Delhi High Court
R.L. Kapoor vs The Minerals And Metals Trading ... on 18 November, 1991
Equivalent citations: ILR1992DELHI707
Author: D.P. Wadhwa
Bench: D.P. Wadhwa, D.K. Jain
JUDGMENT D.P. Wadhwa, J.
(1) This is a petition under Article 226 of the Constitution. The petitioner, who at the relevant time was working as Deputy General Manager of the first respondent (the M.M.T.C.). seeks issue of a writ, order or direction quashing the order of dismissal dated 27 June, 1991 passed by the first respondent against him and then also seeks all consequential benefits. There is a further prayer that rule 30(ii) of the Minerals and Metals Trading Corporation of India Limited Employees Conduct, Discipline and Appeal Rules, 1975, be declared as ultra vires the Constitution. Under this rule disciplinary authority may impose any of the penalties specified in the Rules where the Board of Directors of the first respondent is satisfied for reasons to be recorded in writing that it is not reasonably practicable to hold an inquiry in the manner provided in the Rules.
(2) There are three respondents. First respondent (the M.M.T.C.) is the Minerals and Metala Trading Corporation of India Limited, a Government company and a State within the meaning of Article 12 of the Constitution: second respondent is the Board of Directors of the first respondent: and the third respondent is the Chief General Manager (F & A) of the first respondent under whose signatures the impugned order of dismissal was issued.
(3) After this petition was filed, notice was issued to the respondent to show clause as to why rule (nisi) be not issued. The respondents filed their answer to show cause notice and to that rejoinder was filed by the petitioner. After hearing the parties Rule D. B. was issued. A further counter-affidavit was filed by the respondents and again a rejoinder thereto. Since the impugned order of dismissal had been passed on 27 June, 1991 and the petitioner was retiring on 31 October, 1991, we expedited hearing of the petition. After conclusion of the arguments on 28 October. 1991 we passed an order allowing the writ petition on the following day. This order we reproduce as under :-
"THE petitioner who was working as Deputy General Manager in the Minerals and Metals Trading Corporation of India Ltd., the respondent a Government Company, was dismissed from service by order dated 27 June. 1991 without holding regular disciplinary proceedings. He was dismissed from service under Rule 30(ii). This rule is as under:-
"RULE30. Special Procedure in certain cases. Notwithstanding anything contained in Rule 25 or 26 or 27, the Disciplinary Authority may impose any of the penalties specified in Rule 23 in any of the following circumstances :-
(I)* * * * * * * (II)whe're the Board is satisfied for reasons to be recorded by it in writing that it is not reasonably practicable to hold an enquiry in the manner provided in these Rules; or (III)* * * * * * * THE learned counsel for the parties concluded their arguments yesterday and we expressee. our opinion that we were inclined to allow the writ petition. We also told that since the arguments were quite lung drawn and the record being voluminous it was not possible for us to record full reasons and to give a complete judgment on or before 31 October, 1991, the date the petitioner is retiring from service. Mr. Desai in the course of arguments had slated that in case this Court was of the opinion that the petition be allowed, then reinstatement of the petitioner, in the circumstances of the case. may not he ordered. We are unable to agree with this suggestion. Mr. Subramaniurn, learned counsel for the petitioner, stated that petitioner will join his post on the order of dismissal being set aside but would immediately proceed on leave. We did express our opinion that. we would like the petitioner to join his post before the date of his superannuation so that he has some satisfaction that he was able to get justice before that date. The matter was adjourned to this date to see as to how the petitioner would join the respondent formally and then proceed on leave. However, we need not to say anything more on the subject as there appears to be no agreement on this. We are quite conscious of the fact that in normal circumstances reasons for our judgment should have been given now but the circumstance which make us to depart from this course have been indicated above. We have indicated to the parties that we are setting aside the impugned order principally on the ground that the order suffers from vice of arbitrariness and we will not be commenting on the merit of the case as such. In thi's view of the matter our order will not come ia the way of the respondents taking any other proceedings as per law.
Accordingly, writ petition is allowed. The order the DRO/1(119)/89-P dated 27 June, 1991 dismissing petitioner from service 's quashed. The consequence will be the petitioner will be entitled to all consequential benefits uptil today The petitioner will be entitled to costs. Counsel fee Rs. 2,500.00 .
ORAL request of Mr, Desai, learned counsel for the respondent to stay operation of this order is declined."
(4) Now we proceed to give our reasons.
