Supreme Court Upholds Disciplinary Action Against Employee in U.P. Milk Union Case (23 March 2021)

Date of the Judgment: 23 March 2021
Citation: (2021) INSC 152
Judges: Uday Umesh Lalit, J., Hemant Gupta, J., S. Ravindra Bhat, J. (authored by Hemant Gupta, J.)

Can a disciplinary action against an employee be overturned due to procedural errors, even if the charges are proven? The Supreme Court of India recently addressed this question in a case involving the Uttar Pradesh Milk Union. The court examined whether the High Court was right in setting aside the punishment order of the employee, and whether the disciplinary authority was competent to pass the order. The Supreme Court held that the High Court was incorrect in setting aside the punishment order, and upheld the disciplinary action.

Case Background

The case revolves around disciplinary proceedings against an employee of the Uttar Pradesh Milk Union. The employee, initially appointed as an Executive Trainee on 11 August 1984, was later promoted to Manager Grade-III. A charge sheet was issued to him on 21 April 2015, alleging that he had created a hidden chamber in milk tankers to manipulate weight measurements, causing financial losses to the Federation.

The charge sheet alleged that the employee had created an additional third hidden chamber with a capacity of 310 liters in the milk tankers by partition. This chamber was filled with water to maintain the total weight of the vehicle. After the weight was measured at the time of unloading milk from the two chambers, the water from the additional chamber was discharged. This manipulation of weight measurement caused financial losses to the Federation.

Timeline

Course of Proceedings

The employee challenged the punishment order through a writ petition in the High Court of Judicature at Allahabad. The Single Bench of the High Court ruled that the punishment order was passed without following the due procedure of law, and that the prior approval of the Uttar Pradesh Co-operative Institutional Service Board was not obtained as required under Regulation 87 of the Service Regulations. The Single Bench also noted that the punishment order was passed by the Chairman of the Administrative Committee, and the approval for the punishment was also granted by the same person, which was considered inappropriate.

In an intra-court appeal, the Division Bench of the High Court upheld the Single Bench’s decision, referring to earlier inquiry reports from 2014 where the employee was exonerated. The Division Bench also held that the order dated 8 August 2016 was in direct conflict with the provisions under Regulation 87 of the Service Regulations. The Division Bench stated that the notification dated 17 November 1979 could not be applied to the members of Centralized Services, and that the analogy given by the Milk Commissioner/Registrar while passing the order dated 8 August 2016 was incorrect.

Legal Framework

The judgment discusses the following key legal provisions:

