G S Bhat S/O Sri Shankar S Bhat Vs Karnataka Soaps & Detergents Ltd.

KARNATAKA SOAPS AND DETERGENTS LTD., (A GOVT. OF KARNATAKA UNDERTAKING) HAVING ITS CORPORATE OFFICE AND FACTORY AT "SANDAL CITY", BANGALORE-PUNE HIGHWAY, BANGALORE-560 055 REPRESENTED BY ITS MANAGING DIRECTOR.

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THE CHAIRMAN, BOARD OF DIRECTORS AND APPELLATE AUTHORITY KARNATAKA SOAPS AND DETERGENTS LTD., "SANDAL CITY", BANGALORE-PUNE HIGHWAY, BANGALORE-560 055. …RESPONDENTS

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(BY SMT. SUNITA SRINIVAS, ADVOCATE FOR RESPONDENT NOS.1 AND 2)

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THIS WRIT PETITION IS FILED UNDER ARTICLE 226 OF THE CONSTITUTION OF INDIA PRAYING TO CALL FOR THE RECORDS FROM THE RESPONDENTS 1 AND 2 AND QUASH THE FOLLOWING ORDERS PASSED BY THEM BY THE ISSUE OF A WRIT OF CERTIORARI OR ANY OTHER APPROPRIATE WRIT, ORDER OR DIRECTION, DECLARING THE SAME AS HIGHLY ILLEGAL, IRREGULAR, UNJUST, ARBITRARY, CAPRICIOUS, DISCRIMINATORY AND NOT SUSTAINABLE BOTH IN THE LAW AND ON FACTS : (i) ORDER NO.KSDL/MD/HRD/2008-09/017 DATED 18.04.2008 VIDE ANNEXURE-H PASSED BY THE 1^ST RESPONDENT; (ii) ORDER NO.KSDL/MD/HRD/2010-11/6799 DATED 15.03.2011 VIDE ANNEXURE-L PASSED BY THE 2^ND RESPONDENT AND ETC.

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THIS PETITION HAVING BEEN HEARD AND RESERVED FOR ORDERS ON 01.10.2024 AND COMING ON FOR PRONOUNCEMENT OF ORDER THROUGH VIDEO CONFERENCE THIS DAY, THE COURT MADE THE FOLLOWING:-

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CORAM: HON'BLE MR JUSTICE R. NATARAJ

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CAV ORDER

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The petitioner has challenged an order bearing No.KSDL/MD/HRD/2008-09/017 dated 18.04.2008 passed by the respondent No.1 - disciplinary authority dismissing him from service as General Manager (Finance) and Company Secretary. He has also challenged an order bearing No.KSDL/MD/HRD/2010-11/6799 dated 15.03.2011 passed by the respondent No.2 - appellate

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authority confirming the order of the respondent No.1 - disciplinary authority.

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(i) The petitioner joined the services of the respondent No.1 as an Accounts Officer on 08.04.1982 and after a slew of promotions, he was promoted to the post of General Manager (Finance) in the year 2000. He claimed that in the year 2002, a visiting Medical Officer of the Company, sought for deduction of provident fund out of the retainer fee. He claimed that he refused to accept

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the request of the Medical Officer, who was thereafter, terminated by the Company. He alleged that in the year 2004, the brother-in-law of the said Medical Officer, Mr. Jayaprakash Hegde, an elected member of the legislative assembly, was appointed as a Chairman of the Committee on Public Undertakings. After he took over, the first decision that he took was by directing the respondent No.1 in terms of a letter dated 19.10.2004 to place the petitioner under suspension pending enquiry alleging misappropriation and financial embezzlement.

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Consequently, the respondent No.1 issued an articles of charge dated 30.10.2004 accusing the petitioner of the following charges:

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CHARGE NO.1:

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You Sri G.S.Bhat, being an employee of the Company in a scale of pay covered by Rule 4 of the 1984 Rules, is required and it is your duty to file property returns in Annexure A to 1984 Rules on or before 1^st January (after 7.5.1998 on or before 30^th April) of every year containing such particulars as are indicated in rule 4 and Annexure A of the properties held by you and members of your family, during the previous year. In spite of the said rule 4 of the 1984 rules, Circulars dated 2.1.2004, 24.1.2004 and other Circulars on the subject issued from time to time and a Show Cause Notice dated 5.3.2004, you failed to file the property returns for the years 1987-2003, except for years 1994, 1995 and ending 31.3.2003, and thereby exhibited wilful negligence in the discharge of duties and failed to maintain absolute integrity and devotion to duty expected of an employee and thus you are guilty of misconduct under

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rule 3(a) and 4 read with rule 16(i) and 16(ii) of 1984 Rules.

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CHARGE No.2:

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You Sri G.S.Bhat, being an employee of the Company in a scale of pay covered by Rule 4 of the 1984 Rules, is required and it is your duty to file on or before 1^st January (after 7.5.1998 on or before 30^th April) of every year a return in Annexure A to 1984 Rules, containing true and correct information of the properties, assets and liabilities held by you and members of your family, during the previous year and you have to solemnly declare that the information stated therein are true and correct and that you do not own or hold any assets other than those stated therein. In the return filed by you for the year ending on 31.3.2003 you have failed to disclose property No.1, I cross, Widia Layout, Vijayanagar, Bangalore - 560 040, held by you during the year ending on 31.3.2003 and where you reside. You have solemnly declared in that return that the statements made therein are true and correct and that you do not own or hold any other assets in your name or in the name of any member of your family. The declaration made by

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you is not true and correct and thereby you have made false statements knowing it to be false, exhibited wilful negligence in the discharge of your duties and failed to maintain absolute integrity and devotion to duty expected of an employee holding the post of General Manager (Finance) and Company Secretary i/c. and thus you are guilty of misconduct under Rule 3(a) and 4 read with rule 16(i), 16(ii) and 16(xvi) of 1984 Rules.

