S.B.I vs. NEELAM NAG

1 Reportable IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION CIVIL APPEAL NO.4715 of 2011 State Bank of India & Ors. …..Appellants Vs. Neelam Nag ……Respondent J U D G M E N T A.M.KHANWILKAR, J. The short question involved in this appeal is: whether the High Court was justified in directing stay of the disciplinary proceedings initiated by the appellant-Bank against the respondent until the JUDGMENT closure of recording of prosecution evidence in the criminal case instituted against the respondent, based on the same facts? 2. The respondent was appointed in the clerical cadre of the appellant-Bank. At the relevant time, she was working as an th Assistant (Clearing). Allegedly, some time on 29 May 2006, the respondent by her acts of commission and omission caused loss to Page 1 2 the Bank in the sum of Rs. 44,40,819/- by granting credit to one Laxman Parsad Ratre (who was an employee of Bhilai Steel Plant). The respondent herself introduced Laxman Parsad Ratre to open an

respondent was placed under suspension for indulging in gross irregularities and misconduct including of misplacing the clearing instruments relating to various customers. The respondent vide th letter dated 8 November 2006, not only admitted her misdeeds but assured the Chief Manager of returning the amount commensurate to the financial loss caused to the Bank because of her lapses at the earliest, failing which suitable action can proceed against her. The said communication reads thus: “To, Chief Manager State Bank of India Main Branch, Durg (Ch.G.) JUDGMENT Sir, Context :- Your memo number – Serial number/branch/2006 – 07/196 dated 30.10.2006. In context of your aforesaid memo I am sorry for the wrong ways adopted by me. I admit that I have done a wrong deed and I am suffering from the feeling of guilt. 1. Whatever amount comes in this context that I will try to pay as early as possible after obtaining the amount Page 2 3 from the known sources. At present I am able to arrange Rs. 60,000/- and I am depositing the same. 2. By mortgaging the family movable and immovable

3. Our relatives staying nearby and far away and in other states, with them my contact is continued and arrangement for the amount is continued. This work is also taking time. Therefore to continue my effort proper time to be given to me. 4. Amount of my C.P.F and salary is to be used for compensating this amount. I will keep on informing you regarding my every effort and will deposit the money received in bank account. I have done this work in mental stress and due to pressure of situation for which my heart is feeling sorry that I have used all wrong ways and means. I have two small children, wife and old and ill mother and father, considering all this give me an opportunity to deposit the amount received from my aforesaid efforts for which I will be grateful to you for my whole life. I have not taken such a wrong step in fourteen years of my bank service but this step I have taken due to mental stress and situation. By giving me apology, proper time to accomplish my efforts. JUDGMENT I assure you that I will not commit this kind of mistake in future. If I fail in the above efforts, you are independent for initiating proceedings on me. Thanking you Dated :- 8.11.06 Sd/- (Neelam Nag) Senior Assistant “ Page 3 4 3. Nevertheless, a FIR was lodged in connection with the said irregularities and misdeeds committed by the respondent bearing FIR No.1043/2006, for offences punishable under Sections 409, 34

named as an accused in the said FIR. It is alleged in the FIR that Laxman Parsad Ratre who had account in State Bank of India issued two cheques in favour of Tanishk Securities both valued Rs.6,50,000/-, knowing that he did not have balance in his account. Those cheques were deposited by Tanishk Securities in their U.T.I. Branch Bhilai for clearance. U.T.I. Branch dispatched those cheques to State Bank of India at Durg, Bhilai. The respondent was posted in that Branch at the relevant time, who in connivance with the co-accused dispatched those cheques to State JUDGMENT Bank of India, Malviya Nagar Branch even though Laxman Parsad Ratre did not have account in that Branch. The cheques were returned by that Branch. The respondent intentionally did not immediately return those cheques to U.T.I. Branch at Bhilai. Resultantly, U.T.I. Branch at Bhilai as per the settled practice assumed that the cheques have been cleared and released the payment to Tanishk Securities, by endorsing payment in the name Page 4 5 of State Bank of India. Thereby causing a loss of Rs. 13 lakhs to State Bank of India. That was revealed only on 28.10.2006 during reconciliation of accounts of the two Banks. Further, the

