© IN THE mGH COURT OF JUDICATURE AT BILASPUR W.P. No.S6i- of 2002 ASHOK MATHRANI, SON OF SHRI JUMADAMAL MATHRANI, AGED 43 YEARS, R/0. BALAJI WARD, JAGDALPUR. PETITIONER VERSUS ^ ,o!%^ \^'iK^ •y<s^^'' ^•^y <•",/. ^-1 <;••" ... 1. BASTAR KSHETRIYA GRAMIN BANK A BODY CORPORATE CONSTITUTED UNDER THE PROVISIONS THE REGIONAL RURAL BANKS ACT 1976 THROUGH THE BRANCH MANAGER, BRANCH SARAGIPAL, RAILWAY COLONY, JAGDALPUR, BASTAR, (C.G). • 2. THE CHAIRMAN AND DISCIPLINARY AUTHORITY BASTAR KSHETRIYA GRAMIN BANK, HATKACHORA, JAGDALPUR, BASTAR. IT PETITION UNDER ARTICLES 226/227 OF CONSTITUTION OF EWIA FOR THE ISSllANCE OF JVRTTS ES TEGE NATURE OF RESPONDENTS .MAfoAMUS. AND/OR ORDER(S). AND/OR DMECTION(S) m THE NATURE OF WRITS MOCT'RESraCTFULLY SHOWETH (1) PARTICULARS OF THE PETITIONER As mentioned above in the Cause Title. i <2) PARTICULARS OF THE RESPONDENTS As mentioned above in the Cause Title /\c^ /3- 0-°? fflGH COURT OF CHHATTISGARH AT BILASPUR WRITPETITIONNo. 961 of 2002 PETITIONER Ashok Mathrani. VERSUS RESPONDENTS Bastar Kshetriya Gram.in Bank & another. ^A Post for pronouncement ofjudgment on .... .<•?. .day ofNovember, 2009. Sd/- Satish K. Agnihotri Judge ^s ^ 0 mGH COURT OF CHHATTISGARH AT BILASPUR PETITIONER RESPONDENTS WRITPETITIONNo. 961 of 2002 Ashok Mathrani. VERSUS Bastar Kshetriya Gramin Bank & another. WRIT PETITION UNDERARTICLE 226/227 OF THE CONSTITUTION OF INDIA SB: Hon'ble Shri Satish K. Aenihotri. J. Present: Shri B.P.Shanna, Advocate for the petitioner. Shri Prafull N. Bharat, Advocate for the respondents. JUDGMENT (Passed on ..... /-!>. .day of November, 2009) 1. Challenge in this petition is to fhe order dated 30 June, 1999 (Annexure P/9) whereby the petitioner was reprimanded. It was further directed that the loan advanced to the petitioner for residential purpose was used for commercial purpose and as such, the loan amount be recovered with interest at the rate of 17%. The petitioner further challenges the order dated 18 March, 2002 (Annexure P/12), whereby a direction was issued to recover the loan amount advanced to the petitioner for residential purpose which was used for commercial purpose at the rate of 17%, and the order dated 23 March, 2002 (Annexure P/l 1) whereby after calculation, fhe equated monthly installments (E.M.I.) of Rs. 7,572/- of 108 installments was directed to be recovered from the salary ofthe petitioner. 2. The indisputable facts, in brief, are that the petitioner, being an employee ofthe respondent/Bank, under the housing scheme, made an application on 18 July, 1996 (Aunexure R/l) for graut of loau to purchase a house constructed over a plot ofland bearing plot no. 91/1, sta-eet No. 78 at Pratapganjpara, Main Road, Jagdalpur. A loan amount ^•SSBSS' 8;;l ; il3»' IEB r'1 ofRs. 2 lacs was sanctioned and vide letters dated 20 March, 1996 and 29 March, 1996, the loan amount was disbursed to the petitioner by the respondent bank. After purchase of the said house, the sale deed was executed and registered, and thereafter, the same was deposited with the respondent bank for creation of charge in favour of the bank. The loan amount was recoverable under an agreement. The first Rs. 1 lac would carry interest at the rate of 5% p.a. and the second Rs. 1 lac would carry interest at the rate of 11% p.a.. The said amount of loan with interest was to be paid in 180 equal installments ofRs. 1110/- per month, deductible from the salary of the petitioner. The petitioner reconstructed the old purehased house without prior intimation to the respondent-bank and after obtaining required sanction from the local authorities. After two years, the petitioner received a notice dated 14 July, 1998 (Annexure P/2), calling upon the petitioner to submit required documents indicating sanction of the competent officers for converting the residential building to the commercial shop and expenditure made thereon. The petitioner submitted his reply to the Chairman, Bastar Kshetriya Gramin Bank on 31 July, 1998 (Annexure P/3) stating that the petitioner was constrained to reconstmct the house without obtaining necessary permission, with a request that if a permission was required, the same may be sanctioned to the petitioner. On 7 September, 1999 (Annexure P/4), the respondent-bank issued a show-cause-notice stating that the petitioner has deliberately converted the use of the residential house to commercial shop and as such, why departmental action should not be taken against the petitioner under the provisions