Full Judgment Text
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CASE NO.:
Appeal (civil) 8258 of 2004
PETITIONER:
Damoh Panna Sagar Rural Regional Bank & Anr.
RESPONDENT:
Munna Lal Jain
DATE OF JUDGMENT: 16/12/2004
BENCH:
ARIJIT PASAYAT & S.H. KAPADIA
JUDGMENT:
J U D G M E N T
(Arising out of S.L.P.(C) 19412/2004)
ARIJIT PASAYAT, J.
Leave granted.
Damoh Panna Sagar, Rural Regional Bank- the appellant no.1
(hereinafter referred to as the ’employer’) calls in question legality
of the judgment rendered by a Division Bench of the Madhya Pradesh High
Court at Jabalpur directing the Board of Directors of the employer Bank
(in short the ’Board’) to reconsider the matter and pass any punishment
other than dismissal, removal or termination of the respondent \026 Munna
Lal Jain (hereinafter referred to as the ’employee’).
Background facts in a nutshell are as follows :
On the allegation that while temporarily functioning as the
Branch manager of Kabra Branch, the respondent-employee withdrew a sum
of Rs.25,000/- unauthorisedly and such act amounted to misconduct
warranting serious penalty. Because of such unauthorized withdrawal,
charges were framed against him by charge sheet dated 14.10.1992
alleging that he had withdrawn a sum of Rs.25,000/- on 6.5.1992 for his
personal use. The respondent-employee filed his explanation. Though
not disputing the factum of withdrawal, plea was taken by him that
during the relevant period condition of his wife had deteriorated and
required immediate surgical interference. He had informed about
withdrawal to the Head Office at Damoh. The explanation was not
accepted, an enquiry officer was appointed who submitted his report on
20.7.1993 holding that the employee was guilty of the charges. The
disciplinary authority concurred with the findings of the Enquiry
Officer and after following the formalities i.e. issuance of show-cause
notice, passed the order of removal. In appeal the said order of
removal was maintained. Against the aforesaid order the employee
preferred Writ Petition No. 2719 of 1995. Learned Single Judge held
that the charges levelled have been duly brought home, but remitted the
matter to the appellate authority for re-consideration with regard to
the quantum of punishment. Pursuant to the direction, the matter was
again considered by the Board and it was held that the order of removal
did not require reconsideration. Employee filed a Writ Petition (W.P.
No. 4812 of 1998). Learned Single Judge, who heard the matter, held
that the Board had not considered the matter from all angles keeping in
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view the observations made in the earlier order dated 13.5.1998.
Direction was given to the Board to re-consider the penalty of removal.
The matter was again re-considered and the Board refused to interfere
with the quantum of punishment. The said order was assailed in Writ
Petition No. 5236 of 2000. Learned Single judge declined to interfere
on the ground that the charges had been proved and the Board had passed
a detailed order. Learned Single Judge further held that the factum of
illness of the wife had not been proved as no documents had been filed.
The matter was carried in a Letters Patent Appeal before the
Division Bench. It was stand of the employee before the Division Bench
that the money was withdrawn because of an emergency and he had some of
money in his Provident Fund account. In any event, the money had been
deposited in the bank with 24% interest which was much higher than the
rate of interest that is payable on loan availed without security i.e.
overdraft.
In response, it was submitted by the learned counsel appearing
for the employer, that there was no scope for interference with the
quantum of punishment.
The High Court observed that ordinarily the High Court should not
interfere with the order of learned Single Judge. It, however, noticed
that the amount has been repaid with 24% interest. It was observed
that though adequate material was not placed to establish the wife’s
illness that could not be a ground to uphold the punishment of removal,
particularly when he had paid back the amount with 24% interest. There
was no allegation that earlier he had committed any kind of
delinquency. It was noted that antecedents do not play positive role
in all cases, but in certain cases they cannot be totally ignored.
Reference was made to decision of this Court in Kailash Nath Gupta v.
Enquiry Officer (R.K. Rai) Allahabad Bank and others (AIR 2003 SC
1377). It was also observed that in the said case this Court has taken
note of the fact that a sum of Rs.46,000/-has already been repaid
and no loss was caused to the bank. Though factual matrix was noticed
to be different, yet it was held that the Branch Manager in a difficult
situation had withdrawn the money and repaid with 24% interest. There
was no loss caused. Again the High Court observed that it hastened to
add that it was not its view that unless there is any loss there cannot
be any misconduct. Ultimately it was concluded that this was a fit
case where the Board should be compassionate and gracious enough to
reconsider employee’s case to pass any other punishment other than
dismissal, removal or termination. It was held that there was
irregularity but not such an irregularity as to attract the punishment
of removal. It was also indicated that even if lesser punishment is
awarded the employee would not be entitled to any kind of back wages.