opening an account in the appellant-Bank. She has admitted her lapse in the communication sent by her to the Chief Manager of the th appellant-Bank dated 8 November, 2006. In a written admission th given on 6 November, 2006 Laxman Parsad Ratre mentioned that he was involved in a criminal activity in connivance with the respondent. The FIR has been registered for offence of possible loss of Rs. 29,53,262/-. 4. After registration of the FIR, the local police proceeded with the investigation and filed charge-sheet No. 63/2007, under Section JUDGMENT th 173 of the Criminal Procedure Code, on 6 February, 2007, before the Magistrate. Criminal Complaint No. 1043/2006 was registered for offences punishable under Sections 409, 34 of IPC. The competent Court then proceeded to frame charges against the th th respondent on 12 June 2007. Thereafter, on 7 April, 2008, the appellants, through appellant No.2, called upon the respondent to Page 5 6 offer an explanation about the alleged irregularities and misdeeds th committed by her. The respondent vide communication dated 15 April, 2008 simply denied all the allegations. The Competent

th against the respondent, for which, charge-sheet dated 19 September, 2008 was issued to the respondent, which reads thus: “Shri Neelam Nag, Senior Assistant (Suspended) Indian State bank Bhilai Steel Plant Area Branch Bhilai th Sr. No. Ankara/Area 3/ Anushansha / 820 19 Sep, 2008 Charge sheet I in the capacity of disciplinary authority charge following charges upon you You have committed following mistake during working in Durg Branch. JUDGMENT i. You have given identification to Lachhman Parsad Ratre for opening the account thereafter through this account through accounts you have manage the operation of the Fund of other administrative accounts. ii. Through saving account no. 01119-0021348 two cheques bearing no. 463553 and 4635554 which is amounting to Rs. 6,50,00.00 each in favour of Tanishk Securities on 29.5.2006 which was due Durg Branch. Which was submitted by U.T.I. Bank for adjustment, due to not insufficient amount in Durg Branch instead of returning to Bhilai Branch intentionally for making the balance of adjustment has transfer to Malviya Nagar Durg Branch with responding. Page 6 7

JUDGMENT Page 7 8

JUDGMENT Sd/- Disciplinary Officer and Assistant Chief Managing Director Administration) Sd/- Enclosure : above. 57/dpc/staff Signature 20.9.2008” Page 8 9 5. The appellant No.2 then instituted disciplinary proceedings rd against the respondent on 23 October 2008, which fact was st notified to the respondent on 31 October 2008, by the appellant

cooperate and instead protested the initiation of such disciplinary proceedings against her. She was then advised to file a writ petition bearing Writ Petition No.4629/2009 before the High Court of Chhatisgarh at Bilaspur. The learned Single Judge found merits in the stand taken by the respondent - that the facts involved in the criminal case registered against the respondent and initiation of disciplinary proceedings, was based on the same facts. The learned Single Judge also adverted to Clause 4 of the Memorandum of th Settlement dated 10 April, 2002 which grants protection to the JUDGMENT employees of the appellant-Bank from facing departmental proceedings until the completion of the trial of the criminal case. On that reasoning, the learned Single Judge allowed the Writ Petition and directed the appellants to forbear from proceeding with the disciplinary proceedings until completion of the trial. This decision was challenged by the appellants by way of Writ Appeal No.80/2010 before the Division Bench. The Division Bench affirmed Page 9 10 the view taken by the learned Single Judge and negatived the stand taken by the appellant in her favour. The Division Bench held that the respondent may suffer disadvantage and prejudice if she was

which is likely to be used in the criminal case pending against her. The Division Bench, however, modified the operative order passed

(emphasis supplied) 6. The appellants relying on a recent decision of this Court in the JUDGMENT case of Stanzen Toyotetsu India Private Limited vs. Girish V. & 1 Ors. contend that the departmental proceedings cannot be suspended indefinitely or delayed unduly. It is contended that inspite of the direction given by the Division Bench to the concerned criminal Court to take up the case pending since 2006 on day-to- 1 (2014) 3 SCC 636 Page 10 11 day basis, the trial is still pending and only 3 witnesses out of total 18 prosecution witnesses cited in the charge-sheet have been examined. There is no hope of an early completion of the trial nor of

accused in the said criminal case, including the respondent herein. st In the backdrop of this grievance vide order dated 1 July 2016, the State of Chhattisgarh was directed by this Court to file a status report regarding the criminal proceedings launched against the respondent, giving details of the total number of prosecution witnesses cited in the charge-sheet; number of witnesses examined so far; and the cause for delay in the completion of trial. The State of Chhattisgarh has filed an affidavit of the Additional st Superintendent of Police dated 1 August 2016. From this affidavit, JUDGMENT it is noticed that the criminal trial No.1043/2006 before framing of th charge on 12 June 2007, was listed on 13 dates. After framing of charge, the matter has proceeded before the Sessions Court on 133 dates. In paragraph 9 to 11 of the affidavit, the break up has been given as under: “9. It is further respectfully submitted that the perusal of Court proceedings of 133 dates reveal that the delay in completion of trial was due to multiple Page 11 12

