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Report of Inquiry Committee pursuant to charge sheet wasn’t against principles of natural justice: HC

August 21, 2019[2019] 108 taxmann.com 256 (Delhi)
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CL : Challenge to inquiry report pursuant to charge-sheet on ground of entire disciplinary proceedings being against principles of Natural Justice was to be set aside as MD & CEO were clearly empowered and authorized under delegation of authority as well as standards of conducts and performance of HR Policy (PLL) to initiate disciplinary proceedings including issuance of charge sheet and appointment of Inquiry Committee. Section 178 has no role to play with respect to initiation of disciplinary proceedings

Facts

• Petitioner challenged inquiry report of Inquiry Committee pursuant to charge-sheet dated 21-8-2018 on ground that entire disciplinary proceedings are unconstitutional, void, wrong and against principles of Natural Justice. Further case of the petitioner was that the charge-sheet had been issued by an incompetent authority as it had been issued by Senior Manager HR; under section 178 of the Companies Act, 2013 the appointing authority of the petitioner is the Board of Directors. Since the approval of the Board of Directors was not obtained, the charge-sheet was liable to be quashed and finding of guilt by Inquiry committee on the allegedly incompetent charges was violative of principles of natural justices.

Held

• It was found that charge sheet dated 21-8-2018 was issued to petitioner and same was sent through his reporting officer i.e. Director (Technical) and was communicated by Senior Manager HR. It was duly approved by MD & CEO of the company. The initiation of disciplinary proceedings was in accordance with the applicable rules of the company, including delegation of authority Manual, HR policy amended from time to time and was also not in variance with the Companies Act 2013 and rules thereof.

• As per section 178 of the Companies Act, 2013, if any penalty of removal is imposed then the procedure prescribed under section 178 would be required to be followed. However, for minor and other penalties not envisaged under Companies Act 2013, the MD and CEO would be the competent authority. Thus if any punishment is awarded other than 4.4.3 (e) and (f) of standards of conducts and performance of the HR Policy, MD& CEO is the competent authority. If the punishment falls under 4.4.3 (e) and (f), then the MD & CEO will forward the case to the NRC under section 178 of the Companies Act, 2013, since any removal or demotion of senior management personnel category should be recommended to the board by the NRC. However, section 178 has no role to play with respect to the initiation of the disciplinary proceedings. It will come into picture only at time of imposition of penalty. Thus, MD & CEO is clearly empowered and authorized under delegation of authority as well as standards of conducts and performance of HR Policy (PLL) to initiate disciplinary proceedings including issuance of the charge sheet and appointment of Inquiry Committee and moreover Court had purused original file whereby it was established that MD and CEO had approved issuance of chargesheet.

• Applications are disposed of.

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