IN THE HIGH COURT OF JUDICATURE, ANDHRA PRADESH AT HYDERABAD THURSDAY, THE TWENTY SEVENTH DAY OF AUGUST TWO THOUSAND AND NINE PRESENT THE HON'BLE SRI JUSTICE B.PRAKASH RAO AND THE HON'BLE SRI JUSTICE SANJAY KUMAR WRIT APPEAL No.44 OF 2004 (Writ Appeal under Clause 15 of the Letters Patent against the Order dated 25.09.2003 in W.P.No.23065 of 1996 on the file of the High Court.) Between: K.Tata Babu, S/o.Koteswara Rao, R/o.Krishnatulasinagar, Moosarambagh, Hyderabad. ..... APPELLANT AND 1 The Chariman/President, Hyderabad District Cooperative Central Bank Limited, Nampally, Hyderabad. 2 The Management Committee of Board, Hyderabad District Cooperative Central Bank Limited, Hyderabad. .....RESPONDENTS Counsel for the Appellant : MR.A.GIRIDHAR RAO Counsel for the Respondents: MR.K.RAGHUVEER REDDY The Court made the following : ] THE HON’BLE SRI JUSTICE B.PRAKASH RAO AND THE HON’BLE SRI JUSTICE SANJAY KUMAR WRIT APPEAL No.44 OF 2004 O R D E R (Per Sri Justice Sanjay Kumar) The appellant, a Bank Inspector in the Hyderabad District Co-operative Central Bank Limited, Hyderabad, (for brevity, ‘the Bank’), the 1st respondent herein, was dismissed from service by order dated 04.10.1992 passed by the Chairman/President of the Bank (for brevity, ‘the Disciplinary Authority’). The same was confirmed in appeal by the Management Committee/Board of Management of the Bank, the 2nd respondent herein, under it’s order dated 19.07.1996. Both the aforestated proceedings were subjected to challenge in W.P.No.23065 of 1996 by the appellant. By order dated 25.09.2003, the learned single Judge dismissed the writ petition. Hence, this appeal. The appellant had earlier filed W.P.No.883 of 1993 against the dismissal order dated 04.10.1992 which had been confirmed in appeal by the Board of Management of the Bank in the first instance, by its order dated 21.12.1992. A learned Judge of this Court allowed the writ petition on 31.01.1996 setting aside both the proceedings. On appeal by the Bank in W.A.No.286 of 1996, a Division Bench of this Court remitted the matter back to the appellate authority to give a fresh opportunity to the appellant to make his representation raising all relevant grounds against the order of the disciplinary authority and directed the appellate authority to dispose of the appeal by a speaking order. Thereupon, the appellant submitted representation dated 25.06.1996 before the appellate authority. Under the order dated 19.07.1996, the appellate authority again confirmed the order of the disciplinary authority dismissing the appellant from service. This began the second round of litigation before this Court by way of W.P.No.23065 of 1996. The appellant was initially appointed in 1965 as an Assistant in the service of the Bank. On promotion, he became a Bank Inspector in 1980. While so, a loan application submitted by the A.P. Housing Board Technical Employees Cooperative Credit Society (for brevity, ‘the Society’) was referred to the appellant for inspection and report in June, 1988. Upon his Inspection Report dated 30.06.1988, the loan application under Loan A/c.No.1010 was processed further and ultimately, a medium term loan of Rs.12,26,400/- was sanctioned to 133 members of the Society. Thereafter, upon default in remittance of monthly repayment instalments, irregularities committed in the processing and sanctioning of this loan came to light. The appellant, along with 10 other Officers of the Bank, was placed under suspension by orders dated 11.08.1990 in connection with these alleged irregularities. However, by order dated 22.04.1991 the suspension of all the other Officers, except the appellant, was withdrawn and they were reinstated in service without prejudice to the proceedings instituted against them. The ostensible reason for revocation of their suspension was that there was a shortage of staff in the Bank impeding the conduct of its business. Charge-sheet in Ref.No.E/90-91 dated 31.08.1990 was issued framing two charges against the appellant. The charges were: (1) That he recommended the loan applications of A.P. Housing Board Technical Staff Co-operative Credit Society Limited, Hyderabad, under loan A/c.No.1002 without actually visiting the Society and verifying the loanees and their salary particulars with the Housing Board which has resulted in the sanction of loans to the Benami Members and finally could not recover the amounts and thus caused loss to the Bank. (2) That he failed to ensure disbursement of loans to the proper persons. Allegations in support of both the charges were also detailed in the charge sheet dated 31.08.1990. The Bank appointed an Enquiry Officer to look into the above charges by it’s proceedings dated 09.11.1990. The Enquiry Officer submitted his undated report in March, 1991, wherein he held that the first charge against the appellant was not proved, but as regards the second charge, while holding that the appellant had nothing to do with the