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U.P Rajya Krishi Utpadan Mandi Parishad And Others v. Sanjiv Rajan .
Factual and Procedural Background
Civil Appeal No. 1487 of 1993: The respondent, then Cashier of the Agricultural Market Committee, Rampur, was first suspended on 22 March 1991 for alleged defalcation of “lakhs of rupees.” The High Court quashed that suspension because other suspended officers had been reinstated. After a special audit (April–May 1991) revealed large-scale embezzlement, the Committee issued a fresh suspension order and charge-sheet on 26 March 1992. The respondent again approached the High Court, which stayed the second suspension on the ground that the authority lacked power to issue a “second” suspension order. The Market Committee appealed to the Supreme Court.
Civil Appeal No. 1488 of 1993: The first respondent, Secretary of the same Market Committee (6 Jan 1990 – 2 May 1991), reported suspected embezzlement in February 1991. He was suspended on 3 May 1991, but that order was stayed on 9 May 1991. An audit and preliminary inquiry later suggested his dereliction of duty and possible complicity, leading to a fresh suspension and charge-sheet dated 10 March 1992. A Single Judge revoked the suspension on 2 April 1992; a Division Bench affirmed and ordered the inquiry completed within three months (8 May 1992). The Market Committee appealed both the revocation and the three-month directive.
Legal Issues Presented
- Whether the competent authority could validly issue a second order of suspension after the first had been set aside for reasons unrelated to the merits of the misconduct allegations.
- Whether the High Court was justified, at the interlocutory stage, in revoking or staying suspension orders and in directing completion of disciplinary inquiries within a fixed period, notwithstanding serious pending charges.
Arguments of the Parties
The opinion does not contain a detailed account of the parties' legal arguments.
Table of Precedents Cited
No precedents were cited in the provided opinion.
Court's Reasoning and Analysis
Scope of suspension power. The Court held that there is “no restriction on the authority to pass a suspension order second time.” A prior withdrawal or quashing of an earlier suspension does not preclude a fresh suspension when new or fuller material surfaces, particularly where the earlier quashing was for extraneous reasons (e.g., parity with other officers) and not on the merits.
Need to keep employees away from the establishment. Allegations of large-scale defalcation involving several individuals over 1986-1991 justified keeping the accused officers “out of mischief’s range” during inquiry. Courts should not substitute their assessment for that of the employer unless the suspension is mala fide or lacks even prima facie support.
Judicial restraint with interlocutory orders. Although the Supreme Court usually avoids interfering with interlocutory matters, it intervened because the High Court had “patently misconstrued” the nature of suspension powers and thereby impeded an ongoing disciplinary process.
Delay considerations. The Court acknowledged a year-long gap between suspension and charge-sheet but found the delay reasonable given the complexity of tracing accounts over several years and coordinating with a police investigation.
Balance of hardship. If ultimately exonerated, employees would be entitled to full service benefits for the suspension period, mitigating potential prejudice.
Holding and Implications
HOLDING: Both appeals are ALLOWED; the High Court orders revoking or staying the suspensions are set aside, thereby reviving the suspension orders dated 26 March 1992 (C.A. 1487) and 10 March 1992 (C.A. 1488). No order as to costs.
Implications: The decision reaffirms managerial authority to issue successive suspension orders where warranted and underscores that courts should rarely disturb such orders at the interlocutory stage unless they are demonstrably mala fide or unsupported by prima facie evidence. The Court also signalled that, while disciplinary proceedings must be conducted expeditiously, rigid judicial timelines should not compromise thorough inquiry into serious financial misconduct.
Order
1. Leave granted.
C.A No. 1487 of 1993 (arising out of SLP No. 3171 of 1993):
2. The appeal is directed against the interlocutory order dated May 21, 1992 passed by the High Court. Normally, this Court does not interfere with the interlocutory orders. But the case in hand impels us to do so.
3. The respondent was employed at the relevant time as Cashier of the Agricultural Market Committee (the ‘Market Committee’) at Rampur. The allegation against the respondent is that during his tenure as such Cashier, lakhs of rupees credited in the accounts of the Market Committee were not deposited in its bank account. On learning of the said misfeasance, the appellant-Market Committee suspended him from service with effect from March 22, 1991. He challenged his suspension in the High Court on the ground that some other suspended officers had been allowed to join service. The High Court quashed the suspension order on the said ground.
4. The investigation into the defalcation was, however, in progress. In April, 1991, special auditors were appointed to audit the accounts of the Market Committee. They submitted their report in May 1991 in which it was stated that several lakhs of rupees had been embezzled from the funds of the Market Committee. On May 4, 1991 an order was passed appointing an inquiry officer to inquire into the conduct of various officers of the Market Committee. Upon preliminary inquiry, it was found that the defalcation was done either with the active involvement of the respondent or with his connivance and in any case he was guilty of dereliction of duty for not scrutinising the accounts of the Market Committee, properly. With this prima facie case against the respondent made out in the auditors' report, a fresh order of suspension along with a charge-sheet was served upon the respondent on March 26, 1992. The respondent again approached the High Court and the High Court by the impugned order, stayed the order of suspension on the ground that it was not competent for the appellants to pass the order of suspension second time in the same manner. The High Court, however, directed the appellant to complete the inquiry expeditiously.
