S. K. Pattanayak vs Ministry Of Railways And Ors.
2019 Latest Caselaw 2959 Del

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*      IN THE HIGH COURT OF DELHI AT NEW DELHI

                                     Reserved on:       10.05.2019
                                     Pronounced on:     01.07.2019

+      W.P.(C) 8310/2018 & CM APPL. 31902/2018
       S. K. PATTANAYAK                                 ..... Petitioner
                         Through     Mr.Shaurya Sahay, Adv. with
                                     Mr.Chetan Joshi, Adv.

                         versus

       MINISTRY OF RAILWAYS AND ORS.            ..... Respondents
                     Through Ms.Maninder Acharya, ASG with
                             Mr.V.S.R. Krishna, Mr.Sahil Sood,
                             Mr.Harshul Choudhary & Mr.Viplav
                             Acharya, Advs. for R-1/Railways.
                             Ms.Bharathi Raju, CGSC for R-2.
                             Mr.Sunil K. Jain, Adv. with Ms.Reeta
                             Chaudhary, Adv. for R-4.

       CORAM:
       HON'BLE MR. JUSTICE SURESH KUMAR KAIT

                            JUDGMENT

1. Vide the present petition, the petitioner seeks direction thereby

quashing the office order dated 26.07.2018 issued by the respondent no.4-

Corporation, whereby the services of the petitioner as Managing Director of

respondent no.4 has been terminated forthwith. He further seeks direction

thereby quashing the recommendation dated 26.07.2018 issued by

respondent no.1 recommending the termination of the petitioner.

2. The case of the petitioner is that he joined as Managing Director of

respondent no.4-Corporation on 09.03.2017 as per respondent no.1's letter

dated 16.02.2017. The petitioner was appointed to the post with sanction of

the Hon'ble President of India. The appointment of the petitioner was on

certain terms and conditions which were contained/detailed in letter dated

16.05.2017. The impugned order of termination has been passed without

notice to the petitioner and is violative of the terms of the appointment.

3. As per clause 1.1, the period for his appointment will be for five years

w.e.f. 09.03.2017 in the first instance or till the date of superannuation or

until further orders, whichever event occurs earlier and in accordance with

the provisions of the Companies Act, 1956 as amended. The appointment

may, however, be terminated even during this period by either side on three

months' notice or on payment of three months' salary in lieu thereof.

However, while issuing the termination letter, neither notice nor salary in

lieu thereof has been given to the petitioner. Thus, the terms of appointment

has clearly been violated. Clause 1.15 of the terms of appointment

stipulated that the petitioner would be governed by the provisions of the

IRFC (Conduct, Discipline & Appeal) Rules which contain detailed

provisions governing the manner, mode and methodology of conduct of

inquiries etc. against the employees of respondent no.4.

4. As stated above, the petitioner joined as Managing Director of

respondent no.4 corporation on 09.03.2017, thus completed one year tenure

on 08.03.2018. But the petitioner did not receive confirmation during the

said period. Therefore, by operation of the PESB Guidelines and the

DOP&T OM, the petitioner stood deemed confirmed to the post of MD of

respondent no.4 as on date of completion of one year on the said post.

5. Counsel appearing on behalf of the petitioner submits that during the

tenure of the petitioner as MD of respondent no.4, the petitioner

spearheaded several unprecedented initiatives with respondent no.4 resulting

in unprecedented growth. The petitioner, during his tenure, attained the

highest ever single year borrowing target of ₹36,591.67 Crores, which was a

45% growth in annual disbursement to the respondent no.1 Ministry. The

petitioner also took the lead in raising foreign currency borrowing of 500

million USD through issue of green bonds in the overseas market which is

first of its kind for the railway sector funding in India. As a result of the

drive and determination of the petitioner, the respondent no.4 attained

'excellent' rating for the year 2017-18 from the Department of Public

Enterprises. Therefore, on the competence and performance front, the

petitioner has excelled during the last one year or so, which is evident by

the MoU rating for the year 2017-18. As per the guidelines dated 31.03.2011

of PESB which govern the service conditions of the petitioner, he was

deemed to have been confirmed as the MD of respondent no.4 upon

completion of the tenure of one year. Despite the said position of law, no

formal order confirming the petitioner was passed by respondent no.4,

which is directly in teeth with the rule position on the subject. The decision

of not confirming the petitioner and further to terminate his services is,

therefore, actuated by malice.

