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REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO.   4338          OF 2010 (arising out of SLP(C)No.545 of 2009)

SOUTH BENGAL STATE TRANSPORT  CORPORATION …. APPELLANTS

VERSUS

ASHOK KUMAR GHOSH & ORS.            …. RESPONDENTS

J U D G M E N T  

C.K. PRASAD, J.

1. This  petition  for  special  leave  to  appeal  is  against  the  

judgment and order dated 24.09.2008, passed by the Calcutta  

High Court in MAT No.567 of 2008, whereby it had dismissed  

the appeal preferred by the petitioner and affirmed the order of  

the  learned  Single  Judge  dated  17.04.2008  passed  in  

W.P.No.4100(W)  of  2008  quashing  the  order  of  punishment  

inflicted on respondent No.1.  

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2. Leave granted.

3. Short  facts  giving rise  to this  appeal  are  that  the  writ  

petitioner-respondent  No.1,  hereinafter  referred  to  as  the  

delinquent  employee  was  at  the  relevant  time  working  as  

Conductor with the appellant –South Bengal State Transport  

Corporation. On 17.02.2007 he was assigned duty in a Bus  

bearing  Registration  No.WB-39/2110,  plying  between  

Durgapur to Baharampur. The said bus was checked by the  

checking  squad  at  Baharampur  and  they  detected  one  

ticketless  passenger,  who  was  going  towards  Baharampur  

from Kandi. The checking squad collected fine from the said  

passenger.  Further a sum of Rs.345/- was found in excess in  

the Conductor’s cash-bag. The Divisional Manager, Durgapur  

Division of the South Bengal State Transport Corporation is  

the disciplinary authority of the delinquent employee. A memo  

of  charge  dated  7.3.2007  was  drawn  by  the  Divisional  

Manager, Durgapur alleging the aforesaid misconduct against  

the delinquent employee; i.e. allowing the ticketless passenger  

to  travel  in  the  bus  and  possession  of   excess  amount  of  

Rs.345/-  in the cash-bag. The memo of charge was served on

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the delinquent employee on 8.3.2007 and without giving any  

opportunity  to  him  the  Divisional  Manager,  Durgapur  was  

appointed as the Enquiry Officer.   The delinquent employee  

submitted his reply dated 17.3.2007 denying both the charges  

and  according  to  him  detection  of  the  passenger  travelling  

without ticket is not misconduct, because on the spot itself the  

ticketless  passenger  was tried  and a fine  was realized  from  

him by applying Section 178A of the Motor Vehicles Act. As  

regards the second charge, the plea of the delinquent employee  

is that an amount of Rs.345/- was left  by a passenger and  

when one of the passengers claimed the amount, he verified  

the same and till then kept the amount with the intention of  

returning  it  to  him.   The  enquiry  was  conducted  by  the  

disciplinary  authority  i.e.  the  Divisional  Manager,  Durgapur  

himself who did not accept his plea and held both the charges  

brought  against  him  to  have  been  proved.  Accordingly  the  

disciplinary authority inflicted the punishment and relegated  

the delinquent employee, a Conductor to the status of Daily  

Rated Conductor.

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4. The delinquent employee challenged the punishment by  

filing  the  writ  petition  before  the  High  Court,  inter  alia,  

contending that “the appointment of an Enquiry Officer in the  

chargesheet itself  reflects bias on the part  of  the authority”  

and  this  itself  vitiates  the  punishment.  The  aforesaid  

submission found favour with the High Court and it allowed  

the writ petition, quashed the order of punishment and while  

doing so  observed as follows :  

“In the present case, there is absolutely not an iota  of  material  to  indicate  that  the  show-cause/reply  submitted  by  the  petitioner  in  response  to  the  charge-sheet  was  at  all  taken  into  consideration.  Going a step further, it can be said in the present  case that appointment of an Enquiring Officer while  issuing  a  charge-sheet  is  undoubtedly  an  unconscious  reflection  of  the  sub-conscious  mind  and this, undoubtedly, reflects bias on the part of  the  authority.   Thus,  there  is  bias  at  the  very  initiation of the enquiry.”

Ultimately, the High Court concluded as follows :

“So far as the present case is concerned,  in view of  the  fact  as  indicated  earlier  that  initiation  of  the  proceeding  was  not  free  from  bias  and  in  the  backdrop  of  the  fact  that  there  had  been  non- compliance of Regulation 38(2), this court does not  find any reason as to why the matter shall not be  interfered with.”