of section 17 and 18 of the mles and regulations of the bank. The ^ rt<^ ^vsws^. y (f^ 3. petitioner again submitted reply stating that whatever has happened, it was on account of ignorance of law and the rules, thus, proceedmgs against the petitioner may be dropped. A charge-sheet dated 27 March, 1999 (Aimexure P/6) was issued u&der the provisions of Regulations 17 and 19 ofthe Bastar Kshetriya Grameen Bank (Staff) Service Regulations, 1980 (for short 'the Regulations, 1980'). Consequent thereupon, the impugned order dated 30 June, 1999 was passed. An appeal was preferred before the Chairman i.e. the respondent No. 2, under the provisions ofregulation 31 and 32 ofthe Regulations, 1980. According to the leamed counsel for the petitioner, without affording an opportunity of hearing, the appeal was dismissed confirming the order dated 30 June, 1999. Thereafter, no action was taken for about two years. After a lapse ofabout 2 years, the petitioner was served a letter dated 23 March, 2002, whereby the petitioner was directed to pay monthly installments of Rs. 7,572/-. Thus, this petition. • Shri Sharma, leamed counsel appearing for the petitioner would submit that the petitioner was punished without holding an enquiry stating that the defence/reply of the petitioner was not acceptable to them. The act of the respondent-bank is in violation of the statutory rules and principles ofnaturaljustice. The petitioner was granted loan as an employee of the respondent-bank. Thus, the respondent bank could not have treated the employee in the same manner as a lender is treated. The imposition of any penalty on the delinquent employee cannot be done without enquiry and without affording a reasonable opportunity ofhearing, which is contrary to the regulation 30(2) ofthe Regulations, 1980. The banking authorities had knowledge of the nature of the property throughout. Thus, it cannot be held that the residential use of the property was converted to commercial use when the petitioner resides in the premises. However, one portion of the premises is used for commercial purpose. The respondent authorities have not taken any steps at the time of constmction of the house. The appeal was dealt with in a slip-shod manner without examining various aspects of the matter and without affording an opportunity of hearing. Imposition ofpenal interest is in fact under the disciplinary proceedings. However, the stand taken by the authorities that imposition of penal interest is not a part of the disciplinary action, is misleading. In support of his contention, Shri Sharma relies on a decision of Supreme Court in Chairman, Disciplinary Authority, Rani Lakshmi Bai Kshetriya Gramin Bank v. Jagdish Sharan Varshney & Others . 4. Per contra, on the other hand, Shri Prafilll N. Bharat, leamed counsel appearing for the respondent-Bank would submit that the petitioner being the employee of the respondent, obtained a loan under the Personal Housing Loan Scheme for the Employees ofthe Bank, 1993 (for short 'the Scheme, 1993') for the employees (Annexure R/2). Under the Scheme, the petitioner was granted loan with rebate in interest which was less than the then prevalent rate of interest of the bank and the petitioner gave his undertaking that he would utilize the loan for residential purpose only. Inspite of the undertaking, the petitioner changed the use of loan amount and used the same for construction of shop. Thus, the petitioner played fraud with the answering respondent. Accordingly, after issuing show-cause-notice, a ' (2009) 4 SCC 240 <© charge-sheet was issued. In reply, the petitioner admitted the charges and the change of purpose for which loan was granted (Aimexure R/3). As the petitioner violated the terms and conditions of the agreement under the Scheme, 1993, the penal provision was invoked. The penal provision provides for charge of penal interest over and above 1 '/z % as charged by the State Bank of India. Penal provision further provides that in addition to enhancement of interest, the employee also has to face tKe departmental proceedings. Thiis is in accordance with the penal provision of the Scheme, 1993 and accordmgly the interest at the rate of 17% per annum was charged. The petitioner in his application (Annexure R/l) had opted for purchase ofthe house only and it was not disclosed that the same was to be used for composite purposes i.e. for commercial business also. Since the petitioner has admitted the fact that he has changed the