IN THE HIGH COURT OF GUJARAT AT AHMEDABAD SPECIAL CIVIL APPLICATION No 2370 of 1984 For Approval and Signature: HON'BLE MR.JUSTICE P.B.MAJMUDAR ============================================================ 1. Whether Reporters of Local Papers may be allowed : YES to see the judgment? 2. To be referred to the Reporter or not? : YES 3. Whether Their Lordships wish to see the fair copy : NO of the judgement? 4. Whether this case involves a substantial question : NO of law as to the interpretation of the Constitution of India, 1950 of any Order made thereunder? 5. Whether it is to be circulated to the concerned : NO Magistrate/Magistrates,Judge/Judges,Tribunal/Tribunals? -------------------------------------------------------------- UTTAMCHAND J SHAH Versus DENA BANK -------------------------------------------------------------- Appearance: MR MR ANAND for Petitioner No. 1 MR DIPAK C RAVAL for the Petitioner. MR PRASHANT G DESAI for Respondent Nos. 1-4 -------------------------------------------------------------- CORAM : HON'BLE MR.JUSTICE P.B.MAJMUDAR Date of decision: 09/12/2003 ORAL JUDGEMENT 1. In the present petition, which is pending before this Court practically since two decades, the challenge is against the order passed by the Disciplinary Authority of the respondent-Bank against the petitioner, imposing a penalty of withholding of one increment without cumulative effect. The petitioner has also challenged the action of the Management in not giving him benefit of promotion with retrospective effect, i.e. with effect from 1st June, 1982. The petitioner has also challenged paragraphs 3.8 and 3.9 of the Promotion Policy framed by the Bank, under Regulation 17 of the Dena Bank Officers' (Service) Regulations, 1976, on the ground that the same is unconstitutional and arbitrary. The petitioner has also challenged the finding of the Enquiry Officer, by which the Enquiry Officer found that the petitioner has committed misconduct. 2. The facts leading to the present petition are as under :- At the relevant time, the petitioner was serving as Branch Manager of Dena Bank at Sihori, District : Banaskantha. The petitioner was subjected to charge sheet dated 10th April, 1981. As per the charge sheet, following charges were levelled against the petitioner :- (i) Lack of honesty, integrity, diligence in discharge of duties, exposing or likely to expose the Bank to the risk of heavy financial loss, and / or (ii) committing act/s prejudicial to the interest of the Bank exposing or likely to expose the Bank to the risk of heavy financial loss. The allegation against the petitioner is that while he was working as Branch Manager, at Sihori Branch during the year 1978, he sanctioned term loans for purchasing second hand truck/s as well as for the purchase of diesel jeeps. The petitioner has sanctioned such loans unauthorisedly, violating the discretionary powers vested in him as Branch Manager 'C' Grade Branch. Particulars of the aforesaid loans sanctioned by the petitioner are annexed along with the petition at Annexure 'A' to the petition, at page 32. The respondent-bank, thereafter, appointed the Enquiry Officer and regular departmental enquiry was conducted against the petitioner. After considering the say of the petitioner and after considering the evidence on record, the Enquiry Officer came to the conclusion that the petitioner has exceeded the authority vested in him and moreover, his explanation, as offered in the arguments, to have been confused with the writing of the Discretionary Powers Booklet, as discussed in the report, would mean his deficiency in understanding, which is not expected of a Branch Manager. As per the finding of the Enquiry Officer, which is at page 45 in the compilation, the Enquiry Officer found that the charges levelled against the petitioner do not establish lack of honesty or integrity on the part of the petitioner, but it can be summarised that the petitioner was not diligent in discharge of his duties and had the loan amounts been not repaid, the bank would have been exposed to financial loss, but, since the advances are recovered in full, the Bank is not put to any financial loss, and, as per the opinion of the Enquiry Officer, the charges levelled against the petitioner be viewed liberally. 3. As stated earlier, the enquiry was initiated against the petitioner in connection with his duty as a Branch Manager and he had sanctioned certain loans unauthorisedly. After considering various documents and after considering the evidence of the witnesses, the Enquiry Officer has specifically come to the conclusion that the delinquent could not establish the fact that he was vested with discretionary powers for sanction of loan to the parties mentioned in the chargesheet issued to him, though, of course, the Enquiry Officer came to the conclusion that all the loan amounts, referred to in the chargesheet, have been fully repaid. 