Vinod Kumar vs Bank Of India Through Its Chairman ...
2013 Latest Caselaw 5875 ALL

HIGH COURT OF JUDICATURE AT ALLAHABAD, LUCKNOW BENCH
 
 

                                                                                                                       
 
Reserved
 

 
Writ Petition No.1647 (SB) of 2010 
 

 
Vinod Kumar 					...	Petitioner 
 

 
Versus
 

 
Bank of India and others 			...	Opposite parties 
 

 
----------- 
 

 
Hon'ble Rajiv Sharma, J.

Hon'ble Dr. Satish Chandra, J.

Heard Mr.Kapil Deo, Senior Advocate duly assisted by Mr.Ashwani Kumar, learned Counsel for the petitioner and Mr.Lalit Shukla, Advocate appearing for the respondent-Bank.

Petitioner, who was working as Staff Officer MM-III in the Bank of India, was dismissed from the service, has filed the instant writ petition questioning the validity and correctness of the dismissal order dated 25.6.2010, appellate order dated 16.9.2010, forfeiture and recovery order dated 6.8.2010 including the order dated 22.9.2010 passed on the application, contained in Annexure Nos.1, 2, 3 and 4 to the writ petition.

Bereft of unnecessary details, in short, facts of the case are that during the period 24.5.2005 to 23.5.2007, when the petitioner was posted as Chief Manager, Bank of India, Rudauli Branch, the Branch received a loan application from one Rajesh Singh for setting up a rice mill in the name of M/s Singh Rice Mill in the month of December, 2005. The loan was proposed to be secured by mortgage of land of Khasra nos.2600 and 2656, which was in the name of the proposed Guarantor Shri Tej Bhan Singh whereas the rice mill was proposed to be set up on a separate land, namely, khasra No.2933. After receipt of application for grant of loan, the petitioner carried out the pre-sanction inspection and submitted its report on 24.1.2006 indicating therein that two properties were inspected, viz., the properties which were proposed for mortgage and the property on which the mill was situated. Thereafter, the papers were given to Shri G. N. Khare, an Advocate on the Bank's Panel for the last 25 years, who, in turn, submitted its report dated 22.12.2005 certifying that the land of Khasra Nos.2600 and 2656 could be mortgaged in favour of the bank. The proposal was sanctioned by the Bank and the land Khara Nos.2600 and 2656 was mortgaged in favour of the Bank.

As proprietor of M/s Singh Rice Mill committed default in re-payment of loan, the Branch initiated recovery proceedings against it by filing recovery certificate with the revenue authorities. In this connection, the Rudauli Branch informed the revenue authorities that the rice mill was located on the property which had been mortgaged in favour of the Bank. According to the petitioner, this information furnished by the petitioner's successor was factually incorrect as in the records of the bank, the rice mill was established on different property and not on the mortgaged property, i.e. Khasra Nos.2600 and 2656.

It is in this background that the Additional District Magistrate, Faizabad got the matter investigated by the Naib-Tahsildar, Milkipur and thereafter informed the Bank that no rice mill is existing on the mortgaged property, i.e. Khasra Nos.2600 and 2656 and its owner Shri Tej Bhan Singh had sold his property in 1996. However, on 20.3.2010, the Bank initiated disciplinary proceedings against the petitioner for committing gross dereliction of duties and in gross violation of Bank's procedure while sanctioning cash-credit limit and term loan to M/s Singh Rice Mills, a proprietorship concern of one Rajesh Singh.

After conclusion of enquiry, on 1.6.2010, the Inquiry Officer gave a finding of PROVED. However, the loss was quantified by him likely around Rs.25.68 lacs. Thereafter, on 25.6.2010, the Disciplinary Authority imposed the punishment of 'Dismissal' upon the petitioner. Aggrieved by the aforesaid punishment order, the petitioner preferred an appeal under sub-regulation 17 of the Bank Regulation to the Zonal Manager/Appellate Authority, who rejected the same vide order dated 16.9.2010.

