IN THE HIGH COURT OF GUJARAT AT AHMEDABAD SPECIAL CIVIL APPLICATION No 9256 of 2003 HON'BLE MR.JUSTICE K.S.JHAVERI ============================================================ 1. Whether Reporters of Local Papers may be allowed : YES to see the judgements? 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? -------------------------------------------------------------- N.C.NAVIN Versus GENERAL MANAGER BANK OF INDIA -------------------------------------------------------------- Appearance: MR IS SUPEHIA for Petitioner No. 1 RULE SERVED for Respondent No. 1,2 NANAVATI ASSOCIATES for Respondent No. 2 -------------------------------------------------------------- CORAM : HON'BLE MR.JUSTICE K.S.JHAVERI Date of decision: 06/09/2004 CAV JUDGEMENT 1.0 By way of this petition the petitioner has challenged the order of dismissal from service dated 5.9.2001 and to reinstate the petitioner in service with all consequential benefits including backwages with 12% interest. The petitioner has also challenged the appellate order dated 17th April 2002 and the order dated 28th March 2003 passed in the Review Application. 2.0 The petitioner was serving as Chief Officer, Corporate Service Department, Bank of India. A chargesheet date 7th June 2000 was served to the petitioner for holding a departmental inquiry in respect of four charges. One Shri Raj Bahadur, Deputy Chief Regional Manager was appointed to hold the departmental inquiry against the petitioner. The Inquiry Officer, after holding the inquiry, submitted his report dated 28.9.2000 and held that all the charges leveled against the petitioner were proved. 2.1 The Chief Regional Manager, after getting the inquiry report by letter dated 9.11.2000 called the petitioner to make his submission in respect of the inquiry report and the petitioner filed his reply on 20.11.2000. 2.2 After considering the reply of the petitioner, the Zonal manager, the respondent no.2 herein, by order dated 5.9.2001 imposed a penalty of dismissal from service on the petitioner. 2.3 The petitioner filed appeal against the order of dismissal which came to be dismissed by order dated 17.4.2002. The petitioner filed Review Application which also came to be dismissed by order dated 28.9.2002. Thereafter the petitioner filed a mercy appeal on 22.1.2003 which also came to be rejected by order dated 28.2.2003. Therefore the petitioner has approached this Court. 3.0 The contentions raised on behalf of the petitioner can be summarized as under: [i] That the departmental proceedings are not conducted in just and fair manner inasmuch as the petitioner did not have a fair and just departmental inquiry against him. [ii] The departmental proceedings were held in hot hurry and witnesses of the petitioner could not be examined because of the hurried departmental proceedings conducted by the respondent authorities. [iii] That the department has approbated and reprobated inasmuch as though the alleged irregularity was committed at Ahmedabad, the inquiry was conducted at Jharkand and therefore the inquiry is required to be quashed on the ground of approbate and reprobate on the part of the respondent bank. [iv] That the management witnesses were not allowed to be examined fully. [v] That the statement of the petitioner was not recorded and defence of the petitioner was not found on record. [vi] That the order of dismissal was passed by the person who has not appointed the petitioner and therefore the order is bad in law and deserves to be dismissed. In short, the respondent no.2 had no authority to dismiss the petitioner from service inasmuch as he is neither Appointing Authority nor the Disciplinary Authority of the petitioner. [vii] That assuming everything is against the petitioner, then also the penalty imposed upon the petitioner is disproportionate to the charges leveled against the petitioner inasmuch as various suits were filed and majority of the amount is already recover and if the petitioner would have been allowed to continue at Ahmedabad, he could have recovered the full amount. 4.0 Mr Chudgar, learned counsel for the respondent Bank submitted that the charges levelled against the petitioner are of very serious nature. He submitted that due to the misconduct of the petitioner the bank had incurred a loss of over 45 lacs. According to him the petitioner was given reasonable opportunity before passing the order of penalty. He also submitted that the petitioner had cross-examined the witness, but in spite of the assurance given on 21st August 2002 he has not produced the list of witnesses on 1st September 2002. Moreover, the petitioner has signed when the Inquiry Officer has declared that the inquiry was over. He therefore submitted that no interference is required to be called for in the present petition under Article 226 of the Constitution of India. 