judgment rendered by Hon'ble High Court of Delhi in the case of Jyoti (supra), in my opinion, will have no impact so far as the facts of the present case are concerned.
In the case of Sandeep Pratap Singh and another (supra) decided by this Court by means of the judgment and order dated 13.05.2016, challenge was made to an order passed by the respondent-Corporation, whereby an intimation was given to the Financial Services Executives, who were the petitioners therein, that their engagement as Senior Marketing Executives on contract basis will be ending on 25.04.2016, whereby advising them to return the relevant documents to the authority concerned. The said case was not a case of termination of contract of appointment, rather it was a case where term of contract of appointment had come to an end on 25.04.2016 and it is only intimation of the said fact of contract of appointment coming to an end which was given to the petitioners therein. The Court while dealing with the said case has observed that the renewal clause in the scheme does not give any right of renewal, rather it merely implies permissibility of such renewal. The facts and subject matter of the case of Sandeep Pratap Singh and another (supra) are, thus, different from the subject matter of the instant bunch of writ petitions.
The judgment in the case of Shri Tushar Gajanan Savlajkar and others vs. Life Insurance Corporation of India, rendered by Hon'ble High Court of Bombay on 18.08.2016, which has been relied upon by the learned counsel appearing for the respondent-Corporation also needs to be taken note of. The petitioners therein had inter alia prayed for a writ of Mandamus directing the respondent-Corporation to absorb them in service as permanent employees and to grant benefits of permanency to them. A further prayer in the said writ petition was made for issuing a writ of Certiorari striking down part of the clause existing in the appointment letters issued by the respondent-Corporation whereby renewal of the contract was restricted to three terms. In the said case decided by Hon'ble High Court of Bombay as well, the subject matter was clearly different from the subject matter which has arisen for consideration of this Court in the instant case. Accordingly, the said judgment rendered by Hon'ble High Court of Bombay in the case of Shri Tushar Gajanan Savlajkar and others (supra) will also have no application for resolving the controversy in the present case. So far as the facts of the present case are concerned, at the cost of reiteration, it may be observed that the Scheme, 2007 under which the petitioners were appointed is not a statutory Scheme and further that appointment of the petitioners was made on contractual basis and not in exercise of any statutory functions by the respondent-Corporation but in exercise of its non-statutory and administrative function. However, since the respondent-Corporation is a State within the meaning of Article 12 of the Constitution of India, its action are to be tested on the touchstone of the constitutional mandate including the mandate as enshrined in Articles 14 and 16 of the Constitution of India. For these reasons I have no doubt to hold that the impugned action, even though is in the realm of contract, thus, can be subjected to judicial scrutiny by this Court in exercise of its jurisdiction under Article 226 of the Constitution of India.
As to the first issue, which has arisen in this case for determination of the Court, what needs to be emphasized is that in case the impugned order terminating the services of the petitioners is found to be stigmatic and punitive in nature and the allegations, which find mentioned in two notices issued to the petitioners prior to passing of the impugned order are found to form the basis and foundation of the impugned oder, then the order would have to be held to be penal in nature and must be interfered with as it has not been passed after conducting any enquiry. It would be violation of principles of natural justice as well.
Clause 23 of the Scheme, 2007 provides for termination of contract, according to which, if a Financial Services Executive is unable to procure the stipulated minimum New Business in two successive quarters, then contract is liable to be terminated forthwith without any notice. It further provides that if the Financial Services Executive commits any violation of any statutory provisions or is found to be indulging in activities detrimental to the interest of the Corporation, his contract is again liable to be terminated, provided that before termination of contract, in this situation, a Show Cause Notice shall be issued. It further provides that engagement of Financial Services Executive shall remain suspended during the period of issuance of Show Cause Notice and final decision on the reply thereof. Clause 23 of the Scheme, 2007 is quoted herein below:
23.Termination of Contract: In case a Financial Services Executive dose not procure the stipulated minimum New Business in two successive quarters, then his/her contract shall be terminated forthwith without giving any notice to him/her. The Contract shall also be liable for being terminated, if the Financial Services Executive commits breach of any Statutory Provisions or is found to be indulging in activities detrimental to the interests of the Corporation provided however that, before termination of contract for reasons other than for minimum business parameters as stipulated elsewhere in the scheme, a Show Cause Notice shall be issued to the FSE. The engagement of FSE shall remain suspended during the period of issuance of Show Cause Notice and final decision on the reply thereof. The Sr./Divisional Manager-in-charge of the Division shall be the Competent Authority for termination of contract on any of the grounds mentioned herein."