(5) The petitioner jointed the service of the M.M.T.C. in 1960 as Junior Research Officer. In fact he joined the service in the State Trading Corporation of India Limited which was subsequently bifurcated and an independent and autonomous company, namely. the M.M.T.C. was created and the petitioner transferred to the M.M,.T.C. The petitioner earned his due promotions and was posted at various places. He was finally promoted as Divisional. Manager (later designated as deputy General Manager and was in charge of the Business Development Division of the M.M.T.C. to deal with non-channelised items. It is alleged that the petitioner entered into a deal on behalf of the first respondent with an American firm M/s. J.M.i'. Marketing inc.. Houston. Texas. U.SA.. for sale of crude oil to that firm. The negotiations fell through and the american firm filed a suit for damages in a court in Texas. U.S.A., alleging breach of contract which ultimately led to judgment against the M.M.T.C., it suffering a decree for damages for one million Us dollars. The M.M.T.C has contended that this deal was unauthorisedly entered into by the petitioner and was in fact a.gainst the delegation of powers as promulgated by the M.M.T.C. The petitioner all through contended that he had brought, the negotiations to the notice of the higher authorizes and no concluded contract had taken place. This in fact was also the stand of the M.M.T.C. before the Texas court. The negotiations for sale of crude oil took place in January 1985 and the disputes started immediately thereafter and the judgment of the Texas court delivered on 24 May, 1991. It was stated before us that against that judgment the American firm has filed an appeal and to that the M.M.T.C. has filed cross-objections. On 24 June, 1991, the M.M.T.C. took decision to take action against the petitioner and on 27 June, 1991 the order of dismissal was passed against him.
(6) A look at the Rules and some more facts at this stage will be appropriate.
(7) Rule 4 is general and sub-rule (1) prescribes that every employee of the M.M.T.C. shall at all times maintain absolute integrity and devotion to duty. Rule 5 sets out various instances of misconduct and notes that these instances are merely illustrative in nature and not exhaustive. During the course of hearing we were told that misconduct alleged against the petitioner in the present case would fail under the acts of omission and commission listed at terms (1) and (5) which are as follows :-
"(1)Theft, fraud or dishonestly in connection with the business or property of the Corporation or of property of another person within the premises of the Corporation.
** ** * * (5)Acting in a manner prejudicial to the interests of the Corporation.
**** ** (8) We may note that it has also been specified in Rule 5 that listing of 30 acts of omission and commission though treated as misconduct were without prejudice to the generality of the term "misconduct". Rule 23 specifies penalties both minor and major which may be imposed' on an employee for misconduct committed by him. One of the major penalties is dismissal. Rule 24 specifies the Disciplinary Authority who may impose any of the penalties stated in Rule 23. Then Rule 25 prescribes the procedure For imposing major penalties. The procedure is quite detailed one. There are as many as 19 sub-rules under Rule 25. Rule 26 prescribes as to how action is to be taken on the Inquiry Report particularly where the Disciplinary Authority is not itself the Inquiring Authority. In the end. Rule 30 prescribes the special procedure in certain cases the relevant' portion of which has been set out in the operative part of the judgment above.
(9) The impugned order which is dated.: 27 June, 1991 is not three parts describing (1) the reasons of dismissal of the petitioner from the service; (2) reasons for not holding inquiry before dismissal; and (3) consequences of dismissal. We think we should set out the order in full:-
"THE Board of Directors of Mmtc of India Limited, New Delhi, order the dismissal of Shri R. L. Kapoor, Deputy General Manager, Mmtc under Rule- 23(g.) read with Rule 30(ii) of the Mmtc Employees Conduct, Discipline and Appeal Rules, 1975, with effect from June 27. 1991 for the following reasons :
Reasons for dismissal:
1.Shri R. L. Kapoor, Deputy General Manager entered into negotiations with an American party for sales of crude oil through then Indian representative M/s. Menon Associates. These negotiations were carried on without consulting Finance Division as required under the Corporation's rules and without obtaining orders of the competent authority for entering into any business transactions. He thus acted without authority and his actions involved Mmtc into prolonged litigation in Usa on the ground that Shri Kapoor through his actions had committed the Corporation to a certain business deal. This not only caused considerable embarrassment to the Corporation as well as Government of India but also has put the Corporation to considerable avoidable expenditure in foreign exchange.
2.He thereby committed grave misconduct by contravening Rule 4 in failing to maintain absolute integrity and devotion to duty and acting without proper orders and jeopardising the interests of the Corporation He also committed misconduct within the meaning of Rule 5 of the Mmtc Employees Conduct, Discipline and Appeal Rules, 1975. inasmuch as these negotiations and the exchange of correspondence with the American Party exposed Mmtc to a risky and disadvantageous deal. His action amounted to dishonest' in connection with the business of' the property of the Corporation and acting in a manner prejudicial to the interests of the Corporation.
3.His action also amounted to committing the offence of criminal breach of trust by an employee punishable under section 408 of the Indian Penal Code and also the offence of cheating by a servant punishable under section 418 of the Indian Penal Code.
