Shyama Sundar Sahoo vs Odisha State Warehousing Corporation And Another Vs

A.K. Mohapatra, J.

By filing the present Writ Petition, the present Petitioner seeks to invoke the jurisdiction of this Court under Article 226 of the Constitution of India to quash the Office order dated 21.08.2023 under Annexure-6 to the Writ Petition passed by the Managing Director, Odisha State Warehousing Corporation, Opposite Party No.2. By virtue of the impugned order dated 21.08.2023 the Opposite Party no.2 seeks to recover an amount of Rs.10,91,452/- along with interest at the rate of 12% per annum from the Petitioner without initiating any Disciplinary Proceeding against the Petitioner, who had already retired from service by the time the aforesaid order dated 21.08.2023 was passed directing recovery of the aforesaid amount.

The factual background leading to filing of the present Writ Petition, in short, is that the Petitioner was initially appointed as Work Sarkar on 18.01.1985 by the Opposite Party No.1-Corporation. During his service career, the Petitioner was given promotion to the post of Assistant Superintendent, Deputy Superintendent and Superintendent. After serving for about 38 years in different capacities in the Corporation, the Petitioner finally retired from service on attaining the age of superannuation with effect from 31. 03.2023.

The pleadings further reveal that while the Petitioner was working as Zonal Manager (I/C) of the Corporation he received a show cause notice dated 05.12.2022 to explain as to why a sum of Rs.27,28,630/- shall not be recovered from him. The aforesaid show cause was received on the basis of a verification conducted by the Food Corporation of India (FCI) at Jagatpur Warehoue of the Corporation during January, 2022 and February, 2022. During such verification, it was found that the physical stock did not tally with the stock recorded in the Register. As such, there was a shortfall in the physical stock that was verified in the godown.

In reply to the aforesaid show cause notice, the Petitioner submitted his explanation on 17.12.2022. In his explanation the Petitioner has mentioned that during the aforesaid period, the Warehouse at Jagatpur received an abnormally high number of rakes and due to shortage of staff, the Petitioner was required to handle the whole thing alone. Despite repeated requests, no man power was provided to the Petitioner. Further, it has been categorically stated by the Petitioner in his reply that there is no shortage of stock inasmuch as the total quantity of all the stacks has been tallied with the register. It has been specifically mentioned that the FCI team verified only a selected stock wherein there was some shortage. However, at the same time other stocks were not taken into consideration where the stock was not recorded. As such it has been stated by the Petitioner that there is no shortage of stock and that the show cause notice to recover the amount is totally misconceived and bad in law.

After the Petitioner submitted his reply, no action was taken therein till his retirement. The Petitioner retired from service on attaining the age of superannuation with effect from 31. 03.2023. Four months after his retirement, the Petitioner received a notice dated 20.07.2023 to show cause as to why a sum of Rs.10,91,452/- shall not be recovered from his retiral dues as F.C.I. has recovered an amount of Rs.27,28,630/-from the bill of Opposite Party No1-Corporation. Since the Petitioner was in-charge of the Warehouse, he is liable to bear 40% of the loss, which was quantified at Rs.10,91,452/-. In compliance to the notice dated 20.07.2023, the Petitioner again submitted his reply on 24.07.2023 referring to his earlier reply dated 17.12.2022. The Petitioner remained under the impression that the Opposite Party-Corporation would consider his case and by taking into consideration the fact that there was no shortage, they would have sanctioned and disbursed all his retiral dues. However, to the surprise of the present Petitioner, he received Office order dated 21.08.2023, issued by the Managing Director, Odisha State Warehousing Corporation, under which a sum of Rs.10,91,452/- was sought to be recovered from the retiral dues of the Petitioner and eventually the same has been recovered by the Corporation from the retiral dues of the Petitioner. Being aggrieved by such conduct of the Opposite Parties, the Petitioner has approached this Court by filing the present Writ Petition.

Learned counsel representing the Opposite Parties-Corporation on the other hand referred to the Counter Affidavit filed on behalf of the Opposite Parties and submitted that on verification of stock by the FCI and on detection of the fact that there was a shortage of physical stock, the FCI has raised a demand to the tune of Rs.27,28,630/- against the Opposite Party No.1-Corporation. Although the Opposite Parties-Corporation found that there are discrepancies in the bill raised by the FCI and sought to resolve the same, however on the basis of physical verification report of the FCI, the FCI authority did not agree to settle the matter, as a result of which the Corporation was saddled with liability to the tune of Rs.27,28,630/-.

