Dev Anand Deva, S/O D,Subhakar ... vs Small Industries Development ...
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      THE HONOURABLE SMT. JUSTICE P. MADHAVI DEVI


                 WRIT PETITION NO.5277 OF 2013


                               ORDER

This Writ Petition has been filed seeking a Writ of Mandamus

declaring the action of the 3rd respondent in imposing penalty of

compulsory retirement on the petitioner vide order dt.02.09.2012 and

also consequential proceedings of the 4th respondent vide HRV

No.1500/Staff 37 (51A) dt.10.10.2012 as illegal and arbitrary and

without jurisdiction and in violation of principles of natural justice and

to direct the respondents to reinstate the petitioner into service with all

consequential benefits with retrospective effect and pass such other

order or orders as this Court may deem fit and proper in the

circumstances of the case.

2. Brief facts leading to the filing of this Writ Petition are that the

petitioner joined the Industries Development Bank of India ('IDBI', in

short) in the year 1988 and later on opted to the 1st respondent bank, i.e.,

Small Industries Development Bank of India (SIDBI), in the month of

April, 1990 and continued in the same organisation and put in more than W.P.No.5277 of 2013

23 years of service till imposition of punishment of compulsory

retirement from service vide orders dt.02.09.2011. The petitioner was

promoted to various stages and ultimately reached to the level of Deputy

General Manager before he was compulsorily retired.

3. It is stated by the learned counsel for the petitioner, Sri K. Shiva

Reddy, that the 1st respondent bank had initiated two disciplinary

enquiries against the petitioner for the period he had worked as Deputy

General Manager (Incharge) between 02.05.2006 and 09.07.2008, for

certain alleged irregularities committed by him. It is submitted by the

learned counsel for the petitioner that disciplinary proceedings were

initiated at two different stages on the alleged irregularities and as a

result of the first enquiry, the petitioner was demoted to the post of

Assistant General Manager, against which the petitioner filed

W.P.No.19761 of 2011 before this Court and an interim direction was

given to the effect that the petitioner shall be paid the scale for the post

of Grade-D while discharging his duties in the post of Grade-C. The

Writ Petition is still pending adjudication before this Court. In the

second disciplinary proceedings, three charges were framed against him.

The 1st charge is with regard to submission of pre-disbursal visit report W.P.No.5277 of 2013

dt.24.03.2008 with certain incorrect and misleading information; 2nd

charge is that the first disbursement note was signed by the petitioner

without the signature of the recommending officer and that the petitioner

failed to ensure compliance of certain key conditions without obtaining

any relaxation from the sanctioning authority. The 3rd charge is that the

petitioner failed to obtain and verify the statement of the no lien account

of the borrower even till the third disbursement in the account of Shree

Abhikrishna Papers Private Ltd. (SAPPL), which enabled the promoter

to withdraw cash from the account on a number of times, thus misusing

bank funds. It is submitted that the second enquiry which was initiated

vide Charge Memo dt.05.04.2010 got concluded in awarding the

punishment of compulsory retirement after obtaining the concurrence

from Central Vigilance Commissioner (CVC). Thereafter, the petitioner

preferred an appeal to the Board of Directors, the appellate authority,

under Regulation 48. However, the appeal was also dismissed vide

orders dt.08.05.2012.

4. It is submitted that immediately thereafter, the 4th respondent,

after the lapse of nearly 13 months from the order of compulsory

rtirement had issued a show-cause notice dt.10.10.2012 to the petitioner W.P.No.5277 of 2013

as to why all the retirement benefits of the petitioner should not be

appropriated towards the alleged act of indiscipline as found in the

enquiry. It is submitted that the petitioner filed a detailed reply on

06.11.2012 but without considering the same, the 4th respondent has

given effect to proceedings dt.10.10.2012. Against both the order of

compulsory retirement dt.02.09.2012 and the order of recovery

dt.10.10.2012, the present Writ Petition is filed.

5. The learned counsel for the petitioner, Sri K. Shiva Reddy,

submitted that simultaneously with the departmental proceedings, the

respondents had also complained to the CBI and the CBI had conducted

a detailed enquiry and filed a charge sheet in which the petitioner was

arrayed as accused No.10. He submitted that the CBI Court has passed

a final order dt.17.05.2019 after contested trial, acquitting the petitioner

from all the charges. It is stated that after acquittal from CBI Court, the

petitioner has filed an additional affidavit before this Court and seeks

consideration of the judgment of the CBI Court and on the basis of the

same to set aside the punishment of compulsory retirement imposed by

the disciplinary authority and is also praying for payment of arrears of

salary from the date of removal from service by treating the same as in-

W.P.No.5277 of 2013

service period along with provident fund (employer's contribution) with

applicable rate of interest for the entire period till the date of

superannuation/settlement i.e. 30.06.2018 and pay the gratuity as

applicable taking into consideration the full service, i.e., till the date of

superannuation including ordinary leave encashment for full 10 months.

