Balwant Rai Gupta vs Jammu & Kashmir Bank Ltd.
1991 Latest Caselaw 731 Del

JUDGMENT

Sonanda Bhandare, J.

(1) The petitioner was appointed as a Clerk with the respondent-Jammu & Kashmir Bank Limited in the year 1958 and continued to work with the Bank in various capacities and ultimately was promoted as Chief Manager. He was transferred to the Divisional Office at New,Delhi in April 1984. The petitioner was served with a charge-sheet dated19.7.1984 on alleged charges of misconduct. He submitted a reply on 13.8.1984denying the allegations. Thereafter, a supplementary charge-sheet was given to the petitioner on 20.11.1984 and additional allegations of misconduct were Levelled against him. The petitioner submitted a further detailed reply on28.121984 to the supplementary charge and denied the correctness of the alleged charges. Not being satisfied by the reply given by the petitioner, the respondent communicated to the petitioner that it had been decided to hold an enquiry against him and appointed Dr. B.L. Wanchoo, Deputy GeneralManager, Delhi as Enquiry Officer in the matter. Thereafter, enquiry was conducted by the said Enquiry Officer which commenced on 18.2.1985 and ended on 10.10.1985. The petitioner was placed under suspension on 18.7.1986pending final orders. The order of suspension was followed by a show-cause notice dated 23.7.1986 communicating to the petitioner that it had been decided by the respondent to dismiss the petitioner from service and the petitioner was directed to show cause as to why he should not be dismissed from service of the Bank with immediate effect. In response the petitioner sent a reply dated 8.8.86and requested that a copy of the inquiry report be given to him and submitted an interim reply. The respondent vide letter dated 22.9.1986 sent a copy of the inquiry report and asked the petitioner to send his further reply within 15 days from the date of the issuance of the said letter. Before the petitioner could send the reply to the show-cause notice and before the expiry of 15 days of the receipt of the letter dated 22.9.1986 he received a letter on 15.11.1986 from the Chief Manager, Divisional Office, New Delhi enclosing an order of dismissal dated 10.10.1986. Thereafter, the petitioner filed an appeal against the order of the dismissal to the appellate authority i.e. the Chairman of therespondent on 21.11 1986 Which was rejected on 18.4.1987. The petitioner has,therefore, filed the present writ petition challenging the order of dismissal dated 10.10.1986 as also the order dated 14.4.1987 rejecting the appeal.

(2) A preliminary objection was raised by the respondent regarding the maintainability of the writ petition and it was submitted that the Jammu and Kashmir Bank Limited is not a "State" within the meaning of Article 12 of the Constitution of India and thus the writ petition filed against the Bank under Article 226 of the Constitution of India is not maintainable.

(3) Lengthy arguments were advanced by the learned Counsel for therespondent and a plethora of authorities were cited. It was submitted that since the affairs and working of the respondent Bank is managed by the Board of Directors and is not subject to any directions or instructions which the government may issue to government departments or statutory organisations,undertakings, body or corporations, the respondent is not an agency or instrumentality or an authority within the meaning of Article 12 of the Constitution of India and consequently not amenable to the writ jurisdiction of thisCourt.

(4) Though large number of cases were cited by the learned Counsel for the parties in support of the preliminary contention, for the sake of brevity.I will only refer to a few of them.

(5) The Supreme Court in Ramana Dayaram Shetty v. International Airport Authority of India, considered the question whether International Airport Authority of India was "State" within the meaning of Article 12 so as to subject to enforcement of fundamental rights against it. The Supreme Court observed that the corporations acting as instrumentality or agency of government would obviously be subject to the same limitation in the field of constitutional and administrative law as government itself, though in the eye of the law, they would be distinct and independent legal entities If theGovernment acting through its officers is subject to certain constitutional and public law limitations, it must follow a fortiori that Government acting through the instrumentality or agency of .corporations should equally be subject to the same limitations. While dealing with the question as to how to determine whether a corporation is acting as an instrumentality or agency of the government, the Supreme Court observed as under : "A corporation may be created in one of the two ways. It maybe either established by statute of incorporated under a law such as the Companies Act, 1956 or the Societies Regulation Act, 1860.Where a corporation is wholly controlled by Government not only in its policy making but also in carrying out the functions entrusted to it by the law establishing it or by the Charter of its incorporation,there can be no doubt that it would be an instrumentality or agency of the Government........"

