K.L. Bhasin vs Punjab National Bank & Anr.
2017 Latest Caselaw 1546 Del

*            IN THE HIGH COURT OF DELHI AT NEW DELHI

+                         W.P.(C) No. 7487/2000

%                                                           23rd March, 2017

K.L. BHASIN                                                    ..... Petitioner
                          Through:       Mr. Ashok Bhalla, Advocate with
                                         petitioner in person.

                          versus

PUNJAB NATIONAL BANK & ANR.                   ..... Respondents

Through: Mr. Jagat Arora, Advocate.

CORAM:

HON'BLE MR. JUSTICE VALMIKI J.MEHTA

To be referred to the Reporter or not?

VALMIKI J. MEHTA, J (ORAL)

1. By this writ petition under Article 226 of the Constitution of

India, the petitioner challenges the orders of the departmental authorities of

the respondent no. 1/Punjab National Bank/employer whereby petitioner

had been imposed the major penalty of dismissal from services which is to

be a disqualification for future employment.

2. After hearing the counsel for the petitioner and to some extent

also the counsel for the respondent no.1/employer, a detailed order was

passed on 24.11.2016 noting that the present is a case where on account of

the infraction by the petitioner of the rules of the respondent no.1/employer

with respect to pre-sanction and post-sanction loans granted, no monetary

loss whatsoever has however been caused to the respondent no.1/employer,

and therefore, the purpose of the respondent no.1/employer in removing the

petitioner from services will be satisfied even if instead of dismissal order

an order of compulsory retirement is passed. Noting such facts, the

appropriate authority of the respondent no.1/employer was therefore

directed to reconsider the issue of quantum of punishment imposed upon the

petitioner. This order dated 24.11.2016 was passed noting that the

petitioner had 22 years of unblemished service with the respondent

no.1/employer and in case the punishment of dismissal is changed to

compulsory retirement then the petitioner will be entitled to terminal benefit

of pension as per the service rules of the respondent no.1/employer. This

order dated 24.11.2016 reads as under:-

"1. This writ petition has a chequered history. The charge sheet which was issued against the petitioner dates back to 18.12.1990 i.e around 26 years back. The Enquiry Officer‟s report is dated 26.2.1993 i.e around 23 years old.

2. Petitioner in the first round of litigation in challenging the orders of the departmental authorities succeeded to a limited extent that a learned Single Judge of this Court vide his judgment dated 3.2.2014 converted the punishment imposed upon the petitioner from dismissal of services to that of compulsory retirement. A Division Bench of this Court however set aside the judgment of the learned Single Judge and has remanded the matter to this Court for a fresh decision in accordance with law.

3. I have gone through the factual imputations of misconduct against the petitioner as per the Articles of Charges dated 18.12.1990. Articles of Charges in the present case are really conclusions only with respect to infraction of rules by the petitioner and they are not Articles of Charges in the classic sense because, the Articles of Charges really are the imputations of facts with respect to misconduct

as are stated in Annexure-II to the show cause notice dated 18.12.1990 issued by the respondent no.1/bank against the petitioner.

4. There are a total of five accounts with respect to which there exists imputations of misconduct against the petitioner and which are: (i) M/s Super Plastics; (ii) M/s Aakriti Steels Pvt. Ltd; (iii) M/s Bahadur International; (iv) M/s Missakki Electronics Pvt. Ltd; and (v) M/s Swadeshi Exports.

5. Imputations of misconduct fall under two heads with respect to pre- sanction irregularities and post-sanctioned irregularities.

6. So far as the first two accounts are concerned, they are with respect to domestic manufacturers who were granted term loan facilities for purchase of machinery and cash credit limits for running of their businesses. The charges against the petitioner essentially are technical in nature because it is not the case of the respondent no.1/bank that machineries were not purchased in terms of the term loan limits sanctioned. A technical charge is that cheques under the term loan account should have been made directly in the names of the suppliers of machineries, and in one case machineries were not being found in the premises of the borrower but in the premises of a sister concern. In essence, therefore, machineries were purchased by the borrowers under the term loan limits sanctioned. As regards the cash credit facilities, there is no charge that cash credit facilities were not utilized for the businesses and essentially the charge is really with respect to lack of follow up with respect to not having proper details of stocks etc.

