Shri S.M. Dongarwar vs Pec Limited
2013 Latest Caselaw 1343 Del

*     IN THE HIGH COURT OF DELHI AT NEW DELHI

+                         WP(C) Nos.7615/2008 & 540/2012

%                                                       March 19, 2013

1.    W.P.(C) NO.7615/2008

SHRI S.M. DONGARWAR                                ..... Petitioner
              Through:             Mr. Avneesh Garg, Advocate.

                          versus

PEC LIMITED                                         ..... Respondent

Through: Mr. Baankey Bihari Sharma, Advocate.

2.    W.P.(C) NO.540/2012

SHRI S.M. DONGARWAR                                ..... Petitioner
              Through:             Mr. Avneesh Garg, Advocate.

                          versus
PEC LIMITED                                         ..... Respondent
                   Through:        Mr. Baankey Bihari Sharma, Advocate.
CORAM:
HON'BLE MR. JUSTICE VALMIKI J. MEHTA

To be referred to the Reporter or not?

VALMIKI J. MEHTA, J (ORAL)


+ W.P.(C) No.7615/2008

1. This writ petition has become infructuous inasmuch as this

writ petition sought quashing of the chargesheet dated 14.7.2006 and the

departmental proceedings ensued on that basis, inasmuch as the

respondent-corporation has already withdrawn the chargesheet and

proceedings on that basis.

2. This writ petition is accordingly disposed of.

+ W.P.(C) No.540/2012

3. By this writ petition, the petitioner who was an employee of

the respondent-corporation, a public sector undertaking, seeks quashing

of the chargesheet bearing No.PEC/PERS2(117/98) dated 20.6.2011 and

the departmental proceedings initiated thereupon.

4. Two basic arguments have been urged on behalf of the

petitioner before this Court. The first argument is that issuing of

chargesheet dated 20.6.2011 is barred by the general principle of res

judicata because with respect to similar charges earlier departmental

proceedings were initiated and which resulted in passing of a penalty

order against the petitioner. The second argument is that the impugned

chargesheet dated 20.6.2011 has been issued by withdrawing an earlier

chargesheet dated 14.7.2006, although there is no power vested in the

respondent-corporation to withdraw a chargesheet and issue a fresh

chargesheet. The second argument, in fact, is an issue of lack of

jurisdiction of the respondent-corporation of issuing a fresh chargesheet.

5. The facts of the case in a nutshell are that the respondent-

corporation is engaged in selling of gold TT bars. With respect to gold

TT bars, the petitioner was found to have been guilty of various illegal

acts and which were the subject matter of the articles of charges dated

24.8.2005. The statement of articles of charges reads as under:-

"STATEMENT OF ARTICLES OF CHARGES AGAINST SHRI S.M. DONGARWAR, MARKETING MANAGER Article of charge-I While functioning as Marketing Manager at PEC Bangalore, Shri S.M. Dongarwar delivered gold of 900 TT bars on 19th /20 the March, 2003 and 1000 TT bars on 3rd /4th April, 2003 to M/s Paresh Exports Pvt. Limited, Bangalore without realizing the price of Gold.

Article of Charge-II Shri S.M. Dongarwar did not present following cheques to the bank for encashment Cheque No. Date Amount (Rs.) Drawn on th 548250 19 March, 03 6.5 crores Indusind Bank rd 500003 3 April, 03 3.0 crores J & K Bank rd 500004 3 April, 03 3.5 crores J & K Bank

Article of Charge-III Shri S.M. Dongarwar as head of sub-branch was authorized to operate PEC locker in IDBI Bank, Bangalore where gold is stored. He was required to open the bank locker whenever delivery of gold was to be given to a PEC Associate. But he opened locker on various dates without any corresponding delivery of gold record in stock register.

Article of Charge-IV Shri S.M. Dongarwar did not keep proper records of FDRs received from M/s Paresh Exports Pvt. Ltd., Bangalore against which Gold was delivered."