6. Learned counsel further submits that instead of confirmation, the

petitioner got wind that the Ministry was contemplating proposal for non-

confirmation of the petitioner. Accordingly, the petitioner made

representation dated 05.06.2018 to the Cabinet Secretary on the issue of his

non-confirmation. However, the respondent-Ministry took a decision on

27.06.2018 and communicated the same to divest the petitioner of all powers

of the MD of IRFC with immediate effect. The said order was questioned by

Company Board of respondent no.4-Corporation, when it was put up for

ratification on 11.07.2018. The said Board considered it appropriate to refer

the matter to respondent no.1-Ministry for due clarification on the merit of

the issuing divestment order without due diligence process. However,

respondent no.1 vide its letter dated 16.07.2018 initiated disciplinary

proceedings against the petitioner under Rule 25 of the Indian Railway

Finance Corporation Ltd. (Conduct, Discipline & Appeal) Rules, 2008. The

serving of the chargesheet upon the petitioner itself is indicative of the stand

of the respondent that the petitioner was deemed to be a confirmed

employee and the petitioner could be subjected to any punitive measures

only upon conclusion of the said disciplinary proceedings.

7. According to the procedure laid down under the rules, the petitioner

was served the articles of charge intimating the petitioner of the

charges/allegations against him. The petitioner was accused of petty charges

which were on the face of it concocted and fabricated. The charges revealed

that while the petitioner as MD, IRFC was handling thousands of crores of

rupees, stands accused of misappropriating negligible sums. The allegations

are not borne out of the records and have been made only to start

proceedings against the petitioner by hook or by crook and thereby

providing leeway to the respondent authorities to terminate the petitioner.

8. After issuance of the chargesheet, the petitioner again filed

representation dated 23.07.2018 to the Cabinet Secretary appealed that the

order divesting the petitioner of charge as MD of respondent no.4 ought to

be withdrawn inasmuch as the same is amounting to punishment before trial

and further informed that the petitioner is willing to contest the charges

against him and prove his innocence with due process. To this effect, a copy

of letter dated 23.07.2018 sent by the petitioner to the Cabinet Secretary is

annexed and marked as Annexure-22. Vide letter dated 25.07.2018

submitted to the disciplinary authority, the petitioner denied all charges

levelled against him and has further requested the authorities to conduct a

day-to-day enquiry, in order to enable the petitioner to clear his name of the

allegations made against him. But vide letter dated 26.07.2017, respondent

no.1-Ministry approved and communicated the decision to prematurely

termination of the petitioner with immediate effect.

9. Counsel for the petitioner further submitted that no reasons were

disclosed in the office order, or in the recommendation of the Ministry for

such decision. The immediate termination has left with no other alternative,

than to approach this Court by way of the instant petition.

10. Counsel for the petitioner further submitted that order of termination

has been passed without notice to the petitioner and violated the terms of the

appointment to the post of Managing Director of respondent no.4-

Corporation. Because the terms of appointment permitted termination only

on three months' notice or on payment of three months' salary in lieu

thereof, neither of which has been complied with by the respondents. In

addition, any standing order which conferred such arbitrary, uncanalised and

drastic power to enable the employer to dispense with an inquiry and to

dismiss an employee without assigning any reason by merely stating that it

was expedient not to continue the employee or workman is violative of the

basic requirement of natural justice. This proposition of law has been

settled by the Hon'ble Supreme Court in various judgments including West

Bengal State Electricity Board & Ors. vs. Desh Bandhu Ghosh & Ors.:

(1985) 3 SCC 116; Central Inland Water Transport Corporation Limited

& Anr. vs. Brojo Nath Ganguly & Anr.: (1986) 3 SCC 156; & O. P.

Bhandari vs. Indian Tourism Development Corporation Ltd. & Ors.

(1986) 4 SCC 337.

11. Counsel for the petitioner further submitted that the petitioner is an

officer with outstanding, impeccable and unblemished service record in his

25 years as Group-A officer of the Indian Railway Accounts Services. As a

result of his outstanding service record and credentials, the petitioner was

selected by the respondent no.3 as Director Finance in Heavy Engineering

Corporation Limited and subsequently was selected for appointment as MD

of the respondent no.4. The mandate of the PESB assumes significance in

the context of the present facts inasmuch as the PESB which is the

recommending authority was not even consulted before passing of the

impugned order of termination and in violation of the object clause 2 (d) of

PESB. The impugned termination could not have been on account of

pending inquiry proceedings inasmuch as disciplinary rules of the

respondent no.4 classify termination as 'major penalty' which can only be

passed as a consequence of the completion of the inquiry proceedings. In the

present case, the inquiry proceedings were at the stage of commencement,

therefore, the impugned termination order could not have been passed

merely due to the pendency of the inquiry proceedings.

