W.P.(C)-8888/2004 Page 1 of 32

* IN THE HIGH COURT OF DELHI AT NEW DELHI

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May, 2026

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# CNR No : DLHC010296812004

+ W.P.(C) 8888/2004

SHRI K.P. SHARMA

S/O SHRI PARMANAND SHARMA.

R/O H-32, SECTOR 39,

NOIDA-201 301, (U.P.) .....Petitioner

Through: Mr. Abhay Singh, Ms. Veena Singh,

Ms. Vindhya Singh and Mr. Prakash

Gautam, Advocates.

versus

M/S. INDIAN OIL CORPORATION LTD.

THROUGH ITS CHAIRMAN

SCOPE COMPLEX CORE -2.

7, INSTITUTIONAL AREA. LODHI ROAD.

NEW DELHI- 10003. .....Respondents

Through: Mr. V. N. Koura, Ms. Paramjeet Benipal,

Mr. Shaurya Dahiya and Mr. Aditya

Sharma, Advocates.

CORAM:

HON'BLE MS. JUSTICE NEENA BANSAL KRISHNA

J U D G M E N T

1. The Writ Petition has been filed under Article 226 of the Constitution

of India, by the petitioner, seeking the issuance of an appropriate writ, order

or direction for quashing and setting aside the impugned Order of Dismissal

W.P.(C)-8888/2004 Page 2 of 32

dated 27.04.2004, passed by Sh. M.S. Ramachandran, Chairman of the

Respondent, M/s Indian Oil Corporation Limited (hereinafter referred to as

"IOCL"), whereby the Petitioner has been dismissed from service with

immediate effect, and for the grant of all consequential service and

monetary benefits including full back wages, service benefits and

compensation.

2. The facts in brief are that the Petitioner, Sh. K.P. Sharma, was

employed with the Respondent Corporation as a Mechanical Engineer and

was, over the course of his service spanning approximately twenty years,

promoted to the post of Chief Manager in Grade 'F', vide Appointment

Letter No. P/65537 dated 13.04.1998 issued by Sh. A.K. Arora, Director

(Refineries), and posted as Chief Projects Manager at the Panipat Refinery,

of the Respondent Corporation.

3. The Respondent Corporation's Panipat Refinery comprised, inter alia,

of a Hydrocracker Unit (hereinafter referred to as "HCU") and a Hydrogen

Generation Unit (hereinafter referred to as "HGU"). The mechanical

completion of both Units was accomplished on 30.11.1998, whereafter pre-

commissioning activities commenced.

4. During the pre-commissioning stage, the Process Licensor, UOP-

USA, whose commissioning engineer was present at site, found that the

flange joints in the high-pressure section of the Hydrocracker plant, had

been boxed up with grease. This was a defect of a serious nature relating to

the safety of the plant, since the presence of grease between the flange joints

could form carbon at the operating conditions of the Hydrocracker plant,

which operated at 175 bar pressure and temperatures exceeding 650°C,

leading to the risk of fire and explosion. The Process Licensor accordingly

W.P.(C)-8888/2004 Page 3 of 32

recommended, on an urgent basis, that all flange joints in the high-pressure

section be opened, the damaged metallic ring gaskets replaced, and the

entire section re-boxed, prior to commissioning.

5. A High Powered Committee (hereinafter referred to as "HPC") was

constituted at the Panipat Refinery, comprising Sh. S.S. Saini, Executive

Director, Sh. H.K. Bakshi, General Manager (Projects), and Sh. R. Shankar,

Chief Finance Manager. The HPC exercised the financial powers of a

Director. Given the urgency of the work, which was further compounded by

the proposed visit of the Prime Minister to inaugurate the Refinery, the HPC

directed that available contractors at site be contacted to undertake the work

immediately.

6. Three contractors, namely M/s Dodsal, M/s L&T and M/s Petron,

were approached, but each expressed inability to take up the work on

account of pre-occupation with commissioning activities of other units. M/s

Gayatri Engineering Company (hereinafter referred to as "M/s GEC"), a

Vadodara-based engineering company which was already engaged in

catalyst-loading work at the Hydrogen Unit and whose performance was

stated to be satisfactory, agreed to mobilise and undertake the work

immediately.

7. Since finalisation of rates was likely to take time and the work was of

an urgent nature, M/s GEC was permitted to commence the work with effect

from 08.01.1999, on the basis of verbal approval of the HPC, which was

subsequently ratified by Process Note dated 07.01.1999. The Process Note

was signed by eight officers, namely Sh. Parimal Kumar, DM(ML), the

Petitioner Sh. K.P. Sharma, CPJM, Sh. A.K. Marchanda, DGM (Materials),

Sh. M.R. Verma, DGM (Technical Services), Sh. R. Shankar, CFM, the

W.P.(C)-8888/2004 Page 4 of 32

SM(PJ), Sh. H.K. Bakshi, GM (Projects), and Sh. S.S. Saini, Executive

Director.

8. An estimate of Rs.60.34 lakhs was prepared by Sh. A.K. Kulshreshtha,

Senior Mechanical Engineer (SMLE), on the basis of a fax copy of a

Purchase Order No. VCM/PVC:H2155:VMA dated 02.04.1996, purportedly

placed by M/s Finolex Industries Ltd., on M/s GEC for a similar job. The

estimate was checked by Sh. A.K. Marchanda, DGM (Materials), Sh. M.R.

Verma, DGM (Technical Services), Sh. R. Shankar, CFM, Sh. H.K. Bakshi,

GM (Projects), and approved by Sh. S.S. Saini, Executive Director, Panipat

Refinery.

9. On 03.03.1999, the HPC approved the proposal for award of the work

to M/s GEC for Rs.60,35,728/- on a single-tender post-facto basis, after

comparison and negotiation of the quoted rates, which were found to be

more or less matching with the estimate. A Fax of Acceptance was conveyed

to M/s GEC on 04.03.1999 by Sh. V.K. Rai, Chief Engineering Services

Manager. The Petitioner, Sh. K.P. Sharma, was designated as the

Engineer-in-Charge for the work.

10. On 09.08.1999, the Petitioner submitted his resignation to the

Respondent Corporation, giving three months' notice, as required under his

service conditions. The resignation was not accepted by IOCL and no

reason was assigned for the non-acceptance.

