Can An Employee Be Thrown Out Despite 21 Years Of Service? Supreme Court Says Punishment Must Fit The Misconduct
Court
Supreme Court of India
Coram
Justice Sanjay Karol and Justice Nongmeikapam Kotiswar Singh
Case
Surekha Domaji Bele v. Executive Engineer, Testing Division, MSEDCL
Neutral Citation
2026 INSC 639
Case No.
Civil Appeal No. ___ of 2026, arising out of SLP(C) No. ___ of 2026, Diary No. 11294 of 2025
Date of Judgment
11 June 2026
Judgment By
Justice Nongmeikapam Kotiswar Singh
Court’s Decision
The Supreme Court partly allowed the appeal filed by the appellant-employee. The Court did not disturb the finding that misconduct had been proved against her. However, it set aside the dismissal order dated 12.07.2017 as wholly disproportionate and held that the disciplinary authority ought to have issued a fresh show-cause notice on punishment after the misconduct was proved before the Labour Court in de novo proceedings. The Court also set aside the direction treating the entire suspension period as punishment and directed reconsideration of monetary and service consequences in accordance with the MSEDCL Employees Service Regulations. Since the appellant had already crossed the age of superannuation, reinstatement was not ordered.
Facts
The appellant, Surekha Domaji Bele, was appointed as a Lower Division Clerk in the erstwhile Maharashtra State Electricity Board on 01.04.1985 and joined service on 02.04.1985. She was later promoted as Upper Division Clerk with effect from 11.04.1988.
Before the disciplinary action in question, disputes had already arisen between the appellant and the management. She had earlier challenged her reversion to the post of Lower Division Clerk and also challenged her transfer from Ballarsha to Warora Pole Factory. The transfer order was set aside on 24.06.2003. She had also initiated proceedings under the Payment of Wages Act and other service-related proceedings. According to the appellant, the disciplinary proceedings were a counterblast to those actions. The respondent-management denied this and stated that the proceedings were based on misconduct affecting discipline and office functioning.
On 04.09.2006, the appellant was placed under suspension pending enquiry. The suspension order alleged indiscipline, insubordination, disobedience of superior officers, tampering with official documents and negligence. The order also stated that she would be entitled to subsistence allowance as per rules and directed her to mark attendance once a week at Warora. The appellant objected to the Warora reporting condition because her earlier transfer to Warora had already been set aside.
A charge-sheet dated 19.09.2006 was issued alleging indiscipline, insubordination or misbehaviour, disobedience of superiors, tampering with official documents, negligence in discharge of duty and misuse of company property. The appellant did not file a reply but sought documents. According to her, the documents were requested on 26.11.2006 but supplied only on 18.02.2008.
The domestic enquiry was taken up in March 2008. On 25.03.2008, the appellant sought 8 to 10 days’ time to participate in the enquiry, but the request was refused. The Enquiry Officer proceeded ex parte, examined five witnesses in her absence and closed the enquiry. The Enquiry Officer submitted his report on 25.04.2008 and the management issued a show-cause notice on the same date proposing dismissal.
The appellant challenged the show-cause notice before the Labour Court in Complaint (ULP) No. 34 of 2008. On 29.11.2014, the Labour Court held that the enquiry was not fair and the finding was perverse. The Industrial Court later remanded the matter to the Labour Court and permitted the management to prove misconduct by leading evidence before the Labour Court.
After remand, the management led evidence before the Labour Court. By judgment dated 27.06.2017, the Labour Court held that misconduct stood proved and dismissed the complaint. Thereafter, on 12.07.2017, the respondent passed an order dismissing the appellant from service and also directed that the suspension period be treated as punishment.
The appellant separately challenged the dismissal order before the Labour Court in Complaint (ULP) No. 28 of 2017. The Labour Court dismissed the complaint on 08.08.2019. The Industrial Court dismissed her revision on 18.01.2023. The Bombay High Court, Nagpur Bench, dismissed her writ petition on 05.04.2024 and also rejected her review application on 11.11.2024. The appellant then approached the Supreme Court.
Issues
- Whether the dismissal order dated 12.07.2017 was passed by a competent authority.
- Whether a fresh show-cause notice on punishment was required after the misconduct was proved in de novo proceedings before the Labour Court.
- Whether the appellant’s claim for subsistence allowance during nearly eleven years of suspension required reconsideration.
- Whether the direction treating the suspension period as punishment was valid.
- Whether dismissal from service was disproportionate to the misconduct proved.
Appellant’s Arguments
The appellant argued that the Executive Engineer was not competent to dismiss her because she had been appointed by the Superintending Engineer and could not be dismissed by a lower authority.
She submitted that Regulation 88(j) of the MSEDCL Employees Service Regulations required a post-enquiry show-cause notice communicating the findings and asking the employee to show cause against the proposed punishment. According to her, the show-cause notice dated 25.04.2008 was based on the domestic enquiry, but that enquiry was later held defective. Since the misconduct was ultimately proved in de novo proceedings before the Labour Court, a fresh notice on punishment was mandatory.
