SBI Employee’s Demonetisation-Era Penalty Sent Back For Reconsideration As Calcutta HC Bars Combining Pay Reduction And Increment Stoppage Under 2002 Rules

The petitioner, a bank employee, was charged with making cash deposits disproportionate to his known income, swapping specified bank notes during demonetisation in breach of applicable instructions, and using other persons’ accounts and his salary account to facilitate transactions.

After a disciplinary enquiry, the charges were found proved or partly proved, and the Disciplinary Authority ordered reduction by two stages for two years while also directing that the petitioner would not earn increments during that period.

The Appellate Authority affirmed the penalty.

The petitioner challenged the disciplinary findings and both authorities’ orders under Article 226.

Under Article 226, a High Court does not sit as an appellate authority over a departmental enquiry; it may intervene where, among other grounds, findings are based on no evidence, relevant material has been ignored, irrelevant material has been considered, or the conclusion is perverse or procedurally unfair. Misconduct in a disciplinary proceeding is assessed on the balance of probabilities, not beyond reasonable doubt.

United Bank of India v. Biswanath Bhattacharjee, (2022) 13 SCC 329; Union of India v. P. Gunasekaran, (2015) 2 SCC 610; Union of India v. Dalbir Singh, (2021) 11 SCC 321.

Rule 6(e) of the 2002 Memorandum permits reduction to a lower stage in the pay scale, while Rule 6(f) permits stoppage of increments; the Court treated “or” between these distinct forms of punishment as disjunctive in the circumstances.

Rule 9, which restricts imposing more than one punishment for a single charge, does not itself authorise combining penalties contrary to Rule 6.

Commissioner of Customs, Central Excise and Service Tax, Patna v. Union of India, 2023 SCC OnLine SC 1330.

The Court found no demonstrated procedural violation or sufficiently patent perversity in the findings on the deposits, note-swapping, or use of accounts; the petitioner’s disagreement with the inferences drawn did not warrant reappreciation of evidence under Article 226.

It nevertheless held that the penalty’s operative terms combined two distinct forms of punishment: reduction in pay under Rule 6(e) and non-earning of increments under Rule 6(f).

The order’s reference to Rule 6(e) could not bring the additional increment-related consequence within that clause, and Rule 9 did not cure the defect.

The disciplinary findings were left undisturbed, but the disciplinary and appellate orders were set aside insofar as they sustained the composite penalty.

The matter was remitted to the Disciplinary Authority to select and impose a fresh, reasoned penalty under either Rule 6(e) or Rule 6(f), without combining them in the manner held impermissible.

The Bank was directed to release forthwith the financial benefits withheld under the impugned penalty, without prejudice to lawful consequences of a fresh penalty; reconsideration was to be completed preferably within eight weeks.

No order as to costs.