Jammu & Kashmir High Court
Ashok Kumar Jain vs State Of J&K & Ors on 5 August, 2005
Author: Nisar Ahmad Kakru
Bench: Nisar Ahmad Kakru
HIGH COURT OF JAMMU AND KASHMIR AT SRINAGAR LPA No. 27-J OF 2005 AND LPA No.28-J OF 2005 Ashok Kumar Jain Petitioner State of J&K & Ors Respondent ! Mr. Z.A.Shah, Sr.Advocate for the Appellant. ^ Mr.A.H.Naik, AG assisted by Mr.Jehangir Iqbal Ganai,GA for the Respondents. Coram: Hon'ble Mr.Justice S.N.Jha, Chief Justice Hon'ble Mr.Justice Nisar Ahmad Kakru Dated : 05/08/2005 : JUDGMENT :
1. The dispute in these two letters patent appeals relates to compulsory/premature retirement of the appellant. The appellant was compulsorily retired from the employment of the Jammu and Kashmir Co-operative Supply and Marketing Federation (referred to as 'the Federation') by order dated 12th December, 2003. He challenged the order in SWP no. 329/2004. On 18th May 2004 one Shri Rajinder Singh, Vice Chairman of the Federation purportedly acting as Chairman recalled the order. The Chairman by order dated 22nd May, 2004 kept the said order in abeyance. The appellant challenged that order in SWP no. 904/2004. On 29th May, 2004 the Board of Director of the Federation resolved that the order dated 18th May, 2004 was void ab initio and a nullity in the eye of law which did not confer any right or benefit nor create any obligation in favor or against the appellant or the Federation. The writ petitions having been dismissed by the learned Single Judge by judgment and order dated 12th December, 2004, the appellant has come in letters patent appeals.
2. Fact of the case, briefly, are that the appellant joined the Federation as Field Officer on 22nd October, 1979 and rose upto the post of Deputy General Manager. During his service career he was also posted, more than once, as Regional Manager Srinagar, according to him to set right things in the Regional Office. He later joined the J&K State Road Transport Corporation on deputation as General Manager. While posted in the State Road Transport Corporation he was compulsorily retired by the impugned order. During his tenure in the Federation, on 20th October, 1993, the appellant was placed under suspension pending enquiry into the allegations of misappropriation of funds in the Regional Office, Srinagar. He moved this Court in SWP no. 1316/1993 and by interim order dated 3rd November, 1993, suspension was stayed. He also filed a contempt petition alleging violation of the interim order. The Federation approached the Division Bench in letters patent appeals and by order dated 19th August, 1994 the appeals were disposed of with a liberty to the Federation to pass appropriate order in future. On 23rd November, 1994 the appellant was again placed under suspension pending enquiry and memo of charges was served on him. By interim order dated 2nd December, 1994 in SWP no. 1386/1994, suspension was again stayed. By order dated 19th November, 1996 the petition was admitted and the stay was continued. In the meantime a vigilance case had been instituted against the appellant being case no.9/1995 under sections 120- B, 468, 409, 201 and 467 RPC and section 5(2) of the Prevention of Corruption Act, relating to embezzlement of Rs. 6,09,836.86. By order dated 1st October, 1997 the Special Judge, Anti-Corruption discharged the appellant on the ground of lack of sufficient evidence to connect him with conspiracy with other accused. The order dated 1st October, 1997 was challenged by the State in Criminal Revision no. 17/1997 in this Court which was dismissed on 13th November, 2001. The writ petition, SWP no. 1386/1994 was allowed ex-parte (the Federation did not even care to file counter affidavit or cause appearance) on 3rd July 2000 in view of the aforesaid order of the Special Judge, Anti-Corruption.
3. In the meantime on receipt of complaints relating to large scale bungling and misappropriation of funds in the Federation, the Government of Jammu and Kashmir on 11th March, 1999 appointed Shri K. B. Pillai, an IAS Officer, as a fact finding Commission which came to be known as 'Pillai Commission' to examine the role of the officials and fix responsibility on the persons regarding the bunglings and misappropriation. Vide report dated 31st August, 2000, the Pillai Commission found that the appellant too was instrumental in misappropriation of funds in the Valley, and responsible for non-maintenance of proper records. The Pillai Commission noticed that in the charge sheet served on the appellant it was stated that vital records were reportedly taken away by the appellant from the Regional (Srinagar) office of the Federation and missing; he was involved in shortages of fertilizers and LPG cylinders in various stores; he had retained about two crores rupees as un-remitted sale proceeds of fertilizers and rice; he had shown purchase of saffron worth rupees two crores through M/s Mohi-ud-Din & Co. which had no approval of the competent authority; he had paid rupees forty lakhs to the seller at Ashipora Complex unauthorisedly and without approval of the competent authority and that LPG gas stoves had been directly purchased on commission of Rs. 200 per piece. The Pillai Commission found that the Federation has failed to take any follow up action in the matter.
