H.L.GULATI Vs. UNION OF INDIA & ORS.
Section 9 - Right of President to withhold or withdraw pension
Supreme Court of India (Division Bench (DB)- Two Judge)
Appeal (Civil), 8224 - 8225 of 2011, Judgment Date: Feb 26, 2015
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NOS.8224-8225 OF 2011
H.L. Gulati ..Appellant
versus
Union of India and others ..Respondents
J U D G M E N T
JAGDISH SINGH KHEHAR, J.
1. The appellant was holding charge of the post of Senior Accounts
Officer, in the office of the Controller of Defence Accounts, during the
period 1992 to 1994, when it was discovered that 36 fraudulent claims came
to be authorized by him, resulting in the unauthorised release of an
approximate amount of Rs.42.24 lakhs.
2. The investigative process, indicated the involvement of large number
of officers, including Lt. Col. Pakki Rama Shankar Rao. This led to the
registration of a first information report bearing No.RC AC 11998 A0002
dated 20.05.1998 at police station CBI/SPE/ACU(I) District New Delhi.
Eventually, a charge sheet bearing No.2 dated 6.9.1999 came to be filed,
wherein the appellant was arrayed as accused no.1.
3. Simultaneously, with the initiation of criminal proceedings, the
authorities issued a charge memo dated 7.7.1998 to the appellant, wherein
he was accused of four articles of charge. The articles of charge levelled
against the appellant are being extracted hereunder:
"Article I
That the said Shri H.L.Gulati, SAO while functioning as Sr.Accounts Officer-
in-Charge `M' Section during the period 16.10.92 to 15.10.94 in the Office
of CDA (HQRS.), New Delhi, failed to discharge his duties effectively as
provided for in Appendix 1 to Defence Accounts Department Office Manual
Part I, which led to authorization of payment against 36 fraudulent claims
as listed in Encl.I. to the tune of Rs.42.24 lakhs approximately. Thus the
said H.L.Gulati, SAO failed to maintain devotion to duty, conducted himself
in a manner unbecoming of a Govt. servant and failed to take all possible
steps to ensure the integrity and devotion to duty of all Govt. servants
for the time being under his control and authority, thereby violating the
provisions of Rule 3(1)(ii), 3(1)(iii) and 3(2)(i) of CCS (Conduct) Rules,
1964.
Article II
That during the aforesaid period and while functioning in the aforesaid
office the said H.L.Gulati, SAO failed to detect that (I) fraudulent claims
had been floated against fake sanctions purported to have been issued by
Ministry of Defence/DGOS, (ii) the contingent bills had not been preferred
by the officers of DGOS authorized to do so and (iii) appropriate
procurement procedure relevant to the value of stores procured had not been
followed. Thus the said H.L.Gulati, SAO, failed to maintain devotion to
duty, conducted himself in a manner unbecoming of a Govt. servant and
failed in the performance of his official duties in the exercise of powers
conferred on him, thereby violating the provisions of Rule 3(1)(ii),
3(1)(iii) and 3(2)(ii) of CCS (Conduct) Rules, 1964.
Article III
That during the aforesaid period and while functioning in the
aforesaid office the said H.L.Gulati, SAO authorized the payments of the 36
fraudulent claims to the tune of Rs.42.24 lakhs approximately, as officer-
in-charge `M' Section although the expenditure as per the fake sanctions
was debitable to the Revenue Head "Ordnance stores and did not fall within
the purview of `M' Section as per Chapter VIII of OM Part XII and even
without getting the local purchase bills noted in Accounts Section as
required vide para 437 OM Part II Vol. I. Thus the said H.L.Gulati, SAO
failed to maintain devotion to duty, conducted himself in a manner
unbecoming of a Govt. servant and failed to take all possible steps to
ensure integrity and devotion to duty of all Govt. servants for the time
being under his control and authority, thereby violating the provisions of
Rule 33(1)(ii), 3(1)(iii) and 3(2)(i) of CCS (Conduct) Rules, 1964.
