IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 03.06.2008 C O R A M THE HONOURABLE Mr.JUSTICE P.JYOTHIMANI W.P.No.12362 of 1999 and Connected Miscellaneous Petition N.Ramakrishnan .. Petitioner -Vs- 1. The Disciplinary Authority, Deputy General Manager, Zonal Office, Central Bank of India, New Delhi. 2. Appellate Authority, General Manager, Central Bank of India, Central Office, Chawdur Mukhi Nariman Point, Bombay – 400 021. 3. General Manager, Central Bank of India, Zonal Office, 48/49 Montieth Road, Egmore, Chennai – 600 008. .. Respondents Writ Petition filed under Article 226 of the Constitution of India for the issuance of a Writ of Certiorarified Mandamus calling for the records of the 2nd respondent dated 24.05.1999 and the communication dated 14.06.1999 confirming the order of the 1st respondent dated 24th of January 1998 and quash the same and direct the respondent to issue all terminal benefits to the petitioner. For Petitioner : Mr.N.R.Chandran, Senior Counsel for Mr.Suresh Viswanath For Respondents : Mr.V.Karthick for M/s.T.S.Gopalan & Co - - - - O R D E R The petitioner while working as Chief Manager, Central Bank of India, in its branch office at Janpath, New Delhi, was served with a charge sheet on 10.01.1991. Seven charges were framed against him viz., https://hcservices.ecourts.gov.in/hcservices/ Charge No.1: The petitioner while working as Chief Manager, Janpath branch, during 1989 and 1990, opened number of revolving Letter of Credits in various accounts of Indana Group of Companies and the revolving Letter of Credits were opened without reinstatement clause and he has committed various irregularities and against the terms of sanction in the manual of instructions and Central Office guidelines and therefore he has failed to discharge his duties with utmost integrity, honesty, devotion and diligence and charged under Regulation 3.1 and 3.3 of the Central Bank of India Officer Employees (Conduct) Regulations, 1976 read with Regulation 24 which is punishable under Regulation 4 of the Central Bank of India Officer Employees (Discipline & Appeal) Regulations, 1976. Charge No.2: The petitioner has allowed unauthorized withdrawal of Rs.47 lakhs approximately in the accounts of Foremost Industries (I) Limited and Indodan Industries Limited at the time when accounts were grossly overdrawn and in spite of reminders from Zonal Office, he failed to monitor the accounts and therefore he failed to ensure and protect the interest of the Bank, thus charged under the above said Regulations. Charge No.3: The petitioner has not inspected the stocks in the account of Indodan Industries and Foremost Industries (I) Limited, who have not submitted their monthly stock statements and position of the account which is grossly out of order and therefore charged under the Regulations stated above. On 06.5.1991, the following additional charges were framed against the petitioner viz., Charge No. 4: The petitioner while working as Chief Manager at Janpath branch during 1989-1990, signed Letter of Credit No.44/48 dated 25.08.1990, for Rs.41,18,852.40/- favouring M/s.Manu Steels, 118, Shakti Vihar, New Delhi wherein the advising branch is named as Addison Building, Madras branch. The petitioner should have advised the Letter of Credit direct or through any other branch in Delhi, since the beneficiaries was having its address at Delhi. The beneficiaries M/s. Manu Steels by letter dated 22.09.1990, has brought to the notice of the branch that Letter of Credits is a fraud and it did not pertain to them. The petitioner instead of making enquires, signed the letter dated 05.10.1990 and the matter has not been taken up with the negotiating bank viz., Standard Chartered Bank, Madras. Therefore, despite of knowledge of fraud, the petitioner gave instruction to send telex to honour the https://hcservices.ecourts.gov.in/hcservices/ commitments under the Letter of Credits and therefore liable for action as per the above Regulations. Charge No. 5: The petitioner unauthorisedly and without the knowledge of any other official and without entering into bank’s books, signed the letters to various banks confirming acceptance of documents under Letter of Credits stating that payment of the said bills will be made on due date and hence charged under the above said Regulations. Charge No.5(A): In spite of knowledge of denial by the beneficiary having involved in the Letter of Credit transaction being a fraud, the petitioner signed a letter dated 27.09.1990 to M/s. Standard Chartered Bank, Mylapore that payment will be made on 20.02.1991, without knowledge of any official from Bank and without recording in Letter of Credit register and therefore charged under the above said Regulations. Charge No.6: All revolving Letter of Credits were unauthorized signed by the petitioner and did not contain the important basic documents such as transport documents, insurance documents and commercial invoice. No limiting period was mentioned for presentation of documents for negotiation from the date of shipments and the last date of negotiation as informed by the party without verifying and taking necessary documentary evidence and therefore charged under the above said Regulations. Charge No.7: The petitioner has unauthorisedly transferred a limit of Rs.5 lacs for cheque discounting from the account of M/s.Indodan Industries Ltd. for use at Addison Building, Madras for utilization of discounting local as well as up-country cheques drawn on M/s Indodan Industries Ltd. Even higher authorities were not informed about the same and not reported the position of accounts to the Zonal Office, thus hiding an act done without authority and in gross violation of bank’s rules and therefore charged under the above said Regulations. 