Delhi High Court
Mr. Ashok K. Nanda vs Punjab National Bank & Ors. on 28 October, 2013
Author: Valmiki J. Mehta
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ W.P.(C) No. 5579/1998
% Reserved on : 7th October, 2013
Pronounced on: 28th October, 2013
MR. ASHOK K. NANDA ......Petitioner
Through: Mr. Piyush Sharma and Mr. Vikram
Saini Advocates.
VERSUS
PUNJAB NATIONAL BANK & ORS. ...... Respondents
Through: Mr. Rajat Arora, Advocate.
CORAM:
HON'BLE MR. JUSTICE VALMIKI J.MEHTA
To be referred to the Reporter or not?
VALMIKI J. MEHTA, J
1. This writ petition under Article 226 of the Constitution of India
impugns the orders passed by the departmental authorities; of the
disciplinary authority dated 22.9.1997 and the appellate authority dated
18.5.1998; whereby petitioner was visited with the punishment of removal
from services. Most of the charges against the petitioner contained in the
chargesheet dated 2.6.1992 (and which is accompanied by imputations of
misconduct) have been held against the petitioner. With respect to accounts
of three customers namely M/s Savik Vijay Engineering Private Limited,
M/s Tajesh Minerals Enterprises and M/s Installation and Allied Services
India , petitioner was found guilty in failing to ensure compliance of pre-
sanction and post-sanction requirements, granting of financial facilities
without having powers to do so and concealing the same from the higher
authorities, failing to inform Export Credit Guarantee Corporation (ECGC)
in time resulting in loosing of bank's entitlement with ECGC etc etc.
2. Before adverting to the arguments urged on behalf of the
petitioner, the scope of hearing in a petition filed before this Court under
Article 226 of the Constitution of India needs to be set out. This Court does
not sit as an Appellate Court to re-apprise the findings of facts and law
arrived at by the departmental authorities. Orders of the departmental
authorities can only be challenged on the ground of perversity in the
findings, violation of principles of natural justice, violation of rules/law and
violation of doctrine of proportionality. On these principles let us examine
the arguments which have been urged on behalf of the petitioner.
3. The departmental authorities have found that faults were
committed by the petitioner in accounts of three customers namely M/s
Savik Vijay Engineering Private Limited, M/s Tajesh Minerals Enterprises
and M/s Installation and Allied Services India. With respect to each account
several infractions have been alleged against the petitioner. Most of the
allegations have been held to be proved against the petitioner except
allegation nos.2 and 4 with respect to the account of M/s Savik Vijay
Engineering Private Limited and allegations no.3 and 6 with respect to the
account of M/s Tajesh Minerals Enterprises. The summary of the findings
against the petitioner is as under:-
SUMMARY OF THE FINDINGS
I. M/S SAVIK VIJAY ENGG. PVT. LTD.
Allegations relating to lapses & irregularities at pre-Sanction stage:-
ALLEGATION NO.1 : PROVED
ALLEGATION NO.2 : PROVED
ALLEGATION NO.3 : PROVED
ALLEGATION NO.4 : PROVED
ALLEGATION NO.5 : PROVED
ALLEGATION NO.6 : PROVED
ALLEGATION NO.7 : PROVED
ALLEGATION NO.8. : PROVED
Allegations relating to lapses & irregularities at post-sanction stage:-
ALLEGATION NO.1 : PROVED
ALLEGATION NO.2 : NOT PROVED
ALLEGATION NO.3 : PROVED
ALLEGATION NO.4 : NOT PROVED
ALLEGATION NO.5 : PROVED
II. M/S TAJESH MINERALS ENTERPRISES
ALLEGATION NO.1 : PROVED
ALLEGATION NO.2 : PROVED
ALLEGATION NO.3 : NOT PROVED
ALLEGATION NO.4 : PROVED
ALLEGATION NO.5 : PARTLY PROVED
ALLEGATION NO.6 : NOT PROVED
ALLEGATION NO.7 : PROVED
ALLEGATION NO.8 : PROVED
ALLEGATION NO.9 : PROVED BUT THE FACT OF
ADJUSTMENT OF THE ACCOUNT
NOTED.
ALLEGATION NO.10. : PROVED
III. M/S INSTALLATION & ALLIED SERVICES INDIA
ALL THE CHARGES ARE PROVED EXCEPT THE ONE
RELATING TO OBTAINING OF BLANK DOCUMENTS.
4. The arguments which have been urged before me are basically
in terms of the pleadings which are drawn up with respect to grounds I, J, K
and L which run from pages 49 to 62 of the writ petition. The aforesaid
grounds are with respect to the first two accounts and with respect to the
third account of M/s Installation & Allied Services India. What is argued is
that since the illegal purchasing of the bills were reported, petitioner stands
exonerated.