11. After expiry of the Notice period, the Petitioner informed the

Respondent Corporation by letter dated 30.11.1999 that it would not be

possible for him to continue with IOCL w.e.f. 01.12.1999. The Respondent

Corporation, by telegrams dated 11.09.1999 and 06.12.1999 and by

registered letters dated 29.12.1999 and 08.02.2000, directed the Petitioner to

W.P.(C)-8888/2004 Page 5 of 32

report for duty.

12. The Petitioner thereupon instituted Civil Writ Petition No. 725 of

2000 before this Court on 08.02.2000, asserting that his resignation had

automatically come into effect, on expiry of the notice period. The said Writ

Petition was admitted on 30.10.2000, and remained pending.

13. Meanwhile, a Vigilance Inquiry was conducted into the alleged

irregularities in the award of the contract to M/s GEC, culminating in a

Report dated 29.09.1999 submitted by the Chief Vigilance Officer of IOCL,

which recorded certain discrepancies and found the Petitioner primarily

responsible for the lapses.

14. On the basis of the said Report, the Respondent Corporation lodged a

complaint against the Petitioner, Sh. K.P. Sharma, and Sh. D.R. Patel, a

partner of M/s GEC, on 30.05.2000. FIR No. 147 under Sections 420, 467,

471 and 120-B of the Indian Penal Code, 1860 was registered on

19.06.2000, at Police Station Matlauda. The charge-sheet was filed on

30.04.2001 before the Judicial Magistrate, First Class, Panipat, additionally

invoking Sections 7, 12 and 13(d) of the Prevention of Corruption Act, 1988.

No FIR was lodged against the remaining seven officers involved in the

processing and approval of the award.

15. Departmental Charge-sheets dated 30.08.2000 were thereafter

issued against the remaining seven officers, namely Sh. S.S. Saini,

Executive Director, Sh. H.K. Bakshi, GM (Projects), Sh. R. Shankar, CFM,

Sh. A.K. Marchanda, DGM (Materials), Sh. M.R. Verma, DGM (Technical

Services), Sh. Parimal Kumar, DM(ML) and Sh. A.K. Kulshreshtha, SMLE.

16. On 02.12.2002, the Judicial Magistrate, First Class, Panipat returned

the criminal charge-sheet for presentation before the Special Court, for want

W.P.(C)-8888/2004 Page 6 of 32

of jurisdiction to try offences under the Prevention of Corruption Act, and

the matter was transferred to the Court of the Additional Sessions Judge,

Panipat. On 22.02.2003, the Ld. Public Prosecutor moved an Application

under Section 319 of the Code of Criminal Procedure, 1973, before the

Court of Sh. H.P. Singh, Ld. Additional Sessions Judge, Panipat, seeking to

summon the remaining seven officers as accused, on the ground that there

was sufficient evidence against them.

17. The Respondent Corporation thereupon, filed Criminal Misc. No.

10726 of 2003 under Section 482 Cr.P.C. before the High Court of Punjab

and Haryana on 10.03.2003 and obtained a stay of the proceedings, thereby

preventing the hearing of the said Application.

18. A departmental Charge-Sheet No. P/65537 dated 06.09.2000 was

issued against the Petitioner, alleging gross misconduct in connection with

the award of the work to M/s GEC for Rs.60,35,728/-, alleging inter alia

that the Petitioner had, at his directions, caused the preparation of an

estimate of Rs.44.78 lakhs in the first week of March 1999, but backdated to

06.01.1999; that a fresh estimate of Rs.60.34 lakhs was thereafter, prepared

on the basis of a forged fax of a Purchase Order dated 02.04.1996,

purportedly issued by M/s Finolex Industries Ltd. to M/s GEC; that the first

page of the proposal was substituted to reflect the enhanced estimate; that

the proposals for negotiation and award were likewise, backdated; and that

the Petitioner had unduly favoured M/s GEC with dishonest intention and

for personal gain, causing huge financial loss to the Corporation.

19. The Charge-sheet alleged violations of Rules 7(1), 7(2), 7(5), 7(9),

7(29) and 7(30), as well as Rule 6(1)(i), (ii) and (iii) of the Conduct,

Discipline & Appeal Rules, 1980 (hereinafter referred to as "the CDA

W.P.(C)-8888/2004 Page 7 of 32

Rules").

20. The Departmental Inquiry was conducted by the Inquiry Officer Sh.

Ashok Lokhanpal, Commissioner for Departmental Inquiries, nominated by

the Central Vigilance Commission. The Presenting Officer produced 48

prosecution documents PEX.1 to PEX.48 and examined 15 prosecution

witnesses PW.1 to PW.15. The Petitioner produced 9 defence documents

DEX.1 to DEX.9 and examined 5 defence witnesses, DW.1 to DW.5.

21. The Inquiry Officer submitted his Report, on 30.04.2003. The

findings of the Inquiry Officer, Sh. Ashok Lokhanpal, charge-wise, were as

follows:

(a) Charge 1 — that the work was awarded to M/s GEC at

exorbitant rates: the Inquiry Officer found that the

Petitioner had an active role and that over-enthusiasm in

the award was visible, but held the allegation only "partly

proved."

(b) Charge 2 — that the estimate of Rs.44.78 lakhs was

backdated: the backdating was found established. However,

the Inquiry Officer expressly recorded that "there are no

malafides attributable on account of such backdating." The

allegation was held "partly proved."

(c) Charge 3 — that the estimate was substituted from

Rs.44.78 lakhs to Rs.60.34 lakhs: the Inquiry Officer found

that the higher estimate had been prepared on the basis of

the forged fax received by the Petitioner, and his

involvement in procuring and relying upon the forged

document was found established. However, the Inquiry

W.P.(C)-8888/2004 Page 8 of 32

Officer expressly recorded that "regarding substitution of

the figure of Rs.44.78 lakhs by Rs.60.34 lakhs by Sh.

Kulshreshtha or the CO could not be proved as there was

no evidence to show clear involvement of these officials."

The allegation was held "partly proved."

(d) Charge 4 — that the negotiation proposal dated

15.02.1999 was backdated: held "proved."