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CHARGE NO.3

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You Sri G.S.Bhat, being an employee of KSDL are required by rule 5 of the 1984 Rules and it is your duty, to inform the Competent Authority, whenever you acquire or dispose off any immovable property by sale, gift or otherwise, in your own name or in the name of any member of your family Sri G.S.Bhat acquired premises No.15, II Cross Road, Widia Layout, Vijayanagar, Bangalore-560 040 from Mr. M. Mohan Velu under a sale deed registered as document No.2073 on 3.10.1991 and sold it to Mr. V.Rajappa under a sale deed dated 22.3.2004 and failed to inform about such acquisition and sale to the Competent Authority

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as required by rule 5 of the 1984 Rules) and thereby exhibited wilful negligence in the discharge of your duties and failed to maintain absolute integrity and devotion to duty expected of an employee of your status and thus you are guilty of misconduct under Rule 3(a) and 5 read with Rule 16(i), 16(ii) and 16(xvi) of 1984 Rules

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CHARGE No.4

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You Sri G.S.Bhat, being an employee of KSDL are required by Item (ii) of Rule 16 of the 1984 Rules not to disobey any lawful and reasonable order of your superiors or do any act which is subversive of discipline or of good behaviour and accordingly you are required to obey the orders issued by the company, from time to time, regarding delegation of financial powers to different officers. You are in the habit of acting in violation of such orders by approving payments in excess of the powers delegated to you as per Annexure to this Notice and thereby exhibited wilful negligence in the discharge of your duties and failed to maintain absolute integrity and devotion to duty expected of an employee of your status and thus you are guilty

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of misconduct under Rule 3 read with Rule 16(ii) of 1984 Rules.

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CHARGE NO.5:

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You, Sri G.S.Bhat, has stated in the property returns filed by him for the year ending 31.3.2003 that he and his HUF (i) owns about 20,000 shares/debentures in about 150 companies, purchase value of which is about Rs.38 lakhs, (ii) has purchased shares worth about Rs.5 lakhs during 1980-1990, about Rs.4 lakhs in 2000, about Rs.5 lakhs in 2001, about Rs.15 lakhs in 2002 and about Rs.8 lakhs in 2003 (iii) has Bank balance of about Rs.4 lakhs and loans amounting to about Rs.21 lakhs, in addition to liability in the form of credit facility of Rs.68,66,625/- i.e. credit facility extended by M/s. INNOVA SECURITIES & INVESTMENT LTD on the condition of assignment of the entire shareholding and deposit of title deeds of the house property. As stated in Charges 1 to 4 above, you have failed to file property returns for about 15 years, failed to intimate the Competent Authority about acquisition and sale of immovable property specified in Charge 3, filed incorrect property returns as on 31.3.2003.

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You are in the habit of exercising financial powers in violation of the orders delegating financial powers to different officers. The amount invested by you in shares during 2000, 2001, 2002 and 2003, in particular in 2002 and 2003 is much more than your known sources of income. It is highly unbecoming of an employee holding the posts of General Manager (Finance) and Company Secretary i/c. and dealing with the finances of KSDL to have such conduct and private monetary dealings of that magnitude amounting to doing business in shares and thereby you are guilty of misconduct under rule 3 read with Rule 16(i) 16(ii) and 16(xviii) of 1984 Rules.

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CHARGE NO.6:

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You, Sri G.S.Bhat, General Manager (Finance) along with Accounts Officer/Manager (Accounts) jointly have been delegated with financial powers to issue cheques to the extent of Rs.15.00 lakhs only in each case/transaction and above Rs.15 lakhs it is only the General Manager (Finance) and Managing Director to jointly issue the cheques. From the statements during the year 2001-02 you have issued

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cheques worth about Rs.48.26 crores, during the year 2002-03 you have issued cheques worth about Rs.49.06 crores and during the year 200304 you have issued cheques worth about Rs.59.58 crores without bringing to the notice of the Competent Authority.

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Thus you have violated the Delegation of Powers delegated to you by splitting the cheques of the value of more than Rs.15/- lakhs without bringing to the notice of the Competent Authority which amounts to dishonesty in discharging your duties and committed a grave misconduct under Rule 16(iii) read with Rule 3 of 1984 Rules.

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CHARGE NO.7:

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You Sri G.S. Bhat, General Manager (Finance) have in a chit dated 26.1.2004 (copy enclosed) written in your own handwriting have under the heading "Amount generated & paid" recorded different amounts generated and paid in respect of Caustic Soda Lye, MS Baby Cartons (Colour Shade), IITF, S. Oil Soap Noodles, Marktg:(Miss Mumbai and CCC, S. Oil, Marktg. (i) Film Screening, Mumbai (ii) CCC Mumbai (iii) Film screening, Hyderabad (iv) Wall painting,

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Hyderabad (v) Signal Ambrella, Mumbai etc., This clearly indicates that you have generated funds from the above sources and paid to-----.

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From the above, it is evident that you have indulged in corrupt practices for wrongful gain to yourself and others. Thus, your above action amount to serious misconduct under Rule 16(iii) and 16(xiii) read with Section Rule 3 of 1984 Rules.