Article IV
That the said Shri H.L.Gulati, SAO while functioning as Sr.Accounts
Officer-in-Charge `M' Section during the period 16.10.92 to 15.10.94 in the
Office of CDS (Hqrs), New Delhi, passed 36 fraudulent claims amounting to
Rs.42.24 lakhs approximately. Though the concerned bills related to Store
Section, these were processed and passed for payment in the `M' Section and
without following the prescribed procedures. The above act of Shri
H.L.Gulati resulted in fraudulent payment to the tune of Rs.42.24 lakhs
approximately to the alleged suppliers and caused pecuniary loss to the
Govt. The above act indicates complicity with the alleged suppliers and
also exhibits failure on the part of Shri Gulati to maintain absolute
integrity.
Thus the said H.L.Gulati, SAO failed to maintain absolute integrity and
conducted in a manner unbecoming of a Govt. servant thereby violating the
provisions of Rule 3(1)(i) and (iii) of CCS (Conduct) Rules, 1964."
4. The appellant preferred a reply to the aforesaid charge memo on
4.9.1998. Finding the reply filed by the appellant as unsatisfactory, the
punishing authority decided to hold a regular departmental enquiry, which
came to be ordered against the appellant on 9.10.1998.
5. Having allowed an opportunity to the Presenting Officer, as also, to
the appellant-delinquent to lead evidence, the Enquiry Officer submitted
his report on 18.7.2002. The aforesaid report came to be served upon the
appellant through a communication dated 5.2.2004. The appellant preferred
a representation contesting the findings recorded by the Enquiry Officer on
7.3.2004. Finding the reply submitted by the appellant unacceptable, the
punishing authority by an order dated 30.11.2005, punished the appellant
under Rule 9 of the CCS(Pension) Rules, 1972 (hereinafter referred to as
the '1972 Rules'). Rule 9 afore-mentioned is being extracted hereunder:
"9.Right of President to withhold or withdraw pension
(1) The President reserves to himself the right of withholding a pension or
gratuity, or both, either in full or in part, or withdrawing a pension in
full or in part, whether permanently or for a specified period, and of
ordering recovery from a pension or gratuity of the whole or part of any
pecuniary loss caused to the Government, if, in any departmental or
judicial proceedings, the pensioner is found guilty of grave misconduct or
negligence during the period of service, including service rendered upon re-
employment after retirement :
Provided that the Union Public Service Commission shall be consulted before
any final orders are passed :
Provided further that where a part of pension is withheld or withdrawn the
amount of such pensions shall not be reduced below the amount of rupees
three hundred and seventy-five per mensem.
2(a) The departmental proceedings referred to in sub-rule (1), if
instituted while the Government servant was in service whether before his
retirement or during his re-employment, shall, after the final retirement
of the Government servant, be deemed to be proceedings under this rule and
shall be continued and concluded by the authority by which they were
commenced in the same manner as if the Government servant had continued in
service:
Provided that where the departmental proceedings are instituted by an
authority subordinate to the President, that authority shall submit a
report recording its findings to the President.
(B) The departmental proceedings, if not instituted while the Government
servant was in service, whether before his retirement, or during his re-
employment, -
(i)shall not be instituted save with the sanction of the President,
(ii)shall not be in respect of any event which took place more than four
years before such institution, and
(iii) shall be conducted by such authority and in such place as the
President may direct and in accordance with the procedure applicable to
departmental proceedings in which an order of dismissal from service could
be made in relation to the Government servant during his service.
(3) Deleted
(4) In the case of Government servant who has retired on attaining the age
of superannuation or otherwise and against whom any departmental or
judicial proceedings are instituted or where departmental proceedings are
continued under sub-rule (2), a provisional pension as provided in shall be
sanctioned.
(5) Where the President decides not to withhold or withdraw pension but
orders recovery of pecuniary loss from pension, the recovery shall not
ordinarily be made at a rate exceeding one-third of the pension admissible
on the date of retirement of a Government servant.
(6) For the purpose of this rule, -
(a) departmental proceedings shall be deemed to be instituted on the date
on which the statement of charges is issued to the Government servant or
pensioner, or if the Government servant has been placed under suspension
from an earlier date, on such date ; and
(b)judicial proceedings shall be deemed to be instituted -
(i)in the case of criminal proceedings, on the date on which the complaint
or report of a police officer, of which the Magistrate takes cognizance, is
made, and
(ii)in the case of civil proceedings, on the date the plaint is presented
in the court."
