1997 JTR(SC) 740
1997 AIR(SC) 2403 ; 1997 AIR(SCW) 2314 ; 1997 4 JT 725 ; 1997 LIC 2341 ; 1997 2 LLJ 622 ; 1997 3 LLN 287 ; 1997 3 Scale 654 ; 1997 7 SCC 85 ; 1997 SCC(L&S) 1617 ; 1997 2 SCJ 191 ; 1997 2 SCT 591 ; 1997 KHC 1023 ; 1997 4 Supreme 225
1997(4) Supreme 225
SUPREME COURT OF INDIA
S.C. Agrawal and G.T. Nanavati, JJ.
Haryana State Electricity Board -Appellant
versus
K.C. Gambhir -Respondent
Civil Appeal No. 2986 of 1997
(Arising out of SLP (C) No. 4764 of 1997)
Decided on 24-4-1997
Counsel for the Parties :
For the Appellant : Prem Malhotra and Jasbir Malik, Advocates.
For the Respondent : Attar Singh, Advocate.
Act Referred :SERVICE LAW : .
(A) The Service Rules framed under the relevant Service Law provisions govern the terms and conditions of service, including the age of superannuation and the circumstances under which early retirement or compulsory retirement may be ordered. The rules further contemplate that an employee may be continued in service past the age of superannuation if his service record is satisfactory and no serious misconduct is established, while any adverse administrative action such as stoppage of increments or initiation of departmental proceedings may be weighed as part of the overall assessment of service. The impugned order of compulsory retirement must therefore be tested against the combined effect of the Service Rules and the principles of natural justice, ensuring that an order of retirement is not arbitrary, is based on a fair and objective assessment of the employees record, and takes into account mitigating factors such as past disciplinary proceedings and representations made by the employee.
(B) Key legal principles include that an employee cannot be arbitrarily retired before the age of superannuation unless there is a valid and bona fide ground, such as proven misconduct or material inefficiency; that past service record and previous extensions must be considered cumulatively; that departmental inquiries must be completed before adverse administrative action is finalized; and that an otherwise competent authority must act reasonably and in conformity with the Service Rules and principles of procedural fairness.
Facts of the case:
The respondent was an employee of the Haryana State Electricity Board who had attained the ages of 50 and 55 years on two earlier occasions, and on each occasion his retention in service was decided after considering his good service record and pending representations or departmental inquiries. After the last departmental inquiry concluded in August 1993, he was given three months notice and compulsorily retired in February 1994, about nine months before his scheduled superannuation. The respondent challenged the retirement as arbitrary and illegal.
Findings of Court:
The High Court held that the respondents service record was good, with a majority of favourable reports, and that the two penalties imposed (stoppage of increments and recovery of amounts) were not for serious misconduct. It observed that no fresh misconduct was alleged after the last extension at age 55, and that the delay in retirement following ongoing inquiries was not unjustified, but concluded that retiring the respondent just nine months before superannuation was not proper in the circumstances and was not supported by the material on record.
Issues:
Whether the High Court correctly applied the principles of reasonableness and fairness in evaluating the grounds for compulsory retirement; whether the Service Rules and the respondents past service record and representations justified the timing of the impugned retirement order; and whether the disciplinary proceedings and penalties imposed were of such nature as to legitimately justify compulsorily retiring the respondent so close to his superannuation.
Ratio Decidendi:
An order of compulsory retirement must be based on a reasonable and bona fide assessment of the employees service record, must comply with the relevant Service Rules, and must not be arbitrary or influenced by improper considerations. Where the employee has a long record of satisfactory service, previous extensions, and only minor or non-serious disciplinary issues, retiring him shortly before superannuation is not permissible unless there are cogent and proven grounds for early termination.
Result:
The appeal is allowed, the High Courts judgment and order are set aside, and the writ petition is dismissed without any order as to costs.
(A) The Service Rules framed under the relevant Service Law provisions govern the terms and conditions of service, including the age of superannuation and the circumstances under which early retirement or compulsory retirement may be ordered. The rules further contemplate that an employee may be continued in service past the age of superannuation if his service record is satisfactory and no serious misconduct is established, while any adverse administrative action such as stoppage of increments or initiation of departmental proceedings may be weighed as part of the overall assessment of service. The impugned order of compulsory retirement must therefore be tested against the combined effect of the Service Rules and the principles of natural justice, ensuring that an order of retirement is not arbitrary, is based on a fair and objective assessment of the employees record, and takes into account mitigating factors such as past disciplinary proceedings and representations made by the employee.
(B) Key legal principles include that an employee cannot be arbitrarily retired before the age of superannuation unless there is a valid and bona fide ground, such as proven misconduct or material inefficiency; that past service record and previous extensions must be considered cumulatively; that departmental inquiries must be completed before adverse administrative action is finalized; and that an otherwise competent authority must act reasonably and in conformity with the Service Rules and principles of procedural fairness.
Facts of the case:
The respondent was an employee of the Haryana State Electricity Board who had attained the ages of 50 and 55 years on two earlier occasions, and on each occasion his retention in service was decided after considering his good service record and pending representations or departmental inquiries. After the last departmental inquiry concluded in August 1993, he was given three months notice and compulsorily retired in February 1994, about nine months before his scheduled superannuation. The respondent challenged the retirement as arbitrary and illegal.
