11 Nov 2020 4:30 AM GMT
Two issues were repetedly causing litigations before various courts including before the Supreme Court:whether a departmental inquiry initiated before the superannuation can be continued after an employee reaches the age of superannuation and whether a penalty can be imposed after conclusion of such an inquiry or not whether Gratuity can be withheld in the meanwhile, till the inquiry...
Two issues were repetedly causing litigations before various courts including before the Supreme Court:
whether a departmental inquiry initiated before the superannuation can be continued after an employee reaches the age of superannuation and whether a penalty can be imposed after conclusion of such an inquiry or not
Some Judgments of the Supreme Court had taken a view that it can be done and other judgments held that it cannot be done.
Ultimately, recently a Three Judges Bench while answering the questions (on a reference to a larger Bench by a Two Judges Bench) has put to rest the controvercy. This is an effort to bring home the law laid down by the Supreme Court.
For easy reference, the contents of the article are indexed as below.,
GUIDE TO THE CONTENTS
Summary of Answers given by the Supreme Court
Issue is considered in Context of Service / Pension Regulations of Nationalised Banks
Provisions of concerned Service and Pension Regulations
Judgments taking a similar view prior to the recent Decesion in case of Chairman cum Managing Director, Mahanadi Coalfields Limited Versus Sri Rabindranath Choubey
The recent judgment in case of Chairman cum Managing Director, Mahanadi Coalfields Limited Versus Sri Rabindranath Choubey
Judgments taking a contrary view prior to the recent Decesion in case of Chairman cum Managing Director, Mahanadi Coalfields Limited Versus Sri Rabindranath Choubey
How a reference came to be made to a Three Judges Bench
Questions before the Larger Bench of the Supreme Court
Minority view in dissenting judgment of Hon'ble Mr. Justice Rastogi
What was considered by the Bench
Basic Submissions of the Employee
Basic Submissions of the Employer
Basic Observations of the Court
Consideration of and overruling of previous Judgment in case of Jaswant Singh Gill
How Provisions of S. 4(6) of the Payment of Gratuity Act will be attracted
Even otherwise, the Rules permitted withholding of Gratuity
Rule not inconsistent with S. 4(6) of the Payment of Gratuity Act
Final Decision on Payment of Gratuity
Second Question regarding imposition of Penalty
Specific findings on the issue of Gratuity and Inquiry
Findings with respect to fields of operation of S. 4(1) and 4(6) of the Peyment of Gratuity Act.
Conclusion with respect to S. 4(1) of Payment of Gratuity Act
What penalties can be imposed
Distinction between "Termination and "Dismissal"
Contrary Judgments dealt with
Why submissions of employee rejected
Further observations regarding application of some general observations
Observations and final observations in view of various decisions
Conclusions on Rules
Final conclusions and answers
II Priliminary Discussion
A) Repeatedly the following questions were raised before the Supreme Court and different Benches at different times had taken divergent view on the following questions. However, by a recent Judgment, the controvercy has been now put to rest by the Supreme Court:
B) Supreme Court, has after considering various judgments of the Supreme Court, has answered the questions as follows:
On Question (a)
(ii) if the departmental inquiry was initiated before Superannuation the same can go on and
(iii)penalties as contemplated in the discipline and conduct rules can be imposed even after the employee has reached age of superannuation
On Question (b)
C) I will discuss the issue in context of the Nationalised Banks, where the Officers' Service Regulations provide for such a Rule / Regulation.
D) In the Nationalised Banks the following statutory Regulations are made under the provisions (Section 19 (1) read with S. 19 (2) (d), (e) and (f)) of The Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970.
Regulation 20 (3) of the Officer Employees Service Regulations, 1979 inter alia reads as under:
"3 (i) An officer against whom disciplinary proceedings are pending shall not leave/ discontinue or resign from his service in the Bank without the prior approval in writing of competent authority and any notice or resignation given by such an officer before or during the disciplinary proceedings shall not take effect unless it is accepted by the Competent Authority.
(ii) Disciplinary proceedings shall be deemed to be pending against any employee for the purpose of this regulation if he has been placed under suspension or any notice has been issued to him to show cause why disciplinary proceedings shall not be instituted against him and will be deemed to be pending until final orders are passed by the Competent Authority.