purpose for use ofthe loan amount, thus, it was not thought necessary to hold any enquiry. In support ofhis contention, Shri Bharat relies on a decision of Supreme Court in Chairman & Managing Director V.S.P. &anotherv. Goparaju Sri Prabhakara Hari Babu . ShriBharat would farther submit that a punishment of reprimand was inflicted upon the petitioner and the same was a minor pimishment, therefore, no full-fledged enquiry was necessary. Section 73 of the Indian Contract Act, 1872 (for short 'the Act, 1872') makes it clear that the when a contract has been broken the party who suffers by such breach is entitled to receive, from the party who has broken the contract, the compensation for loss or damage. Section 74 of the Act, 1872 also provides for the same. (2008) 5 SCC 569 9. ^/'}?t 7T^/3[f-^TP'RRIT/^<}> ^ filf§T ^ ^W^' •g.ETR ^»^ ^ Rf^T cW ^E°T sRipTT .CTRr q< ^TffcScfj; STTuT ^fa ^^ ^ ^qcT I^TT um"TT | 4.2.2 'qq'T-T ^T IW^ tR4 3ITqRT ^HT cf^ ^^T viIT^ ^ ^ RrfSr ^ 1 1 /2<:f< ^ 3T<? 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Under section 73 ofthe Act, 1872, it is provided that if the contract is broken, the party who suffers by such breach is entitled to receive, from the party who has broken the contract, compensation for any loss or damage caused by him thereby, which naturally arose in the usual course of things from such breach. Under section 74 ofthe Act, 1872, the party complaining of the breach is entitled to receive from the party the amount so specified in the contract. In the present case, the Scheme, 1993 clearly provides for imposition ofpenalty, as stated 'above. Accordingly, the penalty was imposed. So far as the second contention ofthe petitioner that no opportunity of hearing was afforded to the petitioner at the appellate or revisional stage before imposition of penalty is concerned, this is a case where the petitioner, in his reply has admitted the fact ofconversion ofapart ofthe residential house to a commercial shop. This is a clear breach of the provisions ofthe Scheme, 1993 as under.the Scheme, 1993, loan 10. n. 12. was provided at a lower rate of interest. Once the breach has occurred by admission of the petitioner himself, no further opportunity of hearing is necessary. The third contention of the petitioner that the appellate authority has affirmed the initial order without giving detailed reasons, is noticed to be rejected on a simple ground that it is not necessary to give detailed reason in case of affirmation of the order under challenge. The Supreme Court, in Chairman, Disciplinary Authority, Rani Lakshmi Bai Kshetriya Gramin Bank (supra), observed'as under: "5. In our opinion, an order of affmnation need not contain as elaborate reasons as an order of reversal, but that does not mean that the order of affirmation need not contain any reasons whatsoever. In fact, the said decision in Prabhu Dayal Grover case has itself stated that the appellate order should disclose application of mind. Whether there was an application of mind or not can only be disclosed by some reasons, at least in brief, mentioned in the order of the appellate authority. Hence, we cannot accept the proposition that an order of affirmation need not contain any reasons at all. That order must contain some reasons, at least in brief, so that one can know whether the appellate authority has applied its mind while affirming the order of the disciplinary aufhority. 6. The view we are taking was also taken by this Court in Divl. Forest Officer v. Madhusudhan Rao (vide SCC para 20 : JT para 19), and in M.P. IndiAstries Ltd. v. Union of India, Siemens Engg. & Mfg. Co. oflndia Ltd. v. Union of India (vide SCC para 6 : AIRpara 6), etc." The Supreme Court, in Viveka Nand Sethi v. Chairman, J&K Bank Ltd. & others , it was observed as under: "22. The principle of natairal justice, it is trite, is no unruly horse. When facts are admitted, an enquiry would be an empty formality. Even the principle of estoppel will apply. [See Gurjeewan Garewal (Dr.) v. Dr. Sumitra Dash.~\ The principles ofnaturaljustice are required to be complied with having regard to the fact situation obtaining therein. It cannot be put in a straitjacket formula. It cannot be applied in a vacuum without reference to the relevant facts and circumstances of the case. (See State of Punjab v. Jagir Singh and Karnataka SRTC v. S.G. Kotturappa.)" Further, the Supreme Court, in P.D.Agrawal v. State Bank oflndia & Others , observed as under: (2005) 5 SCC 337 s 13. 