JUDGMENT : HARISANKAR V. MENON, J. 1. These writ petitions have been filed by the employees of the Kerala State Beverages (Manufacturing and Marketing) Corporation Limited (for short, the “respondent Corporation”), challenging certain circulars issued by the Managing Director of the respondent Corporation as well as the steps taken on that basis. 2. The facts as culled out from W.P(C) No.32713 of 2019 are as under: The petitioner was working as an abkari worker (Salesman) in an outlet of the respondent Corporation at Changanassery. He contends that he joined duty at the Changanassery outlet during the month of August, 2018 as a prelude for the Onam season sales. He points out that Ext.P4 complaint was presented to the Warehouse Manager, Kottayam, pointing out certain discrepancies in the stock. He further alleges that by Ext.P5 notice dated 08.05.2019, the respondent Corporation has arrived at a shortage in stock in the afore shop, and by Ext.P6 dated 01.06.2019, a liability of Rs.53,21,973/- is sought to be demanded from the petitioner as well as all others who were working in the afore shop. Ext.P6 also reveals that the Warehouse Manager was also directed to satisfy certain amounts. The petitioner points out that pursuant to the directions issued by this Court in a writ petition filed by certain other noticees in Ext.P6, this Court directed the Managing Director of the respondent Corporation to have an adjudication, and thereafter, Ext.P7 has been issued rejecting the explanations offered. The petitioner also urges that he was not heard while issuing Ext.P10. The petitioner further states in this writ petition that the proceedings as above have been taken purely on the basis of Exts.P1 to P3 circulars issued by the Managing Director of the respondent Corporation. 3. It is challenging the proceedings initiated as above, as well as the circulars issued by the Managing Director of the respondent Corporation, on the basis of which the proceedings have been taken, that the petitioners have filed the captioned writ petition. 4. A counter affidavit dated 14.11.2022 is filed by the respondent Corporation seeking to justify the steps taken as above. 5. I have heard Sri.Deepu Thankan, Sri.C.S.Ajith Prakash, Smt.V.Sethukutty Amma and Smt.Bhavana Velayudhan for the respective petitioners as also Sri.T.Naveen, the learned Standing Counsel for the respondent Corporation. 6. 4. A counter affidavit dated 14.11.2022 is filed by the respondent Corporation seeking to justify the steps taken as above. 5. I have heard Sri.Deepu Thankan, Sri.C.S.Ajith Prakash, Smt.V.Sethukutty Amma and Smt.Bhavana Velayudhan for the respective petitioners as also Sri.T.Naveen, the learned Standing Counsel for the respondent Corporation. 6. Sri.Deepu Thankan, the learned counsel would contend that: i. The services of the workers under the respondent Corporation are to be governed by the Kerala State Beverages (M&M) Corporation Limited Employees Service Rules, 1986 (for short, the “Service Rules”) framed by the said Corporation. He refers to various provisions of the Service Rules and contends that the Rules provide for detailed procedure when misconduct on the part of the employees of the respondent Corporation is detected. He further points out that the Rules provide for a detailed procedure under which the employee concerned is getting an opportunity to prove his innocence as against various allegations, and ultimately, if any proceedings are finalized, the employee has a remedy of appeal, again prescribed by the Rules. ii. In the light of the afore, he contends that the circulars at Exts.P1 to P3 have no legs to stand. He contends that the liability is being fixed on the employee in a summary manner. iii. He points out that the Managing Director of the respondent Corporation is not having any power or authority to issue circulars in the nature of Exts.P1 to P3. 7. Sri.Ajith Prakash, the learned counsel would contend that: i. Some of the employees have already retired during 2020-21 and even retiral benefits are being withheld (the petitioner in W.P(C) No.32987 of 2019) ii. No show-cause notices were issued prior to the impugned steps. iii. Ext.P3 circular dated 20.12.2017 brands the employees against whom steps are taken as “unscrupulous employees” engaged in stealing cash/stocks, without any sort of enquiry. iv. He refers to the provisions of the Operation Manual produced as Ext.P4 in W.P(C) No.32987 of 2019 to contend that the duties of an employee are only with reference to the said Manual, and there cannot be any steps for the realization of the alleged discrepancy without any inquiry. He would also rely on Ext.P5 permit for the transport of intoxicating liquor to show that the consignee is being shown as “shop-in-charge” and huge liability/responsibility is being cast on the shoulders of the employee. He would also rely on Ext.P5 permit for the transport of intoxicating liquor to show that the consignee is being shown as “shop-in-charge” and huge liability/responsibility is being cast on the shoulders of the employee. v. He would rely on the factual position in WP(C) No.33573 of 2019 to contend that the loss/discrepancy in stock is on account of the flooding during August, 2018 in Perinad Panchayath where the outlet concerned was functioning. 