National Insurance Company Limited v. Devender Malhotra & Ors.

5. The appellant in appeal assails the judgmentof the learned single judge on the followinggrounds:

5.1. First, the learned single judge, having concluded that no interference was called qua the findings recorded by the authorities below, could not have interdicted the direction issuedby the MA that the period for which respondent no.1 stood removed from service would constitute a break in service.

5.2. Second, the learned single judge failed to appreciate that the substitution of the punishment imposed on respondent no.1 i.e., removal from service withreemployment could only be construed as fresh employment on the terms stipulated in the order of the MA.

5.3. Third, the power exercised by the MA was, in effect, a power akin to mercy and, therefore, the fact that reemployment was not a punishment provided in the CDA Rules, could not be the reason for interfering with the order of the MA.

6. Before we proceed further, it would be relevant to remind ourselves as to what exactly did the MA hold in its order dated 10.10.2012.

6.1. The MA, as adverted to hereinabove, after noting that there were charges concerning misappropriation of the premium received in cash and failure to regulate the activities of the agents, came to a definitive conclusion that respondent no.1 could be held guilty of only negligence in not monitoring the agent. The charge concerning misappropriation did not find favour with the MA.

6.2. This conclusion, it appears, was arrived at by the MA after perusing the material on record which included the inquiry report, the order ofthe disciplinary authority, the order of the Appellate Authority, as also the replies filed by respondent no.1.

6.3. It is in this context that the MA while exercising the power under Rule 40 of the CDA Rules[1] supplanted the punishment imposed on respondent no.1, which was, removal from service to reemployment.

6.4. The MA, while doing so, also issued a direction that the period for which the order passed against respondent no.1 [concerning his removal from service] remained in operation would not be construed as a period spent on service. In other words, this period would constitute a break in service.

6.5. It is important to note that the penalties which could have been imposed on an employee of the appellant, such as respondent no.1, as an outcome of the disciplinary proceedings are prescribed in Rule 23 of the CDA Rules.

6.6. Rule 23 of the CDA Rules[2] prescribes both minor and major penalties. A quick perusal of Rule 23 wouldshow that reemployment in service

40. Memorial An employee whose appeal under these Rules has been rejected by the appellate authority subordinate to the Chairman/Chairman-cum-Managing Director or in whose case such appellate authority has enhanced the penalty on appeal under Rule 24 or on review under Rule 39(2) may address a memorial to the Chairman/Chairman-cum-Managing Director in respect of that matter within a period of 6 months from the date the appellant received a copy of the order of such appellate authority.

23. Penalties Without prejudice to the provision of other rules, any one or more of the following penalties for good and sufficient reasons, and as herein after provided, be imposed by the Disciplinary Authority on an employee who commits a breach of discipline, or who is guilty of any other act prejudicial to good conduct: Minor Penalties (a) Censure. (b) Withholding of one or more increments for a specified period.

(c) Recovery from pay or such other amount as may be due to him of the whole or part of any pecuniary loss caused to the company by negligence or breach of orders.

(d) Reduction to a lower stage in the time-scale for a period not exceeding three years without cumulative effect. (e) Withholding of Pension or part thereof for a specified period. Major Penalties (f) Withholding of one or more increments permanently. (g) Reduction to a lower service, or post or to a lower time-scale or to a lower-stage in a timescale. is not a prescribed punishment. Therefore, the order that the MA passed was, in a sense, sui generis.

7. It is in these circumstances that the learned single judge, in our view, quite correctly, called upon the MA to reconsider the case of the petitioner, in light of the provisions of Rule 22(b) of the CDA Rules.

