The Supreme Court of India has held that the Maharashtra State Warehousing Corporation (the “Corporation”) lacked the jurisdiction to institute departmental proceedings against a retired employee in the absence of specific provisions in its service regulations.
A Bench comprising Justice J.K. Maheshwari and Justice Vijay Bishnoi allowed the appeal filed by a retired Storage Superintendent, setting aside the judgment of the Bombay High Court and quashing the disciplinary proceedings initiated against him after his superannuation.
The central legal issue before the Court was whether the Corporation could institute a departmental enquiry against the appellant, Kadirkhan Ahmedkhan Pathan, after his retirement, by invoking Rule 27 of the Maharashtra Civil Services (Pension) Rules, 1982 (“1982 Pension Rules”) through a residuary clause in its own regulations, despite the absence of a specific provision in the Maharashtra State Warehousing Corporation (Staff) Service Regulations, 1992 (“1992 Regulations”).
The Court ruled in favor of the appellant, holding that the Corporation had “no jurisdiction to institute the departmental proceedings against the appellant for the alleged misconduct and to direct recovery against him applying 1982 Pension Rules.”
Factual Background
The appellant joined the Corporation in 1969 and superannuated as a Storage Superintendent on August 31, 2008. Approximately 11 months later, on August 18, 2009, the Corporation served him a show-cause notice alleging financial losses amounting to over Rs. 37 lakhs (later revised) due to storage and railway transit losses during his tenure as Centre Head between 2006 and 2008.
Following a departmental enquiry, the Corporation passed a punishment order on March 4, 2017, holding the appellant responsible for a financial loss of Rs. 18,09,809. Consequently, the Corporation withheld his retiral benefits amounting to Rs. 4,43,013 (inclusive of gratuity, provident fund, and leave encashment) and directed recovery of the remaining amount.
The appellant challenged these actions before the Bombay High Court (Aurangabad Bench). The High Court, by a judgment dated January 25, 2021, disposed of the writ petition, directing the appellant to prefer an appeal under the 1992 Regulations. The High Court had accepted the Corporation’s contention that Rule 110 of the 1992 Regulations allowed it to apply Rule 27 of the 1982 Pension Rules to proceed against retired employees.
Arguments of the Parties
The Appellant’s Contentions: The appellant argued that the Corporation lacked jurisdiction at the very inception. It was submitted that Rule 110 of the 1992 Regulations is merely a “residuary clause” or “referral clause” meant to regulate matters where regulations are silent, but it “does not confer jurisdiction to make out a new case for carrying out departmental enquiry against retired employees.” Furthermore, even if the 1982 Pension Rules were applicable, Rule 27(2)(b) requires prior sanction of the Government to institute proceedings after retirement, which was not secured.
The Respondent’s Contentions: The Corporation argued that Rule 110 stipulates that matters not specifically provided for shall be regulated “as far as possible” in the same manner as employees of the Government of Maharashtra. Therefore, they relied on Rule 27 of the 1982 Pension Rules, which empowers the Government to withhold pension for financial loss. regarding the requirement of government sanction, the Corporation argued that since the State Government had approved the 1992 Regulations on March 31, 1990, it constituted a “general sanction” for exercising powers under Rule 27.
The Court’s Analysis
The Supreme Court rejected the Corporation’s reliance on “general practice” and implied sanction. The Bench analyzed Rule 110 of the 1992 Regulations and observed that it is a miscellaneous provision. The Court noted:
“The adoption of 1982 Pension Rules in Rule 110 of 1992 Regulations is limited… Therefore, 1982 Pension Rules do not have ipso facto application until they have been either adopted or applied by a conscious decision taken at appropriate level.”
The Court found that the Corporation failed to produce any Board decision or order specifically adopting the 1982 Pension Rules for instituting enquiries against retired employees.
Regarding the requirement of sanction under Rule 27(2)(b)(i) of the 1982 Pension Rules, the Court held that the provision is mandatory. The Bench termed the Corporation’s argument of “general sanction” as being “devoid of any discernable logic.” The Judgment stated:
“The usage of the word ‘shall’ in Rule 27(2)(b)(i) implies that the requirement of sanction from the Government prior to institution of departmental enquiry is mandatory in nature for each case. Such mandatory safeguard is intended to prevent institution of unwarranted proceedings against the superannuated employees.”
The Court cited the precedent of Bhagirathi Jena Vs. Board of Directors, O.S.F.C. and Others, reaffirming that in the absence of specific authority in regulations, a corporation cannot continue a departmental enquiry or make deductions from retiral benefits after an employee has superannuated.
The Decision
The Supreme Court concluded that the Corporation could not bypass mandatory safeguards under the pretext of general practice. The Bench held:
“In light of the above discussions… the irresistible conclusion can be drawn that the Corporation had no jurisdiction to institute the departmental proceedings against the appellant for the alleged misconduct and to direct recovery against him applying 1982 Pension Rules.”
Order:
- The appeal was allowed, and the High Court’s order was set aside.
- The departmental proceedings instituted against the appellant were quashed.
- The Corporation was directed to release all retiral benefits to the appellant within eight weeks.
- Any recovery made from the appellant in the interregnum was ordered to be refunded within the specified period.