The Supreme Court further observed : "IT will thus be seen that there are several factors which may have to be considered in determining whether a corporation is an agency or instrumentality of Government. We have referred to some of these factors and they may be summarised as under : Whether there is any financial assistance given by the State and if so what is the magnitude of such assistance, whether there is any other form of assistance given by the State, and if so whether it is of the usual kind or it is extraordinary, whether there is any control of the management and policies of the corporation by the State and what is the nature and extent of such control, whether the corporation enjoys State conferred or State protected monopoly status and whether the functions carried out. by the corporation are public functions closely related to governmental functions. This particularisation of relevant factors is however. not exhaustive and by its very nature it cannot be because with increasing assumption of new task growing complexities of Management and administration and the necessity of continuing adjustment in relations between the corporations and Government calling for flexibility, adaptability and innovative skills, it is not possible to make an exhaustive enumeration of the tests which would invariably and in all cases provide an unfailing answer to the question whether a corporation is Government instrumentality or agency".

The Supreme Court came to the conclusion that the InternationalAirport Authority is "State" within the meaning of Article 12 of the Constitution of India.

(6) In Ajay Hasia v. Khalid Mujib, while holding that the Engineering College, a Society registered under the Jammu & Kashmir Registration Societies Act, 1898 is authority within the meaning of Article 12 ofthe Constitution of India, the Supreme Court observed as under : "THE tests for determining as to when a corporation can be said to be an instrumentality or agency of Government may now be called out from the judgment in the International Airport Authority'scase. These tests are not conclusive or clinching, but they are merely indicative indicia which have to be used with care and caution because while stressing, the necessity of a wide meaning to be placed on the expression "other authorities" it must be realised that it should not be stretched so far as to bring in every autonomous body which has some nexus with the Government within the sweep of the expression. A wide enlargement of the meaning must be tampered by a wiselimitation. We may summarise the relevant tests gathered from the decision in the International Airport Authority's case as follow :1. "One thing is clear that if the entire share capital of the corporation is held by Government it would go a long way towards indicating that the corporation is an instrumentality or agency ofthe Government."2. "Where the financial assistance of the State is so much as to meet almost entire expenditure of the corporation, it would afford some indication of the corporation being impregnated with governmental character " ..3. "It may also be a relevant factor......whether the corporation enjoys monopoly status which is State conferred or Stateprotected".4. "Existence or deep and 'pervasive State Control may afford an indication that the corporation is a State agency or instrumentality."5. "If the functions of the corporation are of public importance and closely related to governmental functions, it would be a relevant factor in classifying the corporation as an instrumentality oragency of government."6. "Specifically, if a department or government is transferred to acorporation. It would be a strong factor supportive of this inference of the corporation being an instrumentality or agencyof the Government."

The Supreme Court further observed : "WE may point out that it is immaterial for this purpose whether corporation is created by a Statute or under a Statute. Thetest is whether it is an instrumentality or agency of the Government and not as to how it is created. The inquiry has to be not as to how the juristic person is borne out why it has been brought intoexistence. The corporation may be a statutory corporation created by a Statute or it may be a Government Company or a company formed under the Companies Act, 1956 or i.t may be a society registered under the Societies Registration Act, 1860 or any other similarStatute. Whatever be its genetical origin, it would be an "authority within the meaning of Article 12 if it is an Instrumentality or agencyof the government and that would have to be decided on a proper assessment of the facts in the light of the relevant factors. The concept of instrumentality or agency of the Government is not limited to a corporation created by a statute but is equally applicable to a company or society and in a given case it would have to be decided,on a consideration of the relevant factors, whether the company or society is an instrumentality or agency of the Government so as to come within the meaning of the expression "authority" in the Article 12."

(7) In a more recent judgment in Tek Raj Vasandi alias K.L. Vasandhiv. Union of India Others, while considering the question whether Institute of Constitutional and Parliamentary Studies, an Institute registered under the Societies Act is an agency or instrumentality of the State,the Supreme Court observed :It is time to turn to the facts of the present .case to find out asto what the conclusion should be when the tests formulated by the several cases of this Court referred to above are applied. There cannot indeed be a strait jacket formula. It is not necessary that all thetests should be satisfied for reaching the conclusion either for or against holding an institution to be "State". In a given case some ofthe features may emerge so boldly and prominently that a second view may not be possible. There may yet be other cases where the matter would be on the border line and it would be difficult to take one view or the other outright.

 (8) The Supreme Court, however on the facts of that case came to the conclusion that a broad picture of the matter has to be taken and a discerning mind has to be applied keeping the realities and human experiences in view so as to reach a reasonable conclusion. On consideration of the facts of that case they held that Institute of Constitutional and Parliamentary Studies (ICPS) is not an agency or instrumentality of the State so as to come within the purview of "other authorities" in Article 12 of the Constitution. The Supreme Court further observed:    "WE must say that Icps is a case of its type-typical in many ways and the normal tests may perhaps not properly apply to test itscharacter."  

