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Life Insurance Corporation Of India & Anr. v. Rampal Singh

Rajasthan High Court

Sep 30, 2005

Judgment

Subsequent
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Structured Summary of the Opinion (delivered by Ajay Rastogi, J.)

Factual and Procedural Background

The plaintiff initially joined the Life Insurance Corporation of India (LIC) as a Development Officer on probation on 5.4.1964 and was confirmed with effect from 1.4.1966. His service conditions were governed by the Life Insurance Corporation of India (Staff) Regulations, 1960 ("Staff Regulations") framed under the LIC Act.

A charge sheet dated 16.4.1974 alleging six charges was served on the plaintiff; he was suspended on 9.8.1974 and a supplementary charge sheet was served on 21.10.1974. An inquiry was conducted by R.S. Maheshwari, who submitted his report on 29.1.1976. A show-cause notice was issued on 23.2.1976 proposing dismissal. The plaintiff replied on 2.4.1976 alleging procedural irregularities and denial of reasonable opportunity.

Despite the reply, the disciplinary authority issued a non-speaking order dismissing the plaintiff from service on 11.5.1976. The departmental appeal under Regulation 40 was dismissed by a non-speaking order dated 20.12.1976, and a memorial to the LIC Chairman was similarly dismissed on 12.10.1977.

Aggrieved, the plaintiff instituted a pauper suit under Order VII Rule 1 read with Order XXXIII Rule 1, CPC, seeking a declaration that the disciplinary inquiry and the consequent dismissal were illegal and sought reinstatement with consequential benefits. The Trial Court granted permission to file the pauper suit on 26.7.1982.

The Trial Court framed issues and, on the basis of its findings, held that there had been a complete violation of principles of natural justice; it quashed the dismissal and directed reinstatement with consequential benefits, including back wages for the intervening period. The appellant (the Corporation) instituted a first appeal before the Single Judge, which was dismissed and the Trial Court's decree affirmed by judgment dated 28.5.1996. The Corporation filed the present special appeal challenging that result.

Legal Issues Presented

Whether the civil court had jurisdiction to entertain the suit challenging the dismissal in view of the Industrial Disputes Act, 1947 and the bar on cognizance of certain matters (as argued with reference to Section 9, CPC and the ID Act).
Whether the departmental inquiry and the disciplinary proceedings complied with the principles of natural justice and the procedural requirements of the Staff Regulations, 1960 (notably Rules/Regulations governing inquiry, show-cause procedure and appellate review).
Whether, if the dismissal was found to be in violation of natural justice, the plaintiff was entitled to reinstatement with consequential benefits (including back wages), in view of the "no work — no pay" principle and the fact that the plaintiff had reached superannuation during the intervening period.

Arguments of the Parties

Appellant's (Corporation's) Arguments — as advanced by Shri M.D. Agrawal

The plaintiff was a workman and therefore the provisions of the Industrial Disputes Act, 1947 applied; consequently, the civil court lacked jurisdiction to entertain the suit in view of the bar implied under Section 9, CPC (relying on Raj. State Road Trans. Corp. v. Zakir Hussain).
The disciplinary inquiry complied with principles of natural justice and the evidence supports the findings of guilt: documentary evidence and statements (including those of three other witnesses and the documentary record) were supplied and considered; the absence of cross-examination of Ratanlal (a departmental witness) meant inquiry had to proceed ex parte and did not prejudice the plaintiff.
Even if there were procedural infirmities in 1976, the plaintiff could not claim back wages or reinstatement because he had not worked during the intervening period ("no work — no pay") and had attained superannuation in 2000, making practical execution of reinstatement and benefits impossible.

Respondent's (Plaintiff's) Arguments — as advanced by Shri Sunil Samdaria

The civil court had jurisdiction to decide the challenge to the dismissal because the grievance was a civil law challenge to validity of order of dismissal; the matter did not require reference to rights or remedies exclusively under the Industrial Disputes Act.
Both courts below correctly found that there was a violation of the principles of natural justice in the disciplinary proceedings and that the dismissal was arbitrary and violative of the Staff Regulations, justifying quashing of the dismissal and reinstatement with consequential benefits.
The principle of "no work — no pay" is not applicable where the employee was unlawfully restrained from working by an invalid order; the plaintiff was therefore entitled to back wages (the counsel relied upon Chandrakant Tukaram Nikam v. Municipal Corporation Ahmedabad).

