Madras High Court
Potu Srinivas vs Gic Housing Finance Limited on 1 June, 2023
W.P.No.25919 of 2011
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED : 01.06.2023
CORAM :
THE HONOURABLE MR. JUSTICE J.SATHYA NARAYANA PRASAD
Writ Petition No.25919 of 2011
and M.P.No.1 of 2011
Potu Srinivas ... Petitioner
Vs.
1.GIC Housing Finance Limited
Rep. by its Managing Director,
Universal Insurance Building,
II Floor, Sir P.M.Rond Fort,
Mumbai – 400 001.
2.Vice President (Personnel),
GIC Housing Finance Limited
Universal Insurance Building,
II Floor, Sir P.M.Rond Fort,
Mumbai – 400 001.
3.Area Manager,
GIC Housing Finance Limited,
1st floor, Ramaniyam Building,
216-217, Peters Road,
Royapettah,
Chennai – 600 014.
(R1 to R3 – cause title amended as per order dated 03.09.2012 by KVJ in
Page No.1 of 22
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W.P.No.25919 of 2011
M.P.No.1 of 2012 in the W.P.No.25919 of 2011)
… Respondents
Writ Petition filed under Article 226 of Constitution of India, praying
for issuance of Writ of Certiorarified Mandamus, calling for the records
relating to the proceedings of the first respondent dated 08.09.2011 and
quash the same and for a consequential direction, directing the respondents to
reinstate the petitioner with attendant service benefits.
For Petitioner : Mr.L.Chandrakumar
for Mr.P.J.Rishikesh
P.J.Sri Ganesh
For Respondents 1 to 3 : Mr.D.Muthu Kumar
for M/s.Paul and Paul
ORDER
The relief sought by the petitioner in this writ petition is to call for the
records calling for the records relating to the proceedings of the first
respondent dated 08.09.2011 and quash the same and for a consequential
direction, directing the respondents to reinstate the petitioner with attendant
service benefits.
2. The facts of the case in a nutshell:
The petitioner was appointed as Assistant Administrative Officer
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W.P.No.25919 of 2011
in the respondent corporation on 29.01.1992 and posted at Hyderabad.
Subsequently, the petitioner was transferred to a newly opened branch
Visakhapatnam in the year 1995 as Branch Head. Being the newly opened
branch, the petitioner worked hard by way of marketing and developed the
business of the branch to Rs.40 crores. Later in the year 1997, the petitioner
was promoted a Senior Executive and subsequently in the year 1997, the
petitioner was posted as Branch head at Hyderabad. The petitioner
developed the business of the branch by good marketing strategy from Rs.40
crores to 80 crores. While working at Hyderabad branch, the petitioner
received consolation prize for the period 2002-2003 for customer service on
all India Basis. Even since his appointment, the petitioner has had an
unblemished record of service with devotion to duty and discharged his
duties sincerely and honestly to the utmost satisfaction of his superiors and
gave no room for anybody to complain.
2.1. The petitioner was transferred to Chennai on 10.05.2005 as Area
Manager. While transferring the petitioner as Area Manager (Branch Head),
one Mr.S.Ravi, who was functioning as Branch Head in Chennai was asked
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W.P.No.25919 of 2011
to look after the recovery of NPA accounts in the branch. Further, the
Branch was facing serious problems such as high Non-Performing Assets to
the tune of Rs.25.59 crores. This being so, the petitioner, during the year
2009, sought for transfer on health grounds to Hyderabad but the respondents
transferred the Recovery Department Head Mr.S.Ravi to Trichy. Thereafter,
the petitioner was placed under suspension vide order dated 10.05.2010,
stating that the petitioner committed certain irregularities , manipulated and
falsified the accounts and the account entries were made in violation of the
rules and regulations of the General Insurance Corporation Housing Finance
Ltd., (hereinafter referred as “GICHFL”) during his tenure as Branch
Manager. The suspesnion was made under Rule 20 of the GICHFL conduct,
Disciplines and Appeal Rules, 2009.
2.2. The petitioner was paid only 50% of the Subsistence Allowance on
the old pay scale for fifteen months only. The petitioner was not paid salary
for the month of April 2010 and he was not paid subsistence allowance for
the month of August 2010 and September 2011. Thereafter, the petitioner
was issued with memorandum of charges on 20.07.2010, asking the
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W.P.No.25919 of 2011
petitioner to submit his explanation within 15 days for holding the enquiry.
