Holding

The Tribunal was not justified in interfering with the appointing authority’s suspension order, and the Supreme Court set aside the Tribunal’s orders.

Summary

The respondent, a manager in the Orissa State Guest House, was found to have committed serious financial irregularities and was later discovered to possess disproportionate assets. The appointing authority suspended him pending disciplinary proceedings and a criminal investigation under Rule 12 of the Orissa Civil Services Rules. The Orissa Administrative Tribunal intervened, directing that the suspension not be effected without its prior permission and later set aside the suspension order. The State appealed to the Supreme Court under Article 136, arguing that the Tribunal had no jurisdiction to stay the suspension. The Supreme Court held that the appointing authority was empowered to suspend the employee without seeking the Tribunal's permission and that the Tribunal’s interference was unjustified. Consequently, the Court allowed the appeals and set aside the Tribunal’s orders, without expressing any view on the merits of the underlying misconduct.

Issues considered

Whether the State Administrative Tribunal had the discretionary power to stay or suspend the appointing authority's order of suspension pending disciplinary proceedings.
Whether the appointing authority could lawfully suspend a public servant under Rule 12 of the Orissa Civil Services (Classification, Control and Appeal) Rules, 1962 without prior permission of the Tribunal.
Whether the Supreme Court could interfere with the Tribunal's interim order under Article 136 of the Constitution.

Legislation cited

Orissa Civil Services (Classification, Control and Appeal) Rules, 1962s. Rule 12
Prevention of Corruption Act, 1948s. 13(1), s. 3(2)

Subjects

suspensiondisciplinary proceedingsadministrative tribunalinterim orderArticle 136Rule 12public servantcorruption investigationjurisdictiondiscretionary power

Judgment

52 SUPREME COURT REPORTS [1994) 2 S.C.R.

A Court contending that in view of the serious allegations against the respon-
dent the appointing authority WH justified in suspendin3 him pending
contemplated disciplinary proceedings as well as investigation as con·
templated by Rule 12 of the Orissa Civil Services (Classification, Control
and Appeal) Rules, 1962 and the Tribunal was not justified In interfering
B with the orders.

On behalf of the respondent it was contended that the Tribunal bad
discretionary power to suspend the suspension orders and this Court,
while exercising Its power under Article 136, should not Interdict the
discretionary power exercised by the Tribunal.
c Allowing the appeals and setting aside the orders of the Tribunal,
this Court

HELD: 1. True, normally, this Court would not Interdict the exercise
of the power to pass interim orders by the Courts or Tribunals, obviously,
D with the expectation that they exercise the discretionary power with cir· ,_
cumspectlon after weighing pros and cons to subserve the ultimate result
of the pending adjudication. But In the instant case, the Tribunal appears
to have proceeded In baste in passing the impugned orders even before the
Ink Is dried on the orders passed by the appointing authority. Since serious
E allegations of misconduct have been alleged agabtst the respondent the
Tribunal was quite unjustified In lnterferring with the orders of suspen-
sion of the respondent pending enquiry. Therefore, it is a lit case for
interference by this Court. [56-G, 61-B-D]

2. Suspension is not a punishment but only one of forbidding or
F disabling an employee to discharge the duties of office or post held by him.
In other words, it Is to refrain him to avail further opportunity to per·
petrate the alleged misconduct or to remove the impression among the
members of service that dereliction of duty would pay(rults and the offend·
Ing employee could get away even pending enquiry without any impediment
G or to prevent an opportunity to the delinquent officer to scuttle the enquiry
or Investigation or to win over the witnesses or the delinquent having bad
the opportunity In office to Impede the progress of the investigation or
enquiry etc. [60-E-F].

