IN THE SUPREME COURT OV PAR:ASTI 
(APPELLATE JURISDICTION) 
PRESENT: 
- MR. JUSTICE GULZAR AHMED, HCJ 
MR. JUSTICE IJAZ UL AHSAN 
MR. JUSTICE SYED MANSOOR ALl SHAH 
CIVIL PPEAL NO.1474. OF 2015  
(Against the judgment dated _16.12.2014 
passed by the Peshawar High Court, 
Peshawar in Writ Petition No.162 of 2014). 
• Muhammad Naeem Khan. �
...Appellant(s) 
Versus 
. President, National Bank of Pakistan, etc. �
...Respondent(s) - 
For the Appellant(s): �Mr. Abdul Rehman Khan, ASC. 
For the Respondent(s): �
Mr. Ghulam Sh.oaib Jaily, ASC. 
Syed Rafaqat H. Shah, AOR. 
Date of Hearing: �
10.12.2020. 
JUDGMENT 
WAZ  
 J-. This appeal by leave of 
the Court is directed against a judgment of the Peshawar 
1-ligh Court, Peshawar dated 16.12.2014. Through the 
impugned judgment, a constitutional petition 
(W.P,No.162 of 2014) filed by the Appellant was 
dismissed. 
2. �Briefly stated the facts necessary for disposal 
of this Lis are that the Appellant (Muhammad Naeem 
Khan) was holding the post of Assistant Vice President 
and was posted . as Branch. Manager, National Bank of 
2 
Pakistan, Main Branch, .Swa.bi. A charge sheet was 
issued to him on various allegations including failure to 
keep comprehensive and intelligent check over the 
Branch affairs and control systems, failure to follow 
Circulars regarding steps to be taken to enhance 
confidence in the system resulting in increased business, 
better discipline, reduction in fraud and forgeries and 
improve controls to strengthen operational activities. It 
was alleged that he had failed to perform his assigned 
responsibilities rather he became instrumental and 
supported various individuals in defrauding the 
Government exchequer. It was further alleged that the 
Appellant was informed by a whistleblower namely, 
Gulfraz, Officer Grade--I about the fraud being committed 
in tb.e Branch. However, instead of taking any action 
against the delinquents, he tried to pressurize the 
whistleblower and exerted pressure on him to keep silent 
about the issue. He also removed the whistleblower from 
the pension payment section of the Branch in order to 
facilitate continuation of fraudulent activities in the 
Branch. Despite being informed by the whistleblower that 
fraud was being committed in the pension payment 
section of the Branch, instead of bringing the fraud into 
the notice of the Regional Management he intentionally 
and deliberately concealed the facts from the Controlling 
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clihAPiML?Cl474O?2('Jj 
3 
Office and withheld the relevant information. The charge 
sheet further alleged that the Appellant was in the 
knowledge of irregularities pointed out by the Regional 
Inspectors/Annual Audit/ Surprise Auditors/Internal 
Control Inspectors pertaining to pension payments. 
However, he deliberately kept silent and made no effort to 
improve internal working of the Branch and 
strengthening the operational controls. It was stated that 
he intentionally avoided to relieve an under transfer 
delinquent officer namely Hikrnat Shah, 00-1 for Moneri 
Branch and retained him in his Branch for more than 11 
and a half months with the result that the said 
delinquent officer continued his fraudulent activities and 
embezzled pension payments in substantial amounts 
causing loss to the exchequer. 
