Full Judgment Text
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CASE NO.:
Appeal (civil) 3433 of 2000
Appeal (civil) 1185 of 2003
PETITIONER:
Chairman and Managing Director, United Commercial Bank & Ors.
P.C. Kakkar
RESPONDENT:
P.C. Kakkar
Chairman and Managing Director, United Commercial Bank and Ors.
DATE OF JUDGMENT: 11/02/2003
BENCH:
SHIVARAJ V. PATIL & ARIJIT PASAYAT
JUDGMENT:
J U D G M E N T
ARIJIT PASAYAT J.
Heard.
Leave granted in S.L.P (C) No. 883 of 2000.
Both these appeals relate to judgment of the Allahabad
High Court dated 7.9.1999 and are, therefore, disposed of by
this common judgment. The primary question involved is the
scope of interference in the matter of punishment by the
High Court.
Factual background in a nutshell is as follows:
Disciplinary proceedings were initiated by the United
Commercial Bank (hereinafter referred to as ’the employer’)
against P.C. Kakkar (hereinafter referred to as ’the
employee). It was alleged that he had committed several acts
of misconduct while functioning as Assistant Manager of
Mirzapur Branch. He was placed under suspension w.e.f.
6.7.1983. The disciplinary proceedings were initiated in
terms of United Commercial Bank Officer Employees (Conduct,
Discipline and Appeal) Regulation 1976 (hereinafter referred
to as ’the regulation’). The charges were found established
in respect of charge nos. 1, 2, 3, 6, 7 and 8. On the basis
of findings recorded by the Inquiry Officer and as endorsed
by the Disciplinary Authority, order of dismissal was passed
on 16.8.1988. Appeal preferred by the employee before the
prescribed appellate authority did not bring any relief.
Similar was the fate of the review application. Matter was
carried in writ petition before the Allahabad High Court.
As noticed by the High Court, there was no challenge to the
findings recorded, and what was urged related to the quantum
of punishment. One of the points highlighted to question
the quantum of punishment was that in a similar situation,
lesser punishment was imposed on one M.L. Keshwani though
the allegations against him were of much serious nature.
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The High Court accepted the plea and, inter alia, directed
as follows:-
"The Supreme Court has held in several
cases that there should be no discrimination
in the matter of punishment vide Sangram
Singh Versus State of Punjab (1983 (4) SCC
225).
On the facts of the case we are of the
opinion that the punishment given to the
petitioner was misappropriate and excessive.
Hence while we uphold finding of guilt. We
quash the orders dated 16.8.1988 and the
order dated 11.10.1989 and 5.2.1990 and
direct that the petitioner shall be
reinstated in service within six weeks of
production of certified copy of this order
before the authority concerned but he will be
given a lesser punishment. Since the matter
has been pending for a long time we direct
that the petitioner will be given the
punishment of being deprived of 75% of salary
for the period from the date of removal to
the date of reinstatement and he will be
given a severe warning not to make such
mistakes in future but he will get seniority
and continuity of service as if his service
had not been terminated."
According to learned counsel for the employer, after
having found that the charges were established the High
Court committed an error in interfering with the quantum of
punishment. The scope of such interference is extremely
limited. After having noted that there was no challenge to
the findings, there was no scope for interfering with the
quantum of punishment. Some of the charges were of very
serious nature and one of the charges related to fabrication
and manipulation of records. It is pointed out that even if
a co-delinquent has been given lesser punishment, same
cannot be a ground for interference. The employee was acting
as Assistant Manager in the Bank and committed the acts of
misconduct. Taking into account the higher standard of
honesty and integrity required by such employees any
interference with the quantum of punishment would amount to
misplaced sympathy. According to Mr. Ranjit Kumar, learned
counsel appearing for the employee, there were several
mitigating circumstances. It was categorically urged that
there was no embezzlement or fraud and there was no loss
caused to the Bank. The allegations of fictitious entries
were found not to have been established in a criminal case
which was initiated by the Central Bureau of Investigation
and the employee was acquitted of the charge. Further case
on which the High Court has placed reliance involved more
serious allegations and even if the allegations so far as
other officer M.L. Keshwani and the employee can be
differentiated, yet it has to be noted that the High Court
imposed more severe punishment compared to M.L. Keshwani.
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.
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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
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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
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
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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".
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
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"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 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."
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In B.C. Chaturvedi vs. 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. vs. 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
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
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procedural impropriety or was irrational
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
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
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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 difference 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 certain 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. The only discernible reason was the punishment
awarded in M.L. Keshwani’s case. As was observed by this
Court in Balbir Chand vs. Food Corporation of India Ltd. and
Ors.(1997 [3] SCC 371), even if a co-delinquent is given
lesser punishment it cannot be a ground for interference.
Even such a plea was not available to be given credence as
the allegations were contextually different.
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
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discipline of an organization more 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. But as noted above, the proceedings commenced
in 1981. The employee was placed under suspension from 1983
to 1988 and has superannuated in 2002. Acquittal in the
criminal case is not determinative of the commission of
misconduct or otherwise, and it is open to the authorities
to proceed with the disciplinary proceedings,
notwithstanding acquittal in criminal case. It per se would
not entitle the employee to claim immunity from the
proceedings. At the most the factum of acquittal may be a
circumstance to be considered while awarding punishment. It
would depend upon facts of each case and even that cannot
have universal application.
In the peculiar circumstances of the case, it would be
appropriate to send the matter back to the High Court for
fresh consideration. The High Court shall only consider the
punishment aspect, treating all other matters to be closed
and to have become final. The appeal filed by the employer
is accordingly disposed of while that filed by the employee
is dismissed.