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CASE NO.: Appeal (civil)  4041-4042 of 2007

PETITIONER: M.P. STATE AGRO INDUSTRIES DEVELOPMENT CORPORATION LTD. & ANR

RESPONDENT: JAHAN KHAN

DATE OF JUDGMENT: 05/09/2007

BENCH: DR. ARIJIT PASAYAT & D.K. JAIN

JUDGMENT: J U D G M E N T

CIVIL APPEAL NOS.4041-4042 OF 2007 (Arising out of SLP (C) Nos. 14853-14854 of 2005)

D.K. JAIN, J.:

Leave granted. 1.      The M.P. State Agro Industries Development  Corporation (hereinafter referred to as ’the Corporation’)  has preferred these appeals, questioning the correctness  of the two orders dated 4th August, 2003 and 19th  January, 2005 passed by the learned Single Judge of the  High Court of Judicature at Jabalpur, in a writ petition  filed by one of its employees’ (the respondent herein), and  the review application filed by the Corporation  respectively.  By the former order, the High Court has set  aside order dated 19th December, 1989 passed by the  Managing Director, in his capacity as the disciplinary  authority of the Corporation, imposing a penalty on the  respondent in the form of recovery of an amount  equivalent to the monetary loss suffered by the  Corporation and stoppage of three increments with  cumulative effect.  By the latter order, the High Court has  dismissed the application for review filed by the  Corporation. 2.      A few material facts, giving rise to the appeals, are  as follows: While working as the Branch Manager of the  Corporation at its Satna Branch, the respondent entered  into an agreement for letting out some machinery  belonging to the Corporation, to one M/s. Universal  Construction Company.  It was alleged that the  respondent failed to recover the rent/charges under the  said agreement and thereby caused loss to the  Corporation.  Consequently, a notice was issued to the  respondent to show cause as to why the loss of  Rs.16,903.41 caused to the Corporation due to  dereliction of duty on account of non-recovery of the  estimated amount of rent and the interest be not  recovered from him and a penalty of stoppage of three  increments with cumulative effect be not imposed.  In his  reply to the show cause notice, the respondent, inter alia,  stated that since he had been transferred from the said  Branch and his successor had not taken any steps to  recover rent etc. from the said Company, he was not  responsible for the loss caused to the Corporation.  The

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disciplinary authority, found the explanation to be  unsatisfactory.  He observed that the respondent had let  out the machinery contrary to the instructions from the  Headquarters as a result whereof the Corporation had  suffered financial loss of the aforesaid amount.   Accordingly, vide a composite order dated 19th December,  1989, he directed the recovery of Rs.16,903.41 from the  salary of the respondent at 20%  per month and stoppage  of three increments with cumulative effect. 3.      Being aggrieved, the respondent challenged the  order by way of a writ petition filed under Articles  226/227 of the Constitution mainly on the ground that  the penalty of stoppage of three increments with  cumulative effect being a major penalty, it could not be  imposed without holding a regular departmental enquiry  as per the procedure laid down for imposition of a major  penalty.  The plea found favour with the High Court.  The  High Court was of the view that as per the  Rules/Regulations, the stoppage of three increments with  cumulative effect was a major penalty and, therefore,  could not be imposed without holding a proper enquiry.   Accordingly, the order passed by the disciplinary  authority was quashed.  Nevertheless, leave was granted  to the Corporation to proceed against the respondent, if  so advised.  Not being satisfied with the order, the  Corporation moved an application for review of the said  order but without any success.  As noted above, both the  said orders are under challenge in these appeals. 4.      Learned counsel for the Corporation has submitted  that under M.P. State Agro Industries Development  Corporation Limited Service (Recruitment and Selection)  Regulations of 1976 (for short ’the Regulations’),  punishment of stoppage of increments with cumulative  effect is a minor penalty and, therefore, no regular  enquiry is contemplated thereunder.  It is contended that  the High Court, lost sight of the relevant Regulations and  going by the general notions, without referring to any  other statutory provision, has erred in holding that the  penalty imposed on the respondent was a major penalty.   Learned counsel has also urged that an efficacious  alternative remedy by way of an appeal being available to  the respondent, the High Court should not have  entertained the writ petition. 5.      It is trite that the power of punishment to an  employee is within the discretion of the employer and  ordinarily the courts do not interfere, unless it is found  that either the enquiry, proceedings or punishment is  vitiated because of non-observance of the relevant Rules  and Regulations or principles of natural justice or denial  of reasonable opportunity to defend etc. or that the  punishment is totally disproportionate to the proved  misconduct of an employee.  All these principles have  been highlighted in Indian Oil Corporation Ltd. & Anr.  Vs. Ashok Kumar Arora  and Lalit Popli Vs. Canara  Bank & Ors.  6.      Thus, the short question that arises for  consideration is whether in the context of the Regulations  governing the service conditions of the respondent, the  recovery of the aforementioned amount and stoppage of  three increments with cumulative effect is a major  penalty and if so, the order of punishment is vitiated on  any of the grounds noted above, warranting interference  by the Court? 7.      The Regulations relevant for the purpose of the  instant case are as under:

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"If the Managing Director is satisfied  about the charges levied, he shall grant a  personal hearing to the employee  concerned, and if necessary, take oral  examination of the witnesses named by  the employee in his reply before taking a  final decision.