The aforesaid Rule came to be invoked on account of the fact that the
appellant had attained the age of retirement, and had superannuated from
service with effect from 30.06.2002. While invoking Rule 9 of the 1972
Rules, the punishing authority ordered the withholding of 50% of the
appellant's pension permanently, and also, the withholding of 50% of the
appellant's gratuity.
6. Dissatisfied with the punishment order dated 30.11.2005, the
appellant preferred a review petition on 4.7.2006. Submissions advanced by
the appellant in the review petition were considered by the punishing
authority, whereupon, by an order dated 1.8.2007 the review petition came
to be rejected.
7. Whilst the criminal proceedings were pending consideration, the
aforesaid departmental proceedings attained finality. Insofar as the
criminal proceedings are concerned, it is sufficient to notice, that the
Special Judge, Delhi, while adjudicating upon the controversy vide his
order dated 8.7.2005, found the appellant not guilty of any criminal
accountability. The trial Court, in the criminal case, arrived at the
conclusion, that the complicity of the appellant in the fraud, was not
substantiated, nor was there any intentional culpability proved.
Accordingly, the appellant came to be discharged from the criminal case.
8. Aggrieved by the punishment order dated 30.11.2005, and the rejection
of the review petition vide order dated 1.8.2007, the appellant approached
the Central Administrative Tribunal, Principal Bench, Delhi (hereinafter
referred to as the 'Administrative Tribunal') by filing Original
Application No. 1675 of 2008. The Administrative Tribunal vide its order
dated 13.4.2009 arrived at the conclusion, that the enquiry report
submitted by the Enquiry Officer on 18.7.2002, did not record any finding
of grave misconduct . In the above view of the matter, the Administrative
Tribunal, while interpreting Rule 9 of the 1972 Rules, held that the
punishment inflicted upon the appellant on 30.11.2005 (as also the review
order passed against the appellant on 1.8.2007) were not sustainable.
9. The order passed by the Administrative Tribunal on 13.4.2009, came to
be assailed by the Union of India, before the High Court of Delhi
(hereinafter referred to as the 'High Court') through Writ Petition(C)
No.13664 of 2009. The High Court accepted the writ petition, and set aside
the order passed by the Administrative Tribunal on 31.8.2010. The
appellant before this Court, also preferred review petition No.428 of 2010
before the High Court. The said review petition was, however, rejected by
an order dated 26.11.2010.
10. The orders passed by the Delhi High Court on 31.08.2010 and
26.11.2010, were assailed by the appellant by preferring Special Leave
Petition(C) Nos.3365-3366 of 2011. Leave in the matters came to be granted
on 23.09.2011. It is therefore, that the instant appeals have matured for
consideration, at our hands.
11. Before venturing to determine the culpability of the appellant
insofar as the articles of charge, that came to be levelled against him, it
would be imperative for us to examine the determination of the Enquiry
Officer, in his report dated 18.7.2002, on each of the articles of charge.
We shall accordingly, summarily deal with the findings recorded by the
Enquiry Officer hereunder:
i) Insofar as Article I of the charge memo dated 7.7.1998 is concerned,
the Enquiry Officer arrived at the conclusion, that the responsibility of
the Senior Accounts Officer in respect of the verification of the specimen
signature was not only to be his own verification, but he was also to
ensure that where verification was done, it would be so indicated, in the
voucher. As per the determination of the Enquiry Officer, the aforesaid
obligation would imply that the Senior Accounts Officer, was not only to
record an endorsement on the voucher, he would also have to ensure that the
auditors and the Assistant Accounts Officer also record such endorsements
on vouchers, when they dealt with the issue of specimen verification. A
categoric finding was recorded by the Enquiry Officer to the effect, that
the bills which authorized the payment of the 36 fraudulent claims, did
not show any such endorsements, and therefore concluded, that the
appellant had failed to put his own endorsement, and had also failed to
ensure endorsements by the auditors/Assistant Accounts Officer, about
verification of the specimen signature on the bills, leaving a doubt
whether the auditors/AAOs had verified the specimen signature. Having so
recorded, the Enquiry Officer accepted that Article I of the charge with
reference to the appellant ( who was working in the 'M' section during the
period 16.10.1992 to 15.10.1994 in the office of CDA(HQ), New Delhi) to the
extent, that had failed to discharge his duties effectively as provided for
in Appendix 1 to OM Pt.1. The Enquiry Officer accordingly inferred, that
authorization of the payment of the 36 fraudulent claims, to the tune of
Rs.42.24 lakhs, stood marginally proved.
