Rayala Satyanarayana, vs Sbi Funds Management Pvt. Ltd,
2022 Latest Caselaw 7963 AP

       HONOURABLE SMT. JUSTICE V. SUJATHA

                Writ Petition No.8042 of 2019

ORDER:

The writ petition is filed under Article 226 of the

Constitution of India seeking the following relief:

"to issue a Writ or Order more in the nature of Mandamus declaring the proceedings dated 14.11.2018 issued by the Authorised Signatory in terminating the petitioner from service from the 1st respondent company and the order of the Appellate Authority of the 1st respondent dated 07.02.2019 confirming the termination order as wholly illegal, arbitrary and violative of principles of natural justice and without jurisdiction."

The case of the petitioner, in brief, is that he was

initially appointed as ISC Head (Chief Manager) in the

Salary Grade VI in the first respondent company after due

process of selection on 12.03.2010 and was posted at

Vijayawada Branch and he served for almost nine years.

While so, basing on a complaint given by some third

parties, who have enmity against the petitioner, under the

provisions of Sexual Harassment of Women at Workplace

Act, 2012, the 1st respondent constituted an Internal 2 VS, J

W.P.No.8042 of 2019

Committee to look into the allegations levelled against the

petitioner and some other persons. The Internal Committee

conducted enquiry and submitted a report on 03.09.2018.

Thereafter, the petitioner submitted his objections on

15.09.2018 to the findings given by the Internal Committee

denying the allegations and the procedure adopted by the

Internal Committee in concluding the enquiry in a biased

manner. Without considering the objections and basing on

the findings given by the Internal Committee, the 1st

respondent issued proceedings dated 14.11.2018

terminating the services of the petitioner with immediate

effect, which is purely basing on the enquiry conducted by

the Internal Committee, under the provisions of Sexual

Harassment of Women at Workplace (Prevention,

Prohibition and Redressal) Act, 2013, without even issuing

any charge memo or without even conducting disciplinary

enquiry against him. The termination of services is, in fact,

a major punishment, which cannot be imposed without

conducting a separate departmental enquiry or without

affording an opportunity of hearing or issuing a separate 3 VS, J

W.P.No.8042 of 2019

charge memo. In fact, the Internal Committee conducted

the enquiry in the absence of complainant. However, the

petitioner preferred an appeal to the 3rd respondent-

Appellate Authority, who dismissed the same on

07.02.2019 confirming the order of termination dated

14.11.2018. Aggrieved by the same, the present writ

petition is filed.

The respondents 1 to 3 filed their counter opposing

the writ petition mainly on the ground of its

maintainability. The respondents stated that the 1st

respondent is neither a public authority nor performing

any public duty, whereas it is Private Limited Company

having been incorporated under the provisions of the

Companies Act, 1956. As per the Certificate of

Incorporation, the 1st respondent is a joint venture between

State Bank of India and AMUNDI Asset Management, a

leading European Asset Management Company and that

the 1st respondent company does not fall within the

definition of "State" as stipulated under Article 12 of the

Constitution of India. The respondents opposed the 4 VS, J

W.P.No.8042 of 2019

maintainability of the writ petition as it is in violation of the

ratio laid down by the Hon'ble Supreme Court in a catena

of judgments, more particularly, in Ajay Hasia v. Khalid

Mujib (AIR 1981 SC 487 (LB)) and in a recent judgment in

Ramakrishna Mission and another v. Kago Kunya and

others (Civil Appeal No.2394 of 2019 (SLP (C) 3092 of

2018) and requested to dismiss the writ petition on the

sole ground of its maintainability by taking it as primary

objection.

The respondents further stated that while the

petitioner was working as Assistant Vice President and

SBG Head at Vijayawada, one of the woman employees

namely Sridivya Sangadi made a complaint against Sai

Krishna and V. Chittibabu, co-employees of the petitioner,

alleging sexual harassment, but, the petitioner being the

head of the branch, had kept quiet without initiating any

action. But, the said employee made a complaint against

the petitioner and the other two persons to the 1st

respondent alleging sexual harassment and failure of the

petitioner to provide safety environment to woman 5 VS, J

W.P.No.8042 of 2019

employees in work place. The 1st respondent took the

cognizance of the complaint under the provisions of Sexual

Harassment of Women at Workplace (Prevention,

Prohibition and Redressal) Act, 2013 and accordingly,

constituted an Internal Committee for conducting inquiry

under the provisions of the Act. The said Committee, after

affording an opportunity to the petitioner to make

necessary objections, submitted its report, pursuant to

which the competent authority issued the impugned

proceedings terminating the services of the petitioner,

which is affirmed by the Appellate Authority.