The petitioner was surprised to receive another memorandum dated
22.10.2010 with additional charges and he has submitted his explanation
dated 09.11.2010, denying all the charges as baseless. Moreover, the
petitioner was not served with any documents mentioned in the memorandum
of charges and without considering the explanation properly and without
even conducting any enquiry, the first respondent issued the impugned order
dated 08.09.2011, terminating the service of the petitioner. Aggrieved over
the same, the petitioner has come forward with the present writ petition.
3. Learned counsel for the petitioner submitted that the impugned
order of termination has been passed without holding any enquiry, as
contemplated under Rule 25 of GICHFL (Conduct, Discipline and Appeal
Rules, 2008), before imposing major penalty. The entire set of charges
framed against the petitioner is biased and arbitrary for the reason that the
petitioner was only looking after the development of business and all the
other concerned departments like recovery and accounts departments were
involved in making entries and disbursing the loans and recovery and
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W.P.No.25919 of 2011
accounts departments were headed by senior executives namely S.R.Ravi and
C.H Sai Babu. The petitioner was not directly responsible for the mistakes
committed in the recovery / accounts department in preparing statement of
accounts. However, the petitioner alone is imposed with the punishment of
termination of service. On the other hand, the said S.R.Ravi was given
promotion as Area Manager. Hence, the impugned order is exfacie
discriminatory and illegal.
4. Learned counsel for the petitioner further submitted that the
respondents failed to consider the fact that all the NPA accounts were
sanctioned and disbursed by the predecessors of the petitioner, prior to his
reporting at Chennai area office. Further, the mistakes in accounts entry were
made in the recovery department. Hence, at the most, the petitioner could
only be warned, being the Head of the Branch. Moreover, all the charges
framed against the petitioner did not result in monetary loss to the respondent
and the mistakes committed by the concerned departments were also
subsequently corrected by reversing those entries. The nature of charges
would themselves show that the petitioner did not derive any benefit directly
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W.P.No.25919 of 2011
or indirectly and as such, the imposition of punishment of termination of the
service of the petitioner is highly improper.
5. Learned counsel for the petitioner contended that the sanction of
loan to Rajivnath, and AVK Janaki were done only after closure of earlier
loans and without violating any of the prevailing norms and the service
record of the petitioner, the sequence of facts and events, as stated above,
would disclose that the impugned order is clearly vitiated by malafides, apart
from being arbitrary and discriminatory.
6. Learned counsel for the petitioner further contended that the
impugned order is liable to set aside for the reason that the punishment
imposed is shockingly disproportionate to the offence. The petitioner has not
committed any such grave misconduct warranting the imposition of
dismissal. The penalty of recovery of Rs.89,55,382/- was imposed on the
petitioner for which no charge was framed and no explanation was called for.
For this reason alone, the impugned order is liable to be quashed. The
petitioner brought to the notice of the respondents about the irregularities in
sanctioning the loans with regard to NPA accounts, but respondents have
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W.P.No.25919 of 2011
failed to take proper action and to cover up their lapse, made the petitioner as
scapegoat.
7. Learned counsel for the petitioner further submitted that the Charge
Memo dated 29.07.2010 and 22.10.2010 are vague and ambiguous.
Moreover, the respondents failed to appreciate the fact that during his tenure
stretching over a period of 18 years as area manager of marketing
department, (wherever the petitioner was posted) maintained good track
record and by his devotion and dedication, he developed the business of
those branches and under such circumstances, the impugned order is arbitrary
and improper. Hence, he prayed for allowing this writ petition.
8. Per contra learned counsel appearing for the respondents filed a
counter affidavit and for better appreciation, the relevant paragraphs are
extracted hereunder:
“7. Howsoever, the disciplinary authority of GICHFL
considered ever aspect of explanation offered by the petitioner
in respect of each article of charge on the basis of the
documentary evidence available and concluded that the
explanation was far from satisfactory and the petitioner was
guilty of the charges beyond any doubt. In the circumstances,
the disciplinary authority namely the first respondent herein
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W.P.No.25919 of 2011
passed a very detailed order after adverting to each one of the
Submissions made by the petitioner in respect of each article of
charge and imposed the impugned penalty of recovery of
Rs.89,55,382/- and the penalty of dismissal of service from
GICHFL with immediate effect. In fact, the petitioner has an
appeal remedy available under Rule 31 of GIC Housing
Finance Limited (Conduct Discipline Appeal Rules, 2008) and
without exhausting the same, he has approached to this Hon'ble
Court.
