Shri M.L. Bansal vs Punjab National Bank And Anr.
2015 Latest Caselaw 422 Del

*            IN THE HIGH COURT OF DELHI AT NEW DELHI

+                          W.P.(C) No.824/1999

%                                                    16th January, 2015

SHRI M.L. BANSAL                                        ......Petitioner
                           Through:      Mr. Rohit Gandhi, Advocate, Mr.
                                         Varun Garg, Advocate with petitioner
                                         in person.

                           VERSUS

PUNJAB NATIONAL BANK AND ANR.                  ...... Respondents

Through: Mr. Jagat Arora, Advocate with Mr. Rajat Arora, Advocate.

CORAM:

HON'BLE MR. JUSTICE VALMIKI J.MEHTA

To be referred to the Reporter or not?

VALMIKI J. MEHTA, J (ORAL)

1. This writ petition under Articles 226 and 227 of the Constitution

of India has been filed by the petitioner, the erstwhile employee of the

respondent no.1/Punjab National Bank, impugning the enquiry officer's report

dated 30.12.1994 which holds the petitioner guilty with respect to various sub

charges of the first charge in terms of Article of Charges dated 11.3.1994.

Petitioner also impugns the report of the disciplinary authority dated 22.6.1995

imposing the major penalty of removal from services on the petitioner and

which order of the disciplinary authority has been confirmed by the appellate

authority's order dated 24.8.1995 and which is also challenged in this writ

petition.

2. This case was originally argued in detail on various aspects,

however, in view of the facts of the present case and the limited finding under

Article 1 of the Memo of Charges against the petitioner, counsel for the

petitioner on instructions from the petitioner who has been present in the Court

during the entire course of hearing, confines the relief claimed in this writ

petition to the reduction of the disproportionate punishment imposed upon the

petitioner of removal from service. The ground which is urged in this regard is

ground S of the writ petition and which reads as under:-

"S. Because the charge upheld against the petitioner, even if taken at its face value to be true in entirety, is very minor or procedural in nature, and in any case, the major penalty imposed on the petitioner is not communicated or proportional to the Articles of Charge upheld against him, and therefore the same suffer from vice of arbitrariness and non-application of mind. The impugned report and the orders are liable to be quashed on this ground alone."

3. In order to appreciate this ground let me reproduce at this stage

the relevant part of the enquiry officer's report dated 30.12.1994 which gives

the relevant Article I of Article of Charges and the findings thereon. The

relevant portion of the enquiry officer's report reads as under:-

"CHARGE-I A/C PEARL LASING LTD 80-TOLSTOY MARG, NEW DELHI.

The company approached 80-Tolstoy Marg, New Delhi on 29.12.1986 for Cash Credit Limit of Rs.100 lacs for expansion of their business activities. However, the proposal was forwarded by 'L' Block, New Delhi, vide letter dated 13.1.1987 to Regional Office, Delhi. A copy of the proposal was also sent to Credit Department, Head Office vide letter dated 14.1.1987 containing recommendations that Cash Credit Limit of Rs.100 lacs be sanctioned in favour of the party.

While working as Dy. Chief (Credit) at Head Office, he recommended the proposal to the Board in haste in order to facilitate the party despite the following major short comings:-

a) He put up note dated 28.1.1987 to the Board recommending for sanction of the CCLimit of Rs.100 lacs without waiting for the reply/recommendations of the Regional Office for which Credit Department of Head Office had already taken up with Regional Office. In fact, recommendations of Regional Office were not received at HO even afterwards.

b) At the time of recommending the facility in favour of the company, the conduct and operations in the accounts of its sister/associate concerns, namely M/s. Auto Links, M/s. D.N. Anand & Co. M/s Key Finance Co. and M/s. Kwality Finance Co. were not at all satisfactory. There were persisting irregularities in these accounts and limits were over-due for renewal. But these adverse features were concealed from the Board.

c) Permissible bank Finance was calculated and limit of Rs.100 lacs was recommended without obtaining complete financial data from the company.

d) At the time of recommending the facility, it was not ensured that proposed facility in adquately secured by way of collateral security. In the proposal, it was stipulated that proposed CC(H) limit of Rs.100 lacs will be collaterally secured by Equitable mortgage of property at A-12, Naraina Vihar, New Delhi, having market value of Rs.45.00 lacs only as on 8.9.1986.

