Supreme Court of India
NARINDER MOHAN ARYAversusUNITED INDIA INSURANCE CO. LTD. & ORS.
- Citation
- 2006 INSC 215
- Decided
- 5 April 2006
- Disposal
- Appeal(s) allowed
- Bench
- S B SINHA
Holding
A disciplinary order based on no evidence may be set aside by the High Court, and the appellate authority must apply its mind as mandated by Rule 37, rendering the dismissal unlawful.
Summary
The appellant, an inspector with United India Insurance, was dismissed after a departmental inquiry found him guilty of antedating an insurance cover note following a fire. He appealed, but the appellate authority upheld the dismissal. Simultaneously, a civil suit by the consignor concluded that the cover note was not antedated. The appellant argued that the civil judgment should bind the insurer and that the inquiry was based on no evidence. The Supreme Court held that where a departmental inquiry’s findings are unsupported by evidence, the High Court may exercise judicial review under Article 226 and set aside the disciplinary and appellate orders. The appellate authority must apply its mind as required by Rule 37 of the General Insurance (Conduct, Discipline & Appeal) Rules, 1975, and cannot ignore relevant facts such as the civil judgment. The court set aside the orders, reinstated the appellant, and awarded him 50% back wages.
Issues considered
- The departmental inquiry’s findings were based on no evidence.
- Whether the civil court judgment is binding on the disciplinary proceedings.
- Whether the appellate authority complied with the duty to apply its mind under Rule 37 of the General Insurance Rules.
- Whether the High Court can exercise judicial review under Article 226 despite limited jurisdiction.
- Whether the doctrine of merger applies to the disciplinary and appellate orders.
Legislation cited
- Code of Civil Procedure, 1908s. Section 9
- Constitution of Indias. Article 226
Subjects
disciplinary proceedingsjudicial reviewArticle 226departmental inquiryno evidenceRule 37General Insurance Rulescivil suitres judicatadoctrine of mergernatural justicereinstatementback wages
Judgment
A NARINDER MOHAN ARYA
·-
v.
UNITED INDIA INSURANCE CO. LTD. & ORS.
APRIL 5, 2006
B [S.B. SINHA AND DAL VEER BHANDARI, JJ.]
Constitution of India, 1950:
Article 226-Disciplinary proceedings and consequential orders-
C Judicial review of-Held, power of judicial review would not be refused to
be exercised by High Court although despite it would be lawful to do so--
Writ court would bear in mind distinction between some evidence and no
evidence-Evidence adduced by Management must have nexus with charges-
Inquiry Officer cannot base his findings on mere hypothesis-Discussion on
D material available on record for purpose of applying legal principles was
imperative, which High Court failed to do.
Code of Civil Procedure, 1908:
E
Section 9-Suit challenging findings arrived at disciplinary proceedings
and consequential orders-Held, is maintainable-(Juidelines laid down. -
Service Law:
General Insurance (Conduct, Discipline and Appeal) Rules, 1975-
Rule 37(2)-Disciplinary proceedings-Order of dismissal-Appellate Order-
F Held, must show that there has been proper application of mind by the
appellate authority-Factors to be considered by appellate uuthority-
Discussed.
Disciplinary Proceedings-Report of Inquiry Officer based on no
evidence-Findings of civil court on the same issue-Relevancy of-Inspector
G in Insurance Company chargesheeted for antedating an insurance cover,
goods dispatched whereunder caught fire-Inquiry Officer holding delinquent
guilty-Dismissal order passed-On same issue civil court, in a suit filed by
firm held the contract to be valid and insurance cover not to be antedated-
Held, the findings were relevant and appellate authority could not have
H 932
NARINDER MOHAN ARYA v. UNITED INDIA INSURANCE CO.LTD. 933
without expressing his mind simply ignore the same-Order of appellate A
authority demonstrates total non-application of mind-High Court failed to
exercise its jurisdiction_;_Order of dismissal set aside-Employee to be
reinstated with 50% back wages-Doctrine of merger-Applicability of
Appellant was working as an Inspector in the respondent-United India
Insurance Company. Certain bales of cotton dispatched by a firm and covered B
under the insurance cover issued by the appellant caught fire. A disciplinary
action was initiated against the appellant on the allegation of antedating the
insurance cover. The Inquiry Officer found the appellant guilty. Consequently
he was removed from the service. His appeal was dismissed by the appellate
- authority.
Meanwhile, the firm also filed a suit against the respondent company
arraying the appellant also as a defendant therein. The trial court decreed
the suit holding that the insurance cover was not antedated. The appeal of the
c
insurance company was dismissed by the High Court and the decision attained
finality. D
After the outcome of the suit, the appellant filed a memorial bringing
the findings of the courts to the notice of the Chairman-cum-Managing
Director of the Insurance Company. The memorial was summarily dismissed.
Thereafter the appellant approached the High Court. The litigation before the
High Court ultimately culminated in maintaining the order of dismissal. E
Aggrieved, the delinquent-employee filed the present appeal.
Jt was argued for the appellant, inter alia, that since the subject matter
of dispute in the civil suit as also of the disciplinary proceedings was the same
and the same evidence was adduced, the judgment and decree passed in the
civil court was binding upon the employer; and while disposing of the p
memorial, the Chairman-cum-Managing Director was bound to take into
consideration the relevant fact, namely, the judgment and decree passed by
the Civil Court; that the findings recorded by the Inquiry Officer were based
on no evidence; that the order of appellate authority being a non-speaking
one, was liable to be set aside.