Reasons for not holding enquiry before dismissal: SLIRI Kapoor is to retire on superannuation from 31-10-1991. Order of dismissal, if any, has to be passed before that dale. If an enquiry were to be held under Rule 25 and action to be taken under Rules 26 and 27 of Mmtc Employees Conduct, Discipline and Appeal Rules, 1975, long time will be required to comply with the various stages or me enquiry such as serving the charge sheet, list of documents and list of witnesses, filing of written statement of defense by Shri Kapoor, examination of his written statement and appointment of an enquiry officer, proceeding before the enquiry officer including inter alia inspection of documents and submission of list of additional document's required, actual hearing by the enquiry officer including examination of witnesses both on behalf of the Corporation as well as on behalf of Shri Kapoor, submission of the report by the enquiry officer, consideration of the report of the enquiry officer by the disciplinary authority and issue of show cause notice in regard to the proposed penalty to be imposed, time for replying to show cause notice, preparation of the final orders to be communicated to him, 60 days time available to him for filing the appeal and another 60 days for review of the order. The minimum time required in the enquiry would go well beyond 31-10-1991 after which date order of dismissal could not be passed. The Board was thus convinced that it was "not reasonably practicable" within the meaning of Rule 30(ii) of Mmtc Employees Conduct, Discipline and Appeal Rules. 1975, to hold the enquiry in the manner prescribed in the Rules.
Consequences of dismissal:
(I)Under Rule 19 of Mmtc Group Gratuity cum Lite Assurance Scheme Rules, 1975, gratuity is to be granted for good, efficient and faithful service of the employees. Since his services have been terminated for his willful omission and negligence causing damage and loss to the Corporation, his gratuity shall be forfeited in full as the extent of damage or loss caused by him is more than the amount of gratuity to be given to him.
(II)Under Rule 26 of :he Mmtc Contributory Provident Fund Regulations on account of his willful conduct. Corporation's contribution in the last two completed periods of the currency of the contribution and that of the period of current contribution is liable to be forfeited.
(III)Under para 18.4 of Employees Contributory Super annotation-cum-Family Annuity Scheme, Shri Kapoor will not be entitled to receive any benefit .under the scheme. He shall, however, be entitled to get refund of his contribution towards pension fund without interest.
THE above order is hereby communicated to Shri R. L. Kapoor."
(10) Let us now see the background which led to issue of the impugned order.
(11) The Mmtc in 1984 set up Business Development Division to deal with non-channelised items. The petitioner was posted as the Divisional Manager of that divsion. In late 1984 Mmtc was negotiating with the Libyan Government in relation to crude oil. There is a note dated 7 January, 1985 of Mr. R. Ganapathy, Director (Minerals), to the Chairman, MMTC. In this Ganapathy wants Chairman to recall a meeting with Dr. R. Paramahamsa on 28 November. 1984 when Paramaharnsa. spoke about a deal involving Us dollars 1000 million worth of Libyan crude. At that time the buyers were indicated as Mitsubishi and a French company. The note mentions that at that time the Chairman had desired that a letter of authorisation be obtained by Dr. Paramaharnsa and Ram Mohan Rai respectively from Mitsubishi and the French company that these two persons would be the authorised agents to negotiate with the MMTC. Ganapathy notes "while these representatives have met me since then, they have not given any letter of authority to Dr. Paramaharnsa ur to Mr. Rai so far." Ganapathy further records that in the meanwhile Divisional Manager R. L. Kapoor (the petitioner) and Dr. Paramaharnsa had also been discussing with some other parties and their responses had been summarised in a general way in a note given by the petitioner. Ganapathy did not agree with the petitioner that a delegation be sent to Libya to find out the sale price. He said the visit to Libya in the circumstances mentioned by him in the note was likely to prove an infractions exercise. To this note the Chairman agreed and recorded that the petitioner be asked to get firm letter of commitment from both sides. It would, thus, appear that the Mmtc was arranging two parties meet namely, the seller and the buyer of crude oil and in that process was trying to earn commission. When this note goes back to Ganapathy he marks the same to the petitioner staling "we must discuss". Then there is a noting dated 25 January, 1985 of the petitioner addressed to Ganapathy, the Director (Minerals), who in turn had marked the same to CFM(J). This note by the petitioner mentions contract for sale/ purchase of 25 million barrels of Saudi light crude oil and reference to negotiations with the buyers and the sellers stating that "we have received' firm offers for purchase of 5 Million Barrels of Saudi Light Crude Oil from M/s. Menon Associates and 20 Million Barrels from M/s. Venus International, their Principals in USA." In this note the petitioner mentions the names of the sellers and the terms oh which the crude would be sold to the buyers. He also mentions that M/s. Menon Associates were acting for M/s. Jmt Marketing Inc. Houston. Then the petitioner records as under :-
"THE buyers of M/s. Menon Associates, i.e., Mis. Imt Marketing Inc. Houston, have agreed to open L/C and also furnish Pg Bond of 50 Cents per Barrel as requested by our sellers M/s. Pan Sam Resources International and they are awaiting the signing of the contract immediately. Director (Minerals) may kindly approve of this deal so that our Finance Division may examine the contract in detail before signing the contract for early implementation. Since the contract is to be implemented during 1st February to 15th February, the early finalisation of the contract is necessary.
