Tamil Nadu Magnesite Limited v. Tamil Nadu Magnesite Limited

IN THE HIGH COURT OF JUDICATURE AT MADRASDATED: 11.11.2009CORAMTHE HONOURABLE MR.JUSTICE S.J.MUKHOPADHAYAandTHE HONOURABLE MR. JUSTICE M. DURAISWAMYW.A.Nos.615 of 2004 and 577 of 2005 &W.A.M.P.No.1090 of 20041.Tamil Nadu Magnesite Limited (A Govt. Of Tamil Nadu Undertaking), Rep. By its Board of Directors, 5/53, Omalur Main Road, Jagir Ammapalayam, Salem – 636 302.2.The Managing Director, Tamil Nadu Magnesite Limited (A Govt. Of Tamil Nadu Undertaking), Rep. By its Board of Directors, 5/53, Omalur Main Road, Jagir Ammapalayam, Salem – 636 302. .. Appellants/Respondents in W.A.No.615/2004 R.Mahamani .. Appellant/Petitioner in W.A.No.577/2005 vs R.Mahamani .. Respondent/Writ Petitioner in W.A.No.615/20041.Tamil Nadu Magnesite Limited (A Govt. Of Tamil Nadu Undertaking), Rep. By its Board of Directors, 5/53, Omalur Main Road, Jagir Ammapalayam, Salem – 636 302. https://hcservices.ecourts.gov.in/hcservices/

2.The Managing Director, Tamil Nadu Magnesite Limited (A Govt. Of Tamil Nadu Undertaking), Rep. By its Board of Directors, 5/53, Omalur Main Road, Jagir Ammapalayam, Salem – 636 302. .. Respondents / Respondents in in W.A.No.577/2005Writ Appeals filed under Clause 15 of Letters Patentagainst order of this court made in W.P.No.15693 of 2001 dated25.11.2003. Writ Petition filed under Article 226 of the constitutionof India for issuance of writ of certiorari, calling for the recordsrelating to the proceedings of the Managing Director by the order ofthe Board bearing ref:1(2)/P & A/4046/2001-02, dated 7.8.2001-2002dated 7.8.2001 and the consequential proceedings bearing No.1(2)/P &A/4179/2001-2002 dated 10.8.2001 on the file of the respondents andto quash the same.For Appellant in W.A.615/2004 : Mr.A.Jinasenan For Appellant in W.A.577/2005 : Mr.N.R.Chandran, Sr. counsel for Mr.T.P.Manoharan For Respondents : Mr.N.R.Chandran, Sr. counselin W.A.615/2004 for Mr.T.P.Manoharan For Respondent in W.A.577/2005 : Mr.A.JinasenanJ U D G E M E N T(Judgement of the Court was delivered by M. DURAISWAMY,J) The above Writ Appeals arises against the order of the learnedsingle Judge made in W.P.No.15693 of 2001 dated 25.11.2003.2. The appellants in W.A.No.615 of 2004 are the respondents inthe writ petition. The appellant in W.A.No.577 of 2005 is thepetitioner in the writ petition. 3. The brief case which leads to the filing of the writ petitionis as follows:(i) A notification was issued on 31.7.1979 for the post ofFinancial Controller-cum-Secretary by the first respondent company.The qualification prescribed was "a degree in Arts, Science or https://hcservices.ecourts.gov.in/hcservices/ Commerce from a recognized University, a company Secretary andChartered Accountant". The petitioner applied for the said post on4.8.1979 along with his Bio-Data. In the Bio-Data, the petitionerhad mentioned that he passed B.Com examination in the year 1966,passed final examination of the Institute of Chartered Accountants ofIndia in 1971 and passed final examination of the Institute ofCompany Secretaries of India in 1978(ii) The petitioner attended the interview and he was selectedand was issued with an order of appointment on 5.3.1980. Thepetitioner joined the duty on 2.5.1980. Though the petitioner passedfinal examination of the Institute of Company Secretaries of Indiain June 1978, he was yet to become a Associate Member of theInstitute of Company Secretaries of India. Under Section 2(45) ofthe Companies Act, 1956, the qualifications for the post of CompanySecretary is to be an Associate Member of the Institute of CompanySecretaries of India. Therefore, the petitioner on the date of hisjoining the duty was not qualified to hold the post of CompanySecretary. When the above factor came to light in December 1981,the Board of Directors of the first respondent company passeda resolution to redesignate the petitioner as Acting Secretary–cum-Financial Controller retrospectively from the date on which heassumed Office i.e. 2.5.1980. The Board also asked the petitioner tocomplete all the formalities within a period of 6 months and theManaging Director was authorised to redesignate the petitioner asActing Secretary-cum-Financial Controller on completion of theformalities. By letter dated 12.4.1982, the Institute of CompanySecretaries of India admitted the petitioner as an Associate Memberof the Institute with effect from 12.4.1982. On 16.6.1982, theRegistrar of Companies pointed out to the first respondent companyabout the appointment of the unqualified person to the post ofCompany Secretary. By reply dated 26.6.1982, the first respondentcompany clarified the position. Therefore, on and after 21.4.1982,the petitioner’s appointment as Secretary-cum-Financial Controllerby the first respondent company came to be regularised. (iii) Subsequently on 17.12.1985, the petitioner wassuspended from the service. He was also issued with the charge memodated 13.1.1986. Against the said proceedings, the petitioner filedwrit petitions and against the orders passed in the writpetitions, Writ Appeal Nos.2325 & 2326 of 1987 were filed and thewrit appeals came to be allowed on 3.5.1988. When the writ appealscame to be allowed, this court gave liberty to the first respondentcompany to proceed afresh against the petitioner. Therefore, thepetitioner was suspended again by a fresh order of suspension dated9.5.1988 by the first respondent Board. Further, a fresh charge memodated 19.5.1988 was also issued to the petitioner.