CENTRAL BANK OF INDIAversusC. BERNARD

                       CENTRAL BANK OF INDIA
A
                                 v.
                            C. BERNARD
             '.
                              OCTOBER 9, 1990

B          [S. RATNAVEL PANDIAN, A.M. AHMADI AND
                  K. JAYACHANDRA REDDY, JJ.]

          Labour Law-Bank Employee-Chargesheet-Departmental
    Enquiry-Bank Official appointed as Enquiry Officer and Disciplinary
    A uthority--'-Superannuation of Enquiry Officer-Continuance and con-
e   clusion of Enquiry after superannuation and imposition of punish-
    ment-Held Enquiry Officer's order is incompetent and without juris-
    diction-Absence of bias prejudice or ma/a [ides of the Enquiry Officer
    cannot cure the defect as to his competence~--De facto doctrine held
    inapplicable.

D          The respondent, a bank employee, was chargesheeted for claim-
    ing L-F-C on the basis of fake travel receipts. The Bank appointed one
    of its officers as Enquiry Officer as well as Disciplinary Authority who
    conducted the departmental enquiry against the respondent. However,
    during the pendency of the enqtniry the Enquiry Officer retired from
    service. Notwithstanding his retirement from service he proceeded with
E   the enquiry and concluded the same against the respondent. The
    respondent participa!ed in the enquiry without raising any objection
    against the continuance of the said Enquiry by the said Enquiry Officer.
    After giving an opportunity to the respondent to be heard on the question
    of punishment the Enquiry Officer{Disciplinary Authority imposed the
    punishment of discharge. The respondent r.Jed a departmental appeal
F   which was dismissed. Thereafter, the respondent f'ded a writ petition in
    the High Court challenging the .order of discharge on the ground that
    the order passed by the Enquiry Officer was without jurisdiction.

          A single judge of the High Court allowed the Writ Petition,
    quashed the order of punishment with all consequential benefits to the
G   respondent on the ground that after retirement the Enquiry Officer was
    nobody in the hierarchy of authorities to impose punishment on the
    delinquent-employee and hence his order imposing punishment was
    incompetent and without jurisdiction.

         Against the order of the single judge the Bank preferred a Letter
H   Patent Appeal before a Division Bench of the High Court which was
    dismissed.
                                     196
                             C.B.J. v. C. BERNARD                             197

      In appeal to this Court it was contended on behalf of the appellant
Bank; (i) that the decision of the Enquiry Officer could be saved on the            A
basis of de facto doctrine because (a) his initial appointment being valid
his actions and decisions could not be invalidated by his subsequent
retirement since he continued to function as a de facto Enquiry Officer;
(b) even otherwise the Bank could have appointed a non-official as
Enquiry Officer; (ii) that since the High Court quashed the punishment              B
not on merits but on a mere technicality, it erred in directing payment
of all consequential benefits to the respondent; and (iii) since the
respondent submitted· to the jurisdiction of the Enqujry Officer and
there was no prejudice caused to him be was estopped from raising the
contention as to the competence or jurisdiction of the Enquiry Officer
for the first time in the Writ Petition.
                                                                                    c
       Allowing the appeal in part, IBis .Court,

       HELD: 1. The de facto doctrine has to requisit~s, namely, (i) the
possession of the office and the performance of the duties attached
thereto, and (ii) colour of title, that is, apparent right to the office and        D
acquiescence in the possession thereof by the public. According to this
doctrine the acts of officers de facto performed within the sphere of
their assumed official authority, in the interest of the public or third
parties and not for their own interest, are generally held valid and
binding as if they were performed by de jure officers. This doctrine can
be invoked in cases where__there is an appointment to office which is               E
defective; but notwithstanding the defect to the title of the office, the
decisions made by such a de facto officer clothed with the powers and
functions of the office would be as efficacious as those made by a de jure
officer. The same would, however, not be true of a total intruder or
usurper of office. The doctrine envisages that acts performed de facto
by officers within the scope of their assumed official authority are to be          F
regarded as binding as if they were performed by officers de ju re. While
the de facto doctrine saves official acts done by an officer whose
appointment is found to be defective the private parties to a litigation
are precluded from challenging the appointment in any collateral pro-
ceedings. But the doctrine does not come to the rescue of an intruder or usur-
per or a total stranger to the office. Obviously the doctrine caii have no appli-   G
cation to the case of a person who is not the holder of an office but is merely
a bank employee, for that matter an ex""1lployee. [202E-F; 200F-G; 204A-C]

