Full Text
HIGH COURT OF DELHI
JUDGMENT
DR. ABHAY KUMAR SRIVASTAVA..... Petitioner
Through: Mr. Sanjeev Ralli, Sr. Adv. with Mr. Shubham Yadav, Mr. Ravi Kant
Yadav and Mr. Chetanya Baweja, Advs.
Through: Mrs. Bharathi Raju, Sr. Panel Counsel for UOI
HON'BLE MR. JUSTICE ANOOP KUMAR MENDIRATTA
1. This petition has been filed impugning the order of the respondents dated December 11, 2012 terminating the services of the petitioner and the order of the Central Administrative Tribunal, Principal Bench, New Delhi („Tribunal‟, hereinafter) dated August 10, 2015 affirming the termination.
2. At the outset, we may briefly narrate the facts of the case, as set out in the petition. The petitioner on being selected by Public Enterprises Selection Board and upon approval from Appointments Committee of the Cabinet (ACC) was appointed as the Chairman and Managing Director (CMD) of National Aluminium Company Limited (NALCO) w.e.f. October 1, 2009. As per the terms of appointment, the petitioner was appointed for a period of five years or till the age of superannuation or until further orders, whichever was earlier. Further, the terms of appointment stated that his services could be terminated by either side by giving three (3) months' notice or payment of salary in lieu thereof. Further the terms of appointment stipulated review of performance after completion of one year of service. The NALCO Conduct, Discipline and Appeal Rules, 1984 („CDA Rules‟, hereinafter) were made applicable to the services of the petitioner and the petitioner was eligible for superannuation benefits/benefits as per the Office Memorandum dated November 26, 2008 and February 4,
2009. Upon joining as CMD, NALCO, the service benefits the petitioner had earned with his previous employer- Cement Corporation of India Ltd. (CCI), including an earned leave of ₹6,81,480/- and gratuity of ₹2,24,130/- were transferred to NALCO on a requisition made by NALCO in that regard.
3. The petitioner successfully completed first year of his service and as per the terms of appointment, the administrative Ministry assessed the performance of petitioner as “outstanding” and cleared him for continuing in service for the remaining tenure/period. On the basis of clearance proposal by the Ministry, the Public Enterprises Selection Board recommended confirmation of services of the petitioner till his superannuation i.e., till January 31, 2014.
4. In the meanwhile, on February 25, 2011 the petitioner was implicated in a case under the Prevention of Corruption Act, 1988 („PC Act‟, hereinafter) pursuant to which the respondents placed the petitioner under suspension with effect from February 26, 2011. The stand of the petitioner is that as the case itself was false and ill motivated, the subsequent suspension is faulty. The respondent initiated an internal assessment to hold disciplinary proceedings against the petitioner, with advice solicited and received even from the Central Bureau of Investigation (CBI) vide letter dated March 21, 2012. The respondent with the approval of the Minister of State (Independent Charge), Mines, who happened to be the disciplinary authority of the petitioner, as per the powers delegated to him by the President of India under the Government of India (Transaction of Business) Rules, 1961, invoked the provisions of Rule 33 of CDA Rules vide note dated April 27, 2012, sought to be placed before the ACC, which provides special procedure such as, in the eventuality it is impracticable to hold a regular enquiry, the same may be dispensed with before taking action under Regulation 26, which prescribes for imposition of penalties including the major penalty of termination. The reason for premature termination of the applicant was mentioned as “due to vigilance matter”. No reason was given for invoking the special clause, which is required to be recorded in writing.
5. However, the actions as per the CDA Rule 5(2) “taking or giving bribes or any illegal gratification” were set at nought and the respondent realising that disciplinary action would be a time consuming exercise, dropped the same and invoked clause 1.[1] of the terms of appointment. Subsequently, the respondents vide order dated December 11, 2012 terminated the services of the petitioner by giving three months‟ salary in terms of clause 1.[1] of the terms of appointment read with Article 63 of the Articles of Association of NALCO and removed the petitioner from the post of CMD, NALCO.
6. The petitioner challenged the order dated December 11, 2012 before the Tribunal on the grounds inter alia that the clause 1.[1] of the terms of appointment and Article 63 (f) of the Articles of Association are unconstitutional and that appointment made on a permanent basis cannot be done away without following the due process of law, and that curtailment of fixed tenure so as to financially curtail the benefits being punitive in character mandates appropriate disciplinary action, besides other relevant grounds including the illegal forfeiture of retiral benefits of service already earned.
SUBMISSIONS
7. Mr. Sanjeev Ralli, learned senior counsel appearing for the petitioner submitted that the Tribunal failed to appreciate that as can be seen from paragraph 8 of the note for ACC dated April 27, 2012 it was decided to terminate the services of the petitioner in line with the provisions of the terms of appointment which makes CDA Rules applicable. Rule 33(ii) and (iii) of CDA Rules were invoked with the approval of the Minister of State (Independent Charge), Mines, who has been delegated with this power by the President of India under the Government of India (Transaction of Business) Rules as the disciplinary authority. Rule 33(ii) provides for imposition of penalty including major penalty specified in Rule 26 without inquiry where it is not practicable to hold the same by recording the reasons in writing. No reason was recorded in writing as to why the disciplinary authority was satisfied that it was not reasonably practicable to hold an inquiry. In the absence of recording of any reason for invoking Rule 33(ii), only the regular procedure of inquiry under Rule 28 for imposing major penalty could have been resorted. Further, the respondents invoking the provisions of the terms of appointment after already invoking CDA Rules to terminate the services of the petitioner is bad in law.
8. The policy underlying Article 311(2) of the Constitution is that when it is proposed to take action against a public servant by way of punishment that will entail forfeiture of benefits already earned by him, he should be heard and given an opportunity to show cause against the action. Thus, the real criterion for deciding whether an order terminating the services of a public servant is one of dismissal or removal is to ascertain whether it involves any loss of benefits already earned. In the present case the petitioner has been deprived of his pay, gratuity, leave encashment, pension and Performance Related Pay („PRP‟, for short). The Tribunal totally failed to appreciate that forfeiture of benefits earned by the petitioner during the service with NALCO was punitive ramification of removal and as such the removal cannot be held to be simplicitor but stigmatic and punitive, requiring a proper enquiry. Reliance in this regard is placed on the judgments in L.P. Agarwal (Dr) v. Union of India, (1992) 3 SCC 526 and Nina Lath Gupta v. Union of India & Anr., WP(C) 10385 of 2021 decided on May 01, 2023.
