U.P. STATE SUGAR CORPORATION LTD. AND ORS.versusKAMAL SWAROOP TONDON

                                 [2008] 1 S.C.R. 887

.~··"i
             U.P. STATE SUGAR CORPORATION LTD. AND ORS.                      A
                                         II.
                          KAMAL SWAROOP TONDON
                            (C.A. No. 513 of 2008)
                               JANUARY 18, 2008
                                                                             B
                  [C.K. THAKKER AND P. SATHASIVAM, JJ.]

  ~·            Service Law:
                 Disciplinary inquiry - Minor penalty - Financial loss
           suffered by employer allegedly due to negligence of employee c
           - Departmental proceedings - Writ petition, during pendency
           of which, employer passed orders for recovery of loss from
           refiral benefits payable to employee - High Court held that
           order commencing disciplinaryinquiry against employee was
           illegal as he had retired on the date of order and hence, D
           consequential orders passed for recovery were also liable to
           be quashed - On appeal, held: Show cause notice as to
           disciplinary inquiry was issued to employee when he was very
           much in service -As explanation by employee was not found
           satisfactory, a regular show cause notice was issued and served E
           upon employee before he retired - High Court was wrong in
           holding that proceedings were initiated after the employee
           retired and there was no power, authority or jurisdiction with
           the employer to take any action f3gainst him and in setting
       1
           aside the recovery orders passed against him - Matter remitted
           to High Court - U.P State Sugar Corporation Ltd. General F
           Service Rules, 1988 - rr.93 & 109.
                Negligence of employee - Loss caused to employer -
           Meanwhile employee retiring - Held: Such loss could be
           recovered from employee's retiral benefits.
                                                                             G
    'r          Constitution of India, 1950 -Art. 226 - Jurisdiction under
           - Held: Is equitable and discretionary.
                App·e11ant-Corporation suffered financial loss
           allegedly due to negligence of Respondent-employee.
                                        887                                  H
   888      SUPREME COURT REPORTS                [2008] 1 S.C.R.


A Departmental proceedings were initiated against the
  Respondent. Respondent filed writ petition challenging
  the same. During pendency of the petition, orders were
  passed for recovery of loss suffered by Appellant from
  retiral benefits payable to Respondent. Respondent made
B amendment in the writ petition and challenged the said
  recovery orders as well. High Court allowed the writ
  petition holding that the order commencing disciplinary
  inquiry against the Respondent was illegal as he had
  retired on the date of order and hence, the consequential
C orders passed for recovery were also liable to be quashed.
  Hence the present appeal.
         Allowing the appeal, the Court
       HELD: 1. Show cause notice was issued to
  Respondent-employee on January 13, 2000 when he was
D very much in service. Respondent submitted his
  explanation on January 15, 2000 which was not found to           r
  be satisfactory. A regular show cause notice as to
  departmental enquiry was therefore issued by Appellant-
  Corporation on January 31, 2000 and was served upon
E the respondent-employee on the same day, which was
  also the last day of his service. The notice was also sent
  by registered post which was received by the employee
  on February 11, 2000. It is clear from the documents that ·
  show cause notice was replied to. Therefore, it could not
F be said that the proceedings had been initiated against
  the respondent-employee after he retired from service.
  [Para 1O] [895-B-D]
        2.1. No rigid, inflexible or invariable test can be
  •applied as to when the proceedings should be allowed to
G be continued and when they should be ordered to be
   dropped. If on the facts and in the circumstances of the
   case, the Court is satisfied that there was gross, inordinate
   and unexplained delay in initiating departmental
   proceedings and continuation of such proceedings would
H seriously prejudice the employee and would result in
             U.P. STATE SUGAR CORPORATION LTD. AND ORS.              889
                       v. KAMAL SWAROOP TONDON

_,_,        miscarriage of justice, it may quash them. However, it is A
            an exception to the general rule that once the
            proceedings are initiated, they must be taken to the logical
            end. It, therefore, cannot be laid down as a proposition of
            law or a rule of universal application that if there is delay
            in initiation of proceedings for a particular period, they s
            must necessarily be quashed. [Para 27] [901-A-D]
                 2.2. In the present case, the High Court has not
  ,.        quashed the proceedings on the ground that there was
            inordinate and unexplained delay on the part of the
            Corporation in initiating such proceedings against the C
            respondent. According to the High Court, since the
            respondent retired on January 31, 2000, the proceedings
            could not have been continued against him. However,
            from the case law referred to herein, it is clear that such
            proceedings could have been continued since they were o
            initiated for the recovery of losses sustained by the
            Corporation due to negligence on the part of the
            respondent-employee. ,Such loss caused to the
            Corporation could be recovered from the respondent from
            the retiral benefits of the respondent. [Para 28] [901-D-F] E
                 P V Mahadevan v. MD, T.N. Housing Board, (2005) 6
            SCC 636: JT 2005 (7) SC 417 - distinguished.
                  Garment Cleaning Works, Bombay v. Workmen AIR 1962
            SC 673; Calcutta Insurance Co. Ltd. v. Workmen (1967) 2
       ,.   SCR 596; M. Narasimhachar v. State of Mysore AIR 1960 SC F
            247; Jarnail Singh v. Secretary, Ministry of Home Affairs &
            Ors. (1993) 1 SCC 47 JT 1992 Supp SC 489; State of Uttar
            Pradesh v. Brahm Datt Sharma & Anr (1987) 2 SCC 179;
            Deokinandan Prasad v. State of Bihar 1971 Supp SCR 634;
            State of Punjab v. K. R. Erry (1973) 2 SCR 405; D.S. Nakara v. G
            Union of India (1983) 2 SCR 165; State of Maharashtra v. M.H.
            Mazumdar (1988) 2 SCC 52: JT 1988 (1) SC 432; B.J. She/at
            v. State of Gujarat (1978) 2 SCC 202; Union of India & Ors. v.
            K. VJankiraman & Ors. (1991) 4 SCC 109 and UCO Bank &
            Ors. v. Sanwar Mal (2004) 4 SCC 412 - referred to.             H
    890      SUPREME COURT REPORTS                [2008] 1 S.C.R.