Learned counsel for the Opposite Parties further contended that since the aforesaid dispute could not be resolved, the Corporation has been saddled with the financial liability. Furthermore, since the Petitioner was the Warehouse In-charge at the relevant point of time, therefore, the responsibility has been fixed on the Petitioner and accordingly, after serving notice to show cause, the aforesaid amount has been recovered from the retiral dues of the Petitioner. Learned counsel for the Opposite Parties further contended that in view of the agreement executed between the Corporation and the Service Provider namely, M/S Origo Commodities Pvt. Ltd. on 02.06.2022 the responsibility for storage loss is to be shared on a 60/40 basis. Since the recovery has already been made by the FCI for the storage loss, the Petitioner has been saddled with the liability of the Corporation to the tune of 40% of the total loss and accordingly, such amount has been recovered from the retiral dues of the Petitioner.

The Opposite Parties in their Counter Affidavit have also specifically admitted in Paragraph-7 with regard to the discrepancies in the physical stock verification. They have also stated that some stacks showed shortages in the number of bags and weight, other stacks had excess bags and the same has not been taken into consideration by F.C.I. during verification. Accordingly, FCI has come to a conclusion that there was actually a physical shortage of stock and a sum of Rs.27,28,630/- has been recovered from the bill of the Corporation. Although such fact was raised at the bilateral meeting with the FCI and the same was protested by the Corporation, but the FCI justified the fact of recovery by citing their Circular dated 13.01.2023. In such view of the matter, learned counsel for the Opposite Parties contended that since the Corporation was saddled with the liability to make good the aforesaid loss amount and such liability has arisen on an allegation with regard to shortage of stock of the Warehouse during the period of time when the Petitioner was in charge of the Warehouse. Therefore, it has been contended that the Opposite Parties were justified in their conduct to recover their share of liability from the person, who is responsible for such shortage as has been found by the FCI.

Heard learned counsels for the Petitioner as well as the learned counsel for the Opposite Parties-Corporation. Perused the pleadings of the respective parties on record.

Learned counsel for the Petitioner at the outset contended that the order dated 21.08.2023 passed by the Managing Director, Opposite Party No.2 is absolutely illegal and arbitrary. Further, he contended that no proceeding whatsoever has been initiated against the Petitioner, although a major financial penalty is being sought to be imposed on the Petitioner for recovery of an amount due to a loss of stock kept in the Warehouse. In the aforesaid context, learned counsel for the Petitioner, referring to the Corporation’s Regulation vide Notification dated 10.07.1985 under Annexure-7 to the Writ Petition contended that Sub-Rule (iv) of Regulation 18 provides for recovery from the pay of the employee whole or part of the pecuniary loss caused to the Corporation. He further referred to the explanation-II appended to Regulation-18 which categorically provides that the imposition of a penalty in the shape of recovery is a major penalty. As per the said Regulations, to inflict a major penalty in the shape of recovery from the pay, as has been done in the present case, the Opposite Parties should have proceeded by following the procedure laid down in Regulation-19 of the aforesaid Regulation, 1985.

Learned counsel for the Petitioner, further referring to Regulation-1985, contended that the same lays down the procedure for conducting enquiry and for imposition of major punishment. Therefore, the Opposite Parties-Corporation can only take resort to Regulation-1985 against the employees who are under their employment. So far the present Petitioner is concerned, learned counsel for the Petitioner further contended that by the time the second show cause notice was issued to the Petitioner, he had already retired from service. Further, no such proceeding, as has been prescribed in Rule-19, has been initiated against the Petitioner while he was in service. He further emphatically argued that Rule-19 does not permit for either initiation or continuation of any proceeding which was initiated during the service tenure to be continued after retirement of the employee. On such ground, learned counsel for the Petitioner further submitted that the imposition of a major punishment vide order dated 21.08.2023, under Annexure-6, is without any authority of law. As such the same is unsustainable in law and is liable to be quashed.

He further contended that even though there is no actual loss of physical stock, however, due to a faulty procedure adopted by FCI while conducting the physical verification, a wrong report has been submitted and on the basis of such wrong report, FCI has raised an illegal demand against the Corporation. In any case, learned counsel for the Petitioner further contended that it is between the FCI and the Corporation to resolve the issue and the Petitioner is in no way responsible for the loss incurred by the Opp.Party-Corporation. Moreover, no fault can be found with the Petitioner for the alleged shortage of stock as shown by the F.C.I. based on a faulty report.

