Holding

The principles of natural justice must be read into Regulation 7(2), so the disciplinary authority must give the officer an opportunity to be heard before recording adverse findings and imposing penalty.

Summary

Punjab National Bank (PNB) initiated disciplinary proceedings against two assistant managers, Misra and Goel, after a Rs 1 lakh shortage was discovered in a currency chest. An inquiry officer found Misra guilty of only one charge and exonerated Goel of all charges, but the bank's disciplinary authority disagreed, held both officers responsible and ordered recovery of the loss from their provident fund contributions. The officers, who superannuated during the proceedings, filed writ petitions; the Allahabad High Court quashed the penalties and ordered release of retirement benefits. On appeal, the Supreme Court examined whether the disciplinary authority must afford a hearing when it departs from the inquiry officer’s findings under Regulation 7(2) of the PNB Officer Employees (Discipline and Appeal) Regulations, 1977. The Court held that principles of natural justice are implicit in Regulation 7(2), requiring the authority to record reasons for disagreement and give the delinquent officer an opportunity to be heard before recording its own findings and imposing any penalty. Consequently, the Supreme Court dismissed the appeal, affirming the High Court’s order releasing the retirement benefits.

Issues considered

When does a disciplinary authority have to provide a hearing to an officer if it disagrees with the findings of an inquiry officer under Regulation 7(2) of the PNB Officer Employees (Discipline and Appeal) Regulations, 1977?
Whether principles of natural justice can be read into the regulations governing bank disciplinary proceedings.

Legislation cited

Chartered Accountants Act, 1949s. Section 21(8)
Constitution of Indias. Article 311(2)

Subjects

natural justicedisciplinary proceedingsinquiry officerhearingRegulation 7(2)Punjab National Bankpenaltysuperannuationretirement benefitsArticle 311

Judgment

A PUNJAB NATIONAL BANK AND ORS.
v.
SH. KUNJ BEHAR! MISRA ETC.

AUGUST 19, 1998

B
(S.C. AGRAWAL, S.P. BHARUCHA AND B.N. KIRPAL, JJ.]

Se1vice Law-Punjab National Bank Officer Employees (Discipline and
Appeal) Regulations, 1977-Regulations 6, 7-Disciplinwy proceedilig~--Ac
tion on the inqui1y repmt-Finding recorded by Jnqui1y officer that all or some
C of the charges alleging misconduct against an official are not proved-Can
the disciplina1y autho1ity differ jivm that and give a contrwy finding afTording
any oppo1twzity to delinquent ojfice1~Held, No-Plinciples of natural justice
to be read into Regulation 7(2).

D Disciplinary proceedings were initiated by the appellant bank
against respondents, Assistant Managers of the bank when on physical
verification of the currency chest a shortage of Rs. 1 lac currency was found
in the bank. An enquiry ollicer was appointed to hold an enc1uiry; he found
respondent No. 1 guilty only of one charge, namely that he did not sign the
relevant register from 28.10.1981 to 9.11.1981 but exonerated him of char-
E ges 2 to 6 while respondent 2 was found not guilty of any of the charges
alleged against him. The disciplinary authority to whom the reports were
submitted did not agree, in the case of respondent 1, with the findings of
the inc1uiry ollicer in respect of the charges 2 to 6 and held respondent No.
1 to be responsible for the shortage, holding that he being Assistant
F Manager was in the joint custody of the keys of the currency chest and he
had personal responsibility towards safe custody of the cash and that no
material had been placed to establish that he had discharged his duties in
the manner expected of him. It was held that a minor penalty of propor-
tionate recovery ought to be imposed on the respondent for the loss of Rs.
1 lac caused to the bank due to negligence on ·his part in the discharge of
G his duties. Against respondent 2 also while not agreeing with the inquiry
report the disciplinary authority passed an order directing proportionate
recovery of the loss caused to the bank by him. As both respondents
superannuated during the pendency of these disciplinary proceedings, the
· disciplhiary authority directed the recovery of the money from the bank's
H contribution to the Provident I<und of the respondent ollicers.
22
P.N.B. v. KB.MISRA 23

The respondents filed Civil Writ Petition alleging that the discipli- A
nary authority, who had chosen to disagree with the conclusions arrived
at by the inquiry oflicer, could not have come to adverse conclusions
without giving them an opportunity of being heard. The High Court
allowing the Writ Petition quashed the order imposing penalty and
directed the appellants to release the retirement benefits. These appeals
were filed against the judgment of the High Court.
B

The appellant contended that Punjab National Bank Officer
Employees (Discipline and Appeal) Regulations, 1977 did not require an
opportunity of being heard being given to the delinquent ollicer when the
disciplinary authority disagreed with the findings of the inquiring C
authority once the inquiring authority had given a hearing to them.