9. The contention of Mr. Ralli is that clause 1.[1] of the terms of appointment and Article 63(1) (f) of the Articles of Association are arbitrary, void and in violation of Articles 14 and 16 of the Constitution, and therefore, could not have been invoked for premature removal of the petitioner. Such clauses /provisions forming part of the terms of employment or the rules and regulations of different Public Sector Enterprises have already been declared void and struck down/set-aside by various courts. He has referred to the judgment in the case of Delhi Transport Corporation v. DTC Mazdoor Congress and Ors., (1991) ILLJ 395 SC wherein a Constitution Bench of the Supreme Court considered the question of constitutional validity of the right of an employer to terminate the services of permanent employees without holding any inquiry in certain circumstances by giving a reasonable notice or pay in lieu of notice, and held that the regulation granting such a right is arbitrary, unfair, unjust, unreasonable, opposed to public policy and is in violation of Articles 14, 16(1), 19(1)(g) and 21 of the Constitution. Reliance is also placed on the judgments in West Bengal State Electricity Board and Ors. v. Desh Bandhu Ghosh & Ors., (1985) 3 SCC 116; O. P. Bhandari v. India Tourism Development Corporation Ltd. and Ors., 1987 AIR 111; M. Gopalakrishnaiah v. Union Of India, 1994 SCC OnLine Del 308; M.K. Agarwal v. Gurgaon Gramin Bank, 1987 Supp SCC 64; Uptron India Ltd. v. Shammi Bhan, (1998) 6 SCC 538 and Dr. L.P. Aggarwal (supra) in this regard.
10. According to him, the Tribunal erred and misdirected itself while discussing the challenge of the petitioner to the validity of the above two clauses. The discussion in the impugned order of the Tribunal would show that the Tribunal has grossly erred by discussing the subject pertaining to the scope of judicial review of the Tribunal/Courts in the matters of policy decision of the government which has no relevance in the context of the contention of the petitioner challenging the validity of the aforesaid two clauses contained in the terms of appointment and Articles of Association. In fact, there is no discussion in the impugned order in the relevant context of the real challenge of the petitioner to the validity of the above two clauses raised by him.
11. Mr. Ralli has placed reliance upon the judgment in Central Inland Water Transport Corporation and Anr. v. Brojo Nath Ganguly and Anr., (1986) 3 SCC 156 wherein the rule providing for termination of employment for acts other than misdemeanor was held to be void under Section 23 of the Contract Act, 1872 being opposed to public policy and also ultra vires Article 14 of the Constitution, it being arbitrary and unreasonable and ignoring the doctrine of audi alteram partem.
12. Clause 63 (f) of the Articles of Association of NALCO which confers the President with absolute discretion to remove the CMD is highly arbitrary, and in contravention with Section 388 (B) of the Companies Act, 1956 which grants power to the Central Government to remove managerial persons from office on recommendation of the Company Law Board. If there is a conflict between an Article of Association of a Company and the Companies Act, the later shall prevail. In the present case, since Article 63 (f) is in contravention to Section 388 (B), the same cannot be applied for removing the petitioner.
13. He stated that, premature termination under the doctrine of pleasure in case of fixed tenure appointment is subject to judicial review, as has been held in Union of India v. Sharbandu, (2007) 6 SCC 276.
14. Additionally, the petitioner had a legitimate expectation of completing the tenure of his service, and therefore, any curtailment thereof is an infraction of the principle of legitimate expectation, and therefore is liable to be set aside. In this regard he has relied upon the judgment in Union of India and Ors. v. Hindustan Development Corporation and Ors., AIR 1994 SC 988.
15. Mr. Ralli further contended that the impugned termination was in fact punitive and stigmatic in nature as the same was influenced by pending criminal proceedings which are false and fabricated in which no finding has been recorded against the petitioner till date. There was nothing else which could be the reason for premature and illegal removal/termination of service of the petitioner. The Tribunal failed to appreciate that there was a direct nexus between the termination of the petitioner and the charges leveled by the CBI. The general suitability of the petitioner was very well established as he was adjudged to be a outstanding performer and was allowed to continue beyond one year. Therefore, his performance cannot be a reason / motive for termination. The stand of the respondents that the entitlement of the petitioner to his terminal benefits will depend upon the outcome of the chargesheet filed against him under Section 120-B of the Indian Penal Code, 1860 (IPC) read with Sections 7 & 12 of the PC Act, is illegal. Withholding of terminal benefits pending a decision in the charges filed before a Court of law indicates that the respondents treated the allegations in the CBI case as foundation for his termination. The order of termination is a colourable exercise of power, and as such is stigmatic.
16. The Tribunal also failed to appreciate that the proposal for termination of the petitioner was moved by the Ministry of Mines on April 27, 2012 indicating the reason for termination as “due to vigilance case”. No show-cause notice was issued nor was any inquiry initiated. The order has been made in the form of punitive action for the alleged criminal charges which are the reason and foundation for the termination.
17. Further, the services of the petitioner were in league with other employees of NALCO. He had been cleared for extension of full service of 5 years / till superannuation and as such cannot be treated similar to a temporary employee or a probationer. In the matter of tenure, appointment and termination, Rule 26 of the CDA Rules excludes within the ambit of penalty, termination of services of an employee on probation, temporary capacity, appointment on contract and also on reduction of establishment. The termination resorted to in the case of the petitioner is not covered in any of the exceptions. Further, the appointment of the petitioner was not on account of an agreement but a statutory appointment for a tenure approved by the ACC on recommendations of the Public Enterprises Selection Board. Continuity of service was maintained and all the service benefits were transferred to NALCO. The terms and conditions of appointment do not amount to a contract or an agreement.