IT would be in the fitness of things to bring to the notice of Director that the above two deals are in the nature of trial orderss. Once these are satisfactorily implemented there would be a scope of finalising deal for larger quantities of about 300 Million Barrels to lOC and others which offers are under negotiation.
SUBMITTED for approval."
(12) Earlier to this a telex message dated 23 January 1985 was received by the; Mmtc (A tention Mr. R. L. Kapoor) from Jmt Marketing Inc. Houston giving offer to purchase crude oil from the Mmtc on terms and conditions set out in tns telex. To this a reply telex was sent by the petitioner on the following day. This telex message is as under:-
"JMTMARKETING INC. From , L. Kapoor, D.M., M.M.T.C., New DELHI.
Please refer To Your Telex NO. 3072 Dated 23-1-1985 Received Through Your Local Representative M/S. Menon Associates Re Supply Of I To 5 Million Barrels Of Saudi Light Crude At Ii Per Cent Discount On Opec Price (.) In Case THE: Requirement Is Very Urgent We Can Supply The Entire Quantity Of 5 Million Barrels From Our Sellers Ready Stock At Houston Which Price Will Be 8 Per Cent Less Opec Prices Fob Houston (.) Otherwise We Confirm Our Prices Will Be At Ii Per Cent Minus Opec Price And Delivery From Rastonora On Fob Basts (.) Our SELLER? Are M]S. Pan Sam Resources International CORPORATION. Suite C 22810 Alessandro Boulevard Edgemount, California 92500 (USA) C.) Payment TERMS: You Should Advise Through Your Bankers To Mmtc Bankers State Bank Of India, Parliament Street, New DELHT. CON-" Firming Performance Guarate, BOND/EARNEST Money To Establish L.C. As Soon As The Sellers Furnish A Performance Guarantee Bond At The Rate Of 50 Cents Per Barrel (.) Other Terms And Conditions Are Acceptable (.) Kindly Confirm By Tomorrow Morning To Mr. Menon Since Our Telex Is Not Working (i)"
(13) By another telex message Jmt Marketing Inc. Houston acknowledged the acceptance of their offer to purchase 5 million barrels of Saudi light crude oil by the MMTC. The telex mentions some further details. The petitioner sends another telex message to Jmt Marketing Inc. Houston on 27 January 1985. This telex message reads as under :-
"WEREFER To The Following :- Yrtlx NO. 3072 Dt 23-1-85 Confirm Offer Of Contract To Purchase Our Tlx Dt 24-1-85 Passed To U Through Yr Agents MEMON-ACCEPTANCE Or Yr Firm Offer To Purchase Stop We Are Passed To Inform That We Agree To Sell You 5 Million Barrels Saudi Light Crude During The Months Febimarch As Desired By You Stop As We Are Working Out The Detailed Modus Operandi In Consultation With Our Sellers, And Our Director And Chairman Are Away From Hqrs For A Few Days We Will Confirm In DETAIL. The Exact Date Of Opening L/C/IFURNISH- Ing Pg Bond AND-INVITE You For Signing The Contract To India STOP. However We Will Keep You Informed Of The Development From Time To Time Stop REGARDS."
(14) On Is February 1985 Mr. Bob Russell, Chairman of Jmt Marketing Inc. Houston, arrived in India to meet the officers of the MMTC. It is slated by the Mmtc that it was at that time that it came to know about, the negotiations which the petitioner had on behalf of the Mmtc with Jmt Marketing Inc. Houston.
(15) Earlier to this also we find there is a telex dated 7 February. 1985 from the petitioner to Mr. Bob Russell. In this the petitioner mentioned that he was surprised as to how Russell presumed that contract had been concluded when he was still to come to India to sign the contract after sorting out all issues. The petitioner Further wrote that it was an early stage and he was negotiating for finalising the contract till the sellers were satisfied about the points mentioned in the telex. Since this telex was also sent on behalf of the Mmtc by the petitioner he has used the word "we" instead of "I". He also mentioned in this telex to Bob Russell : "please wait for confirmation of sellers and return of cur Director and Chairman by middle of this month so that any contract can be finalised on basis of abv. Hope position now clear to you." Again there is a telex message dated 18 February, 1985 by the petitioner to Bob Russell who at that time was staying at Taj Mahal Hotel, New Delhi. In this the petitioner refuted the stand of Jmt Marketing Inc. that any contract had been concluded. All these telex messages have been placed on record by the petitioner though at the instance of the Mmtc at the time of hearing of the petition. It is not disputed that these telex messages are in fact from the records of the MMTC.