ii) Insofar as Article II of the memo of charge dated 7.7.1998 is
concerned, the Enquiry Officer arrived at the conclusion, that the
appellant had failed to detect, that the fraudulent claims had been floated
against fake sanctions purported to have been issued by the Ministry of
Defence, was correct. As such the Enquiry Officer accepted, that the
charge stood proved. On Article II, the Enquiry Officer recorded the
following conclusion:
"1) fraudulent claims have been floated against fake sanctions purported
to have been issued by Min. of Defence partially proved.
2) the contingent bills have not been preferred by officers of
DGOS authorized to do so is not proved.
3) The appropriate procurement procedure relevant to the value of stores
procured has not been followed is proved."
iii) Insofar as Article III of the charge memo dated 7.7.1998 is
concerned, it was alleged against the appellant, that the bills which were
routed through the accounts section for noting, bore the endorsement of the
accounts section, to the effect that the bills had been noted in the
accounts section. However, on the basis of exhibits P/1/1 to P/1/36, the
Enquiry Officer arrived at the conclusion, that no such endorsements were
there on these bills. According to the finding recorded by the Enquiry
Officer, although these bills were required to be routed through the
accounts section for noting, they had not been so routed. Based on
paragraph 154 of Chapter 13 of Defence Account Code, which lists items
which are under locally controlled heads, according to which, payment of
stores and miscellaneous claims would come under the purview of locally
controlled heads, i.e., heads susceptible to control against against budget
provision by the various administrative and executive authorities
subordinate to the Government of India, and para 437 OM Pt. II Vol. I
(Miscellaneous Section) which provided that bills in respect of charges
which were debitable to locally controlled heads, would have to be sent to
the accounts section before payment, for obtaining a certificate regarding
the availability of funds, and further para 514 of Chapter VII Stores
Contract Section of OM Pt.II Vol.I which provides that bills relating to
locally controlled heads or centrally controlled heads for which specific
allotment existed, the bills had to be forwarded to the accounts section,
for noting and furnishing a certificate of availability of funds. Hence,
whether or not the bills were processed in 'M' section or Stores Contract
Section, according to the Enquiry Officer, the bills were required to be
sent to the accounts section, for obtaining a certificate regarding the
availability of funds as according to Para 47(a) of Defence Audit Code. One
of the main objectives of audit of expenditure was to ensure, that there is
a provision of funds for the expenditure duly authorized by the competent
authority. On perusal of the bills, the Enquiry Officer found, that
there were no endorsements thereon, of the accounts section. Therefore,
the Enquiry Officer arrived at the conclusion, that the second part of
Article III of the charge memo, that the bills were passed without even
getting the bills noted in accounts section, stood substantiated against
the appellant. Having so concluded, the Enquiry Officer held that Article
III of the memo of charge dated 7.7.1998 to be partially proved.
iv) Insofar as Article IV of the charge memo dated 7.7.1998 is concerned,
the Enquiry Officer arrived at the conclusion, that the same was not proved
against the appellant.
12. The punishing authority accepted the findings recorded by the Enquiry
Officer. Thereupon, a copy of the enquiry report was served upon the
appellant. The appellant submitted a representation in response thereto,
on 7.3.2004. The punishment order dated 30.11.2005 was passed after the
Punishing Authority considered the reply filed by the appellant. The said
punishment order was reiterated, upon the disposal of the review petition
filed by the appellant, vide order dated 1.8.2007.
