Nand Kishore Katyal vs Bank Of India And Ors.
1989 Latest Caselaw 62 Del

JUDGMENT

B.N. Kirpal, J.

(1) The challenge in this writ petition is to the punishment imposed on the petitioner pursuant to disciplinary proceedings which were held against him.

(2) Briefly stated the facts are that in the year 1973 the petitioner was appointed as the Manager of the newly opened Branch of respondent No. I During his tenure as a Manager of the said branch, he sanctioned a hypothecation loan of Rs. 20,000 on 15th September, 1976 in favor of M/s. Texline Agencies. According to the petitioner, the stock of the said firm at that time was of the value of Rs. 62,057.73. On 5th November, 1976 this account was closed and a fresh pledge account was sanctioned by the petitioner for Rs. 50,000. The case of the petitioner is that at that time M/s Texline Agencies had stock worth Rs. 79578.00 which was kept in the Bank. On 31st January, 1977 another hypothecation loan of Rs. 20,0001- was sanctioned against the value of the stock in the show room of Texline Agencies which was stated to be worth Rs. 1,05,809.08.

(3) On the date when the petitioner sanctioned the opening of a pledge account, the respondent-Bank wrote a letter dated 5th November, 1976 to the petitioner. This letter was in relation to the aforesaid hypothecation account which had been opened on 15th September, 1976. In this letter the petitioner was, inter alia, informed that the Reserve Bank had in its latest directives stated that the margin should be 30% whereas the petitioner had proposed a margin of 25% only. The petitioner was further told by this letter that instead of obtaining ' quarterly statements he should obtain them monthly. This letter which was received on 11-11-76 in the bank was replied to by the petitioner's letter dated 16th November, 1976. In his letter it was, inter alia, stated that the petitioner had revised the margin at the rate of 30% and that stock statements would be obtained every month and inspection will also be carried out every month. The case of the petitioner is, and this is not disputed, that the petitioner went on leave on 11th November, 1977 and rejoined duty on 24th November, 1977. According to the petitioner, the letter of 16th November, 1976 had been dictated in his absence by another officer of the Bank and with the rush of work and along with other correspondence, the petitioner signed this letter on 24th November, 1976 and the same was dispatched to the Regional Manager of the respondent-Bank. According to the petitioner, this letter pertained to the cash credit hypothecation limit dated 15th September, 1975 whereas on that day in fact the cash credit hypothecation limit no longer existed as this account had been converted into a pledge account.

(4) The petitioner ultimately relinquished his charge on 5th May, 1977 on his transfer to Muzaffarnagar and the charge was handed over to one Shri C. S. John. According the petitioner his successor had started checking the record as from 11th April, 1977 and had assumed charge after he was satisfied about the correctness of all the accounts.

(5) On 18th March, 1978 a letter was written to the petitioner by the Regional Manager of the respondent-Bank bringing to his notice serious irregularities with respect to the Bank's transactions with M/s Texline Agencies. The reference was to the three amounts which had been sanctioned by the petitioner and it was, inter alia, stated that the petitioner had not complied with the letter dated 5th November 1976 and that the petitioner had granted hypothecation facility on 31st January, 1977 when the pledge account was already out of order. It was also contended that requisite stock inspection had not taken place and the petitioner had not submitted the sanction proposals to the Regional and Area office for their record. The petitioner sent a reply vide his letter dated 4th April, 1978 setting out the aforesaid facts mentioned in the writ petition and contended that no irregularity had been committed by the petitioner.

