Full Judgment Text
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CASE NO.:
Appeal (civil) 2739 of 2007
PETITIONER:
UCO Bank & Anr
RESPONDENT:
Rajinder Lal Capoor
DATE OF JUDGMENT: 18/05/2007
BENCH:
S.B. Sinha & Markandey Katju
JUDGMENT:
J U D G M E N T
CIVIL APPEAL NO. 2739 OF 2007
[Arising out of S.L.P. (C) NO. 668 OF 2007]
S.B. SINHA, J :
1. Leave granted.
2. This appeal is directed against a Judgment and order dated
08.09.2006 passed by a Division Bench of the High Court of
Punjab and Haryana at Chandigarh in Letters Patent Appeal No.
174 of 2006, affirming the Judgment and Order dated 11.07.2006
passed by a learned Single Judge of the said Court in CWP No.
1902 of 2001 whereby the Writ Petition filed by the respondent
herein challenging the correctness or otherwise of the orders
dated 27.09.1999 and 01.12.2000 passed by the Disciplinary
Authority and the Appellate Authority respectively, was allowed in
part by converting the punishment of removal from the service of
the respondent into compulsory retirement with effect from the
date of superannuation i.e. 01.11.1996.
3. The basic fact of the matter is not in dispute.
Appellant No.1 herein is a Nationalised Bank. It framed
several regulations in exercise of its power conferred upon it
under Section 19 (2) of the Banking Companies (Acquisition and
Transfer of Undertakings) Act, 1970, inter alia, UCO Bank Officer
Employees’ Services Regulations, 1979. The Government of
India launched a scheme known as ’Prime Minister Rozgar Yojana’
(PMRY) with an objective to provide sustained employment to 10
lacs educated unemployed Urban Youth, the salient features
whereof, inter alia, are as under :
"a) The scheme would cover whole of the country
from 1994-1995 onwards.
b) The educated unemployed entrepreneurs would
be given a subsidy of 15% subject to a ceiling of
Rs.7500/- each for starting the micro-enterprises.
c) The beneficiary would be required to bring 5% of
the project cost as margin money.
d) An eligible entrepreneur under the scheme could
take a composite loan upto Rs.1 lac from a bank
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without a collateral guarantee project for formal
sponsoring/recommending back to the branches for
sanction."
4. The Reserve Bank of India issued guidelines/directions to
work out the modalities in respect of implementation of the said
scheme to the Scheduled Commercial Banks from time to time.
Pursuant to one of such directions, the Board of Directors of the
Appellant-Bank in terms of a Circular letter dated 31.07.1995
authorized the Branch Managers in Scales I & II to sanction
composite loans upto Rs.1 lac, stating :
" During the last year, some of the
Branch Managers in scale I & II did not
have the necessary sanctioning powers to
sanction and disburse the PMRY
applications sponsored to them. This had
resulted in considerable delay and
Divisional Offices were required to process
these applications and advice sanctions to
those branches which could not dispose of
applications at their level. To obviate this
difficult situation our Board of Directors
have recently vested the Branch Managers
in Scale I & II with necessary sanctioning
powers and the Branch Managers in scale I
& II are now authorized to sanction
compositors loans (both term loan and
working capital finance) upto Rs. 1 lac in
each case in respect of PMRY scheme
sponsored to them. This delegation of
powers has already been advised vide H.O.
Circular No. CHD/SISB/18/95-96 Dt.
16.6.95."
5. Respondent while working in the capacity of the Branch
Manager of his Branch disbursed loan within the capacity to
various persons whose names had been recommended by the
Chairman, Task Force Committee under PMRY Scheme, 1996.
For his alleged acts of omission and commission which included
the purported irregularities committed by him in sanctioning and
disbursing the loans under the PMRY Scheme, a show cause
notice was issued upon him on 24.10.1996. On the eve of his
retirement i.e. on 30.10.1996, another show cause notice was
issued to him purported to be in connection with the irregularities
committed by him in sanctioning and disbursing loans under the
said Scheme, while working as Branch Manager at Kohara Branch
of the appellant-Bank in 1996. Admittedly he was allowed to
superannuate on 1.11.1996. He was however, not paid his retiral
benefits. He made a representation therefor. Inter alia, on the
premise that a sum of Rs. 1 lac could not be recovered from the
two borrowers, the retiral benefits were not disbursed. The
Regional Office of the appellant-bank, however, recommended
grant of terminal benefits in favour of the respondent, by a letter
dated 14.05.1998 addressed to the Zonal Office of the appellant-
bank stating :
"In respect of the irregularities
committed by Sh. Capoor vide our show cause
notice dated 30.10.1996 served on Sh. Capoor
had since been replied and in view of his
request dt. 8.5.97 to keep Rs.50,000/- out of
his terminal benefits as security against the
loan advanced to Sh. Satinder Singh (PMRY
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case) and the letter was sent to you which was
enclosed with our letter No. CDO/P/PER/97-
98/1881 DT. 14.5.97. Accordingly, we have
kept Rs.50,000/- in the shape of FDR for a 4
years 6 months with our Kohara branch. The
present position of the loan account of Sh.
