Karnataka High Court
M R Subba Rao vs The Board Of Directors And The Appellate ... on 16 September, 2025
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 16TH DAY OF SEPTEMBER, 2025
BEFORE
THE HON'BLE MR JUSTICE ANANT RAMANATH HEGDE
WRIT PETITION NO.38299 OF 2009 (L-KSRTC)
BETWEEN:
SRI M R SUBBA RAO,
AGED ABOUT 55 YEARS,
S/O SRI M K RANGANATHA RAO,
EX-ASST. ACCOUNTS OFFICER,
BMTC R/AT NO.629, 1ST MAIN,
1ST STAGE INDIRANAGAR,
BANGALORE-560038.
...PETITIONER
(BY SRI V S NAIK, ADVOCATE)
AND:
1. THE BOARD OF DIRECTORS AND THE
APPELLATE AUTHORITY, KSRTC,
CENTRAL OFFICES,
K H ROAD, BANGALORE-27.
2. THE MANAGING DIRECTOR,
KSRTC CENTRAL OFFICES,
K H ROAD,BANGALORE-27.
...RESPONDENTS
(BY SMT H R RENUKA, ADVOCATE FOR R1 & R2)
THIS WRIT PETITION IS FILED UNDER ARTICLES
226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING
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TO QUASH THE ORDERS DATED 26.09.08/01.10.2008 AND
DATED 09.03.2009 PASSED BY THE 2ND AND 1ST
RESPONDENTS RESPECTIVELY, THE ORIGINAL / TRUE
COPY OF WHICH ARE PRODUCED HEREWITH AS
ANNEXURES-A AND B RESPECTIVELY, SINCE THE ORDERS
ARE WITHOUT ANY JURISDICTION AND BEING VIOLATIVE
OF RULES OF NATURAL JUSTICE AND ETC.
THIS PETITION HAVING BEEN HEARD AND
RESERVED FOR ORDERS ON 08TH SEPTEMBER, 2025 AND
COMING ON FOR PRONOUNCEMENT THIS DAY, THE
COURT PRONOUNCED THE FOLLOWING:
CORAM: HON'BLE MR JUSTICE ANANT RAMANATH HEGDE
CAV ORDER
The petitioner is before this court aggrieved by
the order dated 09.03.2009 passed by the appellate
authority confirming the order dated 01.10.2008,
passed by the disciplinary authority dismissing the
petitioner for service.
2. In terms of the order dated 01.10.2008,
the disciplinary authority dismissed the petitioner from
service and also directed to forfeit the gratuity and to
recover sum of Rs.10,41,719/-.
3. Brief facts noticed from the pleadings are as
under:
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The petitioner was appointed on 07.02.1975 as
Accounts Supervisor in Karnataka State Road Transport
Corporation. On 28.04.2003, a charge-sheet is issued
against the petitioner and 13 others alleging negligence in
discharge of duties resulting in misappropriation of funds.
On 02.06.2003 the petitioner issued reply denying
the charges. A Retired District Judge was appointed as
Enquiry Officer on 03.10.2003, and on 08.10.2007 the
enquiry officer, post enquiry, submitted a report holding
that the petitioner is not guilty of charges.
4. The disciplinary authority disagreed with the
report of the enquiry officer and issued show cause notice
on 14.03.2008 and the petitioner replied to the said notice.
5. The disciplinary authority in terms of order
dated 01.10.2008 dismissed the petitioner holding him
guilty and ordered to recover Rs.10,41,719/-. As already
noticed the appeal before the appellate authority was
unsuccessful. Hence, the petitioner is before this Court.
4
6. The learned counsel appearing for the
petitioner would contend that:
(i) The enquiry officer has held that charges
against the petitioner are not proved and there is no
allegation of misappropriation of funds against the
petitioner and the charges levelled against the petitioner if
read carefully would only indicate that he was charged for
negligence and not for misappropriation of funds. Under
the Karnataka State Road Transport Corporation Services
(Conduct and Discipline) Regulations, 1971. (for short, 'the
Regulations, 1971') the disciplinary authority disagreeing
with the finding of other enquiry officer is required to issue
a show cause notice assigning the reasons for
disagreement and thereafter he must consider the reply in
the light of the evidence placed in the disciplinary enquiry
and then should pass an order. The order passed by the
disciplinary authority is in violation of the Regulations,
1971 and principles of natural justice, and on this account
that the impugned order has to be set aside.
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(ii) The disciplinary and conduct Rules applicable
to the respondent - Corporation does not enable the fresh
enquiry as the petitioner has attained the age
superannuation as such the petitioner is entitled to all
consequential benefits including full backwages.
