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CASE NO.: Appeal (civil)  1997 of 2007

PETITIONER: Coal India Ltd. & Ors

RESPONDENT: Saroj Kumar Mishra

DATE OF JUDGMENT: 17/04/2007

BENCH: S.B. Sinha & Markandey Katju

JUDGMENT: J U D G M E N T [Arising out of S.L.P. (C) No.  15805 of 2006] WITH CIVIL APPEAL NO.1998/2007 @ S.L.P.(C)No. 16569 of 2006

S.B. SINHA, J.

       Leave granted.

       These two appeals involving similar questions of law and facts were  taken up for hearing together and are being disposed of by this common  judgment.    

       Respondents herein were employees of Mahanadi Coalfields Ltd., a  Government Company within the meaning of Section 617 of the Companies  Act.  Coal India Limited admittedly is the holding company of Mahanadi  Coalfields Ltd.  Appellant No. 1 framed rules laying down terms and  conditions of service of its Executive Officers.   The Executive Cadre of the  Officers of Appellant No. 1 is divided in various grades namely Gr. E/1 to  Gr. E/8.   Indisputably, promotion from A/3 to A/4 grades is governed by the  rule of Seniority-Cum-Merit.  For the purpose of considering the cases for  promotion of the eligible officers from Grade E/3 to E/4, a departmental  promotion committee held its meeting in April-May, 1999.

       Respondents were, however, not promoted inter alia on the premise  that the General Manager (Vigilance) of the Mahanadi Coalfields Ltd.  intimated to the concerned authority that vigilance cases were pending  against them.  Orders of promotion were issued in favour of the officers who  were admittedly junior to them on 31.8.1999.   When despite representation,  they were not promoted on the ground of pendency of vigilance cases, they  filed writ petitions before the Orissa High Court praying inter-alia for  notional promotion with effect from the date their juniors were promoted.                  During pendency of the Writ Petitions namely in June, 2002, charge  sheets were issued and upon a disciplinary proceeding having been initiated,  a penalty of reduction of pay by one stage for a period of one year without  cumulative effect was imposed upon the respondents in July, 2003.

       Before the Orissa High Court as also before this Court, reliance has  been placed by the appellants on office memorandums dated 19/27th June,  1979. Upon taking into consideration the said office memorandum as also  subsequent memorandums and in particular the one dated 8.1.1981, the High  Court held;

"15.  Taking into consideration of the entire factual  matrix of the case and keeping in view the ratio  decided by the Apex Court in different cases, so far  as the present petitioner is concerned, the ratio  decided in the case of Union of India Vrs. K.V.

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Jankiraman and Union of India-Vrs.-Dr.(Smt.)  Sudha Salhan has to be followed and since the  concerned employees in the cases of Delhi  Development Authority-Vrs. H.C. Khurana (AIR  1993 S.C. 1488), Union of India \026vrs.-Kewal Kumar  (AIR 1993 SC 1585) and Union of India \026vrs- R.S.  Sharma (AIR 1993 S.C. 2337) stand on a different  footing than the present petitioner, the ratio decided  in those cases cannot be followed in the case of the  present petitioner.  In the case of R.S. Sharma the  order of the Tribunal directing to open the sealed  cover and giving effect to the recommendation made  by the DPC on the ground of non-service of charge  memo, was set aside keeping in view the  Rules/Circulars/O.M. in force more particularly  clause-iv of the O.M. wherein it is provided that  during the pendency or "investigation on serious  allegation of corruption, bribery or similar grave  misconduct is in progress either by the CBI or any  agency, departmental or otherwise", sealed cover  procedure can be resorted to till the proceeding is  over in all respect.  But in the instant case on the  basis of O.M./Circular/Rules followed by the  MCL/Coal India, the sealed cover was opened and  the petitioner was given promotion to next higher  grade (Grade-4) since the so called investigation was  not completed within two years from the date the  immediate junior to the petitioner was promoted.    This particular office memorandum has been issued  may be with the intention to check prolonged  enquiry covering a period of more than two years in  respect of certain allegations against an employee,  so that the concerned employee shall not be harassed  or debarred from getting benefit on the  recommendation of DPC for an indefinite/prolonged  period on the ground of pendency of such enquiry,  without initiation of a departmental proceeding after  service of charge memo.  However once the sealed  cover is opened and the petitioner is allowed the  benefit of the recommendation of DPC by giving  him promotion to the next higher grade, he shall be  entitled for all consequential benefits from the date  his immediate junior got the same.  In this case the  petitioner had never been suspended during the  period of the so-called preliminary enquiry nor  during the period of departmental enquiry.   As such,  he shall be entitled for promotion notionally with  effect from the date his immediate junior got the  same along with all service and financial benefit."

