IMPORTANT POINTS
1. It is not necessary that the authority competent to impose the penalty must initiate the disciplinary proceedings and the proceedings can be initiated by any superior authority who can be held to be the controlling authority who may be an officer subordinate to the appointing authority.
2. Regulations 12 and 13 of the Employees State Insurance Corporation (Staff and Condition of Service) Regulations 1959, must be construed as conferring independent powers on the Director General and it cannot be said to be the powers and functions of the Corporation or the Standing Committee that have been delegated to the Director General by the Corporation or the Standing Committee.
3. Rule 16(2) of the Employees State Insurance (Central) Rules 1950, and the resolution of the Standing Committee, to the extent they empower the Director General to delegate the powers or duties delegated to him under any resolution of the Corporation or the Standing Committee referable to Section 94-A of the Employees State Insurance Corporation Act, are invalid but the rest of the said Rule and the resolution are valid.

Headnote:SERVICE LAW-Employees State Insurance Corporation (Staff and Condition of Service) Regulations, 1959-Regulations 12(2) and 13(1) -Respondent was employed as Insurance Manager Gr. II/ Inspector with the Corporation-Disciplinary proceedings initiated against him by Regional Director of Region-Order passed by Director General imposing penalty of reduction in rank-Challenged on basis that Regional Director was not competent to initiate disciplinary proceedings-Regional Director being officer in charge of region, was controlling officer in respect of respondents-Whether he could institute disciplinary proceedings against respondents even in absence of specific conferment of power in that regard?-(Yes)-It is not necessary that authority competent to impose penalty must initiate disciplinary proceedings-Proceedings can be initiated by any superior authority who can be held to be the controlling authority.
       Held : With regard to initiation of disciplinary proceedings by the Regional Director, we find that the legal position is well settled that it is not necessary that the authority competent to impose the penalty must initiate the disciplinary proceedings and that the proceedings can be initiated by any superior authority who can be held to be the controlling authority who may be an officer subordinate to the appointing authority. The Regional Director, being the officer in charge of the region, was the controlling authority in respect of the respondents. He could institute the disciplinary proceedings against the respondents even in the absence of specific conferment of a power in that regard. (Para 10)
       (ii) Employees State Insurance (Central) Rules, 1950-Rule 16(2)- Employees State Insurance Corporation (Staff and Condition of Service) Regulations, 1959-Regulations 12(2) and 13(1)-Validity of-Challenged-Regulations 12 and 13 must be construed as conferring independent powers on Director General- They must be treated as a valid conferment of power on Director General to delegate his powers under the said Regulations-No infirmity can be found either in Rule 16(2) or in resolution of Standing Committee empowering Director General to dele-gate any of his powers or duties under Rules or Regulations-Rule 16(2) and resolution of Standing Committee, to the extent they empower Director General to delegate powers or duties delegated to him under any resolution of Corporation or Standing Committee referable to Section 94-A, are invalid-Rest of the said Rule and resolution are valid.
       Held : Regulations 12 and 13 must be construed as conferring independent powers on the Director General and it cannot be said to be the powers and functions of the Corporation or the Standing Committee that have been delegated to the Director General by the Corporation or the Standing Committee under Section 94-A. Regulation 12(2) which empowers the Director General to specify by general or special order the authority which can also act as a disciplinary authority and Regulation 13(1) which authorises the Director General to empower by general or special order any other authority to institute disciplinary proceedings against an employee, cannot be regarded as empowering further delegation by the Director General of powers delegated to him. The Tribunal was, therefore, in error in striking down the words "or any other authority specified in this behalf by a general or special order of the Director General" in Regulation 12(2) and the words "or any other authority empowered by him by general or special order may" in Regulation 13(1) on the view that they permit further delegation by the Director General of the powers delegated to him which is impermissible. (Para 12)
       Further Held : Under Rule 16(2) the Director General has been empowered to delegate any of his powers or duties under the Rules or the Regulations or under any resolution of the Corporation or the Standing Committee, as the case may be, to any person subordinate to him. For the purpose of such delegation it is necessary for the Director General to obtain the approval of the Standing Committee. Resolution of the Standing Committee dated May 24, 1968 accords such approval to the Director General. The power of delegation under Rule 16(2) can be divided into two parts; one relating to delegation of the powers or duties under the Rules or the Regulations and the other relating to the powers and duties under any resolution of the Corporation or the Standing Committee. Insofar as the powers or duties under the Rules or the Regulations are concerned, the conferment on the Director General the power to delegate the same is not violative of the principle of sub-delegation as indicated earlier because the said powers and duties are in the nature of independent statutory powers conferred on the Director General under the Rules or the Regulations. No infirmity can, therefore, be found either in Rule 16(2) or in the resolution of the Standing Committee dated May 24, 1968 empowering the Director General to delegate any of his powers or duties under the Rules or the Regulations. The position is, however, different in respect of the powers and duties conferred on the Director General under any resolution of the Corporation or the Standing Committee. The conferment of such powers or duties under a resolution of the Corporation or the Standing Committee could be by way of delegation of the powers of the Corporation or the Standing Committee under Section 94-A of the Act and empowering the Director General to further delegate the said powers or duties would amount to sub-delegation of a power delegated to him which is impermissible in view of the law laid down in Sahni Silk Mills (supra). Rule 16(2) and the resolution of the Standing Committee dated May 24, 1968, to the extent they empower the Director General to further delegate the powers or duties delegated to him by the Corporation or the Standing Committee under a resolution referable to Section 94-A, have to be held to be invalid. (Para 13)

