WP (C) No.2390/2006 Page 1 of 20 * HIGH COURT OF DELHI : NEW DELHI + WP (C) No. 2390/2006 % Judgment pronounced on: 01.11.2010 GOPAL PRASAD ….Petitioner Through: Mr. V.H. Pillai, Adv. Versus CANARA BANK …..Respondent Through: Ms. Meenakshi Sood, Adv. Coram: HON'BLE MR. JUSTICE MANMOHAN SINGH 1. Whether the Reporters of local papers may be allowed to see the judgment? No 2. To be referred to Reporter or not? Yes 3. Whether the judgment should be reported Yes in the Digest? MANMOHAN SINGH, J. 1. That the petitioner has field the present writ petition under Article 226 of the Constitution of India for issuing a writ of mandamus thereby quashing the impugned orders dated 26.12.2005 passed by the appellate authority, order dated 5.3.2005 passed by the disciplinary authority and the Inquiry report dated 11.9.2004. 2. Petitioner joined Canara Bank as a clerk on 13-10-1973 and subsequently promoted to senior manager on 20-04-1998. On 02-06-2001 petitioner was shifted to and so joined Pahar Ganj branch of the respondent bank. 3. On the basis of complaints of certain customers regarding undue favour to some customers of bank in violation to bank‟s rules and procedures, a FIR dated 30-06-2003 bearing no. WP (C) No.2390/2006 Page 2 of 20 8(E)2003-EOW-1/DLI u/s 420/467/468/471/120-B IPC r/w 13(2) and 13(1)(d) of Prevention of Corruption Act, 1988 was registered against the petitioner. 4. The petitioner in pursuant to FIR was arrested by CBI on 04.07.2003 and he was put under suspension. A charge-sheet dated 15.3.2004 was issued against petitioner for the irregularities/misconduct committed within the meaning of Regulation 3(1) read with Regulation 24 of Canara Bank Officer Employees (Conduct) Regulation, 1976 (hereinafter referred to as the Regulation) punishable under the provisions of the said Regulation for serious irregularities. 5. The petitioner vide letter dated 5.4.2004 replied to the charge-sheet denying all the charges of misconduct and irregularities. 6. Thereafter respondent bank took disciplinary proceedings against the petitioner. A preliminary inquiry was conducted on 1.6.2006 followed by regular inquiry. 7. The petitioner urged that proceedings were not conducted as per rules and norms. The petitioner was not given opportunity to cross-examine witness of the investigative officer. Petitioner alleged that his witnesses and documents were not given consideration and were ignored. All the allegations of the investigative officer were accepted as it is. Inquiring Authority accepted all charges against the petitioner vide inquiry report dated 11-09-2004. 8. The Inquiry Officer vide his report found petitioner guilty of the charges. The respondent bank supplied copy of the findings of the Inquiry Authority report to the petitioner. Thereafter WP (C) No.2390/2006 Page 3 of 20 petitioner filed his comments on 04.10.2004 by way of his reply to the said inquiry report to the Disciplinary Authority. On 28-10- 2004, Disciplinary Authority through a letter to the Chief Vigilance Officer (CVO) recommended the punishment of reduction of the grade of the petitioner and also sought second-stage advice in the matter. 9. Disciplinary Authority stated that the allegations against the petitioner can be at most stated as procedural irregularities and there were no evidence of any pecuniary gains made by the petitioner. However, in reply through a letter dated 13-11-2004, CVO advised the punishment of removal of the petitioner from service which shall not be a disqualification for future employment and disagreed with the recommendation of the Disciplinary Authority. 10. Disciplinary Authority in Reply through letter dated 21- 11-2004, informed CVO about the gross irregularities in investigation and past record of the petitioner, but CVO through letter no. VIG- 2940-2004 CVC-147 dated 22-12-2004 again suggested same punishment. 11. Disciplinary Authority showed its dissatisfaction with the advice of CVO through letter dated 15-01-2005 giving many reasons and also stated that matter of such dispute can be resolved as per guidelines contained in letter no. 14/10/98VIG dated 11-05-2004 issued by the Ministry of Finance, Govt. of India. 12. On 10-02-2005, a letter addressed by CVO was sent to Director, Central Vigilance Commission (CVC), seeking their advice in this matter. According to the letter the case was not formally put in front of CMD for his intervention. In February 2005, CVC agreed WP (C) No.2390/2006 Page 4 of 20 with CVO‟s advice regarding the removal of petitioner. Petitioner through a letter dated 21-02-2005, requested for the orders of CVC from the Disciplinary Authority but neither copy of the same was supplied to him nor did he receive any reply to his letter. 13. Later on, on the basis of advise, the Disciplinary Authority, vide order dated 05.03.2005 found petitioner guilty of charges levelled against him and imposed punishment of “removal from service which shall not be a disqualification for future employment”. 