(e) Charge 5 — that the award proposal dated 03.03.1999

was backdated: held "proved."

(f) Charge 6 — non-utilisation of the estimate prepared for

the M/s Technocrates Construction Services contract dated

12.11.1998 for Rs.11,27,616/-: the Inquiry Officer found

that the scope of work was different and held the allegation

"not proved."

(g) Charge 7 — that the Petitioner had procured the

unrealistic estimate with dishonest intent and for personal

gain, and had documents manipulated and backdated at his

direction: considered in three parts. On dishonest intent to

favour M/s GEC, held "partly proved" on the same basis as

Charge 3. On manipulation of documents at the Petitioner's

direction, held "not proved", since the senior officers had

signed "in their own right" and were "not prone to receive

any directions from him." On backdating at the Petitioner's

direction, held "not proved", the backdating being found a

collective exercise across the entire chain of officers rather

than one directed by the Petitioner alone.

W.P.(C)-8888/2004 Page 9 of 32

(h) Charge 8 — that the Petitioner had manipulated the

forged Purchase Order dated 02.04.1996 and thereby

caused huge financial loss: the Inquiry Officer found that

the fax was indeed forged, as established by PW.13, Sh.

M.S. Arora, but expressly recorded that "there is no direct

evidence provided by the prosecution to show such direct

complicity of the CO with M/s GEC." On financial loss, the

Inquiry Officer held that "the statement of financial loss to

IOC is considered purely hypothetical." The estimate,

though initiated at the Petitioner's instance, was routed

through and signed by five senior officers, none of whom

verified its basis, and "the CO cannot thus be held fully and

completely responsible for this lapse." The allegation was

held "partly proved."

22. The Inquiry Officer thereafter examined the statutory

misconduct provisions of the CDA Rules attracted on the above factual

findings on the Charges, and recorded the following:

(i) Rule 7(1) — fraud and dishonesty (arising from

Charges 3, 7 and 8): held "partly proved", since "the

prosecution has not provided any direct evidence to prove

fraud and dishonesty."

(ii) Rule 7(2) — illegal gratification (arising from Charge

7): held "not proved", as no documentary or oral evidence

established receipt of any bribe.

(iii) Rule 7(5) — conduct prejudicial to the interests of the

Corporation (arising from Charges 4, 5 and 8): held

W.P.(C)-8888/2004 Page 10 of 32

"proved."

(iv) Rule 7(9) — negligence in performance of duty

(arising from Charges 4, 5 and 8): held "proved."

(v) Rule 7(29) — acts subversive of discipline (arising from

Charge 7): held "not proved."

(vi) Rule 7(30) — abetment of misconduct (arising from

Charge 7): held "partly proved."

(vii) Rule 6(1)(i), (ii) and (iii) — the omnibus conduct rule

(covering the overall conduct): held "partly proved."

23. The Inquiry Officer observed that all officers, namely Sh. A.K.

Kulshreshtha, SMLE, and Sh. Parimal Kumar, DM(ML), the Petitioner, Sh.

A.K. Marchanda, Sh. M.R. Verma, Sh. R. Shankar, Sh. H.K. Bakshi, and

Sh. S.S. Saini, Executive Director, had signed the relevant documents in the

same backdates. The Inquiry Officer accordingly, held that the Petitioner's

conduct was "not thus viewed as a sole case of a conduct unbecoming of a

responsible officer" and that the charge stood "diluted" to the extent of

the shared institutional responsibility.

24. On 09.03.2004, the Competent Disciplinary Authority, Sh. M.S.

Ramachandran, Chairman of IOCL, forwarded the Inquiry Officer's

findings to the Petitioner and sought a written Representation, within ten

days. The Petitioner, Sh. K.P. Sharma, submitted his Representation on

12.04.2004, contending inter alia that his nearly twenty years of

unblemished service demonstrated his integrity; that he possessed no

financial power to award the contract; that the Fax had been obtained

pursuant to the HPC's own directions, as confirmed by Sh. R. Shankar, CFM

and Convener of the HPC; that the moment the forgery came to his notice,

W.P.(C)-8888/2004 Page 11 of 32

he had stopped all payments to M/s GEC; and that the Inquiry Officer's own

findings did not sustain the charges of fraud, dishonesty, financial loss or

sole responsibility. The Petitioner specifically identified the contradiction

between the Inquiry Officer's findings and the conclusions proposed to be

drawn from them.

25. In the impugned Order dated 27.04.2004, the Competent

Disciplinary Authority, Sh. M.S. Ramachandran, Chairman of IOCL,

observed as under:

“ORDER

This has reference to the Charge-sheet of even number

dated 6.9.2000 and the subsequent Departmental Inquiry

held in this connection against you. The Inquiry Officer has

submitted report vide letter dated 10.6.03 and the same was

forwarded to you vide letter of even reference dated 9.3.04.

Your representation dated 12.04.04 against the findings of

the Inquiry Officer is available on record.

I have carefully gone through the Report/Findings of the

Inquiry Officer along with the proceedings of the inquiry

and your representation dated 12.04.04. I find that you were

given full and fair opportunity for conducting your defence

by examining the witnesses in the Inquiry and the inquiry

was conducted by following the principles of natural justice.

From your representation, I find no new facts have been

brought out for my consideration.

Having applied my mind to the facts and circumstances of

the case, I agree with the findings of the Inquiry Officer and

find that:

1. You played an active role in award of the work to M/s

GEC at an exorbitant rate.

W.P.(C)-8888/2004 Page 12 of 32

2. The proposal dated 7.1.99 was actually prepared during

the first week of March 1999 but was signed in back date.

The proposal note dated 15.2.99 proposing price

negotiation and the proposal note dated 3.3.99 for award of

work to M/s GEC have also been signed in back date.

3. You were found to be involved in substituting the estimate

of Rs.44.78 lakh by Rs.60.34 lakh suggesting fraud &

dishonesty on your part. Moreover, this estimate was based

on a forged document and you relied on this document

without checking its veracity.

4. You had also not stated the reasons for non-availability /

non-applicability of the SOR in the instant case before

suggesting approval of the proposal dated 7.1.99 for award

of work in favour of M/s GEC.

