Karnataka High Court
S.R.Padiyar vs Syndicate Bank & Anr on 10 January, 2024
Author: N S Sanjay Gowda
Bench: N S Sanjay Gowda
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WP No. 24783 of 1997
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 10TH DAY OF JANUARY, 2024
BEFORE
THE HON'BLE MR JUSTICE N S SANJAY GOWDA
WRIT PETITION NO. 24783 OF 1997 (S-PRO)
BETWEEN:
SRI.S.R.PADIYAR,
S/O SRI.RAMESH PADIYAR,
AGED ABOUT 46 YEARS,
EARLIER WORKING AS OFFICER
MIDDLE MANAGEMENT GRADE SCALE-II
SYNDICATE BANK,
SADABAD BRANCH (U.P)
SINCE ILLEGALLY REMOVED FROM SERVICE AND
PRESENTLY RESIDING AT No.204,
LEGRACE CO-OPERATIVE HOUSING SOCIETY
CHURCH ROAD, MAROL, ANDHERI(E)
MUMBAI-40059.
...PETITIONER
(BY SRI.P.S.RAJAGOPAL SENIOR COUNSEL FOR
SRI.JAYANTH DEV KUMAR.,ADVOCATE)
Digitally
AND:
signed by
MANJANNA
MANJANNA E
E Date:
2024.01.12
14:39:51
+0530
1. CANARA BANK,
A BODY CORPORATE CONSTITUTED UNDER
THE BANKING COMPANIES ACQUISITION
AND TRANSFER OF UNDERTAKINGS ACT,1970
HAVING ITS HEAD OFFICE AT
NO.112, J.C.ROAD,
BENGALURU-560 002
REPRESENTED BY ITS GENERAL
MANAGER(PERSONNEL)
2. MR.N.A.SHANBHAG,
INQUIRING AUTHORITY
ASSISTANT GENERAL MANAGER,
ERSTWHILE SYNDICATE BANK,
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WP No. 24783 of 1997
NOW CANARA BANK, HEAD OFFICE,
No.112, J.C.ROAD,
BENGALURU-560 002.
...RESPONDENTS
(BY SRI.PRADEEP.S.SAWKAR, ADVOCATE)
THIS WRIT PETITION IS FILED UNDER ARTICLE 226 OF
THE CONSTITUTION OF INDIA, PRAYING TO QUASH VIDE
ANNEXURE-M DATED:08.02.1997 AND ANNEXURE-P
DATED:09.07.1997 AND GRANT ALL THE CONSEQUENTIAL
BENEFITS INCLUDING REINSTATEMENT INTO THE SERVICES
OF THE R-1 BANK WITH CONTINUITY OF SERVICES AND
GRANT ALL SERVICE BENEFITS INCLUDING FULL BACKWAGES.
THIS PETITION HAVING BEEN HEARD AND RESERVED
FOR ORDERS ON 28.11.2023, COMING ON FOR
PRONOUNCEMENT THIS DAY, THE COURT MADE THE
FOLLOWING
ORDER
1. This petition is filed challenging the punishment of
removal from service (which would not be a
disqualification for future employment) imposed on the
petitioner, and its affirmation in appeal.
2. This petition had been earlier disposed of on
27.09.2005 in the following terms:
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"ORDER
(a) The writ petition is allowed;
(b) The impugned order dated 08.02.1997 passed
by the Disciplinary Authority and the Order
dated 09.07.1997 passed by the Appellate
Authority are set aside;
(c) The inquiry conducted is held vitiated due to
non-supply of relevant and material documents
to the delinquent. The Bank is at liberty to
conduct a de-novo inquiry in accordance with
law after supplying all the relevant and
material documents in accordance with law;
and
(d) The period from the date of passing of the
order of removal till completion of the
Disciplinary Proceedings that is to be
conducted afresh shall be treated as one of
suspension and the petitioner shall be entitled
for subsistence allowance in accordance with
law."
3. Aggrieved by the above order, the respondent -
Bank preferred W.A.No.252/2006, which was allowed in
the following terms:
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"As the learned single Judge has not appreciated the
case on merits, it will not be proper for this Court to
take upon itself the responsibility of considering the
case of merits for the first time. Therefore, the
proper course would be to set aside the order of the
learned single Judge and remand the matter back to
the learned single Judge to consider the case on
merits and in accordance with law except on the
points which are decided by this Court. That would
meet the ends of justice. Hence, we pass the
following order:-
(a) Appeal is allowed.
