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Reportable  

IN THE  SUPREME COURT OF INDIA                        CIVIL  APPELLATE  JURISDICTION                                   CIVIL  APPEAL NOs. 7201-7202 OF 2008                                                                                                             Food Corporation of India & Ors. ..    Appellant(s)                   

  Versus

Sarat Chandra Goswami ..    Respondent(s)                                                            

J U D G M E N T

Dipak Misra,

  The  respondent  while  holding  the  post  of  District  

Manager in the Food Corporation of India (for short the FCI)  

was  proceeded   against  in  a  disciplinary  proceedings  as  

contemplated under Regulation 60 of the Food Corporation of  

India (Staff) Regulations, 1971 (for brevity “the Regulations”)  

on the ground that during the period 15.7.99 to 21.1.02 while  

the respondent was working at North Lakhimpur Region, FCI  

in  Assam  had  not  faithfully  carried  out  his  duties  as  a  

consequence of which the Corporation suffered financial loss.  

After the preliminary inquiry, a show cause notice was issued  

calling for a representation and eventually the punishment

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for  recovery of  a  sum of  rupees five lakhs and  

censure was passed against the respondent.

2. The  aforesaid  order  of  punishment  constrained  the  

respondent  to  approach  the  High  Court  in  Writ  Petition  

No.16812(w)  of  2006.   Before  the  writ  court  the  singular  

contention  that  was  highlighted  was  that  the  disciplinary  

authority had not complied with Regulation 60(1)(b) of the  

Regulations  and,  therefore,  the  whole  proceeding  was  

vitiated.  The learned Single Judge appreciating the facts and  

adverting to the submissions raised at the Bar came to hold  

that the disciplinary authority, the Chairman-cum-Managing  

Director, had not formed any opinion either to hold a regular  

inquiry  or  not  as  contemplated  under  Regulation  58  for  

imposing  the  major  penalty  and,  accordingly,  he  quashed  

the order of punishment as well as the show cause notice.

3. Being  dissatisfied,  the  Corporation  preferred  

F.M.A.No.1187  of  2007  and  the  Division  Bench  placing  

reliance on the decision of this Court in  Food Corporation  

of India, Hyderabad & Ors. v. A. Prahalada Rao & Anr.1  

concurred  with  the  view  expressed  by  the  learned  Single  

Judge and consequently  dismissed the appeal.

1 (2001) 1 SCC 165

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4. We have heard  Mr.  Dharmedra  Kumar  Sinha  learned  

counsel  for  the appellants  and Mr.  Soumitra  G.  Chaudhuri  

learned counsel for the respondent.   

5. The  controversy,  as  it  seems  to  us,  centres  around  

interpretation  of  Regulation  60  and  hence,  we  think  it  

appropriate to reproduce the said Regulation.  It  reads as  

follows:

"(60) Procedure for imposing minor penalties: (1) Subject to the provisions of Sub-regulation (3)  of  Regulation  59,  no  order  imposing  on  an  employee any of the penalties specified in clauses  (i) to (iv) of Regulation 54 shall be made except  after:

(a) informing  the  employee  in  writing  of  the  proposal  to  take  action  against  him  and  of  the  imputation  of  misconduct  or  misbehaviour  on  which it is proposed to be taken, and giving him a  reasonable  opportunity  of  making  such  representation as  he may wish to  make against  the proposal;

(b) holding an inquiry in the manner laid down in  sub-regulation (3) to (23) of the Regulation 58, in  every case in which the disciplinary authority is of  the opinion that such inquiry is necessary;

(c) taking the representation,  if  any,  submitted  by the employee  under clause (a) and the record  of  inquiry,  if  any,  held  under  clause   (b)  into  consideration;

(d) recording  a  finding  on  each  imputation   of  misconduct or misbehaviour.

(2) Notwithstanding anything contained in clause  

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(b)  of  Sub-Regulation  (1,  if  in  a  case  it  is  proposed, after considering the representation, if  any,  made by the employee under clause (a)  of  the Sub-regulation, to withhold increment of pay  and  such  withholding  of  increments  is  likely  to  affect adversely the amount of retirement benefits  payable  to  the  employees  or  to  withhold  increments of a pay for a period exceeding 3 years  or to withhold increment of pay with cumulative  effect for any period,m an inquiry shall be held in  the manner laid down in Sub-regulation (3) to (23)  of  Regulation  58  before  making   any  order  imposing on the employee any such penalty.”

