ARBITRARINESS IS ANTITHETIC TO THE RIGHT TO EQUALITY

Supreme Court of India

A.L.Kalara vs The Project & Equipment ... on 1 May, 1984

Equivalent citations: 1984 AIR 1361, 1984 SCR (3) 646

Author: D Desai

Bench: Desai, D.A.

PETITIONER:

A.L.KALARA

Vs.

RESPONDENT:

THE PROJECT & EQUIPMENT CORPORATION OF INDIA LIMITED.

DATE OF JUDGMENT01/05/1984

BENCH: DESAI, D.A. REDDY, O. CHINNAPPA (J) VARADARAJAN, A. (J)

CITATION:

 1984 AIR 1361                          1984 SCR  (3) 646

 1984 SCC  (3) 316        1984 SCALE  (1)798

 CITATOR INFO :

 F             1985 SC1046           (6)

 RF           1986 SC1571           (60,66,67)

 F             1991 SC1010           (35,223)

ACT:

A    Writ Jurisdiction of the     High Court under Article 226  of the  Constitution- Public  sector  undertakings and other instrumentalities  of the State, whether amenable to the writ jurisdiction.

B    Effect of concession in the Supreme Court by the State  as to  the maintainability  or amenability to the writ jurisdiction-Though the normal procedure is         to remit to  the High  Court, the  Supreme Court,  in order  not  to protract the  litigation involving   the livelihood of a party before it can itself hear the         appeal on merits.

C.   Constitution of India, 1950  Art. 14-Whether there should  be any  specific pleading 

in  the  Petition pointing out  whether anyone  else was either similarly     situated as  the petitioner or dissimilarly treated for entertaining the  charge of discrimination and granting relief on that ground

D.   Legislative Policy, whether judicially reviewable by the courts-Constitution of India, 1950   Arts. 226,32 and 13.

E.   Constitution of India 1950-Distinction between Part XIV and Part III of the

Constitution-Whether the employees of the  Corporation entitled to the protection under Part XIV of the Constitution.

F.        Project  and   Equipment  Corporation   of    India   Ltd. Employees'  (Conduct,  Discipline  and  Appeal)  Rules, 1975-Rules 4,5 and 25, Scope of-                    Rule 4 does not specify any  misconduct and  Rule 5 does not specify      that  Violation of Rule 4 is   per se misconduct-No disciplinary action,                      there   fore will arise  under Rule 4 of the 1975 Rules.

G.   The Project  and Equipment         Corporation of India House Building Advance (Grant and Recovery) Rules Rule 10 (1) (ii) and  the Profits  and                       Equipments  Corporation  of   India Ltd.    conveyance  Advance  (Grant  and  Recovery) Rules 8  and 10 (1)- Whether the non-utilisation of the                     advances within the stipulated time for the purposes of      and no  refund thereof immediately on the expiry of the  period, constitute                                      "misconduct" within  the meaning of  the expression in Rule 4 (i) (iii) of the 1975  Rules and       if not    whether the domestic enquiry and the                         punishment of the dismissal of service is warranted.

H.   Relief for a declaration    in  cases of contract for public  employment-whether  cannot   be specifically  enforced.

I.   Domestic Enquiry-Whether the Inquiry Officer and the  Punishing Authority  must give   reasons before the major punishment is  imposed-  Whether              non  giving  of   the reasons makes  the decision  of dismissal arbitrary and against principles of    natural justice.

HEADNOTE:

     The Project and Equipment Corporation of India Ltd. was formed in 1971 as a wholly owned subsidiary company of State Trading Corporation,  a Government  of India Undertaking. In 1976 it was separated and since  then it functions as a separate Government of India Undertaking.

     The appellant  who joined the service  under the State Trading Corporation  originally  and  later  exercised his option to  serve the  Project and Equipment Corporation with effect from November 9, 1976. The appellant while working as Deputy Finance Manager Grade II applied for and obtained (a) an advance in the amount of Rs. 16,050 for purchasing a plot of land on April 4, 1979 for which he executed the requisite

agreement  as required  by 'the  Project & Equipment Corporation of India Ltd., House Building Advance (Grant and Recovery) Rules,  and (b)  an advance  in the  amount of Rs. 11,000 for  purchase of a new motor cycle on July 7, 1979 as admissible under  "the        Project and  Equipment Corporation conveyance Advance  (Grant and          Recovery) Rules. Under these rules non-utilisation  of the  amounts within the time limit will impose  a liability  of the refund of the entire amount forth  with   together with  penal  interest  thereon.         The appellant failed  to utilise  the amounts and also to refund the same.  Therefore, coercive steps were  taken to recover the entire amount of the House Building advance from his pay by stopping the payment of his salary from 16th November, 1979. As  regards the  conveyance advance, the receipts etc. for purchase made in 1980 were accepted.   On July  22, 1980   a memorandum  was  served  upon   the appellant  stating  therein  that  the       competent  authority proposes to  hold an  enquiry against  him under Rules 27 of the Project  and Equipment  Corporation of  India  Employees (Conduct, Discipline & Appeals Rules, 1975 in respect of the aforesaid mis-utilization  of the advances. The committee of Management in  exercise of  the powers conferred by sub-rule (4) of   Rule 27 of the 1975 rules  appointed one  Sri A.S. Nangia, its  Chief Marketing  Manager as the Enquiry Officer to enquire  into the  two charges against the appellant. The appellant submitted  on June  13, 1980         a detailed statement pointing out  that for various reasons therein            mentioned so as to  explain why  there was delay in refunding the advance and specifically  pleaded that            in view of the fact that the first advance  was sought to be recovered by withholding his salary   and  adjusting         the  pay  towards  the advance and charging penal  interest and in the second case by accepting the document  evidencing purchase  of scooter  no misconduct could be said to have been committed by the            appellant and  the disciplinary enquiry was uncalled for. The  enquiry officer in his report after recapitulating allegations  and   explanation simply  concluded  that           the appellant has  contravened Rule 10 (1) (c) (i) of the House Building Advance  Rules, and  also rules 8 and 10 (1) of the Conveyance Advance  Rules and therefore committed misconduct punishable under Rule 4 (1) (iii) of the 1975 Rules.

     Pursuant to  the report  of the  Enquiry  Officer, the Executive Director  for and  on behalf      of the   Committee of Management of the corporation made an order PEC : P 5 (8) 77 dated  February          4,  1981  stating  that  the  Committee  of management agrees  with the  findings of the inquiry officer and imposes  the punishment  of removal           from  service  with effect from  the date  of the order. The appeal preferred to the Appellate  Authority was  rejected as per the Memorandum dated May  21,1981 signed  by one  Anand Krishna claiming to act for and on behalf of the Board of Directors.

     The appellant,  therefore approached  the High Court of Delhi under  Art. 226  of the  Constitution questioning the correctness and    validity of  the findings  of the  inquiry officer and  the decision  of the  Disciplinary Authority as well as the appellate authority inter     alia on  the ground that the  inquiry was held in violation of the principles of natural justice and the  quasi-judicial authority failed to give reasons  in support  of its  order and the action taken against the  appellant was per se arbitrary and violative of  Arts.  14  and   16  of   the  Constitution  inasmuch  as          the allegation contained  in  the  heads  of  charges,  even  if unrebutted, do           not constitute a misconduct  within the meaning of the expression in 1975 Rules. In order to sustain the maintainability of the writ petition, the appellant also contended that   the respondent  is an instrumentality of the State  and   is comprehended in  the expression  'other authority' in Art. 21 of the Constitution. The writ petition came-up for  admission before a Division Bench of the  Delhi High Court.  It was  dismissed in  limine observing that the writ petition is not maintainable on the facts presently set out in the petition. Hence this appeal by special leave  Allowing the appeal, the Court^

     HELD:  1: 1. Public  sector  undertakings  and  other instrumentalities of  the  State  are  comprehended in the expression  other   authority" in Article 12 of the Constitution. [660A]

