Holding

Adverse entries in the confidential reports for 1975‑76 and 1977‑78, by themselves, cannot sustain a compulsory retirement order; the order is set aside.

Summary

N. Patnaik, a senior engineer in the Orissa Irrigation Department, was compulsorily retired in 1986 under Rule 71(a) of the Orissa Service Code on the recommendation of a Review Committee that cited adverse entries in his confidential reports and several pending investigations. Patnaik challenged the retirement before the Orissa Administrative Tribunal, which dismissed his plea, leading to an appeal before the Supreme Court. The Court examined whether the adverse remarks for the years 1975‑76 and 1977‑78, together with the now‑dropped vigilance and disciplinary proceedings, constituted sufficient material to deem his continued service contrary to public interest. It held that the adverse entries alone, especially after the officer had been promoted and his later performance was rated good, could not justify compulsory retirement, and the other allegations lost significance as they were either dropped or resulted in exoneration. Consequently, the order of compulsory retirement was set aside, Patnaik was deemed to have remained in service until his superannuation in 1991, and he was awarded half‑pay arrears and pension benefits calculated on that basis.

Issues considered

Whether adverse entries in confidential service reports, without any other substantive misconduct, are sufficient grounds for compulsory retirement under Rule 71(a) in the public interest.
Whether pending or dropped disciplinary and vigilance proceedings can be relied upon to justify compulsory retirement.
Whether the order of compulsory retirement should be quashed and the appellant be treated as having continued in service until superannuation, with appropriate pension and arrears.

Subjects

service lawcompulsory retirementconfidential reportspublic interestpensionarrearsreview committeeOrissa Service Code

Judgment

NARASINGH PATNA!K A
v.
STATE OF ORISSA

ARPIL 2, 1996

[S.C. AGRAWAL AND G.T. NANAVATI, JJ.] B

Se1vice Law-Co111pulscny retiren1ent-Reconunended by Review Co111-
111ittee in public interest, conside1ing two adve1:"te confidential repo1ts and
pending depa1t111e11tal proceedings and a c1i111inal investigation against the
./" · appellant-Promotion of the appellant after advei:<e repmts and q11ashing of C
depa1t111e11tal proceedings etc.-Relevance of-Adverse ren1a1*s in the annual
confidential repo1ts by thenise/ves cannot sustain the 011inion leading to con1-
p11lsory retirement of the appellant in public interest-Order of comp11ls01y
retirement quashed-Orissa Se1vice Code-Rule 71 (a).

The appellant joined the Irrigation Department of Government of D
Orissa as an Assistant Engineer (Irrigation) in 1956 and had been
gradually promoted as Chief Engineer in 1984 on ad hoc basis and his
promotion was regularised in 1985. In 1986 the appellant was compulsorily
retired from service. by an order passed by the State Government under
the first proviso to Rule 71(a) of the Orissa Service Code. E
The order of compulsory retirement of the appellant was passed on
the basis of recommendation made by the Review Committee based on
certain circumstances including corruption, irregularities and a vigilance
case against hint.
F
Appellant approached the Orissa Administrative Tribunal contend-
ing that there was no material before the State Government to form the
requisite opinion for his compulsory retirement from service. The Tribunal
dismissed the application. Hence, this appeal.

Allowing the appeal, this Court G

, .,, HELD :1.1. Al"ter the remarks were made in the confidential reports
for the years 1975-76 and 1977-78 the appellant had been promoted on the
post of Superintending Engineer in the year 1978 and thereafter as Chief
Engineer in 1984. In respect of the year prior to 1975-76, in the year 1976-77 H
1061
(

1062 SUPREME COURT REP OR TS [1996] 3 S.C.R.

A and in the years subsequent to 1977-78 the performance of the appellant
was appraised as 11good 11• In these circumstances, the adverse remarJcs in
the annual confidential reports for the years 1975-76 and 1977-78 by
themselves cannot sustain the opinion leading to the compulsory retire-
ment of the appellant on the basis that further retention of the appellant
B in service was not in public interest. [1067-C-D]

Baikuntha Nath Das and Anr. v. Chief Disuict Medical Officer,
Bmipada and Anr., [1992] 2 SCC 299, relied upon.

