http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 1 of 9  

PETITIONER: PYARE LAL SHARMA

       Vs.

RESPONDENT: MANAGING DIRECTOR, JAMMU & KASHMIRINDUSTRIES LTD. & ORS. & V

DATE OF JUDGMENT19/07/1989

BENCH: KULDIP SINGH (J) BENCH: KULDIP SINGH (J) DUTT, M.M. (J)

CITATION:  1989 AIR 1854            1989 SCR  (3) 428  1989 SCC  (3) 448        JT 1989 (3)   133  1989 SCALE  (2)59

ACT:     Jammu  &  Kashmir Industries Employees Service  Rules  & Regulations--R. 16.14---Termination of service--Provision of show  cause  notice sufficient safeguard  against  arbitrary action--Held regulation not arbitrary.     Regulation  16.14--Termination of service--Ground (a)  & (b)Three  months  notice  or pay in  lieu  thereof.  Amended Regulation-grounds (c) & (d) unauthorised absence and taking part in politics--15 days notice required--No requirement of any other notice or pay in lieu thereof. Show cause for  the period  prior  to  amendment--Held  amended  regulation  not operative  retrospectively  and  the notice  served  on  the employee was illegal and the order of termination had to  be set aside. Also held termination on the basis of taking part in politics not maintainable as no show cause given.     Constitution of India 1950--Article 311(1) Employees  of the  company not civil servants--Cannot claim protection  of Art.  311(1) of the Constitution of India nor the  extension of that guarantee on parity-Employees governed by the provi- sions  of  Articles of Association and  Regulations  of  the Company.     Natural Justice-- Principle--No one can be penalised for the action which was not penal on the day it was committed.     Delegated  authority, acquires the power  of  appointing authority-Held M.D. who had been delegated the powers of the Board  of Directors was legally competent to  terminate  the services of the employee.

HEADNOTE:     According to the Regulation 16.14 of the Jammu & Kashmir Industries  Employees Service Rules & Regulations the  serv- ices  of the permanent employee could be terminated  if  the post  is abolished or he is declared medically  unfit  after giving  three month’s notice or pay in lieu thereof  and  in case of temporary employee one month’s notice or pay in 429 lieu thereof.     This regulation was amended on April 20, 1983 by  adding two  more  grounds  namely, if the employee  remains  on  an unauthorised absence or if he takes part in active politics, in  such cases the services shall be terminated if he  fails

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 2 of 9  

to  explain his conduct satisfactorily within 15  days  from the  date  of issue of notice and the  management  shall  be empowered  to take a decision without resorting  to  further enquiries.     Pyare Lal Sharma was employed as a Chemical Engineer  by the  Jammu  &  Kashmir Industries  Ltd.  hereinafter  called ’Company’. The Company issued a show cause notice on 21.4.83 in  terms of the added clauses for his unauthorised  absence from  duty. As no reply was submitted, the  M.D.  terminated his services by an order dated 14.6.1983. Sharma  challenged the  order of termination by way of a writ  petition  before the J & K High Court. Learned Single Judge allowed the  Writ Petition  on  three grounds namely, violation  of  Rules  of Natural Justice, that the Board of Directors having appoint- ed  Sharma, the M.D. who is subordinate authority could  not terminate  his  services and that the regulation  16.14  was arbitrary  and violative of Art. 14 of the  Constitution  of India. The Letters Patent Bench of the High Court  dismissed the  appeal of the Company but denied backwages  to  Sharma. Aggrieved  by that order both the Company as well as  Sharma came  up  in appeals before this court. While  allowing  the appeal of Sharma partially and dismissing the appeal of  the Company, this Court,     HELD:  That  Regulation  16.14 was  not  arbitrary.  The provision  of  show cause notice is a  sufficient  safeguard against  arbitrary  action. Under grounds (a) & (b)  of  the Regulations  three months notice or pay in lieu  thereof  is required.  Regarding grounds (c) & (d) the regulations  pro- vide for 15 days notice to explain the conduct satisfactori- ly and there is no requirement of any other notice or pay in lieu thereof. [437C-D]     There is no provision in the Articles of Association  or the regulations of the company giving same protection to the employees  of the company as is given to the civil  servants under Art. 311(1) of the Constitution of India. An  employee of  the Company cannot, therefore, claim that he  cannot  be dismissed or removed by an authority subordinate to that  by which he was appointed. Since on the date of termination  of Sharma’s services the M.D. had the powers of the  appointing authority  he  was legally competent to  terminate  Sharma’s services. [437F-G] 430     Grounds  (c) & (d) in regulation 16.14  exclusively  and individually are sufficient to terminate the services of  an employee. Once it is established that an employee remains on an unauthorised absence from duty the only action which  can be taken is termination of his services. Similar is the case when an employee takes part in active politics. The  finding in  the  termination order cannot be  sustained  because  no notice in this respect was given to Sharma but the order  of termination can be supported on the ground of his  remaining on unauthorised absence from duty. [437H; 438A-B]     State  of  Orissa v. Vidyabhushan  Mohapatra,  [1963]  1 Supp. SCR 648 and Railway Board v. Niranjan Singh, [1969]  1 SCR 548, relied upon.     It  is a basic principle of natural justice that no  one can  be penalised on the ground of a conduct which  was  not penal  on the day it was committed. The date of  show  cause notice  being April 21, 1983 the unauthorised  absence  from duty which has been taken into consideration is from  Decem- ber  20, 1982 to April 20, 1983. Whole of this period  being prior to the date of amendment of regulation 16.14, the same could  not be made as a ground for proceeding  under  ground (c) of Regulation 16.14. The Notice served on the  appellant

