Holding

A dismissal without an enquiry is unlawful unless the authority can demonstrably show that holding an enquiry is not reasonably practicable; loss of confidence alone does not justify dispensing with the enquiry.

Summary

The employee, Ajay Kumar, was dismissed by Indian Railway Construction Co. Ltd. while on probation for allegedly assaulting a senior officer and creating a violent scene. The employer dispensed with a disciplinary enquiry, invoking loss of confidence and impracticability, and relied on Rule 30 of its Conduct, Discipline and Appeal Rules, 1981. Kumar challenged the dismissal, claiming victimisation for union activities and arguing that Article 311(2) of the Constitution required a enquiry. The High Court quashed the dismissal, and the Division Bench upheld that view on limited judicial review. The Supreme Court held that the authority must show that an enquiry is not reasonably practicable; mere loss of confidence without such justification does not permit dispensing with an enquiry. Consequently, the Court ordered reinstatement with partial back‑wages, amounting to a total settlement of Rs.15 lacs, and dismissed the appeal.

Issues considered

The legality of dismissing an employee without a disciplinary enquiry under the Conduct, Discipline and Appeal Rules, 1981.
Whether Article 311(2) of the Constitution mandates a enquiry before dismissal.
The applicability of the 'loss of confidence' ground to dispense with an enquiry.
The scope of judicial review over the disciplinary authority's decision to forgo an enquiry.

Legislation cited

Constitution of Indias. Article 311(2)

Subjects

Administrative lawJudicial reviewDisciplinary dismissalLoss of confidenceEnquiryProcedural improprietyArticle 311Union activitiesMisconduct

Judgment

INDIAN RAILWAY CONSTRUCTION CO. LTD. A
v.
AJAY KUMAR

FEBRUARY 27, 2003

[SHIVARAJ V. PATIL AND ARIJIT PASAYAT, JJ.] B

Service Law:

Indian Railway Construction Company Limited (Conduct, Discipline and
Appeal) Rules, 1981-Rules 23 and 30-Passing of dismissal order dispensing C
with enquiry-Judicial review-Scope of-Held: Courts below not examining
the question as to practicability or holding the eriquiry in correct perspective-
Reasons to dispense with enquiry not proper-Alleged acts of mis-conduct
have ~ot been disbelieved thus, employer can legitimately raise the plea of
losing confidence on the employee, warranting his nonccontini.tance in D
employment-Payment of back wages-Directions issued-Constitution of
India-Article 3JJ(2).

Appellant alleged that when the respondent-employee was on
probation, he assaulted a senior officer and ransacked the office.
Thereafter without' holding any enquiry dismissal order was passed. E
Respondent alleged that dismissal order was outcome of victimization on
account of his union activities and challenged the order on the ground that
it was violative of law and at variance with the requirement of Article
311(2) of the Constitution for not holding the enquiry. Single Judge of High
Court held that enquiry could not be dispensed with; that protection under F
Article 311(2) was available; and that non observance of the procedure
vitiated the order. Hence he quashed the order. Division Bench held that
Article 311(2) was not attracted. It however, upheld the judgment of the
Single Judge on the limited judicial review, that the order of dispensation
with enquiry was not sustainable. Hence the present appeal.
G
Appellant-employer contended that the Division Bench was not
... justified in upholding the conclusions of the Single Judge about the scope
of judicial review; that merely because the enquiry would have taken some
time, or the aggressive and violent manner in which employees were

387 H
388 SUPREME COURT REPORTS [2003) 2 S.C.R.

A threatened leading to an irresistible conclusion that witnesses would not
have come forward to give evidence during the course of enquiry, would
not be a valid ground for dispensing with enquiry in all cases; that if there
is material with the concerned authority that there is likelihoo<I of
witnesses not coming forward due to threats, coercion, undue influence
B etc. certainly it would be a germane ground for dispensing with enquiry,
and to hold that it would not be possible to hold a fair enquiry; that even
when he was on probation, he assaulted a senior officer, created a scene
of terror, co-employees were threatened and even a lady employee was
not spared; and that Union activities are meant to present views of
employees before the employer for their consideration but same is not
C intended to be done in a vi(1lent form; decency and decorum are required
to be maintained.