6. The learned counsel for the petitioner, while reiterating the

submissions made in the affidavit filed in support of the writ petition

and also the additional affidavit, submitted that SAPPL had made an

application to the bank for sanction of loan and after sanction of the loan

there were three disbursements made, viz., first disbursement of

Rs.75,00,000/-, second disbursement of Rs.50,00,000/- and third

disbursement of Rs.50,00,000/-. It is submitted that the charge against

the petitioner is with regard to the first disbursement of Rs.75,00,000/-

and there were no charges against anybody with regard to disbursement

of the balance of Rs.1.00 Crore, i.e., in two instalments of

Rs.50,00,000/- and Rs.50,00,000/- respectively. He submitted that the

very same charges have been levelled against the petitioner both in the

departmental proceedings as well as in the CBI charge sheet and the

witnesses and evidence led in both the departmental proceedings as well

as in the CBI case are the same. Therefore, according to him, since the W.P.No.5277 of 2013

petitioner has been acquitted of the charges by the CBI Court, after a

contested trial, the same should be considered for acquitting the

petitioner from the charges imputed in the departmental proceedings as

well, and the petitioner should be reinstated into service with all

consequential benefits. In support of his contention that the charges in

the departmental proceedings as well as CBI case and the witnesses and

the evidence are the same, he has filed a detailed paper book and also a

chart showing the similarity of charges and also a copy of the order of

the CBI Court disposing of the CBI case with regard to the said charges.

He also placed reliance upon the following judgments in support of his

contention that where the charges, witnesses and evidence are the same

both in the departmental proceedings as well as in CBI/criminal case, on

acquittal in the criminal case, the accused employee should be

exonerated of all the charges in the disciplinary proceedings as well.

(1) S. Bhaskar Reddy and another Vs. Superintendent of Police and another1.

(2) G.M. Tank Vs. State of Gujarat and another2

(3) Managing Director, State Bank of Hyderabad, Head Office, Hyderabad and another Vs. P. Kata Rao3.

2015 AIR SCW 571

AIR 2006 SC 2129

2007 (5) ALD 514 (DB) W.P.No.5277 of 2013

(4) Union of India and others Vs. K.V. Jankiraman and others4.

He has also drawn the attention of this Court to the fact that the

respondent bank has not filed any appeal against the order of acquittal of

the petitioner herein and therefore, it has become final.

7. The learned counsel for the petitioner further submitted that the

entire amount has already been recovered from the loanee and therefore,

there was no pecuniary loss caused to the bank and appropriation of the

terminal benefits of the petitioner towards the alleged pecuniary loss

supposedly caused to the bank is no longer in subsistence. Therefore, he

prays for reinstatement of the petitioner into service with all

consequential benefits and payment of all the terminal benefits with

interest from the date of superannuation till the date of payment.

8. Learned counsel for the respondent bank, Sri Gandra Mohan

Rao, on the other hand, reiterated the averments in the counter affidavit

and submitted that the disciplinary proceedings are initiated for

misconduct in following the Regulations of the bank, whereas the

proceedings before CBI are with regard to criminal conspiracy

(1991) 4 SCC 109 W.P.No.5277 of 2013

committed by the petitioner and therefore the scope of the enquiry of

both the proceedings is different and acquittal from criminal case will

not automatically exonerate the petitioner from the disciplinary

proceedings which has culminated into the punishment of compulsory

retirement after following the due procedure by affording an adequate

opportunity of hearing to the petitioner. He also placed reliance upon

various judgments in support of his contentions.

9. As regards the contention of the learned counsel for the petitioner

that there was no pecuniary loss caused to respondent No.4 bank, the

learned counsel for the respondent bank submitted that it is true that the

loan amount has been recovered from the loanee, but it is on account of

One Time Settlement (OTS) and therefore, it cannot be said that there

was no loss to the bank.

10. Having regard to the rival contentions and the material on record,

this Court finds that the issue before this Court at this stage is whether

the acquittal in criminal case by the CBI Court will have any bearing on

the disciplinary proceedings against the petitioner herein. For this

purpose, it is necessary to go into the charges framed in the disciplinary

proceedings and also by the CBI against the petitioner.

