Full Judgment Text
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 940 OF 2009
(Arising out of SLP (C) No. 7529 of 2006)
CHAIRMAN, GANGA YAMUNA GRAMIN
BANK & ORS. … APPELLANTS
VERSUS
DEVI SAHAI … RESPONDENT
J U D G M E N T
S.B. SINHA, J.
1. Leave granted.
2. Appellant is a bank constituted and incorporated under the
Regional Rural Banks Act, 1976 (for short, “the Act”). Section 30 thereof
provides for a regulation making power.
On or about 13.5.1980, the Government of India circulated the
model (staff service) regulations for the officers/employees of the
Regional Rural Bank for adoption/approval by their respective Board of
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Directors. The Board of Directors of the Appellant- Bank in exercise of
its powers conferred upon it under Section 30 of the Act after
consultation with the State Bank of India (sponsor bank) and Reserve
Bank of India and with the previous sanction of the Central Government
framed regulations known as “Ganga Yamuna Gramin Bank Staff Service
Regulations, 1985” laying down the terms and conditions of service of its
employees. Some of the relevant provisions of the said Regulations are
as under:
“10.(2)(a) The Bank may terminate the services
of
an
(i) Officer after giving him three month’s notice of
emolument in lieu thereof.
(ii) Employee after giving him one month’s notice or
emoluments in lieu thereof.
(30)(1) PENALTIES—
Without prejudice to the provisions of
other regulations, an officer or employee who
commits a breach of these regulations or who
displays negligence, inefficiency or indolence,
or who knowingly does anything detrimental to
the interests of the Bank or in conflict with its
instructions or who commits a breach of
discipline or is guilty of any other act of
misconduct shall be liable to the following
penalties---
(a) reprimand;
(b) delay or stoppage of increments or promotion;
(c) degradation to a lower post or grade to a lower stage
in his incremental scale;
(d) recovery from pay of the whole or part of any
pecuniary loss caused to the Bank by the officer or
employee;
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(e) Removal from service which shall not be a
disqualification for future employment;
(f) Dismissal.
(2) No officer or employee shall be subjected
to the penalties referred to in clause (b), (c), (d),
(e) or (f) of sub-regulation (1) except by an
order in writing signed by the Chairman and no
such order shall be passed without the charge
being formulated in writing and given to the
said officer or employee so that he shall have
reasonable opportunity to answer them in
writing or in person, as he prefers and in the
latter case his defence shall be taken down in
writing as read to him.
Provided that requirements of this sub-
regulation may be waived. If the facts on the
basis of which action is to be taken have been
established in the court of law or court martial
where the officer or employee has absconded or
where it is for any reason impracticable to
communicate with him or where there is
difficulty in observing them and the
requirements can be waived and the reasons for
so doing shall be recorded in writing.”
3. The Act was amended by Act No. 1 of 1988 which came into force
with effect from 28.9.1988 in terms whereof ‘National Bank’ was defined
in Section 2(ca), to mean:
“(ca) “National Bank” means the National
Bank for Agriculture and Rural Development
established under Section 3 of the National
Bank for Agriculture and Rural Development
Act, 1981.”
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4. However, even prior thereto ‘National Bank for Agricultural and
Rural Development (NABARD)’ being the National Bank, which
although had nothing to do with statutory functioning of the Regional
Rural Banks, allegedly, on requests made by Board of Directors of
several regional banks issued guidelines, stating:
“We have been receiving a number of references
from Chairmen of RRBs requesting us for
guidance on disciplinary procedure to be
adopted by RRBs for disciplinary action against
their staff. In order to meet the demands of the
Chairman of RRBs, we have prepared a set of
guidelines on the above subject with the help of
our Legal Department and representative of
some sponsor banks/RRBs. A copy of the
manual is enclosed for your guidance.”
