Shri D.K. Gupta vs Punjab National Bank
2013 Latest Caselaw 3459 Del

*     IN THE HIGH COURT OF DELHI AT NEW DELHI
+                  W.P.(C) No.3698/1998
                                                 Reserved on: 23rd July 2013
%                                           Pronounced on:6th August, 2013

SHRI D.K. GUPTA                               ..... Petitioner
                           Through:      Mr. Ashok Bhalla, Advocate with Mr.
                                         Hemant Soin, Advocate.

                           versus

PUNJAB NATIONAL BANK                                ..... Respondent

                 Through:                Mr. Ravi Sikri, Advocate with Mr.
                                         Varun Chandiok, Advocate.


CORAM:
HON'BLE MR. JUSTICE VALMIKI J. MEHTA

To be referred to the Reporter or not?


VALMIKI J. MEHTA, J

1. By this writ petition, petitioner impugns the orders passed by

the Departmental Authorities i.e Disciplinary Authority and the Appellate

Authority. The impugned orders impose upon the petitioner the punishment

of removal from service.

2. The petitioner was issued a chargesheet dated 22.12.1994.

The sum and substance of the charges against the petitioner are that he

initiated proposals for giving of loans to M/s. Manju Plywood Industries

without adequately examining the proposals and failing to examine the

proposals with reasonableness. Petitioner was further held guilty of

recommending enhancement of the financial limits in violation of the duties

required. When 17 queries were raised by the Regional Office, he replied to

only three queries and that too in a general way. The respondent no.1-bank

is therefore said to have lost a huge amount of `1,07,97,535/-. The

imputation of charges against the petitioner read as under:-

"STATEMETN OF IMPUTATION OF CHARGE IN SUPPORT OF ARTICLES OF CHARGE AGAINST SHRI D.K. GUPTA, CHIEF INSPECTOR (U/S) PREV. SR. MANAGER, 80: PAHARGANJ, NEW DELHI OF ERSTWHILE NEW BANK CHARGE I He recommended the proposal of M/s. Manju Plywood Industries for sanction of various credit facilities to the Regional Office, Delhi and the following facilities were sanctioned vide their letter dt. 5.2.86:

               Term Loan                -Rs.8 lacs
               CC(Hy.) Limit            -Rs. 6 lacs
               BP/BD Limit              -Rs. 4 lacs
               Import L/C               -Rs.15 lacs (sub-limit of Rs. 8 lacs
   against 90 days DA)

While forwarded the proposal to Regional Office; Delhi he deliberately ignored the adverse features therein to accommodate the party by-

a) accepting party's sale projections of Rs.70 lacs for the next year i.e 31.3.87 against their preference of Rs.62,549/- as on 31.3.85 and Rs.4.40 lacs as on 30.11.85.

b) accepting collateral security by way of equitable mortgages of agricultural land market value of Rs.2 lacs and plant on it valued at Rs.6.47 lacs situated at village Siyana, Distt. Bulandshahr. CHARGE II Soon after the sanction of the aforesaid facilities, he again recommended the enhancement proposal of the party to Regional

Office on 15.5.86. Regional Office raised 17 queries and called for point-wise reply vide their letter dt.19.5.86. He did not give any serious consideration to the queries raised by Regional Office, sent reply vide his letter dt. 21.5.86 attending to only 3 queries of the Regional Office, that too in a general way and forwarded a copy of party's letter dt. 21.5.86 for other objections/queries without his comments thereto.

Thus, on account of serious lapses on the part of Shri Gupta, Bank's huge funds in the above account have been put to stake. As on 6.1.92, an amount of Rs.1,07,97,535/- is proving difficult of recovery.

GENERAL MANAGER DISCIPLINARY AUTHORITY"

3. Before I advert to the report of the Enquiry Officer, order of

the Disciplinary Authority dated 9.12.1996 and the order of the Appellate

Authority dated 14.7.1997, I would like to set out the parameters of the

scope of hearing of a writ petition under Article 226 of the Constitution of

India, which orders passed by the Departmental Authorities are challenged.

