Karnataka High Court
Shri Subraya Hegde vs Canara Bank on 15 October, 2025
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IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 15TH DAY OF OCTOBER 2025
PRESENT
THE HON'BLE MR. VIBHU BAKHRU, CHIEF JUSTICE
AND
THE HON'BLE MR. JUSTICE C M JOSHI
WRIT APPEAL NO. 1335 OF 2024 (S-RES)
BETWEEN:
SHRI SUBRAYA HEGDE,
S/O LATE SHRI RAMA HEGDE,
AGED ABOUT 68 YEARS,
R/AT FLAT NO. 604, 5(B),
KALPATARU ESATE PHASE II,
PIMPLE GURAV, PUNE-411 061.
...APPELLANT
(BY SRI G.K BHAT, SENIOR ADVOCATE A/W
SMT. SUDHA D, ADVOCATE)
AND:
1. CANARA BANK,
HEAD OFFICE,
INDUSTRIAL RELATION SECTION,
HUMAN RESOURCES WING,
3RD FLOOR, NO.112, J C ROAD,
BENGALURU-560 002.
REP. BY GENERAL MANAGER
DISCIPLINARY AUTHORITY.
2. THE EXECUTIVE DIRECTOR,
CANARA BANK, HEAD OFFICE,
INDUSTRIAL RELATION SECTION,
HUMAN RESOURCES WING, 3RD FLOOR,
NO.112, J C ROAD, BENGALURU-560 002.
3. THE ASSISTANT GENERAL MANAGER,
CANARA BANK,
HRM SECTION, CIRCLE OFFICE,
SHIVAJI ROAD, NEAR MANGALA TALKIES,
SHIVAJINAGAR, PUNE-411 005.
...RESPONDENTS
(BY SRI T P MUTHANNA, ADVOCATE FOR R-1 TO 3)
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THIS WRIT APPEAL IS FILED U/S 4 OF THE KARNATAKA
HIGH COURT ACT PRAYING TO CALL FOR RECORDS, ALLOW THIS
WRIT APPEAL AND SET ASIDE THE JUDGEMENT AND ORDER
DATED 04/07/2024 PASSED BY THE HON'BLE SINGLE JUDGE IN WP
NO.15294/2020 AND CONSEQUENTLY ALLOW THE SAID WRIT
PETITION.
THIS APPEAL HAVING BEEN HEARD AND RESERVED FOR
JUDGMENT ON 30.07.2025 AND COMING ON FOR
'PRONOUNCEMENT OF JUDGMENT', THIS DAY, C M JOSHI J.,
PRONOUNCED THE FOLLOWING:
CORAM: HON'BLE MR. VIBHU BAKHRU, CHIEF JUSTICE
and
HON'BLE MR. JUSTICE C M JOSHI
CAV JUDGMENT
(PER: HON'BLE MR. JUSTICE C M JOSHI)
1. This appeal is filed by the appellant impugning an order of the learned Single Judge in W.P.No.15294/2020 (S-RES) dated 04-07-2024, rejecting the challenge of the appellant to the proceedings of the General Manager of respondent No.1-Canara Bank, dated 30.06.2017, and to pay the pension with appropriate interest.
2. The factual matrix that is relevant for the purpose of this appeal is summarized as below:
(a) The appellant [Petitioner] was working as the Chief Manager of the Branch of respondent No.1 at Deccan Gymkhana Branch, Pune, during 10.07.2014 to 04.03.2016 and he retired on attaining the age of superannuation with effect from 30.04.2016.-3-
(b) While he was working in the said Branch, he issued a Letter of Credit [LoC] for `300.00 crores to a Private Company beyond his powers without entry in the Bank's Books. The said LoC was issued manually when the relevant regulations/norms prescribe the LoC has to be issued digitally in SFMS Portal of the Bank.
(c) Responding to the Bills/invoices submitted to the Bank of India, Karve Road Branch, Pune, by a sister concern of the Private Company in whose favour the LoC was issued, the bills were discounted on the basis of the LoC.
(d) Later, the said LoC was found to be not entered in the Books of the issuing Branch and claim made by Bank of India, was rejected.