      I.I In the instant case, the Enquiry Officer can hardly be
described as a person occupying or being in possession of an office to
w!lich certain dmies affecting the members of the general public can be             H
    198         SUPREME COURT REPORTS                 [ 1990] Supp. 2 S ..C.R.

    said to be attached. TherefOre in the facts and circumstances of this case
A   the de facto doctrine can have no application. [203H; 2MA; 201G]

         Pu/in Behari Das v. King Emperor, [l9ll-l2] 16 Cal. Weekly
    Notes 1105; lmmedisetii Ramkrishnaiah Sons v. State of Andhra
    Pradesh, A.I.R. 1976 A.P. 193; Jai Kumar v. State, [1968] All. L.J. 877;
B   Gokaraju Rangaraju v. State of A.P., [1981] 3 S.C.R. 474; referred to.

          Abbe de Fountaine decided in 1431; cited.

          1.2 An Enquiry Officer need not be an officer of the hank: even a       •
    third party can be appointed an Enquiry Officer to enquire into the
    conduct of an employee. But there can be no doubt that a non-official
c   cannot act as a Disciplinary Authority and pass an order of punishment
    against the delinquent employee. Therefore, where punishment is
    imposed by a person who has no authority to do so the very fOundation
    on which the edifice is built collapses and with and it falls the entire
    edifice. It is a case more or less akin to a case tried by court lacking in
D   inherent jurisdiction. Absence of bias, prejudice or ma/a fides, is of no
    consequence so far as the question of competence of the Enquiry Officer
    is concerned. [202B; 2MD-Ei

          Saran Motors (P.) Ltd. v. Vishwanath & Anr., [1964] 2 L.L.J. 139;
    referred to.
E
         Delhi Cloth and General Mills Co. Ltd. v. Labour Court, Tis
    Hazari & Ors., [1970] 1 L.L.J. 23; Held inapplicable.

          2. 1n the instant case, the impugned order of punishment was
    quashed not because the merits of the case so demanded but because the
p   technical plea of incompetence succeeded. Therefore, the High Court
    was right in quashing the impugned order of punishment but having
    regard to the special facts and circumstances of the case, it should not
    have ordered payment of 'all consequential benefits' flowing from the
    declaration that the impugned ordet was bad in law. The order of the
    High Court is modified to the extent that the respondent will be paid
o   50% of the consequential benefits and not all the consequential benefits.
    Except for this modification, the rest of the order of the High Court will
    stand. [205E-G1

          CIVIL APPELLATE JURISDICTION: Civil Appeal No. 3071
    of 1988.
H
                        C.B.I. v. C. BERNARD [AHMADI, J.l                199

          From the Judgment and Order dated 8.4.1988 of the Karnataka
                                                                               A
     High Court in Writ Appeal No. 563 of 1988.

         Narayana B. Shetye, D.N. Misra and O.C. Mathur for the
     Appellant.