3. Normally when an appointing authority or the disciplinary
H authority seeks to suspend an employee pending enquiry or contemplated
STATE v. B.K. MOHANTY [K. RAMASWAMY,J.) 53

', Inquiry or pending investigation into grave charges of misconduct or A
defalcation of funds or serious acts of omission and commission, the order
of suspension would be passed after taking into consideration the gravity
of the misconduct scught to be inquired into or investigated and the nature
of the evidence placed before the appointing authority and on application
of the mind by disciplinary authority. Appointing authority or disciplinary B
authority should consider the above aspects and decide whether it is
expedient to keep an employee under suspension pending aforesaid action.
The suspension must be a step in aid to the ultimate result of the loves·
ligation or enquiry. The authority also should keep in mind public interest
of the impact of the delinquent's continuance in office while facing
departmental enquiry or trial of a criminal charge. It .would not be as an C
administrative routine or an automatic order to suspend an employee. It
should be on consideration of the gravity of the alleged misconduct or the
nature of the allegations imputed to the delinquent employee. The Court
of the Tribunal must cousider each (!1!Se on its own facts and no general
law could be laid down in that behalr. [60·C·E, 60-H, 61-A]
D·
R.P. Kapur v. Union of India, [1964] 5 S.C.R. 431; Balvantray Ratilal
Patel v. State of Maharashtra, [1968) 2 S.C.R. 577; V.P. Grindronfy,. v. State
of M.P., [1970) 3 S.C.R. 448; Government of India, Ministry of Home Affairs
& Ors. v. Tarak Nath Ghosh, [1971) 3 S.C.R. 715 and U.P. Rajya Krishi
Utpadan Mandi Parishad & Ors. v. Sanjiv Rajan, [1993) Suppl. 3 S.C.C. 483, E
referred to.

CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 911-llA-
12 of 1994.

From the Judgment and Order dated 17.3.93 & 30.9.93 of the Orissa F
Administrative Tribunal at Cuttack in M.P. Nos. 701193 in O.A. Nos. 3%/93
& M.P. No. 2492/93 in 0.A. No. 1594 of 1993.

G.L. Sanghi and R.K. Mehta for the Appellant.

R.K. Garg, P.H. Parekh and N.K. Sahoo Advocate for the Respon-
G
dent.

The Judgment of the Court was delivered by

K. RAMASWAMY, J. : Delay of 118 days is condoned. H
54 SUPREME COURT REPORTS [1994] 2 S.C.R.

A Special leave granted.
(

While the respondent was working as Manager of Orissa State Gi;est
House at Bhubneshwar, the government Audit Department audited the
account for the periods from 1984-85 to 1990-91 and noted serious financial
B irregularities, fabrication of records and vouchers and misappropriation to
the tune of Rs. 163.59 lakhs. It suggested further probe into certain items
of expenditure which according to the Audit Report are highly suspicious
and dubious in nature. The respondent was transferred on January 14, 1993 r
to the Secretatiat and was kept in charge of Recovery Cell. Thereafter
certain other financial irregularities relating to purchase of woolen carpets
C etc. apart from suppression of audit objections had come to light. There
were audit reports for the years 1978-79 to 1980-81 also which appear to
have pointed out similar objections. The appointing authority considered
the record and found necessary to take disciplinary proceedings for those
financial irregularities and mis-appropriation committed during that period
D and action was in contemplation against the respondent. On March 17,
1993 they passed an order directing an enquiry into the irregularities 3Dd
also decided to keep him under suspension pending further action. An-
ticipating this action, the respondent attempted to pre-empt it and laid
OA. No. 396 of 1993 in the State Administrative Tribunal, Bhubneshwar
and prayed to quash Government Memorandums dated 14.1.93 and 112.93
E and also filed an application for ad interim injunction. Hardly the ink on
the order of suspension dried on the paper, the Tribunal on the same day,
namely, March 17, 1993 directed not to suspend the respondent and also
directed the standing counsel to obtain instructions of the need W suspend
the respondent. Subsequently, the appellant received information that the
F respo11dent was in possession of disproportionate assets to the known
lawful sources and directed the vigilence to conduct an investigation. On
September 3, 1993, the vigilence conducted a raid on the house of the
respondent and found him to be in possession of disproportionate assets
to the tune of Rs.11.44 lakhs. Accordingly, the crime was registered in
Crime No. 46 under Section 3(2) read with Section 13(1) of the Prevention
G of Corruption Act, 1948 and further investigation was on. On consideration
of the material, and government by order dated September 28, 1993
suspended the respondent from service. It was an independent cause of
action which has nothing to do with the first order and there is no need to
obtain any prior permission from the Tribunal and the rules do not require
H to obtain such a permission. It is the case of the appellant that yet it sought
STATE v. B.K MOHANTY [K RAMASWAMY,J.] 55