7. With respect to equitable mortgage of the properties for the first two accounts, there is no dispute that the properties existed and the only charge is that instead of constructed properties the equitable mortgaged properties were only plots of land. Of course, it is trite that the real value of the property is from the plot of land though about 20 odd percent of the valuation of the property is towards construction on the same. Once the mortgaged properties existed but the borrower/guarantor wrongly sold the mortgaged property, this cannot be an infraction of rules by the petitioner who was the Manager of the concerned Branch of the Bank at the relevant time.

8. As regards the three other accounts, it is seen that such accounts were of exporters. They were granted packing credit limits and it is not disputed that packing credit limits were utilized for the purposes of exports. In fact, there are no allegations in any of the accounts that monies were not used for the export businesses or that monies were partly not recovered on account of bills purchase limit given with respect to the exported goods. In essence, for the three accounts, pertaining to the exporters once again there are only technical charges.

9. The aforesaid facts are to be taken with the aspect that if the petitioner is guilty of processing the proposals for grant of credit limits to the first two accounts without properly processing the proposals at the branch level, equally the Assistant General Manager Sh. K.L.Chandana who sanctioned the facilities at the regional office level should be equally guilty, and I am informed that Mr. K.L.Chandana has only been imposed the punishment of compulsory retirement. It is however not very clear that whether Mr. K.L.Chandana was at all charged with respect to the first two accounts against which charges were made against the

petitioner of processing of the proposals at the branch level without following the relevant rules.

10. Once in essence, it is found that it cannot be said that borrowers or guarantors were non-existing persons, that term loans were not utilized for purchase of machineries, cash credit limits were not utilized for the purposes of businesses, packing credit limits were in fact not used for export and that export proceeds were not received in certain accounts, the fact that there are outstanding in the accounts cannot be said to be a violation by the petitioner/Manager because some of the credit facilities/loans granted by the banks do fall in the category of non- performing assets. This aspect is to be taken with the fact that the credit facilities granted in the five cases did not run into crores and crores of rupees but they were small scale credit facilities running into amounts between 15 lacs to 20 lacs of rupees.

11. In the prima facie opinion of this Court, considering the technical nature of the charges, and the other aspects which have been detailed above, in brief as regards the charge sheet and the departmental proceedings concluded with the report of the Enquiry Officer and the orders of the Disciplinary Authority etc, and the fact that it is well known that Bank Managers are required to bring in business for the bank whether in the form of deposits or by extending credit facilities, then mere association of the petitioner with a Chartered Accountant who got business for the bank is not either an illegality or immorality against the petitioner.

12. For all the aforesaid reasons, in the opinion of this Court, respondent no.1/bank, without prejudice to the respective rights and contentions, may reconsider the penalty to be imposed against the petitioner so far as the present Articles of Charges are concerned whereby the petitioner may be considered for the punishment of compulsory retirement and/or any other appropriate punishment instead of dismissal from services.

13. Let the competent authority in the bank consider the representation of the petitioner already made to the bank and pass appropriate orders as to whether or not punishment imposed on the petitioner of dismissal from services as per the present Articles of Charges, can or cannot be considered for being reduced from dismissal from services to one of compulsory retirement and/or any other appropriate punishment. Needful be done within a period of three months from today.