ACCOUNT M/S SAVIK VIJAY ENTERPRISES LIMITED
5. With respect to this account lapses and enquiries are alleged
against the petitioner both at the pre-sanction and post-sanction stages.
Arguments have been addressed before me only with respect to
allegations/charges 1 to 4, 5 and 8. Charges against the petitioner with
respect to defaults at the pre-sanction stage are as under:-
"A/C M/S Savik Vijay Engineering Private Limited
On the basis of loan proposal forwarded by Shri A.K.Nanda as
Manager, B/O K.G.Road, Bangalore and Sh. K.A.Hegde, the then
Regional Manager, Regional Office, Madras, the following credit
facilities were sanctioned in favour of the company vide Head Office
sanction letter No. Cr../87 dates 12.5.88 and Cr/OPC dated 7.6.90.
a) CC (Hypothecation) Limit Rs.9.00 lacs
b) BP/BD Limit Rs.9.50 lacs
c) Term Loan Rs.54.00 lacs
d) Bridge Loan Rs.10.00 lacs
e) Bank Guarantee Limit Rs.5,92,560.00
The following lapses, irregularities were observed on the part of Sh.
A.K.Nanda at the pre-sanction stage which indicate that the loan
proposal was not at all appraised and Shri. A.K.Nanda did not act in
his best judgment while recommending/forwarding credit proposal of
the company for setting up a new unit/project by over-looking the
following vital factors/deficiencies:
i) The loan proposal was received at B/O K.G.Road, Bangalore
on 14.12.87 and the same was forwarded to Regional Office on
16.12.87. This shows that the loan proposal was dealt with in
an hurried manner without proper scrutiny.
ii) As per Memorandum and Articles of Association of the
Company it was set up on 15.12.86 with the following three
Directors:
a) Shri B. Gopal-Krishnan
b) Shri B. Muthukumarson
c) Smt. M.Savithri
Whereas in the loan application (L-107), the company stated the
following five persons as Directors:
a) Shri B.Gopal-Krishnan
b) Shri B. Muthukumarson
c) Shri V.K.Venkatesh
d) Shri S.G.Subbaratnam
However, no queries were found raised by Shri A.K.Nanda to
ascertain the factual number of Directors, dates of joining of new
Directors of relevant Board Resolutions in this regard.
iii) In contravention of Head Office guidelines, no pre-sanction
inspection was conducted and/or report in respect thereof
submitted alongwith the loan
iv) The credit reports on the Directors as well as associates/sister
concern from their existing bankers were not
obtained/scruitinised.
v) The Balance Sheet of the companies sister/associate concerns
were not obtaining in order to ascertain the financial standing,
experience, capability, performance of the Directors/promoters.
vi) The credit facilities sought for by the company were for setting
up new unit/Project, but no efforts were made to ascertain the
viability of the project from a qualified Engineer/Chartered
Accountant/Government Body. Also no efforts were made to
ascertain the experience of the Directors/promotors in the
proposed line of activity.
vii) As per proposal, the cost of plant and machinery/project was
estimated at Rs.69.37 lacs and as such the company was not
covered under SST, yet the proposal was forwarded treating it
as that of SSI unit.
viii) As against a Paid-up Capital of Rs.3000/- only, credit facilities
to the extent of Rs.83,00 lacs were recommended for sanction.
No efforts were made to ascertain as to what source the
company/promotors would arrange margin money for availing
the credit facilities being recommended.
6(i) The first allegation against the petitioner at the pre-sanction
stage with respect to M/s Savik Vijay Engineering Private Limited was that
the loan proposal was dealt in a hurried manner without proper scrutiny.
With respect to this allegation against the petitioner the finding is that the
issue really is not of hurried manner of forwarding the loan proposal but
actually aspect of hurried manner is to be taken with the aspect of lack of
proper scrutiny. Following are the facilities which were proposed in a
hurried manner without proper scrutiny.
"a) CC-hypn. Limit - 9.00 lacs
b) BP/BD limit - 9.50 lacs
c) Term Loan - 54.00 lacs
d) Bridge Loan - 10.00 lacs
e) Bank Guarantee Limit - 5,92,560.00"
(ii) The deficiencies are with respect to the petitioner making
recommendations without necessary backing of documents and their
evaluations as required at the time of recommending the loan. The report of
M/s Pai & Associates which was relied upon by the petitioner was rejected
because that report was undated, not addressed to anybody and it did not
even bear the signatures of the author of the report, and therefore it was held
that this report could not be said to have existed on record of the bank at the
time of submission of the loan proposal. If the report was available at the
relevant time, then, enquiry officer rightly notes that there was no reason
why it was not made part of the loan proposal. The stand of the petitioner of
one Sh. L.A.Perumal conveying the message of the Regional Manager,
Madras that the higher ups of the bank were interested has been held not to
be established by the petitioner because though Mr. L.A.Perumal was
produced as a witness by the bank, he was however not cross-examined by
the petitioner as to his (Sh. Perumal's) visit to the branch with
recommendation of the Regional Manager. With respect to the notings
appearing on the reverse of calendar slip where certain particulars were
mentioned of the account, the findings were that the same had nothing to do
with Mr. L.A.Perumal or the Regional office inasmuch as the said slip bore
the initials of the petitioner and was not in the handwriting of Sh.
