http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 1 of 13  

CASE NO.: Appeal (civil)  513 of 2008

PETITIONER: U.P. STATE SUGAR CORPORATION LTD. & Ors.

RESPONDENT: KAMAL SWAROOP TONDON

DATE OF JUDGMENT: 18/01/2008

BENCH: C.K. THAKKER & P. SATHASIVAM

JUDGMENT: J U D G M E N T

(Arising out of SLP (c) Nos. 11599 of 2006)

C.K. Thakker, J.

1.              Leave granted. 2.              The present appeal is filed against  the judgment and order passed by the High  Court of Judicature at Allahabad (Lucknow  Bench) on February 24, 2006 in Writ Petition  No. 484 (S/B) of 2000.   3.              Necessary facts giving rise to the  appeal are that the respondent herein was  serving with the appellant- U.P. State Sugar  Corporation Ltd. (\023Corporation\024 for short) as  Resident Engineer at the Head Office of the  Corporation at Lucknow.  On January 13, 2000,  a show cause notice was issued to him stating  therein that a work was allotted to M/s Gupta  & Co., Dehradoon for construction of  residential houses in Saharanpur. The  Contractor had given two Fixed Deposit  Receipts (FDRs) towards the security for the  work to be done.  The details of FDRs were  given in the notice. It was alleged that the  Corporation suffered loss of Rupees one lakh  due to lack of precaution, irregularity, gross  negligence and carelessness by the respondent.   The respondent was, therefore, called upon to  submit explanation within three days why  disciplinary action should not be taken  against him.  On January 15, 2000, the  respondent submitted his reply denying the  allegations and contending that he had not  committed any illegality and there was no  justification to ask for his explanation.  The  Corporation was not satisfied with the reply  filed by the respondent and decided to hold  departmental inquiry against him.  On January  31, 2000, therefore, show cause notice was  issued to the respondent for the losses caused  to the Corporation due to negligence and  carelessness on the part of the respondent.   It may be noted at this stage that the  respondent retired on attaining the age of  superannuation (60 years) on the same day,  i.e. January 31, 2000.  According to the  respondent, since he retired from service on

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 2 of 13  

January 31, 2000, no proceedings could have  been initiated against him and issuance of  show cause notice which was received by him  after office hours at 6.45 p.m. on January 31,  2000 was illegal as there was no relationship  of employer and employee between the  Corporation and him. He, therefore, filed a  writ petition in the High Court of Allahabad  at Lucknow Bench on April 11, 2000.  In the  petition a prayer was made for quashing  charge-sheet and departmental proceedings.  During the pendency of the petition, however,  two orders came to be passed against the  respondent on March 24, 2001 and April 26,  2005.  By the first order of March 24, 2001,  an amount of Rupees one lakh was ordered to be  recovered from the respondent as the  Corporation suffered loss of the said amount  which was ordered to be adjusted from the  gratuity of the respondent. By the second  order dated April 26, 2005, an amount of  Rs.73,235-50ps which was = portion of the  amount of Rs.1,46,471.00ps  was directed to be  recovered as loss had been caused to the  Corporation due to negligence of the  respondent. The respondent sought amendment in  the petition and challenged the above two  orders as well. 4.              The High Court, by the impugned order,  allowed the writ petition holding that the  order dated January 31, 2000 commencing  disciplinary inquiry against the writ  petitioner was illegal as he had retired on  that day. No proceedings, hence, could have  been initiated against him.  Consequently,  orders passed in 2001 and 2005 could not have  been made and they were liable to be quashed.   The Corporation was directed to pay to the writ  petitioner all the benefits of gratuity, leave  encashment and other dues payable to him with  interest @ 8% p.a. from the date of retirement  till the date of actual payment. Being  aggrieved by the order passed by the High  Court, the Corporation has approached this  Court. 5.              On July 28, 2006, notice was issued by  this Court.  Since contempt proceedings were  initiated by the writ petitioner in the  meantime, who succeeded before the High Court,  this Court stayed those proceedings.  Counter- affidavit and affidavit-in-rejoinder were filed  thereafter and the matter was ordered to be  placed for final hearing. That is how the  matter has been placed before us. 6.              We have heard the learned counsel for  the parties. 7.              The learned counsel for the appellant- Corporation contended that the High Court was  wholly wrong in quashing departmental  proceedings and consequential orders passed by  the authorities which were legal, valid and in  consonance with law.  It was submitted that  show cause notice was issued on January 13,  2000 well in time before the writ petitioner  retired asking for an explanation as to why