5. You got the estimates prepared by SMLE and DMMI by

changing the basis to the said forged document of M/s

Finolex faxed by M/s GEC, which amounts to encouraging

abetment of acts of omission and commission.

By the above acts of omission and commission, you have

failed to maintain absolute integrity and devotion to duty in

contravention of Rule 6(1) (i) & (ii) and acted in a manner

unbecoming of a public servant in contravention of Rule

6(1) (iii) of the CDA Rules, as OCL applicable to you. You

had also committed fraud & dishonesty in connection with

the business and property of the Corporation under Rule

7(1) and acted in a manner prejudicial to the interests of the

Corporation under Rule 7(5) of the CDA Rules. Further,

you had been negligent in performance of duties under Rule

7(9) and had also encouraged abetment of acts amounting

to misconduct under Rule 7(30) of the CDA Rules.

Taking into consideration the facts and circumstances of the

case, acts of omissions & commissions and the gravity of

proven charges and acts of misconduct, I impose the penalty

of “Dismissal” upon you with immediate effect.

W.P.(C)-8888/2004 Page 13 of 32

You are advised to collect your dues from Panipat Refinery

after obtaining necessary clearances.

(M.S. Ramachandra)

Chairman

Competent Disciplinary Authority”

26. The Disciplinary Authority, thus, imposed the penalty of dismissal

from service upon the Petitioner, with immediate effect.

27. The Petitioner has challenged the impugned Order on the

grounds that:

(i) the Disciplinary Authority, Sh. M.S. Ramachandran, while recording that he

agreed with the findings of the Inquiry Officer, proceeded to record findings

materially more adverse than those actually recorded by the Inquiry Officer,

Sh. Ashok Lokhanpal, on three separate charges, without recording reasons

for such departure and without affording the Petitioner an opportunity to

meet it, in violation of Rule 32(2) and Rule 34 of the CDA Rules;

(ii) that the Petitioner was the only officer dismissed out of eight charge-sheeted

for the very same transaction, while the remaining officers were either

promoted or given minor penalties;

(iii) that the Chairman, who under the Schedule to the CDA Rules is the

designated Appellate Authority for officers of the Petitioner's grade, passed

the impugned Order as the Disciplinary Authority, thereby extinguishing the

Petitioner's right of appeal since no new Appellate Authority was ever

notified;

(iv) that the penalty of dismissal is shockingly disproportionate to the

misconduct actually found proved, having regard to the Inquiry Officer's

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express findings that no direct evidence of fraud or dishonesty existed, that

illegal gratification was not proved, that the claim of financial loss was

purely hypothetical, and that the Petitioner could not be held fully and

completely responsible; and

(v) that the impugned Order is illegal, arbitrary, discriminatory and vitiated by

mala fide, in violation of Articles 14, 16 and 21 of the Constitution.

28. Per contra, the Respondent Corporation has stated in its Counter-

Affidavit, affirmed by Sh. N.K. Parmar, Chief Employee Relations

Manager, Refineries Division, that the present Writ Petition is misconceived

and not maintainable; the relationship between the Petitioner and the

Corporation being purely contractual. It is contended that IOCL is a

Company registered under the Companies Act, 1956, with no statutory

powers or functions, and that the CDA Rules are purely contractual in

character.

29. It is further contended that the Petitioner had suppressed material

facts, had taken employment abroad in Bahrain, had expressed no interest in

rejoining the Corporation, and had failed to exhaust the alternative remedy

of Appeal to the Board of Directors, under Rule 38 of the CDA Rules.

30. On merits, the Respondent submitted that the Petitioner, as Chief

Project Manager, held a position of trust and was responsible for overseeing

construction and commissioning; that the Petitioner had entered into an

arrangement with M/s GEC at exorbitant rates, ignoring prevailing site rates

on the basis of which the value of the work should not have exceeded

Rs.2,33,902/-; that the Petitioner had procured manipulated Regret Letters

from contractors, caused the proposals and estimates to be backdated and

W.P.(C)-8888/2004 Page 15 of 32

substituted, and placed the forged fax on record; and that this resulted in

an overpayment of approximately Rs.38.33 lakhs.

31. The Counter-Affidavit further alleged for the first time, that the

Petitioner had arranged to receive ten percent of the total contract

value as his personal share. This allegation did not form part of the

Charge-sheet dated 06.09.2000, was never investigated in the Departmental

Inquiry, and found no mention in the Inquiry Report dated 30.04.2003. The

Inquiry Officer had, to the contrary, expressly held the charge of illegal

gratification under Rule 7(2), as "not proved."

32. As to the treatment of the remaining seven officers, the Respondent

stated that all eight officers had been charge-sheeted, and that on the basis

of the Inquiry Report and in consultation with the CVC, major penalty was

imposed upon three officers and minor penalty upon the remaining four,

namely Sh. R. Shankar, Sh. M.R. Verma, Sh. Parimal Kumar and Sh. A.K.

Kulshreshtha, for procedural lapses. These four officers were subsequently

promoted, in the ordinary course. The Respondent submitted that no officer

had been exonerated and that the differential treatment disclosed no

selective victimisation.

33. The Petitioner, in his Rejoinder Affidavit, reiterated his averments

and specifically contested the preliminary objection as to maintainability,

contending that IOCL is a Public Sector Undertaking and an instrumentality

of the State, within the meaning of Article 12 of the Constitution.

34. On the alternative remedy, the Petitioner submitted that, as per the

Schedule to the CDA Rules, the Disciplinary Authority for Officers in Grade

D, E and F in the Refineries Division is the Director (Refineries), and the

Appellate Authority is the Chairman. Although Rule 35 was invoked to

W.P.(C)-8888/2004 Page 16 of 32

appoint the Chairman, Sh. M.S. Ramachandran, as Common Disciplinary

Authority for all eight charge-sheeted officers, the Respondent Corporation

failed to amend or notify a new Appellate Authority, in consequence. The

Petitioner was therefore, denied any effective right of Appeal, since the

same person who had passed the impugned Order of Dismissal was the one

designated to hear his appeal.

