THE HONOURABLE MR v. The General Manager

IN THE HIGH COURT OF JUDICATURE AT MADRASDATED : 4-7-2008CORAM:THE HONOURABLE MR.JUSTICE N.PAUL VASANTHAKUMARW.P.No.35556 of 2007 & M.P.Nos.1 and 2 of 2007W.P.No.35557 of 2007 & M.P.Nos.1 and 2 of 2007W.P.No.35556 of 2007R.S.Hari Shankar...PetitionerVs.1.The General Manager,United India Insurance,Head Office,No.676, P.B.No.676,Whites Road,Chennai - 600 014.2.The Divisional Manager,United India Insurance,Divisional Office,II Floor, Raji Buildings,212, Anna Salai,Chennai - 600 006....RespondentsPRAYER: Petition filed under Article 226 of the Constitution ofIndia, to issue a Writ of Certiorarified mandamus calling for theconcerned records relating to the order of the first respondentdated 13.8.2007 bearing ref No.Ref.HO:G.48(CBI):2007 quash the sameand consequently direct the respondents not to proceed with theimpugned order till the criminal appeal No.156 of 2007 on the fileof this court is finally disposed of.W.P.No.35557 of 2007J. Vasanth Kumar...PetitionerVs.General Manager,United India Insurance,Head Office, No.676, P.B.No.676,Whites Road,Chennai - 600 014....Respondent https://hcservices.ecourts.gov.in/hcservices/ PRAYER: Petition filed under Article 226 of the Constitution ofIndia, to issue a Writ of Certiorarified mandamus calling for theconcerned records relating to the order of the respondent dated13.8.2007 bearing ref No.Ref.HO:G.48(CBI):2007 quash the same andconsequently direct the respondents not to proceed with theimpugned order till the criminal appeal No.156 of 2007 on the fileof this court is finally disposed of.For Petitioners:Mr.N.G.R.Prasad for M/s.Row & ReddyFor Respondents:Mr.A.L.Somayaji, Senior Counsel for Mr.V.PerumalCOMMON ORDERBy consent of both parties, the writ petitions are taken upfor final disposal.2.Prayer in these writ petitions are to quash the showcause notice issued against the petitioners dated 13.8.2007 and forconsequential direction to the first respondent not to proceed withthe impugned show cause notice till the criminal appeal preferredby them is finally disposed of.3.Petitioner in W.P.No.35556 of 2007 was appointed as sub-staff in the respondent Company on 18.12.1991 and he was promotedin the year 1998 as record clerk and he is now working in theDivisional Officer, Rajaji Salai, Chennai - 6.4.Petitioner in W.P.No.35557 of 2007 was appointed asAssistant Administrative Officer in the year 1981 in the respondentInsurance Company and in the year 2000, he was promoted as SeniorDivisional Manager and now he is posted as Manager, Personnel andAdministration at Kerala.5.According to the petitioners, after privatisation ofInsurance business, there was a stiff competition from the privateInsurance Companies as well as from multi nationals and as part ofthe business strategy, there is a practice of giving gifts toimportant customers. The accounts manual issued by the Company inthe year 1994 states that there is a practice of purchasing andgiving gifts to promote business, which was restricted uptoRs.1,000/- subsequently. There is provision for spending amounttowards gifts.6.The petitioners purchased gifts under the head stationaryand printing and gave the gifts to important customers to improve https://hcservices.ecourts.gov.in/hcservices/ the business. For raising the bill under the head stationary andencashment of the bills, Criminal Case No.4 of 2002 was filedagainst the petitioners before the Additional Special Judge for CBICases, Chennai. Petitioners were charged for the offence ofconspiracy and cheating the company to the tune of Rs.2,07,230/-.The learned Additional Special Judge for CBI Cases, Chennai in hisjudgment dated 31.1.2007 convicted the petitioner in W.P.No.35556of 2007 (A1) and petitioner in W.P.No.35557 of 2007 (A2) under theoffences under sections 120B read with 420, 468, 468 read with 471IPC and under Section 13(2) read with 13(1)(d) of Prevention ofCorruption Act, 1988. As against the said conviction and sentence,Criminal Appeal No.156 of 2007 was filed before this Court and on15.2.2007 the said criminal appeal was admitted and suspension ofsentence was ordered and petitioners were enlarged on bail.According to the petitioners they have submitted representation tothe General Manager, who is the disciplinary authority, andrequested not to take any disciplinary action pending criminalappeal.7.The respondent issued show cause notice on 13.8.2007relying on the conviction imposed by the criminal court and interms of Rule 23 of the GI (CDA) Rules, 1975, read with Rule 30(1)of the said rules and directed the petitioners to submit theirexplanation as to why they shall not be dismissed from service bygiving 15 days time to submit their explanation. Petitionerssubmitted their explanation for the said show cause notice dated12.9.2007 and 10.9.2007 respectively by stating that the suspensionof sentence has been granted by this Court and the main appeal ispending and if dismissal order is passed at this point of time,irreparable