REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO.   3298           OF 2009 [Arising out of SLP (Civil) No. 20202 of 2006]

Swaran Singh Chand …Appellant

Versus

Punjab State Electricity Board & Ors. …Respondents

J U D G M E N T  

S.B. SINHA, J :   

1. Leave granted.

2. The core question, in this appeal, arising out of a judgment and order  

dated 17.08.2006 passed by the High Court of Punjab and Haryana in CWP  

No. 10549 of 2004, is as to whether an order of compulsory retirement being  

a stigmatic one would be valid in law.

3. Appellant was directed to be compulsorily retired on attaining the age  

of  55  years  in  terms  of  a  circular  letter  dated  14.08.1981  laying  down  

guidelines for compulsory retirement, the relevant portion whereof reads as  

under:

“(i) Although  the  entire  service  record  of  an  employee  has  to  be  considered,  premature  retirement should not be ordered if during the last  5 years the work and conduct of the employee has  been good or better than that.

(ii) Ordinarily, no retirement should be ordered  within a period of one year preceding the date of  superannuation of the Government employee.

(iii) If an adverse entry relating to integrity exists  in  the  confidential  reports  during  the  10  years  preceding the review, or if after its recording there  has been no change in the class, status or the post  of  the  officer,  that  single  entry  should  be  considered  sufficient  for  ordering  premature  retirement.

(iv) If the adverse report on integrity relates to  the distant past or is more than 10 years old, the  subsequent  record  of  the  employee  should  be  scrutinized  carefully.   If  the  subsequent  reports  vouch-safe  the  integrity  of  the  employee  in  unambiguous  terms,  the  inference  is  that  he  has  improved  his  conduct  and  it  should  not  be  necessary  to  order  his  premature  retirement.   A  similar view can be taken if an employee has been  promoted  after  the  recording  of  the  adverse  remarks.”

2

4. Admittedly, the said order of retirement dated 29.09.2003 was based  

on the aforementioned circular letter.  It reads as under:

“Whereas Shri Swaran Singh Chand, UDC S/o Sh.  Gurbachan Singh presently working in the office  of Sr.Xen, Focal Point Spl. Division, Ludhiana has  attained the age of 55 years on 14.10.01 because  his date of birth is 15-10-1946.

Whereas  as  per  PSEB  Services  (Premature  Retirement)  Regulations,  the  case  of  Shri  Swarn  Singh Chand UDC was considered on 17.9.2003  by  the  High  Empowered  Integrity  Committee  (HEIC) which has been set up to screen the cases  of  non-gazetted  employees  of  Central  Zone  for  retention in service beyond the age of 50/55 years.  The  Committee  took note  of  ACRs,  disciplinary  Cases, personal record and his reputation.

Report  of  disciplinary  cases  of  above  noted  employee (as derived from his personal file) is as  under :-

CE/Op/Central  Zone,  Ludhiana  stopped  one  increment  without  future  effect  vide  this  office  order 81 dated 5.2.96 in the case of charge sheet  No.C-653  dated  30.5.95  issued  to  him  for  embezzlement of Board’s Cash of Rs.3069/- from  M/s Falcon Industry having A/C No.J537.

The assessment of ACRs of the above official was  scrutinized and observed that the following ACRs  are below average with adverse remarks:

(1) 28.10.93 to 31.3.94 below average integrity  doubtful  with  adverse  remarks  of  the  following  nature  

i) Trust worthy Not Good

3

ii) Habits Not Good

iii) Knowledge of work Not Good

iv) Knowledge of rules/Codes Less knowledge

v) Relations with Co-employees and other Sections of the office and with Public Not Good

vi) Integrity Doubtful

vii) Overall Assessment Below Average

viii) Capable for next Promotion No

(2) 1.4.94 to 20.10.94 Below Average with adverse  of following nature :

i) Control over subordinate employees No

ii) Relations with employees & Public No

iii) Knowledge of work No

iv) Capable of next Promotion No

v) Not Good in Office Work

5. Appellant  indisputably  preferred  an  appeal  thereagainst.   In  the  

Memorandum of Appeal, he questioned the legality of the said order inter  

alia contending:

(i) Although a disciplinary proceeding for imposing major penalty had  

been initiated, a minor punishment was imposed without holding a  

departmental proceeding.

