SCA/5736/1987 1/61 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD SPECIAL CIVIL APPLICATION No. 5736 of 1987 For Approval and Signature: HONOURABLE MR.JUSTICE K.A.PUJ ==================================================== 1 Whether Reporters of Local Papers may be allowed to see the judgment ? 2 To be referred to the Reporter or not ? 3 Whether their Lordships wish to see the fair copy of the judgment ? 4 Whether this case involves a substantial question of law as to the interpretation of the constitution of India, 1950 or any order made thereunder ? 5 Whether it is to be circulated to the civil judge ? ==================================================== CHOLPADI JAGANNATH KAMATH - Petitioner(s) Versus P.S.V. MALLYA & 3 - Respondent(s) ==================================================== Appearance : MR DIPAK C RAVAL for Petitioner(s) : 1, MR PV NANAVATI for Respondent(s) : 1 - 3. RULE UNSERVED for Respondent(s) : 3, MR TARESH J BHATTJI for Respondent(s) : 4, MR PJ MALKAN for Respondent(s) : 4, ================================================= CORAM : HONOURABLE MR.JUSTICE K.A.PUJ SCA/5736/1987 2/61 JUDGMENT Date : 23/02/2006 RAL JUDGMENT 1. The petitioner has filed this petition under Articles 226 and 227 of the Constitution of India praying for declaration that the order of removal of the petitioner from the service in question supposed to have been passed against him is null and void and of no effect. The petitioner has also prayed for the declaration that the Regulations 7(2), 7(3) and 19 of the Syndicate Bank Officer Employees (Discipline & Appeal) Regulations, 1976 are illegal and ultra vires Articles 14 and 16 of the Constitution of India. 2. It is the case of the petitioner that the petitioner was working with Syndicate Bank. The petitioner was issued a charge-sheet wherein it was alleged that the petitioner had committed a misconduct within the meaning of Regulation 3(1) of the Syndicate Bank Officer SCA/5736/1987 3/61 JUDGMENT Employees (Conduct) Regulations, 1976 by showing official favour to certain individuals/firms by permitting unsecured over- drawls, issuing bank guarantees without proper authority, discounting cheques under CODs without proper authority etc, while he was functioning as Manager of the Kanpur Branch of Syndicate Bank. It is also the case of the petitioner that at no stage the petitioner had secured any personal gains out of these transactions, or that this was a malpractice indulged in by the petitioner, or that there was any actual loss suffered by the Bank by such transactions. The integrity and/or the efficiency of the petitioner was not in dispute at any stage. The petitioner was holding his post as a Branch Manager of the Kanpur Branch during the period from 23.4.1979 upto 27.2.1985. He was also holding the post of Officer on Special Duty from 1.5.1985 to October 1985 and has been serving as Manager in SCA/5736/1987 4/61 JUDGMENT the Divisional Office of the Bank at Ahmedabad. When the petitioner was a Branch Manager of Kanpur Branch, he had sanctioned advances, loans, bank guarantees and other facilities to various customers of the bank which, in his best judgment, were in the interest of the Bank. During the course of such transactions, it was necessary and expedient to exceed the authority vested in the petitioner officially on paper by the Management of the Bank. It is also the case of the petitioner that this practice followed by the Branch Manager of the Banks, nationalized or otherwise, is in the interest of the Bank and is, therefore, accepted by Bank Managers as a normal course of business. It is also the case of the petitioner that the Management of the Bank including the petitioner's superiors were aware at all relevant points of time that this practice was being followed consistently and in a routine manner. All facilities granted by SCA/5736/1987 5/61 JUDGMENT the petitioner within or in excess of the stated authorized limits were reported to the Management in a number of ways. Routine statements are sent by all branches to the zonal office and the higher management. The Kanpur Branch being a metropolitan branch was also subjected to daily audit by the professional auditors appointed by the Bank and consisted of persons not employed by the Bank. The said branch was also subjected to inspection by the proper officers of the Bank at routine intervals. The routine correspondence was also sent by the petitioner Branch Manager to the Management drawing their attention to the various facilities granted by the petitioner in the normal course of business. The petitioner had, therefore, no reason to believe at any relevant point of time that this practice was going to be objected to by the Bank many years after the Bank had gained or enjoyed the benefits. SCA/5736/1987 6/61 JUDGMENT 3. It is also the case of the petitioner that the petitioner has a good confidential report and there has not been any