4. During the departmental proceedings, the petitioner took the defence that, by oversight, he had sanctioned the said loan and that there was no mens rea on his part. The Disciplinary Authority, subsequently, by its order dated 26th September, 1983, accepted the finding of the Enquiry Officer, in toto, and, by relying upon Regulation 7(3) of the Dena Bank Officer Employees' (Discipline & Appeal) Regulations, 1976, the Disciplinary Authority concurred with the finding of guilt reached by the Enquiry Officer of the charge of lack of diligence in discharge of his duty, exposing or likely to expose the Bank to the risk of heavy financial loss, and ultimately, the Disciplinary Authority passed an order, imposing a penalty of withholding of one annual increment of pay without cumulative effect. The said order of the Disciplinary Authority is produced at Annexure 'D', page 46 in the compilation. Along with the penalty order, copy of the Enquiry Officer's report was also given to the petitioner. 5. The Appellate Authority, after considering the arguments of the petitioner, came to the conclusion that the petitioner herein sanctioned the loan without jurisdiction and referred the matter to the Regional Office thereafter for confirmation. The Appellate authority also found that there was no urgency or special justification for exceeding his authority in disbursing the advances and that too, for second hand trucks or vehicles, for which he had no discretion at all. The appellate authority also found that the petitioner should have obtained the prior permission of the Regional Office and only on receiving approval, should have disbursed the amount. The observations of the appellate authority are finding place at page 54 in the compilation. Considering the aforesaid aspect, the Appellate Authority also dismissed the appeal. The petitioner has, accordingly, challenged the aforesaid order of penalty by way of the present petition. At the time when the departmental enquiry was pending against the petitioner, by order dated June 7, 1982, the petitioner was promoted, along with other Officers, from Junior Management Grade Scale I to Middle Management Grade Scale II with effect from 1st June, 1982, but results of 30 Officers, who have been issued chargesheets on various grounds, were withheld pending clearance of the charges levelled against such Officers. Since the disciplinary proceedings were pending against the petitioner, his promotion was withheld by the said order until the completion of the disciplinary action. After conclusion of the Enquiry, as stated earlier, the petitioner was subjected to penalty, as aforesaid, and in view of the penalty inflicted against the petitioner, he was not given benefit of promotion, even though he was selected for such promotion by the said order dated February 7, 1982. The petitioner has also challenged the said action of the Bank in not giving him benefit of such promotion and withholding the same, on the ground that the said action of withholding his promotion would amount to "Double Jeopardy". The petitioner has also challenged the promotion policy of the Bank, by which the Bank is entitled to withhold promotion for a certain period until the completion of the disciplinary action. The petitioner has prayed that paragraphs 3.8 and 3.9 of the Promotion Policy of the Bank, laid down under Regulation 17 of the Dena Bank Officers' (Service) Regulations, 1976 be declared as unconstitutional. 6. Mr.Raval, learned Advocate who is appearing for the petitioner, strenuously argued the following points :- (i) That the order inflicting penalty is not just and proper, as the petitioner has not committed any 'misconduct', as defined under the Regulations of the Bank; (ii) That it is a case of "No Evidence", that the finding of the Enquiry Officer is perverse, and that the Disciplinary Authority has committed a grave error in inflicting the impugned penalty of withholding of one increment without cumulative effect; (iii) That the action of the Bank in withholding promotion during the pendency of the enquiry is illegal and arbitrary and it would amount to "Double Jeopardy"; (iv) At the time of passing the punishment order, the Bank should also have passed an appropriate order, promoting him retrospectively in view of his selection by the DPC at the earlier point of time. Alternatively, in view of the fact that he was found fit for promotion at the relevant time when the Departmental Promotion Committee met, he was required to be promoted straight away, moment the punishment period is over and was not required to wait till the formation of the DPC; AND (v) That Paragraphs 3.8 and 3.9 of the Promotion Policy of the respondent Bank, by which the Bank is entitled to withhold promotion, is illegal, arbitrary and discriminatory and, therefore, the same are required to be quashed. 