Case: STATE BANK OF INDIA Vs. MOHAMMAD BADRUDDIN

3. The High Court has dealt with two appeals arising out of two separate writ petitions imposing separate punishments4. Firstly, we take up Civil Appeal arising out of Special Leave Petition (Civil) No. 20770 of 2017. The said appeal is directed against an order passed by the High Court in Letters Patent Appeal No. 261 of 2007 wherein the Appellate Authority altered the punishment of compulsory retirement in terms of Rule 49(1) of the State Bank of India (Supervising Staff) Service Rules to one of reversion to the post of Junior Management Grade at the lowest stage vide order dated October 12, 1988. Such order became the subject matter of challenge in C.W.J.C. No. 444 of 1989. The writ petition was dismissed but the letters patent appeal was allowed. The Division Bench set aside the order of punishment on the ground that copy of the Inquiry Report was not supplied to the delinquent before the Disciplinary Authority passed an order of punishment, but was supplied along with the order of punishment, therefore, there is complete violation of cardinal principle of natural justice5. We find that the Constitution Bench judgment reported in Managing Director, ECIL, Hyderabad & Ors. v. B. Karunakar & Ors. (1993) 4 SCC 727 though quoted by the High Court, had been applied wrongly. The Disciplinary Authority has passed an order of punishment on August 12, 1988 i.e. before this Court in Union of India & Ors. v. Mohd. Ramzan Khan (1991) 1 SCC 588 laid down that wherever Inquiry Officer has furnished a report to the Disciplinary Authority at the conclusion of the inquiry holding the delinquent guilty of all or any of the charges with proposal for any particular punishment or not, the delinquent is entitled to a copy of such report and will also be entitled to make a representation against it. A non-furnishing of the report would amount to violation of rules of natural justice and make the final order liable to challenge hereafter. However, the said judgment itself has given prospective effect i.e. that the inquiries concluded prior to the judgment dated November 20, 1990 will not be affected by the law laid down in the said judgment6. The judgment in Mohd. Ramzan case was approved by the Constitution Bench in B. Karunakar, wherein it was held as under:34. However, it cannot be gainsaid that while Mohd. Ramzan Khan case [(1991) 1 SCC 588   : 1991 SCC (L&S) 612 : (1991) 16 ATC 505] made the law laid down there prospective in operation, while disposing of the cases which were before the Court, the Court through inadvertence gave relief to the employees concerned in those cases by allowing their appeals and setting aside the disciplinary proceedings. The relief granted was obviously per incuriam. The said relief has, therefore, to be confined only to the employees concerned in those appeals. The law which is expressly made prospective in operation there, cannot be applied retrospectively on account of the said error. It is now well settled that the courts can make the law laid down by them prospective in operation to prevent unsettlement of the settled positions, to prevent administrative chaos and to meet the ends of justice. In this connection, we may refer to some well-known decisions on the point7. Since the order of punishment was passed by the Disciplinary Authority prior to November 20, 1990, therefore, the same could not beset aside only for the reason that the copy of the Inquiry Report was not supplied to the delinquent. Consequently, the order of the High Court in LPA No. 261 of 2007 is set aside and the order of punishment of reversion to the post of Junior Management Grade at the lowest stage, as modified by the Appellate Authority, is ordered to be restored8. In view of the aforesaid, Civil Appeal arising out of Special Leave Petition (Civil) No. 20770 of 2017 is allowed9. The Civil Appeal arising out of Special Leave Petition (Civil) No. 20488 of 2017, is directed against an order passed by the High Court in Letters Patent Appeal No. 258 of 2007 arising out of C.W.J.C. No. 2310 of 1995 filed by the respondent Mohammad Badruddin. The challenge in the writ petition is to an order dated November 4, 1993 by which the respondent was inflicted penalty of removal from service. The