(6) The petitioner thereafter received a letter dated 29th January, 1980 from the Assistant General Manager who was the disciplinary authority staling that it was proposed to institute disciplinary proceedings against the petitioner for acts of misconduct alleged to have been committed by him during his tenure as the Agent, Muzaffarnagar Branch. Along with this letter, were the articles of charge which read as fellows : "ARTICLE-1, You sanctioned Hypothecation limit of Rs. 20,000.00 to Mis Texline Agencies on '15-9-1976 vide Branch Proposal No. 4 /51 with margis of 25% and stock inspection to be carried out quartely. When you sent to Regional Office a copy of the said proposal for their perusal, you were advised to enhance the margin from 25% to 30% and also to obtain stock statements and conduct stock inspection monthly instead of quarterly. You did not comply with the instructions of the Regional Office and deliberately misrepresented to them by informing vide Branch Iom NO. Mzn : Aka 1164 dated 16-11-1976 that you have complied with their instructions. You closed this account on 5-11-1976 by transferring the entire outstanding balance to the firm's new pledge account with the limit of Rs. 50,000 sanctioned by you. ARTICLE-II You sanctioned pledge limit of Rs. 50.000 on 5-11-1976 to M/s Texline Agencies, vide Branch proposal No. 4159 to close their 'Hypothecation account (limit-Rs. 20,000.00 ) which was not being conducted satisfactorily and was out of order. You did not send to Regional Office a copy of the said proposal for their noting. You stipulated margin of only 25% and quarterly stock statements inspections in the said Pledge account in contravention of the previous instructions of the Regional Office in this regard. While lodgment of goods by the borrower with the Bank, you did not obtain full details such as quantity rate, purchases invoices etc. so as to ascertain the value of the goods pledged with the Bank and, thus deviated from the norms for disbursement of the advance and as a result of which the goods pledged were not found adequate to cover the outstanding balance in the account. You neither obtained stock statements nor did you arrange inspection of the stocks at all during your tenure as Branch Agent although it was expected of you to obtain stock statements from the borrowers and inspect their stocks monthly. The said account had gone had on account of your aforesaid irregularities and the Bank had to initiate legal proceedings against the party for recovery of the outstanding amount. ARTICLE-III You again sanctioned hypothecation limit of Rs. 20,000.00 on 31-1-1977 to M/s Texline Agencies vide your Branch Proposal No. 515 in order to cover up the out of order position of their pledge account with the limit of Rs. 50,0001-. You did not endorse a copy of the aforesaid proposal to Regional Office for their noting. Even in this advance also you stipulated a margin of only 25 percent and stock statements I inspection were stipulated quarterly in contravention of the instructions of the Regional Office in this regard. You did not obtain Guarantee letter in from OD-174 from the guarantors while obtaining documents for hypothecation limit of Rs. 20,0001- sanctioned by you on 31-1-1977 as a result of which the advance remained unsecured by the third party Guarantees of Mr. Bharat Bhushan Garg and Krishan Gopal having worth Rs. 2 lakhs, and 3 lakhs respectively. You neither obtained stock statements nor conducted inspection of stocks hypothecated before disbursement and you treated the sanctioned limit as drawing limit. You have thus shows undue favor to the said firm to the detriment of Bank's interest." It was alleged that the aforesaid acts amounted to misconduct in terms of Clause 24 of the Bank of India Officers Employees (Conduct) Regulations, 1976 as the petitioner had committed the breach of clause 3(i) of the said Regulations "by failing to discharge your duties with utmost integrity, honesty, devotion and diligence and acted in a way unbecoming of a Bank Officer". The Enquiry Officer submitted his report dated 20th May, 1982 and came to the conclusion that all the three articles of charge had been proved beyond doubt. The case of the petitioner is that the disciplinary' authority had initially recommended penalty of only reduction of the petitioner in the time scale by one stage that subsequently the disciplinary authority was prevailed upon to impose the punishment of compulsory retirement vide order dated 22nd November, 1982.

(7) The petitioner then filed an appeal and vide an order dated 21st March, 1983 the appeal of the petitioner was partly allowed. The Appellate Authority found that nothing had been brought on record to the effect that the petitioner had taken any illegal gratification or that he had manipulated the accounts to give out of way accommodation particularly as the petitioner had obtained better security by converting the hypothecation limit into pledge account, which he would not have done if his idea was to deceive the Bank. The Appellate Authority also noted that the subsequent two Managers had given satisfactory report after taking over charge of the Branch about the security documents and the inspection of stocks. What was found by the Appellate Authority against the petitioner was as follows : "WHATtherefore, can be held against Shri Katyal is merely that he did not give correct position about not maintaining of margin and conversion of the account and carrying out inspection in the account quarterly instead of monthly in contravention to the Regional Office instructions and also granting second hypothecation limit mainly for the purpose of reducing the out of order position in the pledge a/c."

(8) The Appellate Authority then considered as to what punishment should be imposed on the petitioner. He held that the petitioner had granted the advances as genuine business transactions but he had not safeguarded the interest of the Bank. He further held that the petitioner was trying to cover up his lapses by not reporting to the higher authorities. Keeping in view 27 years of service, which the petitioner had put on; in the Bank the Appellate Authority came to the conclusion that the punishment of compulsory retirement would cause great hardship and would be humiliating. According to him the ends of justice would be met if a major penalty of "reduction to a lower grade as well as to a lower stage in time scale in terms of clause 4(e) of Officer Employees' . (Discipline & Appeal) Regulations is imposed on the Appellant". The Appellate Authority did not stop here. He further observed that having regard to the gravity of the misconduct and that he was earlier cautioned for his lapses in advance accounts. Shri Katyal is downgraded to Junior Management Grade Scale I and fitted on basic pay of Rs 1320 p.m. on 13th stage in time scale".

(9) The petitioner in this writ petition, as already observed, has challenged the aforesaid orders of the disciplinary authority as well as the Appellate Authority.