8. The learned counsel Smt.Sethukutty Amma and Smt.Bhavana Velayudhan adopts the afore submissions of Sri.Deepu Thankan and Sri.Ajith Prakash. 9. Per contra, Sri.T. Naveen, the learned Standing Counsel for the respondent Corporation, after referring to the history behind the establishment of various outlets by the respondent Corporation, which resulted in the induction of various abkari workers who were displaced on account of the change in Abkari Policy of 1996, contends that: i. The circulars challenged in these writ petitions are only a method for recovery of the loss caused to the respondent Corporation, independent of the Service Rules. ii. He points out the various clauses of the Operation Manual referred to above and points out that the employees are bound to maintain various registers. If such registers were maintained properly, leading to daily updation of the cash/stock position, there would not have been any occasion for a complaint. iii. He refers to Exts.R1(a) minutes of the meeting of the Board of Directors of the Corporation dated 10.07.1984 produced along with the counter affidavit in WP(C) No.32987 of 2019, to contend that the Managing Director was having ample power and authority to issue circulars in the nature of those challenged herein. iv. He further points out that, as of now, even the circular dated 20.12.2017 has been further modified, and the employees’ liability is now equal. v. He points out that the activity undertaken in the retail outlets being a commercial activity, the Service Rules need not be followed. vi. The impugned steps were taken after complying the principles of natural justice. 10. I have considered the afore contentions and the connected records. 11. The petitioners are essentially challenging the circulars issued, as noticed earlier. It is noticed that the first circular dated 08.04.2011, produced as Ext.P1 in W.P(C) No.32713 of 2019, prescribes certain duties and responsibilities of the employees of the respondent Corporation. In paragraph 5 of the said circular, it is laid down as under: “5. 11. The petitioners are essentially challenging the circulars issued, as noticed earlier. It is noticed that the first circular dated 08.04.2011, produced as Ext.P1 in W.P(C) No.32713 of 2019, prescribes certain duties and responsibilities of the employees of the respondent Corporation. In paragraph 5 of the said circular, it is laid down as under: “5. Liability on account of shortage in liquor stocks/cash at the shop will be recovered from the employees working in the Retail shop in the proportion given below: Category of Employee Proportion of Liability Remarks Shop-in-Charge - Shop Assistant 50% See Note (A) below LDC/UDC/Helpers/Abkari Workers/Salesmen/Billing Machine Operator/other employees of the shop 50% See Note (A) below Note-A: The above will apply to employee of whichever category, who is holding charge of the post or is attending to the above duties.” Later, through Ext.P2, Ext.P1 is modified, and this time, the liability is again at 50% for the shop-in-charge/Shop Assistant and 50% to be distributed among the balance employees. Ext.P3 again modifies the liability providing as under: “Therefore considering the above, liability on account of shortage in cash stocks at the KSBC FL-1 Retail Shops will be apportioned and recovered in the proportion given below: i. In case where liability on account of shortage in cash/stock at a KSBC FL-1 Retail Shop during a period of 6 months is equal to or less than Rs.1 lakh, the liability amount will be apportioned equally among all the employees working in the said shop. ii. In case where liability on account of shortage in cash/stock at a KSBC FL-1 Retail Shop during a period of 6 months is more than Rs.1 lakh, 10% of the liability amount will be apportioned to the concerned KSBC FL- 9 Warehouse Manager under whose jurisdiction the said KSBC FL-1 Retail Shop falls and the balance 90% liability shall be apportioned equally among all the employees working in the said shop. iii. In addition to the above, wherever substantial liability on account of shortage in cash/stock is noted, Criminal Case will also be filed against the concerned employees. This Circular is issued in partial modification of the earlier Circular regarding recovery of liability on account of shortage in cash/stock of the KSBC FL-1 Retail Shops and shall come into immediate effect.” It is the sustainability or otherwise of the afore circulars, that is to be considered in these writ petitions. This Circular is issued in partial modification of the earlier Circular regarding recovery of liability on account of shortage in cash/stock of the KSBC FL-1 Retail Shops and shall come into immediate effect.” It is the sustainability or otherwise of the afore circulars, that is to be considered in these writ petitions. It may be noticed that insofar as Exts.P1 and P2 have merged in Ext.P3, the vires of Ext.P3 alone need be considered. 12. The service of the employees under the respondent Corporation, it is seen, is governed by the Service Rules, referred to earlier, formulated and approved by the Government pursuant to G.O.