Holding

A disciplinary authority must provide cogent reasons when altering the quantum of punishment, and judicial interference is limited to exceptional cases where the punishment is disproportionate; failure to do so amounts to denial of justice.

Summary

The respondent, a bus conductor employed by the U.P. State Road Transport Corporation, was terminated for dereliction of duty, violation of the conduct code and alleged misappropriation of money after being found with old tickets and without issuing tickets to passengers. The High Court upheld the termination, but the Division Bench set aside the dismissal on the ground that the punishment was not commensurate with the gravity of the charge, without providing any reasons. The employer appealed, contending that the High Court exceeded its jurisdiction by interfering with the quantum of punishment. The Supreme Court held that a court or tribunal must record cogent reasons when it interferes with the quantum of punishment and that such interference is permissible only in exceptional cases where the punishment is disproportionate. Since the High Court gave no reasons, its order amounted to a denial of justice, and the Supreme Court restored the dismissal order. The appeal was allowed.

Issues considered

The High Court's jurisdiction to interfere with the quantum of punishment awarded in a disciplinary proceeding.
Whether the lack of reasons for deeming the punishment disproportionate constitutes a denial of justice.
The appropriate standard of judicial review for disciplinary punishments.

Subjects

service lawtermination of servicedisciplinary actionpunishment proportionalityjudicial reviewreasons for decisiondenial of justicefiduciary dutyconduct code

Judgment

REGIONAL MANAGER. U.P.S.R.T.C.. ETA WAH AND ORS. A
v.
HOT! LAL AND ANR.

FEBRUARY 11. 2003

[SHIVARAJ V. PATIL AND ARIJIT PASAYAT, JJ.] B

Service law:

Termination of Service-Scope of Judicial Review to interfere with
punishment-Held, the scope of interference is very limited and restricted to C
exceptional cases-Court should record reasons as to why punishment does
not commensurate with the proved charges-Failure to give reasons amounts
to denial ofjustice,

The services of the respondent, a bus conductor were terminated on D
the ground of dereliction of duty, violation of Employee's Conduct Code
and misappropriation of employers money by the act of not issuing tickets
to passengers despite re«::overing money. In writ petition challenging the
termination, High Court found the respondent employee guilty of the
misconduct. On appeal Division Bench of the High Court set aside the
order of termination holding that the punishment awarded was not E
commensurate with the gravity of the charge.

In appeal to this Court appellant-employer contended that High
Court exceeded its jurisdiction in interfering with the quantum of
punishment.
F
Allowing the appeal, the Court

HELD: Court or Tribunal while dealing with the quantum of
punishment has to record reasons as to why it is felt that the punishment
does not commensurate with the proved charges. The scope for
interference is very limited and restricted to exceptional cases in the G
indicated circumstances. In the present case as no reasons whatsoever have
been indicated as to why the punishment was considered disproportionate.
.. '> Reasons are live links between the mind of the decision taker to the
•
controversy in question and the decision or conclusion arrived at. Failure
to give reasons amounts to denial of justice. A mere statement that it is H
1019
1020 SUPREME COURT REPORTS f2003] I S.C.R.

·A disproportionate would not suffice. It is not only the amount involved but
the mental set up, the type of duty performed and similar relevant
circumstances which go into the decision-making process while considering
whether the punishment is proportionate or disproportionate. Lf the
charged employee holds a position of trust where honesty and integrity
B are inbuilt requirements of functioning, it would not be proper to deal with
the matter leniently. Misconduct in such cases has to be dealt with iron
hands. Where the person deals with public money or is engaged in financial
transactions or acts in a fiduciary capacity, highest degree of integrity and
trust-worthiness is must and unexceptionable. 11027-E-H; 1028-AI

C SC. Chaturvedi v. Union of India and Ors., 119951 6 SCC 749; Union
of India anu· Anr. v. G. Ganayutham, (19971 7 SCC 463; Om.Kumar and Ors.
v. Union of India, 12001 I 2 SCC 386; Karnataka State Road Trnasport
Corporation v. B.S. Hul/ikatti, [20011 2 SCC 574 and Regional Manager
RSRTC v. Ghanashyam Sharma, (2002) I LLJ 234, relied on.

D U.P. State Road Transport Corporation and Ors. v. Mahesh Kumar
Mishra and Ors., [2000) 3 SCC 450, distinguished.

