Karnataka High Court

Sri M Vijayan vs Canara Bank on 2 February, 2024

                          1


  IN THE HIGH COURT OF KARNATAKA AT BENGALURU

       DATED THIS THE 2ND DAY OF FEBRUARY, 2024

                       BEFORE

THE HON'BLE MR. JUSTICE SACHIN SHANKAR MAGADUM

       WRIT PETITION NO.39933 OF 2012 (S-DE)

BETWEEN:

       SRI M VIJAYAN
       S/O LATE M. MUNIYANDI
       AGED ABOUT 58 YEARS,
       EARLIER WORKING AS MANAGER
       IN CANARA BANK, SINCE ILLEGALLY
       DISMISSED FROM SERVICE,
       PRESENTLY R/AT NO. 1/415, BANK COLONY,
       K.CHETTIPALAYAM, TIRUPUR-641 608

                                        ...PETITIONER

(BY SRI.K ANANDARAMA, ADVOCATE)

AND:

       CANARA BANK
       A BODY CONSTITUTED UNDER THE BANKING
       COMPANIES (ACQUISITION AND TRANSFER OF
       UNDERTAKINGS) ACT, 1970,
       HAVING ITS HEAD OFFICE AT NO. 112,
       J.C.ROAD, BANGALORE-02,
       REP. BY ITS GENERAL MANAGER

                                        ...RESPONDENT

(BY SRI.P UDAY SHANKAR RAI, ADVOCATE)
                               2


     THIS WP IS FILED UNDER ARTICLES 226 & 227 OF
THE    CONSTITUTION    OF   INDIA   PRAYING    TO
QUASH THE ORDER DT.24.11.07 VIDE ANN-F PASSED BY
THE DISCIPLINARY AUTHORITY, ORDER DT.16.9.08 VIDE
ANN-J PASSED BY THE APPELLATE AUTHORITY & ORDER
DT.16.4.12, VIDE ANN-L PASSED BY THE REVIEWING
AUTHORITY & REINSTATE THE PETITONER WITH BACK
WAGES & ALL CONSEQUENTIAL BENEFITS INCLUDING
INCREMENTS, SENIORITY, PROMOTIONS etc., AS IF THE
ORDER OF PUNISHEMENT WAS NEVER IN EXISTENCE.

     THIS PETITION HAVING BEEN HEARD AND
RESERVED FOR ORDERS ON 01.02.2024, COMING ON FOR
PRONOUNCEMENT OF ORDERS THIS DAY, THE COURT
MADE THE FOLLOWING:

                         ORDER

The captioned petition is filed seeking the

following reliefs:

"a. Call for records.

b. Issue a Writ of Certiorari or any other writ or Order quashing the Order No. IRS DP BLCR 5324 2007 dated 24.11.2007 (Annexure F) passed by the Disciplinary Authority; Order dated 16.09.2008 (Annexure J) passed by the Appellate Authority and Order No.HRW IRS DP BLCR 178 2012 dated 16.04.2012 (Annexure L) passed by the Reviewing Authority and reinstate the petitioner with back wages and all consequential benefits including increments, seniority, promotions etc as if the order of punishment was never in existence.

c. Grant costs of the proceedings.

d. Grant such other relief(s) as this Hon'ble Court deems fit in the facts and circumstances of the case."

2. The brief facts of the case are as under:

Petitioner joined the services of the respondent-

Bank as a Clerk on 20.04.1980 and has worked at the

various branches of the Bank. Petitioner was

promoted as Manager in MMG Scale II on 18.06.2001.

When the petitioner was working as a Manager at the

Dibburahally branch of the 2nd respondent bank, he

was kept under suspension by order dated 15.05.2006

passed by the General Manager. Thereafter a charge

sheet is laid alleging that the petitioner has committed

certain irregularities in sanctioning 272 tractor loans

against the target of 45 for the year 2005-2006 and

also that the petitioner has not conducted any

sanction inspection and the loans were sanctioned

beyond 16 kms. radius without prior permission.

Thereafter on enquiry, the disciplinary authority by

order dated 24.11.2007 imposed punishment of

"dismissal which shall ordinarily be a disqualification

for future employment" on the petitioner.

3. Being aggrieved by the order of the

Disciplinary Authority, petitioner preferred a statutory

appeal under Regulation 17 of the Discipline and

Appeal Regulations before the appellate authority.

