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Disciplinary Action Against Govt. Employee For Conviction In Criminal Case Not Barred Due To Suspension Of Sentence

In Life Insurance Corporation of India vs Mukesh Poonamchand Shah, was found guilty by a CBI Court in 2014 for offences under Sections 13(1)(d) and 13(2) of the Prevention of Corruption Act and Section 120B read with Sections 420, 467, 468 and 471 of the Penal Code. The employee was served with a show cause notice by the LIC proposing to impose the penalty of removal from service in view of his conviction by the Special Judge, CBI. This was challenged by the employee by filing a writ petition on the ground that disciplinary action cannot proceed during the pendency of criminal appeal. The single bench did not accept this and dismissed the writ petition. In further appeal by him, the division bench allowed the plea, restraining LIC from acting against him till his criminal appeal is disposed of. Challenging this, the LIC approached the SC.

At the outset, the SC noted that only the sentence has been suspended in the criminal appeal, and not the conviction. The Court also noted that Regulation 39(4) of the Life Insurance Corporation of India (Staff) Regulations 1960 enabled the authority to take action against the employee where a penalty is imposed on an employee on the grounds of conduct which had led to a conviction on a criminal charge.

The bench also referred to the decision in Dy Director of Collegiate Education (Admn) v S Nagoor Meera (1995) 3 SCC 377 which held that proceedings against a government servant who has been convicted by a criminal court is not barred merely because the sentence or order is suspended by the appellate court. In that decision, the Court specifically disapproved of the view that until the appeal against the conviction was disposed of, action under clause(a) of the second proviso to Article 311(2) was not permissible.


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