HIGH COURT OF DELHI AT NEW DELHI
Subject : Service Matter : Dismissal
WP(C) No. 4417/1999
RESERVED ON: 20-04-2004
DATE OF DECISION: 05-07-2004
Sh.S.D. Gupta ......... Petitioner
through: Mr.Keshav Dayal, Sr.Advocate
with Mr.R.K. Varshney, Advocate.
Punjab National Bank & Others ........ Respondent
through: Mr.Raj Birbal, Sr.Advocate with
Mr.R.S. Mathur and Ms.Raavi Birbal, Advocate.
PRADEEP NANDRAJOG, J.
1. Petitioner seeks quashing of the charge sheet dated 19.7.1995, the enquiry report dated 24.6.1996, order of the disciplinary authority dated 22.1.1998 imposing the penalty of dismissal from service which shall be a disqualification from future service and order of the Appellate Authority dated 9.12.1998 upholding the order of penalty imposed by the disciplinary authority. Petitioner also challenges the charge-sheet dated 20.7.1995 and the enquiry report dated 1.2.1997. Petitioner though laid a challenge to the charge- sheet dated 4.11.1994, enquiry report dated 10.7.1995 and the order of the disciplinary authority dated 5.9.1995 in the writ petition, did not press the same during argument. Arguments were therefore restricted to the charge-sheet dated 19.7.1995, enquiry report pertaining to the said charge sheet and the penalty imposed thereunder. Challenge to the charge sheet dated 20.7.1995 was restricted only to one ground, namely, delay in issuance of the charge sheet. No arguments were advanced in respect of the enquiry report dated 1.2.1997. Counsel for the petitioner stated that challenge to the enquiry report dated 1.2.1997 was given up save and accept that the charge sheet dated 20.7.1995 was being challenged on the ground of delay in issuing the charge sheet.
2. Petitioner was appointed in the clerical cadre under Punjab National Bank on 25.3.1958. He earned various promotions. On 25.6.1983 petitioner was promoted as an officer in scale III. On 25.8.1989 he was promoted as Officer Scale IV. As per the petitioner, he was posted in troublesome, critical, stagnant and loss making branch of the bank at Rajouri Garden, New Delhi on his being promoted in scale IV. He was posted as Chief Manager. Thereafter, petitioner was posted as Chief Inspector (Touring) on 1.2.1992. Said job required the petitioner to conduct inspections and investigations pertaining to complaints qua the working of certain branches of the bank. As per the petitioner he had an unblemished record.
3. Petitioner states that he was to attain the age of 60 years in the month of July 1995 and was to superannuate on 31.7.1995. He was expecting to receive a farewell and his terminal benefits. Petitioner was expecting to lead a happy retired life. Alas, he was struck with a bolt of lightening. Two charge-sheets dated 19.7.1995 and 20.7.1995 were served upon the petitioner.
4. Charge-sheet dated 19.7.1995 lists 4 charges against the petitioner. The charges are:-
He abused his official position and extended undue favour to various borrowers and sanctioned/enhanced credit facilities without conducting pre-sanction appraisal.
He sanctioned/enhanced limits in various borrowal accounts and disbursed/released the amount and deliberately ignored to ensure proper end use of bank's funds which were withdrawn fictitiously and mis-utilised.
He failed to observe post-sanction safeguards thereby jeopardised bank's interest.
He failed to have control over the staff working under him, particular Manager (Loans) who exercised his powers indiscreetly to unduly accommodate the borrowers while sanctioning credit facilities.
He has thus failed to take all possible steps to ensure and protect the interests of the bank and discharge his duties with utmost devotion and diligence."
5. Charge-sheet dated 20.7.1995 lists one charge against the petitioner. The same reads as under:-
He failed to conduct pre-sanction appraisal in respect of creation of Equitable Mortgage of immovable properties to secure collaterally various credit facilities granted to borrowers which resulted in impairment of the right of the bank in enforcing the mortgage and has jeopardised Bank's interest.
He thus did not discharge his duties with utmost devotion and diligence."
6. Since petitioner was due to superannuate on 31.7.1995 and the disciplinary proceedings could not be completed before petitioner attained the age of superannuation an order was passed under Regulation 20(3) (III) of the PNB (Officers) Service Regulations, 1978 by the disciplinary authority to continue the disciplinary proceedings against the petitioner. Order dated 22.7.1995 reads as under :-
"WHEREAS Shri S.D.Gupta, Chief Inspector, Inspection & Control Division, 5 Sansad Marg, New Delhi has been served with the charge sheets dated 4.11.94 read with corrigendum dated 31.5.95, 19.7.95 and 20.7.95 under the Punjab National Bank Officer Employees (D&A) Regulations 1977.
AND WHEREAS Shri Gupta is due to attain age of superannuation on 31.7.95 and disciplinary proceedings are likely to continue beyond the date of superannuation of Shri Gupta.
NOW, THEREFORE in pursuance of the sanction accorded by the Chairman & Managing Director under Regulation 20.3 (iii) of Punjab National Bank (Officers) Service Regulations, 1979, it has been decided that Shri Gupta will cease to be in service on the date of superannuation but the disciplinary proceedings will continue as if he was in service until the proceedings are concluded and final order is passed in respect thereof. Shri Gupta will not receive any pay and/or allowance after the date of superannuation. He will also not be entitled for the payment of retirement benefits till the proceedings are completed and final order is passed thereon except his own contribution to CPF."
7. Statement of imputation in support of the Articles of Charge I under the charge-sheet dated 19.7.1995 was that the petitioner extended undue favour and sanctioned/enhanced credit facilities without conducting pre-sanction appraisal in respect of 4 parties:-
(i) M/s Progressive Colours Pvt. Ltd.
(ii) M/s Akshita Electronics Industries
(iii) M/s R.S.Philtronics Pvt. Ltd.
(iv) M/s Fairdeal Packers.
8. In respect of the second limb of Article of Charge No.I pertaining to sanction of credit facilities without compilation of confidential reports statement of imputation was that confidential report of Shri J.K.Gambhir and Shri Satish Gambhir guarantors in the account of M/s. R.S.Philtronics Pvt. Ltd. were not compiled properly. Similarly confidential report of Shri Mohan Lal, Proprietor Of the Firm M/s Prince Enterprises was not compiled properly. Similar allegations pertained to non-compilation of confidential reports in a proper manner in respect of Shri Sanjay Kumar Proprietor of the firms M/s Akshita Electronics Ltd.
9. Pertaining to Article of Charge No.II, statement of imputation related to sanction/enhanced limits pertaining to the firms M/s Akshita Electronics Industries, M/s Prince Enterprises, M/s R.S.Philtronics Pvt. Ltd., M/s Atma Plastics, M/s Daniel Systems, M/s Prabhu Darshan Industries and M/s Kansara Trading Corporation.
10. Indictment was that immediately on sanction/ enhancement of limits, payments were released by cash orders from the accounts of these firms. Operators of these accounts siphoned away the funds. Petitioner failed to ensure proper end use of the funds made available by the bank. Machinery which was to be purchased, for which the limits were sanctioned/enhanced were never purchased. Petitioner did not take necessary precaution to see that the funds were used for the purpose for which they were sanctioned. In all the cases payments were released under cash orders.
11. Pertaining to Article of Charge No.III, statement of imputation was that pertaining to the account of M/s Indimpex, to secure the loan, an equitable mortgage was created by pledge of property standing in the name of Shri Hans Kumar Channa. Another equitably mortgage of a property belonging to one Smt. Krishnawati was obtained. Property was treated as free from encumbrances on the basis of mere affidavits of the parties without carrying out a search, whether at all, properties were free from encumbrances. Pertaining to equitable mortgage for the credit facilities obtained by M/s Akshita Electronics Industries it was stated that title deeds of the property of Shri D.C.Gupta guarantor were lying with Vijaya Bank, Krishna Park till 28.6.1991 but petitioner had recorded creation of equitable mortgage by deposit of the deeds on 4.3.1991. Another instance listed was the fraudulent creation of equitable mortgage pertaining to the account of M/s Prince Enterprises created on the property of a guarantor, Shri Mukesh Kumar who had denied his signatures as guarantor. Original of the mortgage deed was not available. Pertaining to the account of M/s Daniel Systems imputation records that mortgage was created even prior to the date of sanction of the credit facility. For the account of M/s Bharat Adhesives it was stated that the collateral security by way of deposit of title deeds was shown as secured to the bank on 15.12.1991 whereas the documents were actually received on 12.1.1991. When the documents were received, it was noted that this very property was offered as collateral security by another borrower M/s Sariman Chemicals Corporation. Pertaining to the equitable mortgage created on 12.1.1991 by the firm M/s Bharat Adhesive it was stated that legal formalities for creation of the equitable mortgage were not observed. Another allegation listed pertained to the collateral security for the account of M/s A.P.Enterprises. Equitable mortgage was created on the basis of a sale deed of a property in the name of Shri Sri Ram. This was released and another property in the name of Smt. Gango and Smt. Murti Devi was replaced as security by way of an equitable mortgage. The title documents of these two ladies were fictitious. The statement of imputation further listed not ensuring proper maintenance of stock register and inventory by three firms, M/s Oberoi Packaging, M/s R.S.Philtronics Pvt.Ltd. and M/s Gaurav Packers. Statement of imputation pertaining to Article of Charge No.III further listed instances of the petitioner allowing waivement of legal action in 1983 which waivement was stated to be beyond the powers of the petitioner.