(16) On 18 July, 1985 a notice was received by the Mmtc from the Attorneys of Jmt Marketing Inc. demanding 2.5 million Us dollars as damages for breach of the contract To this a reply was sent through the Advocates of Mmtc in August 1985 refuting the allegations of Jmt Marketing Inc. that any agreement had been finalised. Relevant portions of the reply may be extracted and are as under :-
"1.We have been instructed to state that our clients are quite surprised to receive your communication particularly after the meetings and discussions that Mr. Robert H. Russell. Chairman and Ceo of Jmt had with our clients Chairman and other officials during his visit to India when the whole matter was discussed and Mr. Russell understood and appreciated MMTCs point of view and expressed satisfaction and left an impression that the matter was being treated as closed.
2.We have been instructed to state that our clients disagree with the statement of facts and law contained in your communication and re-assert--what had previously been explained to Mr. Russell of Jmt during his visit-that no contract was finalised or came into existence concerning the supply of the
3.We may point out that from a perusal of the correspondence telex messages exchanged by Jmt with Mr Kapoor it would be manifest that many material and essential terms, details and particulars concerning a contemplated contract had to be worked out and approved by the Management and the Chief Executive of the Mmtc and a written contract was to be signed. However, the matter remained inchoate and no agreement was finals or signed.
(17) On 17 September, 1985 Ganapathy, Director (Minerals) wrote a secret letter to the petitioner on his conduct while trying to handle crude oil in the first quarter of 1985 and contacting a few buyers thereof. The letter said that in the course of that the petitioner exchanged number of telex messages with Jmt Marketing Inc. of Houston. Taxes. It was alleged against the petitioner that the discounts indicated by him in his messages were not realistic and that he had offered to supply the entire 5 million barrels of crude oil to Jmt Marketing Inc. without tying up the supply line in all respects. It was further alleged against him that correspondence had been effected by him without examination of the proposal by the associate finance. Petitioner was reminded that he was aware of the functioning of the Mmtc in that connection and that there was a two-tier system of Sale Purchase Advisory Committees of Mmtc to clear trade transactions of specified amounts and no officer of the Mmtc was allowed to finalise contracts without going through that process. It was pointed out to the petitioner that in telex message dated 27 January 1985 he had led Jmt Marketing Inc. to believe that the petitioner had the authority to negotiate the contract and bind Mmtc ' for the sale of as much as 5 million barrels of oil. He was also told that under the delegation of powers he had no authority to make such statements without getting, the approval of the appropriate authorities stipulated for this purpose. Then this letter finally states as under:--
"3.The financial arrangement made by Jmt through a message sent by the United Bank of Usa forwarded to you by the State Bank of India was not got examined by you by the associate finance at the appro- priate time. Later, when the Chairman of Jmt visited MMTC's office in New Delhi for a discussion on the deal it came to light that the arrangement made by Jmt was without guarantee of an irrevocable commitment on the part of the opening Bank to release payment to MMTC. Your method of handling this deal of such a high magnitude put the management of Mmtc to a considerable and avoidable embarrassment and in this process you committed gross negligence of duty and acted in a manner prejudicial to the interest of the Corporation.
4.You are hereby, therefore, called upon to submit your explanation, if any, in writing which should reach me on or before 30 September, 1985."
(18) To this the petitioner replied by his letter dated 7 October, 1985. He refuted all the contentions and said in effect he had acted in the normal course of his working. He gave his own version of the whole case and concluded by saying : 1st "THEREFORE,your conclusion that I had entered into crude deal without consultation with appropriate authorities and finalising the deal with Jmt Marketing is not only incorrect but grossly misconstrued and unwarranted.
I submit that in view of the explanation given above your demand for an explanation from me on the aforesaid crude deal is uncalled for ."
(19) On 23 December, 1985 a second notice was received by the Mmtc from the Attorneys of Jmt Marketing Inc. claiming compensation. On 11 September, 1986 summons were received by the Mmtc on a suit filed by Jmt Marketing Inc. in the U.S. District Court in Texas making a claim of Us Dollars 77 million against the MMTC. This suit, as noted above, was decreed on 24 May, 1991 in a sum of Us Dollars one million against the MMTC. It is not necessary for us to go into various interlocutory proceedings in between as we were told that at some stage earlier in the proceedings the suit had been decreed ex parte against the MMTC.
(20) Meanwhile, the petitioner was communicated an adverse entry on 20 May, 1985 though this related to the period of his working during April-December, 1984. This is as under :-
"ON a review of the performance of Shri R. L. Kapoor,. D.M., for the period of April-December, 1984, it has been observed as follows:-
"HE displayed an inability to approach the problem in an informed manner, take the finance along with him keep his superiors informed at appropriate stages. This led not only to his not being able to show any results but also to some avoidable embarrassment to management. He has not shown any ability to either enthuse his subordinates or infuse confidence in them."
2. It has been further observed that he symbolised more of promise than of performance. He also lacks a sense of responsibility to the organisation."