permission from the Tribunal but no order was made. It sought to serve A
1 the order of suspension on the respondent on September 28, 1993 and
September 29, 1993; but the respondent avoided the receipt of it. So it was
sent by registered post to the residential address, as well as personally
served on the respondent by the Under Secretary at 4.00 p.m. on Septem-
ber 30, 1993. Immediately, the Tribunal suspended the order on the same B
day, namely, on Sept,ember 30, 1993 in MP. No. 2493/93 (arising out of
OA. No. 1594/93) and obviously after 4 p.m. In the first order, though the
Tribunal directed to obtain prior permission before passing any suspension
order and despite filing of application for permission, without disposing of
the same, the matter was being adjourned from time to time and ultimately
the cases were posted for final disposal. Thus, these appeals by special C
leave.

The contention of Shri G.L. Sanghi, leraned senior counsel for the
appellant is that under Rule 12 of Orissa Civil Services (Classification,
Control and Appeal) Rules (for short the Rules), the appointing authority D
has been specifically emp~wered to suspend an employee pending discipli'
nary proceedings contemplat~J against him or pending or in respect of any
criminal offence under investigation or trial. In this case, in view of the
serious allegations found from the audit reports and the report of the
vigilence authorities, the appointing authority, namely, the State govern-
ment found it expedient to suspend the respondent and the Tribunal was E
not justified in interfering with the orders when they had appraised the
Tribunal of the seriousness of the allegations. Neither permission was
granted nor matters were disposed of. On the other hand the Tribunal
appears to have found fault with the actic.n taken by the appellant. On the
facts and circumstance, the appointing authority is justified in suspending F
the respondent pending contemplated disciplinary proceedings as well as
investigation by the vigilence department. Shri R.K Garg, learned senior
counsel appearing for the respondent, has contended that the Tribunal has
discretionary power to pass suspension of the suspension orders; when the
Tribunal had entertained the application and directed the authorities not G
to take any action except with the leave of the Tribunal, which was not
obtained before passing of the suspension order on September 28, 1993.
The matters are pending consideration by the Tribunal. This Court would
~,
permit the Tribunal to exercise it discretionary powers and would not
interdict the exercise of such discretionary powers while exercising the
power under Article 136. On the given facts, it is not a fit case warranting H
56 SUPREME COURT REPORTS [1994] 2 S.C.R.

A interference of this Court.

We have given our anxious and serious consideration to the respec- r
tive contentions. True, normally, this Court would not interdict the exercise
of the power to pass interim orders by the courts or tribunals, obviously,
with the expectation that they exercise the discretionary power with cir-
B cumspectio::t after weighing pros and cons to subservc the ultimate result
of the pending adjudication. Tbe question is whether this is a fit case w~ere
the Tribunal itself should have interdicted the orders of suspension when
the oppointing authority contemplated disciplinary proceedings or pending
investigat!on into the crime.
c Rule 12 of the Rules reads thus :

"12. Suspension : (1) The appointing authority to which 11 1s
sub-ordinate of any authority empowered by the Governor or the
appointing authority in that behalf may place a Governemt Servant
D under suspension -

(a) where a disciplinary proceeding against him is contemplated
or is pending; or

(b) where a .case against him in respect of any criminal offence
E is under investigation or trial."

Rules 2-6 are or..itted as being not germane for the purpose.

A Constitution Bench of this Court three decades ago in R.P. Kapur
v. Union of India, (1964] 5 SCR 431, laid the law that :
F
"The general principle therefore is that an employer can suspend
an employee pending an enquiry into his conduct and the only
question that can arise on such suspension will relate to the
payment during the period of such suspension. If there is no
express term in the contract relating to suspension and payment
G during such suspension or if there is no statutory provision in any
law or rule; the employee is entitled his full remuneration for the
period of his interim suspe.nsion; on the other hand if there is a
term in this respect in the contract or there is a provision in this
respect in the contract or there is a provision in the statute or the
H rules framed thereunder providing for the scale of payment during
STATE v. B.K.MOHANTY(K.RAMASWAMY,J.] 57

suspension, the payment would be in accordance therewith. These A
general principles in our opinion apply with equal force in a case
where the government is the employer and a public servant is the
' employee with this modification that in view of the peculiar struc-
tural hierarchy of government the employer in the case of govern-
ment, must be held to be the authority which has the power to B
appoint a public servant. On general principle therefore the
authority entitled to appoint a public servant would be entitled to
suspend him pending a departmental enquiry into his conduct or
pending a criminal proceeding, which may eventually result in a
departmental enquiry against him."
c
This Court reiterated the above view in Balvantray Ratilal Patel v.
The State of Maharashtra, (1968] 2 SCR 577, thi•s :