The settled law is that the orders of the Departmental Authorities are not

challenged unless the same are violative of the rules of the organization/law

or are perverse or there is violation of principles of natural justice or the

punishment imposed violates the doctrine of proportionality. This Court

does not sit as an Appellate Court to re-apprise the findings of facts and

conclusions arrived at by the Departmental Authorities. Once the view

which is taken by the Departmental Authorities is possible and plausible, it

cannot be said that the findings are perverse for this Court to interfere, and

that too in exercise of extraordinary jurisdiction under Article 226 of the

Constitution of India.

4. It is also necessary at this outset to state that the petitioner

did not participate in the enquiry proceedings by leading evidence or

stepping into the witness box. It is not as if the petitioner did not have

notice for appearance before the enquiry officer. Petitioner in fact did have

notice, but, he refused to appear on the ground that his representation was

pending before the appropriate authority for employing of a Defence

Assistant situated in a different State, and therefore according to the

petitioner enquiry proceedings automatically stood halted for that reason.

5. Management led evidence of one witness and also proved

various documents in the enquiry proceedings. Two other witnesses were to

be examined by the management, but since the petitioner failed to appear in

the proceedings, and was proceeded ex parte, the management did not

examine the other two witnesses. On the basis of the evidence led before

him, the Enquiry Officer arrived at findings holding the petitioner guilty.

Some of the relevant observations of the Enquiry Officer as contained in the

enquiry report read as under:-

"FINDINGS It is proved from exh. M-74 and M-77 that the sales for the period

ended 31.3.85 and 30.11.85 were Rs. 62549.75 and Rs.4,37,475.90 respectively. Further CO also has accepted that there is nothing wrong in having sales projections of Rs. 70 lacs. But, he has not given any evidence to show that how the borrower will be able to have such big jump in sales to Rs. 70 lacs in the year ending 31.3.87. CO's contention that the proposal was forwarded to RO at the behest of Shri AR Lamba, the then regional head of Delhi is not substantiated by any evidence. No doubt the proposal with so many deficiencies have been sanctioned by the RO, which indirectly shows that RO had concurred with the recommendation of the BM. However, CO in his reply to charge sheet, informed that after satisfying himself with all the parameters of credit valuation, he recommended it to RO.

It is a matter of commonsense that a unit with current ratio of less than one, minus not working capital, very poor debt equity ratio of 12.5:1 and a meagre capital of Rs. 65,914 as on 31.3.85(exhibit M-

74) and deposition by MW-1) which could produce goods worth Rs. 4.4 lacs in 8 months during 1985 could not produce goods worth Rs. 70 lacs during the year 1986-87. As such, accepting sales projections of Rs.70 lacs for the year ended 31.3.87 as against sale of only Rs. 4.4 lacs during 8 months in 1985-86 is out of proportion and inflated. From the evidence produced, it shows that the CO connived with the regional authorities in accommodating the party by deliberately ignoring the adverse features. In case the CO has obeyed the illegal verbal orders of his regional head as contended by him, he is unfit to be a Bank Officer and cannot protect public money. As such, the charge is proved.

xxxxxxxxxxxxx "Management witness, MW-1 deposed that as per the valuer's certificate exh. M-4, value of agriculture land, which was offered as collateral security was Rs. 2 lacs against the value shown by the proprietor of MPI, which was Rs.0.70 lacs exh. M-26 & M-25 and Rs. 061 lacs, exh. M-27. Standing trees was valued at Rs.6.47 lacs, (exh. M-4) could be cut at any time and did not constitute immovable property and cannot be legally mortgaged to Bank. Moreover, there was a condition in the sanction letter dated 5.2.86 exh. M-43 at condition No.1 that the party shall deposit Rs. 6 lacs being the sale

proceeds of the trees on or before 31.12.90.