4. On receipt of the report of the Pillai Commission, the Government sought information from the Federation regarding follow up action against the officials found responsible for misappropriation of funds. The Managing Director informed the Government about the acts of omission and commission and the irregularities committed by the appellant. Though the appellant was an employee of the Federation, on the basis of an order of Commission / Secretary, General Administration Department, dated 22nd February, 2000 he had joined the State Road Transport Corporation as General Manager without obtaining permission from the Federation. He later requested the Managing Director to issue LPC in his favour. The Managing Director informed the Chairman who happens to be Minister Incharge Co-operatives, that the appellant while posted in the Regional Office at Srinagar had created sales tax liability to the tune of Rs. 77.01 lakhs on the sale of saffron and as drawing and disbursing officer released payment to the suppliers of saffron in hot haste without deducting sales tax at source as required under sections 16(c) of the Sales Tax Act, 1962. The Managing Director sought guidance from the Chairman about the issuance of LPC in view of the irregularities committed by him creating liabilities against the Federation. The Chairman directed him to de-link the question of issuance of LPC, and advised him to initiate proceeding against the appellant as per procedure. He also suggested that action should be taken against the appellant for joining the State Road Transport Corporation without being relieved from the Federation.
5. It may be mentioned here that during special audit of the Regional Office, Srinagar, records, such as day book, general ledger, voucher files etc., of the years 1988-89, 1989-90 were found missing. While tracing out the missing record it came to light that the appellant, who was then Dy. General Manager Incharge of Regional Office, Srinagar, had taken away the records but did not return them. He failed to give any clue about the record and avoided queries on the subject on one pretext or the other. Vide letter dated 12th May 2001 the Managing Director informed the Registrar, Cooperative Societies that the managing authority had decided that charges against the appellant be probed by an independent agency to be appointed by the Administrative Department but the Administrative Department instead of probe by any independent agency directed that the matter may be investigated by the Federation at its own level. The Managing Director requested the Registrar, Co- operative Societies to take action in the matter on the basis of facts stated in letter dated 14th December 2000. The Principal Secretary, Agricultural Production Department was also requested to refer the matter to appropriate agency for investigation into the charges. Neither the Government nor the Registrar Co- operative Societies took any action in the matter. The Board on perusal of the appellant's service record, his acts of omission and commission, decided to compulsorily retire him.
The resolution of the Board of Directors reads:
"Whereas Mr. A. K. Jain has joined services of Jammu & Kashmir Cooperative Supply & Marketing Federation Ltd Jammu, on 21.02.1979; and Whereas as per service record date of birth of Mr. Jain is 07.11.1952; and Whereas till date Mr. A. K. Jain has completed 24 years and 10 months of service with J&K Cooperative Supply & Marketing Federation Ltd; and Whereas Shri A. K. Jain has also attained 51 years of age till date; and Whereas while serving with J&K Cooperative Supply and Marketing Federation Ltd as Deputy General Manager Shri Jain was sent on deputation vide Govt. Order No.GAD/Ser/2/99 dated 22.02.2000 to J&K State Road Transport Corporation as General Manager and is serving therein as such till date; and Whereas J&K Cooperative Supply and Marketing Federation Ltd has framed J&K Cooperative Supply and Marketing Federation Ltd Service Rules 1975 (hereinafter referred to as Rules of 1975) only; and Whereas as per clause (b) of Rule 2.12 of the Rules of 1975, J&K Cooperative Supply & Marketing Federation Ltd is empowered to retire its employee on completion of 25 years of service or attaining 50 years of age; and Whereas the Govt. of Jammu & Kashmir vide SRO 233 dated 8th July 1988, has framed Jammu & Kashmir Cooperative Societies Rules dated 8th July, 1988 (hereinafter referred to as rules of 1988); and Whereas the said rules have been made applicable to all the Societies functioning in the State of Jammu & Kashmir including J&K Cooperative Supply and Marketing Federation Ltd. Jammu; and Whereas as per Sub-rule 4 of Rule 13 of the rules of the 1988 J&K Cooperative Supply & Marketing Federation Ltd is empowered to retire any of its employee on the completion of 20 years of service or attaining of 45 years of age; and Whereas as stated above, Shri A. K. Jain has to his credit 24 years and 10 months of service and he has also completed 51 years of age; and Whereas J&K Cooperative Supply & Marketing Federation Ltd Jammu has resolved after considering all the relevant material and service record of Shri A. K. Jain to retire Shri A. K. Jain from its service as being not fit to be retained in service any more by invoking Sub-rule (b) of Rule 2.12 of the rules 1975 read with Sub-rule 4 of Rule 13 of Rules of 1988 referred to supra with effect from afternoon of 12th of December, 2003, in the public interest; and Whereas in such eventualities there is no requirement of serving one month's notice of above action on Mr. A. K. Jain or one month's pay in lieu thereof yet it is resolved that the order of retirement shall be served on Mr. A. K. Jain and he shall be paid one month's pay in lieu of one month's pay in lieu of one month's notice.
Now, therefore, it is resolved by the Board of Directors of J&K Cooperative Supply & Marketing Federation Ltd on this 11th day of December 2003 afternoon that in exercise of the powers conferred by Sub Rule (b) of Rule 2.12 of the Rules of 1975 read with Sub Rule 4 of Rule 13 of Rules of 1988 referred to supra and in the interest of public that Mr. A. K. Jain shall retire from service of J&K Cooperative Supply and Marketing Federation Ltd Jammu with effect from afternoon 12.12.2003. He will be paid pay of one month following the date of his retirement.
