IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED : 27-8-2009 CORAM THE HONOURABLE MR. JUSTICE N. PAUL VASANTHAKUMAR WRIT PETITION No.5387 of 2001 M.Sundar Singh ... Petitioner Vs. 1. Canara Bank, rep.by its Managing Director-cum- Disciplinary Authority, Canara Bank, Head Office, Bangalore – 560 002. 2. The General Manager, Canara Bank, Personnel Wing IR Section, Head Office, Bangalore – 560 002. 3. The Deputy General Manager-cum- Disciplinary Authority, Staff Section (Officers), Circle Office, Canara Bank, Madurai. ... Respondents Writ Petition filed under Article 226 of the Constitution of India praying for the issuance of a Writ of Certiorarified mandamus calling for the records of the first respondent in MPD-536/98 dated 2.7.1998 confirming the order of the second respondent dated 14.10.1996, confirming the order of the third respondent in REF.No.MDUC SSO 4151 E 37, dated 6.4.1995 and quash the same and consequently direct the respondents to reinstate the petitioner in service with full backwages, increments, promotions and other benefits from the date of dismissal from service. For Petitioner : Mr.AR.L.Sundaresan, Senior Counsel, for Ms.AL.Gandhimathi For Respondents : Mr.P.R.Raman https://hcservices.ecourts.gov.in/hcservices/ O R D E R The prayer in the writ petition is to quash the order of the first respondent dated 2.7.1998 confirming the order of the second respondent dated 14.10.1996, which is in confirmation of the order passed by the third respondent dated 6.4.1995 and direct the respondents to reinstate the petitioner in service with full bakwages, increment, promotions and other benefits from the date of dismissal from the service. 2. The brief facts necessary for disposal of the writ petition are as follows: (a) The Petitioner while working as Agricultural Extension Officer in the respondent Bank at Keeranur Branch, was placed under suspension by the order of the third respondent dated 8.11.1993 stating that departmental proceedings were contemplated against him for certain allegations of misconduct. On 9.3.1994 the third respondent served the charge memo containing three charges. Petitioner submitted his explanation through his defence representative. Thereafter oral enquiry was conducted and the Enquiry Officer submitted his report on 10.2.1995 holding that the petitioner temporarily misappropriated the amount entrusted to him by the borrowers for closure of their loan amount and derived undue pecuniary benefits and also misrepresented to the higher authorities that the borroweres have closed their earlier loan accounts, when actually the same were in existence. (b) All the three charges were found proved. The third respondent enclosed the Enquiry Officer's report along with a covering letter dated 13.2.1995 and requested the petitioner to submit his remarks with regard to the Enquiry Officer's finding. On 6.3.1995 the petitioner submitted his remarks and by order dated 6.4.1995 the third respondent imposed the punishment of dismissal with further disqualification for future employment. It was recorded that the petitioner ceased to be in service of the bank with effect from 20.4.1995. (c) The petitioner preferred appeal before the second respondent on 10.5.1995, which was rejected on 14.10.1996. Aggrieved against the same, the petitioner filed review petition before the first respondent, which was also rejected on 2.7.1998. According to the petitioner, the said order was not communicated and after issuance of notice through counsel the same was communicated to the petitioner's counsel on 2.9.2000. (d) The said orders are challenged in this writ petition on the ground that the third respondent, who is the Disciplinary Authority ought to have applied his mind independently before passing final https://hcservices.ecourts.gov.in/hcservices/ orders by considering the explanation/remarks offered by the petitioner with regard to the Enquiry Officer's report; that the order of the third respondent dated 6.4.1995 is a non-speaking order; that the second respondent while disposing of the appeal, acted without application of mind; that the review petition was also rejected without assigning any reason; and that, the finding of the enquiry officer is based on no evidence and therefore the dismissal order passed by the third respondent is without any basis. 