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NON - REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 7717 OF 2014 (arising out of Special Leave Petition (Civil) No. 39113 of 2013)

THE LIFE INSURANCE CORPORATION  OF INDIA & OTHERS .....APPELLANT(S)

VERSUS

S. VASANTHI .....RESPONDENT(S)

J U D G M E N T

A.K. SIKRI, J.

Leave granted.

2) This  appeal  is  preferred  against  the  final  judgment  and  order  

dated June 26, 2013 in Writ Appeal No. 1279 of 2010 passed by  

the  High  Court  of  Judicature  at  Madras  whereby  the  Division  

Bench of the High Court has modified the punishment imposed by  

the  disciplinary  authority  of  appellant  No.1,  i.e.  Life  Insurance  

Corporation of India (hereinafter referred to as the 'LIC') on the  

respondent employee in a departmental enquiry.

3) Insofar  as  facts  are  concerned,  it  is  sufficient  to  note  that  a  

charge-sheet  was  served  upon  the  respondent  with  the  

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allegations  of  tampering  with  the  premium  position  and  other  

records  pertaining  to  17  insurance  policies,  which  resulted  in  

settlement  of  surrender  value  payments,  though these  policies  

had not acquired surrender value.  It was alleged in the charge-

sheet  that  by  this  act  of  the  respondent,  pecuniary  loss  was  

caused to the LIC.  These charges stood proved in the enquiry  

held against the respondent by the Enquiry Officer vide Report  

dated  December  23,  1997.   Based  on  the  said  Report,  the  

disciplinary authority issued show-cause notice to the respondent  

proposing the following punishment:

(i) Recovery  of  loss  to  the  Corporation  of  Rs.16,001.90, and

(ii) Reduction in  Basic  Pay to the lowest  time scale  (i.e.) Rs.1950/-.

4) The  respondent  submitted  her  reply  to  the  said  show-cause  

notice.  After going through the same, the Divisional Manager, as  

disciplinary authority,  passed orders dated December 30,  1998  

accepting the findings of  the Enquiry  Officer  and imposing the  

punishment as proposed in the show-cause notice.  Appeal of the  

respondent preferred thereagainst was dismissed by the appellate  

authority.  The respondent filed a Memorial before the Chairman  

of the LIC, which was also rejeged vide orders dated September  

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25, 2000.   

5) At this stage, the respondent took recourse to judicial proceedings  

by filing the writ petition in the High Court of Judicature at Madras.  

This writ petition was dismissed by the learned Single Judge of  

the  High  Court,  who  not  only  held  that  a  proper  enquiry  was  

conducted in consonance with the principles of natural justice as  

well as the extant rules, but even the punishment imposed by the  

disciplinary authority was justified and upheld the same.  Being  

aggrieved, the respondent preferred writ appeal, which has been  

decided by the Division Bench of the High Court vide impugned  

judgment dated June 26, 2013.  Interestingly, the Division Bench  

has concurred with the learned Single Judge regarding the guilt of  

the respondent in tampering of records, which is clear from the  

following:

“61. On  a  careful  consideration  of  respective  contentions and in view of the detailed discussions  and  for  the  reasons  mentioned  aforesaid,  in  the  instant case, we hold that the conclusions arrived  at  by  the  authorities  concerned  are  based  on  evidence and on available materials on record.  In  fact,  the  Enquiry  Officer  has  submitted  a  Report  dated  23.12.1997,  inter  alia,  holding  that  the  Appellant is clearly guilty of deliberately tampering  with the premium position as detailed in the Report.  The Divisional  Manager (Disciplinary Authority)  of  L.I.C.  of  India  has  passed  the  final  order  on  30.12.1998  by  imposing  the  punishment  of  (i)  Recovery  of  loss  to  the  Corporation  of  Rs.16,001.90 and (ii) Reduction in Basic Pay to the  lowest time scale (i.e.)  Rs.1950/-.   The Appellate  