(b) The impugned order passed by the learned
single Judge is hereby set aside.
(c) The matter is remitted back to the learned
single Judge for considering the case on
merits and in accordance with law.
(d) In so far as the points which are decided in
this appeal are concerned, they are
concluded and are not to be reopened."
4. Being aggrieved by said judgment, the petitioner
preferred SLP(C)No.11061/2013, which was disposed of in
the following terms:
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"ORDER
Heard.
We do not see any ground to interfere at this
stage since the matter is still to be decided by
learned Single Judge. However, we make it clear that
all contentions of both the parties will remain open
before the Single Judge, notwithstanding the
observations in the impugned order.
The special leave petition is accordingly
disposed of.
Pending applications, if any, shall also stand
disposed of."
5. As a result, the writ petition is once again taken up
for consideration to consider all the contentions of both
parties, as directed by the Apex Court.
6. The facts of the case are as follows:
7. On 21.02.1995, a raid had been conducted by the
Directorate of Revenue Intelligence (for brevity, referred
to as "the DRI"), Mumbai, at the Nariman Point Branch of
the Syndicate Bank, in which the petitioner was working as
a Sub-Manager. During the course of raid, cash amounting
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to Rs.1.78 crores was seized from certain customers who
had come to the Branch to remit the same into their
current accounts. This raid also resulted in certain
consequential action being taken by the DRI against the
Bank under the Customs Act, 1962 ("the Customs Act",
for short).
8. The Bank, on conducting the enquiry regarding the
raid, came to the conclusion that there were certain
irregularities in the opening of the current accounts and
accordingly, the Bank issued a show-cause notice to the
petitioner on 08.08.1995.
9. In this show-cause notice, it was stated that there
was improper opening of about 47 current accounts, which
had been done on the introduction of the customers
namely M/s.Bombay Mercantile Co-operative Bank
Limited, Dana Bunder, Malabar Hill, Fort and Nariman
Point Branches, Bombay. The Bank was of the view that
the opening of said current accounts was irregular, and
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the accounts so opened were utilized to carry out
transactions of hawala and smuggling activities.
10. The Bank pointed out that there were eight
irregularities and stated that the petitioner had allowed
the opening of said current accounts by certain
unscrupulous persons in fictitious/benami names and
allowed them to carry on hawala/smuggling/benami
transactions by flouting the rules and guidelines laid down
by the Bank from time to time. It was also pointed out
that the petitioner had extended undue accommodation to
those who had favoured him and had received illegal
commission/some expensive gifts in lieu of the same.
11. It was stated that opening of these accounts and the
consequential raid conducted by the DRI had resulted in a
bad reputation to be attached to the Bank and it had
tarnished the Bank's fair image and therefore, action was
needed to be taken.
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12. It was also stated that the documents/records
relating to the transactions were in the custody of
Sri.N.R.Kamath, Deputy Divisional Manager (Vigilance),
Bombay and if the petitioner desired to verify the same,
he could do so in the presence of Sri.N.R.Kamath, with
prior appointment.
13. It may also be pertinent to state here that the DRI
had also issued a show-cause notice on 16.08.1995 to the
Bank, in relation to the raid that it had conducted on the
Bank premises and seized Rs.1.78 crores in cash.
14. The petitioner, in response to the said show-cause
notice dated 08.08.1995, filed a reply on 08.09.1995
basically denying all the allegations of wrongdoing
attributed to him.
15. The Bank, being dissatisfied with the reply,
proceeded to suspend the petitioner on 22.09.1995.
16. Thereafter, the Bank, proceeded to issue a charge
sheet on 13.10.1995. The Bank alleged in the charge
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sheet that the petitioner had permitted/supervised
opening/conducting of operations in 6+11+30 current
accounts between 09.05.1994 and 21.02.1995. It was
alleged that these current accounts were opened without
following the laid down guidelines concerning the opening
of accounts/allowing operations in such accounts. It was
also stated that the accounts were allowed to be opened
without making reasonable enquiries about the bonafides
of the introducers and the prospective customers, and
without ascertaining the source of huge funds amounting
to crores of rupees that had been transacted by the
parties in said current accounts.
17. It was also stated that the petitioner had permitted
the issuance of pay orders of huge sums without making
reasonable enquiries. It was also alleged that the
petitioner had received undue official favours by
permitting or by causing to permit discounting of cheques
and other instruments drawn for huge amounts to certain
parties. It was also stated that he had caused to allow
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debit balances in certain current accounts without ensuring
end use of the monies sent and in said process, he had
facilitated opening of fictitious/benami accounts by certain
unscrupulous persons.