35. The Petitioner further alleged that after his resignation and

commencement of employment with M/s Lurgi India Ltd., New Delhi, as

Deputy General Manager (Projects), Mr. Thomas Antony, DGM (HR),

Headquarters, IOCL, wrote a letter dated 31.01.2000 to Sh. Onkar Gupta,

Director, M/s Lurgi India, stating that the Petitioner had been "absconding

from his duties from 23rd December, 1999" and that "some vigilance

enquiries are going on against Shri K.P. Sharma in connection with some

purported fraud." The Petitioner contended that on the date of this Letter,

the Vigilance Inquiry Report had already been submitted on 29.09.1999, and

that the Letter contained false information, which caused him to lose his

employment at Lurgi India, forcing his resignation on 08.02.2000.

36. The Petitioner further contended that the Disciplinary Authority had

adopted findings which were directly contradicted by the Inquiry Officer's

own Report, and that the impugned Order had been passed with a pre-

determined mind, in violation of Rule 32(2) and Rule 34 of the CDA Rules

and the principles of natural justice.

37. Learned counsel for the Petitioner, in his Written Submissions, has

asserted that the impugned Order dated 27.04.2004 is illegal, arbitrary,

discriminatory and passed with mala fide intentions; that the Petitioner had

no say or role in awarding the contract as neither did he possess the financial

W.P.(C)-8888/2004 Page 17 of 32

power nor did he award the contract to M/s GEC; that the Inquiry Officer

himself concluded that no loss had been caused to IOCL and that the forged

fax originated from M/s GEC without any proven direct complicity of the

Petitioner; and that the Petitioner is a law-abiding senior citizen with no

gratuity or pension, having twice suffered heart attacks in 2010 and 2019.

Reliance was placed on Articles 14, 16 and 21 of the Constitution.

38. In the Additional Written Submissions dated 21.12.2023, the

Petitioner supplemented his case with the submission that the rectification

work was to be borne by the Process Licensor, UOP-USA, and not by IOCL,

and that the costs were in any event recovered from the Process Licensor;

that the M/s Petron contract for similar work on the same Hydrocracker

Plant, awarded through independent tendering by the Contract Cell, was at a

rate 16.70% higher than the M/s GEC awarded rate; and that the Petitioner

had not been paid since 01.12.1999, although the Order of Dismissal was

passed only on 27.04.2004.

39. Per contra, the learned counsel for the Respondent, in his Written

Submissions, has contended that the Writ Petition is not maintainable for

enforcement of contractual rights. Reliance is placed on Bareilly

Development Authority v. Ajai Pal Singh, (1989) 2 SCC 116; State of U.P. v.

Bridge & Roof Co., (1996) 6 SCC 22; Kerala State Electricity Board v.

Kurien E. Kalathil, (2000) 6 SCC 293; and National Highways Authority of

India v. Ganga Enterprises, (2003) 7 SCC 410. It is further submitted,

relying on the Constitution Bench judgment in Sirsi Municipality v. Cecelia

Kom Francis Tellis, AIR 1973 SC 855, that Article 226 cannot enforce a

contract of employment, except where Article 311 is contravened, a

mandatory statutory obligation is breached, or the principles of natural

W.P.(C)-8888/2004 Page 18 of 32

justice are violated.

40. On interference with findings, reliance is placed upon Indian Oil

Corporation Ltd. v. Ashok Kumar Arora, JT 1997(2) SC 367 and Apparel

Export Promotion Council v. A.K. Chopra, JT 1999(1) SC 61.

41. On proportionality, reliance is placed upon Union of India v. Ex.

Constable Ram Karan, (2022) 1 SCC 373 and Indian Oil Corporation Ltd.

v. Rajendra D. Harmalkar, 2022 SCC OnLine SC 486, to contend that the

Court will not interfere with the punishment, unless it shocks the conscience

of the Court.

Submissions heard and record perused.

42. Briefly stated, the Petitioner, Sh. K.P. Sharma, then serving as Chief

Project Manager in Grade 'F' at the Panipat Refinery, was charge-sheeted

along with seven other officers, for irregularities in the award of pre-

commissioning work to M/s GEC for Rs.60,35,728/-.

43. The Inquiry Officer, Sh. Ashok Lokhanpal, of the eight factual

Charges, held two "proved" (Charges 4 and 5, both relating to backdating),

five "partly proved" (Charges 1, 2, 3, 7 and 8) and one "not proved"

(Charge 6). As a legal consequence of these factual findings, under the

statutory misconduct provisions of the CDA Rules, Rule 7(5) (conduct

prejudicial to the Corporation) and Rule 7(9) (negligence in performance of

duty) were held "proved"; Rules 7(1) (fraud and dishonesty) and 7(30)

(abetment of misconduct) were held "partly proved", and Rules 7(2) (illegal

gratification) and 7(29) (acts subversive of discipline) were held as "not

proved."

44. The Disciplinary Authority, Sh. M.S. Ramachandran, Chairman of

W.P.(C)-8888/2004 Page 19 of 32

IOCL, recorded that he agreed with the Inquiry Officer's findings and

imposed the penalty of dismissal from service.

I. Whether the Respondent-IOCL is an instrumentality of the State and

whether the present Writ Petition is maintainable:

45. The first question that arises is whether this Writ Petition is

maintainable. Learned counsel for the Respondent has urged that the

relationship between the Petitioner and the Respondent Corporation is

purely contractual, that the CDA Rules are not statutory in character, and

that the Petitioner's remedy lies in a civil suit.

46. This submission does not withstand scrutiny. The Petitioner does not

seek enforcement of the terms of his contract of employment or damages for

breach of it. He seeks quashing of the Order of Dismissal on the ground of

violation of natural justice and of Articles 14, 16 and 21 of the Constitution.

47. The Respondent Corporation is a Public Sector Undertaking and has

been expressly recognised by the Supreme Court as an "organ of the State"

or an "instrumentality of the State" within the meaning of Article 12 of the

Constitution. In Mahabir Auto Stores & Ors. v. Indian Oil Corporation &

Ors., (1990) 3 SCC 752, the Supreme Court specifically held that, in the

facts and circumstances of that case, the respondent-company, Indian Oil

Corporation, was an organ of the State or an instrumentality of the State, as

contemplated under Article 12 of the Constitution. The Supreme Court

further held that the action of such a State instrumentality is amenable to

scrutiny under Article 14 and must satisfy the requirements of

reasonableness and non-arbitrariness.

