A disciplinary authority implicated in an alleged coerced confession cannot fairly adjudicate its voluntariness.

The appellant, a Scale IV officer of Dhanlaxmi Bank, was dismissed after a disciplinary enquiry concerning an allegedly pseudonymous email sent to Reserve Bank of India officials and the Bank’s Company Secretary, containing allegations against the Bank’s Managing Director.

The principal evidence against her was a letter dated 7 February 2014 admitting authorship; she maintained that she had confessed under pressure from the disciplinary authority, who allegedly threatened that her sister would otherwise be prosecuted.

She challenged the proceedings, alleging, among other things, that the disciplinary authority had a personal connection to the alleged confession, that she was prevented from examining defence witnesses and producing documents, and that she was denied a reasonable opportunity to respond to the enquiry report.

The Sub Court dismissed her suit, and she appealed.

1. Whether the disciplinary proceedings were vitiated by non-observance of natural justice or failure to follow a fair procedure.

2. Whether the punishment imposed was shockingly excessive.

3. Whether the appellant was entitled to compensation and, if so, in what amount.

4. Whether the Bank could be restrained from charging interest above the stipulated staff rate on the appellant’s credit facilities.

A civil court reviewing a domestic enquiry ordinarily does not reappreciate the evidence; interference is warranted where the enquiry violates natural justice or fair procedure, the finding is based on no evidence, or the punishment is shockingly disproportionate [*Associated Cement Co. Ltd. v. The Workmen*, (1964) 3 SCR 652].

A disciplinary enquiry must be conducted fairly, with the enquiry officer acting as an independent quasi-judicial decision-maker rather than as the management’s representative [*Roop Singh Negi v. Punjab National Bank*, (2009) 2 SCC 570; *State of U.P. v. Saroj Kumar Sinha*, AIR 2010 SC 3131].

The delinquent must receive a meaningful opportunity to present relevant defence evidence, and natural justice may be read into procedural gaps in the applicable rules [*R. Shamanna v. State Bank of Mysore*, ILR 2003 KAR 4467; *Institute of Chartered Accountants of India v. L.K. Ratna*, AIR 1987 SC 71].

Where the enquiry officer is not the disciplinary authority, a reasonable opportunity to respond to the enquiry report before its acceptance is an integral part of natural justice [*Managing Director, ECIL v. B. Karunakar*, (1993) 4 SCC 727].

Compensation for wrongful termination should account for mitigation rather than automatically reflect all remaining service; the Court relied on *O.P. Bhandari v. Indian Tourism Development Corporation Ltd.*, (1986) 4 SCC 337, in assessing reasonable compensation.

The Bank’s Disciplinary Regulations, including clauses 3(1)–(2), 27 and 29(9), were also considered.

The Court held that the confession was the foundation of the charge and that the appellant had raised, at the earliest opportunity, an arguable claim that it was obtained through the disciplinary authority’s pressure. That same authority then assessed the voluntariness of the confession and imposed the penalty, undermining procedural fairness.

The enquiry also failed to secure the attendance of relevant Bank employees whom the appellant sought to call, excluded defence witnesses whose evidence could bear on the confession and allegations, and rejected documents offered to support her defence without adequate reasons.

Further, the disciplinary authority dismissed her without giving a reasonable opportunity to submit her response to the enquiry report after she had requested additional time.

The dismissal was also disproportionate: the email was addressed to the RBI and the Bank’s Company Secretary, the RBI took no action, and there was no evidence of harm to the Bank’s reputation.

Given the passage of time and the circumstances, the Court declined to direct a fresh enquiry and instead awarded compensation, taking account of the appellant’s period without employment and her duty to mitigate loss.

The disciplinary proceedings and consequential dismissal were declared null and void.

The Bank was directed to pay the appellant ₹45,28,140, equivalent to 60 months’ salary, with interest at 6% per annum from the date of suit until realisation.

The Bank was also restrained from charging interest above the stipulated staff rate on her credit facilities, and the appellant was awarded proportionate costs throughout.