Delhi High Court
V. K. Malhotra vs Union Bank Of India & Ors. on 12 October, 2022
* IN THE HIGH COURT OF DELHI AT NEW DELHI
Judgment reserved on: 14.09.2022
% Judgment delivered on: 12.10.2022
+ LPA 298/2021
V. K. MALHOTRA ..... Appellant
Through: Mr. G. S. Chaturvedi and Mr.
Shrinkar Chaturvedi, Advocates.
versus
UNION BANK OF INDIA & ORS. ..... Respondent
Through: Mr. O. P. Gaggar and Mr. Sachindra
Karn, Advocates for respondents.
CORAM:
HON'BLE THE CHIEF JUSTICE
HON'BLE MR. JUSTICE SUBRAMONIUM PRASAD
JUDGMENT
SATISH CHANDRA SHARMA, C.J.
1. The present appeal is arising out of the judgment dated 05.04.2021,
passed in W.P.(C.) No. 625/2016 by which the learned Single Judge has
quashed the charge sheet dated 31.05.2013 and in respect of the charge sheet
dated 11.11.2009; the matter has been remanded back to the disciplinary
authority to pass fresh order.
Signature Not Verified
Digitaaly Signed
By:BHUPINDER SINGH
ROHELLA
Signing Date:12.10.2022
12:31:45
2. The undisputed facts of the case reveal that the appellant before this
Court was appointed as a Clerk in the services of Union Bank of India in
1973 and the last position held by the Appellant was that of General
Manager. The Appellant retired after rendering 36 years of service.
3. The Appellant, while he was in service was subjected to disciplinary
proceedings and a charge sheet was issued on 29.11.2008 in respect of
alleged misconduct relating to sanction of credit facilities to one M/s. Khatri
Mineral & Mining Company at Jabalpur while he was serving as Assistant
General Manager in the year 2007.
4. The Appellant before this Court was due for retirement on 31.12.2009
and before his retirement a second charge sheet was issued on 11.11.2009.
The Appellant in respect of the first charge sheet dated 29.11.2008 was held
guilty of the misconduct and the disciplinary authority by an order dated
03.12.2009 inflicted a punishment of dismissal from service. The Appellant
did prefer an appeal in the matter on 09.01.2010 and finally the Appellate
Authority passed an order dated 06.03.2012 reducing the punishment of
dismissal from service to that of compulsory retirement.
5. The undisputed facts of the case make it very clear that the
punishment of compulsory retirement was not challenged by the Appellant
while filing the writ petition
6. It is pertinent to note that the third charge sheet was also issued after
the retirement of the Appellant on 31.05.2013 and the competent authority
keeping in view the Union Bank Of India Officer Employees' (Discipline
and Appeal) Regulations, 1976 proceeded ahead in the matter and the
Signature Not Verified
Digitaaly Signed
By:BHUPINDER SINGH
ROHELLA
Signing Date:12.10.2022
12:31:45
Enquiry Officer submitted a report on 20.02.2014. A copy of the report was
forwarded to the Appellant and, thereafter finally an order was passed on
06.01.2015 withholding the monthly pension payable to the Appellant
keeping in view the Regulation 43 of the Union Bank of India Officer
(Employees') Pension Regulations, 1995.
7. The Appellant being aggrieved by the order dated 06.01.2015
preferred an appeal on 11.03.2015 and the Appellate Authority by an order
dated 28.05.2015 has dismissed the appeal keeping in view the gravity of
lapse on the part of the Appellant and the order of the Disciplinary Authority
dated 06.01.2015 was upheld. The Appellant, in the year, 2016 preferred a
writ petition which is the subject matter of the present LPA on 19.01.2016,
praying for the following reliefs in W.P.(C.) No. 625/2016:
"In view of the foregoing submissions, it is most respectfully
prayed that this Hon'ble Court may kindly be pleased to:
(a) issue writ in the nature of certiorari or any other writ(s),
order(s) or direction(s) quashing the charge-sheets dated
11.11.2009 and 31.05.2013 as also consequent illegal inquiry
and Report dated 5.2.14 and orders dated 06.01.2015 and
28.05.2015 passed by the Respondent Nos. 2 and 3 as also
show-cause notice dated 23.10.2015;
(b) issue writ in the nature of mandamus or any other writ(s),
order(s) or direction(s) directing the Respondents to grant full
pension as also other retiral benefits including leave
encashment and gratuity w.e.f. 12.12.09 with interest;
(c) cost of this Writ Petition may kindly be also allowed in
favour of the Petitioner and against the Respondents since the
Petitioner has been suffering due to malafide and illegal
actions of the Respondents;
Signature Not Verified
Digitaaly Signed
By:BHUPINDER SINGH
ROHELLA
Signing Date:12.10.2022
12:31:45
(d) pass such other or further order(s) as this Hon'ble Court
may deem fit and proper on the facts and circumstances of the
case and in the interest of justice."
8. The writ petition has been partially allowed by the learned Single
Judge vide order dated 05.04.2021, passed in W.P.(C.) No. 625/2016.
9. Paragraphs 17 to 28 of the order passed by the learned Single Judge
reads as under:
"17. The law on the issue is very clear. No chargesheet can be issued for
events which had taken place four years before the issuance of the
chargesshet.
18. The plea of Mr. Gaggar, that a show-cause notice was issued on June
26, 2009 and the chargesheet is in continuation of the same and as such the
limitation of four years shall not be attracted. I am not impressed by the
submission. The law is very clear that a disciplinary proceeding is said to
have been initiated with the issuance of chargesheet, which in this case was
initiated on May 31, 2013, so the four years have to be seen on that day. The
show-cause notice dated June 26, 2009 cannot be construed as an initiation
of disciplinary proceeding nor it will extend the limitation of four years.
19. In view of the position of law, noted above the chargesheet dated May
31, 2013 needs to be quashed. It is ordered accordingly.