In support of the appeal, learned counsel for the appellant
submitted that the High Court’s judgment is full of contradictions.
Having accepted that there was practically no scope of interference
with the quantum of punishment, yet on irrelevant considerations High
Court directed that punishment of removal, termination or dismissal
should not be passed. The scope for interference with quantum of
punishment has been highlighted by this Court in many cases and this is
a case where no interference was called for. It has been found as a
fact that the defence taken by the employee was false. Though he
claimed that the amount was withdrawn on 9.5.1992, in fact it was
withdrawn on 6.5.1992. There was no evidence adduced regarding the
wife’s ailment.
In response, learned counsel for the respondent-employee
submitted that the appeal was not maintainable and the appeal was
really unnecessary one. Ordinarily this Court should not interfere in
service matters by appreciating evidence. The respondent-employee had
intimated the head office about the withdrawal which is bonafide and he
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had repaid the amount with 24% interest.
The scope of interference with quantum of punishment has been the
subject-matter of various decisions of this Court. Such interference
cannot be a routine matter.
Lord Greene said in 1948 in the famous Wednesbury case (1948 (1)
KB 223) that when a statute gave discretion to an administrator to take
a decision, the scope of judicial review would remain limited. He said
that interference was not permissible unless one or the other of the
following conditions was satisfied, namely the order was contrary to
law, or relevant factors were not considered, or irrelevant factors
were considered; or the decision was one which no reasonable person
could have taken. These principles were consistently followed in the
UK and in India to judge the validity of administrative action. It is
equally well known that in 1983, Lord Diplock in Council for Civil
Services Union v. Minister of Civil Service [(1983) 1 AC 768] (called
the CCSU case) summarized the principles of judicial review of
administrative action as based upon one or other of the following viz.,
illegality, procedural irregularity and irrationality. He, however,
opined that "proportionality" was a "future possibility".
In Om Kumar and Ors. v. Union of India (2001 (2) SCC 386), this
Court observed, inter alia, as follows:
"The principle originated in Prussia in the
nineteenth century and has since been adopted in
Germany, France and other European countries. The
European Court of Justice at Luxembourg and the
European Court of Human Rights at Strasbourg have
applied the principle while judging the validity of
administrative action. But even long before that,
the Indian Supreme Court has applied the principle of
"proportionality" to legislative action since 1950,
as stated in detail below.
By "proportionality", we mean the question
whether, while regulating exercise of fundamental
rights, the appropriate or least-restrictive choice
of measures has been made by the legislature or the
administrator so as to achieve the object of the
legislation or the purpose of the administrative
order, as the case may be. Under the principle, the
court will see that the legislature and the
administrative authority "maintain a proper balance
between the adverse effects which the legislation or
the administrative order may have on the rights,
liberties or interests of persons keeping in mind the
purpose which they were intended to serve". The
legislature and the administrative authority are,
however, given an area of discretion or a range of
choices but as to whether the choice made infringes
the rights excessively or not is for the court. That
is what is meant by proportionality.
xxx xxx xxx xxx xxx
The development of the principle of "strict
scrutiny" or "proportionality" in administrative law
in England is, however, recent. Administrative action
was traditionally being tested on Wednesbury grounds.
But in the last few years, administrative action
affecting the freedom of expression or liberty has
been declared invalid in several cases applying the
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principle of "strict scrutiny". In the case of these
freedoms, Wednesbury principles are no longer
applied. The courts in England could not expressly
apply proportionality in the absence of the
convention but tried to safeguard the rights
zealously by treating the said rights as basic to the
common law and the courts then applied the strict
scrutiny test. In the Spycatcher case Attorney
General v. Guardian Newspapers Ltd. (No.2) (1990) 1
AC 109 (at pp. 283-284), Lord Goff stated that there
was no inconsistency between the convention and the
common law. In Derbyshire County Council v. Times
Newspapers Ltd. (1993) AC 534, Lord Keith treated
freedom of expression as part of common law.
Recently, in R. v. Secy. Of State for Home Deptt., ex
p. Simms (1999) 3 All ER 400 (HL), the right of a
prisoner to grant an interview to a journalist was
upheld treating the right as part of the common law.
