Karnataka High Court
Smt Prem Latha Uppal vs Canara Bank on 15 February, 2023
Bench: Alok Aradhe, Vijaykumar A Patil
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WA No.6228 of 2013
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 15TH DAY OF FEBRUARY 2023
PRESENT
R
THE HON'BLE MR. JUSTICE ALOK ARADHE
AND
THE HON'BLE MR. JUSTICE VIJAYKUMAR A PATIL
WRIT APPEAL NO.6228 OF 2013 (S-DE)
BETWEEN:
1. SMT. PREM LATHA UPPAL
WIFE OF G.L. UPPAL
AGED ABOUT 62 YEARS
FORMERLY WORKING AS SENIOR MANAGER
Digitally AN OFFICER IN MIDDLE MANAGEMENT GRADE
signed by SCALE-III, CANARA BANK, ACCOUNTS SECTION
RUPA V NEW DELHI 110 001
Location: High SINCE RETIRED
Court of RESIDING AT V-1/56, RAJOURI GARDEN
Karnataka
NEW DELHI - 110 027.
...APPELLANT
(BY SRI. P.S. RAJAGOPAL, SR. COUNSEL FOR
SRI. JAYANTH DEV KUMAR, ADV.,)
AND:
1. CANARA BANK
A BODY CONSTITUTED UNDER THE BANKING
COMPANIES (ACQUISITION & TRANSFER OF
UNDERTAKINGS) ACT, 1970
HAVING ITS HEAD OFFICE AT
112, J C ROAD, BANGALORE - 560 002
REPRESENTED BY ITS EXECUTIVE DIRECTOR.
...RESPONDENT
(BY SMT. S.R. ANURADHA, SR. COUNSEL FOR
SMT. SWATHI ASHOK, ADV.,)
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WA No.6228 of 2013
THIS WRIT APPEAL IS FILED U/S 4 OF THE KARNATAKA
HIGH COURT ACT PRAYING TO SET ASIDE THE ORDER
PASSED IN THE WRIT PETITION NO.3150/2008 (S-DE) DATED
02/09/2013.
THIS APPEAL COMING ON FOR HEARING, THIS DAY,
ALOK ARADHE J., DELIVERED THE FOLLOWING:
JUDGMENT
This intra court appeal emanates from an order
dated 02.09.2013 passed by Learned Single Judge by
which writ petition preferred by the appellant has been
dismissed. In order to appreciate the grievance of the
appellant, relevant facts need mention, which are stated
infra.
2. The appellant joined the services of Canara
Bank (hereinafter referred to as 'the Bank' for short) in
the year 1971 as clerk. The appellant for a period from
16.06.2000 till 21.08.2004 was posted as Senior
Manager in Diplomatic Enclave Branch, New Delhi,
which was headed by a Chief Manager. The appellant
was one of the three member's of Credit Sanction
Committee (hereinafter referred to as 'the Committee' for
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short). Mr.P.P.Naik, Chief Manager, R.K.Puram Branch
was the Chairman of the Committee, whereas,
Sri.R.Mutturamalingam, Manager, Diplomatic Enclave
Branch was the other member of the committee. The
committee by a unanimous decision on 19.03.2001
sanctioned Open Cash Credit (OCC) limit of Rs.50
Lakhs to one M/s Aman Trading Company on the
security of Stock and Receivables under the trader's
scheme and collateral security of mortgage of immovable
property, which was valued at Rs.107.21 Lakhs.
3. On 15.02.2002, one Mr.S.S.Bhat, Chief
Manager of the Bank sanctioned a credit limit of Rs.50
Lakhs to M/s Creative Trading Company and on
19.04.2002, he renewed the limit of Rs.50 Lakhs
sanctioned in favour of M/s Aman Trading Company.
The Vigilance Department of the company on
08.04.2003, suspecting the fraud played by the
borrowers viz., M/s Aman Trading Company and M/s
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Creative Trading Company of availing credit limit on
collateral security of mortgage of property with forged
title deeds, ordered investigation. In the findings
recorded in the vigilance investigation, it was found that
borrowers had committed fraud on the bank.
4. Thereupon, on 27.06.2003, the Bank filed a
complaint to the Central Bureau of Investigation (CBI).
In the aforesaid complaint, the name of the appellant
was not mentioned. A Final Investigation Report was
submitted by Vigilance cell of the bank on 18.07.2003,
in which the appellant was absolved and it was
concluded that unit was in existence and was
functioning and the security furnished was valid.
5. The appellant thereafter was promoted to a
selection post viz., Senior Management Grade IV on
19.07.2004. In the year 2005, CBI sought sanction to
prosecute several officers of the bank. Eventually, CBI
agreed to give up the prosecution subject to bank's
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taking regular departmental action against its officers
for imposing major penalty. The appellant who was
posted as Chief Manager, Alwar Road, Gurgaon Branch
of the bank alone, was placed under suspension on
12.05.2005 in contemplation of a disciplinary
proceeding.