The respondents submitted that even if there was no provision in the
regulations nevertheless it was incumbent upon the punishing authority to
give nqtice to the respondent if the authority desired to differ ''ith a
favourable finding recorded by the disciplinary authority were contrary to D
the provision of the regulations and were based on surmises and conjec-
tures.

The question raised for consideration in this appeal is that when the
inquiry oflicer, during the course of disciplinary proceedings, comes to a E
conclusion that all or some of the. charges alleging misconduct against an
ollicial are not proved then can the disciplinary authority differ from that
and give a contrary finding without affording any opportunity to the
delinquent oflicer.

Dismissing the appeal, this Court F

HELD: 1.1.Under Regulation 6 of the Punjab National Bank Ollicer
Employees (Discipline and Appeal) Regulations, 1977, the inquiry proceed-
ings can be conducted either by an inquiry ollicer or by the disciplinary
authority itself. When the inquiry is conducted by the inquiry officer his
report is not final or conclusive and the disciplinary proceedings do not G
stand concluded. The disciplinary proceedings stand concluded with
decision of the disciplinary authority. It is the disciplinary authority which
can impose the penalty and not the inquiry ollicer. Where the disciplinary
authority itself holds an inquiry an opportunity of hearing has to be
granted. When the disciplinary authority differs with the view of the inquiry H
24 SUPREME COURT REPORTS [1998] SUPP. l S.C.R.

A officer and proposes to come to a different conclusion, there is no reason
as to why an opportunity of hearing should not be granted. It will be most
unfair and iniquitous that where the charged officers succeed before the
inquiry officer, they are deprived of representing to the disciplinary
authority before that authority differs with the inquiry officer's report and,
while recording a finding of guilt, imposes punishment on the ollicer. In
B any such a situation the charged officer must have an opportunity to
represent before the Disciplinary Authority before final findings on the
charges are recorded and punishment imposed. [37-H; 38-A-D]

1.2. The principles of natural justice have to be read into Regulation
C 7(2). As a result thereof whenever the disciplinary authority disagrees with
the inquiry authority on any article of charge then before it records its own
findings on such charge, it must record its tentative reasons for such
disagreement and give to the delinquent officer an opportunity to represent
before it records its findings. The report of the inquiry ofticer containing
its findings will have to be conveyed and the delinquent ofticer will }rnve an
D opportunity to persuade disciplinary authority to accept the favourable ,._
conclusion of the inquiry ofticer. The principles of natural justice, require
the authority, which has to take a final decision and can impose a penalty,
to give an opportunity to the officer charged of misconduct to file a repre-
sentation before the disciplinary authority records its findings on the char-
E ges framed against the officer. [38-D-F]

Managing Director ECIL, Hyderabad and Anr. v. B. Kanmakar & Ors.,
[1993] 4 sec 727, followed.

State of Assam and Anr. v. Bimal Kumar Pandit, relied on.
F State Bank of India, Bhopal v. S.S. Koshal, [1994] Suppl. 2 SCC 468
and State of Rajasthan v. M.C. Saxena, [1998] 3 SCC 385, overruled.

Institute of Chartered Accountants of India v. L.K. Ratna and Ors.,
[1986] 4 SCC 537 and Ram Kishan v. Union of India and Ors., [1995] 6
G sec 157, affirmed.
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 1884 of
1993 Etc:

From the Judgment and Order dated 20.2.90 of the Allahabad, High
H Court in W.P. No. 3197 of 1984.
P.N.B. v. KB.MISRA [KIRI' AL, J.] 25
V.R. Reddy, O.C. Mathur and Mrs. Meera Mathur for the Appel- A
!ants.

R. Vasuqevan, D.S. Chauhan, Rajiv K. Garg and N.D. Garg for the
Respondents. •

1:he Judgment of the Court was delivered by B

KIRPAL, J. In these two appeals the common question which arises
for consideration is that when the inquiry officer, during the course of
disciplinary proceedings, comes to a conclusion that all or some of the
charges alleging misconduct against an official are not proved then can the
disciplinary authority differ from that and give a contrary finding without
c
affording any opportunity to the delinquent officer.

The respondents in these two appeals, namely, Shri Kunj Behari
Misra and Shri Shanti Prasad Goe! were working in the appellant bank in
the Hazratganj Branch, Lucknow, as Assistant Managers. On 10th Novem- D
ber, 1981 on physical verification of the currency chest a shortage of Rs. 1
lac currency notes was found. Thereafter first information report was
lodged and disciplinary proceedi11gs were initiated by the appellant bank
against b~th the respondents, who were also placed under suspension. Six
charges were framed against Misra while the charge sheet served on Goel
contained seven charges. The disciplinary authority did not conduct the E
inquiry itself and an. inquiry officer was appointed to hold the inquiry.

