* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ W.P.(C) No. 6401/1998
% 8th October , 2013
SHRI S.K.GAUR ......Petitioner
Through: Mr. Inderjeet Singh, Advocate.
VERSUS
UNION OF INDIA & ORS. .... Respondents
Through: Mr. Jagat Arora and Mr. Rajat Arora,
Advocates.
CORAM:
HON'BLE MR. JUSTICE VALMIKI J.MEHTA
To be referred to the Reporter or not?
VALMIKI J. MEHTA, J (ORAL)
1. This writ petition is filed by Sh. S.K.Gaur, an employee of the Bank of India (represented by respondents no.2 to 7), and who has been imposed the punishment of dismissal from services by the departmental authorities. Petitioner impugns the enquiry officer's report dated 29.9.1995 holding charge no.2 against him and also the order of the disciplinary authority dated 16.7.1997 imposing the punishment of the dismissal from services. The order of the disciplinary authority has been upheld by the appellate authority vide order dated 21.1.1998 and which order is also impugned and also is WPC 6401/1998 Page 1 of 15 impugned the order of the reviewing authority dated 3.9.1998. Effectively therefore the present writ petition is the fifth tier of challenge i.e after the findings of the enquiry officer, disciplinary authority, appellate authority and the reviewing authority.
2. The charge against the petitioner was that he illegally favoured a customer M/s Surlux Mediquip Ltd. by arranging /recommending sanction of a credit limit to the tune of approximately ` 80 lacs without proper introduction of the account and without sanction existing of the Letter of Credit (L/C) limit. I may note that there are three Article of Charges as per the charge-sheet dated 23.11.1994. With respect to charges in Article no.3 petitioner was exonerated and with respect to Article-1 though the same is held against the petitioner, the same is not challenged before me. Petitioner only impugns the findings with respect to Article -2. This Article-2 of the Articles of Charges reads as under:-
"ARTICLE-II That you abused his official position and unduly accommodated M/s Surlux Mediquip Ltd. by arranging/recommending for sanction credit limits to the tune of Japanese Yen 27560000/-in as much as:-
(a) Whilst opening the current account of M/s Surlux Mediquip Ltd. on 20.5.93 he had omitted to obtain proper introduction;
(b) (i) within 8 days of opening the account he advised New Delhi Overseas Branch to open and irrevocable import WPC 6401/1998 Page 2 of 15 Letter of Credit on behalf of M/s. Surlux Mediquip Ltd. favoring M/s.Hitachi, Tokyo for Japanese Yen 27,560,000 for import of Hitachi CT Scanner Model CTW-450-20, without any sanction/approval and by making misleading and factually incorrect statement, grossly against the interest of the Bank.
(ii) Thereafter, when the New Delhi Overseas Branch declined to open the L/C primarily for want of appropriate sanction and secondarily because Nehru Place Branch was the link Branch for the purpose and forwarded the mater to Nehru Place Branch, he vouch-safed, recommended, deftly engineered by misrepresenting and led the Nehru Place Branch officials to believe that appropriate sanctions would be/were obtained and follow.
Due to the aforementioned omission/commissions on his part, the Bank is exposed to serious financial risk to the tune of Rs.88.61 lacs.
The aforesaid acts, if proved, amount to misconduct within the meaning of Regulation 24 of the Bank of India Officer Employees' (Conduct Regulations, 1976 since you have committed breach of regulation 3(1) of the said Regulations."
3. Before I turn to the arguments urged on behalf of the petitioner, it is necessary to state at the outset the scope of hearing of a petition under Article 226 of the Constitution of India by which orders passed by the departmental authorities are challenged. This Court while exercising jurisdiction under Article 226 does not sit as an appellate court to reappraise the findings and conclusions of the departmental authorities. This Court can interfere only if there is a perversity in the findings of the departmental authorities.
