Supreme Court upholds Disciplinary Authority of Functional General Manager in Bharat Petroleum Corporation Case (2020)

Date of the Judgment: March 17, 2020

Citation: (2020) INSC 270

Judges: Ashok Bhushan, J., Navin Sinha, J.

Can a disciplinary authority, other than the one specified for dismissal, issue a charge sheet for a lesser penalty? The Supreme Court of India recently addressed this question in a case involving Bharat Petroleum Corporation Limited (BPCL) and one of its employees, Anil Padegaonkar. The core issue revolved around whether a Deputy General Manager (DGM) was competent to issue a charge sheet to an employee, or if that power was reserved solely for the Functional Director.

The Supreme Court, in this case, was hearing cross-appeals filed by both BPCL and the employee, Mr. Padegaonkar, against a common order passed by the High Court. The High Court had set aside the punishment order against the employee, but had granted liberty to BPCL to issue a fresh charge sheet. The Supreme Court bench comprised Justices Ashok Bhushan and Navin Sinha, with the judgment authored by Justice Navin Sinha.

Case Background

The case originated from disciplinary proceedings initiated against Mr. Anil Padegaonkar, an Aviation Officer at BPCL’s General Aviation Service Station in Gwalior. On December 31, 1993, a charge sheet was issued to him by the Deputy General Manager (Aviation) (DGM). The charge sheet alleged that fresh sand particles were found in all ten fuel tanks after his duty hours, while an earlier inspection had found them to be free of dirt.

A second charge sheet was issued to Mr. Padegaonkar on September 27, 1994, for absence from duty on August 13, 1994. He was charged with acting in a manner prejudicial to the interests of the Corporation and negligence in the performance of duty under Clause 6 & 10 of Part III-A of the Bharat Petroleum Limited Conduct, Discipline and Appeal Rules for Management Staff, 1976 (‘the Rules’).

Following a domestic inquiry, the inquiry officer found Mr. Padegaonkar guilty on January 6, 1995. After considering his reply, the Director (Marketing), on May 21, 1997, ordered his ‘discharge’ from service. Mr. Padegaonkar’s departmental appeal was rejected by the Chairman on October 5, 1998.

Timeline:

Course of Proceedings

Mr. Padegaonkar challenged the orders in a writ petition before the High Court. The High Court held that the punishment of ‘dismissal’ for the first charge was invalid because the charge sheet was not issued by the Functional Director, who was the competent authority. Regarding the second charge sheet, the High Court deemed the punishment disproportionate and ordered a remand. The High Court granted BPCL the liberty to issue a fresh charge sheet for the first charge and to pass a lesser punishment for the second charge. While reinstatement was ordered, the issue of back wages was left for consideration based on the outcome of fresh proceedings.

Legal Framework

The case is governed by the Bharat Petroleum Limited Conduct, Discipline and Appeal Rules for Management Staff, 1976 (‘the Rules’). Key provisions include:

• Rule 3(e): Defines a Functional Manager as the Manager in-charge of a function.
• Rule 3(g): Defines Disciplinary Authority as specified in Schedule I, competent to impose penalties under the Rules.
• Rule 3(h): Defines Competent Authority as any authority empowered by the Board of Directors or the Chairman to discharge functions or use powers.
• Part III-B (2): Specifies major penalties, including removal from service and dismissal from service.
• Part III-F(1): Describes the disciplinary authority to include an authority as specified in Schedule I.
• Part III-F(23): States that the Disciplinary Authority or the Competent Authority can impose penalties.
  
  “(23) If the Disciplinary Authority or the Competent Authority having regard to its findings on all or any of the charges is of the opinion that any of the penalties specified in Rule “B” should be imposed on the Management Staff it shall, notwithstanding anything contained in Rule “G”, make an order imposing such penalty”

Schedule I of the Rules specifies that for Job Group ‘A’, the Functional General Manager is the disciplinary authority for all penalties except dismissal, for which the Functional Director is the disciplinary authority.

Arguments

Arguments by the Corporation:

• The Corporation argued that the employee was ‘discharged,’ not ‘dismissed,’ from service.
• The DGM, as the functional General Manager and Head of the Department, was competent to issue the charge sheet under the manual for delegation of authority dated December 15, 1987, for a punishment lesser than dismissal.
• The manual for delegation of authority had not been withdrawn or superseded, even after the amendment of Rule 3(g) on August 22, 1991.
• The employee did not object to the DGM’s competence to issue the charge sheet in his reply or appeal, raising it for the first time before the High Court.
• The employee failed to demonstrate any prejudice due to the alleged lapse.
• The misconduct was serious, considering the employee’s posting at an air force station.
• There is no standardized yardstick for proportionality of punishment, and it depends on the facts of each case.

