Karnataka High Court

State Bank Of Mysore vs Shivanna D Hulgur on 21 September, 2022

Bench: Acting Chief Justice, S Vishwajith Shetty

                          1



 IN THE HIGH COURT OF KARNATAKA AT BENGALURU

   DATED THIS THE 21ST DAY OF SEPTEMBER 2022

                       PRESENT

           THE HON'BLE MR. ALOK ARADHE
               ACTING CHIEF JUSTICE

                        AND

  THE HON'BLE MR.JUSTICE S. VISHWAJITH SHETTY

             W.A. NO.9 OF 2019 (S-DE)

BETWEEN:

STATE BANK OF MYSORE
A BODY CONSTITUTED UNDER
THE STATE BANK OF INDIA
(SUBSIDIARY BANKS) ACT, 1959
HEAD OFFICE, K.G.ROAD
BENGALURU-560002
BY ITS CHIEF GENERAL MANAGER.

NOW KNOWN AS
STATE BANK OF INDIA
LOCAL HEAD OFFICE, ST. MARKS ROAD
BENGALURU-560001
REP. BY ITS ASST.GENERAL MANAGER (H.R.).
                                       ... APPELLANT

(BY MR. S.S. RAMDAS, SR. COUNSEL FOR
    MR. KAVEESH SHARMA, ADV.,)

AND:

SHIVANNA D. HULGUR
S/O LATE D.S. HULGUR
AGED ABOUT 53 YEARS
                               2



EARLIER WORKING AS DEPUTY MANAGER
AN OFFICER IN MIDDLE MANAGEMENT
GRADE SCALE-II, AT STATE BANK OF MYSURU
SSI BRANCH, SINGASANDRA
SINCE ILLEGALLY COMPULSORILY RETIRED
FROM SERVICE AND RESIDING
AT NO.90, 20TH MAIN, 2ND CROSS
B.T.M.I STAGE, BENGALURU-560068.
                                     ... RESPONDENT
(BY MR. V.S. NAIK, ADV.,)
                          ---

     THIS WRIT APPEAL IS FILED U/S 4 OF THE
KARNATAKA HIGH COURT ACT PRAYING TO SET ASIDE THE
ORDER DATED 10/10/2018 PASSED BY THE LEARNED
SINGLE JUDGE IN WP 6677/2010 AND ALLOW THIS APPEAL.

     THIS WRIT APPEAL COMING ON FOR PRELIMINARY
HEARING, THIS DAY, ACTING CHIEF JUSTICE DELIVERED
THE FOLLOWING:

                         JUDGMENT

This intra court appeal emanates from the order

dated 08.10.2019 passed by learned Single Judge by

which in a writ petition preferred by the respondent,

the order of punishment as well as orders passed by

the appellate authority dated 20.09.2007 and

08.02.2008 respectively have been quashed and the

appellant has been directed to pay all the

consequential service benefits to the respondent along

with interest at the rate of 8% per annum. In addition,

the appellant has further been directed to pay medical

expenses for which respondent was permitted to

furnish the medical particulars. In order to appreciate

the appellant's challenge to the impugned order,

relevant facts need mention, which are stated

hereinafter.

2. The respondent (hereinafter referred to as

'the employee' for short) joined the services of the

State Bank of Mysore (hereinafter referred to as 'the

Bank' for short) as a clerk on 15.01.1979. The

employee was promoted as Officer in Junior

Management Grade Scale-I and as Manager in Middle

Management Grade Scale-II in December 1991 and

December 1997 respectively.

3. The employee worked as a Branch Manager

at BTM Layout, Bangalore for three years and

thereafter, as Branch Manager from 26.06.2003 till

12.06.2004 at J.P.Nagar Branch of the Bank. The

employee thereafter served between a period from

16.06.2004 to 28.05.2005 as Branch Manager of

Anekal Branch of the Bank. The appellant noticed

some irregularities and misconduct committed by the

employee while he was working as Branch Manager at

J.P.Nagar Branch.