12. Pertaining to Article of Charge No.IV, statement of imputation related to failure to maintain control over the staff working under the petitioner and in particular, the Manager (Loan) Shri M.L.Gupta. Facts stated in the statement of imputation were that pre-sanction appraisals were not properly conducted by Shri M.L.Gupta and the petitioner did not observe or take note of the same. 4 instances pertaining to the firms M/s A.P.Enterprises, M/s Daniel Systems, M/s Akshita Enterprises and M/s Trishul Industries were specifically listed.
13. The statement of imputation would reveal that the various action of omission and commission pertained to the years 1990 and 1991.
14. Statement of imputation pertaining to the second charge-sheet dated 20.7.1995 show that the same related 11 firms and pertained to the period June, 1984 to March, 1988 when the petitioner was functioning as Senior Manager at the branch office General Ganj, Kanpur. Facts showing failure to conduct pre-sanction appraisal in respect of creation of equitable mortgage while according sanction for grant of sanction limits were listed. The mortgages were found defective, thereby jeopardising the possibility of recovery of the outstanding amounts from said 11 customers. Statement of imputation would reveal that approximately Rs.42 lacs had become a doubtful recovery as the collateral securities by way of mortgages for these 11 parties were found to be not created as per law.
15. Petitioner submitted reply to both the charge-sheets. I may only note the reply pertaining to the charge-sheet dated 19.7.1995 because challenge to the charge-sheet dated 20.7.1995, as noted above, was restricted only to one ground, namely, delay in issuing the charge-sheet. Merits of the second charge-sheet was not gone into by counsel for the petitioner during arguments.
16. While replying to the charge-sheet dated 19.7.1995 under cover of letter dated 25.8.1995, petitioner stated that the various acts do not constitute a misconduct, at best, they were errors of judgments which could not be enumerated as misconduct. After so stating, petitioner questioned the very initiation of the enquiry against him by stating that they pertained to acts of omission and commission done or not done by the petitioner in the year 1990 and 1991. Disciplinary proceedings were invoked after a lapse of 4 to 5 years. Delay was fatal and therefore the enquiry was vitiated. Petitioner relied upon administrative instructions of the bank contained in circular No.1016 dated 28.7.1984 and circular No.47 dated 13.8.1987 to the effect that for procedural lapses, no disciplinary action could be initiated after expiry of 6 months. Relying upon the said circulars, petitioner stated that successor officer had to report procedural lapses in the charge taking report within 6 months, failing which it was the responsibility of the successor.
17. Pertaining to the IVth Articles of Charge, petitioner stated that under Article of Charge No.I, he was charged with the offence of extending undue favours to various borrowers by sanctioning or enhancing credit facilities without conducting pre sanction appraisal. He stated that under Article of Charge No.IV same charges have been repeated pertaining to pre-sanction appraisal norms not being followed by Manager (Loan) and the petitioner failing to exercise control over the Manager (Loan). Petitioner stated that Article of Charge No.IV was therefore a part of Article of Charge No.I. Similarly in respect of Article of Charge No.II and Article of Charge No.III petitioner stated that the two represented a different facet of the same transaction. Petitioner stated that the Articles of Charge were inextracably inter-linked with each other and therefore all of them required to be clubbed. Thereafter, petitioner proceeded to give his response by realtering the allegations against him. Perusal of the reply would show that the petitioner listed out the allegations against him pertaining to the accounts of different parties and gave his justification thereto under various paragraphs having sub heads A, B, C and onwards and I, II, III and onwards.
18. Reply not being found satisfactory, disciplinary authority appointed an enquiry officer.
19. Disciplinary enquiry against the petitioner had to be conducted as per the PNB Officer Employees (Discipline and Appeal) Regulations,1977. Procedure to be followed was as per Regulation 6 thereof. In compliance with sub Regulation (3) of Regulation 6, charge-sheet was served (as noted above) requiring the petitioner to communicate, in writing, a written statement of his defence. On the same being received, the disciplinary authority under sub Regulation (4) of Regulation 6 appointed an enquiry officer. In terms of sub Regulation (5), the disciplinary authority, forwarded to the enquiry officer the Articles of Charge and statement of imputations, written statement of defence, list of documents and list of witnesses by whom the charges as proposed were to be substantiated. Enquiry officer notified a date for the petitioner to appear before the enquiry officer. Right to be defended by a defence assistant was afforded to the petitioner. Enquiry proceeded.
20. Counsel for the petitioner did not dispute that before the enquiry proceeded, at the preliminary hearing, the 60 documents which were relied upon by the Management along with the list of witnesses containing the name of the witnesses were supplied to the petitioner. Petitioner verified the said 60 documents which were thereafter marked as M-1 to M-60.
21. Petitioner had a right to requisition the relevant documents in defence. Petitioner submitted a list of 162 documents to be summoned from the bank in defence. It is the admitted case of the parties that the enquiry officer held that the said 162 documents were relevant and passed an order for their production. It is further the admitted case of the parties that only 144 documents were produced by the bank. 18 documents could not be traced and a certificate to that effect was filed by the custodian.
22. Enquiry proceeded. The bank led evidence. Full opportunity of cross-examination was granted to the petitioner. Defence assistant appeared and cross-examined the witnesses. The petitioner did not lead any defence evidence, not even his own.
23. Enquiry report was submitted by the enquiry officer on 24.6.1999. The report of the enquiry officer would reveal that he, while submitting the report analysed the evidence and returned his finding in respect of the acts of omission and commission alleged against the petitioner under headings, not as per the charge-sheet served, but as per the re-altered headings given by the petitioner while replying to the charge-sheet.
24. While submitting his report, enquiry officer held which of the re-listed allegations were proved, which were not proved and which were partially proved.
25. Gist of the findings of the enquiry officer are as under:-
a. Allegation pertaining to sanctioning credit facilities to M/s Progressive Colours Private Limited without conducting proper pre-sanction appraisal proved;
b. Allegation pertaining to the aforesaid party that credit facilities were sanctioned on the basis of unaudited balance-sheet, and as a result thereof outstandings of the party with the branch of the bank at NIT, Faridabad were ignored, were held to be proved.
c. Allegation pertaining to the same party that the petitioner acted on an undated loan application and got the date subsequently filled up was established as proved, the result being that the party obtained credit facilities from Faridabad during the pendency of the loan application with the branch headed by the petitioner.
d. Allegation pertaining to the said party that the company was authorised to raise a loan only upto 10 lakhs whereas petitioner sanctioned the loan aggregating to Rs.13.5 lakhs on the basis of a Resolution dated 9.5.1991 was held proved to the extent that the petitioner sanctioned the limit beyond the authorised limits of the company. Allegation that the petitioner acted on the basis of the Resolution dated 9.5.1991 was held not proved as it was held that the bank did not produce the Resolution in spite of it being called for by the petitioner. It may be noted that while recording the finding pertaining to this allegation, the enquiry officer has recorded:-
"In view of the above, on the basis of available records, the charge is partially proved to the extent that C.O. could not produce evidence showing that he sanctioned limit within the authorised limit of the company and charge for T-L and enhanced facilities was registered."
e. Allegations pertaining to M/s Akshita Electronics Industries that without ensuring proper appraisal credit facilities were extended, was held to be proved. It was held that the allegation that the petitioner acted under an undated loan application and subsequently ante-dated the same was held not proved.
Allegation pertaining to this party that facilities had been sanctioned under SSI Scheme acting under a certificate which was cancelled by the Directorate of Industries, was held as not proved.
Allegations pertaining to this party that credit facilities were released without any margin money available with the party were held to be proved to the limited extent that the party had no cash margin when the credit facility was extended. However, allegation that the credit rating of the individual had also to be taken into account while assessing the credit rating of the firm was held to be not proved.
Allegation pertaining to this party that it was availing credit facilities from Vijaya Bank who had recalled the loan amount and while sanctioning the credit facility, this was ignored by the petitioner, in that, petitioner by a little diligence could have avoided the same was held to be proved. (This allegation relates to the petitioner not ensuring proper appraisal).
f. Allegations pertaining to the firm M/s R.S. Philtronics Private Limited were held to be proved that proper appraisal was not done by the petitioner in respect of the documents submitted. Pertaining to the allegations that petitioner omitted to note that the Resolution by the Company did not specify the amount of loan to be raised as also the allegation that the documents submitted by the company did not bear the seal of the company, were held not proved.