14. List on 23rd March, 2017."

3. Learned counsel for the petitioner has placed on record the

order dated 20.2.2017 passed by the appropriate authority of the respondent

no.1/employer passed pursuant to the order of this Court dated 24.11.2016

whereby the appropriate authority of the respondent no.1/employer has

resolved to continue with the penalty of dismissal from services of the

petitioner and not to reduce the same to compulsory retirement. The relevant

observations of the appropriate authority in order dated 20.2.2017 for not

changing the punishment of dismissal from services to compulsory

retirement read as under:-

"8. It is pertinent to point out here that the earlier representation of Shri K.L. Bhasin to the bank to convert/modify his punishment from „Dismissal‟ to „compulsory retirement‟ to enable him to be eligible for pension and other retirement benefits has already been considered by the Reviewing Authority in his order dated 26.02.2010 in pursuant to the directions of the Hon‟ble High Court. Hon‟ble High Court in the order dated 24.11.2016 has made aforesaid observations and directed the bank to consider the same. With due regard to the Hon‟ble High Court I have gone through the entire record pertaining to the disciplinary action in respect to chargesheet dated 18.12.1990 of Shri K.L. Bhasin and observed as under:-

i) In the A/c M/s Super Plastic, Shri Bhasin made the payments directly to the party instead of suppliers of the machinery which is against the Bank‟s guidelines, due to which the party had withdrawn the amount by issuing cheques and the supplier of the machinery M/s Avon Enterprises which was found to be a fake firm. Before disbursing the term loan, neither Shri Bhasin visited the supplier company nor verified the genuineness of the supplier. I observe that he relied upon the facts/documents given by the party without verifying the same which shows that the loan was recommended in a casual manner. Further, in the A/c M/s Aakriti Steels (P) Ltd., the record reveals that Shri Bhasin kept the funds at the disposal of the company, who withdrew the funds instead of making payment for the machinery to the supplier. Later on, the supplier of the machinery M/s Sharma Enterprises was not found in existence which implies that the Bank‟s fund which was to be used to purchase of the machinery was siphoned off by the borrower due to lack of supervision/monitoring on the part of Shri Bhasin. There is no evidence to prove that end use of Bank‟s funds was verified.

ii) In the A/c M/s Super Plastic, I observe that inspection of collateral security was not done by Shri Bhasin. If Shri Bhasin had carried out inspection of collateral security, the fraud could have been detected before recommending the loan. The valuation report dated 03.04.1989 of Shri N.N. Mehta, Govt.

approved valuer was given for 2½ storey constructed building whereas the bank had mortgaged only one plot of 500 sq. yards which proved that Shri Bhasin had accepted higher valuation of the IP. In the A/c M/s Akriti Steels (P) Ltd. the valuation report submitted by Govt. approved valuer was for 2½ storeyed residential building whereas there was no such house built on 400 sq.

yrds plot at 2A/67, Jeevan Park, Delhi, even the said land was to be used for agricultural purpose. Further, there is a great difference in the valuation of agriculture plot viz-a-viz a residential plot on which 2½ storey building constructed as it involves change in land use and various permissions from civic authorities are required. Therefore, over valuation was not to the extent of only 20% but it was many times over. All these irregularities, however, small should have alerted Shri Bhasin to dwell deeper into the details provided by the party & should have checked/verified all the important parameters before recommending the proposal, due to which the fraud could have been prevented along with the loss to the bank.

iii) In the A/c M/s Bahadur International, the party did not have Exporter Code number issued by the RBI which is mandatory for any firm dealing in export business. Further, it has been established in the enquiry proceedings that the branch had purchased two foreign bills amounting to Rs.10,73,948/- drawn on DA basis against orders and adjusted the Packing Credit Limit of Rs.10.00 lac. The payment against these two bills was never received resulting in the loss to the Bank. In the A/c M/s Missakki Electronics (P) Ltd. the branch had released additional PCL of Rs.8.00 lac between May, 1989 to Feb, 1990 but the branch did not inspect the stock regularly as per Bank‟s guidelines and without obtaining stock statement after 31.07.1989, the DP was allowed. Shri Bhasin failed to exercise post sanction follow up which resulted in jeopardizing Bank‟s funds. The branch relied upon the reason given by the borrower that they were unable to ship goods due to cyclone in Bombay and LC had expired in the meantime. However, the branch should have verified/inspected the goods which were ready for shipment before releasing the limit. The buyer‟s credit limit was not approved from ECGC pre shipment stage in the A/C M/s Swadeshi Exports. There are series of omission and commission on the part of Shri Bhasin.

iv) Shri K.L. Chandna, Asstt. General Manager was served with chargesheet dated 31.07.1990 for committing lapses while sanctioning credit facilities in various accounts during his posting as Regional Manager, Regional Office, Delhi. After departmental enquiry, the said chargesheet culminated into imposition of punishment of "compulsory retirement" vide order dated 11.08.1992. The said chargesheet was pertaining to the following accounts:-  M/s Bitco Udyog  Ms Rakesh Kumar and Co.