The respondents further stated that the allegation

that the person, who gave complaint, was not present

before the Committee, is not correct. In fact, the Committee

has taken note of the complaint dated 16.03.2018

addressed to Internal Complaints Committee formulated

under the provisions of the Act through e-mail dated

20.03.2018 and the subsequent meetings with the

complainant and the examination of the complainant by

the Committee clearly establishes a prima facie case of 6 VS, J

W.P.No.8042 of 2019

sexual harassment at work place under Section 2 (n) (i)

(iii)(v) read with Section 3 (1) (2) (ii) (iv) and (V) of the Act

and accordingly, issued the impugned proceedings

terminating the services of the petitioner, which is neither

illegal nor arbitrary. The termination of the petitioner is

based on the Internal Complaints Committee Report. As

per clause (i) of the appointment letter, it was clearly stated

that notwithstanding what has been stated, the company

shall have the right to suspend without pay and/or

equivalent benefits, summarily dismiss or terminate his

services, inter alia, on account of the following:

Insubordination or disobedience of any kind against the superiors;

Misconduct inside or outside premises of the company;

Neglect of duties;

Theft, fraud or dishonesty in connection with the Company's business or property;

Failure to observe the regulations of the company in force from time to time;

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                                                   W.P.No.8042 of 2019

For such other misconduct as the company may consider not fit to continue.

Accordingly, the issuance of order of termination, as

confirmed by the Appellate Authority-the 3rd respondent

vide orders dated 07.02.2019, is neither illegal nor

arbitrary. The respondents mainly opposed the writ

petition on its maintainability and requested to dismiss the

writ petition same on that sole ground.

Learned counsel for the petitioner filed a memo dated

15.03.2021 bringing to the notice of this court that since

the respondent company is being controlled by the State

Bank of India, which is a Government Organisation, having

a share holding of 63% shares in the present respondent

company, the present writ petition is maintainable.

Further, the petitioner also filed Annual Report of SBI

Funds Management Private Limited for the year 2018-2019

as material papers to establish the fact that the State Bank

of India is having share holding of 63% in the respondent

company.

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                                                              W.P.No.8042 of 2019

Heard the learned counsel for the petitioner and the

learned standing counsel for the respondents.

While reiterating the averments of the writ petition,

the learned counsel for the petitioner, in support of his

contention, placed reliance in Managing Director, Indian

Immunologicals Limited, Hyderabad and others v.

Narendra Agarwal1, wherein the High Court had an

occasion to deal with the nature of constitution, activities,

funding etc., of such entities so as to determine whether

such entities are "State" within Article 12 of the

Constitution of India. However, it may be relevant to refer

the same, which reads as under:

"From the above authoritative pronouncements the following indicia are deducible to determine whether an entity/ company/ organization is a State within the meaning of Article 12 of the Constitution of India and is amenable to writ jurisdiction or not.

(a) Mandamus lies to secure the performance of a public or statutory duty, and not performance of obligations which are of private character (PRAGA TOOLS CORPORATON).

(b) The Government company in which majority of shares are held by government; where there is deep and pervasive control of

2021 (2) ALT 292 (DB) (TS) 9 VS, J

W.P.No.8042 of 2019

its day-to-day administration is a State. (MYSORE PAPER MILLS LTD.)

(c) The majority of governing body of the organization substantially comprises of private individuals and when it does not discharge governmental or sovereign functions such organization is not a State (PRADEEP BISWAS).

(d) The company having limited share holding of Government; Chairman and Board of Directors are not appointed by Government and it is not entrusted with statutory/public duties is not a State and not amenable to writ jurisdiction (ANDHRA PRADESH PAPER MILLS LIMITED).

(e) The company wherein Government has 50% shares but management committee is dominated by 2/3rd non-government members is not a State (KISAN SAHKARI CHINI MILLS LTD).

(f) The company which has not given control of running to the alleged parent company (AIR INDIA) and functions of appointment, dismissal, disciplinary action etc. is retained by the company is not a State (BALWANT RAI SALUJA). The employees of the company cannot be placed at the same footing as Air India's regular employees.

(g) The corporation carrying out a governmental activity and governmental functions of vital importance is a State and amenable to writ jurisdiction (CENTRAL INLAND WATER TRANSPORT CORPORATION LIMITED).