Respondent-employee contended that the facts are telltale and the
background highlighted by the respondent in the writ petition clearly
shows that management was bent upon dismissing him for his union
D activities which was sufficient to prove ma/a fides and even if no particular
person was impleaded the management acted in unison through some of
its officers for his dismissal from employment; that though there was no
assertion in the writ petition that the alleged incident did not take place,
the same was on account of the fact that the employee was not aware of
E the alleged incident, in fact, the order dispensing with enquiry surfaced
much later and in the rejoinder affidavit it was pleaded that plea relating
to loss of confidence cannot be permitted to be raised, as every employer
can take the plea and thereby crush the employee's right to raise legitimate
demands through unions; that there has been a long passage of time and
it would not be appropriate, even if it is conceded that there were some
F infirmities in the order of High Court, to start the process afresh; and
that passage of time is a factor which would warrant dismissal of the
appeal and confirmation of the High Court's order; and that High Court
was correct in holding that dismissal order was illegal.

Disposing of the appeal, the Court
G
HELD: I. I. Administrative action is stated to be referable to broad
area of Governmental activities in which the repositories of power may ·
exercise eve.ry class of statutory function of executive, quasi-legislative,
quasi-judicial nature. It is trite law that exercise of power, whether
H legislative or administrative, will be set aside if there is manifest error in
INDIAN RAILWAY. CONST. CO. LTD. v. AJAY KUMAR 389
,- the exercise of such power or the exercise of the power is manifestly A
arbitrary. If the power has been exercised on a non-consideration or non-
application of mind to relevant factors, the exercise of power will be .
regarded as manifestly erroneous. If .a power (whether legislative or
administrative) is exercised on the basis of facts which do not exist and
which are patently erroneous, such exercise of power will stand vitiated. B
[395-E, F; 396-F, G)

1.2. The Court will be slow to interfere in matters relating to
administrative functions unless decision is tainted.by any vulnerability like
illegality, irrationality and procedural impropriety. Whether action falls
within any of the categories has to be established. Mere assertion in that C
·regard would not be sufficient. [397-Fl

2.1. In the instant case neither the Single Judge nor the Division
Bench of the High Court has examined the question as to practicability
or otherwise of holding the enquiry in the correct perspective. They have
proceeded on the footing as if the order was ma/a fide; even .when there D
was no specific person against whom mala fides were alleged being
· impteaded in the proceedings. Except making a bald statement regarding
alleged victimization and mala fides, no specific details were given.
Therefore the approach of the High Court was not proper. But at the same
time, the reasons which weighed with the disciplinary authority to dispense
with enquiry equally do not appear to be proper. {399-F, G; 400-E) E
2.2. Normally in such cases the proper course would be to direct
authorities to hold an enquiry, if they so desire. But two significant factors
need to be considered, one is long passage of time and the other alleged
loss of confidence. (400-E, F)
F
2.3. The submission that an employee even if he claims to be a
member of the employees' union has to act with sense of discipline and
decorum is accepted. Presentation of demands relating to employees
cannot be exhibited by muscle power. It must be borne in mind that every
employee is a part of a functioning system, which may collapse if its G
functioning is affected improperly. For smooth functioning, every employer
depends upon a disciplined employees' force. In the name of presenting
demands they cannot hold the employer to ransom. At the same time, the
employer has a duty to look into and as far as practicable, obviate the .
genuine grievances of the employees. The working atmosphere should be
cordial, as that would be in the best interest of the. establishment. Uniess H
390 SUPREME COURT REPORTS [2003] 2 S.C.R. Ir

A an atmosphere of cordiality exists there is likelihood of inefficient working
and that would not be in the interest of the establishment and would be
rather destructive of common interest of both employer and employees.
1401-A-C! ,.
2.4. If an act or omission of an employee reflects upon his character,
B reputation, integrity or devotion to duty or is an unbecoming act, certainly
the employer can take action against him. The alleged acts have not been
disbelieved by the High Court. They are prima facie acts of misconduct.
Therefore, the employer can legitimately raise a plea of losing confidence
on the employee, warranting his non-continuance in the employment. The
C time gap is another significant factor. [401-D, G]

State of UP. and Ors. v. Renusagar Power Co. and Ors. AIR [1988]
SC 1737; Commissioner ofIncome-tax v. Mahindra and Mahindra Ltd, AIR
11984] SC 1182; Council of Civil Service Unions v. Minister for the Civil
Service, [1984] 3 All. ER 935; Union of India and Anr. v. G. Ganayutham,
D 11997] 7 SCC 463; S. Pratap Singh v. The State of Punjab, [1964] 4 SCR
733; R.P. Royappa v. State of Tamil Nadu and Anr., AIR [1974] SC 555 and
Union of India and Ors. v. K.K. Dhawan, AIR [1993) SC 1478, referred to.

Padfield v. Minister 'of Agriculture, Fisheries and Food, LR [1968) AC
997; Associated Provincial Picture Houses Ltd v. Wednesbury Corpn., 11948]
E 1 KB 223 and Pearce v. Foster, [1866] 17 QBD 536, referred to.

