E. S. Nambiar vs Union Bank of India and others

Varghesb Kalliath, J.—Petitioner challenges an order of dismissal passed against him in a disciplinary proceeding. Petitioner was in the. service of the 1st respondent-Union Bank of India. Ha joined service of the Bank in 1958. He was promoted to the category of Officer in 1969 and he became an Officer Grade I in 1978. He was working as Branch Manager of Quilon during the period 1977 to 1981. From Quilon Branch, he was transferred to Calicut Branch. This, was on 26 6-1981. Petitioner submits that when he was transferred from Quilon Branch to Calicut the successor in office took charge of the Branch and relieved the petitioner. The successor in office certified that he has taken a complete and effective charge of the branch from the petitioner and the petitioner has been relieved. The successor further confirmed that he has satisfied himself that all the account books are balanced and that the cash, securities, valuables, godown, ''documents, etc. have been duly verified by him and found to be in order. Further, petitioner submitted that in the periodical inspections no irregularity was found and is so noted in the inspection reports. Ext. P2 was served on the petitioner by the disciplinary authority. By Ext. P2, articles of charges were framed against the petitioner. Petitioner was informed that an enquiry into the charges framed will be held against him in terms of the provisions of Union Bank of India Officer Employees (Discipline and Appeal) Regulations, 1976 (hereinafter referred to as ''the Regulations''). In Ext. P2, it is also stated that the place, date and time of the enquiry and the name of the inquiring authority will be intimated to the petitioner in due course. Ext. P2 directed the petitioner to submit any statement of defence, if he wants to file within is days of receipt thereof These directions are given, it appears, in accordance with Regulation 6 of the Regulations.

Subsequently, some more charges were added. Ext. P3 is a memorandum relating to the allegations regarding certain charges. Ext. P4, is another memorandum relating to three charges. Ext. P4 is dated 13-1-1983. In Ext. P4, the disciplinary authority has said that an enquiry into the charges mentioned in Ext. P4 will be held by Shri M. K. Satyamurthy, Assistant Superintendent (P), Regional Office, Ernakulam along with the charges levelled against the petitioner vide memorandum No. DP: IR: 2972 dated 18-3-1982 and DP: IR: 1280S. dated 10-11-1982. In Ext. P4, the disciplinary authority directed the petitioner that if he so desires to submit his statement of defence, he may do so, directly to the enquiry officer within 7 days of receipt of Ext. P4. On 29th June, 1983, petitioner was served with another memo of charges. There also, petitioner was directed, if he desires to submit his written statement of defence, he may do so directly to the enquiry officer within 7 days of receipt thereof.

The enquiry officer made a detailed enquiry on the charges framed against the petitioner. Number of records and witnesses were examined and finally found that some of the charges were proved against the petitioner. Tin; enquiry officer did not make any suggestion as to the penalty to be imposed on the petitioner. The disciplinary authority considered the enquiry report and passed the impugned order, Est. P7. Ext. P7 is dated 23-11-1984. By Ext. P7, the disciplinary authority found that in his opinion the ends of justice will be met by imposing on the petitioner the punishment of dismissal from service of the Bank with immediate effect and accordingly exercising his under Regulation 7 of the Regulations, ordered punishment of dismissal from service of the Bank with immediate effect.

Petitioner filed an appeal. Ext. P9 is the appeal memorandum. Several grounds have been raised stating that the punishment is disproportionate to the offence and also that the punishment is unsustainable both in law and on account of procedural impropriety. Ext. F10 is a petition for adding some more grounds in the appeal, Ext. F9. By Ext. P11 order, appeal was dismissed. Now the petitioner is very much aggrieved by the orders, Ext. P7 and P11 and he challenges both the orders.

Before submitting on the merits of the case regarding the unsustainability or the unreasonableness of the order of punishment, counsel for the petitioner submitted that the disciplinary authority in the matter of enquiry is bound by the conditions and terms of the Regulations and that id this case, he has not adhered to the Regulations and so the whole proceedings taken which ended in the dismissal order, Ext. P7 is void and so even without considering the unreasonableness of the order en factual and legal basis, since the disciplinary authority has not conformed to the Regulations, this Court should declare the orders void.