4. Thereafter, a charge sheet dated

28.04.2006 containing Articles of Charges, Statement

of Imputations based upon the Articles of Charges

was served. The following three charges were framed

against the employee, which are reproduced below for

the facility of reference:

"Charge I

In respect of the following 6 housing loan accounts considered as a single project and sanctioned by controlling authority

based on your recommendation. Said six names are as under:

1. Shalini Ashok

2. M.Suresh

3. Mini Annamma

4. J.Madan Kumar

5. D.T.Ethiraj

6. S.Jayaram

Charge II

You have failed to notice the following discrepancies in respect of the following borrowers already mentioned in Charge I and to take corrective measures.

Charge III

Without ascertaining credit worthiness you have sanctioned the following loan limits to Sri.N.Sanjeev Nedungadi, who had instructed the developer of the above project mentioned in Charge-I. It transpires that this borrower is the brother of the developer who had already having a housing loan of Rs.14.75 lacs, which was irregular.

5. The employee was asked to file reply to the

charge sheet within 15 days from the date of receipt of

the charge sheet. However, the employee failed to

respond to the charge sheet. The Bank by an order

dated 26.10.2006 appointed an Enquiry Officer as

well as a Presenting Officer. Thereafter, an enquiry

was held. The employee participated in the enquiry

and engaged a defence assistant of his choice. The

Bank adduced the evidence in the departmental

enquiry and examined two witnesses viz.,

Chandrababu, Deputy Manager of Gangenahalli

Branch of the Bank and S.B.Shivakumar, Manager at

J.P.Nagar Branch, and filed several documents, copies

of which were supplied to the employee. The

employee however, neither examined himself nor

produced any evidence in support of his defence. The

Enquiry Officer concluded the enquiry on 08.06.2007

and submitted a report to the disciplinary authority

vide communication dated 22.06.2007.

6. A copy of the Enquiry Report was furnished

to the employee who submitted his reply on

27.07.2007. The disciplinary authority by an order

dated 20.09.2007 imposed the punishment of

compulsory retirement on the employee. The said

order was upheld in appeal by an order dated

08.02.2008 passed by the appellate authority. The

employee filed a review and thereafter, a writ petition.

During the pendency of the writ petition, the review

petition preferred by the employee was dismissed by

an order dated 08.02.2011.

7. The learned Single Judge by an order dated

10.10.2018 inter alia held that charges leveled against

the employee are vague. It was further held that Bank

acts in a collective manner and if any irregularity is

pointed out, a single person cannot be held

responsible and in case, a Branch Manager

recommends the case for grant of loan, the same has

to be made in a collective manner. It was further held

that no ill motive and fraudulent intention on the

employee has been established and therefore, he

cannot be held to be guilty of misconduct. It was also

held that negligence simplicitor is not an offence. The

learned Single Judge also recorded a finding that

punishment imposed on the employee of compulsory

retirement is disproportionate to the charges leveled

against the employee. The learned Single Judge

therefore, quashed the punishment dated 20.09.2007

passed by the disciplinary authority as well as order

dated 08.02.2008 passed by appellate authority. The

Bank was directed to pay all consequential service

benefits along with interest at the rate of 8% per

annum. The Bank was further directed to pay medical

expenses for which the employee was permitted to

furnish medical particulars. In the aforesaid factual

background, this appeal has been filed.

8. Learned Senior counsel for the appellant

submitted that departmental enquiry was held against

the employee in accordance with the Rules in which

the employee participated. It is further submitted that

in exercise of powers of judicial review under Article

226 of the Constitution of India, in respect of a

disciplinary action, this Court cannot act as a Court

of appeal and cannot re-appreciate the evidence to

arrive at a different conclusion. It is contended that

the finding recorded by the learned Single Judge that

the charges leveled against the employee are vague, is

perverse. It is contended that strict rules of evidence

do not apply to the disciplinary proceedings and the

evidence on record was sufficient to arrive at the

conclusion with regard to punishment of misconduct

by the employee. It is also pointed out that the

employee has not even claimed the relief of

reimbursement of medical expenses and therefore,

learned Single Judge erred in directing the appellant

to accord the benefit of reimbursement of medical

expenses to the employee. In support of aforesaid

submissions, reliance has been placed on decisions of

Supreme Court in UNION OF INDIA AND OTHERS v.