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Raj. State Road Trans. Corp. v. Zakir Hussain, 2005 (5) Supreme 813	Relied upon by appellant to argue that Industrial Disputes Act principles apply and civil court lacks jurisdiction.	The Court held this precedent was of no assistance to the appellant in the facts of the present case.
Chandrakant Tukaram Nikam v. Municipal Corporation Ahmedabad, (2002) 2 SCC 542	Relied upon by respondent in support of entitlement to relief despite absence of "work" during the intervening period.	The Court noted the precedent cited by respondent but grouped it with Raj. State Road Trans. Corp. v. Zakir Hussain when observing those judgments were of no assistance to the appellant on the jurisdiction point.
SK Verma v. Mahesh Chandra, (1983) 4 SCC 214	Held (earlier) that LIC development officers are workmen.	The Court noted this earlier decision but recorded that it was later considered to be per incuriam by the Apex Court and therefore not good law for the present purposes.
HR Adyanthaya v. Sandoz, (1994) 5 SCC 737	Considered SK Verma's conclusion per incuriam (i.e., SK Verma not good law on the question whether LIC Development Officers are workmen).	The Court relied on this line of authority to conclude that LIC development officers are not to be treated as workmen for the purposes of the Industrial Disputes Act.
Mukesh K. Tripathi v. Sr. Div. Manager LIC, (2004) 8 SCC 387 (3-Judge Bench)	Followed HR Adyanthaya in holding that LIC development officers are not workmen.	The Court relied on this 3-Judge Bench authority to support the conclusion that the dispute was not an industrial dispute falling exclusively under the Industrial Disputes Act and that civil remedies remained available.

Court's Reasoning and Analysis

The Court proceeded in two broad veins of analysis: (A) jurisdictional/legal classification of the dispute; and (B) merits of the disciplinary inquiry and relief.

A. Jurisdiction / Nature of Dispute

The Court applied Section 9, CPC and emphasised the presumption in favour of jurisdiction of civil courts: civil courts can try all suits of a civil nature unless their cognizance is expressly or impliedly barred. Exclusion of civil jurisdiction must be explicit or clearly implied.
The plaintiff's challenge was to the validity of the dismissal order passed by a statutory Corporation under its Service Regulations. The grievance was characterized as a civil law challenge to an order alleged to have been passed in violation of principles of natural justice and of the Service Regulations.
The Court examined whether the claim sought enforcement of rights or obligations exclusively under the Industrial Disputes Act. It found the plaintiff had not sought enforcement of any right under that Act or regulations framed thereunder; the grievance arose from common law rights (natural justice and statutory/regulatory procedure). Accordingly, civil courts retained jurisdiction and the Industrial Disputes Act did not bar the suit.
The Court analysed earlier precedents: it noted that earlier decisions (SK Verma) treating LIC development officers as workmen were held to be per incuriam by later authorities (HR Adyanthaya) and that a 3-Judge Bench in Mukesh K. Tripathi confirmed LIC development officers are not workmen. On this basis the Court concluded that the precedents relied upon by the appellant were not helpful to displace civil court jurisdiction in the present case.