20. There is no denial to the fact that vide order dated January 6, 2015, the
disciplinary authority has passed a common order on the two chargesheets
dated November 11, 2009 and May 31, 2013 imposing penalty of
withholding of pension permanently. The chargesheet dated May 31, 2013
having been quashed, the order dated January 06, 2015 is also liable to be
quashed. It is ordered accordingly. It needs to be considered, whether the
single chargesheet dated November 11, 2009 shall entail the same penalty
or a different one. Surely, this Court cannot, vary the penalty in exercise of
its jurisdiction under Article 226 of the Constitution of India. The matter is
required to be relegated back to the Disciplinary Authority to consider the
record of the chargesheet dated November 11, 2009 including the inquiry
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Digitaaly Signed
By:BHUPINDER SINGH
ROHELLA
Signing Date:12.10.2022
12:31:45
report and the response of the petitioner (if any) and pass a fresh order. This
shall be done within twelve weeks from today.
21. In so far as the plea of Mr. Chaturvedi, that the denial of gratuity by the
respondent Bank on the ground that the allegations / charges proved against
the petitioner are of very serious / grave in nature, amount to acts involving
moral turpitude, as illegal, is concerned, there is no dispute that no criminal
case was initiated against the petitioner for his acts of omission and
commission by the respondent Bank. In the absence of initiation of a
criminal case, there is no conviction of the petitioner for an offence
involving moral turpitude. Hence, there is no justification for forfeiture of
gratuity on the said ground. Mr. Chaturvedi is justified in relying upon the
Judgement of the Supreme Court of the Supreme Court in Jaswant Singh
Gill (supra) wherein in Para 14, the Supreme Court has held a under:-
"14. The Act provides for a closely neat scheme providing
for payment of gratuity. It is a complete code containing
detailed provisions covering the essential provisions of a
scheme for a gratuity. It not only creates a right to payment
of gratuity but also lays down the principles for
quantification thereof as also the conditions on which he
may be denied therefrom. As noticed hereinbefore, sub-
section (6) of Section 4 of the Act contains a non- obstante
clause vis-`-vis sub-section (1) thereof. As by reason
thereof, an accrued or vested right is sought to be taken
away, the conditions laid down thereunder must be fulfilled.
The provisions contained therein must, therefore, be
scrupulously observed. Clause (a) of Sub-section (6) of
Section 4 of the Act speaks of termination of service of an
employee for any act, willful omission or negligence
causing any damage. However, the amount liable to be
forfeited would be only to the extent of damage or loss
caused. The disciplinary authority has not quantified the
loss or damage. It was not found that the damages or loss
caused to Respondent No. 1 was more than the amount of
gratuity payable to the appellant. Clause (b) of Sub-section
(6) of Section 4 of the Act also provides for forfeiture of the
whole amount of gratuity or part in the event his services
had been terminated for his riotous or disorderly conduct or
Signature Not Verified
Digitaaly Signed
By:BHUPINDER SINGH
ROHELLA
Signing Date:12.10.2022
12:31:45
any other act of violence on his part or if he has been
convicted for an offence involving moral turpitude.
Conditions laid down therein are also not satisfied."
(emphasis supplied)
22. Even in the case of Union Bank of India v. C.G. Ajay Babu (supra), the
Supreme Court by relying upon Jaswant Singh Gill (supra) has in Paras 18
to 20 has held as under:
"18. Though the learned Counsel for the appellant-Bank
has contended that the conduct of the respondentemployee,
which leads to the framing of charges in the departmental
proceedings involves moral turpitude, we are afraid the
contention cannot be appreciated. It is not the conduct of a
person involving moral turpitude that is required for
forfeiture of gratuity but the conduct or the act should
constitute an offence involving moral turpitude. To be an
offence, the act should be made punishable under law. That
is absolutely in the realm of criminal law. It is not for the
Bank to decide whether an offence has been committed. It is
for the court. Apart from the disciplinary proceedings
initiated by the appellant- Bank, the Bank has not set the
criminal law in motion either by registering an FIR or by
filing a criminal complaint so as to establish that the
misconduct leading to dismissal is an offence involving
moral turpitude. Under sub-Section (6)(b)(ii) of the Act,
forfeiture of gratuity is permissible only if the termination of
an employee is for any misconduct which constitutes an
offence involving moral turpitude, and convicted
accordingly by a court of competent jurisdiction.
19. In Jaswant Singh Gill v. Bharat Coking Coal Limited
and others, it has been held by this Court that forfeiture of
gratuity either wholly or partially is permissible under sub-
Section (6)(b)(ii) only in the event that the termination is on
account of riotous or disorderly conduct or any other act of
violence or on account of an act constituting an offence
involving moral turpitude when he is convicted.
Signature Not Verified
Digitaaly Signed
By:BHUPINDER SINGH
ROHELLA
Signing Date:12.10.2022
12:31:45
"13. The Act provides for a close-knit scheme
providing for payment of gratuity. It is a
complete code containing detailed provisions
covering the essential provisions of a scheme
for a gratuity. It not only creates a right to
payment of gratuity but also lays down the
principles for quantification thereof as also the
conditions on which he may be denied
therefrom. As noticed hereinbefore, sub-section
(6) of Section 4 of the (2007) 1 SCC 663 Act
contains a non obstante clause vis-à-vis
subsection (1) thereof. As by reason thereof, an
accrued or vested right is sought to be taken
away, the conditions laid down thereunder
must be fulfilled. The provisions contained
therein must, therefore, be scrupulously
observed. Clause (a) of sub-section (6) of
Section 4 of the Act speaks of termination of
service of an employee for any act, wilful
omission or 1 was more than the amount of
gratuity payable to the appellant. Clause (b) of
subsection (6) of Section 4 of the Act also
provides for forfeiture of the whole amount of
gratuity or part in the event his services had
been terminated for his riotous or disorderly
conduct or any other act of violence on his part
or if he has been convicted for an offence
involving moral turpitude. Conditions laid
down therein are also not satisfied."negligence
causing any damage. However, the amount
liable to be forfeited would be only to the extent
of damage or loss caused. The disciplinary
authority has not quantified the loss or
damage. It was not found that the damages or
loss caused to Respondent 1 was more than the
amount of gratuity payable to the appellant.
