Holding

The corporation is a State instrumentality, the disciplinary proceedings were arbitrary and unsupported by reasons, the alleged conduct did not constitute misconduct under the Rules, and therefore the removal order is illegal and set aside, with the appellant reinstated and awarded back wages.

Summary

A.L. Kalra, a former Deputy Finance Manager of the Project & Equipment Corporation of India Ltd., was disciplined for allegedly misusing two advances granted under the corporation's House Building and Conveyance Advance Rules. The corporation withheld his salary and, after a disciplinary inquiry that lacked reasons and was conducted arbitrarily, removed him from service. Kalra challenged the removal before the Delhi High Court, which dismissed his writ petition, and then appealed to the Supreme Court. The Supreme Court held that the corporation is an instrumentality of the State and thus amenable to writ jurisdiction under Articles 12, 32 and 226 of the Constitution. It further found that the inquiry officer’s findings were unsupported by reasons, the alleged conduct did not constitute misconduct under the 1975 Rules, and the removal order violated Articles 14 and 16. Consequently, the Court set aside the removal, declared Kalra to be continuously in service, and awarded him back wages (50% for the period he was not in alternative employment) and costs.

Issues considered

Whether the Project & Equipment Corporation of India Ltd. is an instrumentality of the State within the meaning of Article 12 and thus amenable to writ jurisdiction under Articles 32 and 226.
Whether the disciplinary inquiry complied with the principles of natural justice, particularly the requirement to give reasons for findings.
Whether the alleged breaches of the House Building and Conveyance Advance Rules amounted to misconduct as defined in Rule 4 and Rule 5 of the 1975 Rules.
Whether the removal order was arbitrary and violative of Articles 14 and 16 of the Constitution.
Whether the appellant is entitled to reinstatement and back wages despite having taken alternative employment.

Legislation cited

Constitution of Indias. Art.12, s. Art.13, s. Art.14, s. Art.16, s. Art.226, s. Art.32
Specific Relief Act, 1963s. Sec.14

Subjects

instrumentality of Statewrit jurisdictionnatural justicearbitrarinessArticle 14Article 16disciplinary actionpublic employmentback wagesremoval from service

Judgment

A A. L, KALRA
v.
THE PJ,lOJECT & EQUIPMENT CORPORATION
OF INDIA LIMITED .
.B. May 1, 1984
•
{0.A. DESAI, 0. CHINNAPPA REDDY AND A. VARADARAJAN, JJ;J<

A· Writ Jm;isdictlon of the High {Co>rt ~nder Arilcie 22~ of the Constl(uilon-
P!fblt'c- ·sector· undertakings a_nd ·ot~er "inst'rumentalities of the State.,
C whether amenab1e to the \vrif' jUrisdiCtion.

B. Ef!ttct of Conces$io1i. iit the Supreme Court by_ the State as _tO th~
maintainability or amenablity to the Writ jurisdiction-Though the
normal procedure is to ren1it to the High Court, the,. Supreme Court,
in order not to protract tne litigatiOtJ "involving ·the JivelihoOd of a party
befof~ it can lt_self hear the appear on nzeri ts. ·
D
C;_ · ConstitutiOn Of Ind1·a, · 1950 Aft. 1_4'-Whether there should be any
-sp?cific _pleading Jn the _Pe.1ition· pofnting out whether anyone else was·
either stmilarly situated as tire petitioner or disslffiilar/y treated. for
ente.rtaining the charge of discrimination· and· "granting relief .on that -
·ground. . ';...__,
•
D.· Legislative Policy. wheth-!r judlcia/ly,reVif}wable by the courts-Const/.
tution of India, 1950 Arts. 226, 32 ond 13.

E. C0nstitutloii of India· 1950~/Jistifzction between Par( XIV and Part III-
. oi the Conslitution-Whethe'r tlze employeeS of.the Corporatioit entitled
to the protecti.on under Part ){_JV of the Constitutioni
F
P.. Project and Equfpment Corpora,i"an of India _Ltd, Employees• (Coitduct,
Discipline and Appeal) Rules, .l975-Rules4, 5 ond 25, Scope of-R«le
4 dOes not specify any miscand_uct .and Rufe- 5 does not_ specify that
violation of Rule 4 'is per se misconduct-No disciplinary_ ach'on, there·
fore ,will arise wider Rule 4 of the 1975 Rules.
•
G G.. The Project allli Equipment Corporation of India House Building Advance '
(Grant and Recovery) .Rules !111le 10. (J) (ii) and the Profits and
Equipments Corporation af India Ltd. conveyance _Advance (Grant an.d
Recovery) Rules 8 and 10 (J)-Whether the non-utilisation of the
advances within the StiPulared tim·e for the purposes of and ·no refund
.thereof imn.iediatel;Y On the- expirY. Of the periOd, ciJnstitlfte Hmisco1ufuCt"
within the meaning ·of the exprwion in Rule 4 (iJ. (iii) o} the 1975
ff
. A L. [(ALRA v. J>ROiECT EQPT. CORPN. 647'
.•
., . .

Rules and ifnot whether the domestic enquiry and. the puµishment of · A.·.
the disniissal of serviCi is · warrant"'ed•

. H. Rttlief for a declaraiion in cases of cqntract for .publ!c etpp/oynient~
whether caJi!iot be :;jJecifically ellfOrced. ·

I.: Domestic. EnqiJiry-Whether the Illquiry Officer. and the Puizishing
Authority niust give reasons before /he major punishment is impased..-'
Whether non giving of.the reasons- makes the decision of dismissal
arbitrary and against prtncip!es of natural j:1stice.

Th~ ·i>rojecit and EQuiPIDent CorPoration of India Ltd. -was formed
in t 9_71_ as a wholly own.ed subsidiary conip_any of State Trading cOrpo ..
radon, a Q.qvernmcat 'O{ lodia Undc1taking. ·In .1976 it was separated · C
and since then it functions ·as a sep,ttrate.Government of India Undertaking.

·- The appella'nt who joined th~ .!frvice unller the State Trading Corpo.
ration· origipally and Jater exercised hi> option to serve -the PrOject and
.E.quipment Corporation wilh effect ·rrom NoVenlb"er 9, 197.6. The appeliant
while-working as Depuly Finance Manager Grade II ap,PHed for and- obtained
(a) an advance in the amount of Rs. 16,050 for purchasing a plot of 1aod on D.
April 4, 1979 for which be e,lecuted the ·.requisite agreement as rCquired .by
cthe Project & Equipment Corporation of .Jndia Ltd., House.Buildi:ag Advance
(Grent and Recovery) Rul'es, aµd (b) an advance in the amount of_ Rs. 11,000
for purchase of a n-ew mOior cyCle on July 7, 1979 as admissible under ''the·
P_roject and -Equipment Corporation conveyance Advanc~ (Grant and Reco.
very) Rules .. Under these rules- nori-utilisation of the amounts· within tho
time. limit will impose a liability of the refund. of t'be entife a·inount- forth" E
with. tog~ther·with penal interest thereon: The appellant failecJ to·uliiiso
the amounts and also· to re.fund the same. Therefore, coercive steps were
taken to fecover the en_\ire amQuot of the House Building adv,ioce .from his
p·ay by_ stopping ihe· payment of his salary from 16th: N0Vember1 . 1979.
As regards the conveYance advance, the receipts• etc. for purchase made: in
1980 were accepted, • · . .
F
On July 22, 1980 a ·memorandum was served upon the appellaO.t
statirig therein that the compet~nt authqrity proposeii to Dold an enquiry
against him. u·nder Rules 27 of the .Project anJ Equipment Corporation_ of
ladia· Employees (Conduct, Discipline & -··AppeaH Rules, 1975 in.respect
of the aforesaid misutilization or the advances. The committee of Manage..
m~nl i_a exerc_ise of.the powers _Conferred ·by sub~rule (4) of Rule 27 of the :a:
l97S- .rules aPpointed one Sri A.S. Na:ngi.l, its Chief Marketi.lg Manager as
the Eriquiry ·Officer to enquite into the two charges against ·the appellant.
The appellant sqbmitted on June 13, 1980 a detailed statement pointing·
out that for va.rious reasons therein mentioned so as to. explain why there
Was delay -in refunding ihe advance and speCifically pleaded .that in· view . of .
the fa~t that 'the· first advance was sought ·to· be recovered by WithbOldili_g
his sala:ry and adju~ting the pay _towards-the·advance an_d charging penal H
interest and in the second case by- accepting. the ~ocument evideaCiog
purcha.siJ of scoot.er· µo niiscond.uot could be said to ·have be.en committed
648
.. • sUPREME cotlRT REPORts !19$4) 3 S.C.!t

]
A by the app;llant and the di!~iplinary ··enquiry was, uncalled for. . The
enquiry Officer· in hi.s report after ·recaputulating_ all.egations and explan'at.ion
simply concluded that the ·appellant bas contravened Rule IO (I) (c) (i)
of the House Building Advance Rlllcs, ~ad also rules 8 and 10 (I) of the·
Conveyance Advance Rules and ther·efore comm·itted miscondtiGt punisba·ble
'
under Rule 4 (I) (iii) of the 1975 Rules. ·