disbursement of loans to members of the society, the Enquiry Officer held that the appellant had committed major misconduct in discharging his duties as a Bank Inspector. Thereupon, the Bank issued notice dated 01.02.1992 to the appellant to show-cause as to why he should not be dismissed from service. It appears that upon the representation of the appellant, a copy of the enquiry report and certain other documents were furnished to him and after exchange of correspondence by and between the appellant and the Bank, the disciplinary authority passed orders dated 04.10.1992 dismissing the appellant from service. A reading of the said order would show that the disciplinary authority, having referred to the lengthy and protracted exchange of correspondence between the appellant and the Bank, found fault with the appellant for not submitting his explanation and imposed the punishment. There is no discussion on the merits of the case, including the findings recorded by the Enquiry Officer. The appeal filed by the appellant against the order of the disciplinary authority dated 04.10.1992 was dismissed by an unreasoned order on 21.12.1992. As stated supra, the appellant’s challenge to the above proceedings in W.P.No.883 of 1993 met with success and both the proceedings were set aside by a learned single Judge of this Court by order dated 31.01.1996. However, on appeal by the Bank in W.A.No.286 of 1996, the matter was remanded to the appellate authority for fresh disposal. The appellate authority after giving an opportunity of hearing to the appellant, having permitted him to file additional material, rejected his appeal by order dated 19.07.1996, confirming the dismissal order dated 04.10.1992 passed by the disciplinary authority. The challenge to the dismissal order dated 04.10.1992 and the second appellate order dated 19.07.1996 failed before the learned Judge in W.P.No.23605 of 1996 giving rise to this appeal. We are conscious of the limitations on the scope of judicial review in matters relating to disciplinary proceedings. In exercise of it’s writ jurisdiction, this Court will not sit in appeal and sift through the evidence adduced before the disciplinary authorities, for an independent evaluation. Reference may be made to the observations of the Supreme Court in STATE OF A.P. V/s. SREE RAMA RAO[1], reiterating the principles laid down by it earlier in STATE OF ORISSA V/s. BIDYABHUSHAN MOHAPATRA[2]: “The High Court is not constituted in a proceeding under Art. 226 of the Constitution a Court of appeal over the decision of the authorities holding a departmental enquiry against a public servant; it is concerned to determine whether the enquiry is held by an authority competent in that behalf and according to the procedure prescribed in that behalf, and whether the rules of natural justice are not violated. Where there is some evidence, which the authority entrusted with the duty to hold the enquiry has accepted and which evidence may reasonably support the conclusion that the delinquent officer is guilty of the charge, it is not the function of the High Court in a petition for a writ under Art. 226 to review the evidence and to arrive at an independent finding on the evidence. The High Court may undoubtedly interfere where the departmental authorities have held the proceedings against the delinquent in a manner inconsistent with the rules of natural justice or in violation of the statutory rules prescribing the mode of enquiry or where the authorities have disabled themselves from reaching a fair decision by some considerations extraneous to the evidence and the merits of the case or by allowing themselves to be influenced by irrelevant considerations or where the conclusion on the very face of it is so wholly arbitrary and capricious that no reasonable person could ever have arrived at that conclusion, or on similar grounds. But the departmental authorities are, if the enquiry is otherwise properly held, the sole judges of facts and if there be some legal evidence on which their findings can be based, the adequacy or reliability of that evidence is not a matter which can be permitted to be canvassed before the High Court in a proceeding for a writ under Art. 226 of the Constitution.” The Apex Court reiterated this principle in it’s later decisions in STATE OF MADRAS V/s. G.SUNDARAM[3] and B.C.CHATURVEDI V/s. UNION OF INDIA[4]. In this regard, it is relevant to extract the observations of the Supreme Court in B.C.CHATURVEDI’s case (4 supra), which are of guidance to us in the present case. “Judicial review is not an appeal from a decision but a review of the manner in which the decision is made. Power of judicial review is meant to ensure that the individual receives fair treatment and not to ensure that the conclusion which the authority reaches is necessarily correct in eye of the Court. When an inquiry is conducted on charges of a misconduct by a public servant, the Court/Tribunal