(21) Another adverse entry was recorded and communicated to the petitioner on I June, 1987 for the year 1986 and it is as follows:-
"ON a review of the performance of Shri R. L. Kapoor, Divisional Manager, for the year 1986, it has been observed as follows :
"HE is impulsive and not capable of going into details. He landed the company in a legal suit, fully exceeding his powers and brief. Lacks maturity."
2. It has been further observed that he is undependable and highly erratic. He has reached even beyond his level.
3.His over-all performance has been assessed as "POOR". "
(22) We were not told if there was any adverse entry against the petitioner for his performance during' the year 1985. On 15 March, 1986 and again on Ii November, 1986 the Board of Directors of the Mmtc passed two resolutions respecting the sale of crude oil vis-a-vis the petitioner. These resolutions are as under:-
15March, 1986 ITEMNo. 3: Sale of Crude Oil "IT was decided to initiate disciplinary proceedings under .Employees Conduct, Discipline and Appeal Rules, 1975, against Shri R. L. Kapoor, Divisional Manager."
IINovember, 1986 ITEMNo. 5 : Case of Shri R. L. Kapoor, file will be placed at: the Executive Committee Meeting:
THE following course of action was suggested: "(a) departmental enquiries may be initiated."
(B)he may be transferred in May-June, 1987 as per rules of the Corporation since he has had the longest stay at 'Delhi."
(23) Nothing appears to have happened on both these resolutions and it was ultimately on 24 June, 1991 that the Board of Directors took decision to dismiss the petitioner, order of dismissal being dated 27 June 1991 and when the date of superannuation of the petitioner was 31 October, 1991. In spite of our persistent demand that minutes of the meeting of the Board of Directors dated 24 June, 1991 be shown to us this was not done and ultimately we were told that we should see the minutes without being shown to the petitioner. This offer we declined. We were also told that the purpose of keeping quiet aB this period right from. March 1986 till June 1991 was some legal advice received by the Mmtc from that the action of the petitioner in negotiating the sale of the Saudi crude oil was without authority and he acted wrongfully and improperly and against the rules relating to delegation of powers. 1; said that the petitioner in his capacity as Divisional Manager (since designated as Deputy General Manager) could conclude a sale and purchase contract by negotiations/tender only up to Rs. 50 lakhs and that too within certain limitations as prescribed. Mmtc said that the action of the petitioner exposed it to a claim for breach of contrast alleged by the American firm with the result that it had to incur huge expenses in defending the litigation and then suffered a decree for damages amounting to Us dollars one million. Mmtc further said that the petitioner wrongly claimed that he merely was having negotiations and no concluded contract had been entered into when the court in the United States clearly held otherwise and recorded a finding that there was a concluded contract. Mmtc also referred to the statement of the petitioner recorded in the proceedings in the Us court wherein he infact admitted violation of the delegation of powers rules. Mmtc also commented on the conduct of the petitioner in keeping all telex messages with him till third week of February 1985. As to the delay in not initiating the enquiry earlier against the petitioner Mmtc stated that before any disciplinary proceedings could be tnitiated, the American party had instituted proceedings against it in the Us court in September 1986 and thereafter Mmtc was advised that it would its American Attorney not to commence any disciplinary proceedings against the petitioner. We have again not been shown any such legal advice so received by the MMTC.
(24) We are of the opinion that procedure for enquiry as set out in Rule 25 of the Rules is normally to be followed, and not holding an enquiry under clause (ii) of Rule 30 is an exception. Any order made under clause (ii) of Rule 30 must on the face of it show the reasons which led the authority to be satisfied that it was not reasonably practicable to hold an enquiry in the manner provided in Rule 25. After the order under clause (ii) of Rule 30 is made no further reasons can be added and the order cannot be justified en any other ground except those mentioned in the order. Some times due to varying reasons the authority may not consider it appropriate to mention the reasons for not holding the enquiry in the order itself. In a case falling under clause (iii) of Rule 30 it may be that the authority is satisfied that it was not reasonably practicable to hold an enquiry in the manner provided' in these Rules when it is satisfied about this in the interest of the security of the State and in that case ft would be said the reasons may not be reflected in the order it self. This clause (iii) applies where the Board is satisfied that in the interest of the security of the- State it is not expedient to hold any enquiry in the manner provided in the Rules. This is, however, not the case before us as the case falls under clause (ii) of Rule 30.
(25) Mmtc in support of the impugned order has contended be more fair and appropriate to await tile decision of the court and that would also avoid conflict of findings. Mmtc also said that after the explanation of the petitioner it had been decided to ascertain the facts in connection with the disciplinary proceedings and subsequently the investigating agency which had been appointed for the purpose found the facts alleged as correct, and since in the meanwhile proceedings had been initiated by the American firm there, Mmtc was advised that as the proceedings in the American court involved substantial similar facts and questions it would be preferably advisable and fair to await the facts as the same developed in the case and outcome and findings of the case, and that the final judgment came to be rendered in May 1991 and by that time it was too late to conduct the enquiry as per rules and action had to be taken under clause (ii) of Rule 30 of the Rules.