48. The objection that the Petitioner's relationship with the Respondent is

W.P.(C)-8888/2004 Page 20 of 32

contractual, therefore, cannot by itself conclude the question of

maintainability. The Supreme Court in ABL International Ltd. v. Export

Credit Guarantee Corporation of India Ltd., (2004) 3 SCC 553, has

recognised that the mere existence of a contractual relationship does not

constitute an absolute bar to the exercise of writ jurisdiction against an

instrumentality of the State where the impugned action is amenable to

judicial review on public law grounds.

49. In the present case, the Petitioner is not seeking enforcement of a

purely contractual term; he assails an order of dismissal passed in

disciplinary proceedings on the grounds of violation of the prescribed

procedure, principles of natural justice and the constitutional requirement of

non-arbitrariness.

50. The preliminary objection to maintainability is, accordingly,

rejected.

II. Whether the Petitioner had an efficacious alternative remedy of Appeal

under Rule 38 of the CDA Rules:

51. The next question is whether the Petitioner ought to have been

relegated to the appellate remedy, under Rule 38 of the CDA Rules.

52. Rule 38 provides:

"38. (i) An employee may appeal against an order imposing

upon him any of the penalties specified in Rule 29 or

against the order of suspension referred to in Rule 26. The

appeal shall lie to the authority specified in the schedule.

(ii) An appeal shall be preferred within 60 days from the

date of communication of the order appealed against. The

appeal shall be addressed to the Appellate Authority

W.P.(C)-8888/2004 Page 21 of 32

specified in the schedule and submitted to the authority

whose order is appealed against."

53. Under the Schedule to the CDA Rules, for Officers in Grade D, E and

F in the Refineries and Pipelines Division, the authorities are specified as

follows:

Category of Employees Disciplinary Authority Appellate Authority

Officers in Grade D, E

and F

Director Chairman

54. From the Rules, it emerges that for the Officers for whom the

Disciplinary Authority, is the Chairman, the Appellate Authority is the

Board of Directors. The Petitioner, Sh. K.P. Sharma, was an officer in

Grade 'F'. Under the Schedule, the Disciplinary Authority for him was the

Director and the Appellate Authority was the Chairman. Rule 42 of the

CDA Rules addresses this question. It reads as under:

"42. The authorities specified in the schedule shall be

prescribed and notified, as may be required from time to

time, with the approval of Director/Chairman."

55. Rule 42 CDA Rules contemplates that the authorities specified in the

Schedule, are to be prescribed and notified, from time to time.

56. The however, was passed by the Chairman, Sh. M.S. Ramachandran,

who acted as Disciplinary Authority and the impugned Order dated

27.04.2004 was made, in exercise of disciplinary jurisdiction, in terms of

Rule 35.

57. The basis on which the Chairman Sh. M.S. Ramachandran assumed

W.P.(C)-8888/2004 Page 22 of 32

the role of Disciplinary Authority, is Rule 35 of the CDA Rules, which

provides for common proceedings and reads as under:

"35. Where two or more employees are concerned in a case,

the disciplinary authority, or an authority higher than it,

who is competent to impose a penalty on such employees

may make an order directing that disciplinary proceedings

against all of them may be taken in a common proceedings

and specified authority may function as the disciplinary

authority for the purpose of such common proceedings."

58. Since all eight officers were charge-sheeted in the same case, Rule 35

was invoked to appoint the Chairman as the Common Disciplinary

Authority, for the purpose of proceedings. Accepting that Rule 35 validly

conferred the powers of the Disciplinary Authority upon the Chairman, the

consequence must be noted. The Chairman, who under the Schedule is

designated as the Appellate Authority for officers of the Petitioner's grade,

has passed the impugned Order of Dismissal, as Disciplinary Authority. The

question that arises is, what then happens to the Petitioner's right of Appeal.

59. In the present case, however, no material has been placed on record to

show that consequent upon the Chairman being appointed as the Common

Disciplinary Authority under Rule 35, any other authority was prescribed or

notified as the Appellate Authority, as contemplated under Rule 38. The

Schedule designate the Chairman as the Appellate Authority for officers in

Grade D, E and F. Thus, on the material placed before this Court, there was

no separately designated Appellate Authority to whom the Petitioner could

have preferred an Appeal against the Order, passed by the Chairman

himself.

60. The result is that, in terms of Rule 38, an Appeal against the

W.P.(C)-8888/2004 Page 23 of 32

impugned Order would have been addressed to the Chairman as the

Appellate Authority, as specified in the Schedule, whose Order was under

challenge. The same person cannot be the deciding Authority as well as the

Appellate Authority The same authority would thus, be also the Appellate

Authority, which is against the tenets of Service Jurisprudence..

61. In the absence of any material on record showing that an Appellate

Authority was designated before whom the Petitioner could file an Appeal,

it cannot be held that there was any effective appellate remedy, in terms of

Rule 38, was available to the Petitioner.

62. Additionally, the rule excluding writ jurisdiction where an alternative

remedy exists, is a rule of discretion and not one of compulsion. The

Supreme Court in Harbanslal Sahnia v. Indian Oil Corporation Ltd., (2003)

2 SCC 107, following Whirlpool Corporation v. Registrar of Trademarks,

(1998) 8 SCC 1, held that the High Court may exercise its writ jurisdiction

notwithstanding the availability of an alternative remedy, inter alia, where

the petition raises a question involving violation of the principles of natural

justice.

63. The present case involves such a challenge to the decision-making

process, in addition to the fact that the efficacious appellate remedy itself

has not been shown to be not available.

64. The objection is accordingly, rejected.

III . Scope of Judicial Review:

65. Before turning to the impugned Order, it is necessary to state the

scope within which this Court exercises its power of judicial review. The

Supreme Court in B.C. Chaturvedi v. Union of India, (1995) 6 SCC 749,

W.P.(C)-8888/2004 Page 24 of 32

held that judicial review is not an Appeal from a decision, but a Review of

the manner in which the decision was made. The Court does not sit as an

appellate authority over the findings of the Disciplinary Authority and does

not reappreciate evidence. The Court is concerned to see whether the inquiry

was held by a competent authority; whether the rules of natural justice were

complied, and whether the findings are based on some evidence.