Applications for Judicial Review, Law and Practice, by Aldous and John
Alder and Judicial Review of Administrative Action, by Prof De Smith 4th
Edition, p.285-287, referred to.

F 3. By an interim order the appellant was directed to reinstate the
respondent subject to an interim payment of Rupees 3 lacs towards the
back wages. Direction for reinstatement does not automatically entitle an
employee to full back wages. A further payment of Rupees 12 lacs towards
back wages and for giving effect to the order of dismissal on the ground
G of loss of confidence would suffice. The total amount of Rupees 15 lacs
shall be in full and final settlement of all claims.
[401-H; 402-A; 403-A, B]

Hindustan Tin Works Pvt. Ltd v. The Employees of Mis. Hindustan Tin
Works Pvt. Ltd and Ors., 11979] 2 SCC 80 and P.G.I. of Medical Education
H and Research, Chandigarh v. Raj Kumar, 120011 2 SCC 54 , referred to.
INDIAN RAILWAY. CONST. CO. LTD. v. AJAY KUMAR [AR!J!T PASAYAT, J.] 39)

Susannah Sharp v. Wakefield, (1891) AC 173, referred to. A
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 3299 of2000.

From the Judgment and Order dated 29.11.99 of the Delhi High Court
in L.P.A. No. 64 of 1993.
B
Mukul Rohtagi, Additional Solicitor General, Yashwant Das, Saurabh
Mishra and Ms. Suruchi Aggarwal for the Appellant.

K.R. Nagaraja and V. Shekhar (NP) for the Respondent.

The Judgment of the Court was delivered by c
ARIJIT PASAYAT, J. Bitter relationship between the employer and
the employee has resulted in a large number of litigations; unfortunately and
inevitably creating an atmosphere of distrust. In most of the cases, the employer
complains of misconduct by the employed concerned; while the employee D
usually plead victimization. The present case is no exception.

Starting point of the controversy was about two decades back. The
respondent (hereinafter referred to as 'the employee') was appointed on a
probation basis in May, 1981. His appointment was on temporary basis and
he was not confirmed even after the initial period of probation. Alleging that E
he assaulted a senior officer and along with others ransacked the office creating
chaotic condition, an order of dismissal was passed on 7.12.1983. On the
alleged date of incident, information was lodged with police. The order was
passed in respect of two employees, the present appellant and one Mr. V .K.
Talwar. It was pointed out in the order of dismissal that it would not be
practicable to hold an enquiry before directing dismissal. The respondent F
employee, on the other hand, alleged that the order of dismissal was the
outcome of victimization. He took a stand in the writ petition filed before the
Delhi High Court that because of union activities, he had become an eyesore
of the management, and the order of dismissal without holding an enquiry
was violative of law and was at variance with the requirements of Article G
311 (2) of the Constitution of India. 1950 (in short 'the Constitution').

Learned Single Judge was of the view that in a given case, enquiry can
be dispensed with; but the case at hand was not of that nature. It was further
held that the protection under Article 311 (2) was available and non-observance
of the procedure vitiated the order of dismissal. The matter was challenged H
392 SUPREME COURT REPORTS [2003] 2 S.C.R.

A in Letter Patents Appeal before the Division Bench of the Delhi High Court
by the present appellant.

It was submitted that there was no scope for judicial review of the order
dispensing with enquiry. The order of dismissal was quashed on the ground
that it was activated with male fides. Though, it was observed that the decision
B whether an enquiry was to be conducted or not and could be dispensed with
was primarily that of the concerned authority; it could not be his ipse dixit
and in a given case could be judicially reviewed. In any event, Article 311 (2)
had no application.

The Division Bench by the impugned judgment held that Article 3 I I (2)
C was not attracted. However, it upheld the judgment of the learned Single
Judge holding that on a limited judicial review, the order dispensing with
enquiry was not sustainable. It was noted that the appellant before it did not
argue about the sustainability of the reasons and only raised issues relating
to scope of judicial review.
D . In support of the appeal, Mr. Mukul Rohtagi, learned Additional Solicitor
General appearing for the appellant submitted that the Division Bench was
not justified in upholding conclusions of the learned Single Judge about the
scope of judicial review. Both the learned Single Judge and the Division
Bench proceeded to deal with the matter as if male tides had been established.
E There was no finding recorded that the incident did not take place. On the
contrary, both the learned Single Judge and the Division Bench accepted that
certain incident took place. After having held so, the plea on the presumptuous
ground that the respondent-employee was the. victim of bias and the authorities
acted with male fides, cannot be sustained. There was no specific plea relating
to ma/a fides and even persons who allegedly acted male fide were not
F impleaded in the writ petition. Except making a vague statement that the
management was activated with male fides, there was not even a whisper as
to how and why the management and who in particular would act with ma/a
fides. The background scenario as projected by the respondent-employee
does not in any way lead to a conclusion of victimization. Though enquiry
G woµld not have been necessary as the employee was on probation an order
of termination simplicitor would have sufficed. According to him, reasons
which weighed with the authority dispensing with enquiry were germane to
the issue of impracticability in holding the enquiry.

