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2009 DIGILAW 605 (GAU)

Niranjan Borah v. State of Assam

2009-08-25

AMITAVA ROY

body2009
JUDGMENT Amitava Roy, J. 1. The petitioners, employees of the Assam Co-operative Marketing and Consumers' Federation (STATEFED) are before this Court seeking invocation of its extraordinary jurisdiction under Article 226 of the Constitution of India to adjudge the continuation of pending disciplinary proceedings against them to be invalid for want of jurisdiction of the Liquidator, i.e. Respondent Nos. 2 and 3, as well as for an appropriate direction to release the benefits under the Voluntary Retirement Scheme (VRS) and other service benefits due to them. The principal legal issue being common in both the writ petitions, they have been heard analogously at the admission stage and are being disposed of by this common judgment and order. 2. I have heard Mr. N. Deka, learned Counsel for the petitioner in WP(C) No. 3848 of 2008 as well as Mr. A.C. Borborah, learned senior counsel for the petitioner in WP(C) No. 4250 of 2008. I have also heard Ms. J. Borah, learned Counsel for the Liquidator Assam Co-operative Marketing and Consumers' Federation (STATEFED) as well as Mr. P.J. Ghosh, learned State Counsel, Assam. 3. The pleaded versions of the parties are set out in short to draw the canvas of the controversy. The petitioner in WP(C) No. 3848 of 2008, Shri Niranjan Borah, was initially appointed as Inspector in the STATEFED in the year 1974 and was promoted to the post of Deputy Manager following which he was made the in-Charge of Ganeshguri Shopping Corner thereof. As a matter of fact, he had been holding this office on the said arrangement as Assistant Manager before such promotion. The petitioner was placed under suspension pending a departmental proceeding by order dated 20.9.2003 by the Managing Director, STATEFED. The action being challenged in WP(C) No. 6318 of 2004, by the order dated 31.8.2004 the respondents therein were directed to release the subsistence allowance to the petitioner as per law. According to the petitioner, a part of the subsistence allowance payable to him was released to him followed by a show-cause notice dated 7.9.2004 leveling the charges of misappropriation of an amount of Rs. 77,822.62 causing loss to the Co-operative society, dereliction of duty and gross misconduct. The petitioner submitted his reply dated 15.9.2004 denying the same. Thereafter an enquiry was conducted and a report was submitted, but the copy of the same was not furnished to the him. 77,822.62 causing loss to the Co-operative society, dereliction of duty and gross misconduct. The petitioner submitted his reply dated 15.9.2004 denying the same. Thereafter an enquiry was conducted and a report was submitted, but the copy of the same was not furnished to the him. No step or action against the petitioner thereafter was also taken. The Government of Assam in the Department of Public Enterprises meanwhile had floated a Voluntary Retirement Scheme for the employees of the State Level Public Enterprises of Assam which included the erstwhile employees of the STATEFED. The petitioner accordingly elected to go on voluntary retirement under the said scheme. 4. Thereafter another show-cause notice dated 3.5.2006 was issued to him by the then Managing Director of the STATEFED alleging anomalies of stock worth of Rs. 3,93,201. The petitioner was charged with misconduct, lacking in supervision and dereliction of duty resulting in loss to the STATEFED. The petitioner instituted WP(C) No. 2630 of 2006 challenging the validity of the said show-cause notice, inter alia, on the ground of inordinate delay. Meanwhile by notification No. CSS.I/2006/41 dated 14.6.2006 issued by the Registrar of the Co-operative Societies, Assam under Section 66 of the Assam Co-operative Societies Act, 1949 (the Act), the registration of the STATEFED was cancelled and it was decided to be wound up. Following the same, the respondent No. 2 was appointed as the Liquidator to conduct the liquidation process. By order dated 11.9.2006 in Misc. Case No. 3033 arising out of WP(C) No. 6318 of 2004, the Liquidator was directed to release the subsistence allowance payable to the petitioner. Thereafter WP(C) No. 6318 of 2004 was also disposed of. By order dated 13.9.2006 the petitioner and two others were released from the STATEFED. As per notification dated 14.6.2006 the registration of the corporate body and the employees therein ceased to exist w.e.f. that date. The petitioner and two others were released from STATEFED, Morigaon w.e.f. 14.6.2006. According to the petitioner in the list of eligible employees for voluntary retirement scheme whose cases are under consideration, his name is at serial No. 1353. 