Alexandar Machinery Dudley Ltd. v. Crabtree, (1974) LCR 120,
referred to.

E CIVIL APPELLATE JURISDICTION: Civil Appeal No. 5984 of2000.

From the Judgment and Order dated 16.12.1999 in SA 493/99 of the
High Court of Allahabad at Lucknow Bench, Lucknow.

F Pradeep Misra and A.S.G. for the Appellants.

Sudhir Kulshreshtha for the Respondent.

The Judgment of the Court was delivered by

G ARIJIT PASA YAT, J. In this appeal the only point raised by the U.P.
State Road Transport Corporation (hereinafter referred to as 'the employer')
is whether the High Court was justified in interfering with the quantum of
punishment awarded to the respondent no.1-Hoti Lal (hereinafter referred to
as 'the employee').

H The factual background in a nutshell is as follows:
REGIONAL MANAGER. U.P.S.R T.C. ETA WAH v. HOT! LAL fPASA YAT. J.] J 02 J

The employee was appointed as a Conductor on 1.6.1976. On 9. 7.1988 A
he was on duty in Bus No.UGG-108. While checking was done by the Assistant
... ·-)-- Regional Manager. it \vas found that 16 persons \Vere \Vithout ticket. Even
after realising fare fro1n the passengers no ticket had been issued up to the
ti1ne of checking. \\'hen the inspecting officer sta11ed checking. the e1nployee
hurriedly tried to issue tickets. Old tickets were found in his possession \\ ith
1

the intent to use the1n again. Several tickets of various denominations \Vere
B
also recovered. These according to the authorities a1nounted to dereliction of
.... duty, violation of Employee's Conduct Code and misappropriation of
employer's money. The employee was placed under suspension on 23. 7.1988.
A charge-sheet containing, inter alia, aforesaid allegations \Vas served on
16.8.1988 and finally on 30.3.1991 the order of termination was passed. An c
appeal was filed before the prescribed Appellate Authority which was
dismissed by order dated 23.6.1991. The order of termination and the appellate
order were questioned in a writ petition No.4535(S/S) of 1991. The same was
dismissed with the conclusions that after full-fledged inquiry conducted by a
retired District Judge, the employee was found guilty of misconduct and on
consideration of materials the charges were fully established. The matter was D
carried in appeal before the Division Bench by the employee and by the
impugned judgment the Division Bench set aside the order of tennination
leaving it open to the employer to award any punishment, but not of removal
or tennination or compulsory retirement. The conclusions of the Division
~
Bench are, inter alia, as follows: E
xxx xxx xxx xxx

"In the instant case the petitioner was found to be carrying on ticketless
passengers and certain old and used tickets were recovered from his
possession but it was asserted before the learned Hon'ble the Single F
-~
Judge that after issuing of the charge sheet no oral enquiry proceeded
and the petitioner was punished. It was submitted that the punishment
is too severe and harsh in proportion to the alleged misconduct in
which the State suffered only a loss of Rs. 16.

Considering the facts and circumstances of the case, we are of the G
view that the punishment awarded to the petitioner is not commensurate
with the gravity of the charge, hence the writ petition deserves to be
,. allowed."

xxx xxx xxx xxx H
1022 SUPREME COURT REPORTS f2003] I S.C.R.

A In support of the appeal learned counsel for the employer submitted
that the High Court exceeded its jurisdiction in interfering with the quantum
of punishment. Both learned Single Judge and the Division Bench found that
the charges were proved after an elaborate and fair inquiry. The allegations
were of very serious nature and even without indicating any reason as to why
the punishment was not held to be proper, the directions have been given for
B imposing lesser penalty. If the three penalties which have been directed to be
not excluded are kept out only minor penalties can be imposed.
:.c··
Learned counsel for the respondents on the other hand submitted that
in the employer's own case in case of another conductor, almost under identical
C circumstances a similar direction was upheld. Reliance was placed on V.P.
State Road Transport Corpn. and Ors. v. Mahesh Kumar Mishra and Ors.,
c20001 3 sec 4so.
~-
The scope of interference with the punishment awarded has been dealt
with by this Court in several cases. A reference to applicable observations in
D some of these cases would suffice.