                                                                 W.P.No.5277 of 2013



       Departmental proceedings                                CBI Case


Article of Charge - I                                   The allegations in brief in the
                                                 FIR are that during the period 2007-08,

While dealing with the account of the accused private persons in Shree Abhikrishna Papers Pvt. Ltd. connivance with accused public servants [SAPPL], Shri D. Dev Anand Submitted of Small Industries Development Bank of a pre-disbursement-visit-report dated India (SIDBI), Visakhapatnam Branch 24/03/2008, wherein certain incorrect had entered into a criminal conspiracy and misleading information was to cheat SIDBI in the matter of sanction furnished, and the first disbursement, and disbursal of Term Loan of Rs.270 amounting to Rs.75.00 lakh, was allowed lakhs for setting up a new project in the by him in the account on the basis name of M/s. Shree Abhikrishna Papers thereof. Pvt Ltd., East Godavari District, Andhra Pradesh. In pursuance of the criminal This act on the part of Shri D. conspiracy, the accused Directors of the Dev Anand was against the interest of Company got sanctioned and disbursed the Bank, details of which are stated in an amount of Rs.175 lakhs to themselves the corresponding statement of based on forged and fake documents of allegations. properties given as collateral securities to the Bank. However, the project had Shri D. Dev Anand is thus never come up and the Term Loan was alleged to have committed, interalia, not repaid thereby causing wrongful loss breach of Regulation 29 of Small of Rs.175 lakhs to SIDBI and Industries Development Bank of India corresponding wrongful gain to accused [Staff] Regulations, 2001, which if persons. proved, would amount to an act of misconduct, liable to any of the penalties Investigation revealed that A-1 in terms of Regulation 46 of the said M/s. Shree Abhikrishna Papers Pvt Ltd., Regulations. represented by Sathi Gopala Krishna W.P.No.5277 of 2013

Reddy (A2), hereinafter called as M/s Article of Charge - II SAPPL, was a Private Limited Company having it's registered office at D.No.9-

While making disbursements in 54, Sabbellavari Street, Mahendrawada the account of SAPPL, the first village, Anaparthy Mandal, East disbursement note was signed by Shri D. Godavari (E.G.) Dist, Andhra Pradesh. Dev Anand without the signature of the .................................................... 'Recommending Officer', through which A-10 Dev Anand Deva-DGM/Head of a disbursement of Rs.75.00 lakh was the Branch, accused/approver V.V.R. approved by him. Moreover, while Prasad-Manager & accused/approver. effecting the said disbursement, Shri D. .................................................................. Dev Anand failed to ensure compliance had dealt with the loan account of certain 'key-conditions' without pertaining to A-1 M/s SAPPL........

obtaining       any    relaxation        from   the
sanctioning authority for the said non-                          That in pursuance of the criminal
compliance.                                            conspiracy, the application was jointly
                                                       processed & signed by A-10 Dev Anand
         In the aforesaid manner, Shri D. Deva                   and     accused/approver          V.V.R.
Dev Anand acted against the interests of Prasad,                           Manager,               SIDBI,
the Bank, the details of which are stated Visakhapatnam                        Branch       and      then
in    the   corresponding           statement     of forwarded to SIDBI Southern Zonal
allegations.                                           Office, Chennai on 28.12.2006 with
                                                       recommendations to sanction a term

Sri D. Dev Anand is thus alleged loan of Rs.280 lakhs in favour of A-1 M/s to have committed, interalia, breach of SAPPL.....................

Regulation       29        of    Small   Industries
Development Bank of India [Staff]                                That        based          on         the

Regulations, 2001, which if proved, recommendations of A-10 Dev Anand would amount to an act of misconduct, Deva & accused/approver V.V.R. Prasad liable to any of the penalties in terms of and believing it to be true, the Zonal W.P.No.5277 of 2013

Regulation 46 of the said Regulations. Committee of Southern Zonal Office, SIDBI, Chennai had sanctioned a Term Article of Charge - III Loan of Rs.270 lakhs in favour of A-1 M/s SAPPL on 19.02.2007. While Shri D. Dev Anand failed to sanctioning the above loan, the Zonal obtain and verify the statement of the no- Office had instructed the SIDBI lien account of the borrower, even till Visakhapatnam Branch to obtain the third disbursement in the account of satisfactory reports from all the other SAPPL, which enabled the promoter to concerned bankers before disbursement withdraw cash from the account on a of the Loan. However, on 31.03.2008, as number of occasions, thus misusing the first disbursement a sum of Rs.75 lakhs Bank's funds. was disbursed by A-10 Dev Anand Deva in hurry in favour of A-1 M/s SAPPL In the aforesaid manner, Shri D. (Rs.25 lakhs) and it's machinery supplier Dev Anand acted against the interests of A-8 M/s.Hema Paper Machinery India the Bank, the details of which are stated Pvt. Limited, Rajahmundry (Rs.50 lakhs) in the corresponding statement of even before getting any such credit allegations. opinions from other bankers.

Investigation revealed that the credit Shri D. Dev Anand is thus opinions were obtained only in May- alleged to have committed, interlia, June 2008. breach of Regulation 29 of Small Industries Development Bank of India Investigation revealed that ....... [Staff] Regulations, 2001, which if A-10 Dev Anand Deva had wilfully proved, would amount to an act of ignored to monitor the diversion of the misconduct, liable to any of the penalties public funds. It is revealed that A-10 Dev in terms of Regulation 46 of the said Anand Deva, being the Head of the Regulations. Branch, never attempted to obtain and go through the bank statement of the concerned no lien account which W.P.No.5277 of 2013

otherwise would have certainly shown that the funds were diverted for the purposes other than for the purpose it was sanctioned.