damage will be caused to them even before the finalorder is passed in the criminal appeal. The said show causenotices are challenged by the petitioners by filing these writpetitions on 21.11.2007.8.In W.P.No.35557 of 2007, the Deputy General Manager ofthe respondent Insurance Company gave a certificate dated 12.9.2007stating that continuance of the petitioner in the region willbenefit the region. The said show cause notice is challenged onthe ground that the respondent has pre-determined the issue andproposed the penalty of dismissal from service, when the criminalappeal is pending before this Court. The criminal court has notapplied its mind in proper perspective and rule 23 enables thedisciplinary authority to impose minor or major penalties andproposing major penalty of dismissal is not proportionate to thegravity of the allegations.9.The respondents have filed counter affidavit by statingthat the Special Judge for CBI Cases, Chennai, in C.C.No.4 of 2004convicted the petitioners for serious offences including Sections120B, 420, 468, 471 IPC as well as section 13(2) read with 13(1)(d)of the Prevention of Corruption Act, 1988. Once cheating and https://hcservices.ecourts.gov.in/hcservices/ criminal conspiracy have been proved, and the petitioners areconvicted and sentenced to undergo rigorous imprisonment for oneyear and also to pay a fine of Rs.20,000/- each on three counts,the petitioners have no right to challenge the show cause notice asthe respondent is empowered to impose penalties under Rule 30(1) ofthe rules. After considering the reply to the show cause notice,the disciplinary authority passed the order of dismissal on11.10.2007. However, the same is not communicated in view of thegrant of stay by this Court. Ultimately it is stated in thecounter affidavit that the writ petition is premature and the sameis to be dismissed.10.The learned counsel for the petitioners submitted thatthe sentence imposed against the petitioners are suspended and thecriminal appeal has been admitted and the petitioners are having afair chance of success in the criminal appeal and at this stage therespondents are not entitled to issue the show cause noticescalling upon the petitioners to reply as to why they shall not bedismissed. The learned counsel also cited the judgment of theSupreme Court reported in (2008) 2 MLJ 1061 (State of M.P. v.Hazarilal) in support of his contention. The learned counselfurther submitted that the respondent has pre-determined his mind,which is reflected in the show cause notices and on that ground thepetitioners are entitled to challenge the show cause notice as perthe judgment of the Supreme Court reported in (2007) 2 MLJ 295(Siemens Ltd. v. State of Maharashtra). Ultimately the learnedcounsel submitted that even if the respondent is empowered to takeaction, the extreme penalty of dismissal need not be proposed andsome lesser punishment can be imposed.11.The learned Senior counsel for the respondents on theother hand submitted that admittedly the petitioners are convictedfor very serious criminal offences viz., cheating, criminalconspiracy, etc., and the conviction imposed against thepetitioners are still in operation as no stay is granted withregard to the conviction by this court. Therefore a convictedperson for serious offences cannot be retained in the service. Thelearned Senior Counsel further submitted that under Rule 30(1)special procedure is contemplated for imposing penalties specifiedin Rule 23 and even show cause notice need not be given by therespondents to impose penalty in terms of rule 30(1). The learnedSenior Counsel further submitted that prima facie opinion alone wasformed by the respondent while issuing the show cause notice andmerely by expressing the word "I am of the view", the petitionerscannot contend that the respondent has pre-determined his mind andit is only a provisional conclusion of prima facie view, which canbe changed if sufficient and acceptable explanation is submitted.Therefore, the judgment relied on by the petitioner reported in(2007) 2 MLJ 295 (cited supra) cannot be applied to the facts ofthese cases. Similarly the judgment relied on by the petitioners'counsel reported in (2008) 2 MLJ 1061 (cited supra) has also no https://hcservices.ecourts.gov.in/hcservices/ application to the facts of the case as the petitioners havecommitted serious criminal offences holding responsible positionsdealing with monetary transactions. The learned counsel also citedthe judgments of the Supreme Court reported in (1995) 3 SCC 377(Deputy Director of Collegiate Education (Admn) v. S.Nagoor Meera),(1997) 11 SCC 383 (Union of India v. V.K.Bhaskar), 2008 (3) CTC 511(SC) (Union of India v. Vicco Laboratories) and (2006) 10 SCC 509(Union of India v. State of Bihar) in support of his contention andprayed for dismissal of the writ petitions.12.I have considered the rival submissions made by thelearned counsel for the petitioners as well as the learned SeniorCounsel for