It is thus amply evident that the value of collateral security was Rs. 0.61 lacs only and not Rs.8.47 lacs as mentioned by the CO in the limit proposal recommended to RO. As such, value of collateral security was meagre and did not commensurate with the limit recommended by the CO aggregating to Rs.33 lacs. MW-1 deposed that the CO did not comply with legal formalities for mortgaging/creating charge on agriculture and land offered as collateral security, Exh. M-68, M-69 and M-70. As such no collateral security is available in the account. However, CO continued to mislead the RO about the availability of collateral security of Rs. 8.47 lacs.

xxxxxxxxxxxxxx From the evidence produced by PO it is clear that the CO recommended enhanced credit facilities to the extent of Rs. 145 lacs favouring MPI just after 3 months in view of exh. M-12 recommendation of CO dated 15.5.86. It is also clear from exh.M-11 that the party submitted an application for enhancement on 14.5.86 and CO recommended next day i.e. on 15.5.86(exh. M-12). Further from exh. M-5 it is observed that application meant for loan for Rs. 25,000 to Rs. 2 lacs has been obtained for considering a limit of Rs. 145 lacs, which clearly shows that salient information required for processing limit of this magnitude has not been obtained by CO. In the light of these deficiencies RO rightly raised 17 queries exh. M- 14, But, CO has replied only 3 queries at exh. M-15 and evaded reply to the remaining queries and simply enclosed the copy of the replies received from the party without his comments. On going through the argument given by the PO on the 17 queries raised by RO, it is observed that the party's enhancement proposal for Rs. 145 lacs has been recommended by CO in spite of having following serious deficiencies.

xxxxxxxxxxxxxx Party was having meagre capital of Rs.65,748/- as on 31.3.86. If the loss of Rs. 50,433/- is deducted, the capital is negative (exh. M-76), as such debt equity ratio was highly adverse.

-Balance sheet was not audited (exh. M-76).

-Detailed project report not submitted.

-Basis for proposed turnover of Rs. 200 lacs as against actual sale of Rs. 15.6 lacs during 85-86, not given.

-Confirmation of compliance of terms and conditions of previous sanction not given.

-Break even point was at 90% of Projected Sale and about 11.5 times the sale during 85-86, which is highly adverse (exh. M-14)

CO's plea that proposal has been accepted by hierarchy of 4 tier structure is not tenable as he cannot escape the responsibility by having connived with the unscrupulous hierarchy. It is true that with so many deficiencies, the proposal was considered by the then authorities of ENBI, but, at the same time, the CO being incumbent in charge, the authority at grass root level, is primarily accountable for the lapses. It is beyond the imagination of any banker to have recommended credit facility of Rs. 145 lacs to party having negative capital, meagre sales and without any infrastructure for the proposed production. As such it is a clear case of undue favouritism by the CO in connivance with the sanctioning authorities. As such, the charge is proved. xxxxxxxxxxxxxx Exh. M-72 clearly shows that the entire outstanding balance of Rs. 1,07,97,535 as on 6.1.92 has been categorised as bad & doubtful. Co's contention that he recommended at the behest of the regional head has not been substantiated by any evidence. Further CO's argument that till he left the branch the account was regular is also not true in view of exh. M-45, M-46, M-50, M-51, M-52, M-53, M- 56, wherein CO himself pointed out serious deficiencies in the account during his tenure. The contention of the CO that the proposal of the party was recommended for enhancement on 19.7.88 and 15.8.88 has again not been substantiated by the evidence. The date 15.8.88 is apparently wrong as it happens to be a national holiday (Independence Day). In view of the above, the charge is proved.

As all the imputations of Charges is proved, the Article of Charge is proved. (underlining added).