The above facts of the investigation revealed that A-1 M/s Shree Abhikrishna Papers Pvt Ltd. (M/s.

SAPPL), A-2 Sathi Gopala Krishsna Reddy, A-3 Smt. Sathi Surya Kumari, A-

4 Shri Sathi Siva Sathyanarayana Reddy, A-5 V.V.S.T. Mallikarjuna Rao, A-6 Javvadhi Mohana Rao, A-7 Smt. Sabbella Sathiyamma, A-8 M/s Hema Paper Machinery India Pvt Limited, A-9 Nandam Veera Venkata Subrahmanyam, A-10 Shri Dev Anand Deva, accused/approvers V.V.R. Prasad, M.

Ramesh & Mohammed Raja and late Doddi Seshagiri Rao have committed offences of criminal conspiracy, cheating, forging valuable security, committing forgery for the purpose of cheating, knowingly using forged document as genuine and abusing of official position as public servants.

CHARGE 120-B r/w Sec.420, 467, 468 & 471 IPC and Sec.13(2) r/w 13(1)(d) of P.C Act W.P.No.5277 of 2013

That during the period from 2006 to 2008, A-1 M/s Shree Abhikrishna Papers Pvt Ltd., A-2 Sathi Gopala Krishna Reddy, A-3 Smt. Sathi Surya Kumari, A-4 Shri Sathi Siva Sathyanarayana Reddy, A-5 V.V.S.T.

Mallikarjuna Rao, A-6 Javvadhi Mohana Rao, A-7 Smt. Sabbella Sathiyamma, A-8 M/s Hema Paper Machinery India Pvt Limited, A-9 Shri Nandam Veera Venkata Subrahmanyam, A-10 Dev Anand Deva and late Doddi Seshagiri Rao had entered into a criminal conspiracy and agreed to do an illegal act namely, to cheat SIDBI Visakhapatnam Branch in the matter of sanction and disbursal of Term Loan of Rs.270 lakhs for setting up a new project in the name of A-1 M/s Shree Abhikrishna Papers Pvt Ltd., and in pursuance of the said agreement, by misusing/abusing official position as public servants got sanctioned and disbursed an amount of Rs.175 lakhs by forging documents purported to be valuable security for the purpose of cheating and using the same as genuine which they knew the said documents W.P.No.5277 of 2013

were forged documents thereby causing wrongful loss of Rs.175 lakhs to SIDBI and corresponding wrongful gain to themselves.

420 IPC That during the period from 2006 to 2008, A-1 M/s Shree Abhikrishna Papers Pvt Ltd., represented by A2 Sathi Gopala Krishna Reddy and it's Directors viz. A-2 Sathi Gopala Krishna Reddy, A-3 Smt. Sathi Surya Kumari, A-

4 Shri Sathi Siva Sathyanarayana Reddy, A-5 V.V.S.T. Mallikarjuna Rao, A-6 Javvadhi Mohana Rao & A-7 Smt. Sabbella Sathiyamma, A-8 M/s Hema Paper Machinery India Pvt Limited, A-9 Shri Nandam Veera Venkata Subrahmanyam, A-10 Dev Anand Deva cheated SIDBI Visakhapatnam Branch fraudulently and dishonestly and induced the Bank to deliver Rs.175 lakhs in favour of A-1 M/s SAPPL which the Bank would not have delivered if it was not so deceived.

Sec.13(2) r/w 13(1)(d) of P.C Act 1988 That during the period from 2006 to 2008, A-10 Deva Anand Deva, DGM, SIDBI, Visakhapatnam being Public W.P.No.5277 of 2013

Servant had abused/misused his official position as Public Servant in the matter of disbursement of Term Loan amount of Rs.175 lakhs in favour of A-1 M/s SAPPL thereby causing pecuniary advantage to the A1 Company and corresponding wrongful loss to SIDBI Visakhapatnam Branch to the tune of Rs.175 lakhs.