66. This Court has, accordingly, not to go into the sufficiency of the

evidence before the Inquiry Officer, Sh. Ashok Lokhanpal. The questions

which fall for examination are:

(i) whether the Disciplinary Authority, Sh. M.S. Ramachandran,

in recording findings on three separate charges that were

materially more adverse than the conclusions actually

reached by the Inquiry Officer, complied with the

requirements of Rule 32(2) and Rule 34 of the CDA Rules;

(ii) whether the impugned Order relies upon any matter that was

not part of the Departmental Charge-sheet dated

06.09.2000 or the Inquiry record; and

(iii) whether the penalty of dismissal is proportionate to the

misconduct actually found established."

(i). Whether the Disciplinary Authority departed from the findings of the

Inquiry Officer without following the prescribed procedure:

67. Turning now to the impugned Order dated 27.04.2004 and its co-

relation with the findings recorded in the Inquiry Report dated 30.04.2003,

three critical departures are evident, which are set out in seriatim below.

W.P.(C)-8888/2004 Page 25 of 32

Sr. No. Subject Inquiry Officer's Finding

Disciplinary Authority's

Finding in the Impugned

Order

1.

Substitution of the

estimate from

Rs.44.78 lakhs to

Rs.60.34 lakhs

"regarding substitution of the figure

of Rs.44.78 lakhs by Rs.60.34 lakhs

by Sh. Kulshreshtha or the CO

could not be proved as there was no

evidence to show clear involvement

of these officials."

"was found to be involved in

substituting the estimate of

Rs.44.78 lacs by Rs.60.34

lacs suggesting fraud and

dishonesty on your part."

2.

Fraud and

dishonesty under

Rule 7(1)

"the prosecution has not provided

any direct evidence to prove fraud

and dishonesty" — charge held only

"partly proved."

"had also committed fraud

and dishonesty in connection

with the business and

property of the Corporation

under Rule 7(1)."

3.

Abetment under

Rule 7(30)

"could be partially construed as

misconduct" — charge held only

"partly proved."

"encouraged abetment of

acts of omission and

commission."

68. In each of the three matters set out above, an allegation which the

Inquiry Officer had either found not established for want of evidence or held

W.P.(C)-8888/2004 Page 26 of 32

only "partly proved" with express caveats, was treated by the Disciplinary

Authority as fully established against the Petitioner. In none of the three

allegations, did the Disciplinary Authority record any disagreement with the

Inquiry Officer's finding, furnish reasons for the departure, or afford the

Petitioner an opportunity to meet the proposed departure.

69. Equally significant is the findings of the Inquiry Officer, which

the impugned Order does not address.

70. The Inquiry Officer, at paragraph 5.16 of his Report, held that the

claim of financial loss to the Corporation was "purely hypothetical." The

impugned Order does not address this finding at all, notwithstanding that it

bears directly on the gravity of the misconduct and the proportionality of the

penalty.

71. It bears emphasis that the Petitioner, Sh. K.P. Sharma, placed these

very contradictions before the Disciplinary Authority, in his statutory

Representation dated 12.04.2004, quoting the specific findings of the

Inquiry Report and pointing out that those findings did not support the

conclusions the Disciplinary Authority proposed to draw. The impugned

Order responds to that Representation only with the general recital that "no

new facts have been brought out for my consideration."

72. A Representation that identifies with precision, findings the

Disciplinary Authority, cannot be brushed aside by merely stating that the

Representation raised nothing new, when the legal infirmities in the

reasoning process itself, had been specifically highlighted.

73. Rule 32(2) and Rule 34 of the CDA Rules are central to the

determination of this question. Rule 32(2) reads as under:

W.P.(C)-8888/2004 Page 27 of 32

"32. (2) The disciplinary authority shall if it disagrees with

the findings of the inquiring authority on any charge, record

its reasons for such disagreement and record its own

findings on such charge, if the evidence on record is

sufficient for the purpose."

74. Rule 34, the corresponding provision governing communication of

orders, provides:

"34. Orders made by the disciplinary authority under Rule

31 or Rule 33 with regard to its findings on each charge

shall be communicated to the employee concerned who shall

also be supplied with a copy of the inquiry report, if any.

Explanation: Where an inquiry is held by an inquiring

authority appointed by the disciplinary authority and the

disciplinary authority disagrees with any or all the

findings of the inquiring authority on each of the charges,

orders of the disciplinary authority will also state the

reasons for his disagreement with the finding of the

inquiring authority."

75. The requirement embodied in these provisions, was recognised as a

principle of natural justice, in Punjab National Bank v. Kunj Behari Misra,

(1998) 7 SCC 84, where the Supreme Court held that a Disciplinary

Authority proposing to disagree with an Inquiring Authority's findings, must

give the delinquent employee a further opportunity to represent against the

proposed departure.

76. The Disciplinary Authority, Sh. M.S. Ramachandran, did not record

that he disagreed with the Inquiry Officer's findings. He recorded that he

agreed, but recorded the findings which were materially different from

those that were actually reached the Inquiry Officer. This is not a case of a

Disciplinary Authority openly disagreeing and recording reasons, which

W.P.(C)-8888/2004 Page 28 of 32

Rule 32(2) permits. This is a case of a Disciplinary Authority claiming to

agree, recorded contradictory findings, which apparently is misreading of

the conclusions of the findings of the Inquiry officer, which forecloses even

the procedural safeguard that Rule 32(2) provides.

77. The impugned Order is accordingly, vitiated for non-compliance

with Rule 32(2) and Rule 34.

(ii) Whether the impugned Order relies upon any matter that was not part

of the Departmental Charge-sheet dated 06.09.2000 or the Inquiry

Record:

78. Further, the Respondent Corporation in its Counter-Affidavit alleged

for the first time, that the Petitioner had arranged to receive ten percent of

the total contract value, as his personal share. This allegation did not form

part of the Charge-sheet dated 06.09.2000, was never investigated in the

departmental inquiry, was never put to the Petitioner, and found no mention

in the Inquiry Report dated 30.04.2003. The Inquiry Officer had, to the

contrary, expressly held the charge of illegal gratification under Rule 7(2) as

"not proved."