     1: 2. Once it is  conceded  that  the respondent-corporation is    an  instrumentality  of            the  State  and  is therefore, comprehended      in the expression 'other authority' in Art.  12 of   the Constitution, it is indisputable that it is amenable  to the writ jurisdiction under Arts. 32 and 226 of the   Constitution. Apart  from the  concession, the tests collated in  the decision  of the Constitution Bench of this Court in  Ajay Hasia  etc v.  Khalid  Mujib  Sheravardi and Others etc  [1981] 2  S.C R.  79 for  determining whether  a particular body is an instrumentality of the State are fully satisfied and  therefore on precedent and concession it is satisfactorily established that the respondent-Corporation is an instrumentality of the State within the meaning of the expression 'other authority' under Art. 12 of the Constitution  and is  amenable to the writ jurisdiction. The writ  petition filed  by the appellant in the High Court was thus maintainable. [660D-E]

     2. When  once it  is conceded  that the  respondent was amenable to  the writ  jurisdiction, the  question that will arise is  whether the  matter should be remitted to the High Court as  the High  Court has  rejected the writ petition in limine on the ground that the respondent was not amenable to the writ  jurisdiction of  the High  Court. In         order not to protract the  litigation involving  livelihood of  the party approaching the Supreme Court for justice, the Court can set down the  appeal for final hearing on merits, which they did in the instant case. [660F-H]

     3:1 It  cannot be said that executive action which results in  denial of  equal protection of law or equality before law cannot be judicially reviewed nor can be struck down on the ground of arbitrariness as being violative of Art. 14. [661E-F]

     3:2 The  scope and ambit of  Article 14  have been the subject matter  of a catena of decisions. It is well settled that   Article 14          strikes at arbitrariness in executive/administrative action because any  action that is arbitrary must necessarily involve the negation of equality. One need not confine the denial of equality to a comparative evaluation between  two persons to arrive at a conclusion of discriminatory treatment.  An action per se arbitrary itself denies equal  protection of  law. It is thus too late in the day  to  contend  that an  executive  action  shown  to  be arbitrary is  not either judicially reviewable or within the reach of Article 14.  [662A, F-G, 663A-B]     Ajay Hasaia etc. Khalid Majid Shehravardi and Ors[1981] 2 S.C.R           79; E.P.Royappa  v. State  of Tamil  Nadu and      anr. [1974] 2 S.C.R. 348; D. S. Nakara v. Union of India [1983] I S C.  C. 305 and Maneka Gandhi v. Union of India [1978] 2 S. C. R. 621 followed.

     4. Wisdom of the legislative policy may not be open to judicial review  but when the wisdom takes the concrete form of law, the same  must stand the test of being in tune with the fundamental rights and  if it  trenches upon any of the fundamental rights,  it is  void as  ordained  by  Art. 13, Conceding for  the present  purpose that  legislative action follows a  legislative policy  and the legislative policy is not judicially     reviewable, but      while giving concrete shape to the  legislative policy  in the form of a statute, if the law violates  any of  the fundamental  rights including Art. 14, the same is  void to the extent as provided in Art. 13. If the  law is   void  being  in violation  of any  of the fundamental rights  set out  in Part II of the Constitution, it cannot  be shielded  on  the ground that  it  enacts  a legislative policy. [661F-H]

     5.    Even   if  the     respondent   Corporation is an  instrumentality of the State as comprehended in Art. 12, yet the employees  of the  Corporation are         not governed by Part XIV of the Constitution. However it could not be said that the protection conferred by Part III on the public servant  is   comparatively  Less  effective  than  the  one  conferred by  Part XIV. Therefore the distinction sought to be drawn  between protection of part XIV of the Constitution and part III has no-significance. [663B-C, 665A]      Managing   Director.    Uttar    Pradesh    Warehousing Corporation &  Anr. v. Vinay  Narayan           Vajpayee;  [1980]  2 S.C.R.. 773 at p. 784, relied upon.

     6:1. Even    if the facts alleged in two heads of charges are accepted as wholly proved, yet that would not constitute misconduct as  prescribed in  Rule 5  and no  penalty can be imposed for  such conduct, for the reason that while Rule 25 which prescribes penalties specifically provides that any of the  penalties  therein   mentioned  can  be  imposed  on  an employee for  misconduct committed  by him.  Rule 4 does not specify a misconduct. Rule 4 styled as 'General' specifies a norm of behaviour but does not  specify that its violation will constitute misconduct. In Rule 5, it is nowhere stated that anything  violative  of  Rule  4  would  be  per se a misconduct in any of         the  sub-clauses  of  Rule  5  which specifies misconduct. [666B-D]

     6:2.  A   general     expectation   of  a  certain  decent behaviour in  respect of employees keeping in view corporate culture may  be a  moral or  ethical expectation. Failure to keep to such high  standard of moral; ethical or decorous behaviour befitting  an officer   of the  company  by  itself cannot constitute  misconduct unless  the  specific  conduct falls in  any of  the enumerated misconduct in Rule 5. Any attempt to  telescope Rule 4 into Rule 5 must be looked upon with apprehension  because Rule     4 is vague and of a general nature and  what is  unbecoming of a public servant may vary with  individuals   and expose employees  to vagaries  of  subjective  evaluation. What in  a  given  context  would constitute conduct  unbecoming of  a public  servant  to  be treated as  misconduct would expose a grey area not amenable to  objective evaluation.  Where  misconduct          when  proved entails penal consequences, it is obligatory on the employer to specify  and if  necessary define  it with  precision and accuracy so  that any  ex post  facto interpretation of some incident may not be camouflages as misconduct. [665 D-G]   M/s Glaxo  Laboratories (I)  Ltd v.  Presiding Officer, Labour Court, Meerut & Others; [1984] 1. S.C.C. 1, followed.

     7:1.  Seeking  advance  and  granting  the            same  under relevant  rules    is  at   best     a   loan  transaction.     The transaction  may   itself  provide   for  payments  and the consequences of    failure to  repay or to abide by the rules. If the    rules for  granting the            advance themselves provided the consequence       of the  breach of  conditions, it  would be idle to           go in search of any other consequence by initiating any disciplinary action in that behalf unless the 1975 Rules specifically incorporate  a rule  that the  breach of  House Building Advance  Rules and  the conveyance  advance  rules, would by  themselves constitute          a  "misconduct".  Therefore Rule 4(1) is  not only,  not attracted but in this case no attempt was made to establish the correction. And as far       as Rule     4 (1)    (iii) is  concerned, an  advance not refunded in  time where           it was recovered by withholding the salary of a highly placed officer may not disclose a conduct unbecoming of a public servant. Therefore, the first head of charge is  an eye-wash,        It does not constitute a misconduct if it  can be  said to be one even if it remains unrebutted. The  inquiry   officer has   not  said one  word  how the uncontroverted facts  constitute a  conduct unbecoming            of a public servant, or he failed to maintain absolute integrity. Regarding the  conveyance advance  the position is the same. The appellant for no fault has been punished sub-silencio.   [667F-H, 668A, D-E, 669H]

     7:2. Now  if what is alleged  as misconduct  does not constitute  misconduct not  by    analysis  or  appraisal  of evidence, but  per se  under 1975  Rules the  respondent had neither the  authority nor the jurisdiction nor the power to impose         any   penalty  for   the  alleged   misconduct. An administrative      authority   who            purports to act by its regulation must be held  bound by the  regulation. [670H, 671A]

     8.    In  the  matter of public         employment if the termination is     held to be bad, a declaration can be granted that the man continues to be in service. [671G, 672A]      Sukhdev  Singh   &        Ors.  v.  Bhagatram  Sardar  Singh. Raghuvanshi &  Anr. [1975] 3 S.C.R. 619 @ 655. Western India Automobile Association     v. Industrial  Tribunal, Bombay       and Ors.[1949] F.C.R. 321 at 340.

     9:1. The  duty to give reasons  would permit the court hearing a  petition for a writ     of certiorari to ex facie ascertain whether there is any error apparent on the record.A speaking  order will at its best be reasonable and at its worst be at least a plausible one. If reasons for an order are given there will be less scopes for arbitrary or partial exercise of  power and the   order ex facie will  indicate whether extraneous  matters were taken into consideration by authority passing the order. [672D-E]   M.P. Industries  Ltd. v.  Union of India and  Others [1966] 1 S.C.R. 466  at 472;  Vadacha Mudaliar v. State of Madras, A.I.R. 1952 Madras 276; Bhagat Raja v Union of India and Others, [1967] 3 S.C.R. 302 @ 320; referred to.