PUf$oant to the.report of the Enquiry Officer, the Executi.ve Director
for and on behalf of th-e Committee of Maaagement of the corporation m1de
an order PEC: P .5 (8) 77 dated February 4, 1981. stating that the
Committee __ of manag~ment agrees with .he findings of.th¢_ inquiry officer
and .imp()s~S the puaisl:imeat of _removi11- from ser_vjcc· with effect from ·the
date of. the order. The appeal preferred to the Appellate Authority wa•
c rejected as per tho Memorandum dated May 21, 1981 signed by one Anand
·Krishna. claiming.to aCt for and on behalf of the Bo~rd of Dire.ctors. '

Tho. appella~t; therefore approacped the High Court of Delhi under
Art. 226 of th~ ·constituti~n questioniag4\he correctness and validity of 'the
findings of the inquiry officer and the decision of the Disciplinary Authority
as well .as th~ appellate iiuthori~y .. inter. alia <:>n the gro:Und that the. inquiry·
D-' was held iu violation o( the princip!Cs of natuial justice and the q.tiasi-.
judicial authority failed to. give· reasons in support of its order and the ·action
_taken· against the appellant- \Vas per se arbitrary and Wola_tive of Arts.14 arid·,
16 of the ConstitUtion inasmuch as the_ . .a11egatiOc contb.ined in the _beads of·
.1charges, even. if·. unre-butted1 do ~ot · constitute .a misconduct within the
meaning- o_f the ·expression in· 197 5 ·Rules. In order to ·susiaiO the maintaioa ..:
bility of the writ petition, the app.ellant ·alSo c·onten_ded that the r"esp·ondent
·E i.s an instiumentality of the State 11.nd is coalprehended i~ the eXpressioo 'oth~r
3Uthorit.y' in Art. 21 of the - Con.~titution. The· wr·it p.!titioll came~u·p.
for admission before a Division ~·_}nch of the Delhi.· High Court. It WJS ·
dismiSSed in limine observing that 'the ·Writ petition is oot maiotajn1ble on ~..
.the facts .preseQtly set ou.t in th" P'tition. HJncJ tbi-s app°e1l by sP.ecial ·
leave. ·

. ·. Allowing the appeal, the Court

HELD :
•
1 : 1. Public sectof u:1dertakiiig1 aa<l other instrumetlta·
Hties of the ·State.are compFc.h.ended in 'the expressio::i ·otbcr. allthori.ty~'
1

in Article 12 of the CoustitutioQ. [660A]

1.~ 2. Once it is conceded· that the .respondent-corpor.ation is an ·
iilstrumentafity of the s.tate 'and; is therefore, ·compreherided in the ex'pres-
sion 'other authority' in Art. 12 of thel Constitution, it is indisputable
that it is amenable to the wrii: jurisdictio:i uoder Arts. 32 and '226·of the
CopStitution:· Apart from the conc·essioo, the tests .collated in th~ deCisioii
·of the. Coastitution B'nch of.,his:·Court i.n AJay f!asia etc. ·v. Khalid Mujlb
Sheravardi and Others etc. [1981] 2 S.CR. 79 for determining whether
a pa~ticular body is .an "instrumcnta.lity .of the S,tate are fµlly sat~sfied and
therCfore on precedent and conC.:ssioa it is satisfactorily establiShed that
ibe respond~nt~Corpdration ·is an· instrumentality of the 'State within tho.
••

. A. L. KALRA v. PROJECT EQPl'. CORl~.

nieaning or the expression •other authority' under Art. 12 of ·t_h_e ·coasti~ A
: tution and is amenable t.o the writ juriS;diction. The writ Petition filed by
the appellant in the High Court was thus maintainable. [660D;E]. ·

2. \Vhen onCe it is conceded that the respondent was· amenable to
the wr.it jurisdiCtiOo, th~ question _that \vi11 afise is whether ·th.e rQatter.
should be remitted fo the High Court as (he High Court bas rejected tho

._,
.
.
writ petit_ion. in limfne on the ground that the reSpoi:iderit was nOt amenable
to the writ jurisdiction of the High Court. In ord_er not to protract t_he
litigatioll hivOlving livC:lihood of tb_e party approaching -the ·supreme Court
B

for justice, t_he Court can set down the appeal for final hearing on nlerit_s,
which they did in the instant ·case. [660F-H]

3:1. It cannot be said that executive actioil which results iIJ dellial C~"'
of equal protection or- law or equality before law cannot be judicially revie-
wed ·n_or can_ be struck dGwa o!l the ground of arbitrariiless as biing·· violative
of Art. 14 .. [66JEcFJ
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 1.4 strikes at arbi·
trariness ~in execu1ive/administrative _actioff because any action· that is arbi-
trary i.nust necessarily .invo·\ve the negation· Of 'equality. One n·eed -not
confinO. the ·.denial_ .of equality to a co.mparative evalu..1tion between twci
persons to a·rri've .at a conclusi·on of discriminatory treatment. An action
per se arbitrary itself denies equal protection of. law.· It is thus too late
in ihe day to· contend that an executive actjon shown to be arbitrari _is_ not
either judicially rcviewable or wi'1hia the teach of Article 14. E
[662A, F-G, 663A-B]

. ,· Ajay.Hasa;a etc. Khaiid MujMSheh>avardi and Ors [I9n] 2 s.c.R•
?9· E. p; Royappa v. State of Tamil Nadu and aor. [1974] 2 ·s.C.R·
34S; .D. S. Naka,:a v. Union af India, [1983] l S. C. C. 305 and Maneka
Gandhi r. Union af India [1978] 2 S. C. R. 621 followe.d.

4. Wisdom Qf the _legislative-policy may not. ·be opeo to judicial review
btit ·when the wisdom takes the Concrete form of law, the same must stand
the tesfof being in tune· with the fundar#ental rights and if it.· t_renches upon
any of the_ fundamental rights; it is void as ordained by Art. 13, . Conceding
for the preseDt pufpose that legislative action follows a ~egislative pOlicy
and the legislative poli.cy is not judicially reviewable, Qut :whil~ giv~ng coo-•
crete shape to· the le_giSlative policy in the forrri of a statlile 1 -if the Jaw
violates any of t~e fundamental rights ·including Art ... 14, the same is void
to the . extent 'as provided iq. Ar_t. 13. I( the law is void. being ,in violation
. of any ·of the fuadat1_1ent~l· rights set out in Part JI of the ·Constitution, it
. cannot be shielded on the ground that it enacts a legislative policy. [661P-1;1]

5. Even· if .the respondent. Gorporation_ is an intrumentality of the·
State as comprehended .;n Art. 12, yet the· employees of tho Corporation
are not governed by Part XIV of the Constitution, How~ver it could not bo
• SUPRJJME COURT REPORTS [l984j 3 s.c.it .

A S<.l;d that ae protection Conferred by Part III on ·the public servant is com· ,
p"aratively !Si ~lf~~t1\,_, tl:t<\11 ibo one .conf.::rred. by Part XlV. Thei:efore tne
distinction soug't1t t..:> bJ dr-a wn be.tween· prcitection·. of part .XIV of the
Constitution find P>rt Ill has no significance. [663B-C, 66SA]

Mandging Director. Uttar Pradesh Wareh<;Juslng Corpora'1ioh &· Anr. v.
n Vinay Narayan Vajpayee; [1980] 2 SC R. 773 at p, 784, relied upon.
'.
1'- I
· 6:1.' Even.if the facts a)leged i.n two.heads. of charges are accepted as
.·wholly· -proved,. yet that wo~ld not constitute misconduct as prescribed_- in , .,
Ruic 5 )J.nd no pen.atty can be impo~ed '!Or such conduct, for tlle reason that
while Rule 25 whi_:;:h pr_~scri'bcs penalties specifically provides that,any of" '
the penalties therein mentioned can be imposed on an employee for miscon'·.
·c;: duc·t com1nitted by hi1n. Rulo 4 d1es ·not.specify a rnisc.oiiduct. Rule 4 •.
styled as rGeneral' ·spe¢ifies a norm of bch1viour .btit do·.'s not specify that
its viOiation Will. co9stitute misconduct. In Rule 5, it i5 no.where stated
.{bat anythirig violative of Rule 4 would be per se a miscon.duct in ·any of
tho sub-cl:iuses of Rule 5 which specifies misconduct. [6668 D]

I): 6:2. A general expectation· of a .certain decent behaviour in - respect
of employ~es ·keeping in vi9w corporate :culture m·ay be a moral or -ethical
expectation. Failure to keep to s.uch high standard of moral; ethica'I or
a·ecorous b::baviour ·befitting an· officer of the compa'ny by itself ca.noot ·cons ti".'
• tilt~ mjsconduct unless the specific conduct f?:lls ia any of the enumerated·
misconduct in Rule ·s. Any atte1npt to telescopJ··Rule 4 into Rule 5 must..
Qe looked up.on With appp::hcn.sion becau~e Rttle 4 .i~ vague and of a general
naturr and what is u11becoming of a public servant may vary ·with ·individuals
and expose · cmp!oyees to vagaries. of subjeGtiv.e cvatu1tion. ·What in a given
context v:ould constitute cOnduct unbecoming_ of a· Public servant to ho
tfeated as. miscondtict would ex-Pose a grey' area not amJnable to objective
evaluation. Where misconduct when prOved entails penal consequences.; 'it
is obligatory 9n the· employer to specify and if necC:ssafy d~fiJJe. it with
.pr.~cision and ac.curacy so that any· ex post factO intcrprctatio·n of some
. ·incident may not. be Camollfttges as ·n1isconduct. [665D-G] '

M/s Glaxo Laboratories (I) Ltd. v. P'residing Of/icer, Labour Court,
Meerut & OthJrs; [1984] l_. S.C.C. I, followed.