3. �Finally during his tenure as Branch Manager 
important bank books were not maintained including 
pension payment book (B-59)/Pension Register (B-143) 
and updation of pension records. Through his acts of 
omission and commission, he had been guilty of 
negligence and dereliction of duty which resulted in huge 
financial loss to the exchequer. His reply to the charge 
sheet was not found satisfactory and after due process a 
penalty of demotion to one lower grade was imposed by 
way of demoting him from the post of Assistant Vice 
:21
2.X.5 
President to Officer Grade-1. Although the Appellant 
alleges that the punishment was appealed in the 
departmental hierarchy which was not decided, the 
Respondent-Bank totally denies receipt of any such 
 
appeal. Nothing has been placed. on record by way of 
 
proof of filing such appeal. He approached the Peshawar 
High Court, Peshawar in its constitutional jurisdiction 
challenging his punishment and seeking redressal of his 
grievance. Such petition wa.s dismissed by the learned 
High Court, vide impugned judgment dated 16.12.2014. 
4. �Leave to appeal was granted by this Court on 
 
08.12.2015 in the following terms: 
"it is argued by the learned counsel for the 
petitioner that service in the respondent Bank is 
governed by National Bank of Pakistan (Staff) Service 
Rules, 1973, which are statutory rules and in terms of 
Rule 39 inquiry has to be conducted as per the 
instructions Circular No.4/2003 dated 24.04.2003, 
issued by the President of the Bank, SET/13  and 
Chairman of Disciplinary Cases Committee was the 
competent authority to issue charge sheet to the 
Executives. 
2. 
He contends that charge sheet to the petitioner 
has been issued by Mr. Naeem Khan, AI/P/ Manager, 
who was not competent. He further states that whole of 
the disciplinary proceedings against the petitioner were 
tainted with the illegalities. 
3. 
The submissions made, require consideration. 
Leave to appeal is granted to consider the above
points." 
•
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5. �The learned counsel for the Appellant submits 
that service in the Respondent-Bank is governed by the 
National Bank of Pakistan (Staff) Service Rules, 1973 
("Rules, 1973"). Such Rules are statutory in nature and 
in terms of Rule 39 of the Rules, 1973 an inquiry has to 
be conducted as per instructions contained in -Circular 
No.4 of 2003 issued by the President of the Bank. He 
maintains that in issuing the charge sheet, the 
requirements of Rule 3 of the Rules, 1973 were not 
followed insofar as the charge sheet was issued by 
Muhammad Hassan Khaskheli, ENP/Divisional Head 
who was not competent to do so. He f rther maintains 
that disciplinary proceedings were not conducted by the 
competent officer and are therefore a nullity in the eye of 
law. He submits that some co-accused of the Appellant 
namely Syed Qurban Ali Shah, 0G-I and Abdul A.kbar, 
0G-II were exonerated while the Appellant who was 
overall supervisor of the Branch and was not directly 
involved in operational matters was wrongly punished. 
He further submits that the Appellant was not provided a 
copy of the proceedings or that of the inquiry report and 
the impugned penalty has been imposed upon him in 
violation of FR-29. He finally maintains that the 
Appellant was not granted personal hearing before 
imposing the major penalty which has violated his legal 
• 
17.1-ck,  1.4 �
6 
and constitutional rights and amounts to being 
condemned unheard. Further, the major penalty of 
demotion to a. lower rank did not specify the timeframe or 
duration of the penalty which is against the settled 
principles of law on the subject. 
6. �Learned counsel for the Respondent-Bank has 
however defended the impugned judgment. He submits 
that the Appellant being the Branch Manager was 
responsible to keep an eye on all activities in the Branch 
and maintain vigilance against any fraud or illegality in 
the Branch. He points out that despite fraud being 
pointed out to him by the whistleblower, instead of taking 
action the Appellant tried to pressurize the whistleblower 
and ultimately removed him from the pension payment 
section of the Branch. It is further pointed out that in 
contravention of his fiduciary duties the Appellant 
intentionally tried to conceal fraud and ignored illegalities 
committed in the pension payment section of the Branch 
despite such illegalities being pointed out during his 
surprise audit. He further submits that the Appellant 
was overall incharge of the Branch and it was his duty to 
ensure that all books and records including but not 
limited to pension records were immaculately maintained 
and his failure to do so resulted in heavy loss to the 
public exchequer. He further submits that all legal and 
7 
procedural formalities were properly followed, the 
Appellant was given adequate and multiple opportunities 
to defend himself yet he was failed to defend himself and 
was found guilty of most of the charges mentioned in the 
charge sheet by independent inquiry officers/ competent 
authorities who had no personal bias or grudge against 
him. 