JUDGMENT

S.C. Agrawal, J.-

Civil Appeals Nos. 3952/1988, 3953/1988 And 1913/1989

These appeals directed against the judgment of the Central Administrative Tribunal, Bangalore Bench (hereinafter referred to as the Tribunal ) dated January 29, 1988 raise a common question relating to the validity of Rule 16(2) of the Employees State Insurance (Central) Rules,1950 (hereinafter referred to as the Rules ) and Regulations 12(2) and 13(1) of the Employees State Insurance Corporation (Staff and Condition of Service) Regulations, 1959 (hereinafter referred to as the Regulations ).

2. The Employees State Insurance Corporation (for short the Corporation ) established under the provisions of the Employees State Insurance Corporation Act, 1948 (hereinafter referred to as the Act ). Under Section 16 of the Act the Director General of the Employees State Insurance Corporation (for short the Director General ) is the Chief Executive Officer of the Corporation and is one of the principal officers. Section 17 of the Act makes provisions with regard to staff other than the Principal Officers. In sub-section (2) of Section 17 it is provided that the Corporation shall, with the approval of the Central Government, make regulations regarding the method of recruitment, pay and allowances, discipline, superannuation benefits and other conditions of service of the members of its staff. Section 94-A, wherein provision has been made for delegation of powers, provides that the Corporation, and subject to the regulations made by the Corporation in this behalf, the Standing Committee may direct that all or any of the powers and functions which may be exercised by the Corporation or the Standing Committee, as the case may be, may, in relation to such matters and subject to such conditions, if any, as may be specified, be also exercisable by any officer or authority subordinate to the Corporation. Sub-section (1) of Section 95 of the Act empowers the Central Government to make rules not inconsistent with the Act for the purpose of giving effect to the provisions thereof. Under clause (d) of sub-section (2) of Section 95 such rules may provide for the powers and duties of the principal officers and the conditions of their service. Sub-section (1) of Section 97 empowers the Corporation to make regulations not inconsistent with the Act and the rules made thereunder for the administration of the affairs of the Corporation and for carrying into effect the provisions of the Act. Under clause (xxi) of sub-section (2) of Section 97 such regulations may provide for the method of recruitment, pay and allowances, discipline, superannuation benefits and other conditions of service of officers and servants of the Corporation other than the principal officer.

3. The Rules have been framed by the Central Government in exercise of the powers conferred by Section 95 of the Act. Rule 16 relating to the powers and duties of the Director General is as under :-

"Rule 16. Powers and duties of the Director General.-(1) The powers and duties of the Director General shall be-

(i) to act as the Chief Executive Officer of the Corporation;

(ii) to co-ordinate, supervise and control the work of the other Principal Officers;

(iii) to convene, under the orders of the Chairman, meetings of the Corporation, the Standing Committee and the Medical Benefit Council in accordance with the Act and the Rules and to implement the decisions reached at the meetings;

(iv) to enter into contracts on behalf of Corporation in accordance with the Act or the Rules or Regulations made thereunder, or the general or special instructions of the Corporation or the Standing Committee;

(v) to furnish all returns and documents required by the Act or the Rules to the Central Government and to correspond with the Central Government and the State Governments upon all matters concerning the Corporation;

(vi) to undertake

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1996 Supreme(SC) 1013

Cases Referred (5)