A      3. Also, from a reading of Rules 93 and 109 of the            t--~
  U.P. State Sugar Corporation Ltd. General Service Rules,
  1988, it is clear that so far as minor penalty is concerned,
  it was not necessary for the Appellant-Corporation to
  follow detailed and lengthy procedure laid down for
B imposition of major penalties. [Para 31] [903-E]
         4.1. It is well-settled that the jurisdiction of the High
  Court under Article 226 of the Constitution is equitable
  and discretionary. The power under. that Article can be
  exercised by the High Court "to reach injustice wherever
C it is found" [Para 32] [904-B]
       4.2. Considering the facts and circumstances in their
  entirety, it is clear that the High Court was wrong in
  holding that the proceedings were initiated after the
  respondent retired and there was no power, authority or
D jurisdiction with the Corporation to take any action
  against the Respondent and in setting aside the orders
  passed against him. However, since the High Court
  allowed the petition only on the ground that the
  proceedings could not have been instituted against the
E Respondent, it would be appropriate to remit the matter
  to the High Court so as to enable it to consider the rival
  contentions of the parties and take an appropriate
  decision on merits. [Paras 37, 38] [906-D-E, H; 907-A]
      Veerappa Pillai v. Raman & Raman Ltd. & 0 rs . 1 9 5 3
F SCR 583; Sangram Singh v. Election Tribunal, Kotah, (1955)
  2 SCR 1 and Secretary, ONGC Ltd. & Anr. v. VU. Warrier
    (2005) 5 sec 245 - referred to.
       CIVILAPPELLATE JURISDICTION: Civil Appeal No. 513
G of 2008.
         From the final Judgment and Order dated 24.02.2006 of
    the High Court of Judicature at Allahabad, Bench at Lucknow in
    Writ Petition No. 484(S/B) of 2000.
       Rakesh Uttamchandra Upadhyay and Ajay Kumar Rai for
H the Appellants.
          U.P. STATE SUGAR CORPORATION LTD. AND ORS.                 891
          v. KAMAL SWAROOP TONDON [C.K. THAKKER, J.]
--·-/        Ravi Prakash Mehrotra and Garvesh Kabra for the               A
         Respondent.
              The Judgment of the Court was delivered by
              C.K. THAKKER, J. 1. Leave granted.
              2. The present appeal is filed against the judgment and      B
         order passed by the High Court of Judicature at Allahabad
         (Lucknow Bench) on February 24, 2006 in Writ Petition No. 484
         (S/B) of 2000.
               3. Necessary facts giving rise to the appeal are that the
         respondent herein was serving with the appellant- U.P. State      c
         Sugar Corporation Ltd. ("Corporation" for short) as Resident
         Engineer at the Head Office of the Corporation at Lucknow. On
         January 13, 2000, a show cause notice was issued to him
         stating therein that a work was allotted to M/s Gupta & Co.,
         Dehradoon for construction of residential houses in Saharanpur. D
   ..,   The Contractor had given two Fixed Deposit Receipts (FDRs)
         towards the security for the work to be done. The details of FD Rs
         were given in the notice. It was alleged that the Corporation
         suffered loss of Rupees one lakh due to lack of precaution,
         irregularity, gross negligence and carelessness by the E
         respondent. The respondent was, therefore, called upon to
         submit explanation within three days why disciplinary action
         should not be taken against him. On January 15, 2000, the
         respondent submitted his reply denying the allegations and
         contending that he had not committed any illegality and there F
         was no justification to ask for his explanation. The Corporation
         was not satisfied with the reply filed by the respondent and
         decided to hold departmental inquiry against him. On January
         31, 2000, therefore, show cause notice was issued to the
         respondent for the losses caused to the Corporation due to G
         negligence and carelessness on the part of the respondent. It
         may be noted at this stage that the respondent retired on
         attaining the age of superannuation (60 years) on the same day,
         i.e. January 31, 2000. According to the respondent, since he
         retired from service on January 31, 2000, no proceedings could
                                                                            H
    892      SUPREME COURT REPORTS                  [2008] 1 S.C.R.


