When Mr Sai was the procurement manager of the Uttar Pradesh Co-operative Federation Limited, he was tasked with buying paddy from farmers to send to an agro company for de-husking. Although Sai placed purchase orders for 1946.6 quintals of paddy, he only delivered 853 quintals, leaving a shortfall of 1093.6 quintals. Consequently, his employer initiated an enquiry against him.
While the enquiry regarding the said charge-sheet was still ongoing, a supplementary charge-sheet was issued against him alleging that he had embezzled Rs 2 lakh (2,00,850) by falsely reporting the purchase of 5,000 sacks of de-husked paddy for storage. The enquiry found the charges to be substantiated. As a result, he was dismissed from service and an order was given to recover the embezzled amount.
Sai contested the dismissal and recovery order in the Allahabad High Court, arguing that the enquiry was not conducted according to the established rules and violated the principles of natural justice. He claimed there was no oral enquiry, no date, place and time of enquiry was fixed, and no witness was called to prove the charges.
In its counter affidavit to the writ petition, the employer said that Sai being their employee, is governed by the provisions of U.P. Cooperative Societies Act, 1965 as well as U.P. Cooperative Societies Employees Service Regulations, 1975 and the Employees Service Rules, 1980 of U.P. Cooperative Federation Limited during the relevant period.
The employer also pointed out in court that there was material on record to indicate that he had embezzled the amount that was sought to be recovered from him. Further, the employer said, he was given ample opportunity of hearing in the enquiry.
The Allahabad High Court dismissed Sai’s appeal and upheld his punishment and said that the Disciplinary Authority before passing the impugned order had given opportunity of hearing to him and he was heard by the Disciplinary Authority, Managing Director, PCF on June 12, 2014.
The high court also observed that after considering the material on record and reply to the show-cause notice, the Disciplinary Authority by a detailed order had come to the conclusion that he was guilty of the charges levelled against him and liable to be punished by dismissal from service. The high court also said that the competent authority passed a detailed and reasoned order to award the punishment to him.
Feeling aggrieved with this order, Sai appealed to the Supreme Court.
Supreme Court order and analysis
On April 1, 2026, the Supreme court partly ruled in Sai’s favour by cancelling his dismissal and ordered a fresh enquiry.
Sai’s advocate told the Supreme Court that despite the fact that the charges levelled in the charge-sheet were denied by him, not even a single witness was examined in support of the charges and no oral enquiry was held as is required by the service rule. Therefore, the order of dismissal and consequential recovery is in the teeth of the service rules and violates the principles of natural justice.
The employer’s lawyer told the Supreme Court that there was no specific denial of the charges and therefore, examination of witnesses was not required. Moreover, the enquiry report is based on available materials and is well reasoned, therefore, the High Court was justified in dismissing the writ petition.
However, the employer’s lawyer admitted that no witness was examined in the enquiry, but contended that in response to the charge of not supplying 1093.66 quintals of paddy to the agro company, Sai’s answered evasively and that amounted to admitting the charge. Hence, it was not necessary to produce any witness to prove the charge as under Section 58 of the Evidence Act, 1872, facts admitted need not be proved.
The Supreme Court said that they can’t accept this position because there is no categorical admission of the charge by Sai.
The Supreme Court said that a departmental charge-sheet is not a plaint where an evasive reply can amount to an admission. In a departmental enquiry, unless the charge is admitted, the burden to prove the charge lies on the employer/ department. Here, there was no admission of guilt qua the charge.
Even the Allahabad High Court, in paragraph 20 of its judgment, had indicated that the writ petitioner (i.e., the employee, Sai) had denied the charges made against him.
Thus the Supreme Court said that in their view, the employer’s contention that Sai had admitted to the charges is incorrect.
The Supreme Court said that in other benches of their court in cases of Sur Enamel and Kharak Singh, followed in Chamoli District Cooperative , dealt with similar service rules as are applicable here.
From the above mentioned cases, it is now settled that unless the charged employee accepts his guilt in clear terms, an enquiry on the charges drawn against him would have to be held.
In the enquiry, the employer/department would have to take steps first to lead evidence against the workmen / delinquent charged and give an opportunity to him to cross examine those witnesses.
Only thereafter, the workmen / delinquent shall be asked whether he wants to lead any evidence and/ or submit an explanation about the evidence against him. Even in a case based solely on documentary evidence, unless the relied upon documents are admitted by the charged employee, a witness would have to be examined to prove those documents and when so examined, the witness would have to be tendered for cross-examination.
The Supreme Court said that in this case, the employer had not produced any witness in the enquiry even though the charges levelled upon Sai were denied by him. Therefore, in the court’s view, the enquiry stood vitiated. Once the enquiry stood vitiated, the consequential order of punishment/ recovery cannot be sustained.
Supreme Court order
The Supreme Court said that they cannot allow this appeal and the judgment set aside the order of the High Court. The writ petition of the appellant (Sai) was allowed to the extent indicated below.
- The order of dismissal and consequential recovery is set aside. The Federation is, however, at liberty to hold a de novo enquiry, if it so desires, within a period of six months from the date of this order.
- If the Federation does not hold de novo enquiry as permitted above, the appellant (Sai) shall be entitled to reinstatement with benefit of continuity in service including arrears of salary after adjusting suspension allowance, if any, paid already.
- In case the Federation chooses to hold an enquiry, it shall reinstate the appellant and place him under suspension till completion of the enquiry and during this period pay suspension allowance as may be payable in accordance with law.
- In case de novo enquiry is held, other service benefits including arrears of salary as well as benefits of continuity in service shall depend on the outcome of the enquiry.
- Pending application(s), if any, shall stand disposed of.
- There is no order as to costs.