TaxTMI 
TaxTMI 
2006 (11) TMI 299
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....94 Act") whereby and whereunder, the right, title and interest of Indian Airlines were transferred to Indian Airlines Limited. In terms of Section 45 of the 1953 Act, the Corporation made Regulations. Regulation 13 of the said Regulations is in the following terms: "13.The services of an employee may be terminated without assigning any reasons to him/her and without any prior notice but only on the following grounds not amounting to misconduct under the Standing Orders, namely: (a) If he/she is, in the opinion of the Company (the Board of Directors of Indian Airlines) incompetent and unsuitable for continued employment with the Company and such incompetence and unsuitability is such as to make his/her continuance in employment detrimental to the interest of the Company; OR if his/her continuance in employment constitutes, in the opinion of the Company (the Board of Directors of Indian Airlines), a grave security risk making his/her continuance in service detrimental to the interests of the Company; OR if in the opinion of the Company (the Board of Directors of Indian Airlines) there is such a justifiable lack of confidence which, having regard to the nature of dut....
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....se (2) of Article 311 of the Constitution of India opined: "Power to dispense with inquiry is conferred for a purpose and to effectuate the purpose power can be exercised. But power is hedged in with a condition of setting down reasons in writing why power is exercised. Obviously therefore the reasons which would permit exercise of power must be such as would clearly spell out that the inquiry if held would be counter-productive. The duty to specify by reasons the satisfaction for holding that the inquiry was not reasonably practicable cannot be dispensed with. The reasons must be germane to the issue and would be subject to a limited judicial review. Undoubtedly sub- article (3) of Article 311 provides that the decision of the authority in this behalf is final. This only means that the court cannot inquire into adequacy or sufficiency of reasons. But if the reasons ex facie are not germane to the issue namely of dispensing with inquiry the court in a petition for a writ of certiorari can always examine reasons ex facie and if they are not germane to the issue record a finding that the prerequisite for exercise of power having not been satisfied, the exercise of power was bad or....
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....ons of public policy, concern for public interest, regard for public good and the peremptory dictate of a constitutional prohibition" It was further observed: "Those who formed the Constituent Assembly were not the advocates of a despotic or dictatorial form of government. They were the persons who enacted into our Constitution the Chapter on Fundamental Rights. The majority of them had fought for freedom and had suffered imprisonment in the cause of liberty and they, therefore, were not likely to introduce into our Constitution any provision from the earlier Government of India Acts which had been intended purely for the benefit of a foreign imperialistic power. After all, it is not as if a government servant is without any remedy when the second proviso has been applied to him. There are two remedies open to him, namely, departmental appeal and judicial review. The scope and extent of these remedies will be considered later in the course of this judgment" In Brojo Nath Ganguly (supra), Clause (i) of Rule was termed to be a 'the Henry VIII Clause'. It was held that it conferred arbitrary and unguided power upon the Corporation. It was found to be violative of audi....
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....nation of his service by an employee where such termination is sought in order to avoid disciplinary action contemplated or taken by the management." The learned Chief Justice noticed that the Board of Directors of Indian Airlines have approved the amendment carried out in Regulation. In para 109 of the judgment, the learned Chief Justice opined: "109. Efficiency of the administration of these undertakings is very vital and relevant consideration. Production must continue, services must be maintained and run. Efficacy of the services can be ensured only if manned by disciplined employees or workers. Discipline, decency and order will have to be maintained. Employees should have sense of participation and involvement and necessarily sense of security in semi-permanent or quasi-permanent or permanent employment. There must be scope for encouragement for good work. In what manner and in what measure, this should be planned and ensured within the framework of the Constitution and, power mingled with obligations, and duties enjoined with rights, are matters of constitutional adjustment at any particular evolved stage of the philosophy of our Constitution." B.C. Ray, J.....
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....ation before this Court in Hari Pada Khan v. Union of India and Others [(1996) 1 SCC 536] wherein while referring to Hindustan Steel Ltd. (supra) and Tulsiram Patel (supra), this Court opined: "5. The doctrine of principle of natural justice has no application when the authority concerned is of the opinion that it would be inexpedient to hold an enquiry and that it would be against the interest of security of the Corporation to continue in employment the offender-workman when serious acts are likely to affect the foundation of the institution. In Union of India v. Tulsiram Patel, a Constitution Bench of this Court upheld the validity of the similar provisions under Article 311 of the Constitution. Recently, in SLP (C) No. 11659 of 1992 the matter had come up before this Court on 13-11-1995, where the validity of a pari materia provision was questioned. This Court upheld the validity stating that the above clause will operate prospectively. 6. A contention has been raised by Mr Krishnamani that in Tulsiram Patel case this Court had upheld the validity of the rule subject to the principle of natural justice. It is needless to mention that the principle of natural justice ....
