2009 Supreme(SC) 547

2009(3) Supreme 136
SUPREME COURT OF INDIA
R.V. Raveendran and Markandey Katju, JJ.
National Aviation Company of India Ltd. — Appellant
versus
S.M.K. Khan — Respondent
Civil Appeal No. 1622 of 2009
(Arising out of SLP [C] No.21290/2007)
Decided on : 24-03-2009

IMPORTANT POINT
Compulsory retirement is neither a punishment nor considered to be stigmatic.

Headnote:(a) Service Law – Compulsory retirement – An order of compulsory retirement in pursuance of a rule/regulation which enables the competent authority to prematurely retire an employee, on the formation of a bona fide opinion that continuation of the employee in service will not benefit the institution or be in the interest of the institution, on review of the performance/service record of the employee, on the employee attaining the specified age or completing the specified period of service, is valid and not open to challenge – It is neither a punishment nor considered to be stigmatic – Where the compulsory retirement, is not by way of punishment for a misconduct, but is an action taken in pursuance of a valid condition of service enabling the employer to prepone the retirement, the action need not be preceded by any enquiry and the principles of natural justice have no application – The proper approach of the court would be to consider whether the order is sustainable with reference to the requirements of the relevant rule, rather than examining whether the order could also be construed as a punishment for misconduct. (Para 6)

        (1992)2 SCC 299; (1996)4 SCC 504; (1997)6 SCC 228; (2001)3 SCC 389; (2005)6 SCC 224 – Relied upon.

        AIR 1977 SC 2411 – Distinguished.

        (b) Service Law – Compulsory retirement – “Public interest” is used in the context of compulsory retirement of government servants while considering service under the state The concept of public interest would get replaced by `institutional interest’ or `utility to the employer’ where the employer is a statutory authority or a government company and not the government. (Para 9)

        (c) Service Law – Compulsory retirement – Show cause under the rules for compulsory retirement cannot be treated as charge memo to invoke principles of departmental proceedings and natural justice – An employee can be retired compulsorily even without such notice. (Para 11)

       Facts of the case :

        1. The appellant is the successor of Indian Airlines Ltd.

        2. On 12.9.1966 the respondent joined IAL as a Security Assistant. His work was unsatisfactory and several warnings and minor punishments were given for insubordination, indiscipline, negligence, sleeping on duty etc. He was also chargesheeted in regard to the repeated acts of misconduct and was imposed the punishment of demotion to the post of Chowkidar on 26.5.1971. Even thereafter his service was unsatisfactory resulting in several reprimands and warnings. He was however again appointed as Security Assistant with effect from 17.8.1990, in the normal process of recruitmnent, under internal selection. He was also given the benefit of a time bound promotion on 6.7.1998. When he attained the age of 55 years his case was reviewed to consider whether he should be continued in service beyond the age of 55 years. In view of the unsatisfactory service record, on review, the competent authority, issued a notice dated 11.5.1998 proposing to retire him from service with effect from 10.8.1998. The said letter referred to the poor performance and unauthorized absence in the years 1994 to 1997.

        3. The competent authority communicated his decision to retire the respondent from service as at the close of work on 10.8.1998.

        4. However the competent authority sent a letter dated 8.8.1998 stating that respondent will be continued in service for a specific period of one year, beyond 55 years, and that retention beyond one year would be subject to the outcome of review that will be carried out after monitoring his attendance and performance closely.

        5. However, the respondent’s service continued to be unsatisfactory and his unauthorized absences continued. The competent authority passed an order dated 22.6.1999 compulsorily retiring the respondent as at the close of work on 26.8.1999.

        6. The Tribunal held that the IAL management was justified in compulsorily retiring the respondent with effect from 26.8.1999 and respondent was not entitled to any relief.

        7. A learned Single Judge of the High Court set aside the award of the Tribunal and the order of compulsory retirement.

        8. An intra-court appeal filed by IAL was dismissed

       Finding of the Court :

        High Court erred in treating the show cause notice as charge memo and invoking principles of natural justice.

       Result : Appeal allowed.