• Section 121 of the Uttar Pradesh Co-operative Societies Act, 1965: This section empowers the Registrar to frame regulations regarding the terms of employment and disciplinary control of employees in co-operative societies.
  “The Registrar may, from time to time, frame regulation to regulate the emoluments and other conditions of service including the disciplinary control of employees in a co-operative society or a class of co-operative societies and any society to which such terms are applicable, shall comply with those regulations and with any orders of the Registrar, issued to secure such compliance.”
• Section 122 of the Uttar Pradesh Co-operative Societies Act, 1965: This section allows the State Government to constitute authorities for the recruitment, training, and disciplinary control of employees in co-operative societies.
  “The State Government may constitute any authority or authorities, in such manner as may be prescribed, for the recruitment, training and disciplinary control of the employees of co-operative societies, or a class of co-operative societies, and may require such authority or authorities to frame regulations regarding recruitment, emoluments, terms and conditions of service including disciplinary control of such employees and subject to the provisions contained in Section 70, settlement of disputes between an employee of a co-operative society and the society.”
• Section 122-A of the Uttar Pradesh Co-operative Societies Act, 1965: This section empowers the State Government to create centralized services for employees of co-operative societies and prescribe their conditions of service.
  “Notwithstanding anything contained in this Act, the State Government may by rules provide for the creation of one there services of such employees of such co-operative societies or class of co-operative societies as the Stale Government may think fit, common to such co-operative societies and prescribe the method of recruitment, appointment, removal and other conditions of service of persons appointed to any such service.”
• Rule 389-A of the Uttar Pradesh Co-operative Societies Rules, 1968: This rule states that the authority under Section 122 may be constituted by the State Government by notification in the Official Gazette.
  “The authority or authorities under Section 122 may be constituted by the State Government by notification published in the Official Gazette”
• Regulation 87 of the Uttar Pradesh Co-operative Societies Employees Service Regulations, 1975: This regulation mandates that orders imposing penalties such as reduction in rank, removal, or dismissal from service cannot be passed without the prior concurrence of the Board.
  “Order imposing penalty under sub-clauses (e) to (g) of clause (1) of Regulation No. 84 shall not be passed except with the prior concurrence of the Board.”
• Regulation 106 of the Uttar Pradesh Co-operative Societies Employees Service Regulations, 1975: This regulation empowers the State Government or the Registrar to pass orders to remove any difficulty related to service conditions, appointment, termination, or dismissal.
  “The State Government or the Registrar may pass such orders not inconsistent with these Regulations as it or he deems necessary just and proper to remove any difficulty arising in relation to emoluments, terms and conditions of service, appointment or re-appointment, termination, dismissal or removal, deputation or merger.”
• Rule 15 of the Uttar Pradesh Co-operative Dairy Federation and Milk Union Centralised Service Rules, 1984: This rule specifies that the appointing and disciplinary authority for members of the service shall be as laid down in regulations. Until such regulations are enforced, the Chairman of the Administrative Committee shall be the appointing and disciplinary authority.
  “Appointing authority of and the authority exercising disciplinary control over, the members of the service and the Management Trainees and the Executives shall be such as may be laid down in the regulations: Provided that till enforcement of such regulations the Chairman of the Committee shall be the appointing authority and the authority exercising disciplinary control over them.”

Arguments

The arguments presented before the Supreme Court can be summarized as follows:

• Appellant’s (Chairman Administrative Committee U.P. Milk Union & Dairy Federation Centralized Services) Arguments:
  • The appellant argued that the disciplinary proceedings were conducted fairly. The employee was given a charge sheet, an inquiry was conducted, and a show cause notice was issued. The punishment order was passed after obtaining approval from the Commissioner (Dairy Milk).
  • The appellant contended that the Dairy Service Rules of 1984, framed under Section 122-A of the Uttar Pradesh Co-operative Societies Act, 1965, were applicable. Under Rule 15 of these rules, the Chairman of the Administrative Committee is the disciplinary authority until specific regulations are framed. The prior approval of the Dairy Milk Commissioner/Registrar was an additional step taken by the Administrative Committee.
  • The appellant submitted that Regulation 87 of the Service Regulations, which requires prior concurrence of the Board for imposing penalties, was not applicable to the employees of the Centralized Services after the notification dated 17 November 1979, which removed the Apex Level Milk Societies from the purview of the Uttar Pradesh Co-operative Institutional Service Board.
  • The appellant argued that the High Court erred in relying on the resolution dated 20 September 1984, as it could not override the statutory provisions of the Dairy Service Rules. The appellant also argued that the High Court incorrectly concluded that the Chairman of the Administrative Committee and the Milk Commissioner were the same person, leading to a biased decision. The appellant relied on the principle of necessity, stating that if the same person holds two positions, it cannot invalidate the decision.
• Respondent’s (Jagpal Singh) Arguments:
  • The respondent argued that the punishment order was passed without following the due procedure of law.
  • The respondent contended that the prior approval of the Uttar Pradesh Co-operative Institutional Service Board was not obtained, as required under Regulation 87 of the Service Regulations.
  • The respondent submitted that the order of punishment was passed by the Chairman of the Administrative Committee, and the approval for the punishment was also granted by the same person, which was inappropriate.
  • The respondent relied on the High Court’s decision, which held that the notification dated 17 November 1979 was not applicable to the members of Centralized Services.