6. The interpretation of the said Regulation engaged the  

attention of this Court in A. Prahalada Rao (supra).  A two-

Judge Bench, adverting to the anatomy of the Regulation and  

taking  into  consideration  the  submissions  advanced  with  

regard  to  the  abuse  of  the  Regulation,  came  to  hold  as  

follows:

" In our view, on the basis of the allegation that  Food Corporation of India is misusing its power of  imposing minor  penalties,  the Regulation cannot  be  interpreted  contrary  to  its  language.  Regulation  60(1)(b)  mandates  the  disciplinary  authority  to  form  its  opinion  whether  it  is  necessary to hold inquiry in a particular  case or  not.   But  that  would not  mean that  in  all  cases  where  an  employee  disputes  his  liability,  a  full- fledged  inquiry  should  be  held.   Otherwise,  the  entire  purpose  of  incorporating  summary  procedure for imposing minor penalties would be  frustrated.   If  the  discretion  given  under  Regulation 60(1)(b) is misused or is exercised in  an arbitrary manner it is open to the employee to  challenge the same before the appropriate forum.  It  is  for  the  disciplinary  authority  to  decide  whether  regular  departmental  enquiry  as  contemplated  under  Regulation  58  for  imposing  

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major  penalty  should  be  followed  of  not.  This  discretion  cannot  be  curtailed  by  interpretation, which is  contrary to the language  used.   Further,  Regulation  60(2)  itself  provides  that  in  a  case  if  it  is  proposed  to  withhold  increments  of  pay  and  such  withholding  of  increments is likely to affect adversely the amount  of retirement benefits payable to an employee and  in  such  other  case  as  mentioned  therein,  the  disciplinary  authority  shall  hold  inquiry  in  the  manner laid down in Regulation 58 before making  any order imposing any such penalty."

7. It  is  submitted by Mr,  Chatterjee that the High Court  

has  erroneously  understood  the  ratio  and  ruled  that  an  

opinion  has  to  be  formed  in  writing.   It  is  his  further  

submission  that  when  the  reasons  are  manifest  from  the  

preliminary  inquiry  and  from  the  show  cause  it  was  

erroneous on the part of the High Court to emphasise on the  

formation of opinion.

8. Per  contra,  Mr.  Chaudhary  heavily  relied  on  the  

authority in  A. Prabhakar Rao  (supra) and urged that the  

discretion  vested  in  the  disciplinary  authority  under  the  

Regulations casts an obligation on it to form an opinion and  

formation of such opinion has to be in writing.

9. On a perusal of the order passed by the learned Single  

Judge, we find that he has taken note of the fact that there  

was no expression or formation of opinion.  He has further  

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recorded  that  the  learned  counsel  for  the  

Corporation had conceded that there was nothing to show  

that the Chairman-cum-Managing Director who had made the  

final order had recorded any opinion in writing before making  

the final  order  to  the effect  there was no need to hold a  

regular inquiry.  From the principle stated by this Court in A.  

Prahalada Rao’s case it is quite limpid that though in all  

cases  where  the  employees  disputes  his  liability,  a  full-

fledged enquiry  is  not  expected to  be held  as  that  would  

frustrate the purpose of interpreting the summary procedure  

for  imposing  minor  penalties,  yet  the  discretion  conferred  

under the Regulation 1960 (1)(b), if exercised in a arbitrary  

manner, it is open to the employee to challenge the same  

before the appropriate forum.  The Court had further opined  

that  the  Regulation  60(1)(b)  mandates   the  disciplinary  

authority to form its opinion whether it is necessary to hold  

an inquiry in a particular case or not.   

10. Once it is held that there has to be formation of opinion  

and such an opinion is assailable in a legal forum, we are of  

the view that the said opinion has to be founded on certain  

objective  criteria.   It  must  reflect  some  reason.   It  can  

neither  be  capricious  or  fanciful  but  demonstrative  of  

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application  of  mind.  Therefore,  it  has  to  be  in  

writing.  It may be on the file and may not be required to be  

communicated to  the  employee  but  when it  is  subject  to  

assail  and,  eventually,  subject  to  judicial  review,  the  

competent authority of the Corporation is required to satisfy  

the Court that the opinion was formed on certain parameters  

indicating that there was no necessity to hold an enquiry.  

Thus, the High Court has correctly understood the principle  

stated in A. Prabhakar Rao (supra) and we do not find any  

fault with the same.   

11. In  the result,  we do not  perceive any merit  in  these  

appeals and the same stand dismissed with no order as to  

costs.

                                   ....................J.                     [DIPAK MISRA]  

                                          ...................J.

              [N.V. RAMANA]      

NEW DELHI, MAY 21, 2014.     

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