-1- IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION WRIT PETITION NO. 1311 OF 2001 P.A. Karkhanis, ) Indian Inhabitant residing at Sacchidanand ) Co-operative Housing Society Ltd., Tilak Road, ) Near Old Post Office, Dombivili (East) )... Petitioner versus 1. Uco Bank, through its Regional General Manager, ) (Maharashtra Region) through his office at Mafatlal ) Centre, 2nd floor, Nariman Point, Mumbai-400 021 ) 2. Assistant General Manager (Disciplinary Authority) ) Uco Bank, having its office at Inspection and Vigilance ) Department, Mafatlal Centre, 2nd floor, Nariman Point, ) Mumbai-400 021. ) 3. The General Manager, (Appellate Authority), ) Uco Bank, having its office at Mafatlal Centre, ) Nariman Point, Mumbai-400 021 ) 4. Executive Director, Reviewing Authority, ) Uco Bank Head Office, 10, Biptabi Trailokya Sarani, ) Calcutta-700 001. )..Respondents Mrs. Neeta P. Karnik for the petitioner. Mr. V.P. Vaidya for respondents. CORAM: P.B. MAJMUDAR & R.M. SAVANT, JJ. Judgment reserved on: 5 th May, 2009 Judgment pronounced on:22 nd June, 2009 -2- JUDGMENT: (Per P.B. Majmudar, J.) By way of this petition, the petitioner has challenged the order of the dismissal dated 30th March, 1998 passed against him by the disciplinary authority-second respondent which order has been confirmed by order dated 18th January, 1999, in appeal by the appellate authority-respondent No.3. The petitioner carried the matter before the reviewing authority, respondent No.4. The reviewing authority-respondent No.4 rejected the review petition vide order dated 21st March, 2000, preferred by the petitioner. The petitioner has challenged the aforesaid orders in the instant petition by invoking Article 226 of the Constitution of India. 2. It is the case of the petitioner that he was initially appointed as a Clerk in the respondent Bank on 20th June, 1968. The petitioner subsequently applied for the Probationary Officer’s post and he was selected to the said post in the year 1974. The petitioner was subsequently promoted to the post of Scale-II in 1983 and Scale-III in 1988. The petitioner came to be transferred to the Hamam Street branch of the respondent Bank on 3rd September, 1990 as a Senior Manager. After joining at the said Branch, the petitioner noticed several irregularities in the matter of procedure adopted by the said branch in connection with maintaining of proper records of investment securities. The petitioner noticed that Switch transactions worth crores of rupees were undertaken by certain brokers which were found to be risky. In this -3- connection, petitioner wrote letters to the higher authorities from time to time but the petitioner was asked by the higher authorities to continue with the said practice which was followed by the said branch since last many years. The petitioner continued to serve as a Senior Manager of Hamam Street branch of the Bank between 3rd September, 1990 and 18th April, 1992. He was subsequently transferred as a Senior Manager of Andheri (East) branch of the Bank. 3. The petitioner was charge-sheeted and was served with the article of charges on 14/17th June, 1994. The charges levelled against the petitioner were in connection with the alleged misconduct committed by him when he was working at the Hamam Street branch of the Bank between the period 3rd September, 1990 and 18th April, 1992. The petitioner was subjected to eight charges. So far as charge No.1 is concerned, it is in connection with the unauthorized issuance of bank receipts worth several crores of rupees on behalf of various stock brokers. It was alleged that the same was in violation of the instructions of the Zonal Office and against the rules and procedures of the Bank. Charge No. 2 is that the petitioner in violation of rules and regulations of the Bank allowed the branch to issue bank receipts under the single signature of a Junior Officer posted at the said branch, exposing the Bank to risk even though such receipts were required to be issued under the joint signatures only. Charge No.3 is in connection with non-maintenance of proper books and records in -4- respect of the bank receipts, involving huge sums issued by the Bank. As per charge No.4, the petitioner did not ensure that the bank receipts issued or accepted by the Hamam Street were actually backed by relevant securities mentioned therein and such securities were delivered at the time of redemption of the bank receipts. It is alleged that the petitioner had concealed from the higher authorities the fact that in many cases bank receipts were redeemed only by payment and not by physical delivery of the securities mentioned therein. Charge No.5 is in connection with wrongful diversion of huge sums of money to the stock brokers accounts continuously over a long period enabling them to use the same