18. It was also stated that the Bank had been issued
with a show-cause notice as to why the amount should not
be seized and the amount of pay orders, of which
payments were stopped, should not be confiscated and
penalty on the Bank be imposed for opening current
accounts and abetting commission of offences under
various provisions of the Customs Act since the Bank had
allowed the current accounts for being utilized for
smuggling huge amounts.
19. Thus, essentially, the charge sheet was an outcome
of the raid conducted by the DRI, in which, a huge amount
of cash was seized from the customers of the Bank, who
had come to remit the cash into their respective accounts
and the Bank was of the view that this had been made
possible only because of the opening of several current
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accounts that were permitted by the petitioner, which, in
turn, resulted in the current accounts being used for
various nefarious activities.
20. It may also be pertinent to notice here that the
charge sheet itself recorded the fact that the Bank was
issued with a notice by the DRI alleging that the Bank was
guilty of allowing current accounts to be opened in
fictitious/benami names, which had been used for
conducting huge cash transactions.
21. The petitioner submitted his reply to the said charge
sheet on 11.11.1995 denying all the charges alleged
against him. He also stated that he had clarified his stand
in his response dated 08.09.1995 (his reply to the show-
cause notice) and that he would only reiterate the same
contentions.
22. On 03.01.1996, the Bank appointed an Inquiry
Officer to inquire into the charges.
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23. On 15.04.1996, the inquiry proceedings commenced,
and the petitioner was permitted to take the assistance of
a co-worker. The petitioner denied all the charges levelled
against him. The Presenting Officer, thereafter, submitted
the list of witnesses and documents, on which reliance was
placed to prove the charges against the petitioner.
24. The proceedings of the inquiry (Annexure-E),
indicates that the copy of the list of witnesses and the
documents were given to the petitioner under his
acknowledgment. The petitioner was also permitted to
inspect the original documents mentioned in the list of
documents and the Presenting Officer was also ordered to
make proper and necessary arrangements to enable the
petitioner to inspect the documents. It was also stated
that if the documents were not in the possession of the
Presenting Officer, he should get the same from the
authority in whose custody the said documents would be
available, for further action.
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25. On 19.04.1996, the petitioner addressed a letter to
the Inquiry Officer stating that in order to defend himself
in respect of charges levelled against him, he would
require 14 sets of documents (mentioned in Annexure-G).
In this application, the petitioner specifically sought the
copy of the reply which had been submitted by
M/s.B.V.Kumar on behalf of the Bank, in respect of the
show-cause notice issued by the DRI to the Bank. It was
stated that this report was required in order to prove that
neither the Bank, nor any of its officials were, in any way,
involved in the lapses pointed out by the DRI and this was
available at the Zonal Office at Bombay or the Head Office
of the Vigilance Section at Manipal.
26. On 12.08.1996, vide Annexure-H, the petitioner
proceeded to submit his defence in response to the charge
sheet, in which he contended that he was in no way
responsible for the charges levelled against him and that
he had been falsely framed for the lapses/irregularities
committed by A.G.M. and others in the Branch. Along with
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this statement of defence, the petitioner also enclosed the
reply given by the Bank's counsel to the show-cause notice
issued by the DRI, wherein the Bank had categorically
submitted to the DRI that there were no wrongdoings on
the part of the Bank and that the opening of the accounts
was in accordance with the established procedures.
27. On the same day, i.e., on 12.08.1996,
Sri N.R.Kamath, the Deputy Divisional Manager (Vigilance)
was examined on behalf of the Bank as M.W.1 and
through him, 356 documents were admitted in evidence as
MEX-1 to MEX-356. At the conclusion of the enquiry, on
said day, the Presenting Officer submitted that the second
witness had gone out of station and expressed his inability
to produce him before the inquiring authority. He also
sought adjournment of the case to a future date and the
Inquiry Officer, accordingly, adjourned the case.
28. On the next adjourned date i.e., on 11.09.1996, the
Presenting Officer examined Sri.R.Lohidas, the Manager of
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Homji Street Branch, Mumbai, as M.W.2. He was also
cross-examined by the petitioner.
29. After the cross-examination of M.W.2 was concluded,
the Presenting Officer advised the petitioner to state his
defence, if any, either orally or in writing, as per
Regulation 6(15) of the Syndicate Bank Officer Employees'
(Discipline & Appeal) Regulations, 1976 (for brevity,
referred to as "the Regulations").