 M/s Anil Plastics  M/s Mehra Plastics  Ms/ Auto Centre  Ms Rana Bros  Ms Divya warehouse While imposing the aforesaid punishment the then Disciplinary Authority kept in abeyance the chargesheet dated 18.12.1990 served upon Shri Chandna pertaining to the misconducts committed by him in the same accounts at BO, Defence Colony for which Shri K.L. Bhasin was served with chargesheet dated 18.12.1990 and was imposed the punishment of „Dismissal from service‟. In

the said order Disciplinary Authority reserved the right of the bank to proceed against Shri Chandna in case he is reinstated in services of the bank in appeal or otherwise. The record reveals that the loan was sanctioned with various stipulations which were to be complied with before disbursement of loan. Shri Bhasin did not comply with these stipulations and disbursed the loan without obtaining margin money from these companies. Had Shri Bhasi ensured to comply the stipulations before disbursing the loan, financial loss could have averred.

v) & vi) Before recommending the proposal, Shri Bhasin did not carry out proper pre sanction appraisal and due diligence. All the basic requirement for recommending the proposal were overlooked by Shri Bhasin. He violated various Bank‟s guidelines and failed to carry out inspection of collateral security, verification of supplier of machinery, antecedents of the borrowing company, its director and guarantors and stocks at regular intervals. Further he did not scrutinize the financial data of the borrowing company, accepted property at a much higher valuation and accepted higher sales projections. Neither legal opinion from the Bank‟s approved advocate was obtained nor was the property got insured in 1st two accounts. The record reveals that the loan was sanctioned with, various stipulations which were to be complied with, before disbursement of loan, Shri Bhasin did not comply with these stipulations and disbursed the loan without obtaining margin money from these companies. Further, the loss of Rs.15 lac to Rs.20 lac occurred approx. 26 years ago which was not a small amount at that time. As a prudent banker, it was his primary duty to safeguard the Bank‟s interest by following all the guidelines and procedure before recommending the loans. As incharge of the branch and responsible officer of the Bank, it was his duty to cross check/verify all the documents, financial data and genuineness of the promoters. Further, the penalty imposed upon Shri Bhasin was on the basis of lapses committed by him at the time of recommending the proposal and not merely due to his association with a chartered accountant who got business for the Bank. All these facts lead to conclusion that there was a malafide intention on his part and he connived with the party to cause huge loss to the Bank. Has Shri Bhasin taken proper pre sanctioned appraisal and due diligence of all the facts and figures along with strict post sanction follow up, he could have easily detected the ill-intention of the party. Shri Bhasin gave undue advantage and provided leverage to the party at every step. Although he was well versed with all the rules and regulations regarding loans and advances but still failed to check the malpractices of the party. He overlooked important details required for ascertaining the genuine dealings which is not expected from a person having long experience in this field.

9. I find that Shri Bhasin recommended the loan proposal in a very casual manner without taking care of important aspects of the proposal. The branch had made advances recklessly without adhering to the Bank‟s guidelines. Although he was bound by Bank‟s guidelines, even then he recommended the loan in blatant way ignoring bank‟s interest. Out of several lapses, many are serious/grave in nature which proves his connivance/doubtful integrity. As such I do not find any reason to interfere in the punishment imposed by the then Disciplinary Authority."