12. Counsel for the petitioner further submitted that it is settled law that

administrative decisions which are unreasoned are liable to be set aside on

that ground, therefore, the order of termination is liable to be quashed on this

ground alone. In view of the judgments referred by the Supreme Court in the

case of Mohinder Singh Gill vs. Chief Election Commissioner: AIR 1978

SC 851, counsel for the petitioner submits that in view of the facts of the

case, the impugned order is liable to be set aside and respondents may be

directed to complete the departmental proceedings initiated against the

petitioner.

13. Ms.Maninder Acharya, learned ASG appearing on behalf of

respondent no.1 submitted that on the recommendations of PESB and after

obtaining clearance from CVC and after approval of ACC, the petitioner

was appointed to the post of MD, IRFC. Accordingly, the petitioner

assumed charge of the said post on 09.03.2017. He has completed one year

on the post on 08.03.2018. Confirmation process was initiated and Special

Performance Report (SPR) was finalized. He has been awarded a score of

41.50 in the SPR out of 50 and as such he met the PESB benchmark of

confirmation. However, since the petitioner was not cleared from vigilance

angle due to a complaint forwarded by the CVC under Public Interest

Disclosure and Protection of Informer (PIDPI) being under investigation by

the Vigilance Directorate of the Ministry, proposals were sent to PESB and

DOP&T on 06.04.2018 for deferment of confirmation process of the

petitioner for a period of three months. PESB advised that the proposal of

deferment of confirmation of the petitioner due to vigilance issues may be

directly sent to ACC, if the Ministry desires so. DOP&T directed the

Ministry to submit an appropriate proposal for consideration of the ACC, in

the event of the Ministry finally deciding to propose non-confirmation of

petitioner's tenure on the post of MD.

14. In the meanwhile, further investigation by the Vigilance Directorate

of Ministry of Railways substantiated the allegations against the petitioner.

A report in the matter was referred to Central Vigilance Commission on

21.05.2018 recommending the major penalty proceedings against the

petitioner. Keeping in view the vigilance profile of the petitioner, Ministry

of Railways recommended non-confirmation of the tenure of the petitioner

and a proposal was referred to the DOP&T for obtaining approval of ACC.

In the meanwhile, the CVC, on 05.06.2018, advised initiation of major

penalty proceedings against the petitioner. The CVC on 07.06.2018, also

advised that the petitioner be forthwith divested of any sensitive work. The

above position was also conveyed to DOP&T for placing before the ACC.

DOP&T on 25.07.2018, conveyed approval of ACC for the premature

termination of tenure of the petitioner with immediate effect.

15. Learned Additional Solicitor General further submitted that the

respondents have acted as per relevant rules and regulations. No cause has

accrued against the petitioner which is not in dispute that the petitioner was

employed initially for a period of five years and it was explicitly provided

that after completion of the first year, the performance of the petitioner shall

be reviewed to enable government to take a view regarding continuance or

otherwise for the balance period of tenure, hence case of the petitioner is

that not of any other employees of the government who are specifically

covered under special rules. In this light, the petitioner was not a regular

employee. The termination order has been issue due to the tainted vigilance

angle of the petitioner. The Order does not cast any stigma upon the

petitioner in any manner whatsoever. The case of non confirmation was

processed in accordance with the guidelines of PESB & DOP&T. The

petitioner is again wrong in stating that there was no consultation sought

from respondent no.3, the PESB, before the issuance of order of

termination/non-confirmation of the petitioner. The Ministry of Railways

had in fact consulted PESB in the matter of non-confirmation of the

petitioner, though the same was not required as per the guidelines. The

petitioner's non-confirmation was not on performance grounds which

requires recommendations of PESB but on vigilance issues for which no

consultation with PESB was required.

16. As per para 1.2 of the conditions, the performance of the petitioner

will be reviewed after the expiry of the first year to enable Government to

take a view regarding continuance or otherwise for the balance period of

tenure. In accordance with the said para 1.2, performance was reviewed

and on finding adverse vigilance profile warranting major penalty

proceedings during the probation period itself, a conscious decision was

taken by the ACC not to confirm the petitioner and ordered premature

termination of his tenure with immediate effect.

