Thun~abhadra in the objections raised to prevent the matter coming to Industries v. The Government

the judgment and decree dated December 23, 1960, of the Bombay High Court in First Appeal No. 464 of 1958. R.K. Garg, S.C. Agarwala, D.P. Singh and M.K. Ramamurthi, for the appellants. S. V. Gupte, Additional Solicitor General, V.D. Mahajan and R.N. Sachthey, for the respondent. October 23, 1963. The Judgment of the Court was delivered by WANCHOO J. This is an appeal against the judgment and decree of the Bombay High Court on a certificate granted by that Court. The appellant was in the service of the Union of India. He was appointed on June 11, 1949 as an officiating Assistant Director Grade II in the office of the Textile Commis sioner, Bombay and was working as such till Septem ber 15, 1954. The appointment was temporary and his services were liable to be terminated on one month's notice on either side. He was posted after the date of his appointment in the Textile Commissioner's office at Ahmedabad and continued to work there I 5 S.C.R. SUPREME COURT REPORTS 193 v .. 1963 India till Pebruary 1954. He was transferred to Bombay in February 1954 and was informed in August 1954 that his services would be terminated from September ~hampaklal 15, 1954. No cause was assigned for the termination Chimanlal Shah of his services and no opportunity was given to him of showing cause against the action taken against The Union of him. He therefore brought a suit in the City Civil Court at Bombay, and his contention was that his services had been terminated unjustifiably and mall- Wanchoo l. ciously as the Regional Director of Production in the Textile Commissioner's office at Ahmedabad was against him. Because of this on December 29, 1953, the appellant was called upon to explain certain irregularities and was also asked to submit his explanation and to state why disciplinary action should not be taken against him. The appellant went on to state in the plaint that certain enquiries were held against him behind his back but the matter was not pursued and he was transferred to Bombay in February 1954. While he was at Bombay he recieved the notice terminating his services. He claimed that he was a quasi-permanent employee under the Central Civil Services (Temporary Service) Rules, 1949, (here- inafter referred to as the Rules) and no action under r. 5 of the Rules could be taken against him. He was further entitled to the protection of Art. 311 of the Constitution and as his services were terminated without complyinp: with that provision the order was bad and liable to be set aside. It was further conten- ded that if r. 5 applied to him, it was bad inasmuch as it was hit by Art. 16 of the Constitution and in any case the order passed against him was bad as it was discriminatory. The appellant therefore prayed that the order of August 13, 1954 by which his services were terminated be declared illegal and inoperative and he be declared a quasi permanent employee and reinstated in &ervice. There was also a claim for arrears of sala1 y and costs of the suit and such other consequential reliefs as the court might deem fit to give. • The suit was opposed by the Union of India and its main defence was that the appellant was not a quasi permanent employee and that r. 5 of the Rules 1 SCI/64-13 I ' 194 SUPREME COURT REPORTS [1964] . v. 1963 India Wanchoo J. Champaklal services by order dated August 13, 1954. The Union of appellant when his services· were terminated. applied to him and that action was properly taken under that rule when terminating the appellant's It was Chimanlal Shah also contended that r. 5 was perfectly valid and that there was no discrimination practised against the It was admitted that the memo. dated December 29, 1953 was issued to the appellant and he was directed to submit his explanation in respect of the irregulari ties mentioned therein to the Under Secretary, Govern ment of India, New Delhi and to state why disciplinary action should not be taken against him. It was also admitted that from December 1953 onwards some departmental inquiry was conducted against the appellant but it was averred that the said depart mental inquiry was not pursued as the evidence against him was not considered to be conclusive. But as the appellant's work was not found satisfactory, be was transferred to Bombay in February 1954 to give him a chance of improvement. Ashia work and conduct were ultimately found to be unsatis factory, his employment was terminated under r. 5 of the Rules as he was a temporary employee. On these pleadings three main questions arose for decision before the trial court, namely, (i) whether the appellant was a quasi permanent employee and r. 5 of the Rules did not apply to him; (ii) whether r. 5 was invalid as it was hit by Art. 16 of the Consti tution and in any case whether the action taken against the appellant was discriminatory, and therefore hit by Art. 16 of the Constitution, and (iii) even if the appellant was a temporary government servant, whether he was entitled to the protection of Art. 311 (2) of the Constitution the circumstances of this case. The trial court held on all these points against the appellant and dismissed the suit. The appellant then went in appeal to the High Court. The High Court agreed with the trial court and dis missed the appeal. The appellant then applied for a certificate to appeal to this Court, which was granted; and that is how the matter has come up before us. ' 4 5S.C.R. SUPREME COURT REPORTS 195 1963 The first question that falls for consideration is whether the appellant was a quasi permanent em- ployee and r. 5 did not apply to him. If the appellant ~hampaklal is held to be a quasi permanent employee, he will Chimanlal Shah be entitled to the protection of Art. 311(2) and as admittedly the provisions of Art. 311 (2) were not The Union °1 complied with in the present case, his suit would have to be decreed and no further question would arise for decision. Rule 3 of the Rules, which falls for Wanchoo J. consideration in this connection, is as follows:- India v. "A Government servant shall be deemed to be in quasi-permanent service:- (i) if he has been in continuous Government service for more than three years; (ii) if the appointing authority, being satisfied as to his suitability in respect of age, qualifications, work and character, for employment in a quasi permanent capacity has issued a declaration to that effect, in accordance with such instructions as the Governor-General may issue from time to time." The contention on behalf of the appellant is that as there is no conjunction "and" between the two sub-clauses of r. 3, a Government servant