Clause (b) of subsection (6) of Section 4 of the
Act also provides for forfeiture of the whole
Signature Not Verified
Digitaaly Signed
By:BHUPINDER SINGH
ROHELLA
Signing Date:12.10.2022
12:31:45
amount of gratuity or part in the event his
services had been terminated for his riotous or
disorderly conduct or any other act of violence
on his part or if he has been convicted for an
offence involving moral turpitude. Conditions
laid down therein are also not satisfied."
20. In the present case, there is no conviction of the
respondent for the misconduct which according to the Bank
is an offence involving moral turpitude. Hence, there is no
justification for the forfeiture of gratuity on the ground
stated in the order dated 20.04.2004 that the "misconduct
proved against you amounts to acts involving moral
turpitude". At the risk of redundancy, we may state that the
requirement of the statute is not the proof of misconduct of
acts involving moral turpitude but the acts should constitute
an offence involving moral turpitude and such offence
should be duly established in a court of law." (emphasis
supplied)
23. The case of the petitioner is squarely covered by the ratio of
Judgments of the Supreme Court in the aforesaid two cases. Hence, the
forfeiture of the gratuity by the respondent Bank need to be set aside, it is
ordered accordingly. The petitioner shall be entitled to gratuity. The
same shall be released with interest fixed @ 9% per annum.
24. In so far as the plea of Mr. Chaturvedi that even the leave
encashment cannot be stopped / withheld / forfeited by relying upon the
Judgment of this Court in Deepak Sapra (supra) is concerned, the
respondent Bank has not justified its action by relying upon any
regulation. Mr. Chaturvedi is justified in relying upon Deepak Sapra
(supra) wherein the Division Bench of this Court with respect to an
employee who worked in Punjab National Bank and was compulsory
retired had granted the benefit of leave encashment by holding in Para 8
as under:
"8. Thus, in respect of all categories of retirees, the first
proviso states that such employees would be eligible to
payment of leave encashment benefits. Advisedly, the
regulation which was framed after prior consultation with
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Digitaaly Signed
By:BHUPINDER SINGH
ROHELLA
Signing Date:12.10.2022
12:31:45
and approval of the Central Government made no
distinction between one class of retirees and another.
Indeed there is no dispute about the fact that the cessation
of service as a result of retirement can be on the occurrence
of three contingencies - attainment of superannuation;
option by the employee to voluntarily retire from the
service, and the third, retirement of an employee upon
imposition of a penalty or exercise by the employer upon
imposition of a penalty or exercise by the employer of an
option to compulsorily retire the employee on this attaining
a certain age or having served for a certain number of
years, in public interest. The first proviso makes no
distinction between one class of retirees and another. In
other words, each one of them, in terms of Regulation 38 of
the 1979 Regulations is entitled to leave encashment benefit.
In the case of those imposed with penalty of compulsory
retirement, there is no dispute that pension - as applicable
and other terminal benefits are given. In these
circumstances, to single-out one class of retirees, i.e. those
imposed with compulsory retirement and deny them the
benefit of leave encashment would be contrary to plain
intent of Regulation 38 of the 1979 Regulations. This Court
is clear that the first part of the learned Single Judge‟s
reasoning that he preferred and relied upon the bank‟s
circular of 18.01.2001 is clearly erroneous. That circular
flies in the face of the first proviso to Regulation 38 of 1979
Regulations and could not have added words as it sought to,
in the present instance. Another reason which persuades us
to hold as we do, i.e. to say that compulsory retirees would
be entitled to leave encashment benefits is that singling-out
such class of employees for denial for one specific type of
retirement benefit is also arbitrary and furthers no
rationale, having regard to the express terms of Regulation
38 of the 1979 Regulations." (emphasis supplied)
25. I have not been shown any rule, which deny the payment of leave
encashment on imposition of penalty of compulsory retirement. The
petitioner shall be entitled to benefit of leave encashment. The same shall
be released with interest @ 9% per annum.
Signature Not Verified
Digitaaly Signed
By:BHUPINDER SINGH
ROHELLA
Signing Date:12.10.2022
12:31:45
26. A plea has been raised by Mr. Chaturvedi that the petitioner has
been denied pension between the period, December 12, 2009 till March
06, 2012. No justification has been given by the respondents in their
counter-affidavit in that regard. Once the penalty of the petitioner has
been converted into compulsorily retirement, the same shall relate back
to the date of dismissal and the petitioner shall be entitled to pension
from the said date, i.e., December 12, 2009, (the date when the dismissal
order had come into effect). The arrears of pension shall also be paid to
the petitioner till March 06, 2012 with interest @ 9% per annum. The
benefit of the pension, beyond January 6, 2015 shall be regulated by the
order to be passed by the Disciplinary Authority in terms of my direction
in Para 19 above. The petitioner shall be at liberty to challenge the
order to be passed by the Disciplinary Authority, to his prejudice, in
accordance with law.
27. The offshoot of my above discussion is (i) the chargesheet dated May
31, 2013 is quashed; and consequently Disciplinary Authority order
dated January 6, 2015 is set aside. The matter is remanded back to the
Disciplinary Authority to pass a fresh order on the chargesheet dated
November 11, 2009 within twelve weeks from today; (ii) the compulsory
retirement of the petitioner relates back to December 12, 2009; (iii) the
petitioner is entitled to gratuity as of December 12, 2009 with 9%
interest per annum; (iv) the petitioner is entitled to leave encashment as
of December 12, 2009 with 9% interest per annum; (v) the petitioner is
entitled to the arrears of pension w.e.f December 12, 2009 till March 06,
2012 with interest @ 9% per annum.