       On the said findings, the writ petitions were allowed.

       Mr. Ajit Kumar Sinha, learned counsel appearing on behalf of the  appellant took us through the said office memorandum dated 27.6.1979 and  submitted that as in terms thereof pendency of a vigilance or departmental  action would itself be sufficient for not promoting the officer who would, in  the event of their complete exoneration would be promoted as and from the  date his immediate junior has been promoted;  the impugned judgment  cannot be sustained.  The High Court, Mr. Sinha submitted, committed  manifest error in invoking the sealed cover procedure which is not  applicable to the fact of the present case.  If the impugned judgment is  upheld, a flood-gate of litigation would ensue.   Strong reliance in this behalf  has been placed by Mr. Sinha on a reported decision of this case in Manoj  Kumar Singh v The Coal India Ltd. & Ors. in  Civil Appeal No. 17 of 2005

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disposed of on 2.1.2006 as also on State of Madhya Pradesh v. Srikant  Chaphekar [1992 (4) SCC 689].

       Mr. Janaranjan Das, learned counsel appearing on behalf of the  respondent, on the other hand, supported the judgment of the High Court.    

       The factual matrix involved in the matter being not in dispute, the  only question which falls for our consideration is interpretation of the office  memorandums dated 27.6.1979 and 8.1.1981.    

       Both First Appellant as also Mahanadi Coalfields Ltd. are ’State’  within the meaning of Article 12 of the Constitution of India.  Their action  must, therefore, satisfy the test of reasonableness and fairness.   Although an  employee of a State is not entitled to promotion to a higher post as a matter  of right, he is entitled to be considered therefor in terms of Article 16 of the  Constitution of India.   A right of promotion can be withheld or kept in  abeyance only in terms of valid rules.   Rules operating in the field do not  provide that only because some allegations have been made as against an  officer of the company, the same would itself justify keeping a valuable right  to be considered for promotion of an employee in abeyance.  When a  question of that nature comes up for consideration before a superior court,  the extant rules operating in the field must necessarily be construed in the  light of the constitutional scheme of equality.    

       The office memorandum dated 19/27 June 1979 reads as under:- "The issue relating to procedure to be followed with  regard to promotion of an officer who has been kept  under suspension and/or against whom a  vigilance/departmental action is pending has been  engaging the attention of the management for some  time past.   Taking into consideration the extant rules  and orders of the Government of India in this regard the  following decision has been taken:

a)      All orders for promotion will be issued only  after vigilance clearance.

b)      ***                  ***                        ***

c)      When an officer has been completely  exonerated and he is subsequently promoted, his  seniority should be fixed as if he had been promoted in  accordance with the position assigned to him in the  select list.  Period of his eligibility for consideration for  promotion to the next higher grade should be reckoned  with reference to the date his immediate junior has been  promoted.  The pay of such an executive on promotion  should be fixed notionally by allowing the intervening  period during which the officers could not be promoted  due to his suspension and/or pending departmental  enquiry to be counted for increments in the higher  grade but no arrears would be admissible to him.    (Corrected as per No. C-5(A)/50972 (Vol.1) Pt./1507  dated 10.07.1979)."  

       The said office memorandum was, however, clarified by a subsequent  memorandum dated 8.1.1981 wherein it was laid down  "It has been laid down in CIL O.M. number quoted  above that all orders for promotions will be issued only  after vigilance clearance.  The stage at which a  vigilance enquiry should affect the promotion,  confirmation et. Of an employee of CIL and its  subsidiaries has not been clearly defined in the above.    Quoted office memorandum.   Vigilance inquiries take

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considerable time to complete and in absence of a clear  indication regarding the point at which such inquiries  should stand in the ay of an officer’s promotion, there is  scope for confusion on this score.   This matter has been  engaging the attention of the management for quite  some time.  Taking into consideration the existing  orders of the Government of India in this regard, the  following decision has been taken.

"All orders for promotions will be issued only after  vigilance clearance.   However, vigilance clearance  shall not be withheld for the mere fact that a P.E. or  R.C. has been registered by the CBI against an officer  or that complaints are being looked into a preliminary  enquiry departmentally but no conclusion has been  reacted about the prima facie guilt of the officer.    Vigilance clearance shall be withheld only when :

1)      In the case of a Preliminary Enquiry, either by  the CBI or departmental agencies, the competent  authority, on consideration of the results of the  investigation, has formed the opinion that a charge- sheet may be issued on specific imputations for  departmental action, and  

2)      In case of a regular case, the competent  authority has decided to accord saction for prosecution  of the officer in Court.

