Unexamined Complainants and Post‑dated Rules Cannot Sustain Departmental Guilt: Supreme Court Restores CAT in V.M. Saudagar

Case: V.M. Saudagar (Dead) through Legal Heirs v. The Divisional Commercial Manager, Central Railway & Anr.

Citation: 2025 INSC 1257 (Civil Appeal No. 13017 of 2025; arising out of SLP (C) No. 30819 of 2025; Diary No. 19424 of 2019)

Court: Supreme Court of India, Civil Appellate Jurisdiction

Bench: Justice Sanjay Karol and Justice Prashant Kumar Mishra (author)

Date: 27 October 2025

Disposition: Appeal allowed; High Court judgment set aside; Central Administrative Tribunal (CAT) order restored; consequential monetary and pensionary benefits directed to legal heirs within three months.

Introduction

This judgment addresses foundational questions in departmental/disciplinary law: what evidentiary threshold must be met to prove charges of illegal gratification and related misconduct in a domestic enquiry; when can a tribunal or court intervene on grounds of “perversity” or “no evidence”; and whether administrative circulars issued after the event can be relied upon to brand otherwise lawful conduct as misconduct.

The appellant, a Travelling Ticket Examiner (TTE) with Central Railway, was subjected to a surprise vigilance check on 31 May 1988 while on duty on 39-Down Dadar–Nagpur Express. He faced four heads of charge: (i) demand and acceptance of illegal gratification from three named passengers for berth allotment; (ii) possession of “excess cash” of Rs 1,254 (beyond personal and railway cash); (iii) failure to recover a fare difference of Rs 18 from a passenger (Ticket No. 444750); and (iv) forgery of signatures to extend the validity of a duty card pass. The departmental Enquiry Officer held the charges proved; the Disciplinary Authority dismissed him from service on 7 June 1996; the departmental appeal failed in 1997.

In 2002, CAT quashed the dismissal and ordered reinstatement with consequential benefits, but the High Court (Nagpur Bench) in 2017 reversed the CAT, upholding the dismissal. During the pendency, the employee died; his legal heirs pursued the matter. The Supreme Court has now restored the CAT’s order, setting aside the High Court’s judgment.

Key issues:

Whether the bribery charge could stand when the primary complainant was never examined and the other two passengers did not support the allegation.
Whether possession of cash by a TTE, absent a contemporaneous rule or circular prescribing a ceiling, constituted misconduct.
Whether the “fare difference” charge could be proved solely on a vigilance inspector’s statement without examining the relevant passenger or producing the receipt book.
Whether the alleged forgery of a duty pass was proved in the absence of expert evidence or cogent proof.
The permissible scope of tribunal and judicial review over disciplinary findings characterized by “perversity” or “no evidence.”

Summary of the Judgment

Condonation and leave: Delay of 519 days condoned; leave granted.
Charge 1 (illegal gratification): The primary complainant (Hemant Kumar) was never examined; the other two passengers (Dinesh Choudhary and Rajkumar Jaiswal) did not support the allegation and gave statements that either exonerated the appellant or were internally contradictory. Reliance on Hemant Kumar’s untested statement was impermissible. The charge failed.
Charge 2 (excess cash): No rule at the relevant time prescribed a ceiling on cash carried by a TTE; the amount was deposited into Railway Sundry Accounts on the same day; and no supporting official document was produced. A Railway Board circular of 22 August 1997, issued years after the 1988 incident, could not be applied retrospectively. The charge failed.
Charge 3 (failure to recover Rs 18 fare difference): Found proved solely on the vigilance inspector’s statement; the concerned passenger was not examined and the excess fare receipt book was not produced. The charge failed.
Charge 4 (forgery of duty pass): Even the Enquiry Officer had found this not proved. No handwriting expert opinion or cogent supporting evidence existed. The charge failed.
Perversity/no evidence: The Enquiry Officer’s findings were perverse and based on misleading material. CAT was justified in setting aside the penalty; the High Court erred in holding that judicial review could not be exercised.
Relief: High Court judgment set aside; CAT’s order restored. Considering the death of the employee and the vintage of the incident (1988), the Court directed release of all consequential monetary and pensionary benefits to the legal heirs within three months.

