P.N. Swamy v. 1. The Board of Directors

Petition under Article 226 of the Constitution of lndia praying that in the circumstances stated in the affidavit filed therewith, the High Court may be pleased to issue an order, direction of writ,more particularly one in the nature of Writ of lrrlandamus declaring the action of the 2nd respondents in issuing the proceedings No. 2'15 (1)/Admn.IV/DC -112009, dated 07 01.2012, is illegal, arbitrary and unjust and consequently set aside the proceedings No. 2'1 5 (1)/Admn.lV/DC-1t2009, dated 07.01.20'12, issued by the 2nd respondent,. Counsel for the Petitioner: SRI G.RAVI MOHAN Counsel for the Respondents: SRI M.AJAY KUMAR, SC FOR TG KUDA W.P.N O: 22296 OF 20'13 Between: 1 Sved Anwar Died per LR, S/o. Syed Ali, Aged about 62 years, No. 171271N1' Ahnapurna nagar, Opp. Survey of lndia, Uppal, Hyderabad

2. Muneera Ba R/o H.No Hyderabacl iitYf tf iiffiif,l,{:.A%,.,."8"r{.S,r^:ff ";?::.ll:,;rH ji The Chairman Telanqana C Lrmrted,atHyderabaa. )iaryDevelopment-corporation, Federation AND ...PETITIONERS ...RESPONDENTS (C.T is amended as per C.O dt. 2OtO6l2O23 in lA 01/2023.) petition under Articre 226 0f the constitution of rndia praying that in the circumstances stated in the affidavit fired therewith, the High court may be preased to issue a writ, order or direction more particurarry one in the nature of Writ of Mandamus declaring the action to the re spondent in recovering the amount of Rs.g,22,0001 t ry rmpugned proceedings dated- Og.12.2011 as illegat, arbitrary and unjust and consequen,y set aside the proceedings dated- 09.12.201.1 and proceedings dated_27.0..2013 and direct the respondent to pay amount of Rs.8,22,000/_. Counsel for the petitioners: SRI c*RAvl MOHAN counset for the Respondent: SRt n;r.eJniiijileR, sc FoR TG KUDA The Court made the foilowing: COMMON ORDER 'r '_, I 1 ,u, tr'-) Cqv wp_894s 2012 & wp _22296 _)Ol3 N8K, J THE HON,BLE SRIJUSTICE NAGESH BHEEMAPAKA WRIT PETITION No.8945 of 2012 AND WRIT PETITION No.22295 of 2013 COMMON ORDER: The issue and the grievance in these writ petitions being similar, they are analogously heard and taken up for disposal by this common order. For discussion, the facts in wP No.22296 of 2013 are taken wherever necessary.

2. WP No.8945 of 2012 petitioner-PN Swamy was appointed as Assistant Accounts officer in the 2nd respondent-Andhra Pradesh Dairy Development Cooperative Federation Limited (now renamed as Telangana Dairy Development cooperative Federation Limited) in the year LgTg,andthereafter obtained promotions and finally became the General Manager (Finance & Personnel) in the year 2008 and retired from service on 30.06.2009. lt is alleged that the petitioner displayed negligence towards duty and committed irregularities while working as Senior Accounts Officer at Milk Product Factory Hyderabad, during 30.11.2006 to 20.OL.IOO7,and not informed the Managing Director about the abnormally rising dues during 12.08.2008 to 12.09.2008 due to non-payment of necessary amount by the Milk Distributors on the same day before lifting of the stocks, and 47 cheques issued by the Milk Distributors to the Dairy Federation were dishonoured due to insufficient funds, thereby the Dairy Federation sustained huge losses. The respondent-Dairy Federation issued charge sheet to the petitioner on 10.07.2009 alleging seven charges' An enquiry was conducted by appointing a retired District Judge as Enquiry I a I J 2 wp_4945-2012 & the petitioner was herd suirtv or ,r""*'d:i: ssued Pe,i,.ner t::",:'.H':; ,"J::J i'il-t.J' ;:::*J::f#, :::: :::H,;,1,uwas Rs.7,84,ooo /.rrom the iii :':t'':',n" o,r,lr::. charenged in this writ rJ:;:'"' 3. Wp No.22296 ol 2Ot3: benefits of the petitioner' The same is petitioner_Syed respondent_orga nizatic Anwar (since died, per LR) was appointed in the on 16'09'1975 as Zon Inspector at Hyderabad. ,d promofions ,ru ,rtirr] became the Generar Thereafter te ootrin.' Manager (Markefing) prior to his retirement on,.r",, three sets of charges. The first one dated 26.o2.2t31'03'2oog' and the third on 16.05.2009. alreging n".or,oor,second supervision etc., due to \ ross of Rs.3,13,39,740 r-*n''ntherespondent-o'"''n"' order dated og.1.z 2o71,and terminalbenefits"r,n"***["J-d therefore tnt t"'o;t'""1"t'::il:Hil:T an amount of Rs'8'22'ooo/' from the He was issued ono3.o4.2oo9, negligence' lack of