An appeal shall

(a)     Against orders of the Managing  Director to the Chairman.

(b)     Against the order of the Chairman to  the Board.

(c)     An aggrieved employee shall have a  right to appeal provided it is  preferred within 30 days of the  receipt of the order against which  the appeal is preferred.  The  appellate authority (except Board)  shall decide the case within, 2  months from the date of the receipt  of the appeal.

The following punishments may be  awarded for good and sufficient reasons,  including breaches of any rules of  conduct or for committing any of the  offences mentioned in the Schedule  according to gravity of each case:-

"Class of  misconduct

Punishment Appealable or  Non-appealable Minor Lapses and  delinquencies (a) Warning (b) Reprimand (c) Fine upto     1/10th of pay

(d) Recovery from  pay of whole or  part of pecuniary  loss caused to  the corporation  by negligence or  breach of orders  if within Rs.50/-

Non-Appealable Non-appealable  if the amount is  not more than

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Rs.5/-

Non-Appealable

Acts of misconduct (a)     Recovery  from pay of whole  or part of  pecuniary loss  caused to the  corporation by  negligence or  breach of orders  if within  Rs.50/-

(b)withholding  increment for  specific period  (c) stoppage of  promotion (d) reduction to a  lower post or  lower level pay  (e) termination of  service  (f) removal (g) discharge (h) dismissal (i) disqualifying the incumbent  from any  employment in  the Agro Ind.  Corpn. Appealable  

Appealable  

Appealable Appealable

Appealable

Appealable Appealable Appealable Appealable"

8.      A bare reading of the scheme of the afore-extracted  Regulations would show that there is a clear demarcation  of quantum of punishment between the minor lapses,  delinquencies and acts of misconduct.  It is evident that  having regard to the nature of acts of omission and  commission, the punishment prescribed for minor lapses,  and delinquencies, ostensibly not having perpetual effect,  have been made non-appealable in comparison to the  punishments for acts of misconduct, which include

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recovery of whole or a part of pecuniary loss, exceeding  Rs.50/-, caused to the Corporation, withholding of  increments for a specific period, termination of services,  removal etc., which can all be characterized as major  punishments.  Precisely for this reason, all punishments  falling in the latter category have been made appealable.   The perceptive distinction in two sets of penalties, in our  view, makes it abundantly clear that the Corporation has  treated the punishments/penalties falling in the first  category as minor punishments/penalties and the acts of  misconduct, falling in the second category as major  penalties.  We may, however, hasten to add that it cannot  be laid as a hard and fast rule that stoppage of  increments, with or without hedge over it, is always to be  treated as a major penalty, necessitating regular enquiry.   It would depend on the Rules and Regulations governing  the service conditions of the employee, though ordinarily,  in the absence of specific Regulations, withholding of  increments with cumulative effect is treated as a major  penalty because it has a perpetual effect on the entire  tenure of service of the employee. 9.      Be that as it may, we are of the opinion that in the  light of our interpretation of the aforenoted Regulations,  the imposition of penalty vide composite order dated     19th December, 1989, directing recovery of loss of  Rs.16903.41 and stoppage of three increments with  cumulative effect, is a major penalty, clearly envisaging a  regular enquiry before punishing the respondent.  Since  admittedly this procedure was not followed, the High  Court was justified in coming to the conclusion that  imposition of the impugned penalty without holding  enquiry was illegal and without jurisdiction. 10.     Before parting with the case, we may also deal with  the submission of learned counsel for the appellants that  a remedy by way of an appeal being available to the  respondent, the High Court ought not to have entertained  his petition filed under Articles 226/227 of the  Constitution.  There is no gainsaying that in a given case,  the High Court may not entertain a writ petition under  Article 226 of the Constitution on the ground of  availability of an alternative remedy, but the said rule  cannot be said to be of universal application.  The rule of  exclusion of writ jurisdiction due to availability of an  alternative remedy is a rule of discretion and not one of  compulsion.  In an appropriate case, in spite of the  availability of an alternative remedy, a writ court may  still exercise its discretionary jurisdiction of judicial  review, in at least three contingencies, namely, (i) where  the writ petition seeks enforcement of any of the  fundamental rights; (ii) where there is failure of principles  of natural justice or (iii) where the orders or proceedings  are wholly without jurisdiction or the vires of an Act is  challenged. In these circumstances, an alternative  remedy does not operate as a bar. (See: Whirpool  Corporation Vs. Registrar of Trade Marks ,  Harbanslal Sahnia & Anr. Vs. Indian Oil Corporation  Ltd. & Ors. , State of H.P. Vs. Gujarat Ambuja  Cement Ltd.  and Sanjana M. Wig Vs. Hindustan  Petroleum Corporation Ltd.  ).   11.     In the instant case, though it is true that the  penalty order impugned in the writ petition was  appealable in terms of the aforenoted Regulations but  having coming to the conclusion that the order was per  se illegal being violative of the principles of natural  justice, it cannot be said that the High Court fell into an

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error in entertaining the writ petition filed by the  respondent. 12.     For the foregoing reasons, the appeals are devoid of  any merit and consequently the same deserve to be  dismissed, which we hereby do, leaving the parties to  bear their own costs.