V. Muneesan vs Indian Overseas Bank

D. Murugesan, J.—The petitioner was proceeded with disciplinary proceedings while he was working in the East Mada Street Branch of the

respondent bank during the year 1991-92. By charge sheet dated 12.12.91, the following charges were framed against the petitioner viz., (1) that

he had dishonestly and fraudulently discharged and handed over bill of lading relating to IDBF 11/91 for Rs.5,95,000/- to M/s Peacock Polymers

(P) Ltd., one of the clients of the respondent bank on 29.10.91 without receiving payment therefor; (2) that he had addressed a memo dated

26.8.91 to foreign exchange department to debit the branch account for IDBF 5/91 and 6/91 stating that there was sufficient balance in the

customer''s account, whereas actually the account was showing debit balance. The imputation further alleged that the petitioner had knowingly

mislead the bank and made a false statement to foreign exchange department of cathedral branch thereby being a party to the cheating by the

borrower.

The petitioner was also issued with additional charge sheet dated 19.5.92 with five imputations viz., (1) that he had colluded with clerical staff

and allowed them to defraud the bank by misappropriating the bank funds; (2) that many cheques were dishonestly and fraudulently entered in the

clearing register on various dates when no such instruments were presented. Amounts credited to beneficiary were allowed to be withdrawn

thereby causing a loss of Rs.20,000/- to the bank; (3) that he had authorized the release of funds on the same day of the instruments were

presented for clearance even when the instruments were returned not debited to party''s account thereby causing a loss of Rs.13,000/- to the

bank; (4) that he had discounted his own withdrawal slips without sending the instruments to the concerned branch for realization which are still

outstanding thereby misused his official position and (5) on 22.4.91 without there being any instrument presented for clearing, the petitioner being

the branch manager failed to act in the interest of the bank when a sum of Rs.15,000/- was fraudulently credited to savings bank account of Smt.

and Sri Santhanam thereby causing a loss of Rs.15,000/- to the bank.

Based on the above charge sheets, an inquiry was ordered and the petitioner was given opportunity to defend the charges. The inquiry officer,

insofar as the first imputation of the charge sheet dated 12.12.91, even though found that the charge of discharge and handing over of bill of lading

was proved, held that there was no fraudulent intention on the part of the petitioner in discharging and handing over the bill of lading. Accordingly,

the inquiry officer found the said charge partly proved. Insofar as the second imputation of charge sheet dated 12.12.91, the inquiry officer found

the same as proved. The imputations 1, 2 and 3 of the additional charge sheet dated 19.5.92 were held only as partly proved and imputations 4

and 5 were found fully proved. The findings of the inquiry were forwarded to the third respondent, the disciplinary authority who by order dated

30.7.94, while agreeing with the findings of the inquiry officer in respect of the second imputation charge sheet dated 12.12.91 and 4th and 5th

imputations of additional charge sheet dated 19.5.92, disagreed with the findings in regard to the other imputations as to the findings of the inquiry

officer that the charges were only partly proved. Holding so, the disciplinary authority found all the charges were proved and accordingly ordered

punishment of dismissal. Questioning the said order the petitioner filed an appeal and the same was dismissed by the second respondent, the

appellate authority by order dated 12.1.95. Challenging those orders, the petitioner has filed the present writ petition.

In view of the limited submissions as to the legal issue made by the learned counsel for petitioner, I do not propose to elaborate on the merits.

According to the learned counsel for petitioner, when the findings of the inquiry officer were disagreed by the disciplinary authority, the petitioner

should have been given an opportunity before the impugned order was passed. In the absence of such opportunity, the order of dismissal as

confirmed by the appellate authority is unsustainable. In support of the said submission, the learned counsel would rely upon the judgments of the

Apex Court in "" Punjab National Bank and Others Vs. Sh. Kunj Behari Misra, and in ""STATE BANK OF INDIA AND OTHERS v. ARVIND

K.SHUKLA 2001 (3) LLN 93"". The said submission of the learned counsel for petitioner was controverted by the learned counsel for

respondents in placing reliance on the judgment of the Apex Court in "" Aligarh Muslim University and Others Vs. Mansoor Ali Khan, . The learned

counsel contended that even in case of failure to give opportunity to the petitioner as claimed, unless prejudice is shown, the punishment of

dismissal cannot be interfered.