Allegation that the petitioner ignored the actual location of the factory where the assets were located was held not proved.
g. Allegations pertaining to the firm M/s Fairdeal Packers pertaining to release of fresh credit facilities before getting the old account in P.A. category adjusted and closed as advised by the Zonal officer was held to be proved.
h. Allegations pertaining to the sanction of the credit facilities without compilation of Confidential Reports pertaining to the firms M/s R.S. Philtronics Private Limited, M/s Prince Enterprises, M/s Akshita Electronics Industries were held to be proved.
i. Allegations pertaining to lapses in the Confidential Reports pertaining to Sanjay Kumar, proprietor of the firm M/s Akshita Electronics Industries who also acted as Managing Director of M/s Sara Communications and Business Systems Private Limited was held to be proved to the extent that the petitioner failed to effectively supervise the working of the Manager (Loans).
26. Pertaining to the allegations that the petitioner had not ensured proper end use of the bank funds evidenced by the fact that payments were released under cash orders and it was not even got verified whether the machinery, purchase of which was the ostensible reason for the loan, it was held that the allegations pertaining to M/s Akshita Electronics Industries were proved, pertaining to M/s Prince Enterprises they stood proved, pertaining to M/s R.S. Philtronics Private Limited they stood proved, pertaining to M/s Atma Plastics, allegations were proved and pertaining to the firm Prabhu Darshan Industries, allegations were held as proved.
27. Pertaining to the allegation of creating equitable mortgage in a manner where either no equitable mortgage was created or loans were sanctioned prior to receipt of title deeds or the title deeds were forged and fictitious documents, it was held that pertaining to the firms M/s Indempex, M/s Akshita Electronics Industries, M/s Prince Enterprises, M/s Daniel Systems, M/s Bharat Adhesives and M/s A.P.Enterprises, allegations against the petitioner stood established. Allegations that the petitioner did not ensure periodic verification of securities was held established that the petitioner had not regularly verified most of the accounts of the borrowers. Allegation that the petitioner failed to keep the limitation alive was held established in respect of 3 accounts and not all which were subject matter of allegations.
28. Allegations against the petitioner that he failed to exercise control over the staff working under him and in particular the Manager (Loans) was held to be proved.
29. To put it in a graphic form, the re-altered articles of charge as per the reply of the petitioner to the 4 articles of charges, proved, partially proved or not proved are as under:-
CHARGE I (a) (A) (i) PROVED
I (a) (A) (ii) PROVED
I (a) (A) (iii) PROVED
I (a) (A) (iv) PARTIALLY PROVED
CHARGE I (a) (C) (i) PARTIALLY PROVED
I (a) (C) (ii) PROVED
I (a) (C) (iii) NOT PROVED
CHARGE I (a) (D) PARTIALLY PROVED
CHARGE I (b) (i) PROVED
I (b) (ii) PROVED
I (b) (iii) PARTIALLY PROVED
CHARGE II (A) PARTIALLY PROVED
II (B) PARTIALLY PROVED
II (C) PARTIALLY PROVED
II (D) PARTIALLY PROVED
II (E) PARTIALLY PROVED
II (F) PARTIALLY PROVED
II (G) NOT PROVED
CHARGE III (A) PARTIALLY PROVED
III (B) PARTIALLY PROVED
III (C) PARTIALLY PROVED
III (D) PARTIALLY PROVED
CHARGE IV PROVED
30. The disciplinary authority furnished to the petitioner a copy of the enquiry report for the petitioner's response thereto. Petitioner responded to the findings of the enquiry officer under cover of his letter dated 11.8.1996. Inter alia, while giving his response, petitioner stated in respect of charges I(a)(A)(i), I(a)(A)(ii) and I(a)(A)(iii) that the enquiry officer acted upon an inspection report which is not part of the proceedings. In respect of findings pertaining to the said charges, and the charge I(b)(iii), petitioner made a grievance that findings were returned on the ground that the petitioners had failed to dis-prove the same. Petitioner raised a grievance that a negative onus could not be placed upon him. After raising the said two technical objections, petitioner gave his response on merits.
31. It is to be noted that in the reply submitted by the petitioner to the enquiry report, no grievance has been raised pertaining to non-production of 18 documents requisitioned by the petitioner. Much less, is there a grievance that petitioner's defence was prejudiced.
32. Agreeing with the report of the enquiry officer and in view of the record of the enquiry, the disciplinary authority acting under Regulation 20(3)(iii) of the PNB (Officers) Service Regulations, 1979 imposed the penalty of "dismissal from bank service which shall be a dis-qualification for future employment" under the order dated 22.1.1998 which was communicated to the petitioner under cover of letter dated 23.1.1998.
33. Petitioner filed an appeal. In appeal, petitioner raised the grounds that a portion of the inspection report dated 28.11.1991 which was unexhibited was relied upon by the enquiry officer and 18 relevant documents which were held to be relevant and directed to be produced were not produced. Petitioner stated that this vitiated the enquiry report.
34. In appeal, petitioner raised another technical objection that he superannuated on 31.7.1995, his provisional pension had to be fixed. This provisional pension was in the nature of a subsistence allowance. Provisional pension not having been paid to him during the entire duration of enquiry, enquiry stood vitiated.
35. After listing out the aforesaid technical objections, petitioner dealt with the merits of the matter. The appellate authority dismissed the appeal vide order dated 9th December, 1998. Pertaining to the 3 technical objections raised by the petitioner, it was noted by the appellate authority that during evidence, the entire inspection report dated 28.11.1991 was proved. But since it was a bulky document, a copy of the relevant documents was placed on record. While preparing the written arguments, the Presenting Officer had appended a small portion of the said inspection report which was otherwise proved in its entirety but only portion was taken on record for sake of convenience, not to make the record bulky. It was held that it could not be equated with a case where an unproved document was taken on record, it was held that no prejudice was caused. It was further held by the appellate authority that ignoring said portion, there was other evidence on the basis of which that part of the enquiry report could be sustained.
36. In respect of the plea that 18 documents were not summoned, it was held that in view of the non-availability certificate given by the custodian, documents could not be brought on record. It was held that report of the enquiry officer is based on evidence and therefore, the enquiry report was not vitiated. The third plea pertaining to non-payment of provisional pension has not been dealt with by the appellate authority.
37. On merits, appellate authority did not agree with the submissions made by the petitioner and as a consequence thereof rejected the appeal.
38, Grievance of the petitioner in the writ petition may be summarised as under :
(a) The charge-sheet dated 19.,7.1995 pertains to events of 1991-92 and the charge-sheet dated 20.7.1995 pertains to events of 1984 to 1988, being belated, the two had to be quashed. Circular dated 28.7.1984 and No.47 dated 13.8.1987 were relied upon.
(b) Principles of natural justice have been violated by the enquiry officer and hence the enquiry report dated 24.6.1996 and orders passed thereon are liable to be quashed. Three instances of violation of principles of natural justice have been listed:
i) Petitioner had sought production of 162 documents. They were held to be relevant and the enquiry officer directed their production. Only 144 were produced by the bank. 18 were withheld. Therefore, petitioner was denied a fair opportunity of defending himself.
ii) Enquiry officer relied upon un-exhibited portions of an inspection report dated 28.11.1991. By relying upon an unproved document, not even brought on record of the enquiry officer, petitioner's right to challenge the document has been infringed.
iii) Photocopies of some letters were relied upon by the enquiry officer without original being produced and authors of these letters were not examined. MW-3 proved these letters and his evidence was hearsay.
(c) Enquiry report was based on surmises and conjectures.
(d) Copy of C.V.C. advise was not supplied to the petitioner and hence he was denied opportunity to respond to the same.
(e) Order of dismissal could not be passed as only penalty could be under P.N.B. (Employees) Pension Regulations,1995.
(f) Penalty under Pension Regulations could be imposed only if the misconduct was a grave misconduct. There is no finding that the misconduct was a grave misconduct.
(g) Since there was no charge that the petitioner had caused a pecuniary loss to the bank, gratuity had to be paid because only where there was an allegation which was proved that a bank employee had caused pecuniary loss, could the said sum be recovered from the gratuity.
(h) Petitioner was paid provisional pension after 15 months of his superannuation. It was akin to a suspended employee not being paid subsistence allowance during the pendency of the disciplinary proceedings. Therefore, the proceedings before the Enquiry Officer stood vitiated.