11. From a literal reading of the above charges in the disciplinary

proceedings as well as in the CBI case, it is noticed that the basic

allegation against the petitioner in both the proceedings is the same, i.e.,

that the petitioner has given an incorrect visit report and because of the

action of the petitioner in allowing the first disbursement of Rs.75 lakhs,

without following due procedures, it has resulted in pecuniary loss to the

bank. It is also noticed that the witnesses examined by the disciplinary

authority as well as the CBI Court are also the same. In the Disciplinary

Proceedings, the Presenting Officer's witnesses are K.R. Satyanarayana,

P.W.1 and Shri K.S.Sundaram, P.W.2 and defence witnesses were

S.R.P. Sinha D.W.1 and M. Ramesh D.W.2. They (D.W.1 and D.W.2 in

disciplinary proceedings) are prosecution witnesses P.W.2 and P.W.16 W.P.No.5277 of 2013

respectively. Similarly, the documents perused by both the authorities

are also same. In the disciplinary proceedings, around 16 documents

were submitted by the Presenting Officer and around 31 documents

were submitted by the charged officer, i.e., the petitioner herein. In the

CBI case, around 92 documents were submitted by the prosecution,

while 9 documents were submitted by the petitioner herein. Therefore,

all the documents considered in the disciplinary proceedings more or

less formed part of the documents considered during the CBI Court

proceedings as well. In these circumstances, the findings of the CBI

Court on the very same evidence, which has been produced before the

disciplinary authority, would assume importance. The CBI Court has

acquitted the petitioner by observing as under:

"58. At this juncture, if we come to 10th accused, a close scrutiny of oral and documentary evidence led by prosecution, more particularly from the evidence of P.W.13, 16 and 17, it is crystal clear that there is no illegality on the part of 10th accused to connect him with the charges framed against him in the present case. I have no hesitation to say that prosecution has failed to establish its case against 10th accused by placing any positive or cogent evidence.

To prove its case against 10th accused, it was required on the part of prosecution to show:

W.P.No.5277 of 2013

1) That pecuniary advantage had been obtained by 10th accused.

2) That such pecuniary advantage was obtained by 10th accused on account of abuse of his position.

But, neither of the aforesaid two ingredients have been established. An attempt has been made by the prosecution to a large extent to show that 10th accused has not obtained credit opinion at the time of first disbursement of loan amount, maker and checker policy is not followed and that as dealing officer 10th accused has failed to perform his duties as contemplated under banking rules and regulations. But, it has not been shown by the prosecution beyond all reasonable doubt that in dealing with loan file 10th accused had acted with any dishonest intention.

Now, a look at relevant oral and documentary evidence:

PW.4 is Architect and Government Approved Registered Valuer for SIDBI since 2002. Even as per his chief examination he is no way concerned with the ownership of property and his report contains Government value and market value and other particulars. From the evidence of PW.4, it is clear that he did not express any doubt to proceed with the loan file by 10th accused.

As per chief examination of PW.17, "at the pressure of 10th accused, he did the acts as mentioned in his chief examination." Indeed, PW.17 was transferred from SIDBI, Visakhapatnam branch to Panagi branch, Gova long before the loan was disbursed. In such a case, if really any pressure was given on him by 10th accused, he is supposed to bring the said fact to the notice of his higher authorities. Further, PW.17 in unequivocal terms has admitted from W.P.No.5277 of 2013

his cross examination that he never given any written complaint against 10th accused.

It is further contention of prosecution that 1st disbursement of Rs.75 lakh was made before getting the credit reports from other banks. The said contention does not hold water since the record at hand discloses that SIDBI, Visakhapatnam branch has sent letters dated 14.12.2007 duly signed by 10th accused asking credit opinions from other banks and it took place four months prior to first disbursement. Further, the said banks have given satisfactory credit opinions by referring the date of letters addressed by 10th accused. We cannot forget that the audit of branch was done in the first week of May 2018 i.e. after first disbursement of Rs.75 lakh was made; but, the audit team has not made any adverse remarks on the part of 10th accused.

In the present case, the acts and deeds done by 10th accused are interlinked with the acts and deeds done by PWs.3, PW.16 and PW.17, and the said acts are inseparable. Therefore, we cannot throw entire burden on 10th accused by simply saying that PWs.3, 16 and 17 were pressurized by 10th accused, with an evil intention. No such criminal intention on the part of 10th accused can be gathered from the material available on record. PW.3 did not speak from her evidence with regard to her alleged adverse remarks in her visit report, except stating that her visit report was concealed by 10th accused. As per cross examination of PW.3 made on behalf of 10th accused, she had given a written complaint about the irregularities of 10th accused to Head Office, Lucknow. But, the said written complaint did not see the light of day so far.

59. It was not even the case set up by prosecution that 10th accused had taken money or other thing from some person and had W.P.No.5277 of 2013

obtained any pecuniary advantage thereby. It was the obligation of the prosecution to satisfy the aforesaid mandatory ingredients which could implicate the 10th accused under the provisions of Section 13(1)(d) (2) of P.C Act. The attempt of prosecution was to bring the case within the fold of clause(2) alleging that 10th accused misused his official position in releasing the loan amount, utterly fails as it is not proved and not even iota of evidence has led as to what kind of pecuniary advantage was obtained by accused in discharging his duties.