6. The statement of articles of charges is supported by the

detailed statement of imputation of charges containing the facts. With

regard to this chargesheet, the disciplinary authority passed an order on

3/4.4.2006 imposing the major penalty of reduction in rank of the

petitioner from a Marketing Manager to a Deputy Marketing Manager-I.

7. Thereafter, the respondent-corporation issued another

chargesheet dated 14.7.2006 against the petitioner containing the

following articles of charges:

"STATEMENT OF IMPUTATION OF MISCONDUCT IN SUPPORT OF ARTICLES OF CHARGES AGAINST SHRI S.M. DONGARWAR, DY. MARKETING MANAGER ARTICLE OF CHARGE-I Shri Dongarwar, the then Marketing Manager, PEC, Bangalore was responsible for making delivery order of gold to the associate, M/s. Paresh Exports after completing all the procedural formalities. Shri Dongarwar failed to exercise due care and caution in making deliveries of the gold to the associate with the result that a substantial debit accumulated against the associate, M/s Paresh Exports. Shri Dongarwar was raising invoices in respect of gold on his own without asking for instructions from head office. These invoices were not marked provisional even by him nor they contained any stipulation with regard to additional debits, if any, accruing on account of rupee dollar rate fixation.

ARTICLE OF CHARGE-II During 2003-04 and 2004-05 there were communications from H.O to branch office, Bangalore communicating the delivery order rates in respect of the L/Cs. These rates were advised from time to time depending upon the gold rate and the Rupee Dollar

rate. Shri Dongarwar failed to follow these rates while making delivery of the gold to M/s Paresh Exports, Bangalore. For instance, some of the specific cases where delivery order rates issued from Head Office were not followed by him are as follows:-

    File No.     LC No.       DO rate/KG      Net     Amt. Amount          of
                                              due          FDRs
                              (Rs.)
                                              (Rs.)          (Rs.)
    PS-6         9237         631944          126388934      115200000


    PS-7         9314         635332          63533257       57000000


    PS-8         9338         659786          98967837       83200000


    PS-9         9345         651181          97677121       92500000


    PS-11        9363         672157          134431356      129000000


    PS-13        9385         676712          135342408      124000000


    PS-14        9060         666278          133255690      123620898


    PS-15        9008         666600          133320092      119000000


                                              922916695      843520898




   ARTICLE OF CHARGE-III

As per procedure for import of gold the associate was required to fix dolloar rate to determine the rupee liability for the

import. Shri Dongarwar should have thus enquired the dolloar rate fixated by the associate from PEC head office and incorporated the same in setting the accounts with the associate. However, Shri Dongarwar failed to enquire the rupee dollar rate from head office while raising invoices on M/s Paresh Exports which resulted into huge debits against the associate.

ARTICLE OF CHARGE-IV The F.D.Rs issued by M/s Paresh Exports, Bangalore, at the time of maturity were sent by head office to PEC, Bangalore for encashment. However, Shri Dongarwar failed to monitor that there were no matching receipts in PEC's account equivalent to the maturity amounts of the FDRs and he did not report this to head office.

Shri Dongarwar thus failed to maintain devotion to duty, acted in a manner prejudicial to the interest of the Corporation and exhibited negligence in the performance of duty violating Rule 4(1) sub rule (ii) and Rule 5 sub rule (5) & sub rule (9) of PEC Employees Conduct, Discipline & Appeal Rules."

8. This statement of articles of charges dated 14.7.2006 was

however withdrawn in terms of order of the disciplinary authority dated

20.6.2010 (Sic:20.6.2011), and thereafter, the following statement of

articles of charges was issued against the petitioner:-

"STATEMENT OF ARTICLES OF CHARGES AGAINST SHRI S.M. DONGARWAR, DY. MARKETING MANAGER ARTICLE OF CHARGE-I Shri S.M. Dongarwar, the then Branch Manager of Bangalore Branch Office of PEC Ltd. did not keep proper records and did not carefully track the realization of the proceeds of the sixteen Fixed Deposit Receipts (FDRs) and thus did not maintain devotion to duty, acted in a manner prejudicial to the interests of PEC and functioned dishonestly and fraudulently. As a result, PEC Ltd. has suffered a huge loss of Rs.11,22,29,402/- Crores (Rupees eleven crores twenty two lakhs twenty nine thousand

four hundered and two only) in the import of gold business with one of the PEC Ltd.'s Associate M/s Paresh Exports Pvt. Ltd., Residency Road, Bangalore.

