Disciplinary Proceedings; V.P. Ranjini Vs. State [Kerala High Court, 08-06-2016]

Service Law – Kerala Cooperative Societies Act, 1969 – Section 83(2)(1)(a) – Kerala Co-operative Societies Rules – R. 183(2) r/w. 198 – Disciplinary Action – Whether disciplinary proceedings can be initiated or continued against an employee of the Co-operative Society after her retirement – Held, No provision is pointed out which enables the Bank to initiate or to continue the disciplinary proceedings against an employee of the Bank after retirement. In this case there was only a show cause notice followed by a suspension before the retirement. The memo of charge was issued only about two months after retirement. In the absence of any provision enabling the Bank to initiate disciplinary proceedings after retirement, the decision taken by the Bank cannot be said to be legal. There is also no provision which provides that suspension will amount to initiation of disciplinary proceedings. Even assuming that it provides so, there is no provision which enables continuance of the proceedings and finally for imposing any punishment, after retirement. Moreover, none of the punishments enumerated under Rule 198 of the Rules can be imposed on a retired hand. In the above circumstances, the proceedings initiated against the petitioner cannot be said to be proper or legal. Accordingly Ext.P6 and P13 are quashed. Writ petition is accordingly allowed.

# Disciplinary Proceedings


IN THE HIGH COURT OF KERALA AT ERNAKULAM

P.V. ASHA J.

W.P.(C) No.30956 of 2011

Dated this the 8 th day of June, 2016

PETITIONER

V.P. RANJINI MANAGER (RETIRED), THE MANANTHAVADY FARMERS SERVICE CO-OPERATIVE BANK LTD., RESIDING AT REVATHY, MILK SOCIETY ROAD, B.STREET, MANANTHAVADY.

BY ADVS.SRI.P.V.MOHANAN SRI.BIJU P.N.

RESPONDENT(S)

1. THE STATE OF KERALA REPRESENTED BY SECRETARY TO GOVERNMENT, CO-OPERATIVE (C) DEPARTMENT, GOVERNMENT SECRETARIAT, THIRUVANANTHAPURAM-695001.

2. THE JOINT REGISTRAR OF CO-OPERATIVE SOCIETIES (GENERAL), KALPETTA, WAYANAD-685508.

3. THE MANANTHAVADY FARMERS SERVICE CO-OPERATIVE BANK LTD.NO.4034, REPRESENTED BY ITS MANAGING DIRECTOR, THE MANANTHAVADY FARMERS SERVICE CO-OPERATIVE BANK LTD., P.B.NO.6,, MANANTHAVADY P.O., WAYANAD DISTRICT-670 645.

R1 & R2 BY GOVT. PLEADER SRI. JOBY JOSEPH R3 BY ADV. SRI.P.N.MOHANAN

J U D G M E N T

The question arising in this case is whether disciplinary proceedings can be initiated or continued against an employee of the Co-operative Society after her retirement.

2. The petitioner herein was working as Manager in the 3 rd respondent Co-operative Bank. She was due to retire from service on 31.05.2009. She was transferred to the Evening branch of the Bank on 18.09.2008. On 23.3.2009, the Bank issued a show cause notice to her proposing disciplinary action on the allegation that she was granting large number of loans on pledging of spurious gold ornaments. Though she submitted an explanation, she was placed under suspension, as per Ext.P1 order dated 30.03.2009. In the order of suspension it was alleged that petitioner while working as Manager of the Evening counter of the Bank granted loans to 12 persons to the tune of Rs.71,61,140/-, on pledging of spurious gold ornaments and hence petitioner was found to be responsible for causing huge loss to the Bank, apart from causing ill-reputation to the Bank. Petitioner thereupon submitted a representation on 26.05.2009 to the President and Board of Directors requesting for reinstatement. In the meanwhile, she approached this Court challenging the order of suspension filing W.P.(C) No.14593/2009. This Court by Ext.P3 judgment dated 29.05.2009, disposed of the writ petition without interfering with the order of suspension and at the same time directing the Bank to complete the disciplinary action against the petitioner as expeditiously as possible.