7. The learned counsel for the respondent -
Corporation would contend:
(i) The enquiry officer was not justified in
recording a finding of 'not guilty' against the
petitioner and he has overlooked the material
evidence on record and the disciplinary
authority is not bound by the order passed by
the enquiry officer.
(ii) After appreciating the evidence placed before
the disciplinary enquiry, and after going
through the procedure in the Accounts
Department, the disciplinary authority has
issued the second show cause notice with
reasons for rejecting the finding of the enquiry
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officer. The petitioner was asked to show cause
for the proposed penalty penalty and there is
no violation of any of the Regulations 1971,
applicable, as such, the disciplinary authority is
justified in dismissing the petitioner.
(iii) On an appeal filed by the petitioner, the
appellate authority has considered all the
contentions raised by the appellant and passed
the order dismissing the appeal and no
infirmity can be found in the aforementioned
impugned orders.
(iv) The petitioner himself has admitted his
negligence during the course of enquiry and it
is not open for the petitioner to contend that
he is not guilty. It has been brought on record
that the petitioner was negligent in not
verifying the vouchers and other documents
before signing the cheques for payment. Had
he verified the vouchers, the excess payments
7
would not have been made and petitioner is
responsible for excess payment as such the
order of dismissal is justified.
(v) Even in the reply to the show cause notice
issued, the petitioner has not assigned any
acceptable reasons to impose a lesser penalty
other than dismissal and the penalty imposed
is certainly proportionate to the misconduct
committed by the petitioner.
8. This court has considered the contentions
raised at the Bar and perused the records.
9. The primary contention of the petitioner is that
the second show cause notice is defective and contrary to
Regulation 23(25) of the Regulations, 1971. As per
regulation 23(25) of the Regulations, 1971, the disciplinary
authority disagreeing with the finding of the enquiry
authority has to record reasons for said disagreement and
8
record its own finding on the such charge and shall issue
show cause notice on the proposed penalty.
10. Regulation 23(25) reads as under:
" The disciplinary authority shall, if it disagrees
with the findings of the Inquiring Authority on
any article of charge, records its reasons for
such disagreement and record its own findings
on such charge, if the evidence is sufficient for
the purpose."
11. Referring to these Regulations, 1971 learned
counsel for the petitioner would contend that the reasons
for disagreement are not assigned in the second show
cause notice and the reply to the second show cause
notice is not considered in proper prospective.
12. The second show cause notice is dated
14.03.2008. While disagreeing with the finding of the
enquiry officer, the disciplinary authority has referred to
the Accounts Manual which provides for the duties and
9
responsibilities of the Divisional Auditor/Accounts
officer/Assistant Accounts Officer of the Division.
13. After noticing and extracting the duties and
responsibilities of the Accounts Officer in detail, the
disciplinary authority has observed that the petitioner was
working as an Assistant Accounts Officer in the concerned
Division from April, 2000 to January, 2002 and in that
period Rs.63,14,820/- is misappropriated.
14. It is also observed by the disciplinary
authority, that every month, based on the salary bills
prepared by the officials, in the Department the officials in
the Accounts Department should have checked whether
the amount allotted to the Depot was properly utilized by
cross checking with the acquaintance Roll, and if any
amount is transferred in excess, same should be
withdrawn and transferred to the appropriate Account.
15. The disciplinary authority has noticed that the
reconciliation of the accounts was not carried every month
and the lapse continued for two years and because of this
10
lapse on the part of the Assistant Accounts Officer huge
amount is transferred based on fictitious bills. The
disciplinary authority also observed that the petitioner is
one of the Accounts Officers whose negligence and
carelessness resulted in the financial loss on account of
misappropriation.
16. Having said so, the disciplinary authority
issued notice stating that it is disagreeing with the finding
of the enquiry officer and issued show cause notice as to
why the petitioner should not be dismissed from service
under Regulation 18(B)(X) of Regulations, 1971 and to
why entire gratuity amount should not be forfeited to
recover the loss.
17. The petitioner replied to the said notice. As can
be seen from the said reply though the petitioner in one
sentence would say that he would deny all the charges, on
a complete reading of the reply to the show cause notice it
is noticed that the negligence and consequent loss is not
denied.
11
18. It is also noticed that the petitioner tried to
project a defence that because of shortage of staff there
was tremendous pressure and the workload prevented him
from carrying out the job entrusted to him with diligence.