7. Mr.Desai, who is appearing for the Bank, on the other hand, supported the stand of the Disciplinary Authority. It is argued by Mr.Desai that the petitioner, who was serving, at the relevant time, as a Branch Manager, has acted in a negligent manner and he has sanctioned the loan, for which he had no powers and, thereafter, subsequently, tried to get sanction from the higher authority. He submitted that simply because the loan was repaid is no ground to allow the petitioner to go scot-free when the charges levelled against the petitioner are proved and, ultimately, the bank was exposed to the risk of heavy financial loss in case the amount was not recovered within time. Mr.Desai submitted that this Court cannot sit in appeal over the decision of the Disciplinary Authority and that when misconduct is proved, as per the Rules of the Bank, the order imposing such penalty is not required to be interfered with by this Court in its extraordinary jurisdiction. Mr.Desai also further submitted that in view of the penalty imposed on him, the petitioner was not entitled to get promotion till the penalty period was over and simply because during the pendency of the enquiry, he had appeared before the DPC and was finding place in the merit list, he is not entitled to promotion straight away, as, his selection or placement in the merit list is always subject to the outcome of the disciplinary proceedings. Mr.Desai submitted that after the penalty period is over, the petitioner can always appear before the DPC and at that time, this aspect of penalty is not required to be taken into consideration. 8. I have heard Advocates of both the sides, in detail, and I have also gone through the averments made in the petition as well as the affidavit-in-reply filed by the Bank. 9. So far as the first point argued by Mr.Raval, learned Advocate for the petitioner, in connection with the challenge to the penalty order, is concerned, it is required to be noted that the petitioner was serving as a Branch Manager at the relevant time and he was holding a responsible post. The petitioner was subjected to enquiry on the ground that he had shown lack of honesty, integrity, and diligence in discharge of duties, exposing or likely to expose the Bank to the risk of heavy financial loss and / or had committed an act prejudicial to the interest of the Bank, exposing or likely to expose the Bank to the risk of heavy financial loss. In this connection, various witnesses were examined. At page 38 in the compilation, the Enquiry Officer has considered the evidence of various witnesses. The Disciplinary Authority has specifically found that the petitioner has failed to establish the fact that he was vested with the discretionary powers for sanction of loan to the parties mentioned in the chargesheet. The Enquiry Officer has considered, in detail, the evidence on record. At page 43 in the compilation, the Enquiry Officer has observed as under :- " ... ... ... The Defence in his arguments taken a plea of the sign coma, after the word New Chassis as mentioned in the Discretionary Powers Booklet :- "New Chassis, (coma) trucks, vehicles, tempos, etc." and he stated with this, he misunderstood the powers vested with him. In his arguments, he has already admitted that he has exceeded the authority as a result of confusion, and that it was not intentional, but accidental, and, therefore, at the best a misdemeanour. Defence Representative also tried to prove that the action of the charge-sheeted officer was not intentional as he has referred the matter of granting loan to the referred various borrowers to the Regional Office vide Branch Manager's letter No.UJS/114/78 dated September 18, 1978, No.UJS/132/1978 dated October 25, 1978; UJS/103/1979 dated January 1, 1979 and UJS/110/79 dated January 23, 1979 (marked as Exhibits D-1 to D-4), and the Regional Office had received these letters. It is, therefore, clear that the Branch Manager had not concealed any fact from the Regional Office. FINDINGS On going through the evidence and documents and relying on the arguments of Defence, it is evident that he has exceeded the authority vested in him, and moreover his explanation as offered in the arguments to have been confused with the writing of the Discretionary Powers Booklet, as discussed above would at least mean his deficiency in understanding which is not expected from a Branch Manager like him. But, considering the fact as regards the creditability of the borrowers and their financial status, the position, and in view of satisfaction of all the accounts, it is certain that from business point of view on the bank, he has not made any