adverse remarks against him in the post. The petitioner has been given promotions fro time to time. He was given a special award for excellent all-round performance in the first year of his functioning as a Branch Manager. It is also the case of the petitioner that he has achieved record of taking the Kanpur Branch into the category of a Divisional Branch and he had also received letter of appreciation for achievement. Despite the aforesaid facts, the petitioner was served charge-sheet with regard to the alleged irregularities in the aforesaid transactions. The petitioner has filed the present petition mainly challenging the vires of regulation and further challenging the findings of the Inquiry Officer to the effect that the petitioner had committed misconduct SCA/5736/1987 7/61 JUDGMENT within the meaning of the Regulation 3(1). The petitioner has also challenged the legality and validity of the order of removal of the petitioner from the service on the ground that the report of the Inquiry Officer has not been furnished to him prior to effecting the punishment, and also challenged the legality and validity of the punishment on the ground that no show cause notice has been served on him with a view to enable him to make a representation in respect of the punishment imposed and the petitioner has also made it clear in the petition that he reserves his right to file a substantive petition, appeal etc, at appropriate time and this petition was not filed on merits. The petitioner has also raised the issue in the petition that the procedure for consulting the Central Vigilance Commission is violative of principle of natural justice and prejudicial to the charged employee. The Inquiry Officer, instead of SCA/5736/1987 8/61 JUDGMENT submitting his report to disciplinary authority sent it to Central Vigilance Commission for recommendation of the commission to the competent authority, who appeared to have taken into account such recommendation for taking final decision, without taking the confidence of charged employee. It is, therefore, contended that though the recommendation of the commission is not binding on the disciplinary authority, such recommendations may affect the competent authority taking final decision and the recommendations of the commission would be against the interest of the charged employee and, therefore, it is against the principle of natural justice. Since the documents are used against the petitioner without disclosing the same, the action of the respondent Bank against the petitioner is contrary to the law and violative of principle of natural justice and it is, therefore, required to be quashed and set aside. SCA/5736/1987 9/61 JUDGMENT 4. The Court has issued rule and petition was admitted on 4.11.1987. The Court has granted ad interim stay only to the limited extent that any order passed in the inquiry will not be implemented. During the pendency of the petition the petitioner has filed Civil Application No.1955 of 1987 praying for mandatory direction to the respondents to permit the petitioner to resume duty and to entertain his application for leave on account of his mother's demise and alternatively the petitioner has prayed for the direction to the respondents to treat the petitioner as if in service and issue appropriate orders and/or directions permitting him to go to his native place to enable him to perform the last rites of his mother. This application was disposed of on 26.11.1987. While disposing of the said application it was observed that no ground was made out for the purpose of granting interim SCA/5736/1987 10/61 JUDGMENT relief prayed for by the petitioner. It was stated that the order has been served upon the petitioner by sending it by registered post acknowledgment. It was also stated that service by certificate of posting has also been made. Considering all these facts of the case, the Court did not find any material to grant the interim relief and hence the said prayer was refused. 5. On service of notice, the respondents have filed their appearance and filed affidavit in reply on 9.3.1988. Copy of the Inquiry Report and other documents were placed on record. The petitioner has filed his affidavit-in-rejoinder on 29.6.1992 and alongwith the affidavit in reply correspondence between the Bank as well as guide to disciplinary action and certain newspaper clippings were produced. On behalf of the respondent affidavit in sur rejoinder was filed on 28.7.2004 disputing the fresh SCA/5736/1987 11/61 JUDGMENT contention raised by the petitioner. The petitioner has, thereafter, filed affidavit in reply to sur rejoinder and alongwith the same correspondence exchanged between the Central Vigilance Commission as well as copy of judgment of Nagaraj Shivarao Karjagi vs. Syndicate Bank Head Office Manipal and another, is placed on record. On behalf of the respondent, reply to affidavit is filed dealing with several contentions raised by the petitioner in its affidavit in reply. 