Regulation 10 of Canara Bank Discipline Regulations is directory, not mandatory; joint proceedings remain discretionary.

The first Respondent, a Senior Manager at Canara Bank, was charge-sheeted in 2005 for negligence and misconduct regarding the sanctioning of loans to two trading companies without proper verification of assets or borrower identity

Following disciplinary proceedings, the Appellant-Bank reduced her grade from SMG Scale-IV to MMG Scale-III in 2006

The Respondent challenged this before the High Court of Karnataka. While a Single Judge dismissed her petition in 2013, a Division Bench allowed her appeal, setting aside the punishment on the grounds of lack of evidence and non-examination of key witnesses

The Bank appealed to the Supreme Court, raising questions on the scope of judicial review and the interpretation of Regulation 10 of the 1976 Regulations

During the pendency of proceedings, the first Respondent passed away

1. Whether the High Court, in setting aside the order of punishment, exceeded the scope of judicial review of a decision taken in disciplinary proceedings?

2. Whether Regulation 10 of the Canara Bank Officer Employees’ (Discipline and Appeal) Regulations, 1976, is mandatory or directory regarding the conduct of common disciplinary proceedings for multiple employees?

The Court applied the principles of judicial review over domestic inquiries, which restrict courts from re-appreciating evidence unless the findings are vitiated by a lack of evidence or violation of natural justice

The Court interpreted Regulation 10 of the Canara Bank Officer Employees’ (Discipline and Appeal) Regulations, 1976, which uses the permissive term "may" regarding the initiation of common proceedings

It relied on the precedent of T. Baba Prasad v. Andhra Bank, which clarified that "may" should be construed as directory to preserve management discretion

cited State of U.P. v. Babu Ram Upadhya regarding the legislative intent behind mandatory versus directory language

Regarding the first issue, the Court found that the Division Bench did not exceed its jurisdiction because the inquiry findings were based on statements of co-accused officers who were never produced as witnesses for cross-examination

This constituted a "want of a semblance of evidence" and a violation of natural justice, justifying judicial intervention despite the limited scope of review

On the second issue, the Court analyzed the language of Regulation 10. It rejected the High Court of Karnataka's previous view that "may" should be read as "shall." The Court reasoned that interpreting the provision as mandatory would strip the Bank of its necessary discretion to handle dynamic disciplinary situations, such as when employees belong to different cadres or have varying levels of involvement in a misconduct

The Court held that the provision is facilitative/enabling for the employer rather than a vested right for the employee

correcting the legal interpretation of Regulation 10, holding that it is directory and not mandatory for the Bank to hold common proceedings

The Court directed Canara Bank to settle the accounts of the deceased Respondent’s legal heirs within six weeks in light of the quashed punishment

The appeal was disposed of accordingly