"
7:1. Seeking advance arid grl\ntiog the same under r-elevant rilles is
G at best a l~an transaction. The transaction ma)' itsel{·provide for paymens
an.d the conseqilenccs. 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 io go in. si:arc"h of any other conse'"
quence. by initiating any· disciplinary aclion in that"behalf unless the 1975
F.ules specifically inCorporate a rule that the bri::ach Of :1fousfl Building
H Advance Rul·;s and the ·conveyance advance rules, would by themselves
·constitute a HmiscondUct". Therefore Rule 4 (l) (l)·is not only; not attatac ... ~·
ted but u1 tbi~ cas_e no attempt_. was mad'e to establish the· correction. And
A· L. KARLA v. PROJEC'I' JlQPT. CORPN. ·651
as far as Rule 4 (1) (iii). is concerned, an advance not refur\ded in tinle ; A
where it was recovered by withholding the Salary of a highly placid officer
may not disclose a conduct uO.beComing of a public servant. Tberefore, the
first head of charge is an eye-wash, It , does Dot constitute· a misconduct
if it can ~be said to be one even_ if it re1nains unrebutted. ·The inquiry
officer h;!s not said one word_ bow· the uncontrOverted facts consistute a
conduct unbecoming of a public servant, or b·e failed to ffiainiain absolute
·integrity. Regardi'ng the convey<1~ce advancer the.Position is the same. ·The .:1 .B·
• -I apr)eBant for no fai:ilt has been plloished sub-silencio. -
y
.. · , . [667F-H, 668A, D·E, 669H)

7:'2·. Now if what ·is alleged as illisconduct do:s not cOnstitute mis·
conduct not_ by-· a·na1ysis or appraisal Of evidence, but"per se under l 97S ·
Rules the ·respond~nt had neither the- authority nor the jurisdiction nor ·the
power to impose any penalty for th~ alleged miscondu:;t. An administrative· C
authority \Vho ·pu~ports to act by its regutition must b-: h_eld bound bY the
regulation. [670H, 671A] ·

8. In the matt.er-of public em·ptoyment if th.! tCrmin1tion is_ held. to . ·
be dba, a declaratioD can. b~ grante!i that the man continues to be in ,
service. [67 tG, 672A] .. .
D
Sukhdev Sit:glf & Ors. v. Bhagatra1n Sarda~ ·Singh ... Raghuvananshi &
Anr. · [1975). -3 S.C.R,.6l9 _@ 655. Western India Automobile A:,sociation v.
Industrial Tribunal, Bombay and Ors. [1949] F . C.R. 321 at 340. ·

9:1. Jbe dut).- tcr give reasons would permit th:;:: ·court hea~hig a peti ..
tion 'ror a wflt of ·certiorar-i to•ex fa.::iC aqccrtaln whether there· is any errOr E
apparent on the record. A sp~aki~~ order will at its b~st be. reasonable ind
at its _·worst be· a_t.least a plausible one. If reasons for an· order are given
·. there will be.· Jess scope fOr arbitrary or Partial ex:erci se of p·ower aild the
order ex facie .will indicate wbethGr extr·aneous rn3.tters we're taken into
ccmsideration by authoritr passinll. the order. [672D-E]

M. p. Industries Ltdc. .v. Union of India and Others [1966] l S. C, R. F
466 at .472; Vadachala Mnda/iar v. Stare of Madras, A. I .. R. 1952 M;dras
276; Bhagat Raja v. Union of India· and Others; [1967].3 S.C.R. 302@ 320;
r"Cferred to.

9:2. l{~re, the findings of tho inquiry officer .are merely his · ipse dixit.
No. reasons ·are assigned for reaching the liµding·and while recapitualating _O
evidence seif:contradictpry positiOns were adopted·that.either there was no .. 1
misconduct or ther~ was some misconduct or double punishment" was already
iinposed. Rule· 27 {19) c_asts an obligation u·pon .th·' inquiry officer at the
conciu!i.ion of the inquiry ti;> prep.ire a rep:ll:t which must inte.r a!ia inClude
the "findings _o.n- e:tcb ardcle of cbarg,~ and the rea"sons therCfor. The report
is pfep.:ued in co.1travonPon o( tfle afonrrnen_tiOnod rule. The· situaliOn .is
further compounded by the fact t'iat tb' discipli.1ary authority which ii none .. a
other ·than Com;nittee of Management of the ·corporatioa while accepting·
the feport_ of the-inquiry officer which itself was_ defective.did not- assigtt any
SUPREME COURTS REMRTS (1984] 3 sc.R.

.' A reasons. for aCceptini'the.report of the inquiry officer·. Further sub rllle (ii)
of R_ulC 35 'provide& amongst othcis-.that the Api>ellate "AUthority' shall
·consider. whether -the findin·gS ~re justified or whether the penalty_ is ex_cesSive
or inadequate and pass appropriate Grders within three rnonth1 of th\J date-of
appeal. In order to- ascertain whetPer .the rule is complied whh, the- order of
the appella_te authority must show that it took intq consid.:rdtio,1 the
findings ·the quantum· of pen3lty a1ld oth~r rclevJnt coasideiation'>. -There
is no material for showing that the appe!Jato· authority acted in COD'>OD tnce
with its obligation under Rul.e 35. (67 lE-H, 67 3A·D-E]

9:3. '"Therefore, the orde"r of removal pas5ed by the_ Disciplinary
·Authority is illegal and inva.lid tttr the reasons (i) that the· :ictio:l is th<,>rougbly
· arbitrarY and is viola.tive or ,Att'. 14; (ii) that the· alleged misconduct ~oes
_not Cc·nstitute miscoadu:t within the 1975 Rules; (iii) that the inquiry
c officer him.- elf found tbat pll:!ishment was already jmposed for the alleged
miscondq.ct by withholding the salary and the app;,llant could not be e:icposed
to double jeopardy; ·and (iv) ·th'!-t the finding~ of the inquiry- officer are unSup -
ported by reasons and. the order or the Discipliilary Auth~rity as well a'3 t"he
Appellate Authority suffer from the same vice. [673H: 674A-B]

D ·10:1; Once the order-of removal from service is held'.to be illegal and
invalid ·arid the appellant being In public ~mpfoyment, the necJsSary dec1a ..
ration must follow that he.continues to be _in service uninterr.uptedly. -Ordi-
~ narily, it is _well·scttled ·that if termirt1tion of service is ·held. to be bi\d, no
o-ttler punishtnent in th;~ guise of deaial of back. wages can be imposed and
th;irefore; i~ mult as a necessary corollary .follow that he will be enti~led to
all the back wages oo the footing· that h ~ h<is Continued to be in Service
uniO.teiruptedly, ·rr ihe appellant had procured -an alternative employment he
wo_uld nofbe ·entitled to wages and salary -ftom the respondent. . But it is
eqtially true that an Cmployee depending.On salary for his survival when_ 'he-
is exposed to -the vagaries· of the court litigation cannot hold on to a slender
dist~nt hope Of jndicial process ~omlng to his rescue and not try to survive
by· a·ccePtini; an alternative eniploYmem, a hope Whi6h may tu~n out to b~ a
' : mifage .. ·Therefore, the appellant .was perfectly Justified _in procuring all
F 31ternatlve.employment:in "order to keep his body ancl soul together as also
to bear the. expenses of litigatjon to Vindicate his hOaour, integrity and
character. [6748-G] ·•

10:2." ItoWever, in t'1e instarit case, the _appellallt sho~ld be paid SO%
,
of the back wages for the r_est of the_ Period during -which he remah1ed
unemployed. This is so bec·ause the cOnduct of the appellant cannot be said·
G
to be entirely in consonance with corporate clilture. _As.a.highly placed
officer ~e.was bouJd to strengthen the corpo·rate culture and he should bave
acted withill. the ·spirit of ·-the re&ulations both for house building adv<ince
and ·conveyance advance, Which" are devised to help the employees. There
has been· IaPSe in totallY complying-with ihese regulations -by the appeJlant
iH though it neither constitu.tes: misconduct to attr_act a penalty .ndr substantially
good enough for initiation of disciplinary inquiry, -(6 75A-C]
' .
A.+· KALRA v. PROJECT EQPT. CORPN. (Desai, J.) 6.53 .·
.·
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 2703 of 1981. A:
,
From the Judgment and Order dated the 23rd July, 1981 of the
Delhi High Courtin C.W. No, 1648 of 1981.