14. 15. "39. Decision of this Court in S.L. Kapoor v. Jagmohan whereupon Mr Rao placed strong reliance to contend that non-observance of principle of natural justice itself causes prejudice or the same should not be read "as it causes difBculty of prejudice", cannot be said to be applicable in the instant case. The prmciples ofnaturaljustice, as noticed hereinbefore, have undergone a sea cUange. In view of fhe decisions of this Court m State Bank of Patiala v. S.K. Sharma and Rajendra Singh v. State ofM.P. the principle of law is that some real prejudice must have been caused to the complainant. The Court has shiflted from its earlier concept that even a small violation shall result in the order being rendered a nullity. To the principle/ doctrine of audi alteram partem, a clear distinction has been laid down between the cases where there was no hearing at all and the cases where fhere was mere technical infringement of the principle. The Court applies the principles of natural justice having regard to the fact situation obtaining in each case. It is not applied in a vacuum without reference to the relevant facts and circumstances ofthe case. It is no unmly horse. It cannot be put in a straitjacket fonnula. (See Viveka Nand Sethi v. Chairman, J&K Bank Ltd. and State of U.P. v. Neeraj Awasthi. See also Mohd. Sartaj v. State ofU.P.)." In the departmental enquiry, the petitioner has been reprimanded for violation of the service conditions as grant of loan was also a part of service conditions as being an employee of the respondent-bank, the petitioner was entitled to loan for residential purpose on a lesser rate ofinterest. Regulation 30 ofthe Regulations, 1980 dealing witfi penalties clearly provides that except in case ofreprimand, other penalties enshrined at clause (b), (c), (d), (e) or (f) of sub-regulation (1) ofRegulation 30, cannot be passed without signature of the chairman and without the charge being fonnulated in writing and given to the said officer or employee so that he shall have reasonable opportunity to answer them m writmg or m person. In the present case, the charges were formulated and on receipt of the reply of the petitioner to the show-cause-notice, it was found that a minor penalty of reprimand under Regulation 30(l)(a) of the (2006) 8 SCC 776 f~ 10 Regulations, 1980 may be imposed. Thus sub-regulation (2) is not applicable to the present case. Section 30 reads as under: "30. Penalties (1) Without prejudice to the provisions of other regulations, an offic.er or employee who commits a breach of these regulations or who displays negligence, inefficiency or indolence, or who knowingly does anyfliing detrimental to the interest ofthe Bank or in conflict with its instructions or is guilty ofany other act ofmisconduct, shall be liable to the following penalties- (a) reprimand; (b) delay or stoppage ofincrements or promotion; (c) degradation to a lower post or grade or to a lower stage in his incremental scale; (d) recovery from pay of the whole or part of any pecuniary loss caused to the Bank by the officer or employee; (e) Removal from the service which shall not be a disqualification for future employment. (f) Dismissal. (2) No officer or employee shall be subjected to the penalties referred to in clause (b), (c), (d), (e) or (f) of sub- regulation (1) except by an order in writing signed by the Chairman and no such order shall be passed without the charge being fonnulated in writing and given to the said officer or employee so that he shall have reasonable opportunity to answer them in writing or in person, as he prefers and in the latter case his defence shall be taken down in writing and read to him: Provided that the requirements of this sub-regulation may be waived, ifthe facts on the basis ofwhich action is to be taken have been established in a court of law or court martial, or where the officer or employee has absconded or where it is for any other reason impracticable to communicate with him or where there is difficulty in observing them and the requirements can be waived without injustice to him. In every case where all or any of the requireinents of this suB-regulation are waived the reasons for doing so shall be recorded in writing." 16. Applyiag the well-settled principles oflaw to the facts ofthe case on hand and for the reasons stated hereinabove, the petition is devoid of ment. 17. Accordingly, the writ petition is dismissed. No order asto costs. Sd/- Satish K. Agnihotri Amil Judge