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2003 DIGILAW 1209 (BOM)

Maj. (Retd. ) Babu Thomas v. Goa Shipyard Limited

2003-11-25

A.M.KHANWILKAR, C.K.THAKKER

body2003
JUDGMENT : Oral Judgment: (Per C.K.Thakker, CJ.) This petition is filed by the Petitioner for an appropriate writ, direction and/or order quashing and setting aside an order of dismissal dated January 21, 1997 (Exh.P-7) passed by the Chairman and Managing Director of M/s. Goa Shipyard Ltd. (Respondent herein) as also an order dated 22nd September, 1997 passed by the Appellate Authority-Board (Exh.P-9). A further relief is sought in the petition by directing the Respondent to reinstate the petitioner with full back wages and all other consequential benefits. 2. It is not in dispute that the petitioner was appointed as Joint Manager (Security) by an order dated 18th January, 1991 in pursuance of his application dated 26th November, 1990 on the terms and conditions mentioned in the order. The said Order was passed by the Chairman and Managing Director and has been placed on record of the petition by the petitioner (Exh.P Colly.). 3. Disciplinary proceedings had been initiated against the petitioner for several illegalities and irregularities said to have been committed by him. It is also on record that criminal proceedings had been initiated against the petitioner wherein he was acquitted. Finally, by an order dated 21st January, 1997 in departmental proceedings, petitioner was dismissed from service with immediate effect. 4. Being aggrieved by the said order, the petitioner preferred an appeal. The Appellate Authority confirmed the order passed by the Chairman and Managing Director and dismissed the appeal on September 27, 1997. 5. Both the above orders, i.e. order passed by the Chairman-cum-Managing Director and confirmed by the Appellate Authority have been questioned by the petitioner in the present petition. Rule was issued on March 5, 1998. The matter has now been called out for final hearing. 6. At the time of hearing of the petition several contentions have been raised by the learned counsel for the petitioner. It is, however, not necessary for us to enter into other grounds and contentions on merits as we are of the view that a preliminary contention raised by the learned counsel for the petitioner as to the power, authority and jurisdiction of the Chairman-cum-Managing Director to pass the order of dismissal deserves to be upheld and on that ground, the order of dismissal deserves to be set aside. If it is so, obviously, the order passed in appeal also is liable to be quashed and set aside. 7. If it is so, obviously, the order passed in appeal also is liable to be quashed and set aside. 7. It was contended on behalf of the petitioner that his case is governed by Goa Shipyard Officers', Conduct, Discipline and Appeal Rules, 1979. Rule 3 is a definition clause. Clause (c) defines `Board' as "the Board of Directors of the Company" and includes, in relation to the exercise of powers, any committee of the Board/Management or any officers of the Undertakings to whom the Board delegates any of its powers. " Under clause (d) "Chairman/Managing Director" means a Chairman/Managing Director of the Company. As per clause (g), `Disciplinary Authority' means the authority so specified in the Schedule appended to the Rules and includes any other authority to which it is subordinate. Whereas Rules 24 and 25 provide for suspension and subsistence allowance, Rule 27 specifies penalties. Such penalties are minor penalties as also major penalties. The Explanation to the said Rule clarifies that certain orders would not amount to penalty within the meaning of Rule 27. Rule 28 declares that the disciplinary authority or any authority higher than the disciplinary authority may impose any of the penalties specified in Rule 27 on any officer. Rules 29 and 30 lay down procedure for imposing minor penalties and major penalties respectively. Rule 35 confers right of appeal. Rule 41 makes provision for amendment of Rules and reads thus :- " Amendment: The Board may amend, modify or add to these rules, from time to time, and all such amendments, modifications or additions shall take effect from the date stated herein. "(emphasis supplied). 8. Schedule to the Rules, inter alia, enlists the grade of Officers and their appointing, disciplinary, appellate and reviewing authorities. In case of major penalty, if the grade of the Officer is Superintendent and Assistant Manager, Disciplinary Authority is General Manager, Appellate Authority is Functional Director and Reviewing Authority is Managing Director. In case of major penalty on Superintendents to General Managers, the Board is the Appointing Authority. If the penalty is upto reduction of a lower stage in the time scale or to a lower grade/post, Managing Director is the Disciplinary Authority and Board is Appellate as well as the Reviewing Authority. In case of other penalties, however, (which would include a penalty of dismissal), Board is the Disciplinary Authority, Appellate Authority as also Reviewing Authority. If the penalty is upto reduction of a lower stage in the time scale or to a lower grade/post, Managing Director is the Disciplinary Authority and Board is Appellate as well as the Reviewing Authority. In case of other penalties, however, (which would include a penalty of dismissal), Board is the Disciplinary Authority, Appellate Authority as also Reviewing Authority. Note to the Schedule states that for the purpose of the Schedule, Board would mean a Committee of Directors appointed by the Board of Directors. 