G
Allowing the appeal, the Court
HELD :1.1. Despite limited jurisdiction ofa civil court, it is entitled to
interfere in a case where the report of the Enquiry Officer is based on no
evidence. In a suit filed by a delinquent employee in a civil court as also a writ
court, in the event the findings arrived at in the departmental proceedings H
-
934 SUPREME COURT REPORTS (2006] 3 S.C.R.
A are questioned, it should keep in mind the following: (l) the enquiry officer
is not permitted to collect any material from outside sources during the
conduct of the enquiry. (2) In a domestic enquiry fairness in the procedure is
a part of the principles of natural justice (3) Exercise of discretionary power
involve two elements-(i) Objective and (ii) subjective and existence of the
B exercise of an objective element is a condition precedent for exercise of the
subjective element. (4) It is not possible to lay down any rigid rules of the
principles of natural justice which depends on the facts and circumstances of
each case but the concept of fair play in action is the basis. (5) The enquiry
officer is not permitted to travel beyond the charges and any punishment
imposed on the basis of a finding which was not the subject matter of the
C charges is wholly illegal. (6) Suspicion or presumption cannot take the place
of proof even in a domestic enquiry. The writ court is entitled to interfere
with the findings of the fact of any tribunal or authority in certain
circumstances. [944-D-H; 945-AJ
--
State of Assam & Anr. v. Mahendra Kumar Das & Ors .. [19701 l SCC
D 709 : AIR (1970) SC 1255; Khem Chand v. Union of India & Ors.. AIR (1958)
SC 300; State of Uttar Pradesh v. Om Prakash Gupta, [19691 3 SCC 775;
K.L. Tripathi v. State of Bank of India & Ors.. (1984) l SCC 43 : AIR (1984)
SC 273; Sawai Singh v. State of Rajasthan, AIR (1986) SC 995; Director
(Inspection & Quality Control} Export Inspection Council of India & Ors. v.
E Kalyan Kumar Mitra & Ors., (1987) 2 CLJ 344; Central Bank of India Ltd.
v. Prakash Chand Jain. AIR (1969) SC 983; Ku/deep Singh v. Commissioner
of Police and Ors .. [1999[ 2 SCC IO and Sher Bahadur v. Union of India &
Ors.. [2002) 7 SCC 142, relied on.
1.2. lt is beyond any controversy that when a crucial finding like forgery
F was arrived at on an evidence which is non est in the eyes of law, the civil
court would have jurisdiction to interfere in the matter. As regards the
purported forgery committed by the appellant the civil court observed that
respondent No. l miserably failed to prove the same. (942-C; 943-D)
Ramendra Kishore Biswas v. State ofTripura & Ors.. (1999) l SCC 472
G and State of U.P. v. Mohammad Nooh, AIR (1958) SC 86, relied on.
2.1. An appellate order ifit is in agreement with that of the disciplinary
authority may not be a speaking order but the authority passing the same
must show that there had been proper application of mind on his part as
regards the compliance of the requirements of law while exercising his
H jurisdiction under Rule 37 of the-General Insurance (Conduct, Discipline and
-(
I
NARINDER MOHAN ARYA v. UNITED INDIA INSURANCE CO. LTD. 935
Appeal) Rules, 1975. The appellate authority while disposing of the appeal is A
required to apply his mind with regard to the factors enumerated in sub-rule
(2) of Rule 37. The expression 'consider' is of some significance. In the context
of the rules, the appellate authority was required to see as to whether (i) the
procedure laid down in the rules was complied with; (ii) the Enquiry Officer
was justified in arriving at the finding that the delinquent officer was guilty B
of the misconduct alleged against him; and (iii) whether penalty imposed by
the disciplinary authority was excessive. (948-A; D; 949-A)
2.2. .In the memorial the appellant at the first opportunity raised a
contention that the order of the appellate authority was not a speaking order
at all, besides drawing the attention of the Chairman-cum Managing Director C
to the subsequent event, namely, the judgment and decree passed by the civil
court. When such a contention was raised, it was obligatory on the part of the
Chairman-cum-Managing Director while exercising its statutory jurisdiction
to show that he had applied his mifid to the contentions raised. The judgment
of the civil court being inter parts was relevant. The conduct of the appellant
as noticed by the civil court was also relevant. The fact that the respondent D
has accepted the said judgment and acted upon it would be a relevant fact. The
departmental proceedings are quasi criminal in nature. Under certain
circumstances, a decision of a civil court is also binding upon the criminal
court although, converse is not true. However, it is also true that the standard
of proof in a criminal case and civil case is different. The order of the appellate E
authority demonstrates total non-application of mind.
(948-A-B; G; 949-G-H; 950-A]
Apparel Export Promotion Council v. A.K. Chopra, (1999] 1 SCC 759;
Mis Karamchand Ganga Pershad & Anr. v. Union ofIndia & Ors., AIR (1971)
SC 1244 and R.P. Bhatt v. Union ofIndia, (1986) 2 SCC 651, relied on. p
Capt. M Paul Anthony v. Bharat Gold Mines Ltd. & Anr., [1993] 3 SCC
679 and Krishnakafi Tea Estate v. Akhil Bharatiya Chah Mazdoor Sangh &
Anr., (2004] 8 SCC 200, referred to.
' review would not be refused to be exercised
3.1. The power of judicial G
by the High Court, al.though despite it would be lawful to do so. The Judgment
and order of the Single Judge of the High Court suffers from several
infirmities. He had observed that 'the disadvantages of an employer as such
acts are committed in secrecy and in conspiracy with the person affected by
the accident'. No such finding has been arrived at even in the disciplinary
proceedings nor any charge was made out as against the appellant in that H
936 SUPREME COURT REPORTS (2006) 3 S.C.R.
A behalf. He had no occasion to have his say thereupon. Indisputably, the writ
court will bear in mind the distinction between some evidence and no evidence
but the question which was required to be posed and necessary should have
been as to whether some evidence adduced would lead to the conclusion as
regards the guilt of the delinquent officer or not. The evidence adduced on
behalf of the management must have nexus with the charges. The Enquiry
B Officer cannot base his findings on mere hypothesis. Mere ipse dixit on his
part cannot be a substitute of evidence. The Single Judge did not at all
deliberate on the contentions raised by the appellant. Discussion on the
materials available on record for the purpose of applying the legal principles
was imperative. The Division Bench of the High Court also committed the
C same error. [950-F-G; 951-D-E; G)
Manager, Reserve Bank of India Bangalore v. S. Mani & Ors., [2005) 5
sec 100, relied on.