 (9) The Supreme Court in Som Prakash v.Union of India, Mr 1981SC 212 held that Bharat Petroleum Corporation is a State within the meaning of Article 12. Similarly, in A.L. Kalra v. Project & Equipment Corporation. , the Supreme Court held that Project & Equipment Corporation of India is other authority within the meaning of Article 12 of the Constitution.Similar question came up for consideration before the Supreme Court in Central Inland Water Transport Corporation v. Brojo Nath Ganguly. , and it was held that Central Inland Water Transport Corporation, a Government company under Section 617 of the Companies Act is State withinthe meaning of Article 12. The Supreme Court observed as under :    "IF there is an instrumentality or agency of the State which has assumed the garb of a Government company as defined in Sec. 617 of the Companies Act, it does not follow that it thereby ceases to beas instrumentality or agency of the State. For the purpose of Art. 12 one must necessarily see through the corporate veil to ascertain whether behind that veil is the face of an instrumentality or agencyof the State. The Corporation, which is the Appellant in these two .appeals before us, squarely falls within these observations and it also satisfies the distinct tests which have been laid down"  

 (10) Again in M.K. Aggarwal v. Gurgaon Gramin Bank and Others, the Supreme Court held Gurgaon Gramin Bank constituted under the Regional Rural Banks Act 1976 to be State within the meaning ofArticle 12 and observed as follows :    "NOW to the second point. The bank is constituted under the Regional Rural Banks Act, 1976. Having regard to its constitution and nature of its legal entity and the measures of State control, it is an instrumentality of the State and is made of latter's own flesh andbones' and is, accordingly, "State" within the meaning and for,purposes, of Article 12 of the Constitution."  

 Similarly, Prathma Bank established under Regional Rural Banks Act 1976 was held to be an instrumentality of the State in Prathma Bank v. Vijay Kumar Goel & Another, . In M/s.Dwarkadas Marafatia & Sons v.Board of Trustees of the Port of Bombay, , the Supreme Court held that Bombay Port Trust established under Major Port Trusts Act, 1989/1963 is other authority and organ of the State and hence its every action/activity in respect of any right conferred or privilege granted by any Statute is subject to Article 14 and must be reasonable and must be taken only upon lawful and relevant grounds of public interest.. Again, Indian Oil Corporation was held to be a State in Mahabir Auto Stores & Others v Indian Oil Corporation &Others,  and the Supreme Court observed that its action must be reasonable, fair and just.   

 (11) In Modern Food Industries (India) Limited v. M.D. Juvekar, 1988(2) Slr 659, wherein it is held that Modern Food Industries (India) is a State within the meaning of Article 12. In I.A. Abraham v. Balaram Puli, 1988Labour & Industrial Cases Noc 40 the Andhra Pradesh High Court held PragTools, to be a State. The Andhra Pradesh High Court in T.A. Anhraham'scase (supra) observed as under :    "IN the instant case, the facts clearly indicate that almost the entire capital was held by the Central and State Governments. The Company is under the administrative control of the Ministry of defense Government of India, for a very long time and now under the Administrative control of the Ministry of Industry, Government of. India, the Board of Directors were all appointed by the Government and can be removed by the Government, that the tools and machinery manufactured by the appellant's company enjoy monopolystates. It is not enough to examine seriatim each of the factors upon which a Corporation is claimed to be an instrumentality or agency of Government and to support a finding to that effect. It is the aggregate or cumulative effect all the relevant factors that is controlling.The cumulative effect of all the relevant factors in the present case renders the appellant's company to be an "instrumentality of the State" within the meaning of Article 12 of the Constitution."  