Submissions Table

Issues Framed by the Supreme Court

The Supreme Court did not explicitly frame issues, but the core issue was whether the High Court was correct in setting aside the punishment order, and whether the disciplinary authority was competent to pass the order.

Treatment of the Issue by the Court

The following table demonstrates as to how the Court decided the issues:

Authorities

The Supreme Court considered the following authorities and legal provisions:

Judgment

The Supreme Court allowed the appeal, setting aside the orders of the High Court and dismissing the writ petition filed by the employee. The Court held that the Chairman of the Administrative Committee was the competent disciplinary authority under Rule 15 of the Dairy Service Rules, 1984. The Court also found that Regulation 87 of the Service Regulations was not applicable to the employees of the Centralized Services after the notification dated 17 November 1979.

The Court further stated that the prior approval of the Dairy Milk Commissioner/Registrar was an additional step taken by the Administrative Committee, and did not invalidate the punishment order. The Supreme Court also rejected the High Court’s finding that the Chairman of the Administrative Committee and the Milk Commissioner were the same person, stating that the powers were exercised by designation.

Treatment of Submissions

How Authorities were Viewed by the Court

• Section 121 of the Uttar Pradesh Co-operative Societies Act, 1965 and Section 122 of the Uttar Pradesh Co-operative Societies Act, 1965: The court recognized these provisions as the basis for the regulatory framework for cooperative societies, but held that they were overridden by Section 122-A.
• Section 122-A of the Uttar Pradesh Co-operative Societies Act, 1965: The court emphasized that this section, which allows for the creation of centralized services, had an overriding effect over Sections 121 and 122.
• Rule 389-A of the Uttar Pradesh Co-operative Societies Rules, 1968: The court noted that this rule allowed for the constitution of authorities for disciplinary control.
• Regulation 87 of the Uttar Pradesh Co-operative Societies Employees Service Regulations, 1975: The court held that this regulation was not applicable to the Centralized Services after the notification dated 17 November 1979.
• Regulation 106 of the Uttar Pradesh Co-operative Societies Employees Service Regulations, 1975: The court found that this regulation was not applicable in the present case, as it deals with termination, dismissal, or removal, not reversion.
• Rule 15 of the Uttar Pradesh Co-operative Dairy Federation and Milk Union Centralised Service Rules, 1984: The court applied this rule, holding that it made the Chairman of the Administrative Committee the disciplinary authority.
• Chandra Pal Singh v. State of U.P. & Ors.: The court overruled this judgment of the High Court, stating that the High Court had proceeded on wrong assumptions of facts and law. The Supreme Court held that the High Court had incorrectly applied Regulation 87 and had failed to consider the applicability of Rule 15 of the Dairy Service Rules.

What weighed in the mind of the Court?

The Supreme Court’s decision was primarily influenced by the following factors:

• Statutory Rules: The Court emphasized the importance of the Dairy Service Rules of 1984, which were framed under Section 122-A of the Uttar Pradesh Co-operative Societies Act, 1965. The Court noted that these rules had precedence over the general regulations framed under Sections 121 and 122 of the Act.
• Rule 15 of the Dairy Service Rules: The Court relied heavily on Rule 15, which designates the Chairman of the Administrative Committee as the disciplinary authority until specific regulations are framed. This rule was considered crucial in determining the competent disciplinary authority.
• Inapplicability of Regulation 87: The Court clarified that Regulation 87 of the Service Regulations was not applicable to the employees of the Centralized Services after the notification dated 17 November 1979. This was a key factor in overturning the High Court’s decision.
• Procedural Fairness: The Court noted that the disciplinary proceedings were conducted fairly, with a charge sheet, inquiry, and show cause notice. This indicated that the employee was given a fair opportunity to defend himself.
• Principle of Necessity: The Court applied the principle of necessity, stating that if the same person holds two positions, it cannot invalidate the decision, especially when no substitution is possible.