the respondents. Admittedly petitioners have beenproceeded for the offences under sections 120B read with 420, 468,468 r/w 471 IPC and section 13(2) read with 13(1)(d) of thePrevention of Corruption Act, 1988, before the Additional SpecialJudge of CBI Cases, Chennai, and the petitioners were convicted forthe said offences. It is also an admitted case of the petitionersas well as respondents that in criminal appeal No.156 of 2007 thesuspension of sentence alone was granted in M.P.No.1 of 2007, orderdated 15.2.2007 and the conviction was not stayed and the criminalappeal is pending.13.The offences proved against the petitioners are veryserious in nature. The proved offences and punishment imposed onthe petitioners are as follows:"1.Offence under Section 120-B r/w420 IPC - Sentenced to undergo RI for oneyear and also pay a fine of Rs.20,000/-, indefault to undergo SI for three months.2.Offence under Section 468 IPC -Sentenced to undergo RI for one year andalso pay a fine of Rs.20,000/-, in defaultto undergo SI for three months.3.Offence under section 468 r/w 471IPC - Sentenced to undergo RI for one yearand also pay a fine of Rs.20,000/-, indefault to undergo SI for three months.4.Offence under section 13(2) r/w 13(1)(d) of Prevention of Corruption Act, 1988- Sentenced to undergo RI for one year andalso pay a fine of Rs.20,000/-, in defaultto undergo SI for three months."It is the specific case of the petitioners that pursuant to theimpugned show cause notices, petitioners have submitted theirexplanation on 12.9.2007 and 10.9.2007. Rule 30 of the GeneralInsurance (Conduct, Discipline & Appeal) Rules, 1975, reads asfollows:"30.Special procedure in certain cases. https://hcservices.ecourts.gov.in/hcservices/ Notwithstanding anything contained inRule 25 or 26 or 27, the Competent Authoritymay impose any of the penalties specified inRule 23 in any of the followingcircumstances:i.the employee has been convicted on a criminal charge, or on the strengthoffact or conclusions arrived at by ajudicial trial; orii.Where the Competent Authority is satisfied for reasons to be recorded by itin writing that it is not reasonablypracticable to hold an inquiry inthemanner provided in these Rules; oriii.Where the Competent Authority is satisfied that in the interest of thesecurityof the Corporation/Subsidiary it is not expedient to hold any inquiry in themanner provided in these rules;iv.Where an employee has abandoned his post the Competent Authority may considerthe circumstances of the case andpass such orders thereon as it deemsfit.Explanation:For the purpose of this rule, an employeeshall be deemed to have abandoned his post ifhe absents himself from duty without leave oroverstays his leave for a continuous periodof 90 days without any intimation therefor inwriting."From the perusal of the above rule, which is admittedly applicableto the petitioners, it is evident that if an employee is convictedof a criminal charge or on the strength of fact or conclusionarrived at in a judicial trial, the competent authority may imposeany of the penalties specified in Rule 23. One of the penaltyspecified in Rule 23 is dismissal from service. Therefore it isopen to the respondents to pass dismissal order based on theconviction, even without issuing show cause notice. 14.A perusal of the show cause notice discloses a fact thatthe respondent only relied upon the judgment of the criminal courtand opined that the allegations proved against the petitioners aregrave and serious, which warrants imposition of penalty ofdismissal from service. The said statement cannot be treated aspre-determination of the issue, because the charges proved against https://hcservices.ecourts.gov.in/hcservices/ the petitioners are grave and serious, dealing with the funds ofthe respondent company.15.The learned counsel for the petitioners argued that thepetitioners have got a very good case on merits in the criminalappeal. I am not expressing any opinion with regard to the abovesubmission as it is for the appellate Court while dealing with thecriminal appeal to decide the merits of the case.16.The judgment cited by the learned counsel for thepetitioner reported in (2007) 2 MLJ 295 (cited supra) will notapply to the facts of this case. The conviction for theinvolvement of criminal offences of grave and serious nature,committed by the petitioners as on today are not in dispute. Mereexpression of the word after analysing the criminal court judgmentand stating that the respondent is of the view that the allegationsproved are grave and serious and warrants imposition of penalty ofdismissal from service is only a provisional satisfaction recorded,which may or may not be changed after considering the explanation.Therefore I am of the view that merely by using the said words, itcannot be said that the respondent has pre-determined the issue.17.The facts in the Judgment of the Supreme Court reportedin (2008) 2 MLJ 1061 (cited supra) are distinguishable. There,the person involved was a peon appointed in a middle school. Hesaid to have assaulted another person, for which he was prosecutedand convicted and sentenced to pay a fine of Rs.5,000/-. On thebasis of the said facts and allegations of trivial offence, theSupreme Court took a view that for such an offence committed by apeon, punishment of dismissal from service is violative of doctrineof proportionality. Hence the petitioners cannot draw any analogyon the basis of the said judgment since the criminal offencesproved against the petitioners are grave and serious in nature.18.