(e) On the basis of the complaint filed by the Officer of the Bank of India, a case was registered by CBI/ACB, and after investigation, they filed the chargesheet to the Special Court, Pune, in Special (CBI/ACB) case No.09/2018 on 12.01.2018, against the appellant and several others. After trial, the appellant was convicted and sentenced for the offence under Section 120B of IPC- criminal conspiracy; under Section 13(1) r/w 13(2) of the Prevention of Corruption Act. An appeal against the said judgment of conviction -4- is pending before the Bombay High Court, where the sentence is suspended as an interim measure.
(f) On the administrative side, the respondents-Bank issued a show cause notice dated 12.09.2016, obviously, after the appellant retired from service on 30.04.2016, alleging that the lapses of issuing purported manual LoC of `300.00 crores in favour of M/s.
Varron Auto Company Private Limited, in LC 1/2016, was not entered anywhere in the books of the Bank; was issued manually, which is against the guidelines of the Bank; no commission to the extent of `1.99 crores was collected; marginal security was not obtained; loan papers were not obtained; financial papers were not obtained; sanction was not conveyed to the party and not reported to the Circle Office; issuance of LoC was beyond the powers of the appellant and the Branch; acceptance of the Bills drawn under LoC purported to be given by the Bank of India, Karve Road, Pune, under the signature of the appellant and not keeping the copy of the same in the branch record; and acknowledged the receipt of bills purported to have been given to the Bank of India, Karve road and exposing the Bank to huge risk and financial loss.
(g) Pursuant to the said show cause notice, the appellant issued a reply on 19.09.2016, which was not accepted and an enquiry was instituted after issuing Article of Charges and statement of -5- imputations. The appellant participated in the enquiry and the Enquiry Officer gave his Report on 24.04.2017 stating that the charges leveled stand proved.
(h) The second show cause notice was issued and on considering reply by the appellant, the Disciplinary Authority, ordered for withdrawal of pension to the full extent permanently as envisaged under Regulations 43 and 45 of the Canara Bank (Employees') Pension Regulations, 1995 [Pension Regulations, 1995].
(i) The appeal to the Executive Director of the respondent-Bank was rejected on 06.06.2018 confirming the order of the Disciplinary Authority.
3. The appellant, approached this Court in W.P.No.15294/2020 contending that the Disciplinary Authority had no jurisdiction to initiate any disciplinary proceedings after the date of superannuation. The learned Single Judge found that there is no infirmity in the proceedings conducted against the appellant and as such, dismissed the writ petition.
4. The learned counsel appearing for the appellant submits that Regulations 43 and 45 of the Pension Regulations, 1995, could not -6- have been invoked to impose the punishment of withdrawal of pension since the appellant was not found guilty as on the date of Disciplinary Authority's order. He submits that the judgment of the Criminal Court was only delivered on 05.10.2021 and therefore, Disciplinary Authority could have invoked Regulation No.48, concerning the pension. Regulation 48, can only be invoked, if there is any pecuniary loss caused due to criminal breach of trust or forgery. The withdrawal of the pension could only be done with prior consultation with the Board of Directors and not otherwise. When the Disciplinary Authority has opined that there is no financial loss caused to the Bank, and there was no such consultation with the Board, the impugned order is liable to be set aside.
5. In support of his contention, he places reliance on the following decisions:
(1) State Bank of India and others V Navin Kumar Sinha1;
(2) Murugan O K V. The Divisional Manager, Canara Bank and others2
6. Per contra, the learned counsel appearing for respondents submits that the Disciplinary Authority opined that the 1 2024 SCC OnLine SC 3369 2 [Writ Petition No.35266/2024 (S-R) decided on 04.03.2025]. -7- appellant/petitioner attempted fraud in issuing LoC manually, despite there being the Guidelines to issue the same digitally on SFMS portal. Such LoC, nowhere finds a place in the Books of Deccan Gymkhana Branch, Pune, and therefore, an independent enquiry without relying upon the judgment of the Criminal Court was permissible and in pursuance to the report of the enquiry officer, the Disciplinary Authority has imposed the punishment. It was unnecessary for the respondents to wait for the finding by the Criminal Court and therefore, the contentions of the appellant are unsustainable. He contends that the Dispute Resolution Committee, constituted for deciding the claim of Bank of India, as against respondent No.1- Canara Bank, has recommended a sum of `225.00 crores to be paid to Bank of India, and the balance should be borne by the Bank of India itself. Therefore, respondent No.1 has suffered the financial loss.