4

(ii) ACRs of the relevant period had been recorded within a period of  

11 ½ months only for the purpose of upholding the chargesheet.

(iii) He, having been promoted to the post of Upper Division Clerk by  

an office order No. 135 dated 6.11.2001, the Appointing Authority  

could not have taken into consideration his ACRs prior to the said  

period.

  The said appeal was rejected by the appellate authority, stating:

“I  have  gone  through  the  relevant  record/  comments  of  field  officers  and  it  is  found  that  there  is  no  point  in  his  pleading  that  he  was  promoted as UDC recently.   In promotion cases,  different criteria are followed.  In promotions on  seniority-cum-merit,  incumbent  is  required  to  qualify only minimum bench marks on the basis of  ACRs of last 5 years and punishment awarded in  disciplinary  cases.   In  cases  for  extension  in  service,  past  10  years’  record  of  the  concerned  employee  is  put  to  be  screened  by  the  HEIC  constituted  for  the  purpose.   The  appellant  has  mostly  average  record  including  his  ACR  for  28.10.93  to  31.3.94  as  Below  Average  with  Integrity  as  ‘Doubtful’.   Further  his  ACR  for  1.4.94 to 20.10.94 was also below average.  In the  disciplinary  case  relating  to  embezzlement  of  Rs.3069/-, his one AGI without future effect, was  stopped.  Therefore, the decision of the competent  authority is found to be based on facts and record  and  there  is  no  justification  to  intervene  in  the  recommendations made by HEIC of Central Zone,  with regard to his extension in service being not  approved  on  the  basis  of  which,  the  competent  

5

authority,  viz  CE/Op.  (Central),  Ludhiana  has  ordered his premature retirement.

Appeal rejected.”

6. Indisputably, therefore, not only a minor punishment inflicted on him  

had been taken into consideration while passing the impugned order, but it  

was also based inter alia on the premise that his integrity was doubtful.

7. Before the High Court, appellant had inter alia raised a contention that  

the  appellate  authority  had  not  taken  into  consideration  the  contentions  

raised by him before it.  By reason of the impugned judgment, a Division  

Bench dismissed the said writ petition opining that the action taken by the  

respondents could not be held to be unconscionable, stating:

“An employee who reaches the age of 55 years can  only be permitted to continue in service beyond the  aforesaid age on the basis of the assessment of the  work by the competent authority.  The view taken  by the respondent is neither arbitrary nor contrary  to any statutory rules.”

8. The law relating to compulsory retirement is no longer res integra.  

An order of compulsory retirement inter alia can be passed when the officer  

concerned is found to be a dead wood. [See M.P. State Co-op. Dairy Fedn.  

Ltd. & Anr. v. Rajnesh Kumar Jamindar & Ors., 2009 (6) SCALE 16]

6

9. Although for the said purpose, the principles of natural justice are not  

required  to  be  complied  with  and  even  adverse  entries  made  in  the  

confidential  record  including  uncommunicated  entires  may be  taken  into  

consideration but the same should not be passed in place of or in lieu of a  

disciplinary proceedings.  If an order of compulsory retirement is stigmatic  

in nature, the same would be bad in law.

10. It is furthermore well-settled that when the State lays down the rule  

for taking any action against an employee which would cause civil or evil  

consequence, it is imperative on its part to scrupulously follow the same.   

Mr. Justice Frankfurter in Vitarelli v. Seaton [359 US 535] stated:  

“An executive agency must be rigorously held to  the standards by which it professes its action to be  judged.  …  Accordingly,  if  dismissal  from  employment is based on a defined procedure, even  though generous beyond the requirements that bind  such agency, that procedure must be scrupulously  observed.  …  This  judicially  evolved  rule  of  administrative law is now firmly established and, if  I may add, rightly so. He that takes the procedural  sword shall perish with that sword.”

7

[See  also  H.V.  Nirmala v.  Karnataka  State  Financial  Corporation  

(2008) 7 SCC 639]

11. The guidelines issued by the State are binding on it.  Appellant had  

been compulsorily  retired  with  effect  from 29.09.2003.   Salary  for  three  

months from the said date was paid, i.e., upto December, 2003.  His actual  

date  of  retirement  was  31.10.2004.   The impugned order,  therefore,  was  

passed although not strictly within a period of one year preceding the date of  

superannuation but near about the same.  Thus, spirit of Clause (ii) of the  

guidelines issued by order dated 14.08.1981 should have also been taken  

into consideration.  So far as Clause (iii) of the said guidelines is concerned,  

there is a change of post as he had been promoted to a higher post in 2001.  

