Service matter - Senior manger was awarded with punishment of reducing him in two stages in pay scale with cumulative effect as the charge one was partly proved after consultation with CVC - High court set aside the same and further directed to give promotion - Apex court partly allowed the appeal and partly set aside the order of High court as his record is not satisfactory one , High court can not give such direction for promotion =
Division Bench of Punjab and Haryana High
Court in Civil Writ Petition No.18847 of 2001, allowing the said Writ
Petition filed by the respondent, a Senior Manager in the appellant-bank.
That judgment and order quashed the disciplinary order passed by the
appellant-bank reducing him in two stages in pay scale with cumulative
effect and also directed that he be considered for further promotion.=
“Charge No.1 – Respondent had unauthorisedly purchased 3rd party
cheques/drafts of huge amount aggregating to Rs.45.23 crores for
a number of parties much beyond his discretionary powers of
lending without completing pre-sanction formalities in violation
of head office guidelines. Thus he violated Regulation 3(i) of
Oriental Bank of Commerce Officer Employees (Conduct)
Regulation, 1982.
Charge No.2 – Respondent had released advance under the Prime
Minister Rojgar Yojna, and unauthorisedly insisted such
borrowers to provide collateral securities in the shape of
immovable property and guarantee in violation of the above
scheme.”
As per the head office circular, the discretionary
powers of the Branch Manager at the relevant time were up to Rs.30 lacs for
purchasing bank drafts and government cheques, and up to Rs.1.5 lacs for
third party cheques. As against this provision, the respondent had
purchased cheques/drafts aggregating to Rs.45.23 crores as per the details
produced in the inquiry report. This was done without any authorization,
and particularly when the authority of the respondent in this behalf was
placed under abeyance.
- were ratified and confirmed by the higher authorities.
Charge-1 is held as partly proved.”
Thus, the inquiry officer had held that the acts of omission and commission
on the part of the respondent were essentially in the nature of procedural
lapses. He held that the charge of lack of integrity had not been
substantiated. Thus, charge No.1 mentioned above was, partly proved.
As far as charge No.2 is concerned, it was alleged therein that
the respondent had released advances under the Prime Minister Rojgar Yojna,
and for that insisted on the borrowers to provide collateral
securities/guarantees of third party. The inquiry officer, however, noted
that the prosecution had not placed on record any single primary document
of the collateral securities/guarantees of third party to prove that part.
He, therefore, held that charge No.2 was not proved.
The Chief Vigilance Officer
thereafter sent a letter to the disciplinary authority that the
Central Vigilance Commission had advised to impose a major penalty of
reduction of two stages in pay scale, and thereupon the order came to be
passed on 27.10.1999 imposing the punishment of reduction of two stages in
pay scale.
The High Court essentially relied upon the judgment and order
rendered by this Court in the case of Nagaraj Shivarao Karjagi vs.
Syndicate Bank Head Office, Manipal reported in AIR 1991 SC 1507. In that
matter also the bank had acted as per the advice of the Central Vigilance
Commission. The punishment was interfered by this Court. In paragraph 19
of its judgment, this Court observed as follows:-
“19………..The punishment to be imposed whether minor or major depends
upon the nature of every case and the gravity of the misconduct
proved. The authorities have to exercise their judicial
discretion having regard to the facts and circumstances of each
case. They cannot act under the dictation of the Central
Vigilance Commission or of the Central Government. No third
party like the Central Vigilance Commission or the Central
Government could dictate the disciplinary authority or the
appellate authority as to how they should exercise their power
and what punishment they should impose on the delinquent
officer. (See. De Smith’s Judicial Review of Administrative
Action, Fourth Edition, p. 309). The impugned directive of the
Ministry of Finance is, therefore, wholly without jurisdiction
and plainly contrary to the statutory Regulations governing
disciplinary matters.”
Apex court conclusion :
Mr. Bhatt,
learned senior counsel for the appellant submitted that the bank was
required to refer the matter to the CVC which is constituted under the
Central Vigilance Commission Act, 2003.
Regulation 19 of 1982 Regulations
framed thereunder makes it obligatory whenever there is a vigilance angle
involved. This regulation reads as follows:-
“19. Consultation with the Central Vigilance Commission: The Bank
shall consult the Central Vigilance Commission wherever
necessary, in respect of all disciplinary cases having a
vigilance angle.”
14. That apart, he submitted that the bank had arrived at its
decision on its own, and not because of any dictate by the CVC.
We have also been informed that the respondent was considered
for promotion once again in the year 2005, and not found fit for the
promotion. Thus, the bank had considered the respondent after the impugned
judgment which was in favour of the respondent.
We are not concerned as
such with this subsequent consideration, but this is only to point out that
the bank had not declined to consider him.
We are of course concerned with
the direction in the impugned judgment to consider him once again, on the
basis of the material prior to the judgment.
Inasmuch as the record of the
respondent was not satisfactory, in our view, there was no occasion for the
High Court to give any such direction on the footing that the respondent
was denied the consideration only because he had suffered a punishment.
That inference was not called for.
20. In the circumstances, we allow this appeal only in part.
Whereas the judgment and order of the High Court setting aside the
punishment will remain, the direction to consider him for promotion, and
give him benefits on that footing will have to be set aside, which we
hereby direct. The respondent will however get the monetary benefits on
the footing that the said punishment is quashed.
21. Appeal is, therefore, allowed in part as above. Parties will
bear their own costs.
2014(Feb.Part) judis.nic.in/supremecourt/filename=41263
H.L. GOKHALE, J. CHELAMESWAR
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 3081 OF 2006
Oriental Bank of Commerce & Ors. … Appellant (s)
Versus
S.S. Sheokand & Anr. … Respondent (s)
J U D G E M E N T
H.L. Gokhale J.
This Civil Appeal seeks to challenge the judgment and order
dated 16.3.2004 rendered by a Division Bench of Punjab and Haryana High
Court in Civil Writ Petition No.18847 of 2001, allowing the said Writ
Petition filed by the respondent, a Senior Manager in the appellant-bank.
That judgment and order quashed the disciplinary order passed by the
appellant-bank reducing him in two stages in pay scale with cumulative
effect and also directed that he be considered for further promotion.
