M/S GOA SHIPYARD LTD. versus BABU THOMAS

Citation: [2007] 7 S.C.R. 830 · Decided: 30-05-2007 · Supreme Court of India · Bench: H.K. SEMA · Disposal: Appeal(s) allowed

Judgment (excerpt)

A 
MIS GOA SHIPYARD LTD. 
..). 
v. 
;.._-
BABU THOMAS 
MAY 30, 2007 
B 
(H.K. SEMA AND R.V. RA VEENDRAN, JJ.] 
Goa Shipyard Officers' Conduct Discipline and Appeal (CDA) Rules, 
f_ 
1979-Amendment thereof substituting for Committee of Directors appointed 
c 
by Board of Directors (Board) General Manager/Functional Directors as 
Disciplinary Authority and Chairman-cum-Managing Director (CMD) as 
Appellate Authority-Employee dismissed by CMD and same confirmed on 
appeal by him to Board as Appellate Authority-However, High Court holding 
amendment was ineffective as did not mention date from which it would be 
effective as prescribed by Rule 41 ofCDA Rules, and since under-unamended 
• 
D Rules, Board was Disciplinary Authority, dismissal by CMD, a lower authority, 
was without authority-Correctness of-Held-Rule 41 was complied with 
since approval of amendment by circulation of its draft by majority of Board 
_i, 
of Directors was ratified subsequently by Board's resolution mentioning its 
coming into effect from the date when the same were approved by majority 
of Directors Board of Directors could subsequently ratijj; an invalid act and 
E validate it retrospectively-Employee was not denied right of appeal and no 
prejudice caused to him as dismissal order was of CMD and appeal there 
from to Board was dismissed after independent consideration with detailed 
order and application of mind 
F 
The respondent was appointed as Joint Manager (Security) by Chairman 
and Managing Director (CMD) of appellant company. He was caught red 
handed by C.l.D./Crime Branch of Police while demanding illegal gratification 
from contractor employed by the appellant. He was placed under suspension 
in contemplation of the disciplinary proceedings. Charge were levelled against 
him and an Enquiry Officer was appointed. 
G 
The Conduct and discipline of all officers of the appellant was governed 
by the Goa Shipyard Officers' Conduct, Discipline and Appeal (CDA) Rules 
1979. An amendment was made to these Rules to substitute the General 
Manager/Functional Director as Disciplinary Authority in place of Committee 
,,., 
of Directors appointed by Board of Directors (Board), and Chairman-cum-
H 
830 
\ • 
1 
GOA SHI PY ARD LTD. v. BABU THOMAS 
831 
·L 
· Managing Director (CMD) as Appellate Authority in place of board for A 
-,l 
imposing major·penalties in the cases of officers upto and inclusive of 
Managers. 
The inquiry Officer completed the inquiry and submitted his report. A 
show Cause Notice was issued on 5.10.1996 to the respondent as to why that 
Report and its findings should not be accepted. After examining the reply B 
thereto, the respondent was dismissed from service by the Chairman-cum-
Managing Director on 21.1.1997. The respondent's appeal before the Appellate 
Authority the Board, was rejected and it confirmed his dismissal. Aggrieved 
thereby the respondent preferred a Writ Petition. It was disposed of by High 
Court on a preliminary objection that the amendment to CDA Rules by Board c 
had not come into effect since it did not mention the date from which it would 
be effective, as prescribed by Rule 41 ofCDA Rules. Under un-amended CDA 
Rules, the Board was the Disciplinary Authority, therefore dismissal order 
by CMD, a lower authority, was without authority. Hence the present appeal 
by special leave. 
D 
Appellant contended that (i) the draft of the amendment to the CDA Rules 
I 
.J_ 
was circulated and approved by majority of the six Mem hers of Board of 
Directors on 8.1.1996 and given effect from that dated; (ii) this was ratified 
by Board of Directors resolution on 18.3.1998 with clarification of coming 
into effect date of amendment being 8.1.1996. 
E 
Respondent contended that under the amended CDA rules the appellate 
authority is the Chairman and Managing Director but as the major penalty 
has been imposed by the Chairman & Managing Director, he cannot act as 
an Appellate Authority and therefore the respondent has lost one form of 
remedy available to him. 
F 
_, 
Allowing the appeal, the Court 
HELD: 1.1. Having regard to Board's resolution dated 18.3.1998, it 
should be taken that the amendment of CDA Rules by Circular Resolution 
No. 13/1995, itself provided that it would take effect from 8.1.1996 (the date G 
on which the same were approved by the majority of Directors). Therefore, 
Rule 41 of the CDA Rules that the amendment will come into effect from the 
date stated therein is fully complied with. I 

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