17. It is further submitted that the guidelines, in fact, state that a

CMD/MD/Functional Director would be confirmed unless the

Ministry/Department sent a proposal to the PESB, to the contrary, within 30

days after the expiry of one year. The said guidelines also states that if the

Ministry/Department is not inclined to confirm the appointee for reasons

other than performance such as vigilance issues etc. then such proposal shall

be submitted to ACC directly. Non-confirmation of the petitioner was done

in accordance with the said guidelines and with the approval of ACC.

18. I have heard learned counsel for the parties at length and perused the

material available on record.

19. The fact remains that the petitioner was not cleared from vigilance

angle due to a complaint forwarded by the CVC under Public Interest

Disclosure and Protection of Informer (PIDPI), therefore, the case of the

petitioner was under investigation before Vigilance Directorate of the

Ministry. Consequently, the proposals were sent to PESB and DOP&T on

06.04.2018 for deferment of confirmation process of the petitioner for a

period of three months. PESB advised that the proposal for deferment of

confirmation of the petitioner may be directly sent to ACC, if the Ministry

so desires. DOP&T directed the Ministry to submit an appropriate proposal

for consideration of the ACC, in the event of the Ministry finally deciding to

propose non-confirmation of the petitioner's tenure on the post of MD. In

the meanwhile, further investigation by the Vigilance Directorate of

Ministry of Railways substantiated the allegations against the petitioner. A

report in the matter was referred to Central Vigilance Commission on

21.05.2018 recommending the major penalty proceedings against the

petitioner. Therefore, keeping in view the vigilance profile of the petitioner,

Ministry of Railways recommended non-confirmation of the tenure of the

petitioner and a proposal was referred to the DOP&T for obtaining approval

of ACC. In the meanwhile, the CVC on 05.06.2018, advised initiation of

major penalty proceedings against the petitioner. The CVC on 07.06.2018,

also advised that the petitioner be forthwith divested of any sensitive work.

This development was also conveyed to DOP&T for placing before the

ACC. Accordingly, DOP&T on 25.07.2018, conveyed approval of ACC

for the premature termination of tenure of the petitioner with immediate

effect.

20. The fact remains that the petitioner's non-confirmation was not on

performance grounds which requires recommendations of PESB but on

vigilance issues for which no consultation with PESB was required. In fact,

the guidelines, state that a CMD/MD/Functional Director would be

confirmed unless the Ministry/Department sent a proposal to the PESB, to

the contrary, within 30 days after the expiry of one year. The guidelines also

states that if the Ministry/Department is not inclined to confirm the

appointee for reasons other than performance such as vigilance issues etc.

then such proposal shall be submitted to ACC directly. Therefore, I am of

considered view that non-confirmation of the petitioner was done in

accordance with the guidelines and with the approval of ACC.

21. It is a fact that the Ministry of Railways had made references to both

PESB and DOP&T within one month after completion of one year for

deferment of the confirmation process of the petitioner due to adverse

vigilance issues. As such, the claim of the petitioner that he stood deemed

confirmed is mere mis-representation of facts. The decision was taken after

due procedures and with the approval of competent authority, viz. the ACC.

IFRC's letter dated 11.07.2018 seeking certain clarifications has already

been replied to.

22. The contention of the petitioner is that serving of the chargesheet

upon the petitioner itself is indicative that he is being considered as deemed

to be confirmed employee, is not founded upon logic or law.

23. In the case of The Chief General Manager, State Bank of India &

Anr. vs. Shri Bijoy Kumar Mishra: (1997) 7 SCC 550, the Hon'ble

Supreme Court has held that deemed confirmation results on the conduct of

the employer in permitting continuance in service after the expiry of the

maximum period of probation fixed by the rules. When there is no such

conduct of the employer, the very foundation for the argument of deemed

confirmation does not exist.

24. Keeping in view the above discussion and the settled position of law,

I find no merit in the present petition and the same is, accordingly, dismissed

with no order as to costs.

CM APPL. No. 31902/2018

25. In view of the order passed in the present writ petition, the application

has been rendered infructuous and is, accordingly, disposed of.

(SURESH KUMAR KAIT) JUDGE JULY 01, 2019 ms/ab