1.2. Apart from the adverse entries in the confidential reports for the
C years 1975-76 and 1977-78, the other circumstances on which reliance was
placed by the Review Committee were proceedings·wherein either explana-
tion had been asked for from the appellant or where the explanation had
been given and the matter was under consideration of the authorities and
all those proceedings were subsequently dropped. Similarly, the vigilance
D case which had been registered against the appellant by the Vigilance
Department for possession of properties disproportionate to his known
source of income was at the investigation stage at that time and sub-
sequently after completing the investigation the appellant has been ex-
onerated and the final report bas been submitted which bas been accepted
E by the Chief Judicial Magistrate. The penalty of withholding of three
increments which was imposed by the State Government on the appellant
bas been quashed by the Orissa Administrative Tribunal. Hence these
circumstances relied on lost their significance. [1066-A-D]

2. In tl1e normal course the appellant would have retired on April
F 30, 1991 after attaining the age of superannuation of' 58 years. As a result
of the quashing of the order of' compulsory retirement dated March 5,
1986, the appellant has to be treated to have continued in service till April
30, 1991 and for the purpose of pension and other retiral benefits the pay
should be fixed as on April 30, 1991 and the pension and retiral benefits
G payable to him should be computed on that basis. As regards arrears of
pay and other emoluments for the period from March 5, 1986, the date of
the· order of compulsory retirement till April 30, 1991, the date of his
attaining the age of superannuation, the appellant should be paid 50 ' '

percent of the pay and emoluments payable to him for this period.
H [1067-E-G]
N. PATNA!Kv. STATE [S.C. AGRAWAL,J.) 1063

CIVIL APPELLATE JURISDICTION : Civil Appeal No. 645 of A
1988.

From the Judgment and Order dated 28.9.87 of the Orissa Ad-
ministrative Tribunal, Bhubaneswar in O.A. No. 44 of 1986.

. J ayant Das and Raj Kumar Mehta for the Appellant. B

Jndrajeel Roy, Adv. General Orissa and P.N. Misra for the Respon-
dent.

The Judgment of the Court was delivered by
c
S.C. AGRAWAL,J. This appeal is directed against judgment of the
Orissa Administrative Tribunal (hereinafter referred to as 'the Tribunal')
dated September 28, 1987 in O.A. No. 44 of 1986 filed by the appellant
. assailing the order dated March 5, 1986 regarding his premature retirement
from service. D
The appellant joined service as an Assistant Engineer in the Irriga-
tion Department of the Government of Orissa on April l, 1956. He was
promoted as Executive Engineer on ad hoc basis on March 2, 1962 and in
1963 his promotion on the post of Executive Engineer was regularised after
obtaining the concurrence of· the Orissa Public Service Commission. On E
May 21, 1978 he was promoted as Superintending Engineer on ad hoc basis
and the said promotion was regularised in 1979 in consultation with the
Orissa Public Service Commission. On November 30, 1984 the appellant
was promoted as Chief Engineer (Irrigation) on ad hoc basis and the said
promotion was regularised on the recommendation of the Orissa Public F
1 Service Commission on August 23, 1985. By order dated March 5, 1986 the
appellant was compulsorily retired from service. The order of compulsory
retirement of the appellant was passed in exercise of the powers conferred
by the first proviso to Rule 71(a) of the Orissa Service Code which
empowers the State Government to compulsorily retire a Government
servant after his attaining the age of 50 years or his completion of 25 years G
service if the State Government is of the opinion that his further retention
in service was not in public interest. In the petition filed before the Tribunal
the appellant has submitted that there was no material before the State
Government to form the requisite opinion for his compulsory retirement
from service. The said contention has not been accepted by the Tribunal. H
1064 SUPREME COURT REPORTS [1996] 3 S.C.R.

A The order of compulsory retirement of the appellant was passed on
the basis of the recommendations made by the Review Committee duly
constituted for that purpose. The said Review Committee in its meeting
held on February 15, 1986 reviewed the service record of five officers,
including the appellant, who had completed 50 years of age and it recom-
mended premature retirement of the appellant. From the proceedings of
B
the said meeting of the Review Committee (a copy of which has been
placed before us by the learned Advocate General appearing for the State
of Orissa) we find that the recommendations of the Review Committee are
based on following circumstances.:

C (1) There were adverse entries in annual confidential reports of the "'
appellant for the years 1975-76 and 1977-78.