3. The third respondent filed counter affidavit by stating that the petitioner joined in the services of the Bank on 30.8.1982 as Agricultural Extension Officer and while working at Kodaikkanal branch and at Keeranur branch, he received money from the borrowers for the closure of liability in their Farmers Green Card Scheme Loan accounts. The petitioner after receipt of the money from the borrowers did not remit the amount into their loan account and misappropriated the same. The petitioner also obtained fresh loan papers for the renewal of the Farmers Green Card Scheme Loan from the borrowers and submitted the renewal proposal to the sanctioning authority by misrepresenting that the earlier loans were closed, though the non-closure of the loan amount was within his knowledge. When the Kodaikkanal branch officials sent official notices to the borrowers the fact of non-closure of the loan amount came to light and when the borrowers approached the petitioner after knowing about the non-remittance of the amount, the petitioner paid and closed the loan accounts. Thus, the petitioner temporarily misappropriated the amount entrusted to him by the borrowers and derived pecuniary benefits. Departmental proceedings were initiated for the said misconduct by conducting enquiry and it was found that the petitioner was guilty of all the charges and imposed the punishment of dismissal from service. The appeal and review petitions filed were also rejected by the second and third respondents respectively. It is also stated in the counter affidavit that the petitioner was earlier charge sheeted for certain misconduct and was imposed with the punishment of reduction to lower time scale of pay by one stage on 2.8.1997 and the same was modified as 'Censure' on appeal. The disciplinary authority agreed with the findings of the Enquiry Officer and as per the service regulation there is no legal requirement to give detailed reasons. All the facts including the remarks submitted by the petitioner were taken note of by the third respondent before passing the order of dismissal. The appellate authority and reviewing authority found no ground to revise/review the decision. The petitioner was subjected to departmental proceeding in compliance of the Canara Bank Officer Employees' (Disciplinary and Appeal) Regulations, 1976. 4. The learned Senior Counsel appearing for the petitioner argued that the third respondent's order imposing major penalty of dismissal is a non-speaking order and he has not discussed as to how the charges are proved and also not considered the remarks filed by https://hcservices.ecourts.gov.in/hcservices/ the petitioner for not accepting the Enquiry Officer's report. The learned Senior Counsel also submitted that the appellate authority, though passed speaking order, the same will not cure the defect contained in the order passed by the third respondent-original authority. The learned Senior Counsel further submitted that the reviewing authority while concurring with the orders passed by the original authority and appellate authority, failed to give any reason and therefore the order of punishment imposed on the petitioner is liable to be set aside. 5. The learned counsel for the respondents on the other hand submitted that the petitioner having been appointed as bank employee, utmost integrity is expected and he having misappropriated the loan amounts repaid by the borrowers, had committed breach of trust and confidence and therefore he cannot be retained in the banking service. The charges levelled against the petitioner were also proved before the Enquiry Officer and the petitioner was given copy of the enquiry report and after considering the remarks submitted by the petitioner, the Disciplinary Authority concurred with the findings of the Enquiry Officer and imposed the punishment of dismissal. As the Disciplinary Authority concurred with the findings of the Enquiry Officer, no detailed reason need be given to come to the conclusion. Since the charges of misappropriation is proved and the honesty and integrity of the petitioner is not upto the mark, he lost the confidence of the bank and therefore petitioner cannot be retained in the banking service. Consequently the Disciplinary Authority thought fit to dismiss the petitioner from service and the said order was confirmed by the second respondent viz., the appellate authority and by the first respondent in the review application. The learned counsel also produced Canara Bank Officers Employees (Discipline and Appeal) Regulation, 1976, and contended that as per Regulation No.21, on the conclusion of the enquiry, report shall be prepared by the Enquiry Officer and if the enquiring authority is not the Disciplinary Authority, the report shall be forwarded to the Disciplinary Authority along with records and if the Disciplinary Authority disagrees with the findings of the Enquiry Officer, he should record reasons for his disagreement and record his own findings and if the Disciplinary Authority agrees with the findings of the Enquiry Officer, he can impose penalty specified in Regulation No.4. Relying upon the said regulation, the learned counsel submitted that no specific reason is to be mentioned in the order of the Disciplinary Authority, if the Disciplinary Authority agrees/concurs with the findings of the Enquiry Officer and therefore the order passed by the third respondent is just and proper. The learned counsel also cited the judgment of the Supreme Court reported in (1995) 6 SCC 279 (State Bank of Bikaner & Jaipur v. Prabhu Dayal Grover) in support of his contentions. https://hcservices.ecourts.gov.in/hcservices/ 6. I have considered the submissions of the learned Senior Counsel for the petitioner as well as the learned counsel for the respondents. 