2. The said charge sheet dated 10.01.1991, as well as, additional charge sheet dated 06.05.1991, accompanied the various documents and list of witnesses and the petitioner has also inspected various documents as admitted by him in his letter dated 04.02.1991, addressed to the Disciplinary Authority and Deputy General Manager, Central Bank of India, Zonal Office, New Delhi. 3. The Assistant General Manager, Mr.P.E.Rawat, was appointed as the Inquiring Authority on 10.08.1992 and after several sitting, the https://hcservices.ecourts.gov.in/hcservices/ enquiry was concluded on 09.09.1995 and the management side has produced three witnesses in addition to the documentary evidence and ultimately the Inquiring Authority has submitted his findings dated 28.11.1995, a copy of which has been received by the petitioner on 13.01.1996, by courier as admitted by him in his letter dated 22.01.1996, addressed to the Deputy General Manger / Disciplinary Authority. 4. The Inquiring Authority in the findings submitted by him has concluded that Charge Nos.1,2,3 and 5(A) has been proved and Charge No.6 as partly proved and has exonerated the petitioner from Charge Nos.4,5 and 7 as not having been proved. To the findings in the enquiry report, the petitioner has given his reply to the Disciplinary Authority on 22.01.1996 and ultimately the Disciplinary Authority has passed final orders on 19th / 24th of January 1998, holding that Charge Nos.1,2,3 and 5(A) are proved while Charge No.6 partly proved and discharged the petitioner in respect of Charge Nos.4,5 & 7 and awarded the penalty of dismissal from service in respect of Charge No.1, reduction by two stages in the time scale in respect of Charge Nos.2, 3 & 5(A) and reduction by one stage in the time scale in respect of Charge No.6 and exonerated the petitioner from Charge Nos.4,5 & 7 and awarded consolidated penalty of dismissal from bank service in terms of Regulation 4(h) of the Central Bank of India Officer Employees’ (Discipline & Appeal) Regulations, 1976. 5. It was against the said order of the Disciplinary Authority viz., the first respondent, the petitioner has filed appeal. The Appellate Authority viz., the second respondent General Manager, Central Bank of India, Bombay who, by his letter dated 24.05.1999, has confirmed the punishment of dismissal as it was communicated to the petitioner by the second respondent dated 14.06.1999. It is as against the order of dismissal passed by the first respondent as confirmed by the second respondent Appellate Authority as stated above, the petitioner has filed the present writ petition. 6. The main grounds on which the said order of dismissal is challenged by the petitioner in this writ petition is as follows: (i) Vital documents which were required by the petitioner have not been produced to him thereby the principles of Natural Justice is violated. (ii) While major charge framed against the petitioner is that he has allowed opening of revolving Letter of Credits without reinstatement clauses, whereas, the Letter of Credits opened were with automatic reinstatement clause and therefore the charge itself is not true and baseless. (iii) The said major charge itself is based on the instruction dated 18.06.1980 and 08.09.1980, which according to the petitioner, has been superseded by subsequent Central Office circular dated 22.10.1988, in which there is no prohibition to open Letter of Credits as found in the circular dated 08.09.1980 and therefore, the https://hcservices.ecourts.gov.in/hcservices/ transaction which took place between 1989-1990 were covered by subsequent circular of the Central Office dated 22.10.1988 and therefore reliance placed on the earlier circular dated 08.09.1980 is patently wrong. (iv) In spite of repeated representation to call for the files from the Zonal Office which would reveal that the petitioner has informed periodically about the opening of Letter of Credits, the Manager, Janpath branch informed that the files of Indana Group were missing and not traceable. It was in those circumstances that Zonal Office files were requested to be perused and the petitioner was informed that the same is not possible since they are privileged document and would amount to repetition. 