B. Merits — Compliance with Principles of Natural Justice and Service Regulations

Factual evaluation: the Court reviewed the Trial Court's and the Single Judge's detailed analyses of the inquiry record. It accepted the concurrent findings that material defects existed in the inquiry process and subsequent disciplinary and appellate orders.
Key procedural defects identified in the record (as found by the courts below and accepted by this Court) included:
- No copy of the inquiry report was made available to the plaintiff despite request.
- The show-cause notice did not disclose the findings on each charge nor the basis on which the inquiry officer had recorded guilt; it expressed an opinion that the disciplinary authority concurred with the inquiry report but did not specify the underlying reasoning.
- The disciplinary authority and appellate authority issued non-speaking orders that did not reveal an independent application of mind or the reasons for concurrence with the inquiry officer's findings.
- On the day an inquiry was fixed, the plaintiff sought and obtained time to engage a defence assistant; the inquiry then proceeded and the departmental witness Ratanlal's examination-in-chief was recorded but cross-examination was not completed because the plaintiff did not return; the inquiry officer did not recall the witness or ensure cross-examination occurred, depriving the plaintiff of that opportunity.
- For other charges, the persons alleged to have given money to the plaintiff (other than Ratanlal) did not appear as witnesses for the Corporation; the departmental case therefore lacked primary discharge of burden to prove allegations by calling relevant witnesses.
The Court examined the relevant Regulations: Reg. 39 creates a right, after service of the charge sheet, to be afforded a reasonable opportunity of being heard and to defend oneself; after a finding of guilt the show-cause notice must be considered and disciplinary authority must record good and sufficient reasons before imposing penalties. Reg. 46 obliges the appellate authority to independently examine the inquiry record and to consider whether findings and penalties are justified and whether procedures were complied with.
Applying these legal standards to the record, the Court concluded that neither the disciplinary authority nor the appellate authority had applied their minds independently; the procedural omissions and non-speaking orders amounted to breach of principles of natural justice, and the Corporation failed to discharge the primary onus of proof in many respects.
On the contention concerning back wages and the "no work — no pay" principle, the Court reasoned that where a dismissal is held to be invalid and the employee was unlawfully restrained from working (through no fault of his own), the principle does not apply to deny reinstatement and consequential benefits; therefore, laches or the intervening period without work (including the plaintiff's attainment of superannuation) did not preclude the relief awarded by the courts below.

Holding and Implications

Holding: The special appeal is DISMISSED. The concurrent findings of the Trial Court and Single Judge that the disciplinary proceedings violated principles of natural justice and the Service Regulations are affirmed. No order as to costs was made.

Implications for the parties:

The decree of the Trial Court quashing and setting aside the order of dismissal stands confirmed; the plaintiff is entitled to reinstatement in service with consequential benefits, including salary for the intervening period, as previously directed by the Trial Court and affirmed by the Single Judge.
The appellant Corporation's challenge to jurisdiction and the merits of the inquiry failed; the Court held that civil courts had jurisdiction in the circumstances because the challenge was a civil law attack upon the validity of a dismissal alleged to have been effected in breach of natural justice and the Staff Regulations, and not an action seeking enforcement of rights under the Industrial Disputes Act.
The judgment does not purport to lay down a new general precedent beyond applying existing Supreme Court authorities (notably HR Adyanthaya and Mukesh Tripathi) to the classification of LIC development officers and the scope of civil jurisdiction. The direct effect is the confirmation of the earlier orders in favour of the plaintiff; no broader novel legal rule is announced in the text of the opinion.

This summary is based exclusively on the content of the provided opinion and does not add or infer facts or holdings beyond what the opinion itself states.

Show all summary ...

The Judgment of the Court was delivered by

Ajay Rastogi, J.:— It is defendant's special appeal filed against judgment & decree dt. 28.5.1993 passed by Additional District Judge No. 2, Ajmer whereby dismissal of plaintiff dt. 11.5.76 has been set aside with the direction for his reinstatement with all consequential benefits, and affirmed by learned Single Judge while dismissing appeal vide judgment dt. 28.5.96

2. Brief facts relevant to examine controversy are that plaintiff initially joined service on probation as Development Officer on 5.4.64 and was confirmed from 1.4.66 His service conditions are regulated by Life Insurance Corporation of India (Staff) Regulations, 1960 (“Staff Regulations”) framed in exercise of powers vested under Cls. (b) & (bb) of sub-section (2) of S. 49 of Life Insurance Corporation of India (“LIC”).

3. Charge sheet dt. 16.4.74 imputing six charges was served upon plaintiff. Pending inquiry, he was placed under suspension vide order dt. 9.8.74 A supplementary charge sheet was also served on 21.10.74 R.S Maheshwari was appointed as inquiry officer, who after completion of inquiry proceedings, submitted his report to disciplinary authority on 29.1.76 - on the basis of which plaintiff was served with show cause notice on 23.2.76 holding inter-alia as to why he should not be dismissed from service.