(iv) The petitioner filed W.P.No.8420 of 1988 challengingthe order of suspension dated 9.5.1988. In the said writ petition,this Court passed an interim order to the effect that "thepetitioner need not report for duty. However, he should be paid fullsalary." When the matter went on appeal in Writ Appeal No.1143 of1988, the Division Bench of this Court, while upholding the order of https://hcservices.ecourts.gov.in/hcservices/ the learned single Judge, observed that in the event of the order ofsuspension ultimately being upheld, it would be open for the firstrespondent to recover the excess payment made from the amounts due tothe petitioner. (v) The petitioner submitted his explanation to the charge memoon 21.7.1989. On Enquiry, the Enquiry Officer gave his findings on4.10.1993. The Enquiry Officer found that, out of the five chargesframed against the petitioner, only the second part of Charge No.1and charge No.2 were proved, while the rest of the charges were notproved. Based on the findings of the Enquiry Officer, the petitionerwas issued with punishment order dated 3.12.1993, by which, he wasimposed with punishment of reduction in rank from 'General Manager'to 'Manager for a period of three years' while he was allowed tocontinue as 'Company Secretary'. The period of suspension was to betreated as 'leave' to which he was eligible. (vi) Aggrieved by the order dated 3.12.1993, the petitionerfiled writ petition in W.P.No.1219 of 1994. The said writ petitionwas disposed of on 29.1.2001 holding that the order of dismissalwithout furnishing a copy of the findings of the Enquiry Officer wasnot justified and further it was held that, the first respondent wasat liberty to issue a second show cause notice along with the reportof the Enquiry Officer to the petitioner. (vii) On 5.4.2001, the petitioner was issued with second showcause notice along with a copy of the Enquiry Officer's report. Thepetitioner submitted his explanation to the show cause notice on25.4.2001. Thereafter, the present proceedings came to be issued on7.8.2001. (viii) Subsequent to the order of the second respondent dated7.8.2001, by proceedings dated 10.08.2001, a sum of Rs.10,360/-sought to be recovered from the petitioner towards pay andallowances paid over and above his entitlement during the period ofsuspension. Aggrieved over the order dated 7.8.2001 and 10.8.2001,the petitioner filed W.P.No.15693 of 2001. 4. The first respondent filed his counter and opposed thepetition on various grounds. The first respondent specificallystated that the deliberate conduct of the petitioner in not havingdisclosed his lack of qualification to hold the post of 'CompanySecretary' at the time of his entry into service and also his failureto disclose the same for more than a year, can be construed asmisconduct. The second charge is that the appellant had failed tosafeguard the interest of the respondents' company while releasingthe amount belonging to the contractors which are available with thecompany. The charge also refers that the deposits were purchasedfrom the appellant's wife and therefore, the appellant has notproperly safe-guarded the interest of the company with malafideintention. Therefore, according to the respondents, the impugnedorders are just and proper. https://hcservices.ecourts.gov.in/hcservices/

5. The learned single Judge after taking into considerationthe submissions made by both the learned counsel found "that thepunishment imposed in para 19.1 ordering imposition of penalty offixation of pay at the start of the scale of General Manager tillthe date of his retirement" was fully warranted and upheld the saidpunishment. So far as the punishment is para 19.2 is concerned, thelearned single Judge set aside the same holding that the period ofsuspension undergone by the petitioner cannot be treated as leave towhich he is eligible and pay and allowances paid over and above hisentitlement during the period should not be adjusted from his salaryor other dues. 6. Aggrieved over the order of the learned single Judge,in confirming the punishment in para 19.1 of the order dated7.8.2001, the petitioner filed Writ Appeal in W.A.NO.615 of 2004. 7. Aggrieved over the order of the learned single Judge,setting aside the punishment in para 19.2 of the order dated7.8.2001, the respondents filed Writ Appeal in W.A.NO.577 of 2005. 