Ganesh Santa Ram Sirur
Vs.
State Bank of India & Anr.
(2005) 1 SCC 13
Service Law – Dishonest sanction of loan -Removal from service – Held, Sanctioning of loan by a bank manager to his spouse in contravention of service rules not an honest decision and therefore punishment of removal from service is just and proper.
Natural Justice – Personal hearing – Held, principles of natural justice cannot be put in a straitjacket – Where relevant service rule did not provide for a personal hearing, then a decision taken with full application of mind but without giving personal hearing cannot be said to be vitiated.
Facts
The appellant was issued with a charge sheet for certain irregularities committed by him while working as Branch Manager of the respondent bank. Out of the various charges imputed against him, the enquiry officer, after completion of the enquiry, held only the charge pertaining to grant of advance by the appellant to his wife as proved. Thereafter, on the recommendation of the disciplinary authority , the punishing/appointing authority imposed on the appellant the punishment of reduction in substantive salary by one stage. On appeal, the appellate authority initially proposed to enhance the punishment to dismissal. However, after examining the reply given by the appellant to the proposed punishment, the appellate authority imposed on the appellant the punishment of removal from service. The appellant’s request for a review by the Chairman of the respondent bank was also not entertained. The writ petition filed by the appellant to quash the order of the appellate authority and for directions to reinstate him with back wages and arrears of service and other service benefits was dismissed by the Division Bench of High Court of Bombay. Being aggrieved by the same, the appellant preferred the present appeal.
Issues
1. Whether enhancement of punishment by the appellate authority to removal from service, of a bank manager for sanctioning loan to his spouse in contravention of service rule, is just and proper especially when the cheque issued pursuant to the loan was not encashed?
2. Whether the enhancement of punishment by the appellate authority without giving a personal hearing to the appellant was in order?
3. Whether the appellant, having filed appeal after the period of limitation, can contend that his appeal being time barred should not have been considered by the appellate authority?
4. Whether taking into account of unproved charges in the departmental enquiry by the appellate authority while enhancing the punishment in appeal is in order?
Arguments on behalf of the appellant
(i) The appeal should not have been considered by the appellate authority as the same was time barred.
(ii) The appellate authority while enhancing the punishment considered charges which were not proved in the enquiry.
(iii) The order of removal is unsustainable as no personal hearing was given to the appellant by the appellate authority before enhancement of punishment.
(iv) The order of enhancement of punishment by the appellate authority is not just when it is not recommended by the disciplinary authority and that too in the appeal filed by the delinquent employee.
(v) Though loan was granted by the appellant to his wife under a Scheme meant for educated unemployed youth in violation of Service Rules, the bank cheque issued by the appellant was not encashed, it was only an attempt and no loss has been caused to the bank.
(vi) Therefore, impugned action of the respondent bank in enhancing the punishment to removal is unjust, unwarranted, violative of statutory rights as also the principles of natural justice.
Various case laws were cited on behalf of the appellants1 in support of the above contentions and it was pleaded that the punishment of removal be set aside and the punishment imposed by the disciplinary authority be restored.
Arguments on behalf of the respondents
(i) Under Service Rule 34(3)(1) of the respondent bank, granting of loan by an employee to his spouse is prohibited. The appellant deceitfully granted the loan to his wife in her maiden name in order to prevent the offence from coming to light. It was sanctioned under a Scheme meant for educated unemployed youth, which reveals the evil intention of the appellant.
1. Ram Chander v. Union of India (1986) 3 SCC 103:; Ram Niwas Bansal v. State Bank of Patiala (1998) 4 SLR 711 (P&H); Makeshwar Nath Srivastava v. State of Bihar (1971) 1 SCC 662; Bhagat Ram v. State of H.P. (1983) 2 SCC 442; Ranjit Thakur vs. Union of India (1987) 4 SCC 611; Dev Singh v. Punjab Tourism Development Corpn.Ltd.(2003) 8 SCC 9; State of Madras v. T.K. Gopala Iyer AIR 1963 Mad 14; Kailash Nath Gupta v. Enquiry Officer (2003) 9 SCC 480; Union of India vs.
M.A. Jaleel Khan 1999 SCC (L&S) 637.
2. Disciplinary Authority-cum-Regional Manager vs. Nikunja Bihari Patnaik (1996) 9 SCC 69; Union of India v. Jesus Sales Corpn (1996) 4 SCC 69; State Bank of Patiala v. S.K. Sharma (1996) 3 SCC 364; Regional Manager, U.P. SRTC v. Hoti Lal (2003) 3 SCC 605
(ii) Although the cheque granting loan was not encashed, the intention of the appellant is clear and Rule being one of integrity the appellant cannot be continued in service as he was holding a responsible position.
(iii) The order passed by the appellate authority is just and proper and is passed in accordance with the Service Rules. In terms of Rule 69(2) of the Service Rules, the appellate authority had issued show cause to the appellant on the proposed enhancement of penalty and had considered the detailed explanation submitted by the appellant and for reasons recorded has reduced the penalty of dismissal to that of removal.
