Holding

An employer may lawfully commence fresh departmental proceedings under an amended rule despite pending earlier enquiries, and the absence of an explicit reference to the rule in the show‑cause notice does not invalidate a bona‑fide termination.

Summary

The employee, R.K. Shewaramani, was serving as a medical representative of Indian Drugs and Pharmaceuticals Ltd. and faced two charge‑sheets with departmental enquiries pending. After the amendment of Rule 30(A) of the company's Conduct Discipline and Appeal Rules on 30 March 1990, the employer issued a show‑cause notice under the amended rule and terminated his services for alleged unauthorized absence. The employee challenged the termination, arguing that the employer could not bypass the pending enquiries and that the show‑cause notice did not specifically cite Rule 30(A). The Delhi High Court set aside the termination, holding the proceedings were not bona‑fide and the rule could not be applied retrospectively. On appeal, the Supreme Court held that the employer may initiate fresh departmental proceedings under an amended rule even when earlier proceedings are pending, that a specific reference to the rule in the notice is not essential, and that the termination was bona‑fide, thereby allowing the appeal.

Issues considered

Whether a fresh departmental proceeding can be initiated under an amended rule when earlier departmental proceedings are pending.
Whether the show‑cause notice must expressly mention Rule 30(A) for the termination to be valid.
Whether the employer's reliance on the amended Rule 30(A) was bona‑fide or a device to bypass pending enquiries.
Whether the amendment to Rule 30(A) can have retrospective effect on periods prior to its commencement.

Subjects

service lawdisciplinary proceedingsdepartmental enquiryrule amendmenttermination of servicebona fideshow cause noticeretrospective application

Judgment

'(
A INDIAN DRUGS AND PHARMACEUTICALS LTD. AND ANR.
v.
R.K. SHEWARAMANI

AUGUST 3, 2005

B [ARIJIT PASAYAT AND H.K. SEMA, JJ.]

Service Law :

Industrial Drugs and Pharmaceutical Limited Conduct Discipline and
Appeal Rules, 1978-Rule 30(A) (as inserted by amendment)-Departmental
c Proceedings in terms of amended provision-Initiation-Justification of-
Two previous departmental proceedings pending-Aft1endment came into
· effect after initiation of the previous proceedings-Held : Initiation of
proceedings under amended Rule was justified as factors necessary to bring
in application ofthe Rule existed-For initiation offresh proceedings, giving
D a go by to pending proceedings not required.

Two charge-sheets were issued against the respondent-employee.
While these charges were pending in departmental proceedings, action
in terms of Rules 30(A) of Industrial Drugs and Pharmaceutical Ltd.
Conduct Discipline and Appeal Rules, 1978 (as inserted by amendment
E w.e.f. 30.3.1990) were initiated issuing show cause notice. Respondent
replied to the notice taking the stand that employer-appellant cannot be
permitted to by-pass the enquiry and take action on the basis of amended
Rule 30(A). The services of the respondent were terminated.

F The Writ ~etition challenging tbe validity of amended Rule 30(A)
and the order of termination was allowed by High Court on the grounds
that termination order was not passed bonafide; that Rule 30(A) was not
applicable as two departmental proceedings were pending; and that
show cause notice was not in terms of Rule 30(A). Hence the present
appeal.·
G
Allowing the appeal; the Court

HELD: 1. There is no requirement in lawthatforcontinuingwith fresh
proceedings the charge sheetissuea must.indicate that the previous
H proceedings pending have been given a go by. The employer is free to proceed
14
INDIAN DRUGS AND PHARMACEUTICALS LTD. 1'. R.K. SHEWARAMANI {PASAYAT, J.] 15
•
in as many as departmental proceedings as it considers desirable. Merely A
because the two proceedings were pending, that did not in any way stand in
the way of the employer to initiate another departmental proceeding and
that too on the basis of an amended provision which came into effect after
initiation of the previous departmental proceeding. [19-B-C]

2. High Court's observation that in the show cause notice there was B
no reference to Rule 30(A), is not factually correct. Additionally, the
respondent-employee was not taken to surprise and no prejudice was
caused to him by not mentioning of Rule"30(A) specifically. On the other
hand, from his reply it is clearly revealed that he knew that the proceeding
was in terms of the amended Rule 30(A). His specific stand was that the C
Cl)ilj)any having realized that it will not be in a position to establish the
allegations forming foundation of the two departmental proceedings, has
resorted to Rule 30(A). That being so, the High Court was not justified
in drawing in adverse inference by concluding that non-mention.ofRule
30(A) specifically in the show cause·notice vitiated the proceedings. There.
is no dispute that factors necessary to bring in application of Rule 30(A) D
existed. The High Court was also not justified in coming to the conclusion
that the action of the .authorities in initiating the proceedings in terms
• of Rule 30(A) is not bona fide. [19-D-GI

Pyare Lal Sharma v. Managing Director and Ors., [1989] 3 sec 448, E
. distinguished.