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5. It is relevant here to state that while recording the finding  

of bias, the learned Single Judge had referred to a decision of  

this Court in the case of  State of Punjab vs. V.K. Khanna  

and others, (2001) 2 SCC 33,  in which it has been held as  

follows :

“34.The High Court while delving into the issue went into   the factum of announcement of the Chief Minister in regard to   appointment of an enquiry officer to substantiate the frame of  mind of the authorities and thus depicting bias — what bias   means  has  already  been  dealt  with  by  us  earlier  in  this   judgment, as such it does not require any further dilation but   the  factum of  announcement has been taken note of  as an  illustration  to  a  mindset  viz.  the  inquiry  shall  proceed  irrespective of the reply — is it an indication of a free and fair   attitude  towards  the  officer  concerned? The answer  cannot  possibly  be  in  the  affirmative.  It  is  well  settled  in  service  jurisprudence that  the  authority  concerned has to  apply its   mind upon receipt of reply to the charge-sheet or show-cause   as the case may be, as to whether a further inquiry is called   for. In the event upon deliberations and due considerations it   is in the affirmative — the inquiry follows but not otherwise   and it is this part of service jurisprudence on which reliance   was placed by Mr Subramanium and on that score, strongly  criticised  the  conduct  of  the  respondents  (sic appellants)   herein and accused them of being biased. We do find some   justification  in  such  a  criticism  upon  consideration  of  the   materials on record.”

6. Another  plea  of  the  delinquent  employee  was  that  the  

punishment  relegating  him  to  the  status  of  Daily  Rated  

Conductor is not provided in the South Bengal State Transport  

Corporation Service Regulations (hereinafter referred to as the  

‘Regulations’)  but the said plea had been negated by the High  

Court in the following words:  

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“It  cannot  be  denied  that  punishment  inflicted  on  the  petitioner comes within the scope and ambit of Regulation 36.   Punishment imposed is in the nature of reduction to a lower   post or to a lower stage in time scale.”

 7. The appellant, aggrieved by the aforesaid order preferred  

an  appeal  along  with  an  application  for  stay.  The  stay  

application and the appeal were dismissed by a common order  

dated 24.9.2008 with the following directions:

a) The appellant disciplinary authority shall be at  liberty to proceed afresh against the employee  strictly  in  accordance  with  the  provisions  of  Regulation 38(1) and 38(2);

b) During the pendency of the proceeding before  the  disciplinary  authority  the  respondents  shall continue to enjoy the status enjoyed by  him  prior  to  the  passing  of  the  order  of  punishment.”

8. Mr. Janaranjan Das, learned counsel appearing on behalf  

of the appellant-Corporation submits that mere appointment  

of  Enquiry  Officer  while  issuing  the  chargesheet  does  not  

reflect bias and hence, the finding recorded by the High Court  

that initiation of the departmental  proceedings was not free  

from  bias  is  erroneous.  He  submits  that  the  departmental  

proceeding was conducted in accordance with the Regulations

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and it cannot be said that there had been non-compliance of  

Regulation 38(2) of the Regulations. He further submits that  

reliance  on the  judgment  of  this  Court  in  the  case  of  V.K.  

Khanna (supra) is highly misplaced.   

9. Despite  service  of  notice  on  respondent  No.1,  the  

delinquent employee has not chosen to enter appearance.

10. Regulation 38 of the Regulations, inter alia, provides the  

procedure for imposing penalties. As the High Court had held  

that the appointment of Enquiry Officer without considering  

the reply submitted by the delinquent employee speaks of bias  

and the punishment inflicted is in violation of Regulation 38(2)  

of the Regulations, we deem it expedient to reproduce not only  

Regulation 38(2) but 38(3) which are relevant for the purpose :  

38. PROCEDURE FOR IMPOSING PENALTIES   :   

(1) xxx xxxx xxxx

(2) The disciplinary authority shall draw up or cause  to be drawn up-

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(i) The  substance  of  the  imputations  of  misconduct  or  misbehaviour  into  definite  and distinct articles of charge,

(ii) A  statement  of  imputations  of  misconduct  or misbehaviour in support of each article of  charge which shall contain

(a) statement  of  relevant  facts  including  any admission or  confession made by  the employee,

(b) a list of documents by which, and a list  of  witnesses  by  whom,  the  articles  of  charge are proposed to be sustained.”