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Authority  also,  on 28.10.1999,  has confirmed the  order  of  the  Disciplinary  Authority  dated  30.12.1998.   Even  to  the  Memorial  dated  09.02.2000  submitted  by  the  Appellant/Petitioner,  addressed to the 1st Respondent/Chairman of the  L.I.C. of India, Mumbai, an order of rejection has  been passed on 25.09.2000 finding no merit in the  Memorial  warranting  no  interference  with  the  penalties of 'reduction in basic pay to minimum of  scale'  and  'recovery  of  financial  loss  of  Rs.16,001.90'.   As  such,  we  are  in  complete  agreement in regard to the conclusions arrived at  by  the  authorities  concerned  that  the  charges  levelled against the Appellant/Petitioner have been  proved.”

6) However, the Division Bench chose to tinker with the quantum of  

punishment  imposed  by  the  disciplinary  authority.   Though  it  

upheld  the  punishment  of  recovery  of  loss,  the  punishment  of  

reduction in pay scale has been set aside and substituted by the  

punishment of withholding of one increment with cumulative effect  

for a period of one year as per Regulation 39(1)(b) of the L.I.C. of  

India (Staff) Regulations, 1960.  Discussion on this aspect can be  

found in paragraph No.62 of the impugned judgment, which reads  

as under:

“62. Bearing  in  mind  an  important  fact  that  awarding of punishment must suit the offence and  offender and also that the said punishment should  not be either vindictive or unduly harsh, we are of  the considered view that in the present case,  for  the proved charges against the Appellant/Petitioner  (Delinquent  Employee),  the  imposition  of  penalty  viz.,  recovery  of  loss to the L.I.C.  of  India  to  an  extent of Rs.16,001.90 in terms of Regulation 39(1) (c) of L.I.C. of India (Staff) Regulations, 1960 is just  

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valid and proper one.  However, to secure the ends  of  Justice,  inasmuch  as  the  imposition  of  'punishment of reduction in basic pay to the lowest  scale  pay  (i.e.)  Rs.1950/-'  imposed  on  the  Appellant/Petitioner in terms of Regulation 39(1)(d)  of the L.I.C. of India (Staff) Regulations, 1960, is on  the higher side, accordingly, we set aside the same  and instead we impose a penalty of withholding of  one increment with cumulative effect for a period of  one year as per Regulation 39(1)(b) of the L.I.C. of  India (Staff) Regulations, 1960, by restoring her to  the  original  position  at  the  time  of  order  of  punishment  dated  30.12.1998.   However,  we  hereby direct  the Respondents that  the period of  service  put  up  by  the  Appellant/Petitioner  in  the  lowest time scale of pay viz., Rs.1950/- be treated  as service in the original post held by her prior to  the award of the penalty, subject to the condition  that the Appellant/Petitioner shall not be entitled to  any difference of salary for and during the period of  reduction  to  the  lowest  time  scale  of  pay.  Consequently,  the  order  passed  by  the  Learned  Single Judge dated 26.04.2010,. in dismissing the  Writ  Petition,  is  set  aside  by  this  Court  for  the  reasons assigned in this Appeal.”

7) The respondent has not filed any appeal thereby accepting the  

judgment  of  the  Division  Bench.   However,  the  appellants  are  

aggrieved by the decision of the Division Bench in modifying the  

punishment,  as  mentioned  above.   Therefore,  in  the  instant  

appeal, we have heard the learned counsel for the parties on this  

limited aspect as that is the only scope of the present appeal.