Division Bench set aside the order of removal on the ground of violation of principle of natural justice as the reasons of disagreement in respect of charge Nos. 1 and 5 were not communicated to the delinquent10. The memo of charge was served upon the respondent (delinquent) on June 13, 1989 in respect of the following five charges:15.12.1983, he opened a Savings Bank Account No. 11945 in a fake name viz. Shri Ajit Kumar Agrawal and also verified the forged signature appearing on the relative account opening form. He thus showed gross negligence in opening the said account through which a series of frauds involving Rs.2,52,000/- were perpetrated, causing the Bank a pecuniary loss of the same amount. The list of fraudulent payment manipulated through the said account is given in Annexure Apassed the following payments (a to k) from different Savings Bank Accounts although the relative instruments had not been posted in the concerned accounts:- Moreover, the balance of account no. 10586 at the time of making payments mentioned against b, c, d, e and f was Rs.875.44 only. All the aforementioned payments turned out to be fraudulent once. Had he cared to refer to the concerned ledgers before passing the instruments, frauds amounting to Rs.1,12,000/- could have been avertedpassed the aforementioned payment without satisfying himself that the relative instruments were in order in every particular and thereby violated the instructions contained in para 3(c), Chapter2 of the Banks Book of Instructions, Volume-IIthe following dates (a to g of the charge sheet) while checking the Clean Cash Book, he failed to notice that the figures of Savings Bank Account appearing therein did not tally with those of Savings Bank Summary Day Book. His perfunctory checking of the Clean Cash Book resulted in suppression of frauds amounting to Rs.70,000/-has thus not only failed to discharge his duties with devotion and diligence, much against Rule 32(4) of State Bank of India (Supervising Staff) Service Rules but also caused a heavy pecuniary loss to the Bank11. The Inquiry Officer in his Report dated February 5, 1992 held that charge Nos. 1, 2, 3 and 5 were not proved against the delinquent though charge No. 4 stands proved. The Disciplinary Authority disagreed with the findings in respect of charge Nos. 1 and 5 and held as under:(i) The appellant failed to discharge his duties with devotion and diligence;(ii) The appellant failed to interview the depositor before opening Savings Bank Account No. 11945 and he also did not ensure completion of particulars by the depositors on the reverse side of the Account Opening – cum – Specimen signature form, as a result a fake Savings Bank Account in the name of Shri Ajit Kumar Agrawal was opened through which a series of frauds involving Rs.2,52,000/- were perpetrated. The said action indicated gross negligence which caused substantial financial loss to the Bank.(iii)The appellant was found guilty of perfunctory checking of Clean Cash Book which resulted in suppression of frauds amounting to Rs.70,000/-. As a Branch Manager, he also failed to notice all the figures of Savings Bank Account appearing in the Clean Cash Book did not tally with the figures shown in the summary of Savings Bank day books on several dates. Had he carefully checked the Clean Cash Book, the difference would have come to light on the same day12. On the basis of the findings recorded and keeping in view punishment of reversion to Junior Manager Grade at the lowest stage earlier, the delinquent was inflicted penalty of removal from service in terms of Rule 67(g) of the Rules. The appeal against such order of punishment was dismissed on March 8, 1995. The writ petition was dismissed by the learned Single Bench on June 15, 2007. But in an intra court appeal, the Division Bench set aside the order passed by the learned Single Bench as also the order of punishment imposed by the Disciplinary Authority. The Division Bench relied upon Punjab National Bank & Ors. v. Kunj Behari Misra (1998) 7 SCC 84     to hold that the order of punishment stands vitiated as the reasons for disagreement with the Inquiry Report have not been supplied to the delinquent. The Bank is in appeal before this Court against such order passed by the Division Bench.

