S. K. Pattanayak vs Ministry Of Railways And Ors

Vide the present petition, the petitioner seeks direction thereby quashing the office order dated 26.07.2018 issued by the respondent no.4-

Corporation, whereby the services of the petitioner as Managing Director of respondent no.4 has been terminated forthwith. He further seeks

direction thereby quashing the recommendation dated 26.07.2018 issued by respondent no.1 recommending the termination of the petitioner.

The case of the petitioner is that he joined as Managing Director of respondent no.4-Corporation on 09.03.2017 as per respondent no.1’s letter

dated 16.02.2017. The petitioner was appointed to the post with sanction of the Hon’ble President of India. The appointment of the petitioner was

on certain terms and conditions which were contained/detailed in letter dated 16.05.2017. The impugned order of termination has been passed without

notice to the petitioner and is violative of the terms of the appointment.

As per clause 1.1, the period for his appointment will be for five years w.e.f. 09.03.2017 in the first instance or till the date of superannuation or

until further orders, whichever event occurs earlier and in accordance with the provisions of the Companies Act, 1956 as amended. The appointment

may, however, be terminated even during this period by either side on three months’ notice or on payment of three months’ salary in lieu

thereof. However, while issuing the termination letter, neither notice nor salary in lieu thereof has been given to the petitioner. Thus, the terms of

appointment has clearly been violated. Clause 1.15 of the terms of appointment stipulated that the petitioner would be governed by the provisions of

the IRFC (Conduct, Discipline & Appeal) Rules which contain detailed provisions governing the manner, mode and methodology of conduct of

inquiries etc. against the employees of respondent no.4.

As stated above, the petitioner joined as Managing Director of respondent no.4 corporation on 09.03.2017, thus completed one year tenure on

08.03.2018. But the petitioner did not receive confirmation during the said period. Therefore, by operation of the PESB Guidelines and the DOP&T

OM, the petitioner stood deemed confirmed to the post of MD of respondent no.4 as on date of completion of one year on the said post.

Counsel appearing on behalf of the petitioner submits that during the tenure of the petitioner as MD of respondent no.4, the petitioner spearheaded

several unprecedented initiatives with respondent no.4 resulting in unprecedented growth. The petitioner, during his tenure, attained the highest ever

single year borrowing target of ₹36,591.67 Crores, which was a 45% growth in annual disbursement to the respondent no.1 Ministry. The petitioner

also took the lead in raising foreign currency borrowing of 500 million USD through issue of green bonds in the overseas market which is first of its

kind for the railway sector funding in India. As a result of the drive and determination of the petitioner, the respondent no.4 attained ‘excellent’

rating for the year 2017-18 from the Department of Public Enterprises. Therefore, on the competence and performance front, the petitioner has

excelled during the last one year or so, which is evident by the MoU rating for the year 2017-18. As per the guidelines dated 31.03.2011 of PESB

which govern the service conditions of the petitioner, he was deemed to have been confirmed as the MD of respondent no.4 upon completion of the

tenure of one year. Despite the said position of law, no formal order confirming the petitioner was passed by respondent no.4, which is directly in teeth

with the rule position on the subject. The decision of not confirming the petitioner and further to terminate his services is, therefore, actuated by

malice.

Learned counsel further submits that instead of confirmation, the petitioner got wind that the Ministry was contemplating proposal for non-

confirmation of the petitioner. Accordingly, the petitioner made representation dated 05.06.2018 to the Cabinet Secretary on the issue of his non-

confirmation. However, the respondent-Ministry took a decision on 27.06.2018 and communicated the same to divest the petitioner of all powers of

the MD of IRFC with immediate effect. The said order was questioned by Company Board of respondent no.4-Corporation, when it was put up for

ratification on 11.07.2018. The said Board considered it appropriate to refer the matter to respondent no.1-Ministry for due clarification on the merit of

the issuing divestment order without due diligence process. However, respondent no.1 vide its letter dated 16.07.2018 initiated disciplinary proceedings

against the petitioner under Rule 25 of the Indian Railway Finance Corporation Ltd. (Conduct, Discipline & Appeal) Rules, 2008. The serving of the

chargesheet upon the petitioner itself is indicative of the stand of the respondent that the petitioner was deemed to be a confirmed employee and the

petitioner could be subjected to any punitive measures only upon conclusion of the said disciplinary proceedings.