L.A.Perumal.
7(i). The argument with respect to this allegation urged on behalf of
the petitioner was that there was no haste of the petitioner in dealing with
loan proposal because the record showed that the customer was in touch
with the regional office even prior to the loan proposal having been formally
moved. The account holder was also in touch with the predecessor of the
petitioner in the branch and which is argued to be another reason to show
that there was no haste by the petitioner and no basis to the article of charges
of hurried manner in which the loan proposal was received at the branch on
14.12.1987 and forwarded to the regional office within two days on
16.12.1987.
(ii) In my opinion, arguments urged on behalf of the petitioner are
really to confuse the real issue and which is not so much of the hurried
manner of forwarding the loan proposal but really of forwarding of the loan
proposal in a hurried manner without proper scrutiny and which was
required at the branch level. Scrutiny required at the branch level has to be
with respect to the need of the financial limits of the customer, how the
margin money will be brought in, whether the account holder has sufficient
capital with him, financial standing of the Directors of the company,
capacity to re-pay and so on. In fact, even the enquiry officer rightly holds
that issue is not of hurried manner of forwarding of the loan proposal
received on 14.12.1987 and submitted to the regional office on 16.12.1987,
but really of there not being proper scrutiny and availability of the
documents as required for forwarding of a loan proposal.
8(i) The second allegation against the petitioner was with respect to
not taking proper documentation with respect to who were the Directors of
the account company at the time of forwarding of the loan proposal. The
charge is that no queries were raised by the petitioner to ascertain the actual
number of Directors, their dates of joining and the relevant board resolution
inducting the two additional persons as Directors. To this allegation, the
defence of the petitioner was that he got the position as to the numbers of the
Directors confirmed from the minutes book of the company wherein the
names of the Directors were appearing. There is also an argument raised
that three Directors were found in the Memorandum/Articles when the
company was set up on 15.12.1986 and this became 5 Directors in view of
the copy of the minute book furnished by the company.
(ii) With regard to this allegation against the petitioner, it has been
held that petitioner did not ascertain how the additional two Directors came
on to the Board of the Company and by which resolution these two persons
were appointed.
9. The findings against the petitioner are justified inasmuch as
admittedly, the minute book relied upon by the petitioner does not show that
when the two additional Directors came on Board and how the petitioner
made the necessary verifications. I therefore, find that this charge has been
validly established against the petitioner. This argument is therefore rejected.
10(i) The next allegation against the petitioner is with respect to the
petitioner in contravention of the applicable guidelines failing to conduct
pre-sanction inspection and no report in respect thereof was submitted
alongwith the loan proposal. The petitioner contended that the pre-sanction
inspection was conducted and a report in this regard was submitted.
Petitioner placed reliance upon the pre-sanction inspection report aspect
mentioned at item no. 9 of the forwarding letter dated 16.12.1987 as also the
report again having been submitted on 27.4.1988 (but the inspection date
was wrongly written as 27.4.1987).
(ii) The enquiry officer with respect to this allegation has held that
the fact that the inspection report was submitted to the head office on
27.4.1988 cannot mean that the same existed as on 16.12.1987 inasmuch as
the record of the bank showed that this pre-inspection report was submitted
in April, 1988 after considerable follow up by the regional office. The
enquiry officer rightly notes that if really the petitioner had inspected the
plan/site on 27.11.1987 then there was no reason why the inspection report
was submitted in April, 1988 and not sent alongwith the loan proposal in
December, 1987. In my opinion, there is no illegality or perversity in this
finding of the departmental authorities because simply mentioning of a pre-
inspection report at serial no. 9 in the loan proposal does not mean that
inspection report was actually attached to the loan proposal. In fact,
therefore, the enquiry officer rightly notes that because this report did not
form part of the loan proposal therefore, the regional office pursued the
matter with the petitioner and ultimately it was only sent on 27.4.1988. The
argument of the petitioner raised qua this issue is therefore rejected.