must be deemed to be quasi-permanent if he complies with either of the two sub-clauses. It is urged that a temporary government servant will become quasi permanent if he has been in continuous government service for more than three years or if a declaration is made in his favour as required by sub-cl. (ii). The appellant thus reads the word "or " between the two sub-clauses. On the respondent the other hand, contends that looking at the scheme of the Rules the word "and" should be implied between the two sub-clauses and that both the clauses must be fulfilled before a Government servant can be deemed to be in quasi-permanent service. In this connection our attention was drawn to two cases of this Court in which this rule was men tioned. InParshotamLal Dhingra~v. Union of India,(1) this Court, when referring to r. 3 at p. 858, used (I) [1958) S.C.R. 828. j f. .. l .. ' « ' I 196 SUPREME COURT REPORTS [1964) 1963 the conjunction "or" between the two sub-clauses. Learned counsel for the appellant relies on this to Champaklal show that we should read the word "or" between Chimanlal Shah the two sub-clauses. We are however of opinion that this Court was not specifically dealing with the The Union of interpretation of r. 3 in that case and what has been said there about r. 3 was merely for purposes of illus tration. The other case of this Court to which refer- India v. Wanchoo J. ence has been made is K.S. Srinivasan v. Union of India.( 1 ) There while quoting r. 3 at p. 1307, this Court used the word "and" between the two sub clauses. That is probably due to the fact that the brochure on "Central Civil Services (Temporary Services) Rules 1949" printed by the General Manager, Government of India Press, New Delhi, 1959, contains the word "and" between the two sub-clauses in r. 3. That also in our opinion is not conclusive in favour of the respondent, because it is not disputed before us that in the Government gazette where the Rules were first published, neither the word "and" nor the word "or " appears between the two sub-clauses of r. 3. This aspect of the matter was considered by the Bombay High Court in B.M. Pandit v. Union of India(") where the learned Judges pointed out at p. 48 that they found from the copy of the gazette of the Government of India in which these Rules were :first published that neither the word "and" nor the word "or" appeared between the two sub clauses and this position is accepted on behalf of the respondent before us. The question therefore arises whether we have to read the two sub-clauses conjunc tively or disjunctively. We may add that the Bombay High Court in the case mentioned above read the two sub-clauses conjunctively and we are of opinion that that view is correct. The object of these Rules obviously was to pro vide for some security of tenure for a large number of temporary goverment servants who had to be employed in view of World War II and also to provide for former employees of the Governments of Sind, the North West Frontier Province and Baluchistan (2) A.I.R. 1962 Born. 45. (1) [1958] S.C.R. 1295. 5 S.C.R. SUPREME COURT REPORTS 197 v. 1963 India who had come to India on account of the Partition. This protection was afforded to temporary govern- ment servants and the government servants of the Champaklal other type by the device of creating quasi-permanent Chimanlal Shah service. Rule 3 provided in what circumstances a government servant shall be deemed to be quasi- The Union of permanent. Quasi-permanent service is defined r. 2(2) as meaning "temporary service commencing from the date on which a declaration issued under Wanchoo J. r. 3 takes effect and consists of periods of duty and leave (other than extraordinary leave) after that date." R•1lc 3 therefore must be read with r. 2(b) which defines "quasi-permanent service". Under r. 2(b), quasi-permanent service begins from the date on which a declaration is issued under r. 3. It follows there- fore that before a government servant can be deemed to be in quasi-permanent service a declaration must be issued under the second sub-clause of r. 3, for that is the sine quo non for the commencement of quasi-permanent service. Without such a declara- tion quasi-permanent service cannot begin. If there- fore the appellant's contention were to be accepted and a temporary government servant can be deemed to be in quasi-permanent service, if only the first sub-clause has been fulfilled, viz., that he has been in continuous government service for more than three years, there will be complete irreconcilability between r. 2(b) and the first clause of r. 3. Therefore, reading these two rules together the conclusion is inevitable that we must read the two sub-clauses con- junctively and hold that both conditions must be fulfilled before tr Government servant can be deemed to be in quasi-permanent service, namely, (i) that he has been in continuous government service for more than three years, and (ii) that the appointing authority after satisfying itself as to suitability in various res- pects for employment in quasi-permanent capacity It is however has issued a declaration to that effect. urged that the definitions in r. 2 have to be read subject to there being nothing repugnant in the subject or context and it is contended that in the context of · r. 3 the two sub-clauses must be read disjunctively. I • ' 198 SUPREME COURT REPORTS [1964] v. /963 The Union of the rule making authority We are of opinion that there is no force in this argu- ment, and as a matter of fact the context of r. 3 itself Champaklal requires that that rule must be read in harmony Chimanlal Shah with the definition of "quasi-permanent service" in r. 2(b), for it could not possibly be the intention of to create disharmony between the definition in r. 2(b) and the provision in r. 3. The contention on behalf of the appellants that the two sub-clauses are independent and have to be read disjunctively must be rejected and it must be held that both the conditions in r. 3 must be satis fied before a government servant can be deemed to be in quasi-permanent service. Wanchoo J. India · This will in our opinion also be clear from the scheme of the Rules following r. 3. Rule 4 provides that "a declaration issued under r. 3 shall specify the particular post or the particular grade of posts within a cadre in respect of which it isr issued, and the date from which it takes effect." This rule is clearly meant to apply to all quasi-permanent em ployees and shows that no government servant can be deemed to be in quasi-permanent service until a declaration has been issued. Rule 6 provides that "the service of a Government servant in quasi-perma nent service shall be