(12) The question whether Jammu and Kashmir Bank Limited i.e. therespondent herein is an instrumentality or agency of the State Government or whether it can be termed as an "authority", within the meaning of Article 12 of the Constitution came up for consideration before the High Court of Jammu& Kashmir in Jagdish Chander Gupta v. Jammu & Kashmir Bank Limited, AIR19^6 J & K1,.The Division Bench of the Jammu & Kashmir High Court held as under:From the aforesaid discussion we have to analyze as to whether respondent Bank fulfillls all or any of the tests laid down by theSupreme Court for clothing it with the status of an instrumentality oragency of the State. Entire share capital of the respondent Bank isnot owned by the State Government. It owes only a major portion of it, rest of it is owned by private persons. Therefore, according to this test, respondent Bank cannot be held to be an authority for purposes of Article 12 of the Constitution of India as it is not an instrumentality or agency of the State Government.The entire expenditure is not met with the financial assistance ofthe State Government of the resportdent-Bank, therefore, it cannot be termed as an agency or instrumentality of the State Government.It does not enjoy monopoly status which is the State conferred or State protected. Enjoyment of 'monopoly would mean that therespondent Bank is the only Bank conducting banking business under the patronage of the State Government. It may have monopoly qua the State Government but it has no monopoly status in the State which is protected by any Jaw. Therefore, it cannot be termed as aninstrumentality or agency of the State Govt.It has no deep or pervasive State control. Its administrative control is vested in the Board of Directors, majority of them are from the general public. Adminis' ration of the respondent Bank is vested in the Board of Directors and not in the State Government.From among the public it can have seven members on the Board of Directors who are in no way connected with the State Government.Its functions are not of public importance and closely related tothe Government functions. It is a business concern and cannot be said to be discharging any functions which is closely related to theGovt. functions. There is no obligation on the Government to run a banking business. It may patronise a Bank or it may transact its business with a Bank but that would not mean that the respondent Bank is discharging the functions which are closely related to thegovernment functions..Lastly and finally it may be said that it is not a Government department transferred to the Corporation. It was established as a business concern for purposes of transacting banking business by eight individuals under the Company law then applicable to the State.Only two of them were in the services of His Highness. It had its own origin and separate existence.

(13) Thus, it was held that the Jammu & Kashmir Bank Limited does not fulfilll any of the tests laid down in Ajay Hasia's case (supra) so as to make it an instrumentality or agency of the. State Government nor can it be termed as an authority, within the meaning of Article 12 of the Constitution, Yetagain, the very question regarding the status of the Jammu & Kashmir Bank came up for consideration before a Single Judge of the Andhra Pradesh High Court in Rattanlal Koul v. Jammu & Kashmir Bank Limited, 1989 Alt 177.The learned Single Judge of the Andhra Pradesh High Court had the benefit of the judgment of the Jammu & Kashmir High Court referred to hereinabove and on analysing the facts set out in the petition before him observed asunder: "THE Jammu & Kashmir Bank established in 1938 is a government company under Sec. 617 of the Companies Act, the government owning more than 50% share. That by itself may not be sufficient to bring it under the words 'State' in Article 12. But apart from this, it is not disputed that (as stated in a Printed Brochure produced before me), the State of J & K owns 92% of the sharecapital; that it is a bank for the government of J & K, that the clause Iii (c) of its Memorandum of Association states that theBank is "acting as agent for government or local authority, that as per sub-clause (r) (2), it "undertakes" and "transacts" government business including the making of loan to the Co-operative Credit Banks or for agricultural and industrial purposes. This Bank has itself sponsored to two regional Rural Banks (i). the Jammu Rural Bank and (ii) The Kamraj Rural Bank, each having 94 branches(i.e. in all 188) and the Jammu & Kashmir Bank itself has branches all-over the country. It is also a convener of the State LevelBankers' Committee and has the Lead-Bank responsibility for the four districts of the J & K State In Ajay Hasia's case (supra) it was held that if the entire share capital or "almost" the entire share capital is held, a body would be a "State". In Manmohan Singh v. Commissioner, the grant to the school was only 95% but still, the school was held to b.e a State under Article 12, as highlighted in Central Inland Water's case (supra). Ido not agree with the Full Bench decision of the Orissa High Court in Bana Bihari Tripathi v. Registrar, Co-operative Societies, which held that a Society registered under the Cooperative Societies Act could never be a "State" for purposes ofArticle 12 or an "authority or person" for purposes of Article 226..In fact, para 9 of the judgment says it depends on whether the relevant tests are satisfied are not. In the present case inasmuch as92% of the shares are held by the Government of J & K and in view of the other undisputed characteristics listed above by me, I have no difficulty in holding J & K Bank to be "State" even for purposes of Article 12".

(14) The Andhra Pradesh High Court thus held that the Jammu & Kashmir Bank Limited is a State for purposes of Article 12 of the Constitution.

(15) In the light of the above decisions it is necessary to consider whether the respondent-Bank is a State within the meaning of Article 12.