     9:2. Here, the findings  of the  inquiry officer are merely his  ipse dixit. No reasons are assigned for reaching the  finding   and  while   recapitulating  evidence   self- contradictory positions    were adopted  that either there was no  misconduct    or  there  was  some  misconduct  or  double punishment was         already  imposed.  Rule            27  (19)  casts  an obligation upon the inquiry officer at the conclusion of the inquiry to  prepare a  report which  must inter alia include the findings  on each  article of  charge  and           the  reasons therefore. The  report is  prepared in contravention of  the  aforementioned rule.  The situation is further compounded by the fact that the disciplinary authority which is none other than  Committee   of  Management  of  the  Corporation  while accepting the report of the inquiry officer which itself was defective did not assign any reasons for  accepting the  report of  the inquiry  officer. Further sub  rule (ii)    of Rule 35 provides  amongst others that the  Appellate Authority  shall  consider whether the findings are  justified or  whether the penalty is excessive or inadequate  and  pass  appropriate  orders  within  three months of  the date of appeal. In order to ascertain whether the rule  is complied  with,  the  order  of  the  appellate authority must        show that  it took  into  consideration the findings the quantum      of   penalty  and   other  relevant considerations. There  is no  material for  showing that the appellate authority  acted in consonance with its obligation under Rule 35. [672E-H, 673A-D-E]

     9:3. Therefore,  the order  of removal  passed  by           the Disciplinary  Authority     is  illegal  and  invalid  for            the reasons (i)  that the  action is thoroughly arbitrary and is violative or  Art. 14; (ii) that the alleged misconduct does not constitute          misconduct within the 1975 Rules; (iii) that the  inquiry  officer  himself            found  that  punishment         was already imposed for the  alleged misconduct  by withholding the salary  and the appellant could not be exposed to double jeopardy; and  (iv) that the findings of the inquiry officer are unsupported by reasons and the order of the Disciplinary Authority as well as the Appellate Authority suffer from the same vice. [673H. 674A-B]

     10:1. Once the order of removal from service is held to be illegal  and invalid  and the  appellant being  in public employment, the          necessary declaration            must follow  that he continues to  be in  service uninterruptedly. Ordinarily, it is well-settled that if termination of service is held to be bad, no   other punishment  in the  guise of denial of back wages can  be imposed  and therefore, it must as a necessary corollary follow  that he  will be  entitled to all the back wages on  the footing that he has continued to be in service uninterruptedly.  If   the   appellant   had   procured an alternative employment he would not be entitled to wages and salary from  the respondent  But it  is equally true that an employee depending  on salary  for his    survival when  he is exposed to  the vagaries of the court litigation cannot hold on to  a slender  distant hope of judicial process coming to his  rescue   and  not        try  to  survive  by  accepting  an alternative employment, a hope            which may  turn out to be a mirage. Therefore,  the appellant was perfectly justified in procuring an  alternative employment  in order to keep     his body and  soul together   as also  to bear  the expenses  of litigation to vindicate his honour, integrity and character. [674B-G]

     10:2. However,  in  the  instant  case,  the  appellant should be  paid 50%  of the  back wages for the rest of the period during  which he          remained  unemployed.        This  is  so because the  conduct of    the appellant cannot be said to be entirely in  consonance with  corporate culture. As a highly placed officer he was bound to  strengthen  the  corporate culture and  he should       have acted  within the spirit of the regulations both  for house  building advance and conveyance advance, which      are devised to help the employees. There has been lapse  in totally  complying with these regulations by the appellant  though it  neither constitutes  misconduct to attract      a   penalty  nor   substantially  good enough for initiation of disciplinary inquiry. [675A-C]

 

JUDGMENT:

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 2703 of 1981.  

From the Judgment and Order dated the 23rd July, 1981 of the Delhi High Court in C.W. No. 1648 of 1981.  

M.K. Ramamurthi, L.C. Goyal and Ms. Sumitra Goyal for the Appellant. 

Lal Narain       Sinha, M.C. Bhandare and P.P. Singh for the Respondent.  

The Judgment of the Court was delivered by DESAI, J. 

             Failure to adjust the antena to the operative channel and dipping the head like the proverbial ostrich in the sand so as not to view the changing kaleidoscope of the law can alone be said to be responsible for this trivial matter to be brought to this Court. 

Respondent is the Project   & Equipment Corporation of India Ltd. ('Corporation' for short) since its formation in 1971 a wholly owned subsidiary company of State Trading Corporation ('STC' for short), a Government of India Undertaking upto 1976 when it was separated and since then it functions as a Government         of India undertaking.    The appellant A.L.       Kalra joined as Upper Division Clerk in the STC on    August 6, 1963. On November 1, 1969, he came to be promoted as Assistant and earned a further promotion on May 22, 1974 as            Accountant. On the     setting up of the Corporation, the appellant exercising his option came to be transferred as Accountant to the Corporation on November 9, 1976. Under the relevant conditions of transfer, he continued to be governed in the matter of recruitment and promotion by the relevant rules of the STC. He was promoted in an officiating capacity as Deputy Finance Manager Grade II on June 29, 1978 and he was put on probation after being promoted as Deputy Finance Manager Grade II on regular basis effective from     February 5, 1979. The appellant applied for and obtained an advance in the amount of Rs. 16,050      for purchasing a plot of land on            April 4, 1979 for which he executed the requisite agreement on April 4, 1979. The rules under which advance was obtained are styled as 'The Project and Equipment Corporation was India Ltd. House Building Advance (Grant & Recovery) Rules for House Building Advance' for short) framed in exercise of the powers conferred upon the Board of Directors by the Articles of Association of the Corporation. The appellant also applied for and obtained an advance in the amount of Rs. 11,000/- for purchase of a new motor cycle on July 7, 1979. This advance is governed by what are styled as the Projects & Equipment Corporation of India Ltd. Conveyance          Advance            (Grant  & Recovery) Rules ('Conveyance Advance Rules' for short). In respect        of the   house building advance according to the respondent-Corporation, in view of Rule 10 (1) (c) (i) the appellant was required to utilise            the amount drawn by him for the purpose for which advance was granted within two months of drawal and submit the documents evidencing      the purchase of plot within the prescribed time failing which he was liable to refund at once the entire amount together with interest to the Corporation. The agreement dated April 4, 1979 executed by the appellant also obligated him to utilise the advance for the           purpose for which the same   was sanctioned and            to produce the sale-deed for verification by the Corporation           failing which   the whole of the advance had to be refunded with interest.      It was alleged that      the appellant neither utilised the            advance for the purchase of plot nor refunded the   amount despite several reminders and ultimately on November 13, 1979 a memorandum was served upon him cautioning him that if he         failed to refund the entire amount forthwith, disciplinary proceedings will be initiated against him. As the appellant failed  to comply with the request made in the memorandum, his salary from November 7, 1979 as a whole was withheld for adjusting the amount of advance and the interest payable thereon. He was         also charged penal interest for the default committed by him. In respect of the conveyance      advance, which           was sanctioned on July 7, 1979, the appellant is alleged to have committed a default by not purchasing the motor cycle within a period of one month            as required by Rule     10 of    the Conveyance Advance Rules, and  on November 13, 1979 he was advised to refund the amount by November 14, 1979 failing which he was threatened with disciplinary action. It is, however, admitted that the appellant purchased a scooter in April, 1980 and submitted the documents which appear to have been accepted by the Corporation. The balance of advance was also refunded. 