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 3 of 13  

proceedings should not be initiated against  him.  It was further submitted that even  charge-sheet was issued on January 31, 2000  and it was within power of the Corporation to  issue such charge-sheet and the High Court  ought not to have set aside the inquiry  proceedings and consequential orders. It was  urged that it is settled law that relationship  of employer and employee continues to remain  so long as all retiral benefits have not been  paid to the employee.  Since the amount of  gratuity, leave encashment and other  pensionary benefits were yet to be paid to the  employee, the tie continued and proceedings  initiated against the writ petitioner were in  accordance with law and should not have been  interfered with.  That apart, under the U.P.  State Sugar Corporation Ltd. General Service  Rules, 1988 (hereinafter called \023the Rules\024),  such proceedings could have been initiated  even after an employee has retired since they  related to the recovery of losses caused to  the Corporation by the respondent-employee.  Since the present proceedings were for  recovery of loss caused to the Corporation,  such an action could have been taken under the  Rules and the High Court was wrong in holding  that the proceedings could not have been held.  Finally, it was submitted that it was the case  of the Corporation that because of acts and  omissions of the respondent-employee, loss had  been caused to the Corporation. When the  amount of loss was sought to be recovered from  the employee, the High Court ought not to have  exercised discretionary and equitable  jurisdiction under Article 226 of the  Constitution and on that count also, the  impugned action deserves to be set aside.  On  all these grounds, it was submitted that the  impugned order of the High Court is liable to  be set aside and the writ petition filed by  the writ-petitioner should be ordered to be  dismissed by allowing the appeal. 8.              The learned counsel for the  respondent, on the other hand, supported the  order of the High Court.   He submitted that  the date of issuance of show cause notice was  totally irrelevant. Charge-sheet was issued  only on January 31, 2000 and a finding was  recorded by the High Court that it was  received by the respondent after office hours  of January 31, 2000. By the time, the tie was  broken and there was no relationship of  employer and employee between the Corporation  and the writ-petitioner.  No departmental  proceedings, therefore, could have been  initiated against the writ-petitioner and they  were liable to be quashed.  When the  proceedings were without jurisdiction, orders  passed in 2001 and 2005 which were  consequential, were obviously without power,  authority or jurisdiction on the part of the  Corporation in passing them. The High Court  was, therefore, fully justified in quashing  those orders also.  Since the order passed by

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 4 of 13  

the High Court is legal, valid and proper, it  calls for no interference by this Court and  the appeal deserves to be dismissed. 9.              From the facts noted above, it is  amply clear that two orders which were passed  against the respondent-employee related to  recovery of certain amount from the  respondent-employee on the ground that there  was carelessness, negligence or omission on  his part in the discharge of his duties which  resulted in loss to the Corporation.  By the  order dated March 24, 2001, an amount of  Rupees one lakh which was financial loss  suffered by the Corporation was ordered to be  adjusted against the gratuity of the employee.   Likewise, by order dated April 26, 2005, an  amount of Rs.73,235.50 p. [= of  Rs.1,46,471.00] was ordered to be adjusted  against the amount of gratuity and encashment  of earned leave which was also the financial  loss suffered by the Corporation as a result  of negligence of the respondent. It is in the  light of the above facts that we have to  consider whether such an action could have  been taken against the respondent-employee by  the appellant-Corporation. 10.             The learned counsel for the appellant  is right when he submitted that show cause  notice was issued to the respondent-employee  on January 13, 2000 when he was very much in  service.  The respondent submitted his  explanation on January 15, 2000 which was not  found to be satisfactory.  A regular show  cause notice was, therefore, issued by the  Corporation on January 31, 2000 and was served  upon the respondent-employee on the same day.   The notice was also sent by registered post  which was received by the employee on February  11, 2000.  But it is clear from the documents  that show cause notice was issued and replied.   A regular show cause notice as to departmental  inquiry was also served upon the respondent- employee on the last day of his service which  was January 31, 2000.  In our opinion,  therefore, it could not be said that the  proceedings had been initiated against the  respondent-employee after he retired from  service. 11.             Now it is well settled that retiral  benefits are earned by an employee for long  and meritorious services rendered by him/her.   They are not paid to the employee gratuitously  or merely as a matter of boon.  It is paid to  him/her for his/her dedicated and devoted  work. 12.             In Garment Cleaning Works, Bombay v.  Wokmen, AIR 1962 SC 673, the relevant clause of  the Gratuity Scheme provided that if a workman  was dismissed or discharged for misconduct  causing financial loss to the employer,  gratuity to the extent of loss should not be  paid to the workman concerned. It was contended  on behalf of the employer that the retrenchment  benefit and gratuity were payable to the  employee for his long and meritorious services