8) It was argued by the learned counsel for the appellants that it was  

not open to the High Court to modify the penalty of reduction in  

pay scale to the lowest scale of pay, that too without giving any  

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reasons, what to talk of justifiable reasons.  His submission was  

that the High Court, in exercise of judicial review, had very limited  

jurisdiction to interfere with the quantum of punishment imposed  

by the disciplinary authority.  It could be only in those cases where  

penalty is found to be shockingly disproportionate to the gravity of  

charge.  He also submitted that it was not within the domain of the  

High Court to impose a particular penalty and thereby assume to  

itself  the  role  of  disciplinary  authority.   The  leanred  counsel  

submitted  that  the  aforesaid  approach  of  the  High  Court  was  

directly in conflict with the judgment of this Court in Om Kumar v.  

Union of India,  (2001) 2 SCC 386, wherein this Court has held  

that  the question of  the quantum of  punishment  in  disciplinary  

matters  is  primarily  for  the  disciplinary  authority  and  the  

jurisdiction of the High Courts under Article 226 of the Constitution  

or of the Admnistrative Tribunals is limited and is confined to the  

applicability of one or other of the well-known principles known as  

'Wednesbury  principles'.   This  Court,  while  analyzing  the  said  

principles,  also observed that  in  case if  the Court  felt  that  the  

quantum  of  punishment  was  disproportionate,  then  it  should  

remand the matter  back to the disciplinary authority  instead of  

modifying the punishment on its own.  Relevant passage from the  

judgment is extracted below:

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“71.  Thus, from the above principles and decided  cases, it must be held that where an administrative  decision  relating  to  punishment  in  disciplinary  cases is questioned as “arbitrary” under Article 14,  the court is confined to Wednesbury principles as a  secondary reviewing authority.   The court  will  not  apply proportionality as a primary reviewing court  because no issue of fundamental freedoms nor of  discrimination  under  Article  14  applies  in  such  a  context.  The court while reviewing punishment and  if  it  is  satisfied  that  Wednesbury  principles  are  violated, it has normally to remit the matter to the  administrator for a fresh decision as to the quantum  of punishment.  Only in rare cases where there has  been  long  delay  in  the  time  taken  by  the  disciplinary proceedings and in  the time taken in  the courts, and such extreme or rare cases can the  court substitute its own view as to the quantum of  punishment.”

9) We find sufficient force in the aforesaid submission of the learned  

counsel for the appellants.

10) We have already reproduced paras 61 and 62 of the impugned  

judgment  of  the  High  Court.   After  detailed  discussion  of  the  

various contentions advanced by the respondent here (appellant  

before  the  High  Court),  the  High  Court  repelled  all  those  

contentions and in para 61 summed up the position by holding  

that the respondent herein was very much guilty of deliberately  

tampering with the premium position as detailed in the report.  So  

much so, it expressed its  'complete agreement' in regard to the  

conclusions  arrived  at  by  the  authorities  concerned  that  the  

charges levelled against  the respondent had been proved.  As  

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noticed above,  charges pertain  to  tampering with  the premium  

position and other records pertaining to 17 insurance policies.  It  

had resulted in  pecuniary  loss  to  the  LIC as well.   Charge  of  

tampering with the record is a very serious charge and it adds to  

the gravity when it is coupled with financial implications.  Even for  

such a severe charge, the disciplinary authority had inflicted the  

penalty of reduction in basic pay to the lowest time scale.  The  

High Court has not even stated as to how this penalty was bad in  

law and simply labelled it to be “harsh” that too with no reasons.  

While intermeddling with this penalty, the only epithet used is “to  

secure  the  ends  of  justice”.   In  the  absence  of  any  exercise  

undertaken by the High Court that how it perceived such a penalty  

to be “harsh”, there was no reason to interfere with the same.  

Even  otherwise,  we  do  not  find  such  a  penalty  at  all  to  be  

shockingly  disproportionate  having  regard  to  the  very  serious  

charge levelled against the respondent.