4. A reading of the aforesaid relevant portions of the order dated

20.2.2017 passed by the General Manager of the respondent no.1/employer

shows that the same again is only a reiteration of what is stated in the

impugned orders of the disciplinary authority and the appellate authority

which talk of grave infraction of rules by the petitioner. However, the

admitted position even as per the order dated 20.2.2017 is that there is no

monetary loss which is caused to the respondent no.1/employer.

5. Supreme Court in a recent judgment in the case of Asger

Ibrahim Amin Vs. Life Insurance Corporation of India 2015 (10) SCALE

639 held that even if the employee applies for resignation and an employee

is allowed to resign, subsequently an employee can seek the relief that the

resignation in fact be treated as voluntary retirement. The Supreme Court

allowed the conversion of resignation into voluntary retirement because the

employee in the case of Asger Ibrahim Amin (supra) had the necessary

qualifying years of service for grant of pension and terminal benefits and

which benefits/pension would be forfeited in case the employee is taken to

have resigned instead of being voluntarily retired. The relevant paras of the

judgment in the case of Asger Ibrahim Amin (supra) are paras 13 to 16, and

which paras read as under:-

"13. The Appellant ought not to be deprived of pension benefits merely because he styled his termination of services as "resignation" or because there was no provision to retire voluntarily at that time. The commendable objective of the Pension Rule is to extend benefits to a class of people to tide over the crisis and vicissitudes of old age, and if there are some inconsistencies between the statutory provisions and the avowed objective of the statute so as to discriminate between the beneficiaries within the class, the end of justice obligates us to palliate the differences between the two and reconcile them as far as possible. We would be failing in our duty, if we go by the letter and not by the laudatory spirit of statutory provisions and the fundamental rights guaranteed Under Article 14 of the Constitution of India.

14. Reserve Bank of India v. Cecil Dennis Solomon relied upon by the Respondent, although distinguishable on facts, has ventured to distinguish "voluntary retirement" from "resignation" in the following terms:

10. In service jurisprudence, the expressions "superannuation", "voluntary retirement", "compulsory retirement" and "resignation" convey different connotations. Voluntary retirement and resignation involve voluntary acts on the part of the employee to leave service. Though both involve voluntary acts, they operate differently. One of the basic distinctions is that in case of resignation it can be tendered at any time, but in the case of voluntary retirement, it can only be sought for after rendering prescribed period of qualifying service. Other fundamental distinction is that in case of the former, normally retiral benefits are denied but in case of the latter, the same is not denied. In case of the former, permission or notice is not mandated, while in case of the latter, permission of the employer concerned is a requisite condition. Though resignation is a bilateral concept, and becomes effective on acceptance by the competent authority, yet the general rule can be displaced by express provisions to the contrary. In Punjab National Bank v. P.K. Mittal on interpretation of Regulation 20(2) of the Punjab National Bank Regulations, it was held that resignation would automatically take effect from the date specified in the notice as there was no provision for any acceptance or rejection of the resignation by the employer. In Union of India v. Gopal Chandra Misra it was held in the case of a judge of the High Court having regard to Article 217 of the Constitution that he has a unilateral right or privilege to resign his office and his resignation becomes effective from the date which he, of his own volition, chooses. But where there is a provision empowering the employer not to accept the resignation, on certain circumstances e.g. pendency of disciplinary proceedings, the employer can exercise the power.

(Emphasis is ours) The legal position deducible from the above observations further amplifies that the so-called resignation tendered by the Appellant was after satisfactorily serving the period of 20 years ordinarily qualifying or enabling voluntary retirement. Furthermore, while there was no compulsion to do so, a waiver of the three months notice period was granted by the Respondent Corporation. The State being

a model employer should construe the provisions of a beneficial legislation in a way that extends the benefit to its employees, instead of curtailing it.

15. The cases of Shyam Babu Verma v. Union of India, State of M.P. v. Yogendra Shrivastava, M.R. Prabhakar v. Canara Bank, National Insurance Co. Ltd. v. Kirpal Singh, UCO Bank v. Sanwar Mal relied upon by the parties are distinguishable on facts from the present case.

