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PETITIONER:

PYARE LAL SHARMA

Vs.

RESPONDENT:

MANAGING DIRECTOR, JAMMU & KASHMIRINDUSTRIES LTD. & ORS. & V

DATE OF JUDGMENT19/07/1989

BENCH:

KULDIP SINGH (J)

BENCH:

KULDIP SINGH (J)

DUTT, M.M. (J)

CITATION:

1989 AIR 1854 1989 SCR (3) 428

1989 SCC (3) 448 JT 1989 (3) 133

1989 SCALE (2)59

ACT:

Jammu & Kashmir Industries Employees Service Rules &

Regulations--R. 16.14---Termination of service--Provision of

show cause notice sufficient safeguard against arbitrary

action--Held regulation not arbitrary.

Regulation 16.14--Termination of service--Ground (a) &

(b)Three months notice or pay in lieu thereof. Amended

Regulation-grounds (c) & (d) unauthorised absence and taking

part in politics--15 days notice required--No requirement of

any other notice or pay in lieu thereof. Show cause for the

period prior to amendment--Held amended regulation not

operative retrospectively and the notice served on the

employee was illegal and the order of termination had to be

set aside. Also held termination on the basis of taking part

in politics not maintainable as no show cause given.

Constitution of India 1950--Article 311(1) Employees of

the company not civil servants--Cannot claim protection of

Art. 311(1) of the Constitution of India nor the extension

of that guarantee on parity-Employees governed by the provi-

sions of Articles of Association and Regulations of the

Company.

Natural Justice-- Principle--No one can be penalised for

the action which was not penal on the day it was committed.

Delegated authority, acquires the power of appointing

authority-Held M.D. who had been delegated the powers of the

Board of Directors was legally competent to terminate the

services of the employee.

HEADNOTE:

According to the Regulation 16.14 of the Jammu & Kashmir

Industries Employees Service Rules & Regulations the serv-

ices of the permanent employee could be terminated if the

post is abolished or he is declared medically unfit after

giving three month's notice or pay in lieu thereof and in

case of temporary employee one month's notice or pay in

429

lieu thereof.

This regulation was amended on April 20, 1983 by adding

two more grounds namely, if the employee remains on an

unauthorised absence or if he takes part in active politics,

in such cases the services shall be terminated if he fails

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to explain his conduct satisfactorily within 15 days from

the date of issue of notice and the management shall be

empowered to take a decision without resorting to further

enquiries.

Pyare Lal Sharma was employed as a Chemical Engineer by

the Jammu & Kashmir Industries Ltd. hereinafter called

'Company'. The Company issued a show cause notice on 21.4.83

in terms of the added clauses for his unauthorised absence

from duty. As no reply was submitted, the M.D. terminated

his services by an order dated 14.6.1983. Sharma challenged

the order of termination by way of a writ petition before

the J & K High Court. Learned Single Judge allowed the Writ

Petition on three grounds namely, violation of Rules of

Natural Justice, that the Board of Directors having appoint-

ed Sharma, the M.D. who is subordinate authority could not

terminate his services and that the regulation 16.14 was

arbitrary and violative of Art. 14 of the Constitution of

India. The Letters Patent Bench of the High Court dismissed

the appeal of the Company but denied backwages to Sharma.

Aggrieved by that order both the Company as well as Sharma

came up in appeals before this court. While allowing the

appeal of Sharma partially and dismissing the appeal of the

Company, this Court,

HELD: That Regulation 16.14 was not arbitrary. The

provision of show cause notice is a sufficient safeguard

against arbitrary action. Under grounds (a) & (b) of the

Regulations three months notice or pay in lieu thereof is

required. Regarding grounds (c) & (d) the regulations pro-

vide for 15 days notice to explain the conduct satisfactori-

ly and there is no requirement of any other notice or pay in

lieu thereof. [437C-D]

There is no provision in the Articles of Association or

the regulations of the company giving same protection to the

employees of the company as is given to the civil servants

under Art. 311(1) of the Constitution of India. An employee

of the Company cannot, therefore, claim that he cannot be

dismissed or removed by an authority subordinate to that by

which he was appointed. Since on the date of termination of

Sharma's services the M.D. had the powers of the appointing

authority he was legally competent to terminate Sharma's

services. [437F-G]

430

Grounds (c) & (d) in regulation 16.14 exclusively and

individually are sufficient to terminate the services of an

employee. Once it is established that an employee remains on

an unauthorised absence from duty the only action which can

be taken is termination of his services. Similar is the case

when an employee takes part in active politics. The finding

in the termination order cannot be sustained because no

notice in this respect was given to Sharma but the order of

termination can be supported on the ground of his remaining

on unauthorised absence from duty. [437H; 438A-B]

State of Orissa v. Vidyabhushan Mohapatra, [1963] 1

Supp. SCR 648 and Railway Board v. Niranjan Singh, [1969] 1

SCR 548, relied

upon.