A have been initiated against him and issuance of show cause           t--
  notice which was received by him after office hours at 6.45 p.m.
  on January 31, 2000 was illegal as there was no relationship of
  employer and employee between the Corporation and him. He,
  therefore, filed a writ petition in the High Court of Allahabad at
B Lucknow Bench on April 11, 2000. In the petition a prayer was
  made for quashing charge-sheet and departmental
  proceedings. During the pendency of the petition, however, two
  orders came to be passed against the respondent on March
  24, 2001 and April 26, 2005. By the first order of March 24,
c 2001, an amount of Rupees one lakh was ordered to be
  recovered from the respondent as the Corporation suffered loss
  of the said amount which was ordered to be adjusted from the
  gratuity of the respondent. By the second order dated April 26,
  2005, an amount of Rs.73,235-50ps which was Yi portion of
  the amount of Rs.1,46,471.00ps was directed to be recovered
D
  as loss had been caused to the Corporation due to negligence
  of the respondent. The respondent sought amendment in the
  petition and challenged the above two orders as well.
        4. The High Court, by the impugned order, allowed the writ
E petition holding that the order dated January 31, 2000
  commencing disciplinary inquiry against the writ petitioner was
  illegal as he had retired on that day. No proceedings, hence,
  could have been initiated against him. Consequently, orders
  passed in 2001 and 2005 could not have been made and they
F were liable to be quashed. The Corporation was directed to           ~
  pay to the writ petitioner all the benefits of gratuity, leave
  encashment and other dues payable to him with interest@ 8%
  p.a. from the date of retirement till the date of actual payment.
  Being aggrieved by the order passed by the High Court, the
  Corporation has approached this Court.
G
        5. On July 28, 2006, notice was issued by this Court. Since
  contempt proceedings were initiated by the writ petitioner in
  the meantime, who succeeded before the High Court, this Court
  stayed those proceedings. Counter-affidavit and affidavit-in-
H rejoinder  were filed thereafter and the matter was ordered to
              U.P. STATE SUGAR CORPORATION LTD. AND ORS.                  893
               v. KAMAL SWAROOP TONDON [C.K. THAKKER, J.]
-~-?         be placed for final hearing. That is how the matter has been       A
             placed before us.
                  6. We have heard the learned counsel for the parties.
                    7. The learned counsel for the appellant-Corporation
             contended that the High Court was wholly wrong in quashing B
             departmental proceedings and consequential orders passed
             by the authorities which were legal, valid and in consonance
  ..         with law. It was submitted that show cause notice was issued
             on January 13, 2000 well in time before the writ petitioner retired
             asking for an explanation as to why proceedings should not be.     c
             initiated against him. It was further submitted that even charge-
             sheet was issued on January 31, 2000 and it was within power
              of the Corporation to issue such charge-sheet and the High Court
             ought not to have set aside the inquiry proceedings and
             consequential orders. It was urged that it is settled law that
                                                                                 D
             relationship of employer and employee continues to remain so
   ~         long as all retiral benefits have not been paid to the employee.
             Since the amount of gratuity, leave encashment and other
             pensior:iary benefits were yet to be paid to the employee, the tie
             continued and proceedings initiated against the writ petitioner
             were in accordance with law and should not have been interfered E
             with. That apart, under the U.P. State Sugar Corporation Ltd.
             General Service Rules, 1988 (hereinafter called "the Rules"),
             such proceedings could have been initiated even after an
             employee has retired since they related to the recovery of losses
       .-j
             caused to the Corporation by the respondent-employee. Since F
             the present proceedings were for recovery of loss caused to
             the Corporation, such an action could have been taken under
             the Rules and the High Court was wrong in holding that the
             proceedings could not have been held. Finally, it was submitted
             that it was the case of the Corporation that because of acts and G
   >         omissions of the respondent-employee, loss had been caused
             to the Corporation. When the amount of loss was sought to be
             recovered from the employee, the High Court ought not to have
             exercised discretionary and equitable jurisdiction under Article
             226 of the Constitution and on that count also, the impugned H
    894      SUPREME COURT REPORTS                   [2008] 1 S.C.R.


A   action deserves to be set aside. On all these grounds, it was       t- •
    submitted that the impugned order of the High Court is liable to
    be set aside and the writ petition filed by the writ-petitioner
    should be ordered to be dismissed by allowing the appeal.