M.K. Ramamurthi, L.C. Goyal and Ms. Sumitra Goyal
for the Appellant.
T.
Lal Narain Sinha, M.C. Bhanclare and P.P. Singh for the
Respondent.

The Judgment of the Court was delivered by
c
. DE~AT, J. Failure to adju.st the antena to the operative channel· ·
and dipping the. he:d like the proverbial ostrich in the sand so as not
to view the changing kaleidos.cope of the law can alone be said to
be responsible for. this trivial matter to be liroright to this Com:t.
Respon<l~tit is the Projec.t & Equipment Corporation of India
Ltd. ('Corporation' for short) since its formation in 1971 a wholly
own~<l 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 promo.ted as Assist~nt and earned ·a further promotion on
M(ly 22, 19.74 as Accountant. On the setting up of the Corporation,
the appellant exercising his.option came to be transferred as Accoun-
. tarit to the Corporation on November 9, 1976. Under the relevant
conditions of transfer,· h.e continued to be governed in the matter of F
recruitment and promotion by the relevant rules of the STC.. He was
· promoted in an officiating capawy as Deputy Jlinance Manager
Grade II on June 29, 1978 and he was put on probaticin after being
promoted as Deputy ·Finance Manager Grade II on regular basis
· effective from February 5, I 979. The appellant applied for and
obtained. all' advance iri 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 adfance was
oblained are styled as 'The Project and Equipment Corporation was
India ·Ltd. House Building Advance (Grant' & Recovery) Rules
. ('Rules for House .Building Advance' for short) framed in exercise of
the powers conferred upon the· Board of Directors by the Articles of
· Ass0ciation of the Corporation. The appellant also applied for and
obtained an advance in the amount of Rs. 11,000/- for purchase of a
654 .· SUPRE.ME COURT REPORTS [1984l3 S.C.Jl. •

A new motor cycle on July 7, 1979. This advance is governed by wliat
. are styled as the Projects & Equipment Corporation of Indiit Ltd.
Conveyance Advanc~ (Grant & Recovery) Rules ('Conveyance
Advance Rules' for short).

In respect of the house building advance. according to the
respondent-Corporation, in view of Rule JO (I) (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
tim~ failing whic!f he.was liable to refund .at once the entire amount
together with interest to the· Corporation. .The agr~ement 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 C'orporation failing
.which the whole of the advance had to be refunded with interest. Jt
was alleged that the appellant neither utilised the advance for the
purchas·e of plot nor refonded the amount despite several reminders
a·nd ultimately on November 13, 1979 a memorandum was served.
upon him cautioning him that if he failed to refund (be entire
amount forthwith, disciplinary proceedings will be initiated against
him. As the.appellant failed to comply with the request made in.·
a
the memorandum, his salary from Nove.mber .7, 1979 as whole.was
withheld for adjusting the amount of advance and the interest pay-
able thereon: He was also charged penal foterest for the default
committed by him. · . · ·

In respect of the conveyance advance, which was sanctioned on 0

July 7, 1979, the.appellant is. alleged to have committed a default by
F not purchasing the motor cycle within a period of one month as
required by Rule 10 of ihe Conveyance Advance Rules, and 9n
Novembet 13, 1979 he was advise~o refund the amount by Novem"
ber 14, 1979 failing which he was t!)reatened with disciplinary action .
. It is,however, admitted that the appellant purchased a. scooter in
..
·. April, 1980 and submitted the dbcuments. which. appear to have be.en
G
accepted by the Corporation, The . balance. of advance was also
refunded •..
A memorandum dated JuJy 22; 1980. was served upon the
appellant stating therein that the competent auth6rity proposes to
hold an enquiry against him under Rule 27 of the. Project and
H Equipment Cotporaticn of India Ltd. Employees' (Conduct, Disci·
pline & Appeal) Rules, 1975 ('1975 Rules' for short). There were
A, L. KALRA v. PROJECT EQPT. CORPN. (Desai, J.) 655

two heads of charges in the charge-sheet \)rawn-up against the A
appellant 01) which disciplinary enquiry was proposed to.be held,
:·These two heads of charges read as under.; • ·

.
• -I Shri A.L. Kalra while functioning as Deputy Finance
. y Manager-Grade ll in the Finance Division ·of the PEC
· during April,· 1979 applied and drew an advance of
Rs. 16,050 for purchase of a plot ofland a.t Faridabad ..- "t
• he did not furnish the relevant doc~ments in the office nor
did he refund the amount of advance to the Corporation c
within two months of the date of drawal of the advance as
:required under Rule 10 (I) (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 .,U ·
· Rule 4 (!) & {iii) and Rule 5 (5) of the PEC Employees'
(Conduct, Discipline & Appeal) Rules and :Roule 10 (I) (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 abpv~ 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
dLd he refund the amount of advance to the Corporation as
required under Rule 10(1) ibid. .
G
Shri A.L Kalra by his above act exhibit~d lack ofinteg-.
rity and conduct unbecoming of a Public servant and
violated Rule-4 (I) (i) & (iii) and· Rule 5 (5) of PEC Emplo-
yees (Conduct, Discipline & Appeal) Rules and also violated
Rule-8 and Rule-10 (is ofthe PEC Conveyance Advanee
(Grant & R.ecovery) Rules and thereby committed miscon.
duct punishable
.
under. the . FEC. Employe~;·
. . .
(Conduct
_.' . . I
SUPREME COURT REPORfs· · [1984] 3 s.c.R.

Discipline & Appeal) Rules, 1975."

. The appl!'llant was a.lso asked to submit his defence statement
within 10 days from the date .of.the receipt of the memorandum.
The appellant by .his letter dated Feb~uary 13, 1980 requested for
extension·.of time to file the defence statement. fr appears ,that he
sought further extension of.time by thri;e 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 appoinletl •
Shri A.'S .. Nangia, Chief Marketi1ig Manager as the Enquiry Officer
·C • to enquire into the charges against the appellant submitted on
June T3, 1980 a detailed statement pollltlng out that the inq"irj' 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 'he document evidencing purchase· of scooter, no
misconduct could· be said to h11ve·been committed by the appeila.nt
and the diseiplinary enquiry was uncalled for. Various other conten-
tions were also raised in the defence statement. The iuqu·iry officer ·
conducted the enquiry in respect of the afore-mentioned two charges.
One U.S. Aggarwal, Finance Manager of the Corporation appeared ·
as ~resenting Officer. The apRellant conducted his o·wn defeJJce ..
In Para 4 bf fris report, the Inquiry officer states that the
'preliminary hearings of the inquiry was held. on 3rd and 9tl1 April,
1980 and then inquiry w~s held regularly on various dates from 23rd
•F April 1980 to 22nd May, 1980. The appellant was called upon io
submit his statement of defence which he had submitted on June
•
30, 1~80.
The findings purported to have been recorded·by the jf!quiry
officer were the subject matter of.a heated debate between t!ft, parties
· and therefore,· the report. of the. Inquiry Officer may be broadly
scanned here. · After re·capitulating 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, (appel-
lant} pleaded guilty to all the charges mentioned in Annexure I and .
also agreed to the stateinent of imputation of his misconduct in
· support of the article$ of charges framed against him.' In part 5 (3),
of
the inquiry officer discussed \he first he&d of charge in respect the
A. L. KALFA v. PR01£CT EQP l. CORPN. (Desai, J.) 657

house building advance. It was found as a fact that the advance A
was taken for the purchase o( a pl•t 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 fo 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 so111e additional B
amount and'there was dispute between the appellant, the vendee an•d
J.C. Chugh, the vendor as to who should bear the extra burden. In.
paragraph 5.1.4 after 1ecapitulating the reminders sent to the appel-
lant 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 c
extension of tin1e for utilisation of the amount. And then in para~
graph 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.
D
The inquiry officer then proceeded to examine the .second head ,
of the charge. After recapitulating the fact a~out 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
E
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 o~ a F

exira.cted : .
motor cycle. ~hen comes the particular observation which may be ·

"He (appellant) did not obtain any fresh sanction for
.purchase of a scooter but simply submitted the papers' for
regularisatioµ of the advance and although no specific letter G
for sanction of the purchase of. a scooter was h~ued by the
Personnel Division yet the fact that lie Was asked to refutid
the balance amount taniamomtfs to ag;eeing defacto
sanction tor the !'lurchase of the same."