(iii) The officer against whom disciplinary proceedings have been initiated will cease to be in service on the date of superannuation but the disciplinary proceedings will continue as if he was in service until the proceedings are concluded and final order is passed in respect thereof. The concerned officer will not receive any pay and/or allowance after the date of superannuation. He will also not be entitled for the payment of retirement benefits till the proceedings are completed and final order is passed thereon except his own contributions to CPF."
Similar Provisions are also made in the State Bank of India Officers' Service Rules, (1992)
Relevant portions of Regulation 22, 43, 46 and 48 of the Pension Regulations, 1995 of the Nationalised Banks read as follows:
"22. Forfeiture of Service.
"43. Withholding or withdrawal of pension.
The Competent Authority may, be order in writing, withhold or withdraw a pension or a part thereof, whether permanently or for a specified period, if the pensioner is convicted of a serious crime or criminal breach of trust or forgery or acting fraudulently or is found guilty of grave misconduct;
"46. Provisional Pension.
"48. Recovery of Pecuniary loss caused to the Bank.-
E) Various decisions were pronounced over a period of time by the Supreme Court. Some of the decisions held Question (a) in the affirmative and that it can be done. However, some of the decisions took a view that it cannot be done.
The decision in case of Y. K. Singla v. Punjab National Bank and others reported in (2013) 3 SCC 472, answered the Question (b) in the affirmative, subject to payment gratuity with interest, in case the employee is ultimately held entitled to gratuity.
After considering the rival judgments, a recent decision of the Supreme Court (judgment dated 27.05.2020 in Civil Appeal No. 9693 of 2013 in case of Chairman cum Managing Director, Mahanadi Coalfields Limited Versus Sri Rabindranath Choubey) has finally put the controversy at rest.
F) Some of the Earlier decisions on the issue:
With respect to Question (a):
The Supreme Court, after considering the contention that the appellant having allowed to superannuate on his reaching the age of superannuation, continuation of the disciplinary proceedings was bad in law and considering the Regulations, came to a conclusion that:
(II) The Same Bench of the Supreme Court, on the same day, i.e. 18.05.2007, decided the Civil Appeal in the case of UCO Bank and Anr v. Rajinder Lal Capoor reported at AIR 2007 SC 2129.
The Supreme Court, after quoting and considering the Regulation 20 (3) (iii) and the fact that the charge-sheet was issued only on 13.11.98, after the respondent attained the age of superannuation on or before 01.11.1996, it was held that:
Findings on Questions Law:
(both (a) and (b) from para 19)
(all (c) to (f) from para 21)
III A Bench of three Judges of the Supreme Court in case of State Bank of India Vs. Ram Lal Bhaskar reported in AIR 2011 SCW 6577 (decided on 13.10.2011), considered a pari materia provision in the Service Regulations of State Bank of India.
B Submissions on behalf of the Employee:
(all (a) to (i) from para 6)
The Conclusion on the basis of these three Judgments:
Supreme Court had taken a view in case of Nationalised Banks, where, in view of Statutory Regulations, a Deeming Fiction was created
an employee was deemed to be continuing in service if the inquiry is initiated before the date of superannuation
In such a case the Inquiry can be taken to its logical end and a disciplinary order can be passed since he is deemed to be in service.
With respect to Question (b)
Supreme Court, in case of Y. K. Singla (supra), in context of the Pension Regulations of 1995 prevalent in the Nationalised Banks, observed that it was open to the employer not to pay to the employee gratuity, till the culmination of the proceedings pending against him while considering Regulation 46 of the Pension Regulations (supra), and it was observed that:
"It is apparent from a perusal of the reasoning recorded by the High Court, that the High Court relied upon Regulation 46 of the Punjab National Bank (Employees) Pension Regulations, 1995." (from para 11)
"Having perused Regulation 46(2), we are of the view, that the High Court was fully justified in concluding, that it was open to the PNB not to pay to the appellant gratuity, till the culmination of the proceedings pending against him. It is, therefore, apparent, that non-release of gratuity to the appellant after 31.10.1996 (when the appellant retired from his employment, with the PNB), till his acquittal by the Special Judge, CBI Court, Chandigarh, on 31.10.2009, cannot be faulted." (from para 11)
The withholding would be subject to payment of Gratuity with interest as contemplated in section 7 of the Payment of Gratuity Act, 1972, (the Act), in case ultimately the employee was held entitled to the same.