Analytical Commentary

Precedents and Doctrines

The judgment does not expressly cite earlier authorities, but its reasoning tracks well-settled Supreme Court jurisprudence on disciplinary proceedings, especially on the “no evidence” rule, the limits of judicial review, and the procedural fairness owed to a delinquent employee:

“No evidence” and perversity: The Court’s intervention aligns with the rule that findings can be quashed if based on no evidence or are perverse, i.e., conclusions no reasonable person could reach on the material. This principle is long embedded in decisions such as Union of India v. H.C. Goel and Kuldeep Singh v. Commissioner of Police. The Court’s description—“perverse basing on completely misleading materials”—is a classic invocation of this ground.
Scope of judicial/tribunal review: While courts do not reassess adequacy or sufficiency of evidence, they do intervene where procedural fairness is violated or findings rest on no evidence/misreading. This is consonant with B.C. Chaturvedi v. Union of India and later clarifications (e.g., P. Gunasekaran) that permit interference for perversity, violation of natural justice, or reliance on inadmissible material.
Proof in departmental proceedings: Though strict rules of the Evidence Act do not apply, there must be some reliable, probative material; documents must be proved through witnesses; and hearsay statements cannot be the sole foundation for guilt. The insistence on examining the primary complainant and producing the receipt book echoes Roop Singh Negi v. Punjab National Bank and M.V. Bijlani v. Union of India.
Natural justice and cross-examination: When a finding hinges on a complainant’s statement, denial of the opportunity to cross-examine is a serious infraction of audi alteram partem. This reflects the approach in T.R. Varma and K.L. Tripathi v. SBI (cross-examination may not be universal, but is essential where disputed statements are relied upon).
Vigilance trap cases in railway contexts: The Court’s caution that a vigilance officer’s solitary statement cannot substitute for passenger testimony is broadly consistent with the approach in Moni Shankar v. Union of India, where the Court demanded credible, corroborative proof beyond suspicion.
No retrospective penalization via circulars: The Court’s refusal to apply the 1997 circular to a 1988 incident reflects the fair-warning principle in service jurisprudence—employees cannot be punished for conduct not proscribed at the time. While ex post facto prohibitions classically apply to criminal law, service law too disfavors retroactive imposition of misconduct standards through later circulars.

In sum, even without explicit citations, the ruling is rooted in and reinforces established doctrines: decisions must be grounded in some reliable evidence; key witnesses should be examined; documents must be proved; and tribunals/courts may correct perverse or procedurally unfair findings.

Legal Reasoning: How the Court Reached Its Decision

1) Illegal gratification for berth allotment

The Court’s analysis is tightly evidence-focused.

Primary complainant missing: Hemant Kumar’s statement formed a significant basis for the charge, yet he was never examined and his version was never tested through cross-examination. Reliance on such untested material violates the basic fairness of the enquiry, especially where guilt turns on credibility.
Other passengers contradicted the charge: Dinesh Choudhary categorically denied any demand for illegal gratification; he explained that a receipt would be given after the TTE finished rounds. Rajkumar Jaiswal’s testimony was internally inconsistent—while the charge alleged payment of Rs 50 (with a receipt for Rs 45), he deposed to having paid Rs 120. These contradictions vitiated the charge.
Conclusion: With the star complainant absent and the other two not supporting the allegation, there was no reliable basis to conclude that bribery was proved, even on a preponderance of probabilities. The Enquiry Officer’s reliance on unexamined material rendered the finding perverse.

2) Possession of “excess cash”

No contemporaneous rule: The respondents could point only to a 22 August 1997 Railway Board circular—issued nearly nine years after the incident—to suggest a ceiling on cash. The Court agreed with CAT that a later circular cannot retroactively convert earlier lawful possession into misconduct.
Benign disposition of funds: The amount was deposited the same day in Railway Sundry Accounts; there was neither misappropriation nor proof of wrongful retention.
Absence of supporting documents: The charge was not backed by official records demonstrating a breached cash limit or non-declaration requirement in 1988.
Conclusion: In the absence of a contemporaneous prohibition or misuse, mere possession of cash could not, by itself, constitute misconduct under Rule 3(1) of the 1966 Conduct Rules.