(iv) The above said Rule does not provide for a personal hearing or a personal interview
(v) Good conduct and discipline are inseparable for the functioning of every officer, manager or employee of the bank, who deals with public money. There is no defence available to the appellant to say that no loss or profit resulted in the case, when the manager acted without authority and contrary to the Rules and the Scheme which is formulated to help the educated unemployed youth.
(vi) There is no extenuating factor to reduce the punishment imposed on the appellant.
Certain case laws2 showing the current trend of cases on principles of natural justice as well as on the proportionality of punishments in disciplinary proceedings were cited on behalf of the respondents.
Observations of the Court
“Although the cheque for the loan which was sanctioned, had not been encashed, the intention of the appellant to disburse the same in a dishonest way to his wife was amply proved.”
“The appellant was well aware while filing the appeal that his appeal was not filed within the period of limitation as provided under Rule 51(2) of the Service Rules. The appellant having filed the appeal cannot now go around and say that the appeal should have been dismissed on the ground of limitation. The reason is obvious. We, therefore, do not find any merit or substance in the submission in regard to the consideration of the appeal on merits even though it is time-barred. It has to be presumed, that delay, if any, was condoned by the appellate authority while entertaining the appeal and decide the same on merits. Rule 69(5) expressly provides that the authority competent there under may, for good and sufficient reasons or if sufficient cause is shown , extend the time specified there under for anything required to be done there under or condone any delay… ”
“………. According to Mr. Ramamoorthy (Counsel for the appellant), the appellate authority was merely
concerned with Charge 5 regarding disbursement of loan to the wife of the appellant in violation of Rule 34(3)(1) of the Service Rules and that the order of the appellate authority does not in any manner disclose that the same was passed by considering the circumstances germane to the charge against the appellant which had been proved. Even accepting the contention of Mr. Ramamoorthy on Charge 1, the appellant cannot come out of Charge 5, which is more serious and grave in nature. However, we observe that the observations made by the appellate authority on Charge 1 while considering Charge 5, should be treated only as a passing observation and at the same time we cannot ignore or close our eyes in regard to the finding of the appellate authority on Charge 5 which is more serious and grave in nature. The appellate authority had enhanced the punishment imposed by following the procedure laid down in the Service Rules and we see no reason to interfere with the same. As already noticed, the appellant had himself admitted his misconduct and therefore, there is no reason why the appellate authority’s finding on Charge 5 should not be accepted.”
“A reading of the show cause notice and the final order passed by the appellate authority clearly goes to show that the appellate authority has thoroughly considered the detailed submissions made by the appellant and has reached its conclusion on the facts and circumstances of the case and has modified the proposed penalty of dismissal to that of penalty of removal. There is total application of mind on the part of the appellate authority in arriving at the conclusion in regard to punishment.”
‘”……….. principles of natural justice cannot be reduced to any hard- and-fast formulae and as said in Russel v. Duke of Norfolk [ (1949)1All. E.R. 109 (CA)], these principles cannot be put in a straitjacket. Their applicability depends upon the context and the facts and circumstances of each case. The objective is to ensure a fair hearing, a fair deal to a person whose rights are going to be affected. In our opinion, the approach and test adopted in Karunakar case [(1993) 4 SCC 727] should govern all cases where the complaint is not that there was no hearing, no notice, no opportunity and no hearing but one of not affording a proper hearing that is adequate or a full hearing or violation of a procedural rule or requirement governing the enquiry.”
” The bank manager/officer and employees of any bank, nationalised/or non-nationalised, are expected to act and discharge their functions in accordance with the rules and regulations of the bank. Acting beyond one’s authority is by itself a breach of discipline and trust and a misconduct. In the instant case Charge 5 framed against the appellant is very serious and grave in nature .We have already extracted the relevant Rule which prohibits the bank manager to sanction a loan to his wife or his relative or to any partner. While sanctioning the loan the appellant did not appear to have kept this aspect in mind and acted illegally and sanctioned the loan. He realized the mistake later and tried to salvage the same by not encashing the draft issued in the maiden name of his wife though the draft was issued but not encashed. The decision to sanction a loan is not an honest decision. Rule 34(3)(1) is a rule of integrity and therefore, as rightly pointed out by Mr.Salve, the respondent Bank cannot afford to have the appellant as bank manager. The punishment of removal awarded by the appellate authority is just and proper in the facts and circumstances of the case. Before concluding, we may usefully rely on the judgement Regional
Manager, U.P. SRTC v. Hoti Lal [(2003) 3 SCC 605] wherein this Court has held as under: (SCC p. 614, para 10).
‘If the charged employee holds a position of trust where honesty and integrity are inbuilt requirements of functioning, it would not be proper to deal with the matter leniently. Misconduct in such cases has to be dealt with iron hands. Where the person deals with public money or is engaged in financial transactions or acts in a fiduciary capacity, the highest degree of integrity and trustworthiness is a must and unexceptionable. Judged in that background, conclusions of the Division Bench of the High Court do not appear to be proper. We set aside the same and restore order of the learned Single Judge upholding the order of dismissal.’
35. W e entirely agree with the above observations made in the above judgement.”
Decision
Appeal was dismissed and the order passed by the Division Bench of High Court was confirmed. However, in the peculiar facts and circumstances of the case appellant was held to be entitled to full pension and gratuity irrespective of his total period of service.