I am bound to examine this question. My investigation, I feel, has to be started with the power of the disciplinary authority in this matter. Certainly there is no dispute that the power source of the disciplinary authority is Regulations 1976. The particular provisions are Regulation 6 (1) to (4). It reads thus:-

Procedure for imposing major penalties:

(1) No order imposing any of the major penalties specified in clauses (e), (f), (g) and (h) of regulation 4 shall be made except after an inquiry is held in accordance with this regulation.

(2) Whenever the Disciplinary Authority is of the opinion that there are grounds for inquiring into the truth of any imputation of misconduct or misbehavior against an officer employee, it may itself enquire into or appoint any other public servant (hereinafter referred to as the inquiring authority) to inquire into the truth thereof.

Explanation - When the Disciplinary Authority itself holds the inquiry any reference in sub-regulation (8) to sub-regulation (21) to the inquiring authority shall be construed as a reference to Disciplinary Authority.

(3) Where it is proposed to hold an inquiry, the Disciplinary Authority shall frame definite and distinct charges on the basis of the allegations against the officer employee and the articles of charge, together with a statement of the allegations, on which they are based, shall be communicated in writing to the officer employee, who shall be required to submit within such time as may be specified by the Disciplinary Authority (not exceeding 15 days), or within such extended time as may be granted by the said Authority, a written statement of his defence.

(4) On receipt of the written statement of the officer employee, or if no such statement is received within the time specified, an enquiry may be held by the Disciplinary Authority itself, or if it considers it necessary so to do appoint under sub-regulation (2) an Inquiring Authority for the purpose:

Provided that it may not be necessary to hold an inquiry in respect of the articles of charge admitted by the Officer employee in his written statement but shall be necessary to record its findings on each such charge.

It has to be remembered that these Regulations have been framed u/s 19 of the Banking Companies (Acquisition and transfer of Undertakings) Act, 1970 (5 of 1970). Section 19(1) of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 provides thus:

Power to make regulations.- (1) The Board of Directors of a corresponding new bank may, after consultation with the Reserve Bank and with the previous sanction of the Central Government, make regulations, not inconsistent with the provisions of this Act or any scheme made thereunder, to provide for all matters for which provision is expedient for the purpose of giving effect to the provisions of this Act.

There is no dispute that the 1st respondent is a statutory corporation and it is a ''State'' within the meaning of Article 12 of the Constitution. Several decisions have been cited before me for holding that the 1st respondent - Nationalised Bank-is a statutory corporation within the meaning of Article 12 of the Constitution. I do not think that it is necessary, at this distance of time, to cite all those decisions for holding that the 1st respondent is a ''State'' amenable to the overseeing jurisdiction under Article 226 of the Constitution.

Counsel for the 1st respondent submitted that the question that has to be decided in this case is whether a dismissal by a statutory corporation, in this case Nationalised Bank, after an enquiry can be declared as void unless and Until the court comes to a conclusion that the order results in violation of the fundamental rights of the petitioner. This submission was made by the Bank''s counsel primarily based on 4 decisions of this Court, viz., judgments in W. A. No. 91/83, W. A. No.833/88 and O. P. No. 6158/86. The judgment in O. P. 6158/86 was confirmed in W. A. No. 833/88. Counsel also referred me to the decision reported in 1984 K, L. T. 32 (K. S. Sofhi v. Fertilisers & Chemicals Travancore Ltd. & others) This decision has been referred in the judgment in W. A. No. 833/88. Counsel also submitted that even though the 1st respondent is only a ''State'' under Article 12 of the Constitution, there are certain limitations in applying the power of jurisdiction under Article 226 of the Constitution particularly in the matter of disciplinary proceedings taken by such a statutory corporation. Counsel submitted that if no question of fundamental rights are involved. Ibis Court cannot interfere with the order of dismissal passed by such a statutory authority.