The inquiry officer gave the respondents opportunity of being heard.
In his report submitted in connection with the inquiry against Misra, he
found him guilty only of one charge, namely, that he did not sign the
relevant register from 20th October, 1981 to 9th November, 1981 but F
exonerated him of charges two to six. As far as Goel is concerned the

- inquiry officer, in his report, found him not guilty of a~y of the charges and
exonerated him.

On the receipt of the reports from the inquiry officer the disciplinary G
authority, namely, the Regional Manager of appellant bank, to whom the
reports were submitted, did not agree, in the case of Misra, with the
findings of the inquiry officer in respect of charges two to six and by a snort
order dated 12th December, 1983 passed an order holding that it was an
undisputed position that Misra being Assistant Manager was in the joint
custody of the keys of the currency chest and he had personal responsibility H
26 SUPREMECOURTREPORTS (1998] SUPP.1 S.C.R.

A towards the safe custody of the cash and that no material had been placed
during the inquiry proceedings to establish that he had discharged his
duties in the manner expected of him. The disciplinary authority accord-
ingly held Misra to be responsible for the shortage in question and held
that a minor penalty of proportionate recovery ought to be imposed on the
respondent for the loss of Rs.l lac caused lo the bank due to negligence
B on his part in the discharge of his duties. Simi! arl y in the case of Goel the
disciplinary authority did not agree with the inquiry report am! passed an
order dated 15th December, 1983 directing proportionate recovery of the
loss of Rs. l lac caused to the bank by him. It may here be noticed that
during the pendency of these disciplinary proceedings both Misra and Goel
C superannuated on 31st December, 1983. The disciplinary authority accord-
ingly directed the recovery of the money from the bank's contribution to
the provident fund of the respondent officers.

The respondents then filed appeals to the appellate authority but
they were unsuccessful. Thefeupon Misra filed Civil Writ Petition No. 3197
D of 1984 before the Lucknow Bench of the Allahabad High Court while
Goel filed Civil Writ Petition No. 1192 of 1984 in the High Court at
Allahabad. The main contention of the respondents in the said writ peti-
tions was that the disciplinary authority, who had chosen to disagree with
the conclusions arrived at by the inquiry officer, could not have come to
adverse conclusions without giving them an opportunity of being heard and
E the orders passed against them were liable to be quashed. This contention
found favour with the High Court who, while allowing Misra's writ petition
vide its judgment dated 20th February, 1990, quashed the order imposing
penalty and directed the appellants to release the retirement benefits
including provident fund and gratuity. Following the aforesaid decision the
Writ petition filed by Goel was allowed by the High Court on 10th January,
F 1995 and a similar direction was issued for the release of the retirement
benefits like providept fund and gratuity etc. to the said respondent.

These appeals by special leave came up for hearing before a bench
of two Judges of this Court. While the appellants placed reliance on the
-
G decision in State Bank of India, Bhopal v. S. S. Kasha!, [1994) Suppl. 2 SCC
468, the counsel for the respondents placed reliance on two other Two-
J udge Bench decision of this Court in Institute of Chmtered A ccozmtants of
India v. L. K. Ratna and Ors., [1986] 4 SCC 537 and Ram Kislza11 v. Unio11
of India a11d Ors., [1995) 6 SCC 157. Both the sides also referred to the
1
Constitution Bench decision of this Court in Ma11agi11g Director ECIL,
H Hyderabad and Ors. v. B. Kanmakar and Ors., [1993) 4 SCC 727 and each
P.N.B. v. K.13.MISRA [KIRPAL, J.] 27

of them sought to place reliance on them. In view of the apparent conflict A
in the decisions in the first three cases by order dated 30th October, 1996
the case was referred to be heard by a larger bench. We, therefore, propose
to deal with the point in issue and resolve the apparent conflict.

The only contention urged by Sh. V. R. Reddy,· leai:ned senior
counsel for. the appellant, was that Punjab National Bank Officer B
Employees (Discipline and Appeal) Regulations 1977 [for short :the
Regulations'] did not require an opportunity of being heard being given to
the delinquent officer when the disciplinary authority disagreed with the
findings of the inquiring authority once the inquiring authority had given a
hearing to them. It was further submitted by the learned counsel that the
requirement of giving such a hearing could not be read into the said C
regulations and no prejudice could be said to have been caused to the
respondents inasmuch as the inquiring authority had given full opportunity
to them.

It was also submitted by Sh. Reddy that if before the decision of this
Court in Union of India and Ors. V. Mohd. Ramzan Khan, [1991] 1 sec D
588, the disciplinary authority dd not have to give to the delinquent officer
the inquiry report then it was not necessary to give him a hearing in case
where the disciplinary authority differed from the inquiry report as no copy
of the inquiry report was to be given to him.