(16) Learned Counsel for the respondent contended that the respondent-Bank was established on 1.3.1938 by 8 persons and registered under theJammu & Kashmir Companies Act 1947 with the sole object of carrying on banking business. After the coming into force of the Companies Act, 1956 it became a Government company within the meaning of Section 617 of the Companies Act. However, learned Counsel submitted that though the majority of the share holding is of the State Government it has not lost its character and cannot be termed as an instrumentality of the State Government simply because more than 51% of the paid up share capital is held by thegovernment. Learned Counsel submitted that if the share holding is the onlycriteria, then every Government company will have to be considered to be a State within the meaning of Article 12 of the Constitution. It was submitted that the allotment of shares is vested in Directors of the Bank at their absolute discretion and the management has to be carried on by the Chairman of theBank subject to the control of the Board of Directors. The Bank is required have not more than 10 directors or less than 7 at any time and not more than three directors can be appointed by the Jammu & Kashmir Government though only the Government director can be elected as the Chairman. Learned Counsel submitted that the State Government has issued directions to its department to transact the banking business through Jammu & Kashmir Bank,however the Bank does not enjoy monopoly status.

(17) On the. other hand, it was submitted by the learned Counsel for the petitioner that more than 80% of the shares are held by the government6f Jammu & Kashmir and the State of Jammu & Kashmir has all pervasive control over the respondent Bank and thus is an authority or State within the meaning of Article 12 of the Constitution of India.

(18) Undoubtedly, every government company under Section 617 ofthe Companies Act cannot be termed as an instrumentality of the State or an organ of the State within the meaning of Article 12 of the Constitution ofIndia. Moreover, the extent of government share holding certainly is indicative of control the government has on the Bank because the share holding ofthe government would show who is in actual management of the Bank. As the Supreme Court has observed in Bharat Petroleum case (supra) for the purpose of Article 12 one must necessarily see through the corporate veil to ascertain whether behind that veil is the face of an instrumentality or agencyof the State. In the present case, the Jammu & Kashmir Bank, i.e., therespondent herein though was established in the year 1938 by 8 persons and registered under the Jammu & Kashmir Bank Companies Act 1947 after coming into force of the Companies Act 1956 it became a government company within the meaning of Section 617 of the Companies Act. Naturally, therefore, the government share holding is more than 51%. In fact, in one of the brochures issued by the respondent-Bank itself it has advertised that theGovernment of Jammu & Kashmir holds 80% of the shares of the Bank and the Andhra Pradesh High Court in its judgment Rattan Lal Koul's case (supra)has on the basis of material placed before it observed that the State of Jammu& Kashmir holds 92% of the shares. Learned Counsel for the respondent was unable to tell the exact share holding of the Government of Jammu &Kashmir at present but it was not disputed that the Government of Jammu &Kashmir holds substantial share holding. The Memorandum and Articles of Association of the respondent-Bank was filed in Court by the learnedCounsel for the respondent. On perusal of the Memorandum of Association it appears that under clause 3(c) the respondent Bank acts as an agent for government and local authorities. Under clause 3(c) the respondent acts as Bankers on behalf of the government including the making of loans to Cooperative Banks or for agricultural and industrial purposes. Under Clause4(r) the terms and conditions on which the business of the Bank has to be undertaken has to be first settled with the government. Under Clause 69(1)of the Articles of Association, the number of directors of the respondent-Bank at a time shall not be more than 10 or less than 7, out of which 3 directors are to be appointed by the Jammu & Kashmir Government and no other director other than a government director is entitled to be elected as Chairman of the Board of Directors. In fact, it was submitted by the learned Counsel for the petitioner that at the relevant time there were no private directors and theBoard consisted of only the government directors and director appointed by the Reserve Bank of India. The J & K Bank is a scheduled Bank and is thus subject to directory and regulatory control of Reserve Bank of India. The shape holding of the Bank is directly controlled by, the Board of Directors in as much as allotment or disposal of shares and the terms and conditions at which transfer would be made is entirely in the hands of the Board of Directors the Bank. Under Clause 128 the audit of the Bank has to be done once in a year by the Auditors of the Company had it was not disputed that it was declared as a government company under the Companies Act the Auditor General of Government of Jammu & Kashmir has been auditing the accounts of the Bank. In fact, the accounts of the Bank are subject to review by Committee on public undertaking of the legislative assembly of Jammu &Kashmir. The respondent-Bank is also a sponsored bank within the meaningof Section 21 the Regional Rural Banks Act 1976. By Central Government notification under Section 3 of the said Act two Regional Rural Banks were established namely Jammu Rural Bank and Kamraj Rural Bank and the respondent-Bank is a sponsored Bank of both these Rural Banks. TheSupreme Court in M.K. Aggarwal v. Gramin Bank & Others, has held Regional Rural Bank established under Section 3 of Regional Rural Banks Act 1976 to be an other authority within the meaning of Article 12 of the Constitution of India. Under sub-Section (3) of Section 3 of the said Act it is the duty of the sponsored Bank to aid and assist the Regional Rural Banks sponsored by it by subscribing it to the share capital of such Rural Bank and by extending facilities of training personnel and recruitment during the first five years of the functioning of the said Rural Banks. Thus, the respondent-Bank in effect is guided by the government in its policies regarding advance of loans etc. and accordingly it implements the plans and schemes ofthe State Government and the Central Government and extends credit facilities for agricultural and allied activities to small scale industries etc. The credit is also given at economical reasonable rates of interest because of the policy ofthe government to uplift the rural poor,. Now, undoubtedly, policies of government are implemented because of the large share holding of the government and since at a given time the government had held about 92% of shares, theBank was naturally guided by the policy of the government. It also appears that even the non-official directors of the Board of Directors cannot be elected unless the State Government agrees to the appointment of that member. Thus,in substance the entire Board of Directors owes its existence to the StateGovernment. Naturally, the respondent Bank does not carry out all the activities with a profit motive because otherwise request for loans at subsidised rates of interest as per the policy of the government could have never beengiven. Furthermore, I find that an employee of the respondent Bank is a public servant under the Ranbir Penal Code and the status of a government servant is given to such an employee under Section 2(iv) of the Jammu &Kashmir Government Servants Prevention of Corruption Act, 1975.