Counsel for the petitioner submitted the submission made by counsel for the 1st respondent is not in accordance with law. He submitted that there is clear authority of the Supreme Court that if a statutory body comes within the Article 12 of the Constitution violates its own Rules or Regulations in the matter of disciplinary proceedings, the final result, even if it is dismissal or any other punishment, can be declared as void by this Court exercising its power under Article 226 of the Constitution. In the judgement in O. P. No. 6158/86, a learned single Judge of this Court held that unlike in the case of a Government servant, an employee of "another authority", which may be "State", under Article 12 of the Constitution, can sustain an action in this Court only on grounds of violation of his fundamental rights under Part III of the Constitution of India and not on any error of law or other such grounds. The learned single Judge relied on the decision in W. A. No. 91 of 1983. The learned single Judge also said that "Shri Balagangadhara Menon, counsel for the respondents, submits that the enquiry was conducted in due compliance with the provisions contained in Union Bark of India Officer Employees'' (Discipline and Appeal) Regulations, 1976. He asserts, that there was no, irregularity, illegality or impropriety in the conduct of the enquiry". Counsel for the 1st respondent submits that the statement that there was due compliance with the provisions contained in the Regulations and that acceptance of the court that there was no irregularity, illegality or impropriety in the conduct of the enquiry makes the fact of this case distinct and different from the fact considered by the learned single Judge. Of course, the above decision was confirmed by a Division Bench of this Court. There also, the special feature is important. The. Division Bench has highlighted in paragraph 2 of its judgment that it is difficult for the Division, Bench, to disagree with either of the findings recorded by the learned single Judge. The Division Bench said that "A very satisfactory enquiry was held after affording an opportunity to the appellant. The appellant did not avail of that opportunity.. He cannot now make any complaint that reasonable opportunity was not afforded to him. When the appellant was given permission to engage a lawyer nothing prevented the appellant to avail of that facility to engage a lawyer and participated the disciplinary enquiry".

The above quote indicates that if there was no proper enquiry or if the enquiry was not satisfactory or if the enquiry was not conducted in. accordance with the provisions of the Regulations, the Division Bench would not have confirmed the decision of the learned single Judge. I understand the judgment of the Division Bench to say that the decision can be questioned certainly on irrationality or unresonableness or processual impropriety, but that does ''not mean that all the decisions can be challenged on merits on other grounds as stated by the learned single Judge ''any error of law or other such grounds''. I have got my own difficulty to accept this proposition also considering the fact that the concept of judicial review is expanding to regions which were not within the reach till this day. Any how, these aspects need not be considered in this case for reasons to be stated just now. Lord Diplock counselled against the use of a "steamhammer to crack a nut" vide R. v. Goldsmith (1983) 1W. L. R. 151 and opened the wide door of judicial scrutiny and overseeing of punishments on the ground of principle of proportionality-absolutely a new area of judicial review.

Of course, in W. A. No. 91 of 1983, this Court observed that the legal representatives of the appellant in that case cannot call upon this Court to examine the validity of the order of dismissal in proceedings under Article 226 of the Constitution, as a Nationalised Bank can at best be regarded as ''State'' in which event. the appellant could seek only enforcement of the fundamental rights under the Constitution and since no question of violation of the fundamental rights is involved in the case, appeal is only to be dismissed. No question of any irregularity in the matter of enquiry was pointed out in the case referred to (W. A. No. 91/1983).

According to me, if a statutory authority amenable to the writ jurisdiction of Article 226 is bound by the Rules or Regulations, commits any infraction of that Rules or Regulations which visited prejudice to the person concerned, this Court can correct it exercising its power of review under Article 226 of the Constitution of India. This proposition, according to me, is now well settled by several decisions of the Supreme Court. I shall catalogue those decisions and refer to one or two decisions of the Supreme Court: Sukhdev Singh, Oil and Natural Gas Commission, Life Insurance Corporation, Industrial Finance Corporation Employees Associations Vs. Bhagat Ram, Association of Clause II. Officers, Shyam Lal, Industrial Finance Corporation, , A. I. R. 1976 S. C 585 (Executive Committee of Vaish Degree, Shamli and others v. Lakshmi Narain and others), Vidya Dhar Pande Vs. Vidyut Grih Siksha Samiti and Others, , Andi Mukta Sadguru Shree Muktajee Vandas Swami Suvarna Jayanti Mahotsav Smarak Trust and Others Vs. V.R. Rudani and Others, , State of Bank of India Vs. S. Vijaya Kumar, , (1991)-1 SCC 319 (Central Bank of India v. C. Bernard) and 1977 (2) SIR 565 (Lachhman Dass Aggarwal, Accountant, Punjab National Bank, Panipat (Haryana) v. The Punjab National Bank, through the Chairman, Punjab National Bank, 5. parliament Street, New Delhi and others).

