Holding

An employee whose removal order is set aside and the case remitted under Rules 12(3) or 12(4) remains under suspension, and the employer must conduct a fresh enquiry; the High Court’s order foreclosing such enquiry is set aside.

Summary

The respondent, a teacher at a private educational institution, was suspended on 18 March 1989 and a domestic enquiry led to his removal. The Tribunal set aside the removal order because the subsistence allowance had not been paid and remitted the matter for a fresh enquiry. The Karnataka High Court stayed the domestic enquiry and allowed the respondent's civil petition, effectively halting further disciplinary action. On appeal, the Supreme Court held that under Rules 12(3) and 12(4) of the Karnataka Private Educational Institutions (Discipline & Control) Act, once a removal order is set aside and the case remitted, the employee remains under suspension and the employer may conduct a fresh enquiry from the point of the procedural defect. The High Court’s order foreclosing the enquiry was therefore erroneous. The Court directed the employer to complete the fresh enquiry within four months, with any payment made pending adjustment against the subsistence allowance.

Issues considered

Whether an employee whose removal order is set aside under Rules 12(3)/12(4) is deemed to be under suspension pending a fresh enquiry.
Whether the High Court could stay the domestic enquiry and prevent the employer from conducting a further enquiry.
Whether the employer has the authority to restart the disciplinary enquiry from the stage of the identified illegality.

Subjects

suspensiondomestic enquirydisciplinary proceedingsKarnataka Private Educational Institutions Actsubsistence allowanceremoval orderfresh enquiryservice law

Judgment

)
;w THE BOARD OF MANAGEMENT OF A
S.V.T. EDUCATIONAL INSTITUTION AND ANR.
v.
A. RAGHUPATHY BHAT AND ORS.

FEBRUARY 3, 1997
B
[K. RAMASWA.i\1Y AND G.T. NANAVATI, JJ.]
-~

Service Law :

Karnataka Private Educational Institutions (Discipline & Control) Act: c
Rule 12(3) & 12(4)-:Employee suspended from service-Domestic en-
quiry conducted-Order of removal passed-Tribunal setting aside the order
of tennination on the ground that the employee was not paid subsistence
allowance-Remitted for fresh enquiry-High Court stayed the domestic en-
----~ quiry-On appeal held, as a consequence of setting aside of order af tennina- D
tion or removal or dismissalfurther enquiry is required to be undertaken from
that stage-Pending enquiry the employee must be deemed to be under
·suspension-High Court was not right in foreclosing the further en-
quiry--Employer directed to continue and complete the enquiry within four
months-Sum paid to the employee pursuant to High Court's direc- E,
tions-Would be subject to the result of the enquiry and final order and
adjusted towards subsistence allowance or otherwise.

Managing Director, ECIL, Hyderabad & Ors. v. B. Karunakar & Ors.,
[1993] 4 sec 727' followed.
F
CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 695-698
of 1997.

From the Judgment and Order dated 18.4.96 and 5.8.96 of Karnataka
High Court in C.R.P. Nos. 934, 2362/93 & C.P. Nos. 365-66 of 1996.
G

...:
..... C.S. Vaidyanathan, G.V. Chandershekhar, P.P. Singh and Siveam for
the Appellants.

T.L.V. Iyer, T.K. Gpinath, Girish Chandra and P. Mahale for the
Respondents. H/
865
866 SUPREME COURT REPORTS [1997) 1 S.C.R.
A The following Order of the Court was delivered :

Leave granted.

We have heard counsel on both sides.

B This appeal by special leave arises from the order of the Karnataka
High Court, made on 18.4.1996 in C.R.P. Nos. 934/93 and 2362/93 and the
order dated 5.8.1996 ih C.P. Nos. 365 and 366 of 1996. ·

The admitted position is that the respondent was suspended from
service on 18.3.1~89. Domestic enquiry was conducted and the order of
C removal was passed. A petition was filed by the respondent against the said
order before the Tribunal constituted under Kamataka Education Act,
1983. The Tribunal on finding that the respondent was not paid the
subsistence allowance, set aside the order of termination and remitted the
m,atter for fresh enquiry. In revision, the High Court stayed the domestic
D enquiry and the civil petition was allowed by the High Court. Thus, this
appeal by special leave.

It is not necessary for us to go into the merits of this matter. Rules
12(3) and 12(4) of the Rules framed under Karnataka Private Educational
Institutions· (Discipline & Control) Act, provide that in a case where a
E penalty of dismissal, removal or compulsory retirem~nt from service im-
posed upon an employee is set aside in an appeal or on review under these
Rules and the case is remitted for further inquiry or action or with any
· other direction or under Rule 12(4) of the Rules is rendered void in
consequence of or by a decision of a Court of law and the disciplinary )
F authority on consideration of the circumstances of the case, decides to hold
further enquiry against him on the allegations on which the penalty of
dismissal, removal or compulsory retirem.ent was originally imposed, the
employee shall be deemed to have been placed under suspension by the
appointing auth0rity from the date of the original order of dismissal,
removal or compulsory retirement and shall continue to remain under
G suspension until further orders. Thus, it can be seen that the Rules provide
for further enquiry to be conducted by the disciplinary authority. It is
settled law that the employer has power to conduct enquiry afresh from
the stage at which the illegality in the proceedings is found vitiating the
action. The High Court is, therefore, not right in foreclosing ,further
H enquiry after upholding the order of the Tribunal which has held that there
S.V.T. EDUCATIONAL INSTITUTION v. A.RAGHUPATHY BHAT 867

is need for further enquiry and the order of removal was set aside because A
of non-payment of subsistence allowance. The question whether the order
of removal was bad"m law for non-payment of subsistence allowance is left
open, as it has not been canvassed. The disciplinary authority's Proceeding
further, as a consequence of remittance of the order, is clearly adumbrated
under Rule 12(3) or Rule 12(4), as the case may be. It is now well settled B
by a Constitution Bench decision of this Court in Managing Director, ECJL
, Hyderabad & Ors. v. B. Karnnakar & Ors., [1993] 4 SCC 727 that as a
consequence of setting aside of ord.er of termination or removal or dismiss-
al further enquiry is required to be undertaken from that stage. Pending
enquiry, the employee must be deemed to be under suspension. Under
these circumstances, the High Court was not right in foreclosing the further C
enquiry. The appellants are directed to continue and complete the enquiry
within a period of four months from today an until the final order, the
respondent must be deemed to be under suspension.

We are informed that the respondent has been paid a sum of Rs.
2,00,000 (Rupees two lacs only) pursuant to the directions issued by the D
High Court. The said payment will be subject to the result of the enquiry
and final order and must be adjusted, as a consequence of the order of the
enquiry report towards subsistence allowance or otherwise.

The appeal is disposed of accordingly. No costs.
E
G.N. Appeal ~sposed of.