Learned counsel for the Opposite Parties on the other hand contended that since the liability has been saddled on the Corporation by the FCI and demand has been made as indicated herein above, the Corporation had no other alternative but to saddle the liability on the person who was in charge of the Warehouse. He further contended that although attempts were made to amicably settle the issue in their bilateral meeting, however, the same was not adhered to by the FCI. Since the liability has been saddled on the Corporation, the Corporation has no other alternative but to recover the money from the Petitioner as per their share of the loss according to the agreement entered into between the Corporation and the Outsourcing Agency with regard to the procedure to be followed in case of loss.

Learned counsel for the Opposite Parties contended that the Petitioner was given adequate opportunity to file his reply to the show cause. In fact, the Petitioner has submitted his reply to the show cause notice issued by the Corporation. The Corporation, after a due consideration of the reply of the Petitioner, has taken a decision to saddle the liability on the petitioner as he was in charge of the Warehouse during the relevant time. On such ground, learned counsel for the Opposite  Parties  contended that  the  Opposite  Party-Corporation has not committed any illegality and that the order dated 21.08.2023 under Annexure-6 passed by the Opposite Party no.2 does not call for any interference of this Court. Accordingly, it was prayed that the present Writ Petition, being devoid of merit, be dismissed.

Having heard learned counsels appearing for the respective parties, on careful examination of the background facts as well as the respective pleadings of the parties, this Court observes that the pivotal issue involved in the present Writ Petition is with regard to the validity of the conduct of Opposite Party No.2 in issuing the show cause notice under Annexure-6 ?. Further, it is to be examined as to whether such conduct of Opposite Party no.2 is supported by any statutory authority or not ?

To get an answer to the aforesaid question this Court is required to verify the Regulation of the Corporation that was notified on 10.07.1985. The said Regulation has been prepared in exercise of power conferred by Section 42 of the Warehousing Corporation Act, 1962 with the previous sanction of the State Government. Thus, the Regulation under Annexure-7 has a statutory flavour as the same has been framed and notified in exercise of power conferred by section 42 of the Warehousing Corporation Act, 1962. In such view of the matter, there is no dispute that the aforesaid Regulation is required to be mandatorily followed by the Corporation.

On careful examination of the aforesaid Regulation under Annexure-7, this Court observes that recovery from the pay of an employee for any pecuniary loss caused to the Corporation is a punishment prescribed under Regulation-18. Further, the explanation appended to Regulation 18 reveals that such punishment is in the nature of a major penalty and to impose a major penalty, the Opposite Party Corporation is required to follow the procedure as laid down in Regulation 19 of the aforesaid Regulation, 1985.

With regard to the submissions of the learned counsel for the Petitioner that he does not come within the purview of Regulation 1985 since by the time the show cause notice was issued and the subsequent order of recovery was issued by the Managing Director of the Corporation under Annexure-6, the Petitioner was no more an employee of the Corporation and as such, the Petitioner was completely out of the purview of the Regulation, 1985. This Court is of the considered view that, in absence of a specific provision with regard to the applicability of the aforesaid Regulation to a retired employee or to initiate any Disciplinary Proceeding against a retired employee, no such proceeding could have either been initiated against the Petitioner or continued after his retirement. Thus, the order imposing the major punishment in the shape of a recovery of the amount vide letter dated 21.08.2023, under Annexure-6, is completely without jurisdiction.