liable to termination in the same circumstances and in the same manner as a govern ment servant in permanent service." Now under the definition of r. 2(b), quasi-permanent service begins with a declaration issued under sub-cl. (ii) of r. 3. Therefore the protection ofr. 6 can only be given to a quasi-permanent employee after a declaration has been made. This again shows that a declaration is necessary before a Government servant can claim to be in quasi-permanent service. Rule 7 provides that a ~overnment servant in respect of whom the declaration has been issued under r. 3, shall be eligible for permanent appointment on the occurrence of a vacancy in the specified posts which may be reserved for being filled from among persons in quasi-permanent service. This again shows that a quasi-permanent employee can become eligible for permanent appoint- . ment only when a declaration has been issued under I I 5 S.C.R. SUPREME COURT REPORTS 199 v. I11dia 1963 r. 3. Again r. 8 provides that a government servant in quasi-permanent service shall as from the date on which his service is declared to be quasi-permanent Champaklal be entitled to the same conditions of service in respect Chimanlal Shah of leave, allowances and disciplinary matters as a government servant in permanent service holding The Union of the specified post. Here again the benefit of r. 8 can only be availed of by a quasi-permanent govern- ment servant in whose favour a declaration has Wanchoo J. been made. Then r. 9 provides that a government servant in quasi-permanent service shall be eligible for a gratuity under certain circumstances. This gratuity will be at the rate of half a month's pay for each completed year of quasi-permanent service, such gratuity being payable on the basis of the pay admissi- ble to such government servant in respect of the specified post on the last day of his service. This again contemplates a declaration before the benefit of r. 9 can be claimed by a quasi-permanent employee. Rule 10 provides that where a government servant in quasi-permanent service is appointed substantive- ly to a permanent pensionable post, the entire period of quasi-permanent service rendered by him shall be deemed to be qualifying service for the grant of gratuity and pension. Now under r. 2(b) quasi- permanent service only commences after the declaration and therefore unless a declaration is made, the benefit of r. 10 cannot be taken by a quasi-permanent employee. The scheme of the rules therefore clearly that a declaration under r. 3 is necessary before a temporary government servant can claim to be a quasi-permanent employee. Otherwise sub-clauses of r. 3 were to be read disjunctively the result would be that a person may become a quasi- permanent employee under sub-cl. (!) but will get none of the advantages mentioned above. We are therefore satisfied that the scheme of the Rules and the harmony that is essential between r. 2(b) defining "quasi-permanent service" and r. 3 laying down how a government servant can be deemed to be in quasi- permanent service require that the two sub-clauses should be read conjunctively and that two conditions if the • I-· 200 SUPREME COURT REPORTS [1964] v.. 1963 India ~hampaklal (i) continuous service for . more than Wanchoo I. claim to be in quasi-permanent service. are necessary before a government servant can be deemed to be in quasi-permanent service, namely, three years, Chimanlal Shah and (ii) declaration as required by sub-cl. (ii) of r. 3. It is. not in dispute that though the appellant had The Un'.on °1 been in service for more than three years by 1954, no declaration· as required by sub-cl. (ii) of r. 3 has ever been made in his case. He cannot therefore It follows therefore that he cannot c:laim the benefit of r. 6, which lays down that the services of a government servant in quasi-permanent service shall be liable to termination in the same circumstances and in the same manner as government servants in permanent service. If he could claim the benefit of r. 6, he would have been certainly entitled to the protection of Art. 311. As he is not entitled to the benefit of r. 6, he can not claim the benefit of Art. 311(2) on the ground that he must be deemed to be in quasi-permanent service. The appellant therefor·e must be held to be still in temporary service when his services were dispensed with in August 1954. The rule that applies to a tem porary government servant is r. 5 which lays down that-- "(a) the service of a temporary Government servant who is not in quasi-permanent service shall be liable to termination at any time by notice in writing given either by the Government servant to the appointing authority, or by the appointing authority to the Government servant. (b) The period of such notice shall be one month, unless otherwise agreed to by the Govern ment and by the Government servant; Provided that the service of any such Govern ment servant may be terminated forthwith by payment to him of a sum equivalent to the amount of his pay plus allowances, at the same rates at which he was drawing them immediately before the termination of his services, for the period of the notice or, as the case may be, for the period by which such notice falls short of one month or any agreed longer period." I I • ·'I 5S.C.R SUPREME COURT REPORTS 201 v. 1963 India the services of a In short r. 5 gives power to the Government to ter- temporary government minate servant by giving him one month's notice or on pay- Champaklal ment of one month's pay in lieu of notice or such Chimanlal Shah shorter or longer notice or payment in lieu thereof as may be agreed to between the Government and The Union of the employee concerned. This rule is being attacked on the ground that it is hit by Art. 16, which provides that "there shall be equality of opportunity for all Wanchoo J. citizens in matters relating to employment or appoint- ment to any office under the State". We have not been able to understand how this rule can possibly be hit by Art. 16, which provides for equality of oppor- tunity. These Rules show that there are two classes of employees namely, (i) permanent employees, and (ii) temporary employees, the latter being divided into two sub-clauses (a) quasi-permanent, and (b) temporary. It is well recognised that the Government may have to employ temporary servants to satisfy the needs of a parti- cular contingency and such employment would be perfectly legitimate. There can also be no doubt, if such a class of temporary servants could be recruited that there would be nothing discriminatory or violative of equal opportunity if the conditions of service of such servants are different in some respects from