On behalf of ~he respondents it was submitted that even if there was E
no provision in the regulations nevertheless it was incumbent upon the
punishing authority to give notice to the respondents if the said authority
desired to differ with ·a favour able finding recorded by the inquiry officer.
· It was also submitted that the findings recorded by the disciplinary
authority were contrary to the provisions of the regulations and we.re based
F
on surmises and conjectures.

Before dealing with the rival contentions it will be appropriate to
refer to the relevant regulations. Regulation 4 of the regulations sets out
the minor and the major penalties. which may be imposed on an officer
employee for acts of misconduct or for any other good and sufficient G
reason. The procedure for imposing the minor penalties is set out in
Regulation 8. It provides that where it is proposed to impose such a
penalty, the employee concerned has to be informed in writing of the
imputations of lapses against him and an opportunity is given to him to
submit his written statement. Regulation 8(2) provides that where the
disciplinary authority is satisfied that an inquiry is necessary, then it shall H
28 SUPREME COURT REPORTS [1998) SUPP. l S.C.R.

A follow the procedure for imposing a major penalty as laid down in Regula-
tion -6. Regulation-6, to the extent it is relevant in the present case, reads
as follows:

"6. Procedure for imposing major penalties :

B (2) whenever the Disciplinary Authority is of the opinion that there
are grounds for inquiring into the truth of any imputation of
misconduct or misbehaviour against an officer employee, it may
itself enquire into or appoint any other public servant (hereinafter
referred to as the inquiring authority) to enquire into truth thereof.

C Explanation: When the Disciplinary Authority itself holds the in-
quiry any reference in sub regulation (8) to sub regulation (21) to
the inquiring authority shall be .construed as a reference to Dis-
ciplinary Authority.

(3) Where it is proposed to hold an inquiry, the Disciplinary
D
Authority shall frame definite and distinct charges on the basis of
the allegations against the officer employee and the articles o~
charge, together with a statement of the allegations, on which they
are based, shall be communicated in writing to the officer •
employee who shall be required to submit within such time as may
E be specified by the Disciplinary Authority (not exceeding 15 days),
or within such extended time as may be granted by the said
Authority, a written statement of his defence.

(4) on receipt of the written statement of the officer employee, or
if no such statement is received within the time specified, an
F enquiry may be h"-ld by the Disciplinary Authority itself, or if it
considers it nece;.;ary so to do appoint under sub-regulation (2)
an inquiring authority for the purpose.

Provided that it may not be necessary to hold an inquiry in
G respect of the articles of charge admitted by the officer employee
in his written statement but shall be necessary to record its findings
on each such charge.

H
P.N.B. v. KB.MISRA [KIRPAL, J.] 29

(21) (1) On the conclusion of the inquiry the inquiring authority A
shall prepare a report which shall contain the following:

(a) a gist of the articles of charge and the statement of
the imputations of misconduct or misbehaviour;

(b) a gist of the defence of the officer employee 'in B
respect of each article of charge;

(c) an assessment of the evidence in respect of each
article of charge;

(d) the findings on each article of charge and the C
reasons therefor.

Explanation - If, in the opinion of the inquiring authority, the
proceedings of the inquiry establish any article of charge different
from the original article of charge, it may record its findings on
such article of charge. D
.
Provided that the findings on such article of charge shall not
be recorded unless the officer employee has either. admitted the
facts on which such article of charge lis based or has had a
reasonable opportunity of defending himself against such article
E
of charge.

(ii) The Inquiring Authority, where it is not itself the Disciplinary
Authority, shall forward to the Disciplinary Authority the records
of inquiry which shall include.
F
(a) the report of the inquiry prepared by it under clause
(1);

(b) the written statement of defence, if any, submitted
by the officer employee referred to in sub-regulation
(~; G
(c) the oral and documentary evidence produced in the
course of the inquiry;

(d) written briefs referred to in sub-regulation (18), if
any; and H
30 SUPREME COURT REPORTS (1998) SUPP. 1 S.C.R.

A ( e) the orders, if any, made by the disciplinary authority
and the inquiring authority in regard to the inquiry."

What action has to be taken on the submission of the inquiry report is
provided by Regulation-7 which reads as follows:

B "7. Action mz the inquily rcpon:

(l) The Disciplinary Authority, if it is not itself the Inquiry
Authority, may, for reasons to· be recorded by it in writing, remit
the case to the Inquiring Authority for fresh or further inquiry and
'report and Inquiring Authority shall thereupon proceed to hold
c the further inquiry according to the provisions of regulation 6 as
far as may be.