7. In the counter affidavit filled by the respondents it is stated that in respect of extending credit facilities, they are sanctioned by hierarchy of officers depending upon the nature, scope and magnitude and also fix the maximum upper limit and one such facility extended by the bank is Letter of Credit facility. The Letter of Credit is a facility being given at the request of the customer to the third party to make payment as per the stipulations contained in the document and the Letter of Credit limit is given for a period of one year or less on a review of the conduct of the account or the customer. It is an arrangement which ensures that if the customer does not reimburse to the bank, the amount paid under the Letter of Credit to the beneficiaries and the total contingent obligation of the bank exceeds the limit of the Letter of Credit, the bank could decline to issue further Letter of Credit. The Letter of Credit is usually valid in respect of one transaction and in very rare circumstances, revolving Letter of Credit is given to the third party seller / supplier at the request of its customer. The revolving Letter of Credit involves more than one transaction of purchase or sale. In respect of the said revolving Letter of Credit, a limit is established in respect of availability to the beneficiary to the extent of bills drawn, in which event, it enables the bank to stop issue of such reinstatement letter thereby avoiding bank's obligation to the third party. If such Letter of Credit is issued without such restriction clause viz., reinstatement clause, the beneficiary of the Letter of Credit gets the amount without waiting for reinstatement advice. Therefore, in respect of revolving Letter of Credit with reinstatement clause, the liability of the opening bank will be restricted to the amount of the Letter of Credit, whereas in the case of revolving Letter of Credit without such restriction clause, the liability of the opening bank will increase to the number of times by which the Letter of Credit revolves. Therefore, according to the respondents, banks do not issue revolving Letter of Credit without reinstatement clause. 8. Further it is stated in the counter affidavit that in respect of Chief Manager, the aggregate credit limit to be sanctioned by him was fixed at Rs.10 lakhs during 1988. Indodan Industries Ltd., and https://hcservices.ecourts.gov.in/hcservices/ Foremost Industries Ltd. were the customers of the bank in Janpath Branch, New Delhi. Out of whom Indodan Industries Ltd., were enjoying Letter of Credit facility to the tune of Rs.30 lakhs while Foremost Industries was enjoying the said facility for Rs.25 lakhs. It is the case of the respondents that the petitioner who joined in the service of the bank in the year 1972 is a Chartered Accountant and was promoted to the post of Senior Manager Grade Scale IV, working as Chief Manager, Janpath Branch between March 1988 to May 1990. The case of the respondents is that during that time, it was found that the petitioner has opened number of automatic revolving Letters of Credit without reinstatement clause in respect of the above said two companies and has allowed Indodan Industries to enjoy automatic irrevocable revolving Letter of Credit for Rs.3,63,195/- for a period of 36 months in favour of Mani Management Consultants Private Limited. Therefore, he has allowed the said Mani Management Consultants Private Limited to receive the amount without Indodan Industries paying the amount to the bank thereby allowing to enjoy an unauthorised credit limit to an extent of Rs.1,30,75,020/- and likewise in respect of Foremost Industries India Limited also he has allowed an unauthorised credit limit to an extent of Rs.91,55,736/-. It was also found that Indodan Industries had an outstanding of Rs.89.38 lakhs as against the sanctioned limit of Rs.30 lakhs and the Foremost Industries India Limited having an outstanding of Rs.50.56 lakhs against the sanctioned limit of Rs.25 lakhs and the petitioner has allowed the said companies to unauthorizedly withdraw the amount approximately running to Rs.47 lakhs. It was also found that the petitioner has signed various Letter of Credit without having basic documents. It was on that basis, the memo of charge dated 10.01.1991 was issued. By letter dated 28.11.1990, the petitioner has confirmed of opening of various letter of credit stating that it was within the delegated power of the Chief Manager and he was not aware of the difference between opening of Letter of Credit revolving with reinstatement clause and without reinstatement clause. 