4. Heard Mr. G. Ravi learned standing Counser Mohan' Iearned counser for responden.o",rr r"r" the Petitioners, and

5. Learned counsel for the pefitioners would r per the procedure, the pefitioners are required ,otrr"no",,, rike 2nd and 3.d respondenr. ";;,:__'u:'t"o it is the senior officerrts Distributors. rhe obrgarronl: ffi the Mitk Distributors, and the payment shalt be ,, JIJ:.::r::#::T: contend that as to inform the Senior officers of the failure of payment by the Distributors, and action asainst :;;:::.,"cessarv -------------- 3 wp 8945_2012 & wp_22296 2013 NBK,1 next Bank working day and, in case of default, the Milk Distributor is liable to pay penalty of Rs.25,000/- in case of dishonour of cheque for the first-time, and further action under Negotiable lnstruments Act, 1881, rests with the Director or Managing Director, or General Manager (Marketing), who are the signing authority on the Agreement. lt is further contended that the 3'd respondent-General Manager, Marketing, is the appropriate authority for imposing fine and for recovery of money, including transport charges, from the Milk Distributors if there is any default in payment as per Clause 8 of the Agreement. lt is contended that none of these issues were narrated before the Enquiry Officer by the Management Witness, and the Management has never stated anything about the payment responsibility as per the Agreement. It is also contended that the Management witness who were examined were not at all connected with the issue nor do they have any knowledge about this issue to state before the Enquiry Officer, and the Enquiry Officer himself acted as Management Witness and described the issue without there being any statement by the Management Witness, and the discussion in the enquiry is beyond the scope of evidence available before the Enquiry Officer. lt is contended that as per the findings of the Enquiry Officer, the Distributors agreed that there was no cheque bouncing from 07.02.2008 onwards and in fact it was further recorded that the petitioner should be hampered financial commitments through inventory purchase, and it was not a routine meeting as alleged by the enquiry officer, and it was a specific meeting for recovery of amount by the Distributors. lt is also contended that the Management Witnesses were also involved in the case and were issued charge sheets and therefore their evidence cannot be considered. lt is contended that the Enquiry Officer came to the conclusion that M-5 Document shows that the l 4 wp-8945_2O12 & wp_22296 2013 N8K, J petitioner was not responsible for accumulation of dues and the 2nd and 3rd respondents, in spite of knowledge that there were defaults in payment by the Milk Distributors, extended their contract and they never sought any permission or called for remarks from petitiongr, and the 2nd and 3rd respondents coiluded with Milk Distributors. ln that situation petitioner can only be a spectator, and he is not appropriate authority to comment on the Agreement as he is not a party to it. lt is contended that for the milk that has been supplied by the respondent-Dairy Federation, the Milk Distributors are supposed to make advance payments and thereafter take the stocks, and upon default by Milk Distributors, the respondent-Dairy Federation instead of recovering the amounts or filing cases under Negotiable lnstruments Act against Milk Distributors, sought to recover the amounts from terminal benefits of the petitioner and therefore the same is bad in law. Learned counsel further contends that even assuming there is fault on the part of the petitioners, it is not the petitioners alone who can act against the interest of the organization and it is the entire system where every person is involved in the issue.