(26) At the outset we must say we are unable to discern any reasoning that impugned action of the petitioner amounted to committing the offence of criminal breach of trust punishable under section 408 of the Indian Penal Code and also for an offence of cheating by a servant punishable under section 418 of that Coda. Nothing has been said in the re- tu'lin also in support of this reason for dismissal of the petitioner. As we see from the impugned order the main charge of misconduct against the petitioner is that he acted without authority. The two charges or misconduct in the. impugned order can certainly have no correlation with the outcome of the litigation in the American Court either way. If on account of any advice received by the Mmtc it did not initiate the disciplinary proceedings against the petitioner till the time judgment of the American Court was delivered, it could have as well awaited the result of the appeal in the American court. It could be that the appellate court holds that there was no concluded contract and that only negotiations for conclusion of a contract were in progress. It is correct that in June, 1991 Board (respondent No. 2) was satisfied that it was not reasonably practicable to hold an enquiry in the manner provided in the Rules. This would include the whole gamut of the enquiry right from the framing of charges the written statement, appointment of an Inquiring Authority if any, conduct of the enquiry, the right of the charged officer to lead evidence and to cross-examine withnesses, statement of the charged officer, arguments by the presenting officer and the charged officer, the report and the consideration of the report by the disciplinary authority if that itself is not the Inquiring Athority All this procedure which is in consideration detail would certainly take much time and perhaps the enquiry would not be completed within a period of six months. The period could certainly be shortened if the charged officer cooperates but the procedure as provided requires about six months period for conclusion of the enquiry. Then one must not forget the right of appeal in case there is finding adverse finding and punishment. But in the circumstances of the present case, could the Mmtc start initiation of the disciplinary proceedings only in June .1991 and then take up the plea that it was not reasonably practicable to hold an enquiry as provided in the Rules ? We do not think Mmtc could take such a stand to the prejudice of the petitioner to have a full fledged enquiry as per the procedure prescribed in the Rules. We certainly agree with the Mmtc that between 24 June, 1991 when the Board decided to take action against the petitioner and 31 October, 1991. the date of superannuation of the petitioner, it was not reasonably practicable to hold an enquiry as per Rules, but the fact remains that all the facts and acts constituting misconduct charged against the petitioner existed as far back in the third week of February 1985 and were known to the MMTC. Even disciplinary proceedings were contemplated and to initiate action in November, 1986 the alleged advice of the American Attorney not to hold these proceedings coming only ni April 1987. As noted above decision of the American court was quite irrelevant for initiation of the proceedings against the petitioner only in June 1991. All the facts constituting the misconduct were known to the disciplinary authority years before the judgment of the American court and no further material was required which could have the effect cf arresting the enquiry. We do not find the action of the Mmtc in deciding to take action against the petitioner in June 1991 and then seating that it was not reasonably practicable to hold an enquiry against him as per Rules to be in any way either just. fair or reasonable. To our mind it rather lacks bona fides and suffers from the vice of arbitrariness. Silence by the Mmtc all this period right from third week of February 1985 till June 1991 has not been explained at all. Rather it also appears to us that Mmtc not take action against the petitioner only because it wanted to utilise the favorable deposition of the petitioner which he was to give in the Texas court to its advantage. We believe the petitioner must have deposed in '.hat court at the instance of Mmtc and now that very deposition is being used against the petitioner to sustain the charge of misconduct. We certainly do not approve such a conduct from the Mmtc which is a Government comparuy.
(27) We are not at all considering the correctness of otherwise of the charge of misconduct nor are we called upon to decide if there was a concluded contract as held by the American court or only negotiations were in progress as alleged by the petitioner ag well as by the Mmtc itself. In initiating action against the petitioner at such a late stags we feel the Mmtc was oppressed by the enormity of the expenses incurred by it in defending the action in the American court and then suffering a decree for one million Us dollars, but this certainly cannot by itself be a. ground for initiation of any action against the petitioner. As noted above, the basic charge against the petitioner was that he acted without authority. We except the stand of Mmtc on this account it will have serious consequences for various public servants who deal with litigious subjects in the discharge of their official functions and pass orders. An action of a public servant cannot be made dependent upon the result of litigation as a result of his action or order unless it can be said independently of that that the action or conduct was actuated with corrupt cr ulterior motive. It cannot certainly be signed that if a decision of an employee leads to passing of a decree against the employer, the employee will nevertheless be liable for misconduct even though his stand is supported by the employer. Such an attitude would certainly be fraught with grave danger. Disciplinary proceedings against the petitioner could certainly have been imitated in the very 1986 itself. We reject outright the stand of the Mmtc that on account of some legal advice received by it, disciplinary proceedings were not initiated because of pendency of litigation in the American court. Any such advice to our mind. must be quite misplaced and the petitioner cannot be deprived of his right to have enquiry against him as per Rules. We are certainly not on the question if it is a pre-eminently fit case for holding enquiry or if the conduct of the petitioner was right or wrong. The case is certainly not covered under clause (ii) of Rule 30 of the Rules.
