Holding

The compulsory retirement order was valid because the adverse entries for the last two years of service constituted sufficient material, and the High Court Division Bench erred in setting it aside.

Summary

The respondent, an Assistant Engineer in the Posts and Telegraphs Department, was compulsorily retired under Fundamental Rule 56(j) after a high‑powered committee found adverse confidential reports for the financial years 1970‑71 and 1971‑72, indicating a decline in his work standards. He challenged the retirement in the High Court; the single judge upheld it, but a Division Bench set it aside, holding that no material justified the action and that the order was arbitrary. The Union of India appealed to the Supreme Court. The Court held that the adverse entries for the last two years constituted sufficient material to justify retirement, that the department’s decision was not mala fide, perverse or unreasonable, and that compulsory retirement is not a punishment but an exercise of governmental discretion. Consequently, the Supreme Court allowed the appeal, restored the original retirement order, and dismissed the Division Bench’s judgment.

Issues considered

Whether the adverse confidential reports for 1970‑71 and 1971‑72 provided sufficient material to justify compulsory retirement under Fundamental Rule 56(j).
Whether the High Court Division Bench erred in quashing the retirement order on the ground of lack of material and arbitrariness.
Whether courts may interfere with a compulsory retirement order that is not punitive but based on departmental discretion.

Legislation cited

Fundamental Ruless. 56G, s. 56(j)

Subjects

compulsory retirementFundamental Rule 56service lawadministrative discretionnatural justicehigh‑powered committeeconfidential reportspublic interest

Judgment

A POSTS AND TELEGRAPH BOARD AND ORS.
v.
C. S. N. MURTHY

MARCH 26, 1992

B [S. RANGANATHAN, V. RAMASWAMI AND YOGESHWAR
DAYAL, JJ.]

Service Law :

c Fundamental Rules :

F.R. 56(j}-Compulsory retirement~osts and Telegraphs Depart-
ment-Assistant Engineer-Service record-Review of-Standard of work
declined and not satisfactory for last two years-No adverse remarks for
previous years-Order of compulsory retirement passed on recommendation
D of high power committe&-Validity of: whether courts should interfere with.
The case of the respondent, an Assistant Engineer in Posts and
Telegraphs Department, was considered for compulsory retirement under
Fundamental Rule 56(j). There were adverse remarks for the financial
E years 1970-71and1971-72 showing that respondent's standard of work had
declined and was not satisfactory. There was no material adverse to the
respondent up to the year 1969-70. On the recommendation of a high power
c.ommittee, he was compulsorily retired from service in February, 1973.

Respondent's writ petition challenging his compulsory retirement
F was dismissed by the High Court; but the Division Bench of the High Court
allowed his appeal holding that the order of retirement was not found on
any relevant material and was arbitrary and capricious. The Union of
India filed the appeal by special leave to this Court.

Allowing the appeal, this Court,
G
HELD : 1. Notwithstanding the earlier record of the respondent
being good, if the record showed that the standard of work of the respon-
dent had declined and was not satisfactory, that was certainly material
enabling the department to come to a conclusion under Fundamental Rule
H 56(j). [p.343 CD]
338
P. & T. BOARD v. C.S.N. MUKIHY [RANGANATHAN, J.] 339

2. There were adverse entires against the respondent for the finan· A
cilll years 1970·71and1971-72. The purport of the confidential reports of
these years was placed before this Court and had aiso been referred to by
the High Court. 'Iney were objective appraisals of respondent's work. The
adverse remarks for the year 1971-72 standing by themselves, can con-
stitute sufficient material for the Department to come to the conclusion. B
The1-e was material to show that the efficiency of the respondent was
slackening iri the last two years of the period under review and it is,
therefore, not possible to fault the conclusion of the department as being
mala fide, perverse, arbitrary or unreasonable. [pp.341GH; 342A; 343A-C]

3. The Division Bench of the High Court erred in setting aside the C
order of compulsory retirement on the basis that there was no material on
recored justifying the action against the respondent. [p.3430]

4. An order of compulsory retirement under Fundamental Rule
56(j) is not an order of punishment. The nature of the delinquency and
whether it is of such a degree as to require the compulsory retirement of D
the employee are primarily for the Government to decide upon. The Courts
will not interfere with the exercise of this power if arrived at bona fide and
on the basis of material available on the record. [p.342FG]

Baikuntha Nath Das v. Chief District Medical Officer, Baripada, 1992
E
- 2 J.T. 1 (S.C.), relied on.