6. A reading of the aforesaid findings and conclusions as

contained in the enquiry report shows that the petitioner accepted a very

strange proposal whereby a borrower who was essentially in losses and

which borrower had sales for the period ended 31.3.1985 and 30.11.1985

were `62,549.75/- and `4,37,475/- only was projected to have sales in the

figures of `70 lacs in the year ending 31.3.1987. There is also the finding of

the Enquiry Officer that the petitioner connived with the officer in the

Regional Office to get the loan sanctioned. The Enquiry Officer has reached

a conclusion that the value of loan offered as collateral was wrongly valued

at `6 lacs instead of `2 lacs because trees were not included in the value of

the land. There is also a finding that loan proforma was in fact on a form for

grant of loan upto `2 lacs and which was used for applying for a facility of

145 lacs whereby vital information required for sanctioning a huge limit was

left out. The proposal for enhancement was recommended by the petitioner

within a date from its receipt without any appraisal or scrutiny required. All

the queries of the higher authority were not replied to and some which were

replied to were in a general manner i.e for 3 out of 17 queries. The party

which was given the credit facilities after wrongly availing the same

diverted them to their sister/allied concerns. Just one week after the transfer

of the petitioner, the successor of the petitioner found that stocks instead

being of `90 lacs as declared by the party were only of the worth of `6 lacs.

Normal financial parameter to ascertain the credit worthiness of a party were

grossly overlooked because not only the date equity ratio was adverse but

also no detailed project report was submitted and no basis was given for

proposed sales of 70 lacs in the next year when earlier sales for two years

totalled to barely 5 lacs. At the time of enhancement of the loan

confirmation compliance of terms and conditions of previously sanctioned

loan was not given. The Enquiry Officer also holds that the petitioner

cannot escape responsibility of having connived with unscrupulous

hierarchy.

7. Before me, on behalf of petitioner, the following arguments

were raised:-

(i) The chargesheet dated 22.12.1994 is time barred and in any

case delayed because petitioner left the branch in the year 1988 and the

chargesheet was issued in the year 1994.

(ii) There is violation of rules of the organization as also

principles of natural justice because petitioner was not provided with the

Defence Assistant of his choice.

(iii) Petitioner was not given enough time to submit his written

brief after conclusion of proceedings.

(iv) The chargesheet was not accompanied by the documents and

which is violative of Sub Regulation 5 of Regulation 6 of the Punjab

National Bank Officer Employees (Discipline and Appeal) Regulations,

1977.

(v) Doctrine of proportionality is violated because punishment

imposed to one Mr. Kaila ( Regional Manager), who is higher in the

hierarchy, was only of reduction of salary by four stages whereas the

petitioner has been imposed the punishment of removal from services.

8. So far as the argument of the petitioner that the chargesheet

is time barred, reliance was placed upon the circular issued by the

respondent No.1 at page 132 (Annexure A-22) of the paper book. However,

when we read this circular dated 28.7.1984 it only deals with fixing of

responsibility for procedural irregularities on the successor officer and there

is no time limit prescribed in the circular for issuing of the chargesheet. I

therefore reject this argument raised on behalf of the petitioner that the

issuing of chargesheet is time barred. Issuing of chargesheet being time-

barred can only be if a specific period of limitation was prescribed in the

rules of the respondent no.1-organization, and chargesheet would have been

issued beyond that prescribed time, however, this is not so in the present

case.

9. The next argument which was urged on behalf of the

petitioner was that the petitioner has been denied an opportunity to have the

Defence Assistant of his choice. It is argued that the petitioner has been

prejudiced because petitioner wanted to be represented by a Defence

Assistant situated at a different place of posting outside the State but the

respondent refused to accede to the request of allowing such Defence

Assistant and by not giving him TA/DA for that purpose.