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....any irregular or unauthorised manner. The condition precedent for exercise of this power is that an appointment had been made contrary to the Act, rules, statutes and regulations or otherwise. In order to arrive at a conclusion that an appointment is contrary to the provisions of the Act, statutes, rules or regulations, etc., a finding has to be recorded and unless such a finding is recorded, the termination cannot be made, but to arrive at such a conclusion necessarily an enquiry will have to be made as to whether such appointment was contrary to the provisions of the Act etc. If in a given case such exercise is absent, the condition precedent stands unfulfilled. To arrive at such a finding necessarily enquiry will have to be held and in holding such an enquiry, the person whose appointment is under enquiry will have to be issued a notice. If notice is not given to him, then it is like playing Hamlet without the Prince of Denmark, that is, if the employee concerned whose rights are affected is not given notice of such a proceeding and a conclusion is drawn in his absence, such a conclusion would not be just, fair or reasonable as noticed by this Court in D.T.C. Mazdoor Sabha ca....
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....irectors of the Corporation by a letter dated 9th August, 2002 stating: "This is to inform you that the Board of Directors of Indian Airlines Ltd. has decided to terminate your services with immediate effect under Regulation 13 of Service Regulations applicable to you. Accordingly, your services stand terminated with immediate effect from 09.08.2002. Though you are not entitled to any notice or salary in lieu thereof in terms of Regulation 13, however, a cheque No. 354551 dated 09.08.2002 for Rs. 21,734/- is enclosed." A writ petition was filed by Respondent before the High Court of Delhi. In its judgment dated 30th August, 2005, while rendering Regulation 13 as ultra vires, it was held: "We have noted the relevant judgments. We have to note that the incident leading to termination is not denied by the petitioner, she had accepted the guilt at least initially and the criminal trial is still pending. Considering that the serious allegations are found worthy of acceptance by the Board of Directors, we do not think that we should compel the Board of Directors to reinstate such an employee in whom they have obviously lost confidence. She will, however, have to be compensated m....
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....son is required to be assigned as to which of the provisions had been applied. (iv) When an extraordinary power has been conferred keeping in view the objective criteria laid down therein, it was obligatory on the part of the Corporation to spell out as to how they were invoking the said extraordinary rule which was not rule. (v) It was in that sense contended that not only reasons were required to be assigned but opportunity was also required to be given for making a representation. (vi) Extraordinary power cannot be invoked except in a case of security risk. It may not be permissible to invoke the said power only on the purported ground of "justifiable lack of confidence". (vii) Only because power has been conferred upon a high authority, the same by itself is not a ground to uphold the constitutionality of the provision. Had there been a provision for complying with the principles of natural justice, the same would have been a solace to the employee. Our attention was drawn to a decision of this Court in Institute of Chartered Accountants of India v. L.K. Ratna and Others [(1986) 4 SCC 537] wherein the provisions of Chartered Accountants Act, 1949 were upheld opining that ....
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....hority, the question of providing for appeal would not arise. Even in Tulsiram Patel (supra), this Court held that no appeal would be available from an order passed by the President of India. Regulation 13 is invoked when the termination of the services is effected by reason of some act on the part of the employee which does not amount to misconduct. It can be invoked: (i) where an employee is rendered incompetent and unsuitable. (ii) where continuance in employment may also constitute a grave security risk. (iii) where there is justifiable lack of confidence. (iv) where lack of confidence must have a direct correlation to the nature of duties performed. (v) where the Board must consider it to be necessary in the interest of the Corporation to immediately terminate the services of the employee concerned. The provisions, therefore, provide for inbuilt safeguards. In Ajit Kumar Nag (supra), a Three-Judge Bench of this Court had the occasion to construe Standing Order 20(vi) of the Certified Standing Orders of Indian Oil Corporation which reads as under: "Where a workman has been convicted for a criminal offence in a court of law or where the General Manager is satis....
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....) of Standing Order 20 confers a blanket or uncanalised power on the General Manager. In our judgment, sufficient guidelines and safeguards have been provided in the Standing Orders themselves, such as (i) the power is conferred on the highest administrative head of the Corporation; (ii) eventualities have been specifically and expressly stated in clause (vi) of Standing Order 20; (iii) satisfaction of the General Manager that such an eventuality has arisen; (iv) recording of reasons in writing; and (v) right of appeal against the decision of the General Manager. Such a provision, in our considered view, cannot be held arbitrary or unreasonable, violative of Article 14 of the Constitution." The Court further opined that even in absence of an appeal, the employee is not remediless as a power of judicial review would be applicable. As has been held by this Court in Ajit Kumar Nag (supra), per se, the provisions cannot be held to be arbitrary or discriminatory. Although all persons comprising of the Board of Directors would have human frailties, as has been observed by this Court in Brojo Nath Ganguly (supra) but a provision for appeal cannot be made from the h....