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 3 of 9  

was thus illegal and as a consequence the order of  termina- tion can not be sustained and has to be set aside. [438F-G]     When  the termination order is set aside by  the  courts normally the employee becomes entitled to backwages and  all other  consequential  benefits.  In view of  the  facts  and circumstances of this case the court ordered that only sixty percent  of the backwages be paid to Sharma. Moneys  already received by Sharma under orders of either this Court or High Court shall be adjusted and the balance paid to him. If  the money  already  paid to Sharma is more than  what  has  been ordered to be paid now then there shall be no recovery  from him. [439A-C]

JUDGMENT:     CIVIL  APPELLATE JURISDICTION: Civil Appeal No.  3  1543 155 of 1985.     From  the  Judgment and Order dated 26.3.  1985  of  the Jammu & Kashmir High Court in L.P.A. (W) No. 59 of 1984. For the Appellant In-Person in Civil Appeal No. 3 154/85     M.N.  Tiku,  Rakesh Tiku and Pandey Associates  for  the Respondents. 431     M.N.  Tiku, Rakesh Tiku  and Pandey Associates  for  the Appellants. For the Respondent In-Person in Civil Appeal No. 3155/85. The Judgment of the Court was delivered by     KULDIP  SINGH,  J. Jammu &  Kashmir  Industries  Limited (hereinafter called ’company’) is a company registered under the  Indian  Companies  Act, 1956 and is  wholly  owned  and managed  by the State of Jammu & Kashmir. Pyare  Lal  Sharma was employed by the company as Chemical Engineer. His  serv- ices were terminated by the Managing Director of the company on  June 14, 1983. Sharma’s writ petition was allowed  by  a learned  Single Judge of the Jammu & Kashmir High Court.  On appeal  by the company the Letters Patent Bench  upheld  the judgment but denied back-wages to Sharma. This is how  these two appeals, one by the.company and the other by Sharma, are before us.     We  may  briefly notice the necessary facts.  Pyare  Lal Sharma joined the company as Assistant Chemical Engineer  on July 12, 1972. In 1974 he was sent to England as  management trainee  but he returned back without completing the  train- ing. Sharma’s conflict with the company started in 1976 when he filed a suit against the company in Jammu & Kashmir  High Court with various reliefs including a direction that he  be again  sent  to England on company’s expense. The  suit  was dismissed and further appeal to the Division Bench was  also dismissed.  He  then filed another suit in  the  Delhi  High Court  claiming Rs.50 lakhs as damages from the company  but the same did  not proceed on technical grounds.  Thereafter, it  seems,  Sharma  started suspecting  mala-fide  in  every action of the company and resorted to court proceedings even on slight pretext. He challenged the order of transfer  from Baramulla to the headquarters by way of suit in the Jammu  & Kashmir  High  Court. Interim stay, initially  granted,  was vacated by the High Court. In December, 1979 he applied  for leave on medical grounds without disclosing the ailment.  He remained  absent  from  December 7, 1979 to  March  7,  1980 without any sanctioned leave. Disciplinary proceedings  were initiated against him on the charge of unauthorised  absence and  he  was placed under suspension on March  8,  1980.  He filed  Writ Petition No. 58/80 in the Jammu &  Kashmir  High Court  against suspension. Ultimately Sharma  expressed  re-