14. The petitioner thereafter filed an appeal with the appellate authority, the Executive Director of the Bank, bringing in notice procedural irregularities, bias and prejudice against him during the departmental proceedings. 15. The Appellate Authority by an order dated 26.12.2005 refused to interfere with the findings of the Inquiry Authority and the order of the Disciplinary Authority. The appeal of the petitioner was dismissed but his punishment was modified to compulsory retirement instead of punishment of removal of the services. 16. The petitioner has now challenged the order dated 11.09.2004, 05.03.2005 and 26.12.2005 by filing the present writ petition. 17. The main point involved in the present case for determination is as to whether the impugned order of the disciplinary authority dated 05.03.2005 being completely based on the DICTA of the Central Vigilance Commission (CVC) / Chief Vigilance Officer (CVO) and without its own independent application of mind, is illegal and unsustainable or not. 18. In the present case, it is indisputable that the WP (C) No.2390/2006 Page 5 of 20 Disciplinary Authority (hereinafter referred to as the DA) after going through the Inquiry Report and upon his independent application of mind, had recommended the punishment of “reduction to a lower grade i.e. from MMG Scale III to MMG Scale II and his basic pay to be fixed at Rs. 9820/-“ vide his letter dated 28.10.2004. 19. A bare perusal of the letters dated 21.12.2004 and 15.01.2005 from the DA to the CVO reveals that various detailed reasons were assigned by the DA for arriving at the conclusion that most of the charges against the petitioner were merely procedural irregularities and came to the conclusion that, at worst, the same called for a punishment amounting to reduction in lower grade. The recommendation of punishment was issued by the respondent in its letter dated 15.1.2005, for the advice of CVO, the same is reproduced as under: “The General Manager 15.1.2005 Chief Vigilance Officer Canara Bank, Vigilance Department Head Office Bangalore Dear Sir, Sub: In the matter of misconduct on the part of Sri Gopal Prasad (15229), Senior Manager, Canara Bank, R&L Section, Circle Office, Lucknow Ref: Your letter 1, VIG 2486 2004 CVC 147 dt 13/11/2004 2. VIG 2940 2004 CVC 147 dt. 22/12/2004 This has reference to your letter dated 22.12.2004 whereby you have reiterated your second stage advice regarding punishment in view of observation made therein./ in this regard, we wish to clarify that while we agreed with the finding of the inquiring Authority, we proposed the punishment of “reduction to a lower grade WP (C) No.2390/2006 Page 6 of 20 i.e. from MMG Scale III and his basic pay to be fixed at Rs. 9820/- “which we felt as appropriate for the following reasons: 1. There are three distinct and separate charges framed against Gopal Prasad out of the three charges, under charge no1 the integrity and honesty of the officer employee has not been questioned. Under charge no1 and 3 thought the integrity and honesty of the officer employee have been questioned, there are no specific details available on record with regard to the pecuniary gain alleged to have been derived by him. 2. In charge no1 it has been alleged that he has restored to discounting of 6 cheques aggregating to an amount of Rs69.66 lacs to accommodate the party beyond the branch power. Apart from that a local cheques of Rs 4 lacs was also discounted by him which was subsequently returned unpaid. We observe from the records of the enquiry that out of 6 CDBs, ratification from circle office is available in respect of 3 CDBs. However, the said ratification was subject to the condition was not complied with. Further in respect of remaining 3 CDBs, the branch has sent the ratification note to Circle Office. However Circle Office has neither approved the discounting of the cheques nor disapproved the same. In our view the allegation contained in this charge is to be viewed as procedural irregularities. 3. Under charge no2, we have alleged that the officer employee has sanctioned 6 LHV SRTO and can mobile loan within the family member of Sri. Kuldeep Agarwal without complying with the laid down norms and procedure of the Bank for accommodation purpose. In one of the LHV SRTO 7/2002, we have alleged that the LHV was sanctioned in the name of Sri. Devender Kumar though the actual beneficiary is Sri. Kuldeep Agarwal. The vehicle delivered under this LHV is reportedly utilised by the son of the officer employee in his Travel Agency M/s Dwarka Tours and Travels. In this regard we observe from the Writ Petition filed by Sri. Kuldeep Agarwal WP (C) No.2390/2006 Page 7 of 20 which is also taken on record and marked as document in exhibit MEX-2 Ann 25 that Kuldeep Agarwal and Smt. Anu Bansal have admitted having availed various LHV loans under SRTO and in the affidavit filed by them, they have not mentioned anything about the utilization of vehicle by CSO‟s sons. However, we are of the view that mere utilization of the vehicle by the sons of the office employee may not construed as having derived pecuniary benefit. We are of the view that in the absence of specific details with regard to any pecuniary gain derived by the officer employee and any tangible evidence to establish that the vehicle loan was sanctioned to benefit his son, the irregularities may have to be treated as procedural in nature. 