5. While the matter rested thus, the respondent No. 2 by an order dated 5.3.2008 revoked the petitioner's suspension which was earlier effected by order dated 20.9.2003 reinstated him in service w.e.f. 14.6.2006 and released him from STATEFED on the same date. 5. While the matter rested thus, the respondent No. 2 by an order dated 5.3.2008 revoked the petitioner's suspension which was earlier effected by order dated 20.9.2003 reinstated him in service w.e.f. 14.6.2006 and released him from STATEFED on the same date. WP(C) No. 2630 of 2006 was disposed of on 8.4.2008 directing the respondent No. 2 to pass a speaking order on two aspects, namely (1) whether he had the power to act as disciplinary authority under Sections 65 and 66 of the Act and (2) whether after liquidation of the STATEFED, the disciplinary proceeding against the petitioner could continue or not. By the impugned order dated 19/21.6.2008 respondent No. 2 has answered both the questions in affirmative. 6. The petitioner in WP(C) No. 4250 of 2008 who was at the relevant time serving as Inspector at the Hojai Branch of STATEFED was placed under suspension pending drawal of departmental proceeding on 6.10.1999. Thereafter, the petitioner was issued a show-cause notice dated 29.1.2002/18.3.2002 alleging misappropriation of stock of rice and sugar at Hojai Branch of STATEFED. According to the petitioner, on the receipt of the memorandum of charges, he prayed for a copy of the audit report on which the same was based, but the request was declined. His further representation dated 4.10.2002 was also not responded to. Thereafter he instituted WP(C) No. 7681 of 2005 challenging the order of suspension and the show-cause notice and sought a direction to the respondents to release his subsistence allowance. On 6.2.2006 the said writ petition was disposed of with a direction to the respondents therein to pay the subsistence allowance to the petitioner within a time frame fixed by it. The departmental proceeding was also directed to be completed within a period of five months failing which it was ordered that the petitioner should be reinstated without prejudice to the pending enquiry. The petitioner accordingly submitted his reply on 8.3.2006 denying the charges. The petitioner has stated that by an order dated 25.4.2006 issued by the then Managing Director of the STATEFED the option exercised by him to avail the benefits under the voluntary scheme was accepted. The petitioner accordingly submitted his reply on 8.3.2006 denying the charges. The petitioner has stated that by an order dated 25.4.2006 issued by the then Managing Director of the STATEFED the option exercised by him to avail the benefits under the voluntary scheme was accepted. According to the petitioner the Registrar of the Co-operative Societies, Assam vide communication dated 18.7.2006 addressed to the Commissioner & Secretary to the Government of Assam, Co-operation Department had forwarded the VRS proposal in respect of 211 employees of the STATEFED requisitioning an amount of Rs. 19,95,52,138 for their dues under the said scheme. The petitioner's name in the said list appeared at serial No. 43. By order dated 11.12.2007 the Liquidator revoked the order of suspension of the petitioner reinstated him in service of STATEFED w.e.f. 14.6.2006 and further released him on the same date holding that the pay and allowances for the said period would be decided later on the conclusion of the departmental proceeding. The petitioner has approached this Court seeking annulment of the said order dated 11.12.2007 and for a direction to the respondents to release him an amount of Rs. 11,21,296 as his dues under the VRS. 7. The respondent No. 2 in his affidavit has stated that as the authorities who were to dispose of the pending departmental proceedings/appeals have ceased to exist with effect from the date of cancellation of the registration of STATEFED, the Liquidator has the power to continue with and deal with the same as it would be necessary for winding up the affairs of the co-operative society involved under Section 66 of the Act. The answering respondent has reiterated the reasons in support thereof as contained in the impugned order dated 19/12.6.2008 passed in compliance of the order dated 8.4.2008 in WP(C) No. 2630 of 2006. According to the respondent No. 2 pending disposal of the disciplinary proceedings the petitioners are not entitled to be released the benefits under the VRS which they seek. He has pleaded that with the cessation of registration of STATEFED, the Liquidator has been vested with the power to conduct the affairs relating to liquidation under Section 66 of the Act. 8. Mr. He has pleaded that with the cessation of registration of STATEFED, the Liquidator has been vested with the power to conduct the affairs relating to liquidation under Section 66 of the Act. 8. Mr. N. Deka, referring to the Rules 8 and 9 of the Assam Services (Discipline and