28. The petition stands disposed of. No costs."
10. The Appellant being partially aggrieved by the order passed by the
learned Single Judge has filed the present appeal only limited to the extent
of remanding of the matter to the disciplinary authority and to pass a fresh
order qua the charge sheet dated 11.11.2009.
Signature Not Verified
Digitaaly Signed
By:BHUPINDER SINGH
ROHELLA
Signing Date:12.10.2022
12:31:45
11. The aforesaid undisputed facts of the case make it very clear that the
Appellant was subjected to disciplinary proceedings and 3 charge sheets
were issued to the Petitioner from time to time as under:
A. Charge sheet dated 29.11.2008
B. Charge sheet dated 11.11.2009
C. Charge sheet dated 31.05.2013
12. In respect of the first charge sheet dated 29.11.2008, an order of
dismissal was passed by the disciplinary authority on 03.12.2009 and the
appeal preferred by the Appellant under Regulation of the Union Bank of
India (Discipline and Appeal) Regulations, 1976 was allowed.
13. The Appellate authority vide order dated 06.03.2012 moderated the
punishment of dismissal to that of compulsory retirement and the aforesaid
order of compulsory retirement dated 06.03.2012 has not been challenged by
the Appellant.
14. The disciplinary authority in respect of the second charge sheet dated
11.11.2009 after punishment of dismissal was inflicted upon the Appellant
on 03.12.2009 kept the proceedings in abeyance and the proceedings were
re-opened only after the penalty of dismissal was converted into compulsory
retirement. The third charged sheet dated 31.05.2013 was issued to the
Appellant after his retirement and the Appellant took a plea before the
learned Single Judge that no such charge sheet can be issued in respect of
any event which took place more than four years before his retirement. The
Signature Not Verified
Digitaaly Signed
By:BHUPINDER SINGH
ROHELLA
Signing Date:12.10.2022
12:31:45
statement of allegations in respect of the third charge sheet dated 31.05.2013
is reproduced as under:
" STATEMENT OF ALLEGATONS
The following acts of omission have been reported on the part
of Shri V.K. Malhotra, Dy. General Manager (since
compulsorily, retired), Central Office, in the account of M/s
Satyam Cottex with Phagwara branch during his tenure as Dy.
General Manager, Regional Office, Jalandhar:
In August 2007, the account of M/s Satyam Cottex, a
proprietorship firm (Prop. Smt. Renu Sharma wife of Shri
Manoj Sharma) was taken over from Bank of Baroda with
deviation, as its assessed credit rating was CR-5 instead of CR-
4. The firm was enjoying Cash Credit facility of Rs.80.00 lacs
and a Term Loan of Rs.5.00 lacs with Bank of Baroda,
Phagwara Branch. Prior to this, the firm was enjoying credit
facilities of Rs.20.00 lacs from Canara Bank, Phagwara
Branch. It was evident from the statement of account of the firm
with Bank of Baroda, which was enclosed with the proposal
that it had remained overdrawn for nearly 270 days during a
period of one year. The Term Loan was also overdue at the time
of takeover. These facts were pointed out by Regional Office
itself before sanction of the limit in terms of letter No:
ROJ:CR:1680:2007 dated 13.07.2007 and no clarification had
been offered by the branch for this adverse feature. The firm
was sanctioned Cash Credit Limit of Rs.100.00 lacs and fresh
Term Loan of Rs.15.00 lacs apart from taking over the Term
Loan of Rs.4.55 lacs.
While carrying out credit rating exercise of the firm, the loans
availed by the proprietor along with her husband as also by its
sister concerns were not taken into consideration. Although the
proposal for sanction stated that the firm was an SSI unit, it
was revealed that the firm had only applied for SSI status. The
power connection to the unit was also found to be in the name
of an associate firm.
Signature Not Verified
Digitaaly Signed
By:BHUPINDER SINGH
ROHELLA
Signing Date:12.10.2022
12:31:45
The specific reasons for shifting of the account to our Bank
were not ascertained as it was enjoying credit facilities at a
cheaper rate of 13% at Bank of Baroda as compared to our
rate of 14%. The satisfactory dealing certificate of the firm and
its associate concerns was not obtained from the existing
bankers before sanction but was stipulated in the terms and
conditions. The excess over limit at Bank of Baroda was partly
adjusted by creating overdraft in the CD account of the firm
with the branch, while taking over the account.
It is reported that Shri Malhotra had scouted the said account
and despite various adverse features, the sanction / takeover of
the credit limits was ratified by him.
Even before the takeover had been approved, Shri Malhotra
advised the branch to accommodate the firm till regular limits
were sanctioned. As such clean overdraft was allowed by the
branch in the C.D, account of the firm even before the takeover
of the account. As per letter No: PHG:116:07 dated
16.08.2007, Shri Harmesh Singh, Accountant of the branch was
permitted to allow overdraft of Rs.4.00 lacs in the account.
The account was taken over even though the Credit Rating of
the firm was below the acceptable level, approved plan of the
unit was not available, the valuation of the property stipulated
as collateral was not from the approved valuer, SSI registration
was not available and the NWC of the firm was inadequate even
for the existing limit with Bank of Baroda.
Immediately after sanction of the limit, a request for
substitution of one of the properties was placed before Regional
Office stating that it was already mortgaged to Bank of Baroda
against the loan availed by Shri Manoj and Smt. Renu Sharma.
The said fact was not reported by the branch in its proposal for
sanction of limits. However, the reasons for not reporting the
same in the loan proposal were not ascertained from the
branch. The factory inspection report was not called for from
Manager (Tech.), who inspected the unit on 21.07.2007. The
unit was also not got inspected at the time of enhancement of
proposal in March 2008.
