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Supreme Court of India
Food Corporation Of India, … vs A. Prahalada Rao And Another on 1 November, 2000
Author: Shah
Bench: M.B. Shah, D.P. Mohapatra.
           PETITIONER:
FOOD CORPORATION OF INDIA, HYDERABAD AND OTHERS

	Vs.

RESPONDENT:
A. PRAHALADA RAO AND ANOTHER

DATE OF JUDGMENT:	01/11/2000

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




JUDGMENT:

Shah, J.

Leave granted.

L…I…T…….T…….T…….T…….T…….T…….T..J

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

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

54. MINOR PENALTIES:

(i) Censure;

(ii) withholding of his promotion;

(iii) recovery from his pay of the whole or part of any
pecuniary loss caused by him to the Corporation by
negligence or breach of orders;

(iv) withholding of increments of pay.

60. PROCEDURE FOR IMPOSING MINOR PENALTIES:

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

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

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

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

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

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

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

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

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

(iii) his representation, if any;

(iv) the evidence produced during the inquiry;

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

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

Learned counsel appearing on behalf of the appellants
submitted that while interpreting Regulation 60, the High
Court has added a proviso by stating that when the employee
disputes his liability after receipt of the show cause
notice, it is incumbent upon the disciplinary authority to
conduct a detailed enquiry as provided for major punishment.
It is his contention that in case of negligence in discharge
of duties or loss occurred to the Corporation by not
following the directions issued by the Corporation for
taking precautions, there is no question of holding
full-fledged departmental enquiry before imposing minor
penalty as provided in Regulation 54. As against this,
respondent No.2-Joint Secretary, Food Corporation of India
Executive Staff Union who appeared in person submitted that
under the guise of imposing minor penalties, the Management
of appellant is dispensing with holding of regular
departmental enquiry in cases where charges cannot be
proved. He further pointed out that there is large scale
misuse of powers under the said Regulation and, therefore,
the interpretation given by the High Court to the said
Regulation does not call for any interference.

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

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


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