The inquiry officer then proceeds to dispose of the contention
H
of the. appeUant. that in .other case~ of similar advance and default,
' no ac.tion was taken but he was singled out for a harsh treatment •
.' 658 SUPREME COURT REPORTS [1984]3 s.c.R.

for the reasons alleged by him but with which we are not concerne<l
·. at this stage. The inquiry offieer then noticed that the full salary
payable every month to the appellant was stopped'by the Corpora-
tionJrom November 16, 1979 in addition to .the inquiry under whicll
disciplinary action was proposed to be taken'. The inquiry officer
concluded his report as under :
B
• "While deciding the oaie, t.he facf ihat the salary was.
stopped from 16th November, 1979 may be kept in view as
thi• may, I feel, tantamount to double punishment. Nor- •
mally 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 minu-·
tely scanned in the preceeding· 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 Arinexure• M to the petition. This is a bald document of two
paragraphs in which. the inquiry officer .records that the appellant has
contravened Rule lO (I) (c) (i) of House Building Advance Rules and
has thereby committed misconduct punishable urt.der Rule 4 (I) (iii)
of 1975 Rules. In paragraph 2, it is stated that the appellant has
B
· committed breach of Rule 8 and Rule I 0 (i) of the Conveyance
Advance Rules and has thertby ·committed misconduct punishable
under Rule 4 (I) (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 ar~ conspicuous by their
r absence .. The findings are the ipse dixit of the inquir~ officer.

Pursuant. to this report of the inquiry officer the· ·Executive

•
Director for 'and on 'behalf of the. Committee of Management of the
Corporati~n made an Order No. PEC.P ; 5 (8)/77 dated February 4,
1981. The heads of charges ar,e reproduced in paragraph 1. Pa(a-
graphs 2 and.3 are devoted to. the stages through which the enquiry
progressed. In. paragraph 4, the findings unsupported .by ~easons
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 app~llant preferred an appeal to the Appellate Authority
being the Board of Directors. of the Corporatic;iu (,Jn f~bruary 21 1
A. L. KALRA v. PROJErr EQP'r. CORPN. (Desdi, J.) • 659

· 1981. · One Anand Krishna claiming to act for and on. behalf of the A
Board of birectors, Appellate Authority issued •memorandum dated
May 21, '1981, Annexure P to the petition in which it is stated that
the appeal of th.e appellant was cpnsidered by the Appellate Authority
and after going through the records of the case, the Appellate
Authority has dec.ided tt,. uphold the decision of the authority and to
confirm the penalty of removal imposed upon him. B

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~e Appellate Authority is that none of them
made a reasoned order. or speaking order and their conelusions ace .c
. mere ipse dixit unsupported by any analysis of the evidence or r.;ason
in support of the conclusions. •

The appellant approached the High ·court of Delhi under. Art.
226 of the Constitution questioning the . correctnegs and validity of
the findings of the inquiry officer and the decision of the Disdplinary
Authority as well as the Appellate Auth9rity inter a/ia'lon the ground
that the enquiry Was held in violation of the. principles'[of natural
justie!l and the quasi-jqdicial authority failed to give reasons in sup-
port 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 Consti-
E
tution inasmuch as the allegations contained In the heads of charges,
even if unreb_utted, do_ not consitute a misconduct within the· meaning
of the expression iri,l 97 5 Rules. In order to sustain the maintain·
abilit of the writ petition, the appellant also contended that ·the
respondent is an instrumentality of the _State and is comprehended
in the cxpre!lsion 'other authority' in Art. 12 of the · Consti- .,
tution .
. The writ petition came-up for admission _before a Division
.Bench. of the Delhi High Court. It was dismissed in Ii mine <¥>serving
that the writ petition is not maintainable on . the facts presently set
o\\t in the petition. Hence this appeal by special leave. .G

In order to obtain any decision on merits, the appellant will
·have to clear the roadblock about· Jhe maintainability of the writ
•. p~tition in the High Court. }tappily this untenable contention was
.. not pursued in this Court. In para: 2 (vi) of the counter-affidayit
filed by pne Mahartand Khokher on behalf of the respondents it was H
unambiguously stated. that t~e 'respondent-Corporation is advised
not to dispute t)le • piaiptainability of the petitjoner's petition as
660 SUPREME COUR.T REPORTS [1984} 3 S.C.R.

A 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 •
o{ the Central Government and hence withiµ Art. -12. of the Consti-
tution, the respondent Corporation does not dispute the same. This
admission was reiterated in para 5.2: Further in the written submis-
B iions 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 Par.t III of the Constitu'ion, with this reser-

.
vation 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 Umon or ·the State and
c 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
ID Constitution. Once i~ is conceded that the respondent-Corporation
i~ an instrumentality of the State aµd is therefore, comprehended in
the expression 'other auth.ority' in Art. 12 o.f t.he Constitution, it is
indisputable thitt it is amenable to the writ jurisdiCtion under Arts.
32 and 226 of the Constitution. Apart from the concession, the
t~sts collated in the decision of the C~nstitution Bench of this. Court
E in Ajay Rasia 'etc. v. Khalid Mujib Sehravardi & Qrs. etc.,(l) for \!eter-
a
'· ·. mining whether 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 oHhe Constitution and amenable to ;
F the writ jurisdiction.· The writ p.etition filed by the appellant in the
High Court was thus maintainable.
Once when in this Court it was connceded .that the respondent
· was aiioenable to the writ jurisdiction of the H\gh Court, the question
-arose whether the matter should bt remitted to the High Court as the
High Court has. rejected the writ petition .·in limine on the. grourld
G.
that the respondent wao not amenable to the writ· juri§dietion of the
·High Court. Ultimately, in on:Ier not to protract the litigation
involving livelihood of the appellant, the. appeal was set down for·
final hearing on merits. The res):lonant•Corporation was accordingly ·
directed to file its affidavit as also the documents on which it seeks to
H rely. The appeal w~s thereafter heard on merits. •
(1) [1981] 2 SCR 79 •
•
; .
·A. L KA•.RA v. PROJECT EQPT. CORPN. ([/esai, J.) 661
Before we· deal with the contentions raised on behalf of the A.
a
appellant, it is necessary to dispose of contention ha~ing a flavour
of a preliminary object~n raised by Mr, Lal Narain ·Sinha on behalf
of the respondent-Corporation. It was urged that in th.e absence of any
specific pleading pointing out whether any one else was either Similarly
situated as the appellant or dissimilarly treated the cl).arge of discri- · B
mination cannot be entertai.ned and no relief can be claimed on the.
allegation of contravention of Art. 14 o.r Art. 16 of the Constitution ..
It was submitted that the expression discriminat.ion in;iports the con-
cept of comparison between· equals and if the resultant inequality is
pointed out in the treatment so meted out the charge of discrimina-
• .tion can· be. entertained and one can say that equal protection of law c
has been.denied.· Expanding.the submission, it was urged that the
use of the·expression 'equality' in Art. 14 imports duality an.d com-
parison which is predicated upon more than on~ person 'of situ.ation
'and in the absence of available. materiol for compariso11, the plea of
a
discrimination must fail. As corollary, it was urged that ill .the
absence of material· for 'comparative evaluation not only the charge D
• of discrimination cannot be sustained but the execqtive action cannot
be struck .down im the ground that the action~!!; per Ile arbitrary.
· Proceeding' along, it was urged that inaking.faw.is amatter of legis-
lative policy aud the degree of reasonableness jn every such law is
equally a matter of policy ~nd policy . of the legislature is not. judi-
cialljj, reviewable ~n the specious plea that it is either arbitrary or un- E
reasonable.

It ls difficult to accept the. submission that executive action
which results in. denial of equal protection of law or equality
before 'law ca.uuot !>e ·judicially reviewed uor can it bestruck-
down on the groupd of· arbitrariness as being violative of Art. 14. F
Conceding for the present purpos~ that legislative action follows
a legislatiye policy and the legislative policy is notjudicially review-
able, 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 Ar(.
13. If the law is void being in vio1ation of ~ny <if the fundamental G
rights set out in Part III of the Constitution, it cannofbe .shielded on
, the ground that it enacts a legisfative policy. Wi,sdom of the leglslit-
.. tive policy may not be open to judicial reviewbut when the wisdom
takes the'cOncrete form of law, t!)e same mu~t stand the test Of being
in tune with the fundamental rights and if it trenches upon any of the ·
fundamental rights, it is vaid as ordaiped by Art; 13. ' H