           S.R. Bhatt for the Respondent.                                      B

           The Judgment of the Court was delivered by

            AHMADI, J. The short question which arises in this appeal by
     special leave is whether the departmental enquiry entrusted to and
     conducted by a Bank official stands vitiated if the said official proceeds C
      with the enquiry and concludes the same after his superannuation .
      during the pendency of the enquiry? The High Court of Kamataka has
     held that such an enquiry is incompetent and without jurisdiction and,
     therefore, null and void."The facts giving rise to fois appeal, briefly
     stated, are as under:
                                                                                D
           The respondent C. Bernard while serving as a Relieving Head
     Cashier in the K,G. Road Branch of the Bank in Bangalore city availed
     of 15 days leave from April 17, 1978 to May 'I, 1978 and was allowed an
     advance of Rs.2,500 on April ·1, 1978 under LFC to be adjusted later
     on his submitting the LFC Bill. He submitted a bill for Rs.2;80b on
     May 5, 1978 along with a stamped cash receipt purported to have been E
     issued by. M/s. Shri Manju Travels of Bangalore and claimed reim-
     bursement for the same. The said bill was passed by the bank on May
      15, 1978 but subsequent investigations revealed that the firm of M/s.
     Shri Man ju Travels was a spurious one which indulged in issuing fake
     travel receipts. Thereupon the respondent was served with a Memo
     dated August I, 1978 by the Divisional office of the Bank calling for F
     his explanation. A Jetter was also addressed on the same day to M/s.
_,   Shri Manju Travels, Bangalore requesting them to furnish the details
     of the persons who travelled and the amounts received by the said
     firm. No reply was received from the said firm but the respondent sent
     a reply on August 10, 1978 which was not found to be satisfactory.
     Some correspondenc~ ensued between the respondent and the appel- G
     !ant in this connection but finally the respondent was served with the
     charge-sheet dated October 12, 1978 which was followed by a depart-
     mental enquiry. It is not necessary to go into the details in regard to
     proceedings at the departmental enquiry but it would be sufficient to
     state that therespondent participated in the departmental enquiry till
     it was completed by the enquiry officer Shri U .B. Menon.                  H
    200         SUPREME COURT REPORTS                 [1990] Supp. 2 S.C.R.

          Paragraph 9.14 of the Memorandum of Bi-partite Settlement
A
    dated October 19, 1966 empowers the Chief Executive Officer, etc., pf
    the Bank to decide which officer(s) would be empowered to h<ild
    enquiry and take disciplinary action in the case of each office or
    estblishment. Accordingly Shri U.B. Menon, Special Officer, was
    ~ppointed an Enquiry Officer under the Chief Executive Officer's
B   Order dated January 9, 1979, which reads as under:

                "Pursuant to the powers vested in the Executive Director
                by the Chairman and Managing Director of the Bank, as
              '·per his office Order dated 20th December, 1978, authoris-
                ing him to appoint Enquiry Officers and Appellate Autho-
                rities under the provisions of Chapter 19 of the Bi-partite
c               Settlement dated 19th October, 1966, the undersigned is
                pleased to appoint Shri U .B. Menon, Special Officer, to
                work as an Enquiry Officer, to hold and conduct depart-
                mental enquiries against the members of the staff governed
                by the provisions of the Award and Bi-partite Settlement,
D               and to pass necessary orders under the provisions of Chap-
                ter 19 of the Bi-partite Settlement dated 19th October,
                 1966."

    By a subsequent circular dated January 17, 1979 all offices of the Bank
    were informed about the appointment. Shri U.B. Menon was inti-
    mated about the same by the Assistant General Manager's letter dated
                                                                                   r
E
    January 23, 1979. The said Enquiry Officer conducted the dep&rtmen-
    tal enquiry against the respondent. However, during the pendency of
    the departmental enquiry he retired from service on January 31, 1979.
    Notwithstanding his retirement he continued to function as an Enquiry
    Officer and concluded the enquiry against the respondent by the end
F   of 1979. He then gave ff!l opportunity to the respondent to be heard on
    the question of punishment and then passed the impugned order of
    discharge on January 14, 1980. The respondent's departmental appeal
    was also dismissed on June 17, 1980. The respondent did not raise any
    objection against the continuance of the enquiry by the said Shri U .B.
    Menon at any time during the pendency and till the disposal of the
G   departmental appeal preferred by him. Suffice~it tolsay that he raised
    this objection for the first time in Writ Petition No. 18140 of 1980 filed
    against the impugned order of discharge in the High Court.

           A learned Single Judge of the High Court by his order dated
    January 18, 1988 came tc!>j,the conclusion that on the retirement of Shri
H   U ·Il· Menoil '.he was nol!lod)l_iri the hierarchy of authorities' to impose
                   C.B.I. v. C. BERNARD [AHMADI, J.]                   201
                               I


punishment on the respondent and hence the order imposing punish-
                                                                             A
ment was clearly incompetent and without jurisdiction. The ·argument
that since the impugned order of discharge got merged in the appellate
order, the initial defect, if any, stood removed, was repelled by the
learned Judge on the ground that 'as the original order was without
jurisdiction or competence, there was nothing for the Appellate
Authority to confirm'. The learned Single Judge, therefore, allowed          B
the writ petition; quashed the impugned order of punishment and
directed that the respondent be paid all consequential benefits. The
appellant preferred a Letters .Patent Appeal against the said order of
the learned Single Judge. The Division Bench of the High Court which
heard the appeal dismissed it by a one line order: 'no ground for
interference is made out'. It is against this order that the appellant has   C
approached this Court under Art. 136 of the Constitution.