5.0 The charges levelled against the petitioner as found in the Inquiry Report are as under: "Articles of Charge I: On 6.7.1998 you opened C/D A/C No.2023 in the name of Shri Bharat K. Patel & in order to comply with the Bank's requirement of introduction, you asked Shri S.R. Patel, holder of C/D A/c No.1332 to introduce the said C/D A/c No.2023 of Shri Bharat K. Patel knowing fully well that Shri S.R. Patel did not know Shri Bharat K. Patel and as such his introduction could not be accepted as per the bank's laid down norms. At the request of Shri Bharat K. Patel, on 5.9.1998 he also opened another C/D A/c No.2028 in the name of M/s Continental Textile Mills Ltd. in gross violation of Bank's laid down norms and procedure with regard to opening of C/D A/c number of a private limited company. This account was allowed to be operated upon by Shri Bharat K. Patel without ensuring whether Mr. Bharat K. Patel was authorized to open and operate the account in the name of the said company. You also allowed heavy cash withdrawals in the C/d A/c of M/s Continental Textile Mills Ltd. Knowing fully well that while opening the C/D A/c. Shri Bharat K. Patel had also given an undertaking that he will not withdraw the amount, save and except for the purpose of payment of dues for the employees under the settlement. Articles of Charge-II: You purchased two cheques - one on 28.9.1998 and another on 29.9.1998 of Rs.15 lacs each in the newly opened CD A/c No.2023 of Shri Bharat K. Patel and one cheque on 29.9.1998 of Rs.10 lacs in the newly opened CD A/c No.2028 of M/s Continental Textile Mills Ltd., which were returned unpaid. All the three cheques purchased by you were local cheques and were purchased in complete disregard to the Bank's laid down norms and procedure guidelines with regard to purchase of local cheques, and in particular when the amounts of these cheques were much beyond your delegated authority as provided in the scheme of delegation of powers booklet page 10  A to table I-B, at Sr. No.8 and your earlier request TCD of Rs.25 lacs to said party was declined by the Chief Regional Manager. This fact of having exceeded your authority was knowingly not reported by you to higher authorities and it is only after the above 3 cheques amounting to Rs.40 lacs were returned and your efforts to recover the same did not materialize that you reported the same to higher authorities/controlling Office. Consequently, the Bank's funds to the tune ofRs.37,98,785/- plus interest thereon till date are in jeopardy and no security is available and Bank is likely to suffer a loss to that extent. On 14.9.1998 you also purchased cheques of Rs.15 lacs in the newly opened C/D A/c No.2028 of M/s Continental Textile Mills Ltd, which was much beyond his delegated authority as Manager, Saraspur Branch. Article of Charge No.III: Current A/c of M/s Mack Plast Packages A/c No.2003 was opened on 2.2.1998. It is observed from the A/c that the TOD in the A/c was allowed continuously from 23.2.1998 and thereafter the A/c never came in credit. Moreover, on average, a debit balance of Rs.2.00 to 2.50 lacs have been allowed in this newly opened A/c continuously, in complete disregard to bank's laid down norms and procedure in this regard. Moreover, 2 cheques of Rs.156000/- and Rs.230000/- were purchased in the said A/c on 31.3.1998 and 4.4.1998 respectively. Both the cheques were returned unpaid. However, instead of debiting these returned cheques to the C/D A/c of M/s Mack Plast Packages, the same were allowed to be kept pending for 3 to 5 months and were finally released for debiting the A/c on 2.7.1998 and 28.9.1998 creating huge debit balance of Rs.648982/-. No reporting of TCD so created was done by him to the higher authorities/controlling office as is required as per the bank's laid down norms. Thus, bank's funds to the tune of Rs.6.89 lacs plus interest have been put to jeopardy and the bank is likely to suffer financial loss to that extent. Article of Charge No.IV: During the course of the special audit of the Branch, a revenue leakage of Rs.11,8000/- was detected in the C/D A/c of Shri Bharat K. Patel. Due to inapt handling of the above 2 A/cs, our bank had to pay interest of Rs.36980/- to RBI on the adverse clearing caused on the days when number of cheques presented on the above two a/cs were presented and returned by the branch for want of funds, cheque books containing 10000 cheque leaves were also issued in CD account No.2028 of M/s Continental textile Mills Ltd., without any justification. 