WPC 6401/1998 Page 3 of 15
4. Before I deal with the arguments urged on behalf of the petitioner, let me reproduce the relevant portion of the enquiry report holding the petitioner guilty of the charges against him. The relevant portion of the enquiry officer's report reads as under:-
"ANALYSIS Shri I.P.S.Gaba, Officer, working in Current Account Department of S.E.Branch (MW-1) deposed, at the time of opening the account of Surlux Mediquip Ltd. no introduction was obtained. He further deposed that the Chief Manager, Shri S.K.Gaur informed him that he would take care of introduction in due course and approved opening of the account (page 26).
It was observed by the Defence Representative that in the Current Account of M/s. Surlux Mediquip Ltd., the signature of Shri Gaba was not appearing anywhere. It is also observed by him that in the Current Account Opening Form under the column introduction, a signature was there which was not verified and dated. The account was opened on 20.5.1993 with the approval of the Chief Manager. Shri Gaba confirmed that till 4.11.93 was no signature of the Introducer on the form and that he informed the Chief Manager the irregularities (page 28).
Shri Shailendra Paul (DW-1) confirmed that he introduced the Current Account of Surlux Mediquip Ltd. (SML) (page 70). He could not confirm whether he was maintaining account with S.E.Branch on the day when the account of Surlux Mediquip Ltd. (SML) was introduced by him (page 71).
I called for the copy of Account Opening Form of Shri Shailendra Paul and his statement of account which Presenting Officer produced to me (page 87). It is observed that the account was opened on 19.9.93 and he maintained a nominal balance of say Rs.2000/- approx. in his account whereas on 20.5.93, Shri Shailendra Paul's introductions were taken by the Branch for opening Current Account of M/s Surlux Mediquip Ltd.
Shri Gaur in his deposition mentioned that he was personally knowing Shri Shailendra Paul and his introduction was taken at the time of opening the account of Surlux Mediquip Ltd. he also expressed that SML is a Public Limited Company and no formal introduction for opening Current Account was necessary. He further expressed the same observation WPC 6401/1998 Page 4 of 15 in his Written Brief (page 15). As per him "there was no need for any further introduction". However, he obtained introduction of Shri Shailendra Paul who was not having any account with the Bank. The purpose of containing the introduction on his conviction that the introduction was not needed, has not been clarified. OBSERVATION It is the practice of the Bank to obtain introduction even at the time of opening Current Account of Limited Companies. The purpose being that the related persons, the Directors etc., should be properly known/introduced to the Bank. Shri Gaur at the time of opening the Current Account of SML as it appears relied on the prevailing practice of the Bank and endeavour to obtain introduction he obtained introduction of Shri Shailendra Paul stated to be known to him personally but not to the Bank. Shri Shailendra Paul, however, opened S/B Account with Bank's S.E.Branch subsequently. FINDINGS Obtaining introduction is not a mere formality. Introduction is necessary, failure to do so might be construed as the Bank has not having acted in good faith without negligence and the Bank may be deprived of the protection under Section 131 of the N.I.A.1881 against claim by the true owner of the cheque wrongly collected by the Bank. It is evident that proper introduction was not obtained at the time of opening the Current Account of SML Charge levelled stands proved.
PART 2 (b) (i) OF THE CHARGE:
ANALYSIS S.E.Branch sent one IOM. No. SJE:CM:SKG:0131 dated 30.5.93 to N.D.Overseas Branch (Ex-M-20), inter alia, stating "Please establish the L/C as the Blue Star, the authorized agents in India of the Hitachi Co., Tokyo, wants to copy of the L/C soon." In the said ICM., it was also mentioned "SML are maintaining CD Account with us as with an average balance of Rs. 20 lacs", "the Importers have agreed to place another Rs. 20 lacs in Short Deposits besides 10% margin."
The Current Account was opened on 20.5.93 and the ICM, as detailed hereinabove that the request to open the L/C was sent to N.D. Overseas Branch on 28.5.1993.