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 4 of 9  

grets  and he was reinstated into service by an order  dated May  15, 1980. In April, 1981 he was transferred from  head- quarters to one of 432 the  units.  He again filed a writ petition in the  Jammu  & Kashmir High Court challenging the order of transfer but the same  was dismissed. Thereafter he filed Writ  Petition  No. 4086  of  1982 in this Court which was  heard  by  Chinnappa Reddy, J. (Vacation Judge) on 1st of June, 1982. The learned Judge passed the following order:               "Issue  notice  returnable on June  15,  1982.               Notice  be also served on the counsel for  the               State of Jammu & Kashmir Mr. Altar Ahmad.  Mr.               Altar  Ahmad will take instructions  from  his               clients  and  assist this Court  to  know  the               precise facts of the case which it is impossi-               ble  to find from the petitioner. 1 have  sug-               gested to the petitioner that he may engage  a               counsel but he does not appear to be  inclined               to do so. Nor is he willing to be assisted  by               the counsel engaged by the court."     The  writ petition was, however, dismissed as  withdrawn on June 15, 1982. Sharma filed two more writ petitions being 293  of  1982 and 410 of 1982 in the Jammu  &  Kashmir  High Court challenging the promotions of some other officers.     Sharma  absented from duty on September 8, 1982. He  was asked to explain his absence. A para out of his reply is  as under:               "I  have been submitting charge sheet  against               you  since last one year to authorities  about               your  corrupt practices,  communal  character,               and  illegal  financial advancement  you  have               made but no action has been taken against  you               since  you  utilise  political  pressure   and               bribed the chairman."     Sharma  was served with a charge-sheet  dated  September 24, 1982 and he was placed under suspension. Use of  deroga- tory  language  in  various communications was  one  of  the charges  against him. He submitted his reply to the  charge- sheet  on October 7, 1982. Part of the opening paragraph  is as under:               "You  have become frustrated, lost balance  of               mind  and to cover the various  irregularities               committed by you for example  .....  You  will               be prosecuted for levelling false charge sheet               and  false charges against me. Coming  to  the               charge  sheet with above reverence I  have  to               say as under." On  October  22, 1982 an enquiry officer  was  appointed  to enquire 433 into the charges against Sharma. He challenged the order  of suspension by way of Civil Writ Petition 661 of 1982 in  the Jammu  & Kashmir High Court. The High Court stayed the  sus- pension  by its order dated December 20, 1982. The order  of suspension  having  been  stayed by the High  Court  it  was incumbent  on  Sharma to have joined duty.  But  inspite  of company’s letters asking him to do so he remained absent.     Sharma filed Writ Petition 471/82, Writ Petition  129/83 and  Letters Patent Appeal 24/83 for payment of  his  salary and allowances for various periods which were granted by the High Court.     It is also on record that while in service Sharma unsuc- cessfully  fought  assembly elections on two  occasions.  He filed his nomination papers for contesting elections to  the