6.0 The findings of the Inquiry Officer as stated in the Inquiry Report in respect of the charges are as under: Regarding Charge No.1: There is no dispute about the documentary evidence produced by the Presenting Officer. Current deposit account of M/s Continental Textile Mills Ltd. was opened at Saraspur Branch on 5.9.1998 is evident from ME-5, ME-6 ME-7. Shri Bharat K. Patel has signed as Executive Director of the company while opening the account. The signatures of the CSO appearing on ME-5 are dated 23.11.1998. It shows that no bank official was responsible for opening of the account between 5.9.1998 and 23.11.1998. If the account was opened by some other official, the CSO as Manager could have asked the concerned staff to put initials in token of opening the account even at later stage, if he wanted to disown opening of account which he could not. As per ME-76, there were very heavy transactions in the account of the company since 5.9.1998 i.e. the date of opening of the account. Further, as per ME-78, on 29.9.1998, the CSO had purchased a cheque in the account for Rs.10,00,000.00 drawn on Development Credit Bank, Revdi Bazaar which was returned unpaid for financial reasons. Thus, he cannot disown knowledge of account with the branch. Moreover, as per his statement of defence dated 1.9.2000 submitted to the enquiry, he was canvassing the accounts for his branch ME_5 is evidence that Shri Bharat K. Patel requested the CSO to open C/D A/c of M/s Continental Textiles Mills Ltd. ME-20 has very categorically pointed out violation of bank laid down norms and procedure with regard to opening of C/D A/c. of the company. It also confirms that Bharat K. Patel was allowed to open and operate the account without ensuring his authority to do so. ME-76 i.e. the statement of account of M/s Continental Textile Mills Ltd. Is a good evidence to confirm that heavy cash withdrawals were allowed from the account which was in violation of High Court order and undertaking given by Shri Patel. This has been confirmed by ME-17 and 20. Coming to the arguments of CSO, it is observed that the C/D A/c in the name of M/s Continental Tex. Mills Ltd., was opened on the basis of settlement before the Court, Shri Bharat K. Patel and Shri Mann had submitted affidavits to that effect on which subsequent order of the High Court passed adverse strictures. Court order can authorize to open an account if it is specific in contents. Here, even if it is accepted that such directions were intended by the Court order,opening of current account of a Private Ltd. Company without observing basic formalities is beyond comprehension. Second argument of the CSO, that obtention of Articles of Association and Memorandum of Association would have been completion of formality without making any difference to the position of Bank's dues, does not carry conviction. It is an argument without any substance dismissing the need of system and procedure. It is better of a logical sense prevails to understand the consequences of deviations from the laid down norms and procedures. The charge No.1 is proved. 6.1 With regard to Charge No.II the findings of the Inquiry Officer are as under: On the basis of evidence produced by Presenting Officer and also CSO's brief, purchase of cheques as given in the Articles of charge is not disputed. These two accounts were opened on 6.7.98 and 5.9.98. As such the point that these accounts were newly opened, gains support from ME-1 and ME-5. These were local cheques and were returned unpaid by the drawee bank is supported by ME-24, 32, 33, 50, 51, 52, 53, 54, 55, 56, 57, 58, 59, 60, 61, 62, 63, 64, 65, 66, 67, 68, 69, 70, 71. The cheques were purchased in complete disregard to the Bank's laid down norms and procedure is substantiated by MVV-1 in the Evidence Sheet dated 1.9.2000 as well as by ME-20, 24, 25, 32, 80, 82, 84. CSO's argument for grant of such facilities does not hold water. He has not rebutted the allegations. He has only given his own reasons for purchase of Cheques. B."And in particular the amounts of these cheques were much beyond your delegated authority provided in the scheme of delegation of powers book let page 10-A, of Table I-B at serial No.8 and your earlier request of TOD of Rs.25 lacs to said party was declined by the Chief Regional Manager." I.A's observations/comments: While this portion of the Charge pertaining to exceeding authority is substantiated by ME-83, the CSO has himself admitted this in ME-23 and 33. A. TOD limit of Rs.25 lacs to Shri Bharat K.Patel was declined by the Chief Regional Manager on 19.9.98 is supported by ME-32. B."This is fact of having exceeded your authority was knowingly not reported by you to higher authorities and it is only after the above 3 cheques amounting to Rs.40 lacs were returned and your efforts