Residually, it was submitted that the employer lost confidence on the
H emploxee for his grave acts of misconduct, which had adversely affected the
'~
\

INDIAN RAILWAY. CONST. CO. LTD.1•. AJAY KUMAR[ARIJIT PASAYAT,l.l 393

image and reputation of the employer as the incident took place in the presence A
of valued customers, some of whom were foreign customers. If the High
Court felt that the dismissal was untenable in the absence of enquiry at the
most it could have directed enquiry before dismissal order was effectuated.
The dismissal order could not have, in any event, been set aside without any
such direction. These aspects have also to be considered along with the plea B
relating to loss of confidence.

In response, learned counsel for the respondent, employee submitted
that the facts are tellate and the background highlighted by the respondent in
the writ petition clearly shows that management was bent upon dismissing
him for his union activities. That was sufficient to prove mala tides and even C
if no particular person was impleaded, the management acted in unison through
some. of its officers for his dismissal from employment. It was submitted that
the High Court was correct in holding that the order of dismissal was illegal.

It was submitted that though there was no assertion in the writ petition
that the alleged incident did not take place, the same was on account of the D
fact that the employee was not aware of the alleged incident. In fact, the
order dispensing with enquiry surfaced much later and in the rejoinder ~ffidavit
it was pleaded. In respect of the plea relating to loss of confidence, it was
submitted that such a stock plea cannot be permitted to be raised, as every
employer can take the plea and thereby crush the employee's right to raise E
legitimate demands through unions. Finally, it was submitted that there has
been a long passage of time and it would not be appropriate, even if it is
conceded that there were some infirmities in the order of High Court, to start
the process afresh.

It would be appropriate to take not of the ·order dispensing with enquiry F
which forms the Kamei of the dispute. The reasons recorded by the concerned
authority so far as relevant are as. follows:

xxx xxx xxx xxx

"(a) The delinquents have taken the extreme step of freely using G
abusive language and assaulting Shri S.L. Gupta right in the centre of
the activities of the Corporate office of the company. With such high-
handed and recalcitrant attitude of ihe delinquents, I am convinced
that they can indulge in such intimidating and violent acts against
other employees when they come forward to give evidence during
the courage of the enquiry. It will therefore be difficult to hold a H
394 SUPREME COURT REPORTS [2003] 2 S.C.R.

A proper enquiry and witnesses may not come forward to give frank
and true evidence.

(b) The holding of the enquiry will take some time and with the
attitude of the delinquents mentioned above, I am convinced, that
they will continue to indulge in such violent activities which will
B seriously disrupt the functioning of the company apart from affecting
the safety of the employees.

(c) The delinquents have threatened the life of the senior officer of
the rank of a manager in scale Rs. 1500-2000 openly in the office
premises after hurling abuses. This assault appears to have been
c intentional and deliberately executed. It can reasonably be inferred
that the delinquents can resort to such methods against other higher
officers also in case an enquiry is held."

Learned counsel for the appellant fairly submitted that merely because the
D enquiry would have taken some time, same cannot be a ground for dispensing
with enquiry He, however, highlighted other grounds i.e. as contained in
clause (a) above. According to him, the aggressive and violent manner in
which employee were threatened leads to an irresistible conclusion that
witnesses would not have come forward to give evidence during the course
of enquiry. Such a conclusion would not be a valid ground for dispensing
E with enquiry in all cases. If there is material with the concerned authority that
there is likelihood of witnesses not coming forward due to threats, coercion,
undue influence etc. certainly it would, be a germane ground for dispensing
with enquiry, and to l'\old that it would not be possible to hold a fair enquiry.
Except making a bald statement that charged eqiployee can indulge in
F intimidating and violent acts persons would not come forwarci, there is no
other material. On the basis of a presumptuous conclusion, the concerned
authority should not have dispensed with enquiry. As i_ndicated above, if
there exists material and basis for coming to a conclusions, same has to be
specifically dealt with. If such material exists certainly it would be a valid
ground for dispensing with enquiry. That is an aspect which relates to
G impracticability of holding an enquiry.
It is not in dispute that under the Indian Railway Construction Co. Ltd.
(Conduct, Discipline and Appeal) Rules, 1981 (hereinafter referred to as 'the
Rules') the disciplinary authority could dispense with an enquiry. Reasons
are to be recorded in writing and the authority is to be satisfied that it is not
H reasonably practicable to hold an enquiry in the manner prescribed in the
'~
'
INDIAN RAILWAY CONST. CO. LTD. v. AJAY KUMAR [ARIJiTPASAYAT, J] 395
rules. The Rule 30 reads . as follows. A
"R•de 30: Special Procedure in Certain Cases.

