Union of India vs Jeewan Ram

Rewritten Version Notice: This is a rewritten version of the original judgment.

Court: Supreme Court of India

Case Number: Not extracted

Decision Date: 13 March, 1958

Coram: S.K. Das, A.K. Sarkar

In the case titled Union of India versus Jeewan Ram, decided on 13 March 1958, the Supreme Court heard an appeal brought by the Union of India. The appeal was presented on a certificate issued by the learned Judicial Commissioner of Ajmer and sought to set aside the judgment and decree of that Commissioner dated 15 February 1954. In the 1954 decree, the Judicial Commissioner had overturned the decisions of the lower courts and had declared in favour of the respondent that the order of removal from service dated 16 March 1949 was illegal and ineffective. The Court set out the factual background that gave rise to the present appeal.

The respondent, who had been the plaintiff in the proceedings before the lower courts, was initially appointed as an assistant booking clerk in the Ajmer division of the then Bengal Birbhum and Cooch Behar ( B B and C I) Railway on 15 July 1947. He was subsequently confirmed in that position on 26 May 1948. On 7 February 1949 the respondent received a memorandum from the Station Master of Ajmer indicating that, by order of the Traffic Superintendent of Ajmer, he had been placed under suspension effective from that date. The memorandum alleged that on the same day the respondent had refused to issue forty-eight third-class tickets for Makrana to a passenger unless the passenger paid a fare of Rs 2-1-0 per ticket, whereas the correct fare was Rs 1-15-0. It further alleged that the respondent had also refused to issue the entire batch of forty-eight tickets for that station. In response to these allegations a charge-sheet was drawn up on 21 February 1949 under Rule 1702 of the Indian Railway Establishment Code, Volume 1, directing the respondent to show cause why he should not be dismissed from service. The charge-sheet was served on the respondent on 22 February 1949, with a requirement that he submit a written explanation within seven days. The respondent filed his explanation on 28 February 1949, in which he denied the allegations made against him.

Subsequently, on 16 March 1949 an order was issued ordering the respondent’s removal from service, specifying that he would receive one month’s pay in lieu of notice, with the removal to take effect from 18 March 1949. The order, which the respondent contested in his suit, was reproduced in full by the Court. It read: “B B & C I Railway. Notice of imposition of the penalty of removal from service under item (8) of Rule 1702. From D T S BKI. To Jeewan Ram, Y 2093 R A B C AII No. EY 2093A. You are hereby informed that in accordance with the orders passed by me you are given one month’s pay in lieu of notice of removal from service with effect from 18-3-1949. A/N. Date 16-3-49. Sd- D T S BKI. N. B.” On the reverse side of the notice, additional notes appeared, the first of which began with “(b) Settlement of your dues will be made at …”.

In the notice issued at Ajmer, the authority informed the respondent that a subsistence grant equal to one-half of his pay would be provided for the period of his suspension, which extended from 8-2-1949 to 18-3-1949 inclusive, and that under Rule 1717 an appeal against the orders could be presented to the Territorial Superintendent of Ajmer. The respondent subsequently lodged an appeal against the order, but that appeal was dismissed on 3-August-1949. Thereafter, on 17-October-1949, the respondent served a notice pursuant to Section 80 of the Code of Civil Procedure on the General Manager of the B. B. & C. I. Railway, and on 9-January-1950 he instituted suit against the Dominion of India seeking several reliefs. The plaintiff claimed a declaration that his discharge from service was illegal and arbitrary, demanded compensation as claimed, sought payment of Rs 1120-9-7, asked for any further amount due from the date of the suit until the date of his reinstatement, and requested costs of the suit. The learned Additional Subordinate Judge at Ajmer dismissed the suit, holding that the notice served under Section 80 was not lawfully made, that the order of removal was not illegal, and that the respondent was not entitled to reinstatement or damages. The judgment was pronounced on 5-November-1952. The respondent appealed, and the learned District Judge at Ajmer affirmed the findings of the Additional Subordinate Judge by decree dated 24-March-1953. The respondent then filed a second appeal before the learned Judicial Commissioner, who reversed the lower courts’ decisions, concluding that the Section 80 notice was valid, that the removal order dated 16-March-1949 constituted a punitive order, and that the order was illegal and ineffective because it contravened Section 240(3) of the Government of India Act, 1935.