Thus also, withholding of the Gratuity pending the departmental inquiry and passing of the disciplinary order was permissible.
G) This view is now confirmed by a three Judges' Bench (2:1) majority judgment in Civil Appeal No. 9693 of 2013 in case of Chairman cum Managing Director, Mahanadi Coalfields Limited Versus Sri Rabindranath Choubey, (supra) on a reference, as I will discuss hereafter.
H) There are also a few other judgments of the Supreme Court in cases of Nationalised Banks, which took a contrary view that the employee having reached age of superannuation, no disciplinary action can be taken.
The Supreme Court has now come to conclusion that those judgments do not lay down good law since these judgments did not consider the issue of deeming fiction and that a legal fiction must be given full effect and that when a disciplinary proceeding has been initiated against an officer of the bank despite his attaining the age of superannuation, can the disciplinary proceeding be allowed on the basis of the legal fiction created thereunder, i.e., continue "as if he was in service".
Considering this recent judgment in Civil Appeal No. 9693 of 2013 (supra), there is either a specific or implied overruling of such judgments, such other judgments will not be considered good law.
III How a Reference came to be made in case of Civil Appeal No. 9693 of 2013 (supra)
A) Supreme Court, in case of Jaswant Singh Gill Vs. M/S. Bharat Coking Coal Ltd. & Ors reported in (2007) 1 SCC 663, while considering pari materia administrative directions, had after considering facts had observed as follows: the order of the Disciplinary Authority to recorded a finding that in fact no order of termination / dismissal was passed and that this was a case of non-payment of gratuity in contravention of the Payment of Gratuity Act, 1972 in general and Section 4(6) in particular.
"considering the seriousness of the offence would have imposed the punishment of dismissal from the service of Shri J.S. Gill, the then Chief General Manager, BCCL, but for his superannuation. The undersigned also hereby orders forfeiture of his gratuity."
In these circumstances, the appeal came to be allowed and the employee was held to be entitled to Gratuity.
B) Civil Appeal No. 9693 of 2013 (supra) came to be filed before the Supreme Court challenging a judgment of the High Court of Orrisa, which had taken a view based on the judgment of the Supreme Court in case of Jaswant Singh Gill (supra).
"………Having regard to our discussion above of Jaswant Singh Gill (supra) and Ram Lal Bhaskar (supra), this issue needs to be considered authoritatively by a larger Bench. We, therefore, are of the opinion that present appeal be decided by a Bench of three Judges.
26. We accordingly direct the Registry to place the matter before the Chief Justice for constituting a larger Bench to hear this appeal."
C) Consequently, the said Civil Appeal No. 9693 of 2013 (supra) came up before a three Judges bench comprising of M/s. Justice Arun Mishra, M. R. Shah and Ajay Rastogi JJ, and the Supreme Court, by judgment dated 27.05.2020, has put at rest the controversy on the following two issues, which was raging till now.
The Judgment of the Court were delivered by Hon'ble Mr. Justice M. R. Shah for Hon'ble Mr. Justice Arun Mishra and himself and partially concurring and partially dissenting judgment was written returned by Hon'ble Mr. Justice Rustogi.
V Minority dissenting judgment of Mr. Justice Rastogi has taken the following view:
The Mr. Justice Rastogi held that
"I entirely agree with a view on question no. (i) that in view of rule 34.3 of the Coal India Executives' Conduct Discipline and Appeal Rules, 1978(hereinafter being referred to as "Rules 1978"), it is permissible for the employer to withhold gratuity even after retirement/superannuation during pendency of the disciplinary proceedings.
However, unable to persuade myself on question (ii). (para 2)"
And finally, the questions were answered in para 28.
Reading the entire minority judgment and the answers to the questions, it can be concluded that a view is taken to the effect that:
However, in view of majority view, the penalty of dismissal can also be imposed as contemplated in discipline and conduct rules.
VI Majority Judgment was delivered by Hon'ble Mr. Justice M. R. Shah and the following points can be culled out from the same:
A) While considering the issues involved in the appeal, the relevant provisions of the CDA Rules and Section 4 of the Payment of Gratuity Act which were considered necessary to be referred to and considered and were quoted.
