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REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 7515 OF 2012
[Arising out of SLP (Civil) No. 7645 of 2012]
UCO Bank & Ors. .. Appellants
Versus
Sushil Kumar Saha .. Respondent
JUDGMENT
K. S. RADHAKRISHNAN, J.
1. Leave granted.
2. The question that is posed for consideration in this case is
whether the disciplinary authority of the erstwhile place of posting,
where irregularities stated to have occurred/committed, could institute
and complete the disciplinary proceedings against the erring officials
(both officer and award staff), notwithstanding the fact that such
persons are later posted under the administrative jurisdiction of some
other authorities.
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3. The High Court, placing reliance on Regulations 5(1) and 6 of the
UCO Bank (Discipline and Appeal) Regulations, 1976 [for short
‘Regulations 1976’] read with Schedule thereto, took the view that it
was only the Deputy General Manager (for short ‘DGM’) who had the
power to initiate disciplinary proceedings against the respondent and
not the Assistant General Manager (for short ‘AGM’), as per the
Schedule to Regulations 1976, since at the time of initiation of
proceedings he was under the jurisdiction of the DGM. The High
Court, therefore, set aside the entire disciplinary proceedings,
including the charge-sheet, enquiry report, final order of punishment
and the appellate order and directed the Bank to release all the
admissible service benefits and pay admissible dues to the respondent.
We are, in this case, concerned with the legality of the order of the
High Court.
4. The Respondent joined the services of the Appellant UCO Bank
(for short ‘Bank’) as the Field Officer on 11.11.1978. He was later
promoted to the scale of MMGS-III on 17.7.2001. Respondent
functioned as the Senior Manager in the Bansdroni Branch of the Bank
from 15.10.2001 to 23.8.2005. Respondent was later transferred and
posted as the Senior Chief Officer at the Head Office of the Bank
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situated at Kolkata in August 2005. It was then noticed that while the
respondent was working as the Senior Manager at Bansdroni Branch,
he had committed serious irregularities in sanctioning loan and had
granted indiscriminate excess drawings and overdrawing facilities to
various parties beyond his powers and without approval from the
Controlling Office. Consequently, a show-cause-notice dated
23.3.2006 was issued by the Chief Officer, Regional Office, Kolkata.
Respondent filed his reply to the said show-cause-notice on 17.4.2006.
Being dissatisfied with the reply submitted by the respondent, the
Bank issued a charge-sheet along with Statement of Allegations dated
15.12.2006 through the AGM (Disciplinary Authority) to hold a
domestic enquiry against the respondent in terms of Regulation 6 of
the Regulations 1976, levelling 7 charges which are extracted
hereunder for easy reference:
(i) that the respondent granted indiscriminate
excess drawings over the sanctioned Cash
Credit Limits of various parties beyond his
delegated power and without prior approval
from Controlling Office;
(ii) that while granting unauthorized excess
drawings, the respondent concealed the said
fact from the controlling office;
(iii) that the respondent failed to induce the
parties to observe credit discipline and
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indulged in granting them unauthorized
accommodation detriment to the interest of
the bank;
(iv) that before disbursement of credit facility,
respondent did not take collateral security in
respect of various cash credit borrowers
violating sanction stipulation rather extended
the enhanced limit in favour of the borrowers
etc.;
(v) that the respondent did not take steps for
creation of valid stipulation in various cases
and failed to effectively monitor/control and
supervise the following advance accounts to
protect the interest of the bank;
(vi) that the respondent in blatant violation of the
sanctioned limits in the case of M/s J.C.
Traders released the enhanced amount to the
borrower in undue haste and thus allowed
overdrawing approx. Rs.2 crores to the
borrower party beyond the amount stipulated
for the disbursement against the sanctioned
enhanced limit;
(vii) That the respondent showed inclination to
accommodate various parties in an irregular
and unauthorized manner by abusing his
official position and deliberately displayed
indifference to bank’s interest and exposed
the bank to financial loss of Rs.598.07 lacs
approx. as most of the accounts turned
potential NPA/NPA.”