The facts leading to this appeal are this wise:-
2. The respondent at the relevant time was working as the Senior
Manager in a branch of the appellant-bank at Narwana, Bahadurgarh. It was
noticed by the bank that he had purchased third party cheques/drafts of
huge amounts beyond the discretionary powers of lending. This was done
without completing the pre-sanction formalities. The appellant-bank,
therefore, served a show cause notice to the respondent on 26.2.1997 for
committing these unauthorised acts. The respondent filed a detailed reply
dated 12.4.1997. Therein the respondent admitted committing of the alleged
acts. He, however, stated that this was done with the intention of
increasing the profits of the bank. He also contended that the bank had
not suffered any loss in these transactions.
3. The appellant-bank, thereafter, charge-sheeted the respondent
on 1.12.1997 for two specific irregularities, they were as follows:-
“Charge No.1 – Respondent had unauthorisedly purchased 3rd party
cheques/drafts of huge amount aggregating to Rs.45.23 crores for
a number of parties much beyond his discretionary powers of
lending without completing pre-sanction formalities in violation
of head office guidelines. Thus he violated Regulation 3(i) of
Oriental Bank of Commerce Officer Employees (Conduct)
Regulation, 1982.
Charge No.2 – Respondent had released advance under the Prime
Minister Rojgar Yojna, and unauthorisedly insisted such
borrowers to provide collateral securities in the shape of
immovable property and guarantee in violation of the above
scheme.”
4. The charge-sheet was followed by an inquiry. The inquiry
officer gave a report dated 26.2.1999 which was forwarded by the respondent
on 17.4.1999 to make a representation on the findings. In paragraph 4 of
the report, the inquiry officer dealt with statement of SW-1 (State Witness
No.1) which stated that as per the head office circular, the discretionary
powers of the Branch Manager at the relevant time were up to Rs.30 lacs for
purchasing bank drafts and government cheques, and up to Rs.1.5 lacs for
third party cheques. As against this provision, the respondent had
purchased cheques/drafts aggregating to Rs.45.23 crores as per the details
produced in the inquiry report. This was done without any authorization,
and particularly when the authority of the respondent in this behalf was
placed under abeyance. The respondent raised various technical objections
with respect to the production of the documents, but essentially contended
that his acts, which went beyond discretionary powers, were ratified and
confirmed by the higher authorities. He submitted that these instruments
were received from the respectable parties to increase the profit of the
branch. With respect to the instructions issued to him by the Regional
Manager to stop purchasing these cheques and drafts, he submitted that he
had not violated these instructions.
5. The paragraph 4.3 of the Enquiry report contains the assessment
of evidence on charge No.1. It reads as follows:-
“4.3 Assessment of Evidence:-
Ex. S.27 and S.28 are head office circulars which lay down the
discretionary powers of the branch incumbent. SW1 confirmed
that during the material time the powers of the BM (Branch
Manager) was 30 lacs for purchase of bank draft and Rs. 1.5 lacs
for third party cheques. SW1 also confirmed that the CO(Charged
Officer) had purchased cheques/drafts beyond his discretionary
powers. He deposed that 77 cheques/drafts amounting to 40 crores
and 153 cheques/drafts amounting to 14.63 crores were purchased
through clearing adjustment account. It was confirmed that
discounting of cheques/drafts through clearing adjustment
account was not permitted as per HO guidelines. SW1 confirmed
that Ex. S2 was HO (Head Office) Circular dated 11.12.95 which
had placed in abeyance the discretionary powers of the BM and
Regional Heads in respect of loans and advances except in the
priority sector. SW1 confirmed that s-15 was HO circular dated
23.10.96 releasing the aforesaid restrictions. It is,
therefore, evident that the powers of the BM and the Regional
Heads had been kept in abeyance between 11.12.95 to 23.10.96.
On examining Ex. S.3, S4 and S.17, SW1 confirmed that the CO had
unauthorisedly purchased cheques/drafts during the period.
Furthermore, SW1 confirmed that the cheques purchased through
clearing adjustment account are that of sister and allied
concerns. Ex. S.27 and 28 would evidence that this power was
vested with the GM (General Manager) and higher officers only.
SW1 also confirmed that since the parties in question were also
enjoying certain credit facilities sanctioned by RO/HO (Regional
Office/Head Office), the branch should not have purchased
cheques/drafts of the parties under its own powers. Ex. S-6,
S.7, S.8 and S.9 are correspondence which proved that the higher
formation of the bank had raised serious objections to the CO’s
purchase of cheques/drafts. Ex. S.10 and S.12 are
letters/replies of the CO where in he had admitted his mistakes.
SW1 also confirmed that Ex.S.13 and S.14 are letters from the
GM Personnel giving details of the unauthorised purchase of
cheques and drafts by the CO, which were beyond his
discretionary powers and made at a time when his powers were
placed under abeyance. His non-reporting in the matter to RO has
also been questioned. Ex. S14 is a letter from the CO accepting
the aforesaid matter with an assurance to not to repeat the same
in future. In view of the aforesaid evidence the contention of
the CO to treat the matter as that of the priority sector is
naturally not tenable. However, the CO has stated that there
was no loss to the bank. The PO (Prosecuting Officer) has not
disputed this. Therefore, the act of omission and commission of
the CO can essentially be treated as procedural lapses. The
charge of the lack of integrity has not been substantiated.
Charge-1 is held as partly proved.”
Thus, the inquiry officer had held that the acts of omission and commission
on the part of the respondent were essentially in the nature of procedural
lapses. He held that the charge of lack of integrity had not been
substantiated. Thus, charge No.1 mentioned above was, partly proved.
6. As far as charge No.2 is concerned, it was alleged therein that
the respondent had released advances under the Prime Minister Rojgar Yojna,
and for that insisted on the borrowers to provide collateral
securities/guarantees of third party. The inquiry officer, however, noted
that the prosecution had not placed on record any single primary document
of the collateral securities/guarantees of third party to prove that part.
He, therefore, held that charge No.2 was not proved.