         8. The learned counsel for the respondent, on the other
8 hand, supported the order of the High Court. He submitted that
  the date of issuance of show cause notice was totally irrelevant.
  Charge-sheet was issued only on January 31, 2000 and a finding
  was recorded by the High Court that it was received by the
  respondent after office hours of January 31, 2000. By the time,
C the tie was broken and there was no relationship of employer
  and employee between the Corporation and the writ-petitioner.
  No departmental proceedings, therefore, could have been
  initiated against the writ-petitioner and they were liable to be
  quashed. When the proceedings were without jurisdiction,
D orders passed in 2001 and 2005 which were consequential,
  were obviously without power, authority or jurisdiction on the part
  of the Corporation in passing them. The High Cou1i was,
  therefore, fully justified in quashing those orders also. Since the
  order passed by the High Court is legal, valid and proper, it
E calls for no interference by this Court and the appeal deserves
  to be dismissed.

        9. From the facts noted above, it is amply clear that two
  orders which were passed against the respondent-employee
  related to recovery of certain amount from the respondent-
F employee on the ground that there was carelessness,
  negligence or omission on his part in the discharge of his duties
  which resulted in loss to the Corporation. By the order dated
  March 24, 2001, an amount of Rupees one lakh which was
  financial loss suffered by the Corporation was ordered to be
G adjusted against the gratuity of the employee. Likewise, by order
  dated April 26, 2005, an amount of Rs.73,235.50 p. [Y:z of
  Rs.1,46,471.00] was ordered to be adjusted against the amount
  of gratuity and encashment of earned leave which was also the
  financial loss suffered by the Corporation as a result of
H negligence of the respondent. It is in the light of the above facts
              U.P. STATE SUGAR CORPORATION LTD. AND ORS.                    895
               v. KAMAL SWAROOP TONDON [C.K. THAKKER, J.]

     ...--1   that we have to consider whether such an action. could have A
              been taken against the respondent-employee by the appellant-
              Corporation.
                     10. The learned counsel for the appellant is right when he
              submitted that show cause notice was issued to the respondent-
              employee on January 13, 2000 when he was very much in B
              service. The respondent submitted his explanation on January
              15, 2000 which was notfound to be satisfactory. A regular show
        _,,
              cause notice was, therefore, issued by the Corporation on
              January 31, 2000 and was served upon the respondent-
              employee on the same day. The notice was also sent by               c
              registered post which was received by the employee on
              February 11, 2000. But it is clear from the documents that show
              cause notice was issued and replied. A regular show cause
              notice as to departmental inquiry was also served upon the
              respondent-employee on the last day of his service which was D
              January 31, 2000. In our opinion, therefore, it could not be said
        "     that the proceedings had been initiated against the respondent-
              employee after he retired from service.
,\
                    11. Now it is well settled that retiral benefits are earned by
                                                                                   E
              an employee for long and meritorious services rendered by him/
              her. They are not paid to the employee gratuitously or merely as
              a matter of boon. It is paid to him/her for his/her dedicated and
              devoted work.
                    12. In Garment Cleaning Works, Bombay v. Wokmen, F
              AIR 1962 SC 673, the relevant clause of the Gratuity Scheme
              provided that if a workman was dismissed or discharged for
              misconduct causing financial loss to the employer, gratuity to
              the extent of loss should not be paid to tile workman concerned.
              It was contended on behalf of the employer that the retrenchment
                                                                                  G
              benefit and gratuity were payable to the employee for his long
          >   and meritorious services and if he was dismissed by misconduct,
              he would not be entitled to claim retrenchment benefits or gratuity
              and the benefits could be denied to him.
                   13. Dealing with the argument and the basis of payment         H
    896       SUPREME COURT REPORTS                   [2008] 1 S.C.R.