8. The issues involved in both the Writ Appeals are one andthe same. Both the Writ Appeals arise against the order passed inW.P.No.15693 of 2001. Therefore, they are taken up together.9. Heard Mr.N.R.Chandran, learned senior counsel learnedcounsel appearing for the appellant/petitioner and Mr.A.Jinasenan,learned counsel appearing for the respondents/respondents.10. Mr.N.R.Chandran, learned senior counsel appearing forthe appellant/petitioner submitted that the appellant/petitioner hadundergone the punishment between 1993 and 2001 and therefore, theimposition of the present punishment in the order dated 7.8.2001 isnot warranted. Further, the learned senior counsel contended thatthe punishment imposed in para 19.1 was disproportionate to thecharges proved.11. Countering the submissions made by the learned seniorcounsel, learned counsel appearing for the respondents/respondentscontended that the petitioner's act of gaining entry into service bysuppressing his qualification is a conduct for which action can betaken by the first respondent-Management at any point of time.Learned counsel also submitted that considering the gravity of thecharge found proved against the petitioner, the imposition ofpunishment, fixation of pay at the start of the scale of GeneralManager till the date of his retirement cannot be held to bedisproportionate. 12. As far as the treatment of suspension as held in para19.2, the learned counsel submitted that the imposition of such apunishment is permissible under the rules and does not call for anyinterference. The learned counsel for the respondents/respondents https://hcservices.ecourts.gov.in/hcservices/ also submitted that the appellant/petitioner resigned from serviceon 6.6.2002.13. On a careful consideration of the materials availableon record and the submissions made by the learned senior counselappearing for the appellant/petitioner and the learned counselappearing for the respondents/respondents, it could be seen that theappellant/petitioner was issued with second show cause notice dated5/6.4.2001 enclosing a copy of the findings of the Enquiry Officer.The appellant submitted his explanation on 25.04.2001. By hisrepresentationS dated 9.5.2001, 8.6.2001 and 18.07.2001, theappellant requested the respondents to pass suitable orders based onthe orders of this court. By order dated 7.8.2001 of the secondrespondent, it could be seen that the explanation submitted by theappellant on 25.4.2001 was not taken into consideration. The secondrespondent ought to have taken into consideration the explanationsubmitted by the appellant on 25.4.2001 before passing the order ofpunishment on 7.8.2001. 14. Now, it would be appropriate to extract para 19.1 ofthe order dated 7.8.2001, which reads as follows:"19.1 The Board found Thiru P.Mahamani guilty ofmisconduct set out in Clause (c) of Rule 5.2 of "ServiceRules of the Tamil Nadu Magnesite Limited" in regard tocharge 1 and Clause (c) and (k) of the same Rules in regardto charge 2 and to have contravened Rule 5.1 of the saidRules in respect of those two charges and ordered theimposition of penalty of fixation of pay at the start ofthe scale of General Manger till the date of retirement.Accordingly his basic pay is fixed at rs.15,000.0 permonth in the time scale of pay of rs.15000-400-18600 tillthe date of his retirement."From the above paragraph, it could be seen that theappellant/petitioner was fixed in the time scale pay till the date ofhis retirement, i.e., for an indefinite period. Further, theappellant/petitioner had undergone the punishment of reduction inrank for a period of three years pursuant to the earlier order dated3.12.1993. The punishment of reducing the scale of pay without anyincrement till the date of retirement has not been contemplated underthe rules. Further, there cannot be any permanent reduction in lowerrank. Similarly, there cannot be a permanent reduction to a lowertime scale of pay. If such punishment is imposed for an indefiniteperiod, it will amount to enhancing the earlier punishment which willnot only be arbitrary, but will be against the spirit of the order ofthis Court, passed earlier. Therefore, we are of the view that thepunishment made in para 19.1 of the order dated 7.8.2001 cannot besustained and is liable to be set aside. 15. The second respondent imposed the punishment based on thereport of the Enquiry Officer who held both the charges were proved.Learned single Judge set aside the findings of the enquiry in respectof Charge No.1. So far as the Charge No.2 is concerned, theEnquiry Officer and the learned single Judge concurrently found the https://hcservices.ecourts.gov.in/hcservices/ said charge as proved. It is settled law that under article 226 ofthe constitution of India, we cannot reappraise the evidence letin before the Enquiry Officer. Therefore, the factual finding of theEnquiry Officer and the disciplinary authority cannot be re-appreciated. 