Holding

A disciplinary authority must observe natural justice, consider the employee's representation and give a personal hearing before recording its own findings, and therefore the dismissal order was invalid.

Summary

The appellant, an Inspector of Central Excise and Customs, was investigated by the CBI for possessing assets disproportionate to his known income. Although the CBI later filed a closure report and the departmental Enquiry Officer exonerated him, the Disciplinary Authority disagreed with the enquiry findings, issued a show‑cause notice and, without considering the appellant's belated representation, dismissed him from service. The appellant appealed, contending that the principles of natural justice were violated and that his representation should have been considered. The Supreme Court held that a disciplinary authority must comply with natural justice, apply its mind to the material on record, and give the officer an opportunity to be heard before recording its own findings, especially when it departs from the enquiry officer’s report. Consequently, the dismissal order was set aside, the appellant was deemed under suspension, and the matter was remitted to the disciplinary authority for fresh consideration.

Issues considered

Whether the disciplinary authority is bound by the principles of natural justice when it disagrees with the enquiry officer's findings.
Whether a dismissal order can be validly passed without considering the employee's representation or show‑cause submission.
Whether the disciplinary authority must apply its mind to the material on record and rehear the case afresh.
Whether the standard of proof in disciplinary proceedings differs from that in criminal trials in this context.

Legislation cited

Central Civil Services (Conduct) Rules, 1964s. Rule 18(3), s. Rule 3(1)(i)(ii)(iii)
State Bank of India (Supervising Staff) Service Ruless. Rule 50(3)(ii)

Subjects

disciplinary proceedingsnatural justiceshow cause noticeexonerationCBI investigationassets disproportionatestandard of proofadministrative lawservice lawsuspensiondismissal

Judgment

RANJIT SINGH A
v.
UNION OF INDIA AND ORS.

APRIL 5, 2006

[S.B. SINHA AND P.P. NAOLEKAR, JJ.] B

Service Law-Disciplinaiy proceeding against employee~Enquiry
Officer exonerating the charged employee- Disciplinary Authority differing
with those findings-Issuance of show cause notice to employee-Thereafter, C
dismissal order of employee passed without considering the show cause filed
by employee prior to the communication of order-Correctness of-Held:
Disciplinwy Authority was required to comply with the principles of natural
justice-It was obligated to apply its mind to the materials on record in light
offindings arrived at by Enquiry Officer-Even if the Authority had prepared
the dismissal order, show cause could have been considered as it did not D·
leave the office by then-Thus, Disciplinary Authority to consider the matter
afresh in the light of show cause filed by employee by giving him an
opportunity of personal hearing-Administrative Law.

CBI conducted raid in the house of appellant-Inspector, Central Excise E
and Customs Department and found that he allegedly possessed assets
disproportionate to his known source of income. CBI initiated criminal case
against the appellant and framed charges against him and thereafter,
- submitted a closure report. In the departmental proceeding, the Enquiry
Officer submitted a report exonerating him from the said charges. However,
the Disciplinary Authority differed with the findings of the Enquiry Officer F
and called upon the appellant to file representation in his defence. Appellant
sought repeated extension of time. He then filed a representation but by the
time it reached the Disciplinary Authority, the Authority had taken decision
to impose punishment of dismissal from service on appellant. It did not
consider the representation of the appellant and proceeded on the basis that G
the appellant had been given an opportunity of hearing to submit his defence.
Both the Appellate Authority and the Revisional Authority upheld the order
of the Disciplinary Authority. The application filed before the tribunal and
also the Writ Petition before the High Court were dismissed. Hence, the
present appeal.
885 H
886 SUPREME COURT REPORTS [2006] 3 S.C.R.