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 5 of 13  

and if he was dismissed by misconduct, he would  not be entitled to claim retrenchment benefits  or gratuity and the benefits could be denied to  him. 13.             Dealing with the argument and the  basis of payment of gratuity, this Court,  speaking through P.B. Gajendragadkar, J. (as  His Lordship then was), said: \0235. On principle if gratuity is earned  by an employee for long and  meritorious service it is difficult to  understand why the benefit thus earned  by long and meritorious service should  not be available to the employee even  though at the end of such service he  may have been found guilty of  misconduct which entails his  dismissal. Gratuity is not paid to the  employee gratuitously or merely as a  matter of boon. It is paid to him for  the service rendered by him to the  employer, and when it is once earned  it is difficult to understand why it  should necessarily be denied to him  whatever may be the nature of  misconduct for his dismissal. Then, as  to the definition of retrenchment in  the Industrial Disputes Act, we are  not satisfied that gratuity and  retrenchment compensation stand  exactly on the same footing in regard  to the effect of misconduct on the  rights of workmen. The rule of the  provident fund scheme shows not that  the whole provident fund is denied to  the employee even if he is dismissed  but it merely authorises certain  deductions to be made and then too the  deductions thus made do not revert to  the employer either. Therefore we do  not think that it would be possible to  accede to the general argument that in  all cases where the service of an  employee is terminated for misconduct  gratuity should not be paid to him. It  appears that in award which framed  gratuity schemes sometimes simple  misconduct is distinguished from gross  misconduct and a penalty of forfeiture  of gratuity benefit is denied in the  latter case but not in the former, but  latterly industrial tribunals appear  generally to have adopted the rule  which is contained in clause (ii)(b)  of the present scheme. If the  misconduct for which the service of an  employee is terminated has caused  financial loss to the works, then  before gratuity could be paid to the  employee he is called upon to  compensate the employer for the whole  of the financial loss caused by his  misconduct, and after this  compensation is paid to the employer  if any balance from the gratuity

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 6 of 13  

climbable by the employee remains that  is paid to him.\024.  (emphasis supplied)   14.             In Calcutta Insurance Co. Ltd. v.  Workmen, (1967) 2 SCR 596, this Court  considered the concept of gratuity. It referred  to Garment Cleaning Works and other cases. It  noted that the opinion expressed in those cases  was that gratuity was earned by an employee for  \023long and meritorious service\024 and consequently  it must be given to him even though at the end  of such service, he may have been found guilty  of misconduct entailing his dismissal.  