Appeal) Rules, 1964 (the Rules) has urged that the Liquidator is admittedly not either the disciplinary or the appointing authority of the petitioner and, therefore, in absence of any specific authorization to deal with the pending disciplinary proceedings, he lacks jurisdiction and competence to administer it and, thus, in the attending facts and circumstances of the case, following the cancellation of the registration of the STATEFED it is liable to be adjudged as nonexistent in law as well as on facts. According to the learned Counsel neither Section 66 of the Act nor the notification No. CSS.I/2006/41 dated 14.6.2006 whereby the STATEFED has been decided to be wound up and its registration cancelled, does either contemplate or entrust the Liquidator to continue with any pending disciplinary proceeding against any erstwhile employee of the Co-operation. In any view of the matter as the respondent No. 2, the Liquidator not being the disciplinary authority of the petitioner, is not authorized to impose any penalty as contemplated by the Rules, continuance of the proceeding would be merely an abuse of the process of law. Mr. Deka submitted that the proceeding against the petitioner is liable to be quashed and an appropriate direction aught to be issued directing the respondents to release all his dues under the VRS as well as other service entitlements as may be admissible to him. 9. Mr. A.C. Borborah, learned senior counsel for the petitioner in WP(C) No. 4250 of 2008 has urged that in absence of implied or explicit nexus between the disciplinary proceeding and the winding up the process, the authority of the Liquidator to conduct such proceeding is lacking. Drawing the attention to Section 71 of the Act, the learned senior counsel has argued that though the same contemplates a report to be made by the liquidator in course of winding up proceeding, of the registered society, on which the Registrar of the Cooperative Societies if satisfied may take further action as contemplated therein, he is critical of the interpretation provided by the respondent/Liquidator holding it permissible for him to continue the disciplinary proceeding. He has urged that the petitioner in law is entitled to all the benefits under the VRS and the same cannot be denied on the basis of the purported disciplinary proceeding which is non est as on date. Mr. Borborah further urged that even assuming that the continuance of the disciplinary proceeding is permissible denial of the arrear pay of the petitioners as well as provisional pension is without any justification and is liable to be adjudged illegal, arbitrary and discriminatory. 10. Ms. J. Borah has maintained that Section 66(3)(a) of the Act authorizes the respondent Liquidator to conclude the disciplinary proceeding which is in the nature of a legal proceeding. Contending that cancellation of the registration of the STATEFED per se did not tantamount to liquidation in law she has argued that claim of the petitioners for annulment of the disciplinary proceedings and for release or their benefits under the VRS is misconceived. 11. The pleadings and the arguments on the basis thereof have been cautiously evaluated. Admittedly the disciplinary proceedings had been initiated against the petitioners while they were in the service of the STATEFED. Rule 9 lays down the procedure for imposing penalties by way of disciplinary measure. Rule 8 of the said Rules mandates that any one or more of the penalties specified in Rule 7 may be imposed on a member of the State Service by the Appointing Authority or by any other authority empowered in this behalf by a general or special order of the Governor. Rule 8(3) provides that no penalty shall be imposed by an authority lower than the Appointing Authority. Reference to word State Service is understandable as the Rules are contemplated to apply to the Government service. Axiomatically the terms disciplinary authority and appointing authority appearing in Rules 8 and 9 have to be contemplated in terms of the hierarchical set up of the STATEFED. It is not the case of the respondent No. 2 that he had been or is either the appointing authority or the disciplinary authority of the petitioners. The Scheme of the Rules in Part-IV Discipline does not envisage any role of any authority other than those referred to therein. 12. A disciplinary proceeding in law is to be possessed of certain basic characteristics. This is moreso if the initiation and conduct thereof is professed to be governed by any law enacted therefor. The Scheme of the Rules in Part-IV Discipline does not envisage any role of any authority other than those referred to therein. 