7. The charges levelled against the petitioner are as follows: "Charge -I: (Regarding FCGS 61/92 and 67/92) While the CSO was working at our Kodaikanal branch, amounts were entrusted to you by the customers for the closure of loan accounts outstanding in their FGCS liabilities and has not remitted to the accounts, thus misappropriated temporarily. Subsequently you had obtained loan papers from the borrowers for renewal of their Green Card and while forwarding the renewal application to the sanctioning authority, you had misrepresented that the earlier loan sanctioned to the borrowers were closed, even though the non- closure of loan accounts was within your knowledge. Charge -II: (Regarding FCGS 47/92) While the CSO was working at our Kodaikanal branch, amounts were entrusted to you by the customers for the closure of loan accounts outstanding in their FGCS liabilities and has not remitted to the accounts, thus misappropriated temporarily. Subsequently you had obtained loan papers from the borrowers for renewal of their Green Card and while forwarding the renewal application to the sanctioning authority, you had misrepresented that the earlier loan sanctioned to the borrowers were closed, even though the non- closure of loan accounts was within your knowledge. Charge-III: (Regarding FCGS 33/92) While the CSO was working as AEO at our Keeranur branch from 17.8.93 to 15.11.93, has received certain amounts by a customer for closure of PGC loans but not remitted and misappropriated temporarily. Subsequently you had obtained his signatures in loan papers and while filling up the same, you had mentioned that it was "Renewal of FCGS 33/92" eventhough the non-closure of loan account was within your knowledge and got the loan account renewed. Subsequent to the renewal of loan account, you had remitted the amount and closed the loan account." https://hcservices.ecourts.gov.in/hcservices/ The allegations levelled against the petitioner as evident from the above referred charges are that while the petitioner was working as Agricultural Extension Officer at Kodaikkanal branch from 21.9.1989 to 7.8.1993, he sanctioned loan to one M.Rathinam under FGCS and the said M.Rathinam asked his son Chandrasekar to close the loan who in turn on 2.1.1993 handed over a sum of Rs.30,000/- to the petitioner. The petitioner received the said amount, but did not remit the same in the loan account. Later on, when a counter foil was demanded, petitioner informed the said Chandrasekar that he had already remitted the amount to the loan account and counter foil will be given later. The petitioner also requested the said Chandrasekar to bring his father M.Rathinam for renewal of his loan. While processing the renewal application by the Divisional Office, Dindigul, it was informed by the Petitioner that the party had closed the earlier loan and recommended for another loan of Rs.20,000/- and the same was sanctioned to the said M.Rathinam by the then Divisional Officer, Dindigul. When the petitioner was transferred to Keeranur branch, the Kodaikkanal branch issued registered notice for recovery of the overdues of the said M.Rathinam sanctioned in FGCS 61/92 and 62/92 and the said Chandrasekar came to know about the non-remittance of the amount entrusted to the petitioner. The said Chandrasekar came to know about the non-remittance of the amount entrusted to the petitioner and he met the petitioner at his residence and enquired about the non-remittance and at that time, petitioner issued a post- dated cheque dated 25.10.1993 for a sum of Rs.33,400/- and when the cheque was presented for collection at Keeranur Branch on 30.10.1993, there was no sufficient funds in his OD account. Thus, the petitioner misappropriated the amount for closure of the loan account and derived undue pecuniary benefits and misrepresented the then Divisional Officer, Dindigul that the borrower had closed earlier loan account, when in fact the same was not closed. Similar is the charges in respect of charge Nos.2 and 3 also for different loans. 8. The petitioner's explanation having been found not satisfactory, enquiry officer was appointed and during the enquiry all the three charges were found proved. Even though the said M.Rathinam was examined as MW-3, he changed his statement during the enquiry. MW-13, MW-5 and MW-7 who have also witnessed the statement given on 4.11.1993 against the petitioner. MW-7 gave deposition as follows: "........ Sri C.Rathinam had given his statement at our Kodaikkanal branch on 4.11.93. Regarding the statement of Sri C.Rathinam it was given by him in the Branch Manager's cabin at Kodaikanal branch in the presence of the Senior Manager, Inspecting Officer and myself on interrogation by the IO. The statement was written by Sri C.Rathinam himself. Further to the question by PO, can you say anybody compelled these borrowers https://hcservices.ecourts.gov.in/hcservices/ to give such statement, he promptly replied they were not compelled by anybody. ............." Relying on the said statement, the Enquiry Officer gave a finding with regard to Charge No.1 and disbelieved the version of the petitioner that the said Chandrasekar lent money to the petitioner as there is no documentary proof to confirm the same. Insofar as charge No.2 is concerned, it was found proved. With regard to Charge No.3, the deposition of MW-12 and MW-11 indicated the method adopted by the petitioner and clearance of the liability by the petitioner in FGCS No.23/92 and the same was received from one Palaniappa Gounder. In conclusion, the Enquiry Officer in his report stated as follows: "It is clearly evident that the CSO in all the above cases has temporarily misappropriated the amount entrusted to him by the borrowers for closure of their loan accounts and derived undue pecuniary benefits. He had also misrepresented to the higher authorities that the borrowers had closed their earlier loans, when the same were in existence at the time of submitting the proposals for renewal. The modes operandi adopted is similar more or less in all the above cases and the documents pertaining to the loan accounts are in the handwriting of the CSO and he was the Section in-charge of the Agricultural loan department. The alleged money transaction between the CSO and some of the customers gave evidence to their intentions, in getting second loan from the bank when the earlier loans were in existence. By his above action Sri M.Sunder Singh has failed to perform his duties with utmost honesty, integrity, devotion and diligence and all the charges against the CSO stands proved." 9. The Disciplinary Authority in his order dated 6.4.1995 agreed with the findings of the Enquiry Officer and imposed the punishment of dismissal from service. The petitioner's remarks about the Enquiry Officer's finding submitted on 6.3.1995 was also considered and referred to in the order of the third respondent. Even though no detailed order is passed by the third respondent, it is not in dispute that the third respondent agreed with the findings of the Enquiry Officer and chosen to impose the punishment of dismissal from service. 10. In the decision reported in (1995) 6 SCC 279 (State Bank of Bikaner & Jaipur v. Prabhu Dayal Grover), similar regulation viz., Regulation 68(3) of the State Bank of Bikaner & Jaipure Officers' https://hcservices.ecourts.gov.in/hcservices/ Service Regulations, 1979, was considered by the Honourable Supreme Court and in paragraph 13 it is held thus, "13. .......... whether under the Regulations, the authorities concerned are required to give reasons for their decisions. Regulation 68(3) lays down the procedure the disciplinary authority is required to follow after it receives the proceedings of the enquiry including the report of the Inquiry Officer. On careful perusal thereof we find that only in those cases where the disciplinary authority considers it necessary to direct fresh or further enquiry or disagrees with the findings of the Inquiry Officer, it has to record the reasons for its such directions, but there is no such obligation if it agrees with the findings of the Inquiry Officer. It can, therefore, be legitimately inferred that when express provisions have been made in the Regulations for recording reasons in only the first two of the three fact situations — and not the other — there is no implied obligation also to record the reasons in case of concurrence with the findings of the Inquiry Officer. Even if we proceed on the basis that such an obligation is implicit, still the order of the disciplinary authority cannot be held to be bad as, on perusal thereof, we find that before concurring with the findings of the Inquiry Officer it has gone through the entire proceeding and applied its mind thereto. In our considered opinion, when the disciplinary authority agrees with the findings of the Inquiry Officer and accepts the reasons given by him in support of such findings, it is not necessary for the punishing authority to reappraise the evidence to arrive at the same findings. We are, therefore, unable to accept the contention of Mr Dutta that the order of punishment was liable to be struck down as it was a non-speaking order and did not contain any reason." (Emphasis Supplied) 11. The service regulation of the respondent Bank is similar to the service regulation, which was considered by the Supreme Court in the decision referred above. Regulation No.7 of the Canara Bank Offier Employees' (Discipline and Appeal) Regulations, 1976, is extracted hereunder for proper appreciation: https://hcservices.ecourts.gov.in/hcservices/ 7. Action on the inquiry report. (1) The Disciplinary Authority, if it is not itself the inquiring authority may, for reasons to be recorded by it in writing, remit the case to the inquiring authority for fresh or further inquiry and report and the inquiring authority shall thereupon proceed to hold the further inquiry according to the provisions of regulation 6 as far as may be. (2) The Disciplinary Authority shall, if it disagrees with the findings of the inquiring authority on any article of charge, record its reasons for such disagreement and record its own findings on such charge, if the evidene on record is sufficient for the purpose. (3) If the Disciplinary Authority, having regard to its findings on all or any of the articles of charge is of the opinion that any of the penalties specified in regulation 4 should be imposed on the officer employee it shall, notwithstanding anything contained in regulation 8, make an order imposing such penalty. (4) If the Disciplinary Authority having regard to its findings on all or any of the articles of charge, is of the opinion that no penalty is called for, it may pass an order exonerating the officer employee concerned." 