Sandeep Dash vs M/o Finance

(OA No.1050-2017)

(1)

Central Administrative Tribunal
Principal Bench, New Delhi

O.A. No.1050/2017

Reserved on:14.08.2026
Pronounced on:16.10.2026

Hon’ble Mr. R N Singh, Member (J)
Hon’ble Mr. Sanjeeva Kumar, Member (A)

Sandeep Dash
S/o:- Jagannath Dash
Aged about 51 years,
Post Controller of Accounts, Group ‘A’
R/o:-M-12, GF, Kailash Colony
New Delhi-110048. …Applicant

(By Advocate : Mr.Nalin Kohli, Sr.Advocate with
Mr. Ayushman Arora and Ms. Nimisha Menon)

Versus
1. Union of India
Through its Secretary (Expenditure),
Ministry of Finance,
Department of Expenditure,
North Block, New Delhi.

2. Controller General of Accounts,
Ministry of Finance,
Block-E, General Pool Office (GPO) Complex,
Pandit Bhagwan Sahay Vats Vitthi,
Aviation Colony, INA Colony,
New Delhi, Delhi 110023. …Respondents
(By Advocate : Mr.Rajeev Kumar)

O R D E R

Hon’ble Mr. Sanjeeva Kumar, Member (A):

By way of this OA filed under Section 19 of the Administrative
Tribunals Act, 1985, the applicant has sought the following relief(s):-
“(a) Call for the records of the case;

(b) Quash and set aside the impugned penalty order dated
14.03.2016 at Annexure A-1.

(c) Direct the Respondents to give all consequential benefits
including restatement in service, continuity in service,
arrears of salary & allowances and other service benefits
as if the impugned order dated 14.03.2016 was never
passed.

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(d) Cost of Original Application may be awarded in favour of
the Applicants and justice may be done.

(e) Pass any other order or direction (s) which this Hon’ble
Tribunal may deem fit and proper in the circumstances of
the case.”

2. The facts of the case as gleaned from OA are that the applicant,
who belongs to Indian Civil Accounts Service (ICAS-1990 Batch), joined
his service as Assistant Controller of Accounts in the aforesaid cadre on
16.09.1991. Thereafter, he held various positions but the relevant
period concerning the matter is 19.05.2005 to 04.04.2007 when he
served on deputation as Executive Director (Finance) (ED-(F) in BMRCL.
The origin of the controversy can be traced to a proposal recorded by
the then Company Secretary/General Manager (A), [CS/GM-A, also
referred to as CS/GM (F)], Shri R.K.Ravishankar regarding the
deployment of surplus funds amounting to Rs.10 crores as investments
based on a purported discussion. Subsequently, on 19.01.2006, an
investment was made with PNB Asset Management Company Private
Limited. After about 5 months, on 12.06.2006, the CS/GM (A)
submitted a note to MD through ED (F) placing a statement on
investments made including PNB-AMC and also stated that the
investments were within the laid down policy of the Company. The said
noting was for the information of the MD, BMCRL who wrote ‘Seen’. He
also issued certain instructions for the future deployment of funds in the
same noting. But after a lapse of about 4 ½ years from the date of the
applicant’s repatriation from BMRCL on 21.10.2011, a Memorandum of
Charges under Rule 14 of the CCS (CCA) Rules, 1965 was issued to the
applicant, containing 3 Articles of Charge. The charges alleged (i)
unauthorized investment through a broker (Article I), (ii) investment in
equity-based funds in violation of the BPE guidelines (Article II) and (iii)
execution of 36 switch-in/switch-out transactions through Common
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Transaction Forms allegedly causing loss to BMRCL (Article III). The
detailed charges are as follows:
“ Article I
That among other duties, Sh Sandeep Dash, ICAS:1990 was
responsible for ensuring that surplus funds of BMRCL are
invested in compliance to the provisions of the Companies Act,
1956, the Guidelines on investment issued by DPE vide their
Circular dated 25.04.1997 and the decision of the Board of
Directors of BMRCL taken in their 29th meeting held on
29.01.2005, and their decision in their 30th Board meeting held
on 02.08.2005 orders/guidelines/ decision, Sh. Sandeep Dash,
ICAS, 1990 invested with the Principal Pnb Asset Management a
sum of Rs.10 Crore Company Private Limited on 19.01.2006
without the approval of the Managing Director (MD). The said
investment was made through an application signed by him
through broker (Code ARN-3290 relating to M/s. G.R. Financial
Services), though the normal procedure was to invest directly.
Sh. Sandeep Dash did not follow the advice of the then Company
Secretary & General Manager (A) who had signed and given him
an application bearing 'Direct' i.e., for direct investment, which
was replaced by another application by Sh. Sandeep Dash under
his signature for investment through broker. This replacement of
application was done, keeping BMRCL in dark. For this departure
in procedure "direct investment" to "investment through broker",
Sh. Sandeep Dash has neither obtained approval of MD nor
informed the then CS & GM(A) nor kept any record in the form of
noting in file. This amounts to suppression of facts with an
intention to mislead the higher authorities as well as
subordinates. The said investments of Rs. 10 Crore required the
approval of MD as the Board authorized only the MD to decide on
investment and not Sh. Sandeep Dash, ICAS. Inspite of this, Sh.
Sandeep Dash, ICAS, invested the sum of Rs.10 Crore without
approval of MD and thus acted beyond his powers. Sh. Sandeep
Dash by his above mentioned acts exhibited lack of absolute
integrity, behaved in a manner unbecoming of of a Government
Servant thereby contravening Rule 3(1)(i) and 3(1) (iii) of the
CCS(Conduct) Rules, 1964.
Article II
That Sh. Sandeep Dash, ICAS, 1990 while functioning as
Executive Director (Finance) in BMRCL during the period
20.5.2005 to 4.4.2007 made investment in equity based funds in
violation of DPE guidelines and Board's decision. The said
investment of Rs. 10 Crore was in liquid fund. But, Sh. Sandeep
Dash, ICAS submitted, another application dated 19.01.2006
under his signature, for a "New Fund Offer" called "Principal
Infrastructure & Service Industries Fund", which is an equity
based fund into which the amount of Rs.10 Crore was
transferred on 07.02.2006 from another equity fund called
"Principal Focused Advantage Fund". This was done by a
Common Transaction Form signed by Sh. Sandeep Dash, ICAS:
1990 without the approval of the Managing Director who was the
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competent authority to take a decision on investments. This also
is in violation of DPE guidelines dated 25.04.1997 and the
decision of the Board taken in its 29th meeting held on
29.01.2005. Sh. Sandeep Dash by his above mentioned acts
exhibited lack of absolute integrity, behaved in a manner
unbecoming of of a Government Servant thereby contravening
Rule 3(1)(i) and 3(1) (iii) of the CCS(Conduct) Rules, 1964.
Article III
That Sh. Sandeep Dash, ICAS, 1990 while functioning as
Executive Director(Finance) in BMRCL during the period
20.5.2005 to 4.4.2007, has allowed switch-in and switch-out of
the investment in Principal Pnb as many as 36 times through
Common Transaction Forms. The said investment has often been
placed in equity based funds in violation of DPE guidelines dated
25.04.1997 and the decision of the Board taken in its 29th
meeting held on 29.01.2005 Sh. Sandeep Dash, ICAS: 1990, has
done this without disclosing it to higher authorities or informing
the subordinates, without approval of higher authorities, without
keeping records thereof in the concerned file through notings
and copies of signed Common Transaction Forms which were
used for the said switch-in and switch-out. This amounts to
willful suppression of facts, misuse of power and gross
negligence through his unauthorized and negligent actions stated
above, Sh discharging his duties. Sandeep Dash, ICAS, has
caused avoidable loss to the Company. Sh. Sandeep Dash by his
above mentioned unauthorized, negligent acts has exhibited lack
of devotion to duty, behaved in a manner unbecoming of a
Government Servant and caused avoidable loss to the Company.
Thus by his above acts, Sh. Sandeep Dash has failed to maintain
absolute integrity, shown lack of devotion to duty and acted in a
manner unbecoming of the Govt. Servant by exercising powers
which were not delegated to him, suppressing facts willfully to
mislead BMRCL authorities, engaging brokers and indulging in
unauthorized investment transactions involving public money
thereby contravening Rule3(1)(i), 3(1)(ii),3(1)(iii) and 3(2) (i) of
the CCS(Conduct) Rules, 1964.”

