Madras High Court
V. Venkatesan vs Karnataka Handlooms Development ... on 24 April, 1991
Equivalent citations: (1991)2MLJ130
ORDER Somasundaram, J.
1. The first respondent in this writ petition is a Corporation owned and controlled wholly by the State of Karnataka. The petitioner was appointed as the Sales Manager by the first respondent and was posted at Madras on 7.1.1980 and he was entrusted with the duty of canvassing the sale of fabrics, dealt with by the first respondent-Corporation at Madras. Apart from the petitioner, there was an Accounts Assistant, five Sales Assistants and two helpers and with the help of them the petitioner had to manage the affairs of the show room at Madras. On 25.3.1985 the petitioner received a letter described as office order from the first respondent stating that there was a shortfall in the cash receipts and that a sum of Rs. 64,635.33 was due to the first respondent-Corporation. It was further stated in that letter that the petitioner dishonestly misappropriated the abovesaid amount by abusing his official position and the petitioner was warned that if he did not make good that amount, civil, criminal and disciplinary actions would be taken against him. On 17.4.1985 the petitioner sent a reply to the first respondent complaining the manner in which the sales campaign had been carried out by the petitioner. Subsequently by the office order dated 17.4.1985 the petitioner was placed under suspension on the ground that the petitioner extended the credit facilities to Vani Sarees to the extent of Rs. 35,571.90 and to Chini Cabs to the extent of Rs. 27,602.40. It was stated in the said order dated 17.8.1985 that pending issue of the charge-sheet and an enquiry into the charges the petitioner was placed under suspension with immediate effect. The petitioner sent a detailed reply stating the circumstances under which the credit sales had been extended to the various purchasers and denying the charges of misappropriation and dishonesty levelled against the petitioner. On 13.9.1985 the petitioner received the order dated 11.9.1985 from the first respondent dismissing the petitioner from service. It is stated in the order dated 11.9.1985 that as the petitioner had made allegations against the Marketing Manager in the reply submitted by him to the order of suspension no useful purpose will be served in instituting any enquiry against the petitioner. The said order dated 11.9.1985 was passed by the first respondent invoking Clause 21 of the Staff Regulations, 1979 of the Karnataka Handloom Development Corporation Limited, hereinafter called the Regulations, read with Clause 8 of the Order appointing the petitioner as the Sales Manager of the first respondent-Corporation. The order of the first respondent dated 11.9.1985 terminating the services of the petitioner is challenged in this writ petition.
2. Mr. M. Vaidyanathan, learned Counsel for the petitioner in the first place would submit that Clause 21 of the Regulations read with Clause 8 of the Order of appointment can be invoked by the first respondent for terminating the services of the employee only when the order of termination of service passed against the employee is an order of termination simpliciter; the impugned order of termination of service passed against the petitioner is not an order of termination of service simpliciter, but, the services of the petitioner was terminated on the ground of misconduct and, therefore, the impugned order passed by the first respondent terminating the services of the petitioner invoking Clause 21 of the Regulations without framing charge and conducting an enquiry is invalid. There is merit in the contention of the learned Counsel for the petitioner. A perusal of the impugned order shows that the services of the petitioner was terminated on the ground of misconduct and the relevant portion of the impugned order runs as follows:
Thus he has totally misappropriated a sum of Rs. 7,17,193.94 while he was working as sales manager, Priyadharshini Handloom House, Madras.
As the above acts committed by Sri V. Venkatesan amounted to serious irregularities, the Management kept him under suspension vide office order dated 17.9.1985. From the above it is evident that he has committed the following misconduct:
1. Fraud and dishonesty in connection with Corporation's Business or property of the Corporation as per Clause 73(11) of the Staff Regulations, 1979.