(a)In the decision reported in (1995) 3 SCC 377 (DeputyDirector of Collegiate Education (Admn) v. S.Nagoor Meera) theSupreme Court considered the effect of suspension of sentence andin paragraphs 7 and 8 held thus, "7. This clause, it is relevant tonotice, speaks of “conduct which has led hisconviction on a criminal charge”. It does notspeak of sentence or punishment awarded.Merely because the sentence is suspendedand/or the accused is released on bail, theconviction does not cease to be operative.Section 389 of the Code of CriminalProcedure, 1973 empowers the appellate courtto order that pending the appeal “theexecution of the sentence or order appealedagainst be suspended and, also, if he is inconfinement, that he be released on bail, or https://hcservices.ecourts.gov.in/hcservices/ on his own bond”. Section 389(1), it may benoted, speaks of suspending “the execution ofthe sentence or order”, it does not expresslyspeak of suspension of conviction. Even so,it may be possible to say that in certainsituations, the appellate court may also havethe power to suspend the conviction — anaspect dealt with recently in Rama Narang v.Ramesh Narang. At pages 524 and 525, theposition under Section 389 is stated thus:(SCC pp.524-525, paras 15 and 16)“Section 389(1) empowers the AppellateCourt to order that the execution of thesentence or order appealed against besuspended pending the appeal. What canbe suspended under this provision is theexecution of the sentence or theexecution of the order. Does ‘order’ inSection 389(1) mean order of convictionor an order similar to the one underSection 357 or Section 360 of the Code?Obviously the order referred to inSection 389(1) must be an order capableof execution. An order of conviction byitself is not capable of execution underthe Code. It is the order of sentence oran order awarding compensation orimposing fine or release on probationwhich are capable of execution andwhich, if not suspended, would berequired to be executed by theauthorities.***In certain situations the order ofconviction can be executable, in thesense, it may incur a disqualificationas in the instant case. In such a casethe power under Section 389(1) of theCode could be invoked. In suchsituations the attention of theAppellate Court must be specificallyinvited to the consequence that islikely to fall to enable it to apply itsmind to the issue since under Section389(1) it is under an obligation tosupport its order ‘for reasons to berecorded by it in writing’. If theattention of the Court is not invited tothis specific consequence which islikely to fall upon conviction how can https://hcservices.ecourts.gov.in/hcservices/ it be expected to assign reasonsrelevant thereto? ... If such a preciserequest was made to the Court pointingout the consequences likely to fall onthe continuance of the conviction order,the Court would have applied its mind tothe specific question and if it thoughtthat case was made out for grant ofinterim stay of the conviction order,with or without conditions attachedthereto, it may have granted an order tothat effect.”8. We need not, however, concernourselves any more with the power of theappellate court under the Code of CriminalProcedure for the reason that what isrelevant for clause (a) of the second provisoto Article 311(2) is the “conduct which hasled to his conviction on a criminal charge”and there can be no question of suspendingthe conduct. We are, therefore, of theopinion that taking proceedings for andpassing orders of dismissal, removal orreduction in rank of a government servant whohas been convicted by a criminal court is notbarred merely because the sentence or orderis suspended by the appellate court or on theground that the said government servant-accused has been released on bail pending theappeal."