It is however further resolved that after the approval of the resolution by Board of Directors Sh. Zahid Hussain, Managing Director JAKFED (Member Secretary of the Board) will issue order accordingly for and on behalf of Board of Directors of Jammu and Kashmir Cooperative Supply & Marketing Federation Ltd Jammu."
6. Pursuant to the above resolution of the Board the following order was issued on 12th December, 2003:
"Whereas Jammu & Kashmir Cooperative Supply and Marketing Federation Ltd is of the opinion that it is in the public interest to do so.
Now, therefore, in exercise of powers conferred by Sub Rule (b) of rule 2.12 of the rules of 1975 of J&K Cooperative Supply & Marketing Federation Ltd read with Sub rule (4) of Rule 13 of rules of 1988 framed vide SRO 233 dated 8th July, 1988 titled Jammu & Kashmir Cooperative Societies Rules, the Jammu and Kashmir Cooperative Supply & Marketing Federation hereby gives notice to Shri A. K. Jain, Dy. General Manager of Jammu & Kashmir Cooperative Supply & Marketing Federation as on date of deputation to Jammu & Kashmir State Road Transport Corporation as General Manager that he having already completed 24 years and 10 months of service and attained 51 years of age shall retire from service with effect from the afternoon of 12th December, 2003. One month's salary in lieu of one month's notice for the month following the date of his retirement is also sanctioned in his favour."
7. Among other grounds the appellant challenged the order of compulsory retirement on the ground of mala fide alleging that the action had been taken at the instance of respondents 6 to 11 (of SWP no.329/2004 they did not figure as respondents in SWP no.904/2004). However, though the thrust of challenge, if we may say, was mala fide, at the stage of hearing counsel for the appellant stated that respondents 6 to 11 are not necessary parties and their names be deleted, and accordingly by order dated 1st June, 2004 the said respondents were deleted from the array of parties. Inasmuch as allegation of mala fide cannot be looked into, muchless any finding recorded, in absence of the persons against whom it is alleged, it is not necessary to consider the question of mala fide as a ground of challenge of the impugned order. The learned Single Judge in view of the deletion of the names of the concerned respondents also did not go into the question, and rightly.
8. The allegation of mala fide having in effect been given up, the order of compulsory retirement is questioned on the ground that the service rules do not provide for premature retirement. The provision to that effect contained in Rule 2.12 of the J&K Co-operative Supply and Marketing Federation Service Rules, 1975 in ultra vies, and the appellant being an employee of the Federation, recourse to SRO 233 dated 8th July 1988 is not permissible. The Federation has its own rules and bye-laws and SRO 233 cannot be applied to its employees. It is said that the Pillai Commission found a number of officials of the Federation involved in misappropriation of funds and other irregularities but action was taken only against the appellant. Reliance is placed on orders of the Court. Finally, the order is assailed as being arbitrary passed without any material or evidence to sustain the same.
9. It was argued before the learned Single Judge that there was absence of material to justify formation of opinion by the Board to compulsorily retire the appellant and, secondly, the rules professedly applied being either ultra vires or not applicable, the order was without legal authority. The learned Single Judge noticed the antecedents of the appellant and findings of the Pillai Commission and held that the track record of the appellant while in service was far from satisfactory. Not only Pillai Commission had indicated him, there had been serious allegations of corruption against him. In view of his doubtful integrity it cannot be contended that there was no material before the Board to compulsorily retire the appellant in public interest. The learned Single Judge observed that the compulsory retirement does not involve civil consequences nor exercise of power involves the principles of natural justice. The learned Judge noticed the sequence of events leading to the original order of compulsory retirement, the recall by the Vice Chairman and affirmation of the former order by the Board of Directors, and observed that the Board alone was competent to prematurely retire him and Shri Rajinder Singh, who happened to be Vice Chairman, had no authority to assume the power of Chairman and issue another order recalling the earlier order which had been issued pursuant to Board's resolution to which he was a party. The order of Shri Rajinder Singh being completely illegal, the Chairman did not commit any illegality in passing the order dated 22nd May, 2004. On the second point the learned Single Judge held that there is no material difference between the 1975 Rules titled J&K Co-operative Supply and Marketing Service Rules or the 1988 Rules i.e. J&K Co-operative Societies Service Rules notified vide SRO 233 dated 8th July, 1988, and the Board had the authority to compulsorily retire the appellant in the public interest by applying either of the two Rules. Accordingly rejecting the contentions of the appellant, the learned Single Judge dismissed the writ petitions.
10. Mr. Z. A. Shah, learned counsel for the appellant, submitted that the appellant is an employee of the J&K Supply and Marketing Federation which is governed by its won bye-laws and rules, and the 1988 Rules applicable to its employees. Rule 2.12 of the 1975 rules empowers the Board to retire an employee from service on completion of 25 years service or on attaining 50 years age but in absence of any guideline for the exercise of power, the provision is ultra vires and the order of compulsory retirement cannot be sustained under that rule. He submitted that if the law itself is invalid, the exercise of power howsoever reasonable cannot be valid. In support of the proposition he placed reliance on Collector of Customs v Sampathu Shetty, AIR 1962 SC 316. According to the counsel reference to both rule 2.12 of 1975 Rules and rule 13(4) of the 1988 Rules in the impugned order does not improve the situation because the rules are mutually exclusive and cannot stand together. Mr. Shah also submitted that even if rule 13(4) was applicable and it is held that order was passed in exercise of power under that rule, the rule requires that the decision should be approved by the Selection Board, and in absence of such approval the order cannot be sustained under that rule. Thus, according to the counsel, viewed from any angle, the impugned order is fit to be struck down as illegal and without jurisdiction.