7. After receiving the inquiry report the respondent made his
representation dated 4.5.1999, and pleaded that he deserved to be
exonerated. The bank, thereafter, submitted all these papers to the Chief
Vigilance Officer of the Bank to forward the same to the Chief Vigilance
Commissioner (CVC). The respondent at that stage wrote to the appellant-
bank on 28.6.1999 seeking this correspondence with the CVC. In that he
stated as follows:-
“Now, after giving representation dated 4.5.99 on the findings of
inquiry officer dated 26.2.99, the stage has come where second
stage advice has to be remitted to the CVC through Chief
Vigilance Officer of Oriental Bank of Commerce and I also
understand that the case has been remitted or the same is in the
process of remitting to the Chief Vigilance Officer alongwith
recommendations of action proposed for onward submission to the
Chief Vigilance Commissioner (CVC). In the light of above
facts, you are requested to kindly supply me the copies of all
such recommendations meant for second stage advice and the
advice so received or likely to be received from the CVC for my
representation on these recommendations prior to the stage of
final disposal under Regulation ‘7’ of Discipline & Appeal
Regulations, 1982 so that the interest of my defence is not
jeopardized.”
8. The appellant declined that request of furnishing the
correspondence of papers exchanged with the CVC. The Chief Vigilance
Officer thereafter sent a letter to the disciplinary authority that the
Central Vigilance Commission had advised to impose a major penalty of
reduction of two stages in pay scale, and thereupon the order came to be
passed on 27.10.1999 imposing the punishment of reduction of two stages in
pay scale. The respondent filed a departmental appeal, and the appeal came
to be rejected. The review thereof was also rejected by the Board of
Directors. The appellate order dated 26.5.2000 passed by the General
Manager (Personnel) who was the disciplinary authority at the end of it
stated as follows:-
“……In this connection it is submitted that awarding of punishment
with cumulative effect falls within Regulation 4(f) and the
Disciplinary Authority has independently applied its mind while
awarding the punishment. It is further submitted that the
advice of the CVC is not binding on the Disciplinary Authority.
Since the CVC is rendering advice to the Disciplinary authority
the correspondence exchanged is not required to be provided to
the charge sheeted employee. The punishment has been awarded
keeping in view the gravity of the misconduct committed by the
officer employee alongwith the submissions made by the employee.
Submitted for orders please.
SD/- General Manager (Per.)
Disciplinary Authority.”
The Chairman & Managing Director, who was the appellate authority, passed
his orders into following words:-
“I don’t wish to entertain”
Sd/-
2.6.2000”
9. Being aggrieved by the imposition of this punishment, the
respondent filed one Writ Petition earlier bearing No.4116 of 2001 to the
Punjab and Haryana High Court on which an order came to be passed that the
reviewing authority may consider the review application of the respondent.
Time to take the decision was also extended on one occasion, and the High
Court was informed that the Bank was considering commutation of the major
penalty. The Chief Vigilance Officer of the bank wrote to the Chief
Vigilance Commission on 18.8.2001 that the penalty imposed deserved to be
modified to a minor penalty. It, however, appears that the request was not
accepted and, the appellant-bank informed the respondent that the review
petition was rejected. This led the respondent to file Civil Writ Petition
No.18847 of 2001. Apart from the prayer to quash the order of punishment,
the respondent also sought a direction that he be considered for further
promotion from the post which he was then holding viz. that of MMGS-III to
SMGS-VI. It was his contention that his turn had come up for consideration
for promotion, and it was declined because of this departmental action. The
High Court allowed the Writ Petition by the impugned judgment and order.
10. The High Court essentially relied upon the judgment and order
rendered by this Court in the case of Nagaraj Shivarao Karjagi vs.
Syndicate Bank Head Office, Manipal reported in AIR 1991 SC 1507. In that
matter also the bank had acted as per the advice of the Central Vigilance
Commission. The punishment was interfered by this Court. In paragraph 19
of its judgment, this Court observed as follows:-
“19………..The punishment to be imposed whether minor or major depends
upon the nature of every case and the gravity of the misconduct
proved. The authorities have to exercise their judicial
discretion having regard to the facts and circumstances of each
case. They cannot act under the dictation of the Central
Vigilance Commission or of the Central Government. No third
party like the Central Vigilance Commission or the Central
Government could dictate the disciplinary authority or the
appellate authority as to how they should exercise their power
and what punishment they should impose on the delinquent
officer. (See. De Smith’s Judicial Review of Administrative
Action, Fourth Edition, p. 309). The impugned directive of the
Ministry of Finance is, therefore, wholly without jurisdiction
and plainly contrary to the statutory Regulations governing
disciplinary matters.”
11. The High Court relied upon another judgment of this Court in
the case of State Bank of India vs. D.C. Aggarwal reported in AIR 1993 SC
1197. In that matter also, the High Court had quashed the punishment
imposed on the respondent, since the CVC report had not been furnished to
him. In paragraph 5 of the judgment this Court observed as follows:-
“5…… May be that the Disciplinary Authority has recorded its own
findings and it may be coincidental that reasoning and basis of
returning the finding of guilt are same as in the CVC report but
it being a material obtained behind back of the respondent
without his knowledge or supplying of any copy to him the High
Court in our opinion did not commit any error in quashing the
order.”
12. Therefore, in the present case, the High Court set aside the
punishment imposed on the respondent. It also issued a Mandamus to the
appellant-bank to consider the respondent for promotion, which he had
sought. Being aggrieved by that judgment and order, this appeal has been
filed. Mr. K.N. Bhatt, learned senior counsel appeared for the appellants
and Mr. Nidhesh Gupta, learned senior counsel appeared for the respondent.
Submissions on behalf of the parties:-
13. It was submitted on behalf of the appellants that the High
Court had erred in interfering with the punishment, and in any case,
directing consideration of the respondent for promotion. Mr. Bhatt,
learned senior counsel for the appellant submitted that the bank was
required to refer the matter to the CVC which is constituted under the
Central Vigilance Commission Act, 2003.
Regulation 19 of 1982 Regulations
framed thereunder makes it obligatory whenever there is a vigilance angle
involved. This regulation reads as follows:-
“19. Consultation with the Central Vigilance Commission: The Bank
shall consult the Central Vigilance Commission wherever
necessary, in respect of all disciplinary cases having a
vigilance angle.”
