Shri Mashkoor Ahmad vs Union Of India (Uoi) And Ors.
2006 Latest Caselaw 1959 Del

JUDGMENT

Manju Goel, J.

1. Admit.

2. This writ petition is directed against the order dated 6.12.2004 of the President of India whereby the penalty of recovery of 50% of leave encashment and forfeiture of 50% of the gratuity paid to the petitioner on his retirement has been imposed.

3. The petitioner was an employee of the respondent No. 3, The National Small Industries Corporation Ltd.(hereinafter referred to as the `NSIC') which works as per the policies laid down by the respondent No. 1. The respondent No. 3's function is to help small industries in various ways including providing them with loan facilities. At the relevant point of time, the petitioner was working as the Chairman and Managing Director of the respondent No. 3. On 27.8.2002, he was served with a Memorandum informing him that the President had proposed to hold an inquiry against him. The substances of imputations of misconduct were set out in the Articles of Charge. A statement of imputations of misconduct or misbehavior in support of each article of charge was also endorsed with the Memorandum. The Memorandum also enclosed a list of documents and a list of witnesses and copy of the advice of the Central Vigilance Commission, the respondent No. 2. The three Articles of Charge are extracted below:

Article-I

1. That the said Shri Mashkoor Ahmad, then Chairman-cum-Managing Director, NSIC, but presently functioning as OSD in the Ministry of SSI & ARI, while functioning as Executive Director(Development)/Chairman-cum-Managing Director, in National Small Industries Corporation Ltd., during the period from 1990 to 1999 sanctioned heavy amount of financial assistance from time to time under the Raw Material Assistance Scheme of the Corporation(NSIC) to M/s. Morgan Techtronics Pvt. Ltd.(Unit) and its sister concern viz. M/s. Novavision Electronics Pvt. Ltd. and M/s Myson Electronics Pvt. Ltd., in utter dis-regard to the delegation of powers, system/procedure and guidelines as laid down in the said Scheme. The said financial assistance was sanctioned by the said Shri Mashkoor Ahmad, willfully and unauthorisedly without obtaining proper and adequate security from the unit and also without ensuring the repayment of overdue assistance earlier granted. This resulted into a rapid increase in the default and overdues of crores of rupees against M/s. Morgan Techtronics Pvt. Ltd. and ultimately a heavy financial loss to the Corporation.

II. Further, in April, 1992 when the overdues/default of M/s. Morgan Techtronics Pvt. Ltd. had gone over Rs. 2 crores, the accounts of the unit were frozen and no further interest was levied after 01.04.92 on the said outstanding amounts. But the financial assistance was continued to be granted to the unit from Head Office till 1994-95 after the said dated i.e. 01.04.92, on which also no interest was charged. By not charging any interest even on the fresh assistance granted from time to time after 01.04.92, Shri Mashkoor Ahmad, not only jeopardised financial interests of the Corporation but also acted against the principles of Commercial transactions.

III. In spite of bad financial condition of M/s. Morgan Techtronics Pvt. Ltd. and its existing default of more than Rs. 2 crores with the NSIC, Shri Mashkoor Ahmad, got started another channel of financial assistance to the said unit by the NSIC through the Corporation's Regional Office Noida from the year 1994-95 onwards. Assistance from Regional Office Noida continued up to the year 1998-99 even in the wake of continued default of payment to NSIC by the unit and this further raised the default as well as financial loss to the Corporation by more than a crore of rupees.

By the above said acts, Shri Maskoor Ahmad, caused a huge financial loss of crores of rupees to the Corporation. He thereby not only willfully favored a private company but also failed to maintain devotion to duty and rendered himself unbecoming of an employee.

Shri Mashkoor Ahmad, accordingly violated Rules 3(1)(1), 3(10(ii) and 3(1)(iii) of NSIC conduct(Rules) 1966.