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 5 of 9  

Lok  Sabha from Baramulla constituency. But  the  nomination papers were rejected.     Regulation 16.14 of Jammu & Kashmir Industries Employees Service Rules and Regulations before amendment was as under:               "The  service of the permanent employee  shall               be terminated by the company, if (a) his  post               is abolished or (b) he is declared on  medical               grounds to be unfit for further service  after               giving  three  months’ notice or pay  in  lieu               thereof. For similar reasons the service of  a               temporary  employee  also  be  dispensed  with               after giving him one month’s notice or pay  in               lieu thereof."     The  above quoted regulation 16.14 was amended on  April 20, 1983. Amended regulation is as under:               "16.14.  the services of an employee shall be               terminated by the Company if:               (a) his post is abolished, or               (b)  he is declared on medical grounds  to  be               unfit for further service, or               (c)  if he remains on  un-authorised  absence,               or(d) if he takes part in active politics.               In the case of (a) and (b) above the  services               shall be terminated after giving three  months               notice to a permanent               434               employee and one month’s notice to a temporary               employee or pay in lieu thereof.                         In the case of (c) and (d) above the               services of an employee shall be terminated if               he fails to explain his conduct satisfactorily               within  15  days  from the date  of  issue  of               notice.  The management shall be empowered  to               take  a decision without resorting to  further               enquiries.               By order of the Board of Directors."     The  company issued a show cause notice dated April  21, 1983  in terms of clause (c) of amended regulation  16.  14. The notice was in the following terms:               "In  compliance to the orders of  the  Hon’ble               High  Court  Your suspension was  stayed  till               further orders vide Order No. JKI/319/82 dated               21.12.82  issued vide endorsement No.  Adm.(P)               80-65/4866 dated 21.12.82. From that date also               you have continuously remained absent unautho-               risedly from your duties. You are,  therefore,               served  this  notice to show  cause  within  a               period  of  15 days as to  why  your  services               should  not be terminated under rules  of  the               Corporation."     No  reply  to  the show cause notice  was  submitted  by Sharma. By an order dated June 14, 1983 the Managing  Direc- tor of the company terminated his service,. The  termination order is reproduced as under:               "Shri  Pyare  Lal  Sharma  Chemical  Engineer,               Jammu  and  Kashmir  Industries  Limited   has               remained on unauthorised absence  continuously               from  21.12.82 (since the date of his  suspen-               sion was stayed as per orders from the Hon’ble               High  Court).  Shri Sharma was served  with  a               notice under Jammu & Kashmir Industries Limit-               ed  Employees  Service  Rules  to  show  cause               within  a  period  of 15 days as  to  why  his               services should not be terminated. This notice               was  served to him under registered  post  but

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 6 of 9  

             the same was received back in this office  and               later on delivered to him in person on  7.5.83               as per his request. Shri Sharma has failed  to               explain his position.               It  has  now also been established  that  Shri               Sharma was               435               taking  part  in active  politics  during  the               period  of his un-authorised absence  and  has               filed nomination papers for contesting   elec-               tion   from  1-Baramulla   Parliamentary  Con-               stituency.  Now that his unauthorised  absence               as  well  as  his taking part  in  the  active               politics has been established, and in exercise               of  the powers vested in the management  under               Jammu & Kashmir Industries Employees  Services               Regulations  the services of said  Shri  Pyare               Lal Sharma Chemical Engineer J & K  Industries               Limited are hereby terminated."     Sharma  challenged  the order of termination by  way  of Writ Petition No. 70 of 1984 before the Jammu & Kashmir High Court.  Learned Single Judge by his judgment  dated  October 16, 1984 allowed the writ petition on three grounds.     The learned Judge found the impugned order violative  of Rules of Natural Justice as no opportunity to show cause was afforded  to Sharma in respect of the ground of taking  part in  active  politics.  It was also held that  the  Board  of Directors having appointed Sharma, The Managing Director who is  subordinate authority could not terminate his  services. Finally,  the  learned  Judge held regulation  16.14  to  be arbitrary and as such violative of Article 14 of the Consti- tution of India.     The Letters Patent Bench of the High Court dismissed the appeal  of the company but denied back-wages to Sharma.  The Bench held that Sharma’s services could not be terminated by an  authority subordinate to the authority  which  appointed him. The Bench also found that either three months notice or salary in lieu thereof under regulation 16.14 was mandatory. The  Division  Bench did not agree with  the  other  reasons given  by the learned Single Judge in support of  his  judg- ment.     Mr.  Pyare Lal Sharma appeared in person and argued  his case.  He has been of no assistant to us. During the  course of arguments we suggested to Mr. Sharma to engage a  counsel which de declined. We also repeatedly offered to him to have the  services of a counsel engaged by the Court but  he  did not agree and insisted on arguing the case himself.     From  the  pleadings of the parties,  documents  on  the record, the judgment of the learned Single Judge and of  the Letters Patent Bench 436 and  from Sharma’s arguments the following points arise  for our consideration:                    1. Whether Regulation 16.14 is  arbitrary               and  as  such ultra vires Article  14  of  the               Constitution of India.                    2. Whether three months’ notice or pay in               lieu  of the notice period was required to  be               given under Regulation 16.14.                    3.  The  termination  order  having  been               passed  by  the Managing Director who  was  an               authority  subordinate to the Board of  Direc-               tors which appointed Sharma, the order was bad               on that ground.                     4. Whether the impugned order is  viola-