3.2. The matter may be considered from another angle. The order of
,D the disciplinary authority, in view of the statutory provisions, merged with
the order of the appelhte authority as also that of the Chairman-cum-
Managing Director as the appellate proceedings are in continuation of the
original proceedings and, thus, the doctrine of merger shall apply. A revisional
jurisdiction, as is well known, involves exercise of appellate jurisdiction.
(952-A-BI
E
Kunhayammed & Ors. v. State of Kera/a & Anr., (2000[ 6 SCC 359;
Shankar Ramchandra Abhyankar v. Krishnaji Dattatraya Bapat, AIR (1970)
SC l and Nalakath Sainuddin v. Koorikadan Sulaiman, (2002[ 6 SCC I,
relied on.
F 4. The impugned judgments cannot be sustained and are set aside.
Although, the consequence of setting aside of the said orders would have been
to remit the matter back to the disciplinary authority for consideration of the
matter afresh on merits, but having regard to the fact that the disciplinary
proceedings were initiated against the appellant as far back in 1976, and the
appellant indisputably has suffered a lot, it is ordered that he shall be reinstated
G in service; but, keeping in view the fact that no work had been taken from
him, only 50% of the back wages shall be payable to him. [952-D-E)
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 7645 of2004.
From the Judgment and Order dated 26.8.2003 of the High Court of
H Judicature of Punjab and Haryana at Chandigarh in L.P.A. No. 889 of 2002.
NARINDER MOHAN ARYA v. UNITED INDIA INSURANCE CO. LTD. [S.B. SINHA,J.] 937
Puneet Balli, Satinder S. Gulati and Dr. Kailash Chand for the Appellant. A
Sudhir Kumar Gupta and P.K. Seth for the Respondent.
The Judgment of the Court was delivered by
S.B. SINHA, J. The appellant herein was appointed as an Inspector by B
the first respondent. He was at the .material time posted at Hisar. He issued
four insurance cover notes in favour of one Mis Aman Singh Munshi Lal
(firm) on 21.10.1976. The payment in respect of all four covernotes was made
by one cheque. The three cover notes were issued against goods to be
transported through railwa)'S and one cover note for the goods to be
transported by road. The cover notes were despatched from Hisar to its C
divisional office at Sirsa which were received on 23.10.1976. On 22.10.1976
bales of cotton despatched by the firm caught fire. The appellant was on
leave from 23.10.1976 to 30.10.1976. He was in Chandigarh on 23.10.1976. The
said firm raised a claim in respect of the loss of goods suffered by it in the
said incident of fire.
D
However, in respect of the said incident a disciplinary proceeding was
initiated against the appellant on or about 11.1.1978 on an allegation of
antedating one insurance cover note for Rs. 1 lakh after the said fire broke
out on 22.10.1976 which is said to have been issued on 31.10.76. In the
departmental proceedings the Enquiry Officer found him guilty of the said E
charge, whereupon he was removed from service by an order of the Disciplinary
Authority dated 24.7.79. No second show cause notice however, was served
upon him. He preferred a departmental appeal in terms of Rule 37 of the
General Insurance (Conduct, Discipline & Appeal) Rules, 1975 (Rules). The
said appeal was dismissed by an order dated 29.9. I 980.
F
In the meanwhile, the 'firm' filed a suit against the respondent herein
for recovery of the insured sum of Rs. 1,22,795.64. The appellant herein was
also impleaded as a party defendant therein. In the said suit, inter alia, the
following issues were framed :
"2. Whether valid contract of insurance was entered into between the G
plaintiff and defendant No. 1 through deft. No. 2?
3. Whether the contract of insurance entered into between the plaintiff
firm and defendant no. l through cover note No. 09643 dated 2 l. l 0.76
is void ab-initio having been obtained in collusion with defendant
No. 2 after the destruction of the goods through fire .." H
938 SUPREME COURT REPORTS [2006] 3 S.C.R.
A On or about 7. I0.1980 the trial court decreed the said suit for a sum of
Rs. 98,550.16 on a finding that the said cover note was not antedated. For ·
arriving at the said finding, reliance was placed on the opinion of the
handwriting expert.
The first respondent herein being aggrieved by and dissatisfied with
B the said judgment and decree dated 7.10 .1980 passed in Suit No. 50159 of
1978-79 preferred an appeal before the said High Court which was dismissed
by an order dated 4.10.1982. The matter was not carried further.
After delivery of the judgment by the civil court the appellant filed a
C memorial bringing to the notice of the Chairman-cum-Managing Director of
the company thereabout, which was dismissed summarily stating:
"I have considered the Memorial dated 15.11.80 submitted by Shri
N.M. Arya against the order No. NRO: PER:80:3287 dated 29th
September, 1980 of the Appellate Authority, rejecting his appeal and
confirming the penalty of removal from service.
D
I have also considered the Enquiry Proceedings and the relevant
records.
I do not find any reason to interfere with the order of the Appellate
Authority and the Competent Authority. The Memorial is rejected."