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(ii) The petitioner submitted his explanation on 19.11.2004 denying the charges. By an order dated 30.11.2004, the petitioner was placed under suspension pending an enquiry and a retired District Judge was appointed as an enquiry officer. At the enquiry, the respondent No.1 - Company examined three witnesses as MW.1 to MW.3. The petitioner was examined. The enquiry officer submitted his report holding that the charges leveled against the petitioner were proved. Thereafter, the respondent No.1 issued a second show-cause notice to the petitioner on 26.06.2007 and enclosed therewith a

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copy of the report of the enquiry officer. The petitioner submitted his explanation on 13.07.2007 indicating the defects in the report of the enquiry officer and prayed that the same be rejected and further proceedings against him be dropped. However, the Managing Director of the respondent No.1 concurred with the findings of the enquiry officer and passed an order dated 18.04.2008 dismissing the petitioner from service of the Company. The petitioner contends that this order of dismissal was by an officer, who was not competent and therefore, void ab initio. He contends that he was holding the post of General Manager (Finance) and was drawing a pay and allowance in the scale of Rs.12,800 - 16,720, which was much higher than the maximum pay of Rs.2,750/- per month mentioned in Article 20(b) of the Memorandum and Articles of Association of the Company. Therefore, in respect of the appointment of the petitioner as a General Manager (Finance) on promotion, it was absolutely necessary to obtain the approval of the State Government. Therefore, it is the State Government, which is the appointing/

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disciplinary authority. Hence, it is contended that the Managing Director being subordinate to the State Government, cannot usurp the powers of the State Government and initiate proceedings against the petitioner.

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(iii) The petitioner being aggrieved by the order of the respondent No.1 dated 18.04.2008, filed an appeal to the Board of Directors represented by the Chairman - respondent No.2. He contended that the appeal was not disposed off for nearly three years even though 13 Board meetings were held and several reminders were addressed by the petitioner. The petitioner filed W.P.No.6524/2011 seeking for a direction to the respondent No.2 to dispose off the appeal. Following this, the respondent No.2 dismissed the appeal and confirmed the order of dismissal passed by the respondent No.1. The said writ petition was thereafter withdrawn as not pressed.

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(iv) Being aggrieved by the said orders of the respondent Nos.1 and 2, the petitioner is before this Court.

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The learned Senior counsel representing the petitioner submitted the following:

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(i) He contended that the charge No.1 framed against the petitioner was not disputed by him. However, he contended that the respondent No.1 had marked Ex.M23, which was a Circular dated 24.01.2004 calling upon the officers to submit their Annual Property Returns (APR). He contended that the petitioner submitted his APR for the year ending on 31.03.2003. Ex.M26 was the APR

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of the petitioner for the year 1994 and Ex.M27 is the APR of the petitioner for the year 1995, while Ex.M28 was the APR for the year 2003. He contends that the petitioner had filed APR for the years 1991 as evident

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from Ex.D10, 1992 as evident from Ex.D11 and 1993 as evident from Ex.D12 and 1996 as evident from Ex.D13. He contends that though 130 officers had failed to file the APR for various years, no action was taken against them but the petitioner was singled out and action against him was initiated on the premise that he had not filed his APR. He submitted that MW.1 specifically admitted that except the disciplinary proceedings against the petitioner, no action was initiated against the other officers, who had not submitted their property returns. He submitted that MW.1 admitted that a second opportunity was granted to file APR as per the Circular dated 26.07.2005 but the benefit of this Circular was not extended to the petitioner. Therefore, he contends that nonfiling of APR for the period between 1997 and 2001 is curable and the respondent No.1

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should not have initiated action against the petitioner.

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(ii) In so far as charge No.2 is concerned, he contended that the respondents did not demonstrate that the property bearing No.1 at Vijayanagar, Bengaluru, belonged to the petitioner. He contended that the petitioner is bound to declare the acquisition of property in his annual property returns only when he owns, acquires or inherits any property. He contends that the petitioner was in possession of the property bearing No.1 at Vijayanagar, Bengaluru, on the basis of a leave and licence agreement and that the petitioner was paying a monthly rent of Rs.9,000/-. He contends that the sale deed of this property stood in the name of brother-in-law of the petitioner Mr. Sadanand V. Hegde. He contends that therefore, there

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was no need for the petitioner to declare about the said property in the annual property returns. He contends that in proceedings initiated under Section 13(1)(e) read with Section 13(2) of the Prevention of Corruption Act, 1988, against the petitioner, it was alleged that the property bearing No.1 at Vijayanagar, Bengaluru, belonged to the petitioner. He contends that this Court in Crl.A.No.1170/2018 held that this property was not held by the petitioner benami in the name of his brother-in-law. He therefore, contends that this charge was baseless and therefore, no action could have been initiated against him on this charge. Besides this, he contends that when this Court had authoritatively held that the property bearing No.1 at Vijayanagar, Bengaluru, did not belong to the petitioner, which was based on clear evidence, the respondent No.1 could

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not have initiated disciplinary action on that charge and the report of the enquiry officer on this charge was thoroughly faulty and could not be relied upon.