4. It is pertinent to mention here that neither copy of inquiry was made available to the plaintiff nor it was disclosed in show cause notice as to on what premise finding of guilt was recorded by inquiry officer or by disciplinary authority while the decision was taken of his dismissal from service vide order dt. 11.5.76

5. However, plaintiff submitted his reply to show cause notice on 2.4.76 inter-alia pointing out irregularities committed in process of inquiry by the officer and denial of reasonable opportunity of hearing to him; but without taking note of his submissions, by non-speaking order and further without disclosing its opinion, on the basis of which disciplinary authority held the plaintiff guilty of charges levelled and arrived to the conclusion for dismissal from service vide order dt. 11.5.76, against which he preferred departmental appeal under Reg. 40 of Service Regulations - that too was dismissed by a non-speaking order dt. 20.12.76 and memorial submitted to the LIC Chairman, also met with same fate vide order dt. 12.10.77

6. Aggrieved by the orders (supra), plaintiff respondent instituted a pauper suit U/O 7 R1 read with O. 33 R. 1, CPC, for seeking declaration that departmental inquiry proceedings which culminated into passing of order of dismissal from service which was affirmed by appellate authority and the LIC Chairman, be declared illegal and he be held entitled to reinstatement in service with all consequential benefits. Permission to accord sanction for filing pauper suit was granted by Trial Court vide order dt. 26.7.82

7. As many as six issues were framed by Trial Court on the basis of pleadings of the parties. In totality, relevant issue under consideration was as to whether action of respondent in taking decision of his dismissal from service and rejection of appeal so also memorial to LIC Chairman, are in violation of principles of natural justice and in the absence of which, what relief plaintiff is entitled for.

8. The Trial Court decided issues in favour of plaintiff while holding that there was complete violation of principles of natural justice and no reasonable opportunity of being heard was afforded to plaintiff, inasmuch as orders affirming dismissal from service by appellate authority so also LIC Chairman were also passed in breach of provisions contained in the Service Regulations. Ultimately the Trial Court passed a decree quashing & setting aside order of dismissal from service with further direction to reinstate the plaintiff in service alongwith consequential benefits including salary for intervening period; against which the appellant preferred first appeal before learned Single Judge, which has been dismissed and the findings recorded by Trial Court stands confirmed vide judgment dt. 28.5.96 Hence this special appeal.

9. Shri M.D Agrawal, Counsel for appellant urged that plaintiff was workman, so provisions of Industrial Disputes Act, 1947 are applicable, as such civil court has no jurisdiction to entertain suit to examine the validity of his dismissal from service in view of bar as provided in S. 9, CPC. In support of his contention Shri Agrawal placed reliance upon decision of Apex Court in Raj. State Road Trans. Corp. v. Zakir Hussain, (2005 (5) Supreme 813) : (2005 (4) RLW 2512 (SC).

10. It was also contended by Shri Agrawal that both the courts below have committed serious error of law in appreciating material on record and the finding recorded while holding that there was violation of principle of natural justice in conducting disciplinary inquiry, is totally perverse and not at all corroborated by material on record. In this regard, Shri Agrawal has submitted that Shri Ratanlal Teli had appeared in course of inquiry but plaintiff respondent had failed to cross examine him as such there was no option available except to proceed ex parte against him and all charges which were based on documentary evidence were supplied to the plaintiff, therefore, even if no witness has appeared to lead his evidence in course of inquiry, that in no manner caused any prejudice to him in establishing his case; and that apart, three other witnesses who are class IV employee, Managers of Chittorgarh and Sikar Branch of the L.I.C, also appeared in the course of inquiry and got their statements recorded. After taking note of documentary evidence which was duly supported by statements of these witnesses, the inquiry officer held the charges proved against him and disciplinary authority after going through material on the record of inquiry concurred with finding of guilt recorded in inquiry report and issued show cause notice expressing opinion of taking decision of his dismissal from service and finally passed an order of dismissal on 11.5.76 Shri Agrawal contended that these are being quasi judicial proceedings, due compliance has been made strictly in accordance with Regulations, 1960, and the findings recorded by courts below are required to be reconsidered by this Court.

11. Shri Agrawal also contended that the impugned dismissal was of 1976; even if the same is found to be in violation of principle of natural justice, respondent plaintiff could not be held entitled for grant of back wages or other consequential benefits for the reason that he had not worked during intervening period on the principles of no work - no pay and has attained age of superannuation in the year 2000 as such question of reinstatement even if the impugned decree is affirmed by this Court could not be otherwise executed.