12. In the light of the above judgment of the Supreme Court, if the Disciplinary Authority agrees with the findings of the Enquiry Officer, there is no implied obligation to record reasons for concurrence. On the basis of the above regulation as well as the judgment of the Supreme Court, there is no substance in the contention of the learned Senior Counsel for the petitioner that the third respondent has not given any reason to impose the order of dismissal while concurring with the Enquiry Officer's findings. 13. The Appellate Authority considered and discussed about the findings given by the Enquiry Officer by a detailed order and held that there is no point in interfering either with the findings of the Enquiry Officer or with the orders of the Disciplinary Authority and confirmed the punishment. Regulation No.17 deals with disposal of appeals by the appellate authority. As per the said regulation, the appellate authority shall consider whether the findings are justified or whether the penalty is adequate or inadequate and pass appropriate orders. From the perusal of the order of the appellate authority it is evident that the appellate authority has considered the findings https://hcservices.ecourts.gov.in/hcservices/ of the Enquiry Officer and also considering the gravity of the charges proved, confirmed the punishment of dismissal from service. 14. The first respondent, who is the reviewing authority also found that the charges of misappropriation and misrepresentation for renewal of loans to gain undue pecuniary advantage having been proved, which touch upon the petitioner's honesty and integrity. Therefore the first respondent also found that there is no reason to interfere with the findings of the Enquiry Officer or the Disciplinary Authority. 15. The scope of judicial review with regard to the interference in the disciplinary matters is very limited as held by the Supreme Court in the decision reported in (2006) 6 SCC 794 (Union of India v. K.G.Soni) and in paragraphs 14 and 15 it is held thus, "14. .......... the court should not interfere with the administrator’s decision unless it was illogical or suffers from procedural impropriety or was shocking to the conscience of the court, in the sense that it was in defiance of logic or moral standards. In view of what has been stated in Wednesbury case the court would not go into the correctness of the choice made by the administrator open to him and the court should not substitute its decision to that of the administrator. The scope of judicial review is limited to the deficiency in the decision-making process and not the decision. 15. To put it differently, unless the punishment imposed by the disciplinary authority or the Appellate Authority shocks the conscience of the court/tribunal, there is no scope for interference. Further, to shorten litigations it may, in exceptional and rare cases, impose appropriate punishment by recording cogent reasons in support thereof. In the normal course if the punishment imposed is shockingly disproportionate, it would be appropriate to direct the disciplinary authority or the Appellate Authority to reconsider the penalty imposed." (Emphasis Supplied) In the decision reported in (2007) 7 SCC 257 (Union of India v. S.S.Ahluwalia) the Supreme Court considered the scope of Judicial review in disciplinary proceedings. https://hcservices.ecourts.gov.in/hcservices/ 16. The respondents also found that the petitioner, who was a bank employee lost the confidence of the bank. When the employer can lose confidence of an employee, is explained by the Supreme Court in the decision reported in (2001) 9 SCC 609 (Kanhaiyalal Agrawal v. Factory Manager, Gwalior Sugar Co. Ltd.) and in paragraph 9 held as follows: "9. Substantial contention on the merits of the case by the employer in these appeals is that the finding of loss of confidence in the employee by the Labour Court has been reversed in appeal by the Industrial Court on unreasonable grounds. What must be pleaded and proved to invoke the aforesaid principle is that (i) the workman is holding a position of trust and confidence; (ii) by abusing such position, he commits acts which results in forfeiting the same; and (iii) to continue him in service would be embarrassing and inconvenient to the employer or would be detrimental to the discipline or security of the establishment. All these three aspects must be present to refuse reinstatement on the ground of loss of confidence. Loss of confidence cannot be subjective