for speculative purpose. Charge No.6 is in connection with wrong diversion of Rs. 40 crores in the account of share broker Harshad S. Mehta which is detrimental to the Banks interest and showed wrongful favour to a stock broker. Charge No.7 is in connection with wrongfully crediting to the current account of share broker Harshad S. Mehta an amount of Rs. 26 crores which resulted into wrongful gain to the said broker exposing the Bank to substantial financial loss. Charge No.8 is in connection with re-starting security transaction on behalf of the brokers at the Bank’s Hamam Street Branch in violation of the instructions from the Zonal Office, Bombay and thereby failed to protect the interest of the Bank. The petitioner was accordingly subjected to the said charges. -5- 4. The petitioner gave a detailed reply on 8th July, 1994, to the said charges pointing out that he had acted only on the basis of the instructions given by the higher authorities, particulars of which were given in his reply. The petitioner pointed out in his reply that the said practice was followed in the Bank even before his joining and, therefore, it cannot be said that he has acted contrary to the instructions or acted against the interest of the Bank. 5. Subsequently an Enquiry Officer was appointed and a regular departmental enquiry commenced against the petitioner. The petitioner was given opportunity to defend his case in the enquiry proceedings. The enquiry officer subsequently submitted his report on 12th June, 1995, a copy of which is annexed at Exhibit-V to the petition. As regards charge Nos. 1 to 4 and 8 are concerned, the enquiry officer found that the same are partly proved. So far as charge Nos. 5, 6 and 7 are concerned, it was found that the same are proved. The disciplinary authority vide its order dated 30th March, 1998 accepted the report of the enquiry officer. So far as charge Nos. 1 to 4 and 8 are concerned, the disciplinary authority inflicted the penalty of reduction of five increments in the time scale of pay. So far as charge Nos. 5, 6 and 7 are concerned, the disciplinary authority inflicted punishment of dismissal from service and ordered that the same shall not be considered as a disqualification for future employment. -6- 6. The aforesaid order of the disciplinary authority was challenged by the petitioner by way of a departmental appeal. The said appeal of the petitioner was rejected by the appellate authority by its order dated January 18, 1999. 7. The petitioner thereafter preferred a review petition before the Executive Director of the Bank. The reviewing authority by its order dated 21st March, 2000 rejected the said review petition. The petitioner has approached this Court by way of this petition under Article 226 of the Constitution of India challenging the orders of the disciplinary authority, appellate authority and the reviewing authority, as stated above. 8. Mrs. Neeta P. Karnik, learned counsel for the petitioner, has submitted that the relevant documents submitted by the petitioner before the enquiry officer were not taken into consideration by the enquiry officer and some of them, though very vital, were not even discussed or considered by the enquiry officer in his report. The learned counsel further submitted that from day one, after resumption of his duties in the concerned Branch i.e. Hamam Street, the petitioner drew the attention of the higher authorities of the Bank pointing out that certain irregularities are going on in the Bank. It is submitted by the learned counsel for the petitioner that the petitioner was advised by the higher authorities to continue with the said practice on the ground that the said practice which was going on was beneficial to the Bank and under the -7- circumstances, the petitioner had no option but to continue with the past practice which was prevalent at the relevant time in the Bank before his joining the said branch. Learned counsel for the petitioner submitted that even before petitioner’s joining the said branch, the irregularities in Switch transactions were going on in the Bank. In spite of the said fact, the earlier officers who were in charge were not subjected to any domestic enquiry. It is further submitted that the Bank had not suffered any financial loss at all nor there was any mens rea or bad intention on the part of the petitioner in connection with brokers’ transactions undertaken by the said branch. Learned counsel further submitted that the petitioner had from time to time invited the attention of the higher authorities of the Bank to stop such transactions by writing various letters. It is also submitted by the learned counsel for the petitioner that considering the voluminous documentary evidence produced by the petitioner before the enquiry officer, it cannot be said that