Petitioner also submitted a representation dated

19.8.2008 as per Annexure-H to the appellate

authority regarding the security available with the

Bank and that there is no financial loss or even risk of

financial loss to the Bank. The appellate Authority

without considering the ground raised in the appeal

and the representation, rejected the appeal confirming

the order of the Disciplinary Authority.

4. Against the order of the appellate

Authority, petitioner preferred a review petition under

Regulation 18 of the Discipline and Regulations, which

came to be rejected and was communicated to the

petitioner vide letter dated 16.4.2012 vide Annexure-

5. Being aggrieved by the order passed by the

disciplinary authority imposing the punishment of

'dismissal which shall ordinary be a disqualification for

future employment' which is confirmed by both the

appellate authority and the reviewing authority, the

captioned petition is filed seeking to quash the said

orders.

6. Learned counsel reiterating the grounds

urged in the petition would vehemently argue and

contend that the findings recorded by the Enquiry

Officer are erroneous and while holding the petitioner

guilty has virtually discarded the materials placed on

record to counter the allegations. He would

vehemently argue and contend that these documents

would virtually displace the allegations attributed to

the petitioner while sanctioning tractor loans. The

learned counsel for the petitioner has placed strong

reliance on documents marked at DEX12 and DEX19.

Referring to these counter documents, he would point

out that the stand of the management that petitioner

has sanctioned 272 tractor loans against the target of

45 is effectively refuted by these two clinching

documents. Referring to DEX12, he would point out

that the petitioner's superiors vide letter dated

28.2.2005 had notified the petitioner regarding the

tractor mela scheduled on 23.9.2005. He would also

point out to the documents marked at Ex.DEX19 to

demonstrate that tractor loan campaign was

scheduled from 1.8.2005 to 2.11.2005. Referring to

these significant details, he has placed reliance on the

judgments rendered by 1KAILASH NATH GUPTA VS.

ENQUIRY OFFICER (R.K.RAI), ALLAHABAD BANK

AND OTHERS. He would vehemently argue and

contend that penalty is imposed placing reliance on

the recommendations made by the Central Vigilance

Officer. The document marked at Ex.MEX 37 was

served on the petitioner after cross-examination of

MW10. He would further place reliance on the

judgment rendered in W.P.23889/2012. Taking this

Court through the findings recorded by the Co-

ordinate Bench, learned counsel would contend that in

an identical matter pertaining to Canara Bank relating

to sanctioning of tractor loans, the Co-Ordinate Bench

has modified the punishment of removal from service

and has passed an order of compulsory retirement.

2003 LAB IC 2290.

7. Per contra, learned counsel appearing for

respondent-Bank supporting the reasons recorded by

the Enquiry Officer would point out that petitioner is

guilty of recklessly sanctioning tractor loans that has

led to financial implications. He would contend that

the Bank has incurred financial loss of Rs.9 Crores.

8. Before I advert to the case on hand, it

would be useful for this Court to cull out the articles of

charges;

"You were working at our Regional Office, Kolar since 01.03.2006 and you have been placed under suspension with effect from 20.05.2006. Earlier, you were working at our Dibburahally branch from 05.11.2003 to 28.02.2006 as Manager.

While so working in Dibburahally branch, you have indulged in indiscriminate lending in sanctioning 326 Tractor loans. You have sanctioned 272 tractor loans against the target of 45 for the year 2005-2006 inspite of several letters from Regional Office, Kolar from time to time to stop further financing under tractor loan portfolio. Amongst several irregularities, your failure to conduct the pre/post sanction inspection, monitoring and not ensuring delivery

of accessories has resulted in non-availability of prime security.

The loans were also sanctioned beyond 16 Kms. Dibburahally branch without prior permission from Regional Office Kolar, as required, making it very difficult to monitor and follow up. The Bank had issued the guidelines stating that the disbursement of tractor loans to be made only after delivery of tractor/accessories as per the quotation, but in violation of these guidelines, you have disbursed the tractor loans, before the delivery of tractor/trailer/accessories/implements. Even after disbursement of loan, the dealer has not supplied tractor/trailer/ accessories/implements to borrowers, thereby the dealer has played a fraud on the Bank/our borrowers. Margin amount was not brought in by the borrowers in realistic terms.. Instead the advance receipt from the dealer was accepted as margin amount and in some cases the margin amount was remitted by the dealer himself. In some cases, the margin norms are circumvented by accepting inflated quotation on the cost of tractors/ accessories in violation of guidelines of the Bank. Deficiencies in documentation is also observed in some cases.