A of gratuity, this Court, speaking through P.B. Gajendragadkar,          t-- -
  J. (as His Lordship then was), said:
          "5. On principle if gratuity is earned by an employee"for
          long and meritorious service it is difficult to understand
          why the benefit thus earned by long and meritorious
B         service should not be available to the employee even
          though at the end of such service he may have been
          found guilty of misconduct which entails his dismissal.
          Gratuity is not paid to the employee gratuitously or merely
          as a matter of boon. It is paid to him for the service
c         rendered by him to the employer, and when it is once
          earned it is difficult to understand why it should
          necessarily be denied to him whatever may be the nature
          of misconduct for his dismissal. Then, as to the definition
          of retrenchment in the Industrial Disputes Act, we are not
D         satisfied that gratuity and retrenchment compensation
          stand exactly on the same footing in regard to the effect
           of misconduct on the rjghts of workmen. The rule of the
                                                                           •
          provident fund scheme shows not that the whole provident
                                                                                  '•
           fund is denied to the employee even if he is dismissed
E          but it merely authorises certain deductions to be made
           and then too the deductions thus made do not revert to
           the employer either Therefore we do not think that it
           would be possible to accede to the general argument
           that in all cases where the service of an employee is
F          terminated for misconduct gratuity should not be paid to
           him. It appears that in award which framed gratuity·
           schemes sometimes simple misconduct is distinguished
           from gross misconduct and a penalty of forfeiture o;
           gratuity benefit is denied in the latter case but not in the
           former, but latterly industrial tribunals appear generally
G
           to have adopted the rule which is contained in clause
           (ii)(b) of the present scheme. If the misconduct for which
           the service of an employee is terminated has caused
           financial loss to.the works, then before gratuity could be
           paid to the employee he is ca/feel upon to compensate
H
       U.P. STATE SUGAR CORPORATION LTD. AND ORS.                      897
        v. KAMAL SWAROOP TONDON [C.K. THAKKER, J.]
'>-~        the employer for the whole of the financial loss caused A
            by his misconduct, and after this compensation is paid
            to the employer if any balance from the gratuity climbable
            by the employee remains that is paid to him.". (emphasis
            supplied)
             14. In Calcutta Insurance Co. Ltd. v. Workmen, (1967) 2 8
       SCR 596, this Court considered the concept of gratuity. It referred
       to Garment Cleaning Works and other cases. It noted that the
       opinion expressed in those cases was that gratuity was earned
       by an employee for "long and meritorious service" and
       consequently it must be given to him even though at the end of         c
       such service, he may have been found guilty of misconduct
       entailing his dismissal.
            15. The Court then said;
             "In principle, it is difficult to concur in the above opinion.   D
  '>
             Gratuity cannot be put on the same level as wages. We
            are inclined to think that it is paid to a workman to ensure
            good conduct .through out the period       .
                                                             he serves the
            employer. "Long and meritorious service" must mean
            long and unbroken period of service meritorious to the            E
            end. As the period of service must be unbroken, so must
            the continuity of meritorious service be a condition for
            entitling the workman to gratuity. If a workman commits
            such misconduct as causes financial loss to his
            employer, the employer would under the general law have           F
            a right of action against the employee for the loss caused
            and making a provision for withholding payment of
            gratuity where such loss caused to the employer does
            not seem to aid to the harmonious employment of
           labourers of workmen. Further, the misconduct may be
                                                                              G
            such as to undermine the discipline in the workers - a
  >         case in which it would be extremely difficult to assess the
            financial loss to the employer." (emphasis supplied)
           16. In M. Narasimhachar v. State of Mysore, AIR 1960
       SC 247, an amount of Rs.5,215/-was deducted from pension H
    898      SUPREME COURT REPORTS                  [2008] 1 S.C.R.


A of the Government servant. The action was challenged by the
  employee. Considering the relevant provisions of the Rules, this
  Court held that the Government had reserved to itself the right
  to order the recovery from pension and compassionate
  allowances of the Government servant of any amount on account
B of losses found to have been caused to Government by
  negligence or fraud of such officer during his service.
        17. Again, in Jarnail Singh v. Secretary, Ministry of Home
  Affairs & Ors., (1993) 1 SCC 47 JT 1992 Supp SC 489, this
  Court considered the provisions of .Central Civil Services
C (Pension) Rules, 1972. The definition of 'pension' included
  gratuity under Rule 3. Rule 9 conferred on the President power
  to withhold or withdraw pension in certain circumstances. An
  order was passed against an employee withholding pension
  and the entire amount of death-cum-retirement gratuity otherwise
D admissible to him. The direction was given on account of serious
  irregularities found to have been committed by the workman.
  The workman challenged that order unsuccessfully and thereafter
  approached this Court. His contention was that an amount of
  gratuity could not have been withheld.
E       18. Negativing the contention, this Court held that the power
  to withhold gratuity was conferred on the President and such
  action could not be said to be illegal. It was ruled that the
  Government could adjust its dues against the amount of death-
  cum-retirement gratuity otherwise payable to Government
F servant.
        19. In State of Uttar Pradesh v. Brahm Datt Sharma &
  Anr., (1987) 2 SCC 179 : JT 1987 (1) SC 571, this Court held
  that it was open to Government to reduce, forfeit, withhold or
G recover·pension, after affording hearing to the affected person,
  on ground of unsatisfactory service based on proved findings
  of serious misconduct or causing pecuniary loss to the
  Government. Such proceedings can be initiated even after
  retirement for misconduct, negligence or financial irreguiarity.
  Where Government servant was found guilty of misconduct or
H
           U.P. STATE SUGAR CORPORATION LTD. AND ORS.                 899
            v. KAMAL SWAROOP TONDON [C.K. THAKKER, J.]
-·-1       negligence resulting in financial loss to the Government, it was A
           competent to the Government to direct reduction in pension.
                  20. Interpreting Article 470 of U.P. Civil Service
           Regulations, this Court observed that the said provision stated
           that full pension would not be awarded as a matter of course to
           a Government servant on his retirement. It was awarded to him 8
           if service rendered by him was satisfactory. In case of absence
           of 'thoroughly satisfactory' service, the authority was competent
           to reduce the amount of pension. Referring to Deokinandan
           Prasad v. State of Bihar, 1971 Supp SCR 634, State of Punjab
           v. K.R. Erry, (1973) 2 SCR 405 and D.S. Nakara v. Union of c
           India, (1983) 2 SCR 165, the Court held that pension was not a
           'bounty' and an employee was entitled to pensionary benefits, .
           but proceeded to state that a Government employee would earn
           pension by rendering long and efficient service. Considering
           Narasimhachar, the Court held that the employer had right to D
    "i
           reduce pension of an employee if services rendered by him
           were found to be unsatisfactory. Only thing is that in such cases
'          before taking any action, principles of natural justice must be
           observed.
                 21. In State of Maharashtra v. M.H. Mazumdar, (1988) 2 E
           SCC 52 : JT 1988 (1) SC 432, the Court held that departmental
           inquiry can be instituted against a Government servant after
           superannuation and pension can be reduced on proved charges
           of misconduct, negligence or financial irregularity committed
     ...
           during the period of service. Following Narasimhachar and F
           Brahm Datt Sharma, and distinguishing B.J. She/at v. State of
           Gujarat, (1978) 2 SCC 202, the Court held that when financial
           loss was caused to the Government by any act or omission on
           the part of its employee, the purpose of inquiry was not to inflict
           any punishment, but to determine the pension of an employee. G
           Such an action, in our view, can be taken so that the Government
           may not have to suffer financially.
                22. Reference was also made to a leading decision in
           Union of India & Ors. v. K. V Jankiraman & Ors., (1991) 4 SCC
                                                                            H
    900      SUPREME COURT REPORTS                   [2008] 1 S.C.R.


