Mrs. Sarita Dewan vs National Fertilizers Limited & ...
2008 Latest Caselaw 1559 Del

*      IN THE HIGH COURT OF DELHI AT NEW DELHI

+                   WP (C) No. 8219/2004


                                  RESERVED ON :              19th August, 2008

%                                 DATE OF DECISION : September 5th , 2008



MRS. SARITA DEWAN                               ..... Petitioner
                                  Through:      Mrs. Rekha Palli, Advocate


                                      Versus

NATIONAL FERTILIZERS LIMITED
& ORS.                                          ....Respondents
                         Through:               Mr. G. Joshi, Advocate.


CORAM:
HON'BLE MR. JUSTICE MANMOHAN

1. Whether Reporters of local papers may be allowed to see the judgment?
2. To be referred to the Reporter or not?
3. Whether the judgment should be reported in the digest?


                           JUDGMENT

MANMOHAN, J:

1. The present writ petition has been filed under Article 226 of the

Constitution of India for a Writ of Certiorari for quashing the Articles of

Charge issued vide Memorandum dated 10th July, 2003 and the orders

which arose consequent thereto vide Enquiry Report dated 22nd July, 2003,

the order of the disciplinary authority dated 13th January, 2004 and the order

of the Appellate Authority dated 7th April, 2004 upholding the order of Petitioner's

dismissal from Respondent No. 1's service. The Petitioner has also prayed

for her reinstatement with all consequential benefits and dues that have

accrued till date.

2. The facts of this case are that on 11th June, 1987, the Petitioner was

appointed to the post of Steno Clerk in the Respondent Company.

3. On 10th August, 1987 the Petitioner applied to the Respondent

Company for enrollment of herself, her husband, her mother-in-law and her

sister-in-law for availing medical and LTC facilities. In this letter, it was

stated that Petitioner's mother-in-law, now deceased, Late Smt. Ram

Chameli Dewan and sister-in-law Kumari Kiran Lata have no source of

income and were residing with the Petitioner and her husband. In fact, the

sister-in-law of the Petitioner was mentally retarded and unmarried.

4. On 11th September, 1987 the Deputy Manager (Personnel) of the

Respondent Company informed the Petitioner that only her mother-in-law

was entitled to avail medical reimbursement facility in accordance with the

Respondent Company Rules. However, the Petitioner's request for treating

her mother-in-law and sister-in-law as her dependents for the purposes of

LTC was turned down.

5. On 5th June, 1996 a Deed of Family Settlement was executed

amongst the family members of the Petitioner's husband. Since the entire

controversy in the present petition revolves around the Deed of Family

Settlement, the same is being reproduced hereinbelow for ready reference :-

"DEED OF FAMILY SETTLEMENT THIS DEED OF FAMILY SETTLEMENT IS EXECUTED AT DELHI on this 5th day of January, 1996, between (1) Smt. Ram Chameli Dewan, wife of late Shri O.P. Dewan, aged 71 years, resident of 1/15, Old Double Storey, Lajpat Nagar-IV, New Delhi; (2) Smt. Sneh Lata Kumar, wife of Shri Gulshan Rai Kumar, aged 51 years, resident of BSS, Nagar Ward-9, Bargarh, Orissa; (3) Smt. Prem Lata Sharma, wife of Shri J.P. Sharma, aged 49 years, resident of 2631, Sector 40-C, Chandigarh; (4) Kum. Kiran Lata, daughter of late Shri O.P. Dewan, aged 45 years, resident of 1/15, Double Storey, Lajpat Nagar-IV, New Delhi and (5) Shri Bhupinder Kishore, son of late Shri O.P. Dewan, aged 42 years, resident of 1/15, Old Double Storey, Lajpat Nagar-IV, New Delhi (which expression shall unless expressly excluded by the contextor by law; be deemed to include her/his heirs, executors, administrators, legal representatives, survivors and assigns);

WHEREAS party No. 1 is the sole owner and the allottee of property No. 1/15, Old Double Storey, Lajpat Nagar- IV, New Delhi, which was allotted to her by the Ministry of Rehabilitation in lieu of the property left behind during the partition in the partition now known as Pakistan, and the rest of the parties are her children (Parties No. 2, 3 and 4 are her daughters and party No.5 is her son);

Moreover there is another son of Smt. Ram Chameli Dewan i.e., Nand Kishore who has already written a Deed of Disclaimer in settlement of his claim in the said property, therefore, he has nothing to do with the said property i.e., 1/15, Old Double Storey, Lajpat Nagar-IV, New Delhi due to which he has not been made a party in the said deed The said deed of disclaimer is registered documents vide No. 8534, in additional book No. I, Volume No. 6248 at pages 22 and is dated 21.11.1988.