Signature Not Verified
Digitaaly Signed
By:BHUPINDER SINGH
ROHELLA
Signing Date:12.10.2022
12:31:45
Though the branch persisted in allowing huge overdrafts,
purchasing local and outstation cheques, no effective steps
were taken to curb the practice except sending letters to the
branch instructing them to desist from such practice.
The proposal for sanction of adhoc limit of Rs.40.00 lacs was
forwarded by the branch to Regional Office under cover of
letter No: GS:ADV:128:07 dated 25.10.2007. However, the
same was not sanctioned.
Subsequently, the branch submitted a proposal recommending
enhancement of limit from Rs.l00.00 lacs to Rs.200.00 lacs on
19,03.2008. The enhancement was approved by Shri Malhotra,
despite the fact that the irregularities persisted in the account
and the collateral was not sufficient to cover the exposure.
The account was not monitored properly and it turned NPA on
31.12.2008 involving the Bank to a huge monetary loss. It is
therefore evident that Shri Malhotra had not exercised due
diligence while scouting the account and ratifying the sanction /
take over of limits in the said account.
In view of above, Bank is likely to suffer monetary loss to the
extent of Rs. 226.02 lacs alongwith interest thereon from
01.12.2008.
Further on 28.09.2007, an amount of Rs.81.00 lacs was
credited to the Savings Bank (GL Head) by debiting IBP -
Cheque Purchase Head at the branch. This was done at the
instructions of Shri Maihotra to meet the shortfall of the
Region. The targets set for the branch had already been
achieved. However, the branch v/as informed that the said entry
could be passed as the branch was then not under CBS."
15. The statement of misconduct makes it very clear that the allegations
were leveled against the Appellant in respect of certain credit facility
sanctioned by the Appellant in the year 2007 and the accounts became NPA
in the year 2008. Meaning thereby, the event on the basis of which the
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Digitaaly Signed
By:BHUPINDER SINGH
ROHELLA
Signing Date:12.10.2022
12:31:45
charge sheet was issued took place 4 years before the date of issuance of
charge sheet.
16. The learned Single Judge has quashed the charge sheet keeping in
view the judgment delivered in the case of Punjab and Sindh Bank v. Nand
Lal Phatnani, LPA 674-677/2015.
17. The Hon'ble Supreme Court in the aforesaid case has held as under:
"The position therefore would be that against serving
employees of the appellant bank disciplinary proceedings can
be initiated for acts of omission and commission if they
constitute a misconduct irrespective of limitation, but with
respect to employees who have superannuated from service the
disciplinary proceedings cannot be initiated if they relate to
events which took place more than 4 years before the institution
of the disciplinary proceedings.
18. The learned Single Judge has also placed reliance upon a judgment
delivered in W.P.(C) 2846/2017 titled as Baljit Singh Handa v. Punjab and
Sindh Bank, decided on 01.02.2021. Paragraphs 67 to 69 of the aforesaid
judgment read as under:
"67. The plea of Mr. Vivek Singh is primarily based on the
Judgment of this Court in the case of Harpreet Singh Makkar
(supra) which has been upheld by the Division Bench of this
Court in the case titled as Punjab and Sindh Bank (supra). It
was the submission of Mr. Singh that as the subject matter of
the departmental proceedings initiated against the petitioners is
primarily related to the fact that the petitioners herein have
sanctioned the cash credit facilities for two accounts (in
W.P.(C) 2846/2017), sanction of enhancement of ODP limits,
sanction of BG limit (in W.P.(C) 3910/2017 and W.P.(C)
3915/2017) before their respective retirements, which is beyond
the period of four years from the date of the issuance of the
Signature Not Verified
Digitaaly Signed
By:BHUPINDER SINGH
ROHELLA
Signing Date:12.10.2022
12:31:45
impugned charge sheets in the writ petitions as the charge
sheets could not have been issued in view of Regulation 48(2) of
the Pension Regulations.
68. On the other hand, the submission of Ms. Bajaj has been
that it is not the subject matter of the charge which would be
relevant to compute the period of limitation of 4 years under
Regulation 48(2) of Pension Regulations, but the „event‟ of the
credit facilities / accounts of the borrowers becoming NPAs,
shall be the relevant date for computing the limitation of 4
years. In other words, it was her submission that it is the "acts‟
of the petitioners which led to the accounts of the borrowers
turning NPAs which triggered the initiation of the departmental
proceedings against the petitioners. In support of her
submission, she has sought to draw a distinction between the
"acts‟ committed by the petitioners and the „event‟ of
accounts turning NPA (s). In substance, it is her plea that the
„event‟ of the accounts turning NPAs being within a period of 4
years preceding issuance of the charge sheets to the petitioners,
the limitation as prescribed in Regulation 48(2) of Pension
Regulations will not come into play.
69. I am not in agreement with the submission made by Ms.
Bajaj for the simple reason that the word „event‟ as stipulated
in Regulation 48 (2) of Pension Regulations has to be seen from
the perspective of the charges framed against the petitioners
herein. As noted from the charges reproduced above, the
subject matter of the same being that the petitioners prior to
their retirement and also preceding the period of more than 4
years from the date of issuance of charge sheets have
recommended ( the dates of sanctioning being February 13,
2012, March 30, 2012 in respect of W.P.(C) 2846/2017; August
29, 2011, September 29, 2011, March 30, 2012 and June 14,
2012 in respect of W.P.(C) 3910/2017; and August 30, 2011,
September 29, 2011, April 2, 2012 and June 14, 2012 in respect
of W.P.(C) 3915/2017) sanction of cash credit facilities,
enhancement of ODP limit and sanction of BG limit. The
accounts of the borrowers becoming NPA are not the subject
matter of the allegations in their respective charge sheets.
