In Ms. Debjani Sengupta v. Institute of Cost Accountants of India, the Calcutta High Court on 3 May, 2019, decided on the role of internal committee proceedings, when service rules are in place and held that a harmonious reading of the The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 (“Act”) and applicable service rules should be made.

Facts: A writ petition was filed by Ms. Debjani Sengupta (“Petitioner”) challenging the memorandum issued by the Respondent No. 3 (“President”) of the Institute of Cost Accountants of India (“Institute”). The Petitioner filed a complaint of sexual harassment as per the Act dated November 17, 2016 against Respondent No. 7, alleging that he had humiliated and mentally harassed her by using abusive language, words with dual meaning and sexually coloured remarks on several occasions in the year 2015, more particularly August, 2015 and on later occasions further harassed her, by denying leave on medical grounds.

Proceedings before the Internal Committee (“IC”) commenced and on April 21, 2017, the IC gave recommendation under Section 13(3) of the Act. Thereafter, the Petitioner being aggrieved by both, the recommendation made by the IC as well as the delay on the part of the Institute in implementing the recommendation, filed a writ petition. The Learned Single Judge directed the Petitioner to prefer an appeal before the statutory authorities as per Section 18 of the Act. The petitioner approached the Deputy Chief Labour Commissioner (Central) (in short “DCLC”) in terms of Rule 11 of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Rules (“Rules”). This appeal was returned to the Petitioner, enclosing a memorandum stating that the DCLC was not the appropriate appellate authority.

The Petitioner then received a memorandum dated February 19, 2019 (“Memorandum”) issued by the President informing that the Respondent No. 7 had been issued a show cause notice calling upon him to respond and on consideration of his response, the President remitted the matter back to the IC with a direction for submission of a fresh report after consideration of the examinations, cross-examinations of the witnesses and all other submissions. Aggrieved by this Memorandum, this writ petition had been filed.

Arguments raised by the parties:

Appellant: The Petitioner challenged the Memorandum mainly on the following grounds:

1. The President was not the appellate authority and did not have jurisdiction to issue the Memorandum, remitting back the matter to the IC with a direction to file a fresh report upon consideration of the evidence, deposition of witnesses and submissions of the parties.
2. Under Section 19(i) of the Act, it was the duty of the employer to treat sexual harassment as a misconduct under the applicable service rules and impose punishment for such misconduct on the basis of the recommendation of the IC and no regular disciplinary proceeding was further required to be initiated.
3. The remedy available to the Respondent No. 7 was to prefer an appeal in terms of Section 18 of the said Act. As, he had not filed any appeal, hence the recommendation of the IC had become binding and the same could not be challenged by him before any forum.
4. The action of the President in issuing the show cause notice to the Respondent No. 7 calling upon him to answer to the findings of the IC and further action in issuing the Memorandum was contrary to law and thoroughly misconceived, apart from being violative of the principles of natural justice and was thus liable to be set aside.

Respondent: The Respondent Nos. 1 to 4 submitted that the President was the appointing authority as also the disciplinary authority under the Institute of Cost Accountants of India, Officers Service Rules, 1983 (“Service Rules”), which permitted the President to remit the matter to the inquiring authority for fresh and further inquiry. Further, there were procedural shortcomings as the complaint was not filed within 3 months from the last date of the incident. An opportunity for conciliation under Section 10 of the said Act was not given to the Respondent No. 7 and cross-examination of witnesses was also not allowed.

The learned Advocate appearing on the behalf of the Respondent No. 7 submitted that the a conjoint reading of Section 13(3) of the said Act and Rules 7 and 9 of the Service Rules, would indicate that the IC could only recommend to the employer to take action by treating sexual harassment as misconduct. He submitted that the findings of the IC were advisory in nature and were not binding. The Service Rules permitted the employee to contest the disciplinary proceedings pursuant to the recommendation of the IC, irrespective of the fact that the statutory appeal as per Section 18 of the Act had not been filed.

Ratio: The Court held that the Appellant’s first contention can be answered in the negative as it appeared that the President who was the disciplinary authority and also the appointing authority of the Respondent No. 7, in exercise of power conferred under Rule 91(viii) had remitted the matter back to the IC with a direction for submission of a fresh report after considering the examinations and cross-examinations of witness and submissions of the respective parties, had done so not as an appellate authority but, as the appointing authority.