AND WHEREAS with the joint co-operation of each other and blessing of Smt. Ram Chameli Dewan who is the Head of the Family, have grown so high, settled in life and they are intrinsically wedded with love and affection and they are collectively and individually respect their mother Smt. Ram Chameli at the highest esteem;

AND WHEREAS it has become necessary and expedient, in view of the fact that the executant No. 1 being Head of the Family and having attained the age of 71 and

moreover not keeping well, during her life time, settlement of every type may be arrived at, so that after her death any kind of disputes or misunderstanding may not arise. It is, therefore, felt necessary and expedient in the interest of all the parties that these may be reduced into writing as under:-

           NOW THIS DEED                OF     FAMILY     SETTLEMENT
       WITNESSTH AS UNDER:

1. That this Deed of Family Settlement shall be effective immediately.

2. That flat/Property No. 1/15, Old Double Storey, Lajpat Nagar-IV, New Delhi allotted to party No. 1 by the Ministry of Rehabilitation now known as Land & Development Office in lieu of the property left behind at the time of partition in Pakistan and whereas at present Smt. Ram Chameli Dewean is staying with her unmarried daughter party No. 4 and the family of party No. 5.

3. That all the children of party No. 1 i.e., Smt. Ram Chameli Dewan are happily married and well settled in life except party No. 4 Kum. Kiran Lata who is still unmarried at the right age of 45 years and shall remain so till rest of her life. Moreover, she is not educated and not working, has no means of livelihood and is dependent upon her mother and brother i.e., party No. 1 and party No. 5 (i.e., Smt. Ram Chameli Dewan and Bhupinder Kishore).

4. That it is further settled between all the executants of this deed that the property at 1/15, Old Double Storey, Lajpat Nagar-IV, New Delhi shall hereafter belong to Kum. Kiran Lata to the exclusion of others.

5. That it is further settled that if Shri Bhupinder Kishore party No. 5 shall pay a nominal rent to his sister i.e., party No. 4 if he stays in the said property, otherwise one room at the back side shall be used by party No. 1 i.e., Smt. Ram Chameli Dewan and her daughter party No. 4 Kum. Kiran Lata and the front portion will be let out on rent and the rent shall be taken by Kum. Kiran Lata, party No. 4 for her livelihood and shall give receipt for the same as the owner of the property to the tenant then Shri Bhupinder Kishore shall make his own arrangements elsewhere.

6. That the expenses, if any, are to borne in connection with mutation of the property etc. by Kum. Kiran Lata Party No. 4 out of her income from the rent so received.

7. That in so far as moveable properties are concerned it has now been so arranged that mutation in that respect is not necessary as the constitution etc. has been so arranged so as

to suit each other and there is no likelihood of there being any disturbance of any kind. Further if any kind of dis-agreement of any disturbance or dispute of any kind arises before or after the death of party No. 1 i.e., Smt. Ram Chameli Dewan who is the Head of the Family, she authorizes her daughter Smt. Prem Lata Sharma, Party No. 3 to clear or sort out the matter in the peaceful manner and if not able to do so then take relief from the Court of Law. Further she shall also see that this Deed of Family Settlement is executed property and shall keep the originals with her giving a copy to each of the parties.

8. That in so far as Smt. Ram Chameli Dewan party No. 1 is concerned she hereby in-deference to the wishes of all the executants including herself relinquishes her interest in the property in favour of party No. 4 Kum. Kiran Lata. However, so long as she remains alive she shall have the right of enjoyment of the said property.

IN WITNESS WHEREOF we the executants of the Deed of Family Settlement signed and put hands on this Deed of Family Settlement in the presence of the following witnesses on the day of the month and the year first above written.