the petitioner had committed any misconduct worth the name as ultimately, as a subordinate officer, he was required to obey the instructions given by the higher authorities. Learned counsel for the petitioner further submitted that considering the evidence produced before the enquiry officer, it cannot be said that any of the charges for which the petitioner was charged can be said to have been proved. It is further submitted that the enquiry officer has not considered the advice document at Exhibit ME-28 produced by the Respondents. The petitioner has raised this point in ground (h) of the petition. There is no denial to this fact by the respondents by way of -8- affidavit in reply. Learned counsel further submitted that so far as allegations against the petitioner are concerned, they are absolutely vague and not substantiated by any evidence on record. The learned counsel for the petitioner has also placed on record written submissions. In the written submissions, reference is made to various letters exchanged between the petitioner and the Bank. Learned counsel for the petitioner submitted that the appellate authority has not even considered the submissions made by the petitioner about his innocence and the appellate authority without discussing the evidence on record has dismissed the appeal preferred by the petitioner. It is submitted that since the petitioner has already reached the age of superannuation, this Court by setting aside the dismissal order, may direct the Respondent Bank to give all retiral dues to the petitioner 9. Mr. V.P. Vaidya, learned counsel appearing for the Bank, on the other hand, submitted that considering the totality of the facts and circumstances of the case, the enquiry officer found that the charges against the petitioner are proved. He has relied upon the report of the enquiry officer as well as the order of the disciplinary authority. The respondent Bank has not filed any affidavit in reply to the petition. 10. We have heard the learned counsel for the parties at length. We have gone through the voluminous documentary evidence forming part of this -9- petition. We have also gone through the order of the disciplinary authority as well as the order of the appellate authority and the order passed by the reviewing authority. We have also considered the written submissions submitted on behalf of the petitioner. 11. In order to find out as to whether from the evidence on record, misconduct alleged against the petitioner can be said to have been proved and whether the petitioner has acted in a manner detrimental to the Bank’s interest, it is necessary to consider the factual background in connection with the transactions in question as well as the role played by the petitioner in this regard. It is required to be noted that the petitioner was transferred to the Hamam Street Branch of the Bank on 3rd September, 1990. Within few days after joining the duty, the petitioner wrote a letter to the Divisional Manager of the Bank on 18th September, 1990 pointing out certain irregularities. In the said letter, the petitioner pointed out that there was no proper record of H.O. Investment securities and that the securities worth crores of rupees were not traceable. The petitioner pointed out in the said letter that the branch was having Switch transactions on behalf of several brokers. The amounts are in crores. The relevant part of the said letter of the petitioner reads as under: “On behalf of several brokers, the amounts are in crores. The formal sanction is only for one broker i.e. M/s. P.R. Subramaniam. Similarly there are instructions to undertake such transactions only against SGL or actual securities, whereas the branch is undertaking switch transactions on account of several brokers. Bank Receipts. It is on branch record that no other -10- nationalised bank except Bank of India and Andhra Bank is undertaking such transactions for customers. This matter was brought to the notice of Mr.Ramanathan, Divisional Manager during his visit on 12.9.90. He advised us to send the detail proposals for all brokers. However, when I asked a to whether we should conti8nue to undertake the switch transactions till such proposals are sent and decision taken or stop these transactions, he advised to continue undertaking such transactions since they were undertaken upto now, which please confirm. The securities in the account of KCNM Trust & Mr. Kundnani are reported to be not traceable. The balancing of books is not upto date. Since there is no proper record of allotment of this work it is difficult to ascertain the correct position.” 