Mattapudi Bhanu Chand vs Punjab National Bank

Nagesh Bheemapaka, J

The petitioner joined the respondent-Punjab National Bank in clerical cadre in the year 2014, and thereafter obtained promotion as officer in 2016. While he was serving at Gulbarga Branch as a Manager, a charge sheet was issued to him on 01.10.2020 alleging that,during the period 21.09.2016 to 13.08.2018 when he was posted as Officer in-charge of Branch Office, Toopran, he sanctioned loans without conducting due diligence and obtaining confirmation of action as per the Bank’s guidelines, and also exceeded his powers to sanction certain loans. It is alleged that loans to the tune of Rs.615.75 lakhs were sanctioned, risking the money of the Bank, out of which Rs.224.19 lakhs are proving difficult to recover. Petitioner submitted explanation to the charges on 04.12.2020. Pursuant thereto, an inquiry was conducted by appointing one Mr. Subash Chandra Singh, Chief Manager, as Inquiry Officer, and one Smt.Y.Sumathi as Presenting Officer. Based on the inquiry report, petitioner was held guilty of the charges and a major punishment of Compulsory Retirement was imposed by Order dated 01.11.2021 under PNB Officer Employees (Discipline and Appeal) Regulations, 1977. Thereafter, the petitioner made a representation dated 25.11.2021 to the Executive Director of the Bank, which was rejected by Order dated 21.11.2022 observing that the appeal is rejected, confirming the penalty imposed by the Disciplinary Authority. It is the grievance of the petitioner that the inquiry is lopsided,and he was not afforded a fair opportunity to defend his case and the Regulations have not been followed while imposing the punishment. It is his further grievance that his representation dated 25.11.2021 seeking de novo enquiry into the allegations has been construed as an Appeal and the Appellate Authority rejected the same.

Heard Mr. Kumaraswamy Namburi, learned counsel for the petitioner; and Ms. Kalpana Ekbote, learned Standing Counsel representing the respondent-Bank. Perused the record.

Learned counsel for the petitioner, while making submissions on the lines of writ affidavit, would essentially contend that during October 2017 to November 2017, an inspection was conducted and the observations raised in the Inspection Report were complied and the Inspection Report was closed on 25.01.2018; and thereafter a surprise visit was conducted in February 2018 by Mr. Raghunath, Chief Manager from Circle Office and he verified the loan documentation files and reported some pendency and due to the pendency at Branch, loaning powers had been stopped for Toopran Branch since March 2018 thereby new loans were not sanctioned till August 2018. It is contended that Mr. Samir, and Mr. K. Ramesh, Senior Managers in the Credit Department from Circle Office have periodically visited and verified the pendency during May 2018 and June 2018; and thereafter Mr. Raghunath, Chief Manager visited the Branch again during July 2018 and inspected the loan documents and made an observation that all the objections that he made have been rectified, and only after ensuring the inspection observations were rectified at Toopran Branch Office, the petitioner was transferred to

contends that after the petitioner thereafter obtained promotion as Manager Scale-II and was transferred to Bangalore Circle at Dadgi Branch and later to Gulbarga Branch and was informed that he was placed under Suspension for the irregularities at Toopran Branch. Learned counsel contends that none of the aforesaid officials who visited the Branch and made observations and later confirmed that the petitioner complied with the observations, have been examined, and further no documents in support of the charges/allegations were furnished to the petitioner while issuing him the charge sheet dated 01.10.2020, except directing the petitioner to submit explanation within seven days therefrom, and no opportunity of being heard, and no list of witnesses on behalf of Bank, and no opportunity of examining/cross-examining of witnesses have been afforded and therefore the enquiry is vitiated due to non-following of the procedure prescribed under the Regulations. Learned counsel further submits that the petitioner had made a representation dated 25.11.2021 against the punishment imposed by the Disciplinary authority, and that representation was treated as an Appeal and the same was rejected, thereby causing prejudice to the petitioner’s case right from the process of issuance of charge sheet to the enquiry and to the rejection of representation by misconstruing it as an Appeal petition. Learned counsel submits that the petitioner is not seeking re-appreciation of evidence, but only seeks a de novo enquiry with a direction to the respondent-Bank authorities to follow the process stipulated in the Regulations by furnishing the documents being relied on by the Bank in support of the charges and furnish a list of witnesses on behalf of the Bank, and afford an opportunity of being heard to the petitioner, apart from the opportunity of examining/cross examining the witnesses. Learned counsel relies on S.C. Girotra vs. United Commercial bank (UCO Bank) 1995 Supp (3) SCC 212.

Learned Standing Counsel for the respondent-Bank, basing on the counter affidavit, contends that the petitioner has sanctioned the loans without following due procedure of verification and obtaining confirmation of action from the authorities and also exceeded his powers to sanction certain loans against property mortgage, and a huge amount of over 600 lakhs have fallen into risk, and over 200 lakhs are proving difficult to recover. Learned Standing Counsel draws attention to the relevant portions of the counter affidavit to support the contention that separate investigations/special audit were conducted and the petitioner was served with the charge sheet; and the Presenting officer has produced Management Exhibits (ME-1 to ME-434) and the same were accepted by the petitioner. It is contended that the petitioner visited the Branch and collected and submitted the documents that were marked as Defense Exhibits (DE-1 to DE-236) during the regular hearing on 01.06.2021. It is contended that the petitioner did not adhere to the loan sanctioning procedure in about 110 accounts, and about 81 accounts are under Non-Performing Assets amounting to Rs.224.19 lakhs. Relying on the judgment of Hon’ble Supreme Court in State Bank of India v. Ram Lal Bhaskar 2011 (10) SCC 249 and similar other judgments of the Hon’ble Supreme Court to drive home the point that the Court cannot sit in appeal and re-appreciate the evidence over disciplinary action of the authorities, except in the situation where the Court is of the view that such a conclusion could not have been arrived at with the material on record.