9. In the enquiry conducted at Delhi, three witnesses were examined and the petitioner has not chosen to examine any witness. The Enquiry Officer has given a finding on 28.11.1995, holding that Charge Nos.1,2,3 & 5A were proved while Charge No.6 partly proved and Charge Nos.4,5 & 7 not proved. Copy of the findings were given to the petitioner and second show cause notice was issued as per the conduct rules to which the petitioner has given his reply. After considering all these, the Disciplinary Authority passed orders on 19/24.01.1998, dismissing the petitioner from service and the appeal preferred by the petitioner was rejected. The order passed by the Appellate Authority at Bombay was communicated by the third respondent to the petitioner since at that time, the petitioner was employed in the Zonal Office in Chennai, within the administrative control of the third respondent. https://hcservices.ecourts.gov.in/hcservices/ 10. It is the case of the respondents that no cause of action arose within the jurisdiction of this Court. It is also their further case that there is no error apparent on the face of the impugned order. The third respondent has no role except communicating the order of the Appellate Authority to the petitioner, since the petitioner at that time was under the administrative control of the third respondent. Merely because the order in appeal was communicated at Chennai, it cannot be said that this Court has jurisdiction. 11. It is also stated that during the time of enquiry, the petitioner was not placed under suspension. There is no violation of principles of Natural Justice. The petitioner was defended by Mr.J.K.Ramprasad, who was an erstwhile Office bearer of the Central Bank of India Officers' Association and who was also well versed with the procedure in the disciplinary proceedings. It is also stated that two circulars dated 18.06.1980 and 08.09.1980, specifically prohibited the opening of letter of credit with automatic reinstatement clause. Subsequent circular dated 22.10.1988, is only inconsonance with the earlier circular and the same was only issued enhancing the power of the hierarchy of officers in case of upper credit limit. There is no change in the opening of Letter of Credit with automatic reinstatement clause. The file which the petitioner requires was found missing, however, the petitioner was able to produced copies of certain documents which ought to have been found place in the missing files. The petitioner has not explained the source from which he was able to get possession of the said documents. Further, the Disciplinary Authority has dealt with the above aspect. It is also stated that in as much as the charge itself is on opening of revolving letter of credit without reinstatement clause, which was not denied, the non production of the said files would not cause any prejudice to the petitioner. Even though the bank was able to produce the cheques amounting to Rs.36,85,511/- and the remaining amount was not available, the petitioner in his letter dated 14.09.1990, has not disputed payment of Rs.47 lakhs. 12. According to the respondents in the counter affidavit, enquiry was conducted in a fair and impartial manner and the petitioner has never made any grievance regarding the conduct of the enquiry. It is also specifically stated in the counter affidavit by the respondents that the petitioner had opened the revolving letters of credit with automatic reinstatement and revolving letter of credit without reinstatement clause which in effect amounts to not having reinstatement clause at all. By allowing the opening in the said manner, the petitioner has exceeded the credit limits and the respondents sought for the dismissal of the writ petition. 13. Mr.N.R.Chandran, learned senior counsel appearing for the petitioner would submit that the entire disciplinary proceedings have been continued as if the petitioner has committed the charges by https://hcservices.ecourts.gov.in/hcservices/ relying upon the two letters of the petitioner dated 28.01.1990 and 04.12.1991. The genesis of the case of the petitioner is that he was competent to open the letter of credit of any category and that he had reported the said fact to the Zonal Office and had obtained their approval. According to him, in the circular dated 18.06.1980, there was no embargo regarding opening of revolving Letters of Credit. The subsequent circular dated 08.09.1980, is only a clarification and any restriction imposed in the said clarification cannot be read with the original circular dated 18.06.1980. He would also submit that the very charge itself is not correct for the reason that charge memo is for the opening of revolving Letter of credit without reinstatement clause, whereas, the charge itself does not refer to the opening of automatic revolving Letters of Credit but only refers to revolving Letter of Credit. The clarification circular dated 08.09.1980, only prohibits opening of automatic revolving letter of credit and in as much as the charge is not relating to opening of automatic revolving letter of credit, Clause 8 of the clarification circular dated 08.09.1980, cannot be applied and therefore according to him the charges framed are not correct. 