11. Rule 2.12 of the 1975 Rules and rule 13.4 of the 1988 Rules are as follows:
Retirement:
2.12 (a) Every employee appointed to the service shall retire on attaining the age of 58 years.
(b)Notwithstanding anything contained in clause(a) above, an employee may be required by the Board or permitted at his own request, to retire from service on completion of 25 years of service or attaining 50 years of age.
(c) "
"13. Retirement and Resignation (1) Persons appointed to the service shall retire on attaining the age of 58 years or on the date the Society in which he was initially appointed, cease to function. In the event of the Society being wound up, the services of the employee of that Society may, as far as practicable be utilized in any other society by the Selection Board.
(2) (3) (4) Notwithstanding the provision of sub-rule (2) and (3) the Committee/Authority may retire an employee on completion of 20 years of service or obtaining 45 years of age in the public interest with the approval of Selection Board."
12. The difference in the tow rules, it would appear, is that under the 1975 Rules an employee can be retired on completion of 25 years service or attaining the age of 50 years; under the 1988 Rules an employee can be retired on completion of 20 years of service or attaining the age of 45 years. There is no dispute that on the date the appellant was compulsorily retired he had completed over 24 years of service and had attained the age of 51 years and, therefore, by applying either of the two rules the Board had authority to compulsorily retire him in public interest at any time after his attaining the specified age or completing the specified period of service. According to Mr. Shah the provision of rule 2.12(b) being ultra vires the order cannot be sustained under that rule. He, however, fairly stated that if the 1988 Rules are held to he applicable it would not be necessary to go into the question of vires though the question as to whether the exercise of power under the 1988 Rules was in accordance with the rule or not would still remain to be considered.
13. It may be mentioned that the learned Advocate General appearing for the respondents objected to Mr. Shah challenging the vires of rule 2.12(b) of 1975 Rules on the ground that no such challenge was made before the learned Single Bench and the appellant cannot be allowed to raise a new point for the first time in letters patent appeal. We are of the view that an additional ground ordinarily may not be entertained in letters patent appeal but if in order to decide the case properly, it is necessary to do so, new ground(s) may be entertained in the interest of justice provided adequate materials are on record. However, in view of the fact that notwithstanding that rule 2.12(b) finds mention in the impugned order, if the order can be sustained under the 1988 Rules, it may not be necessary to go into the question of vires and make an academic discussion on the point.
14. To appreciate the true import of rule 13(4) of 1988 Rules it is necessary to refer to certain provisions thereof as under:
"1. Short title and commencement. (i)
(ii) They shall be applicable to all Societies which are at present functioning or which will be created.
2. Definitions.
(a)
(b) 'Cadre' means the sanctioned strength of the posts in different classes, categories or grades in a society.
(c) 'Committee' means the Governing body who manages, under the Jammu and Kashmir Co-operative Societies Rules or the by-laws, the affairs of the Society.
(d) 'Chief Executive' means the Managing Director/General Manager/Manager of the Society.
(m) 'Service' means the Jammu and Kashmir Co-operative Societies Service;
(n) 'Selection Board' means the concerned District Selection Board Constituted under Rule 6.
(o) 'Society' means the Co-operative District Wholesale-store Society/Co-operative Marketing Society /Co-operative Sale and Supply Society Co-operative Multipurpose Societies/Co-operative Service Society registered under the Jammu and Kashmir Co-operative Societies Act, 1960.
3. Constitution of the service. The posts borne on the cadre of all societies together shall constitute the J&K Co-operative Societies Service.
4. Appointment to the Service. (1) Appointment to the service shall be made by:
(a) Direct Recruitment; (b) Transfer; (c) Promotion; (d) Deputation from the Government Departments other
institution/employees out of the persons who possess the minimum qualifications and other conditions for relevant posts as laid down in the schedule;
Provided that initially the employees in the different classes, categories and grades on the cadre of the Societies, to which the provisions of these rules are extended, shall constitute the initial constitution of the service.
(2) (3) As soon as any vacancy occurs in any cadre the Chief Executive shall immediately inform the respective Selection Board and supply the detailed information as, generally or specifically in any case, is required by the Board.
(4)
5. Appointment by transfer and deputation. (1) The appointment in a cadre by transfer from another cadre, on an equivalent post or otherwise, shall be made by the Committee/Authority on the recommendations of the Selection Board, on the terms and conditions mutually agreed upon by the two committees with the written consent of the employee concerned.
Provided
6. District Selection Board. (1) For recruitment to different posts of the service falling within the territorial jurisdiction of every revenue District and fro performing other duties prescribed under these rules, there shall be a Selection Board for each District comprising of the:
i) Deputy Registrar, Co-operatives Societies
(Supervision) of the District Chairman;
ii) District Audit Officer Member.
iii) Chief Executive of the Societies to
which the vacancy to be filled up
pertains. Member.
iv) Representative of the Co-operative
Employees Union. Member
(v) Assistant Registrar (Nominated by
the Registrar. Member-Secretary
(2) In case recruitment is to be made in more that one Society for posts of the same category simultaneously, the Societies on the Selection Board will be represented by rotation in an alphabetical order in respect of each recruitment.
