Civil Writ Petition No. 8484 of 2001 1 IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH Civil Writ Petition No. 8484 of 2001 Date of decision : 08.03.2010 Nasib Chand ....Petitioner V/s The Citizens Urban Coop. Bank Ltd. and another ....Respondents BEFORE : HON'BLE MR. JUSTICE RAJAN GUPTA 1. Whether Reporters of local papers may be allowed to see the judgment? 2. To be referred to the Reporters or not? 3. Whether the judgment should be reported in the Digest? Present: Mr. M.S. Bedi, Advocate for the petitioner. Mr. Ashwani Prashar, Advocate for respondent No. 1. RAJAN GUPTA J. (ORAL) This is a petition under Article 226 of the Constitution of India for issuance of writ in the nature of certiorari for quashing order Annexure P-12 passed by the Additional Secretary Cooperation (Appeal) (exercising the powers of State Government under the Punjab Cooperative Societies Act 1961) (respondent No. 2 herein) whereby order dated 30.12.1999 passed by Deputy Registrar Cooperative (Banking) was set-aside. It has further been prayed that consequential reliefs be granted to the petitioner. Brief factual background of the case is that the petitioner was working as accountant-cum-cashier in the Nawanshrhar Urban Cooperative Bank Ltd, Nawanshehar. He was placed under suspension on 26.07.1993 Civil Writ Petition No. 8484 of 2001 2 on the charges of embezzling certain amounts from the accounts of the account holders/customers. It was also alleged in the charge-sheet that petitioner remained absent since 28.10.1994 and thus, committed mis- conduct. An inquiry ensued. The inquiry officer found the petitioner guilty of the charges levelled against him and submitted his inquiry report, Annexure R-1/19. Consequently order Annexure P-8 dated 22.05.1997 was passed terminating the services of the petitioner. The said order was ratified by the Board of Directors on 07.06.1997 vide order Annexure P-9. The petitioner, thereafter, filed an appeal under Rule 13, 2(i) of the Punjab Urban Coop. Banks Services Rules, 1991 before the Registrar Cooperative Societies, Punjab who entrusted the same to the Deputy Registrar (Banking) Cooperative Societies, Punjab. Vide his order dated 30.12.1999 (Annexure P-10), the Deputy Registrar allowed the appeal of the petitioner on the ground that Managing Director was not competent to pass order of termination as the said power vested with the Board of Directors. He, however, gave liberty to the Bank to take a decision in accordance with the rules. Aggrieved, respondent No. 1-Bank preferred a revision petition under Section 69 of the Punjab Cooperative Societies Act, 1961. The said revision petition was decided by Additional Secretary Cooperation (Appeals), Punjab on 11.01.2001. The revisional authority while allowing the appeal preferred by the Bank, held as follows:- “I have heard the ld. Counsel for the parties and have carefully gone through the enquiry report and other relevant record. I am of the considered opinion that allegation of embezzlements of Bank amounts were duly established by the I.O. The respondent who was present in the court on the date of arguments of the case was specifically ordered to bring Civil Writ Petition No. 8484 of 2001 3 any evidence which could falsify the findings of the I.O. with regard to the allegations but the respondent miserably failed to bring any evidence to this effect despite giving four opportunities. I do not agree with the judgment of the appellate authority that MD was not competent to pass termination orders against the respondent and on this score only he accepted the appeal of the respondent and did not care to see the resolution passed by the BOD authorising the Manager to take such action. I find that the appellate authority has stated regarding absenting willfully from the official duties by the respondent but he has not stated any thing with regard to the allegations of embezzlements of bank's amounts for which he was basically terminated from services, therefore, I am of the view that the appellate authority has not applied his mind before deciding the appeal. It is also untenable that the charge-sheet was not served upon him and ex-parte enquiry was held. From the record, it is revealed that the charge-sheet was framed duly served but received back as undelivered. Inquiry Officer was appointed, due notice was sent and later on notice was given in the news papers. It is clearly indicative that the respondent ignored the bak authorities and did not care to appear and defend himself. Therefore, now he cannot take this plea that set procedure as laid down under the rules was not followed before terminating his services. I find that the respondent was rightly terminated by complying with the service rules. Hence, the revision petition is accepted and the impugned order dated 30.12.1999 passed by DRCS(B) is set aside.” The aforesaid order has been challenged in the present petition by the petitioner. Learned counsel for the petitioner has argued that Managing Director had no power whatsoever to terminate the services of the petitioner Civil Writ Petition No. 8484 of 2001 4 as this power is vested with the Board of Directors. He submits that Managing Director namely Mr. Vijay Sethi was biased against the petitioner and his services was terminated due to this reason. Mr. Vijay Sethi was the Managing Director when the order was passed and even at the time of ratification by Board of Directors he was the Chairman of the Board of Directors. He, therefore, submits that order terminating the services of the petitioner needs to be set-aside. Learned counsel has argued that power to terminate the services of any employee could not be delegated by the Board of Directors which has been done in the present case. Learned counsel