14. That apart, he submitted that the bank had arrived at its
decision on its own, and not because of any dictate by the CVC. Charge
No.1 was a serious charge. It was already proved in the Departmental
Enquiry, and although it is true that at some stage the bank management
thought that a lenient view may be taken, it specifically arrived at its
own decision as can be seen from the appellate order. In his submission,
there was no prejudice caused to the respondent by not making the report of
the CVC available to him. Conduct of this type required a stringent action
to be taken. He relied upon the judgment of this Court in the case of
Disciplinary Authority-Cum-Regional Manager vs. Nikunja Bihari Patnaik
reported in 1996 (9) SCC 69. This Court has held in that matter that when
the bank officer acts beyond his authority, it is a misconduct, and a proof
of any loss to the bank is not necessary. That was a case where also a
senior officer of the Central Bank of India had allowed over-drafts and
passed cheques involving substantial amounts beyond his authority, and the
respondent had been dismissed from his service. Mr. Bhatt, submitted that
in the instant case, the appellant-bank had, in fact, been lenient in
imposing the punishment of merely reducing the respondent by two grades.
15. It was then submitted by Mr. Bhatt, that in any case the
direction to consider the respondent for the promotion could not be
sustained. He pointed out to us that the respondent had been punished
earlier for similar conduct on 27.10.1999. He was considered for promotion
in the year 2002, and subsequent to the impugned judgment in the year 2005
also but was not found fit. The learned counsel for the appellant-bank
submitted that the question of promotion to such a senior post had to be
decided on merits and suitability of the candidate. Mr. Bhatt, further
submitted that even if the punishment was to be interfered with, there was
no case for direction for promotion.
16. It was submitted on behalf of the respondent on the other hand,
that there was no loss suffered by the bank, and at the highest it was a
technical lapse. The bank management had also decided that a minor
punishment was required, and it was only because of the dictate of the CVC
that the disputed punishment had been imposed. Firstly, there was mo
reason to refer the issue to the CVC since there was no vigilance angle
involved therein. That apart, the report of CVC was not made available to
the respondent, and it clearly amounted to denial of fair opportunity to
defend. Mr. Gupta submitted that the denial of promotion was essentially
because of this punishment, or else the respondent would have been
promoted. He, therefore, submitted that there was no occasion to interfere
with the impugned judgment and order. Mr. Gupta submitted that the two
judgments relied upon by the High Court in the case of Nagaraj Shivarao
(supra) and State Bank of India (supra) squarely applied to the present
case, and there was no occasion for this Court to take a different view or
to interfere with any part of the judgment.
Consideration of the submissions:-
17. We have considered the submissions of both the counsel. When
we come to the question of imposition of punishment on the respondent, what
we find is that undoubtedly, there was a serious allegation against him,
and as it has been held in the case of Disciplinary Authority-Cum-Regional
Manager (supra), such acts could not be condoned. At the same time, we
have also to note that the bank management itself had taken the view in the
initial stage that the action did not require a major penalty. It is also
relevant to note that the High Court was also informed at the stage of
review that the Bank was considering imposition of a minor penalty. It is
quite possible to say that the bank management did arrive at its decision
to maintain a major penalty at a later stage on its own, and not because of
the dictate of the CVC, but at the same time it has got to be noted that
the CVC report had been sought by the management of the bank, and
thereafter the punishment had been imposed. As observed in the case of
State Bank of India (supra), may be that the Disciplinary Authority had
recorded its own findings, and had arrived at its own decision, but when
this advise from CVC was sought, it could not be said that this additional
material was not a part of the decision making process. When this report
was not made available to the respondent, it is difficult to rule out the
apprehension about the decision having been taken under pressure. Any
material, which goes into the decision making process against an employee,
cannot be denied to him. In view of the judgment in the case of
Disciplinary Authority-cum- Regional Manager (supra), the decision of the
Bank could have been approved on merits, however, the two judgments in the
cases of Nagaraj Shivaraj Karajgi (supra) and State Bank of India (supra)
lay down the requisite procedure in such matters, and in the facts of this
case, it will not be appropriate to depart from the dicta therein. On this
yardstick alone, a part of the judgment of the High Court interfering with
the punishment will have to be sustained.
18. Then, we come to the issue of direction of the High Court to
consider the respondent for promotion. The respondent was already in a post
of a Senior Manager. He was seeking a promotion to a still higher
position. Promotion as such, and in any case, to a higher post cannot be
insisted as a matter of right. In the instant case, it has been brought to
our notice that the respondent was considered for promotion in 2002 and was
not found fit. It was pointed out by Mr. Bhatt that this was not merely on
the basis of the punishment that was imposed on the respondent. He had
previous adverse entry also in his record in the year 1999. Besides, even
if we look to the charge independently, purchasing third party cheques and
drafts of huge amounts beyond his authority of lending has been held to be
proved against the respondent, and that finding has not been seriously
contested and dislodged. Whether he deserved a major punishment or not, or
whether a lenient view of the allegations should be taken by considering
his conduct as a procedural lapse is another aspect. In the instant case,
the decision to impose a major punishment had to be interfered with because
of the manner in which the decision was taken. It has also been submitted
that the High Court should have referred the matter back to the appropriate
authority for reconsideration and imposition atleast of a minor penalty. It
is apparent that it was not a case for complete exoneration, however, it
will not be desirable to give such direction after so many years,
particularly, when the respondent has since retired. That being so, the
order quashing the punishment will remain. That, however, would not mean
that the direction of the High Court to the appellant to consider the
respondent for promotion should be sustained.
19. We have also been informed that the respondent was considered
for promotion once again in the year 2005, and not found fit for the
promotion. Thus, the bank had considered the respondent after the impugned
judgment which was in favour of the respondent. We are not concerned as
such with this subsequent consideration, but this is only to point out that
the bank had not declined to consider him. We are of course concerned with
the direction in the impugned judgment to consider him once again, on the
basis of the material prior to the judgment. Inasmuch as the record of the
respondent was not satisfactory, in our view, there was no occasion for the
High Court to give any such direction on the footing that the respondent
was denied the consideration only because he had suffered a punishment.
That inference was not called for.
20. In the circumstances, we allow this appeal only in part.
Whereas the judgment and order of the High Court setting aside the
punishment will remain, the direction to consider him for promotion, and
give him benefits on that footing will have to be set aside, which we
hereby direct. The respondent will however get the monetary benefits on
the footing that the said punishment is quashed.
21. Appeal is, therefore, allowed in part as above. Parties will
bear their own costs.