Shri Hardeep Singh Matta (MW-V), deposed that he received request for opening a L/C in foreign currency the rupee value of which was WPC 6401/1998 Page 5 of 15 around Rs.70 lacs plus, meant for some import of medical equipment from the S.E.Branch. The IOM was received by him alongwith a L/C application form. There was no sanction details, he was not convinced about the sanction of the L/C Limit and L/C was not opened. He stated to have been informed the Chief Manager, S.E.Branch, Shri Gaur, about the L/C application over telephone (page 47). Shri Matta was told "that the Branch was getting good business from the party, therefore, the L/C opening application was approved by the branch and the Branch would be getting some deposits from the clients." Considering the fact that the foreign exchange business of the S.E.Branch was attached to Nehru Place Branch, Shri Matta forwarded the papers to Nehru Place Branch for their consideration (page 48).
Shri Gaur in his deposition, however, stated "I did not make any wrong or false or misleading statement in the letter dated 28.5.1993 written to N.D.Overseas Branch." Shri Gaur confirmed that he was aware the amount for which the L/C was requested by SML falls within the authority of Head Office. When P.O. in his cross examination of Shri Gaur pointed out that Shri Gaur stated the SML who are maintaining average balance of Rs. 20 lacs whereas it revealed from the statement of account of SML that their balance was far below Rs.20 lacs, Shri Gaur deposed that the average balance of SML was stated taking into account the position of other accounts of the Group. The P.O.pointed out that Shri Gaur specifically mentioned SML were maintaining CD account with average balance of Rs. 20 lacs.
In his reply to the query of P.O., Shri Gaur deposed "the customers agreed to provide collateral security and another Rs. 20 lacs in short deposits if needed." We never advised need of these to them.".
Shri Gaur however, informed the enquiry "I never desired the opening of L/C. Rather I sought assistance from N.D.Overseas Branch vide my IOM. SKG:131 (Ex-M-20) 89). I had forwarded the request of the party with whatever information I had and even suggested to obtain additional securities like deposits and collateral security, if need be. It clearly indicates that the proposal was not finalized and there was no sanction.". In his written Brief (page 17), Shri Gaur brought out deposition by the witness that the telephone conversation with him were not recorded.
OBSERVATION The letter referred to by Shri Gaur clearly states his desire to establish L/C and there is no evidence that his intention of sending the letter alongwith enclosures was for seeking guidance from N.D.Overseas Branch.WPC 6401/1998 Page 6 of 15
In his letter, he clearly mentioned that SML maintaining average balance of Rs. 20 lacs and that the customers agreed to place another Rs. 20 lacs in short deposits besides 10% margin. There is no convincing reason for which the agreed deposit was not obtained.
FINDINGS It is evident that within 8 days of opening the account, Shri Gaur advised N.D.Overseas Branch to open an irrevocable Import Letter of Credit on behalf of M/s SML without any sanction/approval and by making misleading and factual incorrect statement. The charge levelled stands proved.
PART (b) (ii) OF THE CHARGE ANALYSIS Shri H.S.Matta (MW-V) deposed that considering the fact that the foreign exchange business of S.E.Branch was attached to Nehru Place Branch, he forwarded the papers to Nehru Place Branch for their consideration (page 40) Shri Sushil Kumar (MW -VI) Dy. Chief Manager of Nehru Place Branch confirmed that he received a letter of request for opening L/C on account of SML from N.D.Overseas Branch. He confirmed there was no sanction details and L/C application was almost incomplete. As further deposed by Shri Sushil Kumar, Shri Gaur informed him over telephone that "he is already on the job about the sanction details. He is taking care of the sanction. In the meantime, L/C may be established." Shri Sushil Kumar confirmed that he received 2-3 calls from Shri Gaur before receiving the papers on 3rd June, 93. The L/C application form was incomplete. Shri Gaur advised him to assist the customer to fill in the form (page 50).
The L/C was opened by Nehru Place Branch bearing No. NP: 6108:23:71 dated 4.6.93 (Ex-M-22). The branch did not send communication to S.E. Branch after opening the L/C except sending of Debit Note of roughly Rs. 56,000/-relating to charges for establishment of the L/C.
The L/C copy was handed over directly to the customers instead of sending to the S.E. Branch. Even at the time when the bill under the L/C was received, no sanction for opening of L/C was obtained (page 51) WPC 6401/1998 Page 7 of 15 Shri Sushil Kumar further deposed "it is the responsibility of the Branch to obtain sanction who are sending business to Nehru Place Branch for execution."