60. I would agreed with the defence of 10th accused that if the original report and first disbursement note were not available on record or if they have the signature of only 10th accused, then the auditors would have made a serious observation in their audit report to that effect, as it is in violation of "maker and checker" concept of the bank. It may be pointed out herein that a system generated payment voucher marked as Ex.D8 clearly indicates that PW.16 was maker and 10th accused was checker.

61. It is also clear from the evidence on record that the first disbursement of Rs.75 lakh was made by way of cheque for Rs.50 lakh in favour of 8th accused (machinery supplier) and a cheque for Rs.25 lakh in favour of 1st accused company for credit of the no lien account of the company. The cheques were directly issued to the machinery supplier and the second cheque was sent to the bank, with covering letters. So, the disbursement was made as per the banking rules and regulations.

62. Ex.P15 is second disbursement note put up by PW.3. On material points it reads with regard to recommendation portion to the effect that "in view of the fore mentioned facts and request of the company for effecting disbursement to meet the immediate W.P.No.5277 of 2013

requirement of the project which is in advance stage of completion, approval for disbursement of Rs.100 lakh may be accorded and the disbursement is to be effected to the no lien account of the unit maintained with IDBI, Dabagardens, Visakhapatnam."

63. Ex.P16 is third disbursement note put up by PW.16. It also unfolds on material points to the result that "in view of the fore mentioned facts and request of the company for effecting disbursement to meet the immediate requirement of the project which is in advance stages of completion, approval for disbursement of Rs.50 lakh may be accorded and the disbursement is to be effected to the no lien account of the unit maintained with IDBI, Dabagardens, Visakhapatnam.

64. PW.3, 16 and 17 being public servants and getting salary from Government exchequer are not permitted under banking rules and regulations to say that at the pressure of 10th accused they did not perform their legitimate duties. It is nothing but to escape from their lawful duties without any proper excuse. There is no clarification from their evidence with regard to alleged pressure said to have been given by 10th accused against them. It is nothing but a ruse story without any basis, whatsoever. So, they are throwing blame on 10th accused only to cover up their laches. In this case 10th accused was already demoted from Deputy General Manager to Assistant General Manager post on a departmental enquiry. In my view the irregularities pointed out by prosecution against 10th accused do not amount to any illegalities in a way to attract criminal liability.

Therefore, case against 10th accused is not proved.

65. Hence, points 2 to 8 are answered accordingly.

W.P.No.5277 of 2013

66. POINT NO.9:

Having considered all the materials available on record, I am of the considered view that the prosecution has proved its case against accused 1 to 7 only for the charges framed against them, beyond a reasonable doubt and by placing positive and cogent evidence. But, the prosecution has miserably failed to prove its case against accused 8 to 10 by placing any convincing and proper evidence. Thus, accused 8 to 10 are entitled to get a benefit of doubt under law. Accordingly, 1st accused is convicted under section 248(2) of Cr.P.C. for the offences punishable under sections 120-B, 420, 468 and 468 r/w 471 of IPC. 2nd accused is convicted under section 248(2) of Cr.P.C. for the offences punishable under sections 120-B, 420, 467 and 468 of IPC. Accused 3 to 7 are convicted under section 248(2) of Cr.P.C. for the offences punishable under sections 120-B, 420 and 468 of IPC. Accused 8 and 9 are acquitted under Section 248(1) of Cr.P.C for the offences punishable under sections 120-B and 420 of IPC. 10th accused is acquitted under section 248(1) of Cr.P.C for the offences punishable under sections 120-B and 420 of IPC and under section 13(2) r/w 13(1)(d) of Prevention of Corruption Act."

12. In the disciplinary proceedings, the charge is of breach of

Regulation 29 read with Regulation 46 of the Bank Regulations. These

Regulations would get attracted only if the charges against the employee

working against the interest of the bank are proved. The charges of

abuse of power and criminal conspiracy to gain for himself are clearly

not proved before the CBI Court resulting in acquittal of the petitioner.

W.P.No.5277 of 2013

The effect of acquittal by the CBI Court on the similar charges in the

disciplinary proceedings is therefore to be seen in view of the judgments

of the Hon'ble Supreme Court which are quoted by both the petitioner

as well as the respondent bank.

13. The learned counsel for the petitioner has placed reliance upon

the judgments referred supra as 1 to 4.

14. The learned counsel for the respondent bank has relied upon the

following judgments in support of the contention that the acquittal of the

accused in a criminal case does not debar the employer from proceeding

in exercise of disciplinary jurisdiction.

(1) State of Karnataka and another Vs. Umesh5.

(2) State of Karnataka and another Vs. N. Gangaraj6.

(3) Shashi Bhushan Prasad Vs. Inspector General, Central Industrial Security Force and others7.

(4) Management of Bharat Heavy Electricals Limited Vs. M. Mani8.

(5) Baljinder Pal Kaur Vs. State of Punjab and others9.