…………..…………………..J.
[ H.L. Gokhale ]
………………………………J.
[ J. Chelameswar ]
New Delhi
Dated : February 26, 2014
-----------------------
17
Division Bench of Punjab and Haryana High
Court in Civil Writ Petition No.18847 of 2001, allowing the said Writ
Petition filed by the respondent, a Senior Manager in the appellant-bank.
That judgment and order quashed the disciplinary order passed by the
appellant-bank reducing him in two stages in pay scale with cumulative
effect and also directed that he be considered for further promotion.=
“Charge No.1 – Respondent had unauthorisedly purchased 3rd party
cheques/drafts of huge amount aggregating to Rs.45.23 crores for
a number of parties much beyond his discretionary powers of
lending without completing pre-sanction formalities in violation
of head office guidelines. Thus he violated Regulation 3(i) of
Oriental Bank of Commerce Officer Employees (Conduct)
Regulation, 1982.
Charge No.2 – Respondent had released advance under the Prime
Minister Rojgar Yojna, and unauthorisedly insisted such
borrowers to provide collateral securities in the shape of
immovable property and guarantee in violation of the above
scheme.”
As per the head office circular, the discretionary
powers of the Branch Manager at the relevant time were up to Rs.30 lacs for
purchasing bank drafts and government cheques, and up to Rs.1.5 lacs for
third party cheques. As against this provision, the respondent had
purchased cheques/drafts aggregating to Rs.45.23 crores as per the details
produced in the inquiry report. This was done without any authorization,
and particularly when the authority of the respondent in this behalf was
placed under abeyance.
- were ratified and confirmed by the higher authorities.
Charge-1 is held as partly proved.”
Thus, the inquiry officer had held that the acts of omission and commission
on the part of the respondent were essentially in the nature of procedural
lapses. He held that the charge of lack of integrity had not been
substantiated. Thus, charge No.1 mentioned above was, partly proved.
As far as charge No.2 is concerned, it was alleged therein that
the respondent had released advances under the Prime Minister Rojgar Yojna,
and for that insisted on the borrowers to provide collateral
securities/guarantees of third party. The inquiry officer, however, noted
that the prosecution had not placed on record any single primary document
of the collateral securities/guarantees of third party to prove that part.
He, therefore, held that charge No.2 was not proved.
The Chief Vigilance Officer
thereafter sent a letter to the disciplinary authority that the
Central Vigilance Commission had advised to impose a major penalty of
reduction of two stages in pay scale, and thereupon the order came to be
passed on 27.10.1999 imposing the punishment of reduction of two stages in
pay scale.
The High Court essentially relied upon the judgment and order
rendered by this Court in the case of Nagaraj Shivarao Karjagi vs.
Syndicate Bank Head Office, Manipal reported in AIR 1991 SC 1507. In that
matter also the bank had acted as per the advice of the Central Vigilance
Commission. The punishment was interfered by this Court. In paragraph 19
of its judgment, this Court observed as follows:-
“19………..The punishment to be imposed whether minor or major depends
upon the nature of every case and the gravity of the misconduct
proved. The authorities have to exercise their judicial
discretion having regard to the facts and circumstances of each
case. They cannot act under the dictation of the Central
Vigilance Commission or of the Central Government. No third
party like the Central Vigilance Commission or the Central
Government could dictate the disciplinary authority or the
appellate authority as to how they should exercise their power
and what punishment they should impose on the delinquent
officer. (See. De Smith’s Judicial Review of Administrative
Action, Fourth Edition, p. 309). The impugned directive of the
Ministry of Finance is, therefore, wholly without jurisdiction
and plainly contrary to the statutory Regulations governing
disciplinary matters.”
Apex court conclusion :
Mr. Bhatt,
learned senior counsel for the appellant submitted that the bank was
required to refer the matter to the CVC which is constituted under the
Central Vigilance Commission Act, 2003.
Regulation 19 of 1982 Regulations
framed thereunder makes it obligatory whenever there is a vigilance angle
involved. This regulation reads as follows:-
“19. Consultation with the Central Vigilance Commission: The Bank
shall consult the Central Vigilance Commission wherever
necessary, in respect of all disciplinary cases having a
vigilance angle.”
14. That apart, he submitted that the bank had arrived at its
decision on its own, and not because of any dictate by the CVC.
We have also been informed that the respondent was considered
for promotion once again in the year 2005, and not found fit for the
promotion. Thus, the bank had considered the respondent after the impugned
judgment which was in favour of the respondent.
We are not concerned as
such with this subsequent consideration, but this is only to point out that
the bank had not declined to consider him.
We are of course concerned with
the direction in the impugned judgment to consider him once again, on the
basis of the material prior to the judgment.
Inasmuch as the record of the
respondent was not satisfactory, in our view, there was no occasion for the
High Court to give any such direction on the footing that the respondent
was denied the consideration only because he had suffered a punishment.
That inference was not called for.
20. In the circumstances, we allow this appeal only in part.
Whereas the judgment and order of the High Court setting aside the
punishment will remain, the direction to consider him for promotion, and
give him benefits on that footing will have to be set aside, which we
hereby direct. The respondent will however get the monetary benefits on
the footing that the said punishment is quashed.
21. Appeal is, therefore, allowed in part as above. Parties will
bear their own costs.
2014(Feb.Part) judis.nic.in/supremecourt/filename=41263
H.L. GOKHALE, J. CHELAMESWAR
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 3081 OF 2006
Oriental Bank of Commerce & Ors. … Appellant (s)
Versus
S.S. Sheokand & Anr. … Respondent (s)
J U D G E M E N T
H.L. Gokhale J.
This Civil Appeal seeks to challenge the judgment and order
dated 16.3.2004 rendered by a Division Bench of Punjab and Haryana High
Court in Civil Writ Petition No.18847 of 2001, allowing the said Writ
Petition filed by the respondent, a Senior Manager in the appellant-bank.
That judgment and order quashed the disciplinary order passed by the
appellant-bank reducing him in two stages in pay scale with cumulative
effect and also directed that he be considered for further promotion.