12. It is required to be noted that after resumption of his duties at Hamam Street Branch, within a short period, the petitioner informed the Divisional Manager of the Bank about the aforesaid irregularities prevailing in the said Branch. Even the Divisional Manager of the Bank, one Mr. S.V. Ramanathan, informed the General Manager, Head Office at Calcutta on December 18, 1990 pointing out that he along with DGM had discussed the matter with petitioner on 17th December, 1990 and that he (petitioner) was also of the opinion that the Bank should not continue the Switch transactions on behalf of brokers though this alone is the main source of profit for the branch. The aforesaid letter is at Exhibit-B to the petition. There are various other letters in connection with the objection taken by the petitioner regarding Switch transactions carried out by the Branch. -11- 13. It is not in dispute that the said transactions on behalf of brokers routed through the said branch were stopped in May, 1991. However, as per the letter of the Divisional Manager of the Bank dated March 17, 1992, the Zonal Manager of the Bank was informed to re-start the said transactions by taking certain measures. The said letter is at Exhibit-M to the petition. The branch was accordingly asked to start the transaction with immediate effect. Accordingly, at the instance of the higher authorities, even though initially for some time the said transactions were stopped, it was directed to re-start the said transaction. 14. A letter was addressed by the Head Office to the Divisional Manager, Divisional Office, Bombay, seeking advice as to whether it is necessary to obtain any permission from the Reserve Bank of India or any other authority in this respect so that the concerned branch will be in a position to proceed further in the matter. The petitioner has also pointed out in the said letter that the Chairman and Managing Director had suggested to start the transaction at the earliest during the discussions with the Manager of the Branch. The petitioner also wrote another letter on 6th April, 1992, at Exhibit-O to the petition. The said letter was in connection with the Switch transactions. The contents of the said letter are as under: “Kindly refer to the correspondence resting with our letter dated 30.3.92. -12- As you are aware Mr. Ramnathan, Divisional Manager has visited our branch today and instructed to start the above transaction. He told us that this is as per instructions from Chairman and Managing Director. He assured us that he will reply to our above referred letter shortly. He advised us that certain formalities like undertaking and copies of contract will be completed by M/s. H.S. Mehta subsequently and personally supervised the transactions which were undertaken at his insistence. Kindly confirm” 15. The Divisional Manager, thereafter wrote a letter to the petitioner on April 27, 1992 informing the petitioner that the letter of the Bank dated 17th March, 1992 itself is indicative how the Bank would like to go with the transactions in question. The petitioner was also informed by the said letter that he has been provided with number of officers, some of whom are familiar with the transactions. In paragraph 8 of the reply, the Divisional Manager wrote thus: “You have asked in your letter to advise you whether Zonal Manager has since confirmed the arrangement. You need not worry about this as this is an internal matter between the Divisional Office and Zonal Office and as far as you are concerned, our instructions are sufficient. For the time being this rerouting transactions may be stopped pending further instructions from Head Office. ‘ 16. The petitioner by his letter dated 8th March, 1993 had informed the Zonal Manager that he had always protested against these transactions and alerted the higher authorities on almost all points covered in their letter dated -13- 19th January, 1993 but his efforts were not given due consideration. The said letter is at Exhibit-Q to the petition. 17. The learned counsel for the petitioner strongly relied upon the said correspondence and submitted that as a subordinate officer the petitioner had no option but to carry out the instructions given by the higher authorities. The petitioner had served as Senior Manager of Hamam Street Branch between 3rd September, 1990 and 18th April, 1992. While the petitioner was at the Hamam Street Branch, he drew attention of the higher authorities about such irregularities in connection with the Switch transactions. It is not in dispute that the said procedure and transaction was carried out much prior to the petitioner joining at the said branch. It is the petitioner who for the first time drew the attention of the authorities the apprehended danger to the Bank if the Bank proceeds with the transactions in question. It is required to be noted that while the petitioner was working at the said Branch, he was not subjected to any memo or show cause notice of any nature and in fact during his