In view of the above pleadings, the question to be considered lies in a narrow compass as to whether the petitioner was entitled to an

opportunity when the disciplinary authority disagreed with the findings of the inquiry officer. The said question came up for consideration before the

Apex Court in Punjab National Bank''s case (supra). That was a case where disciplinary proceedings were initiated in respect of two officers by

names Kunj Behari Misra and Shanti Prasad Goel. In the report of the inquiry officer, the first officer was found guilty of one charge, but was

exonerated of other five charges namely, charges two to six. So far as the other officer was concerned, the inquiry officer found him not guilty of all

the charges and exonerated him. The disciplinary authority, however, did not agree in the case of Misra with the findings of the inquiry officer in

respect of remaining five charges and ultimately found all the charges were proved and imposed a minor penalty of proportionate recovery of the

amount representing the loss. In the case of the other officer Goel also, the disciplinary authority did not agree with the inquiry report and found all

the charges against him were proved. Accordingly, the disciplinary authority directed the recovery of money from the bank''s contribution to the

provident fund of the said officers. While considering the challenge to those orders of punishment, the Apex Court ultimately held that the regulation

contemplates for an opportunity to the delinquent employee, in case the findings of the inquiry officer were disagreed by the disciplinary authority.

The relevant portions of the law laid down by the Apex Court are as follows:-

Under Regulation 6 the inquiry proceedings can be conducted either by an inquiry officer or by the disciplinary authority itself. When the inquiry is

conducted by the inquiry officer his report is not final or conclusive and the disciplinary proceedings do not stand concluded. The disciplinary

proceedings stand concluded with decision of the disciplinary authority. It is the disciplinary authority which can impose the penalty and not the

inquiry officer. Where the disciplinary authority itself holds an inquiry an opportunity of hearing has to be granted by him. When the disciplinary

authority differs with the view of the inquiry officer and proposes to come to a different conclusion, there is no reason as to why an opportunity of

hearing should not be granted. It will be most unfair and iniquitous that where the charged officers succeed before the inquiry officer they are

deprived of representing to the disciplinary authority before that authority differs with the inquiry officer''s report and, while recording a finding of

guilt, imposes punishment on the officer. In our opinion, in any such situation the charged officer must have an opportunity to represent before the

Disciplinary Authority before final findings on the charges are recorded and punishment imposed.

As a result thereof whenever the disciplinary authority disagrees with the inquiry authority on any article of charge then before it records its own

findings on such charge, it must record its tentative reasons for such disagreement and give to the delinquent officer an opportunity to represent

before it records its findings. The report of the inquiry officer containing its findings will have to be conveyed and the delinquent officer will have an

opportunity to persuade the disciplinary authority to accept the favourable conclusion of the inquiry officer. The principles of natural justice, as we

have already observed, require the authority, which has to take a final decision and can impose a penalty, to give an opportunity to the officer

charged of misconduct to file a representation before the disciplinary authority records its findings on the charges framed against the officer.

In fact the Apex Court in that judgment had also considered the judgment in Managing Director, ECIL, Hyderabad, Vs. Karunakar, etc. etc., ,

wherein the Apex Court held that if the inquiry officer had given an adverse finding, the employee should be given an opportunity by furnishing a

copy of the report to make his submissions. By placing reliance on the above, the Apex Court in the Punjab National Bank''s case (supra) held that

even when the report is adverse the delinquent employee/officer is entitled to an opportunity before the said report is acted upon and it will not

stand to reason that when the findings in favour of the delinquent officer is proposed to be overturned by the disciplinary authority, then no

opportunity should be granted. In that view of the matter, the Apex Court held that even when the findings of the inquiry officer are overturned, the

delinquent officer should be necessarily given an opportunity.

In State Bank of India''s case reported in 2001 (3) LLN 93 supra, the Apex Court following the Punjab National Bank''s case, reiterated the

law once again and held that such an opportunity to the delinquent officer is based on the principles of natural justice. There is no dispute as to the

above settled position of law as declared by the Apex Court.