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....h Edn. But as that learned author observes (at p. 487), "in principle there ought to be an observance of natural justice equally at both stages", and "If natural justice is violated at the first stage, the right of appeal is not so much a true right of appeal as a corrected initial hearing: instead of fair trial followed by appeal, the procedure is reduced to unfair trial followed by fair trial." And he makes reference to the observations of Megarry, J. in Leary v. National Union of Vehicle Builders. Treating with another aspect of the point, that learned Judge said: "If one accepts the contention that a defect of natural justice in the trial body can be cured by the presence of natural justice in the appellate body, this has the result of depriving the member of his right of appeal from the expelling body. If the rules and the law combine to give the member the right to a fair trial and the right of appeal, why should he be told that he ought to be satisfied with an unjust trial and a fair appeal? Even if the appeal is treated as a hearing de novo, the member is being stripped of his right to appeal to another body from the effective decision to expel him. I cannot think ....
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....ures application of mind on the part of the authority or body only to pertinent or germane material on the record excluding the extraneous and irrelevant and also subjects the order of the authority or body to a judicial review under the writ jurisdiction of the Court on grounds of perversity, extraneous influence, mala fides and other blatant infirmities. Moreover all these factors will have to be considered in the light of the scheme of the enactment and the purpose intended to be achieved by the concerned provision. If on an examination of the scheme of the enactment as also the purpose of the concerned provision it is found that the power to decide or do a particular thing is conferred on a very minor or petty officer, that the exercise thereof by him depends on his subjective satisfaction, that he is expected to exercise the power administratively without any obligation to make a speaking order then, of course, the absence of a corrective machinery will render the provision conferring such absolute and unfettered power invalid. But it is the cumulative effect of all these factors that will render the provision unreasonable or arbitrary and liable to be struck down. In three of....
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....w which would vitiate the impugned judgment. 35. In Hindustan Petroleum Corpn. Ltd. v. Darius Shapur Chenai this Court referring to Cholan Roadways Ltd. v. G. Thirugnanasambandam6 held: (SCC p. 637, para 14) "14. Even a judicial review on facts in certain situations may be available. In Cholan Roadways Ltd. v. G. Thirugnanasambandam this Court observed: (SCC p. 253, paras 34-35) '34. It is now well settled that a quasi-judicial authority must pose unto itself a correct question so as to arrive at a correct finding of fact. A wrong question posed leads to a wrong answer. In this case, furthermore, the misdirection in law committed by the Industrial Tribunal was apparent insofar as it did not apply the principle of res ipsa loquitur which was relevant for the purpose of this case and, thus, failed to take into consideration a relevant factor and furthermore took into consideration an irrelevant fact not germane for determining the issue, namely, that the passengers of the bus were mandatorily required to be examined. The Industrial Tribunal further failed to apply the correct standard of proof in relation to a domestic enquiry, which is "preponderance of probabilit....
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....dences collected by the Directorate of Enforcement. The fact that subsequently she had been exonerated or she had been discharged from the criminal case may not be of much significance as the validity of the order must be judged having regard to the fact situation as was obtaining on the day on which the same was passed. We have noticed in the final order dated 13th December, 2005, the Custom Excise and Service Tax Appellate Tribunal, South Zonal Branch at Bangalore exonerated Respondent. However, having regard to the fact that there was no evidence as to why she carried the suit case from Mumbai or she had been handed over the suitcase at Hyderabad and keeping in view the nature of investigation carried out by the Customs Authorities, the penalties imposed on her under Section 114 (i) of the Customs Act was held to be not sustainable stating: "Summing up, we find:- (i) The investigation into this episode is not very thorough; (ii) The reason for abandoning the currency has not been brought out; (iii) There is no evidence to establish that the Appellants made an attempt to export the currency. (iv) The statements do not appear to have been given voluntarily; (v) T....
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....espondent indisputably was appointed prior thereto. A question arose as to whether by reason of the repealing provisions contained in the 1994 Act, the Regulations framed under the 1953 Act survives and consequently the exercise of powers under Regulation 13 shall be void ab initio. Our attention has been drawn to a decision of this Court in Air India v. Union of India and Ors. [JT 1995 (5) SC 578] wherein it was held: "Section 8 of the 1994 Act does not in express terms save the said Regulations, nor does it mention them. Section 8 only protects the remuneration, terms and conditions and rights and privileges of those who were in Air India's employment when the 1994 Act came into force. Such saving in undoubtedly "to quieten doubts" of those Air India employees who were then in service. What is enacted in Section 8 does not cover those employees who joined Air India's service after the 1994 Act came into force. The limited saving enacted in Section 8 does not, in our opinion, extent to the said Regulations." The said decision was rendered when a question was raised as to whether standing orders framed under Industrial Employment (Standing Orders) Act, 1946 surv....