It is a basic principle of natural justice that no one

can be penalised on the ground of a conduct which was not

penal on the day it was committed. The date of show cause

notice being April 21, 1983 the unauthorised absence from

duty which has been taken into consideration is from Decem-

ber 20, 1982 to April 20, 1983. Whole of this period being

prior to the date of amendment of regulation 16.14, the same

could not be made as a ground for proceeding under ground

(c) of Regulation 16.14. The Notice served on the appellant

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was thus illegal and as a consequence the order of termina-

tion can not be sustained and has to be set aside. [438F-G]

When the termination order is set aside by the courts

normally the employee becomes entitled to backwages and all

other consequential benefits. In view of the facts and

circumstances of this case the court ordered that only sixty

percent of the backwages be paid to Sharma. Moneys already

received by Sharma under orders of either this Court or High

Court shall be adjusted and the balance paid to him. If the

money already paid to Sharma is more than what has been

ordered to be paid now then there shall be no recovery from

him. [439A-C]

JUDGMENT:

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 3 1543

155 of 1985.

From the Judgment and Order dated 26.3. 1985 of the

Jammu & Kashmir High Court in L.P.A. (W) No. 59 of 1984.

For the Appellant In-Person in Civil Appeal No. 3 154/85

M.N. Tiku, Rakesh Tiku and Pandey Associates for the

Respondents.

431

M.N. Tiku, Rakesh Tiku and Pandey Associates for the

Appellants.

For the Respondent In-Person in Civil Appeal No. 3155/85.

The Judgment of the Court was delivered by

KULDIP SINGH, J. Jammu & Kashmir Industries Limited

(hereinafter called 'company') is a company registered under

the Indian Companies Act, 1956 and is wholly owned and

managed by the State of Jammu & Kashmir. Pyare Lal Sharma

was employed by the company as Chemical Engineer. His serv-

ices were terminated by the Managing Director of the company

on June 14, 1983. Sharma's writ petition was allowed by a

learned Single Judge of the Jammu & Kashmir High Court. On

appeal by the company the Letters Patent Bench upheld the

judgment but denied back-wages to Sharma. This is how these

two appeals, one by the.company and the other by Sharma, are

before us.

We may briefly notice the necessary facts. Pyare Lal

Sharma joined the company as Assistant Chemical Engineer on

July 12, 1972. In 1974 he was sent to England as management

trainee but he returned back without completing the train-

ing. Sharma's conflict with the company started in 1976 when

he filed a suit against the company in Jammu & Kashmir High

Court with various reliefs including a direction that he be

again sent to England on company's expense. The suit was

dismissed and further appeal to the Division Bench was also

dismissed. He then filed another suit in the Delhi High

Court claiming Rs.50 lakhs as damages from the company but

the same did not proceed on technical grounds. Thereafter,

it seems, Sharma started suspecting mala-fide in every

action of the company and resorted to court proceedings even

on slight pretext. He challenged the order of transfer from

Baramulla to the headquarters by way of suit in the Jammu &

Kashmir High Court. Interim stay, initially granted, was

vacated by the High Court. In December, 1979 he applied for

leave on medical grounds without disclosing the ailment. He

remained absent from December 7, 1979 to March 7, 1980

without any sanctioned leave. Disciplinary proceedings were

initiated against him on the charge of unauthorised absence

and he was placed under suspension on March 8, 1980. He

filed Writ Petition No. 58/80 in the Jammu & Kashmir High

Court against suspension. Ultimately Sharma expressed re-

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grets and he was reinstated into service by an order dated

May 15, 1980. In April, 1981 he was transferred from head-

quarters to one of

432

the units. He again filed a writ petition in the Jammu &

Kashmir High Court challenging the order of transfer but the

same was dismissed. Thereafter he filed Writ Petition No.

4086 of 1982 in this Court which was heard by Chinnappa

Reddy, J. (Vacation Judge) on 1st of June, 1982. The learned

Judge passed the following order:

"Issue notice returnable on June 15, 1982.

Notice be also served on the counsel for the

State of Jammu & Kashmir Mr. Altar Ahmad. Mr.

