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Non-Reportable

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 3829 OF 2011

Bindeshwari Chaudhary            …  Appellant

Versus

State of Bihar & Ors.                              … Respondents

J U D G M E N T

Prafulla C. Pant, J.

This appeal is directed against judgment and order dated

20.05.2008,  passed  by  High  Court  of  Judicature  at  Patna,

whereby Letters Patent Appeal No. 436 of 2000 was disposed

of allowing respondent authorities to withhold 50% of gratuity

and 50% of pension, of the appellant.

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2. Brief facts of the case are that appellant who was posted

as Executive Engineer with Irrigation Department of State of

Bihar, in the District of  Singhbhum, awarded a contract on

29.08.1989 to one M/s. D.K. Road Lines, for bed and slope

lining  of  canal  in  Galudih.  In  terms  of  the  contract,  the

contractor was required to furnish bank guarantee, and the

same was submitted by him for an amount of Rs.23,61,500/-.

In  order  to  verify  the  genuineness  of  the  bank  guarantee

furnished by the contractor, the appellant sent his Accounts

Clerk to Punjab & Sindh Bank, Jamshedpur, with letter dated

29.08.1989  (Annexure-P1).  In  response  to  said  letter,

appellant  received  letter  dated  01.09.1989  (Annexure-P-3)

from  Shri  T.S.  Gandhok,  Branch  Manager  of  the  bank,

confirming the bank guarantee. The appellant made payment

of  Rs.15,00,000/-  on  02.09.1989  towards  mobilization

advance  to  the  contractor.  On  04.09.1989,  Superintending

Engineer, issued letter (Annexure P-4), directing the appellant

not  to  make  mobilization  advance.  But,  subsequently  said

authority allowed the appellant to make second mobilization

advance  to  the  contractor  vide  its  letter  dated  27.10.1989,

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consequently the appellant released payment of Rs.8,60,000/-

on  31.10.1989 towards  second mobilization advance.   After

three months, the Superintending Engineer, vide letter dated

23.12.1989 (Annexure-P-5)  approved the work done by M/s

D.K. Road Lines assessing the work done at Rs.42,79,021/-.

On  12.02.1990,  the  appellant  made  further  payment  of

Rs.2.55 lacs.

3. Meanwhile, when new Manager took over the charge of

Jamshedpur Branch of  Punjab & Sindh Bank, issued letter

dated 13.02.1990 (Annexure-P-7), asking the appellant to send

photocopy of the bank guarantee in question. And vide letter

dated 20.03.1990 (Annexure-P-8) the new Manager informed

the appellant that no such bank guarantee has been issued by

the bank.  Appellant has pleaded that he received said letter

on 10.04.1990, and by then the appellant had released further

payment  of  Rs.7.33  lacs  towards  bill  of  the  contractor.  On

04.05.1990, bank cancelled its  earlier  communication dated

01.09.1989.  The appellant finally released Rs.4.4 lacs towards

current bill of the contractor, whereafter he was transferred on

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11.06.1990 to Daltanganj. It appears that C.B.I. registered a

case RC37(A)/91, Patna in pursuance to the fraudulent/forged

bank guarantee furnished by the contractor.  

4.       On 04.04.1991, appellant was placed under suspension

in contemplation of departmental proceedings. The appellant

challenged order of suspension in Writ Petition C.W.J.C. No.

2673 of  1991 before the High Court which was disposed of

with the observation that if charge sheet is not served within

three weeks on the appellant, the suspension order shall stand

quashed.  On  13.06.1991  the  respondent  authorities  served

charge sheet (dated 02.05.1991) on the appellant, relating to

payment  of  unsecured  advance  of  Rs.14.5  lacs  to  the

contractor.  The  appellant  then  filed  another  Writ  Petition

C.W.J.C. No. 4439 of 1991 once again seeking quashing of the

suspension  order,  and  the  High  Court  vide  its  order  dated

10.10.1991,  quashed  the  same.  The  respondent  authorities

vide  order  dated  05.12.1991  (Annexure–P12)  revoked  the

suspension  order,  and  departmental  enquiry  was  dropped.

Consequently  on  14.01.1992,  the  appellant  joined  his  new

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assignment  as  a  Technical  Advisor  to  Water  Nigam  Circle,

Dumka.

5. After investigation, C.B.I. submitted charge sheet against

accused T.S. Gandhok, Manager of Punjab & Sindh Bank who

confirmed the bank guarantee, and accused Ramdahin Singh,

Senior  Accounts  Clerk  of  the  Irrigation  Department  who

received the bank guarantee from the contractor and verified.