In Sukhdev Singh, Oil and Natural Gas Commission, Life Insurance Corporation, Industrial Finance Corporation Employees Associations Vs. Bhagat Ram, Association of Clause II. Officers, Shyam Lal, Industrial Finance Corporation, Ray C. J. in unmistakable terms said that there is no substantial difference between a Rule and Regulation in as much as both are subordinate legislation under powers conferred by the statute. Further, His Lordship said that the statutory authorities cannot deviate from the conditions of service. Any deviation will be enforced by legal sanction of declaration by Courts to invalidate actions in violation of rules and regulations. The existence of rules and regulations under statute is to ensure regular conduct with a distinctive attitude to that conduct as a standard. The statutory regulations considered in the above case was a similar regulation which I am now considering in the present case. Ray C. J. said that "This Court has repeatedly observed that whenever a man''s rights are affected by Petitioner, who is a dismissed employee, has got a statutory status and if there is any violation of the statutory provisions in the matter of the decision taken against him, he has got an entitlement to get a declaration that the decision is bad and cannot bind on him I may now refer to what justice Mathew has said on the same question That apart, the regulations framed by these corporations were intended to be binding upon them and were the bases on which the employments were made. As the employments were under corporations created by statutes for carrying on business of public importance they were public employment. And even if the regulations have not got the force of law. I think the principle laid down by Justice Frankfurter in Vitarelli v. S. decision taken Under statutory powers, the Court would presume the existence of a duty to observe the rules of natural justice and compliance with rules and regulations imposed by statute. (emphasis added). The order itself proceeds on the basis that it has been passed under Regulations 1976. That itself implicits that the authority which passed the order is under a duty to observe all the relevant regulations imposed by Regulations 1976. In the same decision, again it is stated thus:-

The employees of these statutory bodies have a statutory status and they are entitled to declaration of being in employment when their dismissal or removal is in contravention of statutory provisions. By way of abundant caution we state that these, employees are not servants of the Union or the State. These statutory bodies are "authorities" within the meaning of Article 12 of the Constitution,

I see no difference here in this case also. Petitioner, who is a dismissed employee, has got a statutory status and if there is any violation of the statutory provisions in the matter of the decision taken against him, he has got an entitlement to get a declaration that the decision is bad and cannot bind on him I may now refer to what justice Mathew has said on the same question;

That apart, the regulations framed by these corporations were intended to be binding upon them and were the bases on which the employments were made. As the employments were under corporations created by statutes for carrying on business of public importance they were public employment. And even if the regulations have not got the force of law. I think the principle laid down by Justice Frankfurter in Vitarelli v. Seaton (1959)- 359 US 535 at pp. 546-547 should govern the situation. He said:

An executive agency must be rigorously held to the standards by which it professes its action to be judged...... Accordingly if dismissal from employment is based on a defined procedure, even though generous beyond the requirements that bind such agency, that procedure must be scrupulously observed... This judicially evolved rule of administrative law is now firmly established and, if I may and, rightly so. He that takes the procedural sword shall perish with that sword.