Satinder Singh as of 20.3.98 is balance
outstanding Rs.71,064/- with overdue of Rs.
9414/-. Sh. Satinder Singh had deposited in
the said loan account of Rs.50,000/- as
instalments upto 20.3.1998 and the last
instalment is due in June 2001.
Sh. Capoor has since vacated the leased
accommodation provided to him when he was
posted as Manager at branch office Kohara and
he has returned all the furniture provided at
his residence less 4 regulators of fans and
about Rs.2500/- has been claimed by the
landlord as electricity bill pending against the
said occupation which will be recovered from
his terminal benefits.
In view of the above facts, we
recommend that Sh. Capoor should be allowed
the terminal benefits after retirement and no
RDA be initiated against him."
6. Curiously, despite the said recommendation, a charge-sheet
was issued on or about 13.11.1998. The articles of charges
against him read as under :
"1. Sh. R.L.Capoor had failed to discharge his
duties with utmost integrity, honesty, devotion
& diligence which is violative of Regulation 3(1)
of UCO Bank Officer Employees (Conduct)
Regulations, 1976 as amended.
2. Sh. R.L.Capoor in the exercise of powers
conferred on him, acted otherwise, than in his
best judgment which is violative of Regulation
3(3) of UCO Bank Officer Employees’ (Conduct)
Regulations, 1976, as amended.
3. Sh. R.L. Capoor failed to take all possible
steps to ensure the integrity and devotion to
duty of all persons under his control and
authority which is violative of Regulation 3(4)
of UCO Bank Officer Employees’ (Conduct)
Regulations, 1976, as amended."
7. In the disciplinary proceedings, the Enquiry Officer in his
report dated 13.09.1999 opined that the Charges Nos.1 and 2
had been proved, whereas Charge No. 3 had not been proved.
The summary of the findings of the Enquiry Officer are as under :
Allegation No.1 First Part proved
Second Part not proved
Allegation No.2 2(a) proved
2(b) proved
2(c) Not proved
2(d) Proved
2(e) Proved
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2(f) Not proved
2(g) Not proved
2(h) Not proved
Second part Not proved
Allegation No.3 Not proved
Allegation No.4 Not proved
Charge No.1
The CSOE had failed to Proved as per
discharge his duties with discussions under
utmost integrity, honesty, allegations 1 & 2
devotion and diligence which
is violation of Regulation 3(1)
of UCO Bank Officer Employees’
(Conduct) Regulation, 1976 as
amended.
Charge No.2
The CSOE in exercise of powers Proved as per
conferred on him acted otherwise discussions under
than in his best judgment which is allegations 1 & 2
Violative of Regulation 3(3) of UCO
Bank Officer Employees’ (Conduct)
Regulation, 1976 as amended.
Charge No.3
The CSOE failed to take all Not proved
possible steps to ensure the
integrity and devotion to duty
of all persons under his control
and authority which is violative
of Regulation 3(4) of the UCO
Bank Officer Employees’ (Conduct)
Regulation, 1976 as amended.
8. The Disciplinary Authority by an order dated 27.09.1999,
however, upon purported consideration of the findings of the
Enquiry Officer as also the comments thereupon by the
respondent, imposed upon the respondent, the penalty of
removal from service. The appeal preferred thereagainst was
dismissed by the Appellate Authority by an order dated
01.12.2000. Respondent filed a Writ Petition in the High Court of
Punjab and Haryana, praying for quashing of the charge-sheet
dated 13.11.1998 as also the orders dated 27.09.1999 and
01.12.2000. The learned Single Judge of the said Court, as
indicated hereinbefore, allowed the Writ Petition in part opining
that the respondent was guilty of commission of procedural
irregularities in the matter of sanctioning and disbursing the
amount of loans under the PMRY Scheme. The learned Judge
arrived at a finding that the punishment imposed upon the
respondent was grossly disproportionate, vis-‘-vis, the gravity of
charges framed against him and upon taking into consideration
the fact that the respondent had an unblemished 40 years of
service career. It was, thus, held that imposition of the said
penalty after he attained the age of superannuation would not be
proper. It was, therefore, opined that the penalty of removal
from service should be converted to that of compulsory
retirement.