The rest of the three contentions were answered together.

(i) With regard to whether the employer was duty-bound to follow the recommendation made by the IC, the court observed that – “From a conjoint reading of the provisions of Section 13(3) of the said Act and Rules 7 and 9, it emerges that where service rules existed, the report of the IC was a fact finding report or a preliminary report with regard to the allegation of sexual harassment and the employer was bound to then proceed under the service rules before imposing any major penalty. A harmonious reading of Sections 11, 13(3) and 13(4) of the Act would clarify the position that where no service rules existed, then the IC should proceed in such manner as may be prescribed, and parties should be given an opportunity of being heard.”

In this case, the institute has its own Service Rules. The relevant rule 91(iii) and (viii) of the Service Rules read as:-

“91(iii) Where it is proposed to hold an enquiry, the appointing authority shall frame definite charges on the basis of the allegations against the employee. The charges, together with a statement of the allegations on which they are based shall be communicated in writing to the employee, who shall be required to submit within such time as may be specified by the appointing authority not exceeding 15 days, a written statement whether he admits or denies any of or all the charges. “

“91(viii) The appointing authority, if it is not itself the inquiring authority may, for reasons to he recorded by it in writing, remit the case to the inquiring authority for fresh or further inquiry and report and the inquiring authority shall thereupon proceed to hold the further inquiry according to the provisions of these rules as far as may he.”

Thus, once the charge of sexual harassment was proved before the IC, the basis for proceeding against the accused employee for committing the misconduct of sexual harassment was already there.

(ii) With respect to the Memorandum issued by the President to Respondent No. 7, the Court observed that – Pursuant to the recommendation of the IC, the Service Rules ought to have been followed and the President acting as the appointing authority, should have initiated proceedings, from the stage of Rule 91(iii) and ought not to have issued the Memorandum straight away under Rule 91(viii). Invocation of power contained in Rule 91(viii) does not require issuance of a show-cause notice to the employee and seeking a response from the employee to the enquiry report of the IC. As such, the Memorandum is misconceived, contrary to law and contravenes the Service Rules.

(iii) With respect to whether Respondent No.7 could file an appeal, the court observed that- “It is pertinent to mention here, that Section 18 of the said Act makes it very clear that an aggrieved person had a right of appeal under the said Act without prejudice to the provisions in any other law for the time being in force. This clarifies the position that even if the Respondent No. 7 had the right to prefer an appeal against the findings of the IC before the appellate authority, as per the liberty granted by this court, yet, the respondent No. 7 had the right to contest the disciplinary proceeding, which was to be initiated under the service rules. Further, in this case, the parties have not produced any policy adopted by the Institute, treating the enquiry before the IC as an enquiry in terms of Rule 91 of the Service Rules, in case of allegations of sexual harassment. The records and the procedure adopted by the IC does not indicate that the proceedings were in accordance with the Service Rules of or that the IC was functioning as a delegate of the disciplinary authority. As per Rule 9 of the said Rules, only when there were no service rules governing the accused employee, could the IC recommend the punishment as prescribed by the said Rules.”

“The scheme of the Act does not envisage that the proceeding before the IC would be treated as a regular disciplinary proceeding before an inquiring authority in terms of the Service Rules governing an employee unless, the employer adopted a policy or framed a rule, thereby amending the existing service rules or dispensing with any of the provisions of the service rules.

Held: Thus, the appeal was partly allowed as the Memorandum was quashed and set aside both on the ground of procedural impropriety and also violation of the principles of natural justice. The President was directed to take immediate steps as indicated in Rule 91(iii) of the Service Rules, treating sexual harassment as misconduct and that disciplinary proceedings thus initiated should be concluded within a period of three months.

PAW Comment: High Court on role of internal committee has upheld the harmonious reading of the Act and applicable rules, and stated that provisions of the service rules must be correctly followed and a selective reading of the same, to the detriment of either party can not be done. Thus, it is imperative, that if service rules are applicable to an organization, the employer must ensure that entire proceeding is conducted in consonance with both, the Act and the Service Rules. However, whether the contentions that the report of the IC was vitiated due to the illegality in the procedure, was not decided in this case, as the decision of the IC was not challenged.