10. It is further submitted that the perusal of the Court proceedings reveal the dates on which, the Page 12 13 prosecution witness were present and the outcome on that date :

18.07.2008 prosecution witness Pushpkala present in Court however, she could not be examined since the Ld. Presiding Officer was on leave. 09.03.2009 Prosecution witness Pushpkala present in Court however, she could not be examined. 08.10.2010 Prosecution witnesses Joy C. Aryakara and Ms. Pushpkala present in Court, however, they could not be examined since co-accused Laxman Ratre was not present nor any advocate appeared on his behalf. 22.07.2011 Prosecution witness Pushpkala was examined Prosecution witness Joy C. Aryakara also present in Court however, the defence refused to cross-examine on the ground of non-availability of certain bank documents. This prosecution witness was therefore could not be cross-examined. JUDGMENT 15.09.2011 prosecution witness K.G. Goswami present in Court however, the examination could not take place due to absence of accused / respondent No.1 Neelam Nag. 24.09.2011 Prosecution witnesses KG. Goswami and N. Chandrashekhar present in Court. The co-accused Laxman Ratre is absent. Witness N. Chandrashekhar could not be examined due to non-availability of some documents. Page 13 14 04.11.2011 Witness N. Chandrashekhar present. The examination could not take place due to non-availability of certain documents.

03.09.2015 Prosecution witness Ramesh Kumar present in Court. The accused Neelam Nag was absent. Examination of witness did not take place. 02.11.2015 Prosecution witness Ramesh Kumar Present. The accused Neelam Nag was absent. Examination of witness did not take place. 11. It is submitted that 3 prosecution witnesses have been examined. The delay in completion of trial is due to reasons mentioned in the above paras.” Relying on these facts, the appellants contend that no further indulgence can be shown to the respondent and the protection JUDGMENT given to the respondent by the High Court should be vacated keeping in mind the exposition in the above mentioned reported decision. As regards the argument of the respondent that the disciplinary proceedings must be suspended in view of Clause 4 of th the Memorandum of Settlement dated 10 April 2002, arrived at by the Management of 52 ‘A’ Class Banks as represented by the Indian Page 14 15 Banks’ Association and their workmen under Section 2(p) and Section 18(1) of the Industrial Disputes Act, that cannot be considered as a legal bar atleast in the fact situation of the present

forth by the appellant, would further the cause of justice and in particular larger public interest, considering the fact that the misconduct is in relation to embezzlement of substantial amount by an employee of the public sector bank - which has caused financial loss not only to the bank but resultantly to the public exchequer. It is in the interest of all concerned that the action, as permissible in law, must be taken forward in connection with the gross misconduct and the provision in the Memorandum of Settlement such as Clause 4 cannot be treated as an impediment thereto. Any JUDGMENT other interpretation of Clause 4 of the Settlement would be against public policy and also encouraging unscrupulous employees of the bank to stall the disciplinary proceedings by taking advantage of the pending criminal case, which is an independent action in law. The respondent being named as an accused in the criminal case; and also responsible for prolonging the trial of the criminal case, cannot be permitted to take advantage of her own wrong. Page 15 16 7. The respondent, on the other hand, supported the view taken by the High Court and contends that, in view of Clause 4 of the Memorandum of Settlement and the settled legal position, the

recording and closure of evidence of prosecution witnesses in the criminal case, as directed by the Division Bench. That is essential because the charge framed against the respondent in the criminal case and the charge-sheet issued by the disciplinary authority against the respondent is based on the same set of facts. The defence of the respondent in disciplinary proceedings may cause serious prejudice to the respondent in the criminal case. According to the respondent, in view of the complexity of the facts and the evidence necessary to substantiate the same, it is advisable and JUDGMENT essential to protect the respondent from being exposed to disclosure of her defence which may be identical to one to be taken in the criminal case or for that matter compel her to depose against herself on those facts. 8. We have heard the learned counsel for the parties at some length. The only question that arises for consideration, is no more Page 16 17 res-integra . It is well-settled that there is no legal bar to the conduct of the disciplinary proceedings and criminal trial simultaneously. However, no straightjacket formula can be spelt