The facts leading to this appeal are this wise:-
2. The respondent at the relevant time was working as the Senior
Manager in a branch of the appellant-bank at Narwana, Bahadurgarh. It was
noticed by the bank that he had purchased third party cheques/drafts of
huge amounts beyond the discretionary powers of lending. This was done
without completing the pre-sanction formalities. The appellant-bank,
therefore, served a show cause notice to the respondent on 26.2.1997 for
committing these unauthorised acts. The respondent filed a detailed reply
dated 12.4.1997. Therein the respondent admitted committing of the alleged
acts. He, however, stated that this was done with the intention of
increasing the profits of the bank. He also contended that the bank had
not suffered any loss in these transactions.
3. The appellant-bank, thereafter, charge-sheeted the respondent
on 1.12.1997 for two specific irregularities, they were as follows:-
“Charge No.1 – Respondent had unauthorisedly purchased 3rd party
cheques/drafts of huge amount aggregating to Rs.45.23 crores for
a number of parties much beyond his discretionary powers of
lending without completing pre-sanction formalities in violation
of head office guidelines. Thus he violated Regulation 3(i) of
Oriental Bank of Commerce Officer Employees (Conduct)
Regulation, 1982.
Charge No.2 – Respondent had released advance under the Prime
Minister Rojgar Yojna, and unauthorisedly insisted such
borrowers to provide collateral securities in the shape of
immovable property and guarantee in violation of the above
scheme.”
4. The charge-sheet was followed by an inquiry. The inquiry
officer gave a report dated 26.2.1999 which was forwarded by the respondent
on 17.4.1999 to make a representation on the findings. In paragraph 4 of
the report, the inquiry officer dealt with statement of SW-1 (State Witness
No.1) which stated that as per the head office circular, the discretionary
powers of the Branch Manager at the relevant time were up to Rs.30 lacs for
purchasing bank drafts and government cheques, and up to Rs.1.5 lacs for
third party cheques. As against this provision, the respondent had
purchased cheques/drafts aggregating to Rs.45.23 crores as per the details
produced in the inquiry report. This was done without any authorization,
and particularly when the authority of the respondent in this behalf was
placed under abeyance. The respondent raised various technical objections
with respect to the production of the documents, but essentially contended
that his acts, which went beyond discretionary powers, were ratified and
confirmed by the higher authorities. He submitted that these instruments
were received from the respectable parties to increase the profit of the
branch. With respect to the instructions issued to him by the Regional
Manager to stop purchasing these cheques and drafts, he submitted that he
had not violated these instructions.
5. The paragraph 4.3 of the Enquiry report contains the assessment
of evidence on charge No.1. It reads as follows:-
“4.3 Assessment of Evidence:-
Ex. S.27 and S.28 are head office circulars which lay down the
discretionary powers of the branch incumbent. SW1 confirmed
that during the material time the powers of the BM (Branch
Manager) was 30 lacs for purchase of bank draft and Rs. 1.5 lacs
for third party cheques. SW1 also confirmed that the CO(Charged
Officer) had purchased cheques/drafts beyond his discretionary
powers. He deposed that 77 cheques/drafts amounting to 40 crores
and 153 cheques/drafts amounting to 14.63 crores were purchased
through clearing adjustment account. It was confirmed that
discounting of cheques/drafts through clearing adjustment
account was not permitted as per HO guidelines. SW1 confirmed
that Ex. S2 was HO (Head Office) Circular dated 11.12.95 which
had placed in abeyance the discretionary powers of the BM and
Regional Heads in respect of loans and advances except in the
priority sector. SW1 confirmed that s-15 was HO circular dated
23.10.96 releasing the aforesaid restrictions. It is,
therefore, evident that the powers of the BM and the Regional
Heads had been kept in abeyance between 11.12.95 to 23.10.96.
On examining Ex. S.3, S4 and S.17, SW1 confirmed that the CO had
unauthorisedly purchased cheques/drafts during the period.
Furthermore, SW1 confirmed that the cheques purchased through
clearing adjustment account are that of sister and allied
concerns. Ex. S.27 and 28 would evidence that this power was
vested with the GM (General Manager) and higher officers only.
SW1 also confirmed that since the parties in question were also
enjoying certain credit facilities sanctioned by RO/HO (Regional
Office/Head Office), the branch should not have purchased
cheques/drafts of the parties under its own powers. Ex. S-6,
S.7, S.8 and S.9 are correspondence which proved that the higher
formation of the bank had raised serious objections to the CO’s
purchase of cheques/drafts. Ex. S.10 and S.12 are
letters/replies of the CO where in he had admitted his mistakes.
SW1 also confirmed that Ex.S.13 and S.14 are letters from the
GM Personnel giving details of the unauthorised purchase of
cheques and drafts by the CO, which were beyond his
discretionary powers and made at a time when his powers were
placed under abeyance. His non-reporting in the matter to RO has
also been questioned. Ex. S14 is a letter from the CO accepting
the aforesaid matter with an assurance to not to repeat the same
in future. In view of the aforesaid evidence the contention of
the CO to treat the matter as that of the priority sector is
naturally not tenable. However, the CO has stated that there
was no loss to the bank. The PO (Prosecuting Officer) has not
disputed this. Therefore, the act of omission and commission of
the CO can essentially be treated as procedural lapses. The
charge of the lack of integrity has not been substantiated.
Charge-1 is held as partly proved.”
Thus, the inquiry officer had held that the acts of omission and commission
on the part of the respondent were essentially in the nature of procedural
lapses. He held that the charge of lack of integrity had not been
substantiated. Thus, charge No.1 mentioned above was, partly proved.
6. As far as charge No.2 is concerned, it was alleged therein that
the respondent had released advances under the Prime Minister Rojgar Yojna,
and for that insisted on the borrowers to provide collateral
securities/guarantees of third party. The inquiry officer, however, noted
that the prosecution had not placed on record any single primary document
of the collateral securities/guarantees of third party to prove that part.
He, therefore, held that charge No.2 was not proved.