Lord Hobhouse held that the policy of the
administrator was disproportionate. The need for a
more intense and anxious judicial scrutiny in
administrative decisions which engage fundamental
human rights was re-emphasised in in R. v. Lord
Saville ex p (1999) 4 All ER 860 (CA), at pp.870,872)
. In all these cases, the English Courts applied the
"strict scrutiny" test rather than describe the test
as one of "proportionality". But, in any event, in
respect of these rights "Wednesbury" rule has ceased
to apply.
However, the principle of "strict scrutiny" or
"proportionality" and primary review came to be
explained in R. v. Secy. of State for the Home Deptt.
ex p Brind (1991) 1 AC 696. That case related to
directions given by the Home Secretary under the
Broadcasting Act, 1981 requiring BBC and IBA to
refrain from broadcasting certain matters through
persons who represented organizations which were
proscribed under legislation concerning the
prevention of terrorism. The extent of prohibition
was linked with the direct statement made by the
members of the organizations. It did not however,
for example, preclude the broadcasting by such
persons through the medium of a film, provided there
was a "voice-over" account, paraphrasing what they
said. The applicant’s claim was based directly on
the European Convention of Human Rights. Lord Bridge
noticed that the Convention rights were not still
expressly engrafted into English law but stated that
freedom of expression was basic to the Common law and
that, even in the absence of the Convention, English
Courts could go into the question (see p. 748-49).
".....whether the Secretary of State, in the
exercise of his discretion, could reasonably
impose the restriction he has imposed on the
broadcasting organisations"
and that the courts were
"not perfectly entitled to start from the
premise that any restriction of the right to
freedom of expression requires to be justified
and nothing less than an important public
interest will be sufficient to justify it".
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Lord Templeman also said in the above case that the
courts could go into the question whether a
reasonable minister could reasonably have concluded
that the interference with this freedom was
justifiable. He said that "in terms of the
Convention" any such interference must be both
necessary and proportionate (ibid pp. 750-51).
In the famous passage, the seeds of the
principle of primary and secondary review by courts
were planted in the administrative law by Lord Bridge
in the Brind case (1991) 1 AC 696. Where Convention
rights were in question the courts could exercise a
right of primary review. However, the courts would
exercise a right of secondary review based only on
Wednesbury principles in cases not affecting the
rights under the Convention. Adverting to cases
where fundamental freedoms were not invoked and where
administrative action was questioned, it was said
that the courts were then confined only to a
secondary review while the primary decision would be
with the administrator. Lord Bridge explained the
primary and secondary review as follows:
"The primary judgment as to whether the
particular competing public interest justifying
the particular restriction imposed falls to be
made by the Secretary of State to whom
Parliament has entrusted the discretion. But,
we are entitled to exercise a secondary
judgment by asking whether a reasonable
Secretary of State, on the material before him,
could reasonably make the primary judgment."
But where an administrative action is
challenged as "arbitrary" under Article 14 on the
basis of Royappa (1974) 4 SCC 3 (as in cases where
punishments in disciplinary cases are challenged),
the question will be whether the administrative order
is "rational" or "reasonable" and the test then is
the Wednesbury test. The courts would then be
confined only to a secondary role and will only have
to see whether the administrator has done well in his
primary role, whether he has acted illegally or has
omitted relevant factors from consideration or has
taken irrelevant factors into consideration or
whether his view is one which no reasonable person
could have taken. If his action does not satisfy
these rules, it is to be treated as arbitrary. In
G.B. Mahajan v. Jalgaon Municipal Council (1991) 3
SCC 91 at p. 111 Venkatachaliah, J. (as he then was)
pointed out that "reasonableness" of the
administrator under Article 14 in the context of
administrative law has to be judged from the stand
point of Wednesbury rules. In Tata Cellular v. Union
of India (1994) 6 SCC 651 at pp. 679-80), Indian
Express Newspapers Bombay (P) Ltd. v. Union of India
(1985) 1 SCC 641 at p.691), Supreme Court Employees’
Welfare Assn. V. Union of India (1989) 4 SCC 187 at
p. 241) and U.P. Financial Corpn. V. Gem Cap(India)
(P) Ltd. (1993) 2 SCC 299 at p. 307) while judging
whether the administrative action is "arbitrary"
under Article 14 (i.e. otherwise then being
discriminatory), this Court has confined itself to a
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Wednesbury review always.