30. The petitioner stated that the Management had not
submitted seven documents despite the repeated requests
made by him and these documents were vital for
establishing his defence, though he had this request
before he submitted his defence. The documents sought
included a copy of the special inspection report, current
audit report of M/s.Hariharan & Co. and a copy of the
regular inspection report for the year 1994-95.
31. To this request, the Presenting Officer claimed
privilege as they were classified as confidential documents
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and in view of their confidential nature, he was not allowed
to permit the documents to be brought on record. As
regards the other four documents, he stated that they
were not available/not maintained/not traceable.
32. The Presenting Officer, thereafter, asked certain
questions to the petitioner, which had become necessary,
having regard to the circumstances, which had appeared
to be against the petitioner, in the evidence, which had
been adduced till 11.09.1996. The case was, thereafter,
adjourned.
33. On the next date of hearing i.e., on 19.09.1996, the
Inquiry Officer noted that he had completed the general
examination of the petitioner in terms Regulation 6(17) of
the Regulations and had advised the petitioner to lead his
evidence.
34. In response, the petitioner had produced Mr.Sudhir
Zaveri as his witness, who was examined as D.W.1. The
petitioner then examined another witness namely
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Mr.Deepak Shenoy as D.W.2, who was also cross-
examined.
35. The Inquiry Officer, on assessing the evidence,
submitted an inquiry report on 12.10.1996 stating that 12
of the 13 issues had been proved and only issue No.12
i.e., issue relating to receipt of gratification/commission
had not been proved.
36. In this inquiry report, the Inquiry Officer recorded a
finding that the reply given by the Bank through its
Counsel, to the show-cause notice issued by the DRI to
the Bank, was not properly introduced by providing
reasonable opportunity to the Presenting Officer for
verifying the genuineness of the same and he was,
therefore, not taking cognizance of the contents of the
document. In fact, said finding is also reproduced herewith
for the sake of clarity:
"I also observe from the enclosure to the
written statement of defence dated 12.8.96
submitted by the CSOE that this document is not
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properly introduced by giving reasonable
opportunity to PO to verify the genuineness of the
same. I am therefore not taking cognizance of the
contents of this enclosure."
37. In other words, the Inquiry Officer did not choose to
take into consideration the reply that the Bank had
furnished in response to the show-cause notice issued by
the DRI, wherein the Bank had taken the stand that there
were no wrongdoings of any kind by the Bank in the
matter of opening the current accounts and the Bank
would not be held responsible for transactions which were
under the scrutiny of the DRI. The Inquiry officer was of
the view that this reply of the Bank was not properly
introduced by the petitioner and an opportunity had not
been given to the Presenting Officer to verify the
authenticity of the reply.
38. This inquiry report was served on the petitioner, and
he was called upon to submit his reply to said report. The
petitioner, in response to the same, filed his objections
dated 07.11.1996.
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39. The Disciplinary Authority, thereafter, considered the
report of the Inquiry Officer and the objections of the
petitioner and proceeded to reject the objections raised by
the petitioner before concluding that the guilt of the
petitioner had been proved and that he was required to be
punished by removing him from service.
40. Being aggrieved by the same, the petitioner
preferred an appeal. The Appellate Authority was not
persuaded to accept the same and it proceeded to reject
the petitioner's appeal.
41. Being aggrieved by this punishment and its
confirmation, as already stated above, the present writ
petition is filed.
42. Learned Senior Counsel appearing for the petitioner
contended that the inquiry was completely vitiated, as the
petitioner was not given an adequate opportunity to
defend himself. It was contended that the documents that
the petitioner had sought at the very initial stage of the
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inquiry were not at all furnished, though even during the
course of inquiry, the petitioner did make a specific
request to the Inquiry Officer to ensure that the
documents were furnished.
43. Learned Senior Counsel also contended that three of
the documents which would have an important bearing on
the case, i.e., the inspection reports were deliberately not
furnished by claiming privilege. He submitted that under
the Regulations, the Presenting Officer had no jurisdiction
to claim privilege and it was only the Officer who was the
custodian of the record, who could claim privilege and
despite this provision in the Regulation, the Inquiry Officer
had permitted the Presenting Officer to claim privilege.