       Until the competent authority arrives at such a  conclusion, the officer may be treated at par as per with  orders in the matter of promotion, confirmation etc.  

       These instructions shall come into force with  immediate effect."

       It is not the case of the appellants that pursuant to or in furtherance of  the complaint received by the vigilance department, the competent authority  had arrived at a satisfaction as is required in terms of the said circulars that a  charge sheet was likely to be issued on the basis of a preliminary enquiry  held in that behalf or otherwise.                  The circular letters issued by the appellants put restrictions on a  valuable right of an employee. They therefore, are, required to be construed  strictly.  So construed there cannot be any doubt whatsoever that the  conditions precedent contained therein must be satisfied before any action  can be taken in that regard.

       We may also notice that a revised guideline was also issued on or  about 14.5.2002, wherein it was stated; "the Vigilance clearance shall be withheld only  on the ground (a) when officer is under  suspension (b) when the officer, in respect of  whom a charge sheet has been issued and  disciplinary proceedings are pending; and (c)  when an officer in respect of whom prosecution  for a criminal charge is pending."  

       The said circular although is not ipso facto applicable in this case,  clearly laws down the law otherwise prevailing.

       Reliance placed by Mr. Sinha on Manoj Kumar Singh (supra) is  wholly misplaced.  Therein no law was laid down.  It does not contain any  ratio decidendi.  The question as to whether in absence of any chargesheet or

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at least in absence of any satisfaction having been arrived by the disciplinary  authority that a prima facie case has been made out for proceeding against an  employee, the Vigilance clearance can be given or not, did not fall for  consideration at all therein.  No issue in that behalf was framed; no argument  was advanced; no reason has been assigned in support of the said order.    This Court merely stated; "In the present case, the decision to take action  against the appellant had been formed on  20.1.99. Therefore, the appellant could not have  been granted vigilance clearance. In the  circumstances, we see no reason to interfere with  the order under challenge.  The appeal is,  accordingly, dismissed.   There shall be no order  as to costs."

       It is surprising that although the appellant is a ’State’ within the  meaning of Article 12 of the Constitution of India, it failed  even to be fair to  this Court inasmuch as the subsequent office memorandum dated 8.1.1981  and/or 14.5.2002 were not brought to its notice.  Had the subsequent office  memorandums and in particular the one dated 8.1.1981 been brought to the  notice of the Court,  we have no doubt in our mind that the terms of the  order passed in Manoj Kumar Singh (supra) would have been different.  

       Similarly, reliance placed on Srikant Chaphekar (supra) by Mr. Sinha,  is equally mis-placed.  Therein a Departmental Promotion Committee  considered the adverse remarks passed against the employee concerned.  In  this case, a departmental promotion committee did not take into  consideration the case of the respondents at all. They were indisputably  entitled to be considered for promotion having regard to the rule of  seniority-cum-merit.  Although, in the said rule, merit has some role to play,  but the promotion would not be based only on merit.

       See State of Kerala and Another v N.M. Thomas and Others [AIR  1976 SC 490], E.V. Chinnaiah v State of Andhra Pradesh & Ors [(2005) 1  SCC 394], Bhagwandas Tiwari and Ors. v Dewas Shajapur Kshetriya  Gramin Bank and Ors. [2006 (11) SCALE 593], B.V. Sivaiah and Ors. v K.  Addanki Babu and Ors. etc.  [(1998) 6 SCC 720].

       A departmental proceeding is ordinarily said to be initiated only when  a chargesheet is issued.

       The floodgate argument also does not appeal to us.   The same appears  to be an argument of desperation.  Only because, there is a possibility of  floodgate litigation, a valuable right of a citizen cannot be permitted to be  taken away.  This Court is bound to determine the respective rights of the  parties.         See Zee Telefilms Ltd. and Anr. v Union of India and Ors. [(2005) 4  SCC 649], Guruvayoor Devaswom Managing Committee and Anr. v C.K.  Rajan and Ors. [(2003) 7 SCC 546].

       Even, in such a case, the Employer is not in a helpless situation.  Despite such promotion if the delinquent employee has suffered punishment,  subsequently appropriate steps may be taken on the basis thereof.  

       We, therefore, are of the opinion that there is no infirmity in the  impugned judgments. The appeals being wholly without merits, are  dismissed with costs.   Counsel’s fee assessed at Rs. 50,000/-.