3. Thereafter Ext.P4 memo of charges was issued to the petitioner on 13.07.2009, i.e., subsequent to her retirement. A series of allegations were raised, all relating to granting of loan on the strength of spurious gold which was found to be in connivance with the Appraiser. In answer to Ext.P4 memo of charges, the petitioner submitted Ext.P5 explanation detailing her innocence in the matter and refuting the charges alleged against her, pointing out that the pledging of major portion of the gold was much before her taking charge in the Evening counter. In the meanwhile, Managing Committee of the Bank passed a resolution, Ext.P7 on 18.06.2009 not to approve the retirement of petitioner who was attaining the age of superannuation on 31.5.2009, as she was continuing under suspension and in view of the disciplinary proceedings pending against her. Accordingly the Bank denied the terminal benefits due to her.

4. Petitioner thereupon approached the Joint Registrar filing Ext.P8 petition seeking intervention in the matter pointing out that no disciplinary action can be taken against her after her retirement and requesting for directions to issue terminal benefits. Thereafter, she approached this Court in W.P.(C).No.12189 of 2010 and this Court by Ext.P9 judgment dated 18.05.2010, directed the Joint Registrar to consider the petition filed by her under Rule 176 of the Kerala Co-operative Societies Rules, 1969 in accordance with law and to pass appropriate orders thereon. This Court also ordered that until final orders are passed on the petition, the disciplinary proceedings initiated against her shall remain stayed. Thereafter, the Joint Registrar, passed Ext.P10 order rejecting her petition and approving the action of the Bank, in view of the loss caused to the Bank. The petitioner thereupon filed Ext.P11 appeal before the Government under

# Section 83(2)(1)(a) of the Kerala Cooperative Societies Act, 1969.

Thereafter she approached this Court in W.P.(C).No.36068 of 2010 and by Ext.P12 judgment, this Court directed the Government to consider and pass orders on her appeal and directed that till the disposal of the appeal, respondent Bank shall not pass final orders even on completion of the disciplinary proceedings. By Ext.P13 order dated 18.07.2011 the Government, after hearing the petitioner as well as the Bank, found that there were serious and grave charges alleged against the petitioner and it was not necessary to interfere with the resolution passed by the Board of Directors. It was also mentioned that the disciplinary proceedings had commenced before retirement and there was no legal impediment in continuing the proceedings against the petitioner. Accordingly, the appeal was dismissed. The petitioner has filed this writ petition challenging the orders Ext.P10 of the Joint Registrar and Ext.P13 of the Government and for a direction to the respondents to treat the petitioner as having retired on superannuation on 31.05.2009 and to disburse the terminal benefits. She has also prayed for a direction to the 3 rd respondent not to proceed with the enquiry proceedings pursuant to Ext.P4 memo of charges.

5. While admitting this writ petition on 21.11.2011, this Court stayed the disciplinary proceedings initiated against her by issuing Ext.P4 memo of charges until further orders.

6. The respondent Bank has filed a counter affidavit justifying the action of the Bank. Government has also filed a counter affidavit, justifying the Bank as well as the Joint Registrar and Government. In the counter affidavit of the Bank, it is stated that the petitioner was placed under suspension on 30.03.2009 and memo of charges issued to her immediately thereafter on 13.07.2009, as per Ext.P4. According to the respondentBank immediately after the Bank came to know about the mal-practices in the evening branch, the Bank had issued a show cause notice to the petitioner on 23.03.2009, but in the reply submitted she disowned her responsibilities. It was thereafter that she was placed under suspension on 30.03.2009 and the disciplinary proceedings were initiated with effect from 23.03.2009, the date of issuance of show cause notice. It was also stated that the order of suspension was well before the date of retirement. Moreover, this Court had in Ext.P3 judgment, directed to finalise the disciplinary action against the petitioner expeditiously. Pointing out the grave misconduct and the amount involved in 20 gold loans which came to a sum of Rs.4,16,200/- during the period she was working in the Evening branch of the Bank, it was stated that she cannot be allowed to get away from the clutches of law on the ground of technicalities. It was pointed out that even in a case where there was a recommendation by the Appraiser, petitioner, being the Manager, was responsible to ascertain and ensure the purity of the gold. Being the custodian of all the assets and documents of the branch as provided in Rule 47(d) of the Rules she is supposed to ascertain and supervise all the transactions in the branch. It was also pointed out that 5 loans were sanctioned in the name of Smt.K.V.Usha, who was the wife of the appraiser. The Bank also stated that they were well within their powers to initiate and continue the disciplinary action against her.