During the cross examination by the Defence Representative, the question was posed viz."the IOM states that the party could be rated as "AA". But you made no enquiry in this regard. The witness deposed "I again repeat as a link branch, we are supposed to see foreign exchange control angle whether the L/C can be established or not." All other details mentioned therein are very much irrelevant for us to see. It is the responsibility of the Branch sending the business to obtain sanction at appropriate level (page 54). However, Shri Gaur could not convincingly substantiate as to how he rate the party as "AA" (page 84 and 85). It is revealed that Shri Sushil Kumar opened the L/C without consulting his Chief Manager. He was aware that the business falls under the delegated authority of Head Office. Shri Sushil Kumar confirmed that the L/C application was completely blank but was signed by the customer and he himself completed the L/C application (page 55). In his Written Brief, Shri Gaur also highlighted these facts (page 17,18,19 etc.) However, Shri Sushil Kumar deposed that Shri Gaur over telephone earlier informed him that he would be taking care of sanction part (page
56). Shri Sushil Kumar confirmed that he put the date as 24.5.93 on the L/C application form.
In the written brief (page 16 of Shri S.K.Gaur, he pointed out that the enquiry did not allow witness of Shri K.N.Chaturvedi as requested by him. I wish to mention that the C.O. and the D.R. inspite of repeated requests could not substantiate the relevance and requirement of witness/documents in the enquiry. However, as listed by C.O./D.R.all the witnesses were permitted. Shr. K.N.Chaturvedi's witness was not permitted in the absence of proper explanation/relevance. In regard to Shri K.N.Chaturvedi, as referred by Shri Gaur, I took a decision keeping in view of the fact that the request of Shri Gaur for opening of the L/C was not handled by New Delhi Overseas Branch nor he addressed the letter (Ex-M-
20) for opening the L/C to the Asst. General Manager, New Delhi Overseas Branch or for the attention of Shri K.N.Chaturvedi. OBSERVATION Shri Gaur in his deposition submitted that he neither influenced in any manner on Shri Sushil Kumar nor anyone else. He further expressed "it is beyond comprehension and unimaginable that import L/C of such a large amount is established at branch without any comment/appropriate WPC 6401/1998 Page 8 of 15 knowledge of the Chief Manager and Chief Manager claims that he did not come to know that such a L/C was established without proper sanction for many months".
From the deliberations in the enquiry, it revealed that C.O. having put in about 35 years of service, was well aware of the procedure, rules/regulations of the Bank (page 89). Earlier, erstwhile Dy. Chief Manager of S.E.Branch, Mr. Raghuvansh Kumar, had discussed with C.O.that business required to be sanctioned by preparing proposal etc. Therefore, request for opening of L/C by concerned branch should have been sent only after obtaining proper sanction of appropriate authority, as appraisal/sanction aspect is the responsibility of the forwarding branch. C.O. had forwarded the request (Ex-M-20) categorically stating "please establish the L/C as the Blue Star, the authorised agents in India of Hitachi Co., Tokyo, wants the copy of the L/C soon", and after the L/C was opened sent IOM dated 2.7.93 requesting for amendment to the L/C. Thus C.O.'s contention that he did not desire for opening the L/C (page 89) does not hold good. His deposition that he came to know about opening of L/C in Sept., 93 (page 87), is not also tenable.