B) Admitted facts (para 5.1):
C) Basic submissions of the Employee (para 5.1):
D) Basic Submissions of the Employer (para 5.1):
E) Basic Observations of the Court (para 7):
(i) the disciplinary proceedings to be continued and concluded even after the employee has attained the age of superannuation, for the limited purpose of continuing and concluding the disciplinary proceedings provided the disciplinary proceedings are instituted while the employee was in service.
(ii) It also further provides that such disciplinary proceedings shall be deemed to be the proceedings and shall be continued and concluded by the authority by which it was commenced in the same manner as if the employee had continued in service.
F) Consideration of the Judgment in case of Jaswant Singh Gill (supra) and the ratio thereof (para 8 and para 10.27):
It was observed that:
(i) in case disciplinary proceedings under the relevant rules of service have been initiated before he ceased to be in the bank's service;
(ii) by the operation of, or by virtue of, any of the rules or the provisions of the Rules, the disciplinary proceedings may be continued and concluded by the competent authority
(iii) in the manner provided for in the Rules
(iv)as if the officer continues to be in service, and
(v) that he shall be deemed to be in service only for the purpose of the continuance and conclusion of such proceedings.
And Concluded that:
It is finally held about the Judgment (para 10.27) that:
The jurisdictional scope in the Jaswant Singh Gill case (supra) was limited (para 10.27) because
(i) the observations made in the Judgment were traveling beyond the scope of the proceedings
(ii) therefore the same cannot be said to be binding
(iii) cannot constitute the ratio with respect to continuance of departmental inquiry after superannuation and what kind of punishment can be imposed by an employer.
(iv) The jurisdiction of authority was only to consider payment of gratuity under Section 4(6) of the Payment of Gratuity Act, 1972.
Therefore, the decision in Jaswant Singh Gill (supra) is overruled.
G) How provisions of the Section 4(6) of the Payment of Gratuity Act will be attracted (para 9)?
The Court based their conclusion on the following:
H) Even otherwise, as Per the Rules, withholding was permissible (para 9.1):
I) Hence the Rule 34.3 of the CDA Rules is not ultra vires the Payment of Gratuity Act (from para 9.1):
J) It was finally held (para 9.2):
K) Second Question (para 10, 10.1, 10.5, 10.6, 10.7, 10.8, 10.9 & 10.15):
"it was held that when disciplinary proceedings had been initiated before employee attained the age of superannuation, the rule provided for deemed legal fiction of continuance of employee 'as if he was in service', till finalization of such proceedings, the employee would be deemed to be in service although he has attained the age of superannuation."
(ii) No merit was found in the submission that inquiry and order of dismissal passed after superannuation was illegal and without jurisdiction.
(iii) Rule 34.2 shall hold the field and would be binding, in the absence of any statutory interdiction made by any other provision regarding continuance of the inquiry and for taking it to a logical end in terms of the deemed continuation of the employee in service.
(iv)Decision of the Supreme Court in the case of Ram Lal Bhaskar (supra) is by a three Judge Bench, which is binding.
(i) It was inter alia held that (paras 10.16 and 10.17):
L) With respect to the Act and the departmental inquiries it was held (para 10.18) that:
M) With respect to operation of Section 4(1) and 4(6) of the Act it is held (para 10.19) that:
N) The Court concluded with respect to Section 4(1) of the Act (paras 10.20, 10.25 and 10.27) that:
O) The Court therefore held (para 10.21) that:
P) Distinction between "Termination" and "Dismissal"
Q) Dealing with the contrary Judgments (para 10.26):
The judgments in case of UCO Bank & Ors. v. Rajendra Shankar Shukla, (2018) 14 SCC 92 where the court had not interfered in the peculiar facts of the case and the decision in case of UCO Bank & Ors. v. Prabhakar Sadashiv Karvade (2018) 14 SCC 98 were considered and it is held that,
R) The Court rejected the submissions of the Employee:
in view of the rule in question,
which provides for a legal fiction with respect to continuance in service, and
it has to be given full effect. And
S) The Court observed that (para 10.29)
T) It is also held that in view of the various decisions: (para 10.30)
U) The Court finally observed that: (para10.31)
V) It finally was held that considering the provisions of Rules (para 10.32):
W) The Court concluded that (para 11):
the employer has a right to withhold the gratuity during the pendency of the disciplinary proceedings, and
Views are personal
(Author is a Practicing Lawyer)