On 25.6.2010, a show-cause notice was also issued to the petitioner requiring him to show cause as to why recovery/ forfeiture of Rs.25.68 lacs be not made from the Provident Fund (Bank's Contribution) and Gratuity of the petitioner. Though the petitioner replied to the show cause notice on 14.7.2010, yet it was rejected by the Deputy Zonal Manager, Bank of India, Lucknow Zone on 6.8.2010 and recovery of Rs.25.68 was ordered to be made from the petitioner. Thereafter, the petitioner submitted a representation to the Zonal Manager, Bank of India, Lucknow, who too rejected it vide order dated 22.9.2010. This order has also been assailed in the instant writ petition.

Learned Counsel for the petitioner has submitted that the disciplinary proceedings are governed by the procedure laid down in the Bank of India Officer Employees' (Discipline and Appeal) Regulations, 1976 [in short referred to as the 'Regulations']. Regulation-6 provides procedure for imposing major penalties and enjoins that no major penalty can be awarded except after an enquiry in accordance with the Regulations. Regulation 6 (17) casts a duty upon the Inquiring Authority to give an opportunity to the delinquent employee enabling him to explain any circumstances appearing in the evidence against him. This duty is to be performed after the evidence is closed. It has been vehemently argued that the Inquiring Authority in spite of oral request of the petitioner did not allow the aforesaid statutory opportunity, which vitiates the entire disciplinary proceedings including the order of dismissal.

Elaborating his submissions, learned Counsel for the petitioner submitted that there are serious defects in the disciplinary proceedings as principles of natural justice have been violated with impunity. According to him, the investigation report submitted by the management witnesses as also the report submitted by the Naib-Tahsildar, which were utilized against the petitioner were never supplied to him. Furthermore, during the course of inquiry, the petitioner requested for the joint inspection of record of the office of Sub-Registrar to ascertain the correct fact but the same was also not done. Even the Naib-Tahsildar, whose investigation report was heavily relied upon by the Inquiry Officer, was not called by the Inquiry Officer to prove the document or to give an opportunity to the petitioner for cross-examination. Thus, serious prejudice has been caused to the petitioner and he has been deprived of his vital right to put his effective version in order to defend himself.

Learned Counsel for the petitioner next contended that the Inquiry Officer in its report has concluded that on account of negligence of the petitioner, there is likelihood that the bank will suffer financial loss to the tune of Rs.25.68 lacs. The disciplinary authority passed the order for recovery of Rs.25.68 lacs against the petitioner. The appellate authority also rejected the appeal without dealing with the pleas raised by the petitioner. Both the authorities overlooked the specific pleas of the petitioner regarding non-supply of relevant documents and the fact that borrower had not only deposited Rs.4 lacs towards the loan on 3.8.2010 and a compromise had also been arrived at between the bank and the borrower. Therefore, inflicting the ultimate punishment of dismissal is not commensurate with the guilt of the petitioner as neither there is any charge of embezzlement or misappropriation nor causing deliberate financial loss to the bank.

Per contra, Mr. Lalit Shukla, learned Counsel for the Bank submits that the petitioner was given the copies of documents relied upon by the authorities. He was given ample opportunity to defend his case, witnesses were examined and thereafter, final orders were passed by the competent authority in accordance with law and after following the principles of natural justice. During the course of inquiry, neither the petitioner requested for any document after giving the relevancy of those documents in the inquiry proceedings nor the request of the petitioner was rejected for examining any witnesses during the course of inquiry. The petitioner has no right to question the findings recorded by the departmental authorities under Article 226 of the Constitution of India.

Counsel for the Bank contended that it is incorrect to say that sub-Regulation 17 of Regulation-6 is applicable upon the petitioner. The aforesaid Regulation comes into picture when Inquiring Authority would have been the disciplinary authority. In the instant case, the departmental inquiry was conducted by the inquiring authority and not by the disciplinary authority itself. The investigating report was not supplied to the petitioner, as the Presenting Officer of the Bank claimed its privilege. It is true that the report of the Tahsildar was considered by the authority but the petitioner was dismissed from service not only on the basis of the report of the Tahsildar, but there were other materials available on record.