(2) The Disciplinary Authority shall, if it disagrees with the findings
of the Inquiring Authority on any article of charge, record its
reasons for such disagreement and record its own findings on such
D
charge, if the evidence on record is sufficient for the purpose.

(3) If the Disciplinary Authority, having regard to its findings on
all or any of the articles of charge, is of the opinion that any of
·the penalties specified in Regulation 4 should be imposed on the
E officer employee it shall, notwithstanding anything contained in
Regulation 8, make an order imposing such penalty.

(4) If the Disciplinary Authority having regard to its findings on
all or any of the articles of charge, is of the opinion that no penalty
i_s called for, it may pass an order exonerating the officer employee
F concerned.

A bare reading of the above Regulations shows that Off furnishing of
the charge sheet full opportunity is required to be given tci the delinquent
officer to prove his innocence. This is a case where the Disciplinary
Authority decided that procedure contained in Regulation 6 be followed.
G Under Regulatio.'1 - 6 (2) the Disciplinary Authority, instead of conducting
tli-o inquiry itself, chose to appoint another person as the 'Inquiring
Authority' to inquire into the imputations of misconduct. On the conclusion
of the proceedings in the manner provided by Regulation 6, the inquiring
authority has to forward its report to the Disciplinary Authority along with
H all relevant records. The said report has fo contain the inquiring authority's
t '

P.N.D. v. K.13.MISRA (KIH.PAL, J.] 31
findings on each of the charges framed against the delinquent officer. A
According to sub-regulation (3) of Regulation - 7 the disciplinary
. Authority, having regard to the findings on all or any of the articles of
charge, imposes any of the penalties specified in Regulation-4. This ob-
viously implies that where the inquiring authority has found all or any of
the charges proved against the delinquent officer and the disciplinary
authority agrees with the said findings, then it can proceed to impose any
B
of the penalties specified in the said regulation.

The controversy in the present case, however, relates to the case
where the disciplinary authority disagrees with the findings of the inquiring
authority and acts under Regulation - 7 (2). The said sub-regulation does C
not specifically state that when the disciplinary authority disagrees with the
findings of the inquiring authority, and is required to record its own reason
for such disagreement and also to record its own finding on such charge,
it is required to give a hearing to the delinquent officer.
......
Sh. Reddy relied on the decision of this Court in S.S. Koshal's case D
(supra). In that case the disciplinary authority disagreed with the findings
of the inquiry officer which was favourable to the delinquent. A question
arose whether the disciplinary authority was required to give a fresh
opportunity of being heard. At page 470 a Division Bench (Coram: BP
Jccvan Reddy and BL Hansaria, JJ) while coming to the conclusion that
fresh opportunity was not required, observed as follows:
E

"So far as the second ground is concerned, we are unable to see
any substance in it. No such fresh opportunity is contemplated by
\
the regulations nor can such a requirement be deduced from the
principles of natural justice. It may be remembered that the inquiry F
officer's report is not binding upon the disciplinary authority and
that it is open to the disciplinary authority to come to its own
conclusion on the charges. It is not in the nature of an appeal from
the inquiry officer t~ the disciplinary authority. It is one and the
same proceeding. It is open to a disciplinary authority to hold the
inquiry himself. It is equally open to him to appoint an inquiry G
officer to conduct the inquiry and place the entire record before
him with or without his findings. But in either case, the final
decision is to be taken by him on the basis of the material adduced.
This also appears to be the view taken by one of us (B.P. Jeevan
Reddy, J) as a Judge of the Andhra Pradesh High Court in Ft
32 SUPREME COURT REPORTS [1998] SUPP. 1 S.C.R. '
A Mahendra Kumar v. Union of India. The second contention accord-
ingly stands rejected."

Reliance was also placed on State of Rajasthan v. M. C. Saxena, [1998) 3
SCC 385. In this case also the disciplinary authority disagreed with the
findings of the inquiry officer and the after recording reasons in this regard
B it held that the charges against the delinquent officer stood established. In
coming to this conclusion it was observed that while disagreeing the only
requirement was that the disciplinary authority should record reasons for
disagreement and it was not necessary in such a case for the delinquent
government servant to be afforded a further opportunity of hearing.
c
Sh. Sunil Gupta, learned counsel for the respondent, drew our atten-
tion to the decision in the case of Institute of Chartered Accountant of India
(supra). The respondent therein, who was a Chartered Accountant, was
accused of misconduct. An inquiry was instituted under the Chartered
D Accountants Act, 1949. The disciplinary committee after hearing Ratna
submitted its report to the Council opining that he was guilty of profes-
sional misconduct. The Council considered the report of the disciplinary
committee and found him guilty of misconduct and thereupon the Institute
wrote to Ratna that the Council had found him guilty of professional
misconduct and it was proposed to remove his name from the register of
E members for a period not exceeding five years. Thereupon a writ petition
was filed by Ratna in the Bombay High Court which was allowed with the
finding that the Council should have given an opportunity to Ratna to
represent before it against the report of the disciplinary committee. While
affirming the decision of the High Court and coming to the conclusion that
a member of the Institute of Chartered Accountants accused of misconduct
F is entitled to hearing by the Council when, on receipt of the report of the
disciplinary committee, it proceeds to find whether he is or is not guilty,
this Court at page 550 observed as follows:
.
"Now when it enters upon the task of finding whether the member
is guilty of misconduct, the Council considers the report submitted
G
by the Disciplinary Committee. The report constitutes the material
to be considered by the Council. The Council will take into regard
the allegations against the member, his case in defence, the
recorded evidence and the conclusions expressed by the Discipli-
nary Committee. Although the mL -iber has participated in the
H inquiry, he has had no opportunity to demonstrate the fallibility of
P.N.13. v. KB.MISRA [KIRPAL, J.] 33

