2016 (3) TMI 152 - HC - Companies Law

Termination of services of peon - According to the Official Liquidator the misconduct against Shri Shetty, Peon has been proved considering the report of the enquiry officer and the explanation offered by Shri Shetty and it is grave and of serious nature warranting the punishment of removal from service - Held that - The power vested on the disciplinary authority is a discretionary power and courts will not interfere in the quantum of punishment but if it appears that the punishment being suggested is based on a report, which has not considered all facts and circumstances or it has relied on statement recorded by persons who the employee states have forced him to give that statement and those people who are not made available for cross examination when the punishment recommended is unreasonable, the courts generally interfere. The discretionary power has to be judicially exercised by giving cogent reasons. Suspension is a very drastic action and has very drastic consequences. Termination from service is worse. The Competent Authority while passing an order or recommending the punishment should keep in mind the adverse effect which its order may have on the rights, liberties or interest of persons keeping in mind the purpose for which the rules framed were intended to serve. The person not only gets less or no pay but goes through the ignominy of having to face all his colleagues, family and friends while under suspension and after termination. He is shamed Taking into account the totality of the facts and circumstances, it is of the view that the recommendation of the Official Liquidator in his further report dated 31st October, 2011 read with report dated 18th February, 2013 cannot be accepted. As find it difficult to even accept that Shetty could be faulted. At the same time this court by its order dated 16th January, 2006 declined the prayer of resumption of regular employment to Shri Shetty. Hence Shri Shetty should be given all benefits including increments and promotion that he would have obtained during the period after 16th January, 2006 had he not been under suspension. His salary/emoluments to be fixed/determined accordingly. In the circumstances, have no hesitation in setting aside the inquiry report dated 20th May, 2011 of Shri N. Chinnachamy. Since setting aside the enquiry report itself, the leave sought by the Official Liquidator in his further report dated 18th February, 2013 is declined. The suspension order of Shri S.M. Shetty is set aside. The Official Liquidator is directed to reinstate Shri S.M. Shetty in the same rank and position and pay as he would be with effect from 16th January, 2006, had he not been under suspension.

Summary

Issues Involved:
1. Termination of Shri S.M. Shetty's services.
2. Alleged misconduct and dereliction of duty by Shri S.M. Shetty.
3. Procedural fairness and natural justice in the enquiry process.
4. Delay in conducting the enquiry.
5. Suspension and subsistence allowance of Shri S.M. Shetty.

Detailed Analysis:

Termination of Shri S.M. Shetty's Services:
The Official Liquidator sought the court's sanction to terminate Shri S.M. Shetty's services due to alleged misconduct. The misconduct was considered grave, warranting removal from service. The court examined the service conditions and past records, finding no extenuating circumstances for leniency.

Alleged Misconduct and Dereliction of Duty:
The issue centered on the removal of leased assets from M/s. Otoklin Plants & Equipments Limited's factory, where Shri Shetty was deputed. The enquiry report indicated that Shri Shetty failed to prevent the removal of machinery belonging to Al-Qahtani by representatives of Centurion Bank Limited (CBL). The enquiry officer concluded that Shri Shetty was guilty of dereliction of duty and concealment of facts.

Procedural Fairness and Natural Justice:
The court highlighted significant procedural lapses in the enquiry process. Shri Shetty was not provided with a formal charge sheet, and witnesses were not made available for cross-examination. The enquiry officer based conclusions on statements obtained under duress, violating principles of natural justice. The court emphasized that the enquiry report did not consider crucial documents, including the FIR and statements from other relevant parties.

Delay in Conducting the Enquiry:
The enquiry began almost eight years after the incident, which the court found unreasonable and prejudicial to Shri Shetty's rights. The court cited precedents emphasizing the importance of timely disciplinary proceedings to avoid prejudice and ensure fairness.

Suspension and Subsistence Allowance:
Shri Shetty was suspended in November 2004 and received varying subsistence allowances. The court noted the prolonged suspension, which lasted over 11 years, and its adverse impact on Shri Shetty. The court referenced the Supreme Court's stance on the necessity of concluding departmental inquiries within a reasonable timeframe, ideally within six months to a year.

Conclusion:
The court set aside the enquiry report and the recommendation for termination, finding the process flawed and prejudicial. The court ordered the reinstatement of Shri Shetty with all benefits, including increments and promotions, effective from January 16, 2006. The suspension order was also set aside, and the Official Liquidator was directed to reinstate Shri Shetty in his original rank and position. The court declined the leave sought by the Official Liquidator for termination and disposed of all related Official Liquidator's Reports (OLRs).