(19) In the light of the above facts, I find it difficult to accept the reasoning given by the Jammu & Kashmir High Court that the respondent-Bank is not a State within the meaning of Article 12. I respectfully disagree with that view, I find that the Government of Jammu & Kashmir has all pervasive control over the activities of the Bank and thus is .an instrumentality or agency of the State Government within the meaning of Article 12 of the Constitution of India. The preliminary objection is thus rejected.

(20) Now coming to the merits of the case. As per the charge-sheet issued to the petitioner he was alleged to have committed gross misconduct while functioning as Chief Manager of the Aurbindo Road Branch, New Delhi of the Bank. The charge-sheet was issued to the petitioner Along with the statement of articles of charges on 9.7.1984. The petitioner replied to the charges and after he had sent the preliminary reply, the supplementary articlesof charges were given to him on 20.11.1984 to which the petitioner replied. On consideration of the reply and the explanation given by the petitioner to the charges levelled against him the competent authority by a memorandum dated7.1.1985 communicated to the petitioner that the explanation is found unsatisfactory by the competent authority and, therefore, the competent authority appointed Dr. B.L. Wanchoo, Deputy General Manager as the Inquiry Officer.The Inquiry Officer submitted his report to the competent authority and thereafter a show cause notice was issued to the petitioner on 23.7.1986 calling upon him to show cause why he should not be dismissed from the service of the Bank from the date he was placed under suspension. The petitioner in response tothe show cause notice asked for a copy of the inquiry report, which according to the respondent, was forwarded to the petitioner vide letter dated 22.9.1986.The petitioner was required to submit his reply within 15 days from the date ofthe issuance of the said letter which expired on 7.10.1986. It is the case of the petitioner that in fact the inquiry report was received by the petitioner after the15 days period had expired i.e. on 10.10.1986. However, the impugned order was also passed on 10.10.1986 itself. The petitioner received the order of dismissal on 15.10.1986 though he had come to know about it because of the publication of a report in Kashmir Times on 11.10.1986. The petitioner thereafter filed an appeal to the Chairman on 9.11.1986 which was also dismissed without giving any reasons on 18.4.1987.