E
He filed a writ petition before the High Court of Punjab and Haryana
against the said orders which was marked as Civil Writ Petition No. 3232 of
1981. The writ petition filed by the appellant was allowed by the High Court
directing the respondent to reinstate him in service with continuity of service
and full back wages including the benefit of seniority and promotion. The
F High Court in support of its judgment relied upon the judgment of the civil
court. However, the first respondent filed a Letters Patent Appeal thereagainst
before the said High Court which was marked as LPA No. 344 of 1991. By an
order dated 16.3.94 the said appeal was dismissed. A Special Leave Petition
filed thereaga:inst by the first respondent was marked as SLP (c) No. 11383/
G 94 and by a judgment and order dated 29. 7.94 this Court remitted the matter
back to the learned Single Judge of the High Court opining that:
"From the above facts it becomes evident that the departmental
proceedings against the respondent had concluded in his removal
from service. That conclusion was passed on the evidence placed
H before the Enquiry Officer which was evaluated by the Disciplinary
NARINDER MOHAN ARYA v. UNITED INDIA INSURANCE CO. LTD. [S.B. SINHA, J.J 939
Authority as well as the Departmental Appellate Authority. In a A
co !lateral suit filed by the consignor for damages for loss of goods
by fire the defence was that the cover was antedated. While examining
that defence was that the cover was antedated. While examining that
defence the civil court came to the conclusion that the same was not
proved. That, however, cannot dislodge the decision earlier taken in B
ll the departmental inquiry based on the material and evidence placed
at the said enquiry. The correctness or otherwise of the conclusion
reached by the departmental authorities would depend on the enquiry
recorded and the ultimate conclusion reached by the authorities can
be shaken only on an evaluation of that record. Even if a suit had
been filed for setting aside the removal order, the civil court could not C
have acted as an appellate authority. Therefore, the finding recorded
in the suit cannot dislodge the finding recorded, in the enquiry
concluded earlier in point oftime. Otherwise the decision of the civil
court would appear to be one by an appellate authority against the
departmental enquiry on a record that was not before the Disciplinary
Authority." D
A learned Single Judge of the High Court after remittance of the matter
by this Court allowed the said writ petition by an order dated 11.1.2002.
However, on a Letters Patent Appeal filed by the respondent No. I herein, by
an order dated 13.3.2002 the Division Bench of the High Court remanded the E
matter again to the learned Single Judge directing him not to be influenced
by the finding of the Civil Court on issue No. 2 and 3 in the suit filed by the
said firm. The writ petition filed by the appellant herein was dismissed by an
order dated 22.5.2002. The Letters Patent Appeal filed by the appellant herein
has been dismissed by the impugned judgment.
F
Mr. Puneet Bali, learned counsel appearing on behalf of the appellant
in support of the appeal inter alia submitted:
(1) Keeping in view the fact that the subject matter of dispute in the
civil suit as also that of the disciplinary proceedings was the
same, and same evidences have been adduced, the judgment G
and decree passed by the Civil Court was binding upon the first
respondent.
(2) The High Cou1t in the first round of the litigation not only
considered voluminous records of the disciplinary as also the
civil court proceedings and noticed the findings of fact arrived H
940 SUPREME COURT REPORTS [2006] 3 S.C.R.
A at, which were relevant for disposal of the writ petition filed by
the appellant; but while passing the impugned judgment, it
refused to do so as a result whereof the appellant had gravely
been prejudiced.
(3) A bare perusal of the report of the Enquiry Officer would show
B that the findings recorded therein were based on no evidence.
(4) The order of the appellate authority being a non-speaking one
the same was liable to be set aside.
f5) While disposing of the Memorial, the Chairman-cum-Managing
Director was bound to take into consideration the relevant fact
c namely the judgment and decree passed by the civil court.
Mr. Sudhir Kumar Gupta, learned counsel appearing on behalf of the
respondent, on the other hand, would submit that in view of the fact that the
civil Court could not have acted as an appellate authority over the order
passed by the disciplinary authority, the High Court's opinion is unassailable.
D
The Enquiry Officer in his report dated 5.5.79 recorded the allegations
made as against the appellant in the disciplinary proceedings in the following
terms:
"The brief facts of the case appear to be that Sh. N.M. Arya issued
E a cover note No. 09643 dated 21.10.76 covering a consignment of
cotton bales valued for Rs. One lac in transit from Hansi to Phulwari
Shariff by Truck No. HRR 7297 covering the risk of Marine Insurance
T.P.N.D. and water damage charging a premium of Rs. 165/- plus
Rs. II- as stamp duty totalling Rs. 166/-. This consignment while
F awaiting transhipment at the U.P. border near Ghaziabad caught fire
on 22.10.76 resulting into heavy damage to the stock of cotton bales.
It is alleged that the cover note No. 09643 was issued on or after
22. l 0. 76 after the fire had broken out antedating the date of issue on
21.10. 76. This is only one charge and that is that the cover note No.
09643 was issued after the fire damage to the consignment had taken
G place and cover note was antedated to 21.10.76."
Before the Enquiry Officer three witnesses were examined on behalf of
the first respondent being S/Shri A.R. Sethi, D.D. Jain and K.L. Manchanda
whereu" the appellant herein besides examining himself examined the S/Shri
Ferozilal Jain, B.B. Jain and N.M. Arya. The Enquiry Officer noticed that there
H
NARINDER MOHAN ARY Av. UNITED INDIA INSURANCE CO. LTD. [S.B. SINHA, J .] 941
was no direct oral or documentary evidence or eye witness to prove the A
charge. MW-1 stated that although 23.10.1976 was the date put on the said
envelop as having been received on that date, he allegedly saw them lying
on his table when he returned to his office on 25.10.76. He further accepted
that a telegram Ext. M-3 dated 24.10.76 was received from the said firm
claiming loss "by fire for goods under the cover note in question". MW-3 Shri
K.L. Manchanda was an assistant in the Sirsa branch. He alleged that he did B
-'
not receive the cover note in question on 23.10.1976. Mr. D.D. Jain was an
Inspector of the company. He alleged that a representative of the firm had
approached him on 22.10.1976 to take a transit insurance cover of cotton bales
from Hansi to Phulwari Shariff by road transport w.e.f. 21.10.1976 which he
refused. He was, however, offered a sum of Rs. 15,000/- to Rs. 20,000/- as c
temptation to cover the risk ofthe·cotton bales already damaged. He not only
declined the offer, but he intimated thereabout to Shri S.P. Malhotra, the
Branch Manager at Hisar. The Enquiry Officer noticed:
"Apart from these two witnesses the charge sheeted employee himself
had examined as a witness. I observe from the statement of the D
Management witness that none of them are able to give direct account
as to the conduct of the charge sheeted employee with regard to the
alleged mis-conduct."