18. Once the petitioner was appointed, it is statutory rules and regulations that govern his service and not the terms of the appointment. The respondents cannot pick and choose the rules governing services at their whims and fancies. It cannot be held that suspension was governed by the CDA Rules whereas the termination is governed by clause 1.[1] of the terms of appointment.
19. Further, nothing prevented the respondents from following the procedure regarding disciplinary enquiry under the relevant Rules soon after passing of the suspension order on February 26, 2011. It is pertinent to mention that documents sought from CBI were provided to respondent No. 1 by CBI in the month of April 2011 itself, whereas the impugned termination order was passed after one year and eight months. There is no reason given by the respondents for not conducting the inquiry proceedings during this time.
20. He also submitted that the Tribunal erred in holding that the petitioner was only entitled to service benefits admissible to him before joining NALCO. All the service benefits earned during the earlier tenure with his previous employer- CCI stood transferred to NALCO upon joining in 2009. The petitioner had continuity of service as he did not resign from CCI to join NALCO. Thereafter the petitioner has earned various service benefits during his service in NALCO, which accumulated over and above the benefits earned during service with CCI viz. eared leaves, gratuity, benefits under the New Pension Scheme etc. for which deductions were made from his salary till removal. The Tribunal erred by negating the claim of service benefits during the course of employment with NALCO, including PRP. The Tribunal has not attributed any reasons to substantiate its rejecting the petitioner‟s plea of service benefits.
21. He also contended that despite the fact that the termination of services was not a voluntary act of petitioner but was brought about by the action of respondents, the benefit of post-retirement medical benefits was denied stating that the petitioner did not complete his tenure. It is submitted that curtailment of a beneficial scheme which the petitioner had legitimately earned resulted in a loss to the petitioner, thus making the termination punitive in nature. It is further stated that notwithstanding the same, the Tribunal failed to appreciate that the petitioner was eligible for the contributory scheme for post-retirement medical facilities as the tenure could be said to have been completed on December 11, 2012. The eligibility criteria of "tenure" under the medical scheme cannot be read as to mean whole term of 5 years or till the date of superannuation, as the same was curtailed by the respondent as an administrative decision. The petitioner is entitled to postretirement medical benefits.
22. The decision of the respondents to terminate the services and withhold the dues of the petitioner is apparently punitive in nature inasmuch as despite the petitioner vide letter dated August 18, 2015 addressed to the Secretary of Mines, Government of India followed by reminder dated October 12, 2015, seeking the release of benefits transferred from the petitioner‟s previous employer, the said amount has not been released till date.
23. There was no provision, law and/or rules either available or cited by the respondents for withholding retiral benefits/dues of the petitioner. Retiral benefits is property under Article 300 of the Constitution of India, and withholding of the same has been held to be illegal by the Supreme Court in State of Jharkhand v. Jitender Kumar Srivastava, CA 6770/2013 dated August 14, 2013, reiterated by this Court in Shri Ashok Kumar v. NDPL & Anr, W.P.(C) No. 510/2012 decided on September 5, 2013.
24. Mr. Ralli further submitted that the termination vide order dated December 11, 2012 required payment of three months‟ salary, however the respondent merely paid a part of the said three months salary on December 11, 2012 while deferring the balance payment to February 20, 2013. In the absence an order indicating any revised date of termination, the termination order dated December 11, 2012 is void and the applicant continues to be in service till superannuation. Further, the suspension was also not revoked before the termination and the salary due was not paid before removal.
25. That apart, he has contended that the respondents resorted to colourable exercise of powers in dispensing with the services of petitioner. The reason cited by the respondents as to absence of a CMD in NALCO affecting its functioning is totally superfluous and cooked up in as much as in absence of petitioner, the senior-most Director was given the charge of CMD and later on the Director holding the charge was confirmed as CMD. There was neither any adverse effect on performance of the company nor was the smooth functioning of the company hampered. There have been instances in the past where Navratna and Mahanavratna companies have functioned without CMDs for long intervals with senior-most Director operating as CMD (Incharge). Even NALCO ran for almost five years without a regular CMD and without any visible impact on performance. The respondents acted in a mala fide manner to terminate the services of the petitioner on the alleged premise of unavailability of CMD. There is no public interest involved.
26. He has sought the prayers as made in the petition.
27. Ms. Bharathi Raju, learned senior panel counsel appearing for the respondents has while largely admitting the facts, contested the submissions made by the counsel for the petitioner. She stated that the Articles of Association of NALCO, through Article 63(1)(f) explicitly provides that the President may at any time remove the Chairman/Chairman-cum-Managing Director /Managing Director or any whole-time Director, from office at his absolute discretion. Chairman and whole time Directors may be removed from office in accordance with the terms of their appointment, or if no such terms are specified, on the expiry of three months notice issued in writing by the President or with immediate effect on payment in lieu of the notice period. As an administrative action, the services of the petitioner were terminated by the President, by invoking the provisions of clause 1.[1] of the terms and conditions of his appointment, issued vide letter no.2/5/2009-Met.I dated 28/01/2010, as CMD, NALCO. The petitioner stood removed from the post in terms of Article 63(1) (f) of the Articles of Association of NALCO with immediate effect, vide Ministry of Mines Order No.ll(ll)/2011-Met-I dated December 11, 2012, by payment of three months‟ salary in lieu of three months notice. Therefore, the decision of the Tribunal is in accordance with provision of Article 63(1)(f) of the Articles of Association of NALCO and of clause 1.[1] of the terms and conditions of his appointment.
28. The service benefits that the petitioner earned with his previous services from CCI has already been remitted as per the directions of this Court vide order dated December 06, 2017.
NALCO has credited an amount of ₹8,97,462/- towards 120 days‟ Earned Leave (EL), 181 days‟ Half Pay Leave (HPL) and ₹2,24,1301- towards gratuity, as received from CCI in the account of the petitioner.
29. However, with regards to his benefits during the services with NALCO up to December 11, 2012 i.e. the date of removal, has been withheld for the reason that the petitioner was arrested by the CBI on February 25, 2011 in a trap case for receiving illegal gratification. A case was registered by CBI bearing case No.