A 109: JT 1991 (3) SC 527. In Jankiraman, the question which             t- •
  came up for consideration before this Court related to promotion
  of an officer and adoption of "sealed cover procedure''. It was
  held that consideration of case of an employee for promotion
  could not be withheld merely on the ground of pendency of any
B departmental inquiry/criminal investigation against him. It could,
  however be resorted to once charge memo/charge-sheet is
  issued.
       23. It was submitted by the learned counsel for the
  Corporation that in the case on hand, not only notice was issued
C to the respondent-employee on January 13, 2000, but even
  regular show cause notice was issued on January 31, 2000
  and hence the proceedings could have been continued on the
  basis of law laid down in Jankiraman.
D        24. In UCO Bank & Ors. v. Sanwar Mal, (2004) 4 SCC
  412 JT 2004 Supp 2 SC 487, the Court held that two concepts;
  (i) resignation; and (ii) retirement were different and employed       "
  for different purposes and in different contexts. Resignation
  brings about complete cessation of master and servant
E relationship, but retirement does not do so. In case of retirement,
  master and servant relationship continues for grant of retiral
  benefits.
        25. If it is so, the appellant-Corporation, in our opinion, is
  right in submitting that the proceedings could have been
F continued after the retirement of the respondent-employee as
  far as the financial loss caused to the Corporation because of
  negligence on the part of employee and the benefit claimed by
  the respondent-workman on his terminal benefits.
        26. Strong reliance was placed by the learned counsel for
G the respondent on P V. Mahadevan v. MD. TN. Housing Board,
  (2005) 6 SCC 636 : JT 2005 (7) SC 417. In that case, there
  was inordinate delay of ten years in initiating departmental
  proceedings against an employee. In absence of convincing
  explanation by the employer for such inordinate delay, this Court
H held that the proceedings were liable to be quashed.
           U.P. STATE SUGAR CORPORATION LTD. AND ORS.                     901
            v. KAMAL SWAROOP TONDON [C.K. THAKKER, J.)
 ; -~-1          27. In our opinion, Mahadevan does not help the                 A
~          respondent. No rigid, inflexible or invariable test can be applied
          as to when the proceedings should be allowed to be continued
          and when they should be ordered to be dropped. In such cases
          there is neither lower limit nor upper limit. If on the facts and in
          the circumstances of the case, the Court is satisfied that there       B
          was gross, inordinate and unexplained delay in initiating
          departmental proceedings and continuation of such
          proceedings would seriously prejudice the employee and would
          result in miscarriage of justice, it may quash them. We may,
          however, hasten to add that it is an exception to the general rule     c
          that once the proceedings are initiated, they must be taken to
          the logical end. It, therefore, cannot be laid down as a proposition
          of law or a rule of universal application that if there is delay in
          initiation of proceedings for a particular period. they must
          necessarily be quashed.
                                                                                 D
<.
                 28. In the present case, the High Court has not quashed
          the proceedings on the ground that there was inordinate and
          unexplained delay on the part of the Corporation in initiating
          such proceedings against the respondent. According to the High
          Court, since the respondent retired on January 31, 2000, the           E
          proceedings could not have been continued against him. From
          the case law referred to by us hereinabove, it is clear that such
          proceedings could have been continued since they were
          initiated for the recovery of losses sustained by the Corporation
          due to negligence on the part of the respondent-employee. Such         F
          loss caused to the Corporation could be recovered from the
          respondent from the retiral benefits of the respondent.
                29. The learned counsel for the appellant-Corporation also
          referred to the Rules. Chapter IV titles "Fundamental Duties of
          Service". Rule 31 expressly states that an employee of the G
          Corporation would be 'whole time employee'. Chapter VI 11 (Rules
          93 to 107) deals with 'Disciplinary Proceedings'. Rule 93 is
          material and relevant part thereof reads thus;
               93. The following penalties -may, for good and sufficient H
    902          SUPREME COURT REPORTS               [2008] 1 S.C.R.