6. Mr.Dipak C. Raval, learned advocate appearing for the petitioner has raised several contention while challenging the order of removal. The main contention was raised that the charges which are levelled against the petitioner do not constitute any offence. He drew attention of the Court to the contents of the report of Inquiry Officer and charges enumerated therein do not disclose any mala SCA/5736/1987 12/61 JUDGMENT fide intention of the petitioner nor the interest of the Bank in any way was alleged to have been adversely affected. The petitioner has demonstrated in the petition on the basis of correspondence with regard to all that the transactions which have been entertained with 160 parties that they were within the knowledge of the authorities. The petitioner was not informed at any point of time about any of the objections about advances and loans. The petitioner has tried level best and brought many parties to settle their accounts. He has further submitted that no monetary loss was occurred. In support of his submission he relied on the decision of Hon'ble Supreme Court in the case of Union of India and others vs. J.Ahmed, reported in AIR 1979 Supreme Court 1022, wherein while explaining the concept of misconduct it is held that Code of conduct as set out in the Conduct Rules clearly indicates the conduct expected of a member of the SCA/5736/1987 13/61 JUDGMENT service. It would follow that that conduct which is blameworthy for the Government servant in the context of Conduct Rules would be misconduct. The High Court has noted the definition of misconduct in Stroud's Judicial Dictionary, “misconduct means, misconduct arising from ill motive, acts of negligence, errors of judgment or innocent mistake, do not constitute such misconduct.” It is further observed therein that it is, however, difficult to believe that lack of efficiency or attainment of highest standards in discharge of duty attached to public office would ipso facto constitute misconduct. There may be negligence in performance of duty and a lapse in performance of duty or error of judgment in evaluating the developing situation may be negligence in discharge of duty but would not constitute misconduct unless the consequences directly attributable to negligence would be such as to be irreparable SCA/5736/1987 14/61 JUDGMENT or the resultant damage would be so heavy that the degree of culpability would be very high. An error can be indicative of negligence and the degree of culpability may indicate the grossness of the negligence. Carelessness can often be productive of more harm than deliberate wickedness or malevolence. 7. Mr.Raval has further relied on the decision of Hon'ble Supreme Court in the case of Bhagwati Prasad Dubey vs. The Food Corporation if India, reported in AIR 1988 Supreme Court 434, wherein the concerned workman was removed from the service on ground of misconduct, the conclusion by the Enquiry Officer that a charge of misconduct was proved against him. By interfering in the said finding, the Hon'ble Supreme Court has observed that the Officer under the pressure of necessity had sanctioned payment only at the rates at which another public undertaking, namely, the State SCA/5736/1987 15/61 JUDGMENT Warehousing Corporation had acquired the same goods. It was more so when there was nothing to show that the Officer had any special reasons for favouring the firm from which he purchased the goods. Since there was total absence of any motive, malafide intention, the Court has held that at worst the appellant can only be accused of an error of judgment and there would not be any misconduct. 8. Mr.Raval has, therefore, submitted that in the present case there is no allegation against the petitioner that he has committed an offence or he has derived any monetary benefits out of these transactions. Under the prevailing pretext of the Bank's financial position the petitioner had sanctioned advances and over- drawl, which cannot be termed as misconduct and hence the charges levelled against the petitioner about misconduct are unjustified. SCA/5736/1987 16/61 JUDGMENT 9. Mr.Raval has raised second contention to the effect that the proceedings initiated and culminated against the petitioner were at the behest of the Central Vigilance Commission and order of removal was passed at the behest of the Central Vigilance Commission. For this purpose he has invited the attention of the Court to averments made in the memo of petition Regulation-19 of the Syndicate Bank Officer Employees (Discipline and Appeal) Regulations, 1976 deals with Central Vigilance Commission. It seems to be very innocent and it says only consultation to be done and the opinion of Central Vigilance Commission is sought for the purpose of vigilance angle only. He has submitted that the Bank has issued a Circular to Senior Officers containing guidelines