In this context, this court would like to refer to a few decisions of the Hon’ble Supreme Court wherein the aforesaid position of law has been discussed. In Bhagirathi Jena v. Board of Directors, O.S.F.C., reported in (1999) 3 SCC 666, the Hon’ble Supreme Court, while dealing with a matter where disciplinary proceeding was initiated against the appellant under the Orissa Financial State Corporation Staff Regulations, 1975, but enquiry against such employee could not be completed before his retirement, the Hon’ble supreme Court held observed that no specific provision exists under the Orissa Financial State Corporation Staff Regulations, 1975 for continuance of departmental enquiry after superannuation or for conducting a disciplinary enquiry after the appellant's retirement. In the absence of any such provisions, the Hon’ble Supreme Court held that the respondent-Corporation had no legal authority to make any reduction in the appellant's retiral benefits. Once the appellant had retired from service on 30-6- 1995, there was no authority vested in the Corporation for continuing departmental enquiry and in the absence of such an authority, it must be held that the enquiry had lapsed and the appellant was entitled to full retiral benefits. Similarly in, Dev Prakash Tewari v. U.P. Coop. Institutional Service Board, reported in (2014) 7 SCC 260, the appellant has earlier challenged the continuance of disciplinary proceeding after his retirement by filing a Writ on the file of the High Court of Judicature of Allahabad, Lucknow Bench. The High Court held that there is no ground to interfere with the disciplinary proceeding and directed to complete it within four months by the impugned order dated 18-12-20092. Thereafter, the appellant filed Review Petition No. 139 of 2010 and the High Court the dismissed the same by order dated 29-3-2010. Challenging both the orders the appellant has preferred the present appeals. The Hon’ble Supreme Court dealt with a matter involving regulations of the Uttar Pradesh Cooperative Societies Employees' Service Regulations, 1975, reaffirmed the law laid down in Bhagirathi Jena’s case and held that once the appellant had retired from service on 31-3-2009, there was no authority vested with the respondents for continuing the disciplinary proceeding even for the purpose of imposing any reduction in the retiral benefits payable to the appellant. In the absence of such an authority it must be held that the enquiry had lapsed and the appellant was entitled to get full retiral benefits. The aforesaid legal position has again found support by the decision of the Hon’ble Supreme Court in State Bank of India & Ors vs. Navin Kumar Sinha bearing Civil Appeal No.1279 OF 2024 (decided on 19.11.2024), wherein it was observed in the concluding paragraphs that, a subsisting disciplinary proceeding initiated before superannuation of the delinquent officer may be continued post superannuation by creating a legal fiction of continuance of service of the delinquent officer for the purpose of conclusion of the disciplinary proceeding. However, no disciplinary proceeding can be initiated after the delinquent employee or officer retires from service on attaining the age of superannuation or after the extended period of service.

On a careful scrutiny of the provisions of Regulation 19 of the aforesaid Regulation, 1985, it is revealed that there is no such provision to permit the Corporation to initiate any proceeding against the employee after his retirement to continue the proceeding after retirement of the employee from service or to initiate such proceeding after retirement. Therefore, it is not open to the Opposite Parties-Corporation to initiate a proceeding or to continue any Disciplinary Proceeding after the employee retires from service. In the present case, no proceeding was initiated against the Petitioner, while he was in service. Although a show cause notice was issued prior to the retirement subsequently after his retirement, another show cause notice was issued to which the Petitioner has filed his reply. Further, without resorting to Regulation 19 and without conducting any enquiry or initiating any proceeding as required by the Regulations the impugned order under Annexure-6 was passed directing recovery of money from the retiral dues of the Petitioner. Moreover, learned counsel for the Opposite Parties could not cite any Regulation or authority by which the Opposite Party-Corporation would have proceeded against a retired employee for recovery from his retirement benefits under any of the Regulation of the Corporation. This Court, therefore, has no hesitation in coming to a conclusion that no Disciplinary Proceeding whatsoever was initiated against the Petitioner either while he was in service or even after his retirement.

In view of the aforesaid finding that no Disciplinary Proceeding was initiated against the Petitioner either while he was in service or after his retirement, this Court has no hesitation to hold that no such proceeding could have been initiated against the Petitioner as the Regulation, 1985 does not permit initiation of any such proceeding against an employee after his retirement. Thus, this Court holds that no proceeding whatsoever has been initiated against the Petitioner before imposing a major penalty in shape of Regulation 18(1)(iv). Moreover, no penalty under Regulation - 18 can be imposed without initiating a proceeding for imposition of a major penalty. Therefore, the impugned order dated 21.08.2023 under Annexure-6 is completely without jurisdiction and the same is liable to be quashed. Accordingly, the same is hereby quashed.

The Opposite Party-Corporation is hereby directed to refund the money, along with the interest at the rate of 12% per annum within a period of three months to the present Petitioner chargeable from the date of recovery till such payment is made.

Before parting, this Court would like to observe that a stand has been taken by the Corporation in the Counter Affidavit, which is almost similar to the one taken by the Petitioner, with regard to actual shortfall of the stock. It is further observed that the Corporation has taken a specific stand that actually there was no physical shortage of stock. Although the matter was discussed in the bilateral meeting by the FCI, however the said authority did not accept the claim of the Opposite Parties-Corporation.

Since the issue raised by the Opposite parties that imposition of penalty by the FCI is beyond the scope of the Corporation, this Court has no hesitation in granting liberty to the Opposite Party-Corporation to resort to any appropriate proceeding, if so advised, for recovery of Rs.27,28.630/- from the F.C.I.

Accordingly, the Writ Petition stands allowed, however, there shall be no order as to cost.

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