-- It was further noticed that in the register the date of the cover note was
originally written as 22.10.1976. For the afore-mentioned purpose, the Enquiry
Officer took help of magnifying glass and on the basis of doubt created in
E
his mind as to the veracity of the contention of the appellant, came to the
conclusion that the same was despatched only on 23.10.1976. In the said
report it has been accepted that the appellant emphatically denied any over
writing in the said despatch register. The Enquiry Officer proceeded on a
F
hypothesis as regard the delay in conveying the information to the company
by 48 hours by the said Firm.
Ordinarily, we would not have referred to the findings of the Enquiry
Officer. He was entitled to draw his own inference and so long as the inference
drawn by him is supported by some materials on record, it is well settled that G
c a Court of judicial review would not interfere therewith. We have further
noticed herein before marked features of this case which make this case stand
apart from other cases.
I
The self-same issue fall for consideration before a competent Civil
Court. In the Civil Court a hand writing expert was examined who was of the H
942 SUPREME COURT REPORTS (2006) 3 S.C.R.
A opinion that instead and place of altering the despatch register from 23rd to
22nd it was really the other way round, namely, it was originally 22nd but the
same had been altered to 23rd. Before the Civil Court also both Mr. A.R. Sethi
a:1d Mr. D.D. Jain were examined. Some of the witnesses on behalf of the
respondent were also examined. The Civil Court held :
B "If the original entry had been 23/10, then the figure '3' would have
been written as written in the next serial number and it only shows
that the original figure was 22. An effort has been made to convert
it into 23. So, it is just possible that defendant No. I after taking into
possession the despatch register might have tried to convert it into
23 just to create confusion."
c
As regard the purported forgery committed by the appellant herein the
Civil Court observed that respondent No. I miserably failed to prove the same.
It was held:
"In view of my discussion above, I hold that a valid contract of
D insurance was entered into between the plaintiff and defendant No. I
through defendant No.2 through cover note No.09643 dated 21.10. 76
Ex P-10 and it had not been obtained by plaintiff firm in collusion with
defendant No.2 after the destruction of the goods through fire.
Accordingly, both these issues decided in favour of the plaintiff and
E against the contesting defendants."
The first appellate court also went into the said question in great details
and came to the following conclusion :
"It is further to mention that on the same day, three more cover notes
F Ex.P.7 to Ex.P.9 with regard to three other consignments were issued
by defendant No.2 in favour of the plaintiff firm, the correctness of
which was not challenged at any stage. It is also fruitful to note that
defendant no. I got encashed the cheque pertaining to all the cover-
notes. A resume of the above facts would show that the plaintiff
successfully proved that a valid contract of insurance had come into
G existence and it was rightly held so by the learned trial court under
issue no.2."
It is not in dispute that the second appeal preferred by the respondent
against the said judgment was dismissed. The said decree has also been acted
upon It attained finality.
H
NARINDER MOHAN ARYA v. UNITED INDIA INSURANCE CO.LTD. [S.B. SINHA, J.] 943
On an earlier round of litigation, i.e. in the writ proceedings the appellant A
succeeded both before the learned Single Judge as also the Division Bench.
The High Court proceeded on the basis that the findings of the Civil Court
would prevail over the findings of the Enquiry Officer. However, this Court
did not agree with the said findings on the groun.d that the scope of the
jurisdiction of the Civil Court in a matter arising of the departmental
proceedings in a suit filed by a third party impleading both the parties herein B
as defendants and the principle of res judicata will have no application as
even if a suit was filed for setting aside the order of removal, the civil court
could not have acted as an appellate authority. This Court, however, had no
occasion to consider as to what extent the judgment and decree passed by
the civil court would have been relevant in the subsequent departmental C
proceeding. It was also not suggested that the civil court would have no
jurisdiction to interfere with the order of penalty even if the same was found
to be based on no evidence.
It is, however, beyond any controversy that when a crucial finding like
forgery was arrived at on an evidence which is non est in the eyes of law, D
the civil court would have jurisdiction to interfere in the matter.
This Court remitted the matter back to the learned Single Judge of the
High Court for disposal on other points raised by the appellant in the writ
petition.
E
The learned Single Judge as noticed hereinbefore directed the
appointment of a fresh enquiry officer on the premise that the judgment of
the Civil Court is a relevant piece of evidence.
The Division bench, however, set aside the said judgment stating that
in view of the unequivocal observations made by this Court as regard the F
findings recorded in the civil suit by the firm cannot dislodge the findings
recorded by the enquiry officer and in that view of the matter the learned
Single Judge was not justified in quashing. the punishment. The Division
Bench observed that the judgment of the Single Judge suffers from mutually
destructive findings. G
In its judgment, after remand, the learned Single Judge quoted almost
the entire order of the Enquiry Officer and without discussing the issues
raised therein held:
"(! ) .... When these types of acts are committed by an employee to the H
944 SUPREME COURT REPORTS (2006] 3 S.C.R.
A disadvantage of the employer, these are committed in secrecy and in
conspiracy with the person affected by the accident...
(2) .. .It is a settled principle of law that High Court cannot sit as a
court of appeal over the findings of the appellate authority and that
is the reason the Hon 'ble Supreme Court in various judgments said
B that while dealing with such like cases, we have to make a distinction
whether it is a case of "some evidence" or of "no evidence" ...
(3) ... The sufficiency ofprooflike a criminal charge is not required in
the departmental proceedings nor the strict provisions of Indian
Evidence Act are applicable. The moment it is established to the
C conscious of the Court that the opinion formulated by the inquiry
officer could be reasonably formulated by an ordinary prudent man,
then in such eventuality such decision of the Inquiry Officer should
not be interfered with."
By reason of the impugned judgment the Division Bench dismissed the
D intra-court appeal filed by the appellant summarily.
In our opinion the learned Single Judge and consequently the Division
Bench of the High Court did not pose unto themselves the correct question.