(2) A vigilance case has been registered by the Vigilance Department
against the appellant for possession of properties disproportionate to his
known source of income.
D
(3) The appellant has also been asked to explain the allegation of
corruption during his incumbency as Executive Engineer, Balimela Dam
Project.

E (4) Charges have been framed against him for committing ir-
regularities in splitting up the work during his incumbency as Superintend-
ing Engineer, Central Irrigation Circle.

(5) His explanation has also been asked for placing orders with a
firm in Calcutta for supply of 20 tarpaulins at a cost of Rs. 37,759.66 paise
F without following the coda! formalities and without proper lender enquiries
for ascertaining the lowest available rate during his incumbency as Super- t
intending Eni,'1neer, Central Irrigation Circle.

(6) Proceedings have also been started against him for taking up
work of improvement at Kaushalayagang Fishery Farm at an estimated cost
G of Rs. 4,22,565 and for splitting up the contract into two to bring this within
the financial limit of his power without obtaining the approval of the Chief
Engineer for splitting up the work and thus violating the provisions of the
Orissa P.W.D. Code. The matter being referred to the Administrative
Tribunal for enquiry.by the G.A. (Vigilance) Department, the Administra-
H tive Tribunal recommended to demote the appellant to the rank of Execu-
N. PATNAIKv. STATE [S.C.AGRAWAL,J.] 1065

tive Engineer but the Government after careful consideration had decided A
to reduce his three increments.

(7) He was asked to explain the charge that as Superintending
Engineer, Central Irrigation Circle in the year 1981, he committed ir-
regularities in the matter of disposal of 50 m.l. of scrap steel. He submitted B
his explanation and the matter is pending further enquiry.

It has been submitted by Shri Jayant Das, the learned counsel ap-
pearing for the appellant, that in the vigilance case (circumstance No. 2),
which was registered by the Vigilance Department for possession of
property disproportionate to his known sources of income, a final report C
was submitted by the police after completing the investigation and the same
has been accepted by the Chief Judicial Magistrate, Cuttack by order dated
February 29, 1988. As regards circumstance No. 3 wherein the appellant
was asked to explain allegations of corruption during his incumbency as
Executive Engineer, Balimela Dam Project, it has been submitted by the D
appellant that on the receipt of preliminary explanation and after taking
the view of the Engineer-in-Chief the contemplated proceedings were
dropped. With regard to circumstance No. 4 about charges being framed
against the appellant for committing irregularities in splitting ~p the works
during his incumbency as Superintending Engineer, Central Irrigation
Circle, it has been submitted that after explanation has been submitted by E
the appellant no further action was taken and the proceedings were
dropped. The matter referred to in circumstance No. 5 was also dropped.
As regards circumstance No. 6 relating to the proceedings initiated against
the appellant in respect of Kaushalayagang Fishery Farm, it has been
submitted that at the time when the matter was considered by the Review F
Committee the order of the Government imposing the penalty of withhold-
ing three increments on the appellant had not been intimated to the
appellant and that thereafter the appellant had challenged the said order
by filing a petition (O.A. No. 487 of 1988) before the Orissa Administrative
Tribunal which petition has been .allowed by the Tribunal by judgment
dated December 4, 1991 and the order of the State Government imposing G
the said penalty has been quashed. As regards circumstance No. 7, it has
been submitted that the proceedings in the matter of disposal of 50 m.t. of
scrap steel has been dropped. The dropping of the proceedings in respect
of circumstances Nos. 3, 4, 5 and 7 has not been disputed by the respon-
dent. Nor is the submission of the final report in the Vigilance case H
(

1066 SUPREME COURT REPORTS [1996] 3 S.C.R.

A (circumstance No. 2) and its acceptance by the Chief Judicial Magistrate
as well as quashing of the order imposing the penalty of withholding of
three increments (circumstance No. 6) disputed by the respondent. It
would thus appear that apart from the adverse entries for the years 1975-76
and 1977-78 the other circumstances on which reliance was placed by the
Review Committee were proceedings wherein either explanation had been
B asked for from the appellant or where the explanation had been given and
the matter was under consideration of the authorities and all those
proceedings were subsequently dropped. Similarly, the vigilance case which
had been registered against the appellant by the Vigilance Department for
possession of properties disproportionate to his known sources of income
C was at the investigation stage at that time and subsequently after complet-
ing the investigation the appellant has been exonerated and the final report
has been submitted which has been accepted by the Chief Judicial
Magistrate, Cuttack. The penalty of withholding of three increments which
was imposed by the State Government on the appellant in the proceedings
D relating to work of improvement in Kaushalayagang Fishery Farm has been
quashed by the Orissa Administrative Tribunal.