those of per- manent employees. Further we see no denial of equal opportunity if out of the class of temporary employees some are made quasi-permanent depending on length of service and their suitability in all other respects for permanent employment eventually and thus assimi- It has been urged lated to permanent employees. OJ?. behalf of the respondent that t-st. 16 in any case w11! n~t apply to matters relatmg to termination of service. We ~o not think it necessary for present purposes to ~ec1de whether Art. 16 would apply termination of service. We to rules relatmg to shall ass~me for the purposes of this appeal that Art. 16 . w1~ apply even in the case of rules relating th termmat19n of se; vice. But we fail to see how t e rule .which applies to one class of government servants Ill the matter of termination but does not apply to the other two classes can be said to violate ' • • 202 SUPREME COURT REPORTS [1964] v. 1963 India Champak/al equality of opportunity provided in Art. 16. The classification of government servants into these classes is reasonable and differences in the matter of termina Chimanlal Shah tion of service between these classes cannot be said In parti- to be discriminatory in the circumstances. The Union of cular the very fact that the service of a government servant is purely temporary makes him a class apart from those in permanent service and such govern- Wanchoo J. ment servant cannot necessarily claim all the advanta ges which a permanent servant has in the matter of security of service. We are therefore of opinion that considering the nature of the employment of a temporary government servant, a provision like that in r. 5 in respect of termination of service is a reasonable provision which cannot be said to deny equality of opportunity provided in Art. 16. The attack therefore on r. 5 on the ground that it is hit by Art. 16 of the Constitution must fail. It is next urged that even if r. 5 is good, the order by which the appellant's services were dispensed with In this was bad, because it was discriminatory. connection reference was made in the plaint to a number of Assistant Directors whose services were not dispensed with even though they were junior to the appellant and did not have as good qualifica tions as he had. We are of opinion that there is no force in this contention. This is not a case where services of a temporary employee are being retrenched In such a case because of the abolition of a post. a question may arise as to who should be retrenched when one out of serveral temporary posts is being retrenched In those circumstances, qualifications and length of service of those holding similar temporary posts may be relevant in consider ing whether the retrenchment of a particular employee was as a result of discrimination. The present how ever is a case where the appellant's services were terminated because his work was found to be unsatis factory. We shall deal with the question whether termination in this case is liable to be set aside on the ground that Art. 311 (2) was not complied with later; but where termination of the service of a temporary in an office. I ' ·-1 5 S.C.R. SUPREME COURT REPORTS 203 v. 1963 India It would be Champaklal government servant takes place on the ground that his conduct is not satisfactory there can in our opinion be no question of any discrimination. absurd to say that if the service of one temporary Chiman/al Shah servant is terminated on the ground of unsatisfactory conduct the services of all similar employees must The Union of also be terminated along with him, irrespective of what their conduct is. Therefore even though some of those mentioned in the plaint by the appellant were Wanchoo J. junior to him and did not have as good qualifications as he had and were retained in service, it does not follow that the action taken against the appellant terminating his services was discriminatory for that action was taken on the basis of his unsatisfactory conduct. A question of discrimination may arise in a case of retrenchment on account of abolition of one of several temporary posts of the same kind in one office but can in our opinion never arise in the case of dispensing with the services of a parti- cular temporary employee on account of his conduct being unsatisfactory. We therefore reject the contention that the appellant was denied the protection of Art. 16 and was treated in a discriminatory manner. • We now come to the last question whether the appellant was entitled to the protection of Art. 311(2) of the Constitution, even though he was a porary government servant. It is well settled that temporary servants are also entitled to the protec tion of Art. 311(2) in the same manner as permanent government servants, if the government takes action against them by meting out one of the three punish ments i.e. dismissal, removal or reduction in rank: (see Parshotam Lal Dhingra v. Union of India( 1). But this protection is only available where discharge, removal or reduction in rank is sought to be inflic It ted by way of punishment and not otherwise. is also not disputed that the mere use of expressions like "terminate" or "discharge" is not conclusive and in spite of the use of such innocuous expressions, the court has to apply the two tests mentioned in Parshotam Lal Dhingra's case( 1), namely-(!) whether (I) (1958] S.C.R. 828. . ' • 204 SUPREME COURT REPORTS [1964] v. 1963 India the servant had a right to the post or the rank or (2) whether he has been visited with evil consequences; Charnpaklal and if either of the tests is satisfied, it must be held Chirnanlal Shah that the servant had been punished. Further even though misconduct, negligence, inefficiency or other The Union of disqualification may be the motive or the inducing factor which influences the Government to take action under the terms of the contract of employment or the specific service rule, nevertheless, if a right exists, under the contract or the rules, to terminate the service the motive operating on the mind of the Government is wholly irrelevant. It is on these principles which have been laid down in Parshotam Lal Dhingra' s case( 1 ) that we have to decide whether the appellant was entitled to the protection of Art. 3 II (2) in this case. Wanchoo J. Before however we consider the facts of this case, we should like to make certain general observa tions in connection with disciplinary proceedings It is well known taken against public servants. the services that government does not terminate of a public servant, be he even a temporary servant, without reason; nor is it usual for government to reduce a public servant in rank without reason even though he may be holding the higher rank only temporarily. One reason for terminating the services of a temporary servant may be that the post that he is holding comes In that case there is nothing further to to an end. be said and his services terminate when the post comes to an end. Similarly a government servant temporarily officiating in a higher rank may have to be reverted to his substantive post where the incum bent of the higher post comes back to duty or where the higher post created for a temporary period comes to an end. But besides the above, the government may find it necessary to terminate the services of a temporary servant if it is not satisfied with his conduct or his suitability for the job and/or his work. The same may apply to the reversion of a public servant from a higher post to a lower post where the post is held as a temporary measure. This dissatisfaction with the work and.lor conduct of a temporary servant (I) [1958] s.c.R. 828. 