Holding

A compulsory retirement order is a governmental prerogative, not a punishment, and does not require a speaking order; such an order is valid if based on material and the Government’s subjective satisfaction.

Summary

Shri Dulal Duti, a senior officer of the Indian Railway Stores Service, was served a compulsory retirement order dated 24 April 1990 after facing major penalty charge‑sheets. He challenged the order before the Central Administrative Tribunal (CAT) under Section 19 of the Administrative Tribunal Act, 1985, seeking its quashing and his retention in service. The CAT set aside the retirement order, holding that the order was arbitrary because it was not a speaking order as required by Rule 1802(a) of the Railway Establishment Code. The Union of India appealed to the Supreme Court. The Court held that a compulsory retirement is a prerogative of the Government, not a punishment, and therefore need not be a speaking order; the order was based on material and the Government’s subjective satisfaction and was not mala fide or arbitrary. Consequently, the Supreme Court allowed the appeal, set aside the CAT’s judgment and dismissed the respondent’s application.

Issues considered

Whether a compulsory retirement order under Rule 1802(a) of the Railway Establishment Code must be a speaking order.
Whether the compulsory retirement order issued to the respondent was arbitrary, mala fide, or violative of principles of natural justice.
The scope of judicial review of a government’s prerogative to retire a civil servant prematurely.

Legislation cited

Administrative Tribunal Act, 1985s. Section 19
Fundamental Ruless. Rule 56(3)
Railway Establishment Code, 1987 Editions. Rule 1802(a)
Railways Services (Conduct) Rules, 1966s. Rule 3(1)(i), s. Rule 3(1)(ii)

Subjects

compulsory retirementspeaking ordergovernment prerogativeadministrative lawnatural justicejudicial reviewRailway Establishment Code

Judgment

UNION OF INDIA AND ORS. A
v.
SHRI DULAL DUTI

FEBRUARY 5, 1993

[LALIT MOHAN SHARMA, CJ, YOGESHWAR DAYAL AND B
S. MOHAN, JJ.]

-·-.( Fundamental Ru/es-Rules 56(3) read with Rule 1802 (a) of the Rail-
way Establishment Code, ~ume II, 1987 Editiott-Compulsory retirement
order-Whether to be a speaK~der. C
Civil Services-Indian Railway Stores Service-Compulsory retire-
ment-Whether to be a speaking order.

Railway Establishment Code : Volume II, 1987 Editio1t-Rule 1802
(a), read with Rule 56 (J) F.R.-Compulsory retirement orde1'--U'hether to be D
a speaking order.

On 12.6.1958, the r<spondent joined Indian Railway Stores Service
as Class I officer. He was promoted as District Controller or Stores in
1974, as Additional Controller of Stores in 1980 and as Controller of
Stores in 1982. E
Respondent was served a major penalty charge-sheet dated
5.12.1989 on the charge or finalisation or a tender case of 1983 and another
major penalty charge-sheet dated 23.4.1990 on the charge of construction
ofa residential house during 1981-87 at high cost.
F
By urde;" dated 24.4.1990, which was served on the respondent on
~" 28.1.1991, he was compulsory retired. The delay in the service of the order
was doe to the court proceedings initiated against him.

Respondent challenged the orde1· dated 24.4.1990 before the Central G
Administrative Tribunal.

The Union of India submitted before the Tribunal that the right to
retire a Government servant prematurely was an absolute one and the
only requirement was that there should be the formation of an opinion;
that in the present case, the opinion was formed in public interest and the H
853
854 SUPREME COURT REPORTS [1993] 1 S.C.R.

A requirement of the Rule was strictly complied with.

The tribunal allowed the application against which the Union of
India flied the present appeal by special leave.

Allowing the Appeal, Ibis Co11rt,
B
HELD : 1.01. An order of a compulsory retirement is not an order
of punishment. It is actually a prerogative of the Government but it should
be based on material and has to be passed on the subjective satisfaction
of the Government. Very often, on enquiry by the Court the Government
may disclose the material but it is very much different from the saying
c that the order should be a speaking order. No order of compulsory
retirement is required to be a speaking order. [861A-B]

1.02. The Tribunal completely erred in assuming, in the circumstan·
ces of the case, that there ought to have been a speaking order for
D compulsory retirement. [860H]

1.03. From the very order of the Tribunal it is clear that the Govern·
ment bad, before it, the report of the Review Committee yet it thought it
flt of compulsory retiring the respondent. The order cannot be called
either ma/a fide or arbitrary in law. [861C]
E
Baikuntha Nath Das and another ·v. Chief District Medical Officer,
Baripada and another, (1992] 2 SCC 299; R.L. Butail v. Union of India,
(1970] 2 SCC 876 and Union of India v. J.M. Sinha, [1970] 2 SCC 458,
referred to.
F CIVIL APPELLATE JURISDICTION : Civil Appeal No. 572 of
1993.