7.1. The reasons given by the learned single judge, in this regard, in our opinion are both cogent and legally tenable.

7.2. For the sake of convenience, the relevant portion of the impugned judgment is extracted hereafter:

17. A reading of the aforesaid Rule establishes that whenever an employee who has been dismissed or removed is reinstated, the competent authority is firstly obliged to consider whether the delinquent had been honourably acquitted or otherwise. As the Rule prescribes in unambiguous terms, if the delinquent employee is honourably discharged of the allegations leveled, he would be entitled to full pay and allowances which would have been paid but for the fact that the employee had come to be dismissed, removed or suspended. In cases where the employee is ultimately absolved of the charges on the basis of considerations other than merits or where the competent authority comes to conclude that the order of dismissal or removal is liable to be modified, the Rule confers a discretion on the authority to consider and decide how the period of absence from duty is liable to be treated. However, the Rule enshrines a significant restraint on the period of absence being treated as constituting a break in service. This since it provides that in case the competent authority ultimately proceeds to hold any part or the whole of the period during which an order of dismissal or removal operated to be an absence from duty, while it would be open for him to do so, such a decision would not constitute a break in service. To the aforesaid extent, the Court holds in favour of the petitioner and find itself unable to uphold the decision of the first respondent that the period between removal from service till the petitioner came to be reinstated would constitute a break in service. The aforesaid prescription in the order impugned clearly falls foul of Rule 22 of the 1975 Rules.

18. The Court lastly notes that Rule 22 (b) confers a discretion upon the competent authority to consider the grant of “such proportion of pay and allowances” as also to consider what part of the period during which an order of punishment held the field as being on leave which was otherwise admissible to the employee. The Court is constrained to note that while reinstating the petitioner, the first respondent has failed to accord any consideration to the issue of payment of pay and allowances or a proportion thereof. The authority has additionally failed to examine or deliberate on the question whether the petitioner would be entitled to the grant of any leave that may be otherwise admissible under the Rules for the period in question. Once the respondent came to the conclusion that the order of removal was liable to be set aside and the petitioner reinstated in service, it was clearly incumbent upon the authority to accord due consideration to the terms upon which the petitioner was entitled to be restored in service. To the aforesaid extent, the matter would merit being remanded to the first respondent for consideration afresh.”

7.3. A perusal of the aforesaid observations made in the impugned judgment shows that once the MA had concluded that the punishment imposed upon respondent no.1 of removal from service had to be supplanted with reemployment, and, then, the only avenue open to it was to proceed further under Rule 22(b), which inter alia provides that the period, which is, not treated as spent on duty or leave would not count as service for any purpose under the CDA Rules “but will not constitute [a] break in service".

7.4. The learned single judge, in our opinion, therefore, rightlyquashed that part of the direction issued by the MA and remanded the matter to MA for reexamination concerning what portion of pay and allowances ought to be paid to respondent no.1 and whether the petitioner would be entitled to the grant of any leave that may be otherwise admissible under the Rules for the period in question.

7.5. Therefore the argument advanced on behalf of the appellant that having accepted the findings of the authorities below, the learned single judge ought not to have interdicted the direction issued by the MA concerning break in service, in our view, is an untenable argument, having regard to the language of Rule 22(b) of the CDA Rules.

8. The other submission advanced on behalf of the appellant that the term reemployment used by the MA should be construed as fresh employment, is misconceived, as that is not what the MA intended. The learned single judge interfered with the MA’s order to the extent, that it was not in harmony with the provisions of Rule 22(b) of the CDA Rules. As is evident from a bare perusal of the MA's order, the MA did not apply its mind to the provisions of Rule 22 of the CDA Rules.

9. The other argument advanced before us that the MA was exercising a munificent power akin to mercy is, once again, an argument, which has no merit. As alluded to above, the MA has been expressly conferred power under Rule 40 of the CDA Rules, which enables a party aggrieved with the order passed by the Appellate Authority to approach the MA for redressal. This is exactlywhat occurred in the instant case. Since the Appellate Authority had rejected respondent no.1’s appeal, it preferred a memorial laying challenge to the same with the MA.

10. Thus for the foregoing reasons, we are not inclined to interfere with the impugned judgment of the learned single judge. The appeal is, accordingly, dismissed.

11. Consequently, the pending application shall stand closed.

(RAJIV SHAKDHER) JUDGE (TALWANT SINGH)

JUDGE MAY 23, 2022