11(i) The next allegation against the petitioner is that the petitioner
failed to obtain the credit reports of the Directors as well as of allied firms
from the existing bankers before considering the loan application of a
customer. The petitioner is alleged not to have obtained reports of the
Directors/Promoters with respect to one allied concern namely M/s Vijay
Jacks & Allied. Enquiry officer in this regard has given a finding that
whereas the existing bank M/s Vijaya Bank had given the report with respect
to M/s Vijay Hydraulics, however, the document D-7 does not mention
anything about the other allied concern M/s Vijay Jacks and Allied.
Therefore, it was clear that with respect to M/s Vijay Jacks & Allied no
reports were obtained by the petitioner. The enquiry officer in fact notes that
petitioner maintained that he considered it not necessary to obtain such
report, and which is held against the petitioner because in terms of the
relevant guidelines this was a specific requirement which was not complied
with. The allegation against the petitioner was therefore held to have been
proved.
(ii) I do not find any perversity in the findings of the departmental
authorities because admittedly M/s Vijay Jacks & Allied was an allied
concern and therefore it was necessary to obtain the credit reports with
respect to that concern and its Directors, and which requirement was
admittedly not complied with by the petitioner. Reliance placed upon by the
petitioner on D-7 (14.4.1988) being a letter addressed by the Regional
Manager to the AGM at the Head Office does not show that credit report
was taken with respect to the allied concern M/s Vijay Jacks & Allied. I may
note that the document D-7 is repeatedly relied upon by the petitioner
however, this document has to be taken with a pinch of salt because this is a
letter signed by the Regional Manager much later than forwarding of the
loan proposal in December 1987 and therefore, subsequent documentation
cannot remove the deficiencies which in fact existed at the time of
forwarding the loan proposal in December, 1987 and which deficiencies
ought not to have existed at the time of forwarding of the loan proposal. It
also bears mention that this Regional Manager in fact was charge-sheeted
with respect to another account by the bank and punishment was imposed
upon him. This argument is therefore rejected.
12. The next allegation against the petitioner is that petitioner did
not obtain the balance-sheet of sister/associate concern in order to ascertain
the financial standings/experience/capability/performance of the
Directors/promoters. The defence of the charge-sheeted officer in the
departmental proceedings was that he did not consider this necessary.
According to the petitioner the letter D-7 dated 14.4.1988 shows that this
aspect was evaluated by the Regional Manager and therefore, this
requirement should be held to be complied with. The enquiry officer has in
view of the defence of the petitioner noted that since he considered obtaining
of the reports as not necessary, it was a clear cut admission that the required
reports were not obtained and hence there was violation of the guidelines.
The argument of the petitioner that the book of instruction is an incomplete
document relied upon by the bank is a misconceived argument because if the
petitioner had relied upon an incomplete instruction book, what prevented
the petitioner from filing the complete book of instruction. This obviously
the petitioner did not do because it is an elementary aspect in banking circles
that whenever a loan proposal is forwarded, surely to determine aspects of
financial standing etc, complete reports with respect to the Directors and
promoters have to be obtained. The argument of the petitioner under this
head is therefore rejected.
13(i) The next allegation against the petitioner pertains to the fact
that company had a paid up capital of only ` 3,000/- whereas the credit
facilities of an amount of ` 83 lacs were recommended for sanction and the
petitioner did not make effort to ascertain what is the source of the
company/promoters for arranging the margin money for availing the credit
facilities for being recommended.
(ii) In my opinion, the findings of the departmental authorities in
this regard of holding the charges proved against the petitioner is correct
because even if we look at the documents which are relied upon by the
petitioner namely D-7, M-2, M-6, M-7 and D-42, the same do not show that
petitioner had made enquiry from the Directors/promoters as to how the
company proposed to raise the capital and the source which the company
depended upon for increasing the required capital to meet the margin
requirements for the facilities to be availed from the bank. In my opinion,
merely because the Regional Manager in the letter D-7 in April 1988
mentions that promoters/Directors belong to business community and are
doing business for many years and therefore it will not be difficult for them
to bring in their contribution which cannot take away the fact that as on the
date of forwarding of the proposal the pre-sanction requirement of finding
out the basis of how the promoters/Directors will bring in margin money
was not complied with. There is nothing inconsistent in the findings of the
departmental authorities as is argued before me. This argument of the
petitioner is therefore rejected.
14. The next set of allegations against the petitioner pertain to the
post sanction stage and they read as under:-
"Besides, the following lapses/irregularities were observed on the part
of Shri A.K.Nanda at the post-sanction stage:-
i) Shri A.K.Nanda failed to monitor the end use of bank's funds in
as much as out of the proceeds of Term Loan, following sums were
paid by way of pay Orders drawn in favour of M/s Vijay Jacks and
Allied inspite of knowing that the said firm was a sister/associate
concern of the company.