79. It is a foundational principle of administrative law, stated in Mohinder

Singh Gill v. Chief Election Commissioner, (1978) 1 SCC 405, that the

validity of an Order must ordinarily be tested on the reasons contained in the

Order itself and cannot be supplemented in judicial proceedings by reasons

which did not form part of the decision-making process.

80. The basis for such allegation, may be the Criminal Charge-Sheet that

came to be filed against the petitioner. However, an allegation of this

W.P.(C)-8888/2004 Page 29 of 32

gravity, which was never put to the delinquent officer and never tested,

cannot be relied upon to sustain the impugned Order or to aggravate the

misconduct for the purpose of determining proportionality. Pertinently, the

criminal trial is still pending with no final decision.

81. This allegation can therefore, be not taken into consideration for any

purpose, in the present Writ Petition.

(iii). Whether the penalty of dismissal is disproportionate:

82. The question that next arises is whether the penalty of dismissal, is

proportionate to the misconduct actually found established.

83. Rule 29 of the CDA Rules provides a graded scale of penalties,

divided into two categories. The Minor Penalties, at clauses (a) to (e), range

from Censure at the lightest end to Reduction to a lower stage in the time-

scale of pay for a limited period at the heavier end. The Major Penalties, at

clauses (f) to (i), range from Reduction to a lower stage for a specified

period, through Reduction to a lower grade or post and Removal from

service, up to Dismissal at clause (i), which is the ultimate penalty in the

scale. The Petitioner was visited with the most severe penalty of Dismissal,

under clause (i).

84. The standard which governs interference with the quantum of

punishment is not whether the Court would itself have imposed the same

penalty, but whether the penalty is so disproportionate as to shock the

conscience of the Court, a standard developed in Ranjit Thakur v. Union of

India, (1987) 4 SCC 611.

85. The findings of the Inquiry Officer in respect of Charges, was that the

W.P.(C)-8888/2004 Page 30 of 32

allegation of illegal gratification and the alleged substitution of the estimate

from Rs.44.78 lakhs to Rs.60.34 lakhs was not proved for want of any

documentary or oral evidence. The non-utilisation of the earlier M/s TCS

estimate was not proved, as the scope of work being found different. The

alleged substitution of the estimate from Rs.44.78 lakhs to Rs.60.34 lakhs

"could not be proved as there was no evidence to show clear involvement"

of the Petitioner. The claim of financial loss to the Corporation was held

"purely hypothetical." The allegation of manipulation of documents at the

Petitioner's direction, was held "not proved", the charged officers having

signed "in their own right" and being "not prone to receive any directions

from him."

86. What stood established against the Petitioner, the backdating of the

negotiation proposal dated 15.02.1999 and the award proposal dated

03.03.1999, and the failure to verify the forged Finolex fax, which were held

"proved."

87. The Inquiry Officer did not, however, find the Petitioner to be the sole

author of the irregularities. The negligence in not verifying the forged

document was also not attributable to the Petitioner alone. The estimate

received through Finolex fax, was routed through and signed by the same

five senior officers without independent verification, and the Inquiry Officer

expressly held, thus "the CO cannot thus, be held fully and completely

responsible for this lapse." The Petitioner's conduct was "not thus viewed

as a sole case of a conduct unbecoming of a responsible officer", and the

charge under Rule 6(1) was held "diluted" to the extent of the shared

institutional responsibility.

88. Therefore, the only allegations proved against the Petitioner, was the

W.P.(C)-8888/2004 Page 31 of 32

shared negligence and institutional responsibility. No allegation of bribe or

illegal gratification, has been proved.

89. It is well settled that the punishment must correspond to the

misconduct actually established in the disciplinary proceedings, and cannot

be sustained by relying upon allegations which were not proved in the

inquiry or by attributing to the Petitioner a degree of responsibility which

the Inquiry Officer expressly declined to attribute to him.

90. The significant aspect in the present case, is that in respect of the

same transaction, four of the remaining seven officers, namely Sh. R.

Shankar, Sh. M.R. Verma, Sh. Parimal Kumar and Sh. A.K. Kulshreshtha,

who also were sharing the same charges of procedural lapses, as shared

negligence and the institutional responsibility, in handling the Project and

were characterised by the Respondent as having committed procedural

lapses, were visited with minor penalties and were subsequently, promoted

in the ordinary course.

91. The decision of the Supreme Court in Punjab & Sind Bank v. Raj

Kumar, 2026 INSC 313 also explained the principle that differential

punishment among co-delinquents does not, by itself, amount to

discrimination, particularly where their rank, responsibility or individual

role differs.

92. The question here is not whether the Petitioner was necessarily

required to receive the same punishment as the other officers, but what

emerges from the aforesaid discussion is the discriminatory and

unwarranted extreme punishment of Dismissal, merely because he was the

junior most in the hierarchy of the Charged officers who were held

guilty of the same misconduct. The penalty of dismissal from service had

W.P.(C)-8888/2004 Page 32 of 32

no rational and proportionate relationship to the gravity of that misconduct

actually found proved against the petitioner. It is grossly disproportionate

to the misconduct established on the record.

Conclusion:

93. In view of the foregoing discussion, the impugned Order of Dismissal

dated 27.04.2004 cannot be sustained and is, accordingly, set aside. Having

regard to the nature and extent of the misconduct proved against the

Petitioner, the finding of shared institutional responsibility, and the penalty

imposed upon the co-officers involved in the same transaction for the

procedural lapses found against them, the penalty of dismissal imposed

upon the Petitioner is substituted with the minor penalty under Rule 29 of

the CDA Rules.

94. The Respondent Corporation shall give effect to the substituted

penalty and carry out the consequential pay fixation and computation of the

service and retiral benefits that become due to the Petitioner consequent

upon such substitution and according to law. The Petitioner shall, however,

not be entitled to any back wages for the intervening period.

95. The aforesaid consequential benefits shall be computed and released

by the Respondent Corporation within a period of three months from the

date of receipt of a copy of this judgment.

96. The Writ Petition is allowed, in the above terms. Pending

applications, if any, are disposed of accordingly.

(NEENA BANSAL KRISHNA)

JUDGE

SEPTEMBER 7, 2026/va/RS