5 S.C.R. SUPREME COURT REPORTS 205 1 · v._ 1963 India In such cases It may decide may arise on complaint against him. two courses are open to government. to dispense with the services of the servant or revert Champaklal him to his substantive post without any action being Chimanlal Shah taken to punish him for his bad work and/or conduct. Or the Government may decide to punish such a The Un'.on °1 servant for his bad work or misconduct, in which case even though the servant may be temporary he will have the protection of Art. 311 (2). But Wanchoo even where it is intended to take action by way of punishment what usually happens is that something in the nature of what may be called a preliminary enquiry is first held in connection with the alleged In this preli- misconduct or unsatisfactory work. minary enquiry the explanation of the government servant may be taken and documentary and even oral evidence may be considered. It is usual when such a preliminary enquiry makes out a prima facie case against the servant concerned that charges are then framed against him and he is asked to show cause why disciplinary action be not taken against him. An enquiry officer (who may be himself in the case where the appointing authority is other than the Government) is appointed who holds enquiry into the charges communicated to the servant concerned after taking his explanation and this inquiry is held in accordance with the principles of natural justice. This is what is known as a formal departmental enquiry into the conduct of a public servant. In this enquiry evidence both documentary and oral may be led against the public servant concerned and he has a right to cross-examine the witnesses tendered against him. He has also to give documentary and oral evidence in his defence, if he thinks necessary to do so. After the enquiry is over, the enquiry officer makes a report to the Government or the authority having power to take action against the servant concerned. The government or the authority makes up its mind on the enquiry report as to whether the charges have been proved or not and if it holds that some or all the charges have been proved, it tentatively the punishment to be inflicted determines the right 206 SUPREME COURT REPORTS [1964) v. 1963 on the public servant concerned. It then communica tes a copy of the enquiry officer's report and its own: Champaklal conclusion thereon and asks him to show cause why Chimanlal Shah the tentative punishment decided upon be not inflic- ted upon him. This procedure is required by Art. The Union of 311(2) of the Constitution in the case of the three major punishments, i.e., dismissal, or removal or reduction in rank. The servant concerned has then Wanchoo J. an opportunity of showing cause by making a represen tation that the conclusions arrived at at the depart mental enquiry are incorrect and in any case the punishment proposed to be inflicted is too harsh. India Generally therefore a preliminary enquiry temporary employee or a government usually held to determine whether a prima facie case for a formal departmental enquiry is made out, and it is very necessary that the two should not be confused. Even where government does not intend to take action by way of punishment against a tem porary servant on a report of bad work or miscon duct a preliminary enquiry is usually held to satisfy government that there is reason to dispense with the services of a temporary employee or to revert him to his substantive post, for as we have said already government does not usually take action of this kind without any reason. Therefore when a pre liminary enquiry of this nature is held in the case of a servant holding a higher rank temporarily it must not be confused with enquiry (which usually follows such a preliminary enquiry) when the government decides to frame charges and get a departmental enquiry made in order that one of the three major punishments already indicated may be inflicted on the government servant. There fore, so far as the preliminary enquiry is concerned there is no question of its being governed by Art. 311 (2) for that enquiry is really for the satisfaction of government to decide whether punitive action should be taken or action should be taken under the contract or the rules in the case of a temporary government servant or a servant holding higher In short rank temporary to whilh he has no right. the regular departmental ' 'i'::' ' 5 S.C.R. SUPREME COURT REPORTS 207 v. 1963 India a preliminary enquiry is for the purpose of collec- tion of facts in regard to the conduct and work of a government servant in which he may or may not Champaklal be associated so that the authority concerned may Chimanlal Shah decide whether or not to subject the servant concerned to the enquiry necessary under Art. 311 for inflic- The Union of ting one of the three major punishments mentioned therein. Such a preliminary enquiry may even be held ex parte, for it is merely for the satisfaction Wanchoo J. of government, though usually for the sake of fair- ness, explanation is taken from the servant concerned even at such an enquiry. But at that stage he has no right to be heard for the enquiry is merely for the satisfaction of the Government, and it is only when the government decides to hold a regular departmental enquiry for the purposes of inflicting one of the three major punishments that the government servant gets the protection of Art. 3 !l and all the rights that that protection implies as already indicated above. There must therefore be no confusion between the enquiries and it is only when the government proceeds to hold a departmental enquiry for the purpose of inflicting on the government servant one of the three major