7. In this regard, he places reliance on the following decisions:
(1) Union of India and others V Subedar Ram Narain etc.3, (2) AFR Satya Narayan Dora, V. State Bank of India and another rendered by Orissa High Court, Cuttack4 (3) P. Mathivanan Inbaraj V. Canara Bank and another;
rendered by Madurai Bench of Madras High Court5 ; 3 AIR 1998 SC 3225;
4[W.P.(C) No.24026/2017; decided on 08.12.2021]; 5 2023 SCC OnLine Mad 594 -8- (4) J.B. Chaudry V Indian Overseas Bank and others;
rendered by High Court of Delhi6
8. The appellant, basically challenges the jurisdiction of the Disciplinary Authority to initiate the enquiry after the superannuation of the appellant on 30.04.2016. It is his contention that Regulations 43 and 45 of the Pension Regulations, 1995, speak of conviction by the Court and therefore, the withdrawal of the pension is unsustainable. The provisions of Regulations 43,44, 45 and 48 are reproduced below for better understanding:
"43. Withholding or withdrawal of pension:-
The Competent Authority may, by order in writing, withhold or withdraw a pension or a part thereof, whether permanently or for a specified period, if the pensioner is convicted of a serious crime or criminal breach of trust or forgery or acting fraudulently or is found guilty of grave misconduct.
Provided that where a part of pension is withheld or withdrawn the amount of such pension shall not be reduced below the minimum pension per mensem payable under these Regulations."
44. Conviction by Court:-
Where a pensioner is convicted of a serious crime by a Court of Law, action shall be taken in the light of the judgment of the court relating to such conviction.
45. Pensioner guilty of grave misconduct:-
In a case not falling under Regulation 44 if the Competent Authority considers that the pensioner is prima facie guilty of grave misconduct, it shall, before passing an order, follow the procedure specified in Canara Bank Office Employees' (Discipline 6 2013 SCC OnLine Del 3230 -9- and Appeal) Regulation, 1976 or in Settlement as the case may be.
xxxxxxx
48. Recovery of Pecuniary loss caused to the Bank:-
(1) The Competent Authority may withhold or withdraw a pension or a part thereof, whether permanently or for a specified period and order recovery from pension of the whole or part of any pecuniary loss caused to the Bank if in any departmental or judicial proceedings the pensioner is found guilty of grave misconduct or negligence or criminal breach of trust or forgery or acts done fraudulently during the period of his service:
Provided that the Board shall be consulted before any final orders are passed:
Provided further that departmental proceedings, if instituted while the employee was in service, shall, after the retirement of the employee, be deemed to be proceedings under these regulations and shall be continued and concluded by the authority by which they were commenced in the same manner as if the employee had continued in service.
(2) No departmental proceedings, if not instituted while the employee was in service, shall be instituted in respect of an event which took place more than four years before such institution:
Provided that the disciplinary proceedings so instituted shall be in accordance with the procedure applicable to disciplinary proceedings in relation to the employee during the period of his service.
(3) Where the Competent Authority orders recovery of pecuniary loss from the pension, the recovery shall not ordinarily be made at a rate exceeding one third of the pension admissible on the date of retirement of the employee:
Provided that where a part of pension is withheld or withdrawn, the amount of pension drawn by a pensioner shall not be less than the minimum pension payable under these regulations."
9. The Apex Court in the case of State Bank of India V. Navin Kumar Sinha, referred supra, has held as below:
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"31. As has been held by this Court on more than one occasion, a subsisting disciplinary proceeding i.e. one initiated before superannuation of the delinquent officer may be continued post superannuation by creating a legal fiction of continuance of service of the delinquent officer for the purpose of conclusion of the disciplinary proceeding (in this case as per Rule 19(3) of the Service Rules). But no disciplinary proceeding can be initiated after the delinquent employee or officer retires from service on attaining the age of superannuation or after the extended period of service."