According to the procedure laid down under the rules, the petitioner was served the articles of charge intimating the petitioner of the

charges/allegations against him. The petitioner was accused of petty charges which were on the face of it concocted and fabricated. The charges

revealed that while the petitioner as MD, IRFC was handling thousands of crores of rupees, stands accused of misappropriating negligible sums. The

allegations are not borne out of the records and have been made only to start proceedings against the petitioner by hook or by crook and thereby

providing leeway to the respondent authorities to terminate the petitioner.

After issuance of the chargesheet, the petitioner again filed representation dated 23.07.2018 to the Cabinet Secretary appealed that the order

divesting the petitioner of charge as MD of respondent no.4 ought to be withdrawn inasmuch as the same is amounting to punishment before trial and

further informed that the petitioner is willing to contest the charges against him and prove his innocence with due process. To this effect, a copy of

letter dated 23.07.2018 sent by the petitioner to the Cabinet Secretary is annexed and marked as Annexure-22. Vide letter dated 25.07.2018 submitted

to the disciplinary authority, the petitioner denied all charges levelled against him and has further requested the authorities to conduct a day-to-day

enquiry, in order to enable the petitioner to clear his name of the allegations made against him. But vide letter dated 26.07.2017, respondent no.1-

Ministry approved and communicated the decision to prematurely termination of the petitioner with immediate effect.

Counsel for the petitioner further submitted that no reasons were disclosed in the office order, or in the recommendation of the Ministry for such

decision. The immediate termination has left with no other alternative, than to approach this Court by way of the instant petition.

Counsel for the petitioner further submitted that order of termination has been passed without notice to the petitioner and violated the terms of the

appointment to the post of Managing Director of respondent no.4-Corporation. Because the terms of appointment permitted termination only on three

months’ notice or on payment of three months’ salary in lieu thereof, neither of which has been complied with by the respondents. In addition,

any standing order which conferred such arbitrary, uncanalised and drastic power to enable the employer to dispense with an inquiry and to dismiss an

employee without assigning any reason by merely stating that it was expedient not to continue the employee or workman is violative of the basic

requirement of natural justice. This proposition of law has been settled by the Hon’ble Supreme Court in various judgments including West Bengal

State Electricity Board & Ors. vs. Desh Bandhu Ghosh & Ors.: (1985) 3 SCC 11;6 Central Inland Water Transport Corporation Limited & Anr. vs.

Brojo Nath Ganguly & Anr.: (1986) 3 SCC 156; & O. P. Bhandari vs. Indian Tourism Development Corporation Ltd. & Ors. (1986) 4 SCC 337.

Counsel for the petitioner further submitted that the petitioner is an officer with outstanding, impeccable and unblemished service record in his 25

years as Group-A officer of the Indian Railway Accounts Services. As a result of his outstanding service record and credentials, the petitioner was

selected by the respondent no.3 as Director Finance in Heavy Engineering Corporation Limited and subsequently was selected for appointment as

MD of the respondent no.4. The mandate of the PESB assumes significance in the context of the present facts inasmuch as the PESB which is the

recommending authority was not even consulted before passing of the impugned order of termination and in violation of the object clause 2 (d) of

PESB. The impugned termination could not have been on account of pending inquiry proceedings inasmuch as disciplinary rules of the respondent no.4

classify termination as ‘major penalty’ which can only be passed as a consequence of the completion of the inquiry proceedings. In the present

case, the inquiry proceedings were at the stage of commencement, therefore, the impugned termination order could not have been passed merely due

to the pendency of the inquiry proceedings.

