STATE BANK OF INDIA versus A.G.D. REDDY
[2023] 11 S.C.R. 652, Supreme Court of India, 2023
Outcome: Appeal(s) allowed (Granted)
Segment: Issues
[2023] 11 S.C.R. 652 : 2023 INSC 766
CASE DETAILS
STATE BANK OF INDIA
v.
A.G.D. REDDY
(Civil Appeal No. 11196 of 2011)
AUGUST 24, 2023
[J. K. MAHESHWARI AND K. V. VISWANATHAN, JJ.]
HEADNOTES
Issue for consideration: Whether the Division Bench and the Single 
Judge of the High Court were justiﬁ ed in quashing the order passed by the 
Appointing Authority imposing a punishment of “reduction in basic pay to 
the lowest stage in Scale-I” as envisaged under Rule 49 (e) of the State Bank 
of India (Supervising Staﬀ ) Service Rules and treating the period spent by 
the delinquent oﬃ  cer under suspension from 18.08.1990 till the date of his 
reinstatement as suspension only.
Service Law – Misconduct – Commission of certain acts of 
misconduct by the employee while working as Field Oﬃ  cer of the 
Bank – Disciplinary proceedings – Appointing Authority imposed 
punishment of reduction in basic pay to the lowest stage in Scale-I 
and treated the period spent by the delinquent officer under 
suspension till the date of his reinstatement as suspension only – 
Single Judge and the Division Bench of the High Court quashed the 
order – Correctness:
Held: Both the Single Judge and the Division Bench of the High Court 
erred in interfering with the ﬁ ndings of the Enquiry Oﬃ  cer, the decision of 
the Disciplinary Authority, and the order of the Appointing Authority and 
the Appellate Authority – Thus, the order of the Single Judge and that of the 
Division Bench set aside – State Bank of
India (Supervising Staﬀ ) Service 
Rules – r. 49 (e).[Para 41]
Service Law – Disciplinary proceeding – Onus of proof:
652
653
 Held: In a disciplinary proceeding, the burden of proof depends upon 
the nature of the charge and the nature of the explanation put forward by 
the employee – In a given case, the burden may be shifted to the employee 
depending upon the explanation – On facts, the speciﬁ c charge was with 
regard to a series of named units, periodical inspections were not carried 
out – It was after the production of the inspection register that the defence 
representative of the employee stated, that they would respond after going 
through the said documents – No response was forthcoming – Neither from 
the records nor at the hearing it was demonstrated as to how the charge of 
failure to conduct the inspection was countered by the employee – Records 
sought being made available, the onus did shift to the employee to show 
that the charge was untenable – As regards the failure to conduct periodical 
inspection, it cannot be said that the ﬁ nding of the Enquiry Oﬃ  cer is on a 
mis-reading of the evidence or that the records of the inspection of units 
were part of the records that could be possibly misplaced or that a ﬁ nding 
was based on some stray sentence and personal knowledge was imported 
by the Enquiry Oﬃ  cer de hors the record. [Paras 22-25]
Service Law – Disciplinary proceedings – Scope of judicial review:
Held: Scope of judicial review against a departmental enquiry 
proceeding is very limited – It is not in the nature of an appeal and a review 
on merits of the decision
is not permissible – Scope of the enquiry is to 
examine whether the decision-making process is legitimate and to ensure 
that the ﬁ ndings are not bereft of any evidence – If the records reveal that the 
ﬁ ndings are based on some evidence, it is not the function of the court in a 
judicial review to re-appreciate the same and arrive at an independent ﬁ nding 
on the evidence – On facts, it could not be said that the Enquiry Report, 
the ﬁ ndings of the Disciplinary Authority and the order of the Appointing 
Authority are based on no evidence or are perverse – Even if the report 
insofar as the aspect of non-submission of control form, the transgression 
of the area of operation and non-declaration of the immovable property and 
certain other charges is avoided, the order of penalty can be sustained – 
Aspects of failure to conduct periodic inspection and the negligence in not 
stipulating the taking of immovable property as collateral security in spite 
of the party oﬀ ering it, constrains to conclude that there was material on 
record for the appellant to pass the order of penalty – Orders of the Single 
STATE BANK OF INDIA v. A.G.D. REDDY
654
SUPREME COURT REPORTS 
[2023] 11 S.C.R.
Judge and the Division Bench not sustainable for transgressing the limits of 
judicial review in setting aside the enquiry proceedings and the punishment 
imposed. [Paras 32, 33, 36 and 37]
Service Law – Penalty – Severability of charges – Interference 
with the order of penalty:
Held: If in a disciplinary proceeding, the order of penalty can be 
imposed on the charges proved and the punishment imposed is lawfully 
sustainable on those charges, it is not for the Court to consider whether 
those grounds alone would have weighed with the authority in imposing 
the punishment – Unless punishment imposed is only co-relatable to any 
of those charges found not proved, the penalty cannot be set aside – On 
facts, the punishment can be sustained even if the charges held not proved 
are severed – Test is not of loss having being resulted or proﬁ t having 
been made, the test is whether the delinquent employee, has observed the 
prescribed norms of the Bank – Penalty imposed is “reduction in basic pay 
to the lowest stage in Scale-I” and further, to treat the period spent by the 
delinquent oﬃ  cer as under suspension – Since the charge of not conducting 
periodical inspection and the failure to complete the formalities for creating 
equitable mortgage are supported by evidence, the penalty as imposed is 
not disproportionate so as to shock the conscience of the Court – Penalty 
as imposed by the Appointing Authority and as conﬁ rmed by the
Appellate 
Authority maintained. [Para 41]
LIST OF CITATIONS AND OTHER REFERENCES
State of Orissa v. Bidyabhushan Mohapatra [1963] 1 Suppl. SCR 648; 
Deputy General Manager (Appellate Authority) and Others. v. Ajai Kumar 
Srivastava (2021) 2 SCC 612 – relied on.
