IN THE SUPREME COURT OF INDIA        Reportable

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 5861 OF 2007

STATE BANK OF BIKANER & JAIPUR .......APPELLANT  

Versus

NEMI CHAND NALWAYA .....RESPONDENT

O R D E R

R. V. Raveendran J.,

   The  respondent  was  employed  as  a  clerk  in  the  

Kalindri branch of the appellant Bank.  He was issued a  

charge-sheet dated 30.8.1988.  The two charges against him  

are extracted below :

(i) On 14.10.1987, you disclosed the balance of  SB Account No.1025 of Shri Dharamchand Nathaji  lying  in  in-operative  account  to  an  unidentified person posing himself as the said  account holder though the person was not having  even Pass Book of that account. This disclosure  of  secrecy  led  a  fraudulent  withdrawal  of  Rs.6,000/-  from  the  said  account  thereby  putting the bank into loss.

(ii) On 14.10.1987, you have advised Shri I.M.  Rawal, the counter clerk handling Savings Banks  ledgers  to  transfer  the  balance  lying  in  account number 1025 in the name of Shri Dharam  Chand  Nathaji  from  in-operative  Savings  Bank  ledger  to  that  of  operative  ledgers  without  first obtaining the permission of the Branch  Manager which is a pre-requirement in all such  cases.  It  is  further  alleged  that  you  have  collected the withdrawal form purported to have  been signed by the depositor, handed over the

same to Shri I.M. Rawal, the counter clerk,  obtained  token  and  after  it  was  passed  for  payment by the Branch Manager, obtained payment  from paying cashier Shri S.R. Meghwal  The real  depositor has subsequently complained that the  signature on withdrawal form was forged and the  matter is now under police investigation.”

The charge-sheet followed a preliminary enquiry by one H.  

S. Sharma, an officer of the appellant bank, in which the  

respondent  broadly  admitted  the  facts  constituting  the  

subject matter of the two charges.  

2.     A joint inquiry was held in respect of the  

charges against the respondent and two others namely I.M.  

Rawal and S.R. Meghwal. Several witnesses were examined.  

The  Inquiry  Officer  submitted  a  report  dated  12.6.1989  

holding that both the charges against the respondent were  

proved. He also held that the charges against I.M. Rawal  

and  S.R.  Meghwal  were  also  proved.  The  disciplinary  

authority considered the inquiry report.  He was of the  

view  that  on  the  material  placed  in  the  inquiry,  the  

respondent was not guilty of the first charge. He, however,  

concurred with Inquiry Officer in regard to the finding of  

guilt  recorded  in  respect  of  the  second  charge.  He,  

therefore,  issued  a  show  cause  notice  dated  23.6.1990  

proposing to impose the punishment of dismissal in regard  

to the second charge.  After considering the respondents’  

reply, the disciplinary authority, by order dated 1.8.1990,  

imposed the punishment of dismissal.  The matter rested  

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there for several years.   

3.    In the meanwhile, on the basis of a complaint by the  

Branch Manager, a charge-sheet was filed before the Chief  

Judicial Magistrate, Sirohi, in regard to the allegations  

which were the subject matter of the departmental enquiry.  

The criminal court acquitted the respondent by judgment  

dated 7.7.1994, holding that charges were not proved beyond  

doubt.  Thereafter,  he  filed  a  writ  petition  (WP  

No.5761/1994) challenging his dismissal, on the ground that  

he  was  acquitted  in  the  criminal  case.   The  said  writ  

petition was disposed of by a brief order dated 26.5.1997  

observing that he may avail the remedy of appeal and the  

appellate authority may consider the explanation for delay  

in submitting the appeal.

4. The respondent filed an appeal before the Appellate  

Authority, with an application for condonation of delay.  

The  appellate  authority,  by  order  dated  7.10.1997,  

dismissed   the application for condonation of delay and  

consequently dismissed the appeal.   