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(iii) In so far as charge No.3 is concerned, he contended that the property bearing No.15 at Vijayanagar, Bengaluru was acquired by the joint family on 30.10.1991 and the acquisition of this property was declared in the statements of assets and liabilities for the years 1991 and 1992. Similarly, in the statements of assets and liabilities for the years 1993 and 1994, the acquisition of the above property was declared. In the statement for the year 1993, it was declared that a house was constructed on the aforesaid property. It is contended that the allegation that the petitioner had not disclosed the sale of this property by or

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before 30.04.2004 was false in as much as the petitioner had duly informed the respondent No.1 on 11.04.2004, which is evident from Ex.D16. He contended that Ex.D16 was the APR for the year 2004. However, the respondent No.1 discarded it on the ground that though some documents were sent by RPAD on 11.04.2004, the copy of the sale deed was never enclosed therewith. He contended that the respondent No.1 disbelieved documents that were sent on 11.04.2004 on the ground that the weight of the cover containing the documents was mentioned as 25 grams, while Ex.D16 contained 11 pages, which would weigh more than 25 grams. Therefore, it felt that Ex.D16 did not contain the documents of sale of the property. He contended that the disciplinary authority held that the date of sale was though 22.03.2004, the disciplinary authority

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considered it as 08.11.2004, which was the date of receipt of a copy of the sale deed from the office of Sub-registrar. Thus, he contends that the petitioner has complied with the bye-laws of the respondent No.1 and had declared the sale of the property bearing No.15 at Vijayanagar, Bengaluru, in the APR for the year 2004 and therefore, he cannot be held guilty for charge No.3.

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(iv) As regards Charge No.4, he contended that the management relied upon Exs.M35, M36 and M37. Ex.M35 was a statement showing the existing and proposed financial powers. This document was marked to show that the petitioner did not have the power to approve payments in excess of Rs.15,00,000/-. He contends that this document did not prescribe the powers of the General Manager (Finance). He contends that the disciplinary

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authority proceeded by erroneously assuming that the General Manager (Finance) has the same power as that of Senior Manager and Manager (Finance). His powers are prescribed at Ex.M35. He contends that if the latter is assumed be proved then, the existing financial powers of the authority are not prescribed in Column No.4 of Ex.M35 and what are prescribed in Column No.5 are the proposed powers. Therefore, he contends that Ex.M35 cannot be the basis to accuse the petitioner that he did not have the power

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to approve payments in excess of Rs.15,00,000/-. He contends that a statement showing cheques over Rs.15,00,000/- was issued by the petitioner without approval of the competent authority, which was marked as Ex.M36. He contends that Ex.M36 was prepared by MW.2. Ex.M36 did not contain any unauthorized payment.

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He therefore, contends that there was no basis for the charge. Rebutting Ex.M36, he contends that the statement compiled by MW.2 does not disclose as to who had signed those cheques. He contends that the petitioner had requested for production of cheque counterfoils and other documents to demonstrate that the payments were made after obtaining all necessary approvals. He referred to the evidence of MW.2, who deposed that the Sectional Head signs the cheques after verification and he is responsible for any lapses or irregularities. He further submits that there was no audit objection regarding violation of any delegated powers by the petitioner at any point in time.

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(v) In so far as charge No.5 is concerned, he contended that the shares were purchased

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by the petitioner by using the credit facility granted by M/s. Innova Securities and Investments Ltd. He contends that the petitioner had disclosed the investment made in shares in the APR, which was marked Ex.M28. Therefore, he contends that the petitioner did not make these investments from his own source of income but had purchased the shares out of the credit facility. He contends that as per the annual property returns at Ex.M28, the investment in shares is shown on one side and liability to M/s. Innova Securities and Investments Ltd., is shown on other side. Therefore, he contends that the petitioner had not made any investments out of his own money. He referred to Ex.D15, a certificate issued by the Manager (Finance) of M/s. Innova Securities and Investments Ltd., stating that the petitioner had not made any investment with

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the company and that he has dues payable to M/s. Innova Securities and Investments Ltd., He contends that this document was overlooked by the disciplinary authority and appellate authority by holding that charge No.5 was proved. He contends that the respondents had relied upon the extract of the Demat account of the petitioner (Ex.M33), which did not show that the amount invested was through own means of the petitioner and did not disclose the source of income for making such investment.

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(vi) As far as charge No.6 is concerned, he contends that Ex.M34 was the only document, which was an extract of the cash book, which did not in any manner establish that the petitioner had issued any cheque without bringing it to the notice of the competent authority. He contends that

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Ex.M34 did not even mention the particulars of the persons, who had signed it. He contends that in order to establish the true facts of the case, the petitioner had requested the respondent No.1 to provide relevant documents, which would conclusively prove identity of the signatories of the cheques. However, it is alleged that these documents were not produced before the enquiry officer. He further contends that if the cheques were issued beyond the scope of powers of the petitioner or in excess of authority, the respondent No.1 could not have honoured such payments. Further, he contends that MW.2, who was the person, who signed the cheques, was left out though charges were brought out initially against him and later were inexplicably dropped.

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The learned Senior counsel therefore, contends that

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none of the charges against the petitioner was serious in nature and hence, the punishment of dismissal was alarmingly disproportionate to the alleged misconduct. In support of this contention, he relied upon the following

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judgments:-

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State of Uttar Pradesh and others vs Raj Pal Singh [(2010) 5 SCC 783]

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Man Singh vs State of Haryana & Ors. [AIR 2008 SC 2481]

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Tata Engineering & Locomotive Co. Ltd. vs Jitendra PD. Singh and another [(2001) 10 SCC 530]

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Bhojraj vs Div. Controller, Maharashtra State Road Transport Corporation, Nagpur [2012 (5) SLR 208 (Bom.)]

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Ranjit Thakur vs Union of India and others [(1987) 4 SCC 611]

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M.V.Bijlani vs. Union of India & Ors. [AIR 2006 SC 3485]

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He further submitted that both the disciplinary authority and appellate authority had failed to appreciate the evidence on record, which clearly disclosed that the petitioner was not guilty of any misconduct much less the ones alleged against him in the articles of charge. Therefore, he prayed that the impugned order passed by the respondent No.1 and upheld by the respondent No.2 be set aside.