FINDING Shri H.S. Matta (MW-V) confirmed that be discussed the L/C matter with Shri Gaur. Shri Sushil Kumar, deposed time and again that Shri Gaur talked to him and discussed about the L/C and requested him to establish the L/C with the communication that the sanction part would be taken care of by him. During the enquiry, Shri Gaur confirmed that he was aware that the sanction of the business was falling within the authority of Head Office. After the L/C was opened, S.E. Branch recovered related margin from the customer. The branch further sent request for amending the L.C to Nehru Place Branch on 2.7.93 signed by the C.O. It is no substantiated nor it is convincing as to how Shri Gaur knowing fully well that the sanction for large amount was not obtained atleast at his level, avoided or did not look into the particulars of the sanction/authority under which the L/C was opened. It appears Shri Sushil Kumar relied on assurance of Chief Manager, Shri Gaur that sanction part would be taken care of by Shri Gaur. This was the responsibility of forwarding branch. It would have been wise for Shri Sushil Kumar, Officer of Nehru Place branch to seek written confirmation of Shri Gaur advising him to open the L/C pending obtention of sanction which he assured to have been taken care of or Shri Sushil Kumar should have sent a letter to S.N. Branch confirming the communication of Shri Gaur. The officer, however, deposed that he retired on the assurance of Shri Gaur for obtaining sanction of the proposal by him.WPC 6401/1998 Page 9 of 15
The evidence as discussed here and the circumstances do not help to believe that Shri S.K. Gaur did not influence atleast Nehru Place Branch to lead the Nehru Place Branch to believe that appropriate sanction would be/were obtained and follows. I consider that Charge stands proved." (underlining added).
5. A reading of the aforesaid portion of the enquiry officer's report, and more particularly the underlined portion shows that petitioner is rightly held guilty of wrongly opening of the account and wrongly recommending the opening of the L/C in favour of the M/s Hitachi Japan, and which company was the seller of the CT scanner which was purchased through the special L/C. The report of the enquiry officer shows that petitioner was the Chief Manager of the Safdarjang Enclave Branch and the account which was opened of the customer M/s Surlux Mediquip Ltd. was without proper introduction inasmuch as introduction was by one Mr. Shailendra Paul who did not have an account with the bank as on 20.5.1993 when the account of M/s Surlux Mediquip Ltd. was opened on the introduction of Mr. Shailendra Paul and account was opened simply because petitioner says that he knew Mr. Shailendra Paul and not because there was a proper introduction. Every bank which open a new account necessarily has to have a proper introduction for opening of the account failing which bank would not have statutory protection of Section 131 of the Negotiable Instrument Act, 1881 as rightly held by the enquiry officer. I may also mention that Sh. Shailendra WPC 6401/1998 Page 10 of 15 Paul who introduced the account of M/s Surlux Mediquip Ltd. ultimately opened an account with the bank much later in September, 1993 and that too that account had only a nominal balance of ` 2000 and so. Quite clearly, enquiry officer was justified in arriving at a finding of wrong opening of the account of the customer M/s Surlux Mediquip Ltd.
6. The enquiry officer has further come to a correct finding that petitioner forwarded an application for opening of the L/C to the New Delhi Overseas Branch (which dealt with the foreign exchange account of Safdarjang Enclave Branch) and which did not state that there was an existing sanction for opening of the L/C. The enquiry officer rightly notes that this letter dated 28.5.1993(Annexure P-7 to the writ petition) specifically asked for opening of the L/C and it does not state any aspect as to the fact that sanction has yet not been obtained for opening of the L/C. Further, the enquiry officer rightly notes that petitioner who had served for as long as 35 years in the bank knew the entire procedure that he could not forward the application for opening of the L/C without there existing an actual sanction for opening of the L/C. An important aspect which is noted by the enquiry officer is that in fact the petitioner not only wrongly asked for opening of the L/C originally in May/June 1993, but also sent a letter to the Nehru Place Branch on 2.7.1993 signed by the petitioner for amending the WPC 6401/1998 Page 11 of 15 L/C when the petitioner knew fully well that sanction had not been obtained for opening of the L/C. The enquiry officer notes that request for opening of the L/C by the concerned branch is only after obtaining proper sanction which was not obtained and it is the responsibility of the forwarding branch and therefore, the petitioner quite clearly is to be faulted with. Enquiry officer has rejected the contention that actually it is the management witness Sh. Sushil Kumar who was posted at the Nehru Place Branch as a Deputy Chief Manager, who is guilty, and enquiry officer had arrived at a finding, and which in my opinion cannot be challenged as perverse under Article 226 of the Constitution of India, that Sh. Sushil Kumar relied upon the assurances of the petitioner and therefore did not go into the aspect very deeply. I may also note in this regard that Sh. Sushil Kumar who appeared as a management witness was chargesheeted and was imposed a penalty of withholding of one increment of pay with cumulative effect.