Arguments by the Employee:

• Dismissal is a major punishment under Part III-B (2)(f) of the Rules, and the procedure followed was for a major penalty.
• The High Court correctly held that the employee was dismissed from service based on a charge sheet issued without jurisdiction.
• After the amendment of the term “disciplinary authority” in Rule 3(g) on August 22, 1991, the manual for delegation of authorities dated December 15, 1987, lost its relevance.
• Only the Functional Director was competent to issue a charge sheet for dismissal.
• The charge sheet issued by the DGM was without authority, thus vitiating the punishment.
• The High Court should not have granted liberty to issue a fresh charge sheet or denied back wages while directing reinstatement.
• The punishment of dismissal for absence from duty one hour before duty hours was grossly disproportionate.
• The entire proceedings were vitiated, and back wages should have been granted while directing reinstatement.

The employee argued that the High Court was correct in holding that the charge sheet issued by the DGM was without authority, and therefore, the punishment of dismissal was invalid. He also contended that the High Court should not have granted liberty to issue a fresh charge sheet or denied back wages.

The innovativeness of the argument of the corporation was that the manual for delegation of authority was never withdrawn and the DGM was competent to issue charge sheet for penalties other than dismissal.

The innovativeness of the argument of the employee was that after the amendment of the term “disciplinary authority” in Rule 3(g) on August 22, 1991, the manual for delegation of authorities dated December 15, 1987, lost its relevance.

Submissions by Parties

Issues Framed by the Supreme Court

The Supreme Court considered the following issues:

1. Whether the charge sheet issued by the Deputy General Manager (DGM) was competent under the Rules.
2. Whether the punishment was one of ‘discharge’ or ‘dismissal’
3. Whether the High Court was correct in setting aside the order of punishment on the ground that the charge sheet had not been issued by the disciplinary authority.
4. Whether the High Court was correct in granting liberty to the Corporation for issuance of fresh charge sheet.
5. Whether the High Court was correct in denying back wages while granting reinstatement.

Treatment of the Issue by the Court

Authorities

The Supreme Court considered the following authorities:

On the issue of raising objections to jurisdiction:

• H.V. Nirmala vs. Karnataka State Financial Corporation, (2008) 7 SCC 639: The Supreme Court observed that objections regarding lack of jurisdiction should be raised at the first instance.

On the issue of proportionality of punishment:

• S.R. Tewari vs. Union of India and Another, (2013) 6 SCC 602: The Supreme Court observed that there could be no standardized yardstick for proportionality of punishment, which would depend on the facts of each case.

On the issue of charge sheet not issued by competent authority:

• Union of India vs. B.V. Gopinath, (2014) 1 SCC 351: The Supreme Court observed that a charge sheet not issued according to law renders the entire proceedings non-est.

On the issue of back wages:

• Chairmen-cum-Managing Director, Coal India Limited and Others vs. Ananta Saha and Others, (2011) 5 SCC 142: The Supreme Court observed that back wages ought to have been granted while directing reinstatement.

On the issue of proportionality of punishment:

• Dev Singh vs. Punjab Tourism Development Corporation Limited and Another, (2003) 8 SCC 9: The Supreme Court observed that the punishment of dismissal for absence from place of duty one hour before duty hours was grossly disproportionate.

Relevant Legal Provisions:

• Rule 3(e) of the Bharat Petroleum Limited Conduct, Discipline and Appeal Rules for Management Staff, 1976: Defines a Functional Manager as the Manager in-charge of a function.
• Rule 3(g) of the Bharat Petroleum Limited Conduct, Discipline and Appeal Rules for Management Staff, 1976: Defines Disciplinary Authority as specified in Schedule I, competent to impose penalties under the Rules.
• Rule 3(h) of the Bharat Petroleum Limited Conduct, Discipline and Appeal Rules for Management Staff, 1976: Defines Competent Authority as any authority empowered by the Board of Directors or the Chairman to discharge functions or use powers.
• Part III-B (2) of the Bharat Petroleum Limited Conduct, Discipline and Appeal Rules for Management Staff, 1976: Specifies major penalties, including removal from service and dismissal from service.
• Part III-F(1) of the Bharat Petroleum Limited Conduct, Discipline and Appeal Rules for Management Staff, 1976: Describes the disciplinary authority to include an authority as specified in Schedule I.
• Part III-F(23) of the Bharat Petroleum Limited Conduct, Discipline and Appeal Rules for Management Staff, 1976: States that the Disciplinary Authority or the Competent Authority can impose penalties.

Authorities Considered by the Court

Judgment

The Supreme Court held that the High Court erred in concluding that the employee was ‘dismissed’ from service. The Court emphasized that the order of punishment used the term ‘discharge,’ which, in service jurisprudence, is synonymous with removal and does not carry the punitive consequences of dismissal.

The Court also held that the DGM was competent to issue the charge sheet. The Court observed that the manual for delegation of authority issued on December 15, 1987, had never been withdrawn. The term ‘Competent Authority’ under Rule 3(h) includes a disciplinary authority authorized in the manner prescribed.

The Supreme Court also observed that the words ‘Disciplinary Authority or Competent Authority’ have been used interchangeably in Part III-F of the Rules, which indicates that the delegation of authority manual had never been recalled or superseded.