RC AC 1 2011 A0001 on under Section 120B of the IPC r/w Sections 7 & 12 of the PC Act against the petitioner. As per the chargesheet filed by the CBI, serious allegations of illegal gratification have been leveled against the petitioner. The case is pending trial at the Court of the Special Judge, RADC, New Delhi. For this reason, the respondents are not in a position to calculate the exact damages incurred to the Government of India during the tenure of the petitioner as CMD, NALCO, and as such are constrained to withhold the service benefits as a precautionary measure till the disposal of the CBI case. She has drawn our attention to an inter office memo of NALCO dated April 24, 2012 to justify withholding the petitioner‟s PRP, and to Rules 3.1.20.3.4, 3.1.20.[4] and 31.20.[5] to contend that in case of termination of the services of an employee for whatever reason; any amount due to the company can be recovered from the amount of leave encashment.
30. Insofar as the contention of Mr. Ralli that a proposal has been sent confirming the continuation of services of the petitioner, Ms. Raju states that though such a proposal had been forwarded to the Public Enterprises Selection Board, as vigilance clearance was not received at the time, the order confirming the continuation of services was not issued by the Ministry.
31. She stated that pursuant to the registration of the case by the CBI leading up to the arrest and suspension of the petitioner, as it was not possible to keep the possession of CMD, NALCO vacant, and as the petitioner‟s continuance in NALCO as the CMD was likely to cause further irreparable loss to the functioning and creditability of the Government / NALCO, which would be detrimental to public interest, a note dated April 27, 2012, from the Ministry of Mines was submitted to the ACC for premature termination of the services of the petitioner by giving him three months salary in terms of clause 1.[1] of the terms and conditions of appointment issued with the approval of DPE. The ACC approved the proposal for premature termination on December 05,
2012. The proposal for premature termination reads as under:- “Shri A K Srivastava continues to be under suspension since 26.2.20 11. Consequently, NALCO has been functioning without a regular CMD since 26.2.2011.
NALCO a Navratna CPSE with over 7000 employees and a turnover of about Rs. 7000 crore at that time is facing tremendous administrative problem due to the absence of a regular CMD for the past fourteen months. Although additional charge arrangements have been made against the post by entrusting the responsibility to the senior most functional Director, however, for lending the requisite vision, leadership and continuity in decision making in managing the complex day to day affairs of a Navratna Company like NALCO, it‟s is imperative that a regular CMD is appointed at the earliest. As the judicial proceedings in the case of Shri Srivastava are likely to be protracted and would involve time, it may not be practicable to wait for till such time the Court reaches a conclusion in the matter, to have a regular CMD at the helm of affairs of the Company. Accordingly, for ending the stalemate in public interest, it is essential that an officer is appointed as CMD, NALCO on a permanent basis after due selection process. In view of the circumstances mentioned above, the position of Shri A K Srivastava to continue as CMD of NALCO in future has become completely untenable and therefore it is in public interest to consider terminating his services in order to have a clear vacancy and appoint a fresh CMD on full time basis to run the administrative of NALCO in an efficient manner. Accordingly, in line with the provisions of the terms & conditions of the appointment of Shri Srivastava and Rule 33(ii) & (iii) of NALCO CDA Rules, it has been decided by the concerned Disciplinary Authority i.e., Minister of State (Independent Charge) for Mines to terminate the services of Shri A K Srivastava as CMD, NALCO.”
32. She has stated that the petitioner has misconstrued the interpretation of clause 1.[1] of the terms of appointment and Article 63(f) of the Articles of Association of NALCO. It is a matter of record the petitioner has agreed to the terms and conditions of appointment including clause 1.[1] which clearly states that his services can be terminated by payment of three months‟ salary in lieu of three months notice. Further, Article 63(1)(f) of the Articles of Association was also in existence when the petitioner was appointed CMD, NALCO in terms of which his services were terminated.
33. As for the submissions of Mr. Ralli that the provisions of the Articles of Association and the terms of appointment are in contradictions with Section 388B of the Companies Act, Ms. Raju would submit that the provisions of Section 388B is at the discretion of the Central Government and hence is not a mandatory clause. Moreover, the circumstances mentioned in the said provision are not analogous with the instant case and the CDA Rules and the Articles of Association of NALCO govern the service of the petitioner. Therefore, no parallel enquiry by the Company Law Board was required.
34. She submitted that by way of the present petition, the petitioner is attempting to seek a judicial review of an administrative action of the President / Government of India, which is tantamount to an attempt on the part of the petitioner to compel by means of a judicial order to interfere with administrative decisions which are entirely for the Government of India to make. Reliance in this regard is placed on the judgment of the Supreme Court in Tata Cellular v. Union of India, AIR 1996 SC 11. According to her, the principles laid down by the Apex Court in the said judgment can be summed up as below:- (a) The modern trend points towards judicial restraint in administrative action. (b) The Court does not sit in appeal but merely reviews the matter in which the decision was made.
(c) The Court does not have the expertise to correct an administrative decision. If a review of administrative decision is permitted, the Court will be substituting its own decision without a necessary expertise which itself may be fallible.
35. Further, as for the issue of Post Retirement Medical Benefits Scheme, she submitted that in respect of Board Level Appointment, the incumbent is eligible for the same only after completion of full tenure of service. In the instant case, as the petitioner did not complete his full tenure, it was held that he was not eligible for the said benefit.
36. She also stated that NALCO credited a sum of ₹4,21,763/- on December 11, 2012 to the account bearing No.07072191007994 of the petitioner with the Oriental Bank of Commerce, SSI Branch, NOIDA through RTGS which included subsistence allowance upto December 10, 2012 and three months‟ salary thereafter. He has been further paid a sum of ₹1,65,891/- through RTGS towards perks and HRA on three months‟ pay in lieu of notice period after necessary recovery towards private use of vehicle, medical and TDS from the total amount of ₹1,82,616/-. The petitioner was duly informed by NALCO about these two payments vide letter dated December 17, 2012 and February 20,
2013. That apart, even the respondents had informed the petitioner about the release of payment with regard to subsistence allowance perks and HRA by NALCO vide letter bearing No.11/11/2011-Met.I dated February 21, 2013.