7. �As far as failure to specify the period of major 
penalty is concerned, the learned counsel for the 
Respondent-Bank has pointed out that a categoric 
statement was made before the leaned High Court that 
the Appellant would be considered for promotion on the 
• basis of available record to the next higher post after 
expiry of his three years penalty. Failure on the part of 
the competent authority to specify the period of 
punishment would not have the effect of nullifying the 
entire proceedings specially so where the defect stands 
cured and has been so mentioned in the impugned 
judgment of the learned High Court. 
8. �We have heard the learned counsel for the 
parties and gone through the record with their 
assistance. The main focus of the argument of learned 
counsel for the Appellant is that the show cause notice 
was issued by an incompetent authority. It is claimed by 
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• 
S.22W,...61.016.12.N1W221.1k: 2.411.4 �
8 
the Respondent-Bank that the charge sheet was issued 
by an authorized officer and all proceedings were carried 
out as per the provisions of the Rules, 1973, We have 
examined the said Rules and find that the power to issue 
show cause notice has been mentioned in Rules 38 & 39 
read with Rule 3(d) and Sr.No.12 of Appenclit to the 
Rules, 1973. Rules 38 86 39 of the Rules, 1973 provide 
that a competent authority is authorized to issue show 
cause notice. Rule 3(d) of the Rules, 1973 defines the 
competent authority as an authority specified .in Column 
No.4 of Appendix-1 to the Rules, 1973. For ease ol 
 
reference, Appendix-I to Rules 1973 is reproduced below: 
Sr. 
No 
Reference 
to Rules 
• 
Nature �
of 
powers 
delegated 
Competent authority to whom powers 
delegated 
Categories �
of 
employees �
in 
respect �
of 
which powers 
delegated 
upto 
10. 
32 
Grant �
of 
(a) �
Managing Director 
1(a) 
33 and 34 
permission 
(b) �
Deputy Managing Directors 
1(b) 
to �
incur • 
unsecured 
debt �
and 
giving 
guarantee, 
etc �
to open 
accounts 
with �
other 
banks 
(c) �
Pleads �
of �
Administration 
Department, �
I lead 
Office! Principal Offices 
11 
11. 
37 and 39 
Dismissal 
(a) �
Managing Director 
I (11 
and �
other 
(b) �
Deputy Managing Directors 
II 
punishment 
a 
(c) �
I leads �
of �
Ad in ini s traticm 
Department, �
(lead 
111 
Office/Principal �
Offices �
and 
Senior Regional Managers. 
(d) �
Regional �
Managers �
and 
IV 
Managers �
(Officers �
Grade �
II 
and above). �
 
12. 
38 and 39 
Suspension 
(a) 
Managing Director 
I(a) 
(pending 
(b) 
Deputy Managing Directors. 
All Categories 
enquiry) 
(c) 
Heads �
of �
Administration 
except 1(a), (b) 
grant �
of 
permission 
to �
leave 
station 
during 
suspension 
and issue of 
show cause 
Department, �
Head 
Office/ Principal �
Offices �
and 
Senior Regional Manager. 
(d) 'Heads of Departments at Head 
Office/Principal �
Offices. 