3. The applicant denied the aforesaid charges and submitted his
reply to disagreement note on 29.11.2011. The respondents appointed
Enquiry Officer and Presenting Officer on 13.08.2012 to conduct a
disciplinary enquiry. Thereafter, the applicant was issued a
memorandum of disagreement note by the Disciplinary Authority along
with a copy of the enquiry officer report on 30.05.2014. It is stated that
in his report the Inquiry Officer had already exonerated the applicant
from all 3 charges. Thereafter, the applicant gave his written
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submission on 10.07.2014 to the disagreement note of Disciplinary
Authority. The applicant was also issued an Office Memorandum on
28.09.2015 containing the advice of UPSC inviting his response. The
applicant made a representation dated 06.12.2015 requested for
supplying him certain documents mentioned by him in his
representation to enable him to give an effective reply to the advice of
UPSC. The respondents supplied a few of the documents requested by
the applicant on 14.01.2016 and extended the time for filing the
response to the UPSC.
4. The applicant sent further communication dated 25.02.2016
pointing out that other documents, which the applicant demanded, had
not yet been supplied and the same may be supplied and thereafter the
time may be granted to him to represent against the advice of UPSC. To
this representation, the respondents did not respond. The applicant was
issued the order of Disciplinary Authority dated 14.03.2016 whereby the
penalty of dismissal from service was imposed on him. Aggrieved, the
applicant approached this Tribunal.
5. The respondents in their counter reply have stated that the
disciplinary proceeding under Rule 14 of CCS (CCA) Rules, 1965 was
initiated against the applicant, ICAS-1990 for alleged irregularities
committed by him during his tenure as ED (F), BMRCL from 20.05.2005
to 04.04.2007 vide Charged-Memorandum dated 21.10.2011.
6. It is submitted that on denying the chargesby the applicant vide
written statement of defence dated 29.11.2011, a departmental inquiry
was ordered to enquire into the charges framed against him vide Order
dated 13.08.2012. On 31.10.2012 the Inquiry Officer submitted his
Inquiry Report wherein Article-I, Article-II and Article-III are held as
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‘Not Proved’. The Disciplinary Authority, upon consideration of record of
the inquiry and the inquiry report disagreed with the findings recorded
by the Inquiring Authority and held that each Article of charges against
the applicant stood proved. The Disciplinary Authority forwarded a copy
of Inquiry Report along with its tentative reasons for disagreement with
the findings of Inquiry Authority on each Article of Charge to the
applicant for seeking his representation vide Memorandum dated
30.05.2014.
7. It is further submitted that on receipt of detailed representation
10.07.2014, the Disciplinary Authority took a tentative view to impose a
suitable major penalty on the applicant and referred the case with the
tentative reasons for disagreement of the Disciplinary Authority with the
findings of Inquiry Authority on each Article of Charges to UPSC for their
advice. After assessment of the case and consideration of records, the
UPSC vide letter dated 10.09.2015 tendered its advice wherein it was
held that Article-l of the Charge is partly proved, Article-ll of the Charge
is proved and Article-III of the Charge is proved against the applicant.
After taking into account other aspect relevant to the case, the UPSC
found that the charges established against the applicant, constitute
grave misconduct on his part and considered that the end of justice
would be met in the case of the applicant if the penalty of 'dismissal
from service’ shall ordinarily be disqualification for future employment
under Government' is imposed upon the applicant. A copy of advice of
UPSC was supplied to the applicant with the direction to submit
representation, if any, on the advice of UPSC within 15 days vide O.M.
dated 28.09.2015. As requested by the applicant vide letter dated
12.10.2015, time extension of a period of two months from the date of
his representation dated 12.10.2015 was granted by the Disciplinary
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Authority for submitting his representation on the advice of UPSC.
Before expiry of extended period of two months, the applicant again
submitted another application dated 11.12.2015 with the request to
allow him extension of time for three weeks from the date of provision
of the documents under RTI Act from the Department of Expenditure.
The Disciplinary Authority again acceded to his request by allowing him
further extension of time of three weeks from 14.01.2016 i.e. the date
on which the document sought by the applicant under RTI Act, 2005
had been provided, to enable him to make representation on the advice
of UPSC.
8. It is stated that the extended period granted to the applicant
lapsed on 03.02.2016, but no representation was received from him
within the extended period. Accordingly, the Disciplinary Authority
concluded that he has nothing to represent as if he desired so, he could
have represented on the advice of UPSC within the extended time
allowed to him twice. In the disciplinary case against the applicant, the
Disciplinary Authority found that he failed to maintain absolute integrity,
had shown lack of devotion of duty and acted in a manner unbecoming
of a Government servant by exercising power which were not delegated
to him, suppressing facts willfully to mislead BMRCL authorities,
engaging brokers and indulging in unauthorized transaction involving
public money thereby contravening Rule 3(1)(i), 3(1)(ii), 3(1)(iii) and
3(2)(i) of the CCS(Conduct) Rules, 1964 while he was functioning as ED
(F) in Bangalore Metro Rail Corporation Ltd. (BMRCL) during the period
20.05.2005 to 04.04.2007. After considering Inquiry Report, tentative
reasons for disagreement of the Disciplinary Authority with the findings
of Inquiry Authority on each Article of Charges, UPSC's advice and all
the relevant records of the proceedings, the Disciplinary Authority
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imposed a penalty of "dismissal from service” shall ordinarily be
disqualification for future employment under the Government on the
applicant vide Order dated 14.03.2016.
9. We have heard both the parties and also perused the pleadings
on record, including the counter reply, the rejoinder and the written
submissions filed by the parties.
10. On 30.10.2012, following the departmental enquiry, the Inquiry
Officer (IO) submitted a detailed and exhaustive enquiry report wherein
all the three charges (Articles I, II and III) were held as not proved,
thus completely exonerating the applicant. However, on 30.05.2014,
the Disciplinary Authority issued a disagreement note expressing its
tentative disagreement with the IO’s exoneration report which was
shared with the applicant and the applicant on 10.07.2014 submitted a
detailed representation against the disagreement note. Subsequently,
on 10.09.2015, the UPSC tendered its advice recommending the penalty
of dismissal from service. Lastly, on 14.03.2016, the Disciplinary
Authority issued the impugned order imposing penalty of dismissal from
service.
11. The learned counsel for the applicant based on the submissions
made in the pleadings has submitted that the Memorandum of Charge
issued on 21.10.2011 relates to alleged events of January 2006, i.e.
after over 5 ½ years of the events. It has further been submitted that
the Memorandum of Charge was issued nearly 4½ years after the
applicant had been repatriated and there is no explanation whatsoever
for such an inordinate delay which has seriously prejudiced the
applicant in effectively defending himself against the charges. Reliance
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is placed on the judgment of the Hon’ble Supreme Court in P.V.
Mahadevan vs. MD, T.N. Housing Board (2005) 6 SCC 636.
12. It is also contended by the learned counsel that the Disciplinary
Authority rejected the report of the IO in a mechanical manner,
contrary to the law laid down by the Hon’ble Supreme Court in
Maharashtra State Board of Secondary and Higher Secondary
Education vs. K.S. Gandhi and Others (1991) 2 SCC 716 wherein it
has been held that a quasi judicial authority while differing from the
findings of the Inquiry Officer must provide independent and
substantive reasons when overturning findings.
13. It is also argued that CS/GM(A), SW-2who initiated the matter,
submitted the relevant note and released cheques, was cited as a
prosecution witness but refused to appear before the I.O. despite
having been served with three summons. But no departmental action
was initiated against him, which accordingly to the learned counsel,
clearly demonstrates a biased approach on the part of the authorities.
14. Learned counsel also lays emphasis that in reality the
investments in question yielded a net profit to BMRCL. It is further
submitted that the practice of signing blank Common Transaction Forms
was an established operational practice and that keeping in view the
fluctuations in the Net Asset Value (NAV,) the forms were thereafter
completed internally by the CS/GM (A), without any prompting and
without loss of time. It is also argued that dismissal from service for
administrative/technical procedural lapse, in the absence of any
malafide or pecuniary loss, shocks the judicial consciousness.
15. Learned counsel reiterates that alleged misconduct in the
present case pertains to investment of Rs.10 Crores purportedly by the
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applicant in the Principal PNB Asset Management Company on
19.01.2006 and the concerned person of PNB Shri Manjit was
introduced to the applicant by CS/GM (Finance) as a representative of
Principal PNB AMC and not as a broker.
16. It is also emphasized that the Investment Committee which was
responsible for taking decision about miscellaneous aspects of
investment, was not made functional by the Managing Director nor was
there any standing formal instructions or guidelines in this regard.
Further, there was no statutory or administrative bar against any
investments and the applicant was not a member of the Board and was
not involved in various final decisions of the company like the CS/GM
(Finance), who himself was a Board-level officer, even when being
subordinate in position to the applicant and communications were
directly addressed by the MD to the CS/GM (Finance).
17. Our attention is drawn to the note of the CS/GM (Finance) dated
16.01.2006 (Annexure A-3 pages 41-47) before the initial investment
was made, references to a discussion between the applicant and CS/GM
(F) which the CS/GM (F) had treated as an approval given by the
applicant and accordingly investment of Rs.10 crores was made, to
which the MD had given his post-facto approval on 17.06.2006 and also
made certain remarks for future investments.
18. Moreover, no blemish in the investment was pointed out by the
MD or the auditors and even the Account Statement dated 28.01.2006
(Annexure A-15 page 251) received from PNB Asset Management shows
that the investment made was in a liquid fund and was made directly.
19. Further, there is no reason given why the CS/GM (Finance) who
issued the cheque for payment as to why he did not earlier object to the
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investment at that relevant time but rather raised this issue after two
years.
20. Attention is also drawn towards applicant’s unblemished service
record since joining the Indian Civil Accounts Service in 1991. It is
further submitted that his distinguished service in various capacities
including Additional Secretary and ED of OWSSB in the Government of
Orissa, Director (Finance) at the Planning Commission of India and
Deputy CGA in MoF while on deputation.
21. It is also averred that even assuming that a technical lapse in
approvals occurred, there was no malafide intent, pecuniary gain, or
breach of trust involved as the decision was made in a bona fide
manner with a view to maximize profits and not cause any loss to
BMRCL. In view of such submissions, learned counsel for the applicant
concludes that the penalty of dismissal from service is grossly
disproportionate to the nature allegations leveled against the applicant.
In support of such contention, reliance is placed upon the judgment of
the Hon’ble Supreme Court in Prawin Kumar vs. Union of India
(2020) 9 SCC 471 wherein it was held that where the punishment
imposed is so disproportionate to the alleged misconduct as to shock
the conscience of the Court, it warrants judicial intervention on the
ground of proportionality.
22. Per contra , learned counsel for the respondents, reiterating the
assertions made in the counter reply submits that the Managing
Director, MBCRL vide letter dated 24.01.2009 had informed the
competent authority that some financial irregularities were allegedly
committed by the charged officer during his tenure as ED (F) in BMCRL
from 20.05.2005 to 04.04.2007. Following, with the approval of
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disciplinary authority, a charge memorandum was issued to him on
21.10.2011 and an enquiry as per Rule 14 of CCS (CCA) Rules, 1965
was conducted as per due procedure. The Inquiry Officer submitted his
report on 31.10.2012 wherein all the Articles of charge were held as not
proved. But the disciplinary authority upon due consideration of the
matter disagreed with the findings and held that each of the charges
leveled against the applicant stood proved.
23. Learned counsel submits that subsequently the enquiry report
was duly shared along with tentative disagreement note with the
applicant, seeking his representation, if any. On receipt of the