37. Mr. Ralli in his rejoinder submissions would vehemently contest the stand of the respondents that the service benefits of the petitioner have been withheld as the government was unable to assess or calculate the loss / damage, caused to the Government of India due to actions / omissions on the part of the petitioner during his service at NALCO. He states that the said plea of the respondents is imaginary and baseless and deserves to be rejected, as no such stand has been taken prior to the present proceedings. Even the charges for which the criminal proceedings are going on, does not allege any loss / damage to the Government of India. Even the provisions of the PC Act under which the petitioner has been charged makes no reference to any financial loss / damage to the Government of India.
38. Further, it is the case of the respondents themselves that the termination of the services of the petitioner was purely an administrative action and not on account of any misconduct. If that be so, the respondents cannot place any reliance on the allegations which are a subject matter of the criminal proceedings to deny service benefits to the petitioner.
39. In any case, it is a settled proposition of law that service benefits / dues of a government employee cannot be denied / withheld merely on the ground that criminal proceedings or disciplinary proceedings are pending against the employee. He laid stress on the facts that the suspension of the petitioner was not followed by any disciplinary proceedings even though there was no legal embargo against initiation of such proceedings, which would manifest that the respondents did not have any charge or case against the petitioner. As such he is entitled to full salary and other service dues up to the date of termination including the period of suspension, apart from the service benefits that have to flow to him from the date of termination till January 30, 2015 when he would have superannuated. He has sought the following service benefits to be granted to the petitioner:-
1. Balance amount of salary and allowances from February 26, 2011 till December 11, 2012 after adjusting the amount paid by Respondent No. 1 as suspension allowance.
2. Leave encashment and gratuity.
3. Any other service benefits payable under the rules.
40. The pending dues as claimed by the petitioner have been tabulated as under:- Dues upto 26.02.2011 i.e., date of suspension S.No. Description Amount (₹)
1. Performance Related Pay/Variable Pay 11,04,186/-
2. Leave Encashment 2,42,473/-
3. Gratuity 3,63,402/- Total 17,10,061/- Dues upto 11.12.2012 i.e., date of termination
1. Basic Pay plus DA 8,21,989/-
2. Perks 6,26,112/-
3. Gratuity 3,63,402/-
4. Performance Related Pay 11,04,186/-
5. Leave Encashment 2,42,473/- Total 31,58,162/- Dues upto 12.12.2012 till now
1. Basic Pay plus DA Rs.20,56,990/-
2. Perks (45%) Rs.9,25,646/-
3. Gratuity Rs. 91,285/-
4. Performance Related Pay/Variable Pay --
5. Leave Encashment --
6. Medical reimbursement -- Total Rs. 30,73,921/- ANALYSIS AND FINDINGS
41. Having heard the learned counsel for the parties, we note that the petitioner had filed the O.A. before the Tribunal with the following prayers:- “(i) allow the original application.
(ii) quash and set aside the order dated 11.12.2012
(AnnexureA-1) whereby services of the applicant had been terminated curtailing the tenure of appointment, and then reinstate the applicant in service with immediate effect along with complete back-wages and consequential benefits and the same be paid with 12% per annum interest from the date it has become due; and/or
(iii) alternatively the applicant be given complete backwages/salary till completion of actual date of tenure/retirement and ail terminal and legal dues including pension, gratuity, PF, Leave in enhancement, incentive, performance relative PRP, Post retirement medical benefits etc. and all other dues and the same be paid with 12% per annum interest from the date it becomes due and/or;
(iv) call for. the original files/record from Ministry of
Mines, GOI. and also Department of personnel and training (DoPT) in order to ascertain divisions for premature termination of services of the applicant.
(v) may also pass any further order(s), direction(s) as be deemed just and proper to meet the ends of justice.”
42. In substance, the claim of the petitioner before the Tribunal was to set aside the order dated December 11, 2012 by which the services of the petitioner were terminated as per provisions of clause 1.[1] of the appointment letter issued to him and Article 63 of the Articles of Association of NALCO, with immediate effect by payment of three months‟ salary in lieu of three months notice; and to grant his reinstatement with all consequential benefits. He sought an alternative prayer that he be given complete back-wages/salary till completion of actual date of tenure/superannuation and all terminal/legal dues including pension, gratuity, PF, leave encashment, incentive, PRP, post retirement medical benefits etc. with interest. The Tribunal has upheld the termination by holding in paragraphs 3, 4 and 5 of the impugned order as under:-
During the course of hearing, learned counsel also raised the plea that once after the expiry of the first year of tenure, the performance of the applicant was reviewed and he was further continued in service, the order of termination could not have been passed. We find that the provisions of para 1.[1] are independent of those of para 1.[2] and Clause. Para 1.[1] provide for termination of services at any time during the tenure. Though neither there is any ground raised in the OA or amended OA to this effect nor during the course of argument, learned counsel for applicant could make out any case, but since in the Original Application there is prayer to quash the provision of para 1.[1] of the appointment letter and Articles 63 (1) (f) of the Articles of Associations, NALCO, we need to deal with the same. It is stare decisis that the Court while exercising the power of judicial review, do not sit in appeal over the decisions of administrative bodies and the judicial review lie only on certain well defined grounds. It is also well settled that the Courts should not ordinarily interfere with a policy decision of the State. The judicial review is a fundamental mechanism for keeping public authorities within due bounds and for upholding the rule of law and is not a tool of substituting its own decision for that of some other body. Once it is the policy decision taken by the respondents to have a provision for termination of services of CMD of NALCO before expiry of the tenure, it is not open for this Tribunal to interfere with the same. Moreover, as has been noted hereinabove, the learned counsel for applicant could not make out any case far less sufficient one to persuade us to interfere with in para 1.[1] of the appointment letter or Article 63 (1)(f) of Articles of Association of NALCO. In State of U.P. and Another Vs. Johri Mal ( 2004 (4) SCC 714), Hon ble Supreme Court ruled thus:-
43. On the aspect of termination, the submission of Mr. Ralli is primarily that clause 1.[1] of the terms of appointment and Article 63(1) (f) of the Articles of Association are void being in violation of Articles 14 and 16 of the Constitution of India, inasmuch as any stipulation facilitating termination of services of an employee without holding any enquiry, by giving notice or pay in lieu thereof is arbitrary, unfair, unjust and in violation of of Articles 14, 16(1), 19(1)(g) and 21.