16. We thus hold that the termination of services of the Appellant, in essence, was voluntary retirement within the ambit of Rule 31 of the Pension Rules of 1995. The Appellant is entitled for pension, provided he fulfils the condition of refunding of the entire amount of the Corporation's contribution to the Provident Fund along with interest accrued thereon as provided in the Pension Rules of 1995. Considering the huge delay, not explained by proper reasons, on part of the Appellant in approaching the Court, we limit the benefits of arrears of pension payable to the Appellant to three years preceding the date of the petition filed before the High Court. These arrears of pension should be paid to the Appellant in one instalment within four weeks from the date of refund of the entire amount payable by the Appellant in accordance of the Pension Rules of 1995. In the alternative, the Appellant may opt to get the amount of refund adjusted against the arrears of pension. In the latter case, if the amount of arrear is more than the amount of refund required, then the remaining amount shall be paid within two weeks from the date of such request made by the Appellant. However, if the amount of arrears is less than the amount of refund required, then the pension shall be payable on monthly basis after the date on which the amount of refund is entirely adjusted." (emphasis added)

6. In my opinion, the underlying principle of the judgment

delivered by the Supreme Court in the case of Asger Ibrahim Amin (supra)

in spirit will apply to the facts even of the present case also because the only

concern of the respondent no.1/employer is that it does not want to continue

with the service of an employee who has committed clear cut infringement

of the rules with respect to recommending the sanction of loans as also

failing to monitor certain post sanction compliances. Ultimately, the issue is

of conversion of the heading of the punishment from resignation to

voluntary retirement as was done in the case of Asger Ibrahim Amin

(supra), and in the present case from dismissal to compulsory retirement.

7. The law with respect to disproportionate punishment is that

disproportionate punishment must shock the judicial conscience of a Court,

and in my opinion considering the facts of the present case the punishment

imposed of dismissal from service shocks the judicial conscience of this

Court because the punishment even if the same is of compulsory retirement

would serve the purpose of the respondent no.1/employer without

unnecessarily and seriously prejudicing the petitioner, and which would take

place in case petitioner is to be taken as dismissed from services whereby

the entire service record of the petitioner would be wiped out and hence

petitioner would not be entitled to the terminal benefit of pension. I have

already stated above that petitioner had completed 22 years of unblemished

service in the respondent no.1/employer/bank when the impugned order was

passed by the disciplinary authority and petitioner thus has the qualifying

years of service for grant of pension.

8. Learned counsel for the respondent no.1/employer has argued

that Courts have repeatedly held that an employer is entitled to terminate the

services of an employee even if there is no monetary loss caused to the

employer, however, there is no quarrel to such proposition because such an

employee can always be removed from services, but the issue is that

removal from services is not achieved only through dismissal from services

and that the same could also be achieved by compulsory retirement, because

otherwise an employee who has blemishless service with an employer

totaling to qualifying years of service for the purpose of grant of pension

will be denied pension and hence it is necessary to apply the spirit of the

ratio laid down in the case of Asger Ibrahim Amin (supra). Hence, this

Court converts the punishment of dismissal from services to that of

compulsory retirement, and which will also serve the intention of the

respondent no.1/employer/bank of removing the petitioner from services

without unnecessarily prejudicing the petitioner.

9. In view of the aforesaid discussion, this writ petition is allowed

to the limited extent that the punishment imposed upon the petitioner from

dismissal from services is converted to the punishment of compulsory

retirement and which shall be also a disqualification for future employment

with the respondent no.1/employer.

10. The writ petition is allowed to the limited extent as stated

above, leaving the parties to bear their own costs. Let the terminal benefits,

whichever are payable to the petitioner in view of the passing of the present

judgment, be released to the petitioner within a period of two months from

today. Obviously, what would be the entitlement of the petitioner, taking

the petitioner only as having compulsorily retired, will be the entitlement in

accordance with the applicable rules of the respondent no.1/Punjab National

Bank/employer.

MARCH 23, 2017                                    VALMIKI J. MEHTA, J
AK/Ne