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(i) In response, the respondents have filed

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their objections contending that the petitioner has challenged the authority of the Managing Director of the respondent No.1 to take action against him. It is contended that after the amendment to Rule 19 of the Karnataka Soaps and Detergents Limited Conduct and Disciplinary Act Rules, 1984 (henceforth referred to as 'Rules, 1984') as approved by the Board of Directors, the relevant rule is as under:

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"All posts carrying pay-scales of Rs.36504550-5600 and above inclusive of Rs.3170-4430

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(Manager, Sr. Managers and General Managers) Disciplinary Authority/Competent Authority is the Managing Director and the Appellate Authority is the Chairman."

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(ii) Therefore, it is contended that the contention of

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the petitioner that Managing Director is not competent, is liable to be rejected. It is also contended that the scope of judicial review in disciplinary proceedings is limited and this Court cannot re-appreciate facts to arrive at a wrong conclusion. In support of the above, reliance is placed on the following judgments :

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State Bank of India Vs Ram Lal Bhaskar & another [2011 (10) SCC 249].

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State of Uttar Pradesh & another Vs Man Mohan Nath Sinha and another [2009 (8) SCC 310].

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V. Ramana Vs. APSRTC and others [2005 AIR SCW 4431]

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J.K. Synthetics Vs. K.P. Agrawal and another [2007 (2) SCC 433].

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Uttar Pradesh State Road Transport Corporation Vs. Nanhe Lal Kushwaha [2009 (8) SCC 772].

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(iii) The learned counsel for the respondents submitted that as per the amendment to the Rules, 1984, the annual property returns have to be filed on or before 30^th April of the next year. She contends that the APR for the year 2003 was filed and not for the year 2004. She contends that show-cause notice was issued to all 130 employees, who did not file the returns. She contends that the petitioner was the General Manager (Finance) and he had to lead by example by filing the APR on time. She contends that the requirement to file APR by 30^th April of every year is only to ensure the employer is aware of the conduct of its employees and so that it can take suitable action against the employee, who has properties disproportionate to his known source of income. She therefore, contends that the charge No.1, which is not

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disputed by the petitioner, is a misconduct, which was duly proved by the respondent No.1.

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(iv) In so far as charge No.2 is concerned, she contended that the petitioner claimed that the property bearing No.1, Vijayanagar, Bengaluru, was not owned by him but was rented under a leave and licence agreement dated 01.12.2002. However, in the property returns for the year 2003 filed on 31.03.2003, details of the lease was not mentioned. She contends that this clearly established that the assertion made by the petitioner was an afterthought. She contended that the petitioner did not produce a copy of the sale deed to establish that property bearing No.1, Vijayanagar, Bengaluru was not owned by him but was owned by his brother-in-law. She submitted that a copy of the sale deed was furnished to the State Government later on 26.06.2008 after completion of the enquiry.

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(v) As regards charge No.3, she contended that in the property returns, the property bearing No.15,

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Vijayanagar, Bengaluru, was shown as belonging to HUF. However, in the sale deed dated 22.03.2004, the personal PAN number of the petitioner was mentioned and not the PAN number of the HUF. Therefore, she contends that the property returns itself was doubtful. She contends that any amendment to the property returns is to be filed on or before 30^th April of the subsequent years. However, the property return filed on 23.02.2004 was for the year ending 31.03.2003. She therefore, contended that in the property return dated 11.04.2004, the particulars of the sale deed dated 22.03.2004 was not mentioned. Therefore, she contends that charge No.3 was substantially proved and the report of the enquiry officer was justified.

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(vi) As regards charge No.5, she contended that in the returns for the year ending 31.03.2003, the petitioner had declared that a sum of Rs.68,66,625/- was the facility extended by M/s. Innova Securities and Investments Ltd., on condition of the assignment of the entire shareholding

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and deposit of title deeds of the house property. However, in the returns for the year 2004 dated 10.04.2004, the petitioner had declared a sum of Rs.61,53,237/- as loan extended by M/s. Innova Securities and Investments Ltd., She contends that in terms of a letter dated 28.05.2004, it was stated that the petitioner was not due of any amount

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to M/s. Innova Securities and Investments Ltd.,. She contends that between 10.04.2004 and 28.05.2004, the petitioner had not explained as to how he paid up such a huge amount. She contends that since the Demat account stood in the name of the petitioner, charge No.5 was substantially proved.

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(vii) As regards charge Nos.4 and 6, she contended that the charges related to splitting of amounts in the cheques so that it could be less than Rs.15,00,000/- and lie within the drawing power of the petitioner. She submits that the work allocated by the petitioner showed that the value of the work was more than Rs.15,00,000/- and therefore, the petitioner could have not split the cheques

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so as to sign them and release them instead of placing it before the Board. She submits that this is a serious lapse, as payments made to the contractors were not scrutinized by the Board.

