The main legal point established is the requirement for a fair and timely enquiry process, and the need for justifications in recommending severe disciplinary actions.

1. The Official Liquidator has filed a report dated 18th February, 2013 praying for sanction to terminate with immediate effect the services of Shri S.M. Shetty, company paid Group 'D' Peon. According to the Official Liquidator the misconduct against Shri Shetty has been proved considering the report of the enquiry officer and the explanation offered by Shri Shetty and it is grave and of serious nature warranting the punishment of removal from service. The Official Liquidator states that he has also considered the past record of the employee and there are no extenuating circumstances

warranting any lenient view.

2. The issue relates to handing over of certain leased assets that were in the factory site of M/s. Otoklin Plants & Equipments Limited (in liquidation) at Kandla, Gandhidham, Gujarat. Let us consider what was the act or omission or misconduct of Shri Shetty which has made the Official Liquidator to recommend the highest punishment that he could grant pursuant to the service conditions of the Company Paid Staff settled by this court from time to time, the last one being by an order dated 26th April, 1994. It will be useful to reproduce paragraph 4 (xii), (xiii) and (xv) of the said order and it reads as under :-

“(xii) No person shall be employed as a Company Paid Staff without prior sanction of this court.

(xiii) Services of the Company Paid Staff shall not be terminated without prior sanction of this court.

(xv) In case it is found that any member of the Company Paid Staff is guilty of dereliction of duty, it will be open for the Official Liquidator to take appropriate action including termination of services against such member subject to granting him an opportunity of hearing and sanction of this court.”

3. Pursuant to an order dated 10th April, 2003 this court directed the Official Liquidator to hand over leased equipments belonging to M/s. Centurion Bank Limited (CBL) through the Court Receiver. In order to comply with the order dated 10th April, 2003, the Official Liquidator vide office order dated 26th June, 2003 directed Shri S.M. Shetty, company paid Peon and Shri C.L. Saraiya, the then Junior Technical Assistant (JTA) to proceed to the factory site of M/s. Otoklin Plants & Equipments Limited at Kandla, Gandhidham, Gujarat to hand over through the Court Receiver the leased assets that belonged to CBL. The factory premises it should be noted was situated at Sector IV, Kandla Special Free Trade Zone, Kandla, which means inside a customs notified area.

4. Shri Saraiya and Shri Shetty reached the site on 1st July, 2003. When these two gentlemen reached the site, there were two representatives from the Court Receiver's office, viz., Shri P.S. Rao and Shri Mangesh Jog and two representatives from CBL, viz., Shri Srinivasan and Shri Mahesh Rane. Apart from these six persons there were representatives of the person who had purchased the equipments from M/s. Centurion Bank Limited to take delivery of the same through the Court Receiver.

5. On 1st July, 2003 Shri Saraiya and Shri Shetty then went to the office of the customs for obtaining permission to give delivery of the leased equipments to CBL through Court Receiver. The necessary permission was granted only on 2nd July, 2003 and hence the delivery commenced from 3/4th July, 2003 and it went on till 9th August, 2003. On 3/4th July, 2003 the representative of the Court Receiver – P.S. Rao who was also a valuer, identified the leased equipments by putting a mark on each of the equipment - “CBL” - denoting Centurion Bank Limited. At the time of marking, the representatives of the customs authorities were also present. Alongside there were machineries that belonged to a third party, viz., Al-Qahtani. So far so good. What happened during these 40 days period is that alongwith the leased assets that CBL were entitled to take away, CBL/its purchasers allegedly took away part of the machineries that belonged to Al-Qahtani.

6. It has been noted in the oral order dated 2