      Shri Narain Shetye, the learned counsel for the appellant strongly
urged that the High. Court ought not to have permitted the respondent
to question the compefence or jurisdiction of Shri U.B. Menon to act
as an Enquiry. Officer as well as a Disciplinary Authority after his         D
superannuation since he had participated in the enquiry throughout
without a demur. According to him, by conduct the respondent was
estopped from raising such a contention for the first time in a writ
petition, more so because he had submitted to the jurisdiction of Shri
U.B. Menon and there was no prejudice caused on him on that
account. Lastly, he submitted that even otherwise the appellant could        E
have appointed a non-official as an Enquiry Officer and therefore his
decision could be saved on the de facto doctrine.

      Taking the last submission first we think that in the facts and
circumstances of this case the de facto doctrine can have no applica-
tion. Under paragraph 19.14 of the by-partite agreement the Chief            F
Executive Officer was entitled to decide which officer should be
empowered to hold an enquiry and take disciplinary action in the case
of each office or establishment. Under this paragraph only an officer
of the bank could be empowered to hold an enquiry and take discipli-
nary action against a delinquent. The names of officers so empowered
were required to be published on the bank's notice board. Accord-            G
ingly, Shr.i U .B. Menon was appointed an Enquiry Officer/Discipli-
nary Authority under paragraph 19.14 of the bi-partite agreement
while he was still in service. It is indeed surprising that an officer who
was due to retire within a few days only was chosen to act as an
Enquiry Officer and Disciplinary Authority by the order dated
January 9, 1979. Shri U.B. Menon was intimated about his appoint-            H
    202         SUPREME COURT REPORTS                I 1990] Supp. 2 S.C.R.
    ment by the letter of January 23, 1979, i.e., hardly a week before his
A   superannuation on January 31, 1979. After his retirement from service
    he proceeded with the enquiry and concluded it by the end of 1979.
    The respondent was then served with a second show cause notice on
    the question of punishment and thereafter the impugned order of dis-
    charge was passed on January 14, 1980. There is nothing on the record
B   to show that any formal decision was taken by the appellant to con-
    tinue the services of Shri U.B. Menon as an official of the bank. Shri
    Shetty is right when he contends that an Enquiry Officer need not be
    an officer of the bank; even a third party can be appointed as Enquiry
    Officer to enquire into the conduct of an employee. See: Saran Motors
    (P) Ltd. v. Vishwanath & Anr., [1964] 2 LLJ 139. But there can be no
    doubt that a non-official cannot act as a Disciplinary Authority and
c   pass an order of punishment against the delinquent-employee. It is for
    this reason that the learned Single Judge of the High Court observed
    that on retirement Shri U.B. Menon was nobody in the hierarchy of
    authorities to impose punishment on the ctelinquent. He therefore,
    held that the order of punishment was clearly incompetent and without
D   jurisdiction. The learned counsel for the appellant submitted that since
    the initial appointment of Shri U.B. Menon was valid, his actions and
    decisions could not be invalidated by his subsequent retirement.
    According to him he continued to function as an Enquiry Officer de
    facto and hence his actions and decisions were saved. The de facto          i
E
    doctrine has two requisites, namely, (i) the possession of the office and
    the performance of the duties attached thereto, and (ii) colour of title,   r
    that is, apparent right to the office and acquiescence in the possession
    thereof by the public. According to this doctrine the acts of officers de
    facto performed within the sphere of their assumed official authority,
    in the interest of the public or third parties and not for their own
    interest, are generally held valid and binding as if they were performed
F   by de jure officers. This doctrine dates back to the case of Abbe de
    Fountaine decided way back in 1431 to which reference was made by
    Sir Asutosh Mookerjee, J. in Pu/in Behari Das v. King Emperor,
    I 1911-12] 16 Calcutta Weekly Notes 1105 at 1120. Mookerjee, J. held
    that as the complaint was made after complying with section 196,
    Criminal Procedure Code, by the order of or under authority from
G   Local Government which was de facto, the proceedings were valid. On
    the same principle it was further held that the Court of Sessions,
    assuming it was not the holder of a de jure office, was actually in
    possession of it under the colour of title which indicated the acquie-
    scence of the public in its actions and hence its authority could not be
    collaterally impeached in the proceedings arising from the conviction
H   of Pulin and his co-accused. Again, in Immedisetti Ramkrishnaiah Sons
                  C.B.I. v. C. BERNARD [AHMADI, J .]                  203