the conclusions of the Disciplinary Committee. It is material which A
falls within the domain of consideration by the Council. It should
1 also be open to the member, we think, to point out to the Council
any error in the procedure adopted by the Disciplinary Committee
which could have resulted in vitiating the inquiry. Section 21(8)
arms the council with power to record oral and documentary
evidence, and it is precisely to take account of that eventuality and B
to repair the error that this power seems to have been conferred.
It cannot, therefore, be denied that even though the member has
participated in the inquiry bef~re the Disciplinary Committee,
there is a range of consideration by the Council on which he has
not been heard. He is clearly entitled to an opportunity of hearing C
before the Council finds him guilty of misconduct."

In Ram Kisha11 's case (supra) disciplinary proceedings on two char-

-
ges were initiated against Ram Kishan. The inquiry officer in his report
found the first charge not P,roved and the second charge was partly proved.
The disciplinary authority disagreed with the conclusion reached by the D
inquiry officer and a show cause was issued as to why both the charges
should not be taken to have been proved. While dealing with the contention
that the disciplinary authority had not given any reason in the show cause
to disagree with the conclusions reached by the inquiry officer and that,
therefore, the findings based on that show cause noiice was bad in law, a
Two-Judge Bench at page 161 observed as follows: E

"... The purpose of the show-cause notice, in case of disagreement
with the findings of the inquiry officer, is to enable the delinquent
to show that the disciplinary authority is persuaded not to disagree
with the conclusions reached by the inquiry officer for the reasons F
given in the inquiry report or he may offer additional reasons in
support of the findings by the inquiry officer. In that situation,
unless the disciplinary authority gives specific reasons in the show
cause on the basis of which the findings of the inquiry officer in
that behalf is based, it would be difficult for the delinquent to
satisfactorily give reasons to persuade the disciplinary authority to G
agree with the conclusions reached by the inquiry officer. In the
absence of any ground or reason in the show-cause notice it
amounts to an empty formality which would cause grave prejudice
to the delinquent officer and would result in injustice to him. The
mere fact that in the final order some reasons have been given to H
34 SUPREME COURT REPORTS [1998] SUPP.1 S.C.R.

A disagree with the conclusions reached by the disciplinary authority
cannot cure the defect."

At this stage it will be appropriate to refer to the case of State of
Assam and Anr. v. Bimal Kumar Pandit, (1964] 2 SCR 1 decided by a
Constitution Bench of this Court. A question arose regarding the contents
B of the second show cause notice when the Government accepts, rejects or
partly accepts or partly rejects the findings of the Enquiry Officer. Even
though that case relates to Article 311 (2) before its deletion by the 42nd
Amendment, the principle laid down therein, at page 10 of the report,
when read alone with the decision of this Court in Karunakar's case will
C clearly apply here. The Court observed at Page 10 as follows:-

"We ought, however, to add that if the dismissing authority
differs from the findings recorded in the enquiry report, it is
necessary that its provisional conclusions in that behalf should be
D specified in the second notice. It may be that the report makes
findings in favour of the delinquent officer, but the dismissing
authority disagreeF with the said findings and proceeds to issue the
notice under Article 311 (2). In such a case, it would obviously be
necessary that the dismissing authority should expressly state that
it differs from the findings recorded in the enquiry report and then
E indicate the nature of the action proposed to be taken against the
delinquent officer. Without such an express statement in the notice,
it would be impossible to issue the notice at all. There may also
be cases in which the enquiry report may make findings in favour
of the delinquent officer on some issues and against him on some
F other issues. That is precisely what has happened in the present
case. If the dismissing authority accepts all the said findings in their
entirety, it is another matter: but if the dismissing authority accepts
the findings recorded against the delinquent officer and differs
from some or all of those recorded in his favour and proceeds to
specify the nature of the action proposed to be taken on its own
G conclusions, it would be necessary that the said conclusions should
be briefly indicated in the notice. In this category of case, the action
proposed to be taken could be based not only on the findings
recorded against the delinquent officer in the enquiry report, but
also on the view of the dismissing authority that the other charges
H not held proved by the enquiring officer, are according to the
P.N.B. v. KB.MISRA [KIRPAL, J.] 35