7. The Government filed a counter affidavit justifying the action of the Joint Registrar and Government. It was stated that the disciplinary action was initiated against the petitioner while she was a part of the establishment and once the disciplinary action was initiated it was necessary to continue the same, as observed by this Court in Ext.P3 judgment and therefore, the contention of the petitioner that the proceedings cannot be continued on account of superannuation cannot be accepted.

8. Heard Shri.P.V.Mohanan, the learned counsel appearing for the petitioner, Shri.P.N.Mohanan learned counsel appearing for the respondent Bank and the learned Government Pleader.

9. Contention raised by Sri. P.V. Mohanan is that any disciplinary action against the petitioner after she attained the date of her superannuation is illegal, in the light of

# Rule 183(2) read with Rule 198 of the Co-operative Societies Rules

Therefore I will examine those Rules.

10. Rule 183(2) of the Rules, provides that once an employee completes the age of 58 years cannot continue in the employment of the Bank. Rule 183(2) reads as follows:

“No employee shall be eligible to continue in the service of a society after the last day of the month in which he attains the age of 58 years”.

11. Rule 198 of the Rules , it was argued that, provided for disciplinary action against the members of the establishment of the Bank only and the punishments which can be imposed on them. Rule 198 (1) reads as follows:

# 198. Disciplinary Action

(1) Any member of the establishment of a Co-operative Society may, for good and sufficient reasons, be punished by imposing any of the following penalties, namely:-

(a) Censure;

(b) Fine ( in the case of employees in the last grade);

(c) Withholding of increments with or without cumulative effect;

(d) Withholding of promotion;

(e) Recovery from pay of the whole or part of any pecuniary loss caused to the society, by negligences or breach of orders otherwise;

(f) Reduction to a lower rank;

(g) Compulsory retirement;

(h) Dismissal from service.

From the aforesaid provisions, it can be seen in order to initiate disciplinary proceedings and to impose punishment, one should not have attained 58 years, he should be a member of the establishment of the Cooperative Society and in order to be a member of that Cooperative Society she or he should be in the service of that establishment. Moreover a mere look on the punishments enumerated, will reveal that those punishments can only be imposed on those who are in service.

12. Further the learned counsel refers to Rule 190 (8) which provides that the provisions under the KSR relating to leave will be applicable in the case of employees of the Society, pointing out that it is the only provision which makes the provisions in the KSR applicable. No other Rules are pointed out as applicable to the employees of the Co-operative Societies.

13. Further the learned counsel relied on the judgments in

# Somasekhara Menon v. State of Kerala, 1978 KLT 696

where a Division Bench of this Court considered the authority to initiate disciplinary action against a 1 st Grade Municipal Commissioner after his retirement from service on 31 3 1976. There the memo of charges dated 20.3.1976 was served on the petitioner on 2.4.1976, for disciplinary action the Kerala Civil Services (Classification, Control and Appeal) Rules, 1960. There it was held that major penalty proceedings under Rule 15 on charges of misconduct cannot be pursued against an employee after he retired from service. In

# Raghavan Pillai v. Travancore Devaswom Board, 1980 KLT 782

this court was considering a case where the Devaswom Board ordered inquiry and imposed punishment on the petitioner after retirement. It was held as follows: An employer has authority to proceed against his employee by way of disciplinary action. But he can do so only so long as the contractual relationship of master and servant lasts. Once an employee has ceased to be his servant, and he has thus lost all control over him, in the absence of any statute conferring upon him any special power, he has no authority to proceed by a domestic enquiry against his former servant when the contractual relationship between the two no longer existed. An employer has authority to proceed against his employee by way of disciplinary action.