Date Pay Order No. Amount
24.11.88 640/88 Rs. 4.39 lacs
2.5.89 411/89 Rs. 4.00 lacs
1.3.89 179/89 Rs. 4.00 lacs
All the aforesaid Pay Orders were handed over to Shri
B.Gopalakrishnan, a Director of the Company.
Further, on 25.11.88, a Current Account was opened with Dena Bank,
Jayanagar, Bangalore Branch in the name of the firm M/s Vijay Jacks
and Allied under the proprietorship of Smt. M. Savithri (a Director of
the company) and aforesaid Pay Orders were deposited therein and
subsequently the funds were withdrawn therefrom.
The receipts issued by M/s Vijay Jacks and Allied in token of having
received the payments, were even signed by Sh. B. Muthukumarson,
A director of the Company, but Shri a.K.Nanda did not take any steps
to ascertain the genuineness of the said transactions/end use of the
said funds.
Likewise other pay orders/drafts issued from the loan accounts of the
party were found handed over directly to Sh. B. Gopal Krishnan, the
Director of the company.
(ii) As per one of the sanction stipulation, the IDBI refinance was
to be obtained by the Regional Office before the release of the
facilities. The Regional Office obtained the requisite sanction on
28.7.88 and informed the branch till 12.10.90 as the company failed to
produce the required certificate from DGTD. Incidentally, as per
another sanction stipulation the certificate from DGTD was also
required before the release of the facilities but Sh. A.K.Nanda,
contrary to the said sanction stipulation released the credit facilities
without obtaining the certificate from DGTD. Also the IDBI
refinance was obtained on the amount of sanction limit of Rs. 54.00
lacs and not on the cost of the project.
(iii) Contrary of H.O. instructions for getting the requisite margin
deposited in the account before releasing payments to the supplier of
machineries, Shri A.K.Nanda relied upon the Cash Receipts produced
by the company as advances made to the supplier of the machinery by
the company and treated the same as margin.
In fact, the company was having no funds to meet the margin
requirements and the said aspect was overlooked by Sh. A.K.Nanda at
the time of recommending the limits. Even the Balance Sheets of the
sister-concern received on a subsequent date but before the release of
facilities were not properly looked into. The said Balance Sheet
clearly indicated that there were no funds to meet the required margin.
Shri A.K.Nanda, as such, failed to ensure whether proper margin has
been constituted by the company at the time of machinery purchased
from M/s Avery India Limited, a sum of Rs.2.80 lacs were released
against the cost price of Rs. 3.07 lacs. Likewise, in the case of
machineries purchased from M/s Pillar Induction (O) Pvt. Ltd. the
required margin was not obtained.
(iv) No bills/invoices in respect of machineries purchased were
obtained/held on record.
(v) No post-sanction inspection was conducted to ensure the end
use the bank funds.
As on 24.3.92, the various account of the company were showing an
aggregate outstanding of Rs. 106.55 lacs which were/are proving
difficult of recovery. The aforesaid acts on the part of Sh. A.K.Nanda
have attributed for putting the aforesaid bank's funds into jeopardy."
15. With respect to the post sanction stage allegations the
arguments have been addressed before me only with respect to
allegations/charges no. 1,3 and 5.
16(i) The first allegation is with respect to failing to monitor the end
use of the funds because pay orders were drawn in favour of M/s Vijay Jacks
& Allied in spite of knowing that the said firm was a sister/associate concern
of the company. The pay orders were handed over to B. Gopalakrishnan, a
director of M/s Vijay Jacks & Allied. These pay orders were deposited in an
account opened with Dena Bank, Jayanagar, Bangalore Branch and funds
were withdrawn therefrom.
(ii) In this regard, the enquiry officer has held that it was not
disputed that pay orders were given to Mr. Gopalakrishanan, Managing
Director instead of being handed over to the suppliers and that the concern
M/s Vijay Jacks & Allied was a sister concern. As regards the photographs
filed as documents D-8, enquiry officer has commented that the photographs
do not bear the date and there is nothing on record to show that these
photographs were part of the inspection at the relevant time. The charge has
been held to be proved against the petitioner on account of vagueness in the
documents including the photographs, which were filed.
(iii) Petitioner in this regard before this Court has relied upon the
inspection report dated 4.9.1993 showing existence of current assets at
`30,000/- for the year 1989-1990, ` 7.13 lacs for the 1991 and ` 10.94 lacs
for the year 1991-1992. This report is also relied upon because the inspector
states that installation of the machinery has been verified. Reliance is also
placed by the petitioner upon the letter dated 11.9.1991 of the valuer Mr.
H.N Srinivas alongwith which valuations have been given in the form of a
statement of various machineries.