to recover the same did not materialize that you have reported the same to higher authorities/Controlling Office. Subsequently the Bank's funds to the tune of Rs.37,98,785.00 plus interest thereon till date are in jeopardy as no security is available and bank is likely to suffer a loss to that extent. On 14.9.1998 you also purchased cheques of Rs.15 lacs in the newly opened CD A/c No.2028 of M/s Continental Textile Mills Ltd. Which was much beyond your delegated authority as Manager, Sara spur Branch." To defend this portion of the charge, CSO has mentioned in the brief that the allegations that Bank is likely to suffer loss in aforesaid transactions is not correct as is evident from DE-2, 3 and 5. Also, in any borrowal account wherein litigation is pending, loss cannot be quantified until the outcome thereof. Non reporting of TOD is supported by ME-32, 33. It is a matter of record that Bank's funds to the tune of Rs.37, 98,785.00 plus interest thereon till date are in jeopardy. It is substantiated by ME-75 and 76. There is no evidence to prove availability of security to cover the over drawings. The so called security documents on record (ME-10 to 16) are simply useless pieces of paper as they are signed in blank. The arguments given by defense do not carry any weight. Defense documents are dealing mainly with opinions which are always liable to differ. The cheque for Rs.15 lacs purchased on 14.9.1998 was beyond delegated authority of CSO is substantiated by ME-83. The CSO has himself admitted this in ME-23 and 33. Thus, Charge No.II proved. 6.2 The findings of Inquiry Officer in respect of Charge No.III are as under: The documents produced by the Presenting Officer before the enquiry are not disputed. It is evident from ME-74 that the Current account of M/s Mac Plast Packages was opened at the branch on 2.2.98 from ME-74, it is revealed that an overdraft of Rs.36100 was allowed by the branch on 23.2.98 and thereafter the party always enjoyed overdraft facility. Account was always in debit. An average debit balance of Rs.2.00 to Rs.2.50 lacs appears in the account. Now, the question remains if the state of affairs in the account was in disregard to Bank's laid down norms and procedure in this regard. Out of evidence adduced by presenting officer before the enquiry ME-80 and ME-85 confirm violation of norms and procedures. ME-80 in particular spells that the norms for grant of temporary overdraft. A perusal of this document vis-`-vis the deviations resorted to by the CSO indicates that lending norms were flouted by CSO. He has claimed in his brief that the lending was within his delegated powers. This is not challenged. But such powers are subject to certain norms and guidelines. Purchase of two cheques Rs.156000/- and Rs.230000/- on 31.3.98 and 4.4.98 respectively is a matter of record and supported by ME-37, ME-28, ME-33, ME43, 44, 45, 46. These cheques were returned unpaid. This is supported by ME-35, 36, 38, 39, 40, ME-41B, ME-42A, 42B as well as ME-33. The cheques were purchased under instructions from the CSO is supported by ME-44 & 46 as well as ME-29. Reversal entries for these returned cheques were passed on 2.7.98 and 28.9.98. This is evident from ME-37, 38, 39, 40, 77. Debit of party's account due to reversal of Bill purchase upon return of cheques created a debit balance of Rs.648982.00 in the account is supported by ME-74. Regarding delay in reversal of vouchers to debit party's account, the CSO has put the blame on Shri D.R. Mehta, Dy.Manager (Credit) (ME-28) and Shri Mehta has blamed CSO (ME-29). However, in his statement of defense dated 1.9.2000, CSO has in the same context mentioned on page 4 that the promises of the party about quick realization of these cheques lured him to keep them pending. And due to burden of closing work and tension of CTML's position made him forget this aspect and hence delay. Also in ME-33 it is mentioned that the cheques were kept pending under the impression of recoveries promised by the firm. ME-33 is CSO's reply to the memorandum calling for his explanation. According to the charge, Bank's fund to tune of Rs.6.88 lacs plus interest has been put to jeopardy. This aspect is duly supported by documentary evidence in the form of ME-74. The CSO has mentioned in his statement of defense dated 1.9.2000 that out of the whole amount Rs.1.56 lacs has already been realized. In general, the arguments even by the CSO in his brief are not relevant to allegations appearing in the Articles of Charge. Nowhere his delegated power has been questioned. Violation of procedural aspects argued by CSO does not get any support from the available evidence. Recovery of any amount does not undo the commission of irregularity. Argument advanced about likely loss does not stand the test of scrutiny, because outcome of legal action depends upon so many factors. Thus, charge No.III is proved. 