DALBIR SINGH1, DISCIPLINARY AUTHOIRTY CUM

REGIONAL MANAGER AND OTHERS v. NIKUNJA

BIHARI PATNAIK2, UNION OF INDIA & OTHERS v.

P.GUNASEKARAN3, STATE OF PUNJAB & OTHERS

v. BAKSHISH SINGH4, BANK OF INDIA AND

ANOTHER v. DEGALA SURYANAGARAYANA5,

CHAIRMAN & MANAGING DIRECTOR, UNITED

CIVIL APPEAL NO.5848 OF 2021

(1996) 9 SCC 69

AIR 2015 SC 545

AIR 1997 SC 2696

1999 II LLJ 682

COMMERCIAL BANK & OTHERS v. P.C.KAKKAR6,

SUNIL KUMAR BANERJEE v. STATE OF WEST

BENGAL & OTHERS7, CANARA BANK v.

A.V.HANUMANTHAPPA8.

9. On the other hand, learned counsel for

employee has submitted that the employee was on

medical leave for a period from 08.06.2005 till

30.09.2006 and the copy of the charge sheet was sent

to Anekal Branch of the Bank, whereas, the employee

was posted in Tumkur Branch of the Bank. It is

further submitted, that 112 documents were marked

in the enquiry in the absence of the witnesses. It is

also urged that the witnesses on behalf of the

management have not stated about the misconduct

committed by the employee. It is also urged that the

orders passed by the disciplinary authority, appellate

authority and reviewing authority are cryptic in

AIR 2003 SC 1571

nature and suffer from the vice of non application of

mind.

10. We have considered the rival submissions

made by learned counsel for the parties and have

perused the record. Before proceeding further, we may

refer to the well settled principles with regard to scope

of judicial review of interference with the disciplinary

proceeding. In STATE OF ANDHRA PRADESH &

ORS. v. S.SREE RAMA RAO9, it was held that High

Court in a proceeding under Article 226 of the

Constitution of India does not sit as a Court of appeal

over the decision of the authorities holding a

departmental enquiry. It is only concerned to

determine whether the enquiry held by an authority

competent in that behalf and according to the

procedure prescribed in that behalf and whether the

rules of natural justice have been followed. It has also

(!990) 3 SCC 304

been held that where there is some evidence which

the authority entrusted with the duty of holding an

enquiry has accepted and which may support the

conclusion. It is not the function of the High Court to

review the evidence and to arrive at an independent

finding on the evidence. Similar view was reiterated in

B.C.CHATURVEDI v. UNION OF INDIA & ORS10. In

HIGH COURT OF JUDICATURE AT BOMBAY

THROUGH ITS REGISTRAR v. SHASHIKANTH S.

PATIL & ANR.11, it was held that interference with

the decision of the departmental authorities is

permitted if such authority has held the proceedings

in violation of the principles of natural justice or in

violation of statutory regulations providing the mode

of departmental enquiry. [Also See: PRAVIN KUMAR

v. UNION OF INDIA12].

W.A.NO.4221/2011

AIR 1963 SC 1723

(1995) 6 SCC 749

(2000) 1 SCC 416

(2020) 9 SCC 471

11. In STATE BANK OF BIKANER AND

JAIPUR v. NEMICHAND NALWAYA13, it has been held

that no interference shall be made in a disciplinary

proceeding on the ground that another view is

possible on the basis of material on record. If the

enquiry has been fairly and properly held and the

findings are based on evidence, the question of

adequacy of evidence and reliable nature of evidence

will not be a ground for interfering with the findings.