13. Retirement and Resignation: -
(1) (2) (3) (4) Notwithstanding the provision of sub-rule (2) and (3) the Committee / Authority may retire an employee on completion of 20 years of service or obtaining 45 years of age in the public interest with the approval of Selection Board."
15. The submission that the Federation i.e. the J&K Co-operative Supply and Marketing Federation is not covered by the 1988 Rules has to be summarily rejected in view of the definition of 'Society' under rule 2(o) read with rule 1(ii). Under rule 1(ii) the rules are applicable to all societies whether functioning at present or which may be created. Under rule 2(o) 'Society' means, among others, cooperative marking society and cooperative sale and supply society registered under the J&K Co- operative Societies Act, 1960. The J&K Supply and Marketing Federation admittedly is a society registered under the J&K Co-operative Societies Act and, therefore, being a marketing / sale and supply society it comes within the definition of the term 'society' under rule 2(o). As a matter of fact, it is the admitted position that 1988 Rules have been framed as "common cadre rules" and that is how, under rule 3, the posts borne on the cadre, of all societies together constitute the Jammu and Kashmir Co-operative Societies Service. Under rule 2(m), it may be kept in mind, 'service' means the Jammu and Kashmir Co-operative Societies Service.
16. It is relevant to mention here that 1988 Rules have been framed in exercise of rule making power under Section 124(2)(0-1) and (0-2) of the Jammu and Kashmir Co- operative Societies Act, 1960 since repealed by the 1989 Act, but the rules are saved by the 'saving' provision under section 177; besides, section 176(2) (KIV) and (XV) of the 1989 Act contain identical provisions. Under these provisions the State Government is empowered to make rules regarding constitution of a common service or services of officers and other employees of different classes of co-operative societies, and qualifications, remuneration, allowance, recruitment and other conditions of service of such officials and other employees of the co-operative societies. Clauses (0-1) and (0-2) were substituted for original clause (0) by amendment in 1972. The object of the Rules thus being to frame common rules for all registered co-operative societies as a common service, and marketing/sale and supply societies being societies under rule 2(0), it cannot be doubted that the 1988 Rules are applicable to J&K Co-operative Supply and Marketing Federation (JAKFED) and its officers and employees.
17. The moot question for consideration in the context of 1988 Rules is whether the impugned order has been passed in accordance with rule 13(4)? As seen above, under that rule the Committee/Authority has power to retire an employee on completion of 20 years service or on attaining 45 years of age in the public interest. There is no dispute that the appellant had completed 20 years of service and attained 45 years of age. Further, the decision to compulsorily retire him was taken in the public interest. According to Mr. Shah, however, the decision to compulsorily retire an employee must have the approval of the Selection Board as provided in Rule 13(4), and as in the instant case there is no material to show that the Selection Board had approved the impugned decision, it would follow that the decision is not in accordance with rule 13(4).
18. 'Selection Board' as seen above is defined in rule 2(n) to mean "concerned District Selection Board constituted under rule 6". Rule 6 envisages different Selection Boards for each revenue district comprising of Deputy Registrar, Cooperative Society as chairman and four members, as mentioned in the rule. Rule 6 provides for recruitment to different post of the service, meaning thereby the J&K Cooperative Society Service forming the common cadre within the particular revenue district, by the Selection Board of the District. Such recruitment can be made simultaneously for more than one Society within the territory of a particular district. Apparently rule 6 refers to initial recruitment which becomes clear from the provision contained in the rule following i.e. rule 7 which provides for direct recruitment on the basis of advertisement and selection by the Selection Board. Direct recruitment is one of the modes of appointment under rule 4. In fairness to the appellant, it may be stated that appointment by transfer or deputation also can be made on recommendation of the Selection Board which means the same Selection Board referred to in rule 6 as the rules do not provide for different types of Selection Boards, but significantly, though promotion too is a mode of appointment, in appointment by promotion the Selection Board has no such role. In other words, the Selection Board comes into play only when appointment is made by direct recruitment or by transfer or deputation but not promotion. If powers and functions of the Selection Board are limited to direct recruitment or transfer and deputation the question which arises for consideration is where the officer/employee has reached higher echelons of the service, whether the decision to compulsorily retire him should have the approval of the District Selection Board or the authority which had promoted him to the higher post? In our opinion, rule 13(4) embodies the settled position that removal in whatever form (in the instant case, by compulsory retirement) must be by the authority which made the appointment or above. Thus a person appointed to a higher post by a superior authority, say, the Board of Directors, cannot be dismissed or, for that matter, compulsorily retired by the authority which made the initial appointment. It is to be kept in mind that under rule 4(2) appointment is made by the Chief Executive on the recommendation of the respective Selection Board, and under rule 2(d) 'Chief Executive' is defined to mean the "Managing Director/General Manager". If the General Manager himself is to be compulsorily retired under rule 13(4), who will be the competent authority to approve the decision? Certainly not the District Selection Board. Under rule 13(4) the authority competent to retire an employee is 'Committee/Authority'. The term 'Authority' vide rule 2(a) refers to the new committee/administrator appointed on supersession of the existing committee under section 29 of the Co-operative Societies Act 1960, while the term 'committee' is defined under rule 2(c) to mean "the Governing Body who manages, under the J&K Co-operative Societies Rules/Bye-laws, the affairs of the society". The affairs of the Federation admittedly are managed by the Board of Directors and, therefore, where the decision to compulsorily retire an officer/employee is taken by the Board of Directors, it would follow that rule 13(4) stands substantially complied with, and on the ground or non-approval of the 'District Selection Board' constituted under rule 6, the same would not be invalid.