A memorandum dated July 22, 1980 was served upon the appellant stating therein that the competent authority proposes to hold an enquiry against him under Rule 27 of the Project and Equipment Corporation of India Ltd. Employees' (Conduct, Discipline & Appeal) Rules, 1975 ('1975 Rules' for short). There were two heads of charges in the charge-sheet drawn-up against the appellant on which disciplinary enquiry was proposed to be held. These two heads of charges read as under : 

"Article I Shri   A.L. Kalra while functioning as Deputy Finance Manager-Grade II in the Finance Division of the PEC during  April, 1979 applied and drew an advance of Rs. 16,050 for purchase of a plot of land at Faridabad. The did not furnish the            relevant documents in the office nor did he  refund the amount of advance to the Corporation within      two months of the date of drawal of the advance as required under Rule 10 (1) (c) (i) of PEC House Building Advance (Grant and Recovery) Rules. Shri Kalra by his above act   exhibited lack of integrity and conduct unbecoming  of a public servant and violated Rule 4 (1) & (iii) and Rule 5 (5) of the PEC Employees' (Conduct, Discipline & Appeal) Rules and Rule 10 (1) (c) (i) of PEC House Building Advance (Grant & Recovery Rules and        thereby committed misconduct punishable under the PEC employees (Conduct, Discipline and Appeal) Rules. 1975. Article-II Shri, A.L. Kalra drew a conveyance advance of Rs. 11,000 in          July, 1979 for purchasing a motor-cycle, but did not utilise the amount for the above purpose and did not furnish cash receipt etc. evidencing purchase of the vehicle within one month as required under Rule- 8 of the PEC Conveyance Advance          (Grant  & Recovery) Rules. Nor          did he  refund the amount of advance to the Corporation as required under Rule 10 (1) ibid. Shri A.L. Kalra by his above act exhibited lack of integrity and conduct unbecoming            of a Public servant and violated Rule-4 (1) (i) & (iii) and Rule 5 (5) of PEC Employees (Conduct, Discipline & Appeal) Rules and also violated Rule-8 and Rule-10 (is         of the   PEC Conveyance Advance (Grant & Recovery) Rules and thereby committed misconduct punishable under the     PEC Employees' (Conduct, Discipline & Appeal) Rules, 1975."

The appellant was also asked to         submit his defence statement within 10 days from the date of the receipt of the memorandum. The           appellant by his letter dated February 13, 1980 requested   for extension of time  to file       the defence statement. It appears that he sought     further extension of time by   three weeks which request was declined by         the memorandum dated Feb. 23, 1980. The Committee of Management in exercise of the powers conferred by sub-rule (4) of Rule 27 of the    1975 Rules appointed Shri A.S. Nangia, Chief Marketing Manager as the Enquiry Officer         to enquire into the charges            against            the appellant submitted on June 13, 1980     a detailed statement pointing out that the inquiry was the outcome of malice for various reasons therein mentioned and also explaining why there was delay in refunding the advances and specifically pleaded that in view of the fact that the first advance was sought to be recovered by withholding his salary  and adjusting the        pay towards advance  and charging penal interest and in the second case by accepting the document evidencing purchase of scooter, no misconduct could be said to have been committed by the appellant and the disciplinary enquiry was uncalled for. Various other contentions            were also raised in the defence statement.   The inquiry officer conducted the enquiry in respect of the aforementioned two charges. One U.S. Aggarwal,    Finance Manager of   the Corporation appeared as Presenting Officer. The appellant conducted his own defence. In Para 4 of his report, the Inquiry officer states that the 'preliminary hearings of the   inquiry was held on 3rd and   9th April, 1980 and then inquiry was held regularly on various dates from 23rd April 1980 to 22nd May, 1980 The appellant was called upon to submit his statement of defence which he had submitted on June 30, 1980. The findings purported to       have been recorded by the inquiry officer     were the subject matter of a heated debate between the parties and therefore, the report of the Inquiry Officer may be broadly scanned here. After recapitulating in paras 1        to 4 the various stages through which the enquiry progressed, in para 5, it is stated that at the 'preliminary hearing on 3rd April,           1980, Shri A.L. Kalra,  (appellant) pleaded guilty      to all    the charges mentioned in Annexure I and also agreed to the statement of       imputation of  his misconduct in support of the articles  of charges framed against him.' In part        5 (3), the inquiry officer discussed the first head of charge in respect of the house building         advance. It was found as a fact that   the advance was taken for     the purchase of a plot and that the appellant had negotiated for a purchase of a plot from Shri J.C. Chugh who was examined as a management witness and who admitted that he waited for six months to complete the transaction but after that he disposed of the plot. Evidence of Shri         J.C. Chugh revealed that the deal      was delayed because Haryana        Estate  Officer demanded some additional amount and there was dispute between          the appellant,        the vendee and J.C. Chugh, the vendor as to who should bear the extra burden. In paragraph 5.1.4 after recapitulating the reminders sent to the appellant to refund the advance, it is observed that it is not clear from the relevant rule as to which is the competent authority to grant extension of time for utilisation   of the amount. And then in paragraph 5.1.5 he recommended      that the sanction of the competent authority should be taken before granting any extension. There ends the discussion on the charge in respect of house building advance. The inquiry officer then proceeded to examine the second head of the charge. After recapitulating the  fact about sanction of advance and drawal of the          same, it was observed that the appellant drew the advance on July 9, 1979 and on April 7, 1980 he submitted the documents such as cash receipt in respect of            purchase of a scooter, insurance certificate, receipt of balance amount deposited with the cashier, original insurance policy and registration     book evidencing the purchase of scooter. It is then observed that under the relevant rules motor cycle    had to  be purchased within one month from the date of the drawal of the advance or else          he should have obtained fresh sanction for the purchase of a scooter instead of a motor cycle. Then comes the particular observation which may be extracted :

"He (appellant) did not obtain any fresh sanction for purchase of a scooter but simply submitted the papers for            regularisation of the advance and although no specific letter for sanction of the purchase of a scooter was issued by the Personnel Division yet the fact that     he was asked to refund the balance amount tantamounts to agreeing          defacto sanction for    the purchase of the same."

The inquiry officer then          proceeds to dispose of            the contention of the appellant that in other cases of similar advance and default, no action was taken but he was singled out for a harsh treatment for the   reasons alleged by him but with which we are not concerned at this stage. The inquiry officer then noticed that the full salary payable every month to the appellant was stopped by the Corporation from November 16, 1979 in addition to the inquiry under which disciplinary action was proposed to be taken.   The inquiry officer concluded his report as under :

"While deciding the case, the fact that the salary was stopped from 16th November, 1979 may be kept in view as            this may, I feel, tantamount to double punishment. Normally even where an employee    is suspended certain amount of subsistence allowance is granted whereas in this case the salary was completely stopped and nothing has been paid since then."

What is referred to as the report of the enquiry which is minutely scanned in the preceding paragraphs merely seems to be     the record of inquiry and recapitulation of allegations and explanation. What is styled as findings of the inquiry officer are separately filed being Annexure M to the petition. This is   a bald document of two paragraphs in which the inquiry officer records that the appellant  has contravened Rule 10 (1) (c) (i) of House Building Advance Rules and has thereby committed misconduct punishable under Rule 4 (1) (iii) of 1975 Rules. In paragraph 2, it is stated that the appellant has         committed breach of Rule 8 and Rule 10 (i)  of the            Conveyance Advance Rules and         has thereby committed misconduct punishable under          Rule 4  (1) (iii) of 1975 Rules. By what process this conclusion is reached or what evidence appealed to him is left to speculation. The reasons in support of           the conclusion are conspicuous by their absence.     The findings are the       ipse dixit of     the inquiry officer.  

Pursuant to this report of the inquiry officer the Executive Director for and on behalf       of the Committee of Management of the Corporation       made an          Order No. PEC.P ; 5 (8)/77 dated February 4, 1981. The heads of         charges           are reproduced in paragraph 1. Paragraphs 2 and 3 are devoted to the stages through which the enquiry progressed. In paragraph 4,        the findings unsupported by   reasons            are reproduced. In            paragraph 5, it is stated that the Committee of Management agrees with the findings of the inquiry officer and imposes the punishment removal from service with effect from the date of the order.  

The appellant preferred an appeal to the Appellate Authority being the Board of Directors of the Corporation on February 21, 1981. One Anand Krishna claiming to act for and on behalf of the Board of  Directors, Appellate            Authority issued memorandum dated May 21, 1981, Annexure P to the petition in which it is stated that the appeal of the appellant          was considered by      the Appellate Authority and   after going through the records of the case, the Appellate Authority has decided to uphold the        decision of the authority and to confirm the penalty of removal imposed upon him.  