WITNESSES :

[emphasis supplied]"

6. According to the Petitioner, in pursuance to the family settlement, she

started paying a monthly rent of Rs. 2,000/- to her sister-in-law Kumari Kiran

Lata. On furnishing of the said rent receipts, a sum of Rs. 2,000/- per month

was reimbursed by the Respondent Company as House Rent Allowance, in

accordance with its rules to the Petitioner. This reimbursement continued till

the year 2003.

7. In April, 2002 the Petitioner was transferred to Nangal in Punjab, but

on her representation to the Ministry against the transfer, the said transfer

order was cancelled. According to the Petitioner, this was the beginning of

her trouble as the Senior Management of the Respondent Company turned

against her.

8. On 17th March, 2003 the Vigilance Department of the Respondent

Company asked the Petitioner to clarify about genuineness of the rent

receipts produced by her for claiming House Rent Allowance as well as to

furnish documentary proof regarding ownership of the Lajpat Nagar house.

9. In response, the Petitioner clarified the aforesaid factual position vide

her letter dated 24th March, 2003. A copy of the Deed of Family Settlement

was also enclosed along with said letter.

10. The Vigilance Department of the Respondent Company then asked

the Petitioner to clarify as to whether mutation of the Lajpat Nagar property

had been carried out by the Municipal Corporation of Delhi in pursuance to

the Deed of Family Settlement and whether said Deed had been registered

or not?

11. The Petitioner vide her letter dated 7th April, 2003 clarified that to her

knowledge the Family Settlement was not registered but her sister-in-law

had applied for mutation of the said property with Municipal Corporation of

Delhi vide her letter dated 18th April, 2000.

12. On 10th July, 2003 the Petitioner was issued a Memorandum wherein

it was stated that the Respondent proposed to take disciplinary action

against her in terms of Clause 32 of National Fertilizers Limited Employees

(Conduct, Discipline, Appeal) Rules on the charges listed in the Statement of

Articles of Charge and Imputation of Misconduct in support of articles of

charge. The primary charge against the Petitioner was that in view of para 8

of the Deed of Family Settlement, the Petitioner's mother-in-law continued to

be the sole and absolute owner of the house till the date of her death and

the rent paid by the Petitioner was actually the income of her mother-in-law.

Consequently, it was alleged that the mother-in-law was not dependent on

the Petitioner and not entitled for reimbursement of her medical expenses. It

was alleged that the Petitioner had concealed these facts with mala fide

intention and continued claiming reimbursement of medical expenses for

treatment of her mother-in-law by giving false statement that her income

from all sources was less than as prescribed under the NFL Medical

Attendance and Treatment Rules. Therefore, according to Respondent

Company, Petitioner exhibited lack of integrity and devotion to duty and

acted in a manner prejudicial to the interest of the company, thereby

contravening Rules 5(1) (a), (b), (d), 6.4 and 6.5 of National Fertilizers

Limited Employees (Conduct, Discipline, Appeal) Rules.

13. Thereafter an enquiry was conducted by the Respondent Company. It

is the Petitioner's case that the said enquiry proceedings were conducted in

violation of principles of natural justice inasmuch as the Enquiry Officer

permitted introduction of three documents without notice to her and further

despite the Petitioner's request for an adjournment on the ground that her

son was suffering from Dengue, the Enquiry Officer closed the enquiry

proceedings and, therefore, she was not able to examine her sole witness -

her husband.

14. On 22nd December, 2003 the Enquiry Officer in his report concluded

that the mother-in-law was the absolute owner of the Lajpat Nagar property

till she was alive i.e. till 31st January, 2003 and, therefore, the rental income

belonged to the mother-in-law rendering her not entitled to reimbursement of

medical claims. The Enquiry Officer further concluded that the Petitioner

had concealed vital facts from the Management of the Respondent

Company and had continued to claim medical reimbursement for her

mother-in-law by giving false declaration that the income of her mother-in-

law from all sources was less than the prescribed limit under the Medical

Attendance and Treatment Rules. The basis of conclusion of the Enquiry

Officer was a legal opinion given by the Company Secretary of the

Respondent Company with regard to ownership of the Lajpat Nagar property

with reference to the Deed of Settlement. In the said opinion the Company

Secretary of Respondent Company had opined that Petitioner's mother-in-

law, Ram Chameli, "shall have the right of enjoyment of the property so long

as she remains alive and Kumari Kiran Lata shall become owner of the

property only after the death of Smt. Ram Chameli Dewan and whatever

income has accrued from the property will belong to Smt. Ram Chameli."