6. On 27.07.2005, a disciplinary proceeding was
initiated against the appellant and a charge sheet along
with two documents was served on the appellant. The
appellant submitted a reply to the aforesaid charge
sheet on 02.08.2005. In the departmental enquiry, 3
witnesss viz., Sri.M.K.Gupta (Investigating Officer, MW1)
Sri.B.S.Bhat (Manager, MW2) and Sri.R.Chandra,
(Government Examiner of Questioned Document, MW3)
were examined. The bank produced 53 documents in
support of the charges. The enquiry officer submitted a
report on 14.02.2006 in which charges levelled against
the appellant were found to be proved.
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7. The disciplinary authority by an order dated
31.05.2006 imposed major penalty of punishment of
reduction to a lower grade from SMG-IV to MMG-III and
the basic pay of the appellant was fixed at Rs.21,660/-.
The appellant filed an appeal, which was dismissed by
an order dated 02.06.2007. The appellant filed a review
petition and filed a writ petition on 22.02.2008
challenging the order passed by the disciplinary
authority as well as the appellate authority. During the
pendency of the writ petition, the review petition filed by
the appellant was dismissed on 10.08.2009. The
appellant thereafter attained the age of superannuation
on 31.11.2010.
8. The Learned Single Judge by an order dated
02.09.2013 inter alia held that Regulation 10 of Canara
Bank Officers, Employees (Discipline and Appeal)
Regulation, 1976 (hereinafter referred to as 'the
Regulations' for short) uses the expression 'may' and
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therefore, it is not necessary for the bank to order a
joint enquiry. It was further held that charges levelled
against the officers were different and they were tried in
different proceedings. It was further held that
substantial opportunity was given to the appellant to
defend herself and the charges levelled against the
appellant as well as other officers cannot be said to be
identical in the absence of any material. Accordingly,
the writ petition was dismissed. In the aforesaid factual
background, this appeal has been filed.
9. Learned Senior Counsel for the appellant
submitted that the Bank had initiated disciplinary
action against 7 officers, who were involved in the same
transaction and therefore, in view of mandate contained
in Regulation 10 of the Regulations, a joint enquiry
ought to be held against all the officers including the
appellant. It is further submitted that the expression
'may' used in Regulation 10 of the Regulations has been
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held to be mandatory by this court. It is also submitted
that the appellant on 16.03.2010 had participated in
the meeting of the Committee and had not sanctioned a
single loan.
10. It is pointed out that the statements of
Mr.S.S.Bhat and Mr.R.Chandramouli, which were
recorded by the Investigating Officer were relied by
enquiry officer without producing them in the enquiry. It
is argued that the decision of the committee, the
appellant alone cannot be held responsible. It is
contended that the appellant is entitled to parity in the
matter of imposition of punishment inasmuch as a
major penalty has been inflicted on the appellant,
whereas, a minor penalties have been awarded to the
remaining officers. It is urged that even though the
documents were marked with the consent of the parties,
yet the bank was under an obligation to prove its
contents. It is also urged that initiation of departmental
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proceeding and imposition of penalty was a matter
which was within the special knowledge of the bank and
therefore, the burden could not have been cast on the
appellant to produce the material. It is contended that
even though no vigilance angle was involved, yet, the
Central Vigilance Commission was consulted, which
amounts to submission to external dictation.
11. It is also contended that copy of the first stage
advise of CVC was not supplied to the appellant. In this
connection, reference has been made to office
memorandum dated 28.09.2000. It is also contended
that the penalty imposed on the appellant is not in
conformity with the Regulations. In support of aforesaid
submissions, reliance has been placed on decision of
Hon'ble Supreme Court in 'CENTRAL BANK OF INDIA
LTD. VS. PRAKASH CHAND JAIN', AIR 1969 SC 983
and 'M/S BAREILLY ELECTRICITY SUPPLY CO. LTD.
VS. THE WORKMEN AND OTHERS', AIR 1972 SC
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WA No.6228 of 2013
330, 'BONGAIGAON REFINERY & PETROCHEMICAL
LIMITED VS. GIRISH CHANDRA SARMA', (2007) 7
SCC 206, 'ARUN KUMAR ALVA VS. VIJAYA BANK AND
OTHERS', (2006) 3 KLJ 610 and 'DIPANKAR
SENGUPTA & ANOTHER VS. UNITED BANK OF INDIA
AND OTHERS', (1999) 1 LLJ 208.