As he had been promoted despite recording of the adverse remarks, the said  

fact also should have been taken into consideration.  If adverse report on  

integrity relates to a distant  past or more than ten years old, yet again it  

should not have been considered.

12. This  Court  in  Baikuntha  Nath  Das  and  Another v.  Chief  District  

Medical Officer, Baripada and Another [(1992) 2 SCC 299] laid down the  

law inter alia as under:

8

“(iv) The government (or the Review Committee,  as  the  case  may  be)  shall  have  to  consider  the  entire record of service before taking a decision in  the matter — of course attaching more importance  to  record  of  and  performance  during  the  later  years.  The  record  to  be  so  considered  would  naturally  include  the  entries  in  the  confidential  records/character  rolls,  both  favourable  and  adverse. If a government servant is promoted to a  higher post  notwithstanding the adverse remarks,  such  remarks  lose  their  sting,  more  so,  if  the  promotion is based upon merit (selection) and not  upon seniority.”

13. It  is  a  well-settled  principle  of  law  that  an  order  of  compulsory  

retirement would be held to be stigmatic inter alia, in the event the employer  

has lost confidence [See Chandu Lal v. Management of M/s. Pan American  

World Airways Inc. (1985) 2 SCC 727 at 730, para 8], or he has concealed  

his  earlier  record  [See  Jagdish Parsad v.  Sachiv,  Zila  Ganna Committee,  

Muzaffarnagar and Another (1986) 2 SCC 338 at 342-343, para 9].

He can, however, be subjected to compulsory retirement inter alia if  

he has outlived his utility [See The State of Uttar Pradesh v. Madan Mohan  

Nagar, AIR 1967 SC 1260 at 1262].

9

In  Allahabad Bank Officers’ Association and Another v.  Allahabad  

Bank and Others [(1996) 4 SCC 504], it was held:

“17. The above discussion of case-law makes it  clear  that  if  the  order  of  compulsory  retirement  casts  a  stigma on the  government servant  in  the  sense that it contains a statement casting aspersion  on  his  conduct  or  character,  then  the  court  will  treat  that  order  as  an  order  of  punishment,  attracting  provisions  of  Article  311(2)  of  the  Constitution.  The  reason  is  that  as  a  charge  or  imputation is  made the condition for passing the  order, the court would infer therefrom that the real  intention  of  the  Government  was  to  punish  the  government servant on the basis of that charge or  imputation  and  not  to  exercise  the  power  of  compulsory retirement. But mere reference to the  rule, even if it  mentions grounds for compulsory  retirement,  cannot  be  regarded  as  sufficient  for  treating the order of compulsory retirement as an  order of punishment. In such a case, the order can  be said to have been passed in terms of the rule  and,  therefore,  a  different  intention  cannot  be  inferred.  So  also,  if  the  statement  in  the  order  refers only to the assessment of his work and does  not  at  the  same  time  cast  an  aspersion  on  the  conduct  or  character  of  the  government  servant,  then it will not be proper to hold that the order of  compulsory  retirement  is  in  reality  an  order  of  punishment. Whether the statement in the order is  stigmatic or not will have to be judged by adopting  the test of how a reasonable person would read or  understand it.”

14. The question came up for consideration before a Division Bench of  

this Court in  State of Gujarat v.  Umedbhai M. Patel [(2001) 3 SCC 314]  

10

wherein  Balakrishnan,  J.  (as  the  learned  Chief  Justice  then  was),  

summarized the law, thus:

“11. The law relating to compulsory retirement has  now  crystallised  into  definite  principles,  which  could be broadly summarised thus: (i) Whenever the services of a public servant are  no longer useful to the general administration, the  officer can be compulsorily retired for the sake of  public interest. (ii) Ordinarily, the order of compulsory retirement  is not to be treated as a punishment coming under  Article 311 of the Constitution. (iii)  For  better  administration,  it  is  necessary  to  chop off dead wood, but the order of compulsory  retirement can be passed after having due regard to  the entire service record of the officer. (iv) Any adverse entries made in the confidential  record  shall  be  taken  note  of  and  be  given  due  weightage in passing such order. (v)  Even  uncommunicated  entries  in  the  confidential  record  can  also  be  taken  into  consideration. (vi) The order of compulsory retirement shall not  be  passed  as  a  short  cut  to  avoid  departmental  enquiry when such course is more desirable. (vii) If the officer was given a promotion despite  adverse  entries  made  in  the  confidential  record,  that is a fact in favour of the officer. (viii) Compulsory retirement shall not be imposed  as a punitive measure.”