A Allowing the appeal and remitting the matter to the Disciplinary
Authority, the Court

HELD: I.I. Principles of natural justice were required to be complied
with by the Disciplinary Authority. He was also required to apply his mind to
the materials on record. The Enquiry Officer arrived at findings which were
B in favour of the Appellant. Such findings were over turned by the Disciplinary
Authority. It is in that view of the matter, the power was sought to be exercised
by the Disciplinary Authority, although not as that of an appellate authority,
but akin thereto. The inquiry report was in favour of the Appellant but the
Disciplinary Authority proposed to differ from such conclusions and, thus,
C apart from complying with the principles of natural justice it was obligatory
on his part, in absence of any show cause filed by the Appellant, to analyse
the materials on records afresh. It was all the more necessary because even
the CBI, after a thorough investigation in the matter, did not find any case
against the Appellant and thus, filed a closure report. Therefore, it was not a
case where the Appellant was exonerated by a criminal court after a full fledged
0 trial by giving benefit of doubt. It was also not a case where the Appellant
could be held guilty in the disciplinary proceedings applying the standard of
proof as preponderance of the probability as contrasted with the standard of
proof in a criminal trial, i.e., proof beyond all reasonable doubt. The
Disciplinary Authority in such peculiar situation was obligated to apply his
E mind on the materials brought on record by the parties in the light of the
findings arrived at by the Inquiry Officer. He should not have relied only on
the reasons disclosed by him in his show cause notice which, was only tentative
in nature. [893-F-H; 894-A-Cj

F
1.2. As the Appellate Authority in arriving at his finding, laid emphasis
on the fact that the Appellant has not filed any objection to the show cause
-
notice, ordinarily, this CO'ut would not have exercised its power of judicial
review in such a matter, but the case in hand appears to be an exceptional one
as the Appellant was exonerated by the Inquiry Officer. He filed a show cause
but, albeit after some time the said cause was available with the Disciplinary
Authority before he issued the order of dismissal. Even if he had prepared
G the order of dismissal, he could have considered the show cause as it did not
leave his office by then. The expression "communication" in respect of an
order of dismissal or removal from service would mean that the same is served
upon the delinquent officer. Even otherwise also the jurisdiction of a
Disciplinary Authority to consider the matter would remain with him till it
H
RANJIT SINGH v. U.0.1. [S.B. SINHA, J.] 887
goes out of his hands which would mean the order is dispatched, as in the A
..
case of order of suspension. [894-C-F]

1.3. In the interest of justice, the Disciplinary Authority is directed to
consider the matter afresh in the light of the show cause filed by the appellant
before him by giving an opportunity of personal hearing to the appellant. The
order of Disciplinary Authority and consequently all other orders are set B
aside. Appellant shall be deemed to be under suspension till an appropriate
order is passed by the Disciplinary Authority. [894-G-H; 895-A]

Punjab National Bank and Ors. v. Kunj Behari Misra, (1998] 7 SCC
84; State Bank ofIndia and Ors. v. K.P. Narayanan Kutty, (2003] 2 SCC 447; C
State of Punjab v. Amar Singh Harika, AIR (1966) SC 1313 and Sultan Sadik
v. Sanjay Raj Subba and Ors., [2004] 2 SCC 377, relied on.

CIVIL APPELLATE JURISDICTION : Civil Appeal No. 346/2005.

From the Judgment and Order dated 22. I 0.2002 of the High Court of D
Delhi in C.W. No._6246/2002.

Parag Tripathi, A.P. Vinod, V.K Ohri and M.K. Michael for the Appellant.

T.S. Doabia, G. Prakash, V.K. Verma and B. Krishna Prasad for the
Respondents. E
The Judgment of the Court was delivered by

S.B. SINHA, J. The Appellant herein was an Inspector, Central Excise
and Customs, New Delhi. As his father died in harness, he was appointed on
compassionate grounds. F
A raid by the Central Bureau of Investigation (CBI) was conducted in
his house on 29th November, 1990. He was allegedly possessing assets
disproportionate to his known source of income. A criminal case was initiated
against him by the CBI. On or about 31.12.1991, a disciplinary proceeding was G
initiated against him. The charges framed against him were:

"Article I-That Shri Ranjit Singh during the year 1981-90 while
working as a Government Servant in the capacity oflnspector Customs
and Central Excise failed to maintain absolute integrity and devotion
to duty and acted in a manner unbecoming of a Government servant H
888 SUPREME COURT REPORTS [2006] 3 S.C.R.