Notwithstandirg anything contained in Rule 25 or 26 or 27, the
disciplinary authority may impose any of the penalties specified in
Rule 23 in any of the following circumstances: B
(i) xxx xxx xxx

(ii) Where the disciplinary. authority is satisfied for reason to be
recorded by it in writing that it is not reasonably practicable to hold
an enquiry in the manner provided in these rules." C
It is also not in dispute that one of the penalties specified in Rule 23 is
dismissal from service.

It is fairly well settled that the power to dismiss an employee by
dispensing with an enquiry is not be exercised so as to circumvent the D
prescribed rules. The satisfaction as to whether the facts exist to ju~Lify
dispensing with enquiry has to be of the disciplinary authority. Where two
views are possible as to whether holding of an enquiry would have been
proper or not, it would not be with in the domain of the Court to substitute
its view for that of the disciplinary authority as if the Court is sitting as an E
appellate authority over the disciplinary authority. The contemporaneous
circumstances can be duly taken note of in arriving at a decision whether to
dispense with an enquiry or not. What the High Court was required to do was
to see whether there was any scope for judicial review of the disciplinary
authority's order dispensing with enquiry. The focus was required to be on
the impracticability or otherwise of holding the enquiry. F
One of the points that falls for determination is the scope for judicial
interference in matters of administrative decisions. Administrative action is
stated to be referable to broad area of Government activities in which the
repositories of power may exercise every class of statutory function of
executive, qusai-legislative and quasi-judicial nature. It is trite law that exercise G
of power, whether legislative or administrative, will be set aside if there is
manifest error in the exercise of such power or the exercise of the power is
manifestly arbitrary See State of U.P. and Ors. v. Renusagar Power Co. and
Ors., AIR [1988] SC 1737. At one time, the traditional view in England was
that the executive was not answerable where its action was attributable to the H
396 SUPREME COURT REPORTS (2003] 2 S.C.R.

A exercise of prerogative power. Professor De Smith in his classical work
"Judicial Review of Administrative Action" 4th Edition at pages 285-287
states the legal position in his own terse language that the relevant principles
formulated by the Courts may be broadly summarized as follows. The authority
in which a discretion is vested can be compelled to exercise that discretion,
B but not to exercise it in any particular manner. In general, a discretion must
be exercised only by the authority to which it is committed. That authority
must genuinely address itself to the matter before it; it must not act under the
dictates of another body or disable itself from exercising a discretion in each
individual case. In the purported exercise of its discretion, it must not do
what it has been forbidden to do, nor must it do what it has not been authorized
C to do. It must act in good faith, must have regard to all relevant considerations
and must not be influenced by irrelevant considerations, must not seek to
promote purposes alien to the letter or to the spirit of the legislation that
gives it power to act, and must not act arbitrarily or capriciously. These
several principles can conveniently be grouped in two main categories: (i)
failure to exercise a discretion, and (ii) excess or abuse of discretionary
D power. The two classes are not, however, mutually exclusive. Thus, discretion
may be improperly fettered because irrelevant considerations have been taken
into account, and where an authority hands over its discretion to another
body it acts ultra vires.

E The present trend of judicial opinion is to restrict the doctrine of
immunity from judicial review to those class of cases which relate to
deployment of troupes, entering into international treaties etc. The distinctive
features of some of these recent cases signify the willingness of the Courts
to assert their power to scrutinize the factual basis upon which discretionary
powers have been exercised. One can conveniently classify under three hea4s
F the grounds on which administrative action is subject to control by judicial
review. The first ground is 'illegality' the second 'irrationality', and the third
'procedural impropriety'. These principles were highlighted by Lord Diplook
in Council of Civil Service Unions. v. Minister for the Civil Service, (1984)
3 All. ER. 935, (commonly known as CCSU Case). If the power has been
G exercised on a non-consideration or non-application of mind to relevant factors,
the exercise of power will be regarded as manifestly erroneous. If a power
(whether legislative or administrative) is exercised on the basis of facts which
do not exist and which are patently erroneous, such exercise of power will
stand vifiated. (See Commissioner of Income tax v. Mahindra and Mahindra
Ltd., AIR (19.84) SC 1182). The effect of several decisions on the question
H of jurisdiction have been summed lip by Grahame Aldows and John Alder in
·~
\