Altar Ahmad will take instructions from his

clients and assist this Court to know the

precise facts of the case which it is impossi-

ble to find from the petitioner. 1 have sug-

gested to the petitioner that he may engage a

counsel but he does not appear to be inclined

to do so. Nor is he willing to be assisted by

the counsel engaged by the court."

The writ petition was, however, dismissed as withdrawn

on June 15, 1982. Sharma filed two more writ petitions being

293 of 1982 and 410 of 1982 in the Jammu & Kashmir High

Court challenging the promotions of some other officers.

Sharma absented from duty on September 8, 1982. He was

asked to explain his absence. A para out of his reply is as

under:

"I have been submitting charge sheet against

you since last one year to authorities about

your corrupt practices, communal character,

and illegal financial advancement you have

made but no action has been taken against you

since you utilise political pressure and

bribed the chairman."

Sharma was served with a charge-sheet dated September

24, 1982 and he was placed under suspension. Use of deroga-

tory language in various communications was one of the

charges against him. He submitted his reply to the charge-

sheet on October 7, 1982. Part of the opening paragraph is

as under:

"You have become frustrated, lost balance of

mind and to cover the various irregularities

committed by you for example ..... You will

be prosecuted for levelling false charge sheet

and false charges against me. Coming to the

charge sheet with above reverence I have to

say as under."

On October 22, 1982 an enquiry officer was appointed to

enquire

433

into the charges against Sharma. He challenged the order of

suspension by way of Civil Writ Petition 661 of 1982 in the

Jammu & Kashmir High Court. The High Court stayed the sus-

pension by its order dated December 20, 1982. The order of

suspension having been stayed by the High Court it was

incumbent on Sharma to have joined duty. But inspite of

company's letters asking him to do so he remained absent.

Sharma filed Writ Petition 471/82, Writ Petition 129/83

and Letters Patent Appeal 24/83 for payment of his salary

and allowances for various periods which were granted by the

High Court.

It is also on record that while in service Sharma unsuc-

cessfully fought assembly elections on two occasions. He

filed his nomination papers for contesting elections to the

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Lok Sabha from Baramulla constituency. But the nomination

papers were rejected.

Regulation 16.14 of Jammu & Kashmir Industries Employees

Service Rules and Regulations before amendment was as under:

"The service of the permanent employee shall

be terminated by the company, if (a) his post

is abolished or (b) he is declared on medical

grounds to be unfit for further service after

giving three months' notice or pay in lieu

thereof. For similar reasons the service of a

temporary employee also be dispensed with

after giving him one month's notice or pay in

lieu thereof."

The above quoted regulation 16.14 was amended on April

20, 1983. Amended regulation is as under:

"16.14. the services of an employee shall be

terminated by the Company if:

(a) his post is abolished, or

(b) he is declared on medical grounds to be

unfit for further service, or

(c) if he remains on un-authorised absence,

or(d) if he takes part in active politics.

In the case of (a) and (b) above the services

shall be terminated after giving three months

notice to a permanent

434

employee and one month's notice to a temporary

employee or pay in lieu thereof.

In the case of (c) and (d) above the

services of an employee shall be terminated if

he fails to explain his conduct satisfactorily

within 15 days from the date of issue of

notice. The management shall be empowered to

take a decision without resorting to further

enquiries.

By order of the Board of Directors."

The company issued a show cause notice dated April 21,

1983 in terms of clause (c) of amended regulation 16. 14.

The notice was in the following terms:

"In compliance to the orders of the Hon'ble

High Court Your suspension was stayed till

further orders vide Order No. JKI/319/82 dated

21.12.82 issued vide endorsement No. Adm.(P)

80-65/4866 dated 21.12.82. From that date also

you have continuously remained absent unautho-

risedly from your duties. You are, therefore,

served this notice to show cause within a

period of 15 days as to why your services

should not be terminated under rules of the

Corporation."

No reply to the show cause notice was submitted by

Sharma. By an order dated June 14, 1983 the Managing Direc-

tor of the company terminated his service,. The termination

order is reproduced as under:

"Shri Pyare Lal Sharma Chemical Engineer,

Jammu and Kashmir Industries Limited has

remained on unauthorised absence continuously

from 21.12.82 (since the date of his suspen-

sion was stayed as per orders from the Hon'ble

High Court). Shri Sharma was served with a

notice under Jammu & Kashmir Industries Limit-

ed Employees Service Rules to show cause

within a period of 15 days as to why his

services should not be terminated. This notice

was served to him under registered post but

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the same was received back in this office and

later on delivered to him in person on 7.5.83

as per his request. Shri Sharma has failed to

explain his position.