emphasis supplied Thus, termination of contract of appointment of a Financial Services Executive under Clause 23 of the Scheme can take place in two circumstances. Firstly, in case the Executive fails to procure the stipulated minimum New Business in two successive quarters and secondly, in case such an Executive is found to have acted in breach of any statutory provision or he is found to have indulged in activities detrimental to the interest of the Corporation. In the first circumstance, where the Executive fails to procure the stipulated minimum New Business in two successive quarters, for terminating the contract of appointment, Clause 23 does not stipulate any notice to be given. However, in case the contract of appointment is terminated in a situation where the Executive is found to have acted in breach of any statutory provision or is found to have indulged in any activity which is detrimental to the interest of the Corporation, a Show Cause Notice is required to be issued and the reply is also to be solicited from him. Thus, in the former case, no Show Cause Notice or enquiry has been envisaged in Clause 23 of the Scheme, 2007, whereas in the latter case the issuance of Show Cause Notice and soliciting the reply from the erring Financial Services Executive has been prescribed in Clause 23 itself.
In case of non-achievement of the stipulated volume of business, an order simpliciter terminating the contract of appointment without any notice can, thus, be passed. However, in case of any breach of any statutory provision or in case where a Financial Services Executive is found indulging in any activity detrimental to the interest of the Corporation, it is not only that a Show Cause Notice needs to be issued but also that a reply is to be called for and based on the reply submitted by such an Executive, appropriate order needs to be passed. The principles of natural justice are, thus, engrafted in Clause 23 of the Scheme, 2007 itself in a situation where the appointment is to be terminated in case of breach of any statutory provision or in case any act of the appointee is adjudged to be detrimental to the Corporation. Such a breach or an act of the appointee would certainly form a misconduct and hence, on the basis of such a misconduct if any order terminating the appointment is passed, the same would be punitive in nature and thus, Clause 23 of the Scheme, 2007 rightly provides for issuance of notice and soliciting reply which is not only in conformity with the principles of natural justice but also in consonance with the constitutional mandate enshrined in Article 14 of the Constitution of India, which requires all State instrumentalities to act reasonably, rationally and with fairness.
There is no infirmity as far as the provisions of Clause 23 of the Scheme, 2007 are concerned. In the matter of contractual appointment, it is always the prerogative of the employer to stipulate such a condition in the terms of appointment which envisage passing of an order of termination simpliciter. However, in case an employer intends to terminate the appointment on the ground of misconduct, the employer (specially if it is the State or its instrumentality) needs to conform to the principles of natural justice as also to the constitutional mandate enshrined in Articles 14 and 16 of the Constitution of India.
The instructions issued for implementation of the Scheme, 2007 as modified as on 01.07.2013, also contain a provision relating to termination of contract of appointment, according to which, there are three situations in which contract of appointment of a Financial Services Executive can be terminated. Services can be terminated in case (i) the Executive concerned does not procure the stipulated minimum New Business in two successive quarters, (ii) the Executive concerned commits breach of any Statutory Provision or indulges in any activity detrimental to the interest of the Corporation and (iii) if Extra Ordinary Leave exceeds 30 days and Clause XXI of the said instructions are extracted herein below:
"XXI. Termination of Contract:-The Contract of a FSE can be terminated on the following grounds:
1. If an FSE does not procure the stipulated Minimum New Business in two successive quarters.
2. If the Financial Services Executive commits breach of any Statutory Provisions or is found to be indulging in activities detrimental to the interests of the Corporation provided however, that, before termination of contract for reasons other than for minimum business parameters as stipulated in the scheme, a Show Cause Notice shall be issued to the FSE. The engagement of FSE shall remain suspended during the period of issuance of Show Cause Notice and final decision on the reply thereof.
3. If Extra Ordinary Leave exceeds 30 days; the contract shall be liable to be terminated.
4. The Sr. Divisional Manager in charge of the Division shall be the Competent Authority for termination of contract on any of the aforesaid grounds."
Thus, the instructions stipulate two situations when no Show Cause Notice or enquiry is required for terminating the contract of appointment and these two situations are (i) where the Executive fails to procure minimum stipulated New Business and (ii) his Extra Ordinary Leave exceeds 30 days. So far as termination of service contract in case of breach of any statutory provision or in case of involvement of the appointee in activities detrimental to the interest of Corporation is concerned, Clause XXI of the instructions also prescribes issuance of Show Cause Notice. It further prescribes that engagement of the Executive shall remain suspended during issuance of Show Cause Notice and final decision on the reply thereof.
In the light of the prescriptions available in Clause 23 of the Scheme, 2007 and the instructions as updated till 01.07.2013, I now proceed to examine the facts of the case.