6. Learned Standing Counsel, based on the counter affidavit, would submit that the respondent-Dairy Federation engaged Agencies / Milk distributors for sale of milk. lt is contended that the Milk distributors have to make advance payment of money and thereafter lift the stocks, and the petitioner is the General Manager (Marketing) and he is responsible for supervision of marketing activities Including realization of daily sales amount and collection of amount towards Liquid Milk supplied in the twin cities as per the indents to the t ra nsporte rs/d istributors promptly and to initiate action whenever there are defaults in payments of milk supplied and to ensure that r/ I ,, 5 wp-8945,2012 & w9 -22296.2011 NBK, ] there is no accumuration of arrears beyond the fimit under Bank Guarantees and other securities given by them' lt is further submitted that the milk distributors have not regularly remitted the requisite amounts for the milk thereby the payment dues piled up surpassing the bank guarantees they put with the respondent-Dairy Federation' lt is the specific contention of the respondent-Da iry Federation that the issue of non-payment was brought to the notice of the petitioner daily in a statement issued by the Accounts Officer showing the details of bounced cheques clearly and the petitioner failed to initiate any effective action to collect the arrears or reduce the arrears to the normal limit within the cover of the securities / bank guarantee given by the Agents despite being the regulator of the terms and conditions of the contracts. lt is also contended that in view of the seriousness of the allegations against the petitioner, he was given a charge sheet dated 24'03'2009 as per APDDCF CDA Rules No 5' 9' 37 and 38 as he was in the cadre of Officer' and had it been workmen, then APDDCF Certified Standing Orders would be applicable' Learned counsel would contend that the petitioner is primo focie responsible for non-collection of dues to the tune of Rs'6'O9'77 '223 petitioner submitted explanation on 30'03'2009 denying the charges' Petitioner retired from service on 31'03'2009 on attained the age of superannuation, pending disciplinary proceedings' lt is contended that on noticing further allegations' an additional charge sheet dated 16'05'2009 was issued alleging that the petitioner has committed following alleged acts of misconduct in connection with the non-realisation of Rs '6'09 '77 '223/- the Distributors / Transporters under the APDDCF Conduct' Discipline and Appeal Rules 1983' lt is submitted that Sri DV' Ramana Murthy' District & Sessions Judge (Retd) as Enquiry Officer to enquire into the charges' The and the Irom 6 wp_8945,2012 & 2013 ',,9_22296 NBlC J enquiry officer submitted his report dated 19.08.2011 by holding that the charges of negligence of work, disobedience, dishonesty, acting in a manner that is prejudicial to the interests of the organization and falsification of records. Thereafter, a Show Cause notice dated 05.11.2011 was issued proposing the punishment of recovery of the total loss of Rs.3,13,39,7401- from the terminal benefits such as gratuity, Earned Leave encashment and other amounts due towards the partial recoupment of the pecuniary loss cause to the organization besides reserving the right to recover the rest ofthe outstanding LMS due to as per law. Petitioner submitted his explanation dated