(21) It was submitted by the learned Counsel for the petitioner that theinquiry held by the respondent was completely against the rules of naturaljustice. Learned Counsel submitted that right from the inception of the disciplinary proceedings, the respondent had acted contrary to the Rules. Under Rule 5(c)(i) of the Recruitment Discipline and Appeal Rules 1972 the appointing authority as well as the disciplinary authority of the petitioner was theBoard of Directors. However, the charge-sheet was issued to the petitioner by letter addressed by the Manager (Personnel) though he had mentioned inthe said letter that he was communicating the decision of the CompetentAuthority. However, the show cause notice dated 23.7.1986 and the order of dismissal dated 10.10.1986 were issued by the General Manager of the Bank.It was thus submitted that the General Manager is not authorised to take any disciplinary action against the petitioner. It was further submitted that the charges were vague and pertained to the period and incident with which the petitioner was not concerned The charges were mechanically issued without application of mind. Learned Counsel submitted that the conduct of theinquiry was also very novel. The Inquiry Officer put the whole burden of disproving the charges on the petitioner though the whole burden of proving the charges was on the person who alleged the charges i.e. the respondent-Bank. The petitioner was put in the witness box immediately after statements were filed and the Presenting Officer and the Inquiry Officer cross-examined him at length. The cross-examination runs into 100 pages, however the petitioner was not allowed to ask more than 2 questions to the witness of therespondent. The respondent did not adduce specific evidence inasmuch as the defense put up by the petitioner that the alleged irregularities were at the instance of the Chairman of the Bank. Thus, it was necessary for the Chairman to come in the witness box. However, neither the Chairman nor the General Manager were examined on the point. It was further submitted that the Presenting Officer had required the production of certain documents for conducting the inquiry but the documents were never produced and the inquiry proceeded only on the basis of incomplete documents received only from one Branch. Learned Counsel submitted that the petitioner was never informed that he could be represented by a legal practitioner. If the petitioner had been assisted by a trained person, then the petitioner would have never agreed to his statement being recorded on alleged charges and to lengthy cross-examination before the respondent had produced its evidence.The order of dismissal is also alleged to be passed without application of mind on the ground that the order mentions that the Inquiry Officer had found the petitioner guilty of all the charges though in fact the Inquiry Officer had exonerated the petitioner of some of the charges and the Inquiry Officer himself had dropped Charge No. 1 (B), 3, Supplementary Charge l(iii) and 8. Supplementary Charge 1 (ii) and 7 were partly proved. Learned Counsel submittedthat if an opportunity had been given to the petitioner he would have brought it to the notice of the General Manager that in view of the fact that several charges had been dropped, an extreme penalty of dismissal from service may not be imposed. Learned Counsel further submitted that the Chairman who decided the appeal erred in not giving any reasons. This shows that even the appellate authority passed the order without application of mind. The fact that the petitioner had not received the inquiry report before he made the representation in reply to the show cause notice and the order of dismissal was passed even before the inquiry report reached the petitioner, was not considered by the appellate authority. It was, therefore, submitted that the order of dismissal \and the non-speaking order dismissing the appeal was completely in violation of the rules of natural justice. The sheet-anchor of the argument ofthe learned Counsel for the petitioner was that the petitioner did not get opportunity to reply to the show cause notice' after the report was submitted by theInquiry Officer inasmuch as even before the petitioner could reply, the order of dismissal was already passed.

(22) On the other hand, it was submitted by the learned Counsel forthe respondent that the Chairman is the competent authority to take disciplinary action against the petitioner and the Chairman had authorised the General Manager of the Bank to take action. Accordingly, the show causenotice as well as the order of dismissal was issued by the General Manager.

(23) It was not disputed by the respondent that the inquiry report was not sent Along with the show cause notice, but the report of the Inquiry Officer was sent with letter dated 22.9.1986 and the petitioner was required to submit his explanation within 15 days from the date of the issuance of the letter.Learned Counsel for the respondent could not dispute the fact that the petitioner received the letter Along with the inquiry report after the period of 15days had expired and that the order of dismissal was passed on 10.10.1986. Itwas however submitted that the petitioner did not choose to send a reply immediately but instead only filled an appeal to the Chairman. It was also not disputed that no reasons have been given in the order passed on the appeal filed by the petitioner, however it was submitted that non-giving of reasons doesnot vitiate the inquiry. Learned Counsel for the respondent submitted that atbest, the order on appeal could be set aside by the Court and the matter be sent back to the appellate authority to re-consider the appeal.

(24) I find great force in the contention raised by the learned Counselfor the petitioner. It is well settled that before any order affecting the service of a person is passed he must be given adequate opportunity to represent against the conclusion of the Inquiry Officer holding that the charges are established against him. In a recent judgment of the Supreme Court in Union of India and Others v. Mohd. Ramzan Khan & Others, 1990(16) Indian Factories and Labour Reports 742 the Supreme Court has held as follows : "DELETION of the second opportunity from the scheme of Article 311(2) of the Constitution has nothing to do with providing of a copy of the report to the delinquent in the matter of making hisrepresentation. Even though the second stage of the inquiry in Article 311(2) has been abolished by amendment, the delinquent is still entitled to represent against the conclusion of the inquiry officer holding that the charges or some of the charges are established and holding the delinquent guilty of such charges. For doing away withthe effect of the inquiry report or to meet the recommendations ofthe inquiry officer in the matter of imposition of punishment, furnishing a copy of the report becomes necessary and to have the proceedings completed by using some material behind the back of the delinquent is a position not countenanced by fair procedure. While bylaw application of natural justice could be totally ruled out or truncated nothing has been done here which could be taken as keeping natural justice out of the proceedings and the series of pronouncements of this Court making rules of natural justice applicable to such an inquiry are not affected by the 42nd Amendment. We, therefore,come to the conclusion that the supply of a copy of the inquiry report Along with recommendations, if any, in the matter of proposed punishment to be inflicted would be within the rules of natural justice and the delinquent would, therefore, be entitled to the supply of a copy thereof. The Forty Second Amendment has not brought about any change in this position."