15. On the basis of the said opinion, the Enquiry Officer concluded that

the Petitioner was "fully blameworthy of misconduct as alleged in the

charge".

16. The disciplinary authority not only accepted the finding of the enquiry

report but also ordered imposition of major penalty of dismissal on the

Petitioner under Rule 29(j) of NFL Employees' (CDA) Rules.

17. Though the Petitioner filed an appeal before the Appellate Authority,

(Chairman and Managing Director of the Respondent Company) against the

dismissal order, but the same was rejected on 7th April, 2004.

18. Learned Counsel for the Petitioner, Mrs. Rekha Palli submitted that in

pursuance to the Family Settlement dated 5th June, 1996, the Petitioner's

mother-in-law was no longer the owner of the Lajpat Nagar property. In this

connection Mrs. Palli relied upon the judgment of the Apex Court in Tek

Bahadur Bhujil Vs. Debi Singh Bhujil & Ors. reported in AIR 1966

Supreme Court 292 wherein it has been held, "It is only when the parties

reduce the family arrangement in writing with the purpose of using that

writing as proof of what they had arranged and, where the arrangement is

brought about by the document as such, that the document would require

registration."

19. Mrs. Palli also relied upon observations to the same effect in Ram

Chander Das Vs. Girja Nandini Devi & Ors. reported in AIR 1966

Supreme Court 323 para 11.

20. In the alternative, she submitted that even if the Petitioner's mother-in-

law continued to be the owner of the Lajpat Nagar property, then also how

could rent paid by the Petitioner to her sister-in-law be treated as rent paid to

the mother-in-law.

21. She further submitted that even if the rental income was presumed to

be Petitioner's mother-in-law's income then also how could it be concluded

that the Petitioner had concealed any fact from the Respondent Company.

She contended that at best it could be held that the Petitioner had committed

a mistake in interpretation of the Deed of Family Settlement but it could not

be held that the Petitioner had deliberately concealed some vital facts to

take undue advantage. Mrs. Palli also raised issue of violation of principle of

natural justice by the Enquiry Officer inasmuch as he had allowed the

Respondent Company to introduce three new documents at a belated stage

and not allowed the Petitioner's husband to be produced as a witness.

22. Lastly, Mrs. Palli submitted that in the present facts of the case the

punishment imposed upon the Petitioner was very excessive and

disproportionate to the alleged misconduct. In this connection she relied

upon a judgment of this Court in Ramesh Chander Vashisth Vs. Chief

General Manager State Bank of India reported in (2002) 62 DRJ 193

wherein it was held, "The rule does not specify as to what kind of

misconduct is to be visited with a minor or major punishment. The service

rules only fix the gradation of the punishment but evidently leave the

discretion in this regard to the disciplinary authority and in appeal to the

appellate authority. Since the service rules enumerate and list out various

punishments by way of minor and major penalty and the effect of both the

penalties is materially different, the provision casts a duty on the authority

concerned to record its reasons while awarding a particular punishment,

more so when a major penalty is proposed. Recording of reasons would

otherwise be necessary because unless the reasons are indicated, the

higher authority cannot find out as to what weighed with the concerned

authority to inflict a particular punishment. Needless to say that a penalty

has to be commensurate with the gravity of the misconduct for that any

penalty disproportionate to the gravity of the misconduct would be violative

of Article 14 of the Constitution of India, warranting interference by this

Court."

23. Mr. G. Joshi, learned Counsel for the Respondent Company

submitted that a Family Settlement can convey an interest in immovable

property only if the same was registered. In this connection Mr. Joshi

referred to and relied upon Sections 17 and 49 of the Registration Act, 1908.