7. After receiving the inquiry report the respondent made his
representation dated 4.5.1999, and pleaded that he deserved to be
exonerated. The bank, thereafter, submitted all these papers to the Chief
Vigilance Officer of the Bank to forward the same to the Chief Vigilance
Commissioner (CVC). The respondent at that stage wrote to the appellant-
bank on 28.6.1999 seeking this correspondence with the CVC. In that he
stated as follows:-
“Now, after giving representation dated 4.5.99 on the findings of
inquiry officer dated 26.2.99, the stage has come where second
stage advice has to be remitted to the CVC through Chief
Vigilance Officer of Oriental Bank of Commerce and I also
understand that the case has been remitted or the same is in the
process of remitting to the Chief Vigilance Officer alongwith
recommendations of action proposed for onward submission to the
Chief Vigilance Commissioner (CVC). In the light of above
facts, you are requested to kindly supply me the copies of all
such recommendations meant for second stage advice and the
advice so received or likely to be received from the CVC for my
representation on these recommendations prior to the stage of
final disposal under Regulation ‘7’ of Discipline & Appeal
Regulations, 1982 so that the interest of my defence is not
jeopardized.”
8. The appellant declined that request of furnishing the
correspondence of papers exchanged with the CVC. The Chief Vigilance
Officer thereafter sent a letter to the disciplinary authority that the
Central Vigilance Commission had advised to impose a major penalty of
reduction of two stages in pay scale, and thereupon the order came to be
passed on 27.10.1999 imposing the punishment of reduction of two stages in
pay scale. The respondent filed a departmental appeal, and the appeal came
to be rejected. The review thereof was also rejected by the Board of
Directors. The appellate order dated 26.5.2000 passed by the General
Manager (Personnel) who was the disciplinary authority at the end of it
stated as follows:-
“……In this connection it is submitted that awarding of punishment
with cumulative effect falls within Regulation 4(f) and the
Disciplinary Authority has independently applied its mind while
awarding the punishment. It is further submitted that the
advice of the CVC is not binding on the Disciplinary Authority.
Since the CVC is rendering advice to the Disciplinary authority
the correspondence exchanged is not required to be provided to
the charge sheeted employee. The punishment has been awarded
keeping in view the gravity of the misconduct committed by the
officer employee alongwith the submissions made by the employee.
Submitted for orders please.
SD/- General Manager (Per.)
Disciplinary Authority.”
The Chairman & Managing Director, who was the appellate authority, passed
his orders into following words:-
“I don’t wish to entertain”
Sd/-
2.6.2000”
9. Being aggrieved by the imposition of this punishment, the
respondent filed one Writ Petition earlier bearing No.4116 of 2001 to the
Punjab and Haryana High Court on which an order came to be passed that the
reviewing authority may consider the review application of the respondent.
Time to take the decision was also extended on one occasion, and the High
Court was informed that the Bank was considering commutation of the major
penalty. The Chief Vigilance Officer of the bank wrote to the Chief
Vigilance Commission on 18.8.2001 that the penalty imposed deserved to be
modified to a minor penalty. It, however, appears that the request was not
accepted and, the appellant-bank informed the respondent that the review
petition was rejected. This led the respondent to file Civil Writ Petition
No.18847 of 2001. Apart from the prayer to quash the order of punishment,
the respondent also sought a direction that he be considered for further
promotion from the post which he was then holding viz. that of MMGS-III to
SMGS-VI. It was his contention that his turn had come up for consideration
for promotion, and it was declined because of this departmental action. The
High Court allowed the Writ Petition by the impugned judgment and order.
10. The High Court essentially relied upon the judgment and order
rendered by this Court in the case of Nagaraj Shivarao Karjagi vs.
Syndicate Bank Head Office, Manipal reported in AIR 1991 SC 1507. In that
matter also the bank had acted as per the advice of the Central Vigilance
Commission. The punishment was interfered by this Court. In paragraph 19
of its judgment, this Court observed as follows:-
“19………..The punishment to be imposed whether minor or major depends
upon the nature of every case and the gravity of the misconduct
proved. The authorities have to exercise their judicial
discretion having regard to the facts and circumstances of each
case. They cannot act under the dictation of the Central
Vigilance Commission or of the Central Government. No third
party like the Central Vigilance Commission or the Central
Government could dictate the disciplinary authority or the
appellate authority as to how they should exercise their power
and what punishment they should impose on the delinquent
officer. (See. De Smith’s Judicial Review of Administrative
Action, Fourth Edition, p. 309). The impugned directive of the
Ministry of Finance is, therefore, wholly without jurisdiction
and plainly contrary to the statutory Regulations governing
disciplinary matters.”
11. The High Court relied upon another judgment of this Court in
the case of State Bank of India vs. D.C. Aggarwal reported in AIR 1993 SC
1197. In that matter also, the High Court had quashed the punishment
imposed on the respondent, since the CVC report had not been furnished to
him. In paragraph 5 of the judgment this Court observed as follows:-
“5…… May be that the Disciplinary Authority has recorded its own
findings and it may be coincidental that reasoning and basis of
returning the finding of guilt are same as in the CVC report but
it being a material obtained behind back of the respondent
without his knowledge or supplying of any copy to him the High
Court in our opinion did not commit any error in quashing the
order.”
12. Therefore, in the present case, the High Court set aside the
punishment imposed on the respondent. It also issued a Mandamus to the
appellant-bank to consider the respondent for promotion, which he had
sought. Being aggrieved by that judgment and order, this appeal has been
filed. Mr. K.N. Bhatt, learned senior counsel appeared for the appellants
and Mr. Nidhesh Gupta, learned senior counsel appeared for the respondent.
Submissions on behalf of the parties:-
13. It was submitted on behalf of the appellants that the High
Court had erred in interfering with the punishment, and in any case,
directing consideration of the respondent for promotion. Mr. Bhatt,
learned senior counsel for the appellant submitted that the bank was
required to refer the matter to the CVC which is constituted under the
Central Vigilance Commission Act, 2003.
Regulation 19 of 1982 Regulations
framed thereunder makes it obligatory whenever there is a vigilance angle
involved. This regulation reads as follows:-
“19. Consultation with the Central Vigilance Commission: The Bank
shall consult the Central Vigilance Commission wherever
necessary, in respect of all disciplinary cases having a
vigilance angle.”