(MS) No.4/86/TD dated 7.1.1986. A reference to Rule 3(j) of the Service Rules shows that both full-time and part-time employees under the respondent Corporation are covered thereunder, excluding those employed on a casual basis on daily wages. Chapter 7 of the Service Rules provides for discipline. Rule 82 under the said Chapter provides as to what all acts/omissions would amount to “misconduct”. Seventy-four acts/omissions listed thereunder would amount to misconduct. Rule 83 provides for penalties and procedure and the same reads as under: “ 83. Penalties and Procedure An employee may be punished for any breach rule of the corporation or for any misconduct or for any othergood and sufficient reason by imposing on him any of the following minor or major penalties: Minor penalties i. Censure ii. Fine iii. Withholding of increments with or without cumulative effect. iv. Suspension as substantive punishment. Major Penalties (v) withholding of promotion (vi) Recovery from pay of the whole or any part of any monetary loss caused to the Corporation by negligence or breach of orders or otherwise. (vii) discharge from service (viii) dismissal from service.” The procedure for imposition of minor penalties and major penalties is described under Rules 86 and 87 of the Service Rules as under: “ 86. Procedure for imposition of minor penalties - No minor penalty shall be imposed on an employee unless he has been informed in writing of the grounds on which it is proposed to take action against him, and he has been afforded an opportunity to offer explanation including a personal hearing if so requested for by him. 87. Procedure for imposition of minor penalties - No minor penalty shall be imposed on an employee unless he has been informed in writing of the grounds on which it is proposed to take action against him, and he has been afforded an opportunity to offer explanation including a personal hearing if so requested for by him. 87. Procedure for imposing major penalties - An employee charged with misconduct shall be served with a written charge sheet briefly showing the charges against him and a statement of allegations setting out the circumstances alleged and nature of the misconduct. It shall also specify the time within which the employee may file his written statement of defence. An opportunity will be afforded for the employee to take extracts or copies of the records relied on in framing of the charges at any time as may be fixed in advance at his request before filling of the written statements. We will also be given an opportunity for personal hearing. When an employee refuses to receive the charge sheet or when he is not readily available for its service on him, the charge sheet shall be sent by registered post to his last known address and sending by registered post, and affixing the same on notice board of the premises in which he is employed will be considered proper service of the charge sheet. On receipt of written statement of defence or if no written statement is received within the time allowed to the employee to file it, the disciplinary authority will in cases where the explanation is not considered satisfactory or where no explanation is received, cause a domestic enquiry to be conducted into the charges and allegations. For purposes of conducting the domestic enquiry the appointing authority may appoint an enquiry Officer, and if considered necessary also an employee of the Corporation to assist the Enquiry Officer and to present the case against the delinquent. If the accused employee desires assistance in his defence and makes a request to that effect, the Enquiry Officer may grant permission for assistance by another employee of the Corporation. A pleader will not normally be allowed unless there are special circumstances which in the view of the Enquiry Officer warrants assistance by a Pleader. If the accused employee desires assistance in his defence and makes a request to that effect, the Enquiry Officer may grant permission for assistance by another employee of the Corporation. A pleader will not normally be allowed unless there are special circumstances which in the view of the Enquiry Officer warrants assistance by a Pleader. The Enquiry Officer shall give such notices to witnesses cited by the Management, and the employee intimating the time, date and venue of the enquiry. If the employee is absent in spite of the notice the Enquiry Officer may conduct enquiry in his absence. The accused employee if present will be allowed to cross examine the witnesses examined on behalf of the Management.” A reading of the afore Rules would show that a detailed procedure is prescribed under the Service Rules. With respect to the major penalties, the Rules permit recovery from the employee out of his pay. However, a reading of Rule 87 shows that a chargesheet is to be served on the employee granting the employee an opportunity to obtain copies/extracts of the documents relied on. The employee is also having an opportunity to defend himself against various allegations. If ultimately, the findings are against the employee, he is entitled to file an appeal also. Thus, the Service Rules are exhaustive, as noticed earlier, also taking into account instances like the one sought to be addressed by the impugned circulars. The Service Rules, however, have a legal backing by virtue of the Government Order referred to earlier. It is seen that the circulars are issued by the Managing Director, and I find that he does not have any power or authority to issue such circulars. 