44. We are not in agreement with the said submission of Mr. Ralli. It is an admitted fact that the appointment of the petitioner as CMD of NALCO was for a period of five years, vide order dated January 28,
2010. Clause 1.[1] of his terms of appointment clearly stipulates that the appointment may, however, be terminated even during the said period by either side on three months‟ notice or on payment of three months‟ salary in lieu thereof. Article 63 (1)(f) authorizes the President of India to remove the Chairman or any Whole Time Director at his discretion and according to the terms of appointment. It is necessary to note here that the service of the petitioner was governed by the terms of his appointment, accepted without any protest or demur. In fact, the entire case of the petitioner rests on the fact that he was appointed to a tenure post by virtue of the appointment order. Normally, he would be precluded from challenging the very terms of appointment he is relying upon to support of his case. Be that as it may, since the appointment of the petitioner was on a purely contractual basis, and not based on any statutory rules/instructions, he cannot successfully mount a challenge to the said provisions.
45. The question now would be whether de hors the provisions in the appointment letter/ terms of appointment, the respondents were required to hold an enquiry against the petitioner before terminating his services. Before we answer this issue, it is necessary to deal with the judgments relied upon by Mr. Ralli. In the case of Delhi Transport Corporation (supra) a stipulation providing for termination by giving notice for a particular period or pay in lieu thereof was held to be arbitrary and in violation of Articles 14 and 16. The said judgment may not be applicable to the facts of this case inasmuch as in the said case, the Supreme Court was concerned with a stipulation in the appointment letter of a person who was appointed on a permanent basis. Similar is the position in the cases of West Bengal State Electricity Board (supra), M. Gopalakrishnaiah (supra), Central Inland Water Transport Corporation (supra), O.P. Bhandari (supra), N.K. Aggarwal (supra) and Uptron India (supra). In the present case, the appointment was for a period of five years i.e., on a tenure basis. It is not a permanent appointment in the sense that the employee continues in service till the age of his superannuation resulting in grant of pension to him.
46. The termination order issued to the petitioner reads as under:- “The President was pleased to appoint in terms of Article 63 of the Articles of Association of National Aluminium Company Limited (NALCO), Shri Abhay Kumar Srivastava Chairman-cum-Managing Director, National Aluminium Company Limited w.e.f. 01.10.2009 for a period of 5 years or till the date of superannuation or until further orders, whichever is the earliest, vide Ministry of Mines' Order No.2(2)/2007-Met. Dated 11.8.2012, Inter-alia, with the stipulation that detailed terms and conditions shall be issued separately.
2. The terms and conditions of appointment, issued vide Ministry of Mines letter No. 2(5)/2009-Met.[1] dated 28.1.2010, at para 1.[1] stipulated as hereunder Period: His appointment will be for a period of 5 years w.e.f.1.10.2009(FN) in the first instance or till the date of superannuation or until further orders, whichever event occurs earlier and in accordance with the provisions of the Companies Act, 1956 as amended. The appointment may, however, be terminated even during this period by either side on 3 months notice or on payment of three months salary in lieu thereof."
3. The President after careful consideration by invoking the provisions of para 1.[1] of the of the terms and conditions of appointment of Shri Abhay Kumar Srivastava, as Chairman-cum-Managing Director, National Aluminium Company Limited (presently under suspension) hereby terminates his services as Chairmancum-Managing Director National Aluminium Company Limited Shri Abhay Kumar Srivastava thus stands removed from the said post in terms of Article 63 of the Articles of Association of NALCO with immediate effect by payment of three months salary, in lieu of three months notice.”
47. A perusal of the said order reveals that in paragraphs 2 and 3 thereof, a reference has been made to clause 1.[1] of the order of appointment dated January 28, 2010 and Article 63 of the Articles of Association. No reasons have been given by the respondents for terminating the services of the petitioner, making it an order simplicitor.
48. Though, the letter of termination is simplicitor and not stigmatic or punitive, since a challenge has been made to the termination order before this Court to find out the foundation leading to termination of the services of the petitioner, it is necessary to examine what the motive was for the said order. In State of U. P. & Anr. v. Kaushal Kishore Shukla, (1991) 1 SCC 691, the Supreme Court upheld an order of termination which implied that the employee is unfit for job and observed that mere fact that an enquiry was held against the employee prior to the termination, does not turn an order of termination into one of punishment.
49. The Supreme Court in the case of Pavanendra Narayan Verma v. Sanjay Gandhi PGI of Medical Sciences and Another, (2002) 1 SCC 520 has clearly laid down the law as to when a removal/termination letter is an order simplicitor and not stigmatic. In paragraph 28 of the judgment, in the context of a probationer challenging his termination, it was held that the Court has to first apply the “stigma” or the “form” test. If the order survives then the “substance” of the termination will have to be found out. In other words, it follows that if the order of termination is not stigmatic but simplicitor, though the foundation for such an order is the unsuitability of the government servant/employee, then such termination cannot be held to be illegal. Having said that, now coming to the question posed for our consideration, whether, as stated by Mr. Ralli, an enquiry was required to be held before terminating the services of the petitioner, an enquiry becomes relevant only when the termination order is punitive. In other words, if the order of termination refers to any misconduct committed by the employee, then the termination cannot be effected without an enquiry following the principles of natural justice.