(iv) In my opinion, though two views are possible in view of the
arguments urged on behalf of the petitioner, however, merely because there
are two views possible cannot mean that there is perversity in the findings
for this Court to interfere in the findings of the departmental authorities
more so because filing of photographs will not show the specific dates of
proper utilization of funds for purchase of the machineries. Machineries
would only be shown to exist but not with its co-relation of proper end
utilization of funds at the time of release of the loan amounts. Also, the fact
that the valuer's report of Sh. H.N.Srinivas simply contains details of the
machinery without in any manner giving proof of dates of installation of
such machinery alongwith the relevant bills and other documentary proof.
Since this Court does not sit as an Appellate Court to re-apprise the findings
and conclusions of the departmental authorities, the arguments urged on
behalf of the petitioner under this head are rejected.
17(i) The next allegation against the petitioner is with respect to the
third charge in the post sanction stage that he did not obtain deposit of
margin money and relied upon cash receipts of deposits made with suppliers
of machineries for being treated as margin money.
(ii) The enquiry officer by an assessment of the evidence before
him has come to a finding with the accepted position which is that the
margin money was not deposited in the bank and the customer only
produced receipts issued by the supplier towards deposit of advance which
was argued for being taken as margin money. The enquiry officer also notes
that balance sheet D-40 of the company as on 27.11.1987 showed that the
company was not having any funds to meet the margin money requirements
and therefore, the petitioner was held guilty of not ensuring that the
company raised or increased the capital to meet the margin requirements
before release of the facility. In effect the enquiry officer has held that the
fact that machineries may have come into existence subsequently cannot
mean that there is in fact a compliance of the requirement of the customer
paying in bank the margin money before release of the funds for the
purchase of the machinery. The important conclusion which has been given
by the enquiry officer, and which was also with respect to the earlier similar
allegation at the post sanction stage, was that filing of proof of existence of
machinery cannot be so read as to show that machineries were in fact
installed at the relevant point of time when the funds were released.
Ultimately, some machinery may be found to exist, however, the relevant
question for consideration as noted by the enquiry officer was that it was the
duty of the petitioner to obtain margin money before release of funds and
admittedly with respect to which no evidence was produced to establish that
customer deposited margin money in the bank.
(iii) In my opinion, once again merely because two views are
possible in terms of the arguments urged on behalf of the petitioner cannot
mean that this Court is entitled to interfere with the findings of the enquiry
officer in exercise of powers under Article 226 of the Constitution of India
and more so because issue really is not of existence of machineries at a
subsequent point of time but of deposit of margin money in the bank at the
relevant point of time when the funds were released. Therefore, to the extent
that there has been infraction of the requirement of non-deposit of margin
money at the time of release of the funds, the same stands established
against the petitioner and the argument under this head raised on behalf of
the petitioner is rejected.
18(i) The next allegation on which arguments were addressed before
this Court is with respect to allegation 5 of the post sanction stage violation
and which pertains to not conducting of post sanction inspection to ensure
end use of funds.
(ii) In this regard, arguments which have been raised are similar
with respect to the arguments raised under earlier heads of proper end
utilization of funds by existence of machineries etc, and therefore the
arguments would stand rejected in terms of discussion given hereinabove.
19. Also, an important aspect to be noted is that merely because the
banks subsequently sought to give additional facilities would not mean that
there were no infractions at the relevant stage and subsequent sanction
would condone all the lapses on the part of the officials at the time of earlier
grant of financial limits. In my opinion, the enquiry officer is justified in
giving a finding in this regard against the petitioner because for many
commercial reasons, once financial limits are found to be sanctioned earlier,
then, banks take pragmatic decision to sanction additional facilities so as to
help either the unit to recover or for ensuring recovery of the finances lent,
and therefore, subsequent fresh sanction cannot be taken in favour of the
petitioner that no infractions took place at the earlier stage. Also, the
enquiry officer in this regard rightly notes that the subsequent documents of
additional sanction of financial limits cannot help the petitioner because the
party was yet to avail the additional facilities sanctioned because the
party/customer failed to comply with the terms and conditions of the fresh
sanction of financial limits. This argument urged on behalf of the petitioner
is therefore rejected.
Account M/s Tajesh Minerals Enterprises
20. With respect to this account, following are the charges against
the petitioner:-
"A/c M/s Tajesh Minerals Enterprises
i) Contrary to Head Office guidelines to conduct inspection of
securities charges with the bank at the regular interval, Shri A.K.