In this regard, the relevant circular would be circular of the

respondent No.1 dated 31.10.1994. This circular at page 128 of the paper

book (Annexure A-21) provides that TA/DA can be provided only if the

bank is satisfied that it is not reasonably possible for the chargesheeted

official to get an experienced Defence Assistant representative from within

the same place where the enquiry is being conducted. In the present case,

what is argued before me on behalf of the petitioner is that petitioner wanted

a Defence Assistant from outside the State because that official was well

known to the petitioner and had worked with him and therefore was better

for the petitioner. However, merely because the petitioner thinks that the

said officer is better will not sustain his case for a Defence Assistant from

outside the State because what is required for the explanation in the circular

to apply is that only when an experienced Defence Assistant /representative

from the same State is not available then, in that case only a Defence

Assistant from outside the State can be engaged and TA/DA will then be

paid for the Defence Assistant. The respondent no.1 surely has at least a

few dozen officials in the Delhi who would be experienced and therefore I

do not find any illegality in the action of the respondent to reject the request

of the petitioner that he was bound to be represented by a Defence Assistant

from outside the State and who should be paid TA/DA. Once sufficiently

experienced persons are available in the same State, petitioner cannot insist

that he should be represented necessarily by a Defence Assistant from

outside the State. This argument of the petitioner is also therefore rejected.

10. The next argument urged on behalf of the petitioner is that

the petitioner was not supplied with the documents alongwith the

chargesheet and therefore the petitioner could not give an effective reply.

However, on a query it is not disputed that the documents in support of the

chargesheet were in fact supplied to the petitioner during the course of

enquiry. There may have been a technical violation however I do not think

that the petitioner is seriously prejudiced by the technical violation inasmuch

as petitioner was given the necessary documents in the enquiry proceedings.

It is important to note that the petitioner did not appear for repeated hearings

before the Enquiry Officer and therefore was set ex parte. Once the

petitioner is correctly set ex parte, he leads no evidence including deposing

in his own favour and does not stand for the test of cross-examination, there

is no reason why the evidence which is led by the management should not

be believed. The relevant portion of the report pertaining to enquiry

proceedings against the petitioner reads as under:-

"CO was given 3 opportunities, first on 14.10.95, second on 18.11.95 and third on 11.12.95 to inform the name of his defence assistance, verify the management documents, submit list of defence documents & witnesses and verify the defence documents, but, CO did not avail these opportunities in spite of repeated reminders on 11.12.95, 12.1.96, 25.1.96 and 31.1.96. In view of the above, a notice for holding regular hearing on day to day basis starting from 3.2.96 was issued to CO and PO on 31.1.96, in which only PO attended. CO did not attend the hearing and failed to avail the three opportunities given to him on 14.10.95, 18.11.95 and 11.12.95 to inform the names of his defence assistance, verify the management documents, submit list of defence documents & witnesses and verify defence documents. As such, the proceedings was held ex-parte.

PO was asked to present the case of managements. PO informed that he would present the case through his witnesses & documents. With this regular hearing was adjourned to 5.2.96 and the copy of

proceedings was handed over to PO and sent to CO by hand with an advice to attend the hearing on 5.2.96 alongwith his defence assistance, which was received by CO on 3.2.96 at 3 PM. On 5.2.96 also CO did not appear. As such the ex-parte hearing continued. PO examined Management Witness (MW-1), Shri OP Agarwal, Chief Manager, BO Raipur Main, MP and EO also has put certain questions to MW-1. The deposition of MW-1 is at page 9 to 13 of the proceedings register, copy of which was handed over to PO and sent to CO by courier and registered post, alongwith copy of the PO informed that he is not interested in producing remaining witnesses Shri BK Talwar and Shri Anil Kapur. PO further informed that he has completed the management case and the same has been closed." (underlining added)

11. Accordingly, I reject the argument that the petitioner is in

any manner prejudiced and that the principles of natural justice have been

violated or the petitioner was not given sufficient opportunities. Petitioner

having been given the desired opportunities, but having failed to appear in

the enquiry proceedings and having led no evidence, there is no reason why

the evidence led by the management should not be believed and the

consequent findings and conclusions of the Enquiry Officer based upon the

same should not be believed. As already stated above, this Court does not

sit as an Appellate Court to re-apprise the findings of facts and conclusions

of the Enquiry Officer once the findings and conclusions are possible and

plausible.

