Full Judgment
OF DISMISSAL IN THE HIGH COURT OF JUDICATURE OF MUMBAI, PANAJI BENCH - AMENDMENT TO CDA RULES.
37. CMD apprised the Board in the matter and drew the attention of the Board to Rule 41 of Goa Shipyard Officers' Conduct, Discipline & Appeal Rules, 1979, which provides and empowers the Board to amend, modify or add to the said 1979 Rules, from time to time and further provides that all such amendments, modifications or additions shall take effect from the date stated therein. The CMD further pointed out that no date had been specified as required under Rule 41 in the amendments carried out to the said Rules vide Circular Board Resolution No. 13 of 1995 dated 15.12.1995.
38. The Board noted that the Circular Board Resolution No. 13 of 1995 was circulated under Section 289 of the Companies Act, 1956, in view of urgency to amend the 1979 Rules due to I) changes in grades taken place since then, ii) on account of administrative difficulties faced in implementation of the existing Rules, and iii) Government instructions received by the Company from time to time to amend the Rules, etc. The said amendments were intended to be enforced immediately and after it were approved as required under the Companies Act, 1956. No specific date had been mentioned in the Resolution, since the said Resolution was intended to take effect from the date the same was approved as required under Section 289 of the Companies Act, 1956. The amendment had been brought into force and were being applied from 08.01.1996, on which date the same were approved by the majority of the Directors as required under Section 289 of the Companies Act, 1956 and on which date, in normal course, any such Resolution under the Companies Act would have come into force. The Board noted that the aforesaid Circular Resolution duly signed and approved by the Directors was received by the Company on various dates from 15.12.1995 and the majority of the Directors had forwarded the Resolution by 08.01.1996 to the Company. The CMD also drew the attention of the Board regarding the objections taken by Maj. Babu Thomas (dismissed employee) in Writ Petition No. 414 of 1997, pending disposal in the High Court of Judicature at Mumbai, Panaji Bench, wherein he has challenged his dismissal on the ground amongst others, that the amendments to 1979 Rules have not come into effect since no date is specified in the amendments resolution.
39. CMD brought out to the notice of the Board that the Board at its meeting held on 28.11.1997, had noted the report of the Appellate Authority appointed by the Board confirming the decision of Disciplinary Authority of dismissing Maj. Babu Thomas from the services of the Company w.e.f. 21.01.1976 for serious and grave misconduct committed by him under the CDA Rules. After detailed discussion, the Board, therefore, desired to clarify the position by passing the following resolution:RESOLVED THAT the Circular Board Resolution No. 13 of 1995 dated 15.12.1995 amending the Goa Shipyard Officers' Conduct, Disciplines and Appeal Rules, 1979 shall take effect from the date the same has been approved by the majority of the Directors of the Company, in terms of Section 289 of the Companies Act, 1956.
11. From the facts as adumbrated above it clearly emerges that having regard to Board's resolution dated 18.3.1998, it should be taken that the amendment of CDA Rules by Circular Resolution No. 13/1995, itself provided that it would take effect from 8.1.1996 (the date on which the same were approved by the majority of Directors). Therefore, Rule 41 of the CDA Rules that the amendment will come into effect from the date stated therein is fully complied with. The question whether the Board of Directors of a company could subsequently ratify an invalid act and validate it retrospectively is no more res integra. The question has been considered by a three Judge Bench of this Court in Maharashtra State Mining Corporation v. Sunil : (2006)IILLJ759SC . In that case the respondent, an employee of the Corporation was dismissed by the Managing Director preceded by an inquiry. A Writ Petition was filed challenging the dismissal order on the ground that the Managing Director of the Corporation was incompetent to pass such order. During the pendency of the Writ Petition, the Board of Directors of the Corporation passed a Resolution ratifying the impugned action of the Managing Director and also empowering him to take decisions in respect of the officers and staff in the grade of pay the maximum of which did not exceed Rs. 4700/- p.m. The Managing Director who dismissed the employee had earlier the power only in respect of those posts where the maximum pay did not exceed Rs. 1800/- p.m. The employee at the relevant time was drawing more than Rs. 1800/- p.m. and therefore, the Managing Director was incompetent to dismiss the employee. The High Court set aside the order of termination on the ground that the invalid act cannot be subsequently ratified by the Board of Directors. This Court after referring to various earlier decisions set aside the order of the High Court. This Court held as under:
The High Court was right when it held that an act by a legally incompetent authority is invalid. But it was entirely wrong in holding that such an invalid act cannot be subsequently 'rectified' by ratification of the competent authority. Ratification by definition means the making valid of an act already done. The principle is derived from the Latin maxim 'Ratihabitio mandate aequiparatur' namely ' a subsequent ratification of an act is equivalent to a prior authority to perform such act'. Therefore ratification assumes an invalid act which is retrospectively validated.
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In the present case, the Managing Director's order dismissing the respondent from the service was admittedly ratified by the Board of Directors on 20th February 1991, and the Board of Directors unquestionably had the power to terminate the services of the respondent. On the basis of the authorities noted, it must follow that since the order of the Managing Director had been ratified by the Board of Directors such ratification related back to the date of the order and validated it.
We, therefore, reject the contention that the order of dismissal passed by CMD is invalid for want of authority.
12. Mr. Rao, learned senior counsel for the respondent, referred to the decision of this Court in the case of State of Goa v. Babu Thomas : 2005 CriLJ4379 , in which one of us was a Member of the Bench (Sema,J) particularly the observation made in paragraphs 4,8 and 9 of the judgment. In our view, the judgment rendered in the aforesaid case relating to sanction for prosecution under Section 19 of Prevention of Corruption Act, 1988 would be of no assistance to decide the issue on hand.