15.             The Court then said; \023In principle, it is difficult to  concur in the above opinion. Gratuity  cannot be put on the same level as  wages. We are inclined to think that  it is paid to a workman to ensure good  conduct through out the period he  serves the employer. "Long and  meritorious service" must mean long  and unbroken period of service  meritorious to the end. As the period  of service must be unbroken, so must  the continuity of meritorious service  be a condition for entitling the  workman to gratuity. If a workman  commits such misconduct as causes  financial loss to his employer, the  employer would under the general law  have a right of action against the  employee for the loss caused and  making a provision for withholding  payment of gratuity where such loss  caused to the employer does not seem  to aid to the harmonious employment of  labourers of workmen. Further, the  misconduct may be such as to undermine  the discipline in the workers - a case  in which it would be extremely  difficult to assess the financial loss  to the employer.\024 (emphasis supplied)            16.             In M. Narasimhachar v. State of  Mysore, AIR 1960 SC 247, an amount of  Rs.5,215/- was deducted from pension of the  Government servant. The action was challenged  by the employee.  Considering the relevant  provisions of the Rules, this Court held that  the Government had reserved to itself the  right to order the recovery from pension and  compassionate allowances of the Government  servant of any amount on account of losses  found to have been caused to Government by  negligence or fraud of such officer during his  service. 17.             Again, in Jarnail Singh v. Secretary,  Ministry of Home Affairs & Ors., (1993) 1 SCC  47 JT 1992 Supp SC 489, this Court considered  the provisions of Central Civil Services  (Pension) Rules, 1972.  The definition of  \021pension\022 included gratuity under Rule 3.   Rule 9 conferred on the President power to

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 7 of 13  

withhold or withdraw pension in certain  circumstances.  An order was passed against an  employee withholding pension and the entire  amount of death-cum-retirement gratuity  otherwise admissible to him.  The direction  was given on account of serious irregularities  found to have been committed by the workman.   The workman challenged that order  unsuccessfully and thereafter approached this  Court.  His contention was that an amount of  gratuity could not have been withheld. 18.             Negativing the contention, this Court  held that the power to withhold gratuity was  conferred on the President and such action  could not be said to be illegal. It was ruled  that the Government could adjust its dues  against the amount of death-cum-retirement  gratuity otherwise payable to Government  servant. 19.             In State of Uttar Pradesh v. Brahm  Datt Sharma & Anr., (1987) 2 SCC 179 : JT 1987  (1) SC 571, this Court held that it was open  to Government to reduce, forfeit, withhold or  recover pension, after affording hearing to  the affected person, on ground of  unsatisfactory service based on proved  findings of serious misconduct or causing  pecuniary loss to the Government.  Such  proceedings can be initiated even after  retirement for misconduct, negligence or  financial irregularity. Where Government  servant was found guilty of misconduct or  negligence resulting in financial loss to the  Government, it was competent to the Government  to direct reduction in pension. 20.             Interpreting Article 470 of U.P. Civil  Service Regulations, this Court observed that  the said provision stated that full pension  would not be awarded as a matter of course to  a Government servant on his retirement.  It  was awarded to him if service rendered by him  was satisfactory.  In case of absence of  \021thoroughly satisfactory\022 service, the  authority was competent to reduce the amount  of pension. Referring to Deokinandan Prasad v.  State of Bihar, 1971 Supp SCR 634, State of  Punjab v. K.R. Erry, (1973) 2 SCR 405 and D.S.  Nakara v. Union of India, (1983) 2 SCR 165,  the Court held that pension was not a \021bounty\022  and an employee was entitled to pensionary  benefits, but proceeded to state that a  Government employee would earn pension by  rendering long and efficient service.   Considering Narasimhachar, the Court held that  the employer had right to reduce pension of an  employee if services rendered by him were  found to be unsatisfactory. Only thing is that  in such cases before taking any action,  principles of natural justice must be  observed. 21.             In State of Maharashtra v. M.H.  Mazumdar, (1988) 2 SCC 52 : JT 1988 (1) SC  432, the Court held that departmental inquiry  can be instituted against a Government servant  after superannuation and pension can be