50. The Supreme Court in Pavanendra Narayan Verma (supra) has in paragraphs 21 to 32 referring to its various judgments, held as under:-
23. Thus in Benjamin case [(1967) 1 LLJ 718 (SC)] complaints had been received against a temporary employee. A notice had been sent to the employee to show cause why disciplinary action should not be taken against him. The inquiry officer was appointed but before the inquiry was completed, the services of the employee were terminated with one month's salary in lieu of notice. The Constitution Bench upheld the order of termination and drew a distinction between a preliminary inquiry and a departmental inquiry. It was held that a preliminary inquiry held to satisfy the Government whether there was no reason to dispense with the services of the temporary employee should not be mistaken for a departmental inquiry held to decide whether punitive action should be taken.
24. In State of U.P. v. Kaushal Kishore Shukla [(1991) 1 SCC 691: 1991 SCC (L&S) 587: (1991) 16 ATC 498] the employee had been appointed on a temporary basis for a fixed tenure. During the period of his service, adverse entries were made in his character roll. Complaints were also received by the auditors of the employer. A summary inquiry was held. It was found that the auditor's complaint was correct. The employee was transferred to another post. He did not join and the employer terminated his services. This Court, while upholding the order of termination, said that the mere fact that prior to the issue of the termination an inquiry was held against the employee did not make the order of termination into one of punishment.
25. In Radhey Shyam Gupta v. U.P. State Agro Industries Corpn. Ltd. [(1999) 2 SCC 21: 1999 SCC (L&S) 439] a full-scale inquiry was held into the allegations of bribery against a temporary employee. The Court set aside the termination because it found that the report submitted was not a preliminary inquiry report but it was in fact a final one which gave findings as to the guilt of the employee.
26. In Dipti Prakash Banerjee v. Satyendra Nath Bose National Centre for Basic Sciences, Calcutta [(1999) 3 SCC 60: 1999 SCC (L&S) 596] the termination order itself referred to three other letters. One of the letters explicitly referred to misconduct on the part of the employee and also referred to an Inquiry Committee's report, which report in its turn had found that the employee was guilty of misconduct. The termination was held to be stigmatic and set aside.
27. The case of Chandra Prakash Shahi v. State of U.P. [(2000) 5 SCC 152: 2000 SCC (L&S) 613] related to a constable who was on probation after successfully completing his training. The constable completed his period of probation without blemish. One year later, his services were terminated by issuance of a notice in terms of Rule 3 of the U.P. Temporary Government Servants (Termination of Service) Rules, 1975. An inquiry was held into the allegations of misconduct. The Court found as a fact that the inquiry was not held to judge the suitability of the constable but with a view to punish him. The order was held to be punitive and set aside.
28. Therefore, whenever a probationer challenges his termination the court's first task will be to apply the test of stigma or the “form” test. If the order survives this examination the “substance” of the termination will have to be found out.
29. Before considering the facts of the case before us one further, seemingly intractable, area relating to the first test needs to be cleared viz. what language in a termination order would amount to a stigma? Generally speaking when a probationer's appointment is terminated it means that the probationer is unfit for the job, whether by reason of misconduct or ineptitude, whatever the language used in the termination order may be. Although strictly speaking, the stigma is implicit in the termination, a simple termination is not stigmatic. A termination order which explicitly states what is implicit in every order of termination of a probationer's appointment, is also not stigmatic. The decisions cited by the parties and noted by us earlier, also do not hold so. In order to amount to a stigma, the order must be in a language which imputes something over and above mere unsuitability for the job.”
30. As was noted in Dipti Prakash Banerjee v. Satyendra Nath Bose National Centre for Basic Sciences [(1999) 3 SCC 60: 1999 SCC (L&S) 596]: (SCC p. 73, para 28)
31. Returning now to the facts of the case before us. The language used in the order of termination is that the appellant's “work and conduct has not been found to be satisfactory”. These words are almost exactly those which have been quoted in Dipti Prakash Banerjee case [(1999) 3 SCC 60: 1999 SCC (L&S) 596] as clearly falling within the class of non-stigmatic orders of termination. It is, therefore safe to conclude that the impugned order is not ex facie stigmatic.
32. We are also not prepared to hold that the enquiry held prior to the order of termination turned this otherwise innocuous order into one of punishment. An employer is entitled to satisfy itself as to the competence of a probationer to be confirmed in service and for this purpose satisfy itself fairly as to the truth of any allegation that may have been made about the employee. A charge-sheet merely details the allegations so that the employee may deal with them effectively. The enquiry report in this case found nothing more against the appellant than an inability to meet the requirements for the post. None of the three factors catalogued above for holding that the termination was in substance punitive exists here.”
51. In the case in hand, as stated above, the order of termination is simplicitor and does not cause any stigma and as such is not punitive. Hence, no enquiry was required to be held against the petitioner before terminating his services. The Tribunal is justified in rejecting the O.A. insofar as the challenge to the termination is concerned.
52. Mr. Ralli has relied upon the judgment in Dr. L.P. Agarwal (supra) to contend that even a tenure appointee cannot be removed from service before the completion of his tenure. In that case, the petitioner was appointed as the Director of All India Institute of Medical Sciences for a period of five years, but was later compulsorily retired from service in public interest by giving him three months pay and allowances in lieu of notice. The Supreme Court observed that „tenure‟ means a term during which an office is held, and that it is a condition of holding such office. Such a person does not superannuate, he only goes out of office on completion of his tenure. As the concept of superannuation which is well understood in service jurisprudence is alien to tenure appointments, which has a fixed lifespan, the Court was of the view that the question of prematurely retiring the petitioner does not arise. Though the Court also observed that once a person is appointed to the tenure post his appointment to the said office begins when he joins and comes to an end on completion of the tenure unless curtailed on justifiable grounds, the circumstances under which a tenure appointment could be cut short was not gone into in the factual circumstances. In the present case, the tenure of the petitioner was terminated and no question of retiring him ever arose. As such this judgment is clearly distinguishable.
53. Insofar as the judgment in Nina Lath Gupta (supra) is concerned, therein the petitioner was aggrieved by the actions of the respondent who terminated her services by a punitive and stigmatic order laying down the reasons for her termination, without affording her any opportunity of hearing or conducting an inquiry. Though the stigmatic part of the order was later withdrawn, this Court was of the view that the order was founded on certain allegations and was not an innocuous or a simplicitor order of termination. Though the order was withdrawn in order to wriggle out of legal implications, the allegations initially made were not wiped out and the impugned order was held to be a camouflage, founded on the same allegations, as there was no fresh reason / trigger for truncating her tenure. Suffice it to state, the judgment has no applicability to the facts of the present case, as we have already held the order to be simplicitor and not punitive in character.