The said Sections are reproduced hereinbelow for ready reference :-

"17. Documents of which registration is compulsory.- (1) The following documents shall be registered, if the property to which they relate is situate in a district in which, and if they have been executed on or after the date on which, Act No. XVI

of 1864, or the Indian Registration Act, 1866, or the Indian Registration Act, 1871, or the Indian Registration Act, 1877, or this Act came or comes into force, namely:-

(a) instruments of gift of immovable property;

(b) other non-testamentary instruments which purport or operate to create, declare, assign, limit or extinguish, whether in present or in future, any right, title or interest, whether vested or contingent, of the value of one hundred rupees and upwards, to or in immovable property;

(c) non-testamentary instruments which acknowledge the receipt or payment of any consideration on account of the creation, declaration, assignment, limitation or extinction of any such right, title or interest; and

(d) leases of immovable property from year to year, or for any term exceeding one year, or reserving a yearly rent;

(e) non-testamentary instruments transferring or assigning any decree or order of a Court or any award when such decree or order or award purports or operates to create, declare, assign, limit or extinguish, whether in present or in future, any right, title or interest, whether vested or contingent, of the value of one hundred rupees and upwards, to or in immovable property:

49. Effect of non-registration of documents required to be registered.- No document required by Section 17 [or by any provision of the Transfer of Property Act, 1882 (4 of 1882), to be registered shall-

(a) affect any immovable property comprised therein, or

(b) confer any power to adopt, or (C) be received as evidence of any transaction affecting such property or conferring such power,

unless it has been registered:

[Provided that an unregistered document affecting immovable property and required by this Act or the Transfer of property Act, 1882 (4 of 1882), to be registered may be received as evidence of a contract in a suit for specific performance under Chapter II of the Specific Relief Act, 1877 (3 of1877)or as evidence of any collateral transaction not required to be effected by registered instrument.]"

24. In this connection Mr. Joshi also referred to the judgments of the Apex

Court in Raghunath & Ors. Vs. Kedar Nath AIR 1969 Supreme Court

1316. The Supreme Court in the said judgment has held that in the absence

of registration of a document, the same cannot be received in evidence of

any transaction effecting the property in view of Section 49 of the

Registration Act.

25. Mr. Joshi contended that the Petitioner had given wrong information to

the Respondent Company with regard to the ownership of the Lajpat Nagar

property and as the rental income was actually the Petitioner's mother-in-

law's income, she was not liable to be treated as a dependent upon the

Petitioner and consequently she was not entitled to any medical

reimbursement. Mr. Joshi pointed out that in fact, Respondent Company

had filed a suit for recovery of monies reimbursed to the Petitioner on

account of medical expenses incurred on the treatment of Petitioner's

mother-in-law.

26. Mr. Joshi further submitted that it was not open to the High Court to

act as a Court of Appeal and reappreciate the evidence. In this connection,

he relied upon the judgment of the Apex Court in State Bank of India &

Ors. Vs. Ramesh Dinkar Punde reported in (2006) 7 SCC 212. Mr. Joshi

further submitted that courts should interfere with penalty/punishment only

where punishment is shockingly disproportionate to the misconduct. In the

normal course even if punishment imposed was shockingly disproportionate,

it would be appropriate for the court to direct the disciplinary or appellate

authority to reconsider the penalty imposed. In this connection, Mr. Joshi

relied upon the judgment of the Apex Court in Union of India Vs. Dwarka

Prashad Tiwari reported in (2006) 10 SCC 388.

27. In my view, the submissions of Mr. Joshi are untenable in law as bona

fide and voluntarily executed family arrangements/settlements have been

held to be legal, valid and enforceable even though the said family

arrangements may not be registered. In fact, the Hon'ble Supreme Court in

the case of Kale & Ors. Vs. Deputy Director of Consolidation & Ors.

reported in AIR 1976 Supreme Court 807 has held as under :-

"10. In other words to put the binding effect and the essentials of a family settlement in a concretised form, the matter may be reduced into the form of the following propositions: (1) The family settlement must be a bona fide one so as to resolve family disputes and rival claims by a fair and equitable division or allotment of properties between the various members of the family; (2) The said settlement must be voluntary and should not be induced by fraud, coercion or undue influence; (3) The family arrangements may be even oral in which case no registration is necessary;