13. At this juncture, the submission made by the learned Standing Counsel, Sri.T.Naveen, with reference to the contents of Ext.R1(a) minutes, is to be considered. By the above minutes, the respondent Corporation had delegated certain powers to the Chairman as well as the Managing Director. The powers of the Managing Director are specifically laid down thereunder. Sri.T.Naveen would rely on Clauses 3 and 4 out of the powers delegated to the Managing Director which read as under: “3. Disciplinary powers including suspension and dismissal, in accordance with due procedure to be prescribed by the Board in respect of posts, basic pay below Rs.600/- p.m. 4. The powers of the Managing Director are specifically laid down thereunder. Sri.T.Naveen would rely on Clauses 3 and 4 out of the powers delegated to the Managing Director which read as under: “3. Disciplinary powers including suspension and dismissal, in accordance with due procedure to be prescribed by the Board in respect of posts, basic pay below Rs.600/- p.m. 4. Enforcement of standing orders, regulations and Rules stipulated by the Board for regulating conduct and service conditions of employees.” A reading of the afore powers so delegated, in my opinion, does not confer any power on the Managing Director to issue circulars in the nature of those impugned in these writ petitions. At the maximum, he can only enforce the standing orders/regulations/rules as regards the conduct and service conditions of the employee. In other words, at the maximum, the Managing Director can only seek to enforce the Service Rules referred to earlier, and he cannot independently prescribe new methods for recovery. 14. Furthermore, it is to be noticed that the Service Rules specifically provide for the method for recovery as already noticed. Detailed procedures are prescribed thereunder. In contrast, Exts.P1 to P3 – the impugned circulars do not provide for any procedure, and in my opinion, they are only providing for a summary method of recovery as against the alleged liabilities suffered by the respondent Corporation. Therefore, on account of that reason also, I am of the opinion that the impugned circulars are not to be sustained. 15. In this connection, the judgment of the Apex Court in M.P. State Agro Industries Development Corporation Ltd. and Another v. Jahan Khan , (2007) 10 SCC 88 is to be referred to. In that judgment, the Apex Court has held as under: “6. It is trite that the power of punishment to an employee is within the discretion of the employer and ordinarily the courts do not interfere, unless it is found that either the enquiry, proceedings or punishment is vitiated because of non observance of the relevant Rules and Regulations or principles of natural justice or denial of reasonable opportunity to defend etc. or that the punishment is totally disproportionate to the proved misconduct of an employee.” Thus, it is clear that the court can interfere in cases where the relevant rules are not being followed and where the principles of natural justice are violated. or that the punishment is totally disproportionate to the proved misconduct of an employee.” Thus, it is clear that the court can interfere in cases where the relevant rules are not being followed and where the principles of natural justice are violated. Here, as already found, the respondent Corporation has decided to proceed against the petitioners relying on the circulars, without having any regard to the Service Rules and without following the principles of natural justice. In such circumstances, the impugned proceedings against the petitioners are only to be interfered with. 16. A Full Bench of this Court in Raveendran Nair v. State of Kerala , 2007 (1) KLT 605 has also held that no recovery is possible from an employee unless the liability has been fixed by way of disciplinary proceedings. Thus, the fact that there should be a categoric fixation of liability is clear. Such fixation of liability in the case at hand can only be by following the method prescribed under the Service Rules referred to earlier. 17. In Government of Andhra Pradesh and Others v. Smt. P. Laxmi Devi , (2008) 4 SCC 720 , the Apex Court, with reference to the hierarchy of legal norms – “grundnorm” – has held as under:- “32. According to Kelsen, in every country there is a hierarchy of legal norms, headed by what he calls as the ‘Grundnorm’ (The Basic Norm). If a legal norm in a higher layer of this hierarchy conflicts with a legal norm in a lower layer the former will prevail (see Kelsen’s ‘The General Theory of Law and State’). 33. In India the Grundnorm is the Indian Constitution, and the hierarchy is as follows : (i) The Constitution of India; (ii) Statutory law, which may be either law made by Parliament or by the State Legislature; (iii) Delegated legislation, which may be in the form of Rules made under the Statute, Regulations made under the Statute, etc.; (iv) Purely executive orders not made under any Statute. 