Due to your above actions, there are huge overdues in the finance made available to tractors which has become difficult for recovery and the Bank is exposed to huge financial risk/loss.

The details of the charges are morefully enumerated in the Statement of Imputations to this Articles of Charge.

By your above action, you have failed to perform your duties with utmost devotion, diligence,

honesty and integrity and also failed to ensure and protect the interest of the Bank. You have thereby contravened Regulation 3(1) read with Regulation 24 of Canara Bank Officer Employees' (Conduct) Regulations 1976, which is a "Misconduct" punishable under the provisions of Canara Bank Officer Employees' (Discipline & Appeal) Regulations 1976."

9. It would be also useful for this Court to cull

out the relevant conclusions recorded by the Enquiry

Officer, which reads as under:

"During the year 2005-2006, there was a greater thrust on lending to agriculture in tune with the Govt guidelines to double the agriculture credit in 3 years. The Bank had planned to disburse 12000 tractors loans during 2005-2006 and circle office was given the target of 4000 Tractors for 2005-2006. Accordingly RO Kolar was initially given a target of 600 Tractors for 2005 -2006 and it was revised subsequently to 1000 tractors which was minimum and there was no upper ceiling. Inspite of this, the Dibburahalli branch was initially allotted a target of 45 tractors and there was no revision of target subsequently. The MOU was entered in to with various Tractor companies to ease financing of Tractors to farmers & work in close co-ordination with the dealers by strictly following other terms of arrangement. As per terms of MOU, the dealers have the right to identify the prospective farmers and submit applications

where in, many cases the farmers are not eligible for Tractor loan as per Bank norms. In other words, ineligible farmers are referred to Bank by the dealer by adopting various technique to make them eligible and in such cases it is the responsibility the manager (in this case CSO) to scrutinize the applications and to make due diligence on the applicant/borrowers through proper credit investigation, pre-sanction visits etc to find out the viability of the project and credit worthiness of the borrower and the Manager (CSO) has absolute discretion to reject the unviable proposals."

10. A meticulous examination reveals that

though the petitioner has sanctioned loans, the 2nd

respondent-bank did not incur any financial loss, and

there is lack of evidence demonstrating any monetary

harm as a result of the loans authorized by the

petitioner. The articles of charge issued by the

respondent-Bank does not refer to financial loss, while

during enquiry, the allegations are further elevated

indicating that on account of sanctioning of tractor

loans in excess of target has led to financial loss. The

aspect of financial loss which is not reflected in articles

of charge is taken cognizance by the Enquiry Officer.

It is essential to underscore that the lack of tangible

evidence elucidating any negative impact or

impairment linked to the loans sanctioned by the

petitioner serves to underscore the inherent weakness

of the charges brought against them. The absence of

proof indicating any harm or deterioration associated

with the sanctioned loans further emphasizes the

vulnerability of the allegations leveled against the

petitioner.

11. Moreover, an additional layer of contention

surfaces concerning the procedural improprieties

during the inquiry stage. The petitioner contends that

the disciplinary authority, entrusted with the

responsibility of impartial adjudication, exhibited a

marked disregard for documents tendered by the

petitioner in their defense. Instead, an unwarranted

reliance was placed exclusively on documents

proffered by the management. As rightly pointed out

by the learned counsel for the petitioner, the stand of

the management that petitioner could not have

sanctioned tractor loans against the target of 45 and

beyond 16 Kms. radius without permission cannot be

sustained in the light of the documents placed on

record by the petitioner vide DEX 12 and DEX19. The

conclusions recorded by the Enquiry Officer which is

culled out supra also supports the petitioner's claim

that there was pressure to go all out and sanction

tractor loan to the maximum. These documents are

not at all taken note of by the Enquiry Officer.

12. On examining the entire material on

record, the charges even if held to be proved basically

relate to irregularity in sanctioning of loans. This can

also be attributed to the pressure exerted by the

superiors. There is ample evidence on record to

indicate that there was pressure on the Managers of

the Bank to sanction tractor loans. Though petitioner

is partially responsible for having sanctioned tractor

loans beyond the target, however, the punishment

imposed on petitioner lacks substantial basis.