10. It is pertinent to note that the said finding was in the backdrop of Order 19(1) of the State Bank of India Officer's Service Rules, 1992, where there was no provision which is in pari materia with Regulation 48 of the Pension Regulations, 1995. In that context, the Apex Court held that "no disciplinary proceeding can be initiated after the delinquent employee of officer retires from service". Thus the said decision can be distinguished.
11. In the case of Murugan O.K. V. The Divisional Manager, Canara Bank and others referred supra, this Court has held in para 10 as below:
"No doubt, as contended by learned counsel for the respondent-Bank Sri.Muthanna, the Bank has every right to recover the pecuniary loss caused to the Bank by its employees in accordance with the relevant Regulations. Regulation 43 of 1995 Regulations empowers the competent authority to withhold or withdraw the entire pension, if the pensioner is convicted of a serious crime or criminal breach of trust or forgery or acting fraudulently or is found guilty of grave misconduct, which means power to withhold or withdraw pension would be available to the respondent Bank only on happening of certain events and finding a Bank employee guilty of grave misconduct in an enquiry. Regulation 46 of 1995 Regulations permits recovery of amount determined in an enquiry from the gratuity or pension. Regulation 48 of 1995
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Regulations empowers the Bank to recover pecuniary loss caused to the Bank by its employees and order recovery from the pension, if in any departmental or judicial proceedings, the pensioner is found guilty of grave misconduct or negligence. Regulation 49 of 1995 Regulations empowers the Bank to recover bank dues such as housing loans, advances, license fees, other recoveries and recoveries due to staff co-operative credit society from the commutation value of the pension or the pension or the family pension. But none of the regulations would permit the respondent-Bank to recover the entire pension amount without conducting enquiry. If recovery of entire pension is permitted towards recovery of loan balance, it would defeat the very object of payment of pension."
12. It is pertinent to note that the powers of the bank to withhold or withdraw the entire pension are only in the circumstance if the employee is found guilty in a criminal case or so found in the disciplinary inquiry. In the event, there is loan dues, then recovery can be done only to the extent of 50% and not more under regulation 48. The appellant in the above case was found to owe the bank certain amount concerning a loan raised by him during his service. He had contended that an enquiry cannot be instituted for recovery of such dues. Therefore, the facts are totally different and cannot be applied to the case on hand.
13. In the case of J.B. Chaudhry Vs. Indian Overseas Bank and others, referred supra, the learned Single Judge of the Delhi High Court observed as below:
"9. What the counsel for the petitioner argues by reference to Regulation 44 is an argument which has to be seen in the context of earlier Regulations 42 and 43. Regulation 44 only gives one of the reasons on the basis of which pension can be
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stopped i.e conviction on account of a serious crime by Court of law and that Regulation does not say that for other reasons pension cannot be stopped. In fact, Regulation 42 makes it clear that future good conduct shall be an implied condition of every grant of pension and its continuance under these regulations. Regulation 43 read with Regulation 45 shows that if a retired employee is found guilty of misconduct there is an entitlement to withhold or withdraw the pension. Regulation 45 lays down the procedural requirement that the necessary procedure provided in the Indian Overseas Bank Officer Employees' (Discipline and Appeal) Regulations, 1976 will have to be followed. Therefore, in my opinion, there is no basis that Pension Regulations of the respondent No.1 prevent conducting of departmental proceedings after superannuation/retirement of an employee. In fact, the Regulations provide otherwise i.e they specifically provide that in case of grave misconduct departmental proceedings can be initiated for withholding or withdrawing of the pension even after the retirement/superannuation, and also that good conduct is necessary for continuing of the pension.