The salient feature which flies into the face about the findings recorded by the inquiry officer and the order by the Disciplinary Authority as well as the Appellate Authority is that none          of them made a reasoned order or speaking order            and their conclusions are mere ipse dixit unsupported by    any analysis of the evidence or reason in support of the conclusions.  

The appellant approached the High Court of Delhi under Art. 226 of the Constitution questioning the correctness and validity of the findings of the inquiry officer and            the decision of the Disciplinary          Authority as well as         the Appellate Authority inter alia on the ground that           the enquiry was held in violation of the principles of natural justice and the quasi-judicial    authority failed to give reasons in support of its order and the action taken against the appellant was per se arbitrary and in violation of Art. 14 and      Art.      16 of    the Constitution inasmuch as        the allegations contained in the heads of charges, even if unrebutted, do  not constitute a misconduct          within  the meaning of the expression in 1975 Rules. In order to sustain the maintainability of the writ petition, the appellant also contended that        the respondent            is an instrumentality of the State and is comprehended    in the   expression 'other authority' in Art. 12 of the Constitution. The writ           petition came-up for   admission before a Division Bench    of the Delhi High Court. It was dismissed in limine observing that the writ petition is not maintainable on the           facts presently            set out in the petition. Hence this appeal by special leave. In         order   to obtain any decision on        merits, the appellant will        have to clear the roadblock about     the maintainability of the writ petition in the      High Court. Happily this untenable contention was not pursued in this Court. In para 2 (vi) of the counter-affidavit filed by one Mahanand Khokher on behalf of the      respondents it was unambiguously stated that the           'respondent-Corporation is advised   not to dispute the maintainability of  the petitioner's petition as regards applicability of Art.  12 of    the Constitution.' Further in para 5.1 of the same affidavit, it was stated that as            regards the assertion of the appellant that   the respondent-Corporation is an instrumentality of the Central Government and hence within Art. 12 of the Constitution, the respondent Corporation does not dispute the       same.  This admission was reiterated in para 5.2. Further in the written submissions dated September 30, 1983 filed on behalf of the respondent, it          is conceded that the respondent is a State within the meaning of         Art. 12 for the purposes of Part III of the Constitution,          with     this reservation that          the employees of the respondent are not members of a civil service of the Union or all India civil service or a civil service of a state or holds the civil posts under the Union or the      State and therefore, would not be entitled to the protection of Part XIV of the Constitution. This concession absolves us from the obligation to examine the status and character of the respondent-Corporation to determine whether it is          an instrumentality of       the State and therefore, comprehended in    the expression 'other authority' in Art. 12 of the Constitution.    Once    it is      conceded that the respondent-Corporation is an instrumentality of the State and is            therefore, comprehended      in the expression 'other authority' in Art. 12 of         the Constitution, it      is indisputable that it is amenable to the writ jurisdiction under Arts. 32 and 226 of the Constitution. Apart from the concession, the           tests     collated in the decision of      the Constitution Bench of this Court in Ajay Hasia etc. v. Khalid Mujib Sehravardi & Ors. etc., for determining whether a particular body is an instrumentality of the State are fully satisfied and therefore on precedent and concession it is satisfactorily established that the            respondent- Corporation is     an instrumentality of the State within the meaning of the expression 'other authority' under Art. 12 of the Constitution and amenable to the writ jurisdiction. The writ petition filed by        the appellant in the High Court was thus maintainable.  

Once when      in this  Court it was     concluded that            the respondent was amenable to the writ jurisdiction of the High Court, the question arose whether the matter should be remitted to the High Court as  the High Court has rejected the writ petition in limine on the ground that         the respondent was    not amenable to the writ jurisdiction of the High Court. Ultimately, in order not to protract  the litigation involving livelihood of the appellant, the appeal was set down for final hearing on merits. The respondent- Corporation was           accordingly directed to file its affidavit as also     the documents on which it seeks to rely. The appeal was thereafter heard on merits.  

Before we deal with the contentions raised on behalf of the appellant,      it is necessary to dispose of a contention having a flavour of a preliminary objection raised by Mr. Lal Narain Sinha on behalf of the respondent-Corporation. It was urged that in the absence           of any specific pleading pointing out whether any one         else was either similarly situated as the appellant or dissimilarly treated the charge of discrimination cannot be entertained and no relief can be claimed on the allegation of contravention of Art. 14 or Art. 16 of the            Constitution. It was     submitted that            the expression discrimination imports the concept of comparison between equals   and if   the resultant inequality is pointed out in       the treatment so meted out the            charge of discrimination can be entertained and one can say that equal protection of law has been denied. Expanding the submission, it was       urged that the use of the expression 'equality' in Art. 14      imports duality and comparison which is predicated upon more than one person of situation and in the absence of available material          for comparison, the plea        of discrimination must fail. As a corollary, it was urged that in the            absence of material for comparative evaluation not only the charge of discrimination cannot be sustained but the executive action cannot be struck     down on the ground that the action is per se arbitrary. Proceeding along, it was urged that making law is a matter of legislative policy and the          degree of reasonableness in            every such law is equally a matter of policy and policy of the legislature is not judicially  reviewable on the specious plea that it is either arbitrary or unreasonable.  

It is difficult to accept the submission that executive action which results in denial of equal protection of law or equality before law cannot be judicially reviewed nor can it be struck down on the ground        of arbitrariness as being violative of Art. 14. Conceding for the present purpose that legislative action follows a legislative policy and      the legislative policy is not judicially reviewable, but while giving concrete   shape to the legislative policy in the form of a statute, if the law violates any of the fundamental rights including Art. 14, the same is void to the extent as provided in Art. 13. If the law is void being in violation of any of the fundamental. rights set out in Part III of the Constitution, it cannot be shielded on the ground that it enacts a legislative policy.       Wisdom        of the legislative policy may not be open to judicial review but when           the wisdom takes the concrete form of law, the same must stand the test of being in tune with the fundamental rights and if it trenches upon any of the fundamental rights, it is void as ordained by Art. 13.  

The scope        and ambit of Art. 14 have been the subject matter of a catena of decisions. One fact of Art. 14 which has been noticed in E.P. Rayappa v. State of Tamil Nadu & Anr. deserves    special mention because that            effectively answers the contention of Mr. Sinha. The Constitution Bench speaking through Bhagwati, J.  in concurring       judgment in Royappa's case observed as under:  

"The basic principle    which,  therefore, informs both Arts. 14 and 16 is equality and inhibition against discrimination. Now what is the content        and reach of this great equalising principle ? It is     a founding faith, to            use the            words of pedantic or lexicographic approach.           We cannot 'countenance any attempt to truncate its all-embracing scope and meaning, for to do so would be to violate its activist magnitude. Equality is a dynamic concept with many aspects and dimensions and it cannot be "cribbed, cabined and confined" within traditional and doctrinaire limits. From a positivistic point of view equality is antithetic to arbitrariness. In fact equality and arbitrariness are sworn enemies; one belongs to the rule of law in a republic while the other, to the whim and caprice of an absolute monarch. Where an act is arbitrary it is implicit in it that it is            unequal both according to political logic   and constitutional law and is            therefore violative of Art. 14, and if is affects any matter relating to public employment, it is also violative of Art. 16. Arts. 14 and 16 strike at          arbitrariness in State            action and ensure fairness and equality of treatment."

This view was approved          by the  Constitution Bench in Ajay Hasia case It thus appears well-settled that Art. 14 strikes at arbitrariness in executive/administrative action because any action that is arbitrary must necessarily involve the negation of equality. One need not confine the denial of equality to a comparative evaluation between two persons to arrive at a conclusion of discriminatory treatment. An action per se arbitrary itself denies equal of protection by law. The Constitution Bench pertinently observed in Ajay Hasia's case and put the matter beyond controversy when it said 'wherever   therefore, there is arbitrariness in State action whether            it be of the legislature or of the executive or of    an "authority" under Article 12,            Article 14 immediately springs into action and strikes down such State action.' This view was further elaborated and affirmed in D.S. Nakara v. Union of India. In Maneka Gandhi v. Union of India it was observed that Art. 14    strikes at arbitrariness in State action and ensure fairness and equality of treatment. It is thus too late in the day to contend that an executive action shown to be arbitrary is not either judicially reviewable or within the reach of Art. 14. The contention as formulated by Mr. Sinha must accordingly be negatived.  