dismissing authority, proved. In order to give the delinquent officer A
a reasonable opportunity to show cause under Article 311(2), it is
essential that the conclusions provisionally reached by the dismiss-
ing authority must, in such cases, be specified in the notice. But
whether the dismissing authority purports to proceed to issue the
notice against the delinquent officer after accepting the enquiry
report in its entirety, it cannot be said that it is essential that the
B
dismissing authority must say that it has so accepted the report.
As we have already indicated, it is desirable that even in such cases
a statement to that effect should be made. But we do not think
that the words used in Article 311 (2) justify the view that the
failure to make such a statement amounts to contravention of c
Article 311(2). In dealing with this point, we must bear in mind
the fact that a copy of the enquiry report had been enclosed with
the notice, and so, reading the notice in common sense manner,
the respondent could not have found any difficulty in realising that
the action proposed to be taken against him proceeded on tht:
D
basis that the appellants had accepted the conclusions of the
enquiring officer in the entirety."

In Kanmakar's case (supra) the question arose whether after the
42nd amendment of the Constitution, when the inquiry officer was other
than a disciplinary authority, was the delinquent employee entitled to a E
copy of the inquiry report of the inquiry officer before the disciplinary
authority takes decision on the question of guilt of the delinquent. It was
sought to be contended in that case that as the right to show cause against
the penalty proposed to be levied had been taken away by the 42nd
amendment, therefore, there was no necessity to give to the delinquent a F
copy of the inquiry report before the disciplinary authority took the final
decision as to whether to impose a penalty or not. Explaining the effect of
42nd amendment the Constitution Bench at page 755 observed that "All
that has happened after the Forty-second Amendment of the Constitution
is to advance the point of time at which the representation of the employee
against the enquiry officer's report would be considered. Now, the discipli- G
nary authority has to consider the representation of the employee against
the report before it arrives at its conclusion with regard to his guilt or
innocence of the charges." The Court explained that the disciplinary
proceedings break into two stages. The first stage ends when the discipli-
nary authority arrives at its conclusions on the basis of the evidence, inquiry H
36 SUPREME COURT REPORTS [1998] SUPP. 1 S.C.R.

A officer's report and the delinquent employee's reply to it. The second stage
begins when the disciplinary authority decides to impose penalty on the
basis of its conclusions. It is the second right which was taken away by the
42nd Amendment but the right of the charged officer to receive the report
of the inquiry officer was an essential part of the first stage itself. This was '-
B expressed by the Court in the following words:

"The reason why the right to receive the report of the enquiry
officer is considered an essential part of the reasonable oppor-
tunity at the first stage and also a principle of natural justice is
that the findings recorded by the enquiry officer form an important
c material before the disciplinary authority which along with the
evidence is taken into consideration by it to come to its conclusions.
It is difficult to say in advance, to what extent the said findings
including the punishment, if any, recommended in the report would
influence the disciplinary authority while drawing its conclusions.
D The findings further might have been recorded without considering
the relevant evidence on record, or by misconstruing it or unsup-
ported by it. If such a finding is to be one of the documents to be
considered by the disciplinary authority, the principles of natural
justice require that the employee should have a fair opportunity
to meet, explain and controvert it before he is condemned. It is
E negation of the tenets of justice and a denial of fair opportunity
to the employee to consider the findings recorded by a third party
like the enquiry officer without giving the employee an opportunity
to reply to it. Although it is true that the disciplinary authority is
supposed to arrive at its own findings on the basis of the evidence
F recorded in the inquiry, it is also equally true that the disciplinary
authority takes into consideration the findings recorded by the
enquiry officer along with the evidence on record. In the cir-
cumstances, the findings of the enquiry officer do constitute an
important material before the disciplinary authority which is likely
to influence its conclusions. If the enquiry officer were only to
G record the evidence and forward the same to the disciplinary
authority, that would not constitute an additional material before
the disciplinary authority of which the delinquent employee has no
knowledge. However, when the enquiry officer goes further and
records his findings, as stated above, which may or may not be
H based on the evidence on record or are contrary to the same or
- P.N.B. v. KB.MISRA [KIRPAL, J.] 37
in ignorance of it, such findings are an additional material unknown A
to the employee but are taken into consideration by the disciplinary
authority while arriving at its conclusions. Both the dictates of the
reasonable opportunity as well as the principles of natural justice,
therefore, require that before the disciplinary authority comes to
its own conclusions, the delinquent employee should have an
opportunity to reply to the enquiry officer's findings. The discipli-
B
nary authority is then required to consider the evidence, the report
of the enquiry officer and the representation of the employee
against it."