A         reason and as hereinafter provides, be imposed on an          ;-   .
                                                                                 ~-
          employee.
                           A. MINOR PENALTIES
          (i)    Censure
B         (ii)   With-holding of annual increment(s), including
                 stoppage of an efficiency bar/assessment stage with
                 or without cumulative effect.
          (iii) Recovery from pay or from such other amounts as
c               may be due to the employee of the whole or part of
                any pecuniary loss caused to the Corporation by
                negligence or breach of orders on his part;
                           B. MAJOR PANALTIES

D         (iv) reduction to a lower grade or post or to a lower stage
               in a time scale;
          (v)    removal from service whi9h does not disqualify from     "
                 future employment,
          (vi) dismissal from service which ordinarily disqualifies
E
               from future employment.
                                             (emphasis supplied}
       30. Rule 102 prescribes procedure before starting enquiry.
  Rule 103 provides for major penalties. Rule 109 lays down
F procedure for imposition of minor penalties and is another
  important provision which may be quoted in extenso.
          109. (1) Whenever the punishing authority is satisfied that
          good and sufficient reasons exist for adopting such a
          course it may impose the penalty of
G
          (i)    Censure, or
          (ii) Stoppage at an efficiency bar.
          Provided that it shall not be necessary to frame formal
          charges against the employee concerned but his
H
         U.P. STATE SUGAR CORPORATION LTD. AND ORS.                  903
          v. KAMAL SWAROOP TONDON [C.K. THAKKER, J.]
.... 1
              explanation may be called and considered before A
              imposing such a penalty.                   ·
              (2) In all cases where the punishing authority imposes
              the penalty of-
                    (i)    Withholding of increments in the time scale at B
                           stages where there is no efficient bar.
                    (ii)   Recovery from pay of the whole or part of any
                           pecuniary loss caused to the Corporation by
                           negligence or breach of orders.
                                                                           c
              Formal proceedings embodying statement of the offence
              or fault, the explanation of the person concerned, and the
              reasons for punishment shall be recorded.
              Provided that it shall not be necessary to record such
              proceedings in cases where an employee's increment in D
              the time scale of his pay at any stage other than an
              efficiency bar is stopped due·to his integrity remaining
              uncertified.
                                                  (emphasis supplied)
                31. It is, therefore, clear that so far as minor penalty is E
         concerned, it is not necessary for the Corporation to follow
         detailed and lengthy procedure laid down for imposition of major
         penalties. In the instance case., the proceedings had been
         initiated by the appellant-Corporation against the respondent-
         employee for recovery of pecuniary loss caused to the F
         Corporation by negligence on his part. The proceedings, hence,
         could be instituted by issuing notice which was done on January
         13, 2000. The said action, therefore, could not have been held
         bad or without power, authority or jurisdiction on the part of the
         Corporation. As we have already observed earlier, even regular G
         show cause notice was served on January 31, 2000 which was
         also during the employment of respondent. The High Court, in
         our view, was wrong in quashing the proceedings and setting .
         aside orders dated March 24, 2001 and April 26, 2005. The
         impugned order of the High Court, therefore, deserves to be H
    904       SUPREME COURT REPORTS                   [2008] 1 S.C.R.


A set aside.
       32. Finally, the learned counsel for the appellant-
  Corporation is right in submitting that the High Court was
  exercising discretionary and equitable Jurisdiction under Article
B 226 of the Constitution. It is well-settled that the jurisdiction of
  the High Court under Article 226 of the Constitution is equitable
  and discretionary. The power under that Article can be exercised
  by the High Court "to reach injustice wherever it is found".
        33. In Veerappa Pillai v. Raman & Raman Ltd. & Ors.,
c 1953 SCR 583, the Constitution Bench of this Court speaking
  through Chandrasekhara Aiyar, J. observed that the writs
  referred to in Article 226 of the Constitution are obviously
  intended to enable the High Court to issue them in grave cases
  where the subordinate tribunals or bodies or officers act wholly
0 without jurisdiction, or in excess of it, or in violation of the
  principles of natural justice, or refuse to exercise jurisdiction
  vested in them, or there is an error apparent on the face of the
  record, and such act, omission, error, or excess has resulted in
  manifest injustice.
E        34. Again, in leadlng case of Sangram Singh v. Election
    Tribunal, Kotah, (1955) 2 SCR 1, dealing with the ambit and
    scope of powers of High Courts under Article 226 of the
    Constitution, Bose, J. stated;
               "That, however, is not to say that the jurisdiction will
F         be exercised whenever there is an error of law. The High
          Courts do not, and should not, act as courts of appeal
          under Article 226. Their powers are purely discretionary
          and though no limits can be placed upon that discretion it
          must be exercised along recognized lines and not
G         arbitrarily; and one of the limitations imposed by the courts
          on themselves is that they will not exercise jurisdiction in
          this class of case unless substantial injustice has ensued,
          or is likely to ensue. They will not allow themselves to be
          turned into courts of appeal or revision to set right mere
H         errors of law which do not occasion injustice in a broad
           U.P. STATE SUGAR CORPORATION LTD. AND ORS.                   905
            v. KAMAL SWAROOP TONDON [C.K. THAKKER, J.)