The appellant has pleaded that he is not accused in the charge

sheet, still on 18.06.1993, after the departmental enquiry was

earlier  dropped,  the  respondent  authorities  awarded

punishment  against  the  appellant  withholding  his  three

increments with cumulative effect, and also ‘censured’ for the

year 1989-90.  As such, third C.W.J.C. No. 942 of 1994 was

filed  by  the  appellant  challenging  the  above  order  of

punishment. The said writ petition was allowed on 23.03.1995

by  the  High  Court  holding  that  withholding  of  three

increments with cumulative effect is a major punishment, and

could  not  have  been  awarded  without  resorting  to  regular

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departmental enquiry. However punishment of “Censure’ was

not interfered with by the High Court.

6. On 20th May, 1995, the respondent authorities initiated

fresh departmental enquiry against the appellant, and second

charge sheet (Annexure-P13) was served on him relating to the

same allegations of release of unsecured advance of Rs. 14.5

lacs  to  the  contractor  against  the  order  of  Superintending

Engineer. The appellant filed his objections and participated in

the enquiry. The enquiry report dated 18.10.1996 (enclosure

with the Annexure P-17) was submitted by the enquiry officer

to  the  State  Government  with  the  finding  that  part  of  the

charge stood proved. Consequently, show cause notice dated

23.10.1996 was issued to the appellant to which he responded

on  07.01.1997.   Thereafter  the  appellant  stood  retired  on

31.01.1997.  On  24.09.1997,  appellant  was  awarded

punishment of withholding of 100% pension and gratuity.  

7. Finally, the appellant filed fourth Writ Petition C.W.J.C.

No. 11788 of 1997 before the High Court challenging the order

of withholding of pension and gratuity. During the pendency of

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said  writ  petition,  another  show  cause  notice  dated

17.06.1998 (Annexure-P18) was issued against the appellant

under Rule 43 (b) read with Rule 139 of Bihar Pension Rules,

as to why the pension benefits  be not  decided at  zero.  The

High Court,  vide  its  order  dated 04.12.1998,  dismissed the

writ  petition.  Aggrieved by said order,  Letters Patent Appeal

No. 436 of 2000 was filed by the appellant which was disposed

of by the High Court vide impugned order dated 20.05.2008

restricting withholding of gratuity and pension to the extent of

fifty percent.

8. Challenging  the  impugned  order,  Shri  Das,  learned

counsel for appellant argued that action of the appellant  in

releasing the payment to the contractor was bonafide as the

bank guarantee submitted by him was got verified from the

Branch  Manager  of  the  Bank,  and  by  the  communication

dated 01.09.1989 (Annexure-P3), the bank confirmed the bank

guarantee in question. In this connection, it is further pointed

out that after investigation, it is only Ramdahin Singh, official

of the department, and Shri T.S. Gandhok, the then Branch

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Manager  of  the  bank,  are  facing  the  trial,  and  not  the

appellant. It is further submitted that it is not a case where

the appellant has caused pecuniary loss to the department, as

the payments made to the contractor were either permissible

mobilization advances or against the running bills. It is also

contended that after the High Court quashed the punishment

earlier awarded by the respondent authorities vide order dated

23.03.1995  passed  in  C.W.J.C.  No.  942  of  1994,  fresh

departmental  enquiry  was  not  maintainable.  Lastly,  it  is

contended that from the evidence on record charge against the

appellant cannot be said to have been proved.

9.   On the other hand, Shri Shivam Singh, learned counsel for

the  respondent  authorities  submitted  that  Rule  43(b)  read

with  Rule  139  of  Bihar  Pension  Rules  empowers  the  State

Government  to  withhold  the  pension  and  gratuity  of  the

employee, and the respondent authorities have done so for the

sufficient reasons.

10.   We have considered the submissions of learned counsel

for the parties. The first charge sheet was admittedly served on

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the appellant on 13.06.1991, which was revoked consequent

to  order  dated  10.10.1991,  passed  by  the  High  Court  in

C.W.J.C.  No.  4439  of  1991,  whereby  the  suspension  order

issued against the appellant was quashed. By the same order

dated 05.12.1991 (Annexure P-12) departmental enquiry was

also dropped.  Fresh charge sheet was served on the appellant

on 20.05.1995 in the same matter.  It is pertinent to mention

here that when High Court in earlier round quashed the major

punishment  of  withholding  of  three  increments  with

cumulative  effect,  it  did  not  disturb  the  minor  punishment

‘censure’ awarded against the employee.  However, the High

Court did observe that action can be taken in accordance with

law.