punishments indicated in Art. 311 that the government servant is entitled to the protection of that Article. That this Court emphasised in ) and in Shyamlal v. Parshotam Lal Dhingra's case( 1 that the motive or the The State of Uttar Pradesh( 2 ) inducing factor which influences the government to take action under the terms of the contract of employ- ment or the specific service rule is irrelevant. is why In Shyamlal's case( 2 ) what happened was that the gov~rnment. servant conc~rned was called upon to expli; im certam matters which cast an imputation upon him; but later it was made perfectly clear to him by the government that it was not holding any f9rmal ~e~ar.tmental enquiry against him with a VIew to mfl1ctmg any of the three major punishments alt~ough the government desired to give him an oppor~ tumty to show cause why he should not be compul- Ol [1958] I S.C.R. 828. (2) [1955) I S.C.R. 2 c. "( - • 208 SUPREME COURT REPORTS [1964] v. 1963 India Champaklal sorily retired, and after considering his explanation he was compulsorily retired under the relevant service It was held in that case that this did not amount rule. Chimanlal Shah to punishment within the meaning of Art. 311 (2), even though there was some imputation at an earlier The Union of stage and even though the servant ,concerned was asked to explain why he should not be compulsorily retired. As we have said already it is not usual for Wanchoo J. government to take action against a public servant without rhyme or reason and that is why in the case of temporary servants or servants holding higher ranks to which they have no right some kind of pre liminary enquiry is usually held before the govern· ment decides to dispense with their service or revert them to their substantive posts. The mere fact that some kind of preliminary enquiry is held against a temporary servant and following that enquiry the services are dispensed with in accordance with the contract or the specific service rule (e.g. r. 5 in this case) would not mean that the termination of service amounted to infliction of punishment of dismissal or removal within the meaning of Art. 311(2). Whether such termination would amount to dismissal or removal within the meaning of Art. 311(2) would depend upon facts of each case and the action taken by government which finally leads to the termination of service. Let us now turn to the facts of this case. On December 29, 1953, a memorandum was given to the appellant under the signature of the Under Secre tary to the Government of India. By that memo randum he was informed about four matters and his explanation was called in that connection. The first matter referred to his punctuality in attending office and his absenting himself from duty without prior intimation and instances in that respect were brought to his notice. The second matter was with respect to irregular claims for mileage allowance in respect of his visits to mills some of which were never made. Instances of these were also brought to his notice. The third matter related to a certain visit to a certain mill on a certain date which was f f Ji:--- 5S.C.R. SUPREME COURT REPORTS 209 never undertaken. The fourth matter was general relating to his work and conduct being not satisfac- tory and his not attaching due importance to the Champaklal performance of his duties in accordance with the Chimanlal Shah instructions of the Regional Director. He was re- quired to submit his explanation by January 6, 1954 The Union of and also asked to state why disciplinary action should not be taken against him. The contention on behalf of the appellant is Wanchoo 1· India 1963 v. that this memorandum really amounted to a charge- sheet against the appellant and he was asked to give an explanation thereto and also to state why dis- ciplinary action should not be taken against him. Stress is laid on the last sentence of the memorandum the appellant was asked why disciplinary It may be action should not be taken against him. conceded that the way in which the memorandum was drafted and the fact that in the last sentence he was asked to state why disciplinary action should not be taken against him might give an impression that the intention was to hold a formal departmental enquiry against him with a view to punishing him. But though this may appear to be so, what is import- ant to see is what actually happened after this memo- randum for the courts are not to go by the particular name given by a party to a certain proceeding but are concerned with the spirit and substance of it in the light of what preceded and succeeded it. It is true that in the written statement of the respondent it is stated that from December 1953 onwards a departmental enquiry was being conducted against the appellant, though the written statement went on to say that that departmental enquiry was not pursued as the evidence was not considered to be conclusive. In actual fact however it is not even the case of the appellant that any enquiry officer was appointed to hold what we have called a formal departmental enquiry in which evidence was tendered from both sides in the presence of the appellant. This is clear from para 8 of the plaint in which it is said that some enquiries appeared to have been held after the memorandum of December 1953 but were I SCI 64-14 210 SUPREME COURT REPORTS [ 1964] v. 1963 India Wanchoo J. not pursued further. It is however clear that no formal departmental enquiry as contemplated under Champak/al Art. 311 (2) read with the relevant Central Services Chimanlal Shah Rules was ever held after the notice of December 29, 1953, as otherwise the appellant would have taken The Union of part in such an enquiry and would have been entitled to cross-examine witnesses produced against him and would also have been entitled to lead evidence. It seems therefore clear that though this memoran dum was issued and the appellant was asked therein to state why disciplinary action should not be taken against him, no departmental enquiry followed that memorandum and the matter was dropped. That is further borne out by the fact that the appellant was transferred from Ahmedabad to Bombay in Febru ary 1954, which would be most unlikely if a depart mental enquiry was going on against him in Ahmed abad. The respondent's case in this connection is that it gave up the departmental enquiry even though it was contemplated and transferred the appellant to Bombay in order to give him a chance of improve ment. The appellant worked in Bombay for over six months and thereafter the Government finally decided to terminate his services under r. 5 as his work and conduct were found unsatisfactory even after his transfer to