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9. The Letters Patent Appeal preferred against there has been
dismissed by a Division Bench of the said Court.
10. Appellants are, thus, before us.
11. Mr. Raju Ramachandran, learned Senior Counsel appearing
on behalf of the appellant, would submit :
i) The High Court committed a manifest error in passing
the impugned judgment so far as it interfered with
the quantum of punishment imposed upon the
respondent by the Disciplinary Authority and the
Appellate Authority.
(ii) Interference with the finding of fact arrived at in a
departmental enquiry being impermissible, the High
Court committed a manifest error in passing the
impugned judgment.
(iii) Validity of the charge-sheet having not been
interfered with, the learned Single Judge committed
a serious error in interfering with the quantum of
punishment.
12. Strong reliance, in this behalf, has been placed on
Disciplinary Authority-cum-Regional Manager & Ors. v. Nikunja
Bihari Patnaik, [(1996) 9 SCC 69]; Bank of India & Anr. v. Degala
Suryanarayana, [(1999) 5 SCC 762]; Chairman and Managing
Director, United Commercial Bank & Ors. v. P.C. Kakkar, [(2003)
4 SCC 364], Damoh Panna Sagar Rural Regional Bank and Anr. v.
Munna Lal Jain, [JT 2005 (1) SC 70] and [(2006) 10 SCC 572].
13. Mr. Deepak Sibbal, learned counsel appearing on behalf of
the respondent, on the other hand, contended :
(i) The appellant bank having not suffered any financial loss,
the purported irregularities committed by the respondent were
trivial in nature.
(ii) A target having been fixed to be achieved by the
Appellant-Bank in respect of the PMRY Scheme and emphasis
was laid upon every Branch Manager to achieve the same, it
cannot be said that the respondent exceeded his jurisdiction in
the matter of sanctioning and disbursing the loans.
(iii) Only because the purpose for grant of loan was changed and
recommendation of the Task Force Committee was not strictly
adhered to, cannot by itself be a ground for imposition of such a
harsh punishment, particularly when no ill will or motive on his
part was alleged or established.
14. It is evident from the report of the Enquiry Officer that the
illegalities which are said to have been committed are principally
two being :
1) The proposal of the Task Force for grant of loan for
Rs.50,000/- for the purpose of setting up a cream separator was
altered to dairy and a sum of Rs. 95,000/- was sanctioned
therefor.
2) Two cheques for a sum of Rs.19,5000/- and Rs. 5,000/-
were issued in favour of Shri Paramjit Singh, who is the real
brother of the borrower Satinder Singh.
15. The charges of forgery and interpolation also are said to
have been restricted to the said transactions only.
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16. We agree with the contention of Mr Raju Ramachandran
that ordinarily the High Court should not interfere with the
quantum of punishment imposed by the Disciplinary Authority. It
is also true that the officers of the bank enjoys a part of
confidence in them event a Manager of a Bank is found to have
embezzled or misappropriated any amount, or exceeded the
jurisdiction in the matter of grant of sanction of loans, the Court
takes a strict view of the matter.
17. The High Court, therefore, may not be correct in arriving at
its opinion. However, as would appear from the discussions made
hereinafter, initiation of the departmental proceedings itself, in
our considered opinion, was wholly illegal and without
jurisdiction.
18. The fact that charge-sheet was issued only on 13.11.98 was
not in dispute. It also stands admitted that the respondent
attained the age of superannuation on or before 01.11.1996.
Disciplinary Proceedings admittedly were initiated against the
respondent in terms of Regulation 20 (3) (iii) of UCO Bank Officer
Employees Services Regulations, 1979 which reads as under:
"The officer against whom disciplinary
proceedings have been initiated will cease to
be in service on the date of superannuation but
the disciplinary proceedings will continue as if
he was in service until the proceedings are
concluded and final order is passed in respect
thereof. The concerned officer will not receive
any pay and/or allowance after the date of
superannuation. He will also not be entitled for
the payment of retirement benefits till the
proceedings are competed and final order is
passed thereon except his own contributions to
CPF."
19. A bare perusal of the said provision would clearly show that
by reason thereof a legal fiction has been created. We are not
oblivious of the legal principle that a legal fiction must be given
full effect but it is equally well-settled that the scope and ambit of
a legal fiction should be confined to the object and purport for
which the same has been created.
20. In Dilip S. Dahanukar v. Kotak Mahindra Co. Ltd. and Anr.
[2007 (5) SCALE 452], it was observed :
"46.Legal fiction, it is well-settled, must
be construed having regard to the purport of
the statue. {See Sadashiv Dada Patil vs.