,,
662 '
SUrREME,COURT RE~ORTS [1984i :l s.c.v.:'
y- '•
A · _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
i? E.P. kvyappa,v. State o/T'amil _Nadu .& Anr,.(1) deserves special men
!ton becaus~ that effective1y answers the contention of Mr. Sinha:
.- ;me Constitution Bench speaking through Bhagwati, J. in con'curring
Judgment in Royappq's, case observed as under : - . ,
B
"The basic . principle which,- therefore, informs· both·
Atts. 14 aJ!d 16 is equality and inhibition against discrimi-
nation.. ]"ow what is the content and rea9h of this great ·
equalising. principle ? It is .a founding faitJl, to use the
c words of pedantic or lexicographic.approach.; We cannot •
cpuntenanCe' any attempt to trnncate its all-emoracing scope_
and meaning, for to do so would be to violate its activist
· magnitude. Eguality is a dynamic concept with many as-
pects and _dimensions and it cannot be "cribbed, cabined
and copfuied" within traditional and doctrinaire limiis.
D From a pcisitivistic point of view, equality' is antithetic to
arbitrariness.·. In fact equality and arbitrariness are sworn •
enemies ; on~ belongs ,to /he. ru'le of law in a republic while
the other, to the whim ancfcaprice of a:n absolute monarch.
Whe~ an act is arbitrary it is implicit in it that it is unequal
l;>oth according to political logic and constitutional law and
E !s therefore violative of Art. 14, and if it affei!'ts any matt~
relating to public employment, ,it is also violativ~ of Art. 16._
Arts. 14 and 16 strike at arbitrariness in State action and
ensure fairne~ and equality of treatment."
.,
' . ~ . :.
F This view was approved by the Constitution Bench ii) 1jay 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 equali\y, One_ need ·not
confine the denial of equal_ity to a comparative evalaation between two
persons to arrive at
a conclusion of discriminatory treat~ent. An
G -~ action per se arbitrary itself denie> equal of proteetion by law. The.
·Constitution Bi;nch p;;rtinently obsered in Ajay Hasia's case and
puJ the ·matter beyond controversy wh'en it said 'wherever,therefore,
there is arbitrariness in _State action whether it be of the legislature
or of the executive or ofan "authority" under Article 12, Article 14
· immediately springs into action _and strikes down such State action.' . ,
1:1
(I) [1974] 2 SCR 348.

•
A·. L. KA~RA v: PRoiECT EQPT. CORPN. (Desai, ],) 663,

This view was further elaborated. and affirmed in D.S.. Nak~ra v. A!.
Union of India.( 1)-in Maneka Ganifhi v. Union vf IndiiJ(') it was obser-
ved that Art. 14 strikes at arbitrariness in State action and ensure fair-.
ness and equality of treatment. It is Mius too late in the day to contend
that an ·executive action shown to be ·arbitrary is not either judicially
reviewable or within tlle reach of Art, 14. The ·contention as"formu-
lated by Mr. Sinha must ·accordingly be negatived. B .-
It must be conceded in fairness to Mr. Siriha that he_ is right in
submitting tj:iat even if the respondent-Corporation is an instrumen~
ta!ity" of the S\ate as comp_rehended in Art. 12, yet the employees of
. '. the Corporatiou are not governed by Part XIV of the Constitution .
.Could it however be said· that tt: protection conferred' by Pari III on C ,
public servent• is comparatively less ~ffective than tbe one conferred
by Part XIV? This aspect was examined by this.Court in Managing
Direetor; Uttar Pradesh. Ware~ousi!'g Corporation & Anr. v. Vinay
Narayan Va;payee(!)where 0 .. Chinnappa Reddy, J. in a concurring
_judgment has spoken so eloquently about ii that it deserves quota-
~: D
"!find it very hard indeed to discover any distinction,'
· on principle, between_ a person directly under the employ-
ment of the Government and a person under the employ- •
ment of an agency crr instrumentality of the Government or·
a Corporation; ·set up under a st'!ltute or incorporated but E
wholty owned by the Government. It is self evident and· trite
to s~Y that the function of the Sta_te 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 funC!ion of the State to secure 'social, econo)llic and
political justice', to preserve 'liberty of thonght," expression, F.
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
~.·· a·ttain these objectives has neces~arily resulted in intense
Governmental activity in manifold ways. Legislative and
exe9l!iivity have ·re_aclled very.. far and have touched very G.
. many aspects of a citizen's life. The Government, directly
or through the Corporations, set up by .it or owned by it,
.now owris . or manages, a large mimber of industries and
institutions. It is the. biggest builder in the country.· Mam-
. (1) [198311 sec 30;
(2) [1978] 2 SCR 621 ·
(~ [1980] ,2 SCR 773 at p, 784
H.

• ..
. 664. SUPREME COURT REPORTS [1984) 3 s.cJt.

A moth and .minor irrigatici~ projects, heavy and light engi-
neeri.ng projects, projects of various kirids. are undertaken by
\ the Government; The·Government is also the biggest trader .
in the country. The State ·and themuLitudionous agencies·
and Corporations set up bY it are the pi;jncipal· purchasers
of the produce and the products of our country and they
.B control a vast and cpmplex machinery of distribution. The·
. Government, its agencies ani:! instrumentalities, Corpora-
tions, set up by the Governmen·t u~der statutes and Corpo-
rations incorporated. under the ·Companies Act but owned
by the Government have thus becollie the biggest employers .;
in . the cou'ntry. There is no:-good reason wpy, if Govern····
c ment.is bound to observe the equality cl;mses of the consti-
tution in the lljatter of employ merit a'nd in its dealings with
.
the employees, the Corporations. set' up or owne<l
~

Government should not be.equally boundand why, instead,
. by the
such Corporations, could become citadels of patronage and
arbifi;ary action. Jn a country like ours which teems· with ....'
D
population, where the State, its agencies, its· instrumentali-
ties ~nd its ..Corporations are· th.e 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
E employment {lnder 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 Jo a
Court to enforce a contract of em$Joyment ·and denies him
the protection of Arts.14 and 16 Qf the Constitution. After·
F all employment in the public sector has grown to vast dimen-
sions and employees in the public sector often disc.barge
as onerous duiies as civil servants and. participate in activi·
ties 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
G persons in the service oT local · authorities, .Govefriment
companies and statutory corporations as·public servants an.d
extended to. them by express enactment the protection U.Sll•
ally extend~d to civil servants from suits a.nd prosecution.
It is, therefore, but right that the independence· and integtity
H of those employed in th~ public sector slfould be secured as ·
much as the independence and integ~ity of civil servants." ,
• •
•

·A. t. KALRA v. PRolEct EQPT. CORPN." (Desai, J.)
'
There fore the dis;inction sought ·to be drawn between. protection .of A .
part XIV of the Constiution and Part III has no signiticance.
. 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 (I) (i) and (iii).
B
It reads as under :

"4 (I) Every employee s~all at all times :

(i) .maintain absolute integrity ;
.. '
(ii) ~- c
(iii) do nothing which is unbecoming of a public ,servant:"
Rule 5 prescrib~s various misconducts for which.action can be taken
against au employee governed by the rules.
Rule 4 bears the heasJing 'General'. Rule 5 bears in· the heading
. 'misconduct'. The draftsmen of the 1975 Rules 1'1ade a clear distinc-
tion 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 et~ical expectation. Failure
to keep to 'such high standard of moral, eJhical or decrous behaviour
befitting an officer of the company by itself cannoi constitute miscon- .E
d1!ct unrss the specific conduct falls in any of the o;numerated miscon-.
duct in Rule 5. Any attempt to telescope Rule 4 into Rule. 5 must
be lookeil 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 un-
F·
•
becoming. of a public servant to ·be treated as misconduct .would
expose a grey· area not amenable to objective evaluation. Where
misconduct when proved entnils penal 'consequences, it is obligat:Jry
on the employer to ·specify and if necessary define it with precision
and accuracy so that any ex post faeto. interpretation of~ome incident G
inay rrot be camouflages as misconduct. It is not necessary to dilate
on this point in view ofa i;~ceat decision of this Court in M/s Glaxo •
Lobouratories '(l) Ltd. v. Presiding Officer; Lobour Court, Meerut .
' · & Others (1) where.this Court held that 'everything which is required
. to be prescribed has .to be prescribed with precision and ob argument
can be entertained that some_thing not prescribed can yet be. taken
(I) [1984) I S.C.C. I •

.•
• SllPREME COURT REPORlS iJ 984) 3 s.c.Ji.
into account as varying what is prescribed. ·1n short it canbOt be
left to the vaga,ies. of management to say ex post fucto that some'acts
of omission or 'commission nowhere· found to be enumerated in- the
.relevant standing Of is n~tietheless a misconduct not strictly falling
wiihin the _enumerated misconduct" in ihe relevant standing order but ,,
yet a miscondµct 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(>, it is nowhere
a
stated that anything violative of Rule 4 .would be per as misconduct
in the sub-clauses or' Rule 5 which specifies misconduct. It would
therefore appear that even if the facts alleged in two heads of char-
ges are accepted as wholly proved, yet that would not constitute ' .
misconduct. as pres.cribed ·in Rule 5 and no penalty can be imposed
.for such conduct. It may as well be-mentioned· that Rule 25 which
prescribes penalities specifically provides thai any of the penalities
therein mentioned can be imposed on an emyloyee for misconduct
committed by him. Rule 4 does notspecify a misconduc.t.