The petitioner also tried to defend himself by stating that
during the period under scrutiny the Corporation was in
the process of implementing ERP Accounting Package
which primarily dealt with online transactions and for this
reason the Divisional Accounts Superintendent was
deputed to Central Office, which in turn disturbed the
working conditions in the Accounts Section.
19. Delinquent employee also stated that w.e.f.
February, 2000, the procedure of Manual Compilation of
Establishment expenditure on monthly basis was
discontinued. Petitioner in his reply states that the
problem faced by the staff in the Accounts Department on
account of shortage of workers was repeatedly brought to
the notice of the concerned in various meetings, and same
was not resolved. It is also stated that taking undue
12
advantage of the situation prevailing in the Division many
unscrupulous elements in the Accounts division have
colluded with each other and misappropriated the funds of
the Corporation. Citing these reasons, petitioner denied
the charges of misappropriation to the tune of
Rs.63,14,820/-.
20. The disciplinary authority thereafter in terms of
the impugned order dated 01.10.2008 has concluded that
five delinquent employees including the petitioner are
guilty of charges and accepted the finding of the enquiry
officer relating to other eight employees.
21. It is relevant to note that there is no material
to disbelieve the finding that Rs.63,14,820/- is the amount
misappropriated. Though the enquiry officer has given a
finding that the petitioner has not misappropriated the said
amount for his personal gain or has not gained anything
personally, the negligence on the part of the petitioner in
verifying the bills and payment is very much established.
It is also established that the petitioner signed cheques for
13
the amount in excess of Rs.50,000/- which he was not
authorised.
22. Under these circumstances, this court does not
find any merit in the contention that the reasons are not
assigned by the disciplinary authority while disagreeing
with the finding of the enquiry officer.
23. Though the second show cause notice does not
refer to the evidence in detail what is required to be
noticed is the petitioner was under obligation to cross
verify the bills and was required to reconcile the bills. The
reply given by the petitioner itself would reveal that he did
not reconcile the bills because of shortage of staff.
24. It is to be noticed that under Regulation
23(25), the disciplinary authority disagreeing with the
finding of the enquiry officer has to assign reasons for
disagreeing with the finding and has to assign reasons for
recording his own finding.
14
25. As can be noticed from the second show cause
notice issued by the disciplinary authority, the disciplinary
authority has disagreed with the finding of the enquiry
officer by referring to the duties and responsibilities of the
Assistant Accounts Officer and has concluded that there is
failure to reconcile the funds. Said reason is stated as the
reason for disagreeing with the findings of the enquiry
officer.
26. The impugned order dated 01.10.2008
dismissing the petitioner from service is preceded by the
finding that the disciplinary authority has perused all the
records and also perused the reply to the show cause
notice. Before dismissing the petitioner from service the
disciplinary authority has recorded a finding that Assistant
Accounts Officer/Petitioner being the head of the Accounts
Department failed to exercise proper control to reconcile
the funds released every month by the Division in relation
to the payments made in the Depot.
15
27. According to the disciplinary authority the
omission on the part of the petitioner in verifying the
payments reconciling the accounts and verifying the bills
resulted in misappropriation and loss.
28. For aforementioned reasons one cannot
conclude that the disciplinary authority has not recorded
reasons for disagreement and reasons for imposing the
penalty. The reason recorded to disagree with the report is
the omission to carry out the necessary verification and
reconciliation of accounts contemplated under the
Accounts Manual. The reason for imposing penalty is also
the same. There is no mandate of law that the reasons for
disagreement should be preceded by complete re-
appreciation of evidence placed before the enquiry officer
when the delinquent employee does not point out any
evidence in his reply to the show cause notice to justify the
finding of the inquiry officer, except saying that on
account of shortage of staff he could not pay attention to
the certain things which he was excepted to do.
16
29. In light of reply given by the petitioner, this
Court is of the view that reasons recorded to disagree with
the view of the enquiry officer are sufficiently clear and
one cannot conclude that the show cause notice being
vague did prevent the petitioner from giving adequate
reply pointing out the relevant evidence.
30. Learned counsel for the petitioner placed
strong reliance on the judgment of the Apex Court in
Punjab National Bank and others Vs. Kunj Behari
Misra1 to contend that while interpreting a provision which
is identical to Regulation 23(25), the Apex Court held that
the principles of natural justice have to be read into in
Regulation 7(2) which was under discussion in the said
case. There is no doubt that principles of natural justice
have to be read into in the Regulation 23(25) of
Regulations, 1971 applying the principle laid down in Kunj
Behari Misra supra. However, the question is whether the
principles of natural justice have been complied or not.