From ihe Judgment and Order dated 29.5.92 of the Ceotral Ad-
ministrative Tribunal, Calcutta Bench~ iri 0.A. No. 455 of 1991.
G
V. R. keddy, Additional Solicitor General, Mrs. B. Sunita Rao and
V.K. Verma for the AppeJlants.

G.S. Chatterjee for the Respondent.

H The Judgment of the Court was delivered by
U.0.1. v. DULAL DUTI [DAYAL, J.] 855

YOGESHWAR DAYAL, J. Heard. Special leave granted. With the A
-y consent of learned counsel for the parties the appeal itself is being disposed
of.

The brief facts leading to this appeal are as below :-

The respondent joined Indian Railway Stores Service as Class I B
Officer on 12th June, 1953. He was promoted to. the senior scale as District
Controller of Stores in 1974, as Additional Controller of Stores in 1980 and
-y as Controller of Stores in 1982.

C

-
At the relevant time the respondent was posted as Controller of
Stores, Metro Railway, Calcutta. A major penalty charge-sheet dated 5th
Deceml.ier, 1989 was served on the respondent on the charge of finalisation
of a tender case of 1983. Another major penalty charge-sheet was served
on the respondent on 23rd Apri~ 1990 on the charge of construction of a
residential house at Salt Lake, Calcutta during 1981-87 at high cost.
D
The respondent was issued the impugned order dated 24th April,
1990 by the Joint Secretary (E), Railway Board, on behalf of the President,
by which the respondent was compulsory retired. The said order could be
served on the respondent only on 28th January, 1991 in view of certain
court proceedings initiated by him. Feeling aggrieved by the aforesaid E
order of compulsory retirement of the Railway Board the respondent

'
preferred an application under Section 19 of the Administrative Tribunal
Act, 1985 before the Central Administrative Tribunal, Calcutta. In the said
application the respondent inter alia prayed for the following reliefs:-

"(a) an order directing the respondents to withdraw, F
revoke and cancel the impugned order dated

- 24.4.90/29.1.91 issued by the respondent No.2 and fur-
ther directing the respondents to act in accordance
with law.

(b) an order commanding the respondents to forthwith G
send unto this Hon'ble Tribunal the entire records of
the case relating to the passing of the order retiring
the applicant from service under rule 1802 (a) includ-
ing the impugned order dated 24.4.90/29.1.91 for their
examination and for quashing the same upon such H
l.

856 SUPREME COURT REPORTS (1993] 1 S.C.R.

A examination for doing conscienable justice to the ap-
plicant.

(c) an order directing the respondents the continuance or
retention of the applicant in service till he attains the
age of superannuation en 31st July, 1993 with all con-
B sequential benefits."

The appellants opposed the said application. It was stated on behalf
of the appellants before the Tribunal that in memorandum dated 20th June,
1989 addressed to the respondent it was mentioned that the respondent
C had disposed of the tender expeditiously, the lowest offer which was filed,
cculd have been availed of within the validity period offered by the firm
and the railway would not have been forced to accept a higher rate and it
also indicated lack of proper management of the purchase functions under
the respondent. The aforesaid lapses on the part of the respondent were
brought to the notice of the respondent so that he may be careful in future.
D Attention of the Tribunal was also drawn by the department towards a
statement showing details of present and past vigilance cases involving the
respondent. As regards the present case, there was a list of six, three of
which were staH>d to be under investigation. These were regarding alleged
favours shown to a firm and possession of disproportionate assets to the
E tune of over Rs. two lakhs. In the forth case, the CVS (Central Vigilance
Commission) advised initiation of a major penalty proceedings on 24th
November, 1988. In the fifth case, CVS advised issue of recorded warning
on 16th November, 1988. In the sixth case, CVS on reconsideration advised
closure on 28th February, 1989. It was submitted before the Tribunal on
behalf of the appellants herein that F.R. S6(J) and the corresponding
F Railway Rule 1802 (a) of the Railway Establishment Code, Volume II, 1987
Edition, under which the respondent was prematurely retired, are identical.