INDIAN RAILWAY. CONST. CO. LTD. v. AJAY KUMAR [ARIJIT PASAYAT, J.] 397

their book "Applications for Judicial Review, Law and Practice" thus: A

"There is a general presumption against ousting the jurisdiction
of the Courts, so that statutory provisions which purport to exclude
judicial review are construed restrictively. There are, however, certain
areas of governmental activity, national security being the paradigm
·which the Courts regard themselves as incompetent to investigate, B
beyond an initial decision as to whether the government's claim is
bona fide. In this kind of non-justiciable area judicial review is not
entirely excluded, but very limited. It has also been said that powers
conferred by the Royal Prerogative are inherently unreviewable but
since the speeches of the House of Lords in council of Civil Service C
Unions v. Minister for the Civil Service this is doubtful. Lords Dip lock,
Scaman and Roskili appeared to agree that there is no general
distinction between poweres, based upon whether their source is
statutory or Prerogative but that judicial review can be limited by the
subject matter of a particular power, in that case national security.
Many prerogative powers are in fact concerned with sensitive, non- D
justiciable areas, for example, foreign, but some are reviewable in
principle, including the prerogatives relating to the civil service where
national security is not involved. Another non-justiciable power is the
Attorney General's prerogative to decide whether to institute legal
proceedings on behalf of the public interest." E
(Also see Padfield v. Minister of Agriculture, Fisheries and Food, LR
(1968) AC 997).

The Court will be slow to interfere in such matters relating to
administrative functions unless decision is tainted by any vulnerability p
enumerated above ; like illegality, irrationality and procedural impropriety. ·
Whether action falls within any of the categories has to be established. Mere
assertion in that regard would not be sufficient.

The famous case commonly known as "The Wednesbury's case" is
treated as the landmark so far as laying.down various basic principles relating G
to judicial review of administrative or statutory direction.

Before sunimarizing the substance of the principles laid down therein
we shall refer to the passage from the judgment of Lord Greene in Associated
Provincial Picture Houses v. Wednesbury Corpn., [1948] I KB 223 at
p. 229. It reads as follows: H
398 SUPREME COURT REPORTS [2003] 2 S.C.R.

A ".......... It is true that discretion must be exercised reasonably. Now
what does that mean° Lawyers familiar with the phraseology used in
relation to exercise of statutory discretions often use the word
'unreasonable' in a rather comprehensive sense. It has frequently
been ·used and is frequently used as a general description of the
things that must not be done. For instance, person entrusted with a
B discretion must, so to speak, direct himself properly in law. He must
call his own attention to the matters which he is bound to consider.
He must exclude from his consideration matters which are irrelevant
to what he has to consider. If he does not obey those rules, he may
truly be said, and often is said, to be acting 'unreasonably, Similarly,
C there may be something so absurd that no sensible person could even
dream that it lay within the powers the authority .......... .ln another, it
is taking into consideration extraneous matters. It is unreasonable that
it might almost be described as being done in bad faith; and in fact,
all these things run into one another."

D Lord Greene also observed (KB p. 230 All ER p. 683)

" .... .it must be proved to be unreasonable in the sense that the court
considers it to be a decision that no reasonable body can come to. It
is not what the court considers unreasonable........... The effect of the
legislation is not to set up the court as an arbiter of the correctness
E of one view over another." (emphasis supplied).

Therefore, to arrive at a decision on "reasonableness" the Court has to
find out if the administrator has left out relevant factors or taken into account
irrelevant factors. The decision of the administrator must have been within
F the four comers of the law, and not one which no sensible person could have
reasonably arrived at, having regard to the above principles, and must have
been a bona fide one. The decision could be one of many choices open to the
authority but it was for that authority to decide upon the choice and not for
the Court to substitute its view.