CIVIL APPELLATE JURISDICTION : Civil Appeal No. 1299 of
1976.

From the Judgment and Order dated 20.7.1976 of the Andhra F
Pradesh High Court in W.A. No. 855 of 1974.

V.C. Mahajan and C.V.S. Rao for the Appellants.

R. Venkataramani, S.M. Garg, T. Lajapathi Roy and Ms. Rani
Chhabra for the Respondents. G
The Judgment of the Court was delivered by

RANGANATHAN, J. The respondent, C.S.N. Murthy, was an Assis-
tant Engineer in the Telecommunication Training Centre at Hyderabad.
He was normally due to retire from service in 1980. However, the ·H
~
340 SUPREME COURT REPORTS (1992) 2 S.C.R.
"
A provisions of rule 56G) of the Fundamental Rules were invoked in his case.
~~
A high powered committee consisting of the Secretary to the Ministry of
Finance and the Joint Secretary to the Cabinet Secretariat reviewed the
service records of 96 persons belonging to the Department. The committee
recommended, on an overall assessment of the confidential records, that
there was no justification for continuing the petitioner and two others (with
B whom we are not here concerned) in ser\tice. Accepting the recommenda··
tions of the committee, the Posts and Telegraphs Board issued a notice on ->-
the respondent on 19.10.73 giving him notice of compulsory retirement
under fundamental rule 56G) with effect from the expiry of three months
from the date of service of the notice on him. Consequent thereupon, the
c respondent's services came to an end, by way of compulsory retirement, in
February 1974. -
...
_,,.•
The respondent filed a writ petition in the Andhra Pradesh High
Court challenging the validity of the order of compulsory retirer:nent but ~
the writ petition was unsuccessful. However, the appeal preferred by him
tD
to a Division Bench of the High.Court was allowed. The Division Bench,
in its judgment and order dated 19.7.76, came to the conclusion that the
impugned order of retirement was not founded on any'relevant material
and was arbitrary and capricious. The impugned order was, therefore,
quashed and the petitioner was directed to be reinstated forthwith with all
E the benefits that could have accrued to him had· the order not been
implemented against him. The Union of India has preferred the present
-..t(, "'-·
appeal.

The modalities for the invocation of fundamental rule 56G) have been
examined by a number of decisions of this Court. All these judgments have
F
been reviewed and the legal principles applicable thereto have been sum-
marised by B.P. Jeevan Reddy J., speaking for the Supreme Court, in
Baikzmtha Nath Das v. Chief District Medical Officer, Baripada, 1992-2 J.T.
1 (S.C.). These principles have been set out in paragraph 32 of the ~

judgment, which can be extracted here for purposes of convenient refer- .___
G ence:

32. The following principles emerge from the above discussion:

(i) An order of compulsory retirement is not a punishment. It ~-..,.
H implies no stigma nor any suggestion of misbehaviour.
P. & T. BOARD v. C.S.N. MURTHY {RANGANATHAN, J.] 341

(ii) The order has to be passed by the Government on forming A
the opinion that it is in the public interest to retire a Govern-
ment servant compulsorily. The order is passed on the subjec-
tive satisfaction of the Government.

(iii) Principles of natural justiCe have no place in the context
of an order of compulsory retirement. This does not mean that B
--A_ judicial scrutiny is excluded altogether. While the High Court
or this Court would not examine the matter as a appellate court,
they may interfere if they ~re satisfied that_ the order is passed
(a) ma/a fide or (b) that it is based on no evidence or (c) that

- it is arbitrary- in the sense that no reasonable person would
form the requisite opinion on 'the given material; in short, if it
is found to be a perverse order.
c

(iv) The Government (or the Review Committee, as the case
may ·be) shall have. to consider the entire record of service
before taking a decision in the matter of course attaching more D
importance to record of and performance during the later
years. The record to be so considered would naturally include
the entries in the confidential records/character rolls, both
favourable and adverse .. If a Government sehrant is promoted
to a higher post nohvithstanding the ·adverse r~marks, such £
remarks lose their sting, more so, if the promotion is based
upon merit (selection) and not upon seniority. .