Counsel for the petitioner further submitted that it is settled law that administrative decisions which are unreasoned are liable to be set aside on

that ground, therefore, the order of termination is liable to be quashed on this ground alone. In view of the judgments referred by the Supreme Court in

the case of Mohinder Singh Gill vs. Chief Election Commissioner: AIR 1978 SC 85,1 counsel for the petitioner submits that in view of the facts of the

case, the impugned order is liable to be set aside and respondents may be directed to complete the departmental proceedings initiated against the

petitioner.

Ms.Maninder Acharya, learned ASG appearing on behalf of respondent no.1 submitted that on the recommendations of PESB and after obtaining

clearance from CVC and after approval of ACC, the petitioner was appointed to the post of MD, IRFC. Accordingly, the petitioner assumed charge

of the said post on 09.03.2017. He has completed one year on the post on 08.03.2018. Confirmation process was initiated and Special Performance

Report (SPR) was finalized. He has been awarded a score of 41.50 in the SPR out of 50 and as such he met the PESB benchmark of confirmation.

However, since the petitioner was not cleared from vigilance angle due to a complaint forwarded by the CVC under Public Interest Disclosure and

Protection of Informer (PIDPI) being under investigation by the Vigilance Directorate of the Ministry, proposals were sent to PESB and DOP&T on

06.04.2018 for deferment of confirmation process of the petitioner for a period of three months. PESB advised that the proposal of deferment of

confirmation of the petitioner due to vigilance issues may be directly sent to ACC, if the Ministry desires so. DOP&T directed the Ministry to submit

an appropriate proposal for consideration of the ACC, in the event of the Ministry finally deciding to propose non-confirmation of petitioner’s

tenure on the post of MD.

In the meanwhile, further investigation by the Vigilance Directorate of Ministry of Railways substantiated the allegations against the petitioner. A

report in the matter was referred to Central Vigilance Commission on 21.05.2018 recommending the major penalty proceedings against the petitioner.

Keeping in view the vigilance profile of the petitioner, Ministry of Railways recommended non-confirmation of the tenure of the petitioner and a

proposal was referred to the DOP&T for obtaining approval of ACC. In the meanwhile, the CVC, on 05.06.2018, advised initiation of major penalty

proceedings against the petitioner. The CVC on 07.06.2018, also advised that the petitioner be forthwith divested of any sensitive work. The above

position was also conveyed to DOP&T for placing before the ACC. DOP&T on 25.07.2018, conveyed approval of ACC for the premature

termination of tenure of the petitioner with immediate effect.

Learned Additional Solicitor General further submitted that the respondents have acted as per relevant rules and regulations. No cause has

accrued against the petitioner which is not in dispute that the petitioner was employed initially for a period of five years and it was explicitly provided

that after completion of the first year, the performance of the petitioner shall be reviewed to enable government to take a view regarding continuance

or otherwise for the balance period of tenure, hence case of the petitioner is that not of any other employees of the government who are specifically

covered under special rules. In this light, the petitioner was not a regular employee. The termination order has been issue due to the tainted vigilance

angle of the petitioner. The Order does not cast any stigma upon the petitioner in any manner whatsoever. The case of non confirmation was

processed in accordance with the guidelines of PESB & DOP&T. The petitioner is again wrong in stating that there was no consultation sought from

respondent no.3, the PESB, before the issuance of order of termination/non-confirmation of the petitioner. The Ministry of Railways had in fact

consulted PESB in the matter of non-confirmation of the petitioner, though the same was not required as per the guidelines. The petitioner’s non-

confirmation was not on performance grounds which requires recommendations of PESB but on vigilance issues for which no consultation with PESB

was required.

As per para 1.2 of the conditions, the performance of the petitioner will be reviewed after the expiry of the first year to enable Government to take

a view regarding continuance or otherwise for the balance period of tenure. In accordance with the said para 1.2, performance was reviewed and on

finding adverse vigilance profile warranting major penalty proceedings during the probation period itself, a conscious decision was taken by the ACC

not to confirm the petitioner and ordered premature termination of his tenure with immediate effect.