mistake and in view of that, the allegation that by exceeding powers in above manner, he was likely to entail the bank to financial losses does not stand, as the amount advanced to the referred borrowers was fully recovered. Though the Branch Manager had referred to the Regional Office about the four referred loan account as per Exhibit D-1 to D-4, it is not known why the matter was kept in abeyance by the Regional Office, nor the advances were recalled and why the Branch Manager preferred to keep silence in seeking confirmation of these acts. Furthermore, the Branch Manager is reported to have declared of such accounts in BR-RO-M-2 statements of the branch every month. In view of the foregoing, the charges levelled against the Branch Manager do not establish the lack of dishonesty (sic) and integrity on the part of the Branch Manager. But it could be summarised that the Branch Manager was not diligent in discharge of his duties, had the loan accounts not repaid, the bank would have been exposed to financial loss. But since the advances are recovered in full, the bank is not put to any financial loss, and hence, the charges levelled against Shri U.J. Shah may be viewed liberally. ... ... ...." The finding of the Enquiry Officer is, therefore, based on the evidence on record and, as such, it is not in dispute that the petitioner had acted beyond his powers in the matter of disbursement of the loans. Whether the bank has suffered a financial loss or not, is a different matter altogether, but, it is certain that the petitioner had not acted vigilantly in connection with the sanction and disbursement of the loans. The petitioner, who was serving as a Branch Manager, was supposed to know the procedure and his own jurisdictional limits, upto which he can sanction loans. The Disciplinary Authority has agreed with the said finding and has taken a very liberal view in the matter, by imposing a penalty of withholding of one annual increment of pay without cumulative effect. The Appellate Authority has also considered the said aspect, which I have referred earlier in this judgment. Considering the aforesaid aspect of the matter, and considering the finding of the Enquiry Officer, as well as considering the order of the appellate authority, in my view, it cannot be said that the petitioner has not committed any misconduct or that it is not a case of misconduct as per the Regulations of the Bank. The case of the petitioner squarely falls within the ambit of committing an act, prejudicial to the interest of the bank, exposing or likely to expose the Bank to the risk of heavy financial loss. The contention of Mr.Raval that this is not a case of 'misconduct', as defined under the Regulations of the Bank, cannot be believed. 10. Similarly, the argument of Mr.Raval that this is a case of "No Evidence", cannot be believed. As such, it is not in dispute that the petitioner had sanctioned the loan beyond his powers. Simply because thereafter, he had sought some clarification can never be said to be a ground available to the petitioner, by which he can come out from the charge of so-called negligence, while acting as a responsible Officer of the Bank. In a departmental enquiry, even if there is some evidence on record, the order of the disciplinary authority cannot be set aside by the Court. In a given case, even if two views are possible, that is also no ground for setting at naught the decision of the Disciplinary Authority. However, in the instant case, the charge levelled against the petitioner is appropriately proved by the evidence on record. 11. At this stage, reference is required to be made to the decisions cited by Mr.Raval. Mr.Raval relied upon the decision of the Apex Court in Union of India and others v. J. Ahmed, AIR 1979 SC 1022. In the aforesaid case, the Apex Court has found, in paragraph 9, that the five charges levelled against the delinquent, at a glance, would convey the impression that the respondent therein was not a very efficient officer. Some negligence is being attributed to him and some lack of qualities expected of an officer of the rank of the Deputy Commissioner are listed as charges. Charge No.2 was in relation to the quality of lack of leadership and charge No.5 enumerates inaptitude, lack of foresight, lack of firmness, and indecisiveness. Considering the nature of the charges levelled against the delinquent in that case, the Supreme Court found that the same could not constitute misconduct for the purpose of disciplinary proceedings. In paragraph 17 of the said judgment, it has been found by the Supreme Court as under :- " ... ... ... 