In Writ Petition No.16948 (S/S) of 2016, a letter/Show Cause Notice dated 29.09.2016 has been annexed as annexure no.8 to the writ petition, whereby the petitioner has been required to submit his explanation within seven days from the receipt of the said letter. The said letter/Show Cause Notice dated 29.09.2016 further states that in case the petitioner did not submit his explanation, suitable action would be taken without any intimation to him. The said letter/Show Cause Notice dated 29.09.2014 mentions about a complaint and it further mentions that it has been found that during the petitioner's engagement as Financial Services Executive, a total number of 10 policies have been completed in his code under ECS mode having first premium below Rs.100.00 and no subsequent premium was deposited in the said policies and the said policies were in lapsed conditions. It was further stated in the said letter/Show Cause Notice that the said proposals were submitted by the petitioner without mandatory documentation and the proposal forms were incomplete and further that gross violations of rules while undertaking duties as preliminary underwriter were found. The letter/Show Cause Notice further states that certain papers and documents were not properly filled and witnessed by the Bank or specified persons, age proofs were not proper, neither were they verified by the Bank/LIC official, multiple proposals were completed on a single life without procuring KYC/AML requirements and that proposals were completed in ECS though ECS facilities are not available in Sitapur District. The letter/Show Cause Notice dated 29.09.2014 required the petitioner of this writ petition to submit his explanation as to why violation of certain rules were made by him while submitting the proposals in question which had resulted in fake business causing financial loss to the Corporation. Thus, the letter/Show Cause Notice dated 29.09.2014 talked about certain acts of the petitioner which were found to be detrimental to the interest of the Corporation. Hence, the said Show Cause Notice was issued in terms of the stipulations made in Clause 23 of the Scheme, 2007 and Paragraph XXI of the instructions which require issuance of Show Cause Notice and soliciting the reply from an Executive in case any act or action on the part of the Executive was found to be in violation of rules or detrimental to the interest of the Corporation.
The petitioner had submitted reply to the said letter/Show Cause Notice dated 29.09.2014 on 17.10.2014 (Annexure 9 to the writ petition) stating therein that he had not made any proposal through ESC mode in Sitapur branch and further that he did not have any knowledge of any such policy. He has further stated that as to when the said ten policies were proposed under his code was not known to him, neither did he know the policy numbers. He thus, denied the allegations vide his reply dated 17.10.2014.
Thereafter on 31.03.2016 again a Show Cause Notice was issued to the petitioner of Writ Petition No.16948 (S/S) of 2016 which contains certain allegations relating to ten alleged fake policies submitted in his code in ECS mode. The said Show Cause Notice dated 31.03.2016 further recites that after going through the record it was found that there was sufficient evidence to establish that the petitioner had failed to perform his duties and has acted in a manner detrimental to the interest of the Corporation. The notice further records that the authority issuing the notice had personally come to the conclusion that the petitioner is guilty of violating the provisions contained in para XXI of the Scheme and thereafter by virtue of powers conferred by Clause 23 of the Scheme read with Clause XXI of the instructions, it was proposed to terminate his contract of engagement with immediate effect. The notice dated 31.03.2016 also provides that the petitioner's engagement shall remain suspended till final decision in the matter.
Thus, the said Show Cause Notice dated 29.09.2014 is again in conformity with Clause 23 of the Scheme and para XXI of the instructions whereby issuance of Show Cause Notice and soliciting the reply has been mandated in case any Executive is found to have either acted in violation of rules or to the detriment of the interest of the Corporation.
The petitioner submitted his reply to the said Show Cause Notice dated 31.03.2016 vide his letter dated 23.04.2016 denying the allegations levelled against him and praying therein that he may be reinstated. However, without conducting any further enquiry or giving any finding on the allegations levelled against the petitioner and considering his reply submitted to the Show Cause Notices dated 31.03.2016 and 29.09.2014, the impugned order has been passed which on the first reading appears to be an innocuous order of simpliciter termination of the appointment of the petitioner.
In all other writ petitions, except in Writ Petition No.17310 (S/S) of 2016, which are part of this bunch, similar show cause notices were issued to the petitioners twice containing allegations/charges against the petitioners relating to violation of rules in discharge of their duties and their alleged indulgence in acts detrimental to interest of the Corporation. In Writ Petition No.17310 (S/S) of 2016, petitioner-Satyendra Kumar was served with similar show cause notice though only once. The show cause notice dated 31.03.2016 issued to the petitioner of this writ petition recites that there appears to be sufficient evidence available on record so as to establish that the petitioner has failed to perform his duties and acted in a manner detrimental to the interest of the Corporation.
Hon'ble Supreme Court in the case of State Bank of India and others vs. Palak Modi and another, [(2013) 3 SCC 607] while dealing with the case of a Probationer in service, after reviewing the entire law on the issue, has held that a Probationer has no right to hold the post and his services can be terminated at any time on account of unsuitability for the post but if the allegation of misconduct constitutes the foundation of the action taken, such a decision can be nullified on the ground of violation of principles of natural justice.