Article-II

That Shri Mashkoor Ahmad, the then Chairman-cum-Managing Director, NSIC, but presently functioning as OSD in the Ministry of SSI & ARI, while functioning as Senior Executive Director(Development)/CMD in National Small Industries Corporation Ltd., during the period from September, 1994 to the end of 1999, sanctioned heavy amounts of financial assistance to M/s. Equipment Cable & Conductor Ltd.,(Unit) under Raw Material Assistance and Bill Discounting/IMSP Schemes of the Corporation, in utter disregard of the procedures, instruction and safeguards as laid down in the schemes. In sanctioning the said assistance, he grossly violated delegation of powers. The norms for determining the limit for the unit were not adhered to.

Shri Mashkoor Ahmad, also did not ensure the protecting of the interest of the corporation by enforcing safeguards as provided in the scheme for the purpose such as taking of appropriate and adequate securities and proper appraisal of the viability as well as financial health of the unit assisted.

By the above said willful and unauthorised acts on the part of Shri Mashkoor Ahmad, he caused a huge financial loss of more than Rs. 9 crores to the Corporation and thereby bestowed undue favor on a private company. He also failed to maintain devotion to duty and rendered himself unbecoming of an employee.

Shri Mashkoor Ahmad, thus violated Rules 3(1)(i), 3(1)(ii), and 3(1)(iii) of NSIC Conduct(Rules) 1966.

Article-III

That the Shri Mashkoor Ahmad, while functioning as Chairman-cum-Managing Director, NSIC, but presently functioning as OSD in the Ministry of SSI & ARI, during the period from January, 1998 to the end of 2000, sanctioned higher amounts of financial limits for assistance to M/s. Apex Electricals Ltd. under Bill Discounting/IMSP and Raw Material Assistance Schemes of the Corporation in utter disregard of the procedures, instructions and safeguards as laid down in the schemes. In sanctioning the said limits, he grossly violated delegation of powers. The norms for determining the limit for the unit were not adhered to.

By the above said willful and unautrhorised acts on the part of Shri Mashkoor Ahmad, he failed to maintain devotion to duty and rendered himself unbecoming of an employee.

Shri Mashkoor Ahmad, thus violated Rules 3(1)(ii), and 3(1)(iii) of NSIC Conduct (Rules) 1966.

4. The petitioner filed a reply to the charge sheet. He denied that he had violated the delegation of powers in sanctioning the limit of Rs. 15 lakhs and one time limit of Rs. 7 lakhs in February, 1990 to M/s Morgan Tectronics Pvt. Ltd. by saying that the above sanctions would be violation of delegation only if the previous sanctions to sister concerns were taken into account and that at that time clubbing of sanctions to sister concerns was not the practice. The petitioner thereafter proceeded to justify the excess amount sanctioned. The petitioner denied that adequate security was not taken. Further, he submitted that the decision to sanction the loans in question to M/s Morgan Tectronics Pvt. Ltd. was a collective decision taken by the senior officers. The decision to provide fresh assistance from Regional Office, Noida was justified as a decision in the interest of the respondent No. 3. So far as the charge No. II and Charge No. III are concerned, the petitioner defended himself by justifying his actions and pleading further that he being the Chairman and Managing Director could not be expected to keep track of various documents and facts, which was primarily the job of the second level officers. It is not necessary to burden this judgment with any further details.