11) The scope and power of judicial review of the courts while dealing  

with  the  validity  of  quantum  of  punishment  imposed  by  the  

disciplinary authority is now well settled. In the case of  Deputy  

Commissioner, KVS & Ors. v. J. Hussain, (2013) 10 SCC 106,  

the law on this subject, is recapitulated in the following manner:

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“6.   When  the  charge  proved,  as  happened  in  the  instance  case,   it  is  the  disciplinary  authority  with  whom lies the discretion to decide as to what kind of  punishment  is  to  be  imposed.   Of  course,  this  discretion has to be examined objectively keeping in  mind  the  nature  and  gravity  of  charge.   The  Disciplinary Authority is to decide a particular penalty  specified in the relevant Rules.  Host of factors go into  the decision making while exercising such a discretion  which include,  apart  from the nature  and gravity  of  misconduct, past conduct, nature of duties assigned  to the delinquent, responsibility of duties assigned to  the  delinquent,  previous  penalty,  if  any,  and  the  discipline required to be maintained in department or  establishment where he works, as well as extenuating  circumstances, if any exist.  The order of the Appellate  Authority  while having a re-look of  the case would,  obviously,  examine  as  to  whether  the  punishment  imposed by the Disciplinary Authority is reasonable or  not.  If the Appellate Authority is of the opinion that the  case  warrants  lesser  penalty,  it  can  reduce  the  penalty  so  imposed  by  the  Disciplinary  Authority.  Such a power which vests with the Appellate Authority  departmentally is ordinarily not available to the Court  or  a  Tribunal.   The Court  while  undertaking judicial  review of the matter is not supposed to substitute its  own  opinion  on  reappraisal  of  facts.(See:  Union  Territory of Dadra & Nagar Haveli vs. Gulabhia M.Lad  (2010) 5 SCC 775)  In exercise of power of judicial  review,  however,  the  Court  can  interfere  with  the  punishment  imposed  when  it  is  found  to  be  totally  irrational or is outrageous in defiance of logic.  This  limited  scope  of  judicial  review  is  permissible  and  interference  is  available  only  when  punishment  is  shockingly disproportionate, suggesting lack of good  faith.  Otherwise, merely because in the opinion of the  Court  lesser  punishment  would  have  been  more  appropriate, cannot be a ground to interfere with the  discretion of the departmental authorities.

7. When the punishment is found to be outrageously  disproportionate to the nature of charge, principle of  proportionality comes into play.  It is, however, to be  borne in mind that this principle would be attracted,  which is in tune with doctrine of Wednesbury Rule of  reasonableness,  only  when  in  the  facts  and  

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circumstances  of  the  case,  penalty  imposed  is  so  disproportionate to the nature of charge that it shocks  the conscience of the Court and the Court is forced to  believe  that  it  is  totally  unreasonable  and  arbitrary.  This  principle  of  proportionality  was  propounded by  Lord  Diplock  in  Council  of  Civil  Service  Unions  vs.  Minister for Civil Service in the following words:

“Judicial review has I think developed to a stage  today when, without reiterating any analysis of  the steps by which the development has come  about,  one  can  conveniently  classify  under  three  heads  of  the  grounds  on  which  administrative  action  is  subject  to  control  by  judicial  review.  The  first  ground  I  would  call  “illegality”,  the  second  “irrationality”  and  the  third “procedural impropriety”. This is not to say  that  further  development  on  a  case  by  case  basis  may  not  in  course  of  time  add  further  grounds. I have in mind particularly the possible  adoption  in  the  future  of  the  principle  of  proportionality.”

8. Imprimatur  to  the  aforesaid  principle  was  accorded by this Court as well,  in  Ranjit  Thakur vs.  Union of India (1987) 4 SCC 611.  Speaking for the  Court,  Justice  Venkatachaliah  (as  he  then  was)  emphasizing  that  “all  powers  have  legal  limits”  invokes the aforesaid doctrine in the following words:

“The  question  of  the  choice  and  quantum  of  punishment  is  within  the  jurisdiction  and  discretion of the court-martial. But the sentence  has  to  suit  the  offence  and  the  offender.  It  should  not  be  vindictive  or  unduly  harsh.  It  should not be so disproportionate to the offence  as to shock the conscience and amount in itself  to conclusive evidence of bias. The doctrine of  proportionality as part of the concept of judicial  review,  would  ensure  that  even  on  an  aspect  which is, otherwise within the exclusive province  of the court-martial, if the decision of the court  even as to sentence is an outrageous defiance  of logic, then the sentence would not be immune  from correction.  Irrationality  and perversity  are  recognized grounds of judicial review.”

