The Supreme Court has asserted that in judicial review of disciplinary proceedings, a writ court does not exceed its jurisdiction where it interferes on the ground that the findings are based on material which the delinquent officer had no opportunity to rebut and where the enquiry findings suffer from want of evidence; such interference falls within the settled limits of judicial review.
Second, the Court clarified that Regulation 10 of the Canara Bank Officer Employees’ (Discipline and Appeal) Regulations, 1976, which states that the competent authority “may” direct a common proceeding where two or more officer employees are concerned in a case, is directory and not mandatory. The provision is facilitative and preserves management discretion; it does not confer any right on a delinquent employee to insist on a joint or common disciplinary proceeding, and failure to hold such a joint proceeding does not by itself vitiate the disciplinary action.
Accordingly, the Supreme Court interfered with the Division Bench judgment only to the limited extent of its view on Regulation 10. It otherwise left undisturbed the Division Bench’s interference with the punishment order and directed the Bank to settle the account of the deceased employee in light of the judgment within six weeks.
A Two-Judge Bench of Justice S.V.N. Bhatti and Justice Vijay Bishnoi observed that on the first issue, the Division Bench of the High Court had not exceeded the scope of judicial review in disciplinary matters. The Supreme Court observed that the scope of judicial review in such matters is well settled and that, on examination of the record, the findings of the High Court on the merits were available on the material and disclosed no departure from settled law. It specifically held that the errors noticed by the High Court in relation to the findings against the employee were not immaterial and that the impugned judgment required confirmation to that extent.
On the second issue, the Supreme Court separately considered Regulation 10, which provides that where two or more officer employees are concerned in a case, the competent authority “may” direct that disciplinary proceedings against all of them be taken in a common proceeding. The Court held that the word “may” in Regulation 10 is directory and not mandatory. It held that construing “may” as mandatory would wrongly remove the discretion available to the employer in dynamic situations, including where the roles of charge-sheeted employees differ or where different disciplinary authorities may be competent depending on the cadre of the employee concerned.
Briefly, the appeal arises out of disciplinary proceedings initiated by Canara Bank against Prem Latha Uppal, who was working as a Senior Manager, Scale III, and was one of the three members of the Credit Sanction Committee at the Bank’s Diplomatic Enclave Branch, New Delhi. The charges against the employee arose from sanction of financial assistance to M/s Aman Trading Company and M/s Creative Trading Company. The case of the Bank was that the sanction was vitiated by negligence and collusion amounting to misconduct, particularly because the officers had sanctioned the loans without proper examination of the borrowers and without verifying the assets offered as security.
The charge-sheet contained two Articles of Charges. Under Article I, the allegations included failure to verify the existence of the business, failure to properly investigate ownership of the collateral property, failure to obtain and verify the “OPL” directly from the previous banker, failure to ensure closure of the prior banking account as required by sanction terms, failure to notice discrepancies in financial papers, failure to ensure execution of loan documents by the correct person, failure to verify identity and net worth of the guarantor, permitting large cash withdrawals, and recommending renewal of credit facilities without audited balance sheets. Under Article II, the employee was charged with failing to scrutinise the Legal Scrutiny Report properly, including not identifying discrepancy in the Sub-Registrar’s office address, failing to compare and note differences in photographs and signatures appearing on official identity documents and bank records, failing to verify guarantors’ net worth, permitting large cash withdrawals without monitoring end use, and recommending the credit limit without independently verifying the business existence or ownership of collateral property, including reliance on an introducer whose account did not satisfy the bank’s minimum account age requirement.
In challenging the punishment, the employee contended that she was only a Senior Manager and a member of the Credit Committee and not the final sanctioning authority; that investigation of the fraudulent firms was handled by other officers; that she was being held liable for functions outside her Key Result Areas; that the enquiry relied on statements of persons who were not examined during the disciplinary proceedings, thereby violating natural justice; that she was punished even on charges not found established by the Enquiry Officer; and that there was hostile discrimination because six other officers received only minor penalties while she alone received a severe punishment. She also alleged mechanical consideration by the disciplinary, appellate and reviewing authorities.
The Bank, in response, maintained that as Senior Manager in charge of the Credit Department and as a committee member, she had direct responsibility to cross-check documents and ensure compliance with safeguards while sanctioning the loan. The Bank also contended that strict rules of the Indian Evidence Act did not apply in domestic enquiries, that she had not challenged the veracity of the statements relied upon during the enquiry, that the enquiry authority had in fact exonerated her on some allegations such as cash withdrawals where evidence was lacking.
The Single Judge of the High Court accepted the Bank’s position and held that no material was produced to show that the charges against the employee and those against the other officers were identical, that she had acted casually and negligently in failing to independently verify the firms and collateral securities, and that Regulation 10 was discretionary because the word used is “may.” The Single Judge further held that substantial opportunity had been given in the enquiry and that the authorities had diligently considered her case, leaving no ground for judicial review.
The Division Bench, however, set aside the punishment. On merits, it held that the enquiry was vitiated because statements of S.S. Bhat and R. Chandramouli, who were officers and co-accused in respect of the same cause of action, were relied upon although neither of them had been examined in the departmental enquiry. The Division Bench found that the Enquiry Officer had relied on material which the employee had no effective opportunity to rebut, and that Management Witness 1 was not himself a witness to the accusations but was relying upon statements recorded in preliminary investigation. It therefore held that the findings were vitiated for want of a semblance of evidence.
Appearances:
Hetu Arora Sethi, AOR, Lalit Mohini Bhat, Adv., Rahul Jain, Adv., Siddarth Agarwal, Adv., Sanidhya Kumar, Adv., Anirudh Bhat, Adv., for Appellant
Shailesh Madiyal, Sr. Adv., Mahesh Thakur, AOR, Narveer Yadav, Adv., Siddhartha Sati, Adv., Vineeth B Prasad, Adv., Ruchi Kumari, Adv., Anchit Singla, Adv., Dushyant Pratap Singh, Adv., for Respondent
