Pension; Dipak Kumar Lahiri Vs. National Insurance Company [Calcutta High Court, 19-05-2016]

Contents

General Insurance (Employees’) Pension Scheme, 1995 – Paragraphs 44 and 47 – General Insurance (Conduct, Discipline & Appeal) Rules, 1975 – Rule 26 – Permanent withdrawal of pension – Imposing major penalty of  – Recovery of Pecuniary loss caused to the Corporation or a Company – Paragraph 47 of the Scheme, 1995 provided for passing an order only for recovery of any pecuniary loss of the corporation or company, as the case may be, from the pension of a person. There was no scope for the statutory authority of the respondent no.1, to pass a cryptic order of penalty for “withdrawal of pension” before arriving at a conclusion that “withdrawal of pension” was required for recovery of the pecuniary loss of the respondent no.1.  Therefore, the order cannot be sustained.


IN THE HIGH COURT AT CALCUTTA

Constitutional Writ Jurisdiction Original Side

The Hon’ble Justice Debasish Kar Gupta
And
The Hon’ble Justice Md. Mumtaz Khan

Judgment on: 19/05/2016

APO 237 of 2013

Dipak Kumar Lahiri @ D. K. Lahiri
Versus
National Insurance Company Limited & Ors.

For the appellant : Mr. Pratik Dhar, Sr. Adv., Mr. Ritwik Pattanayak, Mr. Debanshu Ghorai, Mr. Samir Halder; For the respondent : Mr. Dipak Kumar Ghosh, Sr. Adv., Mr. Ranajay Dey.

Debasish Kar Gupta , J. :

This appeal is directed against a judgment dated May 14, 2010 passed in the matter of Dipak Kumar Lahiri vs. National Insurance Company Limited & Ors. (in re: W.P. No.1708 of 2006). By virtue of the impugned judgment the above writ application was dismissed on contest.

The subject matter of challenge in the above writ application was an order dated October 31, 2005, passed by the respondent no.5 against the appellant under the

# General Insurance (Employees’) Pension Scheme, 1995

in exercise of the powers conferred under

# Rule 26 of the General Insurance (Conduct, Discipline & Appeal) Rules, 1975

as amended up to date (hereinafter referred to as the said Rules, 1975) read with paragraphs 44 and 47 of the General Insurance (Employees’) Pension Scheme, 1995 as amended up to date (hereinafter referred to as the said Scheme, 1995) imposing major penalty of “permanent withdrawal of pension” against the appellant, an administrative officer (retired). The appellant preferred a statutory appeal dated January 11, 2006 against the above order. The above appeal was dismissed by the respondent no.3 by an order dated January 22, 2007.

The above order dated October 31, 2005 was passed in connection with a proceeding initiated against the appellant on the basis of a memorandum dated October 3, 2002 issued by the respondent no.5 proposing to hold enquiry against the appellant under Rule 25 of the said Rules, 1975 read with paragraphs 44 and 47 of the said Scheme, 1995. The substance of the imputation of misconduct in respect of which the enquiry was proposed to be held was that while functioning as Administrative Officer, at Divisional Office-IX, Kolkata, during the period 1999-2000, the appellant had committed the following misconduct:-

(i) While working in the Motor Department of the respondent no.1, the appellant committed fraud by preparing six Motor Claims Disbursement Vouchers without obtaining the approval from the competent authority, without involving department assistant and without ensuring the existence of a claim filed in favour of the recipient of the amount preparing, checking and mentioning as “Approved by CA” in all the six Motor Claim Disbursement Vouchers favouring person, no way connected with the insured, whereas against the same claim number, the actual insured had separately been reimbursed the claim amount as per procedure.

(ii) The appellant being the cheque signature authority had signed all the aforesaid cheques as one of the signatory favouring a person not being insured. Due to the wrongful actions of the appellant six double payments were made causing wrongful loss to the respondent no.1 to the tune of Rs.2,29,672/-.

Let it be recorded at the very outset that no submission is made by Mr. Pratik Dhar, learned Senior Advocate, appearing on behalf of the appellant so far as the propriety of concurrence of the respondent no.5 with the views of the enquiry officer was concerned to the extent that the charges levelled against the appellant had been sustained in full.

According to Mr. Dhar, the major “penalty of permanent withholding of pension” of the appellant was passed by the respondent no.5 without jurisdiction as also arbitrarily while exercising the powers conferred under paragraphs 44 and 47 of the said Scheme, 1995 by him.