tenure as a Branch Manager in the said Branch he was asked by the higher authorities to continue with the said transaction. It seems that for the time being the transactions were stopped but again at the instance of higher authorities, same were re-started. It is unfortunate that the enquiry officer has not referred to the said voluminous documents which were produced before him by the petitioner. As pointed out earlier, the petitioner was in charge of the Bank as Senior -14- Manager of the Hamam Street during the period 3rd September, 1990 and 18th April, 1992 and during major part of his tenure he went on corresponding in respect of the transactions in question with the higher authorities. If the act of the petitioner was of such a grave nature, it is surprising as to how the disciplinary authority failed to take into account the said aspect during the period when the petitioner was in the said branch of the Bank. In fact, after his transfer from the said branch to the Andheri Branch, after considerable time, he was subjected to charge-sheet on 14th/17th June, 1994. It seems that the disciplinary authority with a view to cover up the decision of the higher authorities of the Bank ultimately decided to hold an enquiry against the petitioner after a considerable time after his transfer from the Hamam Street branch of the Bank. Neither the Enquiry Officer nor the disciplinary authority has considered the fact that the petitioner had already drawn the attention of the authority the moment he joined at the said branch. It is true, as argued by the learned counsel for the petitioner, that even if the higher authority of the Bank had asked the petitioner to continue with the same practice, the petitioner was still not obliged to follow such instructions. However, as a subordinate officer of the Bank and especially when in view of the letter of the Zonal Office by which the petitioner was asked to obey the instructions of the Bank, no fault can be found with the petitioner in this behalf. It is required to be noted that even before considerable time till the petitioner joined the said branch, the said practice was followed by the Bank. The authorities had not chosen to take -15- disciplinary action against the earlier officers who were in charge of the Bank and who were following the said practice without murmuring in any manner. It is to be noted that within a short period after the petitioner joined the said branch, he drew the attention of the Zonal Manager and other higher authorities of the Bank regarding the switch transactions. From the record it is clear that the Chairman and other higher officers of the Bank were interested in carrying out the said transactions with a view to help certain brokers. 18. In the petition, the petitioner has made a reference to the letter written by the disciplinary authority in October, 2006 to the Head Office Vigilance Department stating that the petitioner had acted under instructions of higher authorities, did not have mala fide intentions and hence dismissal will be unjustified. During the course of hearing, the learned counsel appearing for the respondents fairly submitted that he is not aware of the aforesaid aspect as to whether the disciplinary authority had written any such letter in October, 1996 to the Vigilance Department. In this behalf, there is no denial to the averment made in the petition. In view of this, it is presumed that the disciplinary authority must have written such letter to the vigilance department and the respondent is not in a position to deny the said aspect. 19. Before proceeding further, it may be necessary to deal with the report of the enquiry officer in connection with the enquiry conducted against -16- the petitioner. So far as charge at article No.1 which is in connection with indiscriminate issuance of numerous bank receipts is concerned, the enquiry officer after analysing the evidence found as under in paragraphs 6 and 8. The same read thus: “6. In his letter dated 18.9.90 addressed to DM (Exh. D-1), the CO has sought permission from higher authorities to stop such unauthorised transactions. In fact, the CO should have himself stopped the transactions as he knew that these were unauthorised. 8. The CO has taken the plea that he was consistently against undertaking of such transactions and had taken up the matter again and again with the higher authorities, but they asked him to continue these transactions with other brokers also. Nevertheless the CO should have insisted upon the written approval of DO/ZO and in case the same was not forthcoming he should have stopped these transactions. The CO has also stated that he was prevailed upon to continue these transactions whenever he insisted for stoppage of these transactions, on the assurance that detailed guidelines will