Findings of Court:
The High Court held that the respondents service record was good, with a majority of favourable reports, and that the two penalties imposed (stoppage of increments and recovery of amounts) were not for serious misconduct. It observed that no fresh misconduct was alleged after the last extension at age 55, and that the delay in retirement following ongoing inquiries was not unjustified, but concluded that retiring the respondent just nine months before superannuation was not proper in the circumstances and was not supported by the material on record.
Issues:
Whether the High Court correctly applied the principles of reasonableness and fairness in evaluating the grounds for compulsory retirement; whether the Service Rules and the respondents past service record and representations justified the timing of the impugned retirement order; and whether the disciplinary proceedings and penalties imposed were of such nature as to legitimately justify compulsorily retiring the respondent so close to his superannuation.
Ratio Decidendi:
An order of compulsory retirement must be based on a reasonable and bona fide assessment of the employees service record, must comply with the relevant Service Rules, and must not be arbitrary or influenced by improper considerations. Where the employee has a long record of satisfactory service, previous extensions, and only minor or non-serious disciplinary issues, retiring him shortly before superannuation is not permissible unless there are cogent and proven grounds for early termination.
Result:
The appeal is allowed, the High Courts judgment and order are set aside, and the writ petition is dismissed without any order as to costs.
JUDGMENT
Nanavati, J.-Leave granted.
Heard learned counsel for both the sides.
2. This appeal is directed against the judgment and order dated 22.8.1996 passed by the High Court of Punjab and Haryana in C.W.P. No. 6073 of 1996.
3. The respondent was an employee of Haryana State Electricity Board. He was retired from service on 3rd February, 1994, about 9 months before the date of superannuation. He challenged that action of the appellant Board by filing a writ petition in the Punjab and Haryana High Court. It was the case of the respondent that he was promoted as Executive Engineer on 19th February, 1977. When he attained the age of 50 years his case was considered for retirement/retention in service. It was decided on 30.11.1986 to continue him in service. Again his case was considered when he attained the age of 55 years and it was decided on 30.11.1991 to continue him in service. His service record was good, as on the basis of overall assessment for the last 10 years, the percentage of good reports was 77%. It was, therefore, not proper for the appellant to retire him before he attained the age of 58 years. He had challenged the said action as arbitrary and illegal.
4. It was disputed on behalf of the appellant before the High Court that service record of the respondent was good. It was pointed out that by an order dated 4th August, 1993 he was punished by stopping his two increments and a recovery of Rs. 14,960.50 was ordered. He was again punished by an order dated 26th October, 1995 and Rs. 7,197/- were ordered to be recovered.
5. The High Court after perusing the Confidential Reports for the years 1983-84 and onwards found that they did not justify respondent s compulsory retirement just 9 months before the date of superannuation. The High Court was of the view that the two punishments, imposed on him, were not for serious acts of misconduct. It took note of the fact that no act of misconduct was alleged against him after he was granted extension at the age of 55 years. It, therefore, allowed the petition, set aside the impugned order of retirement and held that he was entitled to continue in service with all benefits till the actual date of superannuation.
6. The contention of Mr. Malhotra, learned counsel for the appellant, is that the High Court failed to appreciate that the order, compulsorily retiring the respondent, was passed by the appellant on the basis of his service record. He also submitted that the appellant did not retire him earlier when his case was taken up for consideration on attaining the age of 50 and 55 years because of pendency of his representation and a departmental inquiry. Soon after the inquiry was over the impugned order was passed. The learned counsel for the respondent, on the other hand, raised the same contentions which were raised before the High Court.
7. The record of the case discloses that in the Confidential Report for the year 1985-86 an adverse remark was made that his integrity was doubtful. At the time when he attained the age of 50 years, his case was taken up for consideration for his retention or retirement but it was not thought proper to retire him then as his representation against the adverse remark was still not decided. His case was again taken up for consideration when he attained the age of 55 years. At that time also the appellant did not think it fit to compulsorily retire the respondent as departmental proceedings were pending against him for a serious act of misconduct. That inquiry was over on 4.8.1993. Thereafter three months notice was given to him and he was retired w.e.f. 3.2.1994. Though the appellant could have taken the action of compulsorily retiring the respondent earlier, it acted very fairly and allowed him to remain in service till his representation against the adverse remark was considered on the first occasion and subsequently, till the departmental inquiry was completed. No grievance can legitimately be made by the respondent for not taking the impugned action earlier as he had not suffered adversely as a result of the delay. The respondent s integrity was found doubtful and in the departmental inquiry regarding shortage of material he was found guilty. One more act of financial irregularity by the respondent was noticed. If under these circumstances the appellant thought it fit to compulsorily retire him even though only nine months were remaining for his superannuation, it cannot be said that the said action was arbitrary and unjustified. All these aspects were overlooked by the High Court and, therefore, the judgment and order passed by the High Court deserve to be set aside.
8. We, therefore, allow this appeal, set aside the judgment and order passed by the High Court and dismiss the writ petition filed by the respondent. However, in the facts and circumstances of the case there shall be no order as to costs.
Appeal allowed.
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