(28) We find that certain additional material has been sought to be brought on record to justify the impugned order of dismissal and to bring the case of the petitioner under clause (ii) of Rule 30. We have not been told as to what was the investigating agency employed and "with what result. The petitioner should have been apprised of these details.
(29) We nave not been shown as to how clause (ii) of Rule 30 is in any way ultra vires the Constitution when Constitution itself contains a similar provision applicable to a member of a civil service. This is clause (b) of proviso to clause (2) of Article 311 of the Constitution. Such a provision is certainly salutary and circumstances could come to exist when the Board may be satisfied that it is nut reasonably practicable to hold an enquiry in the manner provided in the Rules. While considering clause (b) of proviso to clause (2) of Article 311 of the Constitution the Supreme Court .in Satyavir Singh and others v. Union of India and others, , did narrate instances where that proviso might become applicable through those instances were not exhaustive.
(30) It was then contended that principles of natural justice were incorporated in the Rules at two stages: (1) at the stage of enquiry and (2) at the stage of inflicting the punishment. It was submitted that though clause (ii) of Rule 30 takes away first stage but nut the second, and that in the present case before awarding punishment of dismissal the petitioner should have been heard. Though we have held that the enquiry itself could not have been dispensed with and perhaps on that account it may not be necessary to consider this argument, but we find substance in this argument as well. Clause (ii) of Rule 30 grants exemption from holding en enquiry in the manner provided in the Rules' We have noted above that Rule 23 enumerates penalties both minor and major and Rule 25 provides the procedure for imposing major penalties. Under sub-rule (19) of this Rule, after the enquiry is concluded the report is to be prepared' which is to contain (1) a gist of the articles of charge and the statement of the imputations' of misconduct; (2) a gist of the defense in respect of each article of charge; (3) an assessment of the evidence; and (4) the findings on each article of charge and the reasons therefore. The Inquiring Authority, where it is itself not the Disciplinary Authority, is to forward the report w prepared to the Disciplinary Authority. It would appear that along with this whole of the record's of the enquiry proceedings are also to be sent. Then comes the action on the enquiry report and this is Rule 26. Here it is the function of the Disciplinary Authority. One of the provisions under this rule is where the Disciplinary Authority having regard to the findings of the Inquiring Authority is of the opinion that any of the major penalties specified in Rule 23 should be imposed on the employee, Then in that case the Disciplinary Authority is to give the employee a notice staring the penalty proposed to be imposed on him and calling upon him to submit within fifteen days of receipt of the notice or within such further time as may be allowed, his representations as he may wish to make on the proposed penalty on the basis of the evidence adduced during the enquiry under Rule 25. It is only after the consideration of such representations that Disciplinary Authority is to impose the penalty. We, therefore, agree with the submission of the petitioner that whereas clause (ii) of Rule 30 exempts holding of enquiry under Rule 25, the principles of natural justice demand that in such a case a notice should be given to the employee intimating him the proposed penalty and asking foi' his explanation thereon. When Rule 30 starts with the words "Notwithstanding anything contained in Rule 25 or 26 or 27" it has restricted meaning with reference to Rule 26 that it exemplas the Disciplinary Authority only from considering the Inquiring Authority report or from recording any findings thereon agreeing or disagreeing with that report when procedure under Rule 25 cannot be adopted. There appears to us to be no reason why an employee should not be given an opportunity to explain as to why the proposed penalty be not inflicted upon him. Even in proceedings under the Code of Criminal Procedure when the court returns a finding .of conviction the accused is nevertheless heard on the question of sentence. Rule 30, therefore, does not exempt the Disciplinary Authority from even granting an opportunity to the employee to show cause as to why the proposed penalty be not imposed upon him when time for that purpose is certainly available, otherwise Rule 30 to that extent will be void as suffering from the vice of arbitrariness. The impugned order of dismissal is bad on this account as well.
(31) It was submitted by the Mmtc that in the present case the order of dismissal against the petitioner was quite imperative and the facts pointing to his misconduct clearly established and if enquiry was held as per Rule 25 it could not be over by 31 October, 1991, the date the petitioner was to retire and then the petitioner would be beyond the reach of the MMTC. Rules do not contemplate initiation or continuation of the enquiry after retirement of the employee but that does not mean that clause (ii) of Rule 30 should be invoked on that account. Rules can be suitably amended.
(32) We, therefore hold that exercise of power under clause (ii) of Rule 30 by the respondents is bad and impugned order has, therefore to be set aside, and hence our order dated 29 October, 1991 set out in the earlier stages of this judgment. In coming to this conclusion we have drawn support from the two decisions of the Supreme Court in Union of India and another v. Tulsiram Patel, and Satyavir Singh and others v. Union of India and others, .