Mr. · Ramamu¥hi, learned counsel for the appellant further
'contended that the very. initiation of the disciplinary enquiry and
.imposition of ptlnishment. of removal from service is thoroughly
arbitrary and discloses a vindictive attitude on the part of tl\e respon-
dent Corporation. It was urged that the two heads of charges per se
E do not· constitute any misC'onduct and. th·ey can be styled as. trum-
•·'
f)ed-up 'which even jf held approved wouid not render the .a~pellant
liable for any pumshment. The- two, heads of charges have .been
eJ;ttacted herein before. Charge No. 1 refers to the dra"Cal of a House
Building Advance and failure to -comply with the requisite rules
. p,rescribed for House Building Advance. According• to the finding
recorded· by the inquiry officer, the failure of ihe appellant to refund
the amount of advance to the respondent-Corporation .within two
. months of the date of the diawal Would be violative of Rule 10 (1)
(c) (i) df th~ House Building Advance. Rules and it would constitute
misconduct within the meaning of the expressioi1 in Rule4(1 \ (ii1)of
1975 Rules.· Rule 10 0) provides that' the advance-shall. be drawn
·in instalments as prescr.ibed in vaiious sub,clauses.. The relevant
sab-clause in this case is sub-cl.- (C} "".l;iic!t provides that "when
a:d~ance is required partly for purchase of fand and partly for c9ns-
tructing a single storeyed new house thereon.; (i) not more than 20%
of the sanctioned advance on execution by th_e 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
A. ii,, KALRA v. PROiECT EQPT. CORPN. (Desai, !.)
developed plot of land on which ·construction can commence Imme· A.
diately and saJe deed in respect thereof be produced .for the inspection
of CPM/RM within,.tw.o months of th,e date QI) which 2Q% of the
advance ii draw~ or within ·such further time as the. CPM/RM ·may
allow in this behalf failing wh.ich the employee shall be liajile to
refund_ at -once the entire amount to. the Corporation together with
interest thereon." A bare reading of the relevant role wjllshow that
it ptovides for obtaining. advance which fa thfs case was taken for
purchasing a plot. The inquiry ·officer accepts the evidence of Mr:
Chugh that the appellant had 'negotiated with him for pur~hase of a
plot but some dispute arose about some addition.a!' expenditure aµd
. the negotiations protracted over a period of six months, Now para c
I sub-cl. (CJ confers on CPM/RM power to extend the rime for fina-
lising' 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 .
o( taking advance and failure to· keep to the . time-schedule. The"
relevant rule is a selt contained provision providing for 'the condicion
foi grant of advance, time table for repayment and ·consequence of J}
failure to hep 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 ori November
'16, 1979, an order was made withholding the entire .salary of the_
appellant. Even the Inquiry officer ivas constrained to observe that
E
the appeilant was exposed to dqltble jeopardy inasmuch as his salary ·
as a whole waswithhHd and ·he was b~ing removed from service. It ·
is also pertinent t~ not\' that the inquiry officer is not clear when he
S)lid 'that once. the power to extend the time lo repay the advance is
conferred anJ Nnal interesi is charged, is any rule.violated.'' This is·
not an attempt .to i·eappreciate evidence in the casC' but the entire .. F
thing is being analyseq to point out that the action apart from being
arbitrary is motivated and unjust. ·
•
If the rule• for g!anting the advance themselves provided the
-~- consequence of the breach of conditions, it would be idle lo go in
search of any other.consequence by initiating any disciplinary action •
G
in that behalf unless the 1975 Rules specifically. idcorporate'a rule
. that the breach of Hqjise Building· Advance Rules would by itself
.constitute a misconduct. Tl:i'at is not the case h<~re as will be presently
pointed out. · - '

Seeking advance and granting the same under rele:vant .rules is . · H.
at best a loan transaction. The transaction 'may il$elf provide for
• SUl'REME COURT REPORTS . tI984j 3 S.C.R .
.A
•
.. repayment and. the consequence of failure to repay or 'to abide by
the rules. . That 'has beerr done. in this case. Any atte~pt to gq, in
search of.a possible Other consequence of breath 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 inquirJ. oflker this .failure to refund the advance within the time·
B
frame' in which it \vas sanctioned ,constitutes violation of Rule 4 (!) .....
(iii\. Let. us turn to the ch~rge-sheet drawn-up againstthe appellant.
·Under th~lirst head of charge it was stated that the appellant 'was
guilty of misconduc't as prescribed i~ Rule · 4 (l) (i) and (iii). Rule·4
(i),(i) provides that every employee sl)all at all times maintain abso- '
c lute integrity. How did the que.siion of integrity arise passes com pre-
.hens\ on. The appellant appliec\ for. Hous.e Building Adv.cane.
·Inquiry Officer says that the appellant had negotiated with Mr.
Chugh.for purchase of a plot. There is not even negative evidence
'or evi.dence which may permit .an inference that the honse building ~
Vance was utilised for a purpose cit her ·than for ',)'hlch it was granted.
D Therefore Rule 4 (l) (i) is not only· attta.cted hut no attempt was
made ~efore us tci sustain it: Aud. as far as Rule 4 (I) (ii.i) is con:
cerned; v.ie 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 bead or'cnarg., is an eye-wash. It does not constitute a, miscon•
tf · duct·if it can be said to be one even if it· remains unrebutted. The
0

inquiry officer has not said. one word how 'the uncontroverted facts
constitute a coildµe,t unbecom,ing of a public servant, or he failed to
maintairl.' absolute integrity . ·.

F

•
G •
H
••

A. L. KALRA v. PROJECT EQPN. CORPN. (Desai, J.) 669

advance, the whole of the advance together with the interest accrued .A
thereon would become refundable. As the appellant did not keep io
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 req'uisite documents or to refund the advance
latest by November 14, 19.79. ·The inquiry officer in t9is connection,
B
rec~pitulated the facts in paragraphs 5'2, 5·2·1, and 5·2·2,. Then he
proceeded to record a finding that the appellant 'iin April, 7, 1980
submitted the docume'nts namelycash 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 scoote~. The report does not c
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 tanta-
mount to agreeing de facto sanction for the purchase of the same .
(scooter)'. In the. last paragraph, he has stated that a stoppage of D
the salary effective from November 16, 1979. in the opinion of the
inquiry officer taniamounts to imposition of double punishments and
this is compounded by not,. paying even a subsistance allowance. We·
scanned the report minutely with the able assistance of the learned
. counsel for the respondent subjecting it to microscopic analysis to E
asceriain whether the inquiry officer recorded any fin.ding in respect
of this ·charge adverse fo 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 scootet instead of a motor cycle should
not have been visited with such. drastic punishment of.stoppage of F
salary altogether and yet compelling the appellant to render service
without qui¢ pro quo. Curiously, however, in a ·separate document
recorded a! finding, ·the inquiry officer has held that the . appellant
·contravened Rule 10 ll) of the Conveyance .Advance Rules which
. woulr! constitute misconduct within.the meaning of the expression in ·
Rule 4 (I) (iii) of the 197:.0Rules. ·The report and the findings are c·
wholly irrecondlable and left us guessing about the approach of the
.. inquiry officer, his' conclusion and bis finding> This aspect consider-
ably troubled us because we would presently point out thai the
.disciplinary Authorfty as well as the appellate authority have
declined a peep into the working of their minds by making a reasoned ·
or a speakng order. The appellant app,ears to us ·to.have been.coq-
victed sub sileru;io, ·
.
•

670 SUPREME COURT REPORT5 · (19841 ~ s.C.~.
·'A 'fhe first questlon we. tilust pose to ourselves is whether taking
the findings of facts as recorded by· the inquiry officer a11d actepiing
for the present purpose that they are not. open to '(i judicial review,
do tliey constitute misconduct so as to invite penalty.? According
to the inquiry officer, failure either to produce the documents or to
B refund the ai&unt within a period of one n;10nth . from the drawal of
the· conveyance ai:tvance constitutes cc;mtravention of Rule 10 (l)of
the Conveyance Advance Rules. Rule 10 .reads as under : ·

·"10. (1). Where an employee after taking adyance is nnahle
to purchase the vehicle for any reasop, he sha:ll refund with•
in one month bf drawal of advance the full amount with
c interest thereon to the Corpotatio~. If he fails to do so, he·

tion to liability for payment ofadditl\1nal interest in accor-
.
shall be liable to disciplinary • actionfor misconduct in addi-
.
·

dance with·Sub Rule (2).

