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National Fertilizers Ltd. And Another v. P.K Khanna .
Factual and Procedural Background
The respondent, Shri P.K. Khanna, was employed as an Assistant Materials Manager at National Fertilizers Limited (NFL). A lot of 36,000 jute bags supplied by M/s Swastik Laminated Industries was rejected as defective. Company instructions required that rejected bags be defaced before being returned to the supplier. It was alleged that the respondent dispatched the bags without defacement, contrary to procedure.
After a domestic enquiry, the Enquiry Officer found both charges proved, concluding that the respondent had failed to ensure defacement and had shown undue haste in dispatching the bags. On 18 June 1991 the disciplinary authority imposed the penalty of removal from service.
The respondent challenged the order by a civil suit. The trial court set aside the removal for want of a copy of the enquiry report, directed that the report be supplied, and allowed the employer to restart proceedings from that stage. After furnishing the report and receiving the respondent’s representation, the disciplinary authority again removed him from service; the Chairman-cum-Managing Director (Appellate Authority) affirmed the decision.
The respondent then filed a writ petition under Article 226. A Division Bench of the Punjab & Haryana High Court held that (i) the disciplinary authority had to record reasons dealing with the respondent’s objections to the enquiry report, and (ii) the failure to do so violated natural justice. It set aside both the disciplinary and appellate orders, granting liberty to pass fresh orders.
NFL appealed to the Supreme Court, which granted leave to determine whether the High Court’s reasoning was correct and, if necessary, to decide the proper forum for remand.
Legal Issues Presented
- Whether a disciplinary authority must state separate reasons when it concurs with the Enquiry Officer’s findings after the delinquent employee has submitted a representation.
- Whether the disciplinary authority is obliged to issue a separate notice or hearing to the delinquent employee on the question of punishment after recording a finding of guilt.
Arguments of the Parties
Appellants (National Fertilizers Limited)
- The High Court misread the Enquiry Officer’s report; the findings against the respondent were firm and unequivocal.
- Under Rule 33 of the NFL Employees (Conduct, Discipline and Appeal) Rules, the disciplinary authority need record reasons only when it disagrees with the Enquiry Officer; concurrence requires no separate reasoning.
- Precedent (Ram Kumar v. State of Haryana) establishes that a concurring disciplinary authority need not produce a detailed speaking order.
- No further notice on the quantum of punishment is mandated once the employee has received the enquiry report and has been heard on it.
Respondent (Shri P.K. Khanna)
- The disciplinary authority failed to deal with his written objections, violating natural justice.
- Reliance was placed on M.D., ECIL v. B. Karunakar to argue that the disciplinary authority must arrive at “its own finding,” implying a duty to give reasons.
- It was contended that the disciplinary authority did not properly appreciate the evidence and objections; therefore the High Court’s remand to the disciplinary authority was justified.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| Ram Kumar v. State of Haryana, 1987 Supp SCC 582 | A concurring disciplinary authority need not record separate reasons; adoption of the Enquiry Officer’s findings suffices. | Relied upon to hold that the impugned disciplinary order was not vitiated merely because it was brief and adopted the Enquiry Officer’s reasoning. |
| M.D., ECIL v. B. Karunakar, (1993) 4 SCC 727 | Right of a delinquent employee to receive the Enquiry Officer’s report to enable an effective representation. | Distinguished; the Court clarified that “its own finding” in Karunakar does not require fresh reasoning when the disciplinary authority concurs with the Enquiry Officer. |
| Indian Oil Corporation Ltd. v. Ashok Kumar Arora, (1997) 3 SCC 72 | Scope of judicial review over appreciation of evidence in departmental enquiries. | Quoted to emphasise that challenges to factual appreciation by the disciplinary authority are generally not open in judicial review. |
Court's Reasoning and Analysis
Justice Ruma Pal, writing for the Court, held that the High Court both misread the Enquiry Officer’s conclusions and misapplied the governing legal principles.
- Firm Findings Exist: The Enquiry Officer clearly found both charges proved against the respondent; the statement that the respondent was “not alone” responsible did not negate personal culpability.
- No Duty to Give Separate Reasons When Concurring: Rule 33(2) of the NFL Rules requires reasons only when the disciplinary authority disagrees with the Enquiry Officer. Precedent confirms that mere concurrence, coupled with adoption of the report, satisfies natural justice.