It is the second contention of Mr. Dhar that the pre-condition of consultation with the Board of the respondent no.1 before passing the final order dated October 31, 2005, as provided in the provisions of first proviso to paragraph 47 of the said Scheme, 1995, was not complied with. It is also submitted by Mr. Dhar that the impugned judgment is liable to be set aside for non-consideration of the aforesaid grievances of the appellant in accordance with law.

Reliance is placed by Mr. Dhar on the decisions of

# Kollol Kumar Dutta vs. Union of India, reported in 2014 SCC Online Gau 39

# State of Gujarat & Anr. vs. Justice R.A. Mehta (Retired) & Ors., reported in (2013) 3 SCC 1

# Ram Tawakya Singh vs. State of Bihar & Ors., reported in (2013) 16 SCC 206

# State of Rajasthan & Ors. vs. Mahendra Nath Sharma, reported in (2015) 9 SCC 540

# Pepsu Road Transport Corporation, Patiala, vs. Mangal Singal & Ors., reported in (2011) 11 SCC 702

# Commissioner of Central Excise, New Delhi, vs. Hari Chand Sri Gopal & Ors., reported in (2011) 1 SCC 236

# Nautam Prakash DGSVC, VADTAL. & Ors. vs. K.K. Thakkar & Ors., reported in (2006) 5 SCC 330

and

# Indian Banks’ Association, Bombay & Ors. vs. Devkala Consultancy Service & Ors., reported in (2004) 11 SCC 1

in support of his above submissions.

On the other hand it is submitted by Mr. Dipak Kumar Ghosh, learned Advocate appearing on behalf of the respondents, that the appellant was found guilty of the charge of commission of grave misconduct as framed under memorandum dated October 3, 2002. According to him, paragraph 42 of the said Scheme, 1995 empowered the respondent no.5 to withhold or withdraw pension of the appellant or a part thereof, whether permanently or for a specified period, in the event the appellant had been found guilty of grave misconduct. According to Mr. Ghosh, the order of penalty of “withdrawal of pension” of the appellant was not passed by the respondent no.5 without jurisdiction.

Drawing our attention towards the averment made in paragraph 44 of the affidavit-in-opposition affirmed on behalf of the respondents, it is submitted by him that the above order of the respondent no.5 was ratified by the Board of the respondent no.5 in its 297th meeting dated March 31, 2000 in compliance of the provisions of first proviso to paragraph 47 of the said Scheme, 1995.

Reliance is place by Mr. Ghosh on the decisions of

# Forage and Company’s vs. Municipal Corporation of Greater Bombay, reported in AIR 2000 SC 378

# Frick India Ltd. Vs. Union of India, reported in 1990 (1) SCC 400

# Pandit D. Aher vs. State of Maharashtra, reported in (2007) 1 SCC 445

# National Insurance Company Ltd. Vs. General Insurance Development Officers’ Association, reported in (2008) 5 SCC 472

# Kishan Prakash Sharma vs. Union of India, reported in (2001) 5 SCC 212

# State of Jharkhand vs. Jitendra Kumar Srivastava, reported in (2013) 12 SCC 210

# D.S. Nakara vs. Union of India, reported in 1983 SC 130

and

# Deokinandan Prasad vs. State of Bihar, reported in (1971) 2 SCC 330

in support of his above submissions.

Having heard the learned Counsels appearing for the respective parties as also after giving our anxious consideration to the facts and circumstances of this case, we find that admittedly the benefit of monthly pension under the said Scheme, 1995 was extended in favour of the appellant consequent upon his retirement from service of Administrative Officer under the respondent no.1 on attaining the age of retirement on superannuation.

It was also not in dispute that a proceeding was conducted against him adhering to the procedure prescribed in Rule 25 of the said Rules, 1975 framing charge of commission of grave misconduct as provided in paragraph 44 of the said Scheme, 1995, during the tenure of his service within the period from June 1999 to March 13, 2000, which took place within four (4) years before his date of retirement, for taking action against him under paragraph 47 of the said Scheme, 1995.

Consideration of the decision making process in conducting the proceeding against the appellant under Rule 25 of the said Rules, 1975 is not necessary in this appeal because no submission is made on behalf of the appellant before us in this regard.