It must be conceded in fairness to Mr. Sinha that he is right in submitting that even if the respondent-Corporation is an instrumentality of the State as comprehended in Art. 12, yet the employees of the Corporation are not governed by Part XIV of the Constitution Could it however be said that a protection conferred by Part    III on            public  servant is comparatively less effective than the one conferred by Part XIV ? This aspect was examined by this Court in Managing Director, Uttar            Pradesh Warehousing Corporation & Anr. v. Vinay Narayan Vajpayee where O. Chinnappa Reddy, J.     in a concurring judgment has spoken            so eloquently about it that it deserves quotation:  

"I find it very hard indeed to discover   any distinction, on principle, between a person directly under the   employment of the Government and a person under the employment of an agency or instrumentality of the Government or a Corporation, set up under a statute or incorporated but wholly owned by the Government. It is self evident and trite to say that the function of the State    has long since ceased to be confined to the preservation of the public peace, the exaction of taxes and the defence of its frontiers. It now the function of the State to secure 'social, economic and political justice', to preserve 'liberty of thought, expression, belief, faith and worship', and to ensure 'equality of status and of opportunity'. That is the proclamation of the people    in the            preamble to the Constitution.            The desire to   attain   these   objectives has necessarily resulted in intense Governmental            activity in manifold ways. Legislative and executivity have reached very far and have touched very many aspects of a citizen's life. The Government, directly or through the Corporations, set up by it or owned by it, now owns or manages, a large number of industries and institutions. It is the biggest builder in the country. Mammoth and minor irrigation       projects, heavy and light engineering projects, projects of various kinds    are undertaken by the Government. The Government is also the biggest trader in the country. The State and the multitudinous agencies and Corporations set up by it are the principal purchasers of the produce and   the products of our country and they       control a vast and complex machinery          of distribution. The Government, its agencies and instrumentalities, Corporations, set up by the Government under statutes          and            Corporations incorporated under       the Companies            Act but owned by the Government have thus become the biggest    employers in the country. There is no good reason why, if Government is  bound  to observe the equality clauses of            the constitution in the matter of employment           and in  its dealings with the employees, the Corporations set up or owned by the Government should not be equally bound and why, instead, such Corporations could become citadels of patronage and arbitrary action. In a country like ours which            teems with population, where the State, its agencies, its instrumentalities and its Corporations are the biggest employers and where millions seek employment and security, to confirm the applicability of      the equality           clauses of the constitution, in relation to matters of employment, strictly to direct employment under the Government is perhaps to mock at the Constitution and the people. Some element of public employment            is all that         is necessary to take    the employee beyond the reach of the rule which denies him access to            a Court            to enforce a contract of employment and denies him the protection of Arts. 14 and 16 of the Constitution. After all employment in the public sector has grown  to vast dimensions and employees in the public sector often discharge as       onerous duties as civil servants and participate in activities vital to our country's economy. In    growing realization of the importance          of employment in the public sector, Parliament and the Legislatures of the      States  have declared persons in the service of local authorities, Government       companies and statutory corporations as public servants           and extended to them            by express enactment the protection       usually extended to civil servants from suits and prosecution. It is, therefore, but right   that the independence and integrity of those employed in the public sector should be secured as much as the independence and integrity of civil servants." There fore the distinction sought to be drawn between protection of part XIV of the Constitution and Part III has no significance.  

And now to the facts. The gravamen of the two heads of charges is that the appellant is guilty of misconduct as prescribed in Rule 4 (1) (i) and (iii). 

It reads as under:  

"4 (1) Every employee shall at all times:  

(i) maintain absolute integrity; 

(ii) _______ __________        _______ 

(iii) do nothing            which is unbecoming of a public servant." Rule        5 prescribes various misconducts for which action can be taken against an employee governed by          the rules.  

Rule 4 bears the heading 'General'. Rule 5 bears in the heading 'misconduct'. The draftsmen of the 1975 Rules made a clear distinction about what would constitute misconduct. A general expectation of a certain decent behaviour in respect of employees keeping in view Corporation culture may be a moral or ethical expectation.            Failure to keep to such high standard of moral, ethical or decrous behaviour befitting an officer of the company by     itself    cannot constitute misconduct unless the specific      conduct falls in any of the enumerated misconduct in Rule 5. Any attempt ' to telescope Rule 4      into Rule 5 must be looked upon with apprehension because Rule 4 is vague and of a general nature and what is unbecoming of a public servant may vary with individuals and expose employees to vagaries of subjective evaluation. What in a given context would constitute conduct unbecoming of a public servant       to be treated as misconduct would expose a grey area hot  amenable to objective evaluation. Where misconduct when     proved entails penal consequences, it is obligatory on the employer to    specify and if necessary define it with precision and accuracy         so that any ex post facto interpretation of some incident may not be camouflages as misconduct.   It is not necessary to dilate on this point in view of a recent decision of this     Court in M/s Glaxo Laboratories (I) Ltd. v. Presiding officer, Labour Court, Meerut & Others where this Court held that 'everything which is required to be prescribed has to          be prescribed       with precision and no argument can be entertained that something not prescribed can yet be taken into account as varying what is prescribed. In short it cannot be left to the vagaries of management to say ex post facto that some acts of omission or commission nowhere found to be enumerated in the relevant standing or is nonetheless a misconduct not strictly falling within the enumerated misconduct in           the relevant    standing order   but yet a misconduct for         the purpose of imposing a penalty.' Rule 4 styled as 'General' specifies      a norm of behaviour but does not specify that its violation will constitute misconduct. In Rule         5, it      is nowhere stated that anything violative of Rule 4         would be per as a misconduct in the sub-clauses of Rule 5 which specifies misconduct. It would therefore appear that even if the facts alleged in two heads of charges are accepted as wholly proved, yet that would not constitute misconduct as prescribed in Rule 5 and no penalty can be imposed for such conduct. It may as well be mentioned that Rule 25 which prescribes penalties specifically provides that any of the penalties therein mentioned can be imposed on an employee for misconduct committed by him. Rule 4 does not specify a misconduct.  

Mr. Ramamurthi, learned      counsel            for the appellant further        contended that the     very initiation of the disciplinary enquiry and imposition of punishment of removal from service     is thoroughly arbitrary and            discloses a vindictive attitude on the part of the       respondent Corporation. It     was urged that the two heads of charges per se do not constitute any misconduct and they can be styled as trumped-up which even if held approved would not render the appellant liable for any punishment. The two heads of charges have been extracted hereinbefore. Charge No. 1 refers to the drawal of a House Building Advance and failure to comply with the requisite rules prescribed for House Building Advance. According to          the finding recorded by the inquiry officer, the failure of the appellant to refund the amount of advance to the respondent-Corporation within two months of the date of the drawal would be violative of Rule 10 (I)  (c) (i)   of the   House Building Advance Rules and it would constitute misconduct within the meaning of   the expression in Rule 4(1) (iii) of 1975 Rules.            Rule 10 (I) provides that the advance shall be drawn in instalments as prescribed in various sub-clauses. The relevant sub-clause in this           case is sub-cl. (C)        which provides            that "when advance is required partly for purchase of land and partly for constructing a single storeyed new house thereon; (i) not more than 20% of the sanctioned advance on execution by the applicant employees an agreement in the required form for repayment of the advance. The amount will be payable to the applicant only for purchasing a developed plot    of land     on which construction can commence immediately and sale deed in respect thereof be produced for the inspection        of CPM/RM within two months of the date on which 20% of the advance is drawn or within such further time as            the CPM/RM may allow         in this behalf failing which the employee shall be     liable to refund at once the entire amount to the Corporation together with interest thereon." A bare reading of the relevant rule will show that in provides for obtaining advance which in this case was taken          for purchasing a plot. The inquiry officer accepts the evidence of Mr. Chugh that the appellant had negotiated with him for purchase of a  plot but some  dispute arose about    some additional expenditure  and the negotiations protracted over a period of six months. Now para 1 sub-cl.(C) confers on CPM/RM power to extend the time for finalising the deal or call upon the employee to refund the entire amount and he is liable to pay interest thereon. This is the only consequence of taking advance and failure to keep to the time-schedule. The relevant rule is a self contained provision providing for the     condition for   grant of advance, time table  for repayment and consequence of failure to keep to the time schedule. The House Building Advance was drawn on April 4, 1979. On November 13, 1979 the appellant was asked to refund the entire amount. Immediately   on November 16, 1979, an order was made withholding       the entire salary of the appellant. Even         the inquiry officer       was constrained to observe that the appellant was exposed to double jeopardy inasmuch as his salary           as a whole was withheld and he was being removed from service. It is also pertinent to note that the inquiry officer is not clear when he said 'that once the power to extend the        time to repay the advance is conferred and  penal interest  is charged, is any   rule violated.' This      is not an attempt to re-appreciate evidence in the   case but the entire thing is being analysed to point out that the action apart from being arbitrary is motivated and unjust. 