for processing and reference of cases to the Vigilance Commissioner. It is stated inter alia therein that the finalization of a major penalty proceedings, including the conduct of SCA/5736/1987 17/61 JUDGMENT an inquiry, submission of the report by the Inquiry Officer and passing of the final orders by the Disciplinary Authority, should not ordinarily take more than 3 months from the date of issuance of charge-sheet. Another 3 months are available for completion of earlier departmental fact finding investigation, framing of charge-sheet etc, thus making a total period of 6 months, during which a disciplinary case for major penalty should be completed and finalized. No reference should be made in the final orders about CBJ report, CVC's/CVO's opinion and/or advise. On the basis of this he has submitted that while imposing penalty of removing the petitioner from service, Inquiry Officer and Disciplinary Authority mainly acted as per the guidelines of Central Vigilance Commission. He has made this submission and even drawn attention of the Court to the affidavit in reply and affidavit in rejoinder, wherein reference of letter SCA/5736/1987 18/61 JUDGMENT dated 27.7.1984 as well as 21.7.1984 were made. It is stated therein that the advise of the Central Vigilance Commission imposing of the penalty on the delinquent could not have been ignored by the disciplinary authority. The reliance was placed on the decision of Hon'ble Supreme Court in the case of Nagaraj Shivarao Karjagi vs. Syndicate Bank Head Office, Manipal and another, reported in AIR 1991 Supreme Court 1507, wherein the Court has observed that the punishment to be imposed whether minor or major depends upon the nature of every case and the gravity of the misconduct proved. 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 Central Vigilance Commission or of the Central Government. No third party like the Central Vigilance Commission or the Central Government could dictate the disciplinary authority or the SCA/5736/1987 19/61 JUDGMENT appellate authority as to how they should exercise their power and what punishment they should impose on the delinquent officer. The Court has, therefore, held that the impugned directive of the Ministry of Finance is, therefore, wholly without jurisdiction and plainly contrary to the statutory Regulations governing disciplinary matters. The Court quashed and set aside the impugned orders of the disciplinary authority and appellate authority with a direction to the former to dispose of the petitioner's case in accordance with law and in the light of the observations made in the judgment. 10. Mr.Raval further submitted that in the present case Central Vigilance Commission has obviously dictated the disciplinary authority to enforce the penalty. For this purpose he has drawn attention of the Court to the correspondence exchanged between the Central SCA/5736/1987 20/61 JUDGMENT Vigilance Commission. The Director of Vigilance Commission vide letter dated 2.5.1987 has informed the Bank that the Commission would advise acceptance of the Inquiry Officer's report and imposition of major penalty of not less than removal from service of Shri Kamath i.e petitioner. The respondent thereafter made correspondence vide letter dated 11.7.1987 and informed the Commission that the Bank intended to monitor closely the progress made in the direction of recovery and, therefore, proposed penalty may be deferred for 4 to 6 months. 11. Though the ground with regard to non supply of the Inquiry Officer's report was raised in the petition, Mr.Raval has not pressed that issue in view of the law laid down by the Hon'ble Supreme Court and in view of the fact that the order of penalty was passed before 1990. As per law laid down by the Hon'ble Supreme Court mere non-supply of the Inquiry SCA/5736/1987 21/61 JUDGMENT Officer's Report to the delinquent officer would not vitiate the proceedings. Mr.Raval has further submitted that the recommendation is not binding to the disciplinary authority and they have to take independent view. For this purpose he relied on the decision of Hon'ble Supreme Court in the case of State Bank of India vs. D.C.Aggarwal and another , reported in AIR 1993 Supreme Court 1197, wherein it is held that the contention raised on behalf of the Bank that the correspondence with the Central Vigilance Commission is a privileged communication and cannot be forwarded as the order passed by the Appointing Authority deals with the recommendation of the CVC which is considered sufficient'. It was further held that taking action against an employee on confidential document which is the foundation of order exhibits complete misapprehension about the procedure that is required to be followed by the Disciplinary Authority. May be SCA/5736/1987 22/61 JUDGMENT that the Disciplinary Authority has recorded its own findings and it may be coincidental that reasoning and basis of returning