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 7 of 9  

             tive  of rules of natural justice so  much  so               that  the  ground  of taking  part  in  active               politics  was not mentioned in the show  cause               notice  whereas  it  was relied  upon  in  the               termination order.                     5. Whether the period of absence,  which               was prior to the date of coming into force  of               the  amended Regulation 16.14, could be  taken               into consideration for invoking ground (c)  of               the Regulation.     We see no arbitrariness in Regulation 16.14. The Regula- tion  has been framed to meet four  different  eventualities which  may arise during the service of a  company  employee. Under this regulation services of an employee may be  termi- nated (a) if his post is abolished or (b) if he is  declared on medical grounds to be unfit for further service or (c) he remains  on unauthorised absence or (d) if he takes part  in active  politics.  In the case of (a) and (b)  three  months notice  to  a  permanent employee and one  month  notice  to temporary employee or pay in lieu thereof is to be given. In case  of  (c) and (d) a show cause notice,  to  explain  his conduct  satisfactorily, is to be given. So far  as  grounds (a)  and  (b) are concerned there cannot be  any  objection. When a post is abolished or an employee is declared medical- ly unfit for further service the termination is the  obvious consequence.  In the case of abolition of post the  employee may  be  adjusted in some other post if  legally  permitted. Ground  (c)  has also a specific purpose.  "Remains  on  un- authorised absence" means an employee who has no respect for discipline  and absents himself repeatedly and  without  any justification 437 or  the  one  who remains absents for  a  sufficiently  long period.  The  object  and purport of the  regulation  is  to maintain  efficiency  in  the service of  the  company.  The provision  of show cause notice is a  sufficient  safe-guard against  arbitrary  action.  Regarding  ground  (d)  "acting politics"  means almost whole time in politics. Company  job and active politics cannot go together. The position of  the civil  servants who are governed by Article 311 is  entirely different but a provision like grounds (c) and (d) in  Regu- lation 16.14 concerning the employees of  companies/corpora- tions/public  undertakings is within the competence  of  the management.     We  do  not agree with the Division Bench  of  the  High Court  that three months’ notice or pay in lieu thereof  was to  be given to Sharma under Regulation 16.14. It  is  clear from the plain language of the regulation that three  months notice or pay in lieu, is only required when termination  is under ground (a) or (b). Regarding (c) and (d), the  regula- tion  provides for a 15 days notice to explain  the  conduct satisfactorily  and  there is no requirement  of  any  other notice or pay in lieu thereof.     We may now take-up the third point. Sharma was appointed as  Chemical Engineer by the Board of Directors. The  powers of  the Board of Directors to appoint officers  of  Sharma’s category were delegated to the Managing Director on  Septem- ber 12, 1974 and as such from that date the Managing  Direc- tor or became the appointing authority. Needless to say that employees of the company are not civil servants and as  such they  can neither claim the protection of Article 311(1)  of the Constitution of India nor the extension of that  guaran- tee  on  parity. There is no provision in  the  Articles  of Association  or the regulations of the company  giving  same protection  to the employees of the company as is  given  to