17. It thus appears crystal clear that there was no case stricto sensu for a disciplinary proceeding against the respondent. In fact the inquiry was held to establish that the respondent was not fit to hold a responsible post. The respondent was actually retiring from service and there was no question of his any more holding a responsible position. Yet not only the inquiry was initiated but he was retained in service beyond the date of his normal retirement till the final order was made on 11th October, 1963 when he was removed from the Indian Administrative Service. It appears that there were large scale disturbances in the State. There followed the usual search for a scapegoat and the respondent came handy. Some charges were framed none of which could constitute misconduct in law. Some charges were mere surmises. Substance of the allegations was that he was not a very efficient officer and lacked the quality of leadership and was deficient in the faculty of decision making. These deficiencies in capacity would not constitute misconduct. If the respondent were a young man and was to continue in the post for a long period, such an inquiry may be made whether he should be retained in the responsible post. He may or may not be retained but to retain him in service beyond the period of his normal retirement with a view to punishing him was wholly unjustified. The High Court was, therefore, right in coming to the conclusion that the respondent was no longer in service on the date on which an order removing him from service was made and, therefore, the order was illegal and void. ... ... ...." So far as the facts of the present case are concerned, the petitioner was holding an important position in a Bank, wherein he was required to disburse loan to various borrowers and looking to the fact that he was holding a sensitive post, it was expected of him to be vigilant and was required to act as per his powers and jurisdiction. Considering the nature of allegation, for which the delinquent was charged, it cannot be said that he has not committed any misconduct worth the name. Mr.Raval has also relied upon the decision in Bhagwati Prasad Dubey v. The Food Corporation of India, AIR 1988 SC 434. The said case was in connection with disciplinary proceedings and it was found that the finding of the Enquiry Officer about proof of charge of misconduct was based on "no evidence" at all. It has been found by the Supreme Court in paragraph 3 that the Enquiry Officer reached the conclusion on no evidence and without proper appreciation of the background and the circumstances in which the delinquent was required to function at the relevant time. It has been found by the Supreme Court in paragraph 7 that the appellant of that case was constrained to purchase a huge quantity of Mats under the pressure of necessity and that he had acted to the best of his judgment. He, ultimately, sanctioned the payment only at the rates at which another Public Undertaking had acquired the same goods. In the present case, the appellate authority found that there was no urgency worth the name for acting in such a hurried manner. In the instant case, as pointed out earlier, after considering the oral and documentary evidence, the Enquiry Officer has found that the petitioner has committed misconduct for which he was charged and it can be said that the petitioner was not diligent while discharging duties as a Branch Manager. Mr.Raval has also relied upon the decision of the Apex Court in A.L. Kalra v. Project and Equipment Corporation of India Ltd., (1984) 3 SCC 316. The appellant of that case applied for house building advance and he was charged for misusing the said advance and he had not refunded the unutilised advance amount, in time. It has been observed by the Apex Court in the said judgment in paragraph 23 as under :- " ... ... ... 23. Mr. Ramamurthi, learned counsel for the appellant further contended that the very initiation of the disciplinary enquiry and imposition of punishment of removal from service is thoroughly arbitrary and discloses a vindictive attitude on the part of the respondent Corporation. It was urged that the two heads of charges per se do not constitute any misconduct and they can be styled as trumped-up which even if held approved would not render the appellant liable for any punishment. The two heads of charges have been extracted hereinbefore. Charge No. 1 refers to the drawal of a House Building Advance and failure to comply with the requisite rules prescribed for House Building Advance. According to the finding recorded by the inquiry officer, the failure of the appellant to refund the amount of advance to the respondent-Corporation within two months of the date of the drawal would be violative of Rule 10 (I) (c) (i) of the House Building Advance Rules and it would constitute misconduct within the meaning of the expression in Rule 4(1) (iii) of 1975 Rules. Rule 10 (I) provides that the advance shall be drawn in instalments as prescribed in