A inasmuch as he by exploiting his official position as a Government
servant acquired assets to the tune of Rs. 6,43,737.15 in his own name
and in the name of his family members which are disproportionate to
the known sources to his income. During the above said period his
total income from all known sources comes to Rs. 5,54,924.10 p and

--
the expenditure comes to Rs. 1,92,676.83 and the assets disproportionate
B to the known sources of income come to the tune of Rs. 2,81,488.88
p. Thus, said Shri Ranjit Singh by his above acts of omission and
commission contravened provisions of Rule 3 (l)(i)(ii) and (iii) ofCCS
(Conduct) Rules, 1964.

c Article II-That Shri Ranjit Singh during the said period while
functioning in the above said capacity failed to maintain devotion to
duty and acted in a manner unbecoming of a Government servant as
much as he invested Rs. 60,000/- in the purchase of FD Rs in his own
name as well as in the name of his mother Smt. Leelawanti in Punjab
and Sind Bank, Vijayawada in 1981 without any intimation to his
D department/ Government as required under Rule 18 (3) of the CCS
(Conduct) Rules, 1964."

A closure report was submitted by the CBI on 20th July, 200 I. In the
departmental proceeding, the Appellant adduced evidences on his behalf as
E also cross-examined witnesses examined on behalf of the Department. The
Enquiry Officer submitted a report dated 26.9.1996 exonerating him from the
said charges. The Disciplinary Authority, however, differed with the findings
of the Enquiry Officer and issued a memorandum on or about 17.2.1997 stating
the reasons for his difference with the Enquiry Officer and called upon the
Appellant to make his representation in his defence to the grounds of
F disagreement before a final decision is taken stating:

"Any representation which he may wish to make against the tentative
opinion will be considered by the undersigned independent of her
tentative opinion. Such a representation, if any, should be made in
writing and submitted so as to reach the undersigned not later than
G
10 days from the date of receipt of this memorandum."

By a letter dated 13.3.1997, the Appellant prayed for grant of 10 days
time. The same was allowed. Yet again on 25.3.1997, he prayed for further 10
days' time to submit his representation which was also allowed. It is, however,
H not in dispute that on or about 7.4.1997, i.e., after the expiry of 10 days time
RANJIT SINGH v. U.0.1. (S.B. SINHA, J.] 889
from 25.3.1997, he filed another application for granting 3-4 days time. According A
to the Disciplinary Authority, the order of punishment was already prepared
on 8.4.1997 whereas the said application dated 7.4.1997 reached its hand later.

The contention of the Disciplinary Authority in this behalf furthermore
is that he was informed by an order dated 21.3 .1997 that no further opportunity
would be granted to him. The Disciplinary Authority contends that the said B
order was served on the Appellant but according to him he did not receive
the same. ·

The Appellant, however, submitted a memorandum on 10.4.1997 before
the Disciplinary Authority stating in details as to why the conclusion of the C
Enquiry Officer in his report should be upheld. The said memorandum
admittedly was not considered by the Disciplinary Authority.

The Disciplinary Authority by an order dated 8.4.1997 directed dismissal
of the Appellant from services stating:
D
"The charges proved against the charged officer are quite grave in
nature. The charged officer had acquired assets disproportionate to
his known sources of income. This highly unbecoming of a Govt.
servant and necessitate imposition of a severe penalty. I, therefore
J_ impose penalty of removal from service on Sh. Ranjit Singh with E
immediate effect."