The only material which remains is the adverse entries in the annual
confidential reports for the years 1975-76 and 1977-78. Jn the year 1975-76
the Additional Chief Engineer had recorded "he did not put his heart and
E soul to work". In the year 1977-78 the Reporting Officer had recorded "he
is callous towards accounts and audit and does work in field errectically
splitting up work without competent authority". The countersigning officer
made the following remarks :

"During the period of report, he had committed a lot of financial
F irregularities which could have been avoided and he did not apply
his mind at work."

These remarks relate to the period when the appellant was posted
as Executive Engineer. Thereafter he was promoted as Superintending
G Engineer in May 1978, and in 1984 he was promoted as Chief Engineer
(Irrigation). As regards compulsory retirement from service the legal posi-
tion is well settled :

"The government (or the Review Committee, as the case may be)
shall have to consider the entire record of service before taking a
H decision in the matter - of course attaching more importance to
N. PATNAIKv. STATE [S.C. AGRAWAL,J.] 1067

record of an performance during the later years. The record to be A
so considered would naturally include the entries in the confiden-
tial records/character rolls both favourable and adverse. If a
government servant is promoted to a such remarks lose their sting,
more so, if the promotion is based upon merit (selection) and not
11
upon seniority.
B
(See : Bailamtha Nath Das & Anr. v. Chief District Medical Officer,
Balipada & Anr., (1992] 2 SCC 299, at pp. 315-316)

In the instant case, after the remarks were made in the confidential
.J reports for the years 1975-76 and 1977-78 the appellant had been promoted C
on the post of Superintending Engineer in the year 1978 and thereafter
Chief Engineer in 1984. It has been pointed out that in respect of years
prior to 1975-76, in the year 1976-77 and in the years subsequent to 1977-78
the performance of the appellant was appraised as "good". In these cir-
cumstances, we are of the view that the adverse remarks in the annual
confidential reports for the years 1975-76 and 1977-78 referred to above, D
by themselves, cannot sustain the opinion leading to the compulsory retire-
ment of the appellant on the basis that further retention of the appellant
in service was not in public interest. We are, therefore, unable to uphold
the order of compulsory retirement dated March 5, 1986 and the same has
to be set aside.
E
The date of birth of the appellant is April 26, 1933. In the normal
course he would have retired on April 30, 1991 after attaining the age of
superannuation of 58 years. As a result of the quashing of the order of
compulsory retirement dated March 5, 1986, the appellant has to be treated
to have continued in service till April 30, 1991 and for the purpose of F
pension and other retiral benefits the pay should be fixed as on April 30,
1991 and the pension and retiral benefits payable to him should be com-
puted on that. basis. As regards arrears of pay and other emoluments for
the period from March 5, 1986, the date of the order of compulsory
retirement, till April 30, 1991, the date of his attaining the age of superan- G
nuation, we are of the view that having regard to the facts and circumstan-
ces of the case the appellant should be paid 50 per cent of the pay and
emoluments payable to him for this period.

In the result, the appeal is allowed, the judgment of the Tribunal
dated September 28, 1987 is set aside and the order dated March 5, 1986 H
1068 SUPREME COURT REPORTS (1996] 3 S.C.R.

A for compulsory retirement of the appellant from service is quashed. The
appellant will be treated to have continued in service till April 30, 1991 for
the purpose of pension and other retiral benefits. His pay shall be fixed as
on April 30, 1991 and pension and other retiral benefits payable to him
shall be computed on that basis. For the period from March 5, 1986 till
B April 30, 1991 the appellant shall be paid 50 per cent of the pay and
emoluments payable to him. The said amount as well as the arrears payable
to him on account of revision of pension and retiral benefits shall be paid
to the appellant within a period of three months. There will be no order
as to costs.

Mrs. M.K. Appeal allowed.

< -"