In B.C. Chaturvedi v. Union of India and Ors., [1995] 6 SCC 749 it
was held as follows:

"The next question is whether the Tribunal was justified in interfering
E with the punishment imposed by the disciplinary authority. A
Constitution Bench of this Cou11 in State of Orissa v. Bidyabhushan
Mohaputra, AIR ( 1963) SC 779 held that having regard to the gravity
of the established misconduct, the punishing authority had the power
and jurisdiction to impose punishment. The penalty was not open to
review by the High Court under Article 226. If the High Court reached
F a finding that there was some evidence to reach the conclusion, it
L, '
became unassessable. The order of the Governor who had jurisdiction ~·(

and unrestricted power to determine the appropriate punishment was
final. The High Court had no jurisdiction to direct the Governor to
review the penalty. It was further held that ifthe order was supported
on any finding as to substantial misconduct for which punishment
G
"can lawfully be imposed", it was not for the Court to consider whether
that ground alone would have weighed with the authority in dismissing
the public servant. The Court had no jurisdiction, if the findings
prima facie made out a case of misconduct, to direct the Governor to
reconsider the order of penalty. This view as reiterated in Union of
H India v. Sardar Bahadur, [ 1972] 4 SCC 618. It is true that in Bhagat
REGIONAL MANAGER lJ PS.RT C. ETAWAH r. HOT! LAL f PASA YAT . .11 J 023

Ram v. State of H.P .. [1983] 2 SCC 442 a Bench of two Judges of A
this Court, \Vhile holding that the High Court did not f1Jnction as a
court of appeal. concluded that when the finding \\3S utterly perverse.
the High Cou11 could always interfere \vith the san1e. !n that case. the
finding \vas that the appellant was to supervise felling of the trees
which \vere not han1mer marked. The Governn1ent had. recovered
fro111 the contractor the loss caused to it by illicit felling of trees. B
Under those circumstances, this Court held that the finding of guilt
was perverse and unsupported by evidence. The ratio, therefore, is
not an authority to conclude that in every case the Court/Tribunal is
empowered to interfere with the punishment imposed by the
disciplinary authority. In Rangaswami v. State of T.N., [1989] Supp. C
I SCC 686 a Bench of three Judges of this Court, while considering
the power to interfere with the order of punishment, held that this
Court, while exercising the jurisdiction under Article 136 of the
Constitution, is empowered to alter or interfere with the penalty; and
the Tribunal had no power to substitute its own discretion for that of
the authority. It would be seen that this Court did not appear to have D
'
intended to Jay down that in no case, the High Court/Tribunal has the
power to alter the penalty imposed by the disciplinary or the appellate
authority. The controversy was again canvassed in State Bank of
India's, case (1994] 2 SCC 537 where the Court elaborately reviewed
the case law on the scope of judicial review and powers of the Tribunal E
in disciplinary matters and nature of punishment. On the facts in that
case, since the appellate authority had not advrned to the relevant
facts, it was remitted to the appellate authority to impose appropriate
punishment.

A review of the above legal position would establish that the disciplinary F
authority, and on appeal the appellate authority, being fact-finding authorities
have exclusive power to consider the evidence with a view to maintain
discipline. They are invested with the discretion to impose appropriate
punishment keeping in view the magnitude or gravity of the misconduct. The
High Court/Tribunal, while exercising the power of judicial review, cannot G
normally substitute its own conclusion on penalty and impose some other
penalty. If the punishment imposed by the disciplinary authority or the
appellate authority shocks the conscience of the High Cou11/Tribunal. it would
appropriately mould the relief, either directing the disciplinary/appellate
authority to reconsider the penaity imposed, or to shorten the litigation, it
may itself, in exceptional and rare cases, impose appropriate punishment with J-I
1024 SUPREME COURT REPORTS r2003) I S.C.R.

A cogent reasons in support thereof."

In Union of India and Anr. v. G. Ganayutham, [ 1997] 7 SCC 463 it
was held as follows:

·'The current pos1t1on of proportionality in administrative law 111
B England can be summarized as follows:

(I) To judge the validity of any administrative order or statutory
discretion. normally the .Wednesbury test is to be applied to find
out if the decision was illegal or suffered from procedural
improprieties or was one which no sensible decision-maker could,
C on the material before him and within the framework of the law,
have arrived at. The court would consider whether relevant matters
had not been taken into account or whether irrelevant matters had ~·
been taken into account or whether the action was not bona fide.
The court would also consider whether the decision was absurd
or perverse. The court would not however go into the correctness
D of the choice made by the administrator amongst the various
alternatives open to him. Nor could the court substitute its decision
to that of the administrator. This is the Wednesbury (1948 1 KB
223) test. >
(2) The cou1t would not interfere with the administrator's
E decision unless it was illegal or suffered from procedural
impropriety or was irrational in the sense that it was in outrageous
defiance of logic or moral standards. The possibility of other
tests, including proportionality being brought into English
1
administrative law in future is not ruled out. These are the CCSU
F (1985 AC 374) principles.