13. Mr. Rao next referred to the amended CDA rules wherein it has been provided that for all officers up to and inclusive of Manager, the Disciplinary Authority who can impose major penalties is the General Manager/Functional Director and the Appellate Authority is the Chairman & Managing Director. According to Mr. Rao, since the order of dismissal has been issued by the Chairman & Managing Director who is an Appellate Authority, the respondent has been deprived of his right of appeal to the Chairman & Managing Director. According to him, under the amended CDA rules the appellate authority is the Chairman & Managing Director but as the major penalty has been imposed by the Chairman & Managing Director, he cannot act as an Appellate Authority and therefore the respondent has lost one form of remedy available to him. We are unable to countenance to this submission. The respondent was not denied the right of appeal. Undisputedly, the respondent filed an appeal before the Board of Directors, as the order of dismissal was passed by the CMD, and the Board of Directors considered his appeal and by a detailed order dismissed the appeal on 27.9.1997. In fact, the Board of Directors independently considered the appeal and while dismissing the appeal held that charges (ii), (v), (x)(a), (x)(b), (xi) and (xiii) are not fully or entirely proved and confirmed the dismissal order on charges (i), (vi), (vii), (x)(c) and (xii). The appeal was considered independently by the Appellate authority and a detailed order passed after application of mind. In such circumstances, we are clearly of the view that no prejudice whatsoever has been caused to the respondent as he availed an opportunity of an appeal before the Board of Directors as an Appellate Authority.
14. Mr. Rao invited our attention to the decision of this Court rendered in Surjit Ghosh v. Chairman & Managing Director : (1995)IILLJ68SC , where this Court observed as under:
However, when an appeal is provided to the higher authority concerned against the order of the disciplinary authority or of a lower authority and the higher authority passes an order of punishment, the employee concerned is deprived of the remedy of appeal which is a substantive right given to him by the Rules/Regulations. An employee cannot be deprived of his substantive right. What is further, when there is a provision of appeal against the order of the disciplinary authority and when the appellate or the higher authority against whose order there is no appeal, exercises the powers of the disciplinary authority in a given case, it results in discrimination against the employee concerned.
In our view, this decision would be of no help to the respondent's case on facts. As already noticed in the present case, the respondent in fact, had availed the remedy of appeal and filed the appeal before the Board of Directors. That apart, the decision in Surjit Ghosh (supra) has been distinguished by this Court in Balbir Chand v. Food Corporation of India Ltd. : (1997)2LLJ879SC . It was pointed out as under:
The learned Counsel for the petitioner has raised the contention that since the petitioner was required to be dismissed by the disciplinary authority, namely, Zonal Manager, who alone is competent to remove him, the order of dismissal passed by the Managing Director is bad in law. In support thereof, he placed reliance on a judgment of this Court in Surjit Ghosh v. Chairman and Managing Director, United Commercial Bank : (1995)IILLJ68SC . It is an admitted position that as a joint enquiry was conducted against all the delinquent officials, the highest in the hierarchy of competent authority who could take disciplinary action against the delinquents was none other than the Managing Director of the Corporation. In normal circumstances the Managing Director being the appellate authority should not pass the order of punishment so as to enable the delinquent employee to avail of right of appeal. It is now a well settled legal position that an authority lower than the appointing authority cannot take any decision in the matter of disciplinary action. But there is no prohibition in law that the higher authority should not take decision or impose the penalty as the primary authority in the matter of disciplinary action. On that basis, it cannot be said that there will be discrimination violating Article 14 of the Constitution or causing material prejudice. In the judgment relied on by the counsel, it would appear that in the Rules, officer lower in hierarchy was the disciplinary authority but the appellate authority had passed the order removing the officer from service. Thereby, the appellate remedy provided under the Rules was denied. In those circumstances, this Court opined that it caused prejudice to the delinquent as he would have otherwise availed of the appellate remedy and his right to consider his case by an appellate authority on question of fact was not available. But it cannot be laid as a rule of law that in all circumstances the higher authority should consider and decide the case imposing penalty as a primary authority under the Rules, In this case, a right of second appeal/revision also was provided to the Board. In fact, appeal was preferred to the Board. The Board elaborately considered the matter through the Chairman. It is not violative of Article 14 of the Constitution.
[Emphasis supplied]
15. The High Court had allowed the respondents' writ petition by upholding the preliminary contention that the CMD did not have the authority and jurisdiction to pass the order of dismissal. It did not consider the several contentions raised by the respondent on merits. In the view that we have taken, the decision of the High Court dated 25.11.2003 on the preliminary contention cannot be sustained. We, therefore, set aside the Order of the High Court dated 25.11.2003 which allowed Writ Petition No. 414 of 1997 on a preliminary ground. Consequently the writ petition shall stand restored to the file of the High Court. The High Court shall now consider the other contentions raised by the respondent-writ petitioner other than the issue answered by this Court.
16. This Court on 23.8.2004 stayed the operation of the judgment of the High Court subject to the appellant making payment of the amount equivalent to subsistence allowance from the date of the judgment of the High Court within four weeks. This order was passed keeping in view that the order of dismissal was set aside by the High Court. As we have set aside the order of the High Court, the order of dismissal dated 21.1.1997 confirmed by Appellate Authority's order dated 27.9.1997 stands restored subject to the final decision of the writ petition. The respondent-writ petitioner shall not be entitled to any subsistence allowance from today till the writ petition is finally disposed of by the High Court in accordance with law.
17. The appeal is allowed accordingly. Parties to bear their respective costs.