On the strength of the decisions rendered in Syndicate Bank vs Venkatesh Gururao Kulatai [(2006) 3 SCC 150], Staet of U.P. vs Raj Kishore Yadav [(2006) 5 SCC 673], State Bank of India vs Ramesh Dinker Punde [(2006) 7 SCC 212], State 7 SCC 236] and Bank of India vs Ram Lal Bhaskar [(2011) Bank of India vs T. Jogram [(2007) 7 SCC 236] and State of India vs Narendra Kumar Pandey [(2013) 2 SCC 740], Counsel for the Bank submitted that non-supply of the document which is neither forming part of the charge sheet relied upon by the prosecution nor relied upon by the authorities will not violate the principles of natural justice. Therefore, the assertion of the petitioner that the authorities have violated the principles of natural justice is wholly incorrect and misconceived. Lastly, it has been contended that the petitioner has no right to question the findings recorded by the departmental authorities under Article 226 of the Constitution and jurisdiction of this Court under Article 226 of the Constitution cannot be converted as a Court of Appeal.

It is no doubt true that in cases arising out of disciplinary proceedings culminating in punishment of an employee, scope of judicial review is somewhat restricted in the sense that it is a decision making process, which is open for judicial review and not the decision itself. The Court does not sit in appeal. If the procedure prescribed is followed strictly in accordance with rules and the delinquent employee has been given adequate opportunity of defence, the disciplinary authority by assessing record has reached to a conclusion which a person of ordinary prudence in a given set of circumstances may arrive, this Court shall not interfere with the order of punishment, if any, unless it is shown that the same is without jurisdiction or is otherwise bad on account of mala fide etc.

At the same time, a person cannot be denied his right to earn livelihood enshrined under Article 226 of the Constitution of India unless he has been given adequate opportunity of hearing and the conclusion drawn by authorities is one which is probable and permissible from bare perusal of documents and not otherwise. The authorities exercising quasi judicial functions are not courts. They are not bound by principles of evidence yet certain basic principles will have to be observed which may dispel a complaint against fairness, impartiality and pre determination of mind on the part of the employer.

In B.C. Chaturvedi Vs. Union of India reported in 1995 (6) SCC 749, reiterating the principles of judicial review in disciplinary proceedings, the Apex Court held in para 12 as under:

"Judicial review is not an appeal from a decision but a review of the manner in which the decision is made. Power of judicial review is meant to ensure that the individual receives fair treatment and not to ensure that the conclusion which the authority reaches is necessarily correct in the eye of the court. When an inquiry is conducted on charges of misconduct by a public servant, the Court/Tribunal is concerned to determine whether the inquiry was held by a competent officer or whether rules of natural justice are complied with. Whether the findings or conclusions are based on some evidence, the authority entrusted with the power to hold inquiry has jurisdiction, power and authority to reach a finding of fact or conclusion. But that finding must be based on some evidence. Neither the technical rules of Evidence Act nor of proof of fact or evidence as defined therein, apply to disciplinary proceeding. When the authority accepts that evidence and conclusion receives support therefrom, the disciplinary authority is entitled to hold that the delinquent officer is guilty of the charge. The Court/Tribunal in its power of judicial review does not act as appellate authority to re appreciate the evidence and to arrive at its own independent findings on the evidence. The Court/Tribunal may interfere where the authority held the proceedings against the delinquent officer in a manner inconsistent with the rules of natural justice or in violation of statutory rules prescribing the mode of inquiry or where the conclusion or finding reached by the disciplinary authority is based on no evidence. If the conclusion or finding be such as no reasonable person would have ever reached, the Court/Tribunal may interfere with the conclusion or the finding, and mould the relief so as to make it appropriate to the facts of each case."(para 12)

In years by gone the initial exercise of the Courts was first to find out the nature of the order, whether it is an administrative or quasi-judicial order and then to proceed to apply the principles of natural justice. The Apex Court for the first time in the case of State of Orissa Vs. Dr. (Ms.) Bina Pani Dei [AIR 1967 SC 1265] broke free from the necessity to examine nature of the order. It held that even an administrative order or decision involving civil consequences, has to abide by the rules of natural justice. The Constitution Bench in the famous case of A.K. Kraipak V. Union of India [AIR 1970 SC 150] blunted it further to near extinction. It found that "The aim of the rules of natural justice is to secure justice or to put it negatively to prevent miscarriage of justice. These rules can operate only in areas not covered by any law validly made. In other words they do not supplant the law of the land but supplement it. The concept of natural justice has undergone a great deal of change in recent years. In the past, it was thought that it included just two rules, namely (I) no one shall be a judge in his own cause (Nemo debet esse judex proprise causa), and (2) no decision shall be given against a party without affording him a reasonable hearing (audi alteram partem). Very soon, a third rule was envisaged and that is the quasi-judicial inquiries must be held in good faith without bias and not arbitrarily or unreasonably and it went on to hold;