"The general principle ;.; that an employer can suspend an
employee pending an enquiry into his misconduct and the only D
question that can arise in such suspension will relate to payment
during the period of such suspension. It is now well-settled that
the power to suspend, ir. the sense of a right to forbid a servant
to work, is not an implied term i:: an ordinary contract between
master and servant, and that such a power can only be the creature
either of a statute governing the CuuLCact, or of an express term in E
the contract itself. Ordinarily, therefore, the absence of such power
either as an express term in the contract or in the rules framed
under some statute would mean that the master would have no
power to suspend a workman and exen if he d:ies so in the sense
that be forbids the employee to work, be will have to pay wages F
during the period of suspension. Where, however, there is power
to suspend either in the contract of employment or in the statute
or the rules framed thereunder, the order of suspension has the
effect of temporarily suspending the relationship of iiiaster and
servant with the consequence that the servant is not boUBd to
render service and the master is not bound to pay. · G

It is equally well-settled that an order of interim suspension
can be passed against the employee while an enquiry is pending
into his conduct even though there is no such term in the contract
of appointment or in the rules, but in such a case the employee H
SUPREME COURT REPORTS (1994] 2 S.C.R.

A would be entitled to his remuneration for the period of suspension
if there is no statute or rule under which it could be withheld. In
this connection it is important to notice the distinction between
suspending the contract of service of an officer and suspending an
officer from performing the duties of his office on the basis that
•
the contract is subsisting. The suspension in the latter sense is
'3 always an implied term in every contract of service. When an
officer is suspended in this sense it means that the Govt. merely
issues a direction to the officer that so long as the contract is
subsisting and till the time the officer is legally dismissed he must
not do anything in the discharge of the duties of his office. In other
... words, the employer is regarded as issuing an order to the
employee which, because the contract is subsisting, the employee
must obey.'

In V.P. Gindroniya v. State of Madhya Pradesh & Ors., (1970) 3 SCR
448, another Constitution Bench of this Court ~eld that :
)
"The general principle is that if the master has a power to
suspend his servant pending an enquiry into his misconduct, either
in the contract of service or in the statute or the rules framed
thereunder governing the service, an order of suspension passed
by the master has the effect of temporarily suspending the relation-
ship of master and servant with the consequence that the servant
is not bound to render service and the master is not bound to pay
any wages during the period of suspension. Such a power to
suspend the contract of service cannot be implied and therefore,
if in the absence of such a power in the contract, statute or rules,
an order of suspension is passed by the master it only forbids the
servant to work without affecting the relationship of master and
servant, and the master will have to pay the servant's wages.'

This Court in another case titled Government of India, Ministry of
Home Affairs & Ors. v. Tarak Nath Ghosh, [1971) 3 SCR 715, held that :

'Serious allegations of corruption and malpractices had been
made against the respondent, a member of the Indian Police
Service, serving in the State of Bihar. Inquiries made by the State
Govt. revealed that there was a prima facie case made out against
him. He was suspended by an order which stated that disciplinary
STATE v. B.K.MOHANTY[K.RAMASWAMY,J.] 59

proceedings were contemplated against the respondent. A
On the question whether the suspension of a member of the
service can only be ordered after definite charges have been
communicated to him in terms of Rule 5(2) of the All India
Services (Discipline and Appeal) Rules, 1955, or whether the
Government is entitled to place him under suspension even before B
that stage has"been reached after a preliminary investigation.

HELD : (i) The fact that in other rules of servw~ there is
specific provision for an order of suspension even when discipli-
nary proceedings '"'" ~ contemplated, does not mean that a mem- C
ber of the All India Service should be dealt with differently. It
would not be proper to interpret the Rules, which from a self-con-
tained Code, by reference to the provisions of other rules even if
they were made by or under the authority of the President oflndia.'