CIVIL APPELLATE JURISDICTION Civil Appeal No. 5595 of
2002.

From the Judgment of Order dated 22.3 .2002 of the Delhi High Court F
in W.P. No. 1612 of 1991.

V.R. Reddy, Sunil Murarka, S.S. Chaudhary, Ms. Altaf Fatima and
Ms. Meera Mathur for the Appellant.

Ms. Deepti Singh and Rajesh Srivastava for the Respondent. G

The Judgment of the Court was delivered by

• ARTJIT PASAYAT, J. : Legality of the judgment rendered by a
Division Bench of the Delhi High Court is questioned by the appellants. H
16 SUPREME COURT REPORTS [2005] SUPP. 2 S.C.R.

A High Court held that the tennination of services of respondent by order dated
8.1.1991 was illegal.

The basic facts in a nutshell are as under:

The respondent-employee was at the relevant point of time working
B as a medical representative of appellant No. I-company which undisputedly
is "State" within the meaning of Article 12 of the Constitution oflndia, 1950
(in short the 'Constitution'). He was transferred from Delhi to Eluru in the
State of Andhra Pradesh by order dated 17 .6.1989. Alleging that the
respondent-employee had not joined the transferred post a charge sheet was
c issued on 27.9.1989. There was another set of charges and the charge sheet
was issued on 12.12.1989. While these two charges were pending consideration
in departmental proceedings, action in terms of Rule 30A of the Industrial
Drugs and Pharmaceutical Ltd. Conduct Discipline and Appeal Rules, 1978
(in short the 'Rules') was taken. A show cause notice was issued requiring
the respondent to show cause as to why his services shall not be terminated
D on account of unauthorized absence from duty exceeding 30 days. Rule
30(A) was introduced by way of an amendment w.e.f. 30th March, 1990 on
the basis of a decision taken by the Board of Directors on 24.4.1990. On
receipt of the show cause notice the respondent-employee took the stand that
he had already been charge sheeted and enquiry was going on and, therefore,
E the employer cannot be permitted to tum around and by-pass the enquiry and
take action on the basis of alleged amended Rule 30(A). Company has
realized that it cannot prove the charges in the enquiry and, therefore, the
enquiry was being by-passed. He wanted a copy of the approval of the Board
of Directors for amending the Rule 30(A) as done on 30.3.1990. The order
of termination was passed keeping in view. the unauthorized absence arid
F
unsatisfactory reply to the show-cause notice. The Screening Committee
after assessing the materials on record came to the conclusion that the
services of the respondent were to be terminated with immediate effect under
Rule 30(A).

G The order of termination was questioned by filing a writ petition
before the Delhi High Court. Validity of amended Rule 30(A) was challenged
in addition to taking the stand that the authorities have found it inconvenient
to establish the earlier charges and, therefore, have by-passed them and taken
resort to amended Rule 30(A) with ma/a fide intents. Present appellants
H rebutted the stand and supported the action impugned in the order.
. INDIAN DRUGS AND PHARMACEUTICALS LTD. r. R.K. SHEWARAMANI {PASAYAT, J.] 17

The High Court allo\ved the writ petition pri1narily on two grounds;
firstly it was noted that there was no material to show that in the last show-
A
cause notice it was indicated that the earlier departmental proceedings were
dropped and secondly, in the notice it was not indicated that the same was
in terms of the amended Rule 30(A) of the Rules and was not in continuation
of the earlier charge sheets. Even after service of the last show cause notice,
the respondent had been served minutes of charge sheets dated 27.9.1989 B
and 12.12.1989 of the proceedings held on 30.7.1990. He was also asked
to attend enquiry on certain dates. The High Court, therefore, held that the
impugned order cannot be said to have been passed bona fide. Rule 30(A)
of the Rules had no application as the two departmental proceedings were
already pending and those related to periods prior to coming into effect of c
Rule 30(A) which cannot be said to have any retrospective effect. Accordingly,
the writ petition was allowed and the order of termination was set aside.
Liberty was however given to the employer for proceedings further with the
•
departmental proceedings against the respondent.

D
In support of the appeal, learned counsel submitted that the approach

... of the High Court is clearly erroneous. There is no requirement in law that
when a fresh enquiry is commenced, the earlier proceedings should be given
a go by. Further, factually also it is not correct as held by the High Court
that the show cause notice was not in terms of Rule 30(A). In any event,
the respondent himself knew that the action had been taken under Rule E
30(A). There was no ma/a fide involved as erroneously observed by the High
Court.