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 8 of 13  

reduced on proved charges of misconduct,  negligence or financial irregularity committed  during the period of service.  Following  Narasimhachar and Brahm Datt Sharma, and  distinguishing B.J. Shelat v. State of  Gujarat, (1978) 2 SCC 202, the Court held that  when financial loss was caused to the  Government by any act or omission on the part  of its employee, the purpose of inquiry was  not to inflict any punishment, but to  determine the pension of an employee.  Such an  action, in our view, can be taken so that the  Government may not have to suffer financially. 22.             Reference was also made to a leading  decision in Union of India & Ors. v. K.V.  Jankiraman & Ors., (1991) 4 SCC 109 : JT 1991  (3) SC 527. In Jankiraman, the question which  came up for consideration before this Court  related to promotion of an officer and  adoption of \023sealed cover procedure\024. It was  held that consideration of case of an employee  for promotion could not be withheld merely on  the ground of pendency of any departmental  inquiry/criminal investigation against him.   It could, however be resorted to once charge  memo/charge-sheet is issued. 23.             It was submitted by the learned  counsel for the Corporation that in the case  on hand, not only notice was issued to the  respondent-employee on January 13, 2000, but  even regular show cause notice was issued on  January 31, 2000 and hence the proceedings  could have been continued on the basis of law  laid down in Jankiraman. 24.             In UCO Bank & Ors. v. Sanwar Mal,  (2004) 4 SCC 412 JT 2004 Supp 2 SC 487, the  Court held that two concepts; (i) resignation;  and (ii) retirement were different and  employed for different purposes and in  different contexts.  Resignation brings about  complete cessation of master and servant  relationship, but retirement does not do so.   In case of retirement, master and servant  relationship continues for grant of retiral  benefits. 25.             If it is so, the appellant- Corporation, in our opinion, is right in  submitting that the proceedings could have  been continued after the retirement of the  respondent-employee as far as the financial  loss caused to the Corporation because of  negligence on the part of employee and the  benefit claimed by the respondent-workman on  his terminal benefits. 26.             Strong reliance was placed by the  learned counsel for the respondent on P.V.  Mahadevan v. MD. T.N. Housing Board, (2005) 6  SCC 636 : JT 2005 (7) SC 417.  In that case,  there was inordinate delay of ten years in  initiating departmental proceedings against an  employee.  In absence of convincing  explanation by the employer for such  inordinate delay, this Court held that the  proceedings were liable to be quashed. 27.             In our opinion, Mahadevan does not

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 9 of 13  

help the respondent.  No rigid, inflexible or  invariable test can be applied as to when the  proceedings should be allowed to be continued  and when they should be ordered to be dropped.  In such cases there is neither lower limit nor  upper limit.  If on the facts and in the  circumstances of the case, the Court is  satisfied that there was gross, inordinate and  unexplained delay in initiating departmental  proceedings and continuation of such  proceedings would seriously prejudice the  employee and would result in miscarriage of  justice, it may quash them. We may, however,  hasten to add that it is an exception to the  general rule that once the proceedings are  initiated, they must be taken to the logical  end.  It, therefore, cannot be laid down as a  proposition of law or a rule of universal  application that if there is delay in  initiation of proceedings for a particular  period, they must necessarily be quashed. 28.             In the present case, the High Court  has not quashed the proceedings on the ground  that there was inordinate and unexplained  delay on the part of the Corporation in  initiating such proceedings against the  respondent.  According to the High Court,  since the respondent retired on January 31,  2000, the proceedings could not have been  continued against him.  From the case law  referred to by us hereinabove, it is clear  that such proceedings could have been  continued since they were initiated for the  recovery of losses sustained by the  Corporation due to negligence on the part of  the respondent-employee.  Such loss caused to  the Corporation could be recovered from the  respondent from the retiral benefits of the  respondent. 29.             The learned counsel for the appellant- Corporation also referred to the Rules.   Chapter IV titles \023Fundamental Duties of  Service\024.  Rule 31 expressly states that an  employee of the Corporation would be \021whole  time employee\022. Chapter VIII (Rules 93 to 107)  deals with \021Disciplinary Proceedings\022.  Rule  93 is material and relevant part thereof reads  thus; 93. The following penalties may, for  good and sufficient reason and as  hereinafter provides, be imposed on an  employee.