5. Respondent filed his reply to the said charge-sheet on 17.1.2007.
The reply submitted by the respondent was considered by AGM in the
capacity of the Disciplinary Authority and he found the same
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unsatisfactory and decided to hold a departmental enquiry against the
respondent and appointed Shri Benod Bihari Hazra, Retired Executive
of the Bank as an Enquiring Authority to enquire into various charges
leveled against the respondent. Detailed enquiry was conducted and,
ultimately, the enquiry report dated 12.3.2008 was submitted to the
AGM.
6. AGM concurred with the findings of the Enquiring Officer in
respect of the charges, including Charge No. 4, which the AGM found
to be fully proved. A copy of the enquiry report was served on the
respondent, to which he filed a detailed reply. AGM, after considering
the reply submitted by the respondent, passed final order on
19.4.2008, in exercise of his powers conferred under Regulation 4 of
the Regulations 1976 and imposed penalty of dismissal from service.
Aggrieved by the said order of AGM, Respondent filed an appeal before
the Appellate Authority, namely DGM, Personnel Services, Department,
Head Office. Appellate authority dismissed the appeal vide its order
dated 22.7.2008.
7. Aggrieved by the order of the Appellate Authority, respondent
filed a writ petition No. 1546 of 2008 before the High Court of
Calcutta, which was dismissed by the learned single Judge of the High
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Court vide its judgment dated 19.11.2009. Appeal was preferred by
the respondent to the Division Bench vide A.P.O. No. 342 of 2009 and
the Bench vide its judgment dated 19.12.2011 allowed the appeal
holding that AGM has no jurisdiction to initiate the disciplinary
proceedings. The Division Bench also directed reinstatement of the
respondent into service along with all consequential benefits, against
which this appeal has been preferred by the Bank.
8. Shri Vivek Tankha, learned senior counsel appearing for the
Appellant-Bank, submitted that the High Court has committed a grave
error in holding that the proceedings initiated by AGM were without
jurisdiction and ordered reinstatement of the respondent with all
consequential benefits. Learned senior counsel also submitted that the
respondent had not challenged the validity of the Circular dated
11.8.2004 or the note dated 3.8.2004 and that the High Court, on a
wrong interpretation of those provisions, took the view that AGM had
no jurisdiction to act as the Disciplinary Authority. In support of his
contention, learned senior counsel relied upon the judgment of this
Court in Allahabad Bank v. Prem Narain Pande and Others (1995)
6 SCC 634.
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9. Shri Soumitra G. Chaudhuri, learned counsel appearing for the
respondent, submitted that AGM has no jurisdiction to act as the
Disciplinary Authority over the respondent and the Division Bench of
the High Court has rightly held that the entire disciplinary proceedings,
starting from the charge-sheet till the dismissal of the respondent, was
without jurisdiction Learned counsel, placing reliance on Regulations
5(1) and 6 of the Regulations 1976, contended that the DGM alone
could have initiated the disciplinary proceedings against the
respondent. Learned counsel, therefore, submitted that the Division
Bench of the High Court has rightly quashed the entire proceedings
and ordered reinstatement of the respondent with all consequential
benefits.
10. We are, in this case, concerned only with the question whether
the disciplinary proceedings were lawfully initiated by the AGM and
whether power has been conferred on him to act as the Disciplinary
Authority against the respondent, since the irregularities stated to
have been committed while he was working at Bansdroni Branch of the
Bank.
11. Regulations 1976 was framed by the Board of Directors of the
UCO Bank, in exercise of its powers conferred under Section 19 of the
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Banking Companies (Acquisition and Transfer of Undertakings) Act,
1970 (for short ‘Act 1970’), in consultation with the Reserve Bank of
India and the previous sanction of the Central Government.
Regulation 3(g) of the Regulations 1976 reads as under:
“Disciplinary Authority” means the authority specified in the
Schedule which is competent to impose on an officer
employee any of the penalties specified in regulation 4.”
12. Regulation 4 deals with Minor and Major Penalties. Regulation 5
refers to the Authority to initiate disciplinary proceedings and impose
penalties. Regulation 5 is extracted hereunder for easy reference:
“5. Authority to institute disciplinary proceedings
and impose penalties:
(1) The Managing Director or the Executive Director or
any other authority empowered by either of them by
general or special order may institute or direct the
Disciplinary Authority to institute disciplinary
proceedings against an officer employee of the bank.
(2) The Disciplinary Authority may himself institute
disciplinary proceedings.