2. Misappropriation of the funds of the Corporation.
3. Breach of trust and abuse of powers as sales manager for personal gains.
4. Wilful disobedience of reasonable orders of a superior authority as per Clause 73 of Staff Regulations, 1979. It is found that he having held the position of sales manager holding overall control, has grossly abused his position to make unlawful gains for himself which is wholly unbecoming of an official of a Government Corporation. The misconducts committed by him are so grave that the management cannot repose any confidence in him and continuing him in service is wholly undesirable. Considering the gravity of the misconducts, it has been decided to discharge him from the services of the Corporation.
When the service of the petitioner was terminated on the ground that he is guilty of several acts of misconduct referred to in the impugned order and when it involves civil consequences, such order cannot be considered as an order of termination simpliciter. As rightly contended by the learned Counsel for the petitioner the first respondent cannot invoke Clause 21 of the Regulations read with Clause 8 of the Order of appointment for passing the impugned order terminating the service of the petitioner without framing charges against him and conducting an enquiry.
3. The second contention of the learned Counsel for the petitioner is that Clause 21 of the Regulations itself being arbitrary and invalid, the impugned order passed by the first respondent invoking Clause 21 of the Regulations is also illegal and liable to be set aside. In support of his contention the learned Counsel for the petitioner relies on the decision in Delhi Transport Corporation v. D.T.C. Mazdoor Congress . There is substance in this contention of the learned Counsel for the petitioner. Clause 21(1) of the Regulations runs as follows:
The Corporation may at any time in writing terminate the services of any employee after confirmation on giving him three months notice or three months pay in lieu thereof.
Clause 21 of the Regulations enables the Authority to terminate the services of a confirmed employee by issuing a notice without assigning any reasons, without giving an opportunity to the employee to state his case and conducting an enquiry before passing the order of termination of service. Clause 21 of the Regulations thus confers unbridled and arbitrary powers on the authority to terminate the services of a permanent employee without hearing the employee, without holding any enquiry and without giving any reason. Therefore, the learned Counsel for the petitioner is right in contending that Clause 21 of the Regulations is illegal and void and it is arbitrary, discriminatory and without guidelines for the exercise of power." Recently the Supreme Court in Delhi Transport Corporation v. D.T.C. Mazdoor Congress , considered the validity of a similar Regulation viz., Regulation 9(b) of Delhi Road Transport Authority (Conditions of Appointment and Service) Regulations, 1952 which reads as follows:
Termination of services-
Where the termination is made due to reduction of establishment or in circumstances other than those mentioned in (a) above one month's notice or pay in lieu there of will be given to all categories of employees.
The Supreme Court, while declaring the said Regulation 9(b) referred above, as illegal and void, held that Regulation 9(b) which confers powers on the authority to terminate the service of a permanent and confirmed employee by issuing a notice without assigning any reason in the order and without giving any opportunity of hearing to the employee before passing the impugned order is wholly arbitrary, uncanalised and unrestricted violating principles of natural justice as well as Article 14 of the Constitution. The Supreme Court further observed that the Government Company or Public Corporation being State instrumentalities are State within the meaning of Article 12 of the Constitution and as such they are subject to the observance of fundamental rights embodied in Part III as well as to conform to the directive principles in Part IV of the Constitution and the Service Regulations or Rules framed by them are Jo be tested by the touchstone of Article 14. The Supreme Court further held that the procedure prescribed by the Rules and Regulations framed by Government Company or Public Corporation must be reasonable, fair and just and not arbitrary, fanciful and unjust. Ultimately, the Supreme Court held that Regulation 9(b) referred above is illegal and void, as it is arbitrary, discriminatory and without any guidelines for exercise of the power. The Supreme Court further declared that the said Regulation 9(b) is invalid on the ground that it contains the much hated and abused rule of hire and fire reminiscent of the days of laissezfair and unrestrained freedom of contract. Whatever the Supreme Court has said about Regulation 9(b) of the Delhi Road Transport Authority (Conditions of Appointment and Services/Regulations, 1952 equally applies to Clause 21 of the Regulations with which we are concerned in this case. Therefore, the first respondent cannot invoke Clause 21 of the Regulations for terminating the services of the petitioner without framing charges and holding an enquiry.