ARTICLE OF CHARGE-II The eight (8) Nos. FDRs issued in the name of PEC Ltd. by Federal Bank Ltd., Residency Road, Bangalore bearing No.098885, 098906, 098907, 098942, 098951, 098918 and 099011 totalling to a principal amount of Rs.8,10,00,000/- (Rupees eight crores ten lakhs only) submitted by M/s Paresh Exports Pvt. Ltd. to PEC Ltd. against L/C No.9363-N/04 were sent back by Head Office, PEC to Shri S.M. Dongarwar, the then Branch Manager of Bangalore Branch Office of PEC Ltd., on 28.1.2005 for submission to Federal Bank for realization of the proceeds of these FDRs. The said Shri S.M. Dongarwar did not keep track of the realization of the proceeds of these FDRs from Federal Bank to PEC. With the result, the said Mr. S.M. Dongarwar allowed Mohd. Parvez of M/s. Paresh Exports Pvt. Ltd. and the Federal Bank to misappropriate an amount of Rs.5 crores out of the proceeds of these FDRs with the intention to cheat PEC, by issuing three fresh FDRs bearing No.011932, 011933 and 011935 of Rs.2 crores, Rs.2 crores and Rs.1 crore respectively totaling to Rs.5 crores all dated 31.1.2005 of Federal Bank Ltd. favouring PEC Ltd. and remitted only Rs.3,17,58,287/- by way of Demand Drafts out of the proceeds amounting to Rs.8,17,58,287/- of the said FDRs on 31.1.2005. ARTICLE OF CHARGE-III Shri S.M. Dongarwar, the then Branch Manager of Bangalore Branch Office of PEC Ltd. in collusion with Mohd. Parvez of M/s. Paresh Exports Pvt. Ltd. vide his letter dated 31.1.2005 misrepresented the facts to PEC, Head Office that he has received the original FDRs No.099132, 099133 and 099135 with maturity value of Rs.2,02,65,417/-, Rs.2,02,65,417/- and Rs.1,01,39,028/- respectively from M/s Paresh Exports Pvt. Ltd. in collusion with the said Shri S.M. Dongarwar took delivery of additional gold worth Rs.5 crores from PEC Ltd. against these FDRs which were issued in favour of PEC Ltd. by Federal Bank Ltd,. Residency Road, Bangalore towards realization of the proceeds of the eight

FDRs as stated under Article of Charge-II hereinabove and cheated PEC of a sum of Rs.5 crores (Rupees five crores only). ARTICLE OF CHARGE-IV Shri S.M. Dongarwar, while working as Branch Manager of Bangalore Branch office of PEC Ltd. issued two discharge letters one in respect of Fixed Deposit Receipts (FDRs) bearing Nos.099011 and 099012 dated 13.12.2004 for Rs.4 crores (Rupees four crores only) to the Manager, Federal Bank Ltd. Bangalore stating that we have received FDR amounting to Rs.4 crores and that "we hereby state that we don't have any claim on the above such FDR in any manner"

AND another in respect of Fixed Deposit Receipt (FDR) No.99132 dated 31.1.2005 for Rs.2 crores (Rupees two crores only) to the Manager, Federal Bank Ltd., Bangalore stating that we have received FDR amounting to Rs.4 crores and that "we hereby state that we don't have any claim on the above such FDR in any matter"

Subsequently, the said Shri Dongarwar in his own handwriting noted down following on the face of the copy of the said respective discharge letter "Seen this document carefully, I confirmed that I had signed this letter and given to M/s Paresh Export Pvt. Ltd. (Mr. Parvez) undated and without filling the above details about FDR's"; As a result, the proceeds of the aforesaid FDRs were credited in the Current Bank Account with Federal Bank Ltd. of M/s. Paresh Exports Pvt. Ltd. Hence, the said Mr. S.M. Dongarwar in collusion with Mohd. Parvez, allowed M/s. Paresh Exports Pvt. Ltd. to cheat PEC Ltd. of the proceeds of the said FDRs, amounting to Rs.6,00,96,000/- (Rupees six crores ninety six thousand only).