G
The right· to retire a government servant prematurely is an absolute. one
and only requirenlent is that there should be the fornuition of an opinion.
And in the present case., the opinion has been formed in public interest
and the requirement of the rule had.been strict!y complied with.
-
The Central Administrative Tribunal by the impugned judgment
dated 29th May, 1992 allowed the application of the respondent holding
that -

H "the circumstances under which the impugned order was
U.0.1. v. DULAL DUTI [DAYAL, J.] 857

passed have been brought out at paras 33, 34 and 35 of this A
judgment. It is abundantly clear from a perusal of these
-'Y paragraphs that the high level review committee headed by
the Chairman, Railway Board, unanimously recommended
the retention of the applicant, firstly because his perfor-
mance record had been quite good and secondly, because
B
there was no proven vigilance case leading to punishment
so far and the committee was of the opinion that the
~

--r outcome of the more serious cases now pending against
him should be awaited. This decision showed out applica-
tion of mind by review Committee, which obviously felt that
c
- the disciplinary proceedings started against the applicant
from the vigilance angle should first be concluded before
any action was taken. The competent authority did not
agree with the recommendation of the review Committee
for the retention of the applicant He was certainly entitled
r to do so but in arriving at any contrary decision, he should
have recorded a speaking order indicating the reasons of
D
his own opinion. In the departmental file contains only a
single sentence recorded by the competent authority viz.
'he should be removed from service forthwith', we have no
hesitation in holding that the decision of the competent
authority was arbitrary and that it cannot be sustained.' E
~
It is against the judgment that the present appeal has been filed.

We may mention that one of the departmental inquiries initiated vide

-· Order No. E(O)l-89/PU-2/17 dated 11112.10.90 has been concluded by the
Cominissioner for Departmental Inquiries vide his report dated 16th Oc-
tober, 1992. In this case the charge against the respondent was that 'while
F

... ·--.. --. functioning as Controller of Stores in Chittaranjan Locomotive Works,
Calcutta during the year 1983 committed gross misconduct by his following
actions which led to him showing favouritism to Mis. Bharat Traders,
Calcutta in the award of contracts for the procurement of Yellow Dextrine G
on tender No. 02/SF/102/GB-10/4063:-

~ (i) He passed orders for acceptance of a late offer of M/s. Bharat
Traders, treating it as a single tender without obtaining prior approval of
the General Manager; 1-f
858 SUPREME COUR f REPORTS [1993) 1 S.C.R.

A (ii) Later he passed orders for awarding of contract to M/s. Bharat
Traders without formal Tender Committee's recommendations;

(iii) He waived off the Security Deposit payment by M/s. Bharat
Traders without obtaining finance's concurrence and for which the firm
never requested;
B
(iv) He misused purchase powers by exercising option clause, result-
ing in purchase of much higher quantity than what had been indented.

By this aforesaid misconduct, Shri Dula! Dutt failed to maintain
C absolute integrity and devotion to duty and thereby contravened Rule
3(1)(i) and (ii) of the Railways Services (Conduct) Rules, 1966'.

The Commissioner for Departmental Inquiries while assessing the
evidence in respect of the allegations against the respondent split up the
-
charge into four ingredients as stated in paragraph 6.3 of the report. On
D ingredient No.1 the Commissioner for Departmental Inqitlries held :- ~'

'Keeping in view the totality of evidence it is seen that the
factual element in the ingredient No.1 of the charge has
been corroborated. But in the instant case in the context
of extremely critical situation and purchase of emergency
E nature, the CO's arguments and course of action have
mitigated the alleged gravity of the charge. As the entire
course of action specifically the adoption of second round
of negotiation to neutralise the Finance objection vide
Ex.S.6 was within the knowledge of AAO (S) vide Ex.S.7,
F no mala fides have been considered established against the
CO. It is true that in a normal situation acceptance of
revised offer after t.he rates are already known and the
Tender Committee has placed their final recommendation
is not in order. The prosecution argument on that score is
quite acceptable. Tbe prosecution further argued that the
G style of noting by the CO on Ex.S.4 indicated that the CO
initially approved the TC proceedings. However, when
subsequently Ex.S.5 was received the whole process of split
orders started. Moreover, instead of ordering second
round of negotiations the CO could have taken up with the
H GM personally for his approval for the single te11der to
U.O.L v. DULAL DUIT (DAYAL, J.] 859

avoid delay and tide over the emergency within the shortest A
spell of time.

