Supreme Court sets aside MSEDCL clerk's dismissal as disproportionate, orders fresh penalty

A Bench of Justices Sanjay Karol and Nongmeikapam Kotiswar Singh set aside the dismissal of an MSEDCL clerk as disproportionate while leaving the misconduct finding intact and ordering subsistence allowance.

The Supreme Court has set aside the dismissal of Surekha Domaji Bele, a clerk with the Maharashtra State Electricity Distribution Company Limited (MSEDCL), holding the penalty wholly disproportionate to the proved misconduct. The judgment, delivered on 11 June 2026 by Justices Sanjay Karol and Nongmeikapam Kotiswar Singh, allows the appeal in part. It leaves the finding of misconduct undisturbed but directs the competent authority to consider a punishment other than dismissal after issuing a fresh show-cause notice on penalty. The Court also held that treating nearly eleven years of suspension as additional punishment was impermissible, and that the appellant must be paid subsistence allowance for the bulk of the suspension period. The Bench reasoned that once the domestic enquiry was found defective and misconduct was proved afresh before the Labour Court, the disciplinary authority could not impose dismissal by relying on the earlier notice.

How a two-decade career ended in dismissal

Bele was appointed a Lower Division Clerk in the erstwhile Maharashtra State Electricity Board in 1985 and promoted to Upper Division Clerk in 1988. She had served for more than two decades before the disciplinary action in question began.

The record showed earlier service disputes. She was reverted to Lower Division Clerk in 1995, which she challenged, and transferred from Ballarsha to the Warora Pole Factory in 2002, a transfer set aside on 24 June 2003. She also pursued proceedings under the Payment of Wages Act. Her case was that the later disciplinary action was a counterblast to these proceedings; the management maintained the action rested on acts of misconduct affecting discipline and office functioning.

She was suspended on 4 September 2006 and charge-sheeted on 19 September 2006. The charges alleged indiscipline, insubordination, disobedience of superior officers, tampering with official documents, negligence and misuse of company property. The domestic enquiry proceeded ex parte after her request for further time was declined, and an enquiry report followed in April 2008, leading to a show-cause notice proposing dismissal dated 25 April 2008.

The defective enquiry and the de novo route

The Labour Court, by order dated 29 November 2014, held the enquiry unfair and the finding perverse. The Industrial Court set that order aside in August 2015 and remanded the matter, permitting the management to prove misconduct by leading evidence before the Labour Court rather than holding a fresh domestic enquiry.

After remand, the Labour Court held the misconduct proved by judgment dated 27 June 2017. The management then passed the dismissal order dated 12 July 2017, also directing that the suspension period be treated as punishment. The dismissal order recorded that the appellant had not replied to the 25 April 2008 show-cause notice.

The Court drew a sharp distinction here. The misconduct finding attained finality, but its surviving foundation was the post-remand adjudication before the Labour Court, not the discarded domestic enquiry report. The dismissal nonetheless relied substantially on the earlier notice, which was rooted in that defective enquiry.

Competence of the Executive Engineer upheld

Bele argued she was appointed by the Superintending Engineer and could not be dismissed by the Executive Engineer, a lower post. She also invoked Article 311(1).

The Court rejected this. It found that under the Service Regulations, Schedule ‘C’ placed Pay Grade-III employees under the disciplinary authority of an officer of the rank of Executive Engineer or above. On Article 311(1), the Bench applied S.L. Agarwal v. General Manager, Hindustan Steel Ltd. (1970), holding that a corporation with distinct legal personality is not a Government department merely because of Government ownership. Bele had not established that she held a civil post under the Union or State, so the constitutional protection did not apply.

Why a fresh notice on punishment was required

The central holding concerned Regulation 88(j) of the MSEDCL Service Regulations, which requires a post-enquiry notice communicating findings and calling on the employee to show cause against the contemplated punishment. The Court accepted, citing Workmen of Firestone Tyre & Rubber Co. (1973), that an employer may prove misconduct before the Labour Court when a domestic enquiry is defective. But that principle operates only at the stage of proving misconduct.