(3) The disciplinary authority shall deliver or cause  to  be  delivered to  the  employee  a  copy of  the  articles  of  charge  and  the  statement  of  imputations  of  misconduct  or  misbehaviour  prepared  under  clause  (ii)  of  sub-regulation  (2)  and shall require the employee to submit to the  inquiring authority within such time as may be  specified a written statement of his defence and  to state whether he desires to be heard in person.

(4) xxx xxxx xxxx

11. From a plain reading of Regulation 38(2) it is evident that  

the disciplinary authority is required to draw or cause to be  

drawn up,  the  substance  of  imputation  of  misconduct  into  

definite and distinct articles of charges and the statement of  

imputation of misconduct, to contain the statement of relevant  

facts  including  any  admission  or  confession  made  by  the

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employee.  It also requires drawing up a list of documents by  

which and a list of witnesses by whom the articles of charges  

are  proposed  to  be  sustained.  Regulation  38(3)  of  the  

Regulations  obliges  the  disciplinary  authority  to  deliver  or  

cause to be delivered to the employee the articles of charges  

and the statement of imputation of misconduct requiring the  

employee to submit to the Enquiry Officer written statement of  

defence within a period specified. Neither Regulation 38(2) nor  

Regulation 38(3) provides that before the appointment of the  

Enquiry Officer the reply of the delinquent employee is to be  

considered. In our opinion, it may be open for a disciplinary  

authority  to  initiate  the  departmental  proceedings  on  

consideration of the reply of an employee but as an absolute  

proposition  of  law  it  cannot  be  said  that  before  initiating  

departmental enquiry or appointing Enquiry Officer, reply of  

the  delinquent  employee  is  required  to  be  obtained  and  

considered unless it is the requirement of the rules. There may  

be  cases  where  the  charges  are  of  such  a  nature  that  the  

disciplinary  authority  may  not  require  any  reply  from  the  

delinquent  employee  but  straightway  initiates  the

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departmental enquiry and appoint an Enquiry Officer. In the  

present case the Bus was checked by the flying squad of the  

appellant-Corporation  itself  and  in  view  of  what  has  been  

found by it, the disciplinary authority while framing the charge  

had appointed the Enquiry Officer. We are of the opinion that  

mere appointment of Enquiry Officer while framing the charge  

sheet,  even  before  considering  the  reply  of  the  delinquent  

employee, does not reflect any bias.   

12. Now, referring to the authority of this Court in the case of  

V.K.  Khanna(supra),  relied  on  by  the  High  Court,  same  is  

clearly distinguishable. In the said case the chargesheet dated  

24.4.1997  was  issued  to  the  delinquent  employee  who  

happened to be the Chief Secretary of the State and he was  

asked to submit his reply within 21 days but even before his  

reply, the Chief Minister made a statement on 27.4.1997 that  

a judge of the High Court would look into the charge against  

him.   The aforesaid act of the Chief  Minister  coupled with  

other factors led this Court to conclude that the action was

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actuated by bias.  In the present case the facts are completely  

different.

13. It is relevant here to state that imposition of penalty was  

found to be bad by the High Court due to non-compliance of  

Regulation  38(2)  of  Regulations  on  the  ground  that  the  

delinquent employee was not given any chance to have his say  

before  imposition  of  penalty.   Regulation  38(2)  of  the  

Regulations has been quoted in the preceding paragraph of the  

judgment and nowhere it contemplates giving an opportunity  

to the delinquent employee.  Matter would have been different  

had the delinquent employee not given the copy of the enquiry  

report  and opportunity  to  file  reply  thereto.  Thus,  both the  

reasons given by the learned Single Judge, as affirmed in the  

appeal by the High Court, are erroneous.  

14. It may be mentioned that the High Court had held that  

punishment  inflicted  on the  delinquent  employee  to  be  one  

provided under Regulation 36 of the Regulations.  According to  

the  High  Court  punishment  imposed  is  in  the  nature  of  

reduction  of  lower  post  or  to  a  lower  stage  in  time  scale.