G The principles of judicial review of administrative action were further
summarized in 1985 by Lord Diplock in CCSU case as illegality, procedural
impropriety and irrationality. He said more grounds could in future become
available, including the doctrine of proportionality which was a principle
followed by certain other members of the European Economic Community.
H Lord Diplock observed in that a case as follows:
INDIAN RAILWAY CONST. CO. LTD. 1-. AJAY KUMAR [ARIJIT PASAYAT, J] 399

" ......... .Judicial review has 1 think, developed to a stage to<lay A
when, without reiterating any analysis of the steps by which the
development has come about, one can conveniently classify under
three heads the grounds on which administrative action is subject to
control by judicial review. The first ground I woul<l call 'illegality',
the second 'irrationality' and the third 'procedural impropriety'. That B
is not to say that further development on a case-by-case basis may
not in course of theme add further grounds. I have in mind particularly
the possible adoption in the future of the principle of 'proportionality'
which is recognized in the administrative law of several of our fellow
members of the European Economic Community."

Lord Diplock explained "irrationality" as follows:
c
"By 'irrationality' I mean what can by now be succinctly referred to
as Wednesbury unreasonableness." It applies to a decision which is
to outrageous in its definance of logic or of accepted moral standards
that no sensible person who had applied his mind to the question to D
be decided could have arrived at it."

In other words, to characterize a decision of the administrator as
"irrational" the Court has to hold, on material, that it is a decision "so
outrageious" as to be in total defiance of logic or moral standards. Adoption
of "proportionality" into administrative law was left for the future. E
These principles have been noted in aforesaid terms in Union of India
and Anr. v. G. Ganayutham, [1997] 7 SCC 463. In essence, the test is to see
whether there is any infirmity in the decision making process and not in the
decision itself.
F
Neither learned Single Judge nor the Division Bench has examined the
question as to practicability or otherwise of holding the enquiry in the correct
-, perspective. They have proceeded on the footing as if the order was ma/a
'
fide; even when there was no specific allegation of ma/a fides and without
any specific person against whom ma/a fides were alleged being impleaded G
in the proceedings. Except making a bald statement regarding alleged
victimization and ma/a fides no specific details were given.

Doubtless, he who seeks to invalidate or nullify any act or order must
establish the charge of bad faith, au abuse or a misuse by the authority of its
powers. While the indirect motive or purpose, or bad faith or personal ill-will H
400 SUPREME COURT REPORTS (2003] 2 S.C.R.

A is· not to be held established except on clear proof thereof, it is obviously
difficult to establish the state of a man's mind, for that is what the employee
has to establish in this case, though this may sometimes be done. The difficulty
is not lessened when one has to establish that a person apparently acting on
the legitimate exercise of power has, in fact, been acting malajide in the
sense of pursuing an illegitimate aim. It is not the law that ma/a fide in the
B sense of improper motive should be established only by direct evidence. But
it must be discernible from the order impugned or must be shown from the
established surrounding factors which preceded the order. If bad faith would
vitiate the order, the same can, in our opinion, be deduced as a reasonable
and inescapable inference from proved facts. (See S. Pratap Singh v. The
C State of Punjab, [1964] 4 SCR 733). It cannot be overlooked that burden of
establishing ma/a jides is very heavy on the person who alleges it. The
allegations of ma/a fides are often more easily made than proved, and the
very seriousness of such allegations demand proof of a high order of credibility.
As noted by this Court in R.P. Royappa v. State of Tamil Nadu and Anr., AIR
(1974) SC 555, Courts would be slow to draw dubious inferences from
D incomplete facts placed before it by a party, particularly when the imputations
are grave and they are made against the holder of an office which has a high
responsibility in the administration.

The approach of the High Court, therefore, was not proper. But at the
E same time, the reasons which weighed with the disciplinary authority to
dispense with enquiry equally do not appear to be proper.

Normally In such cases the proper course would be to direct authorities
to hold an enquiry, if they so desire. But two significant factors need to be
considered. One is long passage of time and the other alleged loss of
p confidence.

While learned counsel for the respondent submitted that passage of
time is a fl\ctor which would warrant dismissal of the appeal and confirmation
of the High Court's order, learned counsel for the appellant submitted that
any undesirable employee in an establishment is like a rotten apple in the
G pack of apples, and is likely to contaminate the whole pack. Even when he
was on probatio1t, he assaulted a senior officer, created a scene of terror, co-
employees were threatened and even a lady employee was not spared. Union
activities are meant to present views of employees before the employer for
their consideration; but same is not intended to be done in a violent form.
H Decency and decorum are required to be maintained.
'
)

INDIAN RAILWAY. CONST. CO.LTD. v. AJAY KUMAR [ARIJIT PASAYAT,l.J 401

We finel substance in the plea of learned counsel for the appellant that A
an employee even if the claims to be a member of the employees" union has
to act with sense of discipline and decorum. Presentation of demands relating
to employees cannot be exhibited by muscle power. It must be borne in mind
that every employee is a part of a functioning system which may collapse if
its functioning is affected improperly. For smooth functioning, every employer B
depends upon a disciplined employees' force. In the name of presenting
demands they cannot hold the employer co ransom. At the same time the
employer has a duty to look into and as far as practicable, obviate the genuine
grievance of the employees. The working atmosphere should be cordial, as
that would be in the best interest of the establishment. Unless an atmosphere
of cordiality exists there is likelihood of inefficient working and that would C
not be in the interest of the establishment and would be rather destructive of
common interest of both employer and employees.