(Quoted from the Headnote) D
This Court in U.P. Rajya Krish Utpadan Mandi Parishad & Ors. v.
Sanjiv Rajan, [1993] Supp. 3 SCC 483, helds that :

"Ordinarily when there is an accusation of defalcation of monies E
the delinquent employees have to be kept away from the estab-
lishment till the charges are finally disposed of. Whether the
charges are baseless, malicious or vindictive and are framed only
to keep the .individual concerned out of the employment is a
different matter. But even in such a case, no conclusion can be
arrived at without examining the entire record in question and F
hence it is always advisable to allow disciplinary proceedings to
continue unhindered.

From the charge-sheet it is clear that the allegations against
the first respondent are grave inasmuch as they indicate that the G
amounts mentioned therein are not deposited in the bank and
forged entries have been made in the passbook and the amounts
are shown as having been. deposited. In the circumstances,the High
Court should not have interfered with the order of suspension
passed by the authorities. In matters of this kind, it is advisabie
that the concerned employees are kept out the mischief's range. If H
(j() SUPREMECOURTREPORTS (1994) 2 S.C.R.

A they are exonerated, they would be entitled to all their benefits
from the date of the order of suspension."
(
That was also a case in which the High Court passed interlocutory
order and this court, while reiterating that this Court does noi interfere
B with the interlocutory orders, held that the Court was constrained to do so
when the court had over-looked the serious allegations of misconduct.

It is thus settled law that normally when an appointing authority or
the disciplinary authority seeks to suspend an employee, pending inquiry
or contemplated inquiry or pending investigation into grave charges of
C misconduct or defalcation of funds or serious acts of omission and com-
mission, the order of suspension would be passed after taking into con-
sideration the gravity of the misconduct sought to be inquired into or
investigated and the nature of the evidence placed beforn the appointing
authority and on application of the mind by disciplinary aul bority. Appoint-
D ing authority or disciplinary authority should consider the above aspects
and decide whether it is expedient to keep an employee under suspension
pending aforesaid action. It would not be as an administrative routine or
an automatic order to suspend an employee. It should be on consideration
of the gravity of the alleged misconduct or the nature of the allegations
inputed to the delinquent employee. The Court or the Tribunal must
E consider each case on its own facts and no general law could be laid down
in that behalf. Suspension is not a punishment but is only one of forbidding
or disabling an employee to discharge the duties of office or post held by
him. In other words it is to refrain him to avail furthe;- opportunity to
perpetrate the alleged misconduct or to remove the impression among the
F members of service that dereliction of duty would pa~· fruits and the
offending employee could get away even pending enq1 iry without any
impediment or to prevent an opportunity to the delin•1uent officer to
scuttle the enquiry or investigation or to win over the witnesses or the
delinquent having had the opportunity in office to impede the progress of
G the investigation or enquiry etc. But as stated e&rlier, ea;h case must be
considered depending on the nature of the allegatiom., gravity of the
situation and the indelible impact it creates on the sen ice for the con-
tinuance of the delinquent employee in service pending enquiry or con-
templated enquiry or investigation. It would be another thing if. the action
is actuated by ma/a fides, arbitrary or for ulterior purpose. The suspension
H must be a step in aid to the ultimate result of the investig1tion or enquiry.
STATE v. B.K. MOHANTY [K. RAMASWAMY, J.] 61

The authority also should keep in mind public interest of the impact of the A
delinquent's continuance in office while facing departmental enquiry or
trial of a criminal charge.

On the facts in this case, we are of the considered view that since
serious allegations of misconduct have been alleged against the r&pondent,
the Tribunal was quite unjustified in interfering with the orders of suspen- B
sion of the respondent pending enquiry. The Tribunal appears to have
proceeded in haste in passing the impugned orders even before the ink is
dried on the orders passed by the appointing authority. The contentiuu .,f
the respondent, therefore, that the discretion exercised by the Tribunal
should not be interferred with and t•,s court would be loath to interfere C
with the exercise of such discretionary power cannot be given acceptance.

In the light of the above, we are of the considered view that it is a
fit case for interference. However, it is made clear that we have not
expressed any opinion on merits. The entire matter has yet to be inves-
tigated into and proceeded on die legal evidence and according to law. The D
appeals are accordingly allowed and the orders of the Tribunal are set
aside, but is the circumstances without costs.

T.N.A. Appeals allowed.