11

15. In a slightly different context, viz., in a case of probation, this Court in  

Jaswantsingh  Pratapsingh  Jadeja v.  Rajkot  Municipal  Corporation  and  

Another [(2007) 10 SCC 71] opined as under:

“24. In this case, however, the period of probation  as provided for under the statute had expired and  his  misconduct  had  been  taken  note  of.  Such  misconduct  was  not  founded  only  upon  absence  from duty, but also upon carelessness, negligence  on the part of the appellant and lack of devotion  amongst others.

Upon taking into consideration some precedents operating in the field,  

it was concluded:

“28. From the discussions made hereinbefore, it is  evident  that  termination  of  services  of  the  appellant  purporting  to  discharge him simpliciter  cannot be accepted, being stigmatic in nature. The  form of the order terminating the services coupled  with  the  background  facts  clearly  leads  to  the  conclusion  that  the  order  impugned  in  the  writ  petition by the appellant was punitive.”

16. The  learned  counsel  appearing  on  behalf  of  the  respondent  would  

contend that the principles of natural justice are not required to be complied  

with in a case of compulsory retirement, particularly, when no mala fide is  

12

alleged.   Allegation  against  the  delinquent  was  not  only  that  he  lacked  

integrity but also unfit to be retained in service.  Those comments, in our  

opinion, are stigmatic in nature.   

It  is  also not  a case  where there  had been a  steady decline  in the  

performance of the employee.   

17. The  learned  counsel  appearing  on  behalf  of  the  respondent  would  

contend that in this case malice has neither been alleged nor been proved.  In  

support of his contention reliance has been placed on  Purushottam Kumar  

Jha v. State of Jharkhand and Others [(2006) 9 SCC 458] wherein Thakker,  

J. speaking for the Bench, stated the law, thus:

“23. It is well settled that whenever allegations as  to  mala  fides  have  been  levelled,  sufficient  particulars and cogent materials making out prima  facie case must be set out in the pleadings. Vague  allegation  or  bald  assertion that  the  action taken  was mala fide and malicious is not enough. In the  absence  of  material  particulars,  the  court  is  not  expected to make “fishing” inquiry into the matter.  It  is  equally  well  established  and  needs  no  authority that the burden of proving mala fides is  on  the  person  making  the  allegations  and  such  burden is “very heavy”. Malice cannot be inferred  or assumed. It has to be remembered that such a  charge can easily  be “made than made out” and  hence it is necessary for the courts to examine it  

13

with extreme care, caution and circumspection. It  has been rightly described as “the last refuge of a  losing litigant”. (Vide Gulam Mustafa v. State of  Maharashtra; Ajit Kumar Nag v. GM (PJ), Indian  Oil Corpn. Ltd.)”

18. In a case of this nature the appellant has not alleged malice of fact.  

The requirements to comply with the directions contained in the said circular  

letter dated 14.08.1981 were necessary to be complied with in a case of this  

nature.   Non-compliance  whereof  would amount  to  malice  in  law.   [See  

Managaer, Government Branch Press and Another v. D.B. Belliappa (1979)  

1 SCC 477, Smt. S.R. Venkataraman v. Union of India and Another (1979) 2  

SCC 491 and P. Mohanan Pillai v. State of Kerala and Others (2007) 9 SCC  

497]

19. Thus, when an order suffers from malice in law, neither any averment  

as such is required to be made nor strict proof thereof is insisted upon.  Such  

an order being illegal would be wholly unsustainable.   

20. For the reasons aforementioned, the impugned order is set aside.  The  

appeal  is  allowed.   However,  in the facts  and circumstances of  the case,  

there shall be no order as to costs.

………………………….J.

14

[S.B. Sinha]

..…………………………J.     [Dr. Mukundakam Sharma]

New Delhi; May 06, 2009

15