representation of the applicant and following the prescribed procedure,
the disciplinary authority took a tentative view to impose a suitable
major penalty upon the applicant and referred all the documents to the
UPSC for their advice. After receiving their advice, the same was
supplied to the applicant granting time to submit representation, if any
on the advice of the UPSC. On request of the applicant, the disciplinary
authority extended the time to file representation up to 03.02.2016 but
no representation was received within the extended period.
Accordingly, the disciplinary authority found that the applicant failed to
maintain absolute integrity, shown lack of devotion of duty and acted in
a manner unbecoming of a Govt. servant by exercising powers which
were not delegated to him, suppressing facts willfully to mislead BMCRL
authorities, engaging brokers and indulging in unauthorized investment
transactions involving public money thereby contravening Rule3(1)(i),
3(1)(ii),3(1)(iii) and 3(2) (i) of the CCS(Conduct) Rules, 1964,while he
was functioning as ED (F) in BMCRL. Thereafter considering all the
relevant documents including the enquiry report, the disciplinary
authority imposed a penalty of ‘dismissal from service’ which shall
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ordinarily be disqualification for future employment under Government
upon the applicant vide order dated 14.03.2016. It is concluded that the
action of the disciplinary authority in the light of aforesaid facts is as per
law and the applicant has no cause of action against the order dated
14.03.2016.
24. It is reiterated that the charged officer had misled the authorities
by submitting a handwritten note stating that funds deployed were
within the parameter laid down by the BMCRL. Although investment in
equity funds was not allowed, such investments were made under the
CO on his own and without the approval of the MD. There was no need
to sign 36 Common Transaction Forms, if the funds were kept as liquid
funds as claimed for by the CO. Regarding profit or loss under BMCRL,
the learned counsel for the respondents argue that moot point was not
the return on investments but whether he exceeded his powers to make
such decisions in violations of KSBPE and BMRCL Board of Directors’
decisions and guidelines and thus even profit made through such
decision is rather questionable.
25. After hearing both the sides and going through the pleadings,
the main issues that arise for consideration are:
i) Did the Memorandum of charge issued on 21.10.2011
relating to alleged events of January, 2006, i.e. after over
5 years of the event, passes the touchstone of inordinate
delay causing seriously prejudicing the applicant?
ii) Did the non-participation of SW-2, CS/GM (A) who
submitted the relevant note on investment in question,
released cheques and was cited as a prosecution witness
initiated disciplinary proceedings?
iii) Was investment of Rs.10 Crores by the applicant in PNB
AMC on 09.01.2006 in violation of the extant
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guidelines/policy of BMRCL and if there was any deviation,
the responsibility of the applicant therein.
iv) Did the MD approve such investment?
v) Did the tentative disagreement note of the disciplinary
authority was well reasoned taking into account the
existing evidence and the contention raised by the charged
officer in his reply to the tentative disagreement note?
vi) Whether the order of dismissal passed by the disciplinary
authority disproportionate to the alleged act of the
misconduct.
26. So far the question of delayed charge sheet is concerned, we
have gone through the penalty order dated 14.03.2016 which records
the complete sequent of events i.e. initiation of disciplinary authority
under Rule 14 of the CCS (CCA) Rules, 1965, submission of the enquiry
report, disagreement of the disciplinary authority with the findings in
respect of articles of charge, consideration of the applicant’s
representation, reference of the matter to UPSC, receipt and
consideration of UPSC’s advice and final decision to impose penalty of
dismissal from service. It is also relevant to note that it was only in
2008 that alleged misconduct of the applicant came into the notice of
MD and he vide letter dated 24.01.2009 had informed the respondent-
office that some financial irregularities had been accordingly committed
by the charged officer during his tenure as ED (F) in BMCRL from
20.05.2005 to 04.04.2007. Thereafter, with the approval of disciplinary
authority, a charge memorandum was issued to him on 21.10.2011
under Rule 14 of CCS (CCA) Rules, 1965 and subsequent on denial of
the charges by the applicant vide written defence of statement dated
29.11.2011, counter reply dated 07.11.2025, a departmental enquiry
was ordered on 13.08.2012. The Inquiry Officer submitted his report on
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31.10.2012 wherein all the three Article of charges were held as not
proved. Thereafter, the disciplinary authority upon consideration of the
enquiry report and other relevant materials tentatively disagreed with
the findings of the Inquiry Officer and held that each article of the
charge against the applicant stands proved. He forwarded a copy of the
enquiry report with tentative reasons for disagreement note on
30.05.2014. On receipt of the applicant’s detailed representation dated
10.07.2014, took a tentative view to impose a suitable major penalty
against the applicant and referred the case with the tentative reasons
for disagreement of the disciplinary authority along with the findings of
Inquiry Authority on each article of charges to UPSC for their advice.
The UPSC tendered its advice on 10.09.2015 after which a copy of the
advice was given to the applicant with the direction to submit the
representation, if any, within 15 days vide OM dated 28.09.2015. As no
representation was received from the applicant within the extended
period, on request of the applicant, time was extended upto 03.02.2016
but no representation was received from the applicant within the
extended time. Accordingly, the disciplinary authority passed the
impugned order.
27. After going through the aforesaid sequence of events, we find
that the entire process starting from issue of charge memorandum to
the final order consisted of a number of stages, consideration at each
steps, requiring at each stage requiring for careful examination of the
matter. We are aware of the decision of the Hon’ble Supreme Court in
Prem Nath Bali vs. Registrar, High Court of Delhi & Another , AIR
2016 SCC 101and the decision of the Hon’ble Delhi High Court dated
12.03.2019 in WP(C) No.5653/2018 in Union of India and Another
vs. Dr. M.R. Dewan had laid down that ideally, disciplinary proceedings
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should be concluded within a period of 6 to 18 months but to our mind,
delay alone by itself does not automatically leave the proceedings void
unless it is established that such delay has caused prejudice to the
delinquent employee or was attributable to malafide consideration.
While such timeframes have been given to prevent undue
administrative harassment, in the instant case, since the enquiry
involved a detailed examination at various stages, including obtaining
the advice of UPSC and sharing the same with the applicant obtaining
his response, this cannot, itself, constitute the ground for setting aside
the order, provided there was no impropriety with regard to the
procedure and the principle of natural justice was followed.
28. Having considered the first issue, we have clubbed ii, iii and iv
together as they are largely interlinked. So far as the second issue,
namely, non-participation of SW-2 is concerned, it is apparent from the
enquiry officer report that despite 3 chances given to him to give
statement/evidence in the case, he failed to appear before the Inquiry
Officer and as such his oral evidence could not be recorded by the
Inquiry Officer. As he failed to appear before the Inquiry Officer, his
written statement submitted to the Audit Committee of BMCRL dated
22.09.2007 has been taken cognizance of for analyzing and preparing
the report. However, the Inquiry Officer has made it clear that he has
not considered his written statement in arriving at any conclusion.
Moreover, even though the SW-2 did not appear, other witnesses,
including Shri V.Madhu, former Managing Director of BMCRL (SW-1)
appeared before the Inquiry Officer and gave oral evidence. In our
considered view, absence of one witness has not made the enquiry
vitiated. More so when his statement made to the Audit Committee by
him has not been relied upon by the IO in drawing his findings.
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29. Coming to the third issue related to investment with PNB AMC,
the relevant records indicate that in respect of such investment Rs.8
Crores was redeemed from SBI Mutual Fund without recording any
reasons for taking the decision and without seeking approval of the MD.
In fact, the CO had put up a factually incorrect handwritten note,
stating that the funds deployed within the laid down parameters of
BMCRL. Investments in equity funds were not allowed but such
investments were made under the CO’s signature without prior approval
of the MD. Moreover, it is not understood as to why 36 Common
Transaction Forms (CTFs), if the funds were kept as liquid funds, as
claimed by the CO, were signed. Though the charged officer has denied
inquiry of 31 CTFs, he has admitted to have signed the blank application
forms.
30. We have perused the relevant note wherein an amount of Rs.10
Crores was shown in the investment portfolio accounts of PNB, AMC. It
was put up to the MD for his kind information on 12.06.2006. The
nature of investment of Rs.10 Crores with PNB-AMC has not been
explicitly explained though there is mention of investment in liquidity
fund (UTI SBI and Mutual Fund). The note also mentioned switch over
to weekly dividend to save taxes. Since such investment with PNB, AMC
was made for the first time we find it surprising that an explicit
explanation of such investment is not made. We have also perused the
Audit Committee observation (Annexure VII) which states that in its
meeting held on 02.08.2005, the Board authorized the Managing
Director to take decisions on investments in the best interest of the
Company and not to resort to investments in mutual funds as they are
risky and speculative in nature. Though it did not seem to have been
supplemented by any further instructions in writing issued by the
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Managing Director, the existence of such board procedures laying down
modalities for investment is not in doubt. Therefore, at the beginning of
January 2006 when the Company’s funds were first invested in PNB-
AMC, the Company’s administration was required to follow the
parameters of investment laid down by the Board in its meeting held on
29.01.2005.
31. We have also perused the noting dated 16.01.2006 initiated by
CS/GM (A) referring to a discussion with ED (F) on 12.01.2006 leading
to placement of Rs.10 Crores with PNB-AMC. The applicant’s contention
is that the aforesaid noting dated 16.01.2006 initiated by the CS/GM
(A) there was nothing to indicate that the applicant had approved the
investment and told that there was no need to take individual approval.
More so, CS/GM (A) specifically knew that the approval could be
granted only by the MD since he used to take MD’s approval on earlier
investment before the applicant joined as ED (Finance). The applicant
has also contended that he had not given any formal approval to the
impugned investment and it was the responsibility of CS/GM (A) for
objecting to said investment, if it not consonance with the company’s
policy.
32. However, the matter before us pertains to the role of the
applicant and not that of the CS/GM (A). If such an investment was
made under the signature of the applicant, he cannot take shelter
under lack of knowledge about the extent investment guidelines of the
Company. If the investment was based on a discussion, which was not
approved by the applicant, as claimed by him, the charged officer
could have sought necessary clarification from the CS/GM (A) about
the propriety of the said investment and asked if the same was within
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the laid down policy of the Board as well as that of the Karnataka
State Bureau of Public Enterprises, more so when he was present in
the Board meeting on 02.08.2005. However, there is nothing on
record to indicate if any such clarification was ever sought and in fact
investment was made on 15.01.2006, based on the discussion
between CS/GM (F) and the applicant. Even when a note was initiated
on 12.06.2006 and CS/GM (A) certified that the impugned investments
were within the laid down policy of the Board, the applicant never
questioned the same. The applicant being a senior supervisory officer
cannot be absolved from violating the extant investment guidelines.
33. We have also perused the handwritten note of the applicant; the
noting initiating by the CS/GM(A) on 12.06.2006 which was put up to
MD. It reads as follows:
“Bangalore Metro Rail Corporation Ltd.
BMRCL Page No. 9
Sub.: Deployment of Funds
Notes
Funds are placed with Nationalized Banks only after ascertaining
comparative rates to get the best return. Net of two, the arrange
return is 4.5% p.a. No. investment is made per se, as the
average tenure of deposits, etc. is very short, in, only 46-91
days which being less than a year, don't qualify as investments,
under accounting standards. However, due care is given to the
para meters of safety, liquidity and high returns. Disclosures are
being made in the accounts to ensure transparency, apart from
periodic placement of funds status before the Board. For kind
information.
Sd/- 12.6.06.”