In STATE OF BIHAR v. PHULPARI14, it has been held

that standard of proof in the criminal proceeding and

the departmental enquiry is different. In criminal

case, the standard of proof is beyond reasonable

doubt, whereas in the departmental enquiry the

charges have to be proved on the basis of

preponderance of probabilities.

(2011) 4 SCC 584

(2020) 2 SCC 130

12. It is equally well settled in legal proposition

that the question of choice of quantum of punishment

is within the jurisdiction and discretion of the

disciplinary authority. The Court can while

undertaking the judicial review of the matter is not

supposed to substitute its own opinion on reappraisal

of facts. In exercise of power of judicial review, the

Court can interfere with the punishment imposed

when it is found to be totally irrational or is

outrageous in defiance of logic. This limited scope of

judicial review is permissible and interference is

available only when the punishment is shockingly

disproportionate, suggesting lack of good faith.

Otherwise, merely because in the opinion of the court

lesser punishment would have been more appropriate,

cannot be a ground to interfere with the discretion of

the departmental authorities. [See: DADRA & NAGAR

HAVELI v. GULABHIA M. LAD15, CHIEF EXECUTIVE

(2010) 5 SCC 775

OFFICER, KRISHNA DISTRICT COOPERATIVE

CENTRAL BANK LTD. & ORS. v. K.HANUMANTHA

RAO AND ORS.16].

13. In the backdrop of aforesaid well settled

legal principles, we may advert to facts of the case in

hand. The State Bank of Mysore (Officers Service

Regulations), 1979 regulate the procedure pertaining

to disciplinary proceeding. It is pertinent to note that

it is not the case of the employee that the disciplinary

proceeding against him was either initiated or

conducted in infraction of the aforesaid Regulations.

It is also pertinent to note that employee has

participated in the enquiry and has cross examined

the witnesses examined on behalf of the Bank. The

employee was also represented by a defence Assistant.

However, he has neither examined himself as a

witness nor has adduced any evidence.

(2017) 2 SCC 528

14. From perusal of the record, we find that it

is not the case of the employee that the charges

leveled against him were vague. The employee has

also not made any grievance with regard to non

supply of documents. It is also not the case of the

employee that the documents which were not

supplied to him were made the basis for recording

finding against him. Therefore, we hold that the

enquiry, which was initiated against the employee was

held in accordance with the Regulations and does not

suffer from any infirmity. The High Court in exercise

of power of judicial review cannot go into the

sufficiency of the evidence.

15. For the aforementioned reasons, in our

considered opinion, the findings recorded by the

learned Single Judge that the charges leveled against

the employee were vague or that the employee is not

guilty of misconduct as the Bank acts in a collective

manner, cannot be sustained. Similarly, the finding

that negligence simplicitor does not amount to an

offence cannot be sustained in the eye of law. The

learned Single Judge also erred in interfering with the

quantum of punishment on the ground that the same

is disproportionate to the gravity of charges, even

without assigning any reasons. The learned Single

Judge also erred in directing the appellant to pay the

medical expenses for which the employee was

required to furnish medical particulars, even in the

absence of relief claimed in this behalf by the

employee.

16. For the aforementioned reasons, we would

have allowed the appeal. However, we notice another

aspect of the matter. It is well settled law that

Supreme Court in the case of S.N. MUKHERJEE v.

UNION OF INDIA17 has held that the decisions of

this Court referred to above indicate that with regard

to the requirement to record reasons, the approach of

this Court is more in line with that of the American

Courts. An important consideration which has

weighed with the Court for holding that an

administrative authority exercising quasi-judicial

functions must record the reasons for its decision, is

that such a decision is subject to the appellate

jurisdiction of Supreme Court under Article 136 of the

Constitution as well as the supervisory jurisdiction of

the High Courts under Article 227 of the Constitution

and that the reasons, if recorded, would enable this

Court or the High Courts to effectively exercise the

appellate or supervisory power.

17. It is trite law that even a quasi-judicial

authority is required to assign reasons for passing the

(1990) 4 SCC 594

order. In view of the decision laid down by the

Supreme court in VICTORIA MEMORIAL HALL v.