12. Per contra, Shri Sunil Samdaria, Counsel for plaintiff has supported the judgment of courts below and contended that civil court has jurisdiction in such like matters and both the courts have recorded a concurrent finding of fact while arriving at the conclusion that there was violation of principles of natural justice in the course of conducting inquiry, and the decision with regard to his dismissal from service is bad in law, which is duly supported by material on record; and since respondent plaintiff was restrained to work on account of illegal order of dismissal from service, which was arbitrary being violative of principles of natural justice so also of Regulations, 1960, as such principle of no work - no pay will not be applicable. Shri Samdaria placed reliance upon decision of Apex Court in Chandrakant Tukaram Nikam v. Municipal Corporation Ahmedabad ((2002) 2 SCC 542).

13. We have considered rival contentions of the parties and with their assistance, pondered over material on record. Undisputably, in fact there was no such objection ever raised by defendant appellant in written statement in regard to jurisdiction of civil court, thereby no issue was framed for consideration by Trial Court, but being legal issue it was considered by learned Single Judge.

14. S. 9, CPC, provided that civil courts have jurisdiction to try all suits of civil nature excepting suits of which their cognizance is either expressly or impliedly barred. In view of language of S. 9, CPC, there should be presumption in favour of jurisdiction of civil court and exclusion of jurisdiction should not be readily inferred unless such exclusion is either explicitly expressed or clearly implied.

15. Plaintiff respondent challenged validity of order dismissing from service passed by statutory Corporation in exercise of powers under Service Regulations which have been framed in exercise of powers vested under the LIC Act. Grievance raised by plaintiff was purely of civil nature questioning validity of order of dismissal from service passed in violation of principles of natural justice so also of service Regulations. This is a common law right which does not expressly oust jurisdiction of civil court in any manner. That apart plaintiff undisputably has not claimed for enforcement of any right or obligation created under the Industrial Disputes Act or regulations framed thereunder, in the absence of which remedy was available to approach civil court for adjudication of his cause.

16. In earlier decision in SK Verma v. Mahesh Chandra ((1983) 4 SCC 214), the Apex Court held that LIC development officers are workmen but when it came for consideration in HR Adyanthaya v. Sandoz ((1994) 5 SCC 737), the Apex Court considered earlier decision in SK Verma's case (supra) to be per incuriam and not good law, which has also been followed by 3 Judges Bench of Apex Court in Mukesh K. Tripathi v. Sr. Div. Manager LIC ((2004) 8 SCC 387) : (RLW 2004 (4) SC 556). Accordingly LIC development officers were not considered to be workmen who could raise an industrial dispute under the Industrial Disputes Act.

17. In our considered opinion, if dispute is not an industrial dispute and it does not relate to enforcement of any right under the Industrial Disputes Act, remedy lies only in civil court and if dispute is an industrial dispute, but arising out of a right or liability created under General or Common law and not under the Act, jurisdiction of civil court is alternative and leaves a discretion for incumbent to choose his remedy for the relief which is competent to be granted in a particular remedy.

18. In view of what has been observed (supra), judgment on which the Counsel has placed reliance in (1) RSRTC v. Zakir Hussain & (2) C. Tukaram Nikam v. Mun. Corpn. (supra) are of no assistance to the appellant.

19. So far as merits in regard to the inquiry proceedings is concerned, Counsel for appellant has made general contentions that natural justice was fully complied with and findings recorded by Trial Court as well as by first appellate court are not supported by evidence on record. But we find from material on record that what has been stated is contrary to the evidence on record. The Trial Court as well as first appellate court has considered and analysed, in details, as to the charges imputed against plaintiff and inquiry was fixed for 5.2.77 at 10.00 A.M, which is evident from the prosecution (Ex. A/1 to A/10) but on the said date, plaintiff made request seeking permission to engage his defence assistant which was granted and further proceedings were deferred at that time, but thereafter at 11.15 A.M, inquiry again started and examination in-chief of Ratanlal was recorded but remained inconclusive for cross examination by delinquent (plaintiff) and subsequently he had not turned up, nor inquiry officer made efforts to get him recalled and get cross examination record so as to complete his statement and, therefore, there was no opportunity made available to plaintiff for cross examining departmental witness Ratanlal in relation to charge No. 1. As regards other charges, whereunder there was allegation against plaintiff that he took money from policy holders and issued to them a hand written receipt but such money was not deposited by him in the Corporation, persons from whom he took money and issued receipt except Ratanlal no one appeared or got examined by the Corporation in the course of inquiry in support of these charges. In the absence of burden first being discharged by department in getting allegations proved against plaintiff (delinquent), there was hardly any occasion for delinquent having come over to dispute charges imputed against him.