39. Before proceeding to analyse the case pleaded by the petitioner, I may note that pertaining to the third element of violation of principles of natural justice, namely, photocopies of some letters being relied upon by the enquiry officer without originals being produced and authors of the letters not being examined, though raised in the writ petition, during arguments no submissions were made. I may also note that in the written submissions filed, this issue has been raised. However, since during arguments it was not urged, counsel for the respondents did not respond to this and I would treat that the same was not urged at the hearing. Similarly, grievance that C.V.C. advise was not supplied to the petitioner, though raised in the writ petition, during arguments, no submissions were made and as a consequence, counsel for the respondent did not meet the same. I may also note that in the written submissions, this point has been stated. However, since it was not argued at the oral hearing, I would treat this point as not having been urged. In any case, in view of my finding, as would be evident hereunder that an order of dismissal could not be passed and the only penalty which could be inflicted was the one under the Pension Regulations,1995 and in view of my further direction of remand before the Disciplinary Authority, this issue becomes a non-issue as the petitioner can urge this issue before the Disciplinary Authority.
40. Delay in initiating an enquiry by issuing a charge-sheet, may in some cases cause prejudice to an employee. As time passes, memory fades and even documentary evidence may get lost. This causes prejudice to the evidence. An employee and that too of a bank, must show exemplary good conduct while in service. Every misconduct causes injury to the public. Public interest demands that an erring bank official should be punished for his misconduct. Public interest viz-a-viz interest of the individual has, therefore, to be balanced.
41. A misconduct seldom surfaces when committed. A public scandal may break out when some consequence of misconduct is felt. There would always be a hiatus between the time of misconduct and its surfacing. In a banking industry, this would be more true because misconduct normally surfaces when an account becomes sticky and action for recovery is initiated. It is at that stage that lapses and misconduct surfaces. Therefore, in cases pertaining to banks, delay has to be considered in light of the aforesaid. Further, banking business is governed by stipulated procedures and all evidence is documentary. This would be by and large true. Oral evidence constitutes a small fragment of evidence in an enquiry pertaining to misconduct in the banking business by a bank employee. Inherently, there is less possibility of the defence being prejudiced by passage of time in the disciplinary matters pertaining to banks.
42. The two enquiry reports pertaining to the charge-sheets dated 19.7.1995 and 20.7.1995 would reveal that the entire evidence lead is documentary evidence.
43. Charge-sheet dated 19.7.1995 pertains to the events of the years 1991-92. Charge-sheet dated 20.7.1995 pertains to the events of 1984 to 1988. The enquiry reports would reveal that though the acts complained of were committed by the petitioner much earlier, they surfaced when the accounts became sticky.
44. As a senior officer or the bank, if the petitioner wrote on the relevant files that all documentation is complete and purportedly documentation was shown to be complete, there was hardly any scope of detection of the illegality committed, save and except, where the accounts went sticky. Petitioner relied upon two circulars of the years 1984 and 1987, which provide that where an employee is transferred from a branch, his successor must within six months detect lapses and report to higher authorities, failing which responsibility would be that of the successor. Circulars further provide that where an employee has been transferred from a branch and a period of more than three years has elapsed, he may not be held responsible of the lapses at his previous place of posting.
45. The circulars are mere guidelines and cannot be enforced as a statutory right. They are for the guidance of the bank and require the successor-in-interest, while taking charge, to ensure that his predecessor-in-interest has handed over charge of the branch without any lapse committed by him. However, as noted by me above, in a banking industry a misdeamnour or a lapse would normally surface when an account has become sticky. I need not deal much on the two circulars relied upon by the petitioner because bank had thereafter issued circulars on 3.5.1990, 17.6.1990 and 20.6.1990. As per the said circulars, it was noted that in spite of the checks and control exercised at various levels, instances of deviations from the prescribed procedures and violations of guidelines were noted, rendering the individuals accountable for such omissions and commissions. It was further stipulated that instructions under the earlier circulars were intended to apply to situations of expiry of limitations etc. and in respect of liability of recovering advances and it was never intended to prescribe time limit in cases of serious misconduct.
46. Law on the subject as to when a Court should interdict disciplinary proceedings on the grounds of delay in issuing the charge-sheet may be noted.
47. In the decision reported as AIR 1990 SC 1308, State of M.P. Vs. Bani Singh, where there was a delay of 12 years in initiating departmental proceedings and no satisfactory explanation for the inordinate delay forthcoming on record, it was held that it would be unfit to permit the department to proceed at such a belated stage, charge-sheet was quashed. In the decision reported as 1994 (2) SCC 746, Registrar of Co-operative Societies, Madras Vs. F.X. Fernando, charge-sheet was served after a delay of about 5 years. Repelling the challenge to the charge-sheet on ground of delay being fatal, Supreme Court noted that Vigilance and Anti-Corruption Department took time to investigate and, therefore, it could not be said that the disciplinary authority slept over the matter. In the decision reported as 1995 (2) SCC 570, State of Punjab Vs. Chaman Lal Goyal , considering the issue as to what was the effect of delay vis-a-vis disciplinary proceedings, Supreme Court held:-
"Now remains the question of delay. There is undoubtedly a delay of five and a half years in serving the charges. The question is whether the said delay warranted the quashing of charges in this case. It is trite to say that such disciplinary proceeding must be conducted soon after the irregularities are committed or soon after discovering the irregularities. They cannot be initiated after lapse of considerable time. It would not be fair to the delinquent officer. Such delay also makes the task of proving the charges difficult and thus not also in the interest of administration of administration. Delayed initiation of proceedings is bound to give room for allegations of bias, male fides and misuse of power. If the delay is too long and is unexplained, the court may well interfere and quash the charges. But how long a delay is too long always depends upon the facts of the given case. Moreover, if such delay is likely to cause prejudice to the delinquent officer in defending himself, the enquiry has to be interdicted. Wherever such a plea is raised, the court has to weight the factors appearing for and against the said plea and take a decision on the totality of circumstances. In other words, the court has to indulge in a process of balancing."
Thereafter, in paragraph 12 of the judgment, it was concluded that:-
"Applying the balancing process, we are of the opinion that the quashing of charges and of the order appointing enquiry officer was not warranted in the facts and circumstances of the case. It is more appropriate and in the interest of justice as well as in the interest of administration that the enquiry ordered be allowed to be completed."
48. In the decision reported (1995) 3 SCC 134 Deputy Registrar, Co-operative Societies, Faizabad Vs. Sachindra Nath Pandey & Ors., the Hon'ble Supreme Court held:-
"On a perusal of charges, we find that the charges are very serious. We are, therefore, not inclined to close the matter only on the ground that about 16 years have elapsed since the date of commencement of disciplinary proceedings, more particularly when the appellant alone cannot be held responsible for this delay."
49. In the decision reported as (1995) Suppl. (1) SCC 180 Union of India Vs. Ashok Kacker, while reversing the order of the Central Administrative Tribunal quashing the inquiry proceedings, the Hon'ble Supreme Court observed that since the delinquent had not submitted his reply to the charge-sheet, it was not the stage at which the Tribunal ought to have entertained the petition for quashing the charge-sheet. The appropriate course for the delinquent to adopt was to file his reply to the charge-sheet and invite the decision of the disciplinary authority thereon.
50. In the decision reported as (1995) 6 SCC 749, B.C. Chaturvedi Vs. UOI and Others, in Para 11, the Hon'ble Supreme Court held as under:-
"The next question is whether the delay in initiating disciplinary proceeding is an unfair procedure depriving the livelihood of a public servant offending Article 14 of 21 of the Constitution. Each case depends upon its own facts. In a case of the type on hand, it is difficult to have evidence of disproportionate pecuniary resources or assets or property. The public servant, during his tenure, may not be known to be in possession of disproportionate assets or pecuniary resource. He may hold either himself or through somebody on his behalf, property or pecuniary resources. To connect the officer with the resources or assets is a tardy journey, as the government has to do a lot to collect necessary material in this regard. In normal circumstances, an investigation would be undertaken by the police under the Code of Criminal Procedure, 1973 to collect and collate the entire evidence establishing the essential links between the public servant and the property or pecuniary resources. Snap of any link may prove fatal to the whole exercise. Care and dexterity are necessary. Delay thereby necessarily entails. Therefore, delay by itself is not fatal in these type of cases. It is seen that the CBI had investigated and recommended that the evidence was not strong enough for successful prosecution of the appellant under Section 5(1)(e) of the Act. It had, however, recommended to take disciplinary action. No doubt, much time elapsed in taking necessary decision at different levels. So, the delay by itself cannot be regarded to have violated Article 14 or 21 of the Constitution."
51. In (1996) 3 SCC 157, Secretary To Government Prohibition & Excise Department Vs. L.Srinivasan, it was held:
"In the nature of the charge, it would take a long time to detect embezzlement and fabrication of false record which should be done in secrecy. In quashing the suspension and the charges on the ground of delay in initiation of the disciplinary proceedings, the Administrative Tribunal has committed grossest error in its exercise of the judicial review."
I may note that the charge related to offence of embezzlement and fabrication of false records. As noted in the judgment, this is done in secrecy and by its very nature, takes time to be detected. It was a case where detection took time. It was not a case of delay post detection.