(Emphasis Supplied)(b)In the decision reported in (1997) 11 SCC 383 (Union ofIndia v. V.K.Bhaskar) in paragraph 7 and 8 held as follows:"7. ...... The order of dismissal hasto be read as a whole. If it is thus read, itwould be found that in the first paragraph ofthe order the authority has referred to thefact of the respondent having been convictedon a criminal charge under Section 5(1)(c)read with Section 5(2) of the Prevention ofCorruption Act, 1947 and Sections 409, 477-Aand 120-B IPC and his having been awarded thepenalty of rigorous imprisonment for one yearand a fine of Rs.500 by the Special Judge,Jalandhar, on 17-5-1985. In the secondparagraph of the said order the disciplinaryauthority has stated:“It is considered that the conduct ofShri Vinod Kumar Bhaskar which has ledto his conviction is such as to render https://hcservices.ecourts.gov.in/hcservices/ his further retention in the publicservice undesirable/the gravity of thecharge is such as to warrant theimposition of a major penalty formisappropriation of a sum of Rs.300(approx.) along with other accused ManSingh, Jawala Das and Kewal ChanderKumar.”8. The said statement in the order ofdismissal indicates that the disciplinaryauthority has applied its mind and afterconsidering the conduct of the respondentwhich has led to his conviction on a criminalcharge, has arrived at the conclusion thatthe said conduct was such as to render thefurther retention of the respondent in thepublic service undesirable. It cannot,therefore, be said that the order ofdismissal was passed without the disciplinaryauthority applying its mind to the nature ofthe conduct of the respondent which led tohis conviction on a criminal charge and whichhas rendered him undesirable to be retainedin service."(Emphasis supplied)(c)In the decision reported in (2006) 10 SCC 509 (Union ofIndia v. State of Bihar) in paragraph 4 it is held that takingaction against the person on the basis of the criminal courtconviction are matters governed by service rules and the servicerules must be allowed to operate in such cases."4. We have perused the order passed bythe High Court dated 13-3-2000. The HighCourt while exercising its criminaljurisdiction could either have convicted theaccused or acquitted him of the chargelevelled against him, and could pass anyother order which it is authorised to passin exercise of its criminal jurisdiction.However, in exercise of such jurisdiction itcould not have issued a direction that theconviction of the respondent will not affecthis service career, because the High Courtin exercising its criminal jurisdiction hasno authority to prevent the legalconsequences which follow the conviction ofa government servant. Those are mattersgoverned by the Service Rules, and theService Rules must be allowed to operate in https://hcservices.ecourts.gov.in/hcservices/ such cases. We, therefore, find that thedirection contained in the last part of theorder of the High Court dated 13-3-2000 wasan order passed without jurisdiction and,therefore, must be treated as invalid andnon est. We, therefore, allow this appealand declare that the direction made by theHigh Court in Crl. Revision No. 6 of 2000 byorder dated 13-3-2000 to the effect that theorder of conviction will not affect theservice career, including payment of retiralbenefits to Respondent 2 shall be ignored bythe authority concerned as being withoutjurisdiction, invalid and non est. Theappeal is allowed." (d)In 2008 (3) CTC 511 (SC) (Union of India v. ViccoLaboratories) the Supreme Court considered the scope ofinterference in show cause notices. In para 30 it is held thus,"30.Normally, the Writ Court should notinterfere at the stage of issuance of showcause notice by the authorities. In such acase, the parties get ample opportunity toput forth their contentions before theconcerned authorities and to satisfy theconcerned authorities about the absence ofcase for proceeding against the personagainst whom the show cause notices havebeen issued. Abstinence from interferenceat the stage of issuance of show causenotice in order to relegate the parties tothe proceedings before the concernedauthorities is the normal rule. However,the said rule is not without exceptions.Where a Show Cause notice is issued eitherwithout jurisdiction or in an abuse ofprocess of law, certainly in that case, theWrit Court would not hesitate to interfereeven at the stage of issuance of show causenotice. The interference at the show causenotice stage should be rare and not in aroutine manner. Mere assertion by the writpetition that notice was withoutjurisdiction and/or abuse of process of lawwould not suffice. It should be prima facieestablished to be so. Where factualadjudication would be necessary,interference is ruled out." 19.In the light of the above decisions of the Supreme Court https://hcservices.ecourts.gov.in/hcservices/ and the service rules applicable to the petitioners and the natureof the offences committed by the petitioners, which are proved asof now, no case is made out for quashing the impugned orders.There are no merits in the writ petitions and the writpetitions are dismissed. No costs. Connected miscellaneouspetitions are dismissed. Sd/Asst.Registrar/true copy/Sub Asst.RegistrarvrTo1.The General Manager, United India Insurance,Head Office, No.676, P.B.No.676, Whites Road,Chennai - 600 014.2.The Divisional Manager, United India Insurance,Divisional Office, II Floor, Raji Buildings,212, Anna Salai, Chennai - 600 006.1 CC To M/s.Row & Reddy, Advocate, SR NO.34971,349721 CC To Mr.V.Perumal, Advocate, SR NO.34904 W.P.Nos.35556 & 35557/2007nm(co)pmk/16.7.08