The principles explained in the last preceding
paragraph in respect of Article 14 are now to be
applied here where the question of "arbitrariness" of
the order of punishment is questioned under Article
14.
xxx xxx xxx xxx xxx
Thus, from the above principles and decided
cases, it must be held that where an administrative
decision relating to punishment in disciplinary cases
is questioned as "arbitrary" under Article 14, the
court is confined to Wednesbury principles as a
secondary reviewing authority. The court will not
apply proportionality as a primary reviewing court
because no issue of fundamental freedoms nor of
discrimination under Article 14 applies in such a
context. The court while reviewing punishment and if
it is satisfied that Wednesbury principles are
violated, it has normally to remit the matter to the
administrator for a fresh decision as to the quantum
of punishment. Only in rare cases where there has
been long delay in the time taken by the disciplinary
proceedings and in the time taken in the courts, and
such extreme or rare cases can the court substitute
its own view as to the quantum of punishment."
In B.C. Chaturvedi v. Union of India and Ors. (1995 [6] SCC 749)
it was observed:
"A review of the above legal position would
establish that the disciplinary authority, and on
appeal the appellate authority, being fact-finding
authorities have exclusive power to consider the
evidence with a view to maintain discipline. They
are invested with the discretion to impose
appropriate punishment keeping in view the magnitude
or gravity of the misconduct. The High
Court/Tribunal, while exercising the power of
judicial review, cannot normally substitute its own
conclusion on penalty and impose some other penalty.
If the punishment imposed by the disciplinary
authority or the appellate authority shocks the
conscience of the High Court/Tribunal, it would
appropriately mould the relief, either directing the
disciplinary/appellate authority to reconsider the
penalty imposed, or to shorten the litigation, it may
itself, in exceptional and rare cases, impose
appropriate punishment with cogent reasons in support
thereof."
In Union of India and Anr. v. G. Ganayutham (1997 [7] SCC 463),
this Court summed up the position relating to proportionality in
paragraphs 31 and 32, which read as follows:
"The current position of proportionality in
administrative law in England and India can be
summarized as follows:
(1) To judge the validity of any
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administrative order or statutory discretion,
normally the Wednesbury test is to be applied
to find out if the decision was illegal or
suffered from procedural improprieties or was
one which no sensible decision-maker could, on
the material before him and within the
framework of the law, have arrived at. The
court would consider whether relevant matters
had not been taken into account or whether
irrelevant matters had been taken into account
or whether the action was not bona fide. The
court would also consider whether the decision
was absurd or perverse. The court would not
however go into the correctness of the choice
made by the administrator amongst the various
alternatives open to him. Nor could the court
substitute its decision to that of the
administrator. This is the Wednesbury (1948 1
KB 223) test.
(2) The court would not interfere with
the administrator’s decision unless it was
illegal or suffered from procedural impropriety
or was irrational \026 in the sense that it was in
outrageous defiance of logic or moral
standards. The possibility of other tests,
including proportionality being brought into
English administrative law in future is not
ruled out. These are the CCSU (1985 AC 374)
principles.
(3)(a) As per Bugdaycay (1987 AC 514),
Brind (1991 (1) AC 696) and Smith (1996 (1) All
ER 257) as long as the Convention is not
incorporated into English law, the English
courts merely exercise a secondary judgment to
find out if the decision-maker could have, on
the material before him, arrived at the primary
judgment in the manner he has done.
(3)(b) If the Convention is incorporated
in England making available the principle of
proportionality, then the English courts will
render primary judgment on the validity of the
administrative action and find out if the
restriction is disproportionate or excessive or
is not based upon a fair balancing of the
fundamental freedom and the need for the
restriction thereupon.
(4)(a) The position in our country, in
administrative law, where no fundamental
freedoms as aforesaid are involved, is that the
courts/tribunals will only play a secondary
role while the primary judgment as to
reasonableness will remain with the executive
or administrative authority. The secondary
judgment of the court is to be based on
Wednesbury and CCSU principles as stated by
Lord Greene and Lord Diplock respectively to
find if the executive or administrative
authority has reasonably arrived at his
decision as the primary authority.
(4)(b) Whether in the case of
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administrative or executive action affecting
fundamental freedoms, the courts in our country
will apply the principle of "proportionality"
and assume a primary role, is left open, to be
decided in an appropriate case where such
action is alleged to offend fundamental
freedoms. It will be then necessary to decide
whether the courts will have a primary role
only if the freedoms under Articles 19, 21 etc.
are involved and not for Article 14.
Finally, we come to the present case. It is
not contended before us that any fundamental freedom
is affected. We need not therefore go into the
question of "proportionality". There is no
contention that the punishment imposed is illegal or
vitiated by procedural impropriety. As to
"irrationality", there is no finding by the Tribunal
that the decision is one which no sensible person who
weighed the pros and cons could have arrived at nor
is there a finding, based on material, that the
punishment is in "outrageous" defiance of logic.