According to the provision of paragraph 44 of the said Scheme, 1995, upon prima facie finding of a person enjoying monthly pension under the said Scheme, 1995 guilty of grave misconduct, it should be the duty of the competent authority, before passing an order, to follow the procedure specified in the said Rules, 1975. Since the procedure prescribed in Rule 25 of the said Rules, 1975 is not under challenge before us. We need not consider the above provision further.

In order to adjudicate the decision making process of the respondent authority under the provisions of paragraph 47 of the said Scheme, 1995 is quoted below:

# 47. Recovery of Pecuniary loss caused to the Corporation or a Company

(1) The Competent Authority may withhold or withdraw a pension or a part thereof, whether permanently or for a specified period, and order recovery from pension of the whole or part of any pecuniary loss caused to the Corporation or a Company if in any departmental or judicial proceedings the pensioner is found guilty of grave misconduct or megligence during the period of his service:

Provided that the Board of the Corporation or a Company shall be consulted before any final orders are passed:

Provided further that departmental proceedings, if instituted while the employee was in service, shall, after the retirement of the employee, be deemed to be proceedings under this paragraph and shall be continued and concluded by the authority by which they were commenced in the same manner as if the employee had continued in service:

Provided also that no departmental or judicial proceedings, if not initiated while the employee was in service, shall be instituted in respect of a cause of action which arose or in respect of an event which took place more than four years before such institution.

(2) Where the competent authority orders recovery of the pecuniary loss from the pension the recovery shall not ordinarily be made at a rate exceeding one-third of pension admissible on the date of retirement of the employee:

Provided that where a part of pension is withheld or withdrawn, the amount of pension drawn by a pensioner shall not be less than the minimum pension payable under this scheme.”

The above provisions enable the competent authority to withhold or withdraw a pension or a part thereof, whether permanently or for a specified period in order to recover the whole or part of any pecuniary loss from the pension of the person enjoying monthly pension under the said Scheme, 1995, subject to fulfillment of the conditions prescribed in the provisos therein.

In the matter of

# Maniruddin Bapari vs. Chairman, Municipal Corporation, Dacca, reported in 40 CWN 17

it has been held by the Court that a natural person has the capacity to do all lawful things unless his capacity has been curtailed by some rule of law. In the case of a statutory corporation, it is just the other way. The corporation has no power to do anything unless those powers should confer on it by this statute which creates it. The above proposition of law was repeated and reiterated by a Division Bench of our Court in the matter of

# Asian Leather Limited vs. Kolkata Municipal Corporation, reported in 2007 (3) CHN 47

and the relevant portion of the above decision is quoted below:-

“12. At this juncture, it will be profitable to refer to the well-known proposition of law that a natural person has the capacity to do all lawful things unless his capacity has been curtailed by some rule of law. It is equally fundamental principle that in case of a statutory corporation, it is just other way. The corporation has no power to do anything unless those powers are conferred on it by the statutes, which creates it.

(See

# Moniruddin Bepari vs. Chairman of the Municipal Corporation, Dacca, reported in 40 CWN 17).

In view of the above settled proposition of law, paragraph 47 of the said Scheme, 1995 provided for passing an order only for recovery of any pecuniary loss of the corporation or company, as the case may be, from the pension of a person. There was no scope for the statutory authority of the respondent no.1, to pass a cryptic order of penalty for “withdrawal of pension” before arriving at a conclusion that “withdrawal of pension” was required for recovery of the pecuniary loss of the respondent no.1. It will not be out of context to take note of the total loss sustained by the respondent company due to the misconduct of the appellant was 229,672/-, which was not more than the pension payable to the appellant for a period of two years only. Therefore, the above order cannot be sustained in the light of the settled proposition of law as discussed hereinabove.

Further, the provision of first proviso to paragraph 47 of the said pension Scheme, 1995 was under consideration in the matter of

# Kollol Kumar Dutta vs. Union of India reported in 2014 SCC Online Gau 39

where after considering the issue involved in that case in the light of the above pension the Hon’ble Supreme Court quashed and set aside the action of the respondent authority with the observation that the authority had failed to produce any document to establish that the approval of the Board of Directors was secured for taking action against the person concerned. Therefore, there is no scope to reconsider the applicability of the above provision in the light of the above settled proposition of law.

In view of the above, we find substance in the submissions made by Mr. Dhar that the respondent no.5 failed to adhere to the procedure prescribed in first proviso to paragraph 47 of the said Scheme, 1995 though the ratification of the Board of the respondent no.1 was obtained subsequently.

