FOOD CORPORATION OF INDIA, HYDERABAD AND ORS.versusA. PRAHALADA RAO AND ANR.

 A        FOOD CORPORATION OF INDIA, HYDERABAD AND ORS.
                                      v.
                          A. PRAHALADA RAO AND ANR.

                                 NOVEMBER 1, 2000

B                   [M.B. SHAH AND D.P. MOHAPATRA, JJ.]


           Service law:

           Food Corporation of India (Staff) Regulation, 1971: Regulation
c 60(/)(b).
            Minor penalty-Awarding of-Detailed enquiry-Holding of-
      Necessity-Minor penalty awarded to employee for dereliction of his duties
     resulting in loss to the Corporation-However, no detailed enquiry as provided
     for major penalty was held-Validity-Held: It is not necessary to hold afull-
D    fledged enquiry even when employee disputes his liability-It is for the
     disciplinary authority to decide whether. or not to hold a regular departmental
     enquiry-Hence, the High Court erred in holding that it is incumbent upon
     the authority to conduct the enquiry contemplatedfor imposing major penalty.

           Administrative law:
E
           Enquiry proceedings-Judicial review-Scope and ambit of-Held: ls
     limited-Court can interfere only where the en9uiry proceedings are
     inconsistent with the rules of natural justice-If the discretionary power of
     holding or not holding an enquiry is misused or used arbitrarily it would
F    be subject to judicial review.

           Respondents filed a writ petition before the High Court challenging
     the order imposing penalty of recovery of a certain sum from their pay on
     the ground of dereliction of their duties, which caused loss to the appellant-
     Corporation.
G
           Single Judge held that once the employee denied the charge, it was
     incumbent upon the authorities to conduct an inquiry by giving an opportunity
     to him and render findings on the charges; otherwise there was every scope
     for the disciplinary authority to misuse the power under Regulation 60 of
     the Food Corporation of India (Staff) Regulation, 1971. The High Court,
lI                                        330



                                                                                       I
                              F.C.I. v. A. PRAHALADA RAO                           331
      therefore, set aside the order imposing minor penalty as the procedure              A
      contemplated for imposing major penalty was not followed. Division Bench
      confirmed the judgment. Hence this appeal.

              Allowing the appeal, the Court

             HELD : I. On the basis of the allegation that the appellant-Food             B
      Corporation of India is misusing its power of imposing minor penalties, the
      Food Corporation of India (Staff) Regulation, 1971 cannot be interpreted
      contrary to its language. Regulation 60(1)(b) mandates the disciplinary
      authority to form its opinion whether it is necessary to hold enquiry in a
      particular case or not. But that would not mean that in all cases whue
      employee disputes his liability, a full-fledged enquiry should be held.             C
      Otherwise, the entire purpose of incorporating summary procedure for
      imposing minor penalties would be frustrated. If the discretion given under
      Regulation 60(1)(b) is misused or is exercised in an arbitrary manner it is
      open to the employee to challenge the same before the appropriate forum. It
      is for the disciplinary authority to decide whether regular departmental            D
      enquiry as contemplated under Regulation 58 for imposing major penalty
      should be followed or not. This discretion cannot be curtailed by interpretation,
      which is contrary to the language used. 1334-F-G, HI

            2. It is settled law that the Court's power of judicial review in such
      cases is limited and Court can interfere where the authority held the enquiry       E
      proceedings in a manner inconsistent with the rules of natural justice or in
      violation of statutory rules prescribing the mode of enquiry and imposing
      punishment or where the conclusion or finding reached by the disciplinary
      authority is based on no evidence or is such that no reasonable person would
      have ever reached. As per the Regulation, holding of regular departmental           F
      enquiry is a discretionary power of the disciplinary authority which is to be
      exercised by considering the facts of each case and if it is misused or used
      arbitrarily, it would be subject to judicial review. 1335-C-D)

            3. The High Court erroneously interpreted the Regulation by holding
      that once the employee denies the charge, it is incumbent upon the authority        G
      to conduct an enquiry contemplated for imposing major penalty. 1335-B)

              CIVIL APPELLATE JURISDICTION: Civil Appeal No. 6123 of
      2000.