8. It is respectfully submitted that in case the petitioner
is aggrieved on the findings of guilt by the disciplinary
authority, he has efficacious remedy of appeal before the Board
and there would be proper consideration of appeal as to the
procedure adopted, findings, penalty imposed, etc. under Rule
37 of the GIC Housing Finance Ltd., Conduct Discipline
Appeal Rules, 2008. Therefore it cannot be gainsaid that the
petitioner has not been afforded reasonable opportunity to
defend himself. It is further submitted that the grounds raised
by the petitioner in the writ petition are untenable and the same
cannot be countenanced in law.”
9. Subsequently, the petitioner has filed a rejoinder dated 10.06.2012
and for better appreciation, paragraph 7 is extracted hereunder:
“11. The petitioner submits that after suspension, the
respondents without conducting the enquiry and without
following the procedure contemplated under Rule 25 of the
GICHFL (Conduct, Discipline and appeal) Rules, 2008 for
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W.P.No.25919 of 2011
imposing the major penalties, passed the impugned order
imposing two punishments i.e recovery of Rs.89,55,382/- and
terminating the services of the petitioner. The petitioner further
submits that Rule 23 does not contemplate imposition of double
punishments. The respondent did not make any specific charge
with regard to the amount and did not mention in any of the 11
charges framed by them. The petitioner further submits that as
the order is exfacie illegal, unjust and unsustainable in law,
hence, the petitioner has approached this Hon'ble Court for
redressal of his grievance. The petitioner further submits that
there is no appeal against an order made by the respondent
company of his grievance. The Petitioner further under rule 20
or rule 23.”
10. In turn, learned counsel appearing for the respondents submitted
that the Bank is covered under Section 2(3) of the Tamil Nadu Shops and
Establishments Act, 1947 and the petitioner has to file an appeal under this
Act. For better appreciation, Section 2(3) of the aforesaid Act is extracted
hereunder:
“2(3) “commercial establishment” means an
establishment which is not a shop but which carries on the
business of advertising, commission, forwarding or commercial
agency, or which is a clerical department of a factory or
industrial undertaking or which is an insurance company, joint
stock company, bank, broker's office or exchange and includes
such other establishment as the State Government may be
notification declare to be a commercial establishment for the
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W.P.No.25919 of 2011
purposes of this Act;”
Hence, this writ petition is not maintainable for the reason that since, the
petitioner can file an appeal under Section 2(3) of the Tamil Nadu Shops and
Establishments Act, 1947.
11. The first and foremost contention of the respondents is that the
respondent company is not a “State” and will not come under the purview of
Article-12 of the Constitution of India, and therefore, nor amenable to the
writ jurisdiction of this Court. Further, the learned counsel relied on the
judgment of the Hon'ble Apex Court in the case of Federal Bank Vs. Sagar
Thomas and others reported in (2003) 10 SCC – 733. For better
appreciation, the relevant paragraphs are extracted hereunder:
“2. Respondent I challenged the order of his dismissal by
filling a writ petition in the High Court. A preliminary objection
about maintainability of writ petition seems to have been taken
in defence by Federal Bank, saying that it is a private bank and
not a State or its agency or instrumentality, within the meaning
of Article 12 of the Constitution of India, hence a writ petition
under Article 226 of the Constitution is not maintainable against
it.
4.The question thus, which falls for consideration is as to
whether the appellant Bank a private body or falls within the
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W.P.No.25919 of 2011
definition of the State or local or other authorities under the
control of the Government. A body or organization which is an
instrumentality or agency of the State or a company owned and
controlled by the State are all included in the expression "the
State". If it is found that the petitioner falls within the latter
category, there would be no hurdle in holding that such a body
or organization would undoubtedly be amenable to the writ
jurisdiction under Article 226 of the Constitution of India. On
the other hand, if it is found that the appellant is a private body,
in that event it may have to be examined whether a writ petition
would be maintainable or not and the extent to which such
powers can be exercised.”
12. Learned counsel appearing for the respondents further relied on
the judgment passed by this Court in W.P.No.3843 of 2015, relating to
another employee viz., Cheruvu Saibabu, who was also dismissed from
service, this Court has held that the respondent is not a state and therefore,
the writ petition is not maintainable. But, liberty was granted to approach the
appropriate authority. Since, the issue in the above case is identical to the
case on hand, the judgment of the above order binds this Court.