Counsel for the appellant before this Court contested the Judicial Commissioner’s principal finding that the order of 16-March-1949 was illegal and ineffective. He referred to Rule 148 of the Indian Railway Establishment Code, Vol. I, specifically sub-rules (3) and (4), and argued that the respondent’s service termination was carried out in conformity with the terms of his service contract, thereby rendering Section 240 of the Government of India Act, 1935, inapplicable. For the record, sub-rule (3) of Rule 148 states: “The service of other (non-pensionable) railway servants shall be liable to termination on notice.” Sub-rule (4) provides that, in lieu of the prescribed notice, the Railway Administration may terminate service by paying the servant the amount that would have been earned during the notice period. The appellant therefore maintained that, being a permanent non-gazetted employee, the respondent’s dismissal on one month’s notice—or the payment in lieu of such notice—was permissible under the Railway Establishment Code and did not fall within the protective scope of Section 240 of the 1935 Act.

The regulation on notice specified that a notice period was required on either side for the periods indicated, but it clarified that such notice was not necessary in cases of summary dismissal or discharge under the terms of service agreements, retirement upon reaching the age of superannuation, or termination of service because of mental or physical incapacity. For permanent non-gazetted employees, the rule prescribed a notice period of one month. Sub-rule (4) then provided that, in place of the prescribed notice, the Railway Administration could lawfully terminate the service of a railway servant by paying him the salary that would have been earned during the notice period. On behalf of the appellant, it was submitted that the respondent, who was a permanent non-gazetted employee, was entitled to termination on a one-month notice and that, under Sub-rule (4), the Railway Administration was authorized to effect such termination by paying the respondent the equivalent of the notice pay.

With respect to disciplinary matters, the relevant provisions were contained in Chapter XVII. Rule 1702 enumerated the categories of penalties that could be imposed on railway servants for sufficient cause; item (8) dealt with removal from service and item (9) concerned dismissal from service. Rule 1706 outlined the circumstances in which a railway servant could be dismissed, while Rule 1707 prescribed the procedure for conducting an enquiry when a railway servant faced an offence whose maximum penalty was dismissal. Similarly, Rule 1708 identified the situations that warranted removal from service, and Rule 1709 set out the procedure to be followed for such removal. Rule 1712 described the procedure for imposing other penalties, and Rule 1717 allowed an appeal against any order imposing a penalty listed in Rule 1702. Notably, Clause (b) of Rule 1709 stated that when the railway servant proposed for removal had not completed seven years of service, the procedure laid down in Rule 1712 would apply. Rule 1712 read as follows: “Before an order imposing a penalty specified in items (2) to (6) of Rule 1702 or removal from service in the circumstances mentioned in Clauses (b) and (c) of Rule 1709 is passed against a railway servant, he shall be informed of the definite offences or failures on account of which it is proposed to impose the penalty and called upon to show cause why that or any lesser penalty should not be imposed. He should also be given three days’ time in which to submit his explanation and be allowed reasonable facilities for the preparation of his defence.” Rule 1712 further contemplated two stages in a disciplinary enquiry: the first stage involved informing the railway servant of the specific offences or failures that formed the basis for the proposed penalty, and the second stage required the servant to show cause why the penalty, or a lesser one, should not be imposed.

The appellant’s counsel argued that, when properly interpreted, the order dated 16-3-1949 did not constitute a penalty imposed under Rule 1702. Instead, he contended that the order merely terminated the respondent’s service in accordance with the terms of his employment contract, and therefore neither Section 240(3) of the Government of India Act, 1935 nor Rule 1712 were applicable to the respondent. The Court could not accept this line of reasoning. It observed that Article 311(2) of the Constitution uses language that is similar to Section 240(3) of the Government of India Act, 1935, and that both provisions had been examined closely by the Court in two recent decisions: Parshotam Lal Dhingra v. Union of India, Civil Appeal No. 65 of 1957, decided on 1-11-1957, and Khem Chand v. Union of India, Civil Appeal No. 353 of 1957, decided on 13-12-57. In the Dhingra case, the Court held that the protection afforded to government servants by Article 311 is available only when the Government intends to impose one of three specific punishments – dismissal, removal or reduction in rank. Whenever the Government intends to impose any of these punishments, the servant must be given a reasonable opportunity to show cause why the proposed action should not be taken. The Court further explained that if a termination of service is effected for reasons other than punishment, the servant whose service is terminated cannot invoke the protection of Article 311(2). Turning to the question of when a termination of service itself amounts to a punishment, the Court observed that not every termination qualifies as dismissal, removal or reduction in rank. A termination that results from the exercise of a contractual right does not, by itself, constitute dismissal or removal, as earlier held in Satish Chander Anand v. Union of India. Similarly, termination by compulsory retirement pursuant to a specific rule governing conditions of service does not amount to a punishment and therefore does not attract Article 311(2), a principle also affirmed in Shyam Lal v. State of Uttar Pradesh. In both of those cases, the termination did not involve penal consequences such as loss of pay or allowances under Rule 52 of the Fundamental Rules. The Court acknowledged that misconduct, negligence, inefficiency or other disqualification might motivate the Government to act under the contract or service rules; however, if the contract or the rules expressly grant the Government the right to terminate employment, the existence of such a motive does not deprive the termination of its contractual character.

