Disciplinary action against an employee for conviction in a criminal case is not barred due to the suspension of sentence: SC

Approach of Art.136 Cannot Be Adopted While Deciding Petitions by The High Court Under Art.227: SC

The Supreme Court on an appeal filed by the Life Insurance Corporation of India held that the employer is not barred from initiating disciplinary action against its employee who was held guilty of misconducton the ground of suspension of sentence.

Brief facts:

The employee was appointed as Probationary Development officer by the Life Insurance Corporation of India on 27th September, 1990 and his service was confirmed in the month of December 1990. In the year 1996 the employee was charged for professional misconduct and disciplinary inquiry was duly initiated against the employee. On 17th April, 1997, the inquiry officer submitted his report stating that the employee has duly accepted the charges against him. Hence the LIC issued a show cause notice under regulation 39(1)(d) calling upon him to state why the penalty of reducing his basic pay to the minimum of the time scale not to be imposed. Subsequently the disciplinary committee held the employee guilty of misconduct and the penalty was imposed accordingly.

While so, criminal proceedings was also initiated against the employeeby the CBI under section 120 B, 420, 467, 468 and 471 of IPC along with Sections 13(1)(d) and 13(2) of the Prevention of Corruption Act. On 28th July, 2014 the CBI convicted the employee of all the offences charged against him and imposed fine of Rs. 5000 per offence and two years rigorous imprisonment. On 21st August, 2014, the employee filed an application before the High Court praying suspension of sentence. The application was duly ordered by the learned single bench along with certain conditions.

Meanwhile, LIC once again issued a show cause notice under Regulation 39(4)(i) of the 1960 Regulations calling upon him to state why he should not be removed from service based on the conviction by the CBI.The said notice was challenged by the employee before the High Court of Gujarat, wherein the learned single bench judge vide its judgment dated 11 July 2017 uphold the legality of the notice.

Aggrieved by the said order the employee preferred an appeal before the division Bench of the High Court of Gujarat, wherein the bench restrained the LIC from taking any action against the employee till the disposal of the application filed by the employee for suspension of sentence. Hence the present appeal was filed.

Key features:

1. The CBI convicted the employee for the charges against him under the various provisions of Prevention of corruption Act and Indian Penal Code.

2. The employee filed an application before the Learned High court for Suspension of sentence and not against his conviction.

3. The single bench of Gujarat High Court upheld the validity of the show cause notice to suspend the employee from service stating that the notice was issued based on his conviction by the CBIwhich was not challenged before the High Court.

4. However the division bench of the Gujarat High Court reversed the finding of the single bench judge and restrained the LIC from removing the employee from service.

On 25th February, 2020, the appeal was listed before the Supreme Court Bench comprising Justice Dr Dhananjaya Y Chandrachud and Justice Hemant Gupta. The bench held that the notice issued by LIC as legal stating that the show cause notice for removal of the employee was issued following his conviction and hence LIC was acting within its jurisdiction. The Division bench of the Supreme Court upheld the judgment passed by the learned Single Bench Judge of the Gujarat High court and thereby setting aside the order passed by the Division Bench of Gujarat high Court. The appeal filed by the LIC against the order of the Division bench of High Court of Gujarat was duly ordered.

Edited by J. Madonna Jephi

Approved & Published – Sakshi Raje


Civil Appeal No. 1804 of 2020, Supreme Court of India, order dated 25th February, 2020.