5. The ground given by the High Court to stay the operation of the suspension order, is patently wrong. There is no restriction on the authority to pass a suspension order second time. The first order might be withdrawn by the authority on the ground that at that stage, the evidence appearing against the delinquent employee is not sufficient or for some reason, which is not connected with the merits of the case. As happened in the present case, the earlier order of suspension dated March 22, 1991 was quashed by the High Court on the ground that some other suspended officer had been allowed to join duties. That order had nothing to do with the merits of the case. Ordinarily, when there is an accusation of defalcation of the monies, the delinquent employees have to be kept away from the establishment till the charges are finally disposed of. Whether the charges are baseless, malicious or vindictive and are framed only to keep the individual concerned out of the employment is a different matter. But even in such a case, no conclusion can be arrived at without examining the entire record in question and hence it is always advisable to allow disciplinary proceedings to continue unhindered. It is possible that in some cases, the authorities do not proceed with the matter as expeditiously as they ought to, which results in prolongation of the sufferings of the delinquent employee. But the remedy in such cases is either to call for an explanation from the authorities in the matter, and if it is found unsatisfactory, to direct them to complete the inquiry within a stipulated period and to increase the suspension allowance adequately. It is true that in the present case, the charge-sheet was filed after almost a year of the order of suspension. However, the facts pleaded by the appellants show that the defalcations were over a long period from 1986 to 1991 and they involved some lakhs of rupees. It also appears that the authorities have approached the police and in the police investigation, the amount of defalcation is found to be still more. Since the matter is of taking accounts which are spread over from 1986 to 1991 and of correlating the entries with the relevant documents, and several individuals are involved, the framing of charges was bound to take some time. The Court has to examine each case on its own facts and decide whether the delay in serving the charge-sheet and completing the inquiry is justified or not. However, in the present case, the High Court has not quashed the order of suspension on the ground of delay in framing the charges. As stated earlier, it has set aside the order of suspension on the ground that the authority had no power to pass the second order of suspension in the same case. We are afraid that the High Court has misconstrued the nature and purpose of the power of suspension vested in the management. It is not disputed that at present all officers concerned are served with the charge-sheets and have been suspended, There is no discrimination between the officers on that account. The charges are also grave and the authorities have come to the conclusion that during the disciplinary proceedings, the officers should not continue in employment to enable them to conduct the proceedings unhindered. Hence, we are satisfied that the order in appeal was not justified.
6. We, therefore, allow the appeal and set aside the impugned order of the High Court. The effect of this order will be that the order of suspension dated March 26, 1992 would stand revived.
7. The appellants should however, complete the disciplinary proceedings expeditiously.
8. There will be no order as to costs.
C.A No. 1488 of 1993 (arising out of SLP No. 3238 of 1993):
9. The first respondent was employed as the Secretary of the Market Committee at Rampur from January 6, 1990 to May 2, 1991 and one Sanjiv Rajan was the Cashier under him. In February 1991, it was discovered that there was a large scale embezzlement of funds of the Market Committee. This was reported by the first respondent to the higher authorities whereupon a special audit inquiry was directed to be conducted. The special auditors conducted the inquiry from April 4, 1991 to April 22, 1991 and submitted their report in May 1991. During the course of the inquiry it was revealed that the first respondent was guilty of dereliction of duty and it was also possible that he was himself involved in the act of embezzlement. Hence an order of suspension was passed on May 3, 1991. The first respondent requested the Director of the Market Board that since it was at his instance that the embezzlement was found out, the order of suspension against him be revoked. Thereupon, the Director passed an order on May 9, 1991, staying the order of suspension. However, thereafter, that audit report was received on the basis of which a preliminary inquiry was ordered. The Deputy Director (Market) who was appointed to conduct the inquiry gave his preliminary report in which he indicated that if the first respondent had been alert in his duty as Secretary of the Market Committee, he could have avoided the embezzlement. Hence, a charge-sheet was served upon the first respondent on March 10, 1992 along with the suspension order of the same date. Against the order, the respondent approached the High Court and the learned Single Judge by his order of April 2, 1992 revoked the order of suspension. Against the said order, the appellants preferred an appeal before the Division Bench. By its order dated May 8, 1992 the Division Bench upheld the revocation of the order of suspension but directed the appellants to complete the inquiry within a period of three months. Since, it was not possible for the appellants to complete the inquiry within three months, they have preferred the present appeal against the order revoking the suspension as well as the direction to complete the inquiry within three months.
10. We find from the charge-sheet that the allegations against the first respondent are grave inasmuch as they indicate that the amounts mentioned therein are not deposited in the bank and forged entries have been made in the passbook of the relevant accounts and the amounts are shown as having been deposited. In the circumstances, the High Court should not have interfered with the order of suspension passed by the authorities. The Division Bench has given no reason for upholding the learned Single Judge's order revoking the suspension order. In matters of this kind, it is advisable that the concerned employees are kept out of mischief's range. If they are exonerated, they would be entitled to all their benefits from the date of the order of suspension. Whether the employees should or should not continue in their office during the period of inquiry is a matter to be assessed by the authority concerned and ordinarily, the Court should not interfere with the orders of suspension unless they are passed mala fide and without there being even a prima facie evidence on record connecting the employees with the misconduct in question. In the present case, before the preliminary report was received, the Director was impressed by the first respondent-employee's representation. However after the report, it was noticed that the employee could not be innocent. Since this is the conclusion arrived at by the management on the basis of the material in their possession, no conclusions to the contrary could be drawn by the Court at the interlocutory stage and without going through the entire evidence on record. In the circumstances, there was no justification for the High Court to revoke the order of suspension.
11. The appeal is, therefore, allowed and the order of the High Court revoking the suspension of the first respondent is hereby set aside. This will result in revival of the order of suspension dated March 10, 1992. The appellants should, however, conclude the inquiry expeditiously.
12. There will be no order as to costs.
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