Reasoning: 18. A perusal of such omitted provisions would show that an opportunity was required to be given to submit a representation on penalty proposed but such requirement had been omitted by 42 nd Constitutional Amendment.20. In K. Manche Gowdas case, the Inquiry Officer recommended that the delinquent may be reduced in rank. But while serving show cause notice after the report of the Inquiry Officer, the Disciplinary Authority proposed punishment of dismissal from service. The order of punishment considered the previous punishments imposed upon the delinquent to come to the conclusion that the delinquent is unfit to continue in Government service and, therefore, he was ordered to be dismissed from service. It was, in these circumstances, the Court ordered that the past conduct can be taken into consideration during the second stage of inquiry, which essentially relates more to the domain of punishment rather than to that of guilt. An opportunity should be given to the delinquent to know that fact and meet the same21. The omission of the words from clause (2) of Article 311 of the Constitution reproduced above completely changes the requirement of serving notice in respect of the proposed punishment. The amended provisions of Article 311 of the Constitution of India have been considered in Mohd. Ramzans case and later in B. Karunakars case. The judgment of this Court in Nicholas Piramal India Limited arises out of an Award passed by the Labour Court under the Industrial Disputes Act, 1947. The jurisdiction of the Labour Court is much wider where the punishment can be reviewed by the Labour Court in terms of Section 11-A of the said Act23. Thus, the requirement of second show cause notice of proposed punishment has been dispensed with. The mandate now is only to apprise the delinquent of the Inquiry Officers report. There is no necessity of communicating proposed punishment which was specifically contemplated by clause (2) of Article 311 prior to 42 nd Amendment24. The previous punishments could not be subject matter of the charge sheet as it is beyond the scope of inquiry to be conducted by the Inquiry Officer as such punishments have attained finality in the proceedings. The requirement of second show cause notice stands specifically omitted by 42 nd Amendment. Therefore, the only requirement now is to send a copy of Inquiry Report to the delinquent to meet the principle of natural justice being the adverse material againstthe delinquent. There is no mandatory requirement of communicating the proposed punishment. Therefore, there cannot be any bar to take into consideration previous punishments in the constitutional scheme as interpreted by this Court. Thus, the non-communication of the previous punishments in the show cause notice will not vitiate the punishment imposed26. The judgment of this Court in Bidyabhushan Mohapatras case is not applicable to the facts of the present case as in the aforesaid case, the High Court has held that the findings of the Tribunal on charges 1(a) and 1(e) were vitiated because it had failed to observe the rules of natural justice. In the present case, the delinquent has not been apprised of reasons of disagreement which were required to be communicated to the delinquent in view of the judgment of this Court in Kunj Behari Misras case prior to the stage of imposing punishment. Since the reasons of disagreement were not communicated, the order of removal from service would be in realm of conjectures as to whether punishment of removal would be sustainable on charge No. 4 alone. The judgment referred to is only in respect of punishment which is the second stage after recording of finding of the guilt. In the present case, the pre-requisite condition of communicating reasons of disagreement has not been complied with, which is leading to finding of guilt. Therefore, the judgment is not applicable to the facts of the present case28. In the present case, the High Court has set aside the order of punishment on the ground that it violates the principle of natural justice. This Court has not found reasons to set aside the order of punishment whereas in a case where order of punishment has been set aside, the principles of natural justice would warrant that the matter is remitted back to the Disciplinary Authority to consider whether the removal of the delinquent on the basis of charge No. 4 alone can be sustained or not29. In view of the said judgment, the findings recorded by the Division Bench that the order of punishment passed on the basis of uncommunicated reasons of disagreement recorded in respect of charge Nos. 1 and 5 cannot be faulted with. In fact, the argument of Mr. Vishwanathan is that charge No. 4 alone is sufficient to maintain the order of punishment of removal from service. Though, charge No. 4 may be sufficient to inflict punishment but it is not necessary that the charge No. 4 alone will entail punishment of removal from service. While exercising the power of judicial review, it will not be within our jurisdiction to maintain the order of punishment of removal from service in view of findings recorded on charge No. 4 itself. It is for the Disciplinary Authority to inflict punishment as it may consider appropriate after finding the charge No. 4 proved against the delinquent30. It is admitted that the delinquent has attained the age of superannuation. Though, the parties are at variance on the date of superannuation but the fact remains that in view of the finding on charge No. 4 proved against the delinquent to which there was no disagreement, we find that the order of the High Court granting consequential benefits to the delinquent is not justified. However, the question required to be examined is what are the options available at this stage32. Since the delinquent has attained the age of superannuation, there cannot be any order of reinstatement or of suspension. In view thereof, the order of punishment dated November 4, 1993 as also the order of the Appellate Authority are set aside and the matter is remanded back to the Disciplinary Authority to consider as to whether it would like to record reasons of disagreement on charge Nos. 1 and 5 and/or impose punishment on the basis of charge No. 4 with which there is no disagreement, as it may consider appropriate.