"If the purpose of the rules of natural justice is to prevent miscarriage of justice one fails to see why those rules should be made inapplicable to administrative inquiries. Often times it is not easy to draw the line that demarcates administrative inquiries from quasi-judicial inquiries. Inquiries which were considered administrative at one time are now being considered as quasi-judicial in character. Arriving at a just decision is the aim of both quasi-judicial inquiries as well as administrative inquiries. An unjust decision in an administrative enquiry may have more far reaching effect than a decision in a quasi-judicial enquiry."

When a departmental enquiry is conducted against the employee, it cannot be treated as a casual exercise. The enquiry proceedings also cannot be conducted with a closed mind. The inquiry officer has to be wholly unbiased,impartial and fair. The rules of natural justice are required to be observed to ensure not only that justice is done but is manifestly seen to be done. The object of rules of natural justice is to ensure that an employee is treated fairly in proceedings, which may culminate in imposition of punishment including dismissal/removal from service.

In State of Madhya Pradesh vs. Chintaman Sadashiva Waishampayan; AIR 1961 SC 1623; State of U.P. vs. Shatrughan Lal and another; (1998) 6 SCC 651 and State of uttaranchal and others vs. V. Kharak Singh (2008) 8 SCC 236, the Apex Court has emphasized that a proper opportunity must be afforded to a government servant at the stage of the enquiry, after the charge sheet is supplied to the delinquent as well as at the second stage when punishment is about to be imposed on him. In State of Uttaranchal & ors. V. Kharak Singh (supra) the Apex Court has enumerated some of the basic principles regarding conducting the departmental inquiries and consequences in the event, if these basic principles are not adhered to, the order is to be quashed. The principles enunciated are reproduced herein:

(a) The enquries must be conducted bona fide and care must be taken to see that the enquiries do not become empty formalities.

(b)	If an officer is a witness to any of the incident 	which 	is the subject matter of the enquiry or if 	the enquiry 	was initiated on the report of an 	officer, then in all 	fairness he should not be the Enquiry Officer. If 	the 	said position becomes 	known after the 	appointment of the Enquiry Officer, during the 	enquiry, 	steps should be taken to see that the    	task of holding an 	enquiry is assigned to some other 	officer.
 
(C)	In an enquiry, the employer/department should 	take steps first to lead evidence against the 	workman/delinquent charged,  give an 	opportunity to 	him to cross-examine the 	witnesses of the employer. 	Only thereafter, the 	workman/delinquent be asked 	whether he 	wants to lead any evidence and asked to 	give 	any explanation about the evidence led against 	him. 
 
On receipt of the enquiry report, before proceeding further, it is incumbent on the part of the disciplinary/punishing authority to supply a copy of the enquiry report and all connected materials relied on by the enquiry officer to enable him to offer his views, if any.
 

 

In Meenglas Tea Estate v. Its Workmen AIR 1963 SC 1719 the Supreme Court observed that "it is an elementary principle that a person who is required to answer the charge must know not only the accusation but also the testimony by which the accusation is supported. He must be given a fair chance to hear the evidence in support of the charge and to put such relevant questions by way of cross-examination as he desires. Then he must be given a chance to rebut the evidence led against him. This is the barest requirement of an enquiry of this character and this requirement must be substantially fulfilled if the result of the enquiry can be accepted.

In State of U.P. v. C.S. Sharma, AIR 1968 SC 158 the Supreme Court held that omission to give opportunity to an employee to produce his witnesses and lead evidence in his defence vitiates the proceedings. It was further held that a dismissal order has serious consequence and should be passed only after complying with the rules of natural justice.

Considering the importance of access to documents in statements of witnesses to meet the charges in an effective manner the Apex Court in Kashinath Dikshita versus Union of India and others; (1986)3 SCC 229 held in clear words that no one facing a departmental enquiry can effectively meet the charges unless the copies of the relevant statements and documents to be used against him are made available to him. In the absence of such copies the concerned employee cannot prepare his defence, cross examine the witnesses and point out the inconsistencies with a view to show that the allegations are incredible. Observance of natural justice and due opportunity has been held to be an essential ingredient in disciplinary proceedings.