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(viii) She contends that the petitioner who was working as General Manager (Finance) was charged with allegations of acquisition of disproportionate assets and was involved in serious irregularities and financial embezzlement causing loss of Rs.1,81,25,457/-. She contends that a disciplinary enquiry was conducted against him and he was found guilty and was dismissed from service. A domestic enquiry was initiated against him on 30.10.2004. Subsequently, one more charge sheet dated 12.07.2006 was issued against him accusing him of causing financial loss due to willful negligence and failure to maintain absolute integrity and devotion to duty. The petitioner filed W.P.No.7903/2008 to quash the chargesheet dated 12.07.2006. This Court in terms of the order dated 05.09.2011, held that the disciplinary authority has

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the power to initiate second enquiry during the pendency

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of the first. This order was confirmed in W.A.No.16519/2011 and later by the Hon'ble Apex Court in SLP (Civil) No.2007/2013. The petitioner then again challenged the penalty imposed under Rule 17(b)(v) and to recover the monetary loss suffered by the company in W.P.No.37271/2015, which was dismissed on 09.12.2020. The petitioner challenged the said order in W.A.No.65/2021, which was also dismissed. She therefore, contends that the respondent No.1 has now filed a civil suit for recovery of the money misappropriated

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by the petitioner and the same is pending consideration.

¶164

She thus contends that the petitioner holding a high administrative post in the respondent No.1, cannot contravene the rules of the respondent No.1, which would embolden the other officers to follow suit. She therefore, contends that having regard to the status of the petitioner and the misconduct alleged against him and the clinching evidence on record, this Court should not interfere with

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the findings of the disciplinary authority and the appellate

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authority.

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I have considered the submissions of the

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learned Senior counsel for the petitioner as well as the learned counsel for the respondents. I have perused the voluminous records of the enquiry as well as the order of the disciplinary authority and the appellate authority.

¶171

As rightly contended by the learned counsel for

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the respondent, this Court should not re-appreciate the evidence recorded by the enquiry officer to arrive at a finding different than the one recorded by him as well as the disciplinary authority. The employer is the best judge to decide whether continuation of the employee, in the light of the misconduct alleged against him, serves the best interest of the organisation or not. Therefore, the decision of the employer should be based on sound evidence recorded at the enquiry which should be just enough to disbelieve the defence of the employee. The employer is bound to assess the nature of misconduct to

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decide the punishment to be imposed. Hence at all stages, the employer is bound to be circumspect before taking any decision to dispense with the services of the employee. One of the criteria that could guide the disciplinary authority is the position of the employee in the hierarchy of the organisation. The higher the position, the higher would be the scrutiny and the punishment would obviously be severe. However, in cases where the employer takes a decision based on no evidence or ignoring evidence on record or incorrectly appreciates the evidence on record to target an employee or imposes a punishment that is disproportionate to the misconduct alleged, this Court cannot remain a mute spectator but would leave no stone unturned to restore the right and dignity of the employee.

¶175

Insofar as the procedural compliance is concerned, the petitioner was working as a General Manager (Finance) as on the relevant date when the article of charge was served on him. The Karnataka Soaps

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and Detergent Limited (Conduct and Disciplinary Action) Rules 1984 prescribe that in respect of all posts carrying pay scale of Rs.2,750-3,250/- and above, the Managing Director is authorised to initiate disciplinary action including appointment of an enquiry officer. Likewise, in respect of all posts carrying pay scale of Rs.1,050-1,930/and above inclusive of pay scale of Rs.1,725 -2,350/- the Managing Director is the disciplinary authority and the Chairman of the Board is the appellate authority. In the case on hand, the petitioner entered service on 08.04.1982 as an accounts officer and thereafter was promoted from time to time and as on the date the articles of charge was issued, he was functioning as General Manager (Finance) and his pay scale was Rs.12,80016,720/-. Therefore, the Managing Director of KSDL being the disciplinary authority under the Rules 1984 had issued the articles of charge. Therefore, the contention of the petitioner that the approval of the State Government had to be obtained before initiating any disciplinary action is not well founded. The disciplinary authority had provided

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an opportunity to the petitioner to reply to the articles of charge and after due application of mind had felt that the reply was not justified and therefore appointed the enquiry officer who was not connected to KSDL in any manner whatsoever. The enquiry officer held proceedings in the presence of the petitioner and provided an opportunity to the petitioner to cross examine the management witnesses and also provided opportunity to lead his evidence. The enquiry officer after considering the defence statement of the petitioner submitted his report to the disciplinary authority, who, then issued a second show cause notice and enclosed therewith a copy of the enquiry report. The petitioner submitted his reply which was considered by the disciplinary authority, who passed the impugned order dismissing the petitioner from service. Therefore, there was due compliance of all procedure prescribed for the due conduct of a domestic enquiry. The appeal filed by the petitioner before the Chairman of KSDL was also not entertained. It is evident that the enquiry officer, disciplinary authority and the appellate authority

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were all of the opinion that the charges against the petitioner except charge No.7 were proved.

¶184

In the light of the above, this Court would proceed to check the findings of the enquiry officer and the disciplinary authority to assess whether the same was based on reasonable evidence.

¶185

The Charge No.1 relates to non filing of APR for the years 1987-2003 except for the years 1994, 1995 and ending 31.03.2003. Rule 4 of the Rules, 1984 prescribe as follows :-

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“4. Property Returns :

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Every employee in the scale of Rs.1200-2175 and above should at first appointment in the Company’s service and thereafter on the 1^st of January of every subsequent year submit a return in the form Annexure-A of immovable properties owned, acquired or inherited by him or held by him on lease or mortgage either in his own name or in the name of his wife, children of his family or in the name of any other person on this behalf. The Competent Authority may at any time require an employee to submit within a period specified in the orders, a complete statement of movable and immovable property held or acquired by him or by any member of his family after his appointment in the Company as may be specified in the order.

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Such statements shall if so required by the Company or by the Authority so empowered include details of the means by which or the sources from which such property were acquired.”