52. In the judgment reported as (1996) 3 SCC 364, State Bank of Patiala Vs. S.K. Sharma, the Hon'ble Supreme Court held:-
"Justice means justice between both the parties. The interests of justice equally demand that the guilty should be punished and that technicalities and irregularities which do not occasion failure of justice are not allowed to defeat the ends of justice."
53. In the decision reported as (1997) 4 SCC 255 Secretary to Government Vs. K. Munniappan, dealing with a case where as a result of concerted and confabulated action on the part of the employees, an embezzlement of funds of the Government, to the tune of Rs.7.82 crores took place and the delinquent at the relevant time was functioning as the Divisional Accountant, the Hon'ble Supreme Court observed:-
"It is true that there is a time gap, but in a case involving embezzlement of public funds by several persons in a concerted way, a thread bare investigation is required to be undertaken by the investigating officer and, therefore, in the nature of the situation, it would be difficult to find fault with the authorities for not completing investigation expeditiously."
54. In (1998) 4 SCC 154 State of Andhra Pradesh Vs. N. Radhakishan in Para 19, the Hon'ble Supreme Court held as under:-
"It is not possible to lay down any predetermined principles applicable to all cases and in all situations where there is delay in concluding the disciplinary proceedings. Whether on that ground the disciplinary proceedings are to be determined each case has to be examined on the facts and circumstances in that case. The essence of the matter is that the court has to take into consideration all the relevant factors and to balance and weigh them to determine if it is in the interest of clean and honest administration that the disciplinary proceedings should be allowed to terminate after delay particularly when the delay is abnormal and there is no explanation for the delay. The delinquent employee has a right that disciplinary proceedings against him are concluded expeditiously and he is not made to undergo mental agony and also monetary loss when these are unnecessarily prolonged without any fault on his part in delaying the proceedings. In considering whether the delay has vitiated the disciplinary proceedings the court has to consider the nature of charge, its complexity and on what account the delay has occurred. If the delay is unexplained prejudice to the delinquent employee is writ large on the fact of it. It could also be seen as to how much the disciplinary authority is serious in pursuing the charges against its employee. It is the basic principle of administrative justice that an officer entrusted with a particular job has to perform his duties honestly, efficiently and in accordance with the rules. If he deviates from his path he is to suffer a penalty prescribed. Normally, disciplinary proceedings should be allowed to take their course as per relevant rules but then delay defeats justice. Delay causes prejudice to the charged officer unless it can be shown that he is to blame for the delay or when there is proper explanation for the delay in conducting the disciplinary proceedings. Ultimately, the court is to balance these two diverse considerations."
55. A division bench of this court, considered the judgments on the issue. In its judgment delivered on 29th October, 2003 in LPA No.39/1999, Delhi Development Authority Vs. D.P. Bambah & Anr., it was held:-
"In our opinion the legal position, when an action is brought seeking quashing of a charge-sheet on grounds of issuance of the charge-sheet or grounds of inordinate delay in completion of the disciplinary inquiry may be crystalised as under:-
(i) Unless the statutory rules prescribe a period of limitation for initiating disciplinary proceedings, there is not period of limitation for initiating the disciplinary proceedings;
(ii) Since delay in initiating disciplinary proceedings or concluding the same are likely to cause prejudice to the charged employee, courts would be entitled to intervene and grant appropriate relief where an action is brought;
(iii) If bone fide and reasonable explanation for delay is brought on record by the disciplinary authority, in the absence of any special equity, the court would not intervene in the matter;
(iv) While considering these factors the court has to consider that speedy trial is a part of the facet of a fair procedure to which every delinquent is entitled to vis-a-vis the handicaps which the department may be suffering in the initiation of the proceedings. Balancing all the factors, it has to be considered whether prejudice to the defence on account of delay is made out and the delay is fatal, in the sense, that the delinquent is unable to effectively defend himself on account of delay.
(v) In considering the factual matrix, the court would ordinarily lean against preventing trial of the delinquent who is facing grave charges on the mere ground of delay. Quashing would not be ordered solely because of lapse of time between the date of commission of the offence and the date of service of the charge-sheet unless, of course, the right of defence is found to be denied as a consequences of delay.
(vi) It is for the delinquent officer to show the prejudice caused or deprivation of fair trial because of the delay.
(vii) The sword of damocles cannot be allowed to be kept hanging over the head of an employee and every employee is entitled to claim that the disciplinary inquiry should be completed against him within a reasonable time. Speedy trial is undoubtedly a part of reasonableness in every disciplinary inquiry.
In determination of this, the first question which would have to be answered is whether on facts, is there a delay? If yes, how long? Was the delay inevitable having regards to the nature of the charge? Was the delay beyond the control of the employer? Whether the employee willfully contributed to the delay or was responsible for the delay? Has prejudice caused to the defence?
All questions would have to be answered. In a nutshell, the court would have to weigh all the factors, both for and against the employee and come to the conclusion whether in the facts and circumstances prejudice has been shown as having been occasioned to the employee, justifying quashing of the charge-sheet either on account of delay in issuance of the charge-sheet or on account of delay in completion of the disciplinary proceedings."
56. In the light of the legal position noted above, I do not find any delay whatsoever pertaining to charge-sheet dated 19.7.1995 which pertained to the events of the years 1991-92. The enquiry report would reveal that the misconduct surfaces when accounts become sticky. I accordingly repel the challenge to the charge-sheet dated 19.7.1995 on the grounds of delay.
57. Charge-sheet dated 20.7.1995 pertains to the events of 1984 to 1988. Counsel for the petitioner while arguing on challenge to this charge-sheet except for stating that it related to events 16 to 19 years old, made no further submission. A perusal of the enquiry report pertaining to this charge-sheet would reveal that misconduct alleged under this charge-sheet surfaced when accounts became sticky. However, since no order has been passed by the Disciplinary Authority pertaining to this charge-sheet as under the charge-sheet dated 19.7.1995, order of dismissal was passed against the petitioner, since order of dismissal is being set aside by me, as would be evident from my finding hereinafter recorded and I am remitting the matter to the Disciplinary Authority for fresh consideration pertaining to the issue of penalty, I direct that while considering the enquiry report pertaining to the charge-sheet dated 20.7.1995, if the Disciplinary Authority proceeds to take action thereunder in light of my decision pertaining to the charge-sheet dated 19.7.1995, Disciplinary Authority would consider the issue of delay pertaining to the charge-sheet dated 20.7.1995.
58. Have the principles of natural justice been violated. Two grounds were urged at the hearing. The first was that 18 documents which the petitioner wanted to rely, were directed to be produced by the enquiry officer, being relevant, but were not produced by the bank and secondly, un-exhibited portions of the inspection report dated 28.11.1991 were relied upon.
59. Petitioner had sought production of 162 documents. They were held to be relevant and were directed to be produced. 144 documents were produced. Qua 18, certificate was filed that they were not available. Petitioner left the issue at that.
60. A charged officer is entitled to a fair defence and not the fairest possible defence. Merely because a document was relevant at the enquiry and was not produced is not enough. In the decision reported as (1993) 4 SCC 727, Managing Director, ECIL Vs. B.Karunakar, which was followed in the decision reported as (2001) 6 SCC 392, State of U.P. Vs. Harendra Arora, reiterated in the decision reported as (2002) 3 SCC 443, State of U.P. Vs. Ramesh Chandra Manglik, it is for the charged officer to show prejudice caused to him by non-production of relevant document.
61. In the written submissions filed by the petitioner before the Disciplinary Authority pertaining to the enquiry report, I do not find that the petitioner raised any grievance before the Disciplinary Authority regarding non-production of these 18 documents. In appeal, petitioner made a grievance pertaining to the said 18 documents not being produced, but did not indicate as to in what manner prejudice was caused. Even in the writ petition, grievance pertaining to these 18 documents is as per the petitioner's pleadings in para 26 of the writ petition. Except for stating that these 18 documents were not produced, it has not been pleaded as to how prejudice was caused. I, therefore, hold that since no prejudice has been shown to have been caused by non-production of these 18 documents, the report of the enquiry officer and the action taken thereunder cannot be said to be vitiated in law. Even otherwise, it be noted that the bank, at the first instance, filed a certificate that these 18 documents were not available. Petitioner did not insist on their production. The petitioner has not demonstrated before me how prejudice was caused to him due to non-production of 18 documents.
62. Petitioner laid a grievance that the enquiry officer relied upon un-exhibited portions of an inspection report dated 28.11.1991.
63. Record of the enquiry officer would reveal that MW-3 in his testimony proved the report. Since the report was bulky, only portions thereof were formally taken on record. This was by consent of the Presenting Officer and the Defence Assistant. After the enquiry had concluded and the Presenting Officer gave his written brief to the enquiry officer, to make good his submissions, the Presenting Officer rather than extracting quotes from the report dated 28.11.1991 appended parts thereof. It is, therefore, not a case of an un-proved document being relied upon, nor is it a case of a document being relied upon by the enquiry officer behind the back of the petitioner. Learned counsel for the petitioner did not dispute that the findings against the petitioner was not solely based on the inspection report. He admitted that the enquiry officer had relied upon the documents which were proved at the enquiry and had drawn additional support from the inspection report dated 28.11.1991. That concludes the issue against the petitioner.