e) The proposal was for sanction of limit in excess of the paid up capital and reserves of the company But while recommending the limit he did not ensure that Resolution of the General Body of the company to this effect had been obtained.

   xxxx                    xxxx               xxxx                  xxxx
   Charge-I

The Pearl and Leasing Ltd. approached Branch office & __________ New Delhi on 29.12.86 for cash credit limit of Rs. 100 lakhs for extension of their business activities. However, the proposal was forwarded by L-Block, New Delhi vide letter dated 12./ . 87(Ex. C-2) to Regional Office, Delhi. A copy of proposal was also sent to credit Department, Head office vide letter dated 14. / . 87(Ex. C-1) containing recommendations chat cash credit limit of Rs.100 lakhs be sanctioned in favour of the party. The Co, while working as Dy. Chief (Credit) at Head Office, recommended the proposal to the Board in haste in order to facilitate the party despite the following major shortcomings:-

(a)

The CO put up note dated 28.1.87 (Ex.S-4) to the Board recommending for sanction of cash credit limit of Rs. 100 lakhs without waiting for the reply/recommendation of the Regional Office for which Credit Deptt. of Head Office had taken up with Regional Office (Ex.S-3). In fact, recommendations of Regional Office were not received at Head Office even afterwards. The Co, in his general examination, stated that the proposal of the party was sent to Credit Dept. on 14.1.87 of Head office for expeditious disposal by branch Office, L-Block, New Delhi as the party had to introduce deposit of Rs. 100 lakhs on sanction of the same proposal but before release of the facility. Head Office took cognizance of the same in terms of Head Office circular No. 4/87 dated 8.1.87 (Ex.D-1). It was a case of corporate decision that proposal which are backed by deposit should be considered even if the Regional Office recommendation has not come.

The Contention of the CO is not tenable. Ex.D-1 states that in order to ensure quick disposal of loan proposals at Head Office level, it has now been decided that the proposals which are beyond the discretionary powers delegated to the functionaries heading the Regional offices shall be forwarded by Branches directly to respective functional Heads at Head Office with a copy to respective Regional Offices. Such proposals shall be simultaneously scrutinized

and appraised at Regional Office and Head Office level, the Regional Heads would be required to forward such proposals together with their recommendations to respective functional heads at Head Office within 15 days of the date of receipt of the Copy of loan proposal at the Regional Office. The sanction note shall be put up to the competent Sanctioning Authority at Head Office only on receipt of the proposal from the concerned Regional Head. However, in case, the Regional Head's recommendations are not received by Head Office within 15 days of the date of receipt of the copy of loan proposal at the Regional office, the Regional Head would be required to explain reasons for delay. Ex.S-1 is the loan proposal forwarded by the Branch level to Head Office and Ex.S-2 is the copy of the same proposal sent to Regional Office for necessary action at their level. Ex.S-3 is the letter sent form the Head Office to Regional Office for getting their recommendation regarding the loan. This letter was sent on 24.1.87. Just after three days i.e. on 28.1.87 (Ex.S-

4), the C.O. put up the proposal to the Board for the sanction of the loan without getting the recommendation from the Regional Office. Therefore, the action on the part of the C.O. was contrary to the provisions marked in Ex.D-1 and in view of it, this part of the charge is established.

(b)

At the time of recommending the facility in favour of the company the conduct and operations in the accounts of Sister/Associate concerns, namely, M/s Auto Links, M/s D.N. Anand & Co., M/s Anand Finance Corporation and M/s United Finance Co. were not at all satisfactory. There were persisting irregularities in these accounts and limits were over due for renewal. But these advance features were concealed from the Board.

The C.O. in general examination stated that no adverse features with regard to the accounts of Sister concern of the borrower were reported to H.O. by the concerned Branches or Regional Office but

Sr. Manager, L Block, Branch has spoken high of group enclosing the details of the facilities enjoyed by Sister concern as per Ex.S-2 and Ex.S1, page 47

The contention of the C.O. is not tenable. The Ex.S-1 and S-2 page 11 do not say anything about the conduct of the account of the sister concern of the borrowers. Before putting up the proposal to the Board for its sanction, the C.O. should have at the first instance, sought the information regarding conduct of the sister concern. In view of this, this part of the charge is established.