She further contended that she was denied subsistence allowance from 04.09.2006 to 12.07.2017, for nearly eleven years. She argued that subsistence allowance is necessary for survival and for effectively defending disciplinary proceedings, and it could not be denied mechanically on the basis of the Warora reporting condition.
The appellant also argued that dismissal was grossly disproportionate, especially because she had rendered long service, there was no allegation of corruption, moral turpitude, financial misappropriation or pecuniary loss, and the disciplinary authority failed to consider whether a lesser punishment would meet the ends of justice.
Respondent’s Arguments
The respondent supported the orders of the Labour Court, Industrial Court and High Court. It argued that the misconduct had been proved before the Labour Court after the management led evidence. That finding was affirmed in revision and had attained finality.
The respondent submitted that no fresh show-cause notice was necessary because the earlier show-cause notice dated 25.04.2008 had already been held legal and proper by the Labour Court and Industrial Court.
On punishment, the respondent argued that the charges were serious and related to office discipline and functioning. On subsistence allowance, it relied on the condition requiring the appellant to report at Warora and submitted that she had not complied with that condition.
Analysis
The Supreme Court first held that the Executive Engineer was competent to impose punishment. The appellant was a Pay Grade-III employee and the applicable MSEDCL Service Regulations empowered officers of the rank of Executive Engineer and above to impose punishment on employees in that category. The Court also rejected the appellant’s reliance on Article 311 of the Constitution, holding that she had not established that she held a civil post under the Union or State. Therefore, the competence challenge failed.
On the fresh show-cause notice issue, the Court drew an important distinction between proof of misconduct and imposition of punishment. The misconduct finding had attained finality and was not reopened. However, the earlier show-cause notice dated 25.04.2008 was founded on the domestic enquiry, and that enquiry had later been found defective. The misconduct was ultimately proved in a different manner, through evidence led before the Labour Court after remand.
The Court held that Regulation 88(j) was significant because it expressly required the competent authority, after completion of enquiry, to communicate the findings and give the employee an opportunity to show cause against the contemplated punishment. The Court clarified that a second opportunity on punishment may not be constitutionally mandatory in every case, but where the service regulations specifically require such notice, the employer must comply.
The Court held that non-service of a fresh notice did not vitiate the misconduct finding because the appellant had participated in the Labour Court proceedings. However, punishment stood on a different footing. The disciplinary authority had to independently consider the findings which ultimately survived after remand and then apply its mind to the appropriate penalty. Since the dismissal order substantially relied on the earlier show-cause notice, whose foundation had disappeared, the dismissal order could not be sustained.
On subsistence allowance, the Court held that the appellant’s suspension lasted nearly eleven years, from 04.09.2006 to 12.07.2017. Subsistence allowance could not be treated as a routine monetary claim because it is meant to preserve the employee’s minimum means of survival and enable effective defence. The Court accepted that the reporting condition had a regulatory foundation, but held that it could not be used indefinitely to deny subsistence allowance for nearly eleven years.
The Court noted that Regulation 88(a)(ii) required review of suspension if it continued beyond six months. Since no valid review or continuation order beyond six months was shown, the respondent could not rely solely on the original reporting condition after 03.03.2007. Therefore, the appellant was held eligible for subsistence allowance from 03.03.2007 to 12.07.2017. For the first six months, from 04.09.2006 to 03.03.2007, the competent authority was directed to consider the reporting condition, the appellant’s explanation for non-reporting at Warora, the fact that her transfer to Warora had been set aside, and whether leave of absence from reporting ought to have been granted.
On treating suspension as punishment, the Court held that suspension pending enquiry is different from suspension as a substantive punishment. The appellant had initially been suspended pending enquiry, which was not itself a punishment. After dismissing her, the authority also treated the entire past suspension period as punishment. The Court held that the appellant could not be visited with both dismissal and a separate punishment of suspension for the same misconduct. The suspension period could not operate as an independent additional punishment over and above dismissal.
On proportionality, the Court observed that dismissal is the severest form of penalty in service law. It ends employment permanently, affects livelihood, may deprive the employee of past service benefits and retiral benefits, and carries a stigma affecting future employment prospects. Therefore, dismissal must be reserved for the most serious cases.
The Court noted that the misconduct proved related to indiscipline, insubordination and tampering with documents. However, the material did not show corruption, illegal gratification, moral turpitude, misappropriation of funds, proved financial loss, public scandal or conduct bringing the institution into public disrepute. The allegations appeared to arise from internal office functioning and service-related conflict. The disciplinary authority had not considered the appellant’s long service, past record, age, absence or presence of dishonesty, absence or presence of actual loss, and possibility of lesser punishment. Therefore, dismissal was held wholly disproportionate.