34. On the note put up for kind information of the MD, the MD noted
the following:
“1. Seen
2. Pl take quotes and compare into market before investing
3. Pl do not investment more than Rs. 5 Crores with any funds.
Sd/-
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17.6.06”

35. On 17.06.2006, the file was directly marked to GM (Finance) by
MD. The noting gives the impression that the Company has been
investing its surplus funds in Fixed Deposits, Mutual Funds and ICD.
There is no explanation as to which category the fund invested with
PNB-AMC fall and whether it was in conformity with the investment
policy of BMCRL. It is also not clear when the Board of Directors in its
th
29 Meeting held on 29.01.2005 clearly laid down that the MD is
authorized to decide upon various mutual funds and bank’s depending
on the yield in consultation with the Investment Committee, (which was
th
formed by the Board on 10.04.2001) and further in its 30 Meeting
held on 02.08.2005, the Board authorized the Managing Director to take
decisions on investments in the best interests of the Company where it
was also decided that the Company should not resort to investments in
Mutual Funds as they are risky and speculative in nature, which was
also attended by the charged officer. Though the said decisions of the
Board were apparently not communicated or supplemented by any
further instructions in writing issued by the Managing Director, the
charged officer was required to follow the parameters laid down by the
Board, even if the CS/GM(A) did not advise the ED(F) about such
investment in individual funds, the charged officer cannot escape
responsibility as being a supervisory officer, he was aware of the
aforesaid decisions of the Board. Further, the charged officer failed to
bring such investment to the notice of the Managing Director
immediately. The MD came to know of the investment only through the
noting initiated by the CS/GM (A) on 12.06.2006, a note which was put
up only for information of MD. Also, prior to this a discussion between
the CS/GM(A) and ED(F) about the proposed investment of Rs.10
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Crores, which the ED(F) claimed he had not approved, apparently took
place on 16.01.2006, based on which an amount of Rs.10 Crores was
finally invested with PNB-AMC on 19.01.2006 by redeeming Rs.8 Crores
from SBI Mutual Fund. The cheques of the said investment were
accordingly drawn and jointly signed by ED(F) and CS/GM(A). At that
time also, no objections were raised by the charged officer about the
propriety of such investments. Therefore, the contention of the
applicant that it was merely a discussion between him and CS/GM (A),
and such investment was never approved by him does not hold water.
The ED (F) was heading the Finance Department and was responsible
for ensuring that the financial reserves of BMCRL were safeguarded and
its funds are deployed securely and effectively. It has been submitted
that it came to notice of the MD only in May 2007 that investments
were also made in equity fund. Neither internal auditor nor statutory
auditor pointed about the report of investment of the body during 2005-
06 and 2007. However, the charged officer has admitted that his
subordinates used to bring application form or common transaction
form (CTF) for his signature and thereafter they would hand over the
same along with the cheques to the PNB-AMC and they might have got
signed these forms from him. The charged officer also submitted that
he had no idea that the CTFs signed by him with seal would be handed
over to the Asset Management Company without signature of CS/GM
(A) though cheques were jointly signed by ED(F) and CS/GM(A). He has
admitted that the columns relating to the name of the scheme and
broker’s names etc. were left blank when he signed these forms, which
he did in good faith, presuming that the CS/GM(A), had signed the
forms as per the extant instructions. However, such acts based on
mere presumption even if done in good faith were fraught with
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disastrous financial consequences and it does not absolve the CO, a
very high ranking officials, in-charge for prudent fund management of
his responsibility.
36. Having considered the issues at (i) to (iv) we move on to the
tentative disagreement note of DA. As evident from the pleadings, the
disciplinary authority did not agree with the inquiry officer’s findings
disapproving of all the three charges leveled against the applicant. The
matter for consideration before us the crucial facts in this regard would
be whether the disciplinary authority failed to record cogent reasons for
disagreement and afforded the charged officer an opportunity of hearing
and whether he gave independent and substantive reasons leading to
disagreement with regard to all the three charges. Even if the reasons
for disagreement were elaborate, it is necessary to examine whether
they specifically indicated as to how the findings recorded by the inquiry
officer in respect of each individual charge were incorrect.
37. The Sub-rule (2) of Rule 15 of CCS (CCA) Rules, 1965 casts a
on mandatory duty on the disciplinary authority to consider the
representation, if any, submitted by the Government servant and
records its findings thereon before proceeding further and non-
compliance with the aforesaid mandatory requirement vitiates the entire
decision making process.
38. The Hon’ble Supreme Court, in Deputy General Manager
(Appellate Authority) & Ors. v . Ajai Kumar Srivastava , (2021) 2
SCC 612, held that where the inquiry officer is not the disciplinary
authority and the latter disagrees with the findings recorded by the
Inquiry Officer, the disciplinary authority is required to record reasons
for such disagreement and, after affording an opportunity of hearing to
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the delinquent employee, may record its own findings if the evidence
available on record is sufficient for such exercise or else, to remit the
case to the Inquiry Officer for further inquiry. This takes us to a close
reading of the tentative disagreement note with regard to all three
charges to see whether it contains clear, objective and cogent reasons
for disagreement with the findings recorded by the inquiry officer.
39. The first article of charge and the disagreement note with regard
to same read as follows:
“ Article I
. That among other duties, Sh Sandeep Dash, ICAS:1990 was
responsible for ensuring that surplus funds of BMRCL are
invested in compliance to the provisions of the Companies Act,
1956, the Guidelines on investment issued by DPE vide their
Circular dated 25.04.1997 and the decision of the Board of
Directors of BMRCL taken in their 29th meeting held on
29.01.2005, and their decision in their 30th Board meeting held
on 02.08.2005 orders/guidelines/ decision, Sh. Sandeep Dash,
ICAS, 1990 invested with the Principal Pnb Asset Management a
sum of Rs.10 Crore Company Private Limited on 19.01.2006
without the approval of the Managing Director (MD). The said
investment was made through an application signed by him
through broker (Code ARN-3290 relating to M/s. G.R. Financial
Services), though the normal procedure was to invest directly.
Sh. Sandeep Dash did not follow the advice of the then Company
Secretary & General Manager (A) who had signed and given him
an application bearing 'Direct' i.e., for direct investment, which
was replaced by another application by Sh. Sandeep Dash under
his signature for investment through broker. This replacement of
application was done, keeping BMRCL in dark. For this departure
in procedure "direct investment" to "investment through broker",
Sh. Sandeep Dash has neither obtained approval of MD nor
informed the then CS & GM(A) nor kept any record in the form of
noting in file. This amounts to suppression of facts with an
intention to mislead the higher authorities as well as
subordinates. The said investments of Rs. 10 Crore required the
approval of MD as the Board authorized only the MD to decide on
investment and not Sh. Sandeep Dash, ICAS. Inspite of this, Sh.
Sandeep Dash, ICAS, invested the sum of Rs.10 Crore without
approval of MD and thus acted beyond his powers. Sh. Sandeep
Dash by his above mentioned acts exhibited lack of absolute
integrity, behaved in a manner unbecoming of of a Government
Servant thereby contravening Rule 3(1)(i) and 3(1) (iii) of the
CCS(Conduct) Rules, 1964.