It is further submitted that the guidelines, in fact, state that a CMD/MD/Functional Director would be confirmed unless the Ministry/Department

sent a proposal to the PESB, to the contrary, within 30 days after the expiry of one year. The said guidelines also states that if the

Ministry/Department is not inclined to confirm the appointee for reasons other than performance such as vigilance issues etc. then such proposal shall

be submitted to ACC directly. Non-confirmation of the petitioner was done in accordance with the said guidelines and with the approval of ACC.

I have heard learned counsel for the parties at length and perused the material available on record.

The fact remains that the petitioner was not cleared from vigilance angle due to a complaint forwarded by the CVC under Public Interest

Disclosure and Protection of Informer (PIDPI), therefore, the case of the petitioner was under investigation before Vigilance Directorate of the

Ministry. Consequently, the proposals were sent to PESB and DOP&T on 06.04.2018 for deferment of confirmation process of the petitioner for a

period of three months. PESB advised that the proposal for deferment of confirmation of the petitioner may be directly sent to ACC, if the Ministry so

desires. DOP&T directed the Ministry to submit an appropriate proposal for consideration of the ACC, in the event of the Ministry finally deciding to

propose non-confirmation of the petitioner’s tenure on the post of MD. In the meanwhile, further investigation by the Vigilance Directorate of

Ministry of Railways substantiated the allegations against the petitioner. A report in the matter was referred to Central Vigilance Commission on

21.05.2018 recommending the major penalty proceedings against the petitioner. Therefore, keeping in view the vigilance profile of the petitioner,

Ministry of Railways recommended non-confirmation of the tenure of the petitioner and a proposal was referred to the DOP&T for obtaining approval

of ACC. In the meanwhile, the CVC on 05.06.2018, advised initiation of major penalty proceedings against the petitioner. The CVC on 07.06.2018,

also advised that the petitioner be forthwith divested of any sensitive work. This development was also conveyed to DOP&T for placing before the

ACC. Accordingly, DOP&T on 25.07.2018, conveyed approval of ACC for the premature termination of tenure of the petitioner with immediate

effect.

The fact remains that the petitioner’s non-confirmation was not on performance grounds which requires recommendations of PESB but on

vigilance issues for which no consultation with PESB was required. In fact, the guidelines, state that a CMD/MD/Functional Director would be

confirmed unless the Ministry/Department sent a proposal to the PESB, to the contrary, within 30 days after the expiry of one year. The guidelines

also states that if the Ministry/Department is not inclined to confirm the appointee for reasons other than performance such as vigilance issues etc.

then such proposal shall be submitted to ACC directly. Therefore, I am of considered view that non-confirmation of the petitioner was done in

accordance with the guidelines and with the approval of ACC.

It is a fact that the Ministry of Railways had made references to both PESB and DOP&T within one month after completion of one year for

deferment of the confirmation process of the petitioner due to adverse vigilance issues. As such, the claim of the petitioner that he stood deemed

confirmed is mere mis-representation of facts. The decision was taken after due procedures and with the approval of competent authority, viz. the

ACC. IFRC’s letter dated 11.07.2018 seeking certain clarifications has already been replied to.

The contention of the petitioner is that serving of the chargesheet upon the petitioner itself is indicative that he is being considered as deemed to be

confirmed employee, is not founded upon logic or law.

In the case of The Chief General Manager, State Bank of India & Anr. vs. Shri Bijoy Kumar Mishra: (1997) 7 SCC 550, the Hon’ble

Supreme Court has held that deemed confirmation results on the conduct of the employer in permitting continuance in service after the expiry of the

maximum period of probation fixed by the rules. When there is no such conduct of the employer, the very foundation for the argument of deemed

confirmation does not exist.

Keeping in view the above discussion and the settled position of law, I find no merit in the present petition and the same is, accordingly, dismissed

with no order as to costs.

CM APPL. No. 31902/2018

In view of the order passed in the present writ petition, the application has been rendered infructuous and is, accordingly, disposed of.