is concerned to determine whether the inquiry was held by a competent officer or whether rules of natural justice be complied with. Whether the findings or conclusions are based on some evidence, the authority entrusted with the power to hold inquiry has jurisdiction, power and authority to reach a finding of fact or conclusion. But that finding must be based on some evidence. Neither the technical rules of Evidence Act nor of proof of fact or evidence as defined therein, apply to disciplinary proceeding. When the authority accepts that evidence and conclusion receives support therefrom, the disciplinary authority is entitled to hold that the delinquent office is guilty of the charge. The Court/Tribunal on its power of judicial review does not act as appellate authority to reappreciate the evidence and to arrive at the own independent findings on the evidence. The Court/Tribunal may interfere where the authority held the proceedings against the delinquent officer in a manner inconsistent with the rules of natural justice or in violation of statutory rules prescribing the mode of inquiry of where the conclusion or finding reached by the disciplinary authority is based on no evidence. If the conclusion or finding be such as no reasonable person would have ever reached, the Court/Tribunal may interfere with the conclusion or the finding, and mould the relief so as to make it appropriate to the facts of each case.” Thus, this Court in exercise of it’s jurisdiction under Article 226 of the Constitution would be entitled to interfere in disciplinary proceedings where the proceedings against the delinquent officer were held in violation of the statutory procedure or the principles of natural justice or where the conclusion or finding of the disciplinary authority is not based on any evidence. The Supreme Court made it clear that if the conclusion or finding of the disciplinary authority be such that no reasonable person would ever have reached, this Court may interfere with the same and mould the relief so as to make it appropriate to the facts of the case. Thus, notwithstanding the stand of the Bank that this Court would not undertake a review of the action taken by the disciplinary authority against the appellant in exercise of jurisdiction under Article 226 of the Constitution, we would be well justified in examining whether the procedure followed by the Bank in initiating, conducting and concluding the disciplinary proceedings against the appellant was valid and proper; and as to whether the findings recorded against the appellant are based on any evidence. The ‘sufficiency’ of the evidence, no doubt, is beyond the purview of the scrutiny of this Court as laid down by the Supreme Court (APPAREL EXPORT PROMOTION COUNCIL V/s. A.K.CHOPRA)[5]. We would however look into the factum of there being ‘some’ evidence to back the findings of the disciplinary authorities, such findings being of the nature relatable to a ‘reasonable person’. In effect, what this Court would evaluate is not the ‘decision’ but the ‘decision making process’. Further, this Court would also be entitled to interfere in cases involving applicability of the doctrine of proportionality. If the punishment imposed upon the delinquent employee is perceived by this Court to be so disproportionate to the offence so as to shock it’s conscience, this Court would be justified in interfering in the matter. Irrational or perverse findings/decisions of the disciplinary authorities are therefore not immune from judicial review. It is in the light of the aforestated legal principles that the disciplinary action taken against the appellant would have to be examined. The Bank must establish on evidence that the appellant had acted in breach of his required and expected duties or that he acted fraudulently or in collusion with others involved in the irregularities to make out a case of misconduct against him. As the Enquiry Officer found that the appellant had acted in ‘good faith’ and the said finding has not been disturbed by the Disciplinary Authority, it rules out any ‘fraud’ or ‘collusion’ on his part in processing the subject loan. This leaves the question of his acting in breach of his recognized duties. As per Office Order No.E/87-88 dated 10.10.1987, the duties and responsibilities of Bank Inspectors are as follows: 1. Shall regularly inspect Non-Agricultural Credit Societies once in half year; 2. Shall inspect 5 Societies in every month and shall submit report within (3) days from the date of inspection; 3. Shall maintain movement Register in the proforma prescribed and shall obtain approval of their movements in advance from the Deputy General Manager (Banking) and his absence from the Assistant General Manager (Banking); 4. Shall initiate necessary action against the Societies and members for recovery of the over dues; 5. Shall attend to the checking of Reconciliation work as and when entrusted to them; 6. Shall attend to