12. A disciplinary proceeding in law is to be possessed of certain basic characteristics. This is moreso if the initiation and conduct thereof is professed to be governed by any law enacted therefor. The same is then to be initiated and continued by the authorities determined thereby by observing the procedure laid down therefor. It is an admitted fact that for all practical purposes the petitioners ceased to be the employees of the STATEFED on and from 14.6.2006. Even if the departmental proceeding is allowed to continue, having regard to the nature of the charges leveled against them, the penalty of recovery under Rule 7(iii) is the only punishment that can be imposed on them in the attending facts and circumstances of the case. In other words, in the present state of affairs, no effective order of dismissal/removal or any other penalty of the like is feasible. 13. The other aspect which cannot be overlooked is that on and from 14.6.2006 in terms of the notification of that date, the registration of STATEFED was cancelled and that a skeletal staff therefore was retained only for the purpose for facilitating the exercise of winding up the affairs thereof and, thus, finalize its assets and liabilities in an orderly manner so as to avoid any future hassles. The fact situation is obviously different from one where a person in an existing and surviving organization public or private, is deemed to continue in service even after his actual retirement for the purpose of completion of disciplinary proceeding initiated against him or before such an eventuality. Whereas in the instant case, the establishment for all practical purposes has ceased to exist w.e.f. 14.6.2006, it would not be so in case where the organization remain, but the incumbent concerned after his retirement is deemed to continue in service only for the purpose of completion of a disciplinary proceeding which had been initiated against him while in service. No analogy between the two is possible or conceivable. Noticeably in spite of the above, the petitioners who had been released from the service of the STATEFED were deemed to be continuing in service for the purpose of the disciplinary proceedings. No analogy between the two is possible or conceivable. Noticeably in spite of the above, the petitioners who had been released from the service of the STATEFED were deemed to be continuing in service for the purpose of the disciplinary proceedings. In the opinion of this Court, having regard to the fact that on and from 14.6.2006 the STATEFED had been for all practical purpose dissolved and its registration cancelled, the continuation of the departmental proceedings against the petitioners by the respondent No. 2 cannot be upheld as legally tenable. 14. Chapter XI of the Act which deals with the dissolution of a Society registered under it requires that on the cancellation of its registration the order to that effect shall be published in the Official Gazette by a notice relating thereto. The notice shall contain the name of the Liquidator appointed under Section 65 who shall take full charge of the society within two months of the publication thereof. All liabilities recorded in the account books of the society shall be deemed ipso facto to have been claimed. Sub-section (4) of Section 65 while mandates that when cancellation of the registration of a society takes effect, the society shall cease to exist as a corporate body, it shall vest in the Liquidator. Section 66(2) of the Act defines the power of the Liquidator to take immediate possession of all assets, properties, effects and actionable claims of the society or to which the society is entitled and of all books, records, cash and other documents pertaining to the business of the society and in the interest of the society to hold charge of the society. The Liquidator under Section 66(3) shall under the general control of the Registrar, have power, so far as is necessary for the winding up of the society, on behalf of the society to carry on the business thereof and to do all acts and execute all documents necessary to such winding up. The powers of the Liquidator in particular are specified in the sub-clauses of Section 66(3). Under Sub-clause (3)(a) the Liquidator has the power to institute, compromise and defend suits and other legal proceedings on behalf of the society by his name or office. 15. The powers of the Liquidator in particular are specified in the sub-clauses of Section 66(3). Under Sub-clause (3)(a) the Liquidator has the power to institute, compromise and defend suits and other legal proceedings on behalf of the society by his name or office. 15. Under Section 71 of the Act, the Registrar of the Co-operative Societies, Assam if satisfied on a report of the Liquidator made in course of winding up of a registered society that any past or present employee at any time within a period of four years prior to the date of such audit, inspection, injury or report as the case may had been grossly negligent in respect of any loss or deficiency, he may enquire into such conduct and after affording him an opportunity of being heard take necessary steps to recover the amount involved. 