14. That apart, he submitted that the bank had arrived at its
decision on its own, and not because of any dictate by the CVC. Charge
No.1 was a serious charge. It was already proved in the Departmental
Enquiry, and although it is true that at some stage the bank management
thought that a lenient view may be taken, it specifically arrived at its
own decision as can be seen from the appellate order. In his submission,
there was no prejudice caused to the respondent by not making the report of
the CVC available to him. Conduct of this type required a stringent action
to be taken. He relied upon the judgment of this Court in the case of
Disciplinary Authority-Cum-Regional Manager vs. Nikunja Bihari Patnaik
reported in 1996 (9) SCC 69. This Court has held in that matter that when
the bank officer acts beyond his authority, it is a misconduct, and a proof
of any loss to the bank is not necessary. That was a case where also a
senior officer of the Central Bank of India had allowed over-drafts and
passed cheques involving substantial amounts beyond his authority, and the
respondent had been dismissed from his service. Mr. Bhatt, submitted that
in the instant case, the appellant-bank had, in fact, been lenient in
imposing the punishment of merely reducing the respondent by two grades.
15. It was then submitted by Mr. Bhatt, that in any case the
direction to consider the respondent for the promotion could not be
sustained. He pointed out to us that the respondent had been punished
earlier for similar conduct on 27.10.1999. He was considered for promotion
in the year 2002, and subsequent to the impugned judgment in the year 2005
also but was not found fit. The learned counsel for the appellant-bank
submitted that the question of promotion to such a senior post had to be
decided on merits and suitability of the candidate. Mr. Bhatt, further
submitted that even if the punishment was to be interfered with, there was
no case for direction for promotion.
16. It was submitted on behalf of the respondent on the other hand,
that there was no loss suffered by the bank, and at the highest it was a
technical lapse. The bank management had also decided that a minor
punishment was required, and it was only because of the dictate of the CVC
that the disputed punishment had been imposed. Firstly, there was mo
reason to refer the issue to the CVC since there was no vigilance angle
involved therein. That apart, the report of CVC was not made available to
the respondent, and it clearly amounted to denial of fair opportunity to
defend. Mr. Gupta submitted that the denial of promotion was essentially
because of this punishment, or else the respondent would have been
promoted. He, therefore, submitted that there was no occasion to interfere
with the impugned judgment and order. Mr. Gupta submitted that the two
judgments relied upon by the High Court in the case of Nagaraj Shivarao
(supra) and State Bank of India (supra) squarely applied to the present
case, and there was no occasion for this Court to take a different view or
to interfere with any part of the judgment.
Consideration of the submissions:-
17. We have considered the submissions of both the counsel. When
we come to the question of imposition of punishment on the respondent, what
we find is that undoubtedly, there was a serious allegation against him,
and as it has been held in the case of Disciplinary Authority-Cum-Regional
Manager (supra), such acts could not be condoned. At the same time, we
have also to note that the bank management itself had taken the view in the
initial stage that the action did not require a major penalty. It is also
relevant to note that the High Court was also informed at the stage of
review that the Bank was considering imposition of a minor penalty. It is
quite possible to say that the bank management did arrive at its decision
to maintain a major penalty at a later stage on its own, and not because of
the dictate of the CVC, but at the same time it has got to be noted that
the CVC report had been sought by the management of the bank, and
thereafter the punishment had been imposed. As observed in the case of
State Bank of India (supra), may be that the Disciplinary Authority had
recorded its own findings, and had arrived at its own decision, but when
this advise from CVC was sought, it could not be said that this additional
material was not a part of the decision making process. When this report
was not made available to the respondent, it is difficult to rule out the
apprehension about the decision having been taken under pressure. Any
material, which goes into the decision making process against an employee,
cannot be denied to him. In view of the judgment in the case of
Disciplinary Authority-cum- Regional Manager (supra), the decision of the
Bank could have been approved on merits, however, the two judgments in the
cases of Nagaraj Shivaraj Karajgi (supra) and State Bank of India (supra)
lay down the requisite procedure in such matters, and in the facts of this
case, it will not be appropriate to depart from the dicta therein. On this
yardstick alone, a part of the judgment of the High Court interfering with
the punishment will have to be sustained.
18. Then, we come to the issue of direction of the High Court to
consider the respondent for promotion. The respondent was already in a post
of a Senior Manager. He was seeking a promotion to a still higher
position. Promotion as such, and in any case, to a higher post cannot be
insisted as a matter of right. In the instant case, it has been brought to
our notice that the respondent was considered for promotion in 2002 and was
not found fit. It was pointed out by Mr. Bhatt that this was not merely on
the basis of the punishment that was imposed on the respondent. He had
previous adverse entry also in his record in the year 1999. Besides, even
if we look to the charge independently, purchasing third party cheques and
drafts of huge amounts beyond his authority of lending has been held to be
proved against the respondent, and that finding has not been seriously
contested and dislodged. Whether he deserved a major punishment or not, or
whether a lenient view of the allegations should be taken by considering
his conduct as a procedural lapse is another aspect. In the instant case,
the decision to impose a major punishment had to be interfered with because
of the manner in which the decision was taken. It has also been submitted
that the High Court should have referred the matter back to the appropriate
authority for reconsideration and imposition atleast of a minor penalty. It
is apparent that it was not a case for complete exoneration, however, it
will not be desirable to give such direction after so many years,
particularly, when the respondent has since retired. That being so, the
order quashing the punishment will remain. That, however, would not mean
that the direction of the High Court to the appellant to consider the
respondent for promotion should be sustained.
19. We have also been informed that the respondent was considered
for promotion once again in the year 2005, and not found fit for the
promotion. Thus, the bank had considered the respondent after the impugned
judgment which was in favour of the respondent. We are not concerned as
such with this subsequent consideration, but this is only to point out that
the bank had not declined to consider him. We are of course concerned with
the direction in the impugned judgment to consider him once again, on the
basis of the material prior to the judgment. Inasmuch as the record of the
respondent was not satisfactory, in our view, there was no occasion for the
High Court to give any such direction on the footing that the respondent
was denied the consideration only because he had suffered a punishment.
That inference was not called for.
20. In the circumstances, we allow this appeal only in part.
Whereas the judgment and order of the High Court setting aside the
punishment will remain, the direction to consider him for promotion, and
give him benefits on that footing will have to be set aside, which we
hereby direct. The respondent will however get the monetary benefits on
the footing that the said punishment is quashed.
21. Appeal is, therefore, allowed in part as above. Parties will
bear their own costs.
…………..…………………..J.
[ H.L. Gokhale ]
………………………………J.
[ J. Chelameswar ]
New Delhi
Dated : February 26, 2014
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