Signature Not Verified
Digitaaly Signed
By:BHUPINDER SINGH
ROHELLA
Signing Date:12.10.2022
12:31:45
Hence, the facilities / accounts sanctioned by the petitioner may
have turned NPAs but since the very subject matter of the
charges is with regard to sanction given by the petitioners for
such loans, the plea is unsustainable. It can also be said that
the facilities / accounts turning NPAs can be because of the
borrowers having failed to re-pay the loans / credits availed
and such a charge surely cannot be imputed against the
petitioners. If that be so, the limitation of four years has to be
necessarily seen from the date when the sanction was given by
these officers / petitioners for various facilities which resulted
in the accounts becoming NPA."
19. In the light of the aforesaid judgment, the learned Single Judge was
justified in quashing the charge sheet dated 31.05.2013 as it was in respect
of events which took place more than 4 years in case of a retired employee
before such issuance.
20. The bank has not preferred any appeal in the matter so far as the
learned Single Judge has quashed the charge sheet dated 31.05.2013.
21. So far as the charge sheet dated 11.11.2009 is concerned, the
disciplinary authority has passed a common order in respect of two charge
sheets dated 11.11.2009 and 31.05.2013 imposing penalty of withholding of
pension permanently. The order dated 06.01.2015 passed by the disciplinary
authority is reproduced as under:
"
From: To:
Department of Personnel Shri V.K. Malhotra
Industrial Relations Division Deputy General Manager
Central Office (since compulsory retired)
Central Office
(P.F. No.59667)
Signature Not Verified
Digitaaly Signed
By:BHUPINDER SINGH
ROHELLA
Signing Date:12.10.2022
12:31:45
CO:IRD:174:2015 6th January, 2015
This has 'reference to the departmental inquiry conducted by Shri U.
B. Ratrikar, External Inquiring Authority into the charges/allegations
levelled against Shri V.K. Malhotra, Dy. General Manager (since
compulsorily retired), Central Office in terms of Articles of Charge
no. CO:IRD:OS:VIG:366/2009 dated 11.11.2009 and no.
CO:IRD:OS:VIG:258/2013 dated 31.05.2013 alongwith Statements of
Allegations annexed thereto. The findings dated 05.02.2014 of the
Inquiring Authority were sent to Shri Malhotra vide memorandum
dated 14.02.2014 but Shri Malhotra did not make any submissions
thereon.
I have since gone through all the papers of the cases including
Articles of Charge, Statements of Allegations, the explanations
submitted by Shri Malhotra (CSO), inquiry proceedings, oral as well
as documentary. evidence produced at the inquiry, written briefs
submitted by the PO as well as the CSO, findings of the Inquiring
Authority, etc.
Based on the oral as well as documentary evidence produced at the
inquiry, it has been proved that during his tenure as Regional Head;
Jalandhar CSO committed various lapses in the account of M/s
Satyam Cottex with Phagwara Branch. He also misused/abuse his
position as Regional Head, Jabalpur and carried out several
unusual/abnormal transactions in various SB accounts in his name
and in the name of his family members without complying with the
KYC and banking norms.
It has been sufficiently proved during the inquiry that CSO while
working as Regional Head, Jalandhar approved takeover proposal in
the account of M/s. Satyam Cottex with Phagwara Branch to whom
CC limit of Rs. 100.00 lacs and fresh Term Loan of Rs. 15.00 lacs
apart from taking over the Term Loan of Rs.4.55 lacs were
sanctioned, despite following adverse features:
Credit rating was assessed at CR-5 instead of CR-4 required as per
Loan Policy, leading to deviation of norms.
Signature Not Verified
Digitaaly Signed
By:BHUPINDER SINGH
ROHELLA
Signing Date:12.10.2022
12:31:45
The account of the party with Bank of Baroda remained in excess over
limit for 227 days during the period 27.08.2006 to 30.06.2007 and the
Term Loan was overdue though adjusted subsequently.
While carrying out rating exercise of the firm, the loans availed by the
proprietress alongwith her husband as also its sister concerns were
not taken into account. Opinion from other Bank/FI viz. Canara Bank
and Ashok Leyland Ltd. was not obtained.
The unit had only applied for SSI status and a provisional certificate
had been given. The power connection was in the name of associate
concern.
Proper due diligence was not done by branch regarding shifting of
account from Bank of Baroda where credit facilities were sanctioned
at cheaper rate of 13% as compared to our Bank's rate of 14% and
sanctioning authority had not raised the issue before sanctioning the
limit.
Approved plan of the unit was not available and NWC of the firm was
inadequate even for existing limit with Bank of Baroda.
It has come on record of the inquiry that immediately after sanction of
the limit, request for substitution of one of the properties was placed
before CSO stating it was already mortgaged to Bank of Baroda
against loan availed by Shri Manoj and Smt. Renu Sharma. Though,
said fact was not reported by the branch in its proposal for sanction
of limit, the CSO did not ascertain the reasons from the branch for
such non-reporting, No effective steps were taken by the CSO to curb
the practice of branch in allowing huge overdrafts, purchasing local
and outstation cheques except sending letters to branch. Turnover in
the account for the period 07.09.2007 to 19.03.2008 was Rs. 456.98
lacs. Average utilisation of limit was Rs. 162.00 lacs and maximum
availment was Rs. 181.85 lacs. Total 33 cheques amounting to
Rs.154.00 lacs were purchased by branch out of which 6 cheques
totalling to Rs.27.00 lacs were returned unpaid. CSO also sanctioned
enhancement of CC limit from Rs. 100.00 lacs to Rs.200.00 lacs on
19.03.2008 i.e. within a period of almost six months of first sanction
despite persisting irregularities in the account as brought out in the
process note as well as insufficient collateral to cover the exposure.
Signature Not Verified
Digitaaly Signed
By:BHUPINDER SINGH
ROHELLA
Signing Date:12.10.2022
12:31:45
Due to lack of proper monitoring and control over the operations, the
account became NPA immediately after a year and substantial
amount of Bank is at stake.