The Court set aside the High Court’s direction for issuing a fresh charge sheet, holding that the original charge sheet was valid. Consequently, the directions for reinstatement and back wages were deemed academic.

How each submission made by the Parties was treated by the Court?

How each authority was viewed by the Court?

The Supreme Court considered the authorities and legal provisions to come to its conclusion.

• H.V. Nirmala vs. Karnataka State Financial Corporation, (2008) 7 SCC 639:* The Court acknowledged the principle that objections regarding lack of jurisdiction should be raised at the first instance, but still considered the issue as it was a fundamental issue of jurisdiction.
• S.R. Tewari vs. Union of India and Another, (2013) 6 SCC 602:* The Court referred to this case to highlight that there is no standardized yardstick for proportionality of punishment which depends on the facts of each case, but did not apply it to the case at hand.
• Union of India vs. B.V. Gopinath, (2014) 1 SCC 351:* The Court distinguished this case, stating that it was not applicable to the present case. The Court held that the charge sheet was issued by a competent authority, unlike in the cited case.
• Chairmen-cum-Managing Director, Coal India Limited and Others vs. Ananta Saha and Others, (2011) 5 SCC 142:* The Court distinguished this case, stating that it was not applicable to the present case, as the proceedings were not vitiated.
• Dev Singh vs. Punjab Tourism Development Corporation Limited and Another, (2003) 8 SCC 9:* The Court distinguished this case, stating that it was not applicable to the present case, as the issue of proportionality of punishment was not considered by the court.

What weighed in the mind of the Court?

The Supreme Court’s reasoning was heavily influenced by the procedural aspects of the case, particularly the interpretation of the service rules and the delegation of authority. The Court emphasized that the employee was ‘discharged’ and not ‘dismissed’, which was a significant factor in its decision. The Court also focused on the fact that the DGM was a competent authority to issue the charge sheet for a punishment other than dismissal, based on the delegation manual.

The Court was also influenced by the fact that the employee did not raise the issue of the DGM’s competence in his reply to the charge sheet or in the departmental appeal. The Court considered the fact that the employee was working at an Air Force Station, which required a high degree of seriousness in the performance of duties.

The Court also emphasized that the words ‘Disciplinary Authority or Competent Authority’ have been used interchangeably in Part III-F of the Rules, which indicates that the delegation of authority manual had never been recalled or superseded.

The Supreme Court’s reasoning is primarily based on the interpretation of the service rules and the delegation of authority. The Court’s approach is more legalistic, focusing on the procedural aspects of the case and the specific language of the rules.

The Court’s reasoning also shows a slight inclination to uphold the disciplinary actions of the corporation, provided they are in accordance with the rules.

The Court’s approach is more legalistic, focusing on the procedural aspects of the case and the specific language of the rules.

Sentiment Analysis of Reasons Given by the Supreme Court

Fact:Law

Logical Reasoning

Court’s Reasoning

The Supreme Court’s reasoning was primarily based on the interpretation of the service rules and the delegation of authority. The Court emphasized that the High Court had erred in concluding that the employee was ‘dismissed’ from service, as the order of punishment clearly stated ‘discharge.’

The Court observed that, “Though the word ‘discharge’ does not find reference under the Rules, nonetheless in service jurisprudence, removal and/or discharge are synonymous leading to a termination or end of service but without the punitive consequences of dismissal entailing loss of past services, affecting future employment and debarring retiral benefits.”

The Court also held that the DGM was competent to issue the charge sheet. The Court observed that, “We are of the considered opinion that the term Competent Authority will include a disciplinary authority so authorised in the manner prescribed in 3(h) under the delegation of authority manual dated 15.12.1987.”

The Court further reasoned that, “The words “Disciplinary Authority or Competent Authority” have been used interchangeably in Part III-F of the Rules. This would indicate that the delegation of authority manual dated 15.12.1987 has never been recalled or superseded.”

The Court concluded that, “The High Court fell in error in holding that the charge sheet had not been issued by the disciplinary authority. The direction for issuance of fresh charge sheet is therefore unsustainable.”

Conclusion

The Supreme Court’s judgment in the Bharat Petroleum Corporation vs. Anil Padegaonkar case clarifies the scope of disciplinary authority within the organization. The Court upheld the authority of the Functional General Manager to issue charge sheets for penalties other than dismissal, emphasizing the importance of the delegation of authority manual.

The judgment underscores the distinction between ‘discharge’ and ‘dismissal’ in service law, highlighting that these terms have different consequences for an employee’s career. It also emphasizes the importance of raising objections to jurisdiction at the earliest instance.

This case serves as a reminder for organizations to clearly define the roles and responsibilities of disciplinary authorities to avoid legal challenges. It also highlights the importance of understanding the nuances of service rules and the implications of various disciplinary actions.

The judgment emphasizes that the courts will not interfere with the disciplinary actions of an organization if they are in accordance with the rules and procedures.