The matter can be viewed from two angles. Despite limited jurisdiction a civil
E court, it was entitled to interfere in a case where the report of the Enquiry
Officer is based on no evidence. In a suit filed by a delinquent employee in
a civil court as also a writ court, in the event the findings arrived at in the
departmental proceedings are questioned before it should keep in mind the
following: (1) the enquiry officer is not permitted to collect any material from
outside sources during the conduct of the enquiry. [See State of Assam &
F Anr. v. Mahendra Kumar Das & Ors., [1970] 1 SCC 709: AIR (1970) SC 1255]
(2) In a domestic enquiry fairness in the procedure is a part of the principles
of natural justice [See Khem Chand v. Union of India & Ors., AIR (1958) SC
300 and State of Uttar Pradesh v. Om Prakash Gupta, [1969] 3 SCC 775]. (3)
Exercise of discretionary power involve two elements-(i) Objective and (ii)
G subjective and existence of the exercise of an objective element is a condition
precedent for exercise of the subjective element. [See K.L. Tripathi v. State
of Bank of India & Ors.. [l 984] I SCC 43 : AIR (1984 ) SC 273]. (4) It is not
possible to lay down any rigid rules of the principles of natural justice which
dt:pends on the facts and circumstances of each case but the concept of fair
play in action is the basis. [See Sawai Singh v. State of Rajasthan AIR ( 1986)
H SC 995] (5) The enquiry officer is not permitted to travel beyond the charges
NARINDER MOHAN ARYA v. UNITED INDIA INSURANCE CO. LTD. [S.B. SINHA, J.] 945
and any punishment imposed on the basis of a finding which was riot the A
subject matter of the charges is wholly illegal. (See Director (Inspection &
quality Control) Export Inspection Council of India & Ors. v. Kalyan Kumar
Mitra & Ors., (1987) (2) CU 344]. (6) Suspicion or presumption cannot take
the place of proof even in a domestic enquiry. The writ court is entitled to
interfere with the findings of the fact of any tribunal or authority in certain B
circumstances. [See Central Bank of India Ltd v. Prakash Chand Jain, AIR
(I 969) SC 983, Ku/deep Singh v. Commissioner of Police and Ors., (1999] 2
sec 101.
We may notice that this Court in Ramendra Kishore Biswas v. State of
Tripura & Ors., [I 999] 1 SCC 472 was clearly of the opinion that a civil suit C
challenging the legality of a disciplinary proceeding and consequent order of
punishment is maintainable. Even this Court in its order dated 29.7.1994 said
so. It is interesting to note that in the celebrated judgment of this Court in
State of UP. v. Mohammad Noah, AIR (1958) SC 86 this Court opined:
"On the authorities referred to above it appears to us that there may D
conceivably be cases - and the instant case is in point-where the error,
irregularity or illegality touching jurisdiction or procedure committed
by an inferior court or tribunal of first instance is so patent & loudly
obtrusive that it leaves on its decision an indelible stamp of infirmity
-- or vice which cannot be obliterated or cured on appeal or revision. If
an inferior court or tribunal of first instance acts wholly without E
jurisdiction or patently in excess of jurisdiction or manifestly conducts
the proceedings before it in a manner which is contrary to the rules
of natural justice and all accepted rules of procedure and which
offends the superior court's sense of fair play the superior Court may,
we think, quite properly exercise its power to issue the prerogative F
writ of certiorari to correct the error of the court of tribunal of first
instance, even if an appeal to another inferior court or tribunal was
available and recourse was not had to it or if recourse was had to it,
it confirmed what ex facie was a nullity for reasons aforementioned.
This would be so also the more if the tribunals holding the original
trial and the tribunals hearing the appeal or revision were merely G
departmental/tribunals composed of persons belonging to the
departmental hierarchy without adequate legal training and
background and whose glaring lapses occasionally come to our
notice."
(Emphasis supplied) H
946 SUPREME COURT REPORTS [2006] 3 S.C.R.
A Yet again in Sher Bahadur v. Union of India & Ors., (2002 (7) SCC 142]
this Court observed:
"It may be observed that the expression "sufficiency of evidence"
postulates existence of some evidence which links the charged officer
with the misconduct alleged against him. Evidence, however voluminous
B it may be, which is neither relevant in a broad SP,nse nor establishes
any nexus between the alleged misconduct and the charged officer, is
no evidence in law. The mere fact that the enquiry officer has noted
in his report, "in view of oral, documentary and circumstantial evidence
as adduced in the enquiry", would not in principle satisfy the rule of
sufficiency of evidence. Though, the disciplinary authority cited one
c witness Shri R.A. Vashist, Ex. CVI/Northem Railway, New Delhi, in
support of the charges, he was not examined. Regarding documentary
evidence, Ext. P-1, referred to in the enquiry report and adverted to
by the High Court, is the order of appointment of the appellant which
is a neutral fact. The enquiry officer examined the charged officer but
D nothing is elicited to connect him with the charge. The statement of
the appellant recorded by the enquiry officer shows no more than his
working earlier to his re-engagement during the period between May
1978 and November 1979 in different phases. Indeed, his statement
was not relied upon by the enquiry officer. The finding of the enquiry
E
officer that in view of the oral, documentary and circumstantial
evidence, the charge against the appellant for securing the fraudulent
appointment letter duly signed by the said APO (Const.) was proved,
--
is, in the light of the above discussion, erroneous. In our view, this
is clearly a case of finding the appellant guilty of charge without
having any evidence to link the appellant with the alleged misconduct.
F The High Court did not consider this asp.:ct in its proper perspective
as such the judgment and order of the High Court and the order of
the discip~inary authority, under challenge, cannot be sustained, they
are accordingly set aside."
It is also of some interest to note that the first respondent itself, in the
G civil suit filed by the firm relied upon a copy of the report of the Enquiry
Officer. The first respondent, therefore, itself invited comments as regard the
existence of sufficiency of ev idenceiacceptability thereof and, thus, it may not
now be open to them to contend that the report of the Enquiry Officer was
sacrosanct.