If          the rules for granting the       advance themselves provided the consequence of the breach of conditions, it would be idle to go in search of any other consequence by initiating any disciplinary action in that behalf unless the 1975 Rules specifically incorporate a rule that the breach of House Building Advance Rules would by itself constitute a misconduct. That is not the case here as will be presently pointed out. Seeking advance and granting the same under relevant rules, is at best a loan transaction. The transaction may itself provide for repayment and the consequence   of failure to repay or to abide by the rules. That has            been done in this case. Any attempt to go in search of a possible other consequence of breach of contract itself appears to be arbitrary and even motivated. However, the more serious infirmity in framing this head of charge is that according to the inquiry officer this failure to refund the advance within the time frame in which it was sanctioned constitutes violation of Rule 4 (1) (iii). Let us turn to the charge-sheet drawn-up against the appellant. Under the first head of charge it was stated that the appellant was guilty of misconduct as prescribed in Rule 4 (1) (i) and (iii). Rule 4 (1) (i) provides that every employee shall at all times maintain absolute integrity. How did the          question of integrity arise passes comprehension. The appellant applied for House Building Advance. Inquiry officer says that the  appellant had negotiated with           Mr. Chugh for purchase of     a plot.  There is not even negative evidence or evidence which may permit an inference that the house building advance was utilised for a purpose other than for which it was granted. Therefore Rule 4 (1) (i) is not only attracted          but no attempt was made before us to sustain it. And            as far as Rule 4 (1) (iii) is concerned, we fail to see how      an advance not refunded in time where it     was recovered by withholding the salary of a highly placed officer discloses a conduct unbecoming of a public servant. Therefore, the first head of charge is an eye-wash. It does not constitute a misconduct if it can be said to be one even if it remains unrebutted. The inquiry officer has not said one word how the uncontroverted facts constitute a conduct unbecoming of a public        servant, or he failed   to maintain absolute integrity.  

Turning to   the second head of charge, it is alleged that the appellant applied for and obtained a conveyance allowance of Rs. 11,000 on July 7,1979 but did not utilise the amount for the purpose for which it was granted and did not furnish cash receipt evidencing purchase      of a vehicle within one month as required by Rule 8 of the Conveyance Advance  Rules,  nor did he        refund the amount to the Corporation as required by Rule 10 (I). It is not in dispute that the respondent applied for a motor-cycle advance which was sanctioned        and on being sanctioned he drew the same on July 9, 1979. As required by the respondent, the appellant executed an agreement on July 6, 1979, a day preceding the sanction of the advance guaranteeing that if the motor-cycle was not purchased and hypothecated within one month from the date of the drawal of the advance, the whole of the advance together with the interest accrued thereon            would become refundable. As the appellant did not            keep to the time-schedule, memos dated August 20, September 24, November 12 and November 13, 1979 were served upon him calling upon   him to  either furnish the requisite documents or to refund the advance latest by November 14, 1979. The inquiry officer in this connection, recapitulated the facts in paragraphs 5.2. 5.2.1, and 5.2.2. Then he proceeded to record a            finding that the appellant on April, 7, 1980   submitted the  documents namely cash receipt in respect of purchase of          a scooter, insurance   certificate, receipt showing    deposit of the balance of advance          with cashier, original insurance policy and registration book for purchase of the scooter. The report does not show the date of purchase which could have been ascertained with certainty from the insurance certificate as well as the cash receipt. After recapitulating these undisputed facts, he stated that the fact that 'he (appellant)     was asked to   refund the balance amount    tantamount to agreeing de facto sanction for the purchase of the same (scooter)'. In the last paragraph, he has  stated that a stoppage of the salary effective from November 16, 1979 in the opinion of the inquiry officer tantamounts to        imposition of double punishments and this is compounded by not paying even a subsistence allowance. We scanned the report minutely with the able assistance of the learned        counsel for      the respondent subjecting it to microscopic analysis to ascertain whether           the inquiry officer recorded any finding in respect of           this charge adverse to the appellant. We found none. On the contrary, a comprehensive reading of the report clearly indicates that the inquiry officer    was satisfied           that the delay in submitting the documents and purchasing a scooter instead of a motor cycle should not have been visited with such drastic punishment of          stoppage of     salary  altogether and            yet compelling the            appellant to render service without quid pro quo. Curiously,           however, in a separate document recorded as finding, the inquiry officer has held  that the appellant contravened Rule 10 (I) of the Conveyance Advance Rules which would constitute misconduct within the meaning of the expression in Rule 4 (I) (iii) of the 1975 Rules. The report and the     findings are wholly irreconcilable and left us guessing about the approach of the inquiry officer,         his conclusion and       his finding.      This      aspect  considerably troubled us because we     would presently point out that the disciplinary Authority      as well as the appellate authority have declined a peep into the         working of their minds by making a reasoned or a speaking order. The appellant appears to us to have been convicted sub silencio. The first question we must pose to ourselves is whether taking the findings of       facts as recorded by the inquiry officer and accepting for the present purpose that they are not open to a judicial review, do they constitute misconduct so as to invite penalty ? According to the inquiry officer, failure either           to produce the documents or to refund the amount within a period       of one month from the drawal of the conveyance advance constitutes contravention of Rule 10 (I) of the Conveyance Advance Rules. Rule 10 reads as under:  

"10. (1).           Where an employee after taking advance is unable to purchase the vehicle for any reason, he shall refund within one month of drawal of advance the full amount with interest thereon to the Corporation. If he fails to do so, he shall         be liable to disciplinary action for      misconduct in  addition to liability      for payment of            additional interest in accordance with Sub Rule (2).

(2) Where an amount of advance is retained by an employee beyond one month  or where the employee fails to produce           evidence of purchase, insurance policy of registration book,           the normal rate of interest under Rule 5 will be charged for the first month and for the period in excess of one month in addition to the normal rate of interest, additional interest            at a      rate equivalent to difference between the borrowing rate of the Corporation and the normal rate chargeable under Rule 5 will be charged. The additional rate of interest will be compound interest      and it   will be merged with the principal at monthly            intervals for the purpose of calculating interest for subsequent periods."

In this connection, our attention was drawn to Circular dated December 11, 1979 issued by the respondent-Corporation which provides   that henceforth           a penal interest will be levied/charged 'on the total drawn amount under the Conveyance Advance Rules in cash vouchers or receipts are not produced to the Personnel Division within the prescribed period, or in case the amount drawn is refunded without utilisation.' It thus transpires that drawal of the advance, if not utilised within the prescribed period  or if     not refunded within    the same time, will expose the drawer to a liability to penal interest. And in this case, it has been so charged.  