In response, learned counsel for the respondent-employee submitted
that because of trade union activities the respondent was made a victim. F
When two proceedings were already in progress, there was no neces~ity to
• take resort to Rule 30(A) and that too in a hurried manner without proper
opportunity being granted to the respondent to place his side of the case.
Therefore, the High Court was justified in interfering with the order of
teffilination.
G
Rule 30(A) reads as follows:

"30(A) Notwithstanding anything contained to the contrary in any
other rules, the services of any employee shall be terminated by the
J.
Company if:- H
18 SUPREME COURT REPORTS [2005] SUPP. 2 S.C.R.

A (a) his post is abolished;

(b) he is declared on medical ground to be unfit for service in the
• ~-

Company, or

(c) he remains on unauthorized absence for thirty days or more.
B
Explanation:

I. In a case of (a) & (b) above, the services shall be terminated
after giving three months' notice to a permanent employee and
one months' notice to a temporary employee or pay in lieu
c thereof in both the cases;

2. In the case of (c) above, services of any employee shall be
terminated if he fails to explain his conduct satisfactorily
within 15 days from the date of receipt of the Show Cause
D Notice by him. The Management shall be empowered to take
a decision without resorting t<i> further enquiries. ·

3.(a) The decision in case of (c) above would be taken only with
the prior approval of a Screening Committee of 2 Directors/
Executive Director to be constituted for this purpose by the
E Chairman & Managing Director.

(b) The reasons for the decision would be recorded in writing.

These rules are made effective with effect from 30th March,
1990."
F
At this juncture, it is to be noted that the validity of a Rule similar
to Rule 30(A) was considered by this Court in Pyare Lal Sh&rma v. ~

Managing Director and Ors., [1989] 3 SCC 448. In that case after having
held that the concerned rule was lntra-vires, on the facts of the case it was
G held the amended rule could not operate retrospectively and could operate
only from the date of amendment and, therefore, ori the facts of that case
it was held that for a period prior to the introduction of the amended
provision, action cannot be taken. In the instant case, the period of absence
to which reference has been made by the appellants clearly related to a period '
H
subsequent to the date of introduction of the amended provision. That being •
INDIAN DRUGS AND PHARMACEUTICALS LID. 1·. R.K. SHEWARAMANI [PASA YAT, lJ 19

• so, the High Court has rightly not led any stress on that plea though urged
by respondent-employee before the High Court.
A

That brings us to the crucial question as to whether the High Court's
view is sustainable on the facts of the case.

There is no requirement in law that for continuing \Vith fresh B
proceedings the charge sheet issued must indicate that the previous proceedings
pending have been given a go by. The employer is free to proceed in as many
as departmental proceedings as it considers desirable. Even in a hypothetical
case in two of the departmental proceedings the finding is in favour of the
delinquent employee, yet in another departmental proceeding finding adverse C
to the delinquent officer can be recorded. Merely because the two proceedings
were pending, that did not in any way stand on the way of the employer to
ini~iate another departmental proceeding and that too on the basis of an
amended provision which came into effect after initiation of the previous
departmental proceeding. The High Court's view therefore is clearly
unsustainable. The High Court had also observed that in the show cause D
notice there was no reference to Rule 30(A). This is not factually correct.
As the records reveal clear reference was made to IDPL Corporate Office
letter No.IDP/7/32/Estt/90 dated 24.9.1990. This related to the amendment
of Rule 30(A). Additionally, the ~espondent-employee was not taken to
surprise and no prejudice was caused to him by not mentioning of Rule 30(A) E
specifically. On the other hand, from his reply dated 22.6.1990 it is clearly
revealed that he knew that the proceeding was in terms of the amended Rule
30(A). His specific stand as is revealed from reply to the show cause notice
is that the company having realized that it will not be in a position to establish
the allegations forming foundation of the two departmental proceedings, has
resorted to Rule 30(A). That being so, the High Court was not justified in F
drawing an adverse inference by concluding that non mention of Rule 30(A)
• specifically in the show cause notice vitiate the proceedings. There is no
dispute that factors necessary to bring in application of Rule 30(A) existed.
The High Court was also not justified in coming to the conclusion that the
action of the authorities in initiating the proceedings in tertns of Rule 30(A) G
is not bona fide.

Looked at from any angle, the High Court's order is indefensible and
is set aside. The appeal succeeds but without any order as to costs.
,
K.K.T. Appeal allowed.