1
AIR 1998 SC 2713
17
31. This court is of the view that the disciplinary
authority has recorded reasons for disagreement with the
finding of the enquiry officer and has also assigned reasons
for taking a different view. Hence, the impugned order
dated 01.10.2008 cannot be said to be in violation of the
Regulation under 23(25) of the Regulations, 1971.
32. The ratio in the case of Institute of
Chartered Accountants of India Vs. L.K. Ratna and
Ors2 also does not come to the aid of the petitioner given
the fact that the petitioner is given the opportunity to
defend himself after the disciplinary authority disagreed
with the view of the enquiry officer.
33. The learned counsel for the petitioner has also
placed reliance on the judgment of the Co-ordinate Bench
of this court in Anantha Krishna Jois Vs. The Board of
Directors and Appellate Authority and another3 and
the judgment in W.A.2689/2018 confirming the order in
2
(1986) 4 SCC 537
3
WP No.22369/2009
18
W.P.22369/2009. This Court in the aforementioned cases
had an occasion to interpret the Regulation 23(25) of the
Regulations, 1971. Based on the facts obtained in the said
case, this court recorded a finding that there is no material
to indicate that second show cause notice issued to the
delinquent employee in the said case was preceded by the
reasons for disagreement with the finding of the enquiry
officer. Thus, this Court in the said judgments held that
the requirements of Regulations, 1971 are not followed.
However, it is not the case here. This Court has already
noticed the reasons for disagreement with the findings of
the enquiry officer and the reasons for the penalty in the
second show cause notice and the order of dismissal.
34. Now the question is whether the disciplinary
authority is justified in holding that the charges are proved
disagreeing with the finding of the inquiry officer and the
Appellate Authority is justified in dismissing the appeal.
35. The respondent framed four charges against
the petitioner.
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a. First charge is relating to payment of excess
amount towards the salary of the employees working in
the depot which covered the period from April, 2000 to
November, 2001. It is alleged that in the said period the
petitioner and other employees in the Accounts
Department without verifying the salary bills have
disbursed excess amount through cash as well as cheque
and thereafter, deliberately failed to reconcile the accounts
and failed to secure the excess amount back to the
Accounts Department and acting diligently caused loss to
the tune of Rs.53,18,982/-.
b. Second charge is on the same line as that of
the first charge for the period December 2001 to January
2002 and the loss alleged is Rs.1,53,589/-.
c. Third charge is relating to not complying the
directions in the Accounts Manual No.9 and Circular No.26
and not visiting the Depot from time to time to inspect the
accounts and to bring to the notice of the seniors about
the defects in the accounts.
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d. Fourth charge is relating to issuance of cheque
in excess of Rs.50,000/- though the delinquent employee
was not authorised to issue and sign the cheque in excess
of Rs.50,000/-.
36. The enquiry officer while exonerating the
petitioner has observed as under (page No.27 middle two
paragraphs unnumbered):
"In his cross examination PW1 has
categorically admitted that they have not
misapproporiated any amount or gained. PW1
further admitted in his cross examination that
cheque exceeding Rs.50,000/- signed by
Subba Rao and Shri. Sampangi issued to Depot
Managers A/c and that they have not
misappropriated any amount. It is a fact that
there is due to shortage of staff in A/c.
Section they have worked under pressure.
For the above said reasons and discussions, I
have to say that management failed prove
charges levelled against mt. Radhamani,
Nagendran, Subba Rao and Sampangi because
if they have signed documents without criminal
intention".
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37. The above said finding clearly demonstrates
that the cheque in excess of Rs.50,000/- is signed and
issued by the delinquent employee. Admittedly, it is not
the case of delinquent employee that he had the authority
to sign the cheque in excess of Rs.50,000/-. The enquiry
officer has based his report on the premise that the
employer failed to establish that the delinquent employees
have signed the cheque with criminal intention. It is
relevant to note that issuance of cheque with criminal
intention is not the charge levelled by the employer. The
charge is that cheque is issued without authority.
38. The disciplinary authority referring to the
Accounts Manual for violation of which one of the charges
is framed, agreed with the report of the enquiry officer as
in so far as eight employees and disagreed with the finding
as against five employees and issued the second show
cause notice.