- Karunakar Distinguished: Karunakar dealt with the employee’s right to the report, not with an obligation on the disciplinary authority to issue fresh reasons. “Its own finding” means an independent decision, which may be achieved by adoption of the report.
- Opportunity on Punishment Not Required: Neither Karunakar nor Rule 33 mandates a separate hearing on the quantum of penalty once the employee has been heard on the enquiry report.
- Judicial Review Limits: Whether the disciplinary authority correctly appraised objections is ordinarily outside judicial scrutiny; such points may be pursued before the statutory Appellate Authority.
Holding and Implications
DISPOSED OF WITH MODIFICATION. The Supreme Court set aside only the Appellate Authority’s order and directed that the matter be remanded to the Appellate Authority (not the disciplinary authority, as ordered by the High Court) for fresh consideration of the respondent’s objections. No order as to costs.
Implications: The judgment reaffirms that a disciplinary authority need not supply elaborate reasons when it concurs with an Enquiry Officer’s findings and that a separate notice on punishment is not obligatory. The decision clarifies the application of Rule 33 and limits on judicial intervention, but it sets no new substantive precedent beyond applying existing principles to the facts.
Ruma Pal, J.— Leave granted.
2. The two issues which arise for determination in this appeal are:
(1) Whether it is necessary for the disciplinary authority to give reasons for agreeing with the enquiry officer's report when the delinquent officer has submitted a representation challenging the report of the enquiry officer?
(2) Whether the disciplinary authority is bound to issue notice to the delinquent officer before passing the order of punishment?
3. The respondent was employed as an Assistant Materials Manager with the appellant. It is alleged that Lot No. 259 consisting of 36,000 jute bags supplied by M/s Swastik Laminated Industries to Appellant 1 was found to be defective and was rejected. The rejected bags were required to be returned to the supplier after they had been defaced. On the allegation that the respondent did not adhere to the procedure and instructions while dispatching the 36,000 jute bags to the supplier and had not defaced them, disciplinary proceedings were commenced against the respondent. The enquiry officer submitted a report in which he held as follows:
“Charge 1
There is no procedure laid down in writing for defacement of rejected bags, and proper procedure had not been adopted to deliver the rejected bags to the supplier, Shri P.K Khanna alone is not responsible for this lapse. Charge 1 is therefore proved to the extent that Shri P.K Khanna had not ensured the defacement of 36,000 bags when gate passes were issued by him.
Charge 2
Charge 2 proved as Shri P.K Khanna did not get all the rejected bags defaced before issued (sic) of outgoing gate passes thereby showing interest and took hasty actions in dispatching, loading of trucks and issue of outgoing gate passes for rejected Lot No. 259 of jute bags to M/s SLI Bahadurgarh.”
4. On the basis of the enquiry officer's report, on 18-6-1991 the respondent was removed from service. The respondent filed a civil suit challenging the order of removal. The trial court set aside the order of the disciplinary authority and directed him to furnish a copy of the report. However, liberty was granted to the appellants to proceed with the enquiry by placing the respondent under suspension from the stage of furnishing him with a copy of the enquiry officer's report. The respondent's appeal from this order of the trial court was dismissed.
5. In compliance with the order of the civil court, a copy of the enquiry officer's report was made available to the respondent, who was also placed under suspension. The respondent was given an opportunity to represent against the enquiry officer's report within 15 days. The respondent submitted his representation to the disciplinary authority. The disciplinary authority passed the following order:
“The undersigned has carefully gone through the report of the enquiry officer, statements of witnesses and documents produced as evidence both by the presenting officer as well as the defence assistant of the delinquent employee during the enquiry proceedings. I have also carefully examined the representation of Shri P.K Khanna dated 9-6-1997. After going through the enquiry report, documents produced by the respondent during the course of the enquiry, evidence recorded, written statement of defence and representation submitted by Shri P.K Khanna, the undersigned is in agreement with the findings of the enquiry officer that charges levelled against Shri P.K Khanna vide charge-sheet dated 19-2-1990 stand proved.