(c)

Permissible Bank Finance was calculated and limit of Rs. 1000.00 lakhs was recommended without obtaining complete financial data from the Company.

While denying the allegation, the C.O. stated that he obtained financial data from the Company before calculating permissible bank Finance of Ex.D-2, D-3 read with Ex.S-5.

Ex.S-4, page 2, states that the Company has not submitted the details of leased assets to be acquired, hire-purchase assets and leased rent receivables. However, on the basis of the consolidated projected balance sheet submitted by the party, the permissible Bank finance worked out as Rs. 190.85 lakhs (Ex.S-4, page 3).

As the Company did not submit the proper documents i.e. the details of leased assets to be acquired, hire purchase assets and lease rent receivable, the C.O. should have asked for it and waited and should not have recommended to the board for the sanction of the loan on the basis of the projected balance sheet. In view of the above, facts, This part of the charge is established.

(d)

At the time of recommending the facility, it was not ensured that the proposed facility is adequately secured by way of collateral security. In the proposal, it was stipulated proposed CC(4) limit of Rs. 100.00 lakhs will be collaterally secured by Equitable Mortgage of Property at A-12, Naraina Vihar, New Delhi having market value of Rs. 45 lakhs only as on 8.9.1986.

The value of the property proposed as collateral security was much less than the limit proposed. Not only that, the same property was already held by the Bank as collateral security in 7 other accounts of the group enjoying aggregate sanctioned limit of Rs. 53 lakhs.

The C.O. stated that the limit was recommended against the security of leased assets with 30% margin in Bank's favour. For example, Bank will advance only Rs. 70 against the security of Rs. 100/-. The collateral security is not considered must in each and every case (Ex.S-4, page 3 last para). The amount form CC account is released in stages after pledged of security and that to only to the extent of 70% of the value of the security (Ex.D-7 & Ex.S-7 para 1) upto 22.5.87 Limit of Rs. 20.50 lakhs was released (Ex.D-7). There was no other collateral security available except what was mentioned in Ex. S-4, page 3, last para which was taken as further Collateral security are adequacy thereof is considered only by the sanctioning authority. In this case, the sanctioning authority was Board of Directors (Ex.S-6).

Ex.S-4, page 3, para last regarding collateral security states that the facility shall be collaterally secured against the securities charged in different accounts of the group at Tolstoy Marg, L Block and Karol Bagh Branches i.e. Property No. A-12, Naraina, New Delhi having market value of Rs. 45 lakhs. But it does not say that the collateral security is not must in each and every case. As had been stated by the C.O. that there was no other security (collateral) available except the property of A-12, Naraina, New Delhi. If there was no any other collateral security, the C.O. should not have recommended to the

Board for the sanction of the loan. The same property which was already taken as collateral security in different accounts should not be taken as collateral security in the instant case. In view of above, facts, this part of the charge is established.

(e)

The proposal was for sanction of limit in excess of the paid up capital and reserves of the Company. But while recommending the limit, the C.O. did not ensure that Resolution of the General Body of the Company to this effect had been obtained. The C.O. stated that in all the credit proposal obtention of such resolution are obtained by Branch before release of Credit limit (Ex.S-7, page 2, item 3 read with Ex.D-7, last para). This condition was fulfilled by the Branch before release the credit facility Ex.D-7. It may be specifically mentioned that controlling office will follow for compliance of terms & conditions. He was transferred from the Credit Dptt. After five weeks of sanction on 30.3.87. Ex.D-9 and Ex.D-6, para 2, Ex.S-7, page 2, item 4, states that as the facility solicited exceeds the paid up capital and reserves of the Company resolution of the general body meeting shall be obtained and held on record. Also item No. 3 states that before release of the facility, Sr. Manager shall submit complete financial paras of the Company.

Since the proposal was for sanction of limit in excess of the paid up capital and reserves of the Company, the C.O., before recommending the limit, should have ensured that the resolution of the General Body of the Company to this effect had been obtained in the first instant. In view of the fact stated above, this part of the charge is established."