the finding of guilt are same as in the CVC report but it being a material obtained behind back of the respondent without his knowledge or supplying of any copy to him the High Court in our opinion did not commit any error in quashing the order. The Court further held that non-supply of the vigilance report was one of the grounds taken in appeal. But that was so because the respondent prior to service of the order passed by the Disciplinary Authority did not have any occasion to know that CVC had submitted some report against him. Recommendations of Vigilance prior to initiation of proceedings are different than the CVC recommendation which was the basis of the order passed by the Disciplinary Authority. The Court further observed that the action of the respondent that once the disciplinary SCA/5736/1987 23/61 JUDGMENT authority found that the action of the respondent did not cause any harm to the bank nor the respondent gained out of it the High Court cannot be said to have misdirected itself in quashing the order for procedural error. 12. Mr.Raval has further submitted that so far as inquiry proceedings, Inquiry Officer's report and order passed by the respondent authority is concerned, there is no vigilance angle and there was no fraud, misappropriation or allegation to the effect that the advances were given for personal gain or benefits. For this purpose he has invited attention of the Court to the affidavit in rejoinder wherein it is stated that the petitioner was charge-sheeted to the effect that he has caused loss to the Bank, but he was not charge-sheeted to the effect that he had indulged in malpractice. On the contrary it was specifically stated that the petitioner has not secured any personal SCA/5736/1987 24/61 JUDGMENT gain. In the affidavit in reply, for the first time it was stated that he indulged in malpractice and the acts proved against him have clearly brought out lack of integrity and dishonest motive on the part of the petitioner. Since there was no motive regarding malpractice there cannot be lack of integrity or dishonest motive. He has further submitted that it cannot be considered to be an act amounting to lack of integrity and/or dishonest motive. He has further submitted that there is no allegation that he had never sought approval of the transactions in question. Approval has been sought by him in time. Clarifications wherever necessary and wherever asked for were given. However, the competent authority had neither disapproved or approved the transactions in question and hence it cannot be said that there was malpractice. For this purpose he relied on the decision of this Court in the case of B.J.Jadav vs. State of Gujarat, SCA/5736/1987 25/61 JUDGMENT reported in 2005(3) GLR 2650, wherein it is held that the Government gravely erred in law in passing the impugned order of penalty against the petitioner without supplying a copy of the advise of GPSC and taking the same into consideration, and thereby, denying the petitioner the opportunity to meet with the issues raised therein. The Division Bench of this Court held that no valid order of punishment could have been passed on the person who has not been supplied with a copy of the advice of the UPSC. 13. Mr.Raval has further raised the contention that the penalty imposed is quite disproportionate to the charges levelled against the petitioner. He has submitted that the petitioner is having a good service record of 19 years and all through out his carrier not a single memo was issued to the petitioner and there was no finding to the effect that the SCA/5736/1987 26/61 JUDGMENT respondent Bank has suffered any financial loss. Looking to this uncontroverted facts the respondent authority should not have imposed the penalty of removal of service. In support of his submission he relied on the decision of Hon'ble Supreme Court in the case of Ranjit Thakur vs. Union of India and others, reported in (1987) 4 Supreme Court Cases 611, wherein it is held that judicial review, generally speaking, is not directed against a decision but is directed against the “decision making process”. The question of the choice and quantum of punishment is within the jurisdiction and discretion of the court- martial. But the sentence has to suit the offence and the offender. It should not be vindictive or unduly harsh. It should not be so disproportionate to the offence as to shock the conscience and amount in itself to conclusive evidence of bias. The doctrine of proportionality, as part of the concept of SCA/5736/1987 27/61 JUDGMENT judicial review, would ensure that even on an aspect which is, otherwise, within the exclusive province of the court-martial, if the decision of the court even as to sentence is an outrageous defiance of logic, then the sentence would not be immune from correction. The Court, therefore, held in that case that the punishment was no strikingly disproportionate as to