http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 1 of 4  

PETITIONER: FOOD CORPORATION OF INDIA, HYDERABAD AND OTHERS

       Vs.

RESPONDENT: A. PRAHALADA RAO AND ANOTHER

DATE OF JUDGMENT:       01/11/2000

BENCH: M.B. Shah, & D.P. Mohapatra.

JUDGMENT:

Shah, J.

Leave granted. L...I...T.......T.......T.......T.......T.......T.......T..J

   The  notice  issued  by  this Court is  limited  to  the interpretation  given by the High Court to Regulation 60  of the  Food  Corporation  of India (Staff)  Regulations,  1971 (hereinafter  referred  to  as   the  Regulations)   which prescribes  the procedure for imposing minor penalties.   In Writ   Petition  No.14152  of   1989  filed  by   respondent No.1-Assistant   Manager  (Quality   Control)  at   Kakinada challenging  the  order  imposing  penalty  of  recovery  of Rs.7356/-  from  his  pay by 21 monthly instalments  on  the ground  of  dereliction of his duties, which caused loss  to the  Corporation,  learned Single Judge held that  once  the employee  denies  the  charge,  it  is  incumbent  upon  the authorities  to conduct an inquiry by giving an  opportunity to  him and render findings on the charges, otherwise  there is  every scope for the disciplinary authority to misuse the power  under Regulation 60.  The Court, therefore, set aside the   order   imposing  minor   penalty  as  the   procedure contemplated  for  imposing major penalty was not  followed. In  appeal, the Division Bench of the High Court by judgment and  order  dated 18th November, 1997 confirmed the same  by observingwhere  the  employee  disputes that any  loss  is caused to the Corporation either by his negligence or breach of  order,  and  if  so, how much pecuniary  loss  has  been incurred,  it  is  but necessary that an enquiry  should  be conducted, otherwise it is impossible to arrive at a correct finding  with regard to the causing of loss by the  employee by  his negligence or breach of order and with regard to the quantum  of  loss.  The aforesaid interpretation  of  Rules given by the High Court is challenged in this appeal.

   For deciding the question involved, we would first refer to  the  relevant procedure prescribed under Regulations  54 and 60 which read thus:-

       54. MINOR PENALTIES:

(i) Censure;

(ii) withholding of his promotion;

   (iii)  recovery from his pay of the whole or part of any

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 2 of 4  

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

(iv) withholding of increments of pay.

60. PROCEDURE FOR IMPOSING MINOR PENALTIES:

   (1)  Subject to the provisions of Sub-regulation (3)  of Regulation  59, no order imposing on an employee any of  the penalties  specified in clauses (i) to (iv) of Regulation 54 shall be made except after:

   (a) informing the employee in writing of the proposal to take action against him and of the imputations of misconduct or  misbehaviour  on which it is proposed to be  taken,  and giving   him  a  reasonable   opportunity  of  making   such representation as he may wish to make against the proposal;

   (b)  holding an inquiry in the manner laid down in  Sub- regulations  (3) to (23) of Regulation 58, in every case  in which the disciplinary authority is of the opinion that such inquiry is necessary;

   (c)  taking the representation, if any, submitted by the employee under clause (a) and the record of inquiry, if any, held under clause (b) into consideration;

   (d) recording a finding on each imputation of misconduct or misbehaviour.

   (2)  Notwithstanding anything contained in clause (b) of Sub-  regulation  (1),  if in a case it is  proposed,  after considering the representation, if any, made by the employee under   clause  (a)  of   the  sub-regulation,  to  withhold increment  of  pay  and such withholding  of  increments  is likely to affect adversely the amount of retirement benefits payable  to the employee or to withhold increments of a  pay for  a period exceeding 3 years or to withhold increments of pay  with cumulative effect for any period, an inquiry shall be  held  in the manner laid down in Sub-regulations (3)  to (23)  of  Regulation 58 before making any order imposing  on the employee any such penalty.