Nand Kishore Prasad v. State of Bihar and Others (1978) 3 SCC 366 
: [1978] 3 SCR 708; Anil Kumar v. Presiding Oﬃ  cer and Others (1985) 3 
SCC 378 – distinguished.
Orissa Mining Corporation and Another v. Ananda Chandra Prusty 
(1996) 11 SCC 600 : [1996] 8 Suppl. SCR 433; State Bank of India v. Ram 
Lal Bhaskar and Another (2011) 10 SCC 249 : [2011] 12 SCR 1036; State of 
A.P. v. S. Sree Rama Rao AIR 1963 SC 1723 : [1964] SCR 25; Disciplinary
655
STATE BANK OF INDIA v. A.G.D. REDDY
Authority-cum-Regional Manager and Others vs. Nikunja Bihari Patnaik, 
(1996) 9 SCC 69:[1996] 1 Suppl. SCR 314 – referred to.
OTHER CASE DETAILS INCLUDING IMPUGNED 
ORDER AND APPEARANCES
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 11196 of 
2011.
From the Judgment and Order dated 20.10.2010 of the High Court of 
Karnataka at Bangalore in WA No. 8085 of 2003.
Appearances:
Sanjay Kapur, Ms. Mahima Kapur, Surya Prakash, Arjun Bhatia, Advs. 
for the Appellant.
S. N. Bhat, Sr. Adv., Tarun Kumar Thakur, D P Chaturvedi, 
Ms. Parvati Bhat, Ms. Anuradha Mutatkar, Advs. for the Respondent.
JUDGMENT / ORDER OF THE SUPREME COURT
JUDGMENT
K. V. VISWANATHAN, J.
1. The present appeal by the State Bank of India (for short “the Bank”), 
calls in question the correctness of the judgment of the Division Bench of 
the High Court of Karnataka at Bangalore dated 20.10.2010 in Writ Appeal 
No. 8085 of 2003. By the said judgment, the Division Bench had dismissed 
the Appeal of the Bank and conﬁ rmed the judgment and order of the learned 
Single Judge dated 12.11.2003. The learned Single Judge had allowed 
the Writ Petition No. 29547 of 1997 ﬁ led by the respondent and quashed 
the order passed by the Appointing Authority and granted consequential 
beneﬁ ts to the respondent. The Appointing Authority had, by its order of 
31.01.1995, imposed a punishment of “reduction in basic pay to the lowest 
stage in Scale-I” as envisaged under Rule 49 (e) of the State
Bank of India 
(Supervising Staﬀ ) Service Rules and further, has treated the period spent 
by the delinquent oﬃ  cer under suspension from 18.08.1990 till the date of 
his reinstatement as suspension only.
STATE BANK OF INDIA v. A.G.D. REDDY
656
SUPREME COURT REPORTS 
[2023] 11 S.C.R.
2. Being aggrieved, the Bank has ﬁ led the present Appeal. Shri Sanjay 
Kapur, learned counsel for the Bank, contends that the courts below have 
transgressed the limits of Judicial Review. According to the learned counsel, 
the courts below have erred in characterizing the orders of the Disciplinary 
authorities as perverse. 
3. On the contrary, the respondent represented by Shri S.N. Bhat, 
learned Senior Counsel, vehemently defends the orders impugned. Learned 
Senior Counsel contends that the present was a case of “no evidence” and 
the enquiry oﬃ  cer without any evidence on record and based only on his 
personal purported knowledge has recorded the ﬁ ndings of guilt. Learned 
Senior Counsel further contends that the courts below have rightly set aside 
the order of the Disciplinary Authorities and that the case did not call for 
any interference.
Relevant Facts
4. The facts, insofar as they are necessary for the adjudication of this 
Appeal, are set out hereinbelow: 
a) Disciplinary proceedings were initiated against the respondent for 
certain acts of misconduct allegedly committed by him when he was working 
as Field Oﬃ  cer of the Mahadevapura Branch of the Bank. Broadly stated, 
the charges in the Charge Sheet dated 13.02.1992 were:
i) That he recommended and obtained sanction from the Branch 
Manager, credit limits to various units as detailed therein and permitted 
excess drawings on an on-going basis; that he did not
report to the controlling 
oﬃ  ce the excess drawings permitted; that he did not conduct periodical 
inspections as per the extant instructions; that loan sanctions were given and 
credit limit extended to entities operating in the premises of another entity;
ii) That credit limit was recommended and sanction obtained for M/s 
Saraswathi Fabricators even though the unit was located away from the area 
of operation; sanction of the advance was not reported to the Controlling 
Oﬃ  ce; and formalities for creating equitable mortgage over immovable 
property oﬀ ered as collateral security were not completed;
iii) That the respondent recommended and obtained sanction of 
advance to M/s ACE Photo Reprographers and M/s Sangeetha Refreshments
657
STATE BANK OF INDIA v. A.G.D. REDDY
[K. V. VISWANATHAN, J.]
both from Shivajinagar, even though the units were non-existent and the 
particulars furnished were ﬁ ctitious as another ﬁ rm M/s All Arts Company 
was operating from the same premises; that the sanction of these advances 
were not reported to the controlling oﬃ  ce and periodical inspection of the 
units were not conducted.