14. The second submission is that while the charge itself is against the petitioner for having opened the letter of credit without reinstatement clause, but all the letter of credit referred to in the annexure to charge sheet marked as document during the enquiry in fact contains reinstatement clause and therefore, the charge should be deemed not to have been proved. Therefore the Disciplinary Authority has proceeded on a wrong assumption that the letter of credit have been opened without reinstatement clause which is factually incorrect. He has also submitted that only in the counter affidavit the respondents have improved the charge by including the automatic revolving letters of credit which is equivalent to the letter of credit without reinstatement clause. In as much as it is not the charge, the respondents cannot be permitted to improve the case. 15. It is the further contention of the learned senior counsel that in respect of opening of letter of credit, the petitioner has always reported the same and got the approval from the Zonal Office. Further the petitioner has also marked 83 document which are the correspondents between the Branch Office and the Zonal Office and the relevancy has also been proved. However, the Enquiry Officer has refused to deliver the said 83 documents on the basis that the relevancy has not been proved. Further, the petitioner has specifically stated that the higher authorities has full knowledge about the opening of the letter of credit and have never found fault with and the said statement, has not been specifically denied. The non-marking of 83 documents disabled the petitioner to prove the case that Zonal Office was informed about the opening of letter of credit. The claim of the respondents that production of files from Zonal Office is privileged documents is not correct. He would also submit https://hcservices.ecourts.gov.in/hcservices/ that in the absence any charge of misappropriation or personal gain to the petitioner, the punishment of dismissal from service is not proportionate to the charge itself. He would also submit that two letters dated 28.09.1990 and 04.02.1991 of the petitioners does not amount to acceptance. What was stated in the letter dated 28.09.1990, which was before the issue of charge sheet was that the Zonal Office has knowledge of opening of letters of credit and there has been daily audit by M.S.Nanda, Chartered Accountant. The letter dated 04.02.1991, is after the charge sheet, wherein the petitioner has not accepted the charge and made it clear that the letters of credit were opened on instruction from the higher authorities. He would also rely upon the Judgments of the Hon'ble Supreme Court in Coimbatore District Central Cooperative Bank Vs. Coimbatore District Central Cooperative Bank Employees Association and another ((2007) 4 SCC 669) and Moni Shankar Vs. Union of India and another ((2008) 3 SCC 484), to substantiate his contention regarding the proportionality of punishment. Finally the learned senior counsel has also submitted that the petitioner is reaching the age of superannuation on 01.05.2008 and therefore, the petitioner cannot press for reinstatement and in those circumstances, he submitted that the impugned order ought to be set aside. 16. On the other hand Mr.V.Karthick, learned counsel appearing for the respondents would submit that in the first instance, this Court has no jurisdiction. His submission is that show-cause notices were issued in Delhi and the petitioner has replied to the Delhi office apart from the fact that the act of the petitioner during 1988-1990 itself is when he was working in Janpath branch, Delhi. Even the appeal filed by the petitioner was dismissed by the Appellate Authority at Bombay and the third respondent has only communicated the order to the petitioner since at that time, the petitioner was working at Chennai under the administrative control of the third respondent. He relied upon the judgments reported in Kusum Ingots & Alloys Ltd. Vs. Union of India and another (2004 (3) CTC 365) and Canon Steels P. Ltd Vs. Commissioner of Customs (2008 (1) CTC 92) to substantiate his contention that jurisdiction can be either at New Delhi or Bombay and not at Chennai. 17. As far as the violation of principles of Natural Justice is concerned, he would submit that even by non-production of documents which were unable to be produced because of loss, there is no prejudice caused to the petitioner. His submission is that revolving letter of credit is well known in the banking transaction which relates to multiple proceedings namely, repeated financial transaction and only if it contains reinstatement clause, the bank will be protected and the circular dated 18.06.1980, speaks about revised lending power. However, the subsequent circular issued in 1988, which has not superseded the previous circular issued in 1980 specifically prohibits opening of automatic letter of credit. Automatic letter of credit means without reinstatement clause. The https://hcservices.ecourts.gov.in/hcservices/ petitioner being a Chartered Accountant, cannot be permitted to say that he was not aware of those terms especially when he has been in the banking service from 1972 onwards. When the petitioner himself has admitted opening of letter of credit without reinstatement clause, as an officer have the sanction power