Supreme Court

Life Insurance Corporation of India Vs. Mukesh Poonamchand Shah

MANU/SC/0221/2020

25.02.2020

Service

Where a penalty is imposed on employee for a conduct which led to conviction on criminal charges, the employer can independently take disciplinary action against employee

The present appeal arises from a judgment of a Division Bench of the High Court of Gujarat. The Division Bench, in a Letters Patent Appeal arising from an order of a learned Single Judge, allowed the Respondent, who had instituted proceedings under Article 226 of the Constitution of India, 1950 to respond to a notice to show cause issued by the Appellant under Regulation 39(4) of the Life Insurance Corporation of India (Staff) Regulations 1960. However, the Appellant was directed not to issue final orders during the pendency of the appeal filed by the Respondent against his conviction for offences under the Prevention of Corruption Act, 1988 and the Indian Penal Code, 1860 (IPC).

The Respondent has been convicted and sentenced to two years of rigorous imprisonment by the Special Judge, CBI for offences under Sections 420, 467, 468, and 471 read with Section 120B of the IPC, and Sections 13(1)(d) and 13(2) of the Prevention of Corruption Act. By the order of the learned Single Judge, the conviction of the Respondent has not been stayed and it is only the sentence which has been suspended.

While the court hearing a criminal appeal does have the power to suspend the conviction in appropriate cases, this is an exceptional power which can be exercised only when the attention of the court is drawn to the consequences which may ensue if the conviction is not stayed. A criminal miscellaneous application was filed by the Respondent for the grant of bail pending disposal of the criminal appeal. Significantly, in the special civil application which was instituted before the High Court, the Respondent himself understood the order of the Single Judge as having only suspended his sentence and not as having stayed the conviction.

The Appellant exercised its disciplinary jurisdiction while proceeding against the Respondent and after a disciplinary enquiry imposed a penalty of a reduction of his basic pay to the minimum of the scale. The 1960 Regulations determine the terms and conditions of service of the employees of the Life Insurance Corporation of India. Chapter III of the 1960 Regulations provides for conduct, discipline and appeals.

Regulation 39(1) of the 1960 Regulations deals with the penalties which can be imposed upon an employee who is found guilty of misconduct. Regulation 39(2) mandates compliance with the principles of natural justice in terms of providing a reasonable opportunity to the employee to defend the charges. In terms of Regulation 39(4)(i), "where a penalty is imposed on an employee on the grounds of conduct which had led to a conviction on a criminal charge", the Appellant is independently entitled to take steps against the employee. It is in pursuance of the above provision that a notice to show cause was issued to the Respondent. The penalty which was imposed on the disciplinary enquiry was for an act of misconduct. The notice which has been issued under Regulation 39(4) is for the conviction on a criminal charge. The former does not foreclose the latter.

In the present case, following the conviction of the Respondent by the Special Judge CBI, the Appellant was acting within jurisdiction in issuing a notice to show cause under Regulation 39(4) of the 1960 Regulations. The learned single judge was correct in dismissing the special civil application filed by the Respondent challenging the notice to show cause issued by the Appellant. The judgment of the Division Bench restraining the Appellant from taking a final decision on the show cause notice pending the disposal of the criminal appeal has no valid basis in law. The impugned judgment and order of the Division Bench is set aside. Appeal allowed.

Tags : Final orders Passing of Restrain

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