JUDGMENT (iv) Departmental proceedings can go on simultaneously to the criminal trial, except where both the proceedings are based on the same set of facts and the evidence in both the proceedings is common.” (emphasis supplied) 2 (2012) 1 SCC 442 Page 17 18 9. The recent decision relied by the appellant in the case of 3 Stanzen (supra), has adverted to the relevant decisions including the case of M.G.Vittal Rao (supra). After adverting to those

JUDGMENT (emphasis supplied) 10. The Court then went on to examine the facts of that case and observed in para 18 as follows: 3 (2005) 10 SCC 471 Hindustan Petroleum Corpn. Ltd. V. Sarvesh Berry (1999) 3 SCC 679 Capt. M. Paul Antony v. Bharat Gold Mines Ltd. (1997) 2 SCC 699 A.P. SRTC v. Mohd. Yousuf Miya (1996) 6 SCC 417 State of Rajasthan v. B.K. Meena Page 18 19

(emphasis supplied) In paragraph 19, the Court proceeded to conclude thus: “19. In the circumstances and taking into consideration all aspects mentioned above as also keeping in view the fact that all the three Courts below have exercised their discretion in favour of staying the ongoing disciplinary proceedings, we do not consider it fit to vacate the said order straightaway. Interests of justice would, in our opinion, be sufficiently served if we direct the Court dealing with the criminal charges against the respondents to conclude the proceedings as expeditiously as possible but in any case within a period of one year from the date of this order. We hope and trust that the trial Court will take effective steps to ensure that the witnesses are served, appear and are examined. The Court may for that purpose adjourn the case for no more than a fortnight every time an adjournment is necessary. We also expect the accused in the criminal case to cooperate with the trial Court for an early completion of the proceedings. We say so because experience has shown that the trials often linger on for a long time on account of non-availability of the defence lawyers to cross-examine the witnesses or on account of adjournments sought by them on the flimsiest of the grounds. All that needs to be avoided. In case, however, JUDGMENT Page 19 20

11. Reverting to the facts of the present case, indisputably, the alleged misconduct has been committed as far back as May 2006. th The FIR was registered on 5 December, 2006 and the charge-sheet th was filed in the said criminal case on 6 February, 2007. The contents of the charge-sheet are indicative of involvement of the respondent in the alleged offence. Resultantly, the criminal Court th has framed charges against the respondent as far back as 12 June, 2007. The trial of that case, however, has not made any JUDGMENT effective progress. Only 3 witnesses have been examined by the prosecution, out of 18 witnesses cited in the charge-sheet filed before the criminal Court. Indeed, listing of criminal case on 133 different dates after framing of charges is not solely attributable to the respondent. From the information made available by the Additional Superintendent of Police on affidavit, it does indicate that atleast 26 adjournments are directly attributable to the Page 20 21 accused in the criminal case. That is not an insignificant fact. This th is inspite of the direction given by the Division Bench on 28 June, 2010, to the concerned criminal Court to proceed with the trial on

no means, can be said to be satisfactory. The fact that the prosecution has named 18 witnesses does not mean that all the witnesses are material witness for substantiating the factum of involvement of the respondent in introducing the co-accused for opening a new bank account, to misplace the clearing instruments relating to various customers or for the payment released to the undeserving customer causing huge financial loss to the bank. The charge in the criminal case is for offences under Section 409, 34 of IPC, one of criminal breach of trust by a public servant. JUDGMENT 12. In the peculiar facts of the present case, therefore, we accede to the contention of the appellants that the pendency of the criminal case against the respondent cannot be the sole basis to suspend the disciplinary proceedings initiated against the respondent for an indefinite period; and in larger public interest, Page 21 22 the order as passed in Stanzen’s case be followed even in the fact situation of the present case, to balance the equities.

proceedings pending against the respondent. Clause 4 of the Settlement reads thus: “4. If after steps have been taken to prosecute an employee or to get him prosecuted, for an offence, he is not put on trial within a year of the commission of the offence, the management may then deal with him as if he had committed an act of “gross misconduct” or of “minor misconduct”, as defined below; provided that if the authority which was to start prosecution proceedings refuses to do so or comes to the conclusion that there is no case for prosecution it shall be open to the management to proceed against the employee under the provisions set out below in Clauses 11 and 12 infra relating to discharge, but he shall out below in Clauses 11 and 12 infra relating to discharge, but he shall be deemed to have been on duty during the period of suspension, if any, and shall be entitled to the full wages and allowances and to all other privileges for such period. In the event of the management deciding, after enquiry, not to continue him in service, he shall be liable only for termination with three months’ pay and allowances in lieu of notice as provided in Clause 3 above. If within the pendency of the proceedings thus instituted is put on trial such proceedings shall be stayed pending the completion of the trial, after which the provisions mentioned in Clause 3 above shall apply.” (emphasis supplied) JUDGMENT 14. Ordinarily, the scope of Clause 4 of the Memorandum of Settlement pressed into service would be a matter of an Industrial Dispute, to be adjudicated by the competent Forum, if the Page 22 23 respondent can be termed as a workman. The respondent herein was appointed in a clerical cadre of the appellant-bank; but when th the alleged misconduct was committed on 29 May 2006, she was