(25) Undoubtedly, if a person is dismissed without giving an opportunity to represent after an inquiry report is submitted, the action of dismissal would be against the rules of natural justice. Every person must not only know what he is to meet but must have the opportunity to meet the case against him.

(26) In the present case I find that the petitioner was not given theinquiry report before the order was passed and did not get an opportunity to reply to the show cause notice dated 23.7.1986. It appears that the respondent only went through an empty formality of sending the inquiry report to the petitioner. Ordinarily, the time to reply is given from the date of the receipt of the communication and not from the date of the issuance of the communication. I find that in the present case the petitioner was given 15 days time from the date of the issuance of the letter enclosing the inquiry report. Theinquiry report was sent from Sri Nagar to Delhi. Therefore, naturally the service of the inquiry report and the receipt would take sometime. It is not disputed that the petitioner received the inquiry report after the 15 days time had expired. The respondent hastily passed the order of dismissal on10.10.1986 without ascertaining whether the letter dated 22.9,1986 had reached the petitioner. It is not disputed that a news item to that effect appeared in Kashmir Times of 11th October 1986. Thus, the petitioner was quite justified in filing an appeal rather than reply to the show cause notice.

(27) There is also substantial merit in the contention raised by the petitioner that the disciplinary authority did not fully apply its the mind to the report of the Inquiry Officer. The Inquiry Officer has exonerated the petitioner of some of the charges and yet I find that the impugned order observes that the petitioner has been found guilty of all the charges by the Inquiry Officer. If the petitioner had opportunity to represent after having received the inquiry report he would have certainly been in a position to point out to the disciplinary authority that extreme punishment of dismissal was not warranted and benot imposed. Moreover, it is also not disputed by the respondent that the order passed on appeal also does not give any reasons. It has time and again been held that the failure to give reasons vitiates the order passed by the appellate authority. The Supreme Court in Ram Chander v. Union of India& Others, 1986(2) Llj 334 held that reasoned decisions by Tribunal promote public confidence in administrative process and observed that : "AN objective consideration is possible only if the delinquent servant is heard and given a chance to satisfy the authority regarding the final orders that maybe passed on his appeal. Consideration of fair play and justice also requires that such a personal hearing should be given."

(28) I find it difficult to accept the contention of the learned Counselfor the respondent that though the Chairman has not given reasons in the order passed in the appeal, only that order be set aside and the case may be remanded back to the Chairman to give a reasoned order. I find that the petitioner had raised the question of non-supply of inquiry report before the Chairman inthe appeal itself. In my view, since the petitioner did not get the opportunity to represent at the initial stage i.e. at the show cause stage, the order of dismissal cannot be sustained as being violative of rules of natural justice.Professor H.W.R. Wade in his Administrative Law, 5th Edition at page 487observes: "WHETHER a hearing given on appear is an acceptable substitute for a hearing not given, or not properly given, before the initial decision is in some cases an arguable question. In principle there ought to be an observance of natural justice equally at both stages...If natural justice is violated at the first stage, the right of appeal isnot so much a true right of appeal as a corrected initial hearing;instead of fair trial followed by appeal, the procedure is reduced to unfair trial followed by fair trial "

(29) It has been time and again held that the only time a delinquent officer gets an opportunity of showing cause against the action proposed against him pleading to be exonerated from the charge by showing that the evidence adduced at the inquiry is not worthy of credence or that the charges proved against him are not of such a character as to merit the extreme penalty of dismissal or removal is when he replies to the show cause notice to him at the first instance by the disciplinary authority. In the present case, I find thatsince the petitioner had not received the inquiry report he did not get that opportunity of showing cause and, therefore, by simply allowing him an opportunity for being heard by the appellate authority, the damage cannot beremedied.

(30) I have, therefore, no hesitation in holding that the departmental proceedings held in this case were violative of the rules of natural justice andthe order of dismissal deserves to be set aside on that ground. Since in my view the order is vitiated as being violative of rules of natural justice, I do not consider it necessary to go into the other contentions raised by the petitioner challenging the action of the respondent.

(31) In the circumstances the writ petition is allowed. The Rule is made absolute. The order of dismissal dated 10.10.1986 and the order dated18.4.1987 rejecting the appeal are not set aside. The petitioner is entitled to reinstatement with all consequential benefits. The petitioner will also be entitled to costs quantified at Rs. 5000.00.