13. Learned counsel appearing for the respondents drew the attention
of this Court to the letter dated 05.06.2002, issued by the respondent
corporation, in which, it is stated that the petitioner was promoted to the
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W.P.No.25919 of 2011
cadre of Group Head and the same was also accepted by the petitioner vide
endorsement dated 06.06.2002. Hence, he prayed for dismissal of this writ
petition.
14. Heard the learned counsel on either side and perused the materials
available on record.
15. The petitioner was working as Area Manager (Branch Head) in the
respondent corporation. The memorandum of Charge Sheet dated
20.07.2010 was issued by the first respondent to the petitioner in which, five
charges were framed against the petitioner. The termination order dated
08.09.2011 was issued by the first respondent to the petitioner and the same
is extracted hereunder:
“(F) In considering penalties to be imposed on Mr.Potu
Srinivas, I am of the opinion that the penalty should
commensurate to the gravity of misconduct and concurrently
deterrent to other employees and therefore, I am of the view that
the penalty of recovery of Rs.89,55,382/- from him under Rule
23 (i) (c) and the penalty of dismissal from the services of the
company as per Rule 23 (i) (i) on Mr.Potu Srinivas would be
reasonable, adequate and would meet the ends of justice”.
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16. In regard to the Charges 1,2,3 and 4, none of the entries were
made by the petitioner in the computer and the Non-Performing Assets
(NPA) recovery team made the entries, which were also subsequently
reversed and the same was also brought to the notice of the Senior Vice
President dated 06.04.2010 by the petitioner. In regard to the 5th charge,
the Non-Performing Assets (NPA) recovery department under the
supervison of the Senior Executive only prepared the statement and the
petitioner signed and forwarded the same with utmost good faith and the
petitioner has no role to make any such wrong entries, which were
subsequently reversed.
In regard to the 6th charge, which is related to the mortgage loan in the
name of A.V.K.Janaki and Veeraraghavan under file No.GO8996 and the
said account was opened by the earlier officer, who sanctioned the loan
and the petitioner has no role in regard to sanctioning of the loan.
In regard to the 7th charge, the file No.001297 of Ponni Ranganathan
was declared as NPA. The property was valued by the panel valuer and the
report was sent to the head office with recommendation from the recovery
department. After approval from the dead office, auction notice was
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W.P.No.25919 of 2011
published on 02.03.2009 in Indian Express. Only one bidder namely
Mrs.Manomani participated and paid 70% of the bid amount. Later, she
applied for loan under file No.GO8694. After clearing by the recovery and
credit department, the loan was disbursed by the disbursing officer.
Following the required norms, auction was conducted in accordance
with the rules and as such there is no deviation from the procedure and
no pecuniary loss was caused to the company by the petitioner.
In regard to the 8th charge, the insurance premium of Rs.22,155/- was
paid by Mr.S.B.Prabhakar towards the insurance premium of the petitioner,
since he is working in the united insurance company and the same was
remitted to his loan account No.GO7693 and the petitioner has not
committed any irregularities.
In regard to 9th charge, the entries were made by the Accounts
department and for the mistakes committed by the accounts department,
the petitioner, who is the branch head cannot be liable for the mistakes
committed.
In regard to 10th charge, the assets of Govindarajan and R.R.Sridharan
were declared as Non-Performing Assets, after obtaining permission from the
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W.P.No.25919 of 2011
head office, properties were put to auction and one Ramdoss's wife and son
participated in the auction. Mr.Ramdoss did not participate in the auction as
alleged. Both the bidders paid an amount of Rs.2,20,742/- as initial bid
amount and at the time of confirmation, the said bidders turned down the
offer and requested for refund of the amount. The company refused to
refund the amount.
In regard to the 11th charge, the loan was granted to Mr.Rajiv Nath
after he cleared the earlier loan amount for closing the account No.002190.
After clearance from the recovery department only, the new loan was
processed.
From the above 11 charge framed against the petitioner, it is crystal
clear and evident that the petitioner has no role in regard to the above 11
charges and he has been falsely implicated for the said charges. Hence, the
removal of the petitioner from the service by the first respondent by order
dated 08.09.2011, is not sustainable in law and the same is liable to be
quashed.