6.3 With regard to the fourth charge the conclusion of the Inquiry Officer is as under: From the aforesaid, it is evident that there was disregard to the Bank's laid down norms and procedure. Shri Bharat K. Patel was unduly accommodated by opening of two CD accounts, issuance of cheque books, allowing heavy cash withdrawals in violation of Court of orders and violation of undertaking given by Shri Patel while opening CD A/c of the company. The CSO has purchased cheques of the party exposing the Bank to the tune of Rs.40.00 lacs beyond his delegated powers in violation of Bank's laid down norms and procedures when his request in the past to allow TOD of Rs.25.00 lacs had been declined by the Regional office. Likewise, two cheques purchased and returned in the account of M/s Mac Plast Packages were kept pending for long and were not reported to higher authorities in violation to Bank's laid down norms and procedures which has the effect of exposing the Bank to serious loss." 6.4 After considering the inquiry report the authority has imposed the following penalties: Charge No.1: Reduction by 3(three) lower stages in the time scale of pay for 2 year with further direction that you will not earn increment of pay during the period of such Reduction and it will have the effect of postponing the future increments of pay under Regulation 4(f) of Bank of India Officer employees (Discipline & Appeal) Regulations, 1976. Charge No.II: Dismissal from Bank's service which shall ordinarily be disqualification for future employment under Regulation 5(j) of Bank of India Officer Employees (Discipline & Appeal) Regulations, 1976. Charge No.III: Dismissal from Bank's service which shall be ordinarily be a disqualification for future employment under Regulation 4(j) of Bank of India Officer Employees Discipline & Appeal) Regulation,1976. Charge No.IV: Reduction by 1 (one) lower stages in the time of scale of pay for 4(four) years with further direction that you will not earn increment of pay during the period of such reduction and it will have the effect of postponing the future increment of pay under Regulation 4(f) of Bank of India Officer Employees (Discipline & Appeal) Regulations, 1976." I have heard the learned counsel for the respective parties in detail and also perused the relevant record. The records reveal that the charges leveled against the petitioner were proved conclusively by the Inquiry Authority on the basis of the evidence brought out in the inquiry record. 7.0 A bare perusal of the findings of the Inquiry Authority, it is very clear that the inquiry has been conducted in accordance with rules and regulations and principles of natural justice have been observed during the entire proceedings. There is nothing to show that the departmental proceedings are not conducted in just and fair manner. In the Inquiry Report it is stated that the petitioner attended regular hearing along with his defence assistant. At the conclusion of the inquiry the Presenting Officer was directed to submit his brief by 8.9.2000 and defence to submit brief by 15.9.2000. The Presenting Officer's brief has been received on 12.9.2000. The petitioner has sent Fax message on 2.9.2000 from Ahmedabad informing that he was sending written brief by registered post. However, when the registered letter was received from the petitioner it was not brief but request letter dated 9.9.2000 to call defence witnesses. A list of eleven witnesses was given requesting to issue notice to them to present with documents. There was also a request to recall management's witness. This has been replied to vide letter dated 18.9.2000 giving one more opportunity to submit defence brief by 23.9.2000. Ultimately defence brief was submitted on 19.9.2000. Therefore, I am of the opinion that sufficient opportunity has been given to the petitioner in the departmental proceedings. 7.1 The manner in which the inquiry was conducted shows that the inquiry was conducted in a proper manner and the petitioner has been afforded reasonable opportunities. Therefore I do not find any substance in the contention that the departmental proceedings were held in hot hurry and witnesses of the petitioner could not be examined. The petitioner had engaged an officer posted at Ahmedabad as his defence assistant, who had participated in the inquiry proceedings and defended the case of the petitioner. On 21.8.2000 the inquiry officer had asked the petitioner to submit the list of witnesses and had made it clear that if the witnesses are from outside then in that case the request to