any other work entrusted to them from time to time by his superior Officers; The Society submitted application dated 15.06.1988, received by the Bank on 18.06.1988, for a medium term loan of Rs.12,32,410/- for 133 members. The Society had been sanctioned two loans earlier by the Bank. On 16.01.1987, the Bank had sanctioned a loan of Rs.3,20,950/- to the Society, of which about Rs.2,00,000/- had been repaid by the time the subject application was made. Again, on 28.04.1988, the Bank had sanctioned a loan of Rs.11,11,700/- to the Society under loan A/c No.1002, of which a sum of Rs.27,720/- only had been repaid by the date of the subject application. Charge 1 levelled against the appellant pertains to this loan. The loan application dated 15.06.1988 was referred to the appellant for inspection and report. No separate instructions were issued to the appellant by his superior officers with regard to the mode and procedure of such inspection. Thereupon, the appellant submitted his report dated 30.06.1988 which reads as hereunder: “To The General Manager Hyderabad Dist. Co-op. Central Bank Ltd. Hyderabad. Sir, Dt.30.6.88 Sub : Inspection – Inspection of A.P. Housing Board Technical Staff C.C.S. Ltd., Hyd., Inspection Report – Reg. *** With reference to the subject cited I wish to inform you that I have visited the A.P.Housing Board Technical Staff C.C.S. Ltd. on 27.06.88, 28.06.88 and 29.06.88 and inspected the books of accounts. The Society is maintaining all books of accounts with upto date postings. Previously we have advanced two M.T. loans of Rs.3,20,950.00 and Rs.11,11,700.00 on 16.01.87 and 28.04.88 respectively. Again the Society has applied an M.T. loan of Rs.12,26,400/- for 133 members. The individual members have given authorization to pay drawing officer to deduct the monthly instalments from their salaries. The pay drawing officer has given undertaking certificate under Section 37 of the APCS Act 7 of 1964 to deduct the monthly instalments from the salaries and arrange to remit the same in the Bank on or before due date. He further assured to recover the entire outstanding amount from any member who is transferred, resigned, suspended, terminated, due to retirement from the service and arrange for the remittance of the same in the Bank. He has also certified the correctness of the basic and other particulars shown in the statement. The Audit of the Society for the year 86-87 is completed. The Audit Certificate was awaited from the Co-op. Dept. The Society borrowed an MT loan of Rs.11,11,700.00 on 28.04.88 and again applied MT loan of Rs.12,26,400.00 for 133 members. The Society enrolled the 133 members in the month of May 1988. In view of the above facts, the MT loan of Rs.12,26,000.00 may be sanctioned for 133 members (new members) @ 8 times of the Basic pay repayable in 36 monthly instalments. Yours faithfully, Sd/- xx xx xx 30.06.88 Bank Inspector” It appears that the note file pertaining to the process and sanction of the subject loan was made available to the appellant during the course of the disciplinary proceedings. Examination of this ‘note file’ is necessitated for ascertaining wether there was ‘any’ evidence to support the findings and the ultimate decision of the disciplinary authorities and whether such ‘findings and decision’ were reasonable and conscionable. The note file is titled ‘Office Note and Check Memo for sanction of MT Loan Non-Agricultural to the Salary Earners Co-operative Societies. Clause 15 of the said file reads as hereunder: 15. Whether the inspection of the Society is conducted if so by whom, date of conduct of the inspection. Opinion of the Inspecting Officer. The Inspection was conducted by the Bank Inspector on 27, 28 and 29.06.1988. It is relevant to note that the opinion of the appellant which was required to be quoted against Clause 15 supra, was not actually so quoted. Be that as it may, the file reveals that the Section Clerk, E.Sudershan Reddy, recommended the sanctioning of the loan on 30.06.1988 which was affirmed by the Assistant General Manager of the Bank, Mohd.Ghulam Mohammed, and the Deputy General Manager, M.V.Subba Reddy, on the very same date. However, the General Manager, Vishnuvardhana Rao, raised four queries when the file was put before him on 30.06.1988, which were as follows: 1. Please address A.P. Housing Board to (sic) furnish us total strength of the technical staff working at various centers in the state with their designation. 2. F.D. at members level & Invest in the Bank deferred (sic) each other. 3. Certificate furnished by Assistant Secretary is defective with regard to service particulars. 