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12) We are of the opinion that the High Court transgressed its limits of  

judicial  review  by  itself  assuming  the  role  of  sitting  as  

departmental appellate authority, which is not permissible in law.  

The  principles  discussed  above  have  been  summed  up  and

summarised  as  follows  in  the  case  of  Lucknow  Kshetriya  

Gramin Bank (Now Allahabad, Uttar Pradesh Gramin Bank) &   

Anr. v. Rajendra Singh, (2013) 12 SCC 372 :

a) When charge(s) of misconduct is proved in an enquiry, the  

quantum of punishment to be imposed in a particular case  

is essentially the domain of the departmental authorities.

b) The  courts  cannot  assume  the  function  of  disciplinary/  

departmental  authorities  and  to  decide  the  quantum  of  

punishment and nature of penalty to be awarded, as this  

function  is  exclusively  within  the  jurisdiction  of  the  

competent authority.

c) Limited  judicial  review  is  available  to  interfere  with  the  

punishment imposed by the disciplinary authority, only in  

cases where such penalty is found to be shocking to the  

conscience of the court.

d) Even in such a case when the punishment is set aside as  

shockingly  disproportionate  to  the  nature  of  charges  

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framed against the delinquent employee, the appropriate  

course  of  action  is  to  remit  the  matter  back  to  the  

disciplinary  authority  or  the  appellate  authority  with  

direction to pass appropriate order of penalty.  The court  

by itself cannot mandate as to what should be the penalty  

in such a case.

e) The  only  exception  to  the  principle  stated  in  para  (d)  

above, would be in those cases where the co-delinquent is  

awarded lesser  punishment  by  the  disciplinary  authoirty  

even when the charges of misconduct were identical or the  

co-delinquent was foisted with more serious charges.  This  

would be on the doctrine of equaltiy when it is found that  

the employee concerned and the co-delinquent are equally  

placed.   However,  there  has  to  be  a  complete  parity  

between the two, not only in respect of nature of charge  

but  subsequent  conduct  as  well  after  the  service  of  

charge-sheet  in  the  two  cases.   If  the  co-delinquent  

accepts the charges,  indicating remorse with unqualified  

apology, lesser punishment to him would be justifiable.

13) Learned  counsel  for  the  respondent  had  no  answer  to  the  

aforesaid position in law and could not justify the stance of the  

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High Court in modifying the punishment in the manner indicated  

above.  Therefore, sidetracking the central issue, he made a vain  

attempt to argue that the charges against the respondent could  

not be held to be proved as per the records.  Obviously, that is  

not even the issue before us.  As mentioned above, there are  

consistent findings, not only of the departmental authorities, but  

even the Single Judge as also the Division Bench of the High  

Court  to  the  effect  that  charges  against  the  respondent  stood  

established  in  the  departmental  enquiry.   Thus,  it  is  not  

permissible for the counsel for the respondent even to argue such  

a proposition, that too when the respondent did not challenge the  

judgment rendered by the High Court.

14) As  a  result,  the  instant  appeal  is  allowed.   That  part  of  the  

directions contained in para 62 of the impugned judgment which  

modifies  the  penalty  are  hereby  set  aside  and  the  penalty  

imposed by the disciplinary authority is hereby restored. There  

shall, however, be no order as to costs.

.............................................J. (J. CHELAMESWAR)

New Delhi; August 14, 2014.

.............................................J. (A.K. SIKRI)

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