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 8 of 9  

the civil servants under Article 311(1) of the  Constitution of  India.  An employee of the  company  cannot,  therefore, claim that he cannot be dismissed or removed by an authority subordinate to that by which he was appointed. Since on  the date of termination of Sharma’s services the Managing Direc- tor  had the powers of appointing authority, he was  legally competent to terminate Sharma’s services.     The  learned Single Judge allowed the writ  Petition  on the  fourth point though the same did not find  favour  with the Division Bench. Grounds (c) and (d) in regulation 16.14, exclusively  and individually, are sufficient  to  terminate the  services of an employee. Once it is established to  the satisfaction of the authority that an employee 438 remains  on unauthorised absence from duty, the only  action which  can  be  taken is the termination  of  his  services. Similar  is the case when an employee takes part  in  active politics.  The  finding in the termination  order  regarding taking  part in active politics cannot be sustained  because no notice in this respect was given to Sharma but the  order of  termination can be supported on the ground of  remaining unauthorised  absence  from  duty. This Court  in  State  of Orissa v. Vidyabhushan Mohapatra, [1963] 1 Supp. SCR 648 and Railway  Board v. Niranjan Singh, [1969] 1 SCR 548 has  held that  if the order can be supported on one ground for  which the  punishment  can lawfully be imposed it is not  for  the courts  to  consider whether that ground  alone  would  have weighed  with  the authority punishing the  public  servant. Thus there is no force in this argument.     This takes us to the last point which we have discovered from the facts. Regulation 16.14 before amendment  consisted of  only clauses (a) and (b) relating to abolition  of  post and unfitness on medical ground. The company had no authori- ty to terminate the services of an employee on the ground of unauthorised  absence without holding disciplinary  proceed- ings  against him. The regulation was amended on  April  20, 1983 and grounds (c) and (d) were added. Amended  regulation could not operate retrospectively but only from the date  of amendment. Ground (c) under which action was taken came into existence  only on April 20, 1983 and as such the period  of unauthorised absence which could come within the mischief of ground (c) has to be the period posterior to April 20,  1983 and  not  anterior to that date. The show cause  notice  was issued  to Sharma on April 21, 1983. The period  of  absence indicated  in  the show cause notice is obviously  prior  to April  20, 1983. The period of absence prior to the date  of amendment cannot be taken into consideration. When prior  to April 20, 1983 the services of person could not be terminat- ed  on  the ground of unauthorised absence from  duty  under Regulation  16.14  then  it is wholly illegal  to  make  the absence  during that period as a ground for terminating  the services of Sharma. It is basic principle of natural justice that  no  one can be penalised on the ground  of  a  conduct which was not penal on the day it was committed. The date of show  cause  notice being April 21,  1983  the  unauthorised absence from duty which has been taken into consideration is from  December  20, 1982 to April 20, 1983.  Whole  of  this period  being prior to the date of amendment  of  regulation 16.14 the same could not be made as a ground for  proceeding under  ground (c) of Regulation 16.14. The notice served  on the  appellant  was thus illegal and as  a  consequence  the order  of termination cannot be sustained and has to be  set aside. 439     When  the termination order is set aside by  the  courts

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 9 of 9  

normally  the  servant becomes entitled  to  back-wages  and other  consequential  benefits. This case  has  a  chequered history. From 1976 onwards there has been continuous litiga- tion  and mistrust between the parties. The facts  which  we have  narrated  above  go to show that  Sharma  has  equally contributed  to this unfortunate situation. In view  of  the facts and circumstances of this case we order that sixty per cent  of  the back-wages be paid to  Sharma.  Money  already received  by Sharma under orders of this Court or  the  High Court shall be adjusted and the balance paid to him. If  the money  already  paid  to Sharma is more than  what  we  have ordered then there shall be no recovery from him.     Civil Appeal 3154/85 is allowed to the extent  indicated above,  Civil  Appeal 3155/85 filed by the company  is  dis- missed.  C.M.P. 1213/ 88 is dismissed as infructuous.  There shall be no order as to costs. R.N.J. 440