4. D.G.M. (B) may visit Housing Board and discuss with top management about their working system in the State. The file reveals that thereupon, letter dated 08.07.1988 was addressed by the Bank on the points raised by the General Manager. But, surprisingly, this letter which was addressed to the A.P. Housing Board, instead of being despatched to the Board directly, was handed over to M.A.Rasheed, Treasurer of the Society, with the obvious result that it did not reach the Board and the Society itself furnished concocted documents in response to the queries. The file also contains the endorsement made by the Deputy General Manager, M.V.Subba Reddy, which is of significance and reads as under: “The undersigned has visited Housing Board and discussed with the Accounts Officer of the concerned of Technical Staff and arrangements for effective payment of salaries and the recoveries. The arrangements are as follows:- 1) The Salaries, recoveries statements are prepared by individual Units at various places in the State. They are however, sanction at Head Office, Hyderabad and any Additions/deductions are to be made, the Central Office would make arrangements. The drawing Office at H.O. (Hyderabad) would send the final schedule (Salaries) to all the units, after making necessary deductions. The net figure is thus arrived at Hyderabad. In view of the above, it is for consideration, whether we may sanction the loan of Rs.12,26,480/- to the Housing Board Technical Staff C.C.S. Sd/- D.G.M. (B) 19-7” Upon the said endorsement by the Deputy General Manager, the General Manager once again raised a query on 20.07.1988 with regard to the recovery of the loan amount. This query was answered by the Deputy General Manager on 21.07.1988, but surprisingly, instead of forwarding the file to the General Manager, it appears that the file was placed before the President of the Bank, S.Sai Reddy, who sanctioned the loan on 26.07.1988. Thereupon, the loan was processed further and eventually disbursed. It is relevant to note that as per the Bank’s Guidelines, a loan could not have been sanctioned by the Bank in the normal course to a customer with an active previous loan unless such customer had cleared the instalments payable towards such loan at least for a period of six months. In the present case, the Society having availed the loan for Rs.11,11,700/- on 28.04.1988 had not repaid instalments for six months and was therefore ineligible for a fresh loan unless it was sanctioned by the Board of Management of the Bank. As regards the procedure followed by the Bank in the course of the disciplinary proceedings, Charge 1 levelled against the appellant dealt with the earlier loan transaction sanctioned on 28.04.1988 for a sum of Rs.11,11,700/- under Loan A/c.No.1002. However, as the Enquiry Officer found that the file pertaining to this loan account was missing from the Bank and that it was very difficult to establish that the appellant was responsible for the sanction of the loan and for causing loss to the Bank, the Enquiry Officer found that the charge was not tenable in the eye of law and hence, not proved. Charge 2 pertained to the subject loan transaction bearing loan A/c.No.1010 and the charge was that the appellant failed to ensure disbursement of loans to the proper persons. The allegations in support of this charge, as borne out from the charge sheet dated 31.08.1990, are that the appellant had played a most crucial role in getting the benami loan in Application No.1010 of the Society sanctioned by furnishing a false report of verification and a false certificate regarding correctness of the names, designations and their signatures and other important particulars of date of appointment, date of retirement, pay particulars etc. It is stated that it was strange that the appellant could certify these false particulars of 133 individuals with their designations as mentioned in the loan applications, but who are not working in the A.P. Housing Board. Stating so, it was alleged that the appellant had cheated the Bank and colluded with the office bearers of the Society. It was further alleged that he had done so for personal gain. Stating that this was a serious lapse on his part in recommending the loan to fictitious names (sic) which remained unrecoverable, it was alleged that he willfully avoided discharge of his duties as a Bank Inspector and thereby cheated the Bank. With regard to the actual charge, the Enquiry Officer accepted that the appellant was not involved in the disbursement of the loan and was, in fact, transferred from the post of Bank Inspector when the disbursement of the loan was made to 133 members of the Society under Loan A/c.No.1010. In effect, the Enquiry Officer gave a clean chit to the appellant against Charge 2 also. The Enquiry Officer, having called for a list of A.P. Housing Board Employees, thereafter found that the names of the 133 members put-forth by the Society as the beneficiaries of the loan, were not mentioned therein clearly indicating that they were fictitious. The Enquiry Officer found fault with the Chief Executive of the Bank for sanctioning the loan without obtaining the list of it’s employees from the Board. The Enquiry Officer also found that the office bearers of the Society