These observations are clearly in tune with the observations in Bimal c
Kumar Pandit's case (supra) quoted earlier and would be applicable at the
first stage itself. The aforesaid passages clearly bring out the necessity of
the authority which is to finally record an adverse finding to give a hearing
to the delinquent officer. If the inquiry officer had given an adverse finding,
as per Ka1Unakar's case (supra) the first stage required an opportunity to D
be given to the employee to represent to the disciplinary authority, even
when an earlier opportunity had been granted to them by the inquiry
officer. It will not stand to reason that when the finding in favour of the
delinquent officers is proposed to be over-turned by the disciplinary
authority then no opportunity should be granted. The first stage of the
inquiry is not completed till the disciplinary authority has recorded its E
findings. The principles of natural justice would demand that the authority
which proposes to decide against the delinquent officer must give him a
hearing. When the inquiring officer holds the charges to be proved then
that report has to be given to the delinquent officer who can make a
representation before the disciplinary authority takes further action which
F
may be prejudicial to the delinquent officer. When, like in the present case,
the inquiry report is in favour of the delinquent officer, but the disciplinary
authority proposes to differ wiSh such conclusions, then that authority
which is deciding against the delinquent officer must give him an oppor-
tunity of ,being heard for otherwise he would be condemned unheard. In
departmental proceedings what is of ultimate importance is the finding of G
the disciplinary authority.

Under Regulation - 6 the inquiry proceedings can be conducted
either by an inquiry officer or by the disciplinary authority itself. When the
inquiry is conducted by the inquiry officer his report is not final or H
38 SUPREME COURT REPORTS [1998] SUPP. 1 S.C.R.

A conclusive and the disciplinary proceedings do not stand concluded. The
disciplinary proceedings stand concluded with decision of the disciplinary
authority. It is the disciplinary authority which can impose the penalty and
not the inquiry officer. Where the disciplinary authority itself holds an

B
inquiry, an opportunity of hearing has to be granted by him. When the
disciplinary authority differs with the view of the inquiry officer and
proposes to come to a different conclusion, there is no reason as to why
an opportunity of hearing should not be granted. It will be most unfair and
iniquitous that where the charged officers succeed before the inquiry
-
officer they are deprived of representing to the disciplinary authority before
that authority differs with the inquiry officer's report and, while recording a
C finding of guilt, imposes punishment on the officer. In our opinion, in any such
situation the charged officer must have an opportunity to represent before the
Disciplinary Authority before final findings on the charges are recorded and
punishment imposed. This is required to be done as a part of the first stage
of inquiry as explained in Kanmakar's case (supra).
D
The result of the aforesaid discussion would be that the principles of
natural justice have to be read into Regulation 7(2). As a result thereof
whenever the disciplinary authority disagrees with the inquiry authority on
any article of charge, then before it records its own findings on such charge,
it must record its tentative reasons for such disagreement and give to the
E delinquent officer an opportunity to represent before it records its findings.
The report of the inquiry officer containing its findings will have to be
conveyed and the delinquent officer will have an opportunity to persuade
the disciplinary authority to accept the favourable conclusion of the inquiry
officer. The principles of natural justice, as we have already observed,
F require the authority, which has to take a final decision and can impose a
penalty, to give an opportunity to the officer charged of misconduct to file
a representation before the disciplinary authority records its findings on
the charges framed against the officer.

G The <iforesaid conclusion, which we have arrived at, is also in con-
sonance with the underlyjng principle enunciated by this Court in the case
of I11stitute of Chartered Accou11ta11ts (supra). While agreeing with the
decision in Ram Kislza11's case (supra), we are of the opinion that the
contrary view expressed in S.S. Kasha/ a11d M.C. Sa.xe11a's cases (supra) do
H not lay down the correct law.
P.N.B. v. KB.MISRA [KIRP AL, J.) 39

Both the respondents superannuated on 31st December, 1983. A
During the pendency of these appeals Misra died on 6th January, 1995 and
his legal representatives were brought on record. More than 14 years have
elapsed since the delinquent officers had superannuated. It will, therefore,
not be in the interest of justice that at this stage the cases should be
remanded to the disciplinary authority for the start of another innings. We, B
therefore, do not issue any such directions and while dismissing these
appeals we affirm the decisions of the High Court which had set aside the
orders imposing penalty and had directed the appellants to release the
retirement benefits to the respondents. There will, however, be no order
as to costs.

R.A. Appeal dismissed.
c

•

I