7. Before me it is very strenuously urged on behalf of the petitioner that actually the proposal originated and took effect because of Mr. Sushil Kumar and not the petitioner. For this purpose, reliance is placed upon the deposition of Sh. Sushil Kumar in the enquiry proceedings, which is filed at running pages 141 to 143 of the writ petition, showing that Sh. Sushil Kumar had filled the application which was blank and he put a date of WPC 6401/1998 Page 12 of 15 24.5.1993, and which is before 28.5.1993 when the petitioner had sent the letter dated 28.5.1993 to open the L/C to the New Delhi Overseas Branch. It is also argued that Sh. Sushil Kumar was not a small officer but was a Deputy Chief Manager and therefore, it is he who is primarily responsible, but yet he has been let off with punishment only of withholding of one increment. In sum and substance, what is argued on behalf of the petitioner is that entire fault was of Sh. Sushil Kumar and not of the petitioner.
8. I have already stated above, the law with respect to the scope of hearing of this Court examining the findings and conclusions of the departmental authorities. I do not find any perversity for this Court to interfere under Article 226 of the Constitution of India inasmuch as, account of the customer had admittedly been opened at Safdarjang Enclave Branch when the petitioner was the Chief Manager, and which account was, as stated above, opened wrongly without any introduction. Not only that, petitioner wrote a letter dated 28.5.1993 without disclosing that actually sanction had not yet been obtained for opening of the L/C. No doubt, Sh. Sushil Kumar filled out the blank application which was signed by the customer, however, Sh. Sushil Kumar has deposed that there was another draft application which was filled in and he only for the sake of convenience and at the request of the customer filled out the application for L/C. In WPC 6401/1998 Page 13 of 15 essence, since the main forwarding branch was the Safdarjang Enclave Branch where the petitioner was the Chief Manager, may be Sh. Sushil Kumar either was negligent or he wrongly relied upon the petitioner, however, the same cannot mean that the main dramatis personae would be Sh. Sushil Kumar and not the petitioner. I do not think that there is such perversity in the findings of as many as four departmental authorities being the enquiry officer, disciplinary authority, appellate authority and the reviewing authority for this Court to substitute its views for that of the departmental authorities, merely because another view is possible. It is not unknown that in offices with hierarchies a certain amount of implied trust does exist between officers of different levels. Therefore, it is nothing unusual for the enquiry officer to give finding of trust placed by Sh. Sushil Kumar upon the petitioner and who admittedly was the branch in-charge from where the loan proposal had to be initiated.
9. I may also note that no doubt Sh. Sushil Kumar has been given a minor penalty, but it is not as if Sh. Sushil Kumar has been allowed to go scot free. He was also charge-sheeted and punished by imposing of a penalty of reduction of one increment of pay.
10. Learned counsel for the petitioner sought to place reliance upon the judgment of a learned Single Judge of this Court in the case of Mrs. Usha WPC 6401/1998 Page 14 of 15 Kumar Vs. Super Bazar Co-operative Store Ltd., 1991 LLR 320 (Delhi) to argue that petitioner is only guilty of a procedural lapse and therefore petitioner ought not to have been imposed with the punishment of dismissal from services. I however cannot agree with this argument because on account of the obvious favoritism shown by the petitioner to Mr. Sushil Kumar, and the illegality committed by him, the bank was caused a huge loss of over Rs. 80 lacs, and the bank in the absence of any security having been taken was ultimately forced to compromise the matter with the borrower for a sum of Rs. 40 lacs after filing for recovery proceedings before the Debt Recovery Tribunal.
11. In view of the above, I do not find any merit in the writ petition, and the same is dismissed, leaving the parties to bear their own costs.
OCTOBER 08, 2013 VALMIKI J. MEHTA, J.
ib
WPC 6401/1998 Page 15 of 15