              From the Judgment and Order dated 18.11. 97 of the Andhra Pradesh           H



-..
    332                       SUPREME COURT REPORTS [2000) SUPP. 4 S.C.R.

A High Court in W.A. No. 1300 of 1997.
          R.K. Vinnani for the Appellants.

          In-person for the Respondents.

B         The Judgment of the Court was delivered by

          SHAH, J. Leave granted.

          The notice issued by this Court is limited to the interpretation given by
    the High Court to Regulation 60 of the Food Corporation of India (Staff)
C    Regulations, 1971 (hereinafter referred to as "the Regulations") which prescribes
    the procedure for imposing minor penalties. In Writ Petition No.14152of1989
    filed by respondent No. I -Assistant Manager (Quality Control) at Kakinada
    challenging the order imposing penalty of recovery of Rs.7356 from his pay
    by 21 monthly instalments on the ground of dereliction of his duties, which
    caused loss to the Corporation, learned Single Judge held that once the
D   employee denies the charge, it is incumbent upon the authorities to conduct
    an inquiry by giving an opportunity to him and render findings on the
    charges, otherwise there is every scope for the disciplinary authority to
    misuse the power under Regulation 60. The Court, therefore, set aside the
    order imposing minor penalty as the procedure contemplated for imposing
E   major penalty was not followed. In appeal, the Division Bench of the High
    Court by judgment and order dated 18th November, 1997 confirmed the same
    by observing-"where the employee disputes that any loss is caused to the
    Corporation either by his negligence or breach of order, and if so, how much
    pecuniary loss has been incurred, it is but necessary that an enquiry should
    be conducted, otherwise it is impossible to arrive at a correct finding with
F   regard to the causing of loss by the employee by his negligence or breach
    of order and with regard to the quantum of loss." The aforesaid interpretation
    of Rules given by the High Court is challenged in this appeal.

         For deciding the question involved, we would first refer to the relevant
    procedure prescribed under Regulations 54 and 60 which read thus:-
G
          "54. MINOR PENALTIES:

            (i)    Censure;
            (ii)   withholding of his promotion;
H          (iii) recovery from his pay of the whole or part of any pecuniary loss
            F.C.l. v. A. PRAHALADA RAO [SHAH, J.]                        333
        caused by him to the Corporation by negligence or breach of             A
        orders;
 (iv) withholding of increments of pay.

60. PROCEDURE FOR IMPOSING MINOR PENALTIES:

 (I) Subject to the provisions of Sub-regulation (3) of Regulation 59,          B
 no order imposing on an employee any of the penalties specified in
 clauses (i) to (iv) of Regulation 54 shall be made except after:

 (a)    informing the employee in writing of the proposal to take action
        against him and of the imputations of misconduct or misbehaviour
        on which it is proposed to be taken, and giving him a reasonable        C
        opportunity of making such representation as he may wish to
        make against the proposal;
 (b)    holding an inquiry in the manner laid down in Sub-regulations
        (3) to (23) of Regulation 58, in every case in which the disciplinary
        authority is of the opinion that such inquiry is necessary;             D
 (c)    taking the representation, if any, submitted by the employee
        under clause (a) and the record of inquiry, if any, held under
        clause (b) into consideration;
 (d)    recording a finding on each imputation of misconduct or                 E
        misbehaviour.

 (2) Notwithstanding anything contained in clause (b) of Sub- regulation
 (I), if in a case it is proposed, after considering the representation, if
 any, made by the employee under clause (a) of the sub-regulation, to
 withhold increment of pay and such withholding of increments is
 likely to affect adversely the amount of retirement benefits payable to        F
 the employee or to withhold increments of a pay for a period exceeding
 3 years or to withhold increments of pay with cumulative effect for
 any period, an inquiry shall be held in the manner la~d down in Sub-
 regulations (3) to (23) of Regulation 58 before making any order
 imposing on the employee any such penalty.                                     G
 (3) The record of the proceedings in such cases shall include:

 (i)    a copy of the intimation to the employee of the proposal to take
        action against him;
 (ii)   a copy of the statement of imputations of misconduct or                 H
     334                      SUPREME COURT REPORTS (2000) SUPP. 4 S.C.R.