6.9. The issue is the course of action to be taken in view of
the revised late offer and also the criticality of the stock
position of the Yellow Dextrine. There may be a number
of ways to tackle the problem. The CO has opted for a B
course of action an analysed earlier and evident on record.
Since the entire issue was within the knowledge of AAO
(S) and the CO bas made a detailed noting vitle Ex.03
and S.7, no mala fide motive was established as already
observed earlier." c
- On 1ingredient No. 2 it was found as a fact that there was no formal
Tender Committee recommendations.

On ingredient No. 3 it was found that no specific ma/a fides were
established. D
On ingredient No. 4 the Commissioner for Departmental Inquiries
found that the factual elements of some procedural shortcomings have
been corroborated by the documents.

In the end the finding given was that certain procedural shortcomings E
were corroborated in the relevant documents; no ma/a jides against the CO
~ or loss to the Railways have been proved.

The law on the subject of compulsory retirement as recently laid
down by this Court in the case of Baikuntha Nath Das and another v. Chief
District Medical Officer, Baripada and anotller, [1992) 2 SCC 299 was F
noticed by the Tnbunal but erroneously distinguished it. In the case of
Baikunlha Nath aforesaid this Co\IJ"\ 'iiaS exhaustively dealt with the entire
case law on the subject and observed :' ·

'An order of compulsory retirement has to be passed by
the government on forming the opinion that it is in the G
. public interest to retire a government servant compulsorily.
The order is passed on the subjeCtive satisfaction of !he
government. The government (or the Review Committee,
· ' •as the case may be) shall have to consider the entire record
· "· . · bf Service bCfore taking a decision in the matter • of course H
"1 ~.1bl·j ff'': J'~l'
I
860 SUPREME COURT REPORTS (1993) 1 S.C.R.

A attaching more 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.
There may be any number of remarks, observations and
comments, which do not constitute adverse remarks, but
B are yet relevant for the purpose of F.R. 56Q) or a rule
r.orresponding to it."

The court also observed :-

c •An order of compulsory retirement is not a punishment.
It implies no stigma nor any suggestion of misbehaviour.
Principles of natural justice have no place in the context of
an order of compulsory retirement. Since the nature of the
-
function is not quasi-judicial in nature and because the
action has to be taken on the subjective satisfaction of the
D government, there is no room for importing the audi al- ..
teram panem rule bf the natural justice in such a case."

It was further observed by this Court that :

"However, this does not mean that judicial scrutiny is
E excluded altogether. While the High Court or the Supreme
Court would not examine the matter as an appellate court,
they may interfere if they are satisfied that the order is
passed (a) mala fide or (b) thai it is based on no evidence
or (c) that it is arbitrary - in the sense that no reasonable
F person would form the requisite opinion on the given
material; in short, if it is found to be a perverse order. The
remedy provided by Article 226 is no less an important
safeguard. Even with its well known constraints, the remedy
is an effective check against ma/afide, perverse or arbitrary
action.'
G
It will be noticed that the Tribunal completely erred in assuming, in
tile circumstances of the case, that there ought to have been a speaking
order for compulsory retirelllent. This Court, has been repeatedly em-
phasising right from the case of R.L BU/ail v. Union of India, (1970) 2 SC(.
H 876 and Union of India v. J.N. Sinha, (1970) 2 SCC 458 ihl!t an order of d
. .'
U.0.1. v. DUIAI.. DUTI [DAYAL, J.] 861

compulsory retirement is not an order of punishment. It is actually a A
prerogative of the Government but it should be based on material and has
to be passed on the subjective satisfaction of the Government. Very often,
on enquiry by the Court the Government may disclose the material but it
is very much different from the saying that the order should be a speaking
order. No order of compulsory retirement is required to be a speaking
order. From the very order of the Tribunal it is clear that the Government B
had, before it, the report of the Review Committee yet it thought it fit of
compulsory retiring the respondent. The order cannot be called either
mala fide or arbitrary in law.

We are thus constrained to allow this appeal with costs and set aside C
- the impugned order of the Tribunal dated 29th May, 1992 and dismiss the
application of the respondent filed before the Tribunal against the im-
pugned order of compulsory retirement of the respondent.

. 'Y- V.P.R.
'
Appeal allowed.

-._..<