64. Counsel for the petitioner urged that the enquiry report was based on surmises and conjectures. He sought to bring home the point by reading the enquiry report in light of the documents and other evidence.
65. Scope of the judicial review under Article 226 of the Constitution of India is limited. It is impermissible for this Court to re-appreciate the evidence like an Appellate Court. Jurisdiction of this Court would be to find out whether there is no evidence on record or whether on the evidence on record, no person would come to the conclusion arrived at by the enquiry officer. For both, evidence would have to be read as it is without it being re-appreciated. Whether an allegation is proved or is correct on the evidence on record, is primarily a decision to be taken by the Disciplinary Authority.
66. Learned counsel for the petitioner could not show any finding of the enquiry officer which could be labeled as a finding without evidence or a finding which no reasonable person would arrive at, given the evidence before the enquiry officer. Learned counsel for the petitioner wanted this Court to appreciate the defence in light of guideline circulars issues by the bank to draw the necessary conclusions. This, to my mind, is impermissible as it would be a function akin to the role played by an Appellate Court.
67. Learned counsel for the petitioner had made a grievance on the observations made by the enquiry officer where the enquiry officer had observed that the charged officer could not produce evidence showing that he had sanctioned limit, within the authorised limit of the company. Counsel argued that the enquiry officer by placing a negative onus, acted contrary to law.
68. In sub-para (d) of para 25 above, I have noted the observations of the enquiry officer and the context in which it was made. A perusal thereof would show that the observations find place in the enquiry probably because the petitioner was arguing that resolution dated 9.5.1991 of the company on which the petitioner had purportedly acted was not brought on record and, therefore, the charge as a whole must fail. It was in this context that these observations crept in the report of the enquiry officer. Be that as it may, this issue pertained only to a small fragment of allegations against the petitioner and if these findings are to be set aside, only the allegation pertaining to sanctioning of credit facilities to M/s Progressive Colours Pvt.Ltd. in the context of loan being not to be granted beyond Rs.10 lakhs would fail. Other allegations, having no bearing on this issue, would be sustained.
69. Learned counsel for the petitioner, Sh. Keshav Dayal, Sr. Advocate made a submission that some allegations were proved, some not proved and some partly proved. He contended that order passed by the disciplinary authority does not reveal as to what has weighed with it while passing the order. Counsel contended that this has caused prejudice to the petitioner.
70. In the decision reported as (1974) 4 SCC 374, Krishna Chandra Tandon v. The Union of India, the Supreme Court had held:
"12. . . . . . . . . . .The learned judges correctly informed themselves that they could not examine the evidence as if they were sitting in appeal over the findings of the Commissioner. All they could do was to consider whether the order was based on no evidence. Except in a few items the learned judges found that the Commissioner of Income-Tax had evidence for the findings he had recorded. That, however, did not make any difference to the punishment inflicted by the Commissioner because as pointed out by this Court in the State of Orissa v. Bidyabhushan Mohapatra, AIR 1963 SC 779 an order of punishment can be supported on any finding as to the substantial misdemeanour for which the punishment can lawfully be imposed and it was not for the court to consider whether that ground alone would have weighed with the authority in dismissing the public servant."
71. Petitioner raised a grievance that he was not paid the provisional pension for a period of 15 months, post superannuation and this was akin to a suspended employee not being paid the subsistence allowance. Counsel contended that the enquiry, on this ground alone would stand vitiated.
72. In view of the latest pronouncement of the Supreme Court on this issue being the judgment reported as 2004 LLR 228, Indra Bhanu Gaur Vs. Committee, Managementof M.M. Degree College, the plea has to be repelled. It was held by the Supreme Court :-
"7. . . . . . . . . . . So far as the effect of not paying the subsistence allowance is concerned, before the authorities no stand was taken that because of non-payment of subsistence allowance, he was not in a position to participate in the proceedings, or that any other prejudice in effectively defending the proceedings was caused to him. . . . . . . .It is ultimately a question of prejudice. Unless prejudice is shown and established, mere non-payment of subsistence allowance cannot ipso-facto be a ground to vitiate the proceedings in every case."
73. On facts, I may note that the petitioner participated all through along with his Defence Assistant at the enquiry. Petitioner has not shown as to in what manner non-payment of provisional pension vitiated the proceedings, in that, petitioner has not been able to show as to how in the absence of provisional pension, he could not effectively defend himself.
74. That takes me to the most impotant issue raised in the writ petition and on which counsel spent a greater part of their energy. This determination would take care of the grievance of the petitioner whether at all he could be dismissed, whether his gratuity could be withheld and whether he would be entitled to a provisional pension.
75. Punishments which can be inflicted on an officer employee of P.N.B are the ones stipulated under Regulation 4 of the P.N.B Officer Employees (Disciplinary and Appeal ) Regulations, 1977. 5 minor penalties, being censure, withholding of increments of pay, withholding of promotion, recovery from pay of any pecuniary loss caused to the bank and reduction at a lower stage in the time scale of pay are stipulated. 5 major penalties, 3 of them being compulsory retirement, removal from service and dismissal are stipulated.
76. Procedure for imposing major penalties is the one provided by Regulation 6 of the aforesaid regulations of 1977.
77. Regulation 20(3)(iii) of the P.N.B Officers (Service) Regulations 1979 inter alia, reads as under:-
"3(iii) The officer against whom disciplinary proceedings have been initiated will cease to be in service on the date of superannuation but the disciplinary proceedings will continue as if he was in service until the proceedings are concluded and final order is passed in respect thereof. The concerned officer will not receive any pay and/or allowance after the date of superannuation. He will also not be entitled for the payment of retirement benefits till the proceedings are completed and final order is passed thereon except his own contributions to CPF."
78. P.N.B (Employees') Pension Regulations 1995 also deal with the issue of penalties. Regulation 45 of the Pension Regulations reads as under:-
"In a case not falling under regulation 44 if the Competent Authority considers that the pensioner is prima facie guilty of grave misconduct, it shall, before passing an order, follow the procedure specified in Punjab National Bank Officer Employees' (Discipline and Appeal) Regulations, 1977 or in Settlement as the case may be."
79. Regulation 48 of the Pension Regulations reads as under:-
"1) The Competent Authority may withhold or withdraw a pension or a part thereof, whether permanently or for a specified period and order recovery from pension of the whole or part of any pecuniary loss caused to the Bank if in any departmental or judicial proceedings the pensioner is found guilty of grave misconduct or negligence or criminal breach of trust or forgery or acts done fraudulently during the period of his service;
Provided further that departmental proceedings, if instituted while the employee was in service, shall, after the retirement of the employee, be deemed to be proceedings under these regulations and shall be continued and concluded by the authority by which they were commenced in the same manner as if the employee had continued in service;
Provided also that no departmental or judicial proceedings, if not initiated while the employee was ins service, shall be instituted in respect of a cause of action which arose or in respect of an event which took place more than four years before such institution.
2. Where the Competent Authority orders recovery of pecuniary loss from the pension, the recovery shall not ordinarily be made at a rate exceeding one-third of the pension admissible on the date of retirement of the employee;
Provided that where a part of pension is withheld or withdrawn, the amount of pension drawn by a pensioner shall not be less than the minimum pension payable under these regulations."
80. Regulation 46 (1) and (2) read as under:-
1) An employee who has retired on attaining the age of superannuation or otherwise and against whom any departmental or judicial proceedings are instituted or where departmental proceedings are continued, a provisional pension, equal to the maximum pension which would have been admissible to him, would be allowed subject to adjustment against final retirement benefits sanctioned to him, upon conclusion of the proceedings but no recovery shall be made where the pension finally sanctioned is less than the provisional pension or the pension is reduced or withheld etc either permanently or for a specified period.
2. In such cases the gratuity shall not be paid to such an employee until the conclusion of the proceedings against him. The gratuity shall be paid to him on conclusion of the proceedings subject to the decision of the proceedings. Any recoveries to be made from an employee shall be adjusted against the amount of gratuity payable.
81. Pension Regulations aforesaid and the service regulations aforenoted clearly bring out the position that post superannuation, disciplinary proceedings can continue against an officer employee. Neither party contended to the contrary. Area of dispute was as to what penalty can be levied on such an employee. Mr. Keshav Dayal, learned senior counsel appearing for the petitioner would urge that the only penalty which can be imposed upon such an employee is a cut in pension and not dismissal. Counsel contended that once an employee superannuates there is no question of his being in service and hence there can be no dismissal from service. Per contra, Mr. Raj Birbal, learned senior counsel appearing for the bank, by placing reliance on sub-clause (iii) of sub regulation (3) of Regulation 20 of the Service Regulations would urge that by virtue of the provision of the said regulation, the penalty of dismissal can be imposed upon the officer employee.