Bombay. On these facts there can in our opinion be no doubt that even if a depart mental enquiry was contemplated in December 1953 it was not pursued and no punitive action was taken against him on the basis of the memorandum issued to him on December 29, 1953; what appears to have happened is that after the appellant was transferred to Bombay where he worked for six months more, the government came to the conclusion that his work and conduct were not satisfactory and therefore decided to terminate his services under r. 5. W;e cannot accept the proposition that once government issues a memorandum like that issued in this case on December 29, 1953, but later decides not to hold a departmental enquiry for taking punitive action, it can never thereafter proceed to take action against a temporary government servant in the terms of r. 5, f-· 5 S.C.R. SUPREME COURT REPORTS 211 v. 1963 India even though it is satisfied otherwise that his conduct and work are unsatisfactory. The circumstances in this case are in our opinion very similar to the facts Champaklal in Shyamla/'s case\1 l, the difference being that in Chimanlal Shah that case he was compulsorily retired and in this case the appellant's services have been terminated. The Union of In Shyamlal's case( 1 l also at one stage, the govern- ment made imputation against his conduct but later withdrew them and did not follow up the matter by Wanchoo l. is exactly holding a departmental enquiry. This what happened in the present case and it was more than six months after that the appellant who had in the meantime been transferred to Bombay was discharged in the terms of r. 5 because his work and conduct were found unsatisfactory. The order terminating his imputation whatsoever against him and in the circumstances it cannot be said that the termination of his service is visited with any evil consequences as explained in Parshotam Lal Dhingra's case( 2 l. We are there- fore of opinion that on the facts of this case Art. 311 (2) has no application and the appellant was not entitled to the protection of that Article before his services were terminated under r. 5, for the ter- mination of service here does not amount to inflic- tion of the penalty of dismissal or removal. services makes no ' It remains now to consider certain cases on which reliance was placed on either side. Strong reliance has been placed on behalf of the appellant on Madan Gopal v. The State of Punjab(3J. In that case Madan Gopal was a temporary government servant. A charge-sheet was served on him on February 5, 1955 and he was charged with having taken bribes in two cases. He was also asked to explain why disciplinary action should not be taken against him. He was further asked to state if he wanted to be heard in person and also to put forth any defence. It will be clear that charges were served upon Madan Gopal (2) [1958] S.C.R. 828. (1) [1955] 1 S.C.R. 26. (3) [1963] 3 S.C.R. 716. 212 SUPREME COURT REPORTS [1964] v. 1963 India in that case while i;n the present case no charges were ever served on the appellant and the communication Champaklal of December 29, 1953 was headed as a memorandum. Chimanlal Shah Further the charge-sheet in Madan Go pal's case Cl) besides asking him to state why disciplinary action The Union of should not be taken against him also asked him to state in his reply if he wanted to be heard in person and wanted to put forward any defence, which clearly Wanchoo J. showed that a departmental enquiry was going to be held particularly when the charges were given by the Settlement Officer who had apparently been appointed the enquiry officer for the purpose. Further in Madan Gopal's caseC1) an enquiry was held and a report was submitted by the enquiry officer to the Deputy Commissioner. The enqiury officer found Madan Gopal guilty of the charges and recommended that he should be removed from service immediately. On the basis of this report an order was passed by the Deputy Commissioner which stated in so many words that it had been established that bribes had been taken by Madan Gopal and that he accepted the report of the Settlement Officer. The Deputy Commissioner then went on to order that the services of Madan Gopal were terminated on payment of one month's pay in lieu of notice. Obviously in that case a departmental enquiry was held by the enquiry officer, a report was made to the Deputy Commissioner who was apparently the authority to dismiss or remove Madan Gopal and he passed the order terminating his services on the basis of the report, though he did not use the word "dismiss" or "remove" in his order. In those circumstances this Court held in conformity with what had been said in Parshotam Lal Dhingra's caseC 2 l that the mere use of the word "termination" would not con clude the matter and as the facts showed as they did in Madan Gopal's caseC1) that the order was one of dismissal or removal and was passed as a punish ment after inquiry, Art. 311(2) should have been complied with. The facts of that case in our opinion are very different from the facts in the present case. [1958] s.c.R. 828· (I) [1963] 3 S.C.R. 716. (2) • • 5S.C.R. SUPREME COURT REPORTS 213 v. 1963 intention As we have already pointed out no departmental enquiry was really held after the memorandum of December 29, 1953 in this case and no enquiry officer ~hampaklal was appointed and no report was made by any enquiry Chiman/a/Shah officer. Whatever might have been the behind the memorandum dated December 29, 1953, The Union °1 the matter was not pursued and the departmental enquiry if it was ever intended to be held was dropped. Wanchoo J. The appellant thereafter was transferred to Bombay to give him chance of improvement and it was only six months later when it was found that his work and conduct were still unsatisfactory that govern ment took action under r. 5 and dispensed with his services. On the facts of the present case there fore it cannot be said that the order of dispensing with the services of the appellant which was passed in August 1954 was an order punishing the appellant the penalty of removal or dismissal. imposing upon him India The next case is The State Qf Bihar v. Gopi Kishore Prasad< 1 l. That was a case of a probationer and this Court laid down five propositions therein. It is the third proposition therein on which strong reliance has been placed on behalf of the appellant. It is in these terms :- "But, if instead of terminating such a person's service without any enquiry, the employer chooses to hold an enquiry into his alleged misconduct, or inefficiency, or for some similar reason, the termination of service is by way of punishment, because it puts a stigma on his competence In such a and thus affects his future career. case he is entitled to the protection of Art. 311 (2) of the Constitution." It is urged on behalf of the appellant that this proposi tion means that as soon as any kind of enquiry is held against a probationer-and the same it is said temporary employee as the two will apply to a (!) A.LR. 1960 S.C. 689. " ,_..