4. The third submission of the learned Counsel for the petitioner is that in the impugned order it is stated that the petitioner committed several acts of misconduct enumerated in the order and considering the gravity of the misconduct it has been decided to discharge him from the service of the first respondent Corporation; when the service of the petitioner is sought to be terminated on the ground of misconduct the first respondent can do so only by framing the necessary charges against the petitioner and by conducting an enquiry as contemplated in Clause 76 of the Regulations and the impugned order passed by the first respondent without framing charges against the petitioner and conducting any enquiry whatsoever is invalid and liable to be set aside particularly when the impugned order involves civil consequences. There is substance in this contention of the learned Counsel for the petitioner also. Clause 72 of the Regulations provides that an employee, who is guilty of any act of misconduct, shall be liable for imposition of the major penalty of dismissal from service. According to Clause 73 of the Regulations, theft/fraud or dishonesty in connection with the Corporation's business or property amounts to misconduct. In the impugned order it is stated that the petitioner committed the following misconducts:
1. Fraud and dishonesty in connection with Corporation's business or property of the Corporation as per Clause 73(ii) of the Staff Regulations, 1979.
2. Misappropriation of the funds of the Corporation.
3. Breach of trust and abuse of powers as Sales Manager for personal gains.
4. Wilful disobedience of reasonable orders of a superior authority as per Clause 73(i) of the Staff Regulations, 1979.
Clause 76 of the Regulations prescribes the procedure for imposition of major penalties like dismissal from service and it contemplates framing of charges against the delinquent employee calling for written statement of defence from the employee and holding of an enquiry into the charges levelled against him. Admittedly the first respondent has not framed the necessary charges against the petitioner. Similarly the first respondent has not called for any written defence from the petitioner and conducted any enquiry in this case as contemplated in Clause 76 of the Regulations before imposing the penalty. The first respondent gives the following reasons for not conducting the enquiry in the present case.
It is also seen that when explanations are called for, he replies making baseless charges on superior officers as for example his letter No. KHDC/ADM/85 dated 17.4.1985 wherein he has made wild allegations against the Marketing Manager. This shows that no useful purpose will be served in instituting any enquiry against him.
The reason given in the impugned order for not conducting an enquiry as contemplated in Clause 76 of the Regulations cannot be accepted as a valid reason. When there is a specific clause in the Regulations viz., Clause 76 prescribing a particular procedure for imposing major under penalties like dismissal from service, the reason given in the impugned order for not following special procedure prescribed in Clause 76 and for invoking Clause 21 read with Clause 8 of the order of appointment for terminating the service of the petitioner is clearly erroneous. Further the first respondent has levelled serious allegations against the petitioner. But, the first respondent has not admittedly framed the necessary charges against the petitioner; called for explanation from the petitioner and conduct any enquiry. Therefore, the impugned order terminating the service of the petitioner without conducting an enquiry as contemplated in Clause 76 of the Regulations is invalid, violative of the principles of natural justice and the same is liable to be set aside. 5. The learned Counsel for the first respondent submitted that inasmuch as the service of the petitioner was terminated in terms of Clause 8 of the appointment order, it is not a penalty within the meaning of Clause 72 of the Regulations and therefore, the impugned order is not invalid on the ground that the procedure prescribed in Clause 76 is not followed. I am not able to accept the above contention of the learned Counsel for the first respondent, because Clause 8 of the appointment order can be invoked only in cases where the termination of service passed against the employee is a termination simpliciter and it cannot be invoked in the petitioner's case where his service is terminated on the ground of misconduct. The above discussion of mine obliges me to interfere with the order challenged in this writ petition. Accordingly, the writ petition is allowed and the impugned order is set aside. No costs.