In support of the said order, however, no fresh reason was assigned.
The Disciplinary Authority proceeded on the basis that as the Appellant had
been given an opportunity of hearing to submit his defence and as he had
failed to do so, a presumption was drawn that he did not wish to comment F
on the grounds of disagreement. It was stated:

" ... The evidence proving disproportionate assets has already been
discussed at length in the memo dt. 17.02.97. The same are
unchallenged by the charged officer and nothing has come to the
notice of the undersigned to refute the evidentiary value of the material G
discussed in the said memo. The reasons for not treating AC, RCR,
Music System, CTV & VCR as items having been fifteen/ leaned to
Smt. Leelawanti by her relatives have already been given in memo dt.
17.02.97. As per my findings in this regard contained in the above said
memo these items infact belonged to the charged officer and shall be H
890 SUPREME COURT REPORTS [2006) 3 S.C.R.

A treated as his assets.

The money spent on the construction of house no. EA-68 Inderpuri
has also been logically discussed in above referred memo. In the
absence of any objection from charged officer this is also held to
correct calculation.
B
Thus, as per discussion in the memo dt. 17.02.97 an assets
amounting to Rs. 1,15,873.62 owned by Sh. Ranjit Singh are held to
be disproportionate to his known sources of income and therefore
charge I is held to be proved against the charged officer."

C The Appellant thereafter preferred an appeal before the Appellate
Authority being the Commissioner of Central Excise, Delhi against the said
order. The following points were framed by the said authority for consideration:

"(i) Whether by not giving Sh. Ranjit Singh extension of time, which
had twice over expired, prejudice has been caused to him, in other
D words, whether it amounts to denial of principles of natural justice in
the circumstances of the case."

(ii) Whether or not the conclusion arrived at by the Disciplinary
Authority in her disagreement with the inquiry officer, who had
E properly evaluated the evidence and come to the conclusion are in
accordance with the test laid for departmental inquiries namely
preponderance of probability or not."
-
On the first point, the Appellate Authority opined in favour of the
department. On the second point, it was held:
F ''Shri Ranjit Singh has agitated that his mother's property has been
attributed to him, therefore, he has been wronged. According to him,
this point has been overlooked by the inquiry officer and also by the
Disciplinary Authority. There is elaborate findings and discussion in
IO report on the subject, in the nature of circumstances of this case
G that appears to be the most appropriate method. I agree with the same
and reject the contention of Shri Ranjit Singh iii the appeal
memorandum in this regard."

The Appellate Authority on the said premise agreed with the
H observations of the Disciplinary Authority that both the charges have been
RANJIT SINGH v. U.0.1. [S.B. SINHA, J.] 891
established. A
A revision filed thereagainst by the Appellant was also dismissed. The
Revisional Authority used the same language as that of the Appellate
Authority while passing the order dated 22.4.1999.

An Original Application was filed by the Appellant before the Central B
Administrative Tribunal which was marked as OA No. 1106 of2000. The said
original application was dismissed only stating:

"In UOI v. Upendra Singh, (1994) 27 ATC 200 the Hon'ble Supreme
Court has held the Tribunal cannot take over the functions of the
disciplinary authority. The truth or otherwise of the charges is a C
matter for the disciplinary authority to go into. Indeed even after the
conclusion of the disciplinary proceedings, if the matter comes to the
Court or Tribunal, they have no jurisdiction to look into the truth of
the charges or into the correctness of the findings rendered by the
disciplinary authority, or the Appellate Authority as the case may be.
The function of the Court/ tribunal is none of judicial review, the D
purpose of which is to ensure that the individual receives fair
treatment."

A writ petition filed by the Appellant herein was summarily rejected by
the Division Bench of the High Court. The Appellant is, thus, before us.
E
Mr. Parag Tripathi, learned senior counsel appearing on behalf of the
Appellant has raised two contentions in support of the appeal. The learned
counsel would firstly submit that keeping in view of the fact that the Municipal
Corporation of Delhi valued the residential house of the Appellant at Rs.
2,41,576 whereas the Executive Engineer appointed by the CBI valued the p
same at Rs. 3,26,000 and, thus, the difference between the two valuations
being only Rs. 84,426, it cannot be said that the assets possessed by the
Appellant were disproportionate to his known source of income.