In S.C.Givotra v. United Commercial Bank 1995 (Supp) (3) SCC 212, the Supreme Court set aside the dismissal order which was passed without giving the employee an opportunity of cross-examination.

A Division Bench of this Court in Radhey Kant Khare vs. U.P. Cooperative Sugar Factories Federation ltd. [2003](21) LCD 610] held that after a charge-sheet is given to the employee an oral enquiry is a must, whether the employee requests for it or not. Hence a notice should be issued to him indicating him the date, time and place of the enquiry. On that date so fixed the oral and documentary evidence against the employee should first be led in his presence. Thereafter the employer must adduce his evidence first. The reason for this principle is that the charge-sheeted employee should not only know the charges against him but should also know the evidence against him so that he can properly reply to the same. The person who is required to answer the charge must be given a fair chance to hear the evidence in support of the charge and to put such relevant questions by way of cross-examination, as he desires. Then he must be given a chance to rebut the evidence led against him.

In Roop Singh Negi vs. Punjab National Bank & others:(2009) 2 SCC 570, the Apex Court held that in the departmental enquiry, mere production of documents is not enough. The contents of documentary evidence has to be proved by examining witnesses. The relevant paras-14, 15 and 23 read as under:-

"14. Indisputably, a departmental proceeding is a quasi-judicial proceeding. The enquiry officer performs a quasi-judicial function. The charges levelled against the delinquent officer must be found to have been proved. The enquiry officer has a duty to arrive at a finding upon taking into consideration the materials brought on record by the parties. The purported evidence collected during investigation by the investigating officer against all the accused by itself could not be treated to be evidence in the disciplinary proceeding. No witness was examined to prove the said documents. The management witnesses merely tendered the documents and did not prove the contents thereof. Reliance, inter alia, was placed by the enquiry officer on the FIR which could not have been treated as evidence.

15. We have noticed hereinbefore that the only basic evidence whereupon reliance has been placed by the enquiry officer was the purported confession made by the appellant before the police. According to the appellant, he was forced to sign on the said confession, as he was tortured in the police station. The appellant being an employee of the Bank, the said confession should have been proved. Some evidence should have been brought on record to show that he had indulged in stealing the bank draft book. Admittedly, there was no direct evidence. Even there was no indirect evidence. The tenor of the report demonstrates that the enquiry officer had made up his mind to find him guilty as otherwise he would not have proceeded on the basis that the offence was committed in such a manner that no evidence was left.

23. Furthermore, the order of the disciplinary authority as also the appellate authority are not supported by any reason. As the orders passed by them have severe civil consequences, appropriate reasons should have been assigned. If the enquiry officer had relied upon the confession made by the appellant, there was no reason as to why the order of discharge passed by the criminal court on the basis of selfsame evidence should not have been taken into consideration. The materials brought on record pointing out the guilt are required to be proved. A decision must be arrived at on some evidence, which is legally admissible. The provisions of the Evidence Act may not be applicable in a departmental proceeding but the principles of natural justice are. As the report of the enquiry officer was based on merely ipse dixit as also surmises and conjectures, the same could not have been sustained. The inferences drawn by the enquiry officer apparently were not supported by any evidence. Suspicion, as is well known, however high may be, can under no circumstances be held to be a substitute for legal proof."

We are of the considered opinion that the observations in the cases, referred to above, are fully applicable in the facts and circumstances of this case. Non-supply of documents demanded by the petitioner which were actually utilized against him have a potential to cause prejudice to an employee in the enquiry proceedings which would clearly be denial of a reasonable opportunity to submit a plausible and effective rebuttal to the charges being inquired into against the employee/officer.

As much emphasis has been laid on Regulation 6 (17) by both the parties, we deem it appropriate to reproduce the same:-

"The Inquiring Authority may, after the officer employee closes his evidence and shall, if the officer employee has not got himself examined, generally question him on the circumstances appearing against him in the evidence for the purpose of enabling the officer employee to explain any circumstances appearing in the evidence against him.