H
NARINDER MOHAN ARYA v. UNITED INDIA INSURANCE CO.LTD. [S.B. SINHA, J.] 947
We have referred to the fact of the matter in some details as also the A
scope of judicial review· only for the purpose of pointing out that neither the
learned Single Judge nor the Division Bench of the High court considered the
question on merit at all. They referred to certain principles of law but failed
to explain as to how they apply in the instant case in the light of the
contentions raised before it. Other contentions raised in the writ petition also B
were not considered by the High Court.
We may for the aforementioned purpose take note of the extant rules
operating in the field. Requirements of consideration in an appeal from an
order of the disciplinary authority by the appellate authority is contained in
Rule 37 whereas the provisions as regards filing of a memorial are contained C
in Rule 40 thereof, which read as under:
"37. Consideration of Appeals- (I) In case of an appeal against an
order of suspension, the appellate authority shall consider whether in
the light of the provisions of Rule 20 and having regard to the
circumstances of the case the order of suspension is justified or not . D
and confirm or revoke the other accordingly.
(2) In the case of an appeal against an order imposing any of the
penalties specified in Rule 23, the appellate authority shall consider:
(a) Whether the procedure prescribed in these Rules has been
complied with and if not, whether such non-compliance has E
resulted in failure of justice;
(b) Whether the findings are justified; and
(c) Whether the penalty imposed is excessive, adequate or
inadequate, and pass orders:
F
I. setting aside, reducing, confirming or enhancing the penalty;
or
II. remitting the case to the authority which imposed the penalty
or to any other authority with such direction as it may deem
fit in the circumstances of the case. G
"40-Memorial-An employee whose appeal under these Rules has
been rejected by the Chairman/Chairman-cum-Managing Director or in
whose case such appellate authority has enhanced the penalty either
on appeal under Rule 24 or on review under Rule 39 (2) may address
a memorial to the Chairman/Chairman-cum-Managing Director in respect H
948 SUPREME COURT REPORTS [2006] 3 S.C.R.
A of that matter within a period of a 6 months from the date the appellant
received a copy of the order of such appellate authority."
The appellate authority, therefore, while disposing of the appeal is
required to apply his mind with regard to the factors enumerated in sub-rule
2 of Rule 37 of the Rules. The judgment of the civil court being inter parties
B was relevant. The conduct of the appellant as noticed by the civil court was
also relevant. The fact that the respondent has accepted the said judgment
and acted upon it would be a relevant fact. The authority considering the
memorial could have justifiably came to a different conclusion having regard
to the findings of the civil court. But, it did apply its mind. It could have for
C one reason or the other refused to take the subsequent event into
consideration, but as he had a discretion in the matter, he was bound to
consider the said question. He was required to show that he applied his mind
to the relevant facts. He could not have without expressing his mind simply
ignored the same.
D An appellate order if it is in agreement with that of the disciplinary
authority may not be a speaking order but the authority passing the same
must show that there had been proper application of mind on his part as
regard the compliance of the requirements of law while exercising his jurisdiction
under Rule 37 of the Rules.
E In Apparel Export Promotion Council v. A.K. Chopra, [1999] l SCC 759
which has heavily been relied upon by Mr. Gupta, this Court stated:
"The High Court appears to have overlooked the settled position that
in departmental proceedings. the disciplinary authority is the sole
judge of facts and in case an appeal is presented to the appellate
F authority, the appellate authority has also the power/and jurisdiction
to re-appreciate the evidence and come to its own conclusion, on
facts, being the sole fact-finding authorities. "
(Emphasis supplied)
G The appellate authority, therefore, could not ignore to exercise the said
power.
The order of the appellate authority demonstrates total non-application
of mind. The appellate authority, when the rules require application of mind
on several factors and serious contentions have been raised, was bound to
H assign reasons so as enable the writ court to ascertain as to whether he had
- NARINDER MOHAN ARYA v. UNITED INDIA INSURANCE CO. LTD. [S.B. SINHA, J.] 949
applied his mind to the relevant factors which the. statute requires him to do.
The expression 'consider' is of some significance. In the context of the rules,
the appellate authority was required to see as to whether (i) the procedure
A
laid down in the rules was complied with; (ii) the Enquiry Officer was justified
in arriving at the finding that the delinquent officer was guilty of the misconduct
alleged against him; and (iii) whether penalty imposed by the disciplinary B
-- authority was excessive.
InR.P. Bhatt v. Union of India, (1986] 2 SCC 651 this Court opined:
"The word "consider" in Rule 27(2) implies "due application of mind".
It is clear upon the terms of Rule 27(2) that the Appellate Authority
,_ is required to consider (!) whether the procedure laid down in the c
Rules has been complied with; and if not, whether such non-
compliance has resulted in violation of any provisions of the
Constitution or in failure of justice; (2) whether the findings of the
disciplinary authority are warranted by the evidence on record; and
(3) whether the penalty imposed is adequate; and thereaftt;r pass D
orders confirming, enhancing etc. the penalty, or may remit back the
case to the authority which imposed the same. Rule 27(2) casts a duty
on the Appellate Authority to consider the relevant factors set forth
in clauses (a), (b} and (c) thereof.
There is no indication in the impugned order that the Director General E
was satisfied as to whether the procedure laid down in the Rules had
been complied with; and if not, whether such non-compliance had
resulted in violation of any of the provisions of the Constitution or
in failure of justice. We regret to find that the Director General nas
also not given any finding on the crucial question as to whether the
findings of the disciplinary authority were warranted by the evidence F
on record. It seems that he only applied his mind to the requirement
of clause (c) of Rule 27(2) viz. whether the penalty imposed was
adequate or justified in the facts and circumstances of the present
case. There being non-compliance with the requirements of Rule 27(2)
of the Rules, the impugned order passed by the Director General is G
liable to be set aside."