(emphasis is mine)

4. A reading of the aforesaid portions of the enquiry officer's report

leads to the following conclusions:-

(i) Petitioner was only one of the four stage officer ie the third step stage

officer with respect to sanctioning of the loan in the account of M/s Pearl and

Leasing Ltd and he was at the third stage inasmuch as two stages are in the

branch which recommended the loan being the first stage of the dealing officer

in the branch and the second stage of the branch manager and the fourth stage

is the loan sanctioning authority above the petitioner; who was posted as a

Deputy Chief Manager (Credit) in the head office (of the erstwhile New Bank

of India which has merged with the respondent no.1/Punjab National Bank).

(ii) There is no finding nor are there any allegations against the petitioner

that the petitioner has in any manner manipulated facts, misreported the facts,

concealed the facts or did any other impropriety while forwarding the note

pursuant to the recommendations made at the branch level to the higher

authority for sanction of the loan ie the petitioner only forwarded the loan

proposal from the branch as it is.

(iii) The sum and substance of the charges and the findings/conclusions

against the petitioner is that he has put up the documents for sanction of the

loan of amount of Rs.100 lacs in the account of M/s. Pearl and Leasing Ltd as

was forwarded and in the same position by the branch without giving his

effective comments and inputs thereupon.

(iv) Qua sub charge 1(a) and which pertains to putting up the note dated

28.1.1987 in haste, the only finding against the petitioner is that the proposal

dated 28.1.1987 was put up to the Board without waiting for the

recommendations from the regional office i.e it is not the charge against the

petitioner that the Board which recommended the sanctioning of the loan did

not know that they ought to have waited and should not have sanctioned the

proposal till the recommendations were received from the regional office.

(v) Qua charges 1 (b) & (c) of the petitioner being guilty of not checking up

the loan accounts of the sister concerns of M/s Pearl and Leasing Ltd which had

irregularities, the only finding against the petitioner in the enquiry officer's

report is that the petitioner has not given details of facilities enjoyed by the

sister concerns and that no details were given by the petitioner of the leased

assets which were to be acquired from the sanctioned loan i.e the charge against

the petitioner is not that he was the person who was responsible for

directly/himself getting the details of the sister concern accounts and petitioner

had to get the details with respect to assets to be purchased from the sanctioned

loan, and which requirements were admittedly to be done at the branch level

and that the petitioner only forwarded the note and proposal of the branch as it

is.

It is not the case against the petitioner that the petitioner had to take the

details of the leased assets to be purchased by the borrower from the loan which

was to be sanctioned or that the petitioner had to find out the details with

respect to sister concerns and which was admittedly within the scope of duties

of the branch officer and the branch manager had to satisfy these aspects at the

time of giving recommendations for sanctioning of the loan in question.

(vii) So far as charge 1(d) of having a security of mortgaged property which

was much less than the limit to be sanctioned and which mortgaged property

was also charged with respect to other accounts of the borrower, once again

there is no finding nor are there allegations against the petitioner that it was the

petitioner who should have ensured that another security of a mortgaged

property was taken at the branch level inasmuch as this was essentially the duty

at the branch level and the only allegation against the petitioner is forwarding

the note of the branch as it is to the Board for sanctioning of the loan. More

importantly, and as will be discussed below, the Board itself winked with

respect to so called shortcomings and which are alleged against the petitioner.

There is nothing on record that as against any member of the Board which

sanctioned the loan any action was taken by the respondent no.1-bank with

respect to irregularities alleged against the petitioner and which Board is the

final and real loan sanctioning authority.

(viii) The only charge with respect to sub charge 1(e) against the petitioner

was that the petitioner forwarded the proposal without taking the resolution of

the company for increase of paid up capital to meet the higher sanctioned loan

amount, and once again there is no allegation against the petitioner that it is the

petitioner at his level who was to contact the borrower and take the resolution,

because admittedly this was a duty to be performed at the Board level and

finally to be examined with respect to the irregularity being a major one for

non-sanction of the loan at the Board level of the erstwhile New Bank of India

and which in fact sanctioned the loan.