2022 SCC OnLine SC 345

(2020) 3 SCC 423

(2019) 7 SCC 797

(2018) 1 SCC 285

(2016) 1 SCC 671 W.P.No.5277 of 2013

(6) General Manager (Operations) State Bank of India and another Vs. R. Periyasamy10.

(7) Divisional Controller, Karnataka State Board Transport Corporation Vs. M.G.Vittal Rao11.

(8) Samar Bahadur Singh Vs. State of Uttar Pradesh and others12.

(9) Govind Das Vs. State of Bihar and others13.

15. After going through all the judgments, particularly the latest

judgment of the Hon'ble Supreme Court in the case of State of

Karnataka and another Vs. Umesh (5 supra), it is seen that the

Hon'ble Supreme Court has held as under:

"21. In the exercise of judicial review, the Court does not act as an appellate forum over the findings of the disciplinary authority. The Court does not re-appreciate the evidence on the basis of which the finding of misconduct has been arrived at in the course of a disciplinary enquiry. The Court in the exercise of judicial review must restrict its review to determine whether: (i) the rules of natural justice have been complied with; (ii) the finding of misconduct is based on some evidence; (iii) the statutory rules governing the conduct of the disciplinary enquiry have been observed; and (iv) whether the findings of the disciplinary authority suffer from perversity; and (vi)

(2015) 3 SCC 101

(2012) 1 SCC 442

(2011) 9 SCC 94

(1997) 11 SCC 361 W.P.No.5277 of 2013

the penalty is disproportionate to the proven misconduct. However, none of the above tests for attracting the interference of the High Court were attracted in the present case. The Karnataka Administrative Tribunal having exercised the power of judicial review found no reason to interfere with the award of punishment of compulsory retirement. The Division Bench of the High Court exceeded its jurisdiction under Article 226 and trenched upon a domain which falls within the disciplinary jurisdiction of the employer. The enquiry was conducted in accordance with the principles of natural justice. The findings of the inquiry officer and the disciplinary authority are sustainable with reference to the evidence which was adduced during the enquiry. The acquittal of the respondent in the course of the criminal trial did not impinge upon the authority of the disciplinary authority or the finding of misconduct in the disciplinary proceeding."

This principle is culled out after going through various judgments of the

Hon'ble Supreme Court prior thereto.

16. In the case of State of Karnataka and another Vs. N. Gangaraj

(6 supra), the Hon'ble Supreme Court has reiterated that power of

judicial review is not an appeal from a decision but a review of the

manner in which the decision is made.

17. In the case of Shashi Bhushan Prasad Vs. Inspector General,

Central Industrial Security Force and others (7 supra), a Full Bench

of the Hon'ble Supreme Court has held that the charge in departmental W.P.No.5277 of 2013

enquiry and charge in criminal case were indubitably different, based on

different allegations and set of evidence and hence, benefit of acquittal

in judicial proceedings on plea of having nexus with disciplinary inquiry

is unavailable to the petitioner therein. It was further held that in the

absence of any procedural error or violation of principles of natural

justice, it is not open for Courts to interfere in disciplinary proceedings

under its limited scope of review under Articles 226 and 227 of the

Constitution of India.

18. In the case of Management of Bharat Heavy Electricals

Limited Vs. M. Mani (8 supra), the Hon'ble Supreme Court held that

where the Labour Court has found the departmental enquiry to be just

and proper, it could not have set aside the same on the basis of criminal

proceeding, but the only issue that survived for consideration was that

the punishment of dismissal was disproportionate to the gravity of

offence.

19. In the case of Baljinder Pal Kaur Vs. State of Punjab and

others (9 supra), it was held that where the acquittal in a criminal case is

not honourable, but is on account of the witnesses turning hostile, no

interference in the departmental enquiry is called for.

W.P.No.5277 of 2013

20. In the case of General Manager (Operations) State Bank of

India and another Vs. R. Periyasamy (10 supra), the principle for

interference under a judicial review has been reiterated. It has been held

that nature, standard and burden of proof in a departmental enquiry are

on preponderance of probabilities whereas, the standard of proof in a

criminal case is proof beyond reasonable doubt and therefore, the

departmental proceedings can proceed even though a person is acquitted

when acquittal is other than honourable because very often criminal

cases end in acquittal for want of proof beyond reasonable doubt.

21. In the case of Divisional Controller, Karnataka State Board

Transport Corporation Vs. M.G.Vittal Rao (11 supra), it was held

that even if a person stands acquitted by a Criminal Court, domestic

enquiry can be held, since standard of proof required in a departmental

enquiry and that in a criminal case are different and that the facts,

charges and nature of evidence, etc., involved in an individual case

would determine as to whether decision of acquittal would have any

bearing on the findings recorded in the domestic enquiry.