Nanda did not conduct inspection of securities and/or send the
inspection reports at the regular interval.
ii) In violation of Head Office instructions, the fresh PCL was released
to the party in November, 1989 to adjust the earlier PCL allowed to
the party. As a consequence thereof, ECGC rejected the claim lodged
by the bank on the ground that overdue earlier PCL was not adjusted
out of the export proceeds. Besides, it was also commented by the
ECGC that the bank being aware of the incapability of the exporter,
should have taken more care and prudence in monitoring the account.
iii) ECGC premium was found debited to the party's account
from May, 1990 and not from the availment of Packing Credit
Loan/beginning of the account.
iv) In violation of Head Office instructions, the stocks charged
with the bank in the PCL Account were not got insured.
v) The loan documents were found obtained blank and signed by only
one partner instead of all the partners.
vi) Contrary to sanction stipulations, the second charge of the
bank on the Rice Mill was not got registered at the time of release of
the PCL.
vii) Default committed by the party in adjusting the PCL was
reported to ECGC after a delay of four months thereby violating the
procedure set out in FE Circular No.66/90.
ix) The overdraft account allowed to the party should have been
got covered, under DICGC-SSI-1987. However, the said overdraft
was not covered under the DICGS Scheme and no premium was
found paid to DICGC.
x) The sanction of PCL facility was not reported to the ECGC at the
time of release of the same and the ECGC was kept in dark till the
account became overdue which was also one of the reason for
rejecting the bank's claim.
As a consequence of the aforesaid lapses, irregularities committed by
Shri A.K. Nanda in the aforesaid accounts, the bank's funds to the
extent of Rs.1.72 lac involved in the account have fallen into jeopardy
for recovery whereof the bank has to file a civil suit against the party."
21. Before me, arguments have been addressed with respect to
allegations/charges (i), (ii), (v), (viii) and (ix).
22(i) First allegation against the petitioner in this account is that the
petitioner failed to conduct inspection of the securities charged at regular
intervals and did not send the inspection reports at regular intervals to the
higher authorities.
(ii) In this regard the enquiry officer has noted that petitioner
admitted that he did not visit the quarry/factory site at Kallahalli and that he
only relies upon the inspections submitted by the technical inspector M/s
Himalyan Agencies. Petitioner contradicted himself by stating that he also
did inspections and relied upon documents, D-61, D-62, M-42 and M-43, but
the enquiry officer rightly notes that documents D-61 and D-62 are letters
written after the petitioner had left the branch and therefore the same cannot
help the petitioner. In the document M-42 being the godown inspection
register of December, 1989, enquiry officer found the same to be unreliable
as the columns of date and time of inspection bear the initials of the
petitioner without date and time of inspection and therefore the same rightly
cannot have credibility for acceptance as evidence in favour of the
petitioner. So far as document M-43 is concerned, this inspection report is
dated 28.7.1990 i.e after the petitioner had been transferred from the branch
and therefore was not a report given by him. The report by M/s Himalyan
Agencies did not confirm the quantum of stocks so as to co-relate the same
with the advances given by the bank. The enquiry officer finally notes that
petitioner did not ever visit the site for inspection as was admitted by him
during the departmental proceedings.
(iii) I do not find any perversity in the findings by the departmental
authorities because no inspection report, much less regular inspection reports
existed, showing that the petitioner inspected the site or gave such inspection
reports to the higher authorities. The arguments urged on behalf of the
petitioner under this head are accordingly rejected.
23. I may note that it was sought to be argued on behalf of the
petitioner that the loan account of M/s Tajesh Minerals Enterprises stands
settled, and since there is no loss to the bank, the petitioner accordingly
should be exonerated, however, I cannot agree to the argument urged
because the fortuitous circumstance of account having subsequently settled
cannot mean that at the relevant time lapses were in fact not committed by
the petitioner, and which aspects the facts of the case show were deliberately
committed and were not unintentional. I therefore reject the argument urged
on behalf of the petitioner that subsequent settlement of accounts should
result in setting aside of the findings against the petitioner.
Account M/s Installation & Allied Services India
24(i) The allegation against the petitioner with respect to this account
is that he acted beyond his powers by purchasing bills of the amount of
Rs.6.44 lacs and out of which an amount of Rs.2.84 lacs was released to the
party without any authority and setting up of a regular limit. The aspect of
indebtness to the extent of Rs.2.84 lacs, and that too without any authority,
was not disclosed in the loan proposal which was thereafter forwarded and
put up to the regional office. Power of attorney which was executed by the
party with respect to the collection of bills were not got registered with M/s
BHEL which was the drawee of the bills, and as a result of which M/s
BHEL made direct payment to the party and party did not adjust the
outstanding bills purchase entries.