ARTICLE OF CHARGE-V Shri S.M. Dongarwar, the then Branch Manager of Bangalore Branch Office of PEC Ltd., did not keep track of realization of the proceeds of the Fixed Deposit Receipts (i) No.672301 (CC-

7775) for Rs.1 crore having maturity date as 26.3.2005, (ii) No.67230 (CC-7776) for Rs.1 crore having maturity date as 26.3.2005 and (iii) No.672307 (CC-7787) for Rs.2 crores having maturity date as 30.3.2005 issued by Federal Bank Ltd., Residency Road, Bangalore in the name of PEC Limited and committed fraud with PEC Ltd. in collusion with Mr. K. Rajendran, the then Executive Assistant, PEC, Mohd. Parvez of M/s. Paresh Exports Pvt. Ltd. and the officials of the Federal Bank Ltd., Residency Road, Bangalore. Mr. S.M. Dongarwar thus caused PEC to a loss of Rs.21,33,402/- and allowed undue and illegal benefit to M/s. Paresh Exports Pvt. Ltd. of the said amount due to PEC towards interest on these FDRs which has been credited to the Bank account of M/s. Paresh Exports Pvt. Ltd. with Federal Bank Ltd., Residency Road, Bangalore Shri S.M. Dongarwar also got obtained a loan of Rs.4 crores from Federal Bank Ltd. against these three FDRs to M/s Paresh Exports Pvt. Ltd. by opening Loan account No.AAD-1497 in the name of PEC Ltd.

By the above acts, Shri S.M. Dongarwar, DMM-1 failed to maintain absolute integrity, devotion to duty, do nothing which is unbecoming of a public servant, acted in a manner prejudicial to the interests of the Corporation, exhibited negligence in the performance of duty and commissioned acts which amount to fraud and dishonesty in connection with the business, a criminal offence involving moral turpitude, an abetment to an act which amounts to misconduct thus violating Rules 4(1)(i), (ii), (iii) Rule 5(1), Rule 5(5), Rule 5(9), Rule 5(17) & Rule 5(30) of PEC Employees's (Conduct, Discipline & Appeal) Rules, 1975.

9. Before I proceed further, one very important fact is required

to be noted inasmuch as that because of the illegal actions which are

stated by the respondent against the petitioner, the respondent-corporation

has suffered a total loss of a huge amount of Rs.11,22 ,29,402/-. The loss

is caused because gold bars were delivered by the petitioner to one M/s.

Paresh Exports Pvt. Ltd., Residency Road, Bangalore against the cheques

which were not presented or against FDRs which were not encashed or

the FDRs were allowed to be wrongly released causing undue and illegal

benefit to the customer. Let us now examine the two arguments which

have been urged on behalf of the petitioner before this Court.

10. The first argument is that issuing of statement of articles of

charges dated 20.6.2011 is barred by the principle of res judicata as

earlier similar statement of articles of charges was issued and which

resulted in passing of the penalty order dated 3/4.4.2006 reducing the

petitioner from the rank of Marketing Manager to Deputy Marketing

Manager-I. I have already reproduced the first statement of articles of

charges issued against the petitioner dated 24.8.2005. When we compare

this statement of articles of charges to the impugned statement of articles

of charges dated 20.6.2011, we find that articles of charges are totally

separate. Whereas in the first statement of articles of charges there were

limited averments with regard to non-presenting of certain other cheques

or not keeping of the record of removal of gold in the stock register as

also non-realization of the price with respect to 900 gold TT bars

delivered on 19/20.3.2003 and 1000 gold TT bars on 3/4.4.2006 to M/s.