5. By the very nature of the allegations against the petitioner, the evidence required in the inquiry was only documentary. The same was duly produced. The petitioner defended himself with the assistance of Shri Subhash Chandra, General Manager(Retd.). He was given sufficient scope to argue his case. There is no allegation that the principles of natural justice were violated in any way during the inquiry. The inquiry officer vide his report dated 8.9.2003 found the Charge No. I proved and the Charge No. II and Charge No. III partly proved. The part of Charge No. II proved was that the petitioner had not followed, while according to the initial sanction for Rs. 50 lakhs to M/s ECCL Ltd., the NSIC guidelines applicable at that point of time and also that the petitioner had accorded the approval for freezing of the unit's account w.e.f. 1.4.2000 instead of 20.11.2000 or with the approval of the DRC. Similarly, the portion of Charge No. III proved was that the petitioner did not follow the prescribed procedure and instructions as regards delegation of powers. The copy of the report was supplied to the petitioner with an order dated 28.7.2004 allowing the petitioner to make any representation which he may want to within 15 days thereof. The petitioner made his submissions against the report vide his representation dated 10.8.2004. On considering the inquiry report and the representation of the petitioner, the President imposed the penalty in recovery of 60% of leave encashment and forfeiture of 50% of the gratuity admissible to the petitioner. The petitioner by then had retired on 31.8.2002.

6. From the above narration of facts, it is clear that there was no omission in following the procedure of domestic disciplinary inquiry. Nor was there any violation of the principles of natural justice. The petitioner does not claim that any part of the inquiry was vitiated for any reason whatsoever. This Court cannot enter into the merits of the charges framed against the petitioner. The scope of this writ petition goes only so far as an examination in the process of the inquiry and decision making can go. In B.C. Chaturvedi v. Union of India and Ors. , the Supreme Court categorically laid down that the scope of judicial review relate only to the decision making process and where the findings of the disciplinary authority are based on some evidence the Court or the Tribunal cannot reappreciate the evidence to substitute its finding. This opinion has been repeatedly followed by the Supreme Court. The cases in which the judgment of B.C. Chaturvedi (Supra) has been reiterated is that of Lalit Popli v. Canara Bank and Ors. Principal Secretary, Govt. of A.P. and Anr. v. M. Adinarayana .

7. The evidence in this case, as mentioned earlier, depended entirely on documents. The petitioner does not dispute that he had sanctioned loans to the aforesaid organisations. Nor is it in dispute that those organisations have failed to pay the loans back and that the respondent No. 3 has not been able to recover the money lent thereby causing great financial loss to it. It is also not disputed that the petitioner had violated certain norms and procedure. The petitioner, however, justifies his actions by saying that at the relevant time, the previous loans sanctioned to the sister concerns were not required to be clubbed. The inquiry officer has not agreed to the stand of the petitioner and has held that the previous loans had been given to the same firm run earlier under another name. It is not for this Court to sit in appeal over the finding of the inquiry officer to examine whether the norms and procedures had been violated and whether the charges stood proved against the petitioner.

8. The inquiry officer's report is alleged to be perverse. In the first place, it is alleged that the delegation of power to the extent of Rs. 25 lakhs could be said to have been violated only if the assistance given earlier could be taken into account and that the inquiry officer has not given any opinion as to whether the amount previously sanctioned should be added to the sanctions made by the petitioner in order to examine if he exceeded his delegation. Secondly, it is contended that the petitioner took a defense that the decision to extend assistance to the two firms mentioned in Charge No. I was a collective decision on which also the inquiry officer has failed to return a finding. On examination of the report, however, this submission cannot be said to be correct. The inquiry officer has taken note of the contention of the petitioner that the facilities sanctioned earlier to the firm in question had to be added in considering whether the sanction made by the petitioner exceeded the delegation of power. In Paragraphs 7.1.1.2 and 7.1.1.3, the inquiry officer has gone into this question. It is not for this Court to examine whether the finding of the inquiry officer is correct. Suffice it to say that the defense raised by the petitioner was duly considered and, therefore, the report cannot be said to be perverse for having omitted to consider the defense.

9. So far as the plea regarding collective nature of the decisions is concerned, the same is not a plea of any strength. The inquiry officer has taken note of the plea of the petitioner that it was a collective decision including that of senior finance officials in the interest of NSIC has been considered in Paragraph 7.1.2.2. The inqiury officer came to the conclusion that the decision was not in the interest of NSIC.