14. In

# George v. State of Kerala, 1983 KLT 222

this court held that the liability of an officer should be fixed before his retirement and the quantification of the liability should be after giving an opportunity to the officer to explain. In the judgment in

# Union of India v. K.V. Janakiraman, AIR 1991 SC 2010

the apex court was considering the issue as to whether the disciplinary/criminal proceedings can be said to have commenced for the purpose of adopting sealed cover proceedings. It was held therein that the sealed cover procedure can be resorted to only if a charge memo is already served on the concerned official or the chargesheet filed before the criminal court and not before; referring to the disciplinary proceedings initiated in respect of an employee and the purpose of adopting sealed cover, it was held that departmental proceedings can be said to be commenced only when the charge sheet is issued to the delinquent employee. The judgment in Janakiraman’s case was followed in

# Coal India Ltd. And others v. Saroj Kumar Mishra, (2007) 9 SCC 625

Paragraph 18 of the judgment reads as follows:

“18. A departmental proceedings is ordinarily said to be initiated only when a charge sheet is issued”.

15. The very same position is reiterated in

# Union of India and others v. Anil Kumar Sarkar, (2014) 4 SCC 161

Paragraphs 15 and 19 which are relevant read as follows:

15. Mr.Mohan Jain, learned ASG submitted that Para 2 has to be read along with Para 7 of the Office Memorandum dated 14.09.1992. We have already extracted Para 7 of the memorandum which makes it clear that a government servant, who is recommended for promotion by the DPC if any of the circumstances mentioned in Para 2 of the said memorandum arises after the recommendations of the DPC are received, but before he is actually promoted, will be considered as if his case has been placed in a sealed cover by the DPC. After extracting Para 2, we also highlighted the three conditions prescribed therein. Though, the learned ASG has mentioned that four charge sheets were issued to the respondent, enquires were completed and show cause notices had already been served on the respondent, on the relevant date, namely, 21.04.2003, when his batchmates were promoted, none of the conditions was in existence in the case of the respondent. Admittedly, the respondent was not placed under suspension, charge-sheet had been issued only on 13.08.2003 i.e., nearly after 4 months, no disciplinary proceedings were initiated or were pending as on 21.04.2003. In such circumstances, we are of the view that High Court is fully justified in issuing the direction based on Para 2 of the memorandum. No doubt, the learned ASG heavily relied on the later part of Para 7 of the memorandum which reads as under:

“He shall not be promoted until the conclusion of disciplinary case/criminal proceedings and the provisions contained in this letter will be applicable in his case also”.

Inasmuch as none of the circumstances was in existence as on 21.04.2003, reliance placed on the later part of Para 7 cannot be accepted or even not be applicable.

19. In Coal India Ltd. v.Saroj Kumar Mishra this Court in AIR para 22 has held that: (SCC P.632, Para 18)

“18. A departmental proceedings is ordinarily said to be initiated only when a charge-sheet is issued.”

16. In this context judgment of the Apex Court in

# UCO Bank and Another v. Rajinder Lal Capoor, (2007) 6 SCC 694

which relates to the departmental enquiry conducted against an employee of the UCO Bank, is relevant. There the employee had retired on 1.11.1996. The show cause notice was issued on 24.10.1996 and charge sheet was on 13.11.1998. A punishment of compulsory retirement was awarded on 27.09.1999. As per Service Regulation 20 (iii) of that Bank, an officer against whom disciplinary proceedings have been initiated would cease to be in service on the date of superannuation; but disciplinary proceedings will continue until the proceedings are concluded and the officer will not receive any pay and allowances after date of superannuation. Paragraphs 18 and 21 which are relevant read as follows:

18. The fact that charge-sheet was issued only on 13.11.1998 is not in dispute. It also stands admitted that the respondent attained the age of superannuation on or before 1.11.1996. Disciplinary proceedings admittedly were initiated against the respondent in terms of Regulation 20 (3)(iii) of the UCO Bank Officer Employees’ Services Regulations, 1979 which reads as under:

“20.(3)(iii) The officer against whom disciplinary proceedings have been initiated will cease to be in service on the date of superannuation but the disciplinary proceedings will continue as if he was in service until the proceedings are concluded and final order is passed in respect thereof. The officer concerned will not receive any pay and/or allowance after the date of superannuation. He will also not be entitled for the payment of retirement benefits till the proceedings are completed and final order is passed thereon except his own contributions to CPF.”

21. The aforementioned Regulation, however, could be invoked only when the disciplinary proceedings had clearly been initiated prior to the respondent’s ceasing to be in service. The terminologies used therein are of seminal importance. Only when a disciplinary proceedings has been initiated against an officer of the bank despite his attaining the age of superannuation can the disciplinary proceedings be allowed on the basis of the legal fiction created thereunder i.e continue “as if he was in service”. Thus, only when a valid departmental proceedings is initiated by reason of the legal fiction raised in terms of the said provision, the delinquent officer would be deemed to be in service although he has reached his age of superannuation. The departmental proceedings, it is trite law, is not initiated merely by issuance of a show-cause notice. It is initiated only when a charge-sheet is issued (see Union of India v. K.V.Janakiraman). This aspect of the matter has also been considered by this Court recently in Coal India Ltd. v.Saroj Kumar Mishra wherein it was held that date of application of mind on the allegations levelled against an officer by the competent authority as a result whereof a chargesheet is issued would be the date on which the disciplinary proceedings are said to have been initiated and not prior thereto. Pendency of a preliminary enquiry, therefore, by itself cannot be a ground for invoking Clause 20 of the Regulations. Albeit in a different fact situation but involving a similar question of law in Coal India Ltd. this Court held:

“13. It is not the case of the appellants that pursuant to or in furtherance of the complaint received by the Vigilance Department, the competent authority had arrived at a satisfaction as is required in terms of the said circulars that a charge-sheet was likely to be issued on the basis of a preliminary enquiry held in that behalf or otherwise.

14. The circular letters issued by the appellants put restrictions on a valuable right of an employee. They, therefore, are required to be construed strictly. So construed there cannot be any doubt whatsoever that the conditions precedent contained therein must be satisfied before any action can be taken in that regard”. It was furthermore observed that:

“20.A departmental proceedings is ordinarily said to be initiated only when a charge-sheet is issued”.

17. Even in that case the Apex Court held that disciplinary action which continue is one which isas already initiated before retirement and the Bank did not have any authority to initiate any proceedings or impose any punishment after retirement. The Regulation therein was interpreted as one enabling continuance of disciplinary proceedings already initiated prior to the date of retirement of the employee. Referring to the terminologies used therein it was held that the permission was only to continue the proceedings and therefore it should have been initiated before the date of retirement.

18. No provision is pointed out which enables the Bank to initiate or to continue the disciplinary proceedings against an employee of the Bank after retirement. In this case there was only a show cause notice followed by a suspension before the retirement. The memo of charge was issued only about two months after retirement. In the absence of any provision enabling the Bank to initiate disciplinary proceedings after retirement, the decision taken by the Bank cannot be said to be legal. There is also no provision which provides that suspension will amount to initiation of disciplinary proceedings. Even assuming that it provides so, there is no provision which enables continuance of the proceedings and finally for imposing any punishment, after retirement. Moreover, none of the punishments enumerated under Rule 198 of the Rules can be imposed on a retired hand.

19. In the above circumstances, the proceedings initiated against the petitioner cannot be said to be proper or legal. Accordingly Ext.P6 and P13 are quashed.

Writ petition is accordingly allowed.

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