82. A perusal of clause (iii) of sub regulation (3) of Regulation 20 of the service regulations would reveal that it provides for the following, distinct consequences on the superannuation of an employee against whom disciplinary proceedings are pending:
(a) The employee will cease to be in service on the date of superannuation.
(b) Disciplinary proceedings will continue as if he was in service until the proceedings are concluded.
(c) The officer will not receive any pay or allowance after the date of superannuation.
(d) The officer will not be entitled for payment of retiral benefits till the final order is passed except his own contributions to CPF.
83. Pension regulations noted aforesaid would reveal that:-
(a) Vide Regulation 46, on retirement or on attaining the age of superannuation, an employee against whom departmental proceedings are continuing shall be paid a provisional pension.
(b) Gratuity shall be paid to him on conclusion of the proceedings subject to the decision of the proceedings. Any recovery to be made shall be adjusted against the amount of gratuity payable.
(c) Order of penalty under the Pension Regulations shall be passed by following the procedure specified in the Disciplinary and Appeal Regulations (vide regulation 45 of the pension regulations).
(d) Departmental proceedings continued, post superannuation, are deemed to be proceedings under the Pension Regulations and have to be continued and concluded by the authority by which they were commenced in the same manner as if the employee had continued in service (vide second proviso to Regulation 48(1) of the Pension Regulations).
84. It is trite saying that statutory provision or provision having the force of law as contained in rules and regulations have to be read harmoniously and as far as possible, effect given to all the provisions.
85. Pension Regulations which were framed in the year 1995 were preceded by the P.N.B (Officers) Service Regulations 1979 and the P.N.B Officer Employees (Discipline and Appeal) Regulations 1977. The framers of the pension regulations were, therefore, aware of the service regulations as well as the discipline and appeal regulations.
86. The second proviso to sub regulation 1 of Regulation 48 of the Pension Regulations specifically provides that disciplinary proceedings instituted while the employee was in service, shall after the retirement of the employee be deemed to be proceedings under these regulations. This deeming fiction would mean that for all intents and purpose, the disciplinary proceedings get supplanted as the disciplinary proceedings under the pension regulations. Sub-clause (iii) of sub regulation 3 of Regulation 20 of the Service Regulations 1979 is clear. Firstly, an employee against whom disciplinary proceedings stand initiated would cease to be in service on the date of superannuation. Secondly, it provides that the disciplinary proceedings will continue as if he was in service until the proceedings are concluded. If argument of the bank is accepted that continuation of the disciplinary proceedings as contemplated aforesaid would mean that penalty of dismissal/removal from service can be passed, it would render nugatory the pension regulations and in particular Regulation 48 of the Pension Regulations.
87. The second proviso to sub-regulation 1 of Regulation 48 of the Pension Regulations and sub-clause (iii) of sub-regulation 3 of Regulation 20 can be harmoniously read only if the meaning to the words "but the disciplinary proceedings will continue as if he was in service until the proceedings are concluded and final order is passed in respect thereof" in sub-clause (iii) of sub regulation 3 of Regulation 20 of the Service Regulations are interpreted to mean that continuation of the disciplinary proceedings as contemplated pertains to the procedure applicable but as far as the imposition of penalty is concerned, imposition of penalty would have to be as per the pension regulations so that the mandate of the second proviso to sub regulation 1 of Regulation 48 of the Pension Regulations can be simultaneously given effect to. The simultaneous giving effect would be that the departmental proceedings would be deemed to be proceedings under the Pension Regulations, requiring the same to be concluded under the Pension Regulations, i.e. the penalty has to be under the Pension Regulation.
88. In the judgment reported as 1980(4) SCC 314, D.V.Kapoor vs. Union of India & Ors., the Supreme Court in the context of Rule 9(2) of the Civil Service Conduct Rules 1964 held as under:-
"Rule 9(2) of the Rules provided that the departmental proceedings if instituted while the government servant was in service whether before his retirement or during his re-employment, shall, after the final retirement of the government servant, be deemed to be proceedings under this rule and shall be continued and concluded by the authority by which they were commenced in the same manner as if the government servant had continued in service. Therefore, merely because the appellant was allowed to retire, the government is not lacking jurisdiction or power to continue the proceedings already initiated to the logical conclusion thereto. The disciplinary proceedings initiated under the Conduct Rules must be deemed to be proceedings under the rules and shall be continued and concluded by the authorities by which the proceedings have been commenced in the same manner as if the government servant had continued in service."
Regulation 56 of the PNB (Employees) Pension Regulations,1995 stipulates that in case of doubt, in the matter of application of the regulations, regard may be had to the corresponding provisions applicable for central government employees.
89. Following the decision aforesaid, in the judgment reported as 1995 Suppl.(1) SCC 321, High Court of Punjab and Haryana vs. Amrik Singh, the Supreme Court held that where the employee was allowed to superannuate from service, he could not be imposed the penalty of dismissal from service. Order passed against Amrik Singh dismissing him from service was quashed by the High Court. It was held by the Supreme Court that the penalty order which can be passed was under the relevant pension rules. It was held that the Chief Justice of the High Court would be free to pass an appropriate order under the Pension Rules. In the decision reported as (1999) 3 SCC 666, Bhagirthi Jena V. Board of Directors OSFC & Ors., it was held that once an employee superannuates from service, relationship of master and servant snaps and in the absence of a rule permitting continuation of disciplinary proceedings, post superannuation, none can continue.
90. In the decision reported as (1997) 8 SCC 60 SBI vs. A.N.Gupta & Ors., taking note of the fact that there was no rule to continue with an enquiry after the employee reached the age of superannuation and taking note that pension and provident fund was not released to the employee as the bank, invoking Rule 11 of the Imperial Bank of India Pension and Guarantee Pension Rules did not permit the employee to retire, it was held that under Rule 27 of the aforesaid Pension Rules of the Imperial Bank of India, there was an automatic cessation of service when the employee reaches the age of superannuation. It was held that Rule 11 relied upon by the bank was not applicable to a case of retirement on attaining the age of superannuation. Employee was held entitled to his terminal and pensionary benefits.
91. The decision would be an authority on the point that when an employee superannuates, consequences as per rules applicable must flow. What those consequences would be? Rules would determine the same.
92. A later decision of the same Bench of the Supreme Court which delivered judgment in A.N.Gupta's case would illuminate us on the issue a little further. The decision is reported as 1998 LAB.I.C.496, S.B.I vs. C.B. Dhall. Rule 20(a) and 20(b) which was introduced in the S.B.I (Supervising Staff) Service Regulations 1975 were considered by the Supreme Court. The rules read as under:-
"20A. Notwithstanding anything to the contrary in these Rules, no employee who has ceased to be in the Bank's service by the operation of, or by virtue of, any rule, shall be deemed to have retired from the Bank's service for the purpose of the Imperial Bank of India Employees' Pension and Guarantee Fund Rules or the State Bank of India Employees' Pension Fund Rules unless such cessation of service has been sanctioned as retirement for the purpose of either of the said Pension Fund Rules as may be applicable to him.
20.B. In case disciplinary proceedings under these rules have been initiated against an employee before he ceases to be in the Bank's service by the operation of, or by virtue of, any of these rules, the disciplinary proceedings may, at the discretion of the Managing Director, be continued and concluded by the authority by which the proceedings were initiated in the manner provided for in these rules as if the employee continues to be in service, so however, that he shall be deemed to be in service only for the purpose of the continuance and conclusion of such proceedings."
93. Distinguishing its decision in A.N. Gupta's case it was held:-
"Rule 20-A and 20-B have now made a material difference to the applicability of Rule 11 of the Pension Rules. However, the case of A.N.Gupta (1997 AIR SCW 4119) (supra) is distinguishable as these Rules 20-A and 20-B, came into existence only w.e.f. March 31, 1977. Under Rule 20-A retirement under the Pension Fund Rules has now to be sanctioned by the competent authority. Under this Rule, retirement would mean retirement on superannuation or any other type of retirement.
Under Rule 20-B disciplinary proceedings if initiated against an employee before he retires from service could be continued and concluded even after his retirement and for the purpose of conclusion of the disciplinary proceedings, the employee is deemed to have continued in service but for no other purpose. After the disciplinary proceedings were concluded, the State Bank directed that (1) sanction of Dhall to retire be withheld and (2) Bank's contribution to his provident fund accounts be forfeited. Under Rule 10 of the Pension Fund Rules, an employee dismissed from the Bank service for wilful neglect or fraud shall forfeit all claims upon the fund for pension. Dhall has not been dismissed from service though he was charged with wilful neglect and fraud. The question that arises for consideration is what is the effect of the direction of the State Bank that sanction to retire of Dhall be withheld here cessation of service of Dhall on retirement has not been sanctioned and accordingly as per the last portion of Rule 11 of the Pension Fund he forfeits all claims upon the fund for pension."