A.       MINOR PENALTIES

(i)     Censure (ii)    With-holding of annual  increment(s), including stoppage  of an efficiency bar/assessment  stage with or without cumulative  effect. (iii)   Recovery from pay or from such  other amounts as may be due to  the employee of the whole or part  of any pecuniary loss caused to

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 10 of 13  

the Corporation by negligence or  breach of orders on his part;

B. MAJOR PANALTIES          (iv)    reduction to a lower grade or  post or to a lower stage in a  time scale; (v)     removal from service which does  not disqualify from future  employment, (vi)    dismissal from service which  ordinarily disqualifies from  future employment.                     (emphasis supplied)

30.             Rule 102 prescribes procedure before  starting enquiry.  Rule 103 provides for major  penalties.  Rule 109 lays down procedure for  imposition of minor penalties and is another  important provision which may be quoted in  extenso.          109. (1) Whenever the punishing  authority is satisfied that good  and sufficient reasons exist for  adopting such a course it may  impose the penalty of  

(i)     Censure, or (ii)    Stoppage at an efficiency bar.

Provided that it shall not be  necessary to frame formal charges  against the employee concerned but  his explanation may be called and  considered before imposing such a  penalty.

(2)     In all cases where the  punishing authority imposes the  penalty of- (i)     Withholding of increments in  the time scale at stages  where there is no efficient  bar. (ii)Recovery from pay of the whole  or part of any pecuniary loss  caused to the Corporation by  negligence or breach of  orders.

Formal proceedings embodying  statement of the offence or fault,  the explanation of the person  concerned, and the reasons for  punishment shall be recorded.

Provided that it shall not be  necessary to record such  proceedings in cases where an  employee\022s increment in the time  scale of his pay at any stage  other than an efficiency bar is  stopped due to his integrity

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 11 of 13  

remaining uncertified.                 (emphasis supplied)

31.             It is, therefore, clear that so far as  minor penalty is concerned, it is not necessary  for the Corporation to follow detailed and  lengthy procedure laid down for imposition of  major penalties.  In the instance case, the  proceedings had been initiated by the  appellant-Corporation against the respondent- employee for recovery of pecuniary loss caused  to the Corporation by negligence on his part.  The proceedings, hence, could be instituted by  issuing notice which was done on January 13,  2000. The said action, therefore, could not  have been held bad or without power, authority  or jurisdiction on the part of the Corporation.   As we have already observed earlier, even  regular show cause notice was served on January  31, 2000 which was also during the employment  of respondent. The High Court, in our view, was  wrong in quashing the proceedings and setting  aside orders dated March 24, 2001 and April 26,  2005.  The impugned order of the High Court,  therefore, deserves to be set aside. 32.             Finally, the learned counsel for the  appellant-Corporation is right in submitting  that the High Court was exercising  discretionary and equitable jurisdiction under  Article 226 of the Constitution.  It is well- settled that the jurisdiction of the High Court  under Article 226 of the Constitution is  equitable and discretionary.  The power under  that Article can be exercised by the High Court  \023to reach injustice wherever it is found\024.   33.             In Veerappa Pillai v. Raman & Raman  Ltd. & Ors., 1953 SCR 583, the Constitution  Bench of this Court speaking through  Chandrasekhara Aiyar, J. observed that the  writs referred to in Article 226 of the  Constitution are obviously intended to enable  the High Court to issue them in grave cases  where the subordinate tribunals or bodies or  officers act wholly without jurisdiction, or in  excess of it, or in violation of the principles  of natural justice, or refuse to exercise  jurisdiction vested in them, or there is an  error apparent on the face of the record, and  such act, omission, error, or excess has  resulted in manifest injustice. 34.             Again, in leading case of Sangram  Singh v. Election Tribunal, Kotah, (1955) 2 SCR  1, dealing with the ambit and scope of powers  of High Courts under Article 226 of the  Constitution, Bose, J. stated;         \023That, however, is not to say that  the jurisdiction will be exercised  whenever there is an error of law.   The High Courts do not, and should  not, act as courts of appeal under  Article 226.  Their powers are purely  discretionary and though no limits can  be placed upon that discretion it must  be exercised along recognized lines  and not arbitrarily; and one of the