(3) The Disciplinary Authority or any authority higher than
it, may impose any of the penalties specified in
regulation 4 on any officer employee.”
(emphasis added)
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Regulations 6(1) and (2) deal with the procedure for imposing major
penalties and they are as follows:
“6. Procedure for imposing major penalties:
(1) No order imposing any of the major penalties specified
in clauses (f), (g), (h), (i) and (j) of regulation 4 shall
be made except after an inquiry is held in accordance
with this regulation.
(2) Whenever the Disciplinary Authority is of the opinion
that there are grounds for inquiring into the truth of
any imputation of misconduct or misbehavior against
an officer employee, it may itself enquire into, or
appoint any other public servant (hereinafter referred
to as the inquiring authority) to inquire into the truth
thereof.”
13. Regulation 18 (unamended) deals with Review and the same
reads as follows:
“18. Review:
Notwithstanding anything contained in these regulations,
the Reviewing Authority may call for the record of the case
within six months of the date of the final order and after
reviewing the case pass such orders thereon as it may
deem fit.
Provided that –
(i) If any enhanced penalty, which the Reviewing
Authority proposes to impose, is a major penalty
specified in clauses (f), (g), (h), (i) or (j) of
regulation 4 and an enquiry as provided under
regulation 6 has not already been held in the case,
the Reviewing Authority shall direct that such an
enquiry be held in accordance with the provisions of
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regulation 6 and thereafter consider the record of
the enquiry and pass such orders as it may deem
proper;
(ii) If the Reviewing Authority decides to enhance the
punishment but an enquiry has already been held
in accordance with the provisions of regulation 6,
the Reviewing Authority shall give show cause
notice to the officer employee as to why the
enhanced penalty should not be imposed upon him
and shall pass an order after taking into account
the representation, if any, submitted by the officer
employee.”
14. The Board of Directors of UCO Bank, in exercise of its powers
conferred under Section 19 read with sub-section (2) of Section 12 of
the Act 1970, approved the amendment to Regulation 18 and the
Schedule to the Regulations 1976, in consultation with the Reserve
Bank of India and with previous sanction of the Central Government,
and a circular No. CHO/POS/11/2002 dated 4.4.2002 to that effect was
issued and sent by the Bank to all branches/office, the operative
portion of the same reads as follows:
“In the UCO Bank Officer Employees (Discipline and
Appeal) Regulations, 1976.
(a) For regulation 18, the following regulation shall
be substituted namely:
18. Review
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Notwithstanding anything contained in these
regulations, the Reviewing Authority may at any time
within six months from the date of the final order,
either on his own motion or otherwise review the said
order, when any new material or evidence which could
not be produced or was not available at the time of
passing the order under review and which was the
effect of changing the nature of the case has come or
has been brought to his notice and pass such orders
thereon as it may deem fit.
xxx xxx xxx
xxx xxx xxx
The existing schedule, the following schedule shall be
substituted namely:
a. Scale/ Disciplinary Appellate Reviewing
category of authority Authority authority
post
xxx xxx xxx xxx
b) Officers in MMG/ Asst. Gen. General E.D.
Scale III & Manager Manager
officers in Grade attached to
B posted at office of
Branches / respective
Offices under General
jurisdiction of Manager
Regional Offices (Operations)
headed by
Regional Manager
in Senior
Management
Grade/ Scale IV /
Grade A including
officers sent on
deputation
xxx xxx xxx xxx
c Posted at Head Dy. General G.M. E.D.
office or any Manager (Pers)
other office/ (Personal)
establishment
coming under
direct control of
Head Office
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including the
regional Rural
Banks / Regional
Training Centres/
Central Staff
college and
officers sent on
deputation &
inspecting officers
xxx xxx xxx xxx
Note- 1. Where a post of any of the above said
authorities remains vacant without officiating/ acting
arrangement having been authorized, the powers
should be exercised by the next higher authority.
2. The powers of any of the above specified
authorities may be exercised by any other authority
nominated by the Executive Director/Chairman &
Managing Director who is equal in rank to or higher
than the authority specified above.
The amendments to the above regulation and to the
schedule came into force w.e.f. 9.2.2002.”