v. State of Andhra Pradesh, AIR 1976 A.P. 193, the Government
                                                                             A
nominated nine persons on a Market Committee which nomination
was later set aside by the High Court. However, before the High Court
pronounced its judgment, the Market Committee had functioned as if it
had been properly constituted. Between the date of its constitution
and the date of the High Court decision it had taken several decisions,
issued notifications, etc., which were the subject-matter of challenge       B
on the ground that its constitution was ab initio bad in law. Chinnappa
Reddy, J. relying on the observations of Mookerjee, J., in Pulin's
case concluded that the acts of the Market Committee de facto
performed within the scope of its assumed official authority, in the
interest of the public or third persons and not for his own benefit are
generally as valid and binding as if they were performed by a de Jure
Committee. The Allahabad High Court in Jai Kumar v. Staie, [ 1968)
                                                                             c
All. L.J, 877 upheld the judgments of the District Judges whose
appointments were later struck down by this Court on the principle
that the acts of officers de facto are not to be questioned becapse of the
want of legal authority except by some direct proceeding instituted for
the purpose by the State or by someone claiming the office de Jure, or       D
except when the person himself attempts to build up some right, or claim
some privilege or benefit by reason of being the officer which he claims
to .be. In all other cases, the acts of an officer de facto an; valid and
effectual, while he is suffered to retain the office, as though he were an
officer by right and the same legal consequences will flow from them
for the protection of the public and of the third parties. This Court in     E
GokaraJu Rangaraju v. State of A.P., [1981) 3 SCR 474=AIR 1981 SC
 1473 was required to consider the question of tile effect of the declara-
tion of this Court holding the appointment of an Additional Sessions
Judge invalid on judgments pronounced by him prior to such .declara-
tion. This Gour! observed that the de facto· doctrine is founded on good
sense, sound policy and practical experience. It is aimed at the preven-     F
tion of public and private mischief and the protection of public and
private interest. It avoids endless confusion and needless chaos. It,
therefore, seems clear to us that the de facto doctrine can be invoked
in cases where there is an appointment to office which is defective; but
notwithstanding the defect to the title of the office, the decisions
made by such a de facto officer clothed with the powers and functions        G
of the office would be as efficacious as those made by a de iure officer.
The same would, however, not be true of a total intruder or usurper of
office.
      In our view, the submission of Shri Shetty based on the de facto
doctrine is clearly misconceived. Shri U .B. Menon can hardly be             H
described as a person occupying or being in possession of an office to
    204          SUPREME COURT REPORTS                 I 1990] Supp. 2 S.C.R.
    which certain duties affecting the members of the general public can be
A
    said to be attached. The de facto doctrine, as explained earlier, envis-
    ages that acts performed de facto by officers within the scope of their
    assumed official authority are to be regarded as binding as if they were
    performed by officers de jure. While the de facto doctrine saves official
    acts done by an officer whose appointment is found to be defective the
B   private parties to a litigation are precluded from challenging the
    appointment in any collateral proceedings. But the doctrine doe' not
    come to the rescue of an intruder or usurper or a total stranger to the
    office. Obviously the doctrine can have no application to the case of a.
    person who is not the holder of an office but is merely a bank emp-
    loyee, for that matter an ex-employee. We, therefore, see no merit in
    this contention.
c
        True it is that the respondent did not attribute any bias or ma/a
  [ides to the Enquiry Officer nor did he complain that he was in any
  manner prejudiced on account of the said Enquiry Officer conducting
  the domestic enquiry but that will not cure the defect as to his compe-
D tence. Where punishment is imposed by a person who has no authority
  to do so the very foundation on which the edifice is built collapses and
  with and it falls the entire edifice. It is a case more or less akin to a case
  tried by a court lacking in inherent jurisdiction. We, are. therefore, of
  the opinion.that absence of bias, prejudice or mala [ides, is of no
  consequence so far as the question of competence is concerned. The
  two cases which were cited at the bar (i) Delhi Cloth and General Mills
E Co., Ltd. v. Labour Court, Tis Hazari & Ors., I 1970] 1 LLJ 23 and (ii)
  Saran Motors, (supra) also have no application to the special facts and
  circumstances of this case.
          Shri Shetye next submitted that if a third party non-official can
    validly be appointed an Enquiry Officer, though not Disciplinary
F   Authority, his report upto the stage preceding the issuance of a second
    show-cause notice could be saved because both sides to the proceed-
    ings had not raised any objection to the continuance of the enquiry by
    the said Enquiry Officer and therefore the High Court ought to have
    remitted the matter to the competent Disciplinary Authority to take a
    fresh decision based on the report of the Enquiry Officer. To put it
G   differently, according· to the learned counsel for the appellant, the
    High Court should have remanded the matter with a direction that the
    competent Disciplinary .Authority will proceed to dispose of the
    departmental enquiry from the stage of the report submitted by the
    Enquiry Officer. We would have considered it necessary to examine
    this submission had the delinquent not retired in the meantime on
H   August 21, 1986. The High Court pronounced its Judgment thereafter
                   C.B.J. v. C. BERNARD {AHMADI, J.l                 205