39. The second show cause notice issued to the
petitioner specifically refers to the Accounts Manual and
22
the duties and responsibilities of the personnel working in
the Accounts Department. After extracting the relevant
provisions of the Accounts Manual, the disciplinary
authority records a finding as under:
"10. The result of these inspections should be
placed on record for information of the Chief
Accounts Officer but serious financial
irregularities like defalcation or loss of stores,
money etc., together with any suggestions
should be reported at once to the Chief
Accounts Officer even though they might have
been set right under the orders of Competent
Authority.
b) In this particular case, Sri M.R. Subba Rao,
was working as Asst. Accounts Officer of
Bangalore (C) Division from April 2000 to
January 2002 during which time
Rs.63,14,820/- (Rupees Sixty three lakhs
fourteen thousand eight hundred and twenty
only) was misappropriated out of the total
misappropriation amount of Rs.68,29,719/-.
He has released huge amounts to Depot - 1,
every month for making salary payments,
encashment payments etc., based on the
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salary bills prepared by the depot authorities.
After releasing the payments, the divisional
authorities should have checked whether the
amount allotted to the depot has been
properly utilised by cross checking with the
aquittance rolls. After cross checking, the
excess amount pending with the depot
authorities should have withdrawn and
transferred to divisional account. In other
words, reconciliation of funds in the depot
was not carried out every month and this was
continued for a period of almost two years.
The serious lapse on the part of the Asst.
Accounts Officer made the Pay Bill Clerks,
Accounts Supervisors working in the depot
and the accounts staff working in the
divisional office to misappropriate the huge
sums by preparing fictitious bills.
c) The said lapse could be attributed only to
the Accounts Officer and his supervisory staff
in the division and accounts staff in the depot.
At the relevant point of time, Sri M.R Subba
Rao was the Asst. Accounts Officer who was
heading the accounts department in the
Bangalore Central Division.
24
5. His negligence and carelessness in not
maintaining the accounts of the depot has led
to the misappropriation of funds. Had he
been cautions, prompt and vigilant in his
duties, this situation would not have taken
place and the Corporation would not have lost
this huge amount. In the circumstances
explained above, there is adequate evidence
to prove that he is involved in
misappropriation of the said funds".
40. Citing aforementioned reasons, the disciplinary
authority has disagreed with the findings of the enquiry
officer. The Court cannot find fault with the finding of the
disciplinary authority as the said finding is based on
evidence which point to the lapses on the part of the
employee in following the mandate of the accounts manual
which have to be adhered to by the persons working in
accounts department.
41. The charges levelled against the petitioner is
negligence, non-verification of accounts and vouchers,
failure to reconcile the amounts, and in addition issuance
25
of cheque in excess of Rs.50,000/- without authorisation,
are found to be established.
42. This Court is of the view that in terms of
second show cause notice, the petitioner is put to a proper
notice for disagreement with reasons. Thereafter, the
disciplinary authority in the same show cause notice has
proposed dismissal from service under Regulation 18(B)(x)
of Regulations, 1971.
43. Though the learned counsel appearing for the
petitioner referring to Regulation 23(25) contends that
disciplinary authority has not recorded the reasons for
disagreement with the report of the enquiry officer and its
own finding, this Court for the reasons already recorded
has to hold that reasons for disagreement are very much
found in the second show cause notice. Though one may
technically argue that the reasons for its finding are not
separately recorded in the second show cause notice, on
careful perusal of the second show cause notice one can
safely conclude that the reasons for disagreement with the
26
findings of the enquiry officer can also be the reasons for
its own findings in certain circumstances.
44. In few cases where the disciplinary authority
relies on any material not noticed by the enquiry officer
may have to record reasons for its own finding distinctly
from the reasons for disagreement with the findings of the
enquiry officer. Since, the charge is relating to negligence
and non-compliance of the Accounts Manual, this Court is
of the view that the finding recorded for disagreement with
reference to non-compliance of requirement of Accounts
Manual can also be the reason for its finding to hold the
petitioner guilty.
45. The reliance placed by the learned counsel for
the petitioner in Poonacha Vs. New Government
Electric Factory4 is also not applicable to the present
case as the said judgment is rendered in a completely
factual background and the ratio in the said case is not
attracted to the case on hand.
4
ILR 1986 Karnataka 3181
27
46. The very object of second show cause notice is
to provide a fair opportunity to the party to give his say on
the findings of the disciplinary authority. The delinquent
employee has replied to the show cause notice. The reply
to the show cause notice would clearly disclose that the
delinquent employee has understood as to what is put
against him and in substance has admitted the allegation
of negligence by trying to blame the respondent for the
scenario on the premise that there was shortage of staff in
the Accounts Department resulting in unbearable workload
on the petitioner.
47. For the reasons recorded this Court does not
find any reasons to interfere with the impugned orders.
48. Accordingly the writ petition is dismissed.
SD/-
(ANANT RAMANATH HEGDE)
JUDGE
BL/CHS
...