(v) An order of compulsory retirement is not liable to be
quashed by a Court merely on showing that, while passing it
un~ommunicated adverse remarks were also taken into con- F
sideration. That circumstance by itself cannot be a basis for
interference.

Interference is permissible only on the grounds mentioned in
(iii) above. This aspect has been_ discussed in paras 29 to 31 G
above.

In the present case, the service records of the pet1t1oner were
reviewed by a high powered committee. It is true that there was no material
adverse to the respondent upto the year 1969-70: But there were adverse
entries for the financial years 1970-71 and 1971-72. The purport of the H
342 SUPREME COURT REPORTS [1992) 2 S.C.R.

A confidential reports of these years has been placed before this court and
had also been referred to by the High Court. These have been set out in
letters addressed to the respondent by his superiors on 29.4.19il and
15.4.1972 respectively. A perusal of these letters shows that they were
objective appraisals of the petitioner's work during the two financial years
in question. They point out that certain aspects of the respondent's working
B were quite satisfactory but they also eri1phasise that certain deficiencies
w~re found in his work during these years for whieh he was duly cautioned. ..k-
In the first letter he was cautioned to take more interest in Auto Manual
Positions' functioning and against indulging in disrespectful language
towards supenors. The petitioner's capacity for tact and courtesy was
C described as not satisfactory. It was also observed that he had not taken
adequate interest in his job, that his handling of staff has also not been
satisfactory leading to several complaints, and that there were cases of.
•-
delays, bad relations and technical neglect, calling for improvement. The
letter dated 15.4.72, likewise, after referring to the favourable remarks
D earned by the respondent emphasised three aspects on which the
petitioner's ~onduct was unsatisfactory. He had been warned for delay in
disposal of complaint cases, for delay in confirming a deceased official and
for not taking timely action for clearance of jungle on "main line Cuddapah-
Tadpatri."

E It will be clear from the extracts referred to above, that though the
respondent's conduct was quite satisfactory till March 1970, his standard
of work had declined in the last two years under review. In both these years,
it was found that he was not taking adequate interest in his work and was
responsible for delays of various kinds. As has already been pointed out,
F an order of compulsory retirement is not an order of punishment. Fun-
damental Rule 56G) authorises the Government to review the working of
its employees at the end of their period of service referred to therein and
to require the servant to retire from service if, in its opinion, public interest
calls for such an order. Whether the conduct of the empicyee is such as to
justify such a conclusion is primarily for the departmental authorities to
G decide. The nature of the delinquency and whether it is of such a degree
as to require the compulsory retirement of the employee are primarily for
the Government to deciae upon. The courts will not interfere with the
exercise of this power, if arrived at bona fide and on the basis of material
available on the record. No ma/a fides have been urged in the present case.
H The only suggestion of the High Court is that the record discloses no
P. & T. BOARD v. C.S.N. MURTHY [RAi'l"GANATHAN, J.] 343

material which would justify the action taken against the respondent. We A
are unable to agree. In our opinion, there was material which showed that
the efficiency of the petitioner was slackening in the last two years of the
period under review and it is, therefore, not possible for us to fault the
conclusion of the department as being ma/a fide, perverse, arbitrary or
unreasonable. The Division Bench seems to have thought that, since the
adverse remarks mentioned in the earlier letter of 29th April, 1971 were
B
not repeated in the subsequent letter, it should be taken that they had been
given up subsequently or that the respondent had improved in the sub-
sequent year. We do not think that this is a legitimate inference, for the

-- report for 1971-72 only shows that the respondents' propensity to delay
matters persisted despite the warning of the previous year. But, even if one
assumes that the High Court was correct on this, the adverse remarks made
c
against the respondent in relation to the period 1971-72, standing by
themselves, can constitute sufficient material for the department to come
to a conclusion in the matter. It i!'. irue that the earlier record of the
respondent was good but if the record showed that the standard of work
of the respondent had 'declined and was not satisfactory, that was certainly D
material enabling the department to come to a conclusion under Fudamen-
tal Rule 56G). We are of opinion that the High Court erred in setting aside
the order of compulsory retirement on the basis that there was no material
at all on record justifying the action against the respondent.
E
For the reasons mentioned above, we allow this appeal and set aside
the order of the Division Bench and restore the order of the Single .Judge
of the High Court as well as the order of compulsory retirement of the
petitioner dated 29.10.71. We, however, make no order as to costs.

R.P. Appeal allowed.