A                  misbehaviour delivered to him;
             (iiO his representation, if any;
             (iv) the evidence produced during the inquiry;
             (v)   the findings on each imputation of misconduct or misbehaviour;
B                  and
             (vi) the orders on the case together with the reasons therefor."
          Learned counsel appearing on behalf of the appellants submitted that
   while interpreting Regulation 60, the High Court has added a proviso by
   stating that when the employee disputes his liability after receipt of the show
C cause notice, it is incumbent upon the disciplinary authority to conduct a
   detailed enquiry as provided for major punishment. It is his contention that
   in case of negligence in discharge of duties or loss occurred to the Corporation
   by not following the directions issued by the Corporation for taking
   precautions, there is no question of holding full-fledged departmental enquiry
D before imposing minor penalty as provided in Regulation 54. As against this,
  respondent No.2-Joint Secretary, Food Corporation of India Executive Staff
  Union who appeared in person submitted that under the guise of imposing
  minor penalties, the Management of appellant is dispensing with holding of
  regular departmental enquiry in cases where charges cannot be proved. He
  further pointed out that there is large scale misuse of powers under the said
E Regulation and, therefore, the interpretation given by the High Court to the
  said Regulation does not call for any interference.

           In our view, on the basis of the allegation that Food Corporation of
     India is misusing its power of imposing minor penalties, the Regulation
     cannot be interpreted contrary to its language. Regulation 60(1)(b) mandates
F    the disciplinary authority to form its opinion whether it is necessary to hold
    enquiry in a particular case or not. But that would not mean that in all cases
    where employee disputes his liability, a full-fledged enquiry should be held.
    Otherwise, the entire purpose of incorporating summary procedure for imposing
    minor penalties would be frustrated. If the discretion given under Regulation
G   60(I)(b) is misused or is exercised in arbitrary manner, it is open to the
    employee to challenge the same before the appropriate forum. It is for the
    disciplinary authority to decide whether regular departmental enquiry as
    contemplated under Regulation 58 for imposing major penalty should be
    followed or not. This discretion cannot be curtailed by interpretation which
    is contrary to the language used. Further, Regulation 60(2) itself provides that
H   in a case if it is proposed to withhold increments of pay and such withholding
                 F.C.I. v. A. PRAHALADA RAO [SHAH, J.]                       335
of increments is likely to affect adversely the amount of retirement benefits       A
payable to employee and in such other cases as mentioned therein, the
disciplinary authority shall hold enquiry in the manner laid down in Regulation
58 before making any order imposing any such penalty. Hence, it is apparent
that High Court erroneously interpreted the regulation by holding that once
the employee denies the charge, it is incumbent upon the authority to conduct
enquiry contemplated for imposing major penalty. It also erred in holding that      B
where employee denies that loss is caused to the Corporation either by his
negligence or breach of order, such enquiry should be held. It is settled law
that Court's power of judicial review in such cases is limited and Court can
interfere where the authority held the enquiry proceedings in a manner
inconsistent with the rules of natural justice or in violation of statutory rules   C
prescribing the ~de of enquiry and imposing punishment or where the
conclusion or finding reached by the disciplinary authority is based on no
evidence or is such that no reasonable person would have ever reached. As
per the Regulation, holding of regular departmental enquiry is a discretionary
power of the disciplinary authority which is to be exercised by considering
the facts of each case and if it is misused or used arbitrarily, it would be        D
subject to judicial review.

     In the result, the appeal is allowed to the aforesaid extent. There shall
be no order as to costs.

v.s.s.                                                         Appeal allowed.