appearing for respondent No. 1 submits that the order terminating the services of the petitioner was valid and in accordance with the rules. Detailed inquiry was conducted in respect of the charges and inquiry report, Annexure R-1/19 was submitted by the inquiry officer. In the said inquiry, charges levelled against the petitioner were found to be correct which included embezzlement of bank money and absence from the duty. Mr. Prashar, has further pointed out that before the initiation of the inquiry, notices Annexures R-1/17 & R-1/18 were issued to the petitioner asking him to appear before the inquiry officer and present his case. However, the petitioner neither appeared before the inquiry officer nor cooperated with the inquiry proceedings in any manner. Learned counsel has also referred to power and duties of the Chief Executive Officer as contained in Bye-Law 40 (xviii) of the Citizen Urban Cooperative Bank Limited in support of his contention that Chief Executive Officer was authorized to discharge such duties as would be delegated or entrusted to him by Board of Directors. He further submits that Chief Executive Officer of the Bank would necessarily mean Managing Director of the Bank in view Civil Writ Petition No. 8484 of 2001 5 of Bye-Law 4(viii). Learned counsel has relied upon the judgment of the Apex Court in Maharashtra State Mining Corporation Vs. Sunil 2007(1) SLR 525 to contend that in case a dismissal order is passed by the Managing Director who was not competent authority at the relevant time but the same is ratified by the Board of Directors later, the order of termination would be sustainable. I have heard counsel for the parties and perused the record annexed with the petition. It is evident that a charge-sheet was served on the petitioner regarding certain allegations on 01.05.1995. A list of charges was also annexed to the show-cause-notice which included charges of embezzlement of certain amounts of the bank as well as absence from the duty without permission. An inquiry was initiated and the petitioner was placed under suspension. The inquiry officer issued notices Annexures R-1/17 & R-1/18 asking the petitioner to appear before him to defend the charges. However, it appears that petitioner failed to appear before the inquiry officer due to which inquiry officer had to proceed against the petitioner ex-parte. Inquiry officer completed the inquiry and came to the conclusion that Nasib Chand (petitioner herein) was guilty of embezzlement of the amount in question. A detailed inquiry report dated 05.12.1996 with regard to the ten charges levelled against the petitioner was submitted. A show-cause-notice was thereafter sent to the petitioner along with a copy of the inquiry report. This notice was received back un-delivered with the comments “unclaimed, returned to sender”. As a result, bank had to resort to publication of a notice in the news paper. A public notice thus, appeared in two local dailies on 30.04.1997 whereby the petitioner was asked to submit his reply to show- Civil Writ Petition No. 8484 of 2001 6 cause-notice within a period of fifteen days failing which further necessary action would be taken. The petitioner failed to respond to this notice. Resultantly, order dated 22.05.1997, Annexure P-8 terminating the services of the petitioner was passed. Admittedly, termination order was passed by Managing Director of the Bank which was later ratified by the Board of Directors on 07.06.1997 vide order Annexure P-9. Thus to consider the argument that Managing Director was not competent to pass the impugned order as the authority therefor vests in the Board of Director, the judgment in Sunil case (supra) is relevant. In the said case an employee of the Corporation was placed under suspension on various charges of mis- conduct. An inquiry was conducted wherein the employee was found guilty. The Managing Director who was not competent to terminate the services of the employee, passed an order dispensing with his service. While the Civil Writ Petition was pending, the decision of the Managing Director was ratified by the Board of Director of the Corporation by passing a resolution. This decision was challenged on the ground that Managing Director was not competent to terminate respondent's service as on the relevant date he did not have the power to do so. This apart, the said defect could not be rectified by resolution of the Board of Directors. After considering number of judgments the apex court held as under:- “7. The High Court was right when it held that an act by a legally incompetent authority is invalid. But it was entirely wrong in holding that such an invalid act cannot be subsequently 'rectified' by ratification of the competent authority. Ratification by definition means the making valid of an act already done. The principle is derived from the Latin maxim 'Ratihabitio priori mandato aequiparatur' ratification Civil Writ Petition No. 8484 of 2001 7 of an act is equivalent to a prior authority to perform such act.' Therefore ratification assumes an invalid act which is retrospectively validated. [See P. Ramanatha Aiyar's Advanced Law lexicon (2005) Vol. 4 p. 3939 et seq.] 8. In Parmeshwari Prasad Gupta, the services of the General Manager of a company had been terminated by the Chairman of the Board of Directors pursuant to a resolution taken by the Board at a meeting. It was not disputed that meeting had been improperly held and consequently the resolution passed terminating the services of the General Manger was invalid. However, a subsequent meeting had been held by the Board of Directors affirming the earlier resolution. The subsequent meeting had been properly convened. The Court held: “Even if it be assumed that the telegram and the letter