(ii) Enquiry officer has given the findings, and which cannot be
disputed before me that, the petitioner had no power to sanction financial
limits by purchasing bills from the party concerned. The result of the
blatantly illegal acts of the petitioner in giving loans without having any
authority was that the party was accommodated as on 30.11.1989 to the
extent of Rs.5,30,924.10 and as on 1.12.1989 to the extent of
Rs.5,89,924.90/-. The enquiry officer has rightly come to the conclusion
that petitioner in the subsequent proposal document M-45 to regional office
on 27.9.1989 for recommending sanctioning of various limits did not
mention the details of bills already purchased from the party. Even in the
subsequent correspondence, the enquiry officer rightly notes that, petitioner
concealed the aspect of the purchasing of the bills from the higher
authorities and only two days prior to his being relieved from the branch
petitioner recommended the cancellation of limits in favour of the party
although the recommendation was infructuous because limit itself was never
released and lapsed with the efflux of time. The defence of the petitioner
was rejected that the bills were purchased under the oral instructions of the
Regional Manager by keeping of the necessary margin. This defence was
rejected because document D-74 filed by the petitioner himself negated the
defence because the charged officer was in fact asked to give comments of
accommodating the party beyond his powers without prior approval of the
Regional Manager. The other documents filed by the petitioner only showed
that the transaction of 23.6.1989 was authorized by the Regional Manager
and subsequently confirmed by him, whereas all other transactions of bill
purchase did not have any confirmation of the Regional Manager. Enquiry
officer rightly concludes that there was no faithful reporting of the
outstandings and the charge of concealment also stood as established.
(iii) In my opinion, once it is established on record that petitioner
acted beyond his powers to grant loans by purchasing bills, and there is no
authorization shown of the Regional Manager for any of the transactions of
bills purchased except one, and the fact that the matter was never reported to
the higher authorities, clearly shows that there is no perversity in the
findings against the petitioner and the arguments of the petitioner under this
head are rejected. Reliance was placed by the petitioner upon the circular
dated 4.9.1984 giving directions to various branches qua reporting of
defaults, I do not understand how it can help the petitioner because surely a
general circular with respect to follow up action of adjustment of accounts
cannot exonerate the petitioner who in fact illegally granted loans. In fact, in
my opinion, this document will only go against the petitioner because the
same shows that higher authorities of the bank found that there were various
lapses in various accounts and therefore strict follow up was desired, failing
which strict action was to be taken against the officers.
25. The argument urged on behalf of the petitioner of subsequent
reporting even if for the sake of the argument taken as correct does not take
away the fact that petitioner in abuse of his power purchased bills and
granted financial limits to a customer beyond his powers. In my opinion,
therefore there is no illegality or perversity in the findings of the
departmental authorities against the petitioner with respect to the account of
M/s Installation & Allied Services India.
26. After having referred to the arguments urged before this Court
under various heads and which have been rejected by me as stated above, the
following important points also need to be mentioned for dismissing the
petition:-
(i) Though the law is that this Court does not sit as an Appellate Court,
and this Court can only interfere when there exists a clear cut perversity of
findings, arguments which have been addressed before me really are seeking
to make this Court into an Appellate Court over the findings and conclusions
of the departmental authorities. It may be noted that on two or three of the
allegations, at best, case of the petitioner can be of two views being possible,
however, existence of two views does not permit this Court to interfere with
the conclusions of the departmental authorities, and more so, when as many
as 18 odd other charges which have been established against the petitioner.
(ii) The fact that petitioner has not even pleaded or addressed arguments
on some of the allegations against him shows that qua those allegations
clearly the charges were proved and petitioner is accordingly guilty on that
score. Obviously, the petitioner did not argue as regards those allegations
established against him where the petitioner did not have a single worthy
argument to stand in his favour.
(iii) In fact, there is another chargesheet against the petitioner for various
other lapses and with respect to which no action was taken because
petitioner was dismissed from services pursuant to the allegations being
established in the present chargesheet.
(iv) The letter D-7 signed by the Regional Manager dated 14.4.1988 is by
that Regional Manager, Mr. K.A. Hegde against whom chargesheet with
respect to other accounts was issued on 25.11.1990 and he was visited with
punishment of dismissal from services. Therefore, too much credit cannot
be given to the statements made in document D-7, and which in any case do
not derogate from the findings of lapses having been committed at the
relevant time, at the pre-sanction stage and also at the post sanction stage. It
appears that Mr.K.A.Hegde was seeking to help the petitioner however
document D-7 does not help the petitioner to explain the lapses committed
by him at the relevant point of time. Also a minor error of the enquiry
officer stating that Mr. Hegde was proceeded departmentally with respect to
the same charges against the petitioner (although it was a different
chargesheet) cannot mean that otherwise valid findings/conclusions can be
set aside just because of this minor error.
27. In view of the above, and the detailed report of the enquiry
officer, and the orders passed by the departmental authorities, and the fact
that nothing has been shown to this Court to justify setting aside of those
finding under Article 226 of the Constitution of India, the present writ
petition is therefore devoid of merit, and is accordingly dismissed, leaving
the parties to bear their own costs.
OCTOBER 28, 2013 VALMIKI J. MEHTA, J.
ib/Ne