¶190

The petitioner submitted in his reply to this charge contending that the Rules, 1984 had lost its relevance and had become redundant. He contended that the KSDL was not insisting for the APR and had exempted its employees by not insisting upon the filing of APR. He contended that the KSDL insisted for the APR only after the Hon‘ble Lokayukta asked for the APR of its employees. He further contended that KSDL had issued circulars dated 02.01.2004, and 24.01.2004 altering, adding or deleting the format of the APR which was outside the jurisdiction of the Managing Director. Therefore, he contended that Rule 4 of the Rules, 1984 was not seriously construed by the employer and that many employees had failed to file their APR against whom no action was taken and that the petitioner alone was discriminated and was proceeded against by initiating a domestic enquiry. He also

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contended that the non filing of APR is used as a garb to punish employees rather than accomplish the objective for which APR was made mandatory.

¶194

The petitioner was at the relevant time, employed as a General Manager (Finance) which is a high ranking office in KSDL. If the petitioner had filed his APR for the years 1994, 1995 and ending 31.03.2003, there is no justification in he contending that Rule 4 of the Rules, 1984 requiring the filing of an APR had become redundant. The fact that the petitioner had not submitted his APR was admitted in clear terms. The respondent has placed on record the notices issused by it to 170 employees who had not filed their APR in time. Therefore, the contentions of the petitioner that filing of an APR was not insisted by the petitioner and therefore he did not file it, is no justification.

¶195

An employer cannot be expected to keep a track of the activities of the employees, which is well nigh impossible. Therefore, employers insist upon the

¶196

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employees to file their annual property returns to keep a watch on the activities of the employees, so that any acquisition of assets disproportionate to his or her source of income can be suitably dealt with. Therefore, the contention of the petitioner that the filing of an APR remained a mere formality and was not insisted for several years in KSDL is no justification. As a matter of fact, the petitioner who joined the service of respondent as an Account Officer, was bound to know that the significance of an APR, which atleast he must have known when he was promoted as Manager, in the year 1992 and to the post of Senior Manager in the year 1995 or when he was posted as a General Manager (Finance) in the year 2000. Rule 16 of the Rules, 1964 reads breach of any of the provisions of the conduct rules as a misconduct and that the concerned employee would be liable for disciplinary action. Hence, there is no error in the enquiry officer holding that Charge No.1 framed against the petitioner was proved.

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Insofar as the second charge is concerned, the petitioner was admittedly residing in the house at bearing No.1, 1^st Cross, Widia Layout, Vijayanagar, Bengaluru – 40. Though the petitioner had purportedly taken the house on rent from 01.12.2002, he failed to disclose it in the property returns filed as on 31.03.2003. In the reply filed to the articles of charge, the petitioner claimed that the property was rented and therefore there was no need to mention it in the property returns. Having regard to the Rule 4 of the Rules, 1984 any property held by an employee on lease also had to be declared in the annual property returns. Therefore, the finding of the enquiry officer that the Charge No.2 was proved cannot be doubted. However, since the petitioner has placed on record, a sale deed executed in the name of his brother in law in respect of this property, and in the light of the finding of this Court in Criminal Appeal No.1170/2018, it can be safely held that the property bearing No.1, 1^st Cross, Widia Layout, Vijayanagar, Bengaluru – 40 did not belong to the petitioner. However, in the annexures to the

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wealth tax returns of the brother in law of the petitioner, it appears that he had advanced loan of Rs.17,50,000/- to the petitioner. This was also not disclosed by the petitioner in his APR as on 31.03.2003. Therefore, the disciplinary authority was justified in suspecting the transaction namely the purchase of this property by the brother-in-law of the petitioner. The fact that the petitioner had failed to disclose that he had taken any house on lease cum licence basis from his brother-in-law is established beyond doubt and therefore the finding of the enquiry officer, the disciplinary authority is just and proper and does not call for any interference.

¶204

Insofar as Charge No.3 is concerned, the petitioner had purchased property No.15, II Cross, Widia Layout, Vijayanagar, Bengaluru in terms of a sale-deed dated 03.10.1991 and sold it to Mr.Rajappa under a sale deed dated 22.03.2004. The acquisition of this property was no doubt declared in the APR filed in 1994 but the disposal of this property on 22.03.2004 was not informed

¶205

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to the employer. Though the petitioner claimed that he had intimated KSDL about the acquisition and the disposal in the property returns for the year 2003-04 filed on 11.04.2004 and that he had enclosed a copy of the saledeed, the disciplinary authority was justified in holding that the sale-deed was not enclosed, since the date of issue of the copy of the sale-deed was 08.11.2004 and therefore that could not have been enclosed with the APR filed on 11.04.2004. The finding of the disciplinary authority that the property returns as on 31.03.2003 was not furnished as claimed by the petitioner under Ex.D16, is difficult to accept since in charge No.1, it was specifically mentioned that the petitioner had furnished his return for one year ending on 31.03.2003. Therefore, it has to be held that the petitioner had filed his property returns as found in Ex.D16 but had failed to disclose the disposal of this property.

¶207

Insofar as Charge No.4 and 6 are concerned these were indeed serious charges. The petitioner had

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released a sum of Rs.14,35,23,000/- towards advances between 2001-2002 to 2003-2004. Likewise, he had drawn cheques for Rs.48,26,00,000/- during 2001-2002, Rs.49,06,00,000/during 2002-2003 and Rs.59,58,00,000/- during the year 2003-2004.

¶210

Ex.D3 which is an officer order regarding work allocation in the department of accounts and finance shows that the petitioner being the General Manager of Finance had directed that each section of the head should issue detailed work allocation to the respective assistants provided to them on or before 24.03.2001 so that the entire work given to them are attended to promptly and correctly. He had mandated that the sectional heads shall be fully responsible for any lapse or irregularity.