Having considered the respective submissions and perused the record, the aspect that needs examination is whether the impugned punishment was imposed after following the due process of law prescribed under the Regulations, after examining the evidence, examining/cross examining the witnesses,and after affording an opportunity of hearing.

At this juncture, it may be noted that it is the specific contention of the petitioner that at the relevant time during 2017, Mr. Raghunath, Chief Manager conducted the inspection and made certain observations and the same were complied, and later periodical inspections/verification was done by Mr. Samir and Mr. Ramesh who are Senior Managers from the Circle Office and they too gave an observation report that the pendency brought to the notice of the petitioner were rectified. A perusal of the Charge Sheet dated 01.10.2020 would show that though an Annexure-III has been enclosed (captioned “List of copies of documents/witnesses, if any”), no documents and list of witnesses, specifically the aforesaid officers who visited the Branch at relevant time for verification/inspection and who are said to have given compliance report thereafter, were stated to have been marked to the petitioner. Further, the Annexure-III enclosed with the charge sheet would show that the Presenting Officer reserves the right to add or delete any documents while presenting the case, and it does not disclose if any documents that were decided to be deleted or added were to be informed/furnished to the petitioner. Further, the counter affidavit does not disclose the list of witnesses examined by the Bank and cross-examined by the petitioner, as per the procedure for inquiry stipulated under the Regulations of the Bank. Further, the email correspondence dated 28.05.2021 (enclosed at material page No.80 of the writ petition) would show that the petitioner requested to furnish the proceedings from Presenting Officer to enable him to submit his defense supporting documents and letter for the charge sheet dated 01.10.2020.This makes it amply clear that the charge sheet was not accompanied by the mandatory documents in support of the allegations and list of witnesses. These discrepancies go to the root of the inquiry proceedings and the manner the inquiry proceedings were pursued.

It may be noted that an inquiry process, inter alia, comprises of furnishing of all the documents being relied on by the respondent-authorities in support of allegations against the delinquent official and a list of witnesses proposed to be examined on behalf of the authorities. These documents are essentially furnished along with the charge sheet, so as to enable the delinquent official to respond with his supporting evidence and witnesses; and examination/cross examination of witnesses is done before passing an order in the matter. In the instant case, the material placed before this Court shows the documents and list of witnesses were not furnished to the petitioner along with Charge Sheet dated 01.10.2020. Further, it is not known whether the petitioner was given the opportunity to examine his witnesses and cross examine the witnesses of respondent-Bank and whether the officials who had taken part in inspection/verification of the alleged loan documents at the relevant time during 2017-18, namely, Mr. Raghunath, Mr. Ramesh, and Mr. Samir were examined/cross examined, and whether an opportunity of hearing was afforded before passing the impugned order imposing a major punishment of Compulsory Retirement.

This Court, having perused the record and considered the respective contentions and also the judgments relied on by respective counsel, is of the considered view that the respondent-Bank has not followed the due process as per the Regulations of the Bank before imposing the major punishment of Compulsory Retirement. Further, the representation dated 25.11.2021 requesting de novo enquiry has been construed as an Appeal petition and was rejected.In that view of the matter, this Court is convinced that the conclusion to impose impugned punishment of Compulsory Retirement could not have been reached with the material sought to be relied on, and in the manner the inquiry was conducted. Therefore, this Court is of the view that the prayer of the petitioner to set aside the impugned order and direct the authorities to conduct de novo enquiry is just and fair in the facts of the case.

At this juncture, it is relevant to note the judgment of the Hon’ble Supreme Court in S.C.Girotra (supra), wherein it was held in paragraph No.5 as follows:

“5. In view of the infirmity in the inquiry indicated earlier, it is appropriate that the inquiry proceedings are set aside from the stage of the enquiry report and the respondent-bank is directed to conduct the inquiry afresh from that stage giving the appellant due opportunity to defend himself. For this purpose the appellant should be given the opportunity to cross-examine V.P. Jindal, J.R. Sharma, Rajinder Paul and B.B. Bhatia who were examined by the management in support of the charges. The Enquiry Officer must then conclude the inquiry and make the report on the entire materials before him. Further action must then be taken in accordance with law based on the finding given by the Enquiry Officer. In the circumstances of the case, we also direct that the appellant shall remain under suspension from today and he be dealt with according to the rules and regulations applicable to him in this behalf. The appellant, during the period of his suspension commencing from today shall be paid subsistence allowance at the current rates in accordance with the rules. The appellant shall report to the Zonal manager, Chandigarh Zone of the respondent-bank on 1-3-1994 for taking further directions in this behalf and he shall fully cooperate with the authorities to enable completion of the inquiry as early as possible and preferably by the end of May 1994.”

Accordingly, the present writ petition is allowed and the impugned order dated 01.11.2021 is set aside. The respondent-Bank is directed to conduct the inquiry afresh into the allegations against the petitioner in strict conformity with the applicable Regulations, and conclude the enquiry and pass appropriate orders within four months from today.The petitioner shall remain under suspension until completion of the enquiry and he shall be paid subsistence allowance as per rules. No costs. Miscellaneous petitions pending, if any, shall stand closed.