Departmental Inquiry vs. Criminal Acquittal: Supreme Court Upholds Employee Dismissal

The Supreme Court of India recently ruled on a crucial employment law issue regarding the dismissal of an employee based on departmental inquiry findings, despite his acquittal in a criminal trial. The case involved the Karnataka Power Transmission Corporation Limited (KPTCL) and its former employee, C. Nagaraju, who was dismissed for corruption-related misconduct. The Supreme Court overturned the High Court’s order that had reinstated the employee and upheld the employer’s right to dismiss him based on the findings of the departmental inquiry.

Background of the Case

The dispute originated in 1998 when C. Nagaraju, a Junior Engineer at KPTCL, was accused of demanding and accepting a bribe of Rs. 1,250 for providing an electrical connection. A contractor named K. Chandrasekhar lodged a complaint with the Karnataka Lokayukta police, leading to Nagaraju’s arrest in a trap operation. He was charged under Sections 7 and 13(1)(d) read with Section 13(2) of the Prevention of Corruption Act, 1988.

While Nagaraju was acquitted in the criminal trial due to prosecution witnesses turning hostile, a separate departmental inquiry conducted by KPTCL found him guilty of misconduct. The disciplinary authority, considering the seriousness of the charges, dismissed him from service in 2007. The Karnataka High Court later set aside his dismissal, leading to KPTCL’s appeal before the Supreme Court.

Arguments of the Appellant (KPTCL)

KPTCL’s counsel presented the following key arguments:

• The departmental inquiry and the criminal trial operated in separate legal domains and had different standards of proof.
• Nagaraju’s acquittal in the criminal case was due to lack of evidence, not because he was proven innocent.
• The inquiry officer in the departmental proceedings found strong evidence, including witness testimonies, proving Nagaraju’s misconduct.
• The Lokayukta police caught Nagaraju red-handed accepting the bribe, and his guilt was well established.
• There was no legal or procedural bar preventing KPTCL from dismissing an employee on the basis of departmental inquiry findings.

Arguments of the Respondent (C. Nagaraju)

C. Nagaraju’s counsel countered with the following arguments:

• Since Nagaraju was acquitted in the criminal trial, he should not have been dismissed from service.
• The Karnataka High Court correctly observed that an order of dismissal could not be passed when the employee had been honorably acquitted.
• The same set of facts and evidence were used in both the criminal trial and the departmental inquiry, making the latter’s findings unsustainable.
• The High Court relied on past Supreme Court rulings in Captain M. Paul Anthony v. Bharat Gold Mines Ltd. and G.M. Tank v. State of Gujarat, which held that an employee should not be punished after being acquitted in a criminal case.

Supreme Court’s Analysis

The Supreme Court carefully reviewed the case and highlighted several important legal principles:

• The standard of proof in a criminal trial is ‘beyond a reasonable doubt,’ whereas, in a departmental inquiry, it is based on ‘preponderance of probabilities.’
• Acquittal in a criminal case does not automatically entitle an employee to relief in disciplinary proceedings.
• Since prosecution witnesses turned hostile in the criminal trial, it did not mean that Nagaraju was innocent; rather, the criminal case failed due to lack of cooperation from witnesses.
• In the departmental inquiry, independent evidence was presented and evaluated, leading to Nagaraju’s guilt being established.
• The High Court had misapplied past Supreme Court rulings, as those cases involved employees who were acquitted on merits, whereas in this case, the acquittal was due to lack of evidence.

Final Judgment

The Supreme Court ruled in favor of KPTCL, setting aside the High Court’s order and restoring the dismissal of C. Nagaraju. The judgment stated:

“It is settled law that the acquittal by a Criminal Court does not preclude a Departmental Inquiry against the delinquent officer. The Disciplinary Authority is not bound by the judgment of the Criminal Court if the evidence that is produced in the Departmental Inquiry is different from that produced during the criminal trial.”

The Court emphasized that an employer has the right to discipline employees based on internal inquiries, even if criminal proceedings fail due to lack of evidence.

Implications of the Judgment

This ruling has significant implications for employment law and disciplinary proceedings. Key takeaways include:

• Employers can proceed with disciplinary action regardless of the outcome of criminal trials.
• Departmental inquiries have a lower standard of proof compared to criminal cases.
• Public servants and government employees can be dismissed if found guilty in a departmental inquiry, even if acquitted in a criminal court.
• The judgment reinforces the importance of maintaining ethical standards in public service.

The Supreme Court’s decision strengthens employers’ ability to uphold discipline while ensuring that departmental inquiries remain independent of criminal proceedings.

Petitioner Name: Karnataka Power Transmission Corporation Limited.
Respondent Name: C. Nagaraju & Another.
Judgment By: Justice L. Nageswara Rao, Justice Hemant Gupta.
Place Of Incident: Mysore, Karnataka.
Judgment Date: 16-09-2019.

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