Sentiment Analysis of Reasons

Fact:Law Ratio

Logical Reasoning

The Supreme Court rejected alternative interpretations of the law, particularly the High Court’s reliance on Regulation 87 of the Service Regulations. The Court clarified that the Dairy Service Rules of 1984, framed under Section 122-A of the Uttar Pradesh Co-operative Societies Act, 1965, had precedence over the general regulations framed under Sections 121 and 122 of the Act. The Court also rejected the High Court’s finding that the Chairman of the Administrative Committee and the Milk Commissioner were the same person, stating that the powers were exercised by designation.

The Court’s decision was based on a careful analysis of the statutory rules and regulations, and a clear understanding of the legislative intent behind Section 122-A of the Uttar Pradesh Co-operative Societies Act, 1965. The Court’s reasoning was logical and consistent with the established principles of administrative law.

The Supreme Court’s decision is clear and accessible, and it provides a comprehensive analysis of the legal issues involved in the case. The Court’s decision is based on a careful analysis of the statutory rules and regulations, and a clear understanding of the legislative intent behind Section 122-A of the Uttar Pradesh Co-operative Societies Act, 1965.

The Supreme Court quoted the following from the judgment:

• “The Administrative Committee exercises overall control and supervision over the members of the Service in terms of Rule 10(i) of the Dairy Service Rules. Such Administrative Committee constituted under Rule 5 of the Dairy Service Rules is the Appointing Authority till the time Regulations are framed in terms of Rule 15 of the said Rules.”
• “It would, therefore, be incorrect to rely upon or import the principles of Rule 87 in substitution of clear intent and mandate of Rule 15 of 1984 Rules.”
• “The Milk Commissioner has been appointed as Registrar in exercise of the powers conferred on the State Government by the Act. The approval from the Registrar is in terms of the resolution of the Administrative Committee constituted in terms of Dairy Service Rules. The exercise of the powers under the Act are conferred by designation.”

There were no dissenting opinions in this judgment.

Key Takeaways

• The Chairman of the Administrative Committee is the competent disciplinary authority for employees of the Centralized Services under the Uttar Pradesh Co-operative Dairy Federation and Milk Union, as per Rule 15 of the Dairy Service Rules, 1984.
• Regulation 87 of the Uttar Pradesh Co-operative Societies Employees Service Regulations, 1975, which requires prior concurrence of the Board for imposing penalties, is not applicable to the employees of the Centralized Services after the notification dated 17 November 1979.
• Statutory rules have precedence over general regulations and executive instructions.
• When a statute empowers a particular official to act, that official is generally the only person who can do so, even if they have a personal interest.

Directions

The Supreme Court did not give any specific directions in this case.

Development of Law

The Supreme Court clarified that the Dairy Service Rules of 1984, framed under Section 122-A of the Uttar Pradesh Co-operative Societies Act, 1965, had precedence over the general regulations framed under Sections 121 and 122 of the Act. This ruling reinforces the principle that specific statutory rules override general regulations. The court also clarified that the Chairman of the Administrative Committee is the competent disciplinary authority under Rule 15 of the Dairy Service Rules, 1984.

The ratio decidendi of this case is that the disciplinary authority for employees of the Centralized Services under the Uttar Pradesh Co-operative Dairy Federation and Milk Union is the Chairman of the Administrative Committee, as per Rule 15 of the Dairy Service Rules, 1984, and that Regulation 87 of the Uttar Pradesh Co-operative Societies Employees Service Regulations, 1975, is not applicable to the employees of the Centralized Services after the notification dated 17 November 1979.

Conclusion

In conclusion, the Supreme Court’s judgment in the Jagpal Singh case clarifies the legal framework for disciplinary actions against employees of the Uttar Pradesh Milk Union. The Court upheld the disciplinary action against the employee, emphasizing the importance of statutory rules and the competence of the Chairman of the Administrative Committee as the disciplinary authority. The judgment also clarifies the inapplicability of Regulation 87 of the Service Regulations to the employees of the Centralized Services after the notification dated 17 November 1979. The Supreme Court’s decision ensures that disciplinary actions are carried out in accordance with the law and that employees are held accountable for their actions.