13. The first contention advanced by the learned counsel for the
appellant was premised on the interpretation of Rule 9 of the 1972 Rules in
the same fashion as the same had been interpreted by the Administrative
Tribunal. In sum and substance, the contention of the learned counsel for
the appellant was, that it was the Enquiry Officer who ought to have
recorded a finding of "grave misconduct" or "grave negligence", whereupon
the punishing authority could have invoked Rule 9 of the 1972 Rules, to
inflict an appropriate punishment upon the appellant.
14. Having perused Rule 9 of the 1972 Rules, it is not possible for us to
accept the first contention advanced by the learned counsel for the
appellant. The responsibility vested on an enquiry officer is limited to
the determination of the innocence or guilt of a delinquent employee, with
reference to charges levelled against him. It is on the establishment of
the charges (if any), that the punishing authority will record a finding,
whether the conclusions lead to the further inference, that the delinquent
has committed acts of "grave misconduct" or "grave negligence". It is on
such determination by the punishing authority that Rule 9 of the 1972 Rules
can be invoked, in case the delinquent employee has, in the meantime,
retired on attaining the age of superannuation. It is not a matter of
dispute that when the punishment was inflicted upon the appellant by an
order dated 30.11.2005, the appellant had already retired from service
having superannuated on 30.06.2002. We therefore find no merit in the
first contention advanced at the hands of the learned counsel for the
appellant.
15. The only other contention advanced at the hands of the appellant
was, that the Enquiry Officer had recorded findings on the first three
articles, that the charges against the appellant were partly/marginally
proved. Having invited our attention to the conclusion drawn by the
Enquiry Officer, learned counsel for the appellant, also drew, our
attention to the impugned punishment order dated 30.11.2005/1.8.2007, and
contended, that the findings recorded by the Enquiry Officer were fully
endorsed by the punishing authority. Based on the aforesaid, it was the
vehement submission of the learned counsel for the appellant, that the
Enquiry Officer cannot be stated to have recorded any conclusion, which
would lead to the inference that the appellant was guilty of "grave
misconduct".
16. The details of the findings recorded by the Enquiry Officer have been
noticed by us hereinabove. We find merit in the instant contention of the
learned counsel for the appellant. What was sought to be proved against the
appellant was negligence in the discharge of his duties as Senior Accounts
Officer, which resulted in the unauthorised payment of 36 fraudulent
claims, and thereby, the unauthorised dispersal of approximately Rs.42.24
lakhs. Additionally, it was sought to be emphasised by the learned counsel
for the appellant, that the charge of ill-motive was levelled against the
appellant in Article IV of the memo of charges dated 7.7.1998. But insofar
as Article IV of the memo of charges is concerned, the appellant was found
innocent thereof by the Enquiry Officer. The submissions sought to be put
forward was, that it had come to be established, that there was no ill-
motive at the hands of the appellant, insofar as his involvement in the
release of payments of the 36 fraudulent claims is concerned.
Additionally, it was the contention of the learned counsel for the
appellant, that even in the course of the criminal prosecution, initiated
against the appellant, his complicity in the fraud was not proved, nor was
it found that there was any intentional culpability of the appellant,
insofar as the release of the fraudulent claims are concerned. In the above
view of the matter, it was the assertion of the learned counsel for the
appellant, that there was no express ill-intention at the hands of the
appellant. In other words, the issue substantiated against the appellant
was of mere negligence.
17. We affirm the aforesaid submission advanced at the hands of the
appellant, inasmuch as, it is not possible for us to accept, that the
appellant was blameworthy/guilty of any "grave misconduct" because the
enquiry report dated 18.7.2002 only found that the appellant was negligent
in the discharge of his duties. Insofar as Artivle IV of the memo of
charges dated 7.7.1998 is concerned, he was accused of complicity with the
alleged suppliers, and also, responsible for having failed to maintain
absolute integrity. But then, Article IV of the charge memo was held to be
not proved in the Enquiry Report dated 18.7.2002. Equally important is the
fact, that the appellant was discharged from the criminal prosecution
initiated against him with reference to the same sequence of facts. We
are accordingly satisfied to conclude, that the appellant may have been
negligent in the discharge of his duties, but it is not possible to
conclude, that the appellant was guilty of "grave misconduct".