terminating the services of the appellant by the Chairman was in pursuance to the invalid resolution of the Board of Directors passed on December 16, 1953 to terminate his services, it would not follow that the action of the Chariman could not be ratified in a regularly convened meeting of the Board of Directors. The point is that even assuming that the Chairman was not legally authorized to terminate the services of the appellant, he was acting on behalf of the Company in doing so, because, he purported to act in pursuance of the invalid resolution. Therefore, it was open to a regularly constituted meeting of the Board of Directors to ratify that action which, though unauthorized, was done on behalf of the Company. Ratification would always relate back to the date of the act ratified and so it must be held that the services of the appellant were validly terminated on December 17, 1953”. 9. The view expressed has been recently approved in the case of High Court of Judicature for Rajasthan v. P.P. Singh Civil Writ Petition No. 8484 of 2001 8 (supra). [See also Chaude-Lila Parulekar v. Sakal Papers (P) Ltd. (2005) 11 SCC 73.] 10. That same view has been expressed in several cases in other jurisdictions. Thus in Hartman vs. Hornsby (142 Mo 368, 44SW 242, 244) it was said “Ratification” is the approval by act, word, or conduct, of that which was attempted (of accomplishment), but which was improperly or unauthorizedly performed in the first instance”. 11. In the present case, the Managing Director's order dismissing the respondent from the service was admittedly ratified by the Board of Directors on 20th February 1991, and the Board of Directors unquestionably had the power to terminate the services of the respondent. On the basis of the authorities noted, it must follow that since the order of the Managing Director had been ratified by the Board of Directors such ratification related back to the date of the order and validated it.” In view of above, I am of the considered view that contention of learned counsel for the petitioner that termination order in respect of present petitioner deserves to be set-aside on the ground that Managing Director did not have the power to dispense with the services is devoid of merit. It is evident that by virtue of order Annexure R-1/2 dated 25.02.1995, the Managing Director was authorized to take disciplinary action against the petitioner. The decision taken by him was later ratified by the Board of Directors vide order Annexure P-9 dated 07.06.1997 This plea raised by the petitioner thus fails. As regards delegation of power by the Board of Directors and the Managing Director, Bye-law 40 of the registered Bye-Laws of the respondent-bank reads :- “(xvii) To exercise such other powers and discharge Civil Writ Petition No. 8484 of 2001 9 such other duties as may be delegated or entrusted to him by the Board of Directors or by the Chairman” The Chief Executive Officer has been further defined in Bye- laws of The Citizens Urban Co-op Bank Ltd. in Bye-law 4(viii) which says:- “(viii) 'Chief Executive Officer' means the Managing Director appointed by the Board of Directors. If a Managing Director is not appointed, then the General Manager or Manager or Secretary appointed by the Board of Directors of the Bank will be the Chief Executive Officer. The employees of the bank shall exercise their powers and perform their duties under supervision and control of the Chief Executive Officer subject to the control of the Board of Directors.” It is thus clear that Board of Directors is empowered to delegate its powers to Chief Executive Officer under Bye-Law 4(viii) and Chief Executive Officer means the Managing Director, General Manger Manager or Secretary as the case may be. There can thus, be no doubt that in the instant case even on the relevant date, Managing Director was empowered to take a decision on the basis of inquiry report submitted to him. It is worthwhile to mention here that in the present petition there is no challenge to the Bye-Laws aforesaid and thus in my considered view stand of the respondent/Bank is not mis-placed. Another argument advanced by learned counsel for the petitioner is regarding bias of the Managing Director namely Mr. Vijay Sethi against the petitioner. The plea of malafides has been raised during the course of arguments. The Managing Director was never impleaded in the petition by name. He thus, got no opportunity to rebut the allegation levelled against him. In reply filed by respondent No. 1-bank it has been Civil Writ Petition No. 8484 of 2001 10 clearly stated that action against the petitioner was not taken by the Managing Director due to any malafidies on his part. It has been stated in the reply that petitioner was levelling baseless allegations in this regard. No re-joinder has been filed to the reply filed by the respondent No. 1-bank. I thus, feel that this argument is mis-conceived. This apart, the revisional authority i.e. Additional Secretary Corporation examined all the pleas raised before him and came to the conclusion that the petitioner miserably failed to bring anything on record to show that findings arrived at by the investigating officer were incorrect. The revisional authority also observed that the petitioner had failed to cooperate with the bank authorities and did not appear before it to defend himself. Thus, the plea that the set procedure was not followed was rejected by the said authority. I find no legal infirmity with the said order. No further argument has been advanced. In view of the above, no interference is called for in the impugned orders in writ jurisdiction of this court. The petition is devoid of merit and is dismissed with no order as to costs. March 08, 2010 (RAJAN GUPTA) Ajay JUDGE