Para 25 of the judgment of Hon'ble Supreme Court in the case of State Bank of India and others (supra) is extracted herein below:
"25. The ratio of the abovenoted judgments is that a probationer has no right to hold the post and his services can be terminated at any time during or at the end of the period of probation on account of general unsuitability for the post held by him. If the competent authority holds an inquiry for judging the suitability of the probationer or for his further continuance in service or for confirmation and such inquiry is the basis for taking decision to terminate his service, then the action of the competent authority cannot be castigated as punitive. However, if the allegation of misconduct constitutes the foundation of the action taken, the ultimate decision taken by the competent authority can be nullified on the ground of violation of the rules of natural justice."
A division Bench of this Court in the case of Sandeep Pandey vs. Union of India and others, [(2016) 2 UPLBEC 1574] while dealing with the termination of contract of appointment has held that if the employee concerned is attributed of some misconduct and order terminating the services is passed without holding any enquiry by violating the principles of natural justice, then such an order casts stigma and will be punitive in nature.
The impugned order needs to be examined and tested on the basis of ratio laid down by the aforesaid judgments. So far as the facts of the instant case are concerned, it is not in dispute that two Show Cause Notices had preceded the impugned order terminating the services of the petitioners. The notices issued were in conformity with Clause 23 of the Scheme, 2007 and para XXI of the instructions. These two provisions clearly stipulate that in case services of an Executive are to be terminated on the ground of violation of any rule or in case conduct reported is found to be detrimental to the interest of the Corporation, it is not only that the Show Cause Notice is to be issued but a reply is also to be obtained. The notices were thus, issued twice making certain allegations relating to violation of rules, and also pointing out certain acts of the petitioners being detrimental to the interest of the Corporation. Such allegations, in my opinion, constituted misconduct and hence without holding an enquiry and without considering the reply submitted by the petitioners in respect of the charges, if the services of the petitioners have been terminated, the same would be in violation of principles of natural justice. Such a course would also be in violation of Clause 23 of the Scheme, 2007 and para XXI of the instructions issued for implementation of the Scheme.
As already observed above, any action of the respondent-Corporation, even if it is non-statutory or administrative in nature, has to conform to the well established principles of non-arbitrariness and fairness. The impugned order is though innocuously worded and from its appearance it seems to be an order of termination simpliciter, however, applying the principles of lifting the veil, the Court finds that, in fact, the impugned order is founded on the allegations contained in the notices. The allegations, thus, levelled against the petitioners are the foundation of the impugned action though the impugned order does not make any mention of any allegation against the petitioners. Hence, I have no hesitation to hold that the order under challenge herein having been passed in violation of principles of natural justice, cannot be permitted to be sustained. Further, I may observe that the impugned order is also in violation of stipulations and prescriptions made by and available in clause 23 of the Scheme, 2007 as also in para XXI of the instructions. The respondent-Corporation having levelled the allegations and having issued the notices containing allegations relating to alleged violation and breach of rules and acts on the part of the petitioners being detrimental to the respondent-Corporation could not have passed the simpliciter order terminating the appointment of the petitioners.
It is also noticeable that before passing the impugned order, not once but twice notices were issued to the petitioner [except in Writ Petition No.17310 (S/S) of 2016, where only one show cause notice was issued] containing allegations of misconduct of breach of rules and alleged indulgence of the petitioners into acts which were said to be detrimental to the interest of the Corporation. The allegations mentioned in these notices clearly relate to misconduct which even in terms of Clause 23 of the Scheme was required to be probed and enquired into. It is in this background that the Court finds that if the veil from the impugned action of the respondent-Corporation is lifted and the impugned action is unmasked, what is found is that these allegations are the foundation of the impugned order. Order under challenge can not be saved as an order of termination simpliciter. After levelling the allegations of misconduct against the petitioner vide two notices as aforesaid and after soliciting the reply from the petitioner, respondent-Corporation could have proceeded further and could have taken appropriate decision depending on the findings on the allegations after considering the reply submitted by the petitioner. The course thus, adopted by the respondent-Corporation which has ultimately precipitated in the impugned order is not free from arbitrariness and illegality, being in violation of even Clause 23 of the Scheme itself.
For the discussions made and the reasons given above, the impugned orders terminating the services of the petitioners in all these writ petitions are not sustainable.
Resultantly, the writ petitions are allowed. The impugned orders terminating the services of the petitioners which are contained in annexure no.1 to these writ petitions, are hereby quashed.
However, it will be open to the respondent-Corporation to proceed afresh against the petitioners in accordance with law and observations made herein above.
There will be no order as to costs.
Order Date :- 17.05.2017 akhilesh/