We do not find substance in the submissions made by Mr. Ghosh, appearing on behalf of the respondents that it was open for the respondent no.5 to pass an order of “withdrawal of pension” under the provisions of paragraph 42 of the said Scheme, 1995. After further examination of the memorandum dated October 3, 2002 we do not find that the appellant had been made aware of proceeding against him in the light of the provisions of paragraph 42 of the said Scheme, 1995. So, it was not permissible for the respondents to adopt the policy to put the cart before the horse for passing an order to deprive the appellant of his “right to livelihood” or in other wards “right to live” as guaranteed to him under the provisions of Article 21 of the Constitution of India. So, our interference with regard to the interpretation of the paragraph 42 of the said Scheme, 1995 for examining the decision making process of the respondent authority on merit in this regard is not necessary.

With regard to the decisions produced by Mr. Ghosh in support of his submissions we find that in the matter of Forage and Company’s (supra), Frick India Ltd. (supra), the issues involved in those cases were decided on the settled principles of law that the heading prefixed to sections or entries cannot control the plain words of the provision. In our case, we have considered the propriety of the decision making process of the respondent authority in the light of the plain and simple meaning of the provisions of paragraph 47 of the said Scheme, 1995. So, the above decisions do not help the respondents.

We do not find consideration of the above grounds by the learned Single Judge while passing the impugned judgment In the matter of Pandit D. Aher (supra) the point for consideration before the Court whether the retired person concerned had committed grave misconduct or negligence during his tenure of his service which was a question of fact. The issue involved in the instant case was not relating to the dispute so far as the question of commission of grave misconduct by the appellant was concerned. Therefore, the above decision has no manner of application in the instant case.

In the matters of General Insurance Development Officers’ Association (supra), Kishan Prakash Sharma (supra) and Jitendra Kumar Srivastava (supra) the interference of the employees in the matter of rationalisation of the provisions embodied in the General Insurance Business (Notification) Act, 1997 was under consideration. It has no manner of applicability so far as the action on the part of the respondent no.5 in withholding the pension of the appellant invoking paragraph 47 of the said Scheme, 1995 was concerned.

The issue involved in the matter of Jitendra Kumar Srivastava (supra) was the validity of the action of the employer in withholding 10% of pension and non-release of other terminal dues pending disciplinary proceeding against him. Needless to point out that in view of the distinguishable facts and circumstances as also in view of the subject matter of challenge involved in the case in hand the above decision does not require any consideration so far as this appeal is concerned.

So far as the case of D.S. Nakara (supra) was concerned, the question for consideration of the Hon’ble Supreme Court was propriety of the action of the Government in fixing a cut off date of retirement for classification of the retired employees in the matter of extending terminal benefits to them. In view of the above we do not find any necessity to take into consideration the above decision for deciding the issue involved in this appeal.

In the matter of Deokinandan Prasad (supra) it was decided that the pension payable to a retired employee is a property within the meaning of Article 31 (1) of the Constitution of India and he could be deprived of the same only by an authority of law. In the case in hand we have arrived at a conclusion hereinabove that the facts and circumstances involved in the case did not authorise the respondent no.5 to withhold the pension of the appellant in the light of the provision of paragraph 47 of the said Scheme, 1995. Therefore, the above decision does not help the respondents at all.

As a result the impugned judgment is quashed and set aside. The order dated October 31, 2005 passed by the respondent no.5 as also the order dated January 22, 2007 passed by the respondent no.3 in statutory appeal are interfered with partially setting aside the decision of withdrawal of the pension of the appellant.

The competent respondent authority is further directed to release the monthly pension of the appellant including the entire arrears amount together with interest at the highest rate payable on the fixed deposit payable by a Nationalised Bank after realisation of the pecuniary loss sustained by the respondent no.1 due to the misconduct of the appellant as evidenced from the aforesaid order dated October 31, 2005 of the respondent no.5 together with interest at the highest rate payable on a fixed deposit by a Nationalised Bank. The aforesaid pensionary benefit shall be released to the appellant strictly in terms of the aforesaid direction by the respondents within two (2) months from date by passing a speaking order.

This writ application is thus, disposed of.

There will be, however, no order as to costs.

Urgent photostat certified copy of this judgment, if applied for, be given to the parties, on priority basis.

I agree.

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