(3) (a) As per Bugdaycay (1987 AC 514), Brind (1991 (I) AC
696) and Smith (1996 (I) All ER 257) as long as the Convention
is not incorporated into English law, the English courts merely
exercise a secondary judgment to find out if the decision-maker
G could have, on the material before him, arrived at the primary
. judgment in the manner he has done.

(3) (b) If the Convention is incorporated in England making
available the principle of proportionality, then the English courts
will render primary judgment on the validity of the administrative
H ·action and find out ifthe restriction is disproportionate or excessive
REGIONAL MANAGER. U P.S.R.T C.. ETA WAH ».HOT! LAL [PASAYAT. J.J 1025
or is not based upon a fair balancing of the fundamental freedo1n A
and the need for the restriction thereupon.

(4) (a) The position in our countr~, in ad111inistrative la\v, \Vhere
no funda111ental freedon1s as aforesaid are involved. is that the
courts/tribunals 'viii only play a secondary role \vhile the pri1nary
judg1nent as to reasonableness \Vill re1nain \Vith the executive or B•
--...; ad1ninistrative authority. The secondary judg1nent of the court is
to be based on Wednesbury and CCSU principles as stated by
Lord Greene and Lord Diplock respectively to find if the executive
or ad1ninistrative authority has reasonab!y arrived at his decision
as the primary authority.
(4) (b) Whether in the case of administrative or executive action
c
affecting fundamental freedoms, the courts in our country will
apply the principle of "proportionality" and assume a primary
role, is left open, to be decided in an appropriate case wh~re such
action is alleged to offend fundamental freedoms. It will be then
necessary to decide whether the courts will have a primary role D
only ifthe freedoms under Articles 19, 21 etc. are involved and
not for Article 14.

Finally, we come to the present case. It is not contended before
us that any fundamental freedom is affected. We need not therefore
go into the question of"proportionality". There is no contention that E
the punish1nent imposed is illegal or vitiated by procedural impropriety.
As to "irrationality", there is no finding by the Tribunal that the
decision is one which no sensible person who weighed the pros and
cons could have arrived at nor is there a finding, based on material,
that the punishment is in "outrageous" defiance of logic. Neither
F
Wednesbury nor CCSU tests are satisfied. We have still to explain
"Ranjit Thakur [1987] 4 SCC 611".

In Ranjit Thakur this Court interfered with the punishment only
after coming to the conclusion that the punishment was in outrageous
defiance of logic and was shocking. It was also described as perverse G
and irrational. In other words, this Court felt that, on facts, Wednesbury
) and CCSU tests were satisfied. In another cas.!', in B.C Chaturvedi v.
Union of India, [1995] 6 SCC 749 a three-Judge Bench said the same
thing as follows: (SCC p. 762, para 18)

"18 ...... The High Court/Tribunal, while exercising the power of H
1026 SUPREME COURT REPORTS [20031 I S.C.R.

A judicial review. cannot normally su_bstitute its own conclusion on
penalty and impose some other penalty. If the punishment imposed
by the disciplinary authority or the appellate authoriiy shocks the
conscience of the High Court/Tribunal. it \\'OU Id appropriately
mould the relief. either directing the disciplinary/appellate authorit~
to reconsider the penalty imposed, or to shorten the litigation. it
B may itself, in exceptional and rare cases. impose appropriate
punishment with cogent reasons in support thereof.''