It has now also been established that Shri

Sharma was

435

taking part in active politics during the

period of his un-authorised absence and has

filed nomination papers for contesting elec-

tion from 1-Baramulla Parliamentary Con-

stituency. Now that his unauthorised absence

as well as his taking part in the active

politics has been established, and in exercise

of the powers vested in the management under

Jammu & Kashmir Industries Employees Services

Regulations the services of said Shri Pyare

Lal Sharma Chemical Engineer J & K Industries

Limited are hereby terminated."

Sharma challenged the order of termination by way of

Writ Petition No. 70 of 1984 before the Jammu & Kashmir High

Court. Learned Single Judge by his judgment dated October

16, 1984 allowed the writ petition on three grounds.

The learned Judge found the impugned order violative of

Rules of Natural Justice as no opportunity to show cause was

afforded to Sharma in respect of the ground of taking part

in active politics. It was also held that the Board of

Directors having appointed Sharma, The Managing Director who

is subordinate authority could not terminate his services.

Finally, the learned Judge held regulation 16.14 to be

arbitrary and as such violative of Article 14 of the Consti-

tution of India.

The Letters Patent Bench of the High Court dismissed the

appeal of the company but denied back-wages to Sharma. The

Bench held that Sharma's services could not be terminated by

an authority subordinate to the authority which appointed

him. The Bench also found that either three months notice or

salary in lieu thereof under regulation 16.14 was mandatory.

The Division Bench did not agree with the other reasons

given by the learned Single Judge in support of his judg-

ment.

Mr. Pyare Lal Sharma appeared in person and argued his

case. He has been of no assistant to us. During the course

of arguments we suggested to Mr. Sharma to engage a counsel

which de declined. We also repeatedly offered to him to have

the services of a counsel engaged by the Court but he did

not agree and insisted on arguing the case himself.

From the pleadings of the parties, documents on the

record, the judgment of the learned Single Judge and of the

Letters Patent Bench

436

and from Sharma's arguments the following points arise for

our consideration:

1. Whether Regulation 16.14 is arbitrary

and as such ultra vires Article 14 of the

Constitution of India.

2. Whether three months' notice or pay in

lieu of the notice period was required to be

given under Regulation 16.14.

3. The termination order having been

passed by the Managing Director who was an

authority subordinate to the Board of Direc-

tors which appointed Sharma, the order was bad

on that ground.

4. Whether the impugned order is viola-

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tive of rules of natural justice so much so

that the ground of taking part in active

politics was not mentioned in the show cause

notice whereas it was relied upon in the

termination order.

5. Whether the period of absence, which

was prior to the date of coming into force of

the amended Regulation 16.14, could be taken

into consideration for invoking ground (c) of

the Regulation.

We see no arbitrariness in Regulation 16.14. The Regula-

tion has been framed to meet four different eventualities

which may arise during the service of a company employee.

Under this regulation services of an employee may be termi-

nated (a) if his post is abolished or (b) if he is declared

on medical grounds to be unfit for further service or (c) he

remains on unauthorised absence or (d) if he takes part in

active politics. In the case of (a) and (b) three months

notice to a permanent employee and one month notice to

temporary employee or pay in lieu thereof is to be given. In

case of (c) and (d) a show cause notice, to explain his

conduct satisfactorily, is to be given. So far as grounds

(a) and (b) are concerned there cannot be any objection.

When a post is abolished or an employee is declared medical-

ly unfit for further service the termination is the obvious

consequence. In the case of abolition of post the employee

may be adjusted in some other post if legally permitted.

Ground (c) has also a specific purpose. "Remains on un-

authorised absence" means an employee who has no respect for

discipline and absents himself repeatedly and without any

justification

437

or the one who remains absents for a sufficiently long

period. The object and purport of the regulation is to

maintain efficiency in the service of the company. The

provision of show cause notice is a sufficient safe-guard

against arbitrary action. Regarding ground (d) "acting

politics" means almost whole time in politics. Company job

and active politics cannot go together. The position of the

civil servants who are governed by Article 311 is entirely

different but a provision like grounds (c) and (d) in Regu-

lation 16.14 concerning the employees of companies/corpora-

tions/public undertakings is within the competence of the

management.

We do not agree with the Division Bench of the High

Court that three months' notice or pay in lieu thereof was

to be given to Sharma under Regulation 16.14. It is clear

from the plain language of the regulation that three months

notice or pay in lieu, is only required when termination is

under ground (a) or (b). Regarding (c) and (d), the regula-

tion provides for a 15 days notice to explain the conduct

satisfactorily and there is no requirement of any other

notice or pay in lieu thereof.