In the case on hand, imputation no.1 of charge sheet dated 12.12.91 and imputations 1, 2 and 3 of additional charge sheet dated 19.5.92 have

been held by the inquiry officer only partly proved and the disciplinary authority had disagreed with those findings and ultimately came to the

conclusion that those charges were also fully proved. After such adverse findings by the disciplinary authority, no opportunity was given to the

delinquent officer. However, the learned counsel for respondents would rely upon the judgment in Aligarh Muslim University case (supra) to

contend that unless the petitioner shows prejudice for non furnishing of the inquiry report, the order of dismissal cannot be set aside. Firstly, the

judgment in B.Karunakar''s case (supra) rendered by three Judges of the Apex Court was not brought to the notice of the Apex Court while

dealing with the above case. Secondly, the Apex Court held following the earlier judgment in "" Godde Venkateswara Rao Vs. Government of

Andhra Pradesh and Others, that it is not necessary to quash the order merely because of violation of principles of natural justice, if the quashing of

the order, which is in breach of natural justice, is likely to result in revival of another order which is in itself illegal. Following another judgment in

M.C. Mehta Vs. Union of India (UOI) and Others, , the Apex Court held that there can be certain situations in which an order passed in violation

of principles of natural justice need not be set aside under Article 226 of the Constitution of India. The Apex Court has never laid down a general

proposition of law that in all cases prejudice should be shown, as the same depends upon the facts of each case. In fact, in that case, as per Rule

5(8)(i) of the Aligarh Muslim University Non Teaching Employees (Terms and Conditions of Service) Rules, 1972 if an employee absents himself

from duty without having previously obtained leave or fails to return to his duties on the expiry of leave without having previously obtained further

leave, the Head of the Department/Office concerned in cases where is the Appointing Authority, after waiting for three days, shall communicate

with the person concerned asking for an explanation and shall consider the same. In cases where the Head of the Department/Office is not the

Appointing Authority, he shall, after waiting for three days from the date of unauthorized absence without leave or extension of leave, inform the

Registrar/Finance Officer, and the Registrar (Finance Officer in the case of staff borne on the Accounts Cadre) shall communicate with the person

concerned asking for an explanation which shall be submitted to the Vice-Chancellor/Executive Council. Unless the Appointing Authority regards

the explanation satisfactory, the employee concerned shall be deemed to have vacated the post, without notice, from the date of absence without

leave. Though the appellant therein was entitled to an opportunity under the rule before any order as to the overstayal of leave, factually he was not

given opportunity and the Apex Court held that merely because he was not given opportunity when the overstayal was proved on facts, the order

of punishment need not necessarily be quashed.

Coming to the facts of this case, the findings of the inquiry officer holding certain charges were proved only partly, were disagreed by the

disciplinary authority and imposed a punishment. Under given circumstances of the facts of this case, I am of the considered view that the law laid

down by the Apex Court in Punjab National Bank''s case (supra) would alone apply as the said case governs a similar situation on facts. The very

disagreement and the consequential punishment would by itself amount to prejudice and in that case the question of establishing prejudice may not

arise. When once this conclusion is arrived, order of dismissal passed by the disciplinary authority as confirmed by the appellate authority, cannot

be sustained.

In fact when a similar question came up for consideration before this Court in W.P.No.15959 of 1995 where the respondent bank was also a

party, this Court by order dated 18.7.2002 held that where the regulation mandates for furnishing copies of the disagreement report of the

disciplinary authority to the delinquent officer and in the absence of the same, the punishment cannot be sustained. I am in agreement with the said

judgment.

In view of the above discussions, the impugned orders are set aside and the matter is remitted back to the disciplinary authority viz., the third

respondent for proceeding further from the stage of receipt of inquiry report. Any further action against the petitioner could be taken only after

furnishing the copies of the disciplinary authority in disagreeing with the findings of the inquiry officer and only after receiving the explanation, further

orders should be passed.

With the above observation, the writ petition is allowed in part. No costs.