(h) The whole time Directors of the Company are appointed by State (President of India); the company is under obligation to submit monthly, half-yearly performance reports to the Government (of India); company implementing reservation policy as per directions of Government. The company and alleged parent company have a common Chairman; the company is an 'authority' amenable to writ jurisdiction (BALMER LAWRIE & COMPANY LIMITED)....."

On the other hand, learned standing counsel for the

respondents, while reiterating the contents of the counter, 10 VS, J

W.P.No.8042 of 2019

placed a reliance in Ramakrishna Mission and another v.

Kago Kunya and others2, wherein the Hon'ble Supreme

Court held that a private body can be held to be amenable

to the jurisdiction of the High Court under Article 226

when it performs public functions which are normally

expected to be performed by the State or its authorities;

and that a writ jurisdiction would not lie to enforce purely

private law rights and consequently, even if a body is

performing a public duty and is amenable to the exercise of

writ jurisdiction, all its decisions would not be subject to

judicial review. The Hon'ble Supreme Court further held

that even if writ petition would be maintainable against an

authority, which is "State" under Article 12 of the

Constitution, before issuing any writ, particularly writ of

mandamus, the court has to satisfy that action of such an

authority, which is challenged, is in the domain of public

law as distinguished from private law. The Hon'ble

Supreme Court ultimately concluded that contracts of a

purely private nature would not be subject to writ

(2019) 16 SCC 303 11 VS, J

W.P.No.8042 of 2019

jurisdiction merely by reason of the fact that they are

structured by statutory provisions and the only exception

to this principle arises in a situation where the contract of

service is governed or regulated by a statutory provision.

In the light of above precedent, it is to be seen that

whether the 1st respondent falls within the definition of the

"State" as stipulated under Article 12 of the Constitution of

India and is amenable to writ jurisdiction?

A perusal of the additional material papers filed by

the petitioner makes it clear that the respondent company

is being controlled by the State Bank of India, which is

admittedly a Government Organisation having a share

holding of 63% in the present respondent company and

even as per Annual Report of the SBI Funds Management

Private Limited for the year 2018-2019 clearly establishes

that the State Bank of India is having share holding of 63%

in the respondent company. The said fact is neither

disputed nor objected by the respondent company. As

such, this court is of the considered view that the 1st 12 VS, J

W.P.No.8042 of 2019

respondent company is a State within the meaning of

Article 12 of the Constitution of India and is amenable to

writ jurisdiction.

That leaves this court to decide the other issue

whether the impugned proceedings issued by the 1st

respondent terminating the services of the petitioner suffer

from any illegality?

In Dr. Duraiswamy Baskaran v. GAIL (India) Ltd.,

New Delhi and others3, wherein the High Court for the

State of Telangana categorically held that as per Rule 30 of

the GAIL Employees (Conduct, Disciplined and Appeal)

Rules, 1986, no orders imposing any major penalty can be

imposed against any employee without conducting an

enquiry in accordance with Rule 30, which mandates that

initiation of disciplinary proceedings is a mandatory

requirement and without conducting any enquiry, no

employee can be imposed any major penalties as

contemplated under Rule 30.

    2021 (3) ALD 461 (TS)
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                                                          W.P.No.8042 of 2019

In Rakesh Kumar Vs. State of U.P.4, wherein, it

was held that:

"....this court under its power conferred by Article 226 of Constitution of India, can interfere in the matter of disciplinary proceedings if the disciplinary/enquiry proceedings were conducted in violation of manner prescribed and against the principles of Natural Justice and if the order of concerned authority is non-speaking and unreasoned. This Court can interfere in the matter of disciplinary proceedings if the decision making process is in violation of Rules and against Principles of Natural Justice. The judicial review in the matter of departmental proceedings is permissible with respect to decision making process and not against the decision itself unless it is shown that the decision is without any evidence or suffers from malafide and malice or harsh or without jurisdiction'.

It was also observed in Allahabad Bank V.