15. The Top Management Committee (for short ‘TMC’) of the Bank
convened its 11th Meeting on 26.6.2004 at Bank’s Head Office at
Calcutta and the necessity of expeditious disposal of disciplinary cases
was discussed in that meeting, though it was not minuted in the
proceedings, says the learned senior counsel appearing on behalf of
the Bank. Following the TMC meeting held on 26.6.2004, an Inter
Departmental Note dated 3.8.2004 was placed by the GM (Personnel)
of the Bank before the Chairman and Managing Director (for short
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‘CMD’) referring to the decision taken for expeditious disposal of
disciplinary cases, the operative portion of the same reads as follows:
“NOTE TO CHAIRMAN & MANAGING DIRECTOR
Sub: Expeditious disposal of disciplinary action cases
– decision taken in the TMC meeting dated 26.06.2004
In terms of existing Schedule of Disciplinary Authorities,
consequent upon transfer of any employee (both officer
and Award staff) from one region to another, the
disciplinary authority changes. As per Head Office Circular
No. CHO/PMG/4/2002 dated 16.1.2002 with the transfer of
a charge sheeted employee (both officer and award staff),
the disciplinary authority over him will remain the same
and the said disciplinary authority would complete the RDA
cases, irrespective of the fact that the charge sheeted
employee has been transferred. This order has been made
effective from 1.2.2002. In terms of the above circular,
however, if the irregularity is detected after the transfer of
the employee, the disciplinary authority at the new place of
posting will take appropriate action.
In view of the above, it has been observed that delay
occurs in the matter of initiating appropriate action
including disciplinary action against the erring employees,
who had committed irregularities in his earlier place of
posting. Therefore, the TMC in its meeting held on
26.6.2004 decided that henceforth the disciplinary
authority of erstwhile place of posting where the
irregularities took place, will institute and complete the
RDA against the erring official (both officer and award
staff) considering the nature and extent of irregularities as
the relevant records are readily available with them.
Accordingly, Personnel Department, Head Office proposes
to issue a Circular which would be made effective from
16.8.2004, in compliance with the above directives of TMC,
a copy of which is enclosed for kind perusal and approval.”
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(emphasis added)
16. The note was perused and approved by the CMD of the Bank on
10.8.2004 in exercise of his powers conferred under Regulation 5(1) of
the Regulations 1976. On the next day, i.e. 11.8.2004, the General
Manager (Personnel) of the Bank issued a Circular No.
CHO/PMG/22/2004 to all the branches for expeditious disposal of
disciplinary cases stating, inter alia, as follows:
“As the new disciplinary authority is not naturally aware of
the nature and extent of irregularities allegedly committed
by the employee in his earlier place of posting and relevant
records / documents etc. are kept in the old place of
posting, it was decided vide Bank’s Circular No. CHO/PMG?
4/2002 dated 16.1.2002 that with the transfer of a charge
sheeted employee (both officer / award staff) the
disciplinary authority over him would remain the same and
the said DA would complete the RDA case irrespective of
the fact that the charge sheeted employees has been
transferred. The operation of the circular was made
effective from 1.2.2002. However the provision of this
circular was not made applicable for employees, in whose
cases the irregularities were detected subsequently and no
appropriate steps for such irregularities which warrant
timely action including disciplinary action against the erring
officials, often gets delayed as neither the new disciplinary
authority nor the old office/branch from where the
employee has been transfers, takes proper care to facilitate
initiation of RDA and expeditious disposal of the same.
The matter was thoroughly discussed in the Top
Management Committee in meeting dated 26.6.2004. To
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obviate delay in initiation of RDA and conclusion of the
same, due to change of disciplinary authority consequent
upon transfer of the employee, against whom lapses are
attributable for his irregular action in earlier place of
posting, the committee decided that henceforth, in terms of
bank’s circular No. CHO/PAS/2/2000 dated 23.6.2000 for
Award staff and CHO/POS/11/2002 dated 4.4.2002 for
officers, the disciplinary authority of erstwhile place of
posting, where irregularities occurred/committed, will
institute and complete the RDA against the erring officials
(both officer and award staff), considering the nature and
extent of the irregularities on case to case basis,
notwithstanding such employees are presently posted under
the administrative jurisdiction of some other authorities.