Relevant portion of the said guidelines are as follows:
“…..The penalty prescribed in sub-regulation
(1) can be imposed only after following the
procedure as laid down in the regulation strictly
in accordance with the principles of natural
justice. Broadly stated in a case of disciplinary
action, those principles require that:
i) there is good and sufficient reason for
formulating the charges;
ii) The charge-sheeted official knows
precisely what the charges are against him and
the grounds on which these have been based;
iii) the employee is given reasonable
opportunity to show cause against the penalty
prescribed to be imposed on him.”
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5. Indisputably, on or about 6.8.1996, an explanation was sought for
from the respondent for alleged acts of misconduct committed by him.
He submitted his reply to the show cause notice but the same was not
found satisfactory by the competent authority. On or about 25.2.1997, a
charge-sheet was issued to him. An Inquiry Officer was appointed to
conduct a departmental inquiry. In spite of several
notices/advertisements published in the newspaper, respondent did not
attend the departmental inquiry. The Inquiry Officer conducted the
inquiry ex parte and submitted his report holding the charges as proved.
The Disciplinary Authority by its letter dated 18.6.1998 forwarded the
report of the Inquiry officer to the respondent and called upon him to
submit his comments, if any, within one week from the date of receipt of
that letter. As the respondent did not do so within that time, he was
granted another opportunity by letters dated 11.07.1998 and 29.07.2008.
The Disciplinary Authority thereafter imposed a penalty of dismissal
upon him by order dated 28.9.1998.
Some of the charges held proved against the respondent are as
under:-
i) Respondent sanctioned a demand loan for himself, from time
to time – without obtaining sanction, contrary to the rules of
the Bank. Thus misusing his powers as Branch Manager for
his personal interest;
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ii) To achieve the target of the Branch, he started making
window dressing by first crediting and later debiting the
amount, of the account holders, without their request;
iii) Bank amount was misutilized. He received the cash amount,
but did not deposit the same, instead he purchased NSC in
his name, and thereafter took demand loan against the said
NSC.
iv) He left the cash, under the custody of a clerk/cashier; he
entrusted the master key to the said clerk, thereby failing to
discharge his duties.
v) He left the place of his duty without permission of the
competent authority.
vi) He sanctioned crop loan to 16 debtors, however did not
allow them to withdraw the amount till closure of financial
year, to achieve the target.
vii) Complaint was received that he was demanding bribe.
viii) Complaint was also made that he fraudulently withdrew an
amount from the saving account of a customer.
6. An appeal was preferred thereagainst. In the said Memo of Appeal,
no plea was raised by him that a second show cause notice was required
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to be issued. He also did not make any reference to the NABARD
guidelines; he also did not say that any prejudice has been caused to him.
On or about 8.7.1999, the Appellate Authority dismissed the said
appeal. He filed a writ petition thereagainst. However, in the meanwhile,
he filed a review petition against the order of the Appellate Authority. By
an order dated 17.7.2001, the writ petition was dismissed in view of the
pendency of the review petition. By an order dated 21.8.2001, the review
petition was dismissed. He filed another writ petition on 14.11.2002 for
quashing the order of dismissal dated 28.9.1998 passed by the
Disciplinary Authority as also the order dated 8.7.1999 passed by the
Appellate Authority, which by reason of the impugned judgment and
order dated 30.12.2003 was allowed. A review petition filed by the
appellant – Bank thereagainst has been dismissed by an order dated
1.3.2006.
Appellant is, thus, before us.
7. Mr. Sanjay Kapur, learned counsel appearing on behalf of the
appellant would contend that the High Court committed a serious error in
passing the impugned judgment in holding that the guidelines issued by
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NABARD were mandatory in character and non-compliance thereof had
resulted in rendering the order of dismissal void.
8. Mr. Anand Prakash Srivastava, learned counsel appearing on
behalf of the respondent, on the other hand, would not only support the
impugned judgment but also contend that the procedure laid down in the
said guidelines have been followed in the cases of the other employees
and, thus, there was absolutely no reason as to why the same could not be
implemented in the case of the appellant.