iv) That the respondent had recommended and obtained sanction on 
20.05.1987 cash credit limit to M/s. Rajeswari Enterprises and the respondent 
did not submit control return; that periodical inspections were not carried out 
and formalities for creation of equitable mortgage over immovable property 
stipulated as pre-condition for sanction of limit were not completed. Certain 
other charges set out, which are not directly relevant for the adjudication of 
the Appeal, have not been highlighted hereinabove. 
v) It was alleged in the charge memo that by the acts committed, 
the respondent failed to comply with the extant instructions with regard 
to sanction and follow-up of advances and failed to take all possible 
steps to ensure and protect the interest of the Bank and did not discharge 
his duties with utmost diligence and integrity and thereby violated the 
service rules.
b) As part of the charge, it was further alleged that he purchased 
agricultural land in October 1987 ad-measuring 21.36 acres and got it 
registered in his name for a nominal amount, using the inﬂ uence of one Shri
Ramamurthy of M/s Bindu Enterprises who are enjoying credit facilities with 
the branch and he failed to declare to the Bank the purchase of immovable 
property as per the extant instructions. It was alleged that by the above acts, 
he placed himself under pecuniary obligations to the party.
c) The statement of imputations were also furnished.
Findings of the Enquiry Oﬃ  cer
5) The respondent ﬁ led his detailed reply denying the allegations. 
An Enquiry Oﬃ  cer was appointed. Before the Enquiry Oﬃ  cer, the Bank 
examined seven witnesses and marked twenty four documents. The 
delinquent employee did not examine any witness but had produced 
thirty documents. The Enquiry Oﬃ  cer, after completion of the enquiry 
proceedings, analyzed all the oral and documentary evidence and found 
the respondent guilty for some of the charges levelled and absolved the
658
SUPREME COURT REPORTS 
[2023] 11 S.C.R.
respondent with regard to a few other charges. The presenting Oﬃ  cer did 
not pursue the following charges contained in the chargesheet. 
“(a) Recommendation of the loan by charged oﬃ  cial in respect of 
M/s. Fotograﬁ ks.
(b) Charge vii (b) - The unit had borrowing from Central Bank of 
India, Avenue Road, Bangalore.
(c) Charge II - The inﬂ uence of Shri Ramamurthy of M/s. Bindu 
Enterprises towards purchase and registration of 21.36 acres of 
lands.”
The following charges were held not proved:
“I. Charge No. (ii) (a) pertaining to M/s. Farooq Tanning Control 
forms in respect of these units were submitted.
II. Non reporting of excess drawings permitted in the case of M/s 
Fotograﬁ ks.
III. M/s Ace Photo Reprographers
The charge that the unit is not functioning is not proved.”
The remaining charges were held proved. 
6) With these ﬁ ndings, the Enquiry Oﬃ  cer submitted his report 
dated 23.08.1993 and the records of the enquiry to the Disciplinary 
Authority. The Disciplinary Authority issued a second show cause notice 
along with the copy of the Enquiry report to which the respondent ﬁ led 
a detailed reply. Thereafter, the Disciplinary Authority also issued a 
notice dated 04.10.1993 setting out the points of disagreement with 
regard to the Enquiry Oﬃ  cer’s ﬁ ndings to which again the respondent 
furnished a reply. 
Findings of the Disciplinary Authority and Imposition of 
Penalty
7) The Disciplinary Authority, by his order
of 28.12.1994, 
elaborately considered the matter. He agreed with all the ﬁ ndings of the 
enquiry oﬃ  cer and even on the aspects where the enquiry oﬃ  cer held 
that the charges were not proved, the disciplinary proceeding diﬀ ered
659
with the enquiry oﬃ  cer on some of those aspects and held the charges 
to be proved. 
For example, in the case of a unit - ACE Foto Reprographers not 
functioning in the premises, while the enquiry oﬃ  cer held the charge not 
proved, the Disciplinary Authority held the charge to be proved. 
8) These aspects need not detain the Court any further. As it will be 
clear from the discussion below, ultimately the charges with regard to not 
conducting periodical inspections of the units mentioned in the charge and 
the non-completion of the formalities for creating equitable mortgage over 
immovable property oﬀ ered as collateral security, in the case of M/s Saraswathi 
Fabricators are the primary aspects that has engaged the attention of this Court. 
As will be clear from the discussion in the later part of this judgment, it is those 
two charges which have ultimately been found to be proved that have been 
elaborated herein below. 
9. Pursuant to the above, the Appointing Authority passed an order on 
31.01.1995 imposing the penalty of “reduction in basic pay to the lowest 
stage in Scale-I” as provided under Rule No. 49(e) of the State Bank of 
India (Supervising Staﬀ ) Service Rules and further to treat the period under 
suspension from 18.08.1990 till the order of his reinstatement as suspension 
only. 
10. The Appellate Authority to whom the respondent approached 
conﬁ rmed the orders. 
11. Challenging the order of the Disciplinary Authorities and the Appellate
Authority, the petitioner moved a writ petition, which has now resulted in the 
orders of the learned Single Judge and that of the Division Bench. 
12. The learned Single Judge classiﬁ ed the common heads under Charge 
I as was also done by the Enquiry Oﬃ  cer as being 
i) Conduct of periodical inspection;
ii) Non-submission of control forms; and 
iii) Area of operation
13. We will deal with the ﬁ rst limb, after we consider the second and 
third limbs, for the sake of convenience.