If an act or omission of an employee reflects upon his character,
reputation, integrity or devotion to duty or it an unbecoming act, certainly the
employer can take action against him. In this context, reference may be made D
to the following observations of Lopes C.J. In Perce v. Foster, (18'16) 17
QBD 536, p. 542):

"If a servant conducts himself in a way inconsistent with the faithful
discharge of his duty in the service, it is misconduct which justifies E
immediate dismissal. That misconduct, according to my view, need
not be misconduct in the carrying on of the service of the busin.ess.
It is sufficient if -it is conduct which is prejudicial or is likely to be
prejudicial to the interests or to the reputation of the master, and the
master will be justified, not only if he discovers it at the time, but
also if he discovers it afterwards, in dismissing that servant." F
This view was re-iterate4 by a three-Judge Bench of this Court in Union of
India and Ors. v. K.K. Dhawan, AIR (1993) SC 1478.

Here, the alleged acts have not been disbelieved by the High Court.
They are prima facie acts of misconduct. Therefore, the employer can G
legitimately raise a plea of losing confidence on the empioyee, warranting his .
non-continuance in the employment. The time gap is another significant factor.

Question then would be how the conflicting •mterests can be ,best
balanced. By an interim order dated 5.5.2000 the appell1mt was directed to H
402 SUPREME COURT REPORTS (20()3) 2 S.C.R. •

A reinstate the respondent subject to interim payment of Rupees 3 lacs towards
the back wages. Direction for reinstatement does not automatically entitle an
employee to full back wages. In Hindustan Tin Works Pvt. Ltd. v. The
Employees of Mis. Hindustan Tin Works Pvt. Ltd. and Ors .. [ 1979] 2 SCC 80,
a three-Judge Bench of this Court laid down : "In the very nature of things
B there cannot be straight-jacket formula forwarding relief of back wages. All
relevant consideration will enter the verdict. More or less, it would be a
motion addressed to the discretion of the Tribunal. Full back wages would be
the normal rule and the party objecting to it must establish the circumstances
necessitating departure. At that stage the Tribunal will exercise its discretion
keeping in view all the relevant circumstances. But the discretion must be
C exercised in a judicial and judicious manner. The reason for exercising
di.scretion must be cogent and convincing and must appear on the face of the
record. When it is said that something is to be done within the discretion of
the authority, that something is to be done according to the rules of reason
and justice, according to law and not humour. It is not to be arbitrary, vague
and fanciful but legal and regular (see Susannah Sharp v. Wakefield, (1891)
D AC 173, 179)."

In P. G.J. of Medical Education and Research, Chandigarh v. Raj Kumar,
[200 I] 2 SCC 54, this Court found fault with the High Court in setting aside
the award of the Labour Court which restricted the back wages to 60% and
E directing payment of full back wages. It was observed thus:

"The Labour Court being the final Court of facts came to a
conclusion that payment of 60% wages would comply with the
requirement of law. The finding of perversity or being erroneous or
not in accordance with law shall have to be recorded with reasons in
F order to assail the finding of the Tribunal or the Labour Court. It is
not for the High Court to go into the factual aspects of the matter and
there is an existing limitation on the High Court to that effect."

Again at paragraph 12, this Court observed:

G "Payment of back wages having a discretionary element involved
in it has to be dealt with in the facts and circumstances of each case
and no straight-jacket formula can be evolved, though, however, there
..•·
is statutory sanction to direct payment of back wages in its entirety.
(See Hindustan Motors Ltd. v. Tapan Kumar Bhattacharya and Anr.,
H (2002) AIR sew 3008)".
INDIAN RAILWAY. CONST. CO LTD.''· AJAY KUMAR [ARIJ!T PASAYAT, J.] 403

Jn our considered opinion, a further payment of Rupees 12 lacs towards back A
wages and for giving effect to the order of dismissal on the ground of loss
of confidence would suffice. The total amount of Rupees 15 lacs shall be in
full and final settlement of all claims. The payment is to be paid within eight
weeks from today after making permissible deductions statutorily provided'
and/or adjustments, if any, to be made.
B
The appeal is accordingly disposed of in the above terms.

N.J. Appeal disposed of.

·~