3) Failure to recover Rs 18 fare difference

Sole reliance on vigilance inspector: The finding rested only on the statement of the vigilance inspector (N.C. Dhankode).
Critical gaps: The passenger holding Ticket No. 444750 was not examined; the relevant excess fare receipt book was not produced to corroborate the alleged recovery.
Conclusion: The proof fell short. A single official’s assertion, absent primary testimony and core documentary corroboration, did not meet even the departmental standard.

4) Alleged forgery of duty card pass

Already not proved by the Enquiry Officer: Even at the enquiry stage, this charge had failed.
No expert evidence: The alleged forged signatures were never sent to a handwriting expert; the evidence only verified the pass’s authenticity through an office superintendent, not the alleged extensions.
Conclusion: With no credible, technical, or documentary basis, the forgery allegation could not stand.

5) Perversity and the role of CAT and High Court

CAT’s approach upheld: CAT had meticulously examined the record, contrasted testimony against charges, and found pervasive evidentiary gaps.
High Court’s error: By treating the matter as immune from judicial review, the High Court ignored the well-recognized exception that tribunals and courts can intervene where findings are perverse or based on no evidence, or where material is misread.

Impact and Future Implications

Examination of key complainants is essential: In bribery or integrity charges premised on passenger complaints, departments must make earnest efforts to produce those complainants and allow cross-examination. Reliance on untested or hearsay statements risks annulment.
Vigilance operations must be evidence-rich: Beyond vigilance officers’ narratives, departments should secure passenger testimony, preserve contemporaneous documents (e.g., ticket/excess fare receipt counterfoils), and ensure chain-of-custody and probative integrity.
No retrospective application of administrative circulars: Conduct not expressly proscribed at the material time cannot be retroactively labeled misconduct via later-issued instructions. Departments should ensure clear, prospective communication and training on new operational restrictions (e.g., cash handling limits).
Reinforcement of the “no evidence/perversity” gateway: Tribunals and High Courts retain the power to quash disciplinary findings that are unsupported by any reasonable evidence, or that misread material, even while refraining from reweighing adequate evidence.
Guardrails for Rule 3(1) (integrity/devotion to duty): The judgment cautions against using broad conduct rules as catch-alls without concrete proof of the underlying act. Generalized allegations of “lack of integrity” cannot substitute for evidence.
Remedial pathway for deceased employees’ estates: The direction to release monetary and pensionary benefits to legal heirs underscores that the law’s remedial reach persists posthumously, addressing the long shadows cast by delayed justice.

Complex Concepts Simplified

Perversity: A finding is perverse if no reasonable person could have reached it on the evidence. It includes ignoring vital evidence, relying on non-existent or inadmissible material, or drawing conclusions that defy logic.
“No evidence” rule: Courts and tribunals may set aside a disciplinary finding if there is literally no reliable evidence supporting it, even though they will not re-evaluate the sufficiency of adequate evidence.
Standard of proof in departmental enquiries: Lower than criminal trials (no “beyond reasonable doubt”); the touchstone is “preponderance of probabilities.” But even this requires some cogent, credible material.
Natural justice—cross-examination: While domestic enquiries are flexible, if a critical witness’s statement is relied upon to establish guilt, the delinquent should, in fairness, be given a chance to cross-examine that witness.
Retrospective application of circulars: Administrative instructions generally operate prospectively. Using later circulars to criminalize or penalize past conduct offends fairness and legal certainty.
Consequential benefits: When a dismissal is set aside, “consequential benefits” typically include back wages (subject to law and equity), continuity of service, and pensionary/terminal dues. Where the employee has died, these flow to legal heirs.

Conclusion

The Supreme Court’s decision in V.M. Saudagar delivers a clear message: disciplinary punishment must rest on reliable, tested evidence. Key complainants must be examined; contradictions must be confronted; documentary proof should be produced; and post-dated circulars cannot be invoked to condemn past conduct. The ruling strengthens tribunal oversight against perverse or “no evidence” findings and restores balance between administrative discipline and procedural fairness. For departments—especially those conducting vigilance checks—it is a blueprint for robust, defensible enquiries. For employees, it reaffirms that even under broad conduct rules, integrity-related charges require concrete proof, not conjecture or convenience.