Regional �
Managers �
and 
Managers (Officers Grade I and 
above) 
and (c) 
notice 
(c) �
Managers of lira riches (Officers 
II 
Grade If and a once) 
(I) �
Managers of Branches (Officers 
Ill 
L 
----------------------- •_
Grade III and Junior Officers) 
9. �A perusal of the Appendix-I above reveals that 
delegation of powers in respect of issuance of show caus
1.10. Am, �
Nc?,_Lcerilf3 
9 
notices have been mentioned at Sr.NO.12 thereof. in 
 
terms of the said item, the power to issue show cause 
notice to all categories except (i)(a), (b) and (c) are 
delegated to Deputy Managing Director, Head of 
Administration Department, Head Office, Principal 
Offices and Senior Regional Managers. In the case in 
hand, the show cause notice was issued by Executive 
Vice President/ Divisional Head, Head Office, Karachi. It 
would therefore appear that the show cause notice to the 
Appellant has prima facie been issued by a competent 
authority. We, therefore, find that the power conferred 
through Rules, 1973 was rightly exercised by the 
Executive Vice President and the objection of the 
Appellant in this regard is misconceived and is 
accordingly over ruled and repelled. 
10. �
It also appears to us that the nomenclature of 
different designations has changed overtime. However, 
the powers of officers of various categories, in the matter 
of disciplinary proceedings remain the same. According 
to the learned counsel for the Respondent-Bank, after 
change of nomenclature, various categories may be read 
as follows: 
"CATEGORY 
a) 
Senior Exec-utlue Vice President/Executive Vice President 
f'xecutive grade) 
b) 
Senior Vice President: (Senior grade-I) 
c) 
Vice President: (Senior grade-I1) 
d) 
Assistant Vice President: (Senior grade-III) 
e) 
Officer Grade-I. 
.1) �
Officer Grade-II/Chief Cashier. 
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.6BOL.40),Q.1.174.12.1LVt4 �
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FY) �
Officer Grade-Ill/Senior Head Cashier. 
CATEGORY II 
a) 
Senior Assistant/ Head Cashier/ Stenographer/ Godown. 
Inspector/ Head Draftsman. 
b) 
Draftsman/ Estimator/ Overseer. 
c) 
Senior Cashier/ Stenotypist/ Teleprinter/ Telex. Operator/ Key 
Punch Operator. 
d) 
Assistant/ Typist/Cashier/ Godown Keeper/ Machine & Telephone 
Operator/ 0)ristructicm �
Supervisor/ Works 
Supervisor/ Tracer/ Mechanic and other technicians. 
CATEGORY III 
a) 
Electrician (Possessing Wireman's Competency Licence)/ Ferro 
Printer. 
b) 
Driver/ Chief Jemadar/ Daftari 
c) 
Bank Guard/ Chowkidar/ Messenger/ Electrician/ Mali and other 
inferior staff 
d) 
Sweeper." 
11. 
As far as the argument of the learned counsel 
for the Appellant in respect of President's Office Circular 
No.4 of 2003 dated 22.04.2003 is concerned., the same 
mentions the authority to issue charge sheet as 
Chairman/Disciplinary Cases Committee (DCC). We have 
found the said reading of the Circular by the Appellant is 
erroneous and misleading. Rule 5 of the Rules, 1973 
defines delegation of powers as follows: 
`Rule 5(2) provides that "The Managing Director may, where considered 
necessary, delegate any of the powers vested in him to the Deputy 
Managing Directors and those exercised by the Deputy Managing Directors 
to other officers." 
12. 
It appears that by virtue of the powers 
available under Rule 5(2), the President of the Bank 
delegated his powers to the DCC through Circular No.4 of 
2003. In the same circular at point No.2(a) it is clearly 
mentioned.. that "all the disciplinary cases failing within 
the competence of the President and the Board of 
Directors, shall be considered, deliberated upon. and 
decided/recommended by the Committee". it further
 
COLIALTMLni 1Y-1 Sk.2q1.1i �
11 
appears that under Circular No.4 of 2003, the President 
of the Bank delegated his Own powers which by virtue of 
the Appendix are in respect of issuing show cause notices 
to DepUty Managing Director, Senior Principal Officers 
and Principal Officers. in the case in hand, the matter is 
not in respect of issuing show cause notice to any of the 
said officers because the Appellant was neither Deputy 
Managing Director, Senior Principal Officer nor the 
Principal Officer and in fact he was an Assistant Vice 
President. Therefore, his stance that only the 
Chairman/ICC were the competent authorities to issue 
him show cause notice is clearly misconceived. We have 
also gone through NBP Instruction Circulars, Office 
Circulars, information Circulars and NBP Employee 
Discipline Policy (EDP). On perusal of the said documents 
leads us to the conclusion that the charge sheet was 
validly and lawfully issued by an authorized officer, 
competent to do so. 