STATE BANK OF INDIA v. A.G.D. REDDY
[K. V. VISWANATHAN, J.]
660
SUPREME COURT REPORTS 
[2023] 11 S.C.R.
Charge regarding non-submission of control forms and area of 
operation
14. On the aspect of non-submission of the control forms, the learned 
Single Judge records that the burden was wrongly shifted on the respondent 
when the Enquiry Oﬃ  cer held that the delinquent had not proved the 
submission of the control forms. The learned Single Judge held that when 
the respondent denied the charge, the onus was on the Disciplinary Authority 
to prove the charge alleged against the delinquent employee by producing 
relevant material and the material must be such that it amounts to proving 
the guilt of the employee in respect of the charge against him with some 
degree of deﬁ niteness. 
15. We have perused the Enquiry Report on this issue and we are 
satisﬁ ed that the learned Single Judge is right on this score. The following 
ﬁ ndings in the Enquiry Report fortify that conclusion:- 
“However, in respect of other units listed in the charge sheet regarding 
non-submission of control form the charges are proved. Although, it 
is likely that the Bank’s ﬁ les may be missing due to shifting of the 
branch, no attempt has been made by the defence to bring the control 
forms from the controlling authority. It only clearly indicates that the 
control forms have not been submitted. This is a failure on the part of 
the charged oﬃ  cial.”
16. Equally with regard to the third limb, namely, transgression of the 
area of operation, the learned
Single Judge rightly found that in a number 
of instances loans had been sanctioned outside the area of operation and, as 
such, it could not be held that there was any transgression by the delinquent 
respondent. This view is independently fortiﬁ ed when we peruse the Enquiry 
Report.
17. In the preliminary paragraphs under the head “Area of operation”, 
while dealing with the relative instructions of the Bank, the following is 
set out:
“ii) Where there are clusters of eligible units, whether SSI or Small 
business, situated outside the respective operational area, assistance 
could be rendered to them, provided the place is accessible throughout 
the year and is connected by the public transport. Even in such cases,
661
the location of units should not be far beyond the operational area and 
the number of units should reasonably large. (sic.) Recommendations in 
this regard should be ﬁ rst got approved from the controlling authority.
iii) Lending to SSI and small business units could also be aﬀ ected in 
adopted villages with the prior approval of the controlling authority.
iv) Care, should however, be taken that the ﬂ exible approach does not 
lead to scattered lending. Approach should preferably be ﬁ nancing of 
clusters of units/growth centres.”
Nowhere in the Enquiry Report or in the evidence had it been brought 
out that any of these above conditions in the excepted categories were 
breached. 
Charge regarding conduct of periodical inspections
18. However, we ﬁ nd that the learned Single Judge and the Division 
Bench, which conﬁ rmed the order of the learned Single Judge, erred in 
recording the following ﬁ nding with regard to the ﬁ rst limb, namely, about 
the respondent not conducting the periodical inspections as required under 
the extant instructions:-
“In so far as the ﬁ rst component of the charge is concerned, it can 
safely be said that none of the witnesses examined by the Bank 
before the enquiry oﬃ  cer have spoken about the truth or otherwise 
of the allegations made in the charge memo. However, the enquiry 
oﬃ  cer in his lengthy report based on his personal knowledge about 
the instructions and guidelines issued by the Head Oﬃ  ce of the bank 
for conduct of
inspection by Field Oﬃ  cers of the bank, observes that 
it is the duty of the Field Oﬃ  cer, to conduct periodical inspection 
and maintain proper records of those inspections. To arrive at the 
conclusion that the delinquent oﬃ  cer is guilty of this charge, he 
merely states in his report that Sri Krishna Murthy Urala - PW 4 has 
deposed that the charged oﬃ  cial has not conducted any periodical 
inspection. This conclusion of the enquiry oﬃ  cer is based on the mis-
reading of the evidence of PW-4 by the enquiry oﬃ  cer. In fact, PW 
4 in his lengthy deposition before the enquiry oﬃ  cer has stated that 
the periodical inspections of units were carried out by the petitioner 
sometimes independently and some time with the Branch Manager 
STATE BANK OF INDIA v. A.G.D. REDDY
[K. V. VISWANATHAN, J.]
662
SUPREME COURT REPORTS 
[2023] 11 S.C.R.
and the relevant records were not available at the Branch. It has also 
come in the evidence that the Branch was shifted to new building some 
time in the year 1989 and during shifting, books used for recording 
of the inspection of units might have been misplaced and they are bit 
traceable. So, in my opinion picking out one stray sentence here and 
there in the deposition of P.W. 4 and importing his personal knowledge 
about the so called instructions and guidelines issued by the Bank, in 
my view, the enquiry oﬃ  cer could not have come to the conclusion 
that the Petitioner failed to conduct periodical inspection and therefore 
that part of the charge in the charge memo is proved against him.”
19. To satisfy ourselves on this aspect, we examined the enquiry report. 
The rationale for the inspection is set out in the preliminary portion of the 
report. It is stated as follows:-
“Follow up and supervision for term loans:
Term lending particularly to small scale units, is subject to various 
risks due to the long period of loan and the fact that the small 
scale units being ﬁ nancially vulnerably are likely to be aﬀ ected 
by even minor adverse changes in their fortunes, where mortgage 
of immovable properties are obtained, we are in a relatively better 
position although the process of realization in the event of default 
may prove to be cumbrous. Where, however, the security comprises 
machinery in leased, rented premises, the
risks are much greater; 
movable machinery, particularly, being liable to felonious removal. 