9. Indisputably, Appellant has been constituted under the Act. It has
a regulation making power. Regulations framed by it subject to the
compliance of the statutory mandate contained in Section 30 of the Act
have statutory force. The provisions of the Act and the Service
Regulations made by the appellant, therefore, form self-contained Code.
Indisputably, at a point of time when NABARD issued guidelines, it had
nothing to do with the functionings of the Regional Rural Banks. Act
No.1 of 1988, in terms whereof the ‘National Bank’ was defined and in
terms whereof instead of consulting the Reserve Bank of India for the
purpose of making regulation in terms of Section 30 of the Act,
NABARD was required to be consulted, came into force only with effect
from 28.9.1988.
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10. Concededly again, the guidelines issued by NABARD laying down
the procedure to be adopted for disciplinary action in Regional Rural
Banks were made part of the Regulations. Even after coming into force
of Act No.1 of 1988, regulations were not amended. Issuance of second
show cause notice for the purpose of obtaining the views of delinquent
officer in regard to quantum of punishment is not a part of the common
law principles of natural justice. Such a provision could be laid down by
reason of a statute. The respondent does not enjoy any status. The
service conditions of employees of Regional Rural Banks are not
protected in terms of Article 311(2) of the Constitution of India.
11. The validity or otherwise of the regulations framed by appellant is
not in question. In any event, respondent did not participate in the
inquiry.
The learned counsel, however, submitted that a situation was
created by transferring the respondent to Uttar Kashi as a result whereof
he could not participate in the inquiry. It is stated before us that such a
contention has been raised in the writ petition. A copy of the writ
petition has not been placed before us. We are not aware as to whether
such a contention has been raised in the writ petition as from the perusal
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of the order passed by the High court it does not appear that such a
contention had been raised. In any event, respondent does not show how
he was prejudiced. He was supplied with a copy of the report of the
Inquiry Officer. He even did not submit any reply thereto. As indicated
hereinbefore, notices had not only been published asking the respondent
to take part in the disciplinary proceedings but also chance after chance
had been given to him to respond to the report of the Inquiry Officer. We,
therefore, are of the opinion that the NABARD guidelines having been
issued only for the guidance of the Regional Rural Banks, the same was
not mandatory in character and in any event respondent was not
prejudiced by reason of non-compliance thereof.
In Bank of India vs. Apurba Kumar Saha [(1994) 2 SCC 615], this
Court opined as under:
“4. Having regard to the arguments addressed
by learned Counsel on both sides we have gone
through the papers and seen that the High
Court's view that there was violation of
principles of natural justice, in conducting the
disciplinary proceedings against the respondent,
was wholly unjustified. The records of the
disciplinary proceedings show that the
respondent had avoided filing of the written
explanation for the charges of misconduct
levelled against him and also had for no valid
reason refused to participate in the disciplinary
proceedings. A Bank employee who had refused
to avail of the opportunities provided to him in a
disciplinary proceeding of defending himself
against the charges of misconduct involving his
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integrity and dishonesty, cannot be permitted to
complain later that he had been denied a
reasonable opportunity of defending himself of
the charges levelled against him and the
disciplinary proceeding conducted against him
by the Bank-employer had resulted in violation
of principles of natural justice of fair hearing.”
12. We, therefore, are of the opinion that the High Court committed a
serious error in passing the impugned judgment. It is set aside
accordingly. However, as it is stated before us that the respondent had
raised several other contentions before the High Court, we remand the
matter to the High court for consideration of all other contentions raised
by the respondent. In the facts and circumstances of the case, as the
disciplinary proceeding against the respondent had been initiated long
time back, we would request the High Court to consider the desirability of
disposing of the matter at the earliest possible opportunity and preferably
within six months from the date of communication of this Court’s order.
13. The appeal is allowed with the aforementioned directions.
However, in the facts and circumstances of the case, there shall be no
order as to costs.
……………………………….J.
[S.B. Sinha]
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..…………………………..…J.
[Dr. Mukundakam Sharma]
New Delhi;
FEBRUARY 12, 2009