9. In the affidavit-in-reply, filed by the General Manager (Personnel and Administration) of the respondent, it was stated that in 1982 the Board of Directors at their meeting dated 15th March, 1982 approved the change of designation of Assistant Manager as Joint Manager without any financial implications. A Copy of the said amendment has been produced on record. It was further stated that there was delegation of powers of the Board on the Managing Director in terms of Article 130(B) of the Articles of Association of the Company by the Board of Directors at its meeting dated 28th January, 1987 with a view "to facilitate the normal day-to-day working of the Company". It was thus the case in the counter that the power of the Board to impose major penalty on Officers were delegated to the Chairman and Managing Director. The relevant entries relate to creation of posts, appointment, termination of service and disciplinary actions. As to the amendment, it was stated that the amendments were notified on 29th March, 1996. For the said purpose, Exh.R-4 has been placed on record. Reading R-4, it appears that the Board of Directors had approved amendments in the Service Rules. It was then stated: "These amendments come into force w.e.f. 8-1-1996." The Schedule to the amendment deals with minor as well as major penalties. One of the columns covers rank of Deputy General Manager to Chief General Manager. The Appointing Authority is the Board, but the Disciplinary Authority is Chairman and Managing Director. Board is the Appellate and Reviewing Authority. It was thus submitted that the action of imposing penalty of dismissal taken by the Chairman and Managing Director against the Petitioner was legal, valid and in consonance with Service Rules. 10. The contention of the learned counsel for the petitioner, however, is that Chairman-cum-Managing Director cannot be said to be an authority who could have taken such action. It was thus submitted that the action of imposing penalty of dismissal taken by the Chairman and Managing Director against the Petitioner was legal, valid and in consonance with Service Rules. 10. The contention of the learned counsel for the petitioner, however, is that Chairman-cum-Managing Director cannot be said to be an authority who could have taken such action. If the action of dismissal was without authority, on that ground alone, the order passed by him deserves to be quashed and set aside. It was also contended that if the initial action was not in conformity with law, the order passed by the appellate authority would also not change the legal position and even that order is liable to be quashed. In such situation, Counsel submitted, the matter deserves to be remanded to the Board by directing the Board to take an appropriate decision in accordance with law after affording an opportunity of hearing to the petitioner. 11. The learned counsel for the respondent, on the other hand, submitted that the Petitioner was appointed by the Chairman-cum-Managing Director. He was thus the appointing authority of the petitioner. It was, therefore, open to him i.e. the appointing authority, to take an appropriate action and as the decision is taken by him as the Chairman-cum-Managing Director (appointing authority), it cannot be said to be illegal. It was also in accordance with the provisions of the General Clauses Act as well as in conformity with law relating to Master and Servant. Moreover, the petitioner submitted to the jurisdiction of the Chairman-cum-Managing Director who had afforded an opportunity of hearing to the petitioner and thereafter an action was taken. It is now not open to the petitioner to raise a contention that the order passed by him was without jurisdiction particularly when the petitioner had also preferred an appeal against that order and even the appeal was dismissed by the Board. 12. It was also submitted that, in any case, in 1996, with effect from January 8, 1996 the Rules had been amended and thereafter the Chairman-cum-Managing Director could have taken the action. Since the order imposed in the present petition was passed in 1997 i.e. after January, 1996, it cannot be said to be without jurisdiction. 12. It was also submitted that, in any case, in 1996, with effect from January 8, 1996 the Rules had been amended and thereafter the Chairman-cum-Managing Director could have taken the action. Since the order imposed in the present petition was passed in 1997 i.e. after January, 1996, it cannot be said to be without jurisdiction. The counsel stated that the petitioner had approached this Court earlier by invoking the jurisdiction of this Court under Article 226 of the Constitution and at that stage, no such contention was raised as to the authority, power or jurisdiction of the Chairman-cum-Managing Director to initiate the proceedings and on that ground, he should not be allowed to raise such a contention at this belated stage. 13. Our attention was also invited to Section 289 of the Companies Act, 1956 and it was urged that when a decision was taken by a Circular Board Resolution, for all purposes, the effective date would be the date on which such a decision was taken i.e. 8th January, 1996 when the amendment became effective. It was argued that it cannot be said that the Rules had not come into force. The counsel, in that connection, relied on the Resolution stated to have been passed on 18th March, 1998. In paragraph 39 it was stated as under :- " CMD brought out to the notice of the Board that the Board at its meeting held on 28.11.1997, had noted the report of the Appellate Authority appointed by the Board confirming the decision of Disciplinary Authority of dismissing Maj. Babu Thomas from the services of the Company w.e.f. 21.01.1997 for serious and grave misconduct committed by him under the CDA Rules. After detailed discussions, the Board, therefore, desired to clarify the position by passing the following resolution :- "RESOLVED THAT the Circular Board Resolution No.13 of 1995 dated 15.12.1995 amending the Goa Shipyard Officers' Conduct, Discipline and Appeal Rules, 1979 shall take effect from the date the same has been approved by the majority of the Directors of the Company, in terms of Section 289 of the Companies Act, 1956". 14. It was thus submitted that the respondent had already resolved to amend the Rules. 