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Tentative disagreement by the DA
The IO in his report on page 5 & 6 has recorded the details of
the DPE circular dated 25/4/1997 and Board of Directors
decisions taken on 29/1/2005 and 2/8/2005 which indicate the
procedures for investing BMRCL funds. The IO in his report on
page 55 & 56 has also recorded the duties and responsibilities
issued vide Office Order No. BMRCL/Job allocation/2006 dated
25/8/2006 that were assigned to the CO. As per the Office Order
dated 25.8.2006, the CO was responsible for Fund Management
(receipts, payment, cash and bank transactions, cash and fund
flow etc.). The documentary evidence i.e. the CO's hand written
note dated 12/6/2006(Sl. No.11 of Annexure III of the Charge
Sheet) marked to Managing Director indicates that the CO has
recorded that the funds have been deployed within the
parameter laid down by BMRCL Board in its 29th meeting held
on 29.1.2005. However, the documentary evidence i.e. the
application dated 19/1/2006 (Sl. No. 9 of Annexure III of the
Charge Sheet) for investment of a sum of Rs.10 Crore with the
Principal Pnb Asset Management Company Private Limited
indicates that such investment was made under CO's signature
and in contravention with the laid down procedures i.e. such
investment was not made with the approval of MD and was not
as per DPE guidelines and the Board's decision. The
documentary evidence i.e.the application dated 19/1/2006
signed by the CO further indicates that such investment was
made through broker (Code ARN-3290 relating to M/s. G.R.
Financial Services), though the normal procedure was to invest
directly. These available documentary evidences placed on
record during the inquiry indicate that the CO acted beyond his
powers and these acts also exhibited lack of absolute integrity
and behaved in a manner unbecoming of a Government Servant
and thereby contravening Rule 3(1)(i) and 3(1)(iii) of the CCS
(Conduct) Rules, 1964.
Though the IO has concluded that the charge is not proved, the
IO has not recorded any acceptable reasons for ignoring the
available documentary) evidence. While the IO has ascribed the
wrongdoing to collective lapses including the CO, the above
documentary evidence points to direct involvement of the CO".

40. The main issue herein was regarding the investment of BMRCL
surplus funds of Rs.10 Crores with the PNB-AMC. The DA was of the
view that the funds were invested without prior approval of Managing
Director violating the Department of Public Enterprises guidelines and
the decision of the Board on the previous year. Moreover, the funds
were deployed through broker and the charged officer failed to maintain
absolute integrity and behaved in a manner unbecoming of a
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Government Servant and thereby contravening Rule 3(1)(i) and 3(1)(iii)
of the CCS (Conduct) Rules, 1964. The disciplinary authority was also
of the view that the investment was made through a broker based on
Application No.14155511.But the DA overlooked the Account Statement
dated 28.01.2006 issued by the Principal Pnb Asset Management AMC
which categorized investment of Rs.10 Crores as direct investment.
Further, the SW-3 in his submission stated that blanks forms were
readily available at the Branch and that the cheques were directly
handed over to the PNB-AMC representative.
41. The serious charge against the charged officer was that the
investment dated 19.01.2006 with PNB-AMC was without the approval
of the Managing Director and from the records it is clear that even file
note submitted on 12.06.2006 which was initiated by CS/GM (A),
BMRCL and routed through ED (Finance) was for MD’s information.
Subsequently, the MD reviewed the note and provided further
instructions regarding mode of fund deployment. It is relevant here to
mention that the stand taken by the IO was that the BMCRL was a
fledgling organization with a Non-functional Investment and Audit
Committee, a bare minimum of 3 members dealing with the financial
matters and more importantly no written guidelines or instructions from
the Board/MD. However, such preposition overlooks proceedings of the
Board meeting dated 25.01.2005 referred to earlier.
42. So far as the Charge-II and disagreement are concerned, they
are summed up as below:
Article II
That Sh. Sandeep Dash, ICAS, 1990 while functioning as Executive
Director (Finance) in BMRCL during the period 20.5.2005 to
4.4.2007 made investment in equity based funds in violation of
DPE guidelines and Board's decision. The said investment of Rs. 10
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Crore was in liquid fund. But, Sh. Sandeep Dash, ICAS submitted,
another application dated 19.01.2006 under his signature, for a
"New Fund Offer" called "Principal Infrastructure & Service
Industries Fund", which is an equity based fund into which the
amount of Rs.10 Crore was transferred on 07.02.2006 from
another equity fund called "Principal Focused Advantage Fund".
This was done by a Common Transaction Form signed by Sh.
Sandeep Dash, ICAS: 1990 without the approval of the Managing
Director who was the competent authority to take a decision on
investments. This also is in violation of DPE guidelines dated
25.04.1997 and the decision of the Board taken in its 29th meeting
held on 29.01.2005. Sh. Sandeep Dash by his above mentioned
acts exhibited lack of absolute integrity, behaved in a manner
unbecoming of of a Government Servant thereby contravening Rule
3(1)(i) and 3(1) (iii) of the CCS(Conduct) Rules, 1964.
Tentative disagreement by the DA
The IO in his report on page 5 has recorded the details of DPE
circular dated 25/4/1997 which prohibit any investment in equity
based funds. The IO has also recorded in his report on page 6
about the decision of the Board of Directors in its meeting on
29/11/2005 and on 2/8/2005 which authorized only the Managing
Director to take investment decisions. The IO has also recorded on
page 55 & 56 about duties and responsibilities assigned to the CO
vide Office Order No. BMRCL/Job allocation/2006 dated 25/8/2006
which indicates that the CO was responsible for Fund Management
(receipts, payment, cash and bank transactions, cash and fund flow
etc.). The documentary evidence i.e. the application dated
19/11/2006 (SL No. 9 of Annexure III of the Charge Sheet)
indicates that the investment was made under CO's signature
under Principal Cash Management Fund and in contravention of the
laid down procedures i.e. such investment was not made with the
approval of MD. The documentary evidence placed on record i.e.
Common Transaction Form dated 6.2.2006 signed by the CO also
indicates that all amounts from Principal Cash management
Scheme was transferred to Principal Focus Advantage Fund
Scheme (an equity based fund) and such transfer of funds from
Principal Cash Management Scheme to Principal Focus Advantage
Fund Scheme has also been substantiated from the Accounts
Statement dated 2nd April, 2008 issued by Principal Pnb Asset
Management Company Private Limited. However, such transaction
made by the CO was in contravention of the laid down procedures
i.e. such investment were not made with the approval of MD and
such investment were also made in equity based fund. The IO in its
report on page 61 has noted that it is possible that the CO signed
the blank application form without any mala fide intention and in
the interest of the organisation. The IO has, however, not referred
to any documents/proof in support of this possibility. Therefore,
the IO's conclusion that the charges are not proved cannot be
established merely on the basis of such possibilities when the
available cogent documentary evidence on record indicates that the
CO had acted in violation of laid down procedures. These available
documentary evidence placed on record during the inquiry indicate
that the CO exhibited lack of absolute integrity and behaved in a
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manner unbecoming of a Government Servant and thereby
contravening Rule 3(1)(i) and 3(1)(iii) of the CCS (Conduct) Rules,
1964. Though the IO has concluded that the charge is not proved,
the IO has not recorded any acceptable reasons for ignoring the
available documentary evidence. While the IO has ascribed the
wrongdoing to collective lapses including the CO, the above
documentary evidence points to direct involvement of the CO.