--; -i'         and general sense, for, though no legislature can impose A
                limitations on these constitutional powers it is a sound
                exercise of discretion to bear in mind the policy of the
                legislature to have disputes about these special rights
                decided as speedily as may be. Therefore, writ petitions
                should not be lightly entertained in this class of case." B
                                                      (emphasis supplied)

                  35. Recently, in Secretary, ONGC Ltd. & Anr v. VU.
            Warrier, (2005) 5 SCC 245: JT 2005 (4) SC 489, an employee
            of Oil and Natural Gas Commission (ONGC) unauthorisedly
            retained an official accommodation after his retirement. When
                                                                              c
            penal rent was charged and sought to be recovered from retiral
          . benefits of the employee, he filed a petition invokin9 Article 226
            of the Constitution. The High Court allowed the petition and
            directed the Corporation to release all the benefits to which the
            employee was entitled. The High Court observed that it was D
     •      open to the Corporation to take appropriate proceedings for
            recovery of the dues claimed by the Corporation. A9grieved
            ONGC approached this Court.
                36. Allowing the appeal, setting aside the order passed
                                                                              E
          by the High Court and considering the relevant decisions on the
          point, one of us (C.K. Thakker, J.) observed;

                    · "As already adverted to by us hereinabove, the facts
                of the present case did not deserve interference by the
                High Court in exercise of equitable jurisdiction under Article F
                226 of the Constitution. The respondent-petitioner before
                the High Court-, was a responsible officer holding the post
                of Additional Director (Finance &Accounts). He was, thus,
                "gold collar" employee of the Commission. In the capacity
                of employee of the Commission, he was allotted a G
                residential quarter. He reached the age of superannuation
                and retired after office hours of February 28, 1990. He
                was, therefore, required to vacate the quarter allotted to
                him by the Commission. The Commission, as per its policy,
                granted four months' time to vacate. He, howeve~. failed to H
    906       SUPREME COURT REPORTS                   [2008] 1 S.C.R.


A         do so. His prayer for continuing to occupy the quarter was
          duly considered and rejected on relevant and germane
          grounds. The residential accommodation constructed by
          him by taking loan at the concessional rate from the
          Commission was leased to Commission, but the
B         possession of that quarter was restored to him taking into
          account the fact that he had retired and now he will have
          to vacate the quarter allotted to him by the Commission.
          In spite of that, he continued to occupy the quarter ignoring
          the warning by the Commission that if he would not vacate
c         latest by June 30, 1990, penal rent would be charged from
          him. In our judgment, considering all these facts, the
          High Court was wholly unjustified in exercising
          extraordinary and equitable jurisdiction in favour of the
          petitioner- respondent herein - and on that ground also,
          the order passed by the High Court deserves to be set
0
          aside".     (emphasis supplied)
        37. Considering the facts and circumstances in their              •
  entirety, in our considered opinion, the High Court was wrong in
  holding that the proceedings were initiated after the respondent
E retired and there was no power, authority or jurisdiction with the
  Corporation to take any action against the writ-petitioner and in
  setting aside the orders passed against him. In our judgment,
  proceedings could have been taken for the recovery of financial
  loss suffered by the Corporation due to negligence and
F carelessness attributable to the respondent-employee. The
  impugned action, therefore, cannot be said to be illegal or
  withoutjurisdiction and the High Court was not right in quashing
  the proceedings as also the orders issued by the Corporation.
  The appeal, therefore, deserves to be allowed by setting aside
G the order of the High Court.
         38. For the foregoing reasons, the appeal is allowed and
  the order passed by the High Court is set aside. But since the
  High Court has allowed the petition only on the ground that the
  proceedings could not have been instituted against the writ-
H petitioner, it would be appropriate if we remit the matter to the
          · U.P. STATE SUGAR CORPORATION LTD. AND ORS.                907
             v. KAMAL SWAROOP TONDON [C.K. THAKKER, J.)
~- --1.   High Court so as to enable it to consider the rival contentions of A
          the parties and take an appropriate decision on merits. We may
          clarify that we may not be understood to have expressed any
          opinion one way or the other on the controversy involved in the
          case and as and when the High Court will take up the writ
          petition, it will decide the same without being influenced by B
          any observation made .in this judgment. On the facts and in
          the circumstances of the case, the parties will bear their own
          costs.
          B.B.B.                                        Appeal allowed.
                                                                            c