10. The mere fact that it was a collective decision does not absolve the petitioner of the liability of taking the decision. Undoubtedly, he was the person who was at the helm of affairs and the others who may have assisted him in taking this decision did not have any superior power which might have influenced the petitioner in joining in the decision making. Therefore, it was not necessary to examine whether the decision making was collective and whether the petitioner could be absolved of any liability for making incorrect decision. Thus, the plea that the inquiry officer's report is perverse for having not taken into account the collective nature of the decision also has no force.

11. The petitioner has challenged the order of punishment by alleging that the punishment order is a non speaking order and that it has been passed without sufficient application of mind. It is contended by the petitioner that in the four page order, the disciplinary authority has merely reproduced the proceedings leading up to the order and has, thereafter, imposed the penalty. A bare perusal of the order of punishment dated 6th December, 2004 shows that the submission has no force. the portion of the order which can be attributed to the disciplinary authority, namely, the President is reproduced below:

NOW, THEREFORE, after considering the record of the inquiry and the facts and circumstances of the case, the President has come to the conclusion that Shri Mashkoor Ahmad, has sanctioned financial assistance to the three firms named in the charge sheet again and again on the pretext of one time assistance and in the process, the total liabilities kept on increasing and even then the assistance were continued to be sanctioned beyond his delegated powers and without following the prescribed procedure, instructions and guidelines, thereby jeopardizing the financial interests of the Corporation. The charges as proved are fairly serious and prove the mala fide on the part of Shri Mashkoor Ahmad, beyond any doubt. The misplaced generosity shown to the private parties had also resulted in heavy losses to the Corporation. Therefore, the President is of the view that ends of justice would be met if the penalty of recovery of 50% of Leave Encashment and forfeiture of 50% of the amount of gratuity due/admissible to Shri Ahmad, is imposed on Shri Mashkoor ahmad, as laid down under Rule 39(3) of the Central Civil Services(Leave) Rules, 1972, as followed by NSIC, and Rule 5(x) of National Small Industries Corporation Limited (Control and Appeal) Rules, 1968 read with Sub-Section (6) of Section 4 of the Payment of Gratuity Act respectively.

ACCORDINGLY, the President in exercise of powers conferred under Rule 39(3) of the Central Civil Services (Leave) Rules, 1972, and Rule 5(x) of National Small Industries Corporation Limited (Control and Appeal) Rules, 1968 read with Sub-section (6) of Section 4 of the Payment of Gratuity Act hereby orders imposition of above said penalty on Shri Mashkoor Ahmad, Chairman-cum-Managing Director(Retd.), National Small Industries Corporation Limited.

A copy of this order may be added to the Confidential Rolls of Shri Mashkoor Ahmad, Chairman-cum-Managing Director(Retd.), National Small Industries Corporation Limited.

12. It is clear that the President has duly considered the seriousness of the charges and the fact of heavy loss suffered by the respondent No. 3 on account of `misplaced generosity' shown by the petitioner to the private parties.

13. The petitioner has cited a good number of authorities in support of his plea that the disciplinary authority in passing an order of punishment is acting as a quasi judicial authority and must give a speaking order disclosing application of mind. There is no quarrel with this proposition. As mentioned above, the disciplinary authority in this case has given reasons for imposing the punishment namely the heavy losses caused to the Corporation by his `misplaced generosity' beyond his power and in violation of applicable procedure, instructions and guidelines. The disciplinary authority has agreed with the finding of the inquiry officer. It is not necessary for the disciplinary authority in such a case to give further reasons for agreeing with the decision of the inquiry officer. The Supreme Court went into the question related with the necessity to pass a speaking order in the case of Tara Chand Khatri v. Municipal Corporation of Delhi and Ors. . The Supreme Court laid down that in case the disciplinary authority differs with the inquiry officer it has an obligation to give reasons for its difference. But the situation is quite different if the disciplinary authority agrees with the inquiry officer. After examining the previous judgment on this issue, the Supreme Court said:

In this connection, we would like to make it clear that while it may be necessary for a disciplinary or administrative authority exercising quasi-judicial functions to state the reasons in support of its order if it differs from the conclusions arrived at and the recommendations made by the enquiring officer in view of the scheme of a particular enactment or the rules made there under, it would be laying down the proposition a little too broadly to say that even an order of concurrence must be supported by reasons. It cannot also, in our opinion, be laid down as a general rule that an order is a non-speaking order simply because it is brief and not elaborate. Every case, we think, has to be judged in the light of its own facts and circumstances. Reference in this connection may be made with advantage to a catena of decisions. In Bimal Kumar Pandit's case it was categorically laid down by the Constitution Bench of this Court that it was not a requirement of Article 311(2) that in every case, the punishing authority should in its order requiring the civil servant to show cause give not only the punishment proposed to be inflicted on him but also the reasons for coming to that conclusion. In that case, it was clarified that the view is not justified that the appropriate authority must state its own grounds or reasons for proposing to take any specific action against the delinquent government servant.

14. The second challenge to the order of punishment is that the punishment imposed is not within the scope of the NSIC Control & Appeal Rules, 1968 and are also barred by the Payment of Gratuity Act.

15. The relevant provisions of the NSIC (Control and Appeal) Rules, 1968 applicable to the petitioner are those available in Rule 5(x) which are as under:

During the pendency of the disciplinary proceedings, the disciplinary authority, may withhold payment of gratuity, for ordering the recovery from gratuity of the whole or part of any pecuniary loss caused to the Company if the employee is found in a disciplinary proceedings or judicial proceeding to have been guilty of offences/misconduct as mentioned in Sub-section (6) of Section 4 of the Payment of Gratuity Act, 1972 or to have caused pecuniary loss to the Company by misconduct or negligence, during his service including service rendered on deputation or on re-employment after retirement. However, the provisions of Section 7(3) and 7(3A) of the Payment of Gratuity Act, 1972 should be kept in view in the event of delayed payment, in case the employee is fully exonerated.

16. Section 4 Sub-section 6 of The Payment of Gratuity Act, 1972 prescribes as under:

Nothwithstanding anything contained in Sub-section (1),-

(a) the gratuity of an employee, whose services have been terminated for any act, willful omission or negligence causing any damage or loss to, or destruction of, property belonging to the employer, shall be forfeited to the extent of the damage or loss so caused:

(b) the gratuity payable to an employee may be wholly or partially forfeited

(i)if the services of such employee have been terminated for his riotous or disorderly conduct or any other act of violence on his part, of

(ii)if the services of such employee have been terminated for any act which constitutes an offence involving moral turpitude, provided that such offence is committed by him in the course of his employment.

Thus there are ample provisions for forfeiture of gratuity.

17. However, quoting the provision of the Act, it is submitted that gratuities can be forfeited only when an employee is terminated from service on account of his misconduct either covered by Clause (a) or Clause (b) of Sub-section 6 of Section 4 of the Gratuities Act.

18. In the present case, the petitioner had already superannuated on 31st August, 2002. He did not suffer an order of termination of his service on account of the misconduct now proved against him. It is, thus, submitted that this order of forfeiture of gratuity is bad. The petitioner had already retired when the punishment order was made and, therefore, it was not necessary to pass further order terminating his service. It is true that an order technically/formally terminating petitioner's service with effect from the date of his retirement could be passed. But such an order would not have been benefitted the petitioner in any way and might have deprived him of other benefits of the long service rendered by him with the respondent No. 3. It has to be remembered that in view of the financial loss of crores of rupees suffered by the respondent No. 3 on account of the `misplaced generosity' of the petitioner, the respondent No. 3 might as well have terminated the services of the petitioner. It cannot be said that the order of withholding of gratuity in the present case is bad because the petitioner had already retired by then and this order did not come along with an order terminating his service from the respondent No. 3.

19. In view of the above, I see no reason why the impugned order should be interfered with. The writ petition is dismissed with costs.