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Regulation 36 provides for the penalties which can be imposed  

on delinquent employee. Regulation 36 reads as follows :  

“36.PENALTIES  :  The  following  penalties  may,  for  good  or  sufficient reasons and as hereinafter provided, be imposed on  an employee namely :

i) Censure; ii) with-holding of increments or promotions; iii) recovery from pay of the whole or part of any  

pecuniary  loss  caused  to  the  Corporation   by  negligence or breach of orders;

iv) reduction to a lower stage in time scale of pay   for a specified period with further direction as to   whether  or  not  the  employee  will  earn  increments  of  pay  during  the  period  of  such  reduction  will  or  will  not  have  the  effect  of  postponing the future increments of his pay;

v) reduction to a lower time scale of pay, grade,   post or service which shall ordinarily be a bar to  the promotion of the employee to the time scale  of  pay,  grade,  post  or  service  from which  he  was reduced, with or without further directions  regarding  conditions  of  the  restoration  to  the   grade  or  post  of  service  from  which  the   employee  was  reduced and  his  seniority  and  pay on such restoration to  that  grade, post or  service;

vi) compulsory retirement;  vii) removal  from  service  which  shall  not  be  a  

disqualification for future employment; viii) dismissal  from service  which  shall  ordinarily  

be a disqualification for future employment.”

15. The punishment inflicted on the delinquent employee is  

of relegating him to the status of Daily Rated Conductor from  

the post of Conductor.  The post of Conductor carries a time  

scale and Regulation 36(4) provides for penalty of reduction to

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a lower stage in time scale of pay for a specified period.  The  

reduction to a lower stage in the time scale would obviously  

mean that the employee retains the same post but the scale of  

pay, which every post carries, can be reduced to a lower stage.  

Relegation of the delinquent employee to the status of Daily  

Rated Conductor cannot be said to be a reduction to a lower  

stage in the time scale of pay or reduction to a lower grade as  

delinquent  employee  has  been  deprived  of  the  post  of  

Conductor. This reduction to a lower stage, in our opinion, has  

to be in the scale of pay of the Conductor itself.  Reduction to  

a lower grade should be with reference to the same post. In  

our  opinion,  the  punishment  inflicted  also  does  not  come  

within  the  ambit  of  reduction  to  a  lower  post  or  grade  as  

contemplated under Regulation 36(5) of the Regulations.

16.    We  may  next  consider  whether  the  punishment  is  

permissible  in  service  jurisprudence.   It  is  well  settled that  

while an employee can be reverted to a lower post or service,  

he cannot be reverted to a post lower than the post in which  

he entered service (See: Nyadar Singh vs. Union of India – AIR

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1988 SC 1979). Further it is also well settled that reversion to  

a lower  post  or service  does not permit  reversion to a post  

outside the cadre that is  from regular post  to a daily  wage  

post.   We  are  therefore  of  the  view  that  the  punishment  

inflicted  on  the  delinquent  employee  not  being  one  of  the  

punishments enumerated in Regulation 36, is not permissible  

in law.

17. However we are of the view that the reasoning of the High  

Court  for  quashing  the  order  of  punishment  is  not  

sustainable. While we do not agree with the High Court that  

the enquiry is to be set aside on the ground of bias, we agree  

that  the  punishment  imposed  by  the  disciplinary  authority  

requires to be modified.  Though, normally, in such a situation  

the  matter  should  be  referred  back  to  the  disciplinary  

authority for imposition of fresh penalty, having regard to the  

facts  and  circumstances  and  to  do  complete  justice,  we  

propose to impose the penalty.

18.  We  accordingly  allow  this  appeal  in  part  with  the  

following directions:

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(a) The  judgment  of  the  High  Court  is  set  aside  and  the  

finding  of  guilt  recorded  by  the  Disciplinary  Authority  is  

upheld.

(b) The punishment imposed by the appellant  is  set  aside  

and the direction for reinstatement is upheld.  

(c) However  as  the  punishment  is  being  set  aside  and  

reinstatement  is  directed  on  a  technical  ground,  the  

respondent-employee will not be entitled to any back wages.

(d) Instead of reversion to the post of daily wage conductor  

we substitute the punishment as reduction to the lowest stage  

of the time scale applicable to the post of conductor with effect  

from the date of imposition of punishment.

…………………………...J.                                                  (R.V. RAVEENDRAN)

………………………….J.                                                               (R.M. LODHA)

………………………….J.      (C.K. PRASAD)

NEW DELHI, MAY  06, 2010.