43. The charge relates to investment in equity-based funds allegedly
made in contravention of the Board Resolution and the Department of
Public Enterprises (DPE) guidelines dated 25.04.1997, without obtaining
the approval of the Managing Director. In his defence, the CO attributed
the alleged irregularities to systemic deficiencies and collective lapses
within the organisation, rather than to any individual misconduct on his
part. However, the Disciplinary Authority (DA) asserted that the
documentary evidence available on record, particularly the application
dated 19.01.2006 and the Common Transaction Form dated
06.02.2006, established the CO's personal involvement in the alleged
misconduct. As per the issue of approval is concerned, it has been
addressed while dealing with the disagreement note against Charge-I.
We are of the considered view that though the noting made by the
Managing Director on 17.06.2006 indicates ratification of the action
taken by the Charged Officer but the note dated 12.06.2006 itself was
misleading in as much as it stated that the investment was in line with
Company’s policy. Further, the Inquiry Officer and the Audit Committee
noted that the Managing Director had not laid down any written
operating procedure prescribing the obligations or protocol to be
th th
followed by the subordinates but the 29 and 30 Board meeting made
the investment modalities clear of which CO was aware. The Disciplinary
Authority also placed reliance upon the Application Form, the Common
Transaction Form, and the Asset Management Company Account
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Statement dated 02.04.2008, and concluded that the funds were
deliberately routed into an equity-based scheme.
44. The Disciplinary Authority rejected the Inquiry Officer's finding of
a collective lapse and asserted that the CO's signing of the relevant
forms connected him with the alleged misconduct. However, the
deposition of SW-I (MD) indicates that, owing to the skeletal strength of
only three officers in the Finance Department, the day-to-day affairs
were being conducted on the basis of mutual trust and without any
clearly defined Standard Operating Procedures (SOPs).
45. Signing blank forms to facilitate liquidity/investment transactions
was undoubtedly an irregular practice.
Article III
That Sh. Sandeep Dash, ICAS, 1990 while functioning as
Executive Director(Finance) in BMRCL during the period 20.5.2005
to 4.4.2007, has allowed switch-in and switch-out of the
investment in Principal Pnb as many as 36 times through Common
Transaction Forms. The said investment has often been placed in
equity based funds in violation of DPE guidelines dated
25.04.1997 and the decision of the Board taken in its 29th
meeting held on 29.01.2005 Sh. Sandeep Dash, ICAS: 1990, has
done this without disclosing it to higher authorities or informing
the subordinates, without approval of higher authorities, without
keeping records thereof in the concerned file through notings and
copies of signed Common Transaction Forms which were used for
the said switch-in and switch-out. This amounts to willful
suppression of facts, misuse of power and gross negligence
Through his unauthorized and negligent actions stated above, Sh
discharging his duties. Sandeep Dash, ICAS, has caused avoidable
loss to the Company. Sh. Sandeep Dash by his above mentioned
unauthorized, negligent acts has exhibited lack of devotion to
duty, behaved in a manner unbecoming of a Government Servant
and caused avoidable loss to the Company.
Thus by his above acts, Sh. Sandeep Dash has failed to maintain
absolute integrity, shown lack of devotion to duty and acted in a
manner unbecoming of the Govt. Servant by exercising powers
which were not delegated to him, suppressing facts willfully to
mislead BMRCL authorities, engaging brokers and indulging in
unauthorized investment transactions involving public money
thereby contravening Rule3(1)(i), 3(1)(ii),3(1)(iii) and 3(2) (i) of
the CCS(Conduct) Rules, 1964.”
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Tentative disagreement by the DA
The IO in his report on page 5 has recorded the details of DPE
circular dated 25/4/1997 which prohibit any investment in equity
based funds. The IO has also recorded in his report on page 6
about the decisions of the Board of Directors in its meeting on
29/1/2005 and on 2/8/2005 which authorized only the Managing
Director to take investment decisions. The documentary evidence
i.e. all 36 Common Transaction Forms (CTF) (Sl. No. 10 of
Annexure III of the Charge Sheet), by which switch in and switch
out were made, indicate that all 36 CTFs were under the CO's
signature and such acts were in contravention of the laid down
procedures i.e. such investment were not made with the approval
of MD and was not as perDPE guidelines. The CO has admitted
signing the Common Transaction Forms as recorded on page 13 of
Audit Committee Report(Sl. No. 13 of Annexure III of the Charge
Sheet). Further, the 10 in his report on page 61 has noted that it is
possible that the CO signed the blank Common Transaction Forms
without any mala fide intention and in the interest of the
organisation. The IO has, however, not reflected to any
documents/proof in support of this possibility. Therefore, the IO's
conclusion that the charges are not proved cannot be established
merely on the basis of such possibilities when the available
documentary evidence indicates that the CO had acted in violation
of laid down procedures. The 10 while making his conclusion
against Articles of Charge-III, has recorded that "If, any action
results in loss that should not be a cause for taking penal action
against the concerned or the responsible member of the
Management". This indicates that IO has not made any distinction
between legitimate and illegitimate action in this case as the
documentary evidence i.e. the CO's signature on all 36 Common
Transaction Forms indicate that the CO had acted on his own and
such acts were in violation of laid down procedures.
The CO has recorded that the Common Transaction Forms were
always handed over by CS&GM(A) to the Principal Pnb AMC and it
was, therefore, duty of CS&GM(A) to ensure its correctness.
However, as per the duties and responsibilities issued vide Office
Order No. BMRCL/Job allocation/2006 dated 25/8/2006 the CO was
responsible for Fund Management (receipts, payment, cash and
bank transactions, cash and fund flow etc.) and therefore, cannot
evade his responsibility for any mismanagement of any MBRCL
funds. Further, IO's recording that "in this case no officer or staff
has been charged for any other offence. Therefore, it is
inappropriate to charge the CO under Rule 3(2) (i) of CCS
(Conduct) Rules" is devoid of any merit as the CO has failed to
produce any documents to indicate that any possible steps were
taken by him to ensure the integrity and devotion to duty of such
officer under his control and authority, as required under Rule
3(2)(i) of the CCS (Conduct) Rules, 1964.
The available documentary evidence placed on record indicates
that the CO has failed to maintain absolute integrity and shown
lack of devotion to duty and acted in a manner unbecoming of a
Government Servant by exercising powers which were not
delegated to him, engaging brokers and indulging in unauthorised
investment transactions involving public money and thereby
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contravening Rule 3(1)(i), 3(1) (ii), 3(1)(iii) and 3 (2) (i) of the
CCS (Conduct) Rules, 1964.