(4) It is well settled that registration would be necessary only if the terms of the family arrangement are reduced into writing. Here also, a distinction should be made between a document containing the terms and recitals of a family arrangement made under the document and a mere memorandum prepared after the family arrangement had already been made either for the purpose of the record or for information of the Court for making necessary mutation. In such a case the memorandum itself does not create or extinguish any rights in immoveable properties and therefore does not fall within the mischief of Section 17(2) (sic) (Section 17(1)(b)?) of the Registration Act and is, therefore, not compulsorily registrable;

(5) The members who may be parties to the family arrangement must have some antecedent title, claim or interest even a possible claim in the property which is acknowledged by the parties to the settlement. Even if one of the parties to the settlement has no title but under the arrangement the other party relinquishes all its claims or titles in favour of such a person and acknowledges him to be the

sole owner, then the antecedent title must be assumed and the family arrangement will be upheld, and the Courts will find no difficulty in giving assent to the same;

(6) Even if bona fide disputes, present or possible, which may not involve legal claims are settled by a bona fide family arrangement which is fair and equitable the family arrangement is final and binding on the parties to the settlement."

28. In the case of Hari Shankar Singhania & Ors. Vs. Gaur Hari

Singhania & Ors. reported in (2006) 4 SCC 658 the Apex Court has

reiterated that the family arrangement/settlement stand on a different

pedestal and technical considerations should not stand in the way of

enforcement of family arrangement/settlement. In this judgment the case

law regarding the family arrangement/settlement was discussed. The

relevant portion of the said judgment is reproduced hereinbelow for ready

reference :-

"42. Another fact that assumes importance at this stage is that, a family settlement is treated differently from any other formal commercial settlement as such settlement in the eye of the law ensures peace and goodwill among the family members. Such family settlements generally meet with approval of the courts. Such settlements are governed by a special equity principle where the terms are fair and bona fide, taking into account the well-being of a family.........

53. Therefore, in our opinion, technical considerations should give way to peace and harmony in the enforcement of family arrangements of family arrangements or settlements."

29. I am also of the view that para 8 of the Deed of Family Settlement only

gives a life time interest of enjoyment of the said property to the Petitioner's

mother-in-law. Since right, title and interest had already been conveyed to

the Petitioner's sister-in-law, the same did not vest with the Petitioner's

mother-in-law subsequent to the execution of the deed of settlement.

30. The case of Raghunath (Supra) referred to by Mr. Joshi has no

relevance to the present case as the same does not deal with family

settlements which, as pointed out hereinabove, are to be treated differently

from any other formal commercial document.

31. Consequently the Respondent's argument and the legal opinion of the

Company Secretary, which formed the basis of the Enquiry Officer's

findings, that a non registered family settlement can convey no title or

interest in the property and the Petitioner's mother-in-law continued to be the

owner of the property is contrary to facts and untenable in law.

32. I am also of the view that as the Petitioner's husband and his family

members have accepted the deed of family settlement and have acted in

pursuance thereto, how can the Respondent Company contend that such a

settlement conveys no right or title or interest in the property. In any event,

since the Petitioner's husband and his family members have acted upon the

said settlement, it is not understood as to how the Enquiry Officer, the

disciplinary authority and the Appellate Authority came to the conclusion that

the Petitioner had concealed vital facts and had continued to claim medical

reimbursement for her mother-in-law by giving false declaration that the

income of her mother-in-law was less than the prescribed limit. I am also in

agreement with Mrs. Palli's argument that without a deeming statutory

provision, it was not open to the Respondent Company to treat the rent paid

by the Petitioner to her sister-in-law as income of the mother-in-law.

33. I am also of the view that the punishment meted out to the Petitioner

is excessive and shockingly disproportionate to the alleged misconduct

committed by the Petitioner. Since I have accepted the Petitioner's primary

submission, I am not deciding the Petitioner's other submission with regard

to the violation of principles of natural justice by the enquiry officer.

34. Consequently, the present writ petition is allowed and the Petitioner is

directed to be reinstated in service. However, keeping in view the fact that

the Petitioner has not worked with the Respondent Company during the

interregnum, the Petitioner would not be entitled to any salary from the date

of her dismissal to the date of her joining the service. However, this period

would be counted for giving terminal benefits like gratuity, provident fund as

well as for determining the Petitioner's seniority.

September 5th , 2008                                             [Manmohan]
rn                                                                 Judge