13. �
Having dealt with the question of validity of the 
charge sheet, we have gone through the inquiry report 
and the material collected during the inquiry. It is clear 
and obvious to us that the Appellant being Branch 
Manager was, responsible to keep an eye on the activities 
in his Branch relating to its business: There is no denial 
of the fact. that fraud was actually committed and in the 
ZIRFE-JH ROMET,A0MOW 
„Ay 
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virti.Pent; NO.14  74 OE  Atifi �
12 
opinion of the inquiry officer, lack of vigilance for long 
periods of time and failure of the Appellant to put 
systems in place and maintaining the relevant registers, 
perpetrated and perpetuated continuous fraud for almost 
four years. It also appears that the Appellant consciously 
and deliberately covered up the fraud and thereby 
facilitated commission of such fraud which resulted in 
misappropriation of substantial sums of money at the 
cost of the exchequer. There is no explanation available 
on the record why despite being intimated by a 
whistleblower and others including surprise audits the 
Appellant remained complacent, failed to take any action 
and taking steps to ensure that the delinquents were 
brought to book by way of appropriate action in 
accordance with law and that continuation of the fraud 
and misappropriation of public money was stopped. 
Instead, he pressurized the whistieblower to remain 
silent and ultimately removed him from the pension 
payment section and failed to take any action despite 
identification of fraud and misappropriation of funds 
from the pension account during surprise audits. This 
emboldened those who were misappropriating funds tc 
continue their activities for years on end. 
14. �
A perusal of the record also reveals that the 
' '
Appellant was provided all relevant documents required 
. �
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• 
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• • ,'.;:•• �
.-• ; • •;;;',;" �
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13 • 
by him in order to build his defence and he was also 
given an opportunity to cross-examine the witnesses who 
appeared against him. The Appellant signed the inquiry 
proceedings confirming the fact that he was provided all 
due process rights for his defence and cannot be heard at 
this stage to take a different stance specially so where 
this stance Was not even taken before the High Court. 
. 15. �
As far as the argument of the learned counsel 
for the Appellant that some of the co-accused were 
exonerated and the Appellant deserved equal treatment is 
concerned, we find that the same is contrary to the 
record. Our examination of the record reveals that all 
relevant officials were charge sheeted and their cases 
were decided as per gravity of their involvement. It has 
been pointed out to us that penalties were imposed on 
nine (09) different delinquents and only two namely, 
•Shahab ucl.  Din, 004 and Muhammad Said, 00-II, 
Incharge Government Section were exonerated because 
the charges against them were not proved. However, a cc-
accused with the Appellant namely Shah. Nawaz, 
AVP/Manager was down graded by one step in his pay 
Seale. Syed Qurban Ali Shah, Operation Manager was 
demoted to next lower grade like the Appellant. 
Muhammad Urnar, 00-I and Abdul .Akbar, 00-II were 
demoted to the next lower grade. Badar Munk, 00-II and 
fL1/27,211TBMin 
.Q.E.2 �
L. 
Bakht Sher, 0G-III were dismissed from service with 
immediate effect. It appears and has also been stated at 
the bar that except the Appellant none of the said 
officials has challenged the penalties imposed upon 
them. 