11. The  communication  dated  29.08.1989  (Annexure  P-1)

sent by the appellant from the Branch Manager of the Bank,

and reply dated 01.09.1989 (Annexure P-3) confirming bank

guarantee received from the Bank are not disputed.  It is also

not  disputed  that  after  investigation  C.B.I.  found  evidence

against  the  then  Branch  Manager,  and  Ramdahin  Singh,

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Senior  Accounts  Clerk  of  the  appellant,  as  the  persons

responsible  with  the  contractor,  in  the  matter.   It  is  also

nobody’s case that the appellant caused pecuniary loss to the

exchequer.  In the light of above, we find force in submission

of  learned  counsel  of  the  appellant  that  the  appellant  was

bonafide in making the payment in question to the contractor,

as  he  did  make  enquiries  from the  bank  concerned  before

releasing mobilizing advance to the contractor. Copy of letter

dated  29.08.1989  (Annexure-P1)  sent  by  the  appellant  to

Manager of Punjab & Sindh Bank is reproduced below:-

“OFFICE OF THE EXECUTIVE ENGINEER IRRIGATION DIVISION, GALUDIH

Letter No. 916/Galudih/ Dated:29-08-1989     

To,

The Manager, Punjab and Sindh Bank, Jamshedpur

Subject: Confirmation  of  Bank  Guarantee  No.  20/89  dated 29-08-1989 for Rs. 23,61,500/- issued in the name of Executive Engineer, Irrigation Division on behalf of M/s. D.K. Road Lines.

Dear Sir,

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The  above  Bank  Guarantee  has  been  submitted  by M/s. D.K. Road Lines as a security performance which has been issued by your Bank.

It  is,  therefore,  requested to  please confirm the issue through Sri  Ramdahin Singh, S.A.C of this Division,  who is deputed in your bank for the purpose. It is also requested to please confirm the issue in future if any guarantee issued in my favour without waiting for any request letter.

Yours faithfully,

Sd/- Executive Engineer

IRRIGATION DIVISION, GALUDIH”

In response to above, letter dated 01.09.1989 (Annexure-P3)

appears to have been received by the appellant from the bank.

The said letter reads as under:-

“PUNJAB AND SINDH BANK JAMSHEDPUR

Dated: 01-09-1989

To, The Executive Engineer, Irrigation Division, Galudih

Sir,

Ref: Your letter No.916/Galudih dated 29-08-1989.

In response to your letter mentioned above, we hereby confirm  having  issued  bank  guarantee  No.  20/89  dated 29-08-1989 for Rs.  23,61,500/-  and B.G.  No.  21/89 dated

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31-08-1989 for Rs. 23,61,500/- in your favour on behalf of M/s. D.K. Roadlines.

This is for your information please.

For PUNJAB & SINDH BANK

Sd/- T.S. Gandhok, Manager, Jamshedpur”

12. The  Enquiry  Report  dated  18.10.1996  (enclosure  to

Annexure  P-17),  in  its  para  8,  shows  that  though  it  is

mentioned that charge is proved against the appellant in the

enquiry,  but  the  finding  is  based on earlier  enquiry  report.

The earlier enquiry report was in question in C.W.J.C. No. 942

of  1994  in  which  punishment  of  withholding  of  three

increments  with  cumulative  effect  was  quashed.   The

authorities  could not  and should not  have relied upon said

enquiry  report  as  basis  in  fresh  enquiry  for  holding  the

appellant  guilty  of  the  charge  and to  award punishment  of

withholding of pension and gratuity.  In the circumstances, we

do not find that there was sufficient reason for the respondent

authorities to exercise the powers under Rule 43 (b) read with

Rule  139  of  Bihar  Pension  Rules  as  neither  there  was

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pecuniary loss to the State, nor the present case is of a grave

misconduct on the part of the appellant.  

13. For the reasons as discussed above, we are inclined to

interfere with the impugned order passed by the High Court.

Therefore, the appeal is allowed. The orders dated 24.09.1997

and 17.06.1998, passed by the respondent authorities shall

stand quashed. No order as to costs.

……………………………....J. [J. Chelameswar]

………………………..……..J. [Prafulla C. Pant]

New Delhi; November 29, 2016.