14. It was thus submitted that the respondent had already resolved to amend the Rules. Such amendment would be effective from the date the same had been approved by the majority of the Directors of the Company in terms of Section 289 of the Companies Act, 1956 i.e. from 8th January, 1996. From that date, therefore, the Chairman-cum-Managing Director was competent authority to impose punishment on the petitioner. Hence, it cannot be contended that the Chairman-cum-Managing Director had no powers to pass the order of dismissal. Since the order was passed by him after 8th January, 1996 it was legal, valid and proper. It was also submitted that in any case, the amendment in Rules was administrative in nature and all administrative decisions would take effect from the date of such decisions. Hence, in 1997, when the action was taken, the Chairman-cum-Managing Director was possessing requisite power to take action and to impose a penalty of dismissal and no objection could be raised against it. 15. It was also submitted that even under the unamended Rules the Board had power to delegate its authority upon the Chairman-cum-Managing Director and in the light of such authority to delegate power, the petitioner cannot contend that the Chairman-cum-Managing Director had no authority to take action against the petitioner. 16. So far as the unamended Rules of 1979 are concerned, it is clear that the action could have been taken by the Board. It is not the case of the respondent that the Board had taken the action. It is also not the case of the respondent that the power of the Board was delegated on the Managing Director and as "delegate" of the Board, the action was taken. The specific case of the respondent is that in the light of the amendment in the Rules with effect from 8th January, 1996, the action had been taken by the Chairman-cum-Managing Director. 17. The question, however, is whether the Rules could be said to have been amended and come into force. As already noted earlier, Rule 41 specifically and expressly provides for amendment in the Rules. Under the said provision, the Board could amend, modify or add the Rules, but such amendment would take effect "from the date stated therein". In other words, the Rules would get amended and such amendment would be effective from the date mentioned in such amendment. As already noted earlier, Rule 41 specifically and expressly provides for amendment in the Rules. Under the said provision, the Board could amend, modify or add the Rules, but such amendment would take effect "from the date stated therein". In other words, the Rules would get amended and such amendment would be effective from the date mentioned in such amendment. So far as the amendment is concerned, nothing is stated in the amendment. Exh.R-4 recites: "Amendments to Goa Shipyard Officers' Conduct, Discipline and Appeal Rules, 1979". It also states that those amendments would come into force from 8th January, 1996. Such a communication/notice (CMD/34/96), in our opinion, however, cannot be said to be amendment in the Rules covered by Rule 41 of the Rules. Obviously, therefore, when the amendments were made in the Rules, no provision had been made as to when they will come into force and with effect from which date, they will be implemented. Reliance on Section 289 of the Companies Act, 1956 does not help the respondent. We would have considered the said submission, but in view of the specific provision in rule 41 of the Rules which expressly lays down the date on which the amendment would come into force, the learned counsel for the petitioner, in our opinion, is right in contending that the amendment would not come into operation till the procedure laid down in Rule 41 is followed and the date is specified. Apart from that, no resolution has also been placed on record as to when such a decision was taken and as to the date from which the amendment would become effective. The so-called decision dated 18th March, 1998 produced at the time of hearing is subsequent to the order of dismissal dated 21st January, 1997 and the same cannot salvage the situation. The order of dismissal passed by the Chairman-cum-Managing Director, hence, deserves to be set aside as also the order passed in Appeal by the Board. If the initial order is invalid, its invalidity cannot be cured by ratification, approval or confirmation by any authority (Vide State of U.P. v. Mohd. Nooh, AIR 1958 SC 86 ; Farid Ahmed v. Ahmedabad Municipal Corporation, AIR 1976 SC 2095 , Marathawada University v. Sheshrao, AIR 1989 SC 1582 ). 18. If the initial order is invalid, its invalidity cannot be cured by ratification, approval or confirmation by any authority (Vide State of U.P. v. Mohd. Nooh, AIR 1958 SC 86 ; Farid Ahmed v. Ahmedabad Municipal Corporation, AIR 1976 SC 2095 , Marathawada University v. Sheshrao, AIR 1989 SC 1582 ). 18. For the foregoing reasons, in our opinion, the petition deserves to be allowed and is accordingly allowed by quashing and setting aside the order passed by the Chairman-cum-Managing Director dated 21st January, 1997 as also the Order passed by the Appellate Authority on September 22, 1997 and the matter is remanded to the Board for consideration on its own merits in accordance with law i.e. in accordance with the Rules then in force i.e. unamended Rules. Since the matter is very old, it would be appropriate if we direct the Board to take an appropriate decision as expeditiously as possible, preferably within four months from today. We may state that we have not entered into the merits of the matter and we may not be understood to have expressed any opinion on merits or on other considerations. 19. The Learned counsel for the respondent Board at this stage prays that some time may be granted to the respondent Board so as to enable it to approach the Supreme Court. In our view, the prayer is reasonable. Let this order be not implemented for a period of six weeks from today. 20. Petition is accordingly allowed to the extent indicated above. In the facts and circumstances of the case, however, there shall be no order as to costs.