16. �
We have also gone through the record and find 
that there is no denial of the fact that there was 
continuous embezzlement in pensionary funds in the 
Main Branch, Swabi where the Appellant was posted as 
Branch Manager. In view of his senior and supervisory 
position, it was his responsibility arid duty to supervise, 
exercise, control and keeping a vigilant eye on each and 
every a.spect of business and services provided by 
different sections of the Branch including but not limited 
to pension payment section. He was not only required to 
be vigilant but to have direct and first hand knowledge 
and maintain supervision of all activities and the manner 
in which such activities were being conducted. It is clear 
and obvious to us that controls of the Appellant were 
lacking, he was unwilling to take responsibility for the job 
that had been assigned to him and was reluctant to take 
action despite being informed by various sources that 
misappropriation was being committed by officials 
working under his supervision and control. Further, he 
failed 'to informhe Regional Management, his immediate 
2:ElEfIn2M4 RiZEIEfirat. EqE*:igi.E;i:2RfifEiNIIME'giiigt8O211fff.E255E11:'Y.Z.E•EadaafigtdNEtl.I'il°aiiggRFeaMPAgiaiiif;sgik"Mgta'Ctfa§:iftLa#;Lii.WC::,'i;iLI,•, 
1V11,./IPPIIALM.14 74 OP Z215 
superior authority about the delinquency of his 
subordinate staff. On the contrary, he made active efforts 
to cover up and hide their activities and let embezzlement 
continue unabated for about four years. 
17. �
The argument of learned counsel for the 
Appellant that some of the officials have been visited with 
lesser penalties while the Appellant was demoted to a 
loWer grade indefinitely is concerned, the same has not 
impressed us. Admittedly, other officials were at a lower 
level of seniority, were not responsible and answerable for 
all activities of the Branch, while the main focal person 
and Incharge of the Branch was the Appellant. Failure on 
his part to perform his functions efficiently, diligently and 
vigilantly has correctly attracted a higher penalty in view 
of the fact that he not only ignored the Standard 
Operating Procedures and failed to maintain records and 
conduct or cause to be conducted regular scrutiny of the 
records to ensure that there were no violation of the 
procedures • and �
no �
financial �
mishandling, 
misappropriation or embezzlement of public money but 
also actively and deliberately ignored information and 
reports that embezzlement was taken place. This is 
clearly highlighted by his treatment of the whistleblower 
who had provided direct and credible information to him. 
In- these circumstances, we are neither persuaded no3- 
1,11:kfl 
gymApPii:AL �
16 
convinced by the argument of the learned ASC that the 
Appellant has been discriminated against on the issue of 
imposition of penalty or that his penalty was unduly hard 
and disproportionate to the offences committed by him. 
18. 
As far as the duration of the penalty is 
concerned, the Respondent-Bank had made a categoric 
statement before the learned High Court to the effect that 
the penalty imposed on the Appellant was for a limited 
period of three years and that he shall be considered for 
promotion in accordance with the rules by the competent 
authorities on expiry of the said period. This has been 
repeated before us during the course of arguments. 
Further, it is settled law that after the period of penalty of 
an official has expired, the same does not operate as an 
impediment in his future prospects of promotion if 
Otherwise due. 
19. 
We find that the judgment of the learned High 
Court elaborately and extensively discusses all pleas 
raised by the Appellant, has correctly applied the relevant 
law, rules and regulations to the facts and circumstances 
of the case. No illegality, failure or refusal to exercise 
jurisdiction or erroneous conclusions unsupported by the 
record have been pointed out to us. On hearing the entire 
Matter extensively and scrutinizing the record, we have 
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13.11.11,,VEJL,11-.11:N_QE.201.44 �
17 
reached the same conclusions as the. High Court and 
have no reason,. basis or justification to take a different 
view. 
20. �
For reasons recorded above, we find no merit 
in this appeal. It is accordingly dismissed. 
ISLANI A.B AD. 
1.0.12.2020. 
ZR/* 
. 
fAfat Approved For Reporting'