Purushottam Onkar Patil (D) By Lrs. [2006
(10) SCALE 21]; M.P. State Electricity Board
vs. Union of India & Ors. [2006 (9) SCALE
194]; Maruti Udyog Ltd. vs. Ram lal & Ors.
[(2005) 2 SCC 638]; Bharat Petroleum Corpn.
Ltd. vs. P. Kesavan & Anr. [(2004) 9 SCC
772]}"
21. The aforementioned Regulation, however, could be invoked
only when the Disciplinary Proceedings had clearly been initiated
prior to the respondent’s ceases to be in service. The
terminologies used therein are of seminal importance. Only when
a disciplinary proceeding has been initiated against an officer of
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the bank despite his attaining the age of superannuation, can the
disciplinary proceeding be allowed on the basis of the legal fiction
created thereunder, i.e., continue "as if he was in service". Thus,
only when a valid departmental proceeding is initiated by reason
of the legal fiction raised in terms of the said provision, the
delinquent officer would be deemed to be in service although he
has reached his age of superannuation. The departmental
proceeding, it is trite law, is not initiated merely by issuance of a
show cause notice. It is initiated only when a chargesheet is
issued (See Union of India etc. etc. v. K.V. Jankiraman, etc.
etc. reported in AIR 1991 SC 2010). This aspect of the matter
has also been considered by this Court recently in Coal India
Limited & others v. Saroj Kumar Mishra [2007 (5) SCALE
724] wherein it was held that date of application of mind on the
allegations levelled against an officer by the Competent Authority
as a result whereof a chargesheet is issued would be the date on
which the disciplinary proceedings said to have been initiated and
not prior thereto. Pendency of a preliminary enquiry, therefore,
by itself cannot be a ground for invoking Clause 20 of the
Regulations. Albeit in a different fact situation but involving a
similar question of law in Coal India Ltd. (supra) this Court held :
"13. It is not the case of the appellants that
pursuant to or in furtherance of the complaint
received by the vigilance department, the
competent authority had arrived at a
satisfaction as is required in terms of the said
circulars that a chargesheet was likely to be
issued on the basis of a preliminary enquiry
held in that behalf or otherwise.
14. The circular letters issued by the
appellants put restrictions on a valuable right
of an employee. They, therefore, are required
to be construed strictly. So construed there
cannot be any doubt whatsoever that the
conditions precedent contained therein must
be satisfied before any action can be taken in
that regard."
It was further more observed that :
"20. A departmental proceeding is ordinarily
said to be initiated only when a chargesheet is
issued."
(See also Union of India v. Sangram
Keshari Nayak 2007 (6) SCALE 348)
22. Respondent, therefore, having been allowed to
superannuate, only a proceeding, inter alia, for withholding of his
pension under the Pension Regulations could have been initiated
against the respondent. Discipline and Appeal Regulations were,
thus not attracted. Consequently the chargesheet, the enquiry
report and the orders of punishment passed by the Disciplinary
Authority and the Appellate Authority must be held to be illegal
and without jurisdiction.
23. An order of dismissal or removal from service can be
passed only when an employee is in service. If a person is not in
employment, the question of terminating his services ordinarily
would not arise unless there exists a specific rule in that behalf.
As Regulation 20 is not applicable in the case of the respondent,
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we have no other option but to hold that the entire proceeding
initiated against the respondent became vitiated in law.
24. We are not oblivious of the peculiar legal position obtaining
in this case. A gross illegality has been committed by the
appellant in initiating a departmental proceeding against the
respondent but he did not question the same. The learned Single
Judge of the High Court held him guilty of commission of some
irregularities. He did not question the correctness or otherwise of
the said order also.
25. However, the legal effect of the order passed by the learned
Single Judge could be that he became entitled to receive all retiral
benefits. Thus, in our opinion, it is permissible for him to raise
all contentions in support of the order passed by the learned
Single Judge, in terms of the provisions contained in Order 41,
Rule 33 of the Code of Civil Procedure and the principles akin
thereto.
26. Furthermore, the respondent has retired as far back as on
01.11.1996. At this late stage, we are of the opinion that we
should not allow an illegality to be perpetuated which is otherwise
apparent on the face of his record.
27. We, therefore, are of the opinion that although the learned
Single Judge and also the Division Bench of the High Court may
not be correct in passing the impugned judgments, we should in
exercise of discretionary jurisdiction under Article 142 of the
Constitution of India, should allow the Writ Petition of the
respondent to do complete justice to the parties.
28. We direct the appellant to pay all retiral benefits to the
respondent expeditiously.
29. The Appeal is dismissed with aforementioned directions.
However, in the facts and circumstances of the case, there shall
be no order as to costs.