(10) It has been contended by the petitioner that the charges as framed do not fall in the category of 'misconduct' and that the interest of the Bank was fully protected. It is also the contention of the petitioner that in fact more than one punishment has been awarded and his was not permissible. Mr. Marwaha also submitted that the action of the respondents was arbitrary and violative of Article 14 of the Constitution because in the case of another officer who was guilty of more serious lapse, a lesser punishment was awarded. According to the petitioner the clauses of the Regulations were violative of Articles 14 and 16 as there were no guidelines as to how they were to be exercised.

(11) The respondents, in their return, have supported the impugned orders and have contended that; no illegality has been committed.

(12) The first submission which is raised before me by the learned counsel for the petitioner was that the charges as framed do not fall in the category of misconduct, in order to appreciate this, it is necessary to see the relevant clauses of the Regulations. Clause 3(i) of the Regulations reads as follows :    "3(I)General Every Officer employee shall, at all times take all possible steps to ensure and protect the interests of the bank and discharge his duties with utmost integrity, honesty, devotion and diligence and do nothing which is unbecoming of a bank officer."  

Clause 24 of the said Regulations is as follows :    "24.Acts of Misconduct : A breach of any of the provisions of these regulations shall be deemed to constitute a misconduct punishable under the Bank of India (Discipline and" Appeal) Regulations, 1976."  

According to the learned counsel, clause 3(i) is general in nature and cannot be regarded as amounting to misconduct. Reliance is placed by him on A.L. Kaira v. The Project and Equipment Corporation of India Ltd., - In that case the officer had been found guilty of misconduct as prescribed by rule 4(l)(i) and (iii) of the Corporation Rules which read as under :    "4(1)Every employee shall at all times : (i) maintain absolute integrity (ii) ............... (iii) do nothing which is unbecoming of a public servant."  

The Court further noted that Rule 5 prescribed various misconducts for which action could be taken against employees governed by the rules. According to the Supreme Court the aforesaid rule 4 specified a norm of behavior and did not specify that its violation will constitute misconduct. It was noted that "in Rule 5, it is nowhere stated that anything violative of Rule 4 would be per se a misconduct in any of the sub-clauses of R. 5 which specifies misconduct. It would therefore appear that even if the facts alleged in the two heads of charges are accepted as wholly proved, yet that would not constitute misconduct as prescribed in Rule 5 and no penalty can be imposed for such conduct....... Rule 4 does not specify a misconduct". In my opinion. A. L. Kalra's case can be of no assistance to the learned counsel for the petitioner because in the present case clause 24 (supra) clearly states that breach of any of the provisions of the Regulations shall be deemed to constitute misconduct. Clause 3 (i), though general in terms, is part of the same Regulations and its breach must necessarily constitute an act of misconduct. It is inconceivable that if an employee does not discharge his duties with utmost integrity, honesty or devotion, it cannot be regarded as an act of misconduct.

(13) It was then sought to be submitted that on the facts of this case, the petitioner had not acted in any manner which could be regarded as a misconduct within the meaning of clause 130).

(14) The jurisdiction of this Court under Article 226 of the Constitution is not an appellate jurisdiction. The Court would, normally, not investigate or go into the disputed questions of fact. In the present case the conclusions arrived at by the appellate authority with regard to the three articles of charge are conclusions of fact. Unless and until it can be shown that the said conclusions are perverse or not based on any evidence, it would not be open to this Court to go into questions of fact and even come to a different conclusion.

(15) In the present case, it has been found as a fact by the appellate authority that the petitioner was not guilty of taking any illegal gratification. It has further been found that the stock position was satisfactory as per report given by the subsequent two officers. To this extent, therefore, the petitioner succeeded before the Appellate Authority. The Appellate Authority, however, found that the petitioner had not given correct position about not maintaining the margin and about conversion of the accounts and about carrying out inspection quarterly instead of monthly. It was further found by the appellate authority that the petitioner had granted second hypothecation limit mainly for the purpose of reducing the out of order position in the pledge account. This latter finding regarding the grant of the second hypothecation limit cannot be regarded as perverse when one finds that when this hypothecation limit was granted immediately the sum of Rs. 20,000 was transferred to the Pledge Account. The appellate authority has come to the conclusion that this hypothecation limit has been granted solely with a view to reduce the position in the pledge account and it is not possible for me to come to the conclusion that tins conclusion of the appellate authority is either perverse or without any evidence. This being so, the findings of the appellate authority have to be accepted.