19. At this stage it may be mentioned that from the record, it appears that the Federation was initially registered as a Cooperative Society in the year 1948 with head office at R.S.Pura, Jammu. In 1968 it became the apex body with headquarters at Jammu. The membership of the Federation comprises of cooperative societies as well as individuals, the State Government, merchants, traders and commission agents, as nominated members without any right to vote. The objects for which the Federation was constituted are sale, supply and marketing of agricultural produce. Under the bye-laws the management and affairs of the Federation vests in the Board of 18 Directors comprising of one nominee of the Government; four representatives each of the marketing societies from Kashmir and Jammu Divisions; four representatives from marketing societies, four individual cultivators and one from financial agency. The elected members of the Board functioned upto 29th December, 1969. Thereafter, the nominated Board constituted by the Government came into existence and since 1969 the affairs of the Federation were managed by the nominated Board constituted from time to time until recently when an elected body came to be constituted to manage the affairs of the Federation. The Board of Directors being the apex body of the Federation, we find no substance in the submission of Mr. Shah the in absence of the so called approval of the District Selection Board the decision to compulsorily retire the appellant is not in accordance with law. The submission is, accordingly, rejected.
20. Having rejected the contention that the order of compulsory retirement is without the authority of law, we may now briefly notice the factual matrix of the case to find out the materials available with the respondents to warrant compulsory retirement of the appellant. We have already notice some of his alleged acts of omission and commission earlier. We have also referred to the report of Pillai Commission. Giving reference to the report the respondents stated in the counter affidavit as under:
i) As per the cash book, salary for the month of February 1991 has been shown drawn twice, but disbursed only once as is evidenced by the pay aquittance roll for the period. Inaction on the part of Shri Jain resulted into illegal retention or Rs. 1,19,616.24 by the cashier with the former's connivance who besides being the drawing and disbursing, officer for the JAKFED Regional Officer, Srinagar, was also its Incharge.
ii) Shri A. K. Jain has drawn an amount of Rs. 3.00 lac from the State Co-operative Bank, Srinagar, vide cheque No. 096508 dated 16.10.1991 and reflected only Rs. 30,000.00 in the books of accounts as also on the counter foil of the cheque, resulting into misappropriation of Rs. 2,70,000.00.
iii) Shri Jain male a payment of Rs. 6.16 lac as per below noted detail, for the purchase of butter but neither the butter nor the sale proceeds were received in the JAKFED:
S.No. Draft No. Dated Amount
1. 256026 10.6.1991 Rs. 1,00,000.00
2. 256022 24.5.1991 Rs. 2,16,000.00
3. 0411551 29.5.1991 Rs. 3,00,000.00
Total: Rs. 6,16,000.00
iv) Shri Jain made a payment of Rs. 65,400.00 to one M/s New Bonanza
Trading Corporation vide cheque No. 052013 dated 25.5.1991 for purchase of walnuts but neither the sale proceeds nor the walnuts were received in the JAKFED.
v) There appears to be a willful involvement of the officials of the Regional Office, in embezzling the recognized trucks, since some of the trucks were shown engaged twice in a day for a destination as far as 150 km in Kupwara District from the dispatching stores.
vi) It is given to understand that there are trucks, which have been dispatched from Regional Office Srinagar to stores in the Valley but the concerned store-keepers refused to acknowledge the same.
vii) An amount of Rs. 14.01 lac as imprest shown advanced to the Field Officers/Managers during the year 1990-91 was not shown acknowledged.
viii) Under receipt No. 4029 dated 12.3.1991 Rs. 23,400 shown received from Marketing Society, Pulwama, was not shown accounted for in the cash book leading to misappropriation.
ix) There has been detected a shortage of 509 filled cylinders and 956 empty cylinders totaling 1445 cylinders at Regional Office, Srinagar. This figure further increases when the reports furnished by various authorities on the handling of LPG by Srinagar office are scrutinized.
x) The entry pertaining to he debiting of an amount of Rs. 12,000 to Shri Faiz Khalid, Manager, on 8.3.1991 appears doubtful due to his non- appearance.
xi) Closing cash balance on 29.6.1991 for Rs. 2,51,000 required to be carried over as opening balance as on 1.7.1991 was not shown handed over by Shri Jain to his successor.
xii) Suspected embezzlement of Rs. 4,80,250 was detected during the course of verification of posting of counter foils/cash receipt in the cash book in respect of one cash receipt book bearing No. 4001- 4100.