54. The question as to whether the services of a person appointed on a contractual basis can be terminated prematurely had come up for consideration before the Supreme Court in the case of Indian Railway Construction Company Limited v. Lt. Col. AK Dogra (Retd.) 1993 SCC OnLine Del 125 on which reliance has been placed by Mr. Ralli. The Apex Court while holding that even where the appointment is contractual, the tenure of the employee cannot be cut short or brought to an end arbitrarily at the whim and caprice of the employer, observed that there must exist adequate reasons for bringing an end to the services of an employee, for such an appointment to be terminated before the contractual period expires. Therefore, an inference can be drawn that if adequate and cogent reasons exist, the services of a person engaged/appointed on a contractual/tenure basis can be lawfully terminated by the employer.
55. Now coming to the other pleas as advanced by Mr. Ralli, the same are primarily regarding payment of gratuity, leave encashment and PRP. Insofar as the payment of gratuity is concerned, there is no dispute that an amount of ₹2,24,130/- as received from CCI- the erstwhile office of the petitioner, has been released to the him. The claim of the petitioner is primarily on the balance amount of ₹3,63,402/-. The plea of Ms. Raju in this regard is primarily relying upon the criminal proceedings initiated against the petitioner, inasmuch as in the charge sheet filed by the CBI, there are serious allegations of illegal gratification leveled against the petitioner and the case is pending trial at the Court of the Special Judge, New Delhi. The respondents are not in a position to calculate the exact damages incurred by Government of India during the tenure of the petitioner as CMD, NALCO and are constrained to withhold the service benefits as a precautionary measure till the disposal of the CBI case.
56. There can be no dispute that gratuity is payable to the petitioner under the Payment of Gratuity Act, 1972. Section 4(6) of the Act lays down certain conditions for forfeiture of gratuity. “4.xxx (6) Notwithstanding anything contained in sub-section (1),— (a) the gratuity of an employee, whose services have been terminated for any act, wilful omission or negligence causing any damage or loss to, or destruction of, property belonging to the employer shall be forfeited to the extent of the damage or loss so caused; (b) the gratuity payable to an employee 17 [may be wholly or partially forfeited]—
(i) if the services of such employee have been terminated for his riotous or disorderly conduct or any other act of violence on his part, or
(ii) if the services of such employee have been terminated for any act which constitutes an offence involving moral turpitude, provided that such offence is committed by him in the course of his employment.”
57. It is only on the above instances that the gratuity of an employee can be withheld/ forfeited. None of the above instances are applicable in the case in hand as it is not the case of the respondents that the services of the petitioner has been terminated for any misconduct, act, willful amount or negligence causing any damage or loss to, or destruction of, property belonging to the employer. Nor has the petitioner been terminated for any offences involving moral turpitude. In other words, in the absence of any ground for terminating the services of the petitioner as contemplated under Section 4 of the Payment of Gratuity Act, the respondents cannot withhold the gratuity of the petitioner.
58. Insofar as the payment of leave encashment is concerned, Ms. Raju has relied upon the following provision of certain rules which according to her shall be applicable in case of the petitioner. Clause 3.1.20.3.[4] as relied upon by Ms. Raju reads “Where the services of an employee are terminated on disciplinary ground, no encashment of Earned Leave, Half Pay Leave and Sick Leave will be permitted.” Suffice to state, the petitioner has not been terminated on disciplinary grounds. In fact it is the case of the respondents themselves that the removal of the petitioner is for administrative reasons. If that be so, leave encashment of the petitioner cannot be withheld.
59. Similarly, on the aspect of PRP, as per Ms. Raju, the same can be withheld if the employee is under suspension or any disciplinary proceedings have been initiated against him. In that regard, she has relied upon a clarification dated April 24, 2012 issued by NALCO, relevant part whereof reads as under:-
60. The above state that during the period of suspension or pendency of disciplinary proceedings, PRP shall be withheld. In the case in hand, though no disciplinary proceedings were initiated, as the petitioner was suspended on February 26, 2011, and continued to be under suspension till the date of his termination, he shall only be entitled to PRP till the date of his suspension. In fact, his claim for PRP is also only till February 26, 2011. We hold that PRP as due on the date of his suspension, is payable to the petitioner.
61. Mr. Ralli has placed reliance on the judgments in State of Karnataka v. R.S. Naik, 1983 SCC OnLine Kar 56 and S.P. Jain v. Punjab National Bank, 1992 SCC OnLine Del 479 to contend that the suspension period of the petitioner should be treated as period spent on duty and consequential financial benefits be granted. We have seen the said judgments. In both the cases, the petitioners who were placed under suspension due to their involvement in criminal cases, later retired from service, and subsequently sought the suspension period to be treated as „on duty‟. Considering the fact that the petitioners were permitted to voluntarily retire/retire in due course, the Court held that their previous orders of suspension ceased to operate, and allowed the petitions. In the present case, though the petitioner was placed under suspension, he was neither allowed to retire or complete his tenure, but was removed from office by an order simplicitor. The facts being different, these judgments would not help the cause of the petitioner.
62. In view of our above discussion, it must be held that the Tribunal had rightly refrained from interfering with the termination of the petitioner. However, we hold that the petitioner shall be entitled to PRP and leave encashment (except for the period of suspension), and gratuity.
63. The respondents shall calculate the dues payable under the three heads as per rules and release the same to the petitioner along with interest at the rate of 7% per annum, within a period of eight weeks from today.
64. The petition is disposed of in the aforesaid terms, without any order as to costs. CM APPL. 29049/2016
65. In view of our decision, this application has become infructuous. It is dismissed as such.
V. KAMESWAR RAO, J
ANOOP KUMAR MENDIRATTA, J NOVEMBER 20, 2023/ds/aky