Now if what is alleged as misconduct does    not constitute misconduct      not by  analysis or appraisal of evidence, but per se under 1975 Rules the respondent had neither the           authority nor   the jurisdiction nor the power to impose            any penalty for the alleged misconduct. An administrative authority who purports to act  by its regulation must be     held bound by the regulation. 'Even if these regulations have no force of law the employment    under   these   corporations    is public employment, and     therefore an employee would get a status which would enable him to      obtain  a declaration   for continuance in       service, if he was dismissed or discharged contrary to the regulations.'        [Sukhdev Singh            & Ors. v. Bhagatram Sardar Singh Raghuvanshi and Anr.] If thus it is satisfactorily established that   the employment under such Corporation like the respondent which is an instrumentality of the State, is public employment it is difficult to entertain the submission of Mr. Sinha which did prevail for some time in the days gone by that contract of public service cannot be specifically enforced. Mr. Sinha in this          connection relied upon Sec. 14 of the Specific Relief            Act, 1963 and  urged   that where the origin of employment is in a contract the breach of it cannot be remedied by directing specific performance of a contract of personal service. He also drew our attention  to Western India Automobile Association v. Industrial Tribunal, Bombay and Ors. Where a Constitution     Bench  of this Court    has observed as under:  

"It is true that this Tribunal can do what no Court can,         namely, add to or alter the terms or conditions of the contract of service. Express power to do so is given by the regulation, while there are no words conferring a power            to reinstate or revive a contract lawfully determined."

Reference was also made to Dr. S.B. Dutt v. University of Delhi wherein it was held that an arbitrator appointed by the parties and functioning under the Arbitration Act, 1940 cannot by his award enforce a contract of personal service in contravention of the provisions of the Specific Relief Act and      this discloses an error apparent on the face of the award. But neither Sec. 14 nor the          aforementioned          two decisions can        render any assistance        to the respondent because it is well-settled that in the matter of public employment if the termination is  held to be bad, in view of the latest decisions in Sukhdev Singh and Uttar Pradesh Warehousing Corporation's cases a declaration can be granted that the man continues to be in service.

 Mr. Ramamurthi on    behalf  of the appellant further contended that        the order of removal from service is void as it is passed in violation of   the principles  of natural justice and at any rate an order imposing penalty by a quasi-judicial tribunal must be supported by reasons in support of its conclusions. It was urged that duty to give reasons would permit the court hearing a petition for a writ of certiorari to ex facie ascertain whether there is any error apparent            on the record.) It was conceded that for the present submission adequacy or sufficiency of reasons is not questioned. What is contended           is that  the inquiry officer has merely recorded his ipse       dixit and no reasons            are assigned in support of      the findings. The mental process is conspicuously silent. A speaking order will at its best be reasonable and     at its    worst be at least a plausible   one (M.P. Industries Ltd. v. Union of India & Others).    What prevents the authority authorised to impose penalty  from giving reasons    ? If reasons for an order are given, there will be            less scope for arbitrary or partial      exercise of power and the orders ex facie will indicate whether extraneous circumstances were taken into consideration by authority passing the order. This view in Vedachala Mudaliar v. State of Madras was approved by this Court in Bhagat Raja v. Union of India and Others.    As pointed out earlier, the findings of the inquiry officer are merely his ipse dixit. No reasons are assigned for reaching the finding and while recapitulating        evidence self-contradictory position  were adopted that either there was no misconduct or there was some misconduct        or double punishment was already imposed. Rule 27 (19) casts an obligation upon the inquiry officer at the conclusion of the inquiry to prepare a report which must inter alia include the   findings on each article of charge and the reasons therefor. The report is   prepared in contravention of the aforementioned rule. 

The situation is further           compounded by the fact that the disciplinary authority which is none other            than Committee of Management of the Corporation while accepting the report of the inquiry officer which itself was defective did not     assign any reasons for accepting the report of the inquiry officer. After reproducing the findings of the inquiry      officer, it         is stated that the Committee of Management agrees with the same. It is even difficult to make out how the Committee of  Management agreed with the observations of          the inquiry officer because at one stage while recapitulating     the evidence the inquiry officer unmistakably observed that appellant was subjected to double punishment and  at other. place, it        was observed  that granting extension of time and acceptance of documents and balance advance would tantamount to extending the time which would make the affair           look wholly innocuous.   This shows utter non-application of mind of the Disciplinary Authority and the order is vitiated.  

A detailed appeal was submitted by the appellant to the Board of Directors running into about   8 pages. The    only order while dismissing the appeal brought to our notice is a communication by a gentleman Anand Krishna whose authority and designation       are not stated, but who purported to act on behalf   of the   Board  of Directors,    that the appellate authority, after going through the records of the case, has decided to uphold the decision of the disciplinary authority and to confirm the penalty of removal from service imposed upon the appellant. Rule 35 of 1975 Rules deals         with appeals. Sub-rule (ii) of Rule 35 provides amongst others that the Appellate Authority shall consider  whether           the findings are justified or whether the penalty is excessive or inadequate and pass appropriate orders within three months of the date of appeal. In order to ascertain whether the rule is complied with, the order of the appellate authority must        show that it took into consideration   the findings the            quantum          of penalty and other relevant considerations. There is no material for showing that the appellate authority acted in consonance with its obligation under Rule 35. However, in para 5.14 to 17 of the counter affidavit, it was stated that 'full inquiry        report with annexure can be shown   to the court at the time of hearing, if desired.' If the respondent was anxious to sustain its action, it was obligatory upon it to         disclose the            full inquiry report.      Nothing was shown to us nor any attempt to show the proceedings of the appellate authority to disabuse our mind that the appellate authority was guilty of utter non-application of mind and discharged its duty under Rule  

35. No  attempt was made to urge that the three authorities had ever assigned reasons in support of their conclusions. For this additional reason also, the        initial order of the Disciplinary Authority as well      as the            Appellate Authority are liable to quashed and set aside.  

To sum up the order of removal passed by Disciplinary Authority is illegal and invalid for     the reasons:(i) that the action is thoroughly arbitrary and is violative of Art. 14, (ii) that the alleged misconduct does      not constitute       misconduct within the 1975 Rules; (iii) that the    inquiry officer himself found           that punishment was already imposed for the alleged misconduct by withholding the      salary  and the appellant could not be exposed to double jeopardy; and (iv)          that the findings of the inquiry officer are unsupported by reasons and the order of the       Disciplinary Authority           as well as the Appellate Authority suffer from the same vice. Therefore, the order of removal from service as well as the appellate order   are quashed and set aside.

The last question then is to what relief the appellant is entitled ? Once the order of removal from service is held to be illegal and invalid and the appellant being in public employment, the necessary declaration   must follow that he continues to be in service uninterruptedly.           This aspect does, not present any      difficult and     the declaration is hereby granted.

When removal from service   is held to be    illegal and invalid, the next question is whether: the victim of such action is entitled to backwages. Ordinarily,   it is well- settled that if termination of service is held to be bad, no other punishment in the guise of denial of back wages can be imposed and therefore, it must as a          necessary corollary follow that he will be entitled to all the back wages on the footing          that      he has  continued to be            in service uninterruptedly. But it was pointed out in this case that the appellant was employed as Factory            Manager by M/s KDR Woollen Mills, A-90, Wazirpur            Industrial Area, Delhi from where he resigned with     effect from August 8, 1983. It was also submitted    that he was drawing a salary of Rs. 2500 per month. Now if the appellant had procured an           alternative employment, he   would not be entitled  to wages and salary from the respondent. But it is equally true that an employee depending on salary for his survival when he is exposed. to the vagaries of the court litigation         cannot hold on to a slender distant    hope of judicial process coming to        his rescue and not try to survive        by accepting an alternative employment, a hope which may turn out to be a mirage. Therefore, the         appellant was perfectly justified        in procuring an alternative employment in order  to keep            his body and soul together     as also to bear the      expenses of litigation to vindicate his honour, integrity and character. The submission of the respondent that the appellant had accepted employment with M/s KDR Woollen Mills may be accepted in view of the evidence tendered in the case. Therefore, the appellant would not be entitled to salary for the period he was employed with M/s KDR Woollen Mills. Even for the rest of the period, the conduct of the appellant cannot be said to be entirely in consonance with corporate culture. As a highly placed officer he was bound to strengthen the corporate culture and he should have acted within the spirit of the regulations both for house building advance and conveyance advance, which are devised to help the employees. There has been lapse in totally complying with these regulations by the appellant though it neither constitutes misconduct to   attract a penalty         nor substantially good enough for      initiation of disciplinary inquiry. Accordingly, having regard to all the aspects of the case, the appellant should be paid 50% of the back wages for the           period since his removal from service upto   his reinstatement excluding the period for which he had procured an alternative employment. The respondent shall also pay the costs of the appellant quantified at Rs. 3000. 

S.R.                                                           Appeal allowed.  

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