D (2) Where an amount of advance is retained by an
em_ployee beyond one month or where the employee fails to
produce· evidence of purchase, insurance policy of registra-
tion book, the normal rate of i!)terest nnder ·Rule 5 will be
·charged for the first month and for the period in excess of
one .month iil addition to the normal .rate of interest, addi- ·
·E tional interest at a rate equivalent to difference between the ·
borrowing rate of the . Corporation and the normal rat~
chargeabl~ under Rule 5 wiH be charged. The additional ·,
•
rate of interest will be compound interest and it will be
merged with the principal at monthly. inte!vals forthe
purpose of calculating interest for subsequent periods."
F . . , I

In this connection, our attention was drawn to Circular dated .
December 11, 1979 issued by the · respondent-Corpotation which
provides that henceforth a penal iMe~est will be lcvicd/cliarged 'on'
·the total drawn. amonnt under the Conveyance Advance Rules in
cash vo~chers or receipts are .not produced. to the Personnel Division
within the prescribed peri9d, or in case !!Te amount drawn is refumled
'"without utilisation.; It thus transpires that drawal of the advance,
if not utilised within the prescribedperiod or if not refu~ded within "
·the saqie 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 miscon-
. duct po~ bj analysis er appraisal 9f evidence, but per s~ under )975
•
A: L. KALRA v. PROJECT EQPN_. GORPN. (Desai, J.)
• 671

·Rules the respondent had neither the authority" nor: the jurisdiction no,.
the power to · impose any penalty for the alleged misconduct. An
administrative, authority who purports to act by its regulation mµst be
held bound by the regulation. 'Even if tliese. regulations have no
force· of law· the employment under these corporatiDns is public
employment, and' th~refore an empl~ee would get ·a >Status which ::B
would· enable him to obtain ·a declaration for continuance in service,

.. if he was dismissed or discharged coqtrary to the regulations.'
[Sukhdev Singh & Ors. v. Bhagatram SarJar Singh Raghuvanshi and·
Anr.(1 )]
'·
If thus it is satisfactorily established that the employment under c
such Corporation like the respondeqt which is .an instrumentality of
the State, is public employment, it is difficult to entertain the submis-
sion of Mr. Sinha which did prevail for some time in the days gorieby
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 thai where the origin of employment is in a
contract the breach of it cannot be remedied by dirtcting 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 ;
E.

"It is true that this Tribunal can do what no Court can,
namely, "!dd to or alter the terms or conditions of the cont-
ract 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." F
•
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 Arbitratio11. Act, i940 cannot by bis award
enforce a contract of personal service in i:.ontravention of the prov!-
. sions 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 rerid·er .any assistance to the respondent because it
· 'is well-s~ttled that in the matter of public employment if the termina-

(1) (1975] 3 S.CR 619 at 6S~.'
at
(2) [1949] F.C.'I\. 32\ 34()
(f) [1959].S.C,R. 123~
..
•
•
672 SUPREME COURT REPORTS (1984) 3 S.C.R •.

A •tion is held to be bad; in_ view of the latest decisions in Sukhdev
Singh and Ut(/;lr Pradesh Warehousing Corporation's cases a declara-
tion can be granted that the man continues to be in service.

Mr. R,lmamurthi on behalf' of the appellant further contended
'that' the order of removal' from service is void as it is passed iµ viola-
tion 0(1he 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. Jt was urged that duty to give
reasons would permit the court hearing a petition for a wri!'of
c certiorari to ex facie ascertain whether thete is any error apparent on
the record) n was conceded that for the present submission adequacy
or suffici~ncy of reasons 1s nqt questioned. What is contended is
that the inquiry officer has merely recorded his ipse dixif and no
reasons are assigned in support of the findings. The mental process ·
is conspicuosly silent. A speaking order wiil at its best be reasonable
and at its worst be at least a plausible one (M.P. Industries Ltd. v ..
D 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 scopefor arbitrary or partial exercise of poiver
ancl the orders ex faci~ will indicate. whether extraneous circumstances
were taken into consideration by authority passing the order. This
view in Vedachala Muda/iar v. Sta.te 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 anda'{hile recapitu-
lating evidence. self-contradictory position were adopted that either
there was fio misconduct or there was some misconduct or double
F punishment was already imposed. ·Rule 27 (19) cast_s an obligation
upon the inquiry officer ait the conclusion of the inquiry to prepare a
-rep 0 rt which must inter alia include the findings on each.article of
charge and the reasons therefor. The report is prepared in ·contra-
vention of the aforementione.d rule.

G1 The situation is further compounded by the fact that the discip· ,
linary 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

.ff (I) [1966} l SCR 466 at 472. ·
(2) AIR 1952 M.ldras 276.
(3] [1967] 3 SCR 302 at 3~0,
•
A,.L. KALRA v. PROJECT EQPN. CORPN. (Desai, J:} 673 \ '

inquiry officer; it is stated that the Oimmittee of Management agrees
with th.e same. Ii is even difficult to make out how the ~ommittee Of
Management agteed with the 9bservatio'ns of the inquiry officer
because at .one stage while recapitulating the evide.nce the inquiry
officer unmistakably observed that appellant was subjected to 1doilbJe
punishment and at olher place, it was observed that granting exten-
sion of time and acG!lptance of documents and balance advance would
tantamount to ~xtending the time which would make the affair look
Wholly innocuous. This shows utter non-application of mind of the
biseipliiiary Authority and the order .is vitiated .
. A detailed appeal wa~ submitted by the appellant to the Board
of Directors runn.ing itito about 8 . pages .. The only order while c
di11missing the appeal brougl\t.to. our notice is ~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, !\as decided· to uphold the decision of the disciplinary authority
· .and·to confirm· the penalty ofremoyal fmm service H:\1posed upon the
appellant. Rule ~5 of 1975 Rules deals with app.eals, Sub-rule (ii)
of:Rule · 35 provides amongst others, tj:iat the Appellate Authority
shall consider whe!her the findings are ·justified oi whether the penlllty
is_exces$ive oi inadequate and. pass · appropriate orders within three
m11nths of the' date· of appeal. ·In order to ascertain whether the
rule <jg complied with;' the order of th(}: appellate authority must show
thitt it took into ·consider-ation . the. findings the quantum of penalty
and other relevant·considerations. There is no material for showing
th!iM'he" a~llate authority / acted in consonance with its obligation
u.nder·Rule 35: ·However; in para 5.14 to 17 ofthecounter-iiffidavit,
it was statetf.thaf 'full inquiry·report with annexute can be shown to F
the C!JUrt ·at the time of hearing, if desired.' If the respondentw~s
anxious to sustain its action, it was obJ.igatory upon it to disclose the
fu!Hnquiry report. Nothing was shown !o us ?or any attempt to
show the proceedings of the appellate authority to disabuse out m.ind
' ' .
thaf the appellate ·authority was· guilty of utter non-application of
mind and discharged its duty under Rule 35.. No attempt was made
- .t<i urge that the three authorities had ever assigned reasons in support G
of their conclusions. Far this ·additional reason also, the initial order
of the Disciplinary Auihority as well as the Appellate Authority are
. lial!ki to quashed· and set aside.

To sum uv the order of removal passed by. Disciplinary Autho-
r\!Y is iUega~ an.d ,invalid for· tl;le rea?ons : (i) thai the action is tho-
roughly aj:bitrary and is vi<Jlatlve of Art. l 4, (ii) th11t the :alle$ed
674 SUPREME COURT REPORTS (1984) 3 S.C.• R. Y- • .

A misconduct does not constitute misconduct within the 1975 Rules·;
(iii) that the inql1iry officer himself found that punishment was already
imposed for the alleged misconduct by withholding the salary and the
appellant cou.ld riot he exposed to 'double jeopardy ; and (iv) that the
... findings of the inquiry officer are unsµpported by reasons and the·
order of the Disciplinary Authority as well as th~ Appellate Authority
suffer .from the same vice. . Therefore, the. order of removal from
service as well as the appellate order are quashed and sei !1Side.

· The last question then is to what relief the appellant is entitl~d ?
· Once the order of removal from service is hekl to be illegal and inva-
lid, and the· appe)lant being in public employment·, the necessary
dy:claration must follow that he continues to·be in service.uninterrup-
tedly. 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
Is
next question is.whether~ _the .victim of such action entitled to
· backwages. Ordinatily, it is well-settled that if termination of service
is held to be bad, no other punishment iil 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 w~ges on the footing that
he has continued to be in service uninterruptedly. Bnt it was pointed
. ont iri 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
\yould not be entitled to wages and salary from the respondent. B.ut
it ·is equally true that an employee depending on salary for his survi- •
val when he is exposed to the vagaries of the court litigation cannot
hold on to a slender distant hope of judici;;l .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 arid soul together as also to bear the expenses •
of litigation to vindicate his honour, integrity and character.
l
The submission of the respndent that the appellant had accepted .
employmentwiih M/s _KOR 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. h~ was employed with M/s KOR .
: W oolfon Mills.
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A.. L. KALRA v. PROJECT EQPT. COR'PN. (Desai, J.) 675
Even for the rest of the period, the conduct of the appellant . A
cannot be s~id 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 fo help the employees. There . has been lapse in . totally
complying with these regulations by the appellant though it rieit~er B
[constitutes ·misconduct to attract a penalty nor substantially good
enotlilh for initiation of disciplinary inquiry. Accordingly, having.
·regard to all the aspetcs of the case, the 11ppellant should· be paid
.' 50 %of the back wages for the period since his removal from service
upto his reinstatelllent excluding the period for which he had procured]'
·an alternative employment. The respondent shall also pay the costs C
of the appella9t quantified at Rs. 3000.

S.R. Appeal al/owed,.

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