Similarly, the appellate authorities of earlier place of
posting of the erring official (both officer and award staff)
would take steps for disposal of the appeals preferred
against the final orders passed by such disciplinary
authorities. This decision has been taken keeping in view
the position that the earlier disciplinary authority/appellate
authority is better aware of the facts and circumstances of
such cases and the relevant documents/records are readily
available in the earlier place of posting.
We feel that the above revised guidelines will expedite
disposal of RDA cases within the stipulated time frame of
four and six months for non vigilance and vigilance cases
respectively as directed by the DPC.
The disciplinary authorities/appellate authorities are advised
to note this changes for strict compliance, which would
come into operation w.e.f. 16.8.2004. Existing cases,
where charge sheets / letters of imputations or lapses have
already been issued, will however, not be affected by the
operation of this circular.
A copy of this circular should be displayed on the notice
board for the information of all concerned.”
(emphasis added)
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17. We have already indicated that the respondent was working as
the Senior Manager at Bansdroni Branch of the Bank from 15.10.2001
to 23.8.2005 and the irregularities were committed or occurred while
he was working at that branch of the Bank and the respondent was
later transferred to the Head Office on August 2005. While he was
working at the Head Office, the Bank came to know of the
irregularities committed by him while he was working at the Branch
Office of the Bank during the above mentioned period. Consequently,
disciplinary proceedings were initiated against him and a charge-sheet
dated 15.12.2006 was issued to him by AGM following the above
mentioned circular dated 11..8.2004, which conferred powers on AGM
since the irregularities occurred or committed when he was functioning
at the Branch Office.
18. In the instant case, however, AGM is justified in initiating
disciplinary proceedings which is in accordance with the decision dated
3.8.2004 as well as the circular dated 11.8.2004. The Note dated
3.8.2004 which was approved by CMD in exercise of the powers
conferred on him under Regulation 5(1) is statutory in nature.
Regulation 5 specifically empowers the Managing Director or the
Executive Director or any other authority empowered by either of them
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by general or special order, may institute or direct the disciplinary
authority to institute disciplinary proceedings. Further, note 2 to the
schedule also stipulates that the powers of the specified authorities
may be exercised by any other authority nominated by the Executive /
CMD, who is equal in rank or higher than the authority specified
therein. The reasons for entrusting the task of initiating the
disciplinary proceedings on the disciplinary authority of the erstwhile
place of posting is that the new disciplinary authority might not be
aware of the nature and extent of irregularities allegedly committed by
the employee in his earlier place of posting, since the relevant records,
documents etc. are kept in the old place of posting. The Bank in its
wisdom felt that such a course will expedite disposal of the disciplinary
cases within the stipulated time framed. This Court is not expected to
sit in judgment over wisdom of the Bank in taking such a decision
which is to expedite the disciplinary proceedings.
19. Consequently, the AGM who had the disciplinary control over the
respondent while he was working at the Branch Office has got
jurisdiction to conduct an enquiry with regard to the irregularities
committed by the respondent while he was working as the Senior
Manager at the Branch Office of the Bank from 15.11.2001 to
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23.8.2005. We may indicate that in Allahabad Bank (supra), this
Court while interpreting the provisions of Regulations 3, 4, 5(1) & (2),
6(3), 21(ii) and 7(3) of the Allahabad Bank (Discipline and Appeal)
Regulations, 1976, held that the High Court has taken too narrow a
view of the controversy posed before it and has set aside the dismissal
on too hyper-technical a view which cannot be sustained on the
scheme of the Regulations.
20. We are of the view that, in this case also, the High Court has
taken a narrow view while interpreting Regulation 1976, the Note
dated 3.8.2004, Circular dated 11.8.2004 read with Regulation 5(1).
Omitting to note its purpose and object, that is speedy and expeditious
disposal of cases with regard to the disciplinary proceedings against
erring officials, the High Court has committed an error in quashing the
note as well as the circular.
21. In the facts and circumstances of the case, we are of the view
that the Division Bench of the High Court has committed an error in
quashing the proceedings initiated by the AGM (Disciplinary Authority)
and the punishment imposed. Consequently, the appeal is allowed
and the judgment of the Division Bench of the High Court is set aside.
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………………………………………..J.
(K.S. Radhakrishnan)
……………………………………..J.
(Dipak Misra)
New Delhi,
October 15, 2012
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