- ' -.J • 214 SUPREME COURT REPORTS v'. 1963 India stand more or less on the same footing-the protec- tion of Art. 311(2) would be available. We are Champaklal of opinion that this is reading much more in the Chzmanlal Shah proposition then was ever intended by this Court. In that case the Government after some kind of enquiry The Um.on °1 said in the order terminating the services of the servant concerned that confidential enquiries showed that Wanchoo J. he had the reputation of being a corrupt officer and that there was ample material to show that the report about his resorting to corrupt practices was justi fied. The order further said that his work was wholly unsatisfactory and in consideration of those matters, it was provisionally decided to terminate the probation and the government servant was asked to show cause why he should not be discharged. His explanation was then considered and the Government finally decided to discharge him. The facts of that case as they appeared from the copy of the government decision showed that the government was actually 311(2) was proceeding on is why some applicable enquiries were held and a provisional conclusion to terminate the services of the officer concerned was arrived at and he was asked to show cause against In those circumstances this Court held that that. as government had purported to take action under Art. 311, the action was bad as the protection en visaged by that Article was not afforded to the servant concerned. The third proposition therefore in that case does not in our opinion lay down that as soon as any kind of enquiry is held into the conduct of a probationer or a temporary servant he is immediately entitled to the protection of Art. 311. All that the third proposition lays down is that if the govern ment chooses to hold an enquiry purporting to act under Art. 311 as was the case in that case, it must afford to the government servant the protection which that Article envisages. the basis that case and that Art. Gopi Kishore Prasad's casec 1 ) was considered by this Court in a later case in the State of Orissa (I) A.LR. 1960 S.C 689. f 5 S.C.R. SUPREME COURT REPORTS 215 v. 1963 India In Ram Narayan Das's case,<1l ) which was also a case of a v. Ram Narayan Das,< 1 probationer. order was to the effect that the government servant ~hampaklal was discharged from service for unsatisfactory work Chimanlal Shah and conduct from the date on which the order was served on him. This Court in Ram Narayan Das's The Un~on °1 case< 1 l referred to the rules, which provided that "where it is proposed to terminate the employment Wanchoo J. of a probationer, whether during or at the end of the period of probation, for any specific fault or on account of his unsuitability for the service, the probationer shall be apprised of the grounds of such proposal and given an opportunity to show cause against it, before orders are passed by the authority compe- tent to terminate the employment" and pointed out that action in accordance with the rules would not be hit by Art. 311. Gopi Kishore Prasad's case< 2 J was distinguished in that case and it was pointed out that the third proposition in Gopi Kishore Prasad's case< 2 l referred to "an enquiry into allegations of misconduct or inefficiency with a view, if they were found established, to imposing punishment and not to an enquiry whether a probationer should be con- firmed," which means that where the Government purports to hold an inquiry under Art. 311 read in order to punish an officer, it must with the Rules afford him the protection provided therein. The third proposition therefore in Gopi Kishore Prasad' s case< 2 l must be read in the context of that case and cannot apply to a case wliere the government holds what we have called a preliminary enquiry to find out whe~her a temporary. serv~nt should be discharged or ~ot m ac.cord_ance wit~ his contract or a specific service rule m view of his conduct. The third pro- position must be restricted only to those cases whether of temporary government servants or others, where government purports to act under Art. 311(2) but In such ends up with a mere order of termination. a case the form of the order is immaterial and the termination of service may amount to dismissal or (!) [1961] I S.C.R. 606. (2) A.I.R. 1960 S.C. 689. .. , 216 SUPREME COURT REPORTS . . 1963 removal. The same view has been taken in Jagadish Mitter v. Union of lndia< 1 ) Champak/a/ Chimanlal Shah v India ~e are. therefore of ?pmion tha. t on the fa.cts of this case it cannot be said that the order by which The U~ion of the appellants, .seryi~es were tei:minated und~r ~. 5 was an order mfhctmg the pumshment of d1sm1ssal It was or removal to which Art. 311(2) applied. in our opinion an order which was justified under r. 5 of the rules and the appellant was not entitled to the protection of Art. 311 (2) in the circumstances. The appeal therefore fails and is hereby dismissed. In the circumstances we pass no order as to costs. Wanchoo J. Appeal dismissed. 1963 October 13 THE MAHALAXMI MILLS LTD. v. THE COMMISSIONER OF INCOME-TAX, BOMBAY (And connected appeals) (A. K. SARKAR, M. HrnAYATULLAH AND K. C. DAS GUPTA JJ.) Income Tax-Depreciation-Computation of written down value-Deduction of depreciation in earlier years-Scope-Saurashtra Income Tax Ordinance, 1949, s. 13(5) (b)-Taxation Laws (Part B States) (Removal of Difficulties) Order, 1950, para 2-Indlan Income Tax Act, 1922 (11 ofl922), s. 10(5) (b). The assessces were carrying on business in Bhavnagar which was formerly an Indian State. In 1948 Bhavnagar became part of the United State of Saurashtra and on March 16, 1949 the Saurashtra Income-tax Ordinance was promulgated. For the purpose of calculating the depreciation allowance to which the assessees were entitled in computing the profits or gains of the business, the written down value of the building, machinery etc., had to be ascertained in accordance with the provisions of the Ordinance. Section 13(5) (b) of the Ordinance provided that "the written down value meant, in the case of assets acquired before the previous year, the actual cost to the assessee less all depreciation actually allowed to him under this Ordinance or ......... which would have been allowed to him if the Indian Income-tax (1) A.LR. 1964 S.C. 449. ·- , ...