on January 18, 1988. No useful purpose, therefore, can be served by
adopting the procedure suggested by Shri Shetye as the respondent           A
had admittedly retired from service in 1986 and if the order imposing
punishment is quashed he would ordinarily have to be paid his wages
etc., upto the date of his retirement. We, therefore, do not think that,
in the facts and circumstances of this case, the course suggested by Shri
Shetye can be usefully adopted.                                             B
       Lastly, Shri Shetye submitted that in any event the respondent
succeeded in getting the order of punishment quashed on a mere tech-
nicality and that too on the contention belatedly raised before the
High Court for the first time and, therefore, the High Court was in
error in directing payment of all consequential benefits. We think
there is merit in this contention. If the objection was raised at the       c
earliest possible opportunity before the Enquiry Officer the appellant
could have taken steps to remedy the situation by appointing a compe-
tent officer to enquire into the charges before the respondent's retire-
ment from service. It is equally true that the penalty has not been
quashed on merits. On the contrary, if one were to go by the charge
levelled against the respondent and the reply thereto one may carry         D
the impression that the respondent had made the claim on the basis of
the fake receipt; whethe'r the respondent himself was duped or not
would be a different matter. The fact, however, remains that the
impugned order of punishment has to be quashed not because the
merits of the case so demand but because the technical plea of incom-
petence succeeds .. In the circumstances, we think that the ends of         E
justice would be met if instead of directing 'all consequential benefits'
the appellant is ordered to pay '50% of the consequential benefits' to
which the respondent would be entitled on superannuation. For the
above reasons, we are of the opinion that the High Court was right in
quashing the impugned order of punishment but we think having
regard to the special facts and circumstances pointed out earlier, it       F
should not have ordered payment of 'all consequential benefits' flow-
ing from the declaration that ·the impugned order was bad in law. We,
therefore, modify this part of the order by substituting the words 'fifty
percent' in place of the word 'all' in the penultimate paragraph of the
learned Single Judge's order. To put the matter beyond the pale of
doubt we clarify that the respondent    :willbe paid 50% of the conse-      G
quential benefits and not all the consequential benefits. Except for this
modification, the rest of the order of the High Court will stand. The
appeal will stand allowed to the above extent but, in the facts and
circumstances of this case, we think the parties should be directed to
bear their own costs.
                                                                            J-1
T.N.A.                                           Appeal allo·Ned partly.