12. On the other hand, Learned Senior counsel
for the respondent submitted that no material has been
produced by the appellant to show that the charges
levelled against the appellant as well as the other
officers were the same. It is contended that the word
'may' used in Regulation 10 of the Regulations is
directory. It is further contended that decision in ARUN
KUMAR ALVA's case supra does not apply to the fact
situation of the case as in the aforesaid case, it was
admitted that the charges levelled against the officers
were identical. It is also urged that Ex.P41 and Ex.P44
are not statements of individuals but reports of
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WA No.6228 of 2013
Mr.S.S.Bhat and Mr.R.Chandramouli. It is urged that
reliance placed by the enquiry officer on reports of
aforesaid officers has not caused any prejudice to the
appellant.
13. It is argued that the vigilance report is not
against the appellant. Therefore, it is not necessary to
supply copy of the vigilance report. It is contended that
the penalty imposed on the appellant is in consonance
with the Regulations and a minor penalty has been
imposed on the appellant. It is submitted that the
enquiry held against the appellant does not suffer from
any infirmity.
14. We have considered the rival submissions and
have perused the record. The main issues, which arise
for consideration in this appeal are as follows:
(i) The nature of Regulation 10 of the
Regulations and the effect of its non
compliance, in the facts of the case?
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WA No.6228 of 2013
(ii) Whether the findings recorded by
the enquiry officer are vitiated in law as
statements of Mr.S.S.Bhat and
Mr.R.Chandramouli recorded by the
Investigating Officer were relied upon by the
Enquiry officer in the absence of their
examination as witnesses in the departmental
enquiry proceeding?
(iii) Whether the Central Vigilance
Commission was required to be consulted, in
the facts of the case?
15. We shall now advert to the issues ad
seriatum. Regulation 10 of the Regulations reads as
under:
10. Common Proceedings:
Where two or more officer
employees are concerned in a case, the
authority competent to impose a major
penalty on all such officer employee may
make an order directing that disciplinary
proceedings against all of them may be
taken in a common proceedings.
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WA No.6228 of 2013
The aforesaid Regulation provides that where two
or more officer employees are concerned in a case, the
authority competent to impose a major penalty on such
officer or employees may make an order directing that
disciplinary proceedings against all of them may be
taken in a common proceeding.
16. Prima facie, the word 'may' used in a
provision indicates a directory requirement, whereas,
the word 'shall' indicates a mandatory requirement. The
word 'may' is an enabling word and it confers capacity
power of authority and imply discretion. [See: 'MADAN
LAL FAKRI CHAND DUDHEDIYA VS. S.CHANGDEO
SUGAR MILLS', AIR 1962 SC 1543]. The word 'may' in
the legal and factual context, in which power is to be
exercised may combine the power with an obligation to
exercise it and the same may mean must. In other
words, it may be treated as mandatory. The Hon'ble
Supreme Court in 'STATE OF UTTAR PRADESH VS.
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WA No.6228 of 2013
JOGINDER SINGH', AIR 1963 SC 1618, has held that
the word 'may' is capable of meaning 'must' or 'shall' in
the light of the context and where a discretion is
conferred on a authority coupled with an obligation the
word 'may' which denotes discretion should be
construed to mean a command. The aforesaid principle
was reiterated by Hon'ble Supreme Court in
'SRI.RANGASWAMY, THE TEXTILE COMMISSIONER
AND OTHERS VS. SAGAR TEXTILE MILLS (P.) LTD.
AND ANOTHER', AIR 1977 SC 1516 AND ORISSA
STATE (PREVENTION & CONTROL OF POLLUTION)
BOARD VS. ORIENT PAPER MILLS AND ANOTHER',
(2003) 10 SCC 421.
17. Regulation 10 of the Regulations has been
enacted with an object to ensure parity in treatment to
employees who are involved in a case and provides that
the disciplinary proceeding against all of them may be
taken in a common proceeding. The Regulation
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WA No.6228 of 2013
stipulates that a well informed and consistent view has
to be taken by an authority while dealing with cases of
two or more employees who are involved in a case. The
aforesaid Regulation also takes into account the
salutary principal of maintaining parity in the matter of
punishment with co-delinquents. Therefore, Regulation
10 of the Regulations creates an obligation on the
authority to proceed against such employees by way of a
common proceeding. It, thus, creates an obligation on
an authority and therefore, the expression 'may' used in
Regulation 10 of the Regulations has to be construed as
'shall'. In any case, if an authority decides to proceed
against two or such employees separately, it has to
record reasons for the same. The aforesaid Regulation
does not envisage that charges against the employees
should be identical.