Receipt No. Date. Amount
4015 27.12.1990 12,200.00
4019 29.01.1991 12,000.00
4029 12.03.1991 23,400.00
4032 12.03.1991 20,800.00
4033 13.03.1991 24,800.00
4034 16.03.1991 17,000.00
4057 22.04.1991 10,000.00
4058 23.04.1991 50,000.00
4059 23.04.1991 43,000.00
4060 24.04.1991 65,000.00
4061 26.04.1991 75,000.00
4062 27.04.1991 18,000.00
4063 29.04.1991 10,000.00
4064 29.04.1991 09,550.00
4065 29.04.1991 20,000.00
4066 30.04.1991 70,000.00
xiii) It has been further revealed that from the cash receipt book bearing S. No. 8301 to 8400 used for issuing receipt to various agencies/individuals, some of the cash receipts were either not entered in full or not posted at all and the amount realized thereon embezzled. The case receipt numbers are 8309, 8310, 8311, 8317, 8318, 8319, 8320, 8321, 8322, 8323, 8325, 8326, 8327, 8328 and 8329.
xiv) There were shown to have been raised fictitious debts by showing 1.38 truck loads of fertilizers as dispatched to stores which as alleged were not actually received at the destinations. The storekeepers concerned confirmed non-receipt of 138 such consignments.
xv) A doubtful payment of Rs. 2,07,320.00 was however charged off in the cash book as freight paid to the transporters. Similar doubtful/fictitious entries of freight payment amounting to Rs. 31,76,321.45 were shown charged off in the cash from 15.03.1990 to 26.06.1991 as there are no supporting vouchers for the same.
xvi) There is a loss of vital record including cash book from 01.07.1991 to 08.12.1991."
21. We may make a few observations regarding compulsory retirement at this stage. Compulsory retirement simpliciter is a well accepted measure of weeding out the inefficient, the corrupt and the dishonest from employment. Rule 56(j) of the Fundamental Rules contains provision to that effect. Likewise, different service rules governing the conditions of service of government servants, employees of boards, corporations etc. also provide for premature retirement on completion of certain period of service and/or attaining certain age. Compulsory retirement does not attract the enquiry provision or the rules of natural justice. It is not a penalty. It is a condition of service and the person does not lose the benefits which he has already earned. It is true that if he had remained in service for a few years more he would have earned salary and allowances, and also proportionate pension, but if it is a condition of service, the employer may require him to retire on completing certain period of service or attaining certain age in the public interest and he cannot make a grievance that he has been deprived of additional salary etc. which he would have otherwise earned. See State of U. P. v Shyam Lal Sharma, (1971) 2 SCC 514.
In Union of India v. Col. J. N. Sinha, (1970) 2 SCC 458, it was observed:
"One of the conditions of the 1st respondent's service is that the Government can choose to retire him any time after he completes fifty years if it thinks that it is in public interest to do so. Because of his compulsory retirement he does not lose any of the rights acquired by him before consequences. The aforementioned Rule 56 (j) is not intended for taking any penal action against the Government servants. That rule merely embodies one of the facts of the pleasure doctrine embodied in Article 310 of the Constitution. Various considerations may weigh with the appropriate authority while exercising the power conferred under the rule. In some cases, the Government may feel that a particular post may be more usefully held in public interest by an officer more competent than the one who is holding. It may be that the officer who is holding the post is not inefficient but the appropriate authority may prefer to have a more efficient officer. It may further be that in certain key posts public interest may require that a person of undoubted ability and integrity should be there. There is no denying the fact that in all organizations and more so in Government organizations, there is good deal of dead wood. It is in public interest to chop off the same. Fundamental Rule 56(j) holds the balance between the rights of the individual Government servant and the interests of the public. While a minimum service is guaranteed to the Government servant, the Government is given power to energise its machinery and make it more efficient by compulsorily retiring those who in its opinion should not be there in public interest.
It is true that a compulsory retirement is bound to have some adverse effect on the Government servant who is compulsorily retired but then as the rule provides that such retirements can be made only after the officer attains the prescribed age. Further, a compulsorily retired Government servant does not lose any of the benefits earned by him till the date of his retirement. Three months' notice is provided so as to enable him to find out other suitable employment."
In Brij Mohan Singh Chopra v State of Punjab, (1987) 2 SCC 188, while emphasizing that the power of compulsory retirement as to be exercised in public interest only, the Supreme Court observed.
"The public interest in relation to public administration envisages retention of honest and efficient employees in service and dispensing with the services of those who are inefficient, deadwood or corrupt and dishonest. Therefore, the rule contemplates premature retirement of the inefficient, corrupt or deadwood which would subserve the public interest."
Dealing with the question whether compulsory retirement having nexus with acts of omission and commission i.e. misconduct of the person, he is entitled to opportunity of hearing the Supreme Court in Union of India v. R.S. Dhaba, (1969) 3 SCC 603, stated"
"Further, even though misconduct, negligence, inefficiency or other disqualification may be the motive or the inducing factor which influences the Government to take action under the express or implied terms of the contract of employment or under the statutory rule, nevertheless, if a right exists, under contract or the rules, to terminate the service the motive operating on the mind of the Government is wholly irrelevant. The test for attracting Article 311 (2) of the Constitution in such a case is whether the misconduct or negligence is a mere motive for the order of reversion or termination of service or whether it is the very foundation of the order of termination of service of the temporary employee"
In Union of India v M. E. Reddy, (1980) 2 SCC 15, the Supreme Court added a caveat as under:
"It will indeed be difficult if not impossible to prove by positive evidence that particular officer is dishonest but those who have had the opportunity to watch the performance of the said officer from close quarters are in a position to know the nature and character not only of his performance but also of the reputation that he enjoys"
In Baikuntha Nath Das v Chief District Medical Officer, (1992) 2 SCC 299, after survey of the case law on the subject, the Supreme Court laid down the following principles:
"The following principles emerge from the above discussion:
i) An order of compulsory retirement is not a punishment. It implies no stigma nor any suggestion of misbehaviour.