The Court held that the disciplinary authority still had to consider the findings that ultimately survived and apply its mind to the penalty. The dismissal order proceeded substantially on the footing that a notice had issued and no explanation was received — an approach that did not reflect independent consideration of the post-remand findings or of factors relevant to quantum.

The Bench was careful about prejudice. Since Bele was a party to the Labour Court and Industrial Court proceedings, absence of a fresh notice did not vitiate the finding of guilt. But punishment stood “on a different footing.” The seven days under the 2008 notice had long expired and its basis no longer existed, so a fresh notice on the proposed punishment was required.

Subsistence allowance for nearly eleven years

Bele was denied subsistence allowance from 4 September 2006 until dismissal on 12 July 2017. The management relied on the reporting condition in the suspension order, which required weekly attendance at Warora. The Court treated subsistence allowance as a means of survival and effective defence, citing State of Maharashtra v. Chandrabhan Tale (1983), O.P. Gupta v. Union of India (1987) and Ajay Kumar Choudhary v. Union of India (2015) on the impropriety of indefinite suspension.

Reading Regulation 88(a)(i), (ii) and (iii) together, the Court held that the reporting condition could not justify mechanical denial of allowance for eleven years. Regulation 88(a)(ii) required review where suspension continued beyond six months. No order reviewing or validly continuing the suspension beyond six months was shown.

The Court accordingly split the claim. For 4 September 2006 to 3 March 2007, the authority must consider the reporting condition, the explanation for non-reporting at Warora, the effect of the set-aside transfer, and whether leave of absence ought to have been granted. For the period after 3 March 2007 till 12 July 2017, Bele was to be treated as eligible for subsistence allowance, protected under Regulation 88(a)(v) even though the suspension was treated as punishment.

No double punishment for the same misconduct

On treating the suspension period as punishment, the Court distinguished suspension pending enquiry from suspension as a substantive penalty. Bele's 2006 suspension was the former. Relying on Union of India v. S.C. Parashar (2006), the Bench held that where the rules prescribe distinct penalties, an authority cannot impose an amalgam of separate substantive penalties for the same misconduct unless the rules authorise it.

The Court held Bele could not be visited with both dismissal under Regulation 91(2)(g) and a separate suspension penalty under Regulation 91(2)(d) for the same misconduct. The direction treating the suspension period as punishment was set aside as an independent additional penalty.

Dismissal found disproportionate

On proportionality, the Court declined to reclassify the proved charges as minor lapses under Schedule A, since they were framed under Schedule B and the Labour Court had found heads such as indiscipline, insubordination, disobedience and tampering with documents proved. But the finding of guilt did not settle the penalty.

Citing Ranjit Thakur v. Union of India (1987), B.C. Chaturvedi v. Union of India (1995) and Mukul Kumar Choudhuri (2010), the Court held a punishment that shocks the conscience invites judicial scrutiny. It noted the material did not show corruption, illegal gratification, moral turpitude, misappropriation or proved pecuniary loss, and that the allegations arose from internal office functioning. With long service from 1985 and no allegation of dishonesty, the authority had failed to weigh the appellant's service record, age, and the possibility of a lesser penalty.

Order

The appeal was partly allowed. The Court set aside the second punishment of treating the suspension period as punishment, and set aside the dismissal order dated 12 July 2017 as wholly disproportionate, while leaving the finding of misconduct undisturbed. The competence challenge was rejected.

The competent authority was directed to issue, within four weeks, a proper show-cause notice based on the Labour Court's findings in Complaint (ULP) No. 34 of 2008 proposing a penalty other than dismissal, and to pass a reasoned order on penalty within eight weeks. It was further directed to determine the subsistence allowance claim in the two parts indicated, with the amount to be paid irrespective of the nature of punishment finally imposed.

As Bele had crossed the age of superannuation, no reinstatement was directed; monetary and retiral consequences would abide by the fresh order. The judgment and order dated 5 April 2024 of the Bombay High Court, Nagpur Bench, in Writ Petition No. 1200 of 2023, and the order dated 11 November 2024 in MCA No. 357 of 2024, were set aside in those terms.