¶211

In the reply to this charge, the petitioner claimed that the entire function of processing and preparation of cheque are done by the Manager (accounts), AGM (accounts) and cashier etc. Ex.M35 is the delegation of powers that was approved by the board of

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KSDL which indicate that General Manager (Finance) was conferred with the financial powers with the accounts officer up to Rs.15,00,000/- at a time. It appears that from the details of advances made by the petitioner as per Ex.M.36, in order to overcome the involvement of the accounts officer, the petitioner had split the payments to less than Rs.15,00,000/and made payment of Rs.14,35,23,000/- without the approval of the competent authority namely the Managing Director, though the work order was for more than Rs.15,00,000/-. The justification of the petitioner that these payments were “on account payments” after purchase orders were issued, is difficult to accept as the petitioner did not produce any document to justify that he was authorised to make such “on account payments”. On the contrary, in the vouchers that are marked as Ex.D37, it is seen that they were made on the instructions of the petitioner. The enquiry officer as well as disciplinary authority has thoroughly gone into this aspect of the matter and have held that the petitioner had unauthorisedly made the payments. This Court does not

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see any justification to record a different finding or to disbelieve the finding recorded by the enquiry officer or disciplinary authority. It is relevant to note that MW.2 who was the Deputy General Manager was also proceeded against departmentally for splitting the payments and he deposed that the petitioner had made the payments without the approval of the Managing Director. This witness no doubt accepted that there was no unauthorised payment and that he did not bring it to the notice of the petitioner that the payments were made in violation of the delegated power. He also admitted that there is no audit objection regarding the violation of the delegated powers by the petitioner. However, this will not help the petitioner in any manner whatsoever. It is not in dispute that the petitioner had released the payments “on account” and also towards bills payable. The petitioner was bound to know the limits of his power as per the board resolution in force. If Ex.D3 is taken into account that any payment made beyond Rs.50,00,000/- had to be approved and done by the Managing Director. However, the petitioner

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seems to have drawn cheques for huge sums of money between the year 2001-2002, 2002-2003 and 2003-2004 without bringing it to the notice of the Managing Director which is a misconduct under Rules 16(ii) of the Rules, 1984. Therefore, the enquiry officer was justified in holding that these two charges were proved against the petitioner. Likewise the disciplinary authority was also justified in holding that the charges were proved.

¶220

Insofar as charge No.5 is concerned, this too was a serious charge as the petitioner was accused of investing huge sums of money in the share market during the years 2000, 2001, 2002 and 2003 which was in excess of his known source of income. It is no doubt true that in the annual property returns as on 31.03.2003 the petitioner had declared that he had liabilities of Rs.68,66,625/payable to Innova Securities and Investment Limited, towards the facility extended by it for purchase of shares by the petitioner. In support of this contention, the petitioner relied upon Ex.D15 which is a

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declaration made by Innova Securities and Investments Limited that as on 28.05.2004, the petitioner was liable to pay certain dues. The petitioner contends that there is no embargo against the petitioner engaging in the equity market, even though Rule 16(xviii) mandated that the petitioner should not indulge in private business. The petitioner seems to have maintained a Dmat account with Innova Securities and Investments Limited for the purpose of trading in shares. He seems to have entered into some kind of understanding with Innova Securities and Investments Limited, which purportedly granted a credit facility to the petitioner to trade in shares, subject to assignment of the entire share holding and deposit of title deeds. The petitioner claims to have deposited the title deeds of the property bearing No.15, Vijayanagar, Bengaluru, which he strangely disposed it off on 22.03.2004, for a sum of Rs.25,00,000/-. It appears that the petitioner paid off the outstanding to Innova Securities and Investments Limited, which is evident from Ex.D15. It is not known as to how the petitioner could cough off cash

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of more than Rs.35,00,000/- to pay Innova Securities and Investment Limited by April 2004. This therefore is an indication that something is amiss and the petitioner has not come out clean. The fact that the petitioner had made huge payments during the year 2000-2001 till the year 2004, generates suspicion as to how the petitioner managed to invest more than Rs.60,00,000/- in shares. It is also doubtful as to how a credit facility could be extended to the petitioner to purchase shares in view of the mandate issued by the Security and Exchange Board of India regarding settlement and delivery of the traded shares. Therefore, it is probable that the petitioner was in possession of funds disproportionate to his source of income which he had ploughed back into the share market. Hence, the finding of the enquiry officer and the disciplinary authority are just and proper and does not warrant any interference.

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In view of the above, this Court does not see any reason to interfere with the findings of the disciplinary authority and the appellate authority.

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Insofar as the punishment of dismissal is concerned, if it was a mere case of non filing of the APR, a lesser punishment would have been adequate. However, in a case where the petitioner has over reached his financial drawing limits, by drawing cheques to keep it within his financial limits, coupled with the investment made by the petitioner in shares amounting to more than Rs.60,00,000/- and clearing off the loan within a month, makes it probable that the petitioner was not honest in conduct of his official duties. Therefore, the order of dismissal from service is just and proper. Consequently, this writ petition lacks merit and is dismissed.

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Sd/(R. NATARAJ) JUDGE

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PMR

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List No.: 19 Sl No.: 1

G S Bhat S/O Sri Shankar S Bhat v. Karnataka Soaps & Detergents Ltd.

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G S Bhat S/O Sri Shankar S Bhat v. Karnataka Soaps & Detergents Ltd.

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