46. The Disciplinary Authority was of the view that the CO, by
signing the 36 Common Transaction Forms, exercised authority in
relation to transactions which facilitated the switch-in and switch-out of
investments, allegedly in violation of the extant guidelines of the
Department of Public Enterprises. The Disciplinary Authority further
observed that, under the decision of the BMRCL Board, the authority to
take decisions relating to such investments was vested exclusively in
the Managing Director. The Disciplinary Authority observed that the
presence of the CO's signatures on the relevant documents established
his deliberate involvement in the alleged misconduct and, according to
the Disciplinary Authority, constituted a violation of the standards of
absolute integrity and devotion to duty prescribed under Rules 3(1)(i),
3(1)(ii), 3(1)(iii) and 3(2)(i) of the CCS (Conduct) Rules, 1964. The
Inquiry Officer exonerated the CO, observing that BMRCL suffered from
an utter lack of proper systems and procedures, weak internal control
mechanisms, and a non-functional Audit and Investment Committee.
The Inquiry Officer accordingly concluded that there was insufficient
evidence on record to establish any mala fide intention on the part of
the CO. The CO contended that the disciplinary authority’s
disagreement note was based on conjectures executive inferences. The
CO highlighted the systemic deficiencies prevalent in the organization,
the established practice adopted for ensuring liquidity, and the role
played by subordinate officers, particularly the CS/GM (Finance) and the
Accounts Section. While the Disciplinary Authority correctly pointed out
that the Inquiry Officer's finding that the CO had signed the blank forms
without any mala fide intent was unsupported by adequate proof, the
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Disciplinary Authority, in arriving at its conclusion, relied upon the
documentary evidence, including the DPE Circular dated 25.04.1997
prescribing restrictions on equity investments, the BMRCL Board
Resolutions dated 29.01.2005 and 02.08.2005 vesting exclusive
authority in the Managing Director, and the Office Order relating to
allocation of duties issued in 2006, which designated the CO as
responsible for funds management. At the cost of repetition, we find
that, although considerable emphasis has been placed by the
Disciplinary Authority on the CO's having signed 36 Common
Transaction Forms (CTFs), only photocopies of the said forms were
produced during the inquiry.
47. It is not denied that the Charter of Duties of the applicant was
issued only on 25.08.2006, but irrespective of the post of Executive
Director inherently was responsible, including those relating to the
investment of BMCRL. CS/GM (A) was only the assistant to the
Executive Director in financial matters and was not the decision making
authority.
48. On 17.06.2006, the noting was initiated by CS/GM (A) for MD’s
information through ED(F). The noting gives the impression that the
Company has been investing its surplus funds in Fixed Deposits and
Mutual Funds and ICD. There is no explanation as to which category the
fund investments with PNB-AMC fall and whether it was inconformity
with the investment policy of BMCRL.
49. The noting placed on record also indicates that the CS/GM had
initiated the matter which reproduced as follows:
“GM (Finance) discussed with the ED(F) herein to place Rs.10
Crores with the Principal Asset Management-PNB. Rs.8 Crores
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may be redeemed from SBI on 16.01.2026 and placed on
17.01.2026….”

50. There is also no denying that though the existing Investment
Committee was formed way back in 2001, no regular meetings were
held. Similarly, the Audit Committee was also not functioning.
However, the investments were made circulating the files among the
members of the Committee. The enquiry officer has also noted that the
action of the charged officer should not be seen in violation but in the
overall context of weak internal control system, non-functional Audit
and Investment Committee and collective unprofessional roles at the
level of Company Secretary/Managing Director, Executive Director
(Finance) and the Board of Directors.
51. The moot question is that even if the Company suffered from
inadequate internal control, can anyone justify the conduct of ED
(Finance) in signing a large number of blank financial documents which
were open to misuse. It is also evident that he was present in the
meeting held on 02.08.2005 when the decision by the Board not to
invest in Mutual Fund was taken and the Board also authorized MD to
take decision on investment in the best interest of the Company. By no
stretch of imagination, signing of such blank forms can be justified by
the officer. Whether he signed many such forms or few, is just an
exercise in statistics. Even a single such blank form signed by an officer
responsible for fund management, exposed the Company to huge
financial risk and it cannot be blamed on absence of internal financial
control, diluting the role of the CO.
52. In the tentative disagreement by the DA, he has taken into
account all the above factors, including misleading the MD by stating
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that the funds deployed were within the parameters laid down by
BMCRL Board in its meeting held on 21.01.2005. The disciplinary
authority in his tentative disagreement note has also taken into account
signing of such application forms which ultimately lead to switch-in and
switch-out such funds including switching over to equities. The CO
incidentally had admitted signing of blank form though he has claimed
that it was done in good faith and in the interest of the organization
which the IO also tends to agree. However, in the face of subsequent
switch-in and switch-out which went uninterrupted, one is compelled to
question the credentials of the charged officer rather than accepting the
IO views that it was done in good faith.
53. It is also not in doubt that disagreement note of the DA was
tentative and not conclusive and DA has exercised his mind indicating
as to why he did not agree with the findings which were not proved,
concluding that the charges are fully established. An opportunity was
also given to concerned officer to submit his response to the
disagreement note. It is pertinent that, while discussing each and every
article seriatim, the disciplinary authority concluded that the IO’s
findings have not been acceptable and the charges have been viewed as
proved. However, the disciplinary authority had not formed a conclusion
on the guilt of the charged officer with regard to the charges framed
against him. The disciplinary authority had not formed a final opinion
with regard to the petitioner’s guilt while issuing the disagreement note
and the final opinion was formed after considering the representation of
the petitioner and after dealing with his submission. Therefore, we see
no reason to question the duly considered tentative disagreement note
of the disciplinary authority.
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54. Judicial review of disciplinary proceedings lies against the
decision making process and not against the decision itself. The court
cannot act as an appellate forum and, thus, cannot re-appreciate the
evidence. The scope of judicial review is limited to correct errors of law
or procedure. Therefore, the court can interfere, if the action/decision
is found to be perverse where no reasonable body or person properly
involved could have come to such conclusion where the order is based
on irrelevant or extraneous matters or considerations, or where relevant
material has not been considered. Therefore, a statutory functionary is
obliged to apply its mind to proximate matters only, while eschewing
irrelevant and remote considerations.
55. The purpose of judicial review is to ensure that the delinquent
employee receives fair treatment, and not to ensure that the conclusion
reached by the authority is necessarily correct.
56. A three-Judge Bench in State of Haryana & Anr. v. Rattan
Singh was dealing with the issue of non-examination of passengers
when the allegation against the conductor was non- issuance of the
tickets. This Court held that in a domestic enquiry, strict and
sophisticated rules of evidence under the Indian Evidence Act may not
apply and that all materials which are logically probative for a prudent
mind are permissible. The Court held as under:
“4. It is well settled that in a domestic enquiry the strict and
sophisticated rules of evidence under the Indian Evidence
Act may not apply. All materials which are logically probative for
a prudent mind are permissible. There is no allergy to hearsay
evidence provided it has reasonable nexus and credibility. It is
true that departmental authorities and Administrative Tribunals
must be careful in evaluating such material and should not glibly
swallow what is strictly speaking not relevant under the Indian
Evidence Act . For this proposition it is not necessary to cite
decisions nor text books, although we have been taken through
case-law and other authorities by counsel on both sides. The
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essence of a judicial approach is objectivity, exclusion of
extraneous materials or considerations and observance of rules
of natural justice. Of course, fairplay is the basis and if
perversity or arbitrariness, bias or surrender of independence of
judgment vitiate the conclusions reached, such finding, even
though of a domestic tribunal, cannot be held good. However,
the courts below misdirected themselves, perhaps, in insisting
that passengers who had come in and gone out should be
chased and brought before the tribunal before a valid finding
could be recorded. The ‘residuum’ rule to which counsel for the
respondent referred, based upon certain passages from
American Jurisprudence does not go to that extent nor does the
passage from Halsbury insist on such rigid requirement. The
simple point is, was there some evidence or was there no
evidence — not in the sense of the technical rules governing
regular court proceedings but in a fair commonsense way as
men of understanding and worldly wisdom will accept. Viewed in
this way, sufficiency of evidence in proof of the finding by a
domestic tribunal is beyond scrutiny. Absence of any evidence in
support of a finding is certainly available for the court to look
into because it amounts to an error of law apparent on the
record. ………..”