34. If a law (norm) in a higher layer in the above hierarchy clashes with a law in a lower layer, the former will prevail. Hence a constitutional provision will prevail over all other laws, whether in a statute or in delegated legislation or in an executive order. The Constitution is the highest law of the land, and no law which is in conflict with it can survive. Hence a constitutional provision will prevail over all other laws, whether in a statute or in delegated legislation or in an executive order. The Constitution is the highest law of the land, and no law which is in conflict with it can survive. Since the law made by the legislature is in the second layer of the hierarchy, obviously it will be invalid if it is in conflict with a provision in the Constitution (except the Directive Principles which, by Article 37, have been expressly made non enforceable).” Thus, if there is a conflict between the norms, the norm in the higher layer will prevail over that in the lower layer. Therefore, assuming that the impugned circular is one validly issued by the Managing Director insofar as the same is in apparent conflict with the Service Rules, the Circulars issued by the Managing Director will have to be brushed aside. On account of the afore reasoning also, the impugned circular/s are only to be declared illegal. 18. At this juncture, the contention raised by Sri.T.Naveen, with respect to the recovery from the gratuity amount, is to be considered. He contends that by virtue of the provisions of Rule 8(1) of the Service Rules, the provisions of the Kerala Service Rules (KSR) are adopted insofar as the Service Rules do not stipulate how the liability/dues to the respondent Corporation can be recovered from superannuated abkari workers. He, therefore, submits that the dues can be recovered with reference to the provisions of Note 2 to Rule 3 of Part III KSR from the gratuity payable to the employee. Here, it may be noticed that the very same contention was considered by a Division Bench of this Court in the judgment reported as Ramakrishnan P.K. v. Kerala State Beverages (M&M) Corporation Ltd. and Others, 2022 (2) KHC 503 . The Division Bench of this Court noticed that Chapter V of the Service Rules provides for gratuity, and a recovery of liabilities from an employee out of the gratuity, as provided under Rules 76, 77, and 78. In such circumstances, this Court noticed that the respondent Corporation can only rely on the provisions of Rule 3 of Part III KSR to the extent of non-mentioning of fixation of liability/grant of gratuity under the Service Rules. In such circumstances, this Court noticed that the respondent Corporation can only rely on the provisions of Rule 3 of Part III KSR to the extent of non-mentioning of fixation of liability/grant of gratuity under the Service Rules. This Court also noticed the provisions of the Payment of Gratuity Act and went on to hold as under: “The operative portion of Rule 3 of Part III KSR has no application or relevance in the instant case since the respondent employer Corporation does not pay the pension to its employees. So also, there are no Rules applicable in the employer Corporation for continuing post-retirement disciplinary proceedings for the purpose of ascertaining as to whether any gratuity amount can be recovered, as permitted by Clause (a) and Clause (b)(i) of Section 4(6).” Thus, I find that insofar as the respondent Corporation does not pay any pension to its employees, as found by the Division Bench of this Court, Rule 3 of Part III KSR would have no application/relevance. In such circumstances, the contention raised by the learned Standing Counsel is only to be recorded and rejected. 19. Lastly, the contention raised by Sri.T.Naveen, the learned Standing Counsel, with respect to concluded proceedings on the basis of the impugned proceedings is to be considered. He points out that the first circular was issued in the year 2011, the second one in 2016 and the third one in 2017 and contended that many of the employees of the respondent Corporation have already satisfied the amounts sought to be recovered, and such concluded proceedings are not to be disturbed. I find force in the afore-submission. There might be cases where the payments would have already been effected by the employees who were proceeded against. In such circumstances, it is held that such concluded proceedings are not to be disturbed, by virtue of the findings in this judgment. Resultantly, these writ petitions are disposed of as under: i. The circular dated 20.12.2017 issued by the Managing Director of the respondent Corporation (Ext.P3 in W.P(C) No.32713 o 2019) is set aside. ii. It is declared that the respondent Corporation cannot proceed against its employees on the basis of the afore circulars. iii. Resultantly, these writ petitions are disposed of as under: i. The circular dated 20.12.2017 issued by the Managing Director of the respondent Corporation (Ext.P3 in W.P(C) No.32713 o 2019) is set aside. ii. It is declared that the respondent Corporation cannot proceed against its employees on the basis of the afore circulars. iii. It is further declared that the respondent Corporation can proceed for the realization of the loss suffered by the respondent Corporation from its employees, only with reference to the provisions of the Service Rules approved by the Government pursuant to G.O.(MS) No.4/86/TD dated 7.1.1986. iv. The concluded proceedings on the basis of the circulars dated 08.04.2011, 20.12.2016, and 20.12.2017 against the employees of the respondent Corporation, who have not challenged such recovery steps, are not to be affected by the principles laid down in this judgment.