44. Learned Senior Counsel also laid great emphasis on
the findings recorded by the Inquiry Officer that the reply
given by the Bank in response to the show-cause notice
issued by the DRI to the Bank, wherein the Bank had
contended that there were no wrongdoings on the part of
the Bank, was deliberately overlooked on the ground that
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it was not properly introduced. He submitted that as the
reply given by the Bank to the DRI was not in dispute, the
reason given that the Presenting Officer was required to
verify the genuineness of the same was an absurd reason.
45. Learned Senior Counsel contended that the reply
given by the Bank to the show-cause notice was, in itself,
a complete answer to all the charges levelled against the
petitioner and since in its own reply, the Bank had
categorically stated that there were no wrongdoings on the
part of the Bank, consequently, the Inquiry Officer could
not have come to the conclusion that the petitioner was
guilty of the charges levelled against him in relation to the
irregular opening of current accounts.
46. Learned Senior Counsel also contended that the Bank
as well as the petitioner, had challenged the penalty
imposed by the DRI in a proceeding under the Customs
Act before the Central Excise & Gold (Control) Appellate
Tribunal (for brevity, referred to as "the Tribunal"). The
Tribunal, on consideration of the appeal, had accepted the
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contention of the Bank and had set aside the order of
penalty imposed on it. He contended that in the order
passed by the Tribunal, it had been clearly observed that it
was not the duty of the Bank to ascertain the source of
funds or its ultimate beneficiary. He, therefore, contended
that the entire proceedings initiated against the petitioner
were vitiated.
47. In light of the arguments advanced, the following
points arise for consideration:
i) Whether the procedure prescribed under
the Regulations was followed?
ii) Whether the inquiry was vitiated for not
furnishing the documents sought by the
petitioner?
iii) Whether the Inquiry Officer was justified in
allowing the claim of the Presenting Officer for
claiming privilege?
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iv) Whether the Inquiry Officer could have
eschewed the consideration of the reply given by
the Bank to the DRI and the order that had been
passed in the proceedings initiated by the DRI
against the Bank under the Customs Act?
48. One of the preliminary contentions of the petitioner
was that he was not furnished with the documents which
he had sought, in order to put forth his defence. The
petitioner, admittedly, submitted a requisition for
production of certain documents vide his letter dated
19.04.1996. The documents sought by him were as
follows:
"1) Copy of the special inspection report in respect
of the accounts mentioned in the chargesheet. The
report is available with the inspection department
and the same is required by me to prove my
innocence.
2) Copies of the concurrent audit report of
M/s.Hariharan & Co. for the period June'94 to
February, 1995. The copies of the report are lying
with Narimanpoint Branch.
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3) Copy of the regulation inspection report for the
year 1994-95 report are available with Nariman
point Branch/RI Bombay.
4) Copy of the office order book Nariman point
Branch showing herein the initials and specimen
signature of all the employees for the 1994-95.
5) Copy of the office order book of Nariman point
Branch for the year 1994-95 showing therein the
work allotted to the officers working at the Branch.
Office order book available with Nariman point
Branch.
6) Copies of the office notes put by the CDD
Department in respect of CDD's No.3/95, 99/95,
100/95, 122/95, 144/95, 147/95 to the AGM for
orders.
7) Copies of the debit and credit slips in respect of
the above DDs."
49. In this regard, Regulations 6(10), 6(11) and 6(12) of
the Regulations, would be relevant and they read as
follows:
"6(10) (a)The Inquiring Authority shall, where the
Officer Employee does not admit all or any of
the Articles of Charge, furnish to such Officer
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Employee a list of documents by which and a
list of witnesses by whom, the articles of
Charge are proposed to be proved.
b) The Inquiring Authority shall also record an
order that the Officer Employee may for the
purpose of preparing his defence-
i) inspect within Five Days of the order
or within such further time not
exceeding Five Days as the Inquiring
Authority may allow, the documents
listed;
ii) submit a list of documents and
witnesses that he wants for inquiry;
iii) be supplied with copies of statements
of witnesses, if any, recorded earlier
and the inquiring Authority shall
furnish such copies not later than
three days before the commencement
of the examination of the witnesses
by the Inquiring Authority.
iv) give a notice within ten days of the
order or within such further time not
exceeding ten days as the Inquiring
Authority may allow for the discovery
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or production of the documents
referred to in item (ii).
Note: The relevancy of the documents and
the examination of the witnesses
referred to in item (ii) shall be given by
the Officer Employee concerned.
6(11) The Inquiring Authority shall, on receipt
of the notice for the discovery or
production of the documents, forward the
same or copies thereof to the authority in
whose custody or possession the
documents are kept, with a requisition for
the production of the documents on such
date as may be specified.