Seeing the gravity of the charges and the critical nature of the job of the materials department where the Company's officers have to handle matters connected with the business and property of the Company involving huge financial stake in each and every transaction, the charges proved against Shri Khanna assume utmost gravity. Therefore, the undersigned has come to the conclusion that retention of Shri P.K Khanna, Assistant Materials Officer in the services of the Company is not in the interest of the Company and imposition of penalty of removal from service in this case is reasonable and will meet the ends of justice. Therefore, the undersigned in exercise of powers conferred by Rule 30 of the NFL Employees (Conduct, Discipline and Appeal) Rules imposes the penalty of removal from the service of the Company on Shri P.K Khanna, Assistant Materials Officer with immediate effect.”
6. The respondent's appeal to the Chairman and Managing Director was rejected. It was held that the respondent had not brought out any new facts in his representation and that the respondent had shown undue favour to the supplier in the dispatch of the rejected bags without ensuring defacement before issue of the defective bags. The Appellate Authority held that by doing so, the respondent had acted in a manner prejudicial to the interest of National Fertilizers Limited and had shown wilful disobedience of the instructions and had negligently performed his duties. The penalty of removal was accordingly confirmed.
7. The respondent challenged the order of removal under Article 226 before the High Court of Punjab and Haryana. The Division Bench was of the view that after supply of the enquiry officer's report a delinquent employee, if he opts to submit his reply/objections against the finding of the enquiry officer, it is imperative for the disciplinary authority to deal with the objections giving his own reasons in support of his conclusion. It was also noted that the enquiry officer had not given a firm finding and in relation to Charge 1, concluded that the respondent alone was not responsible for the lapse. According to the High Court, failure to give reasons dealing with the respondent's objections to the enquiry officer's report amounted to violation of principles of natural justice. This defect in the disciplinary authority's order was also true of the Appellate Authority's order. The orders of the disciplinary authority and the Appellate Authority were accordingly set aside with liberty granted to the disciplinary authority to pass fresh orders keeping in view the observations made by the High Court.
8. We are unable to agree with the reasoning or with the conclusion reached by the High Court. We have quoted the conclusions of the enquiry officer. It could not be said that the enquiry officer had not reached a firm conclusion with regard to both the charges as far as the respondent was concerned. It is true that the enquiry officer said that there was no procedure laid down in writing relating to the defacement of rejected bags. But he did not say that there were no instructions given to the respondent to ensure the defacement of rejected bags. In fact the enquiry officer had listed his conclusions and findings at the end of his report from which it is abundantly clear that he was convinced that instructions had been issued to the respondent to deface the bags before dispatching them to the supplier. The enquiry officer held that the respondent alone was not responsible for the lapse. This did not mean that he had not come to a firm conclusion that the respondent was responsible. As far as Charge 2 is concerned the conclusion was categorical that it had been proved against the respondent.
9. Apart from misreading the enquiry officer's report, the High Court also misapplied the law. The various decisions referred to in the impugned judgment make it clear that the disciplinary authority is required to give reasons only when the disciplinary authority does not agree with finding of the enquiry officer. In this case the disciplinary authority had concurred with the findings of the enquiry officer wholly. In Ram Kumar v. State of Haryana 1987 Supp SCC 582 the disciplinary authority after quoting the content of the charge-sheet, the deposition of witnesses as recorded by the enquiry officer, the finding of the enquiry officer and the explanation submitted by the employee passed an order which, in all material respects, is similar to the order passed by the disciplinary authority in this case. Learned counsel appearing on behalf of the respondent sought to draw a distinction on the basis that the disciplinary authority had, in Ram Kumar case 1987 Supp SCC 582 itself quoted the details of the material. The mere quoting of what transpired would not amount to the giving of any reasons. The reasons were in the penultimate paragraph which we have said virtually used the same language as the impugned order in the present case. This Court dismissed the challenge to the order of punishment in the following words:
“8. In view of the contents of the impugned order, it is difficult to say that the punishing authority had not applied his mind to the case before terminating the services of the appellant. The punishing authority has placed reliance upon the report of the enquiry officer which means that he has not only agreed with the findings of the enquiry officer, but also has accepted the reasons given by him for the findings. In our opinion, when the punishing authority agrees with the findings of the enquiry officer and accepts the reasons given by him in support of such findings, it is not necessary for the punishing authority to again discuss evidence and come to the same findings as that of the enquiry officer and give the same reasons for the findings. We are unable to accept the contention made on behalf of the appellant that the impugned order of termination is vitiated as it is a non-speaking order and does not contain any reason. When by the impugned order the punishing authority has accepted the findings of the enquiry officer and the reasons given by him, the question of non-compliance with the principles of natural justice does not arise. It is also incorrect to say that the impugned order is not a speaking order.”