12. The final argument which was urged before me was that

there is violation of Doctrine of Proportionality because whereas Mr. Kaila,

Regional Manager was only imposed the punishment of stopping of

increments by four stages, petitioner has been removed from service. I do

not find that there is any violation of Doctrine of Proportionality because in

the present case, it is the petitioner who initiated the proposal in haste,

initiated the proposal by making fantastic projections, proposal was not

accompanied by the necessary documents, there were inadequate replies to

the queries raised by the higher authorities and in spite of the illegality with

respect to the first sanction, a fresh sanction for enhancement of the loan

was applied for. All the aforesaid illegalities resulted in a loss of substantial

amount of `1,07,97,535/- to the respondent-bank. There is therefore no

violation of Doctrine of Proportionality because before the orders of the

Disciplinary Authority are hit by the Doctrine of Proportionality it is

necessary that judicial conscience must be shocked with respect to

punishment imposed. Surely two different officers of the respondent-bank

at two different levels would have two different sets of responsibilities and it

cannot be said that petitioner's position was equivalent to Mr. Kaila. In fact,

the petitioner was the person at the spot who was the main person to ensure

that all formalities are completed whether before seeking sanction of loan or

after sanction of the loan for its utilization. On all these aspects petitioner is

found to have miserably failed. I therefore do not find any reason to apply

the Doctrine of Proportionality in favour of the petitioner in the facts of the

present case.

13. Counsel for the petitioner placed reliance upon the judgment

of a Division Bench of this Court in the case of M.L. Kalra Vs. Union of

India and Anr. 155 (2008) DLT 365 (DB) to argue that the facts of the

present case are very similar to the case of M.L. Kalra (supra) because in

the case of M.L. Kalra (supra) the Court set aside the order of the

Disciplinary Authority because chargesheet was issued with delay of six

years and higher authorities were found responsible but no action was taken

against the said higher placed person. I may note that the counsel for the

respondent-bank as also the counsel for the petitioner agrees that decision in

the case of M.L. Kalra (supra) is sub judice because an SLP has been

admitted in the Supreme Court for hearing. Therefore, I need not refer to

the observations in the case of M.L. Kalra (supra) however I am still doing

so and I find that the facts of the said case are distinguishable from the facts

of the present case for the following salient reasons:-

(i) In the case of M.L. Kalra (supra) besides the charged

official there were in fact other officials in the branch of the bank who had

initiated the loan proposal.

(ii) The charged official in the said case had no role

whatsoever in the enhancement of the credit facilities which took place after

the charged official was transferred from the concerned branch of the bank.

(iii) The grant of loan itself was illegal because bank could

not grant loan for taking up shares of other companies.

(iv) No action was taken against the board members in said

case who had sanctioned the loan whereas in the present case disciplinary

proceedings were taken against the Regional Manager Mr. Kaila who

sanctioned the loan and punishment was imposed upon him.

(v) It is very relevant that against the petitioner who is the

charged official in the present case (and who is subjected to punishment of

removal) besides the subject chargesheet which resulted in the punishment

of removal from service, there were four other chargesheets against the

petitioner dated 24.4.1993, 31.7.1993, 22.11.1993 and 27.6.1994, all for

various major penalty proceedings, however, the said chargesheets were

kept in abeyance because the petitioner already stood removed from service

in terms of the orders of the Departmental Authorities in the present case.

14. In view of the above, I do not find that the petitioner has made

out any case for exercise of the extraordinary writ jurisdiction of this Court

under Article 226 of the Constitution of India. The orders passed by the

Departmental Authorities cannot be said to be perverse, more so because

petitioner failed to lead any evidence and did not have the courage or

conviction to step into the witness box for cross-examination. Petitioner

wrongly asked for a Defence Assistant from outside the State although it is

not the case of the petitioner that sufficiently experienced officials were not

available within the State, and merely because the official outside the State

was well known to the petitioner the same is not a ground for a person from

outside the State to be appointed as a Defence Assistant and to be given

TA/DA by the respondent-bank.

15. Accordingly, the writ petition being without any merit, is

dismissed, leaving the parties to bear their own costs. All pending

applications stand disposed of.

VALMIKI J. MEHTA, J AUGUST 06, 2013 ib/Ne