HOWRAH GANATANTRIK NAGRIK18, reasons were

held to be the heartbeat of every conclusion, apart

from being an essential feature of the principles of

natural justice, that ensure transparency and

fairness, in the decision making process. [SEE: MAYA

DEVI v. RAJ KUMARI BATRA & ORS.19, SANT LAL

GUPTA & ORS. v. MODERN CO-OPERATIVE GROUP

HOUSING SOCIETY LIMITED AND OTHERS20, UNION

OF INDIA & ANR. v. TALWINDER SINGH21, and

UNION OF INDIA v. RAVINDER KUMAR22]. It is well

settled in law that non-application of mind by the

enquiry Officer, of the Disciplinary Authority, non-

recording of reasons in support of conclusion

arrived at by them are justifiable grounds for

2010 (3) SCC 732

(2010) 9 SCC 486

(2010) 13 SCC 336

(2012) 5 SCC 480

(2015) 12 SCC 291

interference by Writ Courts (SEE: ALLAHABAD

BANK AND ORS. VS KRISHNA NARAYAN

TIWARI23).

18. In the instant case, after supply of the

enquiry report, the employee had submitted a reply.

The disciplinary authority has passed an order dated

20.09.2007. The relevant extract is reproduced below

for the facility of reference:

"I have gone through the charge sheet, Enquiry Officer's findings, charged official's submission and all the relevant records of the case. The lapses established against the officer include the failure on the part of the charged official to notice in the sanction process:

(a) the connection of borrowers with the builder, even though there were inconsistencies like mentioning the name of one of the applicant as Shalinin Ashok in the application where as her name was

(2017) 2 SCC 308

mentioned as Shalini Nedungadi (indicating the relationship with the builder Sri.Rajeev Nedungadi), in her salary intimation letter.

(b) To verify the reasons for mentioning the builder /power of attorney holder's name as "Rajeev Ramachandran"

in joint development agreement dated 10.11.1999 and as "Rajeev Nedungadi in Joint General Power of Attorney dated 14.03.2000.

(d) to verify the original title deeds (parent deed)

(e) to verify date of expiry of approved building plan.

(f) to verify the authenticity of the borrowers addresses.

Further, he had failed to conduct post- sanction inspection to ensure end use of

funds, obtained mortgage confirmation letter without creating Equitable Mortgage and also exhibited laxity in follow up of the said loans for recovery of installments.

I find that there is preponderance of proof indicating dilution of bank's norms, acts of commission which have jeopardized the interest of the Bank, and disregard for the instructions of the bank leading to huge potential financial loss of Rs.71.58 lacs as the proposed security of flats have already been mortgaged to other banks / KSFC by the builder / Power of Attorney Holder. This calls for severe deterrent punishment.

However, I am of the view that imposition of the punishment of "compulsory retirement" on the charged official in terms of Regulation 67(h) of State Bank of Mysore Officers Service Regulations 1979 will meet the ends of justice. I order accordingly."

19. Being aggrieved, the appellant preferred an

appeal. The appellate authority by an order dated

08.02.2008 dismissed the appeal preferred by the

employee. The relevant extract of the order reads as

under:

"g. It is observed that the nature of punishment inflicted against the appellant is in commensurate with the gravity of the misconduct found to have been committed in the enquiry proceedings; there is no scope for modification of the same.

5. In view of the above, I find no reason to differ with the order passed by the disciplinary authority.

6. For the foregoing, appeal preferred by the appellant is devoid of merits and therefore rejected. I order accordingly."

20. The employee thereafter, preferred a review,

which is provided under the Regulations. The

reviewing authority by an order dated 08.02.2011 has

dismissed the review petition. The relevant extract of

the order is extracted below:

"I have also carefully perused the review petition submitted by the officer. My view in this case is that the appellate authority has taken a balanced and reasonable view of the case and has accordingly concurred with the decision of the disciplinary authority.