It has also been established in the inquiry that during the tenure of
CSO as Regional Head, Jabalpur, a number of huge cash deposit
transactions were observed in various SB, DRC and Secured loan
accounts of CSO and his family members/relatives. All those
transactions were beyond known source of income of CSO. A number
of transactions involving transfer of funds from and to the accounts of
various customers/borrowers e.g. Rs. 30.00 lacs with Shri Anil Grover
enjoying Cash Credit facility, Rs.20.00 lacs with M/s Solitaire
Colonizers & Builders having account with G.T. Road Branch,
Ludhiana, Rs.30.00 lacs with Shri Kamaljeet Singh s/o Trilok Singh
Bagga, having SB account with Jabalpur City Branch Rs.9.50 lacs
with M/s J. K.P. Collection Agency having account with Jabalpur City
Branch, etc. were observed in his account.
It is proved in the inquiry that during his tenure at Jabalpur Region
various deposits receipts of huge amount were prepared in the names
of his relatives by way of deposit of cash without complying with KYC
norms. In number of cases AOF were incomplete. Maturity proceeds
of these deposit receipts were credited in the secured loan a/cs of the
CSO though deposit receipts are not transferable and there were no
discharge instructions in favour of the CSO. CSO misused his position
as Regional Head by directing respective BMs to make payment /
renewal of these deposit receipts without obtaining discharge from the
account holders. In many cases proceeds of deposit receipts in the
names of third parties were credited to secured loan accounts of CSO
at his behest, violating all the banking rules and procedures. There
were number of transactions carried out in the accounts related to
him, his family members and relatives without proper mandate.
Various deficiencies were observed in his Assets & Liabilities
Statements vis-à-vis the fund flow reflected in his various accounts
and transfer of funds, etc. which were not commensurate with the
known source of income of the CSO. Apart from non/wrong disclosure
of various huge deposit receipts, the above transactions of Rs.20.00
lacs and Rs.30.00 lacs with the customers M/s Solitaire Colonizers
Signature Not Verified
Digitaaly Signed
By:BHUPINDER SINGH
ROHELLA
Signing Date:12.10.2022
12:31:45
and Builders and M/s Kamaljeet Singh s/o Trilok Singh were not
reflected in the statement as of 31.03.2007.
Based on the allegations proved against Shri Malhotra, the Inquiring
Authority has held the following charges proved against him:
Failure to take all possible steps to ensure and protect the interest of
the Bank.
Failure to discharge his duties with utmost devotion and diligence.
Acting otherwise than in his best judgement in the performance of his
official duties,
It is evident that the CSO committed serious lapses by approving
takeover proposal in the account of M/s Satyam Cottex inspite of
deviations/shortcomings and enhancing the limits in a short time
despite negative features. He also misused/abused his position by
carrying out various transactions in his name as well as in the name
of his family members/relatives; some of which in cash, in utter
violation of bank's/RBI norms beyond his known source of income. He
also committed an act of impropriety by entering into transactions of
huge amount with customers/ borrowers in violation of Service Rules
and not properly disclosing the same in his Statement of Assets and
Liabilities. The reasons cited by the CSO that the transactions with
customers were personal in nature, were carried out for a few days
and should not considered as commercial transactions are not
convincing. There is something more than what it meets the eye and
points needle of suspicion to his intentions and integrity.
It is observed from the past service record of the CSO that major
penalty of dismissal from the services of the Bank was imposed on the
CSO vide Order No. CO:IRD:6325/09 dated 03.12.2009 for certain
serious irregularitles observed on his part in the account of M/s.
Khatri Minerals and Mining Co. during his tenure as Regional Head,
Jabalpur which was reduced to that of 'Compulsory Retirement from
the services of the Bank' by the Appellate Authority vide Order
No.CO:IRD:1370/2012 dated 06.03.2012.
Considering the gravity of allegations/charges proved against Shri
Malhotra, in the present inquiry, I am of the opinion that the ends of
Signature Not Verified
Digitaaly Signed
By:BHUPINDER SINGH
ROHELLA
Signing Date:12.10.2022
12:31:45
justice will be met by withholding the monthly pension payable to him
permanently as provided in Regulation 43 of Union Bank of India
(Employees') Pension Regulations, 1995.
Accordingly, in exercise of the powers vested under Union Bank of
India Officer Employees' (Pension) Regulations, 1995, I hereby pass
the following order:
ORDER
"Monthly pension payable to Shri V.K. Malhotra be and is
hereby withheld permanently as specified in Regulation 43 of
Union Bank of India Officer (Employees") Pension Regulations,
1995. However, the minimum pension per mensem payable
under the said Regulations shall be paid to him."
22. In the considered opinion of this Court, once a common order was
passed in respect of the two charge sheets dated 11.11.2009 and 31.05.2013
imposing penalty of withholding of pension permanently and as one of the
charge sheets has been quashed by the learned Single Judge, the learned
Single Judge was justified in remanding the matter back to the disciplinary
authority to pass a fresh order in respect of the charge sheet dated
11.11.2009.
23. Learned counsel for the Appellant has vehemently argued before this
Court that Regulation 48 of Pension Regulations envisages recovery of
pecuniary loss, however, the said regulation is not applicable to dismissed/
compulsorily retired employees who have been compulsorily retired by way
of punishment keeping in view the definition of retirement as contained in
Regulation 2(y).