(emphasis supplied)
We respectfully adopt the view. The position is further clarified by Rule 33 of the Employees (Conduct, Discipline and Appeal) Rules. It reads as follows:
“1. The disciplinary authority, if it is not itself the enquiring authority may, for reasons to be recorded by it in writing remit the case to the enquiring authority for fresh or further enquiry and report and the enquiring authority shall thereupon proceed to hold further enquiry according to the provisions of Rule 32 as far as may be.
2. The disciplinary authority shall, if it disagrees with the findings of the enquiring authority on any article of charge, record its reasons for such disagreement and record its own findings on such charge, if the evidence on record is sufficient for the purpose.
3. If the disciplinary authority having regard to its findings on all or any of the articles of charge is of the opinion that any of the penalties specified in Rule 29 should be imposed on the employee shall, notwithstanding anything contained in Rule 31, make an order imposing such penalty.
4. If the disciplinary authority having regard to its findings on all or any of the articles of charge, is of the opinion that no penalty is called for, it may pass an order exonerating the employee concerned.”
10. It is apparent from sub-rule (2) that the disciplinary authority is not required to record its reasons if it concurs with the enquiry officer's findings in contradiction with the situation in which the disciplinary authority disagrees with the findings of the enquiring authority. Only in the latter case does sub-rule (2) expressly mandate that the disciplinary authority shall, if it disagrees with the findings of the enquiry officer record its reasons for such disagreement as well as its own findings on such charges.
11. The respondent's reliance on the decision in M.D, ECIL v. B. Karunakar (1993) 4 SCC 727, (1993) 25 ATC 704 is misplaced. That decision relates to the right of a delinquent officer to a copy of the enquiry officer's report. In the course of the judgment, the Court had no doubt said that the report of the enquiry officer is required to be furnished to the employee to make proper representation to the disciplinary authority before such authority arrives at its own finding with regard to the guilt or otherwise of the employee and the punishment, if any, to be awarded to him. By using the phrase “its own finding” what is meant is an independent decision of the disciplinary authority. It does not require the disciplinary authority to record separate reasons from those given by the enquiry officer. The concurrence of the disciplinary authority with the reasoning and conclusion of the enquiry officer means that the disciplinary authority has adopted the conclusion and the basis of the conclusion as its own. It is not necessary for the disciplinary authority to restate the reasoning.
12. As far as the second question is concerned, neither the decision in Karunakar (1993) 4 SCC 727, (1993) 25 ATC 704 nor Rule 33 quoted earlier postulate that the delinquent employee should be given an opportunity to show cause after the finding of guilt as to the quantum of the punishment. The Rules envisage the passing of an order by the disciplinary authority not only finding the delinquent guilty, but also imposing punishment after the delinquent has been given a copy of the enquiry report and had an opportunity of challenging the same.
13. Learned counsel appearing on behalf of the respondent sought to take us through the enquiry officer's report to contend that the disciplinary authority had not correctly appreciated the objections taken by the respondent to the report. That is normally not a plea which is available as a ground for judicial review. (See Indian Oil Corpn. Ltd. v. Ashok Kumar Arora (1997) 3 SCC 72, AIR 1997 SC 1030.) Nevertheless, it would be open to the respondent to raise all such grounds before the Appellate Authority, who should deal with the same.
14. This Court had issued limited notice as to whether the matter should be remanded back to the Appellate Authority rather than the disciplinary authority as directed by the High Court. For the reasons stated we are of the view that the appropriate order in the circumstances of this case will be to remand the matter back to the Appellate Authority to reconsider the respondent's plea that the disciplinary authority had not appreciated the respondent's objection correctly.
15. Accordingly we dispose of the appeal by modifying the order of the High Court setting aside the decision of the Appellate Authority so that the matter may be remanded back to the Appellate Authority for reconsideration of the objections raised by the respondent to the enquiry report. No costs.
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