Krishna Narayana Tewari5, by the Apex Court that:

"7. We have given our anxious consideration to the submissions at the Bar. It is true that a writ court is very slow in interfering with the findings of facts recorded by a departmental authority on the basis of evidence available on record. But it is equally true that in a case where the disciplinary authority records a finding that is unsupported by any evidence whatsoever or a finding

. 2019 SCC Online All 4004

(2017) 2 SCC 308 14 VS, J

W.P.No.8042 of 2019

which no reasonable person could have arrived at, the writ court would be justified if not duty-bound to examine the matter and grant relief in appropriate cases. The writ court will certainly interfere with disciplinary enquiry or the resultant orders passed by the competent authority on that basis if the enquiry itself was vitiated on account of violation of principles of natural justice, as is alleged to be the position in the present case. Non-application of mind by the enquiry officer or the disciplinary authority, non-recording of reasons in support of the conclusion arrived at by them are also grounds on which the writ courts are justified in interfering with the orders of punishment. The High Court has, in the case at hand, found all these infirmities in the order passed by the disciplinary authority and the appellate authority. The respondent's case that the enquiry was conducted without giving a fair and reasonable opportunity for leading evidence in defence has not been effectively rebutted by the appellant. More importantly the disciplinary authority does not appear to have properly appreciated the evidence nor recorded reasons in support of his conclusion. To add insult to injury the appellate authority instead of recording its own reasons and independently appreciating the material on record, simply reproduced the findings of the disciplinary authority. All told, the enquiry officer, the disciplinary authority and the appellate authority have faltered in the discharge of their duties resulting in miscarriage of justice. The High Court was in that view right in interfering with the orders passed by the disciplinary authority and the appellate authority."

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                                                                W.P.No.8042 of 2019

It was also observed in State of U.P. Vs. Deepak

Kumar6 by the Division Bench of this High Court that:

"It is settled by the catena of judgments that it is the duty of Enquiry Officer to hold ''Regular Enquiry'. Regular enquiry means that after reply to the charge-sheet the Enquiry Officer must record oral evidence with an opportunity to the delinquent employee to cross-examine the witnesses and thereafter opportunity should be given to the delinquent employee to adduce his evidence in defence. The opportunity of personal hearing should also be given/awarded to the delinquent employee. Even if the charged employee does not participate/co-operate in the enquiry, it shall be incumbent upon the Enquiry Officer to proceed ex-parte by recording oral evidence. For regular enquiry, it is incumbent upon the Enquiry Officer to fix date, time and place for examination and cross-examination of witnesses for the purposes of proving of charges and documents, relied upon and opportunity to delinquent employee should also be given to produce his witness by fixing date, time and place. After completion of enquiry the Enquiry Officer is required to submit its report, stating therein all the relevant facts, evidence and statement of findings on each charge and reasons thereof, and thereafter, prior to imposing any punishment, the copy of the report should be provided to charged officer for the purposes of submission of his reply on the same. The punishment order should be reasoned and speaking and must be passed after considering entire material on record."

W.P.No.34093 of 2018(S/B), dated 28.11.2016 16 VS, J

W.P.No.8042 of 2019

Having regard to the facts and circumstances of the

case and in view of the law laid down in the judgments

referred to supra, this court is of the considered view that

though an enquiry was conducted by the Internal

Committee and submitted its report, the conclusions

arrived at by the Committee cannot be the basis for

imposing a major penalty of removal from service, mainly

on the ground that the conclusions arrived at by the

Committee shall not be treated as a mere preliminary

investigation or inquiry leading to a disciplinary action, but

shall be treated as a finding/report in an enquiry into the

misconduct of the delinquent. The impugned proceedings

further suffer from severe illegality as the said proceedings

were issued without there being any regular departmental

enquiry and without giving any opportunity as per the

Service Rules, which mandate that initiation of disciplinary

proceedings is a mandatory requirement and without

conducting any enquiry, no employee can be imposed any

major penalties.

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                                                     W.P.No.8042 of 2019

In the case on hand, the fact remains that no regular

departmental enquiry was initiated pursuant to the

findings given by the Internal Committee and straight

away, the petitioner was removed from service without

initiating any disciplinary proceedings. In that view of the

matter, the proceedings dated 14.11.2018 issued by the

Authorised Signatory terminating the services of the

petitioner from the 1st respondent company, which was

further confirmed by the 3rd respondent-Appellate

Authority vide orders dated 07.02.2019 are liable to be set

aside.

Accordingly, the writ petition is allowed and the

proceedings dated 14.11.2018 issued by the Authorised

Signatory of the 1st respondent, and the consequential

proceedings dated 07.02.2019 passed by the 3rd

respondent-Appellate Authority, confirming the order of

termination, are set aside, leaving it open to the

respondent authority to initiate necessary disciplinary

proceedings against the petitioner basing on the findings

given by the Internal Committee, in accordance with law.

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                                            W.P.No.8042 of 2019

As a sequel thereto, miscellaneous petitions, if any,

shall stand closed.

_______________ V. SUJATHA, J

Date: 19.10.2022 Ksn