Signature Not Verified
Digitaaly Signed
By:BHUPINDER SINGH
ROHELLA
Signing Date:12.10.2022
12:31:45
24. Regulation 2(y) and Regulation 48 of the Regulations are reproduced
as under:
"2.(y.) "retirement" means cessation from Bank‟s service -
a) on attaining the age of superannuation specified in Service
Regulations or Settlements;
b) on voluntary retirement in accordance with provisions
contained in Regulation 29 of these Regulations;
c) on premature retirement by the Bank before attaining the age
of superannuation specified in Service Regulations or
Settlement;
x x x x x x x x x
48. Recovery of pecuniary loss caused to Bank-
(as per Pension (Amendment) Regulations, 2017)
(1) The Competent Authority may withhold or withdraw a
pension or a part thereof, whether permanently or for a
specified period, and order recovery from pension of the whole
or part of any pecuniary loss caused to the Bank if in any
departmental or judicial proceedings the pensioner is found
guilty of grave misconduct or negligence or criminal breach of
trust or forgery or for acts done fraudulently during the period
of his service:
Provided that the Board shall be consulted before any final
orders are passed: Provided further that where a part of
pension is withheld or withdrawn the amount of pension drawn
by a pensioner shall not be less than the minimum pension
payable under these regulations:
Provided also that the departmental proceedings, if instituted
while the employee was in service, shall, after the retirement of
the employee, be deemed to be proceedings under these
regulations and shall be continued and concluded by the
Signature Not Verified
Digitaaly Signed
By:BHUPINDER SINGH
ROHELLA
Signing Date:12.10.2022
12:31:45
authority by which they were commenced in the same manner
as if the employee had continued in service.
(2) No departmental proceedings, if not instituted while the
employee was in service, shall be instituted in respect of an
event which took place more than four years before such
institutions:
Provided that the disciplinary proceedings so instituted shall be
in accordance with the procedure applicable to disciplinary
proceedings in relation to the employee during the period of his
service.
(3)Where the Competent Authority orders recovery of
pecuniary loss from the pension, the recovery shall not
ordinarily be made at a rate exceeding one-third of the pension
admissible on the date of retirement of the employee."
25. In the considered opinion of this Court, the learned Single Judge has
rightly remanded back the matter to the disciplinary authority and all
grounds can certainly be raised by the Appellant before the disciplinary
authority including the ground regarding applicability of Regulation 48 of
the Regulations.
26. Learned counsel for the Appellant has argued before this Court that
the disciplinary authority does not have the power to initiate enquiry in
respect of the charge sheet dated 11.11.2009 and heavy reliance has been
placed upon the judgment delivered in the case of State of Jharkhand &
Ors. V. Jitendra Kumar Srivastava & Ors., Civil Appeal 6770/2013.
27. In the considered opinion of this Court, as the Appellant was a retired
employee and was inflicted with a punishment of compulsory retirement,
does not get exonerated on account of compulsory retirement and the
Signature Not Verified
Digitaaly Signed
By:BHUPINDER SINGH
ROHELLA
Signing Date:12.10.2022
12:31:45
Regulations in vogue provides for continuance of the departmental enquiry
even after retirement.
28. As a common order was passed in respect of the 2 charge sheets dated
11.11.2009 and 31.05.2013, the learned Single Judge was justified in
remanding the matter back to the disciplinary authority to pass a fresh order
in accordance with law.
29. It has also been vehemently argued before this Court that no show
cause notice was issued before passing an order dated 06.01.2015
withholding the pension permanently and in the light of the judgment
delivered in S.P. Malhotra v. P.N.B. and Ors, Civil Appeal 5128/2013,
Hira Lal v. State of Bihar & Ors., Civil Appeal 1677-78/2020, State of A.P.
v. N. Radhakishan, Civil Appeal No. 3503/1997, no such punishment of
withholding of pension could have been passed without issuing a show cause
notice.
30. In the considered opinion of this Court, once the matter has been
remanded back to the disciplinary authority in respect of charge sheet dated
11.11.2009 the disciplinary authority will certainly follow the prescribed
procedure as provided under the law and, therefore, this ground also does
not help the Appellant in any manner.
31. Learned counsel has also vehemently argued before this Court that
once the order dated 06.01.2015 has been quashed all the benefits, including
pension should be released to the Appellant.
Signature Not Verified
Digitaaly Signed
By:BHUPINDER SINGH
ROHELLA
Signing Date:12.10.2022
12:31:45
32. In the considered opinion of this Court Regulation 48 of the Union
Bank Of India (Employees') Pension Regulations, 1995 provide for
continuance of the departmental proceedings if instituted while the employee
was in service and after the retirement of the employee the proceedings shall
be treated as proceedings under the Pension Regulations and, therefore, the
proceedings are to be brought to a logical conclusion and the other issues
can certainly be looked into while passing a final order by the disciplinary
authority as directed by this Court.
33. The order passed by the learned Single Judge does not suffer from any
legal infirmity and the undisputed facts of the case reveal that out of the two
charge sheets dated 11.11.2009 and 31.05.2013, the charge sheet dated
31.05.2013 imposing penalty of withholding of pension permanently by
order dated 06.01.2015 has been set aside and the learned Single Judge was
certainly justified in quashing the order dated 06.01.2015 and by directing
remand of the matter to the disciplinary authority. In the considered opinion
of this Court no case for interference is made out in the peculiar facts and
circumstances of the case as the disciplinary authority has to pass a fresh
order in respect of the charge sheet dated 11.11.2009.
34. The learned Single Judge has also directed payment of gratuity with
interest @ 9% per annum, arrears of pension with the interest of 9% per
annum and the grant of other retiral dues as claimed by the Appellant can
certainly be looked into after a final order is passed by the disciplinary
authority in respect of the charge sheet dated 11.11.2009.
Signature Not Verified
Digitaaly Signed
By:BHUPINDER SINGH
ROHELLA
Signing Date:12.10.2022
12:31:45
35. This Court does not find any reason to interfere with the order passed
by the learned Single Judge in the peculiar facts and circumstances of the
case and the LPA is accordingly dismissed.
(SATISH CHANDRA SHARMA)
CHIEF JUSTICE
(SUBRAMONIUM PRASAD)
JUDGE
OCTOBER 12, 2022
N.Khanna
Signature Not Verified
Digitaaly Signed
By:BHUPINDER SINGH
ROHELLA
Signing Date:12.10.2022
12:31:45