18. Having so concluded, it emerges that the findings against the
appellant could certainly not have been of "grave misconduct". Be that as
it may, the punishing authority, while passing the impugned punishment
order dated 30.11.2005 recorded the following conclusion:
"9. AND WHEREAS, the President in the light of the above observation and
findings and after taking into account all relevant aspects as contained in
record of the case, is satisfied that the charges which were established
against Shri H.L. Gulati, SAO(Retd.) constitutes a grave misconduct.
Therefore, the President considers that ends of justice would be met if 50%
of the pension admissible to Shri H.L. Gulati, SAO (Retd.) is withheld on
permanent basis and 50% of gratuity is withheld."
(emphasis is ours)
19. Based on the conclusion, which had been recorded by the punishing
authority in the order dated 30.11.2005(extracted above), namely, that the
delinquency levelled against the appellant in the charge memo dated
7.7.1998 which stood established constituted "grave misconduct". A review
petition filed by the appellant to assail the order of punishment was
rejected on 1.8.2007.
20. We are satisfied, that it was open to the punishing authority to have
passed the punishment order, in terms of the mandate contained in Rule 9 of
the 1972 Rules. We are further satisfied, that the punishing authority
could have passed such an order after arriving at the conclusion that the
appellant/delinquent was either guilty of "grave negligence" or of "grave
misconduct". The punishing authority recorded, while passing the
punishment order, that the appellant was found to have committed acts of
"grave misconduct". Having perused the charges proved against the
appellant, we have already concluded above, that the delinquency
established against appellant was of negligence, and not of misconduct.
Therefore, the finding recorded in the impugned order that the appellant
had committed acts of "grave misconduct" cannot be accepted. The above
conclusion, in the impugned order being unacceptable, is hereby set aside.
In the absence of the conclusion of "grave negligence", the punishment
order is liable to be set aside, and is accordingly set aside.
21. Since the delinquency relates to the years 1992 to 1994, it would not
be in the fitness of the matter, to require the punishing authority to
reconsider a lesser punishment, in view of the conclusion recorded by us
hereinabove. We would therefore exercise our jurisdiction under Article
142 of the Constitution of India, to inflict an appropriate punishment upon
the appellant. Keeping in mind the delinquency proved and established
against the appellant in the enquiry report dated 18.7.2002, which was
accepted by the punishing authority, we are satisfied that ends of justice
would be met if the punishment of withholding 50% of his gratuity is
maintained/sustained. Insofar as the permanent withholding of 50% of the
appellant's pension is concerned, we are of the view that it would be just
and appropriate to sustain the same till the end of the current month, and
to order the release of 100% of the appellant's pension with effect from
01.03.2015. Ordered accordingly.
The instant appeals stand disposed of in the aforesaid terms.
.......................................J.
[JAGDISH SINGH KHEHAR]
NEW DELHI;
.........................................J.
FEBRUARY 26, 2015. [SHIVA KIRTI SINGH]
ITEM NO.120 COURT NO.4 SECTION XIV
S U P R E M E C O U R T O F I N D I A
RECORD OF PROCEEDINGS
Civil Appeal No(s). 8224-8225/2011
H.L.GULATI Appellant(s)
VERSUS
UNION OF INDIA & ORS. Respondent(s)
(with office report)
Date : 26/02/2015 These appeals were called on for hearing
today.
CORAM :
HON'BLE MR. JUSTICE JAGDISH SINGH KHEHAR
HON'BLE MR. JUSTICE SHIVA KIRTI SINGH
For Appellant(s) Dr. M.P. Raju, Adv.
Mr. E.J. Varghese, Adv.
for Mr. M. T. George,AOR(NP)
For Respondent(s) Mr. K. Radhakrishnan, Sr. Adv.
Ms. Sadhana Sandhu, Adv.
Ms. Rekha Pandey, Adv.
for Mrs. Anil Katiyar,AOR(NP)
UPON hearing the counsel the Court made the following
O R D E R
The appeals are disposed of in terms of the Reportable
Judgment, which is placed on the file.
(Parveen Kr. Chawla) (Renu Diwan)
Court Master Court Master
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