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 12 of 13  

limitations imposed by the courts on  themselves is that they will not  exercise jurisdiction in this class of  case unless substantial injustice has  ensued, or is likely to ensue.  They  will not allow themselves to be turned  into courts of appeal or revision to  set right mere errors of law which do  not occasion injustice in a broad and  general sense, for, though no  legislature can impose limitations on  these constitutional powers it is a  sound exercise of discretion to bear  in mind the policy of the legislature  to have disputes about these special  rights decided as speedily as may be.   Therefore, writ petitions should not  be lightly entertained in this class  of case.\024              (emphasis supplied)

35.             Recently, in Secretary, ONGC Ltd. &  Anr. v. V.U. Warrier, (2005) 5 SCC 245 : JT  2005 (4) SC 489, an employee of Oil and Natural  Gas Commission (ONGC) unauthorisedly retained  an official accommodation after his retirement.   When penal rent was charged and sought to be  recovered from retiral benefits of the  employee, he filed a petition invoking Article  226 of the Constitution. The High Court allowed  the petition and directed the Corporation to  release all the benefits to which the employee  was entitled.  The High Court observed that it  was open to the Corporation to take appropriate  proceedings for recovery of the dues claimed by  the Corporation.  Aggrieved ONGC approached  this Court.  36.             Allowing the appeal, setting aside the  order passed by the High Court and considering  the relevant decisions on the point, one of us  (C.K. Thakker, J.) observed;         \023As already adverted to by us  hereinabove, the facts of the present  case did not deserve interference by  the High Court in exercise of  equitable jurisdiction under Article  226 of the Constitution.  The  respondent-petitioner before the High  Court-, was a responsible officer  holding the post of Additional  Director (Finance & Accounts).  He  was, thus, \023gold collar\024 employee of  the Commission.  In the capacity of  employee of the Commission, he was  allotted a residential quarter. He  reached the age of superannuation and  retired after office hours of February  28, 1990.  He was, therefore, required  to vacate the quarter allotted to him  by the Commission.  The Commission, as  per its policy, granted four months\022  time to vacate.  He, however, failed  to do so.  His prayer for continuing  to occupy the quarter was duly  considered and rejected on relevant  and germane grounds.  The residential

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 13 of 13  

accommodation constructed by him by  taking loan at the concessional rate  from the Commission was leased to  Commission, but the possession of that  quarter was restored to him taking  into account the fact that he had  retired and now he will have to vacate  the quarter allotted to him by the  Commission.  In spite of that, he  continued to occupy the quarter  ignoring the warning by the Commission  that if he would not vacate latest by  June 30, 1990, penal rent would be  charged from him.  In our judgment,  considering all these facts, the High  Court was wholly unjustified in  exercising extraordinary and equitable  jurisdiction in favour of the  petitioner \026 respondent herein \026 and  on that ground also, the order passed  by the High Court deserves to be set  aside\024.  (emphasis supplied)

37.             Considering the facts and  circumstances in their entirety, in our  considered opinion, the High Court was wrong in  holding that the proceedings were initiated  after the respondent retired and there was no  power, authority or jurisdiction with the  Corporation to take any action against the  writ-petitioner and in setting aside the orders  passed against him.  In our judgment,  proceedings could have been taken for the  recovery of financial loss suffered by the  Corporation due to negligence and carelessness  attributable to the respondent-employee.  The  impugned action, therefore, cannot be said to  be illegal or without jurisdiction and the High  Court was not right in quashing the proceedings  as also the orders issued by the Corporation.   The appeal, therefore, deserves to be allowed  by setting aside the order of the High Court. 38.             For the foregoing reasons, the appeal  is allowed and the order passed by the High  Court is set aside. But since the High Court  has allowed the petition only on the ground  that the proceedings could not have been  instituted against the writ-petitioner, it  would be appropriate if we remit the matter to  the High Court so as to enable it to consider  the rival contentions of the parties and take  an appropriate decision on merits.  We may  clarify that we may not be understood to have  expressed any opinion one way or the other on  the controversy involved in the case and as and  when the High Court will take up the writ  petition, it will decide the same without being  influenced by any observation made in this  judgment.  On the facts and in the  circumstances of the case, the parties will  bear their own costs.