The case of the Petitioner is that the 1st respondent has not followed the provisions regarding disciplinary proceedings contained in the Regulations. If this contention is accepted, I find no difficulty to hold that the decision is unsustainable. So the only question that has to be considered as preliminary point is whether the enquiry was conducted and the decision was taken conforming to the provisions contained in Regulations 1976. I have already quoted the relevant Regulation, viz.. Regulation 6. The case of the petitioner is that he received Ext. P2 charges only on 15-5-1982, since he was on leave from 15-4-1982 to 14-5-1982 and that he joined duty 15-5-1982. According to the petitioner, hi sought for extension of time by filing an application on 17-5-1982. Ha sought extension up to 15-6-1982. Copy of the application is Ext. P12 produced along with the affidavit in CM P. No. 2546/91. Petitioner submits that this application was granted and time was extended till 15-6-1982. He sought times in order to comply with sub-regulation (3) of Regulation 6 of the, regulations viz, to file his statement of defence. In fact, petitioner filed his statement of defence on 10-6-1982. But the enquiry officer was appointed en 21-5-1982. This, according to counsel for the. petitioner, is a plain and clear violation of an important Regulation in the matter of disciplinary proceedings. Counsel submitted that in fact, 15 days time was granted at the first stage from the date of receipt of Ext. P2 and according to the petitioner, he received Ext. P2. only on 15-5-1982 and so he had time till 30-5-1982 and the appointment of the enquiry officer on 21-5-1982 is irregular and that has adversely affected the enquiry, because it is defective at the very root of the enquiry.

Counsel for the petitioner also submitted that a reading of sub-regulation (3) of Regulation 6 of the Regulations indicates that whenever a charge is framed against a delinquent and that charge is served on him, he must be given an opportunity to file his statement of defence before the disciplinary authority himself and that the directions contained in Exts. P4 and PS that the petitioner can file his written statement of defence before the enquiry officer are also not unconformity with sub-regulation (3) of Regulation 6 of the Regulations.

Counsel for the respondents submitted that even if an enquiry officer was appointed before the expiry of the date fixed for filing the explanation before the disciplinary authority, it is not an irregularity or violation of sub-regulation (3) of Regulation 6 of the Regulations. He relied on sub-regulation (2) of Regulation 6 of the Regulations and submitted that If the disciplinary authority is of opinion that there are grounds for inquiring into the truth of any imputation of misconduct or misbehaviour of an employee, the disciplinary authority itself can enquire into the matter or appoint any other public servant to inquire in to the truth thereof. In view of the power granted to the disciplinary authority under sub-regulation (2) of Regulation 6 of the Regulations, the disciplinary authority is not bound to wait for the written statement of defence of the delinquent officer or employee. It is difficult for me to agree with this submission. I feel that the purpose of calling for written statement of defence is to examine the explanation offered by the delinquent by the disciplinary authority in order to initiate enquiry proceedings by himself or by appointing an enquiry authority. I say so because, sub-regulation (4) of Regulation 6 of the Regulations says what has to be done on receipt of the written statement of the officer or employee and what has to be done, if no such statement is received from the employee within the time specified. In case, no statement is received, the disciplinary authority itself or the disciplinary authority considers it necessary so to do appoint under sub-regulation (2) of Regulation 6, an inquiring authority for the purpose.

It is difficult for me to accept that at this stage, viz., when the delinquent officer file a statement under sub-regulation 3 of Regulation 6 the disciplinary authority cannot drop the enquiry proceedings. The proviso to sub-regulation (4) of Regulation 6 of the Regulations says that it may not be necessary to hold an enquiry in respect of the articles of charge admitted by the officer in his written statement but there also the disciplinary authority has to record its findings on each such charge It is necessary for the disciplinary authority to peruse the explanation or the written statement of the delinquent''s defence and has to act by appointing an enquiry authority or taking himself the burden of the enquiry. Here, when waiting for written statement of defence of the petitioner/delinquent, the enquiry authority was appointed on 21-5-1982. Further in regard to charges under Exts. P4 and P5 sub-regulation (3) of Regulation 6 of the Regulations has not been given effect to, since the disciplinary authority was not prepared to receive the written statement of defence of the petitioner. I am of the view that at the first stage itself, the enquiry proceedings were vitiated for not conforming to the requirements contemplated under Regulation 6 of the Regulations. In this view, all proceedings have to be quashed including the result of the same, viz, Ext. P7 which was confirmed by Ext. P11. I do so. Since I have quashed Exts. P7 and P11, petitioner should be reinstated in service without any delay. But I make it clear that this will not preclude the 1st respondent from initiating the enquiry on the same charges in accordance with the provisions of the Regulations. Since I have now held that the enquiry proceedings are vitiated for not conforming to the provisions under the Regulations. I am not considering all other points raised in this Original Petition by the petitioner. Original Petition is disposed of as above.

Issue carbon copy to the parties on usual terms.