Executive circulars cannot override established statutory service rules governing employee conduct and rights in cases of misconduct or liability.

JUDGMENT

[WA Nos.642/2025, 728/2025, 1152/2025, 1166/2025, 1168/2025, 1182/2025, 1191/2025, 1207/2025, 1432/2025, 1436/2025]

Sushrut Arvind Dharmadhikari, J.

These writ appeals filed under Section 5 of the Kerala High Court Act , 1958 arise out of the common judgment passed in WP(C) No.32713 of 2019 and connected cases whereby the learned Single Judge has disposed the writ petitions setting aside the impugned circulars.

2. The facts of W.P © No.32713 of 2019 is being taken for the purpose of deciding this bunch of appeals.

3. The brief facts of the case are that the respondent-employee was working as an Abkari Worker (Salesman) in an outlet of the appellant-Corporation at Changanasseri. During the month of August, 2018 i.e before the Onam season, a complaint was received alleging shortage in stock in different shops and a liability of Rs.53,21,973/- was sought to be demanded from the respondent as well as others who were working in the shops. Notices were issued to respondent-employees by the appellants purely based on Exts.P1 to P3 circulars issued by the Managing Director of the Corporation. The respondents had challenged the proceedings initiated against them as well as the Circulars issued by the Managing Director on the ground that the services of the workers under the appellant-Corporation is governed by the Kerala State Beverages (M&M) Corporation Limited Employees Service Rules, 1986 (for short, ‘the Service Rules’) framed by the Corporation. The Rules specifically provide for a detailed procedure when misconduct is noticed on the part of the employees of the Corporation. According to the Rules, proper enquiry is required to be conducted. Thereafter, the employee would have remedy of appeal against the order. Therefore, Exts.P1 to P3 circulars are executive instructions and therefore, the same cannot override the statutory Service Rules. The challenge to the Circulars came up before the learned Single Judge who disposed of the bunch of writ petitions by passing a detailed order in the following manner:

“i. The circular dated 20.12.2017 issued by the Managing Director of the respondent Corporation (Ext.P3 in W.P(C) No.32713 of 2019) is set aside.

ii. It is declared that the respondent Corporation cannot proceed against its employees on the basis of the afore circulars.

iii. It is further declared that the respondent Corporation can proceed for the realization of the loss suffered by the respondent Corporation from its employees, only with reference to the provisions of the Service Rules approved by the Government pursuant to G.O.(MS) No.4/86/TD dated 7.1.1986.

iv. The concluded proceedings on the basis of the circulars dated 08.04.2011, 20.12.2016, and 20.12.2017 against the employees of the respondent Corporation, who have not challenged such recovery steps, are not to be affected by the principles laid down in this judgment”.

4. Learned counsel for the appellants submitted that the learned Single Judge failed to consider the fact that Service Rules are not applicable to the matter related to fixation of liability in the retail outlet as the functioning is purely commercial. Learned Single Judge was wrong in holding that the Service Rules are having supremacy over the Circulars issued by the Managing Director as it was issued by virtue of a Government Order. The basic reason for issuing the Circulars was of realising the loss caused to the appellant-Corporation which occurred due to the malpractices and liabilities in its retail outlet. Therefore, the judgment passed by the learned Single Judge deserves to be set aside.

5. Per contra, learned counsel for the respondents opposed the prayer and submitted that it is settled legal principle that the Circulars cannot override the statutory Service Rules.

6. Heard learned counsel on both sides.

7. It is a settled