17. It is pertinent to extract Rule 23 of the GIC Housing Finance
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W.P.No.25919 of 2011
Limited (Conduct, Discipline and Appeal) Rules, 2008:
“23. Penalties:-
Without prejudice to the provisions of other rules, any one or more of the following
penalties may for good and sufficient reasons, and as hereinafter provided, be imposed by
the competent authority on an employee who commits a breach of discipline, or who is
guilty of any other act prejudicial to good conduct:-
Minor Penalties:-
(i) (a) Censure;
(b) Withholding of one or more increments for a specified period;
(c) Recovery from pay or such other amount as may be due to him of the
whole or part of any pecuniary loss caused to the company by negligence
or breach of orders;
(d) Reduction to a lower stage in the time-scale for a period not exceeding
three years without cumulative effect.
Major Penalties:-
(e) Withholding of one or more increments permanently;
(f) Reduction to a lower service or post or to a lower time-scale, or to a lower
stage in a time- scale;
(g) Compulsory retirement;
(h) Removal from service which shall not be a disqualification for future
employment;
(i) Dismissal.
18. It is pertinent to extract Rule 31 of the GIC Housing Finance
Limited (Conduct, Discipline and Appeal) Rules, 2008:
“31. Right of Appeal:
Every employee shall have a right of appeal to the
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W.P.No.25919 of 2011
appellate authority against an order imposing upon him any of
the penalties specified under Rule 23. An appeal against an
order of suspension passed under Rule 20 shall be on the
authority to which the authority which made or is deemed to
have made the order of suspension is immediately subordinate.
Notwithstanding anything contained in this rule, no appeal
shall lie against an order made by the Company under Rule 20
or Rule 23.”
In the above Rule 31, it is clearly stated that notwithstanding anything
contained in this rule, no appeal shall lie against an order made by the
Company under Rule 20 or Rule 23 and in this case, the order of penalty
and recovery of Rs.89,55,382/- from the petitioner under Rule 23 (i) (c)
and dismissal of petitioner from the service of the company, as per Rule
23 (i) (i). Hence, it is crystal clear and evident that there is no appeal
remedy against the order passed under Rule 23.
19. Learned counsel appearing for the respondents submitted that the
petitioner has to approach the competent authority under Section 2(3) of the
Tamil Nadu Shops and Establishments Act, 1947 is not sustainable. Even in
the counter affidavit, the respondents have stated that there is an appeal
provision under Rule 31 of the GIC Housing Finance Limited (Conduct,
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W.P.No.25919 of 2011
Discipline and Appeal) Rules, 2008, which is not sustainable for the
reason that, the Rule itself clearly stated that no appeal shall lie against
an order made by the Company under Rule 20 or Rule 23. In this case,
the order of penalty and dismissal was passed under Rule 23 of the GIC
Housing Finance Limited (Conduct, Discipline and Appeal) Rules, 2008.
20. The counter affidavit was filed by the respondents dated
07.12.2011 and in the rejoinder dated 10.06.2012 of the petitioner has
clearly stated that there is no appeal against the order dated 08.09.2011,
issued by the respondent company under Rule 20 or 23, for which, the
respondents have not filed any reply affidavit, denying the same and
stating that the petitioner has to approach the competent authority
under Section 2(3) of The Tamil Nadu Shops and Establishments Act,
1947.
21. In view of the above facts and circumstances, it is crystal clear
and evident that there is no appeal provision under the penalty imposed
under Rule 23 (i) (c) and the penalty of dismissal from service of the
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company, as per Rule 23 (i) (i).
22. Hence, this Court is of the considered view that the writ petition is
maintainable and the order passed by the first respondent dated 08.09.2011 is
liable to be quashed and the same is quashed.
23. In the result, this writ petition stands allowed and the respondents
are directed to pay all the attendant service benefits and all other
consequential benefits to which the petitioner is entitled, as per GIC Housing
Finance Limited (Conduct, Discipline and Appeal Rules, 2008), within a
period of six weeks from the date of receipt of a copy of this order.
24. Post the case under the caption “For Reporting Compliance” on
18.07.2023.
01.06.2023
vm
Index : Yes/No
Speaking Order : Yes/No
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J.SATHYA NARAYANA PRASAD,J.
vm
To:
1.The Managing Director,
GIC Housing Finance Limited,
Universal Insurance Building,
II Floor, Sir P.M.Rond Fort,
Mumbai – 400 001.
2.Vice President (Personnel),
GIC Housing Finance Limited
Universal Insurance Building,
II Floor, Sir P.M.Rond Fort,
Mumbai – 400 001.
3.Area Manager,
GIC Housing Finance Limited,
1st floor, Ramaniyam Building,
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W.P.No.25919 of 2011
216-217, Peters Road,
Royapettah,
Chennai – 600 014.
W.P.No.25919 of 2011
01.06.2023
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