Further, the tenancy in rented premises may sought to be terminated 
by the owner although the law generally protects the tenancy against 
unfair ejectment. 
Having regard to the foregoing consideration, it is needles to add the 
proper selection of clients is one matter to which considerable thought 
should be given. The only means of forestalling and avoiding possible 
loss would lie in the vigilant follow up of loans after they have been 
granted.”
Thereafter, some guidelines have been set out. Dealing with the charge, 
the Enquiry Oﬃ  cer records the following:-
663
“From the above instructions it may be observed that it is the duty 
of Field Oﬃ  cer to conduct periodical inspection and maintain proper 
records of those inspections. 
The defence merely contested the charge on the plea that inspection 
register has not been produced for evidence. The I is not only supposed 
to maintain the inspection register but also report the observations 
made by his (sic.) during the inspection by means of separate report. 
None of such reports have been produced by the defence to prove that 
inspections have been conducted by him. 
In this connection it is pertinent to bring the following instructions 
of the Bank in regard to report to be submitted by the ﬁ eld Oﬃ  cer.
Accounts with borrowings of Rs.2 lacs and over should be followed 
up by I on the basis of a proforma marked follow up form for I 
(STF6). The objective underlying the form is to relate outstanding to 
the activity level on a continuing basis i.e. every month, and to relate 
the activity level to earlier projections (as indicated in the scheme or 
estimates based on past performance). A systematic follow-up through 
this form will reveal any tendency towards irregularity in an account 
and the probable reasons if any irregularity does occur. In either case, 
the situation is brought to the attention of the Manager SIB or BM, 
who even otherwise will be expected to check these statements every 
month. The abnormalities indication (sic.) in item 6 of the Notes on 
Form SIF 6 are
illustrative. There could be other abnormalities which 
could be inferred on the basis of this form. Sri Krishnamurthy Urala 
- PW4 deposed on page 10,11 of the proceedings that the charged 
oﬃ  cial has not conducted any periodical inspection. This deposition 
clearly proves the above charge.
Accordingly, I conclude that the charges levelled against him regarding 
conduct of periodical inspection has been amply proved.”
(In the summary of ﬁ ndings ‘I’ is recorded as indicating 
the Field Oﬃ  cer)
No doubt, the report records that no such report has been produced by 
the defence to prove that the “inspections have been conducted by him”. 
To satisfy ourselves, whether the onus has been wrongly shifted on the 
employee, we perused the evidence of PW-4 Krishnamurthy Urala to whose 
STATE BANK OF INDIA v. A.G.D. REDDY
[K. V. VISWANATHAN, J.]
664
SUPREME COURT REPORTS 
[2023] 11 S.C.R.
deposition, copious references were made both by Mr. Sanjay Kapur, learned 
Counsel and Mr. S.N. Bhat, learned Senior Counsel. 
20. In the charge memo, the respondent was speciﬁ cally charged that 
the respondent had recommended and obtained sanction from the Branch 
Manager, credit limits to various units as detailed therein and permitted 
excess drawings on an on-going basis and the respondent did not report to 
the controlling oﬃ  ce the excess drawings and did not conduct periodical 
inspections as per the extant instructions. A number of units were mentioned 
in the charge memo to substantiate the allegation that periodical inspections, 
as per the extant instructions, were not conducted on them. The following 
have emerged in the deposition of PW-4 - Shri Krishnamurthy Urala recorded 
on 17.02.1993:
“PO:  
Mr. Urala do you by chance know who was the ﬁ eld oﬃ  cer 
handling this unit between June 86 to 1988.
PW4:  
 Yes. It is Mr. AGD Reddy.

…. …..
PW4:  
 What is the procedure for conducting inspections to units as 
per laid down instructions.
PO:  
 The laid down instruction is the unit has to be inspected 
normally once in a month by FO along with the stock 
statements to verify whether the disbursal of the funds from 
the a/cs has been properly utilized.
The ﬁ eld oﬃ  cer should carry branch inspection book to the 
units and write the observations thereon, and also he has to 
make the observations in the inspection book kept at the unit.”

….. …….
PO: 
 Were the inspections conducted for these units.
PW4: 
 No.”
Deposition of PW-4 recorded in the enquiry on 03.03.1993:
“DR: 
You said certain units have not been inspected by your 
predecessors. Can you tell us the basis for this allegation.

665
PW 4: 
No proper records were maintained.
DR: 
Did you trace/see the inspection cards relating to the 
period of 1988, 87 & back.
PW4:  
Yes.
DR: 
A submission to EO: We have been told by the branch 
that the inspection records related to 88,87 & back are 
not available. Kindly direct the prosecution to make 
available copies of the records for the defence purpose. 
EO: 
DR to speciﬁ cally mention the inspection registers in 
r/o which units you require to enable EO to examine your request.
DR: 
Inspection cards in r/o units mentioned in the charge 
sheet.
EO: 
PO may examine the request of DR and if possible 
records, if available may be given.
Otherwise a report may be given to EO.”
21. It transpires that there was a direction to produce the inspection 
records relating to units mentioned in the chargesheet. The following is 
found in the transcript in the enquiry proceeding (dated 04.05.1993):-
“PO: I was requested by DR in the previous sitting to produce two 
documents viz. Inspection register for the relevant period and list 
of machinery in r/o M/s. Bindu Enterprises. I am submitting the 
inspection register & also a list of machineries as requested for 
perusal of EO & DR.