Paresh Exports Pvt. Ltd., the subsequent article of charges dated

20.6.2011 pertains to totally separate gold bars and which were not the

subject matter of the first statement of articles of charges dated 24.8.2005.

Counsel appearing for the respondent confirms the fact that the gold bars

which were in issue and the consequent charges as per the first statement

of articles of charges dated 24.8.2005 will not be and are not the subject

matter of the enquiry which is presently initiated against the petitioner in

terms of subsequent statement of articles of charges dated 20.6.2011.

Accordingly, in my opinion, there is no ground at all for the petitioner to

state that there is identity of articles of charges as per the first statement

of articles of charges dated 24.8.2005 and the present article of charges

dated 20.6.2011, the subject matters of the two statements of articles of

charges being different.

11. The second argument which is urged on behalf of the

petitioner is that there is no provision for dropping the earlier statement of

articles of charges and issuing a fresh statement of articles of charges

inasmuch as the articles of charges dated 14.7.2006 cannot be replaced

with the articles of charges dated 20.6.2011. It is argued that before

dropping certain articles of charges and issuing fresh articles of charges,

it is necessary that there should be appropriate powers in the respondent-

corporation as per its rules for dropping of a chargesheet and issuing of a

fresh chargesheet/articles of charges. In my opinion, even this argument

is wholly without merit because really it is the petitioner who has to

prove that there is a bar in the respondent-corporation to withdraw a

chargesheet because it is not the law that the respondent cannot issue a

fresh chargesheet by actually amending and adding to an earlier

chargesheet. Actually, the action of the respondent in some way is

equivalent to amending of a plaint containing the cause of action. Since

there cannot be a bar upon the departmental authority altering the articles

of charges, so that a clear cut chargesheet is thereafter made out, I do not

find that petitioner is entitled to complain with regard to altering of article

of charges. In fact even de hors the issue of amendment of articles of

charges similar to amendment of a plaint there is no bar in law in

initiating a new enquiry on new article of charges. The petitioner will

have a right in the departmental proceedings to contest the charges on all

issues of facts and law, but the enquiry itself cannot be quashed. The

petitioner can complain about altering of articles of charges, if the

enquiry proceedings has already been completed and a penalty is

proposed to be issued not on the basis of the old articles of charges for

which enquiry was held but with respect to new articles of charges with

respect to which there are no departmental proceedings, however, if

departmental proceedings are still to take place i.e both the parties have to

lead evidence and the enquiry officer has to give a report, there is no

prejudice in issuing of a fresh chargesheet once the corporation found that

there was additional material or certain facts may have been left out and

which were thereafter sought to be added in the new chargesheet dated

20.6.2011. There is no principle of estoppel with respect to articles of

charges once the new articles of charges seek to add facts which in any case

have yet to be enquired into and findings arrived at before the same can be

the basis of an order by the disciplinary authority.

I may note that in this case enquiry proceedings were to be

continued but no final order was to be passed as per the order of the learned

Single Judge of this Court on 13.8.2012.

12. The aforesaid facts show that petitioner has been allegedly

guilty of causing loss of crores of rupees to the respondent-corporation (of

course, these are prima facie observations and the merits of the same will be

seen during the enquiry proceedings). It is thus not possible to allow the

petitioner to scuttle the enquiry proceedings on the basis of lack of articles

of charges against him. On the one hand, loss has been caused to the

respondent-corporation and on the other hand the corporation is being

prevented from carrying out the departmental enquiry against the petitioner,

and with respect to which there cannot be any allegation of any

bias or non-following of the due process of law, and which is not even so

alleged by the petitioner.

13. In view of the above, the writ petition is dismissed with costs

of Rs.15,000/-. Costs can be recovered by the respondent-corporation in

accordance with law.

VALMIKI J. MEHTA, J MARCH 19, 2013 Ne