16. Noticeably both Section 66 and the notification dated 14.6.2006 are conspicuously silent about the role or the power of the Liquidator vis-à-vis a disciplinary proceeding pending on the date of cancellation of registration of the society. According to the Liquidator, as expressed in the impugned order dated 19/21.6.2008, he was authorized to continue with the disciplinary proceeding in terms of Sections 66(3)(a) as the same is a legal proceeding. Further though on and after 14.6.2006 the STATEFED had been dissolved, he has the power to do all acts and to execute the documents in connection with such winding up proceeding and that he, thus, retains the jurisdiction to administer such disciplinary proceeding. 17. To start with, the presupposition that the disciplinary proceeding is a legal proceeding is apparently erroneous. A disciplinary proceeding though has to be informed with a fair procedure cannot be equated with a legal proceeding which synonimises a judicial proceeding. The distinction in this regard is laid bare amongst others in Rules 21 and 22 of the Assam Services (Pension) Rules, 1969 from where it is apparent that a departmental proceeding is not a judicial proceeding. Having regard to the set up in which the Liquidator is installed to maintain the affairs relating to the winding up of the society dissolved under the Act, the equation of disciplinary proceeding with a legal proceeding does not appear to be in the comprehension of the law makers. This plea of the respondent No. 2/Liquidator, therefore, cannot be sustained. Having regard to the set up in which the Liquidator is installed to maintain the affairs relating to the winding up of the society dissolved under the Act, the equation of disciplinary proceeding with a legal proceeding does not appear to be in the comprehension of the law makers. This plea of the respondent No. 2/Liquidator, therefore, cannot be sustained. The legislative intendment contained in Section 66(4) of the Act conveys that the cancellation of the registration of the society would render it non-existent as a corporate body but vest the Liquidator with the power to do all necessary acts which are essential for winding up thereof Though a very remote and distant nexus between a pending disciplinary proceeding and the winding up process is not imperceptible, ipso facto thereby it is difficult to infer the empowerment of the Liquidator to administer such proceeding as a disciplinary authority. This is more so, as indicated hereinabove that having regard to the fact that the petitioners for all practical purpose have ceased to be in the service of the STATEFED, the only penalty for the charges leveled if proved would be recovery for financial loss suffered by the society. 18. This determination has a reference to the course of action available to the Registrar of the Co-operative Societies, Assam under Section 71 of the Act whereunder on the basis of the report made even by Liquidator against past and present employees and a proper enquiry conducted by him, if so satisfied the same can be resorted to. In other words, the Act provides a clear course of action under Section 71 vis-à-vis an eventuality where a past or present employee is found to be negligent in respect of loss or deficiency to the Society. The jurisdiction of a Liquidator to continue with a pending disciplinary proceeding, thus, seems to be discordant with the scheme of the Act. To acknowledge and approve the power of Liquidator in absence of any provision in the Act entitling him to conduct a pending disciplinary proceeding against the petitioners would, thus, amount to superseding the relevant provisions thereof. Such an interpretation ought to be eschewed. In the opinion of this Court, therefore, the order dated 19/21.6.2008 of the Liquidator cannot be sustained and is, therefore, interfered with. Consequently, the pending disciplinary proceedings pending against the petitioners are set aside. 19. Such an interpretation ought to be eschewed. In the opinion of this Court, therefore, the order dated 19/21.6.2008 of the Liquidator cannot be sustained and is, therefore, interfered with. Consequently, the pending disciplinary proceedings pending against the petitioners are set aside. 19. The petitioners would be entitled to the benefits under the VRS and other arrears which they have claimed for the service rendered by them during the existence of the STATEFED if there is no other impediment in law. It would be open for the respondents, if so advised, to contemplate and take action under Section 71 of the Act, however, strictly in accordance with law. 20. The petitions stand allowed in the above terms. There will be no order as to costs. Petition allowed.