94. It was held that denial of pension was valid as permission to retire from the bank was denied under Rule 20A of the Supervising Staff (Service) Rules 1975.
95. On reaching the age of superannuation and in the absence of any order extending the service, the jural relationship of employer and employee pertaining to the tenure of appointment gets snapped. Relationship may continue for purposes of post retirement benefits. But in so far as the service is concerned, the relationship gets snapped. If a person ceases to be in employment, I fail to understand as to how a penalty of dismissal from service could be passed against the employee. Since the bond is not completely snapped and the employee would be entitled to pensionary benefits, proceedings may continue if the rules permit, but in such eventuality penalty which could be imposed would be the one which impinges upon the pensionary benefits which the employee would be entitled to under the rules. Indeed the P.N.B(Employees) Pension Regulations 1995 contemplate a cut in the pension. This cut may be a part or whole of the pension, but it must relate to pension.
96. Regulation 46 of the Pension Regulations requires that on attaining the age of superannuation or otherwise, if disciplinary proceedings are pending against the employee and are continued, a provisional pension has to be fixed. It is further provided that the same would be subject to adjustment against final retirement benefits sanctioned upon conclusion of the proceedings but no recovery shall be made where the pension finally sanctioned is less than the provisional pension. Thus, immediate on superannuation, if a disciplinary proceedings is pending against an employee and its is continued, provisional pension has to be fixed. Indeed, petitioner was granted a provisional pension. The rule prohibits recovery of the provisional pension if the same is more than the final pension fixed after the cut in pension. If it is held that qua such an employee an order of dismissal from service can be passed, he would be entitled to no pension and consequences would be that the provisional pension paid would have to be recovered. This course of action would come into conflict with Regulation 46 of the Pension Regulations.
97. In view of the legal provisions as interpreted above, in the light of the various judgments of the Supreme Court, it is held that the order dismissing the petitioner from service is illegal. The same is accordingly quashed.
98. Learned counsel for the petitioner had submitted that the acts complained of do not constitute misconduct, much less grave misconduct. Charges which were established, gist whereof has been noted by me in paras 25 to 29 above would reveal the petitioner had sanctioned/enhanced credit facilities without conducting pre-sanction appraisal, proper end use was not ensure, post sanction safeguards were ignored and proper supervision was not exercised.
99. Competence to hold a post, lack of qualities of leadership, foresight, firmness, ability to discharge functions attached to a post, indecisiveness are things different from an act of omission or commission. They may not attract lack of integrity or failure of devotion to duty. Error of judgment and negligence in a given situation may not attract misconduct. But as explained in the decision reported as 1979 SCC (L &S) 197, U.O.I v. J. Ahmed, following constitute misconduct:
a. Lack of integrity.
b. An act or omission which runs counter to the expected code of conduct.
c. An act or omission contrary to the written norms, guidelines or practice followed.
d. Gross negligence and carelessness where degree of culpability is high is misconduct. As observed in the judgment, carelessness can often be productive of more harm than deliberate wickedness or malevolence.
e. Failure to maintain devotion to duty i.e. conducting self in a way inconsistent with due and faithful discharge of duty in service.
100. In the decision reported as (1996) 9 SCC 69 Disciplinary Authority-cum-Regional Manager & Ors Vs. Hikunja Bihari Patnaik it was held that acting beyond one's authority is misconduct and proof of loss is not necessary. It was observed:
"The findings of the inquiry officer which have been accepted by the disciplinary authority, and which have not been disturbed by the High Court, clearly show that in a number of instances the respondent allowed overdrafts or passed cheques involving substantial amounts beyond his authority. True, it is that in some cases, no loss has resulted from such acts. It is also true that in some other instances such acts have yielded profit to the Bank but it is equally true that in some other instances, the funds of the Bank have been placed in jeopardy; the advances have become sticky and irrecoverable. It is not a single act; it is a course of action spreading over a sufficiently long period and involving a large number of transactions. In the case of a bank- for that matter, in the case of any other organisation every officer/employee is supposed to act within the limits of his authority. If each officer/employee is allowed to act beyond his authority, the discipline of the organisation/bank will disappear; the functioning of the bank chaotic and unmanageable. Each officer of the bank cannot be allowed to carve out his own little empire wherein he dispenses favours and largesse. No organisation, more particularly, a bank can function properly and effectively if its officers and employees do not observe the prescribed norms and discipline. Such indiscipline cannot be condoned on the specious ground that it was not actuated by ulterior motives or by extraneous considerations. The very act of acting beyond authority- that too a course of conduct spread over a sufficiently long period and involving innumerable instances- is by itself a misconduct. Such acts, if permitted, may bring in profit in some cases but them may also lead to huge losses. Such adventures are not given to the employees of banks which deal with public funds. If what we hear about the reasons for the collapse of Baring Bank is true, it is attributable to the acts of one of its employees, Nick Leeson, a minor officer stationed at Singapore, who was allowed by his superiors to act far beyond his authority. As mentioned hereinbefore, the very discipline of an organisation and more particularly, a bank is dependent upon each of its employees and officers acting and operating within their allotted sphere. Acting beyond one's authority is by itself a breach of discipline and a breach of Regulation 3. It constitutes misconduct within the meaning of Regulation 24. No further proof of loss is really necessary." (Emphasis underlined)
101. In the decision referred as JT 1999(3) SC 385, S.B.I & Ors v. T.J.Paul, an order of removal from service was passed against the employee. Writ petition filed had succeeded on the ground that no financial loss was proved and not taking adequate security from the loaners was at best a minor infraction which could not attract major penalty. Reversing the decision of the High Court, the Supreme Court held, negligence, gross or otherwise, involving or likely to involve the banks in serious loss is gross misconduct. It was observed:
"15.. . . . . . . . . . . In other words likelihood of serious loss coupled with negligence is sufficient to bring the case within gross misconduct. The Inquiry Officer's findings of gross misconduct on the ground of not attaining adequate security is, therefore, correct."
102. In 1998(4) SCC 310, Union Bank of India v. Vishwa Mohan in the context of banking business it was observed:-
"12. . . . . . . . . . .It needs to be emphasised that in the banking business absolute devotion, diligence, integrity and non-est needs to be preserved by every bank employee nd in particular the bank officer. If this is not observed, the confidence of the public/depositors would be impaired."
103. It cannot be said that the findings do not bring out the charge of misconduct. It is not a case where petitioner has been found to be merely not prudent or being inefficient or his decision only have taint of error of judgment. Charges established are positive. They establish abuse of official position by extending undue favours by ignoring pre- sanction appraisal, ignoring proper end use thereby jeopardising bank's interest and exercise of powers indiscretely.
104. As per the Pension Regulations, if there is a finding that a charged officer has caused pecuniary loss to the bank, the said pecuniary loss can be recovered from the gratuity. Withholding of gratuity was, therefore, justified.
105. The writ petition is disposed of with the following directions :-
i) The impugned order dated 22.,1.1998 of dismissal passed by the Disciplinary Authority dismissing the petitioner from service is set aside. Order dated 9.12.1998 passed by the Appellate Authority rejecting the appeal is also set aside.
ii) Proceedings pursuant to the enquiry report dated 24.6.1996 pertaining to the charge-sheet dated 19.7.1995 and further the proceedings pursuant to the charge-sheet dated 20.7.1995 shall be taken by the Disciplinary Authority for the purpose of penalty under the PNB (Employees) Pension Regulations,1995.
iii) The Disciplinary Authority shall issue a show cause notice to the petitioner before taking any action, proposing the penalty it seeks to levy, and shall give reasonable time to the petitioner to respond to the show cause notice. Final decision taken would be after considering the reply of the petitioner.
iv) Pertaining to the charge-sheet dated 20.7.1995, the Disciplinary Authority shall specifically consider whether there is undue delay in issuing the said charge-sheet dated 20.7.1995 in light of the present decision.
v) If, in view of the report of the enquiry officer, Disciplinary Authority opines that a pecuniary loss has been caused to the bank, it would be notified to the petitioner in the show cause notice itself to enable the petitioner to respond thereto. If no pecuniary loss is quantified by the Disciplinary Authority, gratuity would be released to the petitioner as expeditiously as possible. If pecuniary loss to the bank is quantified and established, as well as maintained and the same is less than the gratuity payable, balance gratuity would be paid to the petitioner after adjusting the loss as expeditiously as possible.
vi) Petitioner would be entitled to his provisional pension which was fixed but was discontinued upon passing of the order of dismissal from the date it was discontinued till the date fresh orders are passed against the petitioner.
106. Since, interpretation of the Pension Regulations and Regulation 20(3)(iii) of the Service Regulations, came up for consideration for the first time in a court of law, there shall be no order as to costs.
July 2004 (PRADEEP NANDRAJOG)