5. Learned counsel for the petitioner therefore very passionately and

vehemently argued that the procedural irregularities alleged against the

petitioner are by a person who is only a middle link in the chain and just an

administrative officer with respect to putting up a note inasmuch as neither he

had forwarded the proposal at the first/original stage and nor he had sanctioned

the proposal at the final stage ie the charges which are proved against the

petitioner amount to simply forwarding of the note dated 28.1.1987 and the

same cannot in the facts of this case result in extreme punishment of removal

from service especially because there is no charge of any financial irregularity

or misappropriation by the petitioner. It is argued on behalf of the petitioner

that not only there is no charge of financial irregularity or misappropriation by

the petitioner, and since petitioner had served the bank for as many as 28 years,

the effect of the dismissal order; instead of a lesser punishment; has the effect

of totally wiping out the service record and consequent denial of all retirement

benefits to the petitioner including the gratuity, provident fund/pension etc. It is

argued that the petitioner at best could have been imposed, in view of the facts

of the present case as the charge essentially is only of forwarding of the note

dated 28.1.1987, of a reprimand or some reduction in monetary emoluments,

but, the harshest punishment of removal from service could/should not have

been imposed, and which is grossly disproportionate and which should shock

the judicial conscience of this Court.

6. In response to the argument of disproportionate punishment,

learned counsel for the respondents argued that it is not as if the petitioner had

not been imposed punishment earlier inasmuch as petitioner pursuant to the

chargesheet dated 16.3.1994 was given a minor penalty of withholding of

promotion for one year in terms of the disciplinary authority order dated

10.3.1995 and therefore it could not be argued by the petitioner that he has an

unblemished service record of 28 years.

7. No doubt, petitioner has been once given the punishment of minor

penalty of withholding of promotion for one year, however, in the facts of the

present case where the petitioner is only a third stage administrative link out of

the four stages of sanctioning of the loan and the petitioner neither forwarded

the loan proposal at the original stage and nor he was the authority which had

sanctioned the loan at the final stage and the petitioner had not in any manner

misrepresented any fact or concealed any fact or committed any other

irregularity while forwarding the note as it is vide his note dated 28.1.1987,

petitioner in the opinion of this Court should have been imposed any other

major penalty but definitely not the harshest penalty of removal from service.

8. I have found merits in the arguments urged on behalf of the

petitioner not only because only procedural improprieties are alleged against

the petitioner but also because the petitioner was neither the original

forwarding authority with respect to the loan nor the final loan sanctioning

authority inasmuch as he was only a person who puts up the note and that

nothing has been placed before me on behalf of the respondent no.1-bank that

any or all officer(s) of the higher authority which sanctioned the loan have been

proceeded against by the respondent no.1-bank departmentally.

9. I thus put to the counsel for the petitioner in the presence of the

petitioner that whether the petitioner will be satisfied if he is imposed the

punishment of compulsory retirement from service in terms of the impugned

order of the disciplinary authority, and in reply to which query the counsel for

the petitioner on instructions from the petitioner who is present in person,

agrees that punishment imposed in the present case of removal from service be

changed to one of compulsory retirement.

10. No doubt, Courts themselves do not impose punishment and

ordinarily matters are remanded back to the departmental authorities which

impose punishment, but, simultaneously there are judgments of the Supreme

Court that considering the large number of years which pass from the date of

passing of the penalty order by the departmental authorities and till the year

when the case comes up for final decision in the Court, Courts can in order to

avoid any further delay themselves direct imposition of a particular

punishment. In the present case, chargesheet is of the year 1994 and today we

are in the year 2015 i.e around 21 years later on. This huge period of 21 years

persuades me that any procedural irregularity of forwarding a note dated

28.1.1987 which is found against the petitioner, the petitioner not being either

the original forwarding authority or the final loan sanctioning authority, and

considering that the petitioner had 28 years of service record which will get

wiped out on his removal from service thus resulting in his not getting any

monetary emoluments of a retired employee as per rules, I order that the

petitioner instead of being imposed the penalty of removal from service will be

imposed the penalty of compulsory retirement in terms of the disciplinary

authority's order dated 22.6.1995.

11. Writ petition is therefore allowed to the limited extent of changing

the punishment imposed upon the petitioner to that to be one of compulsory

retirement instead of removal from service. I however hasten to clarify that I

am not in one way or the other opining with respect to entitlement of the

respondents to continue with respect to any other chargesheets which the

respondent no.1-bank feels are required to be proceeded with against the

petitioner. Whatever monetary emoluments which will become due to the

petitioner on his standing compulsory retired, in terms of the present judgment,

will as per rules be paid to the petitioner within a period of three months from

today.

JANUARY 16, 2015                                     VALMIKI J. MEHTA, J
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