10. The final argument which is urged on behalf of the petitioner is that the chargesheet has not been issued by the appropriate authority. In support of this argument, counsel for the petitioner has also placed reliance upon the definition of "Competent Authority" as found in Regulation 2 (e) of the Indian Overseas Bank Officer Employees' (Conduct) Regulations, 1976 of the respondent No.1. Surely, a company functions through its Board, however, such Board does and in fact has delegated powers with respect to various aspects to various authorities of the bank. A general argument that it is only the Chairman which is the competent authority therefore cannot in any manner assist the petitioner. In any case, I would leave this aspect to be urged and decided in the departmental proceedings which have been initiated against the petitioner. The issue as to whether or not the Chairman is the competent authority will also be an issue which the petitioner can raise in the departmental proceedings and which will be decided in the departmental proceedings inasmuch as before me there is no sufficient material filed by the petitioner to decide this issue one way or the other."
14. The perusal of Regulation 43 shows that it speaks of:
a) Withholding or withdrawing of pension or part of it;
b) Whether permanently or for a specified period;
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c) If the pensioner is convicted of a serious crime or criminal breach of trust or forgery or acting fraudulently or is found guilty of grave misconduct.
When the impugned order was passed, there was no such conviction. The proviso to Regulation 43 directs minimum pension to be paid if part of the pension is withheld or withdrawn.
15. Regulation 45 deals with the situation when the pensioner is guilty of grave misconduct. If the pensioner is not convicted by a Court, but the Competent Authority finds the pensioner guilty, such finding has to be in accordance with the procedure laid down in Canara Bank Officer Employees (Discipline and Appeal) Regulations, 1976. Thus, there is no need to resort to look into Regulation 48. It is not the case of the respondents that the withholding or withdrawing the pension is not for recovery of the pecuniary loss.
16. The learned Single Judge has relied on the decision in the case of P. Mathivanan Inbaraj Vs. Canara Bank and others, referred supra, rendered by Madras High Court, which lays down that the Regulations 43 and 45 stand in isolation to Regulation 48 and as such, there is no need to consult the Board of Directors while passing the order of withholding or withdrawal of the pension. In para 53 and 54 of the said judgment, it is observed as below:
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"53. As already stated above, Regulation 48 relates to recovery of pecuniary loss caused to the Bank, wherein clause (2) mandates that no departmental proceedings, if not instituted while the employee was in service, shall be instituted in respect of an event which took place more than four years before such institution. Though clause (2) of Regulation 48 starts with the words "No departmental proceedings", however, what is to be seen is the heading under which the said provision stands. It falls under the heading "Recovery of Pecuniary loss caused to the Bank". In effect, it means that only if the competent authority intends to recover the pecuniary loss caused to the bank by the act of the pensioner while in service, the competent authority could resort to Regulation 48 and in such a situation clause (2) of Regulation 48 would get attracted. Therefore, if a departmental proceedings is to be initiated for the purpose of recovering the pecuniary loss caused to the bank from the pension of the erstwhile employee, then in such a scenario, it should be instituted within a period of four years from the date on which the event took place and any period beyond four years from the date on which the event took place, no departmental proceeding could be initiated. Further, if such a departmental proceeding is initiated, before any order is passed either for withholding or withdrawing the pension and also an for order of recovery from pension, the Board shall be consulted by the competent authority before passing any order.
54. However, if the intention of the competent authority is not to recover, from pension, the pecuniary loss caused to the bank, there is no necessity for the competent authority to resort to Regulation 48 and the competent could very well resort to Regulation 45 and in such circumstances, departmental proceedings could be initiated by following the procedure prescribed under the DA Regulations and subject to the outcome of the enquiry, the competent authority can pass orders under Regulation 43 without resorting for any consultation with the Board. In the aforesaid scenario, by no means could Regulation 43 and 48 be read in conjunction and both the Regulations stand in isolation and are to be invoked in the scenarios, which the competent authority decides, subject to what the competent authority intends to do on the outcome of the proceedings, if any, initiated against the pensioner."
17. We agree with the above view. The appellant was found to have committed grave misconduct. Such finding was in accordance with the procedure laid under Canara Bank Officer
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Employees (Discipline and Appeal) Regulations, 1976. Therefore, we find no reason to hold that the views of the learned Single Judge can be faulted on any aspect. The appeal is unmerited and as such, the same is dismissed.
18. Pending applications are also disposed of.
Sd/-
(VIBHU BAKHRU) CHIEF JUSTICE Sd/-
(C M JOSHI) JUDGE tsn*