Neither Wednesbury nor CCSU tests are satisfied. We
have still to explain "Ranjit Thakur (1987 [4] SCC
611)".
The common thread running through in all these decisions is that
the Court should not interfere with the administrator’s decision unless
it was illogical or suffers from procedural impropriety or was shocking
to the conscience of the Court, in the sense that it was in defiance of
logic or moral standards. In view of what has been stated in the
Wednesbury’s case (supra) the Court would not go into the correctness
of the choice made by the administrator open to him and the Court
should not substitute its decision to that of the administrator. The
scope of judicial review is limited to the deficiency in decision-
making process and not the decision.
To put differently unless the punishment imposed by the
Disciplinary Authority or the Appellate Authority shocks the conscience
of the Court/Tribunal, there is no scope for interference. Further to
shorten litigations it may, in exceptional and rare cases, impose
appropriate punishment by recording cogent reasons in support thereof.
In a normal course if the punishment imposed is shockingly
disproportionate it would be appropriate to direct the Disciplinary
Authority or the Appellate Authority to reconsider the penalty imposed.
In the case at hand the High Court did not record any reason as
to how and why it found the punishment shockingly disproportionate.
Even there is no discussion on this aspect.
A Bank officer is required to exercise higher standards of
honesty and integrity. He deals with money of the depositors and the
customers. Every officer/employee of the Bank is required to take all
possible steps to protect the interests of the Bank and to discharge
his duties with utmost integrity, honesty, devotion and diligence and
to do nothing which is unbecoming of a Bank officer. Good conduct and
discipline are inseparable from the functioning of every
officer/employee of the Bank. As was observed by this Court in
Disciplinary Authority-cum-Regional Manager v. Nikunja Bihari Patnaik
(1996 (9) SCC 69), it is no defence available to say that there was no
loss or profit resulted in case, when the officer/employee acted
without authority. The very discipline of an organization more
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particularly a Bank is dependent upon each of its officers and officers
acting and operating within their allotted sphere. Acting beyond one’s
authority is by itself a breach of discipline and is a misconduct. The
charges against the employee were not casual in nature and were
serious. These aspects do not appear to have been kept in view by the
High Court.
It needs no emphasis that when a Court feels that the punishment
is shockingly disproportionate, it must record reasons for coming to
such a conclusion. Mere expression that the punishment is shockingly
disproportionate would not meet the requirement of law. Even in respect
of administrative orders Lord Denning M.R. in Breen v. Amalgamated
Engineering Union (1971 (1) All E.R. 1148) observed "The giving of
reasons is one of the fundamentals of good administration". In
Alexander Machinery (Dudley) Ltd. v. Crabtree (1974 LCR 120) it was
observed: "Failure to give reasons amounts to denial of justice".
Reasons are live links between the mind of the decision taker to the
controversy in question and the decision or conclusion arrived at".
Reasons substitute subjectivity by objectivity. The emphasis on
recording reasons is that if the decision reveals the "inscrutable face
of the sphinx", it can, by its silence, render it virtually impossible
for the Courts to perform their appellate function or exercise the
power of judicial review in adjudging the validity of the decision.
Right to reason is an indispensable part of a sound judicial system.
Another rationale is that the affected party can know why the decision
has gone against him. One of the salutary requirements of natural
justice is spelling out reasons for the order made, in other words, a
speaking out. The "inscrutable face of a sphinx" is ordinarily
incongruous with a judicial or quasi-judicial performance.
These aspects were highlighted in Chairman and Managing Director,
United Commercial Bank and Others v. P.C. Kakkar (2003 (4) SCC 364).
In the case at hand, the High Court’s judgment is full of ifs and
buts. There is no definite finding recorded that the punishment is
suffering from any infirmity. No basis has been indicated to direct
re-consideration of the quantum of punishment. It is to be noted that
the respondent had miserably failed to prove bonafides. Though he took
the stand that he had informed the head office about the withdrawal, no
material was placed before any of the authorities to prove it. It is
to be noted that on the basis of material on record, it was concluded
that the withdrawal was on 6.5.1992 and not on 9.5.1992 as was claimed.
The respondent-employee has withdrawn a sum of Rs.20,000/- from the
account of bank with the State Bank of India on 6.5.1992 and had
withdrawn a further sum of Rs.5,000/- from the cash.
Above being the position the impugned judgment of the High Court
cannot be maintained and the same is set aside. The Writ Petition
filed by the respondent-employee, stands dismissed.
The appeal is allowed. No costs.