It was further submitted that the Appellate Authority could have granted
some time to the Appellant to file his show cause having regard to the fact G
that although he is said to have prepared his order on 8.4. I 997, it was not
dispatched from his office till then and in that view of the matter, it must be
held that the principles of natural justice have been violated.

Mr. T.S. Doabia, learned senior counsel appearing on behalf of the
H
892 SUPREME COURT REPORTS [2006] 3 S.C.R.

A Respondent, on the other hand, contended that the Executive Engineer of the
CBI was examined before the Deputy Commissioner for the purpose of proving
his report on valuation of the residential building of the Appellant and in that
view of the matter, his report was admissible in evidence. It was contended
that from the order of the Appellate Authority, it would appear that a portion
of the building was not valued by the MCD.
B
It is not disputed that the Disciplinary Authority had issued a show
cause notice. It is also true that pursuant to or in furtherance of the said
notice, the Appellant did not file any show cause. However, it stands admitted
that a show cause was filed by the Appellant herein prior to communication
C of the order. The Disciplinary Authority states that the Appellant was
communicated the order dated 21.3.1997 that no further time would be granted,
but the Appellant, on the other hand, contends that that he did not receive
the same. The Tribunal, before whom the said contention was raised by the
respondent for the first time, did not go into the same nor was it established
by or on behalf of the Disciplinary Authority that the said communication
D dated 21.3.1997 reached the hands of the Appellant before he made a request
for grant of 3-4 days' further time by letter dated 25.3.97.

The Disciplinary Authority did not arrive at any independent finding for
passing the order of dismissal dated 8.4.1997. He, as indicated herein before,
proceeded on the basis that as the Appellant had not filed a show case, he
E must be held to have accepted the points on the basis whereof the Disciplinary
Authority recorded his disagreement with the findings of the Inquiry Officer.

-
The Disciplinary Authority, however, failed to consider that the grounds on
which he had disagreed with the Inquiry Officer forming the basis for issuing
the show cause notice dated 17.2.1997, was a tentative one. Only because the
F Appellant did not file a show cause, the same would not mean that he was
not required to consider the materials brought on records by the parties
before the Disciplinary Authority, afresh. He was obliged to do so.

!n Punjab National Bank and Ors. v. Kun} Behari Misra, [ 1998] 7 SCC
84, this Court has clearly held that the principles of natural justice are required
G to be complied with by the Disciplinary Authority in the event he intends to
differ with the findings of the Enquiry Officer observing:

"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 enquiry
H
-{

RANJJT SINGH v. U.0.1. (S.B. SINHA, J.] 893
authority on any article of charge, then before it records its own A
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 enquiry
officer containing its findings will have to be conveyed and the
delinquent officer will have an opportunity to persuade the disciplinary B
authority to accept the favourable conclusion of the enquiry officer.
The principles of natural justice, as we have already observed, 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 r~presentation before the disciplinary authority records its
findings on the charges framed against the officer." C
The said decision has been followed by this Court in State Bank of
India and Ors. v. K.P. Narayanan Kutty, [2003) 2 SCC 447, wherein it was
clearly held that in such an event the prejudice doctrine would not be applicable
stating:
D
"6 .... In para 19 of the judgment in Punjab National Bank case extracted
above, when it is clearly stated that the principles of natural justice
have to be read into Regulation 7(2) [Rule 50(3)(ii) of the State Bank
of India (Supervising Staff) Service Rules, is identical in terms
applicable to the present case] and the delinquent officer will have to E
be given an opportunity to persuade the disciplinary authority to
accept the favourable conclusion of the enquiry officer, we find it
difficult to accept the contention advanced on behalf of the appellants
that unless it is shown that some prejudice was caused to the
respondent, the order of dismissal could not be set aside by the High
Court." F
In view of the aforementioned decisions of this Court, it is now well
settled that the principles of natural justice were required to be complied with
by the Disciplinary Authority. He was also required to apply his mind to the
materials on record. The Enquiry Officer arrived at findings which were in
favour of the Appellant. Such findings were required to be over turned by G
the Disciplinary Authority. It is in that view of the matter, the power sought
to be exercised by the Disciplinary Authority, although not as that of an
appellate authority, but akin thereto. The inquiry report was in favour of the
Appellant but the Disciplinary Authority proposed to differ with such
conclusions and, thus, apart from complying with the principles of natural H
894 SUPREME COURT REPORTS [2006] 3 S.C.R.
..,
A justice it was obligatory on his part, in absence of any show cause filed by
the Appellant, to analyse the materials on records afresh. It was all the more
necessary because even the CBI, after a thorough investigation in the matter,
did not find any case against the Appellant and thus, filed a closure report. •
It is, therefore, not a case where the Appellant was exonerated by a criminal
court after a full fledged trial by giving benefit of doubt. It was also not a
B case where the Appellant could be held guilty in the disciplinary proceedings
applying the standard of proof as preponderance of the probability as
contrasted with the standard of proof in a criminal trial, i.e., proof beyond all
reasonable doubt. When a final form was filed in favour of the Appellant, the
CBI even did not find a primu fucie case against him. The Disciplinary
C Authority in the aforementioned peculiar situation was obligated to apply his
mind on the materials brought on record by the parties in the light of the
findings arrived at by the lnqu1ry Officer. He should not have relied only on
the reasons disclosed by him in his show cause notice which, it will bear
repetition to state, was only tentative in nature. As the Appellate Authority
D in arriving at his finding, laid emphasis on the fact that the Appellant has not
filed any objection to the show cause notice; ordinarily, this Court would not
have exercised its power of judicial review in such a matter, but the case in
hands appears to be an exceptional one as the Appellant was exonerated by
the Inquiry Officer. He filed a show cause but, albeit after some time the said
cause was available with the Disciplinary Authority before he issued the
E order of dismissal. Even if he had prepared the order of dismissal, he could
have considered the show cause as it did not leave his office by then. The
expression "communication" in respect of an order of dismissal or removal
from service would mean that the same is >erved upon the delinquent officer.
[See State of Punjab v. Amar Singh Huriku, AIR (1966) SC 1313]

F Even otherwise also the jurisdiction of a Disciplinary Authority to
consider the matter would remain with him till it goes out of his hands which
would mean the order is dispatched, as in the case of order of suspension.
[See Sultan Sadik v. Sanjay Raj Subba and Ors., (2004] 2 SCC 377]

We are, therefore, of the opinion that interest of justice will be sub-
G
served if the Disciplinary Authority is directed to consider the matter afres~
in the light of the show cause filed by the Appellant herein before him. It will
be desirable that an opportunity of personal hearing is also given to the
appellant herein. We make it clear that although we are setting aside the order
of Disciplinary Authority and consequently all other orders, we direct that the
H Appellant shall be deemed to be under suspension till an appropriate order
RANJIT SINGH v. U.O. I. [S.B. SINHA, J.] 895
is passed by the Disciplinary Authority. The question of payment of A
backwages, it is directed, would depend upon the ultimate order that may be
passed by the Disciplinary Authority. For the views we have taken, it is not
necessary for us to consider the other contentions raised by Mr. Tripathi.

This appeal is allowed to the afore-mentioned extent and the matter is
remitted to the Disciplinary Authority for consideration of the matter afresh
in the light of the observations made herein before. However, in the facts and
circumstances of the case, there shall be no order as to costs.

NJ. Appeal allowed.

..