   (3)  The  record of the proceedings in such cases  shall include:

   (i)  a  copy  of the intimation to the employee  of  the proposal to take action against him;

   (ii)  a  copy  of  the   statement  of  imputations   of misconduct or misbehaviour delivered to him;

   (iii) his representation, if any;

   (iv) the evidence produced during the inquiry;

   (v)  the  findings on each imputation of  misconduct  or misbehaviour;  and

   (vi)  the  orders on the case together with the  reasons therefor.

   Learned  counsel  appearing on behalf of the  appellants submitted  that  while interpreting Regulation 60, the  High

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 3 of 4  

Court  has added a proviso by stating that when the employee disputes  his  liability  after receipt of  the  show  cause notice,  it is incumbent upon the disciplinary authority  to conduct a detailed enquiry as provided for major punishment. It is his contention that in case of negligence in discharge of  duties  or  loss  occurred to  the  Corporation  by  not following  the  directions  issued by  the  Corporation  for taking   precautions,  there  is  no  question  of   holding full-fledged  departmental  enquiry  before  imposing  minor penalty  as  provided  in Regulation 54.  As  against  this, respondent  No.2-Joint Secretary, Food Corporation of  India Executive  Staff Union who appeared in person submitted that under  the guise of imposing minor penalties, the Management of   appellant  is  dispensing   with  holding  of   regular departmental  enquiry  in  cases  where  charges  cannot  be proved.   He  further pointed out that there is large  scale misuse  of powers under the said Regulation and,  therefore, the  interpretation  given  by the High Court  to  the  said Regulation does not call for any interference.

   In  our  view, on the basis of the allegation that  Food Corporation of India is misusing its power of imposing minor penalties,  the Regulation cannot be interpreted contrary to its language.  Regulation 60(1)(b) mandates the disciplinary authority  to  form its opinion whether it is  necessary  to hold  enquiry  in a particular case or not.  But that  would not  mean  that  in all cases where  employee  disputes  his liability,   a   full-fledged  enquiry   should   be   held. Otherwise,  the  entire  purpose  of  incorporating  summary procedure  for imposing minor penalties would be frustrated. If the discretion given under Regulation 60(1)(b) is misused or  is  exercised  in arbitrary manner, it is  open  to  the employee to challenge the same before the appropriate forum. It  is  for  the disciplinary authority  to  decide  whether regular   departmental   enquiry   as   contemplated   under Regulation  58 for imposing major penalty should be followed or   not.    This   discretion   cannot  be   curtailed   by interpretation  which  is  contrary to  the  language  used. Further,  Regulation 60(2) itself provides that in a case if it  is  proposed  to  withhold increments of  pay  and  such withholding  of increments is likely to affect adversely the amount  of  retirement benefits payable to employee  and  in such  other  cases  as mentioned therein,  the  disciplinary authority  shall  hold  enquiry in the manner laid  down  in Regulation  58  before  making any order imposing  any  such penalty.   Hence, it is apparent that High Court erroneously interpreted the regulation by holding that once the employee denies  the  charge, it is incumbent upon the  authority  to conduct enquiry contemplated for imposing major penalty.  It also  erred in holding that where employee denies that  loss is  caused  to the Corporation either by his  negligence  or breach of order, such enquiry should be held.  It is settled law  that Courts power of judicial review in such cases  is limited and Court can interfere where the authority held the enquiry  proceedings in a manner inconsistent with the rules of  natural  justice  or  in violation  of  statutory  rules prescribing  the mode of enquiry and imposing punishment  or where  the conclusion or finding reached by the disciplinary authority  is  based  on  no evidence or  is  such  that  no reasonable  person  would  have ever reached.   As  per  the Regulation,  holding  of regular departmental enquiry  is  a discretionary  power of the disciplinary authority which  is to be exercised by considering the facts of each case and if it  is  misused or used arbitrarily, it would be subject  to judicial review.

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 4 of 4  

   In  the  result, the appeal is allowed to the  aforesaid extent.  There shall be no order as to costs.