(16) Where the appellate authority appears to have committed an error is in the interpretation and application of clause 4(e)of the Officer Employees' (Discipline and Appeal) Regulations. Clause 4 deals with both minor as well as major penal- ties. Clause 4(e) reads as follows : "4. Penalties : The following are the penalties which may be imposed, on as officer employee, for acts of misconduct or for any other good and sufficient reasons. (e) reduction to a lower grade or post, or to a lower stage in a time scale;

(17) Under clause 4(e) the major penalties which can be imposed are either of the following three in nature :    "(A)reduction to a lower grade'. (b) reduction to a lower post; or (c) reduction to a lower stage in a time scale."  

The word "or" used in clause 4(e) shows that the penalty which can be imposed can be either of these three types. The word "or" is not to be read as meaning "and".   

(18) In the present case, the petitioner was in Scale Ii This scale was of Rs. 1200-70-1550-75-2000. In this scale the petitioner had reached the highest and was drawing Rs. 20001- per month since 1982. The petitioner, by the impugned order of the appellate authority, was reduced to Scale I which was of Rs. 700-40-900-50-1100-EB-1200-60-1800. As a result of. the appellate authority's order the petitioner was not only reduced from Scale Ii to Scale I but in Scale I he was fitted on a basic salary of Rs. 1320.00 per month which was 13th stage in the time scale. According to the learned counsel for the respondents, in the time scale of Rs. 1200-2000 the petitioner was at the 12th stage and, therefore, he was put in the 13th stage in the lower scale of Rs. 700--1800. He was placed at the 13th stage instead of 12th in Rs. 700-1800 because in the scale of Rs. 1200-2000 the petitioner had been at Rs. 2000.00 for more than one year.

(19) To my mind, this action of the respondents resulted in imposing two punishments on the petitioner. Firstly, the petitioner was reduced to lower grade or time scale. Secondly, in the lower scale he was not put at the corresponding position but was put lower down in that time scale. In the scale to Rs. 1200--2000 an-officer could reach the highest in the scale on his earning 12 increments because, as is evident from. the scale indicated above, the rate of annual increments was Rs. 70.00 and, after Rs. 1550.00 , it was Rs. 75.00 . On the other hand, the 'rate of increment in the lower scale of Rs. 700-1800 varied from Rs. 401- per year to Rs. 60.00 , year. It, therefore, took longer number of years for an officer in scale I to reach the top of the scale, namely, Rs. 1800.00 .

(20) In my opinion, when a person is directed to be reduced. to a lower grade then his relative position in the lower grade has to be fixed. This is best fixed by taking a percentage and nut by taking the number of stages which he had reached in the scale from which he was reduced. The petitioner had reached the highest of scale Ii, namely, Rs. 2000.00 per month. Either the petitioner should have been reduced in that scale, which was not done in this case, or he could have been placed at the corresponding position in scale I which was at the highest of scale of Rs. 700-1800. The petitioner should, therefore, have been put at Rs. 18001- and not at Rs. 1320.00 . The effect of the order of the respondents is, as already noted, the petitioner being put to a lower stage in a time scale in the lower grade. The reading of the order of the appellate authority clearly shows that the punishment which he had imposed was reduction to a lower grade as well as to a lower stage in time scale. The appellate authority was in error in presuming that both the punishments of reducing the petitioner to a lower grade as well as putting him in the lower stage in the time scale could be imposed. In my opinion, this should not be done and this is evident from the reading of clause 4(e) of the aforesaid Regulations. The petitioner could have either been reduced to a lower grade or to a lower stage in the same time scale in which he was. On the facts of this case the petitioner should have been reduced to the corresponding position in the lower grade, namely, to the scale of Rs. 700--1800 from scale of Rs. 1200-2000 and the corresponding position of the petitioner in the lower scale would be at Rs. 1800.

(21) It is only to this extent that the order of the appellate authority is set-aside and prevailed. There is no reason as to why the other findings of the appellate authority should be interfered with in any manner.

(22) Before concluding, I may notice that a contention had been raised that the appellate authority had taken into consideration the comments of the disciplinary authority at the time when the appellate authority considered the appeal. It was suggested that such consideration of comments could amount to violation of the principles of natural justice. Realizing that the consequence of success of this contention may be the setting aside of the order of the appellate authority and remission of the case for fresh decision, learned counsel for the petitioner did not press this ground.

(23) For the aforesaid reasons the writ petition is partly allowed. A writ of mandamus is issued directing the respondents to fix the pay of the petitioner at Rs. 1800 in the scale of Rs. 700-1800 instead of the petitioner having been placed at Rs. 1320.00 in the said scale. The result of this would be that the petitioner would be entitled to all the consequential benefits including fixation of a proper seniority and consideration for promotion in his turn, if the re-fixation of the salary of the petitioner at Rs. 1800 has any effect on seniority and future promotion. There will be no order as to costs.