6(12) On the receipt of the requisition under
Sub-Regulation (11), the authority having
the custody or possession of the
requisitioned documents, shall arrange to
produce the same before the inquiring
Authority on the date, place and time
specified in the requisition:
Provided that the authority having
the custody or possession of the
requisitioned documents, may claim
privilege if the production of such
documents will be against the public
interest or the interest of the Bank. In
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the event, it shall inform the Inquiring
Authority accordingly."
50. As could be seen from Regulation 6(10)(b)(iv) of the
Regulations, it is permissible for an employee to give a
notice within ten days of the order to allow for discovery of
production of documents.
51. As could be seen from Regulation 6(1)(b)(ii) of the
Regulations, the Officer Employee, in order to prepare his
defence, is entitled to submit a list of documents and
witnesses that he wants and in order to do so, he is
required to give a notice of ten days.
52. Regulation 6(11) of the Regulations stipulates that
on receipt of such notice for discovery or production of
documents, the same is required to be forwarded to the
authority in whose possession the documents are kept,
with a requisition for production of documents on the date
as may be specified.
53. Regulation 6(12) of the Regulations states that on
receipt of requisition under sub-regulation (11) of
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Regulation 6, the authority in possession of the
requisitioned documents should arrange for production of
the same before the Inquiry Officer on the specified date
and time.
54. There is, however, a proviso appended to Regulation
6(12) of the Regulations which enables the authority, in
whose custody the documents are kept, to claim privilege
for production of such documents on the ground that
production would be against public interest or against the
interest of the Bank and the said authority is required to
inform the claim of his privilege to the Inquiring Authority.
55. It is, therefore, clear that fundamentally an
employee is entitled to seek for documents which are in
custody of some other authority and on such requisition
made, the Inquiry Officer is bound to call upon such
authority in whose custody the documents are kept to
furnish the same for the purpose of inquiry. The
Regulation, therefore, did not permit the Presenting Officer
to object to the requisition of the documents or to contend
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that the documents are irrelevant. It is to be noticed here
that Regulation 6(10) of the Regulations states that the
documents can be sought for by an employee for the
purpose to prepare his defence. It is, therefore, imperative
that in order to enable an employee to put forth an
effective defence, the documents upon which he wishes to
place reliance on or seek support of, for filing his defence
should be made available to him.
56. In fact, the Inquiring Authority is bound to act upon
his requisition and direct the authority to handover the
documents in order to produce the same at the specified
time and place, and no discretion is granted to the
Inquiring Authority to deny access to the documents
sought by the employee.
57. What is significant to be noticed in proviso to
Regulation 6(12) is that the privilege of the authority to
refuse production of documents sought, is vested in the
authority who possess those documents. However, in the
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proceedings dated 11.09.1996, it has been recorded as
follows:
"Before submitting the defence, CSOE has submitted
that despite repeated request, management has not
submitted the following documents which according
to them were very vital for disproving the charges
mentioned in the charge sheet.
1) Copy of the special Inspection Report.
2) Copies of the concurrent audit report of
M/s.Hariharan & Co.
3) Copies of the regular inspection report for the
year 1994-95.
4) Credit vouchers in respect of CDD 99/95 and
5) Copies of the office Note in respect of CDD
147/95 dated 20.2.95
6) Copy of the office Note in respect of debit
balance allowed in the account of M/s Khosla
Trading Co.
7) A report on the financial standing of Mr.Sudhir
Zaveri, a customer of Malabar Hill branch.
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In respect of first 3 items, P.O. has claimed
privilege as they are classified and confidential
documents. In view of the confidential nature, I
am not allowing the above documents. However,
P.O. has conceded that documents mentioned under
4 to 7 are not available/not maintained/not
traceable."
(underlining by me)
58. It is apparent from the above, that the petitioner had
made a categorical request to the Inquiry Officer that the
seven documents mentioned therein were vital for
disproving the charges levelled against him and these
documents had not been furnished to him despite
repeated requests made in that regard. It may also be
pertinent to state here that in the communication dated
19.04.1996, the petitioner did make a request as
evidenced in said communication, which is produced at
Annexure-G to the writ petition.
59. As could be noticed from the above-extracted
portion, the Inquiry Officer, instead of sending the request
to the authority, in whose custody the documents were
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kept, has proceeded to accept the claim of privilege made
by the Presenting Officer. As already stated above,
privilege could be claimed only by the authority who
possessed the documents and it would not be open for the
Presenting Officer to claim privilege on the ground that the
documents sought are classified as documents of
confidential nature, and at any rate, it would not also be
open for the Inquiring Authority to disallow the request on
the ground that the documents were of confidential
nature.