Precedents Relied Upon
The Supreme Court referred to S.L. Agarwal v. General Manager, Hindustan Steel Ltd., (1970) 1 SCC 177, to explain that employees of a government-controlled company do not automatically hold civil posts under the Union or State for the purpose of Article 311.
The Court referred to Khem Chand v. Union of India, AIR 1958 SC 300, to explain that reasonable opportunity includes an opportunity to make representation on why the proposed punishment should not be imposed.
The Court relied on Managing Director, ECIL v. B. Karunakar, (1993) 4 SCC 727, to emphasise the importance of giving the delinquent employee an opportunity to meet findings that may influence the disciplinary authority.
The Court referred to Workmen of Firestone Tyre & Rubber Co. of India (P) Ltd. v. Management, (1973) 1 SCC 813, to hold that where a domestic enquiry is defective, the employer may prove misconduct before the Labour Court or Tribunal by leading evidence.
The Court relied on State of Maharashtra v. Chandrabhan Tale, (1983) 3 SCC 387, O.P. Gupta v. Union of India, (1987) 4 SCC 328, and Ajay Kumar Choudhary v. Union of India, (2015) 7 SCC 291, on the importance of subsistence allowance and the need to avoid indefinite suspension.
The Court referred to Union of India v. S.C. Parashar, (2006) 3 SCC 167, to hold that separate substantive penalties cannot be combined unless the rules permit such a course.
The Court also relied on Ranjit Thakur v. Union of India, (1987) 4 SCC 611, B.C. Chaturvedi v. Union of India, (1995) 6 SCC 749, and Chairman-cum-Managing Director, Coal India Ltd. v. Mukul Kumar Choudhuri, AIR 2010 SC 75, on proportionality of punishment and judicial review of excessive penalties.
Reasoning
The Supreme Court reasoned that while the finding of misconduct had attained finality, the disciplinary authority could not mechanically impose dismissal by relying on an old show-cause notice which was based on a domestic enquiry later found defective. Once the misconduct was ultimately proved before the Labour Court in de novo proceedings, the authority had to freshly consider the surviving findings and give the appellant an opportunity to respond on punishment.
The Court held that the disciplinary authority’s failure to consider relevant mitigating factors made the dismissal unsustainable. The appellant had served for a long period, and the record did not show corruption, misappropriation, moral turpitude, financial loss or conduct causing public disrepute. Since dismissal is the harshest penalty, the authority had to examine whether a lesser penalty could meet the ends of justice.
The Court also reasoned that subsistence allowance has a distinct status under the Regulations. Even if the suspension period is later not treated as duty, subsistence allowance already paid or payable cannot be denied. The original reporting condition could be relevant for the first six months, but after six months, the suspension had to be reviewed under the Regulations. In the absence of such review, the employer could not deny subsistence allowance for the entire remaining period.
Conclusion
The Supreme Court partly allowed the appeal. It held that the finding of misconduct would remain undisturbed. However, the dismissal order dated 12.07.2017 was set aside as wholly disproportionate. The direction treating the suspension period as punishment was also set aside.
The Court directed the competent authority to issue a proper show-cause notice within four weeks from receipt of the judgment, based on the Labour Court’s findings in Complaint (ULP) No. 34 of 2008, proposing a penalty other than dismissal. The authority must then pass a reasoned order on penalty within eight weeks.
The Court further directed that the appellant’s subsistence allowance claim must be decided in two parts. For 04.09.2006 to 03.03.2007, the authority must consider the original reporting condition and the appellant’s explanation. For the period after 03.03.2007 till 12.07.2017, the appellant must be treated as eligible for subsistence allowance, and the amount must be paid irrespective of the fresh punishment imposed.
Since the appellant had already crossed the age of superannuation, the Court did not order reinstatement. Monetary and retiral consequences, if any, will depend on the fresh order passed by the competent authority under the Regulations. The Bombay High Court’s judgment dated 05.04.2024 and its review order dated 11.11.2024 were set aside.
Implications
This judgment is significant for service law and disciplinary proceedings. It clarifies that when a domestic enquiry is found defective and misconduct is later proved before the Labour Court, the employer cannot mechanically rely on the old enquiry-based show-cause notice to impose punishment. A fresh and meaningful opportunity on punishment may be necessary where the service regulations require it.
The judgment also strengthens the protection around subsistence allowance. Employers cannot keep an employee under prolonged suspension and deny subsistence allowance indefinitely by relying only on the original reporting condition, especially when the rules require review of suspension beyond six months.
Most importantly, the Supreme Court reiterated that dismissal from service is the harshest punishment and cannot be imposed as a matter of routine merely because misconduct is proved. The disciplinary authority must consider long service, past record, nature of misconduct, absence of financial loss, absence of dishonesty, and possibility of lesser punishment before imposing the ultimate penalty.