DR: We will respond after going through the said documents.”

(emphasis supplied)
Onus of proof
22. Having considered the above, we are constrained to conclude 
that the charge of the Bank, that the inspection was not carried, stood 
established. Then it was for the respondent to show, as undertaken by 
him, what his response to the allegation was.
STATE BANK OF INDIA v. A.G.D. REDDY
[K. V. VISWANATHAN, J.]
STATE BANK OF INDIA v. A.G.D. REDDY
[K. V. VISWANATHAN, J.]
666
SUPREME COURT REPORTS 
[2023] 11 S.C.R.
23. It is well settled that, in a disciplinary proceeding, the question of 
burden of proof would depend upon the nature of the charge and the nature 
of the explanation put forward by the respondent. In a given case, the burden 
may be shifted to the respondent depending upon the explanation. [See Orissa 
Mining Corporation and Another vs. Ananda Chandra Prusty, (1996) 11 
SCC 600, Para 6].
24. Here the speciﬁ c charge was with regard to a series of named units, 
periodical inspections were not carried out. To support the charge, witnesses 
were examined and on the request through his defence representative, the 
Enquiry Oﬃ  cer has directed the presenting oﬃ  cer to produce the inspection 
records. The Enquiry Oﬃ  cer speciﬁ cally asked the defence representative to 
mention the inspection registers in respect of the units which are required. 
The defence representative speciﬁ cally makes a request for the inspection 
records in respect of the units mentioned in the charge sheet. The Enquiry 
Oﬃ  cer directs the presenting oﬃ  cer to examine the request and records, if 
available, be given. Thereafter, it has come on record that the Presenting 
Oﬃ  cer produced the inspection register for the relevant period for perusal 
of the Enquiry Oﬃ  cer and the defence representative. On this, the defence 
representative stated that they would respond, after going through the 
documents. In the written submissions ﬁ led, a grievance is
raised that the 
records pertaining to inspection were produced at the fag end of the enquiry. 
We are not impressed with the submission since, it was after the production 
of the inspection register that the defence representative of the respondent 
had stated, that they will respond after going through the said documents. No 
response was forthcoming. Neither from the records nor at the hearing has it 
been demonstrated as to how the charge of failure to conduct the inspection 
was countered by the respondent. The records sought being made available, 
the onus did shift to the respondent to show that the charge was untenable. 
25. In view of the above, clearly with regard to the ﬁ rst limb of the 
ﬁ rst charge, namely, the failure to conduct periodical inspection, it cannot 
be said that the ﬁ nding of the Enquiry Oﬃ  cer is on a mis-reading of the 
evidence or that the records of the inspection of units were part of the records 
that could be possibly misplaced or that a ﬁ nding was based on some stray 
sentence and personal knowledge was imported by the Enquiry Oﬃ  cer de 
hors the record.
667
Charge regarding formalities for creation of equitable mortgage
26. There is one other aspect which has completely escaped the 
attention of the learned Single Judge and consequently the Division Bench. 
One of the charges dealt with by the Enquiry Oﬃ  cer was about not securing 
the advance to M/s Saraswathi Fabricators by creation of an equitable 
mortgage even though the equitable mortgage of immovable property was 
oﬀ ered by the party. The following ﬁ ndings were recorded by the Enquiry 
Oﬃ  cer:-
“On page 12 para 7.2 of PEX 9, the borrower has oﬀ ered equitable 
mortgage of building at No. 458, Viveknagar, Bangalore, a site 
measuring 1500 sq. ft. and built in area of 700 sq. ft. belonging to Sri 
K. V. Srinivasan valued at Rs. 4.5 lacs. The CO by his negligence has 
not stipulated this in his recommendations to the BM. In the process 
the advance could not be collaterally secured by non-creation of 
equitable mortgage. Hence the charge that equitable mortgage has not 
been created is proved.”
27. To satisfy ourselves, we examined the record of the enquiry 
proceedings on this issue. In the deposition of PW-4, recorded in the enquiry 
proceeding on 17.02.1993, the following is found:-
“PO: 
Looking to PEX page 12 item 7.2 of PEX 9 please tell us 
the collateral security oﬀ ered by the unit.
PW4: 
…. security is a site measuring 1,500 sq. ft. & bldg. area of 
700 sq. ft. belonging to Sri KV Srinivasan at Vivek Nagar, 
Bangalore valued at Rs.4.5 lacs.
PO: 
Was the
formality completed at the time of sanctioning of 
this loan.
PW4:  
No.”
Deposition of PW-4 recorded on 03.03.1993:-
“DR:  
Who puts the stipulations in sanctioning of a loan?
At the branch level?
PW4:  
Field Oﬃ  cer in consultation with the Br. Manager.
STATE BANK OF INDIA v. A.G.D. REDDY
[K. V. VISWANATHAN, J.]

668
SUPREME COURT REPORTS 
[2023] 11 S.C.R.
DR:  
Can the Br. manager as sanctioning authority waive any 
stipulation?
PW4:  
Depends on the circumstances.

…. …..
DR:  
Showing PEX9 from pg. l to 12 constitute the application. 
Do you agree?
PW4:  
It is application cum interview form.
DR:  
From pg. 13 to 19 forms appraisal memorandum.
PW4:  
Yes.
DR:  
The application contains the oﬀ ers of the applicant and 
the appraisal contains the conditions of sanction by the 
sanctioning authority. Do you agree?
PW4:  
The application cum interview form is containing information 
regarding the prospective borrower.