We may now take-up the third point. Sharma was appointed

as Chemical Engineer by the Board of Directors. The powers

of the Board of Directors to appoint officers of Sharma's

category were delegated to the Managing Director on Septem-

ber 12, 1974 and as such from that date the Managing Direc-

tor or became the appointing authority. Needless to say that

employees of the company are not civil servants and as such

they can neither claim the protection of Article 311(1) of

the Constitution of India nor the extension of that guaran-

tee on parity. There is no provision in the Articles of

Association or the regulations of the company giving same

protection to the employees of the company as is given to

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the civil servants under Article 311(1) of the Constitution

of India. An employee of the company cannot, therefore,

claim that he cannot be dismissed or removed by an authority

subordinate to that by which he was appointed. Since on the

date of termination of Sharma's services the Managing Direc-

tor had the powers of appointing authority, he was legally

competent to terminate Sharma's services.

The learned Single Judge allowed the writ Petition on

the fourth point though the same did not find favour with

the Division Bench. Grounds (c) and (d) in regulation 16.14,

exclusively and individually, are sufficient to terminate

the services of an employee. Once it is established to the

satisfaction of the authority that an employee

438

remains on unauthorised absence from duty, the only action

which can be taken is the termination of his services.

Similar is the case when an employee takes part in active

politics. The finding in the termination order regarding

taking part in active politics cannot be sustained because

no notice in this respect was given to Sharma but the order

of termination can be supported on the ground of remaining

unauthorised absence from duty. This Court in State of

Orissa v. Vidyabhushan Mohapatra, [1963] 1 Supp. SCR 648 and

Railway Board v. Niranjan Singh, [1969] 1 SCR 548 has held

that if the order can be supported on one ground for which

the punishment can lawfully be imposed it is not for the

courts to consider whether that ground alone would have

weighed with the authority punishing the public servant.

Thus there is no force in this argument.

This takes us to the last point which we have discovered

from the facts. Regulation 16.14 before amendment consisted

of only clauses (a) and (b) relating to abolition of post

and unfitness on medical ground. The company had no authori-

ty to terminate the services of an employee on the ground of

unauthorised absence without holding disciplinary proceed-

ings against him. The regulation was amended on April 20,

1983 and grounds (c) and (d) were added. Amended regulation

could not operate retrospectively but only from the date of

amendment. Ground (c) under which action was taken came into

existence only on April 20, 1983 and as such the period of

unauthorised absence which could come within the mischief of

ground (c) has to be the period posterior to April 20, 1983

and not anterior to that date. The show cause notice was

issued to Sharma on April 21, 1983. The period of absence

indicated in the show cause notice is obviously prior to

April 20, 1983. The period of absence prior to the date of

amendment cannot be taken into consideration. When prior to

April 20, 1983 the services of person could not be terminat-

ed on the ground of unauthorised absence from duty under

Regulation 16.14 then it is wholly illegal to make the

absence during that period as a ground for terminating the

services of Sharma. It is basic principle of natural justice

that no one can be penalised on the ground of a conduct

which was not penal on the day it was committed. The date of

show cause notice being April 21, 1983 the unauthorised

absence from duty which has been taken into consideration is

from December 20, 1982 to April 20, 1983. Whole of this

period being prior to the date of amendment of regulation

16.14 the same could not be made as a ground for proceeding

under ground (c) of Regulation 16.14. The notice served on

the appellant was thus illegal and as a consequence the

order of termination cannot be sustained and has to be set

aside.

439

When the termination order is set aside by the courts

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normally the servant becomes entitled to back-wages and

other consequential benefits. This case has a chequered

history. From 1976 onwards there has been continuous litiga-

tion and mistrust between the parties. The facts which we

have narrated above go to show that Sharma has equally

contributed to this unfortunate situation. In view of the

facts and circumstances of this case we order that sixty per

cent of the back-wages be paid to Sharma. Money already

received by Sharma under orders of this Court or the High

Court shall be adjusted and the balance paid to him. If the

money already paid to Sharma is more than what we have

ordered then there shall be no recovery from him.

Civil Appeal 3154/85 is allowed to the extent indicated

above, Civil Appeal 3155/85 filed by the company is dis-

missed. C.M.P. 1213/ 88 is dismissed as infructuous. There

shall be no order as to costs.

R.N.J.

440