13. This procedural lapse raises justifiable

concerns about the fairness and impartiality of the

inquiry process, thereby impinging upon the integrity

of the entire adjudicative apparatus. Additionally, it is

contended that the severity of the punishment is

incongruent with the nature of the charges, which

pertain to purported irregularities in the process of

loan sanctioning. Given the circumstances elucidated,

it posits that the punitive measures employed are

unduly severe and lack a commensurate nexus to the

alleged transgressions.

14. Central to the judicial scrutiny is the

application of the principles of natural justice. These

principles demand a fair hearing and unbiased

decision-making. If an employee is deprived of the

opportunity to present their side of the story or if the

disciplinary process lacks due diligence, the courts are

inclined to intervene, rectifying any procedural

improprieties and upholding the right to a fair and

reasonable inquiry.

15. The doctrine of proportionality constitutes

another vital aspect of judicial evaluation. Courts

assess whether the severity of the punishment

corresponds to the gravity of the alleged misconduct.

In cases where a dismissal appears excessively harsh

for a single instance of negligence, the judiciary aims

to rectify the imbalance, ensuring that the punishment

is commensurate with the offence. This approach

prevents arbitrary or disproportionate actions by

employers and safeguards the employee's right to fair

treatment.

16 Moreover, constitutional safeguards come

into play, especially in jurisdictions where fundamental

rights protect individuals from arbitrary state actions.

Service decisions, including dismissals, are subject to

constitutional scrutiny, and the Courts ensure that

these decisions comply with fundamental rights and

principles. Additionally, adherence to relevant laws

and statutory provisions is carefully examined by the

judiciary. If a dismissal is found to violate established

laws, the courts intervene to rectify the infringement,

emphasizing legal compliance.

17. In conclusion, the cumulative effect of the

aforementioned considerations suggests that the

penalty imposed on the petitioner lacks substantial

basis. This articulates that not only did the bank fail to

incur any actual financial loss due to the sanctioned

loans, but also, crucially, there is absence of tangible

evidence demonstrating any adverse impact or

impairment linked to the petitioner's actions. As a

result, the foundation of the allegations appears frail,

and when viewed in conjunction with other procedural

concerns raised during the inquiry, it reinforces the

assertion that the punishment meted out to the

petitioner is disproportionate. In light of these

deficiencies, it becomes apparent that the severity of

the imposed penalty is incongruent with the nature of

the alleged irregularities, thereby underscoring the

need for a reevaluation of the disciplinary measures

imposed.

18. Crucially, it is evident that throughout the

extensive tenure of the petitioner's service, there is an

absence of any historical instances denoting

irregularity or misconduct, leading to the petitioner's

dismissal. In light of the preceding narrative, it is

evident that the scope for interference with the

quantum of punishment is notably circumscribed.

However, it becomes apparent that when pertinent

factors germane to the quantum of punishment are

overlooked, a judicial directive for reconsideration, or

in certain instances, a specification of the appropriate

punishment, may be warranted to expedite legal

proceedings.

19. Therefore, considering the cumulative

effect of the discussed factors, the petitioner's plea for

reassessment of the imposed punishment is evidently

grounded in the principles of fairness and

proportionality. The judicial prerogative, in such

instances, is to safeguard against the imposition of

unduly harsh penalties, especially when there is a

dearth of substantiated evidence linking the

petitioner's actions to financial detriment or the

sanctioning of imprudent loans.

20. In the light of the discussions made supra,

it would be appropriate that the petitioner shall stand

compulsorily retired from service w.e.f. 24.11.2007.

21. Hence, I proceed to pass the following:

ORDER

(i) The writ petition is allowed.

(ii) The order dated 16.4.2012 passed by the Reviewing Authority confirming the order passed by the Appellate Authority and the Disciplinary Authority is hereby quashed.

(iii) The petitioner shall stand compulsorily retired from service w.e.f. 24.11.2007.

(iv) Consequently, the petitioner shall be paid all benefits arising out of he being compulsorily retired from service within a period of three months from the date of receipt of copy of this order.

Sd/-

JUDGE

*alb/-