4. In respect of charge no3 we have alleged that the officer employee has sanctioned OCC limit of Rs 24 lacs under branch power to M/s HR Industries of Sri Kuldeep Agarwal, though the aggregate loan amount exceeded Rs 25 lacs including that of LHV. We have further alleged that with intention to generate funds for establishing M/s Dwarka Studio and Color Lab and M/s Dwarka Watch Company, the officer employee has accommodated the party by restoring to discounting cheques and allowing transgression in the account. In this regard, we observe that though we have alleged that sons of the officer employee have business interest in the above two concerns, on perusal of the affidavit as exhibit MEX2 – Ann25, they have deposed that these two concerns are propriety concerns and the proprietary are Sri. Kuldeep Agarwal and Amt. Anu Bansal w/o Sri. Kuldeep Agarwal. Therefore the evidence brought on record has not established that the officer employee‟s sons have business interest in these concerns. Though the Inquiring Authority has relied on the statement of Sri. Kuldeep Agarwal in the affidavit with regard to demanding of illegal gratification and favour, their concerns have not been taken into account. Therefore the allegation that officer employee has accommodated the party to generate WP (C) No.2390/2006 Page 8 of 20 funds to establish the above concerns may not be sustainable. 5. There is no specific detail with regard to deriving pecuniary benefits by the officer employee and the allegation is sought to be founded upon based on the statement of Sri. Kuldeep Agarwal made in Writ Petition. 6. It is on record that officer employee has action against Sri. Kuldeep Agarwal towards recovery of Bank‟s liability by seizing the goods on 26/02/2003 and it is also probable that Sri. Kuldeep Agarwal may have made statement against the officer employee due to provocation on account of action initiated by the officer employee. Therefore, relying on such statement without providing opportunity of cross examination may not comply with the principle of natural justice. 7. In cases like receipt of illegal gratification, we are of the view that it is necessary that the Chargesheeted employee be provided opportunity of cross examining the persons who have alleged to have paid illegal gratification to comply with the principle of natural justice. In this case these parties have neither been cited or witness nor summoned in the enquiry to depose and/or confirm their statement. In absence of their cross examination by CSO, replying upon the statement to establish the charge of illegal gratification may not be proper. 8. The statement of Sri. Kuldeep Agarwal in the affidavit annexed to WP that M/s Dwarka Colour Lab and M/s Dwarka Watch Company are their proprietary concern may dispel the allegation that the CSO has accommodated the parties to generate funds to establish the above concern for his son. Having this statement on record, it may be difficult to hold that the CSO‟s sons have business interest in these concerns. Therefore taking into consideration the above factor/aspects and the fact there is no adverse remark in the past record of the officer employee, we have proposed the aforesaid punishment vide WP (C) No.2390/2006 Page 9 of 20 letter dt. 28/10/2004. In view of diverging view in the matter, we feel that the matter may have to be further processed in terms of the guidelines contained in letter no.14/10/1998 VIG dt. 11/5/2004 received from GOI, Ministry of Finance. We request you to kindly do the needful and inform us the CVC‟s advice to enable us to proceed further in the matter. Yours faithfully Sd/- K. Suresh Rao General Manager” 20. As per the case of the petitioner, however, the letters of the CVO are contrary to the settled principle of service law that punishment in a departmental proceeding should only be decided upon by the disciplinary / punishing authority upon his own independent application of mind based on the material on record, without being influenced by any external sources. It is submitted by the petitioner that the CVO was adamant upon imposition of the punishment of removal from service. 