Based on the information the FO in consultation with BM 
has to ﬁ x the credit limits and stipulations in the appraisal 
memorandum.
DR:  
On page 12 para 7. 2 though there is an oﬀ er, on pg. 18 para 
9.2 there is no stipulation to the eﬀ ect that the oﬀ er of the 
applicant should be taken as collateral security. Do you see?
PW4:  
I do not know.
DR:  
On pg.12 para 7.2 there is a mention of equitable mortgage 
of certain properties. Do you see?
PW4:  
Yes.
DR:  
On pg.18 para 9.2 under the stipulation the stipulation column 
is vacant. Do you see?
PW4:  
Yes.
DR:  
The taking of equitable mortgage of certain securities is not 
a condition stipulated by the sanctioning authorities i.e. BM 
at branch level in r/o PEX9, pg. 18, para 9.2 ‘stipulations’.
669
PW4:  
Yes,
DR:  
Hence the question of completion of the formalities of non-
existent stipulation does not arise. Do you see?
PW4:  
I do not know.”
28. What is signiﬁ cant to note is PEX 9 pertains to the application for 
working capital in respect of M/s Saraswathi Fabricators together with the 
appraisal memorandum. It is clear from the deposition that the applicant for 
the loan had oﬀ ered collateral security in the form of land and building and 
that the formality of collateral security was not taken. It is further borne out 
that it is the Field Oﬃ  cer in consultation with the Branch Manager who has 
to ﬁ x the credit limit and the stipulations. It appears from the records that 
no stipulation was put with regard to equitable mortgage so mentioned with 
regard to M/s Saraswathi Fabricators, even though the party had oﬀ ered 
equitable collateral security in the form of immovable property. 
29. The explanation of the respondent is only that there was no 
stipulation in the sanction order with regard to the taking of collateral 
security. The charge is that, with regard to M/s Saraswathi Fabricators, 
the formalities for creating equitable mortgage over immovable property 
oﬀ ered as collateral security were not completed. The evidence of PW-4 is 
that the stipulation for collateral security is so made by the Field Oﬃ  cer in 
consultation with the Branch Manager.
30. In the light of the above, the ﬁ nding of the Enquiry Oﬃ  cer that the 
respondent, by his
negligence, did not stipulate this in his recommendation 
to the Branch Manager and, as such, the advance could not be collaterally 
secured by creation of equitable mortgage cannot be said to be perverse or 
based on no evidence. 
31. The answer given by the respondent in the writ petition that 
personal guarantee was available; that the sanction did not contain any 
condition regarding equitable mortgage of the property; that documents 
of title were traced only in September, 1988 after he left the Branch in 
June, 1988; that as required by the successor of the respondent and the 
then Branch Manager, the respondent had identiﬁ ed the documents and 
suggested that they complete the work connected with the creation of 
equitable mortgage, are not matters on which the view of the Disciplinary 
STATE BANK OF INDIA v. A.G.D. REDDY
[K. V. VISWANATHAN, J.]
670
SUPREME COURT REPORTS 
[2023] 11 S.C.R.
Authority can be substituted. In the written submissions filed, the 
respondent claims that, after the papers were traced, the mortgage was, 
in fact, eﬀ ected. Even this would not make any diﬀ erence to the charges 
and the ﬁ ndings recorded, which themselves were based on the evidence 
on record.
Scope of judicial review in disciplinary proceedings
32. From the above discussion, it is clear that it could not be said that 
the Enquiry Report, the ﬁ ndings of the Disciplinary Authority and the order 
of the Appointing Authority are based on no evidence or are perverse. Even 
if we eschew the report insofar as the aspect of non-submission of control 
form, the transgression of the area of operation and non-declaration of the 
immovable property and certain other charges are concerned, the order of 
penalty can be sustained. 
33. As has been demonstrated above, the aspects of failure to conduct 
periodic inspection and the negligence in not stipulating the taking of 
immovable property as collateral security in the case of M/s Saraswathi 
Fabricators in spite of the party oﬀ ering it, constrain us to conclude that 
there was material on record for the appellant to pass the order of penalty. 
34. Mr. S.N. Bhat, learned Senior Counsel, relying upon the judgments 
of this Court in Nand Kishore Prasad vs. State of Bihar and Others, (1978) 
3 SCC 366 and Anil Kumar vs. Presiding Oﬃ  cer and Others, (1985) 3 SCC 
378 contends that the
Disciplinary Authority should arrive at its conclusion 
on the basis of some evidence with some degree of deﬁ niteness pointing to 
the guilt of the delinquent in respect of the charge against him. He would 
contend that a suspicion cannot be allowed to take the place of proof and 
scrupulous care must be taken to see that the innocent are not punished by 
recording ﬁ ndings merely based on ipse dixit of the Enquiry Oﬃ  cer. We are 
unable to accept the contention that the principles laid down in the above 
judgments are attracted to the present case. The judgments cited are clearly 
distinguishable, for the reasons that we have set out hereinabove, while 
analyzing the facts of the present case.
35. Shri Sanjay Kapur, learned counsel for the Bank relies on State 
Bank of India vs. Ram Lal Bhaskar and Another, (2011) 10 SCC 249. In 
that judgment the scope of judicial review of departmental proceedings was
671
set out and the principle laid down in State of A.P. vs. S. Sree Rama Rao, 
AIR 1963 SC 1723, was reiterated, which reads as follows:-
“This Court has held in State of A.P. and Others v. S. Sree Rama 
Rao (AIR 1963 SC 1723, para 7):
“7. … The High Court is not constituted in a proceeding under Article 
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 oﬃ  cer is guilty 
of the charge, it is not the function of the High Court in a petition for 
a writ under Article 226 to review the evidence and to arrive at an 
independent ﬁ nding on the evidence.”