20. As regards other witnesses - Class IV servant & Branch Managers whose statements were recorded in official capacity, very premise on which inquiry officer recorded their versions for holding delinquent guilty, was not supported by any material on record. Learned Single Judge further recorded finding that inquiry and disciplinary officers were different and copy of inquiry report was not placed on record despite having been demanded by plaintiff (delinquent) pendente proceedings either before disciplinary authority or civil court; and even show cause notice served upon him dt. 23.2.76 does not disclose finding in respect of each of charges, on the basis of which he was being held guilty of charges proved on record, while merely an opinion was expressed that disciplinary authority concurred with finding recorded by inquiry officer holding him guilty, and was called upon to submit explanation as to why he should not be dismissed from service and even the contentions made by him against show cause notice were not considered, rather by a non-speaking order, opinion expressed in show cause notice was confirmed by passing order of dismissal from service.

21. Findings have also been recorded after due appreciation of evidence on record that neither appellate authority nor LIC Chairman to whom appeal was preferred, by a non-speaking order, rejected his appeal so also memorial submitted to LIC Chairman. After comprehensive appreciation of evidence on record, concurrent finding of fact was recorded by courts below holding action of appellant Corporation in passing impugned orders of dismissal from service was in clear violation of principles of natural justice as no reasonable opportunity of being heard was afforded under Service Regulations and even orders by disciplinary authority so also of appellate authority and the LIC Chairman to whom memorial was submitted, were passed by nonspeaking order.

22. Under Reg. 39 of Service Regulations, after service of the charge sheet, a right is created of affording reasonable opportunity of being heard and defending himself against such imputed charges and after finding of guilt is recorded, show cause notice has also to be forwarded for proposed action and after explanation against show cause notice is received, disciplinary authority may examine the same and record good & sufficient reasons before inflicting any of penalties provided under service Regulations.

23. As regards obligation upon appellate authority, it is provided under Reg. 46 of Service Regulations under which, appellate authority has to independently examine the whole record of inquiry including finding recorded by disciplinary authority and to further consider as to whether finding recorded are justified and whether penalty imposed is excessive or adequate or inadequate, or as to whether procedure as prescribed under Service Regulations has been complied with in course of inquiry proceedings and if not, whether such non-compliance has resulted in failure of justice.

24. Upon careful pondering over impugned orders of disciplinary authority as well as of appellate authority, it clearly depicts that either of the authorities have not applied their mind independently while taking decision, with regard to holding the plaintiff guilty of imputed charges or inflicting penalty upon him.

25. We are in full conformity with concurrent findings recorded by courts below in upholding that there was breach of principles of natural justice and no reasonable opportunity of being heard was afforded to plaintiff (delinquent) nor does impugned orders disclose independent application of mind on the part of the authorities concerned while inflicting penalty vide impugned decision.

26. As regards last contention advanced by Counsel for appellant Corporation that plaintiff remained out of service and has not worked during intervening period as such he is not entitled to grant of consequential benefits, in our considered opinion, such a contention is of no substance. It is a case where plaintiff has been restrained from working in service of Corporation for no fault on his part and once order of dismissal from service has been found to be in violation of principles of natural justice and of relevant service Regulations, as a consequence whereof, reinstatement in service with consequential benefits is a natural corollary thereto and no departure can be made therefrom, and principle of no work - no pay does not apply in the facts of present case. In our existing system if dispute remained pending in courts for last 29 years, laches in no manner can be attributed upon the plaintiffs to deprive him of legitimate claim, to which he is legally entitled for. We do not find any error in the judgments of Trial Court as well as of learned Single Judge in passing impugned decree in this regard. No other submission has been made.

27. Consequently, this special appeal fails and is hereby dismissed. No order as to costs.