21. The following is the details of chart indicating the variation in the letters/orders passed by the disciplinary authority prior to and pursuant to the directions/ advice of the CVC is as under: PARTICULARS RECOMMENDATIONS OF DISCIPLINARY AUTHORITY PRIOR TO DICTA OF CVO/CVC (15.01.2005) FINDINGS OF DISCIPLINARY AUTHORITY PURSUANT TO DICTA OF CVO/CVC (05.03.2005) PECUNIARY ADVANTAGE No specific details available on record with regard to pecuniary gain alleged to have been delivered by him The statement of Kuldeep Aggarwal filed before the High Court corroborates the evidence that has come on WP (C) No.2390/2006 Page 10 of 20 record and proves that the CSO has misused his official position to derive undue pecuniary benefits for himself and his family members RATIFICATION OF CDBs Out of 6 CDBs ratification from circle office is available in respect of 3 CDBs- In respect of three remaining CDBs, the branch has sent a ratification note to Circle Office, however, Circle Office has neither approved nor ratified the same – Allegation is to be viewed as procedural irregularities Contention of CSO regarding seeking ratification not acceptable The contention of CSO that he had sought ratification for CDBs 400, 401 & 402 not sustainable since there is neither any ratification on record nor has any document been produced to prove that ratification has been granted by the Circle Office. SANCTION OF CANMOBILE AND VEHICLE LOAN In absence of specific details with regard to pecuniary gain derived by him and any tangible evidence to establish that vehicle loan was sanctioned to benefit his son, the irregularities may have to be treated as procedural It is established that CSO has accommodated the party by showing undue favour violating the systems and procedures 22. From the documents on record that the Chief Vigilance Officer (hereinafter referred to as CVO) of the Bank not only disagreed with the punishment imposed by the DA but also wanted the imposition of the punishment of “removal from service”. 23. It is argued by the respondent that a bare reading of the order dated 05.03.2005 would show that the order of the WP (C) No.2390/2006 Page 11 of 20 Disciplinary Authority is detailed order and it reflects independent and due application of mind. Hence, there can be no reason whatsoever for the petitioner to allege that the disciplinary authority has not exercised its mind in passing the order. 24. It is argued by the respondent that Clause 19 of the Canara Bank Officer Employees‟ (Discipline and Appeal) Regulation, 1976 provides that the bank shall consult the CVC wherever necessary in respect of all disciplinary cases having a vigilance angle. It is to be underlined that the said Regulation, through provides for consultation with the CVC wherever necessary, it does not mandate compliance with its recommendations. 25. Therefore, the proceedings initiated against the petitioner were within the parameters of the prescribed rules/regulation of the bank. The Disciplinary Authority, exercising the powers conferred under Regulation 4(i) of Canara Bank Officer Employees‟ (Discipline and Appeal) Regulation, 1976 imposed the punishment on the basis of conducting the regular inquiry. 26. It is further argued that the Appellate Authority also considered the Appeal filed by the petitioner and after giving a personal hearing, keeping in view facts and circumstances of the case, reduced the punishment of „removal from service which shall not be disqualification for future employment‟ modified to „compulsory retirement‟ vide order dated 26.12.2005. 27. In the present case, it is evident after comparison of the initial view taken by the DA vide his letter dated 15.01.2005 and the final order of punishment passed by him on 05.03.2005, it is clear without any doubt that the order of services was not only WP (C) No.2390/2006 Page 12 of 20 entirely based upon the dicta of the CVO/CVC but was also completely contrary to the bank‟s earlier stand/decision which was arrived at, upon his own independent application of mind. The reasons assigned by the DA in his order dated 05.03.2005 for imposing the punishment of removal from service upon the petitioner, is exactly opposite to the reasons assigned by the bank in his letter dated 15.01.2005 by concluding that the charges against the petitioner, at worst, amounted to procedural irregularities. 28. The reasons assigned by the DA in his order dated 05.03.2005 are almost the same to the reasoning given by the CVO in his letter dated 22.12.2004. Hence, DA took a different stand from his earlier stand. 29. One can easily come to he conclusion that the DA had exactly followed the command of the CVO and imposed the punishment of removal from service as directed, it was only on an appeal preferred by the petitioner wherein the order passed by the DA was brought to the notice of the Appellate Authority, the punishment was altered. In case, the order passed by the DA is in line with the letter dated 15.01.2005 the petitioner would have continued to be in service albeit at a lower scale w.e.f. 05.03.2005. 