60. It may be pertinent to state here that the documents
sought by the petitioner were copies of the special
inspection report, the concurrent audit report and also the
regular inspection report. If, in fact, the special inspection
report, the concurrent audit report and the regular
inspection report indicated that there was no wrongdoing
on the part of any officials of the Bank, this would
obviously be a set of vital documents for establishing the
defence of the petitioner. Thus, denial of these documents
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on the ground of privilege claimed by the Presenting
Officer was grossly illegal and in direct contravention to
the above-referred Regulation. As a consequence, it is
undeniable that the petitioner was not provided documents
which could have enabled him to disprove the charges
levelled against him and thus, the inquiry was clearly
vitiated.
61. It may be pertinent to notice here that the Inquiry
Officer has recorded his findings, which is already
extracted above and is reproduced once again for the sake
of clarity:
"I also observe from the enclosure to the
written statement of defence dated 12.8.96
submitted by the CSOE that this document is not
properly introduced by giving reasonable
opportunity to PO to verify the genuineness of the
same. I am therefore not taking cognizance of the
contents of this enclosure."
62. As already noticed above, the Inquiry Officer has
refused to take cognizance of the reply that the Bank gave
to the DRI in response to the show-cause notice on the
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ground that it was not properly introduced by affording a
reasonable opportunity to the Presenting Officer to verify
the genuineness of the same. In fact, this reply was the
reply given by the Bank through its counsel to the DRI and
it was not the case of the Presenting Officer that this
document was not genuine or that no reply had been
given by the Bank to the show cause notice issued by the
DRI.
63. It may also be pertinent to state here that the
Regulation does not contemplate any procedure for
introducing a document. So long as the Bank admitted the
issuance of the reply to the show-cause notice, the Inquiry
Officer could not have come to the conclusion that the
document was improperly introduced, when there was no
provision in the Regulation which prescribed any defined
procedure for a charge sheeted employee to introduce a
document in support of his defence.
64. Regulation 6(10) of the Regulations does, as noticed
above, enable a charge sheeted employee to seek
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documents. There is also no bar under the Regulation for a
charge sheeted employee to submit a document in his
defence. In the light of the Regulations, the findings of the
Inquiry Officer that the reply furnished by the Bank to the
DRI was not properly introduced cannot be sustained.
65. The document i.e., the reply given by the Bank to
the show-cause notice issued by the DRI was, in fact,
enclosed to the reply dated 19.04.1996 given by the
petitioner and the production of this document was also
not objected to by the Inquiry Officer. In other words, the
reply of the Bank to the show-cause notice was already on
record and therefore, the question of presenting it once
again would not arise. This document, obviously, had a
definite bearing on the charges levelled against the
petitioner. In this reply, the Bank has categorically stated
that there was no wrongdoing on its part, which warranted
initiation of action against it. The Bank has also justified
the opening of current accounts and the acceptance of
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cash, by its officials. In fact, in the reply, it is categorically
stated as follows:
"The employees of the branch, keeping in mind the
overall objective, have opened the said current
accounts in the branch with the bonafide belief that
considerable amounts of each deposits will be
received through these accounts."
66. In light of this averment of the Bank itself in the
reply to the show-cause notice issued by the DRI, it
becomes obvious that the Bank did not find any
wrongdoing on the part of its employees in the matter of
opening of the current accounts.
67. Even assuming for a moment that such a kind of
reply had to been given by the Bank in response to the
show-cause notice issued by the DRI so as to defend itself,
the fact remains that the opening of current accounts was
not barred under any circular or notification. The Inquiry
Officer, in his report, has not pointed out as to which
established procedure was not followed and he has also
not pointed out as to which Circular had been violated in
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either opening the current accounts in question or the
acceptance of cash.
68. It has to be borne in mind that the raid was
conducted by the DRI and cash was seized from persons
who were not the employees of the Bank. If certain private
individuals were guilty of any wrongdoing in depositing
huge amounts of cash, the action of the Bank, which is
bound to accept the amount that its customers want to
deposit, cannot be found fault with and the acceptance of
cash deposits from the customers into existing current
accounts by the officials of the Bank would not amount to
a misconduct on their part.