Judge, the Division Bench nor before us any argument has been canvassed on the factum of whether the respondent can be treated as a workman within the meaning of the Industrial Disputes Act, 1947. Both sides, however, have relied on the said Clause and invited us to spell out its purport. 15. On the plain language of Clause 4, in our opinion, it is not a stipulation to prohibit the institution and continuation of disciplinary proceedings, much less indefinitely merely because of the pendency of criminal case against the delinquent employee. On JUDGMENT the other hand, it is an enabling provision permitting the institution or continuation of disciplinary proceedings, if the employee is not put on trial by the prosecution within one year from the commission of the offence or the prosecution fails to proceed against him for want of any material. Page 23 24 16. As can be culled out from the last sentence of Clause 4, which applies to a case where the criminal case has in fact proceeded, as in this case, for trial. The term “completion of the trial” thereat,

time frame. This clause cannot come to the aid of the delinquent employee - who has been named as an accused in a criminal case and more so is party to prolongation of the trial. 17. Notably, in the present case inspite of a peremptory direction th of the Division Bench given on 28 June 2010 to the concerned criminal Court to proceed with the trial on day-to-day basis, as noted above, no effective progress has been made in that trial (except recording of evidence of three prosecution witnesses out of eighteen witnesses) so far. In the last six years, evidence of only two JUDGMENT additional prosecution witnesses has been recorded. The respondent has not pointed out any material on record to even remotely suggest that she had tried her best to dissuade the criminal Court from adjourning the trial, in breach of direction given by the Division Bench of the High Court to proceed on day-to- th day basis and to conclude the trial within one year from 28 June, Page 24 25 2010. Pendency of criminal trial for around 10 years, by no means, can be said to be a reasonable time frame to withhold the disciplinary proceedings. We are fortified in taking this view on the

envisages that if the Authority which has to start the prosecution refuses (read fails) to do so within one year from the commission of the offence, the departmental action can proceed under the provisions as set out in Clauses 11 and 12 of the Settlement. 18. In the fact situation of the present case, it is possible to take the view that the first part of Clause is attracted. In that, respondent has been put on trial in connection with the alleged th offence, by framing of charges on 12 June 2007. That has happened after one year from the commission of the offence. JUDGMENT 19. Be that as it may, the remedy of writ being an equitable jurisdiction and keeping in mind the larger public interests (atleast in cases of involvement of the employees of the Public Sector Banks in offence of breach of trust and embezzlement), the arrangement predicated in the case of Stanzen (supra) would meet the ends of justice. For, the disciplinary proceedings instituted against the Page 25 26 respondent cannot brook any further delay which is already pending for more than 10 years.

21. Accordingly, we exercise discretion in favour of the respondent of staying the ongoing disciplinary proceedings until the closure of recording of evidence of prosecution witnesses cited in the criminal trial, as directed by the Division Bench of the High Court and do not consider it fit to vacate that arrangement straightway. Instead, in our opinion, interests of justice would be sufficiently served by directing the criminal case pending against the respondent to be decided expeditiously but not later than one year from the date of this order. The Trial Court shall take effective steps to ensure that JUDGMENT the witnesses are served, appear and are examined on day-to-day basis. In case any adjournment becomes inevitable, it should not be for more than a fortnight when necessary. 22. We also direct that the respondent shall extend full cooperation to the Trial Court for an early disposal of the trial, which includes cooperation by the Advocate appointed by her. Page 26 27 23. If the trial is not completed within one year from the date of this order, despite the steps which the Trial Court has been directed to take the disciplinary proceedings against the respondent shall be

the respondent of keeping the disciplinary proceedings in abeyance shall then stand vacated forthwith upon expiring of the period of one year from the date of this order. 24. In the result, we partly allow this appeal to the extent indicated above. The parties are left to bear their own costs. 25. A copy of this order be forwarded to the concerned Sessions Court for information and necessary action for ensuring compliance of the direction. JUDGMENT ………………………….. CJI (T.S.Thakur) ……………………………. J. (A.M.Khanwilkar) New Delhi, th 16 September, 2016 Page 27