The Court observed that the statement made by Chief Justice Chagla in Shrinivas Ganesh v. Union of India was completely irrelevant to the issue under consideration. In essence, the Court held that when a termination of service is based on a right expressly provided by the contract of employment or the applicable service rules, such termination is prima facie not a punishment, it does not produce any adverse consequences, and consequently Article 311 of the Constitution does not apply. However, the Court clarified that even if the Government possesses, under the contract or the rules, the authority to dismiss an employee without following the procedural safeguards required for imposing a punishment such as dismissal, removal or reduction in rank, the Government may still decide to punish the employee. Where the termination is sought on the grounds of misconduct, negligence, inefficiency or any other disqualification, the termination amounts to a punishment and the safeguards prescribed in Article 311 must be observed.

Turning to the principles laid down in Khem Chand’s case (B), the Court reiterated that the “reasonable opportunity” contemplated by Section 240(3) of the Government of India Act, 1935 and by Article 311(2) of the Constitution comprises three distinct rights. First, the servant must be given a chance to deny the allegations against him and to prove his innocence, which requires that he be informed of the exact charges and the factual basis of those charges. Second, the servant must be allowed to defend himself by cross-examining the witnesses produced against him and by presenting his own witnesses in support of his defence. Third, after the inquiry is concluded, the competent authority must afford the servant an opportunity to make a representation as to why the proposed punishment should not be imposed; this can be done only after the authority has considered the seriousness of the proved charges and has tentatively decided which of the three punishments is appropriate, and then communicates that tentative decision to the servant.

The Court then examined whether these principles applied to the present dispute. It noted that counsel for the appellant did not dispute the fact that the respondent had not been given a chance to make a representation as to why the proposed punishment should not be imposed, and it was undisputed that the requirements of Section 240(3) of the Government of India Act, 1985 had not been complied with. Counsel for the appellant argued that Section 240(3) was inapplicable altogether. The Court referred to the impugned order dated 16-March-1949, which was headed “Notice of imposition of the penalty of removal from service under item (8) of Rule 1702”. Counsel for the appellant contended that this heading mis-described the true nature of the order and emphasized that the order mentioned a one-month payment in lieu of notice, arguing that the order was in fact made under Rule 148(3).

The Court observed that the argument of learned counsel for the appellant, which relied on provisions of Rule 4 of the Indian Railway Establishment Code, ignored several material facts. The impugned order itself, in Clause (c), stated that the respondent had been deprived of half of his pay during his suspension from 8-2-1949 to 18-3-1949, both dates inclusive. This fact demonstrated that the order was a penal one, because if the order had merely terminated the respondent’s service as a contractual right, there would have been no basis for withholding any portion of his salary for that period. The counsel for the appellant attempted to distinguish between suspension as a substantive punishment and suspension pending an inquiry, but the Court held that this distinction did not affect the issue before it. The sole question was whether the order dated 16-3-1949 imposed penal consequences, and the Court found that it did, as it expressly withheld part of the respondent’s pay during the suspension. Moreover, Clause (d) of the order conferred on the respondent a right of appeal under Rule 1717, further indicating that the order was intended as a penal measure. The respondent’s plaint also identified additional punitive effects, noting that he received neither dearness allowance nor house-rent allowance from 8-2-1949 to 18-4-1949. Consequently, the Court concluded that the impugned order was indeed a penal order, i.e., an order of punishment, and that the principles laid down in the earlier decisions of Parshotam Lal Dhingra and Khem Chand were applicable. Because the order clearly violated the provisions of Section 240(3) of the Government of India Act, 1935, the Court affirmed that it was illegal and ineffective, as correctly held by the learned Judicial Commissioner.

The Court then considered the appellant’s other submission concerning the validity of the notice served under Section 80 of the Civil Procedure Code. The lower courts had held that the relief described in the notice did not correspond with the relief actually claimed in the plaint. The Court agreed with the Judicial Commissioner that there was no substantial difference between the two. The notice, in paragraph 18, stated that the client was entitled to be reinstated to his former post and to be paid the amount due to him on the basis that he should be treated as if he had not been discharged from the date of discharge up to the date of reinstatement. In the plaint, the principal relief sought was a declaration that the order of discharge or removal of the respondent was illegal and arbitrary. The Court found that these formulations were essentially the same and therefore held that the notice under Section 80 CPC could not be declared invalid on the ground raised by the appellant.

In this matter, the Court carefully considered the submissions presented by the appellant and reached the conclusion that the appeal did not succeed. Accordingly, the Court ordered that the appeal be dismissed. In addition, the Court directed that the costs of the proceedings be awarded against the appellant, requiring the appellant to bear the expenses incurred by the other party in the litigation.