69. To reiterate, the inquiry report does not record as to
which Circular barred the acceptance of cash, nor does it
highlight any specific irregularity in the opening of current
accounts. It is also to be kept in mind that mere opening
of account and accepting of cash would not per se amount
to any wrongdoing on the part of the officials of the Bank.
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70. It may also be pertinent to state here that the
proceedings were admittedly initiated by the
Commissioner of Customs against not only the Bank, but
against several others (including the petitioner) alleging
wrongdoings under the Customs Act and which culminated
in the imposition of a penalty by the Customs authorities
against the Bank and others.
71. The Bank as well as the petitioner preferred an
appeal before the Tribunal and this appeal was filed
challenging the imposition of penalty against the Bank in
relation to the above-mentioned cash that had been seized
from the premises of the Bank. The Tribunal passed an
order, which is produced as Annexure-Q to the writ
petition, allowing the appeals filed by the Bank as well as
by the petitioner and the order of the Commissioner of
Customs imposing the penalty has been set aside. In fact,
at paragraphs 31 and 32 of its order, the Tribunal has
recorded as follows:
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"31. As we see it the function of a bank is to accept
money on behalf of its depositors and lend this
money to creditors. Such transactions necessarily
involve deposits into, and withdrawal from the bank
of money, some of which may at times be large. We
do not think that it is the legitimate function of any
bank or its officials, unless the law requires it, to
enquire into the source of the funds, before they
decide to accept the deposits. In our opinion that
militates against the general concept of banking. The
commissioner's order does not disclose the existence
of any legal requirement that the employees of the
banks must satisfy themselves that the source of the
funds are satisfactorily accounted for. Further we do
not find any evidence that officials of the bank who
were concerned with opening and operating of these
accounts, or any of their supervisory officers knew or
had reason to believe that what has been deposited
in the banks was money obtained by proceeds of sale
of smuggled gold. The Commissioner himself does
not cite my such specific evidence in support of his
view.
32. Even if we assume for a moment that the bank
officials acted negligently or carelessly in accepting
these accounts, an had contravened regulations of
the Reserve Bank of India in this regard, that will not
establish their liability to penalty under clause (b) of
the Section 112 of the Act requires a particular state
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of mind of the person concerned. He must know or
have reason to believe that the goods that he deals
with are liable confiscation under Section 111. This
state of mind has not been shown at all. It is the
normal function of the bank employees to encourage
deposits into his bank. That after all is how the
success of a bank is measured. We therefore do not
find anything particularly strange or sinister in that
these officers perhaps went out of their way to
facilitate operations of the account of Zakir Hussein.
As was argued by one of the counsel that this what
any commercial established would do for a large
scale customer. If there was negligence on the part
of any of the employees of the banks, the
Commissioner was at liberty to refer the matter to
the Reserve Bank of India or to take appropriate
action. We do not find that any such reference was
made or action taken."
72. In the light of this finding even by the Tribunal, that
when it was the legitimate function of the Bank to accept
the deposits and when there was no evidence that the
officials of the Bank had reason to believe that the
amounts that were deposited in the Bank were all
proceeds of smuggled goods, the Bank could not have
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come to the conclusion that the petitioner was guilty of
any wrongdoing.
73. In this view of the matter, for the reasons stated
above, I am of the view that the inquiry report was
vitiated for not furnishing the petitioner with an adequate
opportunity to put forth his effective defence and it was
also vitiated because the document which had a vital
bearing on the entire defence of the petitioner i.e., the
reply given by the Bank to the DRI was not even
considered by the Inquiry Officer. Consequently, the
inquiry report cannot be sustained and the same is
quashed.
74. Since the inquiry report was vitiated, the Disciplinary
Authority could not have blindly accepted the same and
the Appellate Authority could not also have affirmed the
same (in part) without noticing the serious lacuna in the
inquiry report. I am, therefore, of the view that the
punishment imposed on the petitioner and the affirmation
of the same by the Appellate Authority, cannot also be
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sustained. Consequently, the impugned orders are set
aside.
75. Since the petitioner has attained the age of
superannuation, the question of reinstating him would not
arise. Having regard to the fact that the lis has been
pending since 1997, in my view, interests of justice would
be served if the petitioner is awarded 50% backwages
for the period during which he was entitled to serve in the
Bank i.e., until he attained the age of superannuation.
76. The petitioner would also be entitled for all
consequential benefits that he is entitled to, including the
terminal monetary benefits which shall be made over to
him within a period of two months from the date of receipt
of a copy of this order.
Writ Petition is, accordingly, allowed.
Sd/-
JUDGE
PKS