Similar view was taken in Indian Oil Corpn. ltd. v. As/10k Kumar
Arora, [I 997] 3 SCC 72 that the Court will not intervene unless the
punishment is wholly disproportionate.
c
In such a situation, unless the court/tribunal opines in its secondary
role, that the administrator was, on the material before him, in-ational
according to Wednesbury or CCSU norms, the punishment cannot be
quashed. Even then, the matter has to be remitted back to the
appropriate authority for reconsideration. It is only in very rare cases
-'
D as pointed out in B.C. Chaturvedi's case that the Court might to
shorten litigation think of substituting its own view a:s to the quantum
of punishment in the place of the punishment awarded by the
competent authority. (In B.C. Chaturvedi and other cases referred to
therein it has however been made clear that the power of this Court
E under Article 136 is different.) For the reasons given above, the case
cited for the respondent, namely, State of Maharashtra v. M.H.
Mazumdar, [I 988] 2 SCC 52 cannot be of any help."

In Om Kumar and Ors. v. Union of India. (2001] 2 SCC 386 it was
observed as follows:
F
"Thus, from the above principles and decided cases, it must be
held that where an administrative decision relating to punishment in
disciplinary cases is questioned as "arbitrary" under Article 14, the
court is confined to Wednesbury principles as a secondary reviewing
authority. The court will not apply proportionality as a primary
G reviewing court because no issue of fundamental freedoms nor of
discrimination under Article 14 applies in such a context. The court
while reviewing punishment and if it is satisfied that Wednesbury i
principles are violated, it has normally to remit the matter td the
administrator for a fresh decision as to the quantum of punishment.
Only in rare cases where there has been long delay in the time taken
H
REGIONAL MANAGER.UPS RT C . ETA WAH " HOT! LAL [PASA YAT. J.] ] 027

by the disciplinary proceedings and in the time taken in the courts, A
and such extren1e or rare cases can the court substitute its O\\'n vie\v
as to the quantu111 of punish1nent ...

The decision in l../. P. State Road Transport C'orporation 's case (supra)
was really in a different factual background 111aking it distinguishable fro1n
the facts of the present case. and has no application. In Karnataka State Road B
Transport Corporation V. B.S Hu/likatti, [2001] 2 sec 574 it was held that
it is misplaced sympathy by Cou11s in awarding lesser punishments where on
checking it is found that the Bus Conductors have either not issued tickets to
a large number of passengers, though they should have, or have issued tickets
of a lower denomination knowing fully well the correct fare to be charged. C
It is the responsibility of the Bus Conductors to collect the correct fare from
the passengers and deposit the same with the Corporation. They act in a
fiduciary capacity and it \Vould be a case of gross misconduct if knowingly
they do not collect any fare or the correct amount of fare. It was finally held
that the order of dismissal should nor have been set aside. The view was re-
iterated by a three Judge Bench in Regional Manager, RSRTC v. Ghanashyam D
Sharma, (2002) I LLJ 234, where it was additionally observed that the proved
acts amount either to a case of dishonesty or of gross negligence, and Bus
Conductors who by their actions or inactions cause financial loss to the
Corporations are not fit to be retained in service.

It needs to be emphasized that the Court or Tribunal while dealing with E
the quantu1n of punishment has to record reasons as to why it is felt that the
punishment does not comn1ensurate with the proved charges. As has been
highlighted in several cases to which reference has been made above, the
scope for interference is very litnited and restricted to exceptional cases in
the indicated circumstances. Unfortunately, in the present case as the quoted F
extracts of the High Court's order would go to show, no reasons whatsoever
have been indicated as to why the punishment was considered disproportionate.
Reasons are live links between the mind of the decision taker to the controversy
in question and the decision or conclusion arrived at. Failure to give reasons
amounts to denial of justice. (See Alexander Machinery Dudley ltd. v.
Crabtree, (1974) LCR 120 A mere statement that it is disproportionate would G
not suffice. A party appearing before a Court, as to what it is that the Court
is addressing its mind. It is not only the amount involved but the mental set
up, the type of duty performed and similar relevant circumstances which go
into the decision-making process while considering whether the punishment
is proportionate or disproportionate. If the charged employee holds a position H
1028 SUPREME COURT REPORTS [2003] I S.C.R.

A of trust where honesty and integrity are inbuilt requirements of functioning,
it would not be proper to deal with the matter leniently. Misconduct in such
cases has to be dealt with iron hands. Where the person deals with public
money or is engaged in financial transactions or acts in a fiduciary capacity,
highest degree of integrity and trust-worthiness is must and unexceptionable.
B Judged in that background, conclusions of the Division Bench of the High
Comt .do nbt appear to be proper. We set aside the same and restore order
of learned Single Judge upholding order of dismissal.

The appeal is allowed.

C K.K.T. Appeal allowed.
)•