16. In this back ground, so far as para 19.2 of the orderdated 7.8.2001 is concerned, on a perusal of Rule 5.6.1 of theservice Rules of the company, it could be seen that in the event ofpunishment being imposed, it is incumbent on the part of the firstrespondent under Rule 5.6.1(b) to state that such a proportion ofpay and allowance that would become payable or not payable which isto be prescribed by the disciplinary authority. It is alsoappropriate to extract Rule 5.6.1 and Rule 5.6.2 of the service rulesof the Company, which reads as follows:"5.6.1 TREATMENT OF THE PERIOD OF SUSPENSION Whenthe suspension of an employee is held to be unjustified ornot wholly justified or when an employee who has beendismissed or suspended is reinstated the disciplinaryappellate or reviewing authority as the case may be whosedecision shall be final may be granted to him for theperiod of his absence from duty.a) If he is honourably acquitted the full pay andallowances which he would have been entitled to, if he hadnot been dismissed or suspended less the subsistenceallowance.b) If otherwise such proportion of pay and allowance asthe disciplinary, appellate or reviewing authority mayprescribe.5.6.2 In case falling under clause (a), the period ofabsence from duty will be treated as a period spent onduty. In case falling under cause (b), it will not betreated as a period spent on duty unless the disciplinary,appellate or reviewing authority as the case may be whosedecision will be final, so direct."When the appellant has been imposed with a punishment, it is openfor the first respondent to either state as to beyond the subsistenceallowance whether any amount would be payable towards pay andallowance or by invoking Rule 5.3 and state that the period ofsuspension would also be treated as one of the punishment and alsowhether by virtue of such decision, the petitioner would be eitherpaid any subsistence allowance or it would be treated as one withoutpay. The first respondent treated the suspension undergone by theappellant for the period from 9.8.1988 to 9.12.1993 as leave and thepay and allowance paid over and above his entitlement during theperiod is to be adjusted against the monthly salary payable to himor other dues if any due from the company. The learned single Judgeset aside the punishment made in para 19.2 of the order. https://hcservices.ecourts.gov.in/hcservices/

17. Having regard to the fact that part of the charges wereproved against the appellant/petitioner, which rendered the period ofsuspension justified, it is perfectly correct for the management totreat the said period as leave and recover all amounts paid in excessto the leave period to which the appellant/petitioner was entitledto. The decision, as taken in para 19.2 cannot be said to be apunishment. Further, in para 19.2, it could be seen that the orderdoes not contemplate any recovery or refund of subsistence allowancepayable or paid under the rules. Therefore, the order of the learnedsingle Judge setting aside the decision taken in para 19.2 of theorder dated 7.8.2001 also cannot be sustained and is liable to be setaside.18. So far as arrears of salary is concerned, it is to becalculated in accordance with law. By impugned order contained inpara 19.2, the period of suspension from the post is only treated asleave. Therefore, from the date of order of revocation ofsuspension, the appellant-petitioner will be entitled to receive fullsalary of the post with usual increments, etc. Such salary to bepaid upto the date of retirement, i.e., 6.2.2002. Therefore, themanagement of the company is directed to pay the difference of salaryof the aforesaid period, i.e., from the date of revocation ofsuspension till the date of retirement, after deducting the salaryalready paid to him, within a period of one month from the date ofreceipt of a copy of this order.19. The order passed by learned single Judge is modified to theextent above. The order dated 7.8.2001 passed by the management sofar as para 19.1 is set aside, but the decision taken in para 19.2 isupheld. W.A. Nos. 615/04 and 577/05 are allowed to the extent above.Consequently, connected miscellaneous petition is closed. In view ofthe order passed in the writ appeals, W.A.M.P. No.1090/04 is alsoclosed. But there shall be no order as to costs. Sd/Asst.Registrar/true copy/Sub Asst.RegistrarrjTo1.The Board of Directors, Tamil Nadu Magnesite Limited (A Govt. Of Tamil Nadu Undertaking), 5/53, Omalur Main Road, Jagir Ammapalayam, Salem – 636 302. https://hcservices.ecourts.gov.in/hcservices/

2.The Managing Director, Tamil Nadu Magnesite Limited (A Govt. Of Tamil Nadu Undertaking), Rep. By its Board of Directors, 5/53, Omalur Main Road, Jagir Ammapalayam, Salem – 636 302. + 2 ccs to Mr.A.Jenasenan, Advocate, SR 60802 Judgment in W.A.Nos.615 of 2004 and 577 of 2005PUR (CO)RH (1.12.09)