A perusal of the aforesaid Regulations would show that it contains the word "Inquiring Authority" only and there is no reference to "Disciplinary Authority" in this regulation. Therefore, the assertion of the Bank that aforesaid Regulation comes into picture when Inquiring Authority would have been the disciplinary authority himself, is not acceptable.

Non-supply of the Investigation Report on the ground of privilege claimed by the Presenting Officer is against the provisions of the Regulations. We find force in the assertion of the petitioner that according to Regulation 6 (12), only the authority having custody or possession of the document can claim privilege. Thus, the Presenting Officer had no authority to claim privilege. It is immaterial whether the Bank has relied exclusively or not, on the investigating report whilst framing the charges. Once the Investigating Officer was produced as management witness, the petitioner had the right to cross-examine him on the contents of his investigation report. According to sub-regulation 5 (iv) of Regulation 6 of the Regulations, the Inquiring Authority supplied a copy of the statement of witnesses. This implies that the Disciplinary Authority had supplied the copy of the Investigating Officer's report to the Inquiring Authority. Failure to provide this report to the petitioner has, therefore, resulted in the Inquiring Authority, giving his finding based on material obtained behind the back of the petitioner. It may be noted that a perusal of record shows that Deputy Collector, Milkipur, District Faizabad wrote a letter dated 10.4.2009 to the Bank, which was produced by the Presenting Officer. According to the petitioner, this letter contains three Annexures, out of which Annexure 2 is the Investigating Report of Naib-Tahsildar. It is hard to believe that when other two Annexures enclosed with the letter are available with the Bank, how can the third Annexure can be said to be not available on the record of the Bank. It creates serious doubt in our minds regarding innocence of the Bank.

It is settled principle that if any material is sought to be used in an enquiry, the copies of material must be supplied to the party against whom such an enquiry is held. The Disciplinary Authority as well as Appellate Authority did not consider this aspect of the matter and expressed their concurrence to the finding of the Inquiry Officer, without applying their independent and free mind. The assertion of the Bank that there is no violation of any statutory provision or principles of natural justice while conducting the disciplinary proceeding is wholly misconceived and is rejected. The Appellate Authority while considering the appeal of the petitioner failed to appreciate the fact that the Enquiry Officer at the back of the petitioner had proved charges without affording reasonable opportunity to controvert the same. Therefore, the order of Appellate Authority is bad in law and cannot be sustained.

So far as order of recovery is concerned, it is the specific stand of the petitioner that the borrower had already deposited a sum of Rs.4 lacs towards the loan on 3.8.2010 and a compromise has also been arrived at in between the borrower and the bank for depositing the remaining amount with the bank. The bank in its counter-affidavit candidly admitted that the offer submitted by the borrower is under consideration and the compromise is yet to be materialized. However, they did not deny the fact that Rs.4 lacs were deposited by the borrower towards the loan. The petitioner in his rejoinder-affidavit has stated in paragraph 28 that borrower of the loan has entered into a compromise with the bank and in consequence whereof, some amount was deposited by the borrower. He also pointed out that the compromise was approved by the General Manager on 17.8.2010 and the Zonal Office of the Bank informed the same to Rudauli Branch on 29.11.2010. This fact is substantiated by the letter dated 29.11.2010 written by the Chief Manager of the Bank to the proprietor of M/s Singh Rice Mill, which is on record. When the borrower had deposited the amount towards the settlement of loan, no financial loss has accrued to the Bank there was no justification to recover the same amount from the petitioner's gratuity and provident fund. The Bank ought to have modified the order of recovery or recalled it but the same was not done.

The long and short of the discussion and taking the holistic view of the matter, the writ petition deserves to be allowed, which is hereby allowed and the impugned orders dated 25.6.2010 passed by the Disciplinary Authority, 16.9.2010 passed by the Appellate Authority, the order dated 6.8.2010 forfeiting and recovery passed against the petitioner as also the order passed on the application of the petitioner dated 22.9.2010 are hereby quashed. As the petitioner has already attained the age of superannuation much earlier, no useful purpose would be served for ordering fresh enquiry in the matter. Since the petitioner has attained the age of retirement, the intervening period between the date of dismissal and date of retirement shall be treated as period rendered in service for the purposes of payment of terminal benefits.

Dt.18..9.2013

MH/lakshman