13. Thus, in a proceeding under Article 226 of the Constitution, the 
High Court does not sit as an appellate authority over the ﬁ ndings of 
the disciplinary authority and so long as the ﬁ ndings of the disciplinary 
authority are supported by some evidence the High Court does not 
re-appreciate the evidence and come to a diﬀ erent and independent 
ﬁ nding on the evidence. This position of law has been reiterated in 
several decisions by this
Court which we need not refer to, and yet 
by the impugned judgment the High Court has re-appreciated the 
evidence and arrived at the conclusion that the ﬁ ndings recorded by 
the enquiry oﬃ  cer are not substantiated by any material on record and 
the allegations leveled against the respondent no.1 do not constitute 
any misconduct and that the respondent no.1 was not guilty of any 
misconduct.”
36. It is now well settled that the scope of judicial review against 
a departmental enquiry proceeding is very limited. It is not in the nature 
of an appeal and a review on merits of the decision is not permissible. 
The scope of the enquiry is to examine whether the decision-making 
process is legitimate and to ensure that the ﬁ ndings are not bereft of 
any evidence. If the records reveal that the ﬁ ndings are based on some 
STATE BANK OF INDIA v. A.G.D. REDDY
[K. V. VISWANATHAN, J.]
672
SUPREME COURT REPORTS 
[2023] 11 S.C.R.
evidence, it is not the function of the court in a judicial review to re-
appreciate the same and arrive at an independent ﬁ nding on the evidence. 
This lakshman rekha has been recognized and reiterated in a long line 
of judgments of this Court. 
37. In the present case, it could certainly not be said that the report 
is based on no evidence or that it is perverse. The learned Single Judge 
transgressed the limits of judicial review in setting aside the enquiry 
proceedings and the punishment imposed. The Division Bench, in a short 
order has, after extracting a part of the learned Single Judge’s judgment, gone 
on to hold that having perused the records of the enquiry they do not ﬁ nd 
that the charges have been dealt with in any manner of speciﬁ city. Thereafter 
they conclude that the learned Single Judge was justiﬁ ed in arriving at its 
conclusion. We are not able to sustain the orders of the learned Single Judge 
and the Division Bench.
Severability of charges
38. The question that remains is, in the light of the ﬁ ndings above, 
does the order of penalty imposed call for any interference?
39. The law is well-settled that if in a disciplinary proceeding, the 
order of penalty can be imposed on the charges proved and the punishment 
imposed is lawfully sustainable on those charges, it is not for the Court to 
consider whether those grounds alone would have weighed with the authority 
in imposing the punishment. No doubt, on
the facts of the present case, 
on some aspects of the charge, the proof may have been found wanting. 
However, since the law laid down by this Court is that unless punishment 
imposed is only co-relatable to any of those charges found not proved, the 
penalty cannot be set aside. In this case, the punishment can be sustained 
even if the charges held not proved are severed. [See State of Orissa vs. 
Bidyabhushan Mohapatra [1963] Supp. 1 SCR 648 and Deputy General 
Manager (Appellate Authority) and Others. vs. Ajai Kumar Srivastava,
(2021) 2 SCC 612].
40. Then the only question is does the penalty imposed shock the 
conscience of the Court? In the oral arguments as well as in the written 
submissions, the respondent contended that there was no charge of 
ﬁ nancial misappropriation or of causing any ﬁ nancial loss to the Bank.
673
This submission was countered by the appellant by placing reliance on the 
judgment of this Court in Disciplinary Authority-cum-Regional Manager 
and Others vs. Nikunja Bihari Patnaik, (1996) 9 SCC 69, particularly, 
the holding of the Court in para seven thereof to contend that the test is 
really not of loss having been resulted or proﬁ t having been made. The test 
is whether the delinquent employee, has observed the prescribed norms of 
the Bank. The penalty imposed in this case is “reduction in basic pay to the 
lowest stage in Scale-I” as envisaged under Rule 49 (e) of the State Bank of 
India (Supervising Staﬀ ) Service Rules and further, to treat the period spent 
by the delinquent oﬃ  cer under suspension from 18.08.1990 till the date of 
his reinstatement as suspension only. Since the charge of not conducting 
periodical inspection and the failure to complete the formalities for creating 
equitable mortgage with regard to M/s Saraswathi Fabricators are supported 
by evidence, we do not think that the penalty as imposed is disproportionate 
so as to shock the conscience of the Court. We maintain the penalty as 
imposed in the order of the Appointing Authority dated 31.01.1995 and as 
conﬁ rmed by the Appellate Authority. 
41. For the reasons stated above, we have no hesitation in holding 
that both the learned Single Judge and the Division Bench were in error in 
allowing the writ petition and interfering with the ﬁ ndings of the Enquiry 
Oﬃ  cer, the decision
of the Disciplinary Authority, the order of the Appointing 
Authority and the decision of the Appellate Authority. We, therefore, set 
aside the order of the learned Single Judge and that of the Division Bench 
and dismiss the Writ Petition No. 29547 of 1997 ﬁ led by the respondent. 
Accordingly, the Appeal is allowed, with no order as to costs.
Headnotes prepared by : 
Appeal allowed.
Nidhi Jain
STATE BANK OF INDIA v. A.G.D. REDDY
[K. V. VISWANATHAN, J.]