57. In the instant case, there is nothing to suggest non-application
of mind by the disciplinary authority or non-recording reason in support
of the conclusion arrived at by him. Also, it is not the case that the
enquiry was conducted without giving a fair and reasonable opportunity
to the charged officer and it is a case of no evidence. Similarly,
production of photocopies of transaction forms, to our mind, has not
caused any prejudice to the applicant as he has himself admitted to
have signed such few blank forms in good faith.
58. It is settled law that interference with the orders passed
pursuant to a departmental inquiry can be only in case of no evidence.
Sufficiency of evidence is not within the realm of judicial review. The
standard of proof as required in a criminal trial is not the same in a
departmental inquiry. Strict rules of evidence are to be followed by the
criminal Court where the guilt of the accused has to be proved beyond
reasonable doubt. On the other hand, preponderance of probability is
the test adopted in finding the delinquent guilty of the charge.
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Interference with the order of dismissal of the respondents by re-
examining the evidence and taking a view different from that of
disciplinary authority, therefore it does not call for interference with the
order of the dismissal.
59. The plea of the charged officer is that signing of blank forms was
due to practical and operational considerations, as the applicant was
required to travel frequently, and given that the Net Asset Value of
mutual funds fluctuates on daily basis, timely execution of transactions
was essential to optimize returns their organization. It is also stated
that this was an established and accepted practice within the
organization, prevailing even prior to the applicant’s tenure with BMRCL
and thus a bona fide administrative practice adopted in the interest of
maximizing returns of the organization. However, we cannot go beyond
the extant policy/instructions to deal with such informal arrangements
and there is nothing to suggest that such informal arrangements had
the sanction of MD.
60. Having dealt with the five issues, we come to the last question
whether the magnitude of the impugned action is so disproportionate to
shock the conscience. The submission of the learned counsel for the
applicant is that the proceedings was initiated solely against the
applicant while no action has been taken against the officials who were
equally involved, thereby indicating selective targeting and lending
credence to the allegations of mala fides and institutional bias. In the
context of occurrence of such malpractice, the persons concerned are
not before us and are not a party in the application.
61. Moreover, the officers subordinate to him were not the decision
making authority as per the organizational hierarchy and admitted
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position of the applicant himself, the ultimate responsibility for financial
decisions, with the charged officer. The initiation of note by CS/GM
does not absolve the applicant, as the final decision was taken by him.
He was also signing application forms, cheques etc. The contention of
the applicant that approval of the Managing Director was not taken in
earlier instances is not tenable because the Board’s decisions clearly
mandated that investment decisions were subject to approval of the
Managing Director. Past deviations, if any, do not grant legal immunity
for the specific violation in this case.

62. Thus, there is no denying that the applicant signed application
forms which were blank, irrespective whether he signed 36 Common
Transaction Forms for switch-in and witch-out actions or less. Signing
blank financial instruments or application forms is highly irregular and
unacceptable. Also, the application forms and transaction documents
bear the signature and subsequent investment, including those through
broker’s code involving switch-in/switch-out actions were executed on
the basis of such documents. Even assuming the forms were incomplete
at the time of signing, the responsibility for correctness and preventing
misuse of such forms squarely rests with the applicant. There is nothing
on record to suggest whether in the aftermath of signing of blank forms,
the applicant took any follow-up action or exercised any supervisory
control to ensure that the forms are not misused or not converted to
equality by way of CTFs.

63. Learned counsel for the applicant has placed reliance on the
judgments of the Hon’ble Supreme Court in Maharashtra State Board
of Secondary and Higher Secondary Education vs. K.S.Gandhi
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and Others (supra) and S.N.Mukherjee vs. Union of India (1990) 4
SCC 594. However, we find that the ratio of these two judgments do
not apply in the instant case as the disciplinary authority has applied its
mind and given cogent reason while recording the tentative
disagreement note. He has duly considered the particular facts and
circumstances of the case and the reasons therein are clear and explicit
to indicate that the disciplinary authority has given due consideration to
the point in controversy.
64. It has also been made out by the learned counsel for the
respondents that with regard to financial loss caused because of such
transactions, the UPSC has specifically considered the financial aspect of
the transactions and noted that the broker had paid Rs.3.00 Crores
towards losses. The charged officer, however, cannot derive any relief
merely from the fact that the financial consequences was ultimately
limited, recovered or otherwise mitigated. The disciplinary misconduct
arose from the manner in which public funds were dealt with and from
the applicant acting beyond the authority available to him and contrary
to the governing investment framework. The existence or absence of a
substantial net loss is therefore not the sole determinant of the
misconduct. Moreover, the allegation was not confined to a single
isolated transaction rather it concerns repeated multiple instances of
switch-in and switch out transactions through common transaction
forms. Therefore, the expression “financial loss” cannot be treated as
the sole foundation of the penalty.
65. We draw strength from Regional Manager U.P.S.R.T.C.
Etawah , vs. Hoti Lal and Another , AIR 2003 SCC 1462, wherein the
Hon’ble Supreme Court has held as follows:
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“It needs to be emphasized that the Court or Tribunal while
dealing with the quantum of punishment has to record reasons as
to why it is felt that the punishment does not commensurate with
the proved charges. As has been highlighted in several cases to
which reference has been made above, the scope for interference
is very limited and restricted to exceptional cases in the indicated
circumstances. Unfortunately, in the present case as the quoted
extracts of the High Court's order would go to show, no reasons
whatsoever have been indicated as to why the punishment was
considered disproportionate. Reasons are live links between the
mind of the decision taker to the controversy in question and the
decision or conclusion arrived at. Failure to give reasons amounts
to denial of justice. (See Alexander Machinery Dudley Ltd. v.
Crabtree (1974 LCR 120) A mere statement that it is
disproportionate would not suffice. A party appearing before a
Court, as to what it is that the Court is addressing its mind. It is
not only the amount involved but the mental set up, the type of
duty performed and similar relevant circumstances which go into
the decision-making process while considering whether the
punishment is proportionate or disproportionate. If the charged
employee holds a position of trust where honesty and integrity are
inbuilt requirements of functioning, it would not be proper to deal
with the matter leniently. Misconduct in such cases has to be dealt
with iron hands. Where the person deals with public money or is
engaged in financial transactions or acts in a fiduciary capacity,
highest degree of integrity and trust-worthiness is must and
unexceptionable. Judged in that background, conclusions of the
Division Bench of the High Court do not appear to be proper. We
set aside the same and restore order of learned Single Judge
upholding order of dismissal.
The appeal is allowed.”
66. We have also considered the issue of proportionality of the
penalty imposed on the applicant. Part of it has already been answered
in the context of afore cited judgment of the Hon’ble Supreme Court.
The instant case highlights the severe breach of fiduciary duty and
company’s policy committed by the charged officer, the senior-most
officer entrusted with funds management in his capacity as ED (F).
The applicant had pre-signed blank investment application forms,
which were subsequently utilized to deploy the company’s funds into
high risk equity schemes, an investment area strictly prohibited under
the company’s investment mandate. By signing such blank
instruments surpassing all approvals and checks, exposing company’s
financial resources to market volatility was a serious misconduct, as it
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created a direct vulnerability for systematic financial fraud. The officer
without specifying amounts or other relevant details signed forms. In
fact as the senior-most officer, dealing with the finance of the
company, the charged officer should have demonstrated a superior
standard of stewardship, but on the contrary there is nothing on
record to indicate that once such blank forms were signed whether the
charged officer took any step to review the subsequent development
with regard to investment based on such forms, including the mode of
deployment of funds. This amounts to gross negligence, operational
recklessness and a failure to exercise basic supervisory control.
67. Further, to our mind, the officer cannot be absolved of liability,
even if no direct mandatory loss materialized or the same was done in
good faith or for administrative convenience. The absence of gain or
actual mandatory loss does not insulate the senior finance officer of
from severe disciplinary action. The fact that the financial risk did not
result into a specified monetary loss does not lessen the degree of
operational recklessness, irrespective of whether it was done in good
faith or out of administrative exigency. Further, the past clean record
of long service of the applicant is not relevant as the disciplinary
authority has recorded a clear finding of guilt for policy breach,
negligence and procedural violations. We have also considered the
plea taken in the pleadings by the learned counsel for the applicant
that other officers more particularly CS/GM (A) who was also
responsible for such irregularity and MD who had supposedly approved
the investment in question were not acted against. However, even if
the action against him may appear discriminatory, it does not absolve
the delinquent officer nor reduces his individual liability. An individual
who has committed misconduct cannot claim immunity merely
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because another employee escaped action. The doctrine in parity in
disciplinary proceedings have a very narrow window and it could have
be applied, if other officers were also charged in the disciplinary
proceedings under consideration, for the same act and one was given
a light penalty and the other is given a severe punishment without any
rational distinction. But in the instant matter, only the applicant has
been charged and other officers are not before us. Therefore, the plea
of discrimination or parity raised by the applicant is legally not tenable.
68. In view of the above discussions, we see no reason to interfere
with the impugned penalty order dated 14.03.2016. The OA is
dismissed accordingly. No order as to costs.

(Sanjeeva Kumar) (R.N.Singh)
Member (A) Member (J)

/kdr/

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