W.P.No.5277 of 2013

22. In the case of Samar Bahadur Singh Vs. State of Uttar

Pradesh and others (12 supra), it was held that acquittal in criminal

case has no bearing or relevance to departmental proceedings as

standard of proof in both cases is totally different.

23. In the case of Govind Das Vs. State of Bihar and others (13

supra), the same principle has been set out as in the case of Samar

Bahadur Singh Vs. State of Uttar Pradesh and others (12 supra).

24. In the decisions relied upon by the learned counsel for the

petitioner cited 1 to 4 supra, the Hon'ble Supreme Court, while

reiterating the principles laid down in the above judgments which have

been quoted by the learned counsel for the petitioner, has held that where

the charges in the disciplinary proceedings and also that of criminal

proceedings are similar and the witnesses examined and the evidence

produced are also similar and the acquittal in a criminal case is

honourable acquittal, then it would be unjust and unfair to allow the

finding recorded in the departmental enquiry to stand. The observations

in the case of S. Bhaskar Reddy and another Vs. Superintendent of

Police and another (1 supra) are to this effect.

W.P.No.5277 of 2013

25. In the case of G.M. Tank Vs. State of Gujarat and another (2

supra), the Hon'ble Supreme Court has explained the meaning of

criminal Court honourably acquitting the employee and held that where

the findings to the contrary are recorded in the departmental enquiry, it

would be unfair and oppressive to allow the dismissal order to stand.

This judgment of the Hon'ble Supreme Court was followed by a

Division Bench of the A.P. High Court in the case of Managing

Director, State Bank of Hyderabad, Head Office, Hyderabad and

another Vs. P. Kata Rao (3 supra), wherein it was held that if the

departmental and criminal proceedings are founded on the same set of

allegations and the evidence produced during the two proceedings is

common, then in such a case, honourable acquittal in the criminal case

will definitely have impact on the result of the disciplinary action.

26. From all the above judgments referred to by both the learned

counsel, the common principle that emerges is that under Articles 226

and 227 of the Constitution of India, this Court cannot re-appreciate the

evidence on the basis of which the finding of misconduct has been

arrived at in the course of a disciplinary enquiry unless the points set out

in the judgment of State of Karnataka and another Vs. Umesh (5 W.P.No.5277 of 2013

supra) are satisfied. If it is found that the disciplinary proceedings by the

department and the criminal proceedings are on the same set of facts,

same evidence and witnesses, honourable acquittal in criminal

proceedings will have an impact on the disciplinary proceedings as well.

In the case before this Court, as already brought out in para-11 above,

the witnesses examined during the disciplinary proceedings are also the

witnesses of the prosecution in the case before the CBI Court and the

charges and the evidence produced by both the disciplinary authority as

well as the CBI Court are similar. From the decision of the CBI Court,

which has been reproduced above, it is not the case of the prosecution

witnesses turning hostile, but it is seen that it was closely contested case

and the CBI Court has given a finding that the petitioner has not acted

unjustly and that he has not violated any of the banking regulations and

the CBI Court has also brought out that there were no objections from

the audit reports with regard to the Note put up by the petitioner for

disbursement of the first instalment of Rs.75.00 lakhs by the petitioner

and also that the other banks have not commented negatively about

satisfactory dealing with the loanee. It was indeed in such circumstances

that the petitioner was honourably acquitted from the criminal case

launched against him by the bank with the CBI. It is also to be noted W.P.No.5277 of 2013

that the bank has not appealed against the order of the CBI Court. The

bank has also not taken any action against the officers for the 2nd and 3rd

disbursements. Further, it is also not denied that the bank has not

incurred any pecuniary loss as alleged by them, as admittedly, the loanee

has repaid the loan as per the One Time Settlement Agreement entered

by them with the bank. In the absence of any pecuniary loss, the order

dt.10.10.2012 passed by the disciplinary authority seeking to recover the

pecuniary loss from the pensionary and other terminal benefits of the

petitioner is not sustainable.

27. The petitioner has attained the age of superannuation on

30.06.2018. The petitioner was acquitted from the criminal case only in

2019 vide CBI Court order dt.17.05.2019. Therefore, the petitioner

cannot be reinstated into service. However, this Court deems it fit and

proper to direct the respondent bank to treat the period from the date of

compulsory retirement, i.e., from 02.09.2012 till the date of his

retirement on attaining the age of superannuation as notional service

without 50% back wages and such notional service shall be counted for

the purposes of continuity of service and retirement benefits to the

petitioner. The gratuity and other retirement benefits shall be paid to the W.P.No.5277 of 2013

petitioner with interest at the rate of 6% per annum from the date of

superannuation till the date of payment.

28. The Writ Petition is accordingly partly allowed. No order as to

costs.

29. Pending miscellaneous petitions, if any, in this Writ Petition shall

stand closed.

___________________________ JUSTICE P. MADHAVI DEVI

Date: 14.07.2022 Svv