30. An important thing in the matter that it was the same officer viz. K. Suresh Rao, General Manager, who was the DA on 15.01.2005 when the earlier decision was communicated to the CVO and on 05.03.2005 when the final order was passed within the gap of later than two months as per command of the CVO. 31. The decision of the Hon‟ble Supreme Court in the case of Nagaraj Shivrao Karjagi Vs. Sydicate Bank, 1991 (3) SCC 219 WP (C) No.2390/2006 Page 13 of 20 is directly applicable to the facts of the instant case. In the present case, the bank in question had recommended a lesser punishment upon the delinquent which was not agreed upon by the CVC, whereupon the Supreme Court at Paras 16 & 17 held that it was only for the disciplinary authority alone to decide upon the imposition of punishment. While setting aside the orders passed by the disciplinary and the appellate authority in the said case, it was held in Para 19 that “The authorities have to exercise their judicial discretion having regard to the facts and circumstances of each case. They cannot act under the dictation of the CVC or the Central Government. No third party like the CVC or the Central Govt. could dictate the disciplinary authority or the appellate authority as to how they should exercise their power and what punishment should they impose on the delinquent officer”. The claim of the respondent that in the said case there was a Circular from the Ministry of Finance, making the advice of the CVC binding does not render the rate of the said judgment as invalid. The conclusions drawn therein by the Apex Court with respect to the power of imposition of punishment solely being vested with the disciplinary authority without any interference by any third party like the CVC holds equally good in the instant case. It was in that context that besides the orders of the disciplinary authority and the appellate authority, the Apex Court chose to quash the directive issued by the Ministry of Finance as well, in the said case. Paras 16, 17 and 19 of the decision of the Apex Court are reproduced hereunder: “16. The power of the punishing authorities in departmental proceedings is regulated by the statutory Regulations. Regulation 4 WP (C) No.2390/2006 Page 14 of 20 merely prescribes diverse punishment which may be imposed upon delinquent officers. Regulation 4 does not provide specific punishments for different mis- demeanours except classifying the punishments as minor or major. Regulations leave it to the discretion of the punishing authority to select the appropriate punishment having regard to the gravity of the misconduct proved in the case. Under Regulation 17, the appellate authority may pass an order confirming, enhancing, reducing or completely setting aside the penalty imposed by the disciplinary authority. He has also power to express his own views on the merits of the matter and impose any appropriate punishment on the delinquent officer. It is quasi-judicial power and is unrestricted. But it has been completely fettered by the direction issued by the Ministry of Finance. The Bank has been told that the punishment advised by the Central Vigilance Commission in every case of disciplinary proceedings should be strictly adhered to and not to be altered without prior concurrence of the Central Vigilance Commission and the Ministry of Finance. 17. We are indeed surprised to see the impugned directive issued by the Ministry of Finance, Department of Economic Affairs (Banking Division). Firstly, under the Regulation, the Bank's consultation with Central Vigilance Commission in every case is not mandatory. Regulation 20 provides that the Bank shall consult the Central Vigilance Commission wherever necessary, in respect of all disciplinary cases having a vigilance angle. Even if the Bank has made a self imposed rule to consult the Central Vigilance Commission in every disciplinary matter, it does not make the Commission's advice binding on the punishing authority. In this context, reference may be made to Article 320(3) of the Constitution. The Article 320(3) like Regulation 20 with which we are concerned provides that the Union Public Service Commission or the State Public Service Commission, as the case may be, shall be consulted-on all disciplinary matters affecting a civil servant including memorials or petitions relating to such matters. This Court in A.N. D'Silva v. Union of India [1962] Su 1 SCR 968 has expressed the view that the Commission's WP (C) No.2390/2006 Page 15 of 20 function is purely advisory. It is not an appellate authority over the inquiry officer or the disciplinary authority. The advice tendered by the Commission is not binding on the Government. Similarly, in the present case, the advice tendered by the Central Vigilance Commission is not binding on the Bank or the punishing authority.