23.71.2071denying the charges, and since the explanation to the Show Cause notice was not satisfactory the proposed punishment off recovery oftotal loss from the terminal lt is contended that this Court in the order dated24.71.2OLO has directed the respondent to conclude the disciplinary proceedings against the petitioner within six months and in compliance of the orders of this Court, the disciplinary case was finalized and proceedings dated 09.12.2011 were issued. lt is further contended that the petitioner; being the Head of Marketing wing, has failed to initiate or propose the action to terminate the contractor and that it is the duty of the petitioner to handle the subject of regulating the appointment of distributors, collecting security deposits and other terms and conditions entrusted with the duty of calling tenders etc., as such he cannot disown his responsibility. lt is further contended that the enquiry was conducted by a retired District Judge in a fair manner giving all reasonable opportunity to the petitioner and proper evidence was adduced with relevant records on behalf of the management, and that it is not correct to state that the enquiry officer went beyond the scope of evidence. lt is further contended that though the Chief Executive of the Organization can .) / --------- 7 wp_894s_2012 & wp_22295 2013 NBK, J terminate the contract but this does not debar the petitioner who is the Head of Marketing department to initiate or propose the action to terminate the contractor without being continued. lt is further contended that it is the duty of the petitioner to handle the subject of regulating the appointment of the distributors, collecting security deposits and other terms and conditions entrust.ed with the duty of calling tenders etc. lt is further contended that basing on the Report of the Special Secretary to the Government, charges have been framed against eight other employees of the Organization, however, since the charges were not proved against the said employees, further action was dropped against those employees vide proceedings dated

25.1O.2O12.|t is contended that charges against the petitioner who is Head of Marketing was held proved and the respondent-orga nization is veiy much considerate in withholding only a partial amount of Rs.8,22,000/- from out of the terminal benefits of Rs.3,13,39,7 40/ -. Learned counsel would therefore contend that there is no illegality in the impugned order dated 09.12.2011 directing recovery of Rs.8,22,000/- in partial recoupment of the financial loss of Rs.3,13,39,7401-.

7. Having considered the respective submissions, and perusing the record, it may be noted that the petitioners, as the General Manager (Marketing), was entrusted with the responsibility of supervising the marketing activities, \ ensuring timely realization of dues, and initiating action against defaulting \ distributors. lt is the specific contention of the respondent-Dairy Federation \ that the respondent, through Daily Statements, has been informing the petitioner of the defaults in payments, and such information is undoubtedly to enable the petitioner to follow up for immediate payment and to take stringent action. Further, the enquiry proceedings were conducted by a 8 $'D 3945-2012 & qp 22296 2OI3 NBK, ] reasonable E-''l ) retired District Judge, who provided the pefitioner with opportunity to defend himself' The Enquiry Report' dated 19'08'201f is based on evidence adduced by the management' including records of bouncedchequesandarrears,andthepetitioner'sallegationthattheEnquiry Officer exceeded the scope of the evidence is not substantrated' lt may be noted that the petitioner's negligence resulted in a significant financial loss of Rs. 3,13,39,740/- to the organization' The recovery of Rs' 8'22'000/- from the petitioner's terminal benefits is a partial recoupment of this loss and the same cannot be said to be illegal or disproportional' and the respondent has been considerate in withholding only a fraction of the total loss from the petitioner's terminal benefits. The disciplinary proceedings were conducted in accordance with the APDDCF Conduct, Discipline' and Appeal Rules' 1983' The respondentcompliedwiththedirectionsofthisCourtdated24'11'2010' concludingtheproceedingswithinthestipulatedtimeframe.Theimpugned order dated Og.l2.2}71does not suffer from any illegality'

8. Accordingly, the writ petitions are dismissed' upholding the impugned order dated 07.O1.2012 passed in WP No'8945 of 2012' and the impugned order dated 0g.12.2OL1 in WP No'22296 of 2013' No order as to costs' Miscellaneous petitions pending, if any, shall stand closed' //TRUE COPYII SD/-N. SRIHARI ASSISTA.NT REGISTRAR \t'{ SE,3TION OFFICER J One C C to SRI G RAVI MOHAN, Advocate [O PU One CC to SRI Two CD CoPies N/,AJAY KUMAR, SC FOR TG KUD loPUCl To 1 2 3 PSK 6\kc:n HIGH COURT DATED:2510212025 I I COMMON ORDER WP.Nos.8945 of 2012 AND 22296 of 2013 1 uE ST{ a .! .) J 2 i rint 2925 o t !-- DISMISSTNG THE WRIT PETITIONS WITHOUT COSTS @{6"t g* I