ii) The order has to be passed by the government on forming the opinion that it is in the public interest to retire a government servant compulsorily. The order is passed on the subjective satisfaction of the government.
iii) Principles of natural justice have no place in the context of an order of compulsory retirement. This does not mean that judicial scrutiny is excluded altogether. While the High Court or this Court would not examine the matter as an appellate court, they may interfere if they are satisfied that the order is passed (a) mala fide or (b) that it is based on no evidence or (c) that it is arbitrary in the sense that no reasonable person would form the requisite opinion on the given material; in short, if it is found to be a perverse order.
iv) The government (or the Review Committee, as the case may be) shall have to consider the entire record of service before taking a decision in the matter of course attaching more importance to record of any performance during the later years. The record to be so considered would naturally include the entries in the confidential records / character rolls, both favourable and adverse. If a government servant is promoted to a higher post notwithstanding the adverse remarks, such remarks lose their sting, more so, if the promotion is based upon merit (selection) and not upon seniority.
v) An order to compulsory retirement is not liable to be quashed by a Court merely on the showing that while passing it uncommunicated adverse remarks were also taken into consideration. That circumstance by itself cannot be a basis for interference."
22. From the above decision it would appear, among other things, that compulsory retirement can be challenged only on grounds of mala fide or lack of evidence or being arbitrary-in the sense that no reasonable person would form the opinion to compulsorily retire the employee on the given materials. The instant case has to be examined on the touchstone of the law laid down by the apex court in the above decision.
23. As far as the ground of mala fide which was the sheet-anchor of his case is concerned, it was given up by the appellant even before the writ petitions were taken up for hearing. The question is whether it is a case of 'no evidence' or an arbitrary decision? Having noticed the facts constituting the alleged acts of omission and commission of the appellant, it can be said that there was plenty of materials available to the respondents on the basis of which decision could be taken to compulsorily retire the appellant; and the decision therefore cannot be said to be arbitrary. It is to be kept in mind that compulsory retirement is the result of subjective satisfaction of the employer and he is the best judge of the conduct of his employees, and this Court cannot sit in appeal. The report of Pillai Commission provided materials to the respondents and the respondents further took into consideration the entire service record of the appellant before taking the impugned decision to compulsorily retire him.
24. In Jugal Chandra Saikia v State of Assam, (2003) 4 SCC 59, the order of compulsory retirement was passed in the light of the recommendation of the Screening Committee based on the report of fact finding committee. The Supreme Court held that as the entire service record of the appellant also had been taken into account, the order did not suffer from any illegality.
25. Mr. Shah placed reliance on State of U. P. v Shyam Lal Sharma, (1971) 2 SCC 514, Mohender Singh Gill v Chief Election Commissioner, (1978) 1 SCC 405 para 66, and Senior Superintendent of Post Offices v Izhar Hussain, (1989) 4 SCC 318. In Shyam Lal Sharma the Supreme Court laid down propositions of law regarding compulsory retirement and there is nothing in the decision which could help the appellant. In Mohinder Singh Gill in the passage relied upon, the Supreme Court explained the meaning of 'civil consequences'. In Izhar Hussain, the rule was held to be ultra vires in absence of any guidelines or safeguard for exercise of power and it was held that a statutory rule which is constitutionally invalid cannot be validated with the support of exclusive instructions.
26. We are satisfied that the appellant's alleged acts of omission and commission did not form the foundation of the order, but provided motive to weed him out in the public interest. His conduct was under cloud for several years. In 1994 charge sheet was served and he was twice placed under suspension. Then there was the report of the Pillai Commission indicting the appellant for his acts of omission and commission. Taking an over-all view of the matter the respondents decided to retire the appellant in the public interest and no interference is called for in writ jurisdiction.
27. As regards the second writ petition, SWP no.904/2004, the appellant had moved this Court for quashing the order of the Chairman dated 2nd May, 2004 by which the so called decision of Shri Rajinder Singh, Vice Chairman, purporting to recall the decision of the Board of Directors, was kept in abeyance. The Board of Directors met soon after on 29th May, 2004 and passed the resolution declaring the orders of Shri Rajinder Singh, among other things, void ab initio. The order of compulsory retirement dated 12th December 2003 was pursuant to the decision of the Board of Directors and the Vice Chairman purporting to act as Chairman had no authority to recall the order-even as Chairman. The resolution dated 29th May, 2004 merely re- affirmed the earlier decision regarding appellant's compulsory retirement. Neither order of the Chairman dated 22nd 2004 nor the Board's resolution dated 29th May, 2004 can be said to be erroneous.
28. In the above premises, the impugned judgment of the learned Single Judge dismissing the writ petitions does not suffer from any infirmity to warrant any interference. The letters patent appeals are, accordingly, dismissed, but without any order as to costs.