18. In the instant case, the following two charges
were framed against the appellant. The first charge is
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WA No.6228 of 2013
with regard to sanction of Rs.50,00,000/- on 19-3-2001
against the hypothecation of stocks, collateral security of
house property, bank guarantee of Sri. Sanjay Jain and
Sri. B.K. Jain was stipulated. The second charge was to
the effect that one M/s. Creative Trading Company, a
proprietory concern of Sri. Ashok Jain as proprietor and
trading in Copper Winding Wires, was sanctioned OCC
limit of Rs.50,00,000/- against hypothecation of stocks
book debts, collateral security of house property and
personal guarantee of Sri. Sanjay Jain and Sri. Rajeev
Jain was stipulated.
19. The bank in para 4 of statement of objections
has stated as follows:
It is submitted that the CBI after
investigation sought permission/sanction
for prosecuting the petitioner. But after
analysing the CBI report, the D.A. did not
find any criminal connivance on the part of
the petitioner and hence, decided not to
give sanction for prosecution, thereby not
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WA No.6228 of 2013
putting the petitioner to undue
harassment. But at the same time D.A.
was of the view that the gross/blatant
lapses/irregularities observed on the part
of the petitioner in safeguarding and
protecting the interest of the bank and
ensuring financial discipline particularly
considering the position she holds in the
bank cannot be absolved and hence
decided to proceed Departmentally.
20. The relevant extract of para 15 of the
statement of objections filed by the bank is reproduced
below:
Apart from the petitioner six other
officials, including a pensioner were proceeded
against departmentally and considering their
role in the matter appropriate punishment
were imposed on them.
Thus, the charges levelled against the appellant
and six other officials arise out of the two transactions
of loan. The appellant was one of the three member's of
the Committee, which had unanimously recommended
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the grant of loan. The appellant had not individually
sanctioned any loan. The appellant as well as 6 other
officers were involved in the same transactions though
their role was different. Therefore, in view of mandate
contained in Regulation 10 of the Regulations, the
authority ought to have directed a common enquiry.
Therefore, the departmental enquiry proceeding initiated
against the appellant is vitiated in law as the same was
initiated in violation of Regulation 10 of the Regulations.
Accordingly, the first issue is answered.
21. So far as second issue is concerned, we may
refer to cross-examination of MW1- Sri.N.K.Gupta. The
relevant of the cross-examination reads as under:
9 DR Please peruse M.Ex.41 again and confirm that branch officials including
Smt. Uppal again visited business premises of the party on 07-12-2001.
MW1 Yes. As per the information provided by Sri. S.S. Bhat in his statement
the business place of Aman Trading Co., was visited by him alongwith
Smt. Prem Lata Uppal and normal business activities was observed by
them.
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WA No.6228 of 2013
13 DR Please peruse statement of Sri. R.C. Mouli dated 17.07.2003
[M.Ex.44/1] and confirm that Sri. P.P. Nayak had instructed Sri.
Mouli to place office note for sanction to him.
MW1 M.Ex.44/1 is the statement given by Sri. R.C. Mouli during the
course of investigation wherein he mentioned that the office note
was typed by him when the Chief Manager asked him to
prepare the proposal for sanction. However, this aspect was not
apparent/substantiated in the Office Note.
From perusal of the record, it is evident that the
aforesaid witnesses were not examined as witnesses in
the enquiry. However, their statements have been relied
upon by the enquiry officer in its report while recording
a finding that charges levelled against the appellant are
partly proved. Thus, the enquiry officer relied upon a
material in respect of which no opportunity was afforded
to the appellant to rebut the same. Therefore, the
findings recorded by the enquiry officer are vitiated.
Accordingly, the second issue is answered.
22. From perusal of the charges levelled against
the appellant supra, it is evident that no vigilance angle
was involved. Therefore, it was not necessary to consult
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WA No.6228 of 2013
the Central Vigilance Commission. However, the Central
Vigilance Commission was consulted, which was not
required in the facts of the case. Accordingly, third issue
is answered.
23. For the aforementioned reasons, the order
dated 02.09.2013 passed by Learned Single Judge
cannot be sustained in the eye of law. Accordingly, the
orders dated 02.09.2013 passed by Learned Single
Judge, the order dated 31.05.2006 passed by the
disciplinary authority and the order dated 02.06.2009
passed by appellate authority are quashed. Ordinarily
we would have granted the liberty to the bank to
proceed against the appellant afresh. However, in
peculiar facts of the case, we refrain from doing so for
more than one reason. Firstly, it will have an impact on
other officers of the bank who are not before us.
Secondly, in view of the stand taken by the bank itself
in para 4 of the statement of objection that no criminal
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connivance on the part of the appellant was found by
the bank. Thirdly, the appellant was appellant was
subsequently promoted on 19.07.2004 and lastly, for
the reason that the appellant has already attained the
age of superannuation on 31.11.2010. For the
aforementioned reasons, we are not inclined to grant the
liberty to the bank to proceed afresh against the
appellant.
Accordingly, the appeal is allowed.
Sd/-
JUDGE
Sd/-
JUDGE
SS