In paragraph 13 of the memorial the appellant at the first opportunity
raised a contention that the order of the appellate authority was not a
speaking order at all, besides drawing the attention of the Chairman-cum
Managing Director to the subsequent event namely the judgment and decree H
950 SUPREME COURT REPORTS [2006] 3 S.C.R.
A passed by the civil court. The said authority again did not apply its mind
while passing his order dated 31st March, 1981. When such a contention was
raised, it was obligatory on the part of the Chairman-cum-Managing Director
while exercising its statutory jurisdiction to show that he had applied his mind
to the contentions raised. Such application of mind on his part is not apparent
from the order. The departmental proceedings are quasi criminal in nature.
B
Under certain circumstances, a decision of a civil court is also binding
upon the criminal court although, converse is not true. [See Mis Karamchand
Ganga Pershad & Anr. v. Union of India & Ors. AIR (1971) SC 1244].
-
However, it is also true that the standard of proof in a criminal case and civil
C case is different.
We may notice that in Capt. M Paul Anthony v. Bharat Gold Mines
Ltd. & Anr., [1993] 3 SCC 679 this Court observed:
"Since the facts and the evidence in both the proceedings, namely, the
departmental proceedings and the criminal case were the same without
D
there being any iota of difference, the distinction, which is usually
drawn as between the departmental proceedings and the criminal case
on the basis of approach and burden of proof, would not be applicable
to the instant case."
E We may not be understood to have laid down a law that in all such
circumstances the decision of the civil court or the criminal court would be
binding on the disciplinary authorities as this Court in a large number of
decisions points point that the same would depend tipon other factors as
well. See e.g. Krishnaka/i Tea Estate v. Akhil Bharatiya Chah Mazdoor
Sangh & Anr., [2004] 8 SCC 200 and Manager, Reserve Bank of India
F Bangalore v. S. Mani & Ors .. [2005] 5 SCC 100. Each case is, therefore,
required to be considered on its own facts.
It is equally well settled that the power of judicial review would not be
refused to be exercised by the High Court, although despite it would be lawful
G to do so. In Manager, Reserve Bank of India Bangalore (supra) this Court
observed:
"The findings of the learned Tribunal, as noticed hereinbefore, are
wholly perverse. It apparently posed unto itself wrong questions. It
placed onus of proof wrongly upon the appellant. 1ts decision is
H based upon irrelevant factors not germane for the purpose of arriving
_, J
·NARINDER MOHAN ARYA v. UNITED INDIA INSURANCE CO. LTD. [S.-B. SINHA, l.J 95 J
--- at a correct finding of fact. It has also failed to take into consideration A
the relevant factors. A case for judicial review, thus, was made out."
In that case also, in view of the admissions made by the Management
witness, it was found that tribunal's findings were based on no evidence and,
thus, irrational. This Court also noticed that the circumstances relied upon by
the tribunal were wholly irrelevant stating: B
"The circumstances relied upon, in our opinion, are wholly irrelevant
for the purpose of considering as to whether the respondents have
completed 240 days of service or not. A party to the !is may or may
not succeed in its defence. A party to the !is may be filing
representations or raising demands, but filing of such representations C
or raising of demands cannot be treated as circumstances to prove
their case."
The Judgment and order of the learned Single Judge suffers from several
infinnities. He had observed that 'the disadvantages of an employer as such D
acts are committed in secrecy and in conspiracy with the person affected by
the accident'. No such finding has been arrived at even in the disciplinary
proceedings nor any charge was made out as against the appellant in that
behalf. He had no occasion to have his say thereupon. Indisputably, the writ
court will bear in mind the distinction between some evidence or no evidence
....... but the question which was required to be posed and necessary should have E
been as to whether some evidence adduced would lead to the conclusion as
regard the guilt of the delinquent officer or not. The evidence adduced on
behalf of the management must have nexus with the charges. The Enquiry
Officer cannot base his findings on mere hypothesis. Mere ipse dixit on his
part cannot be a substitute of evidence.
F
The findings of the learned Single Judge to the effect that 'it is
established with the conscience (sic) of the Court reasonably fonnulated by
an Enquiry Officer then in the eventuality' may not be fully correct ina,smuch
as the Court while exercising its power of judicial review should also apply
its mind as to whether sufficient material had been brought on record to G
sustain the findings. The conscience of a court may not have much role to
play. It is unfortunate that the learned Single Judge did not at all deliberate
on the contentions raised by the appellant. Discussion on the materials
available on record for the purpose of applying the legal principles was
imperative. The Division Bench of the High Court also committed the same
error. H
l I
A
952 SUPREME COURT REPORTS (2006] 3 S.C.R.
The matter may be considered from another angle. The order of the
disciplinary authority, in view of the statutory provisions, merged with the
order of the appellate authority as also that of the Chairman-cum-Managing
-
Director as the appellate proceedings are in continuation of the original
proceedings and, thus, the doctrine of merger shall apply. [See Kunhayammed
B & Ors. v. State of Kera/a & Anr., [2000] 6 sec 359].
A revisional jurisdiction as is well known involves exercise of appellate
jurisdiction. [See Shankar Ramchandra Abhyankar v. Krishnaji Dattatraya
Bapat, AIR (1970) SC I and Nalakath Sainuddin v. Koorikadan Sulaiman,
[2002] 6 sec 1J.
c Mr. Bali, learned counsel appearing on behalf of the appellant raised a
contention that the disciplinary proceedings was vitiated as the authorities
acted mala fide and with a biased attitude. We do not find any substance
therein.
D For the foregoing reasons the impugned judgments cannot be sustained
which are set aside accordingly. Although, the consequence of setting aside
of the said orders would have been to remit the matter back to the disciplinary
authority for consideration of the matter afresh on merit, but having regard
to the fact that the disciplinary proceedings were initiated against the appellant
as far back in 1976, we refrain Ol)rselves from doing so. He indisputably, have
E suffered a lot. However, the question which arises is what relief should be
granted to the appellant. The appellant shall be reinstated in service. We,
however, while directing reinstatement of the appellant, keeping in view of the
fact that no work had been taken from him, direct that only 50% of the back
wages shall be payable. The appeal is allowed with the abovementioned
directions.
F
In the facts and circumstances of the case the parties shall bear their
own costs.
RP. Appeal allowed.
G
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