5. The respondent challenged the order of the appellate  

authority in WP No.450/1998. A leaned Single Judge of the  

Rajasthan High Court dismissed the writ petition on the  

ground that the appellate authority had not committed any  

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error in dismissing the appeal on the ground of delay.  The  

respondent filed a special appeal and the division bench of  

the High Court allowed the appeal by the impugned judgment  

dated  4.4.2006.  The  pendency  of  the  criminal  case  was  

accepted  as  sufficient  explanation  regarding  delay.  The  

division bench held that the non-filing of the appeal by  

the respondent in time was due to a bona fide impression  

that he could do so after the disposal of the criminal  

proceedings. With reference to merits, the division bench  

held that no wilful or fraudulent conduct with intention to  

cause loss to the appellant Bank, nor misappropriation by  

the respondent, was made out.  The division bench was of  

the view that the case was not one where respondent had  

acted  in  wilful  dereliction  of  duty;  and  that  in  an  

increasing customer-friendly atmosphere in the Bank, the  

respondent  had  acted  bona  fide  and  allowed  the  person  

considered by him to be a valued customer to operate on the  

account not realising that such person was impersonating  

the account holder.  The High Court was of the view that in  

such  circumstances,  the  question  of  loss  of  confidence  

would not arise and the punishment of dismissal was grossly  

disproportionate  to  the  misconduct.   Therefore,  it  set  

aside the order of dismissal and directed reinstatement  

with full backwages and consequential benefits.  The said  

order is challenged in this appeal by special leave.

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6. It is now well settled that the courts will not act as  

an appellate court and reassess the evidence led in the  

domestic enquiry, nor interfere on the ground that another  

view is possible on the material on record. If the enquiry  

has been fairly and properly held and the findings are  

based on evidence, the question of adequacy of the evidence  

or the reliable nature of the evidence will not be grounds  

for  interfering  with  the  findings  in  departmental  

enquiries.  Therefore,  courts  will  not  interfere  with  

findings of fact recorded in departmental enquiries, except  

where such findings are based on no evidence or where they  

are clearly perverse. The test to find out perversity is to  

see whether a tribunal acting reasonably could have arrived  

at such conclusion or finding, on the material on record.  

Courts  will  however  interfere  with  the  findings  in  

disciplinary matters, if principles of natural justice or  

statutory regulations have been violated or if the order is  

found to be arbitrary, capricious, mala fide or based on  

extraneous  considerations.  (vide  B.  C.  Chaturvedi  vs.  

Union of India – 1995 (6) SCC 749, Union of India vs. G.  

Gunayuthan –  1997  (7)  SCC  463,  and  Bank  of  India  vs.  

Degala Suryanarayana – 1999 (5) SCC 762,  High Court of  

Judicature at Bombay vs. Shahsi Kant S Patil – 2001 (1) SCC  

416).  

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7. When  a  court  is  considering  whether  punishment  of  

‘termination from service’ imposed upon a bank employee is  

shockingly excessive or disproportionate to the gravity of  

the  proved  misconduct,  the  loss  of  confidence  in  the  

employee will be an important and relevant factor. When an  

unknown  person  comes  to  the  bank  and  claims  to  be  the  

account-holder of a long inoperative account, and a bank  

employee,  who  does  not  know  such  person,  instructs  his  

colleague  to  transfer  the  account  from  “dormant”  to  

“operative” category (contrary to instructions regulating  

dormant accounts) without any kind of verification, and  

accepts the money withdrawal form from such person, gets a  

token and collects the amount on behalf of such person for  

the purpose of handing it over to such person, he in effect  

enables such unknown person to withdraw the amount contrary  

to the banking procedures; and ultimately, if it transpires  

that the person who claimed to be account holder was an  

imposter, the bank can not be found fault with if it says  

that it has lost confidence in the employee concerned. A  

Bank is justified in contending that not only employees who  

are  dishonest,  but  those  who  are  guilty  of  gross  

negligence, are not fit to continue in its service.

8. Several witnesses were examined to prove the charge.  

One of them was H.S. Sharma who conducted the preliminary  

inquiry and to whom the respondent had made a statement  

broadly admitting the facts which constituted the subject  

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matter  of  the  second  charge.  I.M.  Rawal,  who  was  the  

cashier and I.C. Ojha, the officiating Branch Manager were  

also  examined.  Based  upon  their  evidence,  the  Inquiry  

Officer found the respondent to be guilty of the second  

charge  and  that  has  been  accepted  by  the  disciplinary  

authority.  The High Court has interfered with the said  

finding without expressly holding that the said finding of  

guilt was erroneous.  The High Court has proceeded as if it  

was sitting in appeal over the departmental inquiry and  

interfered with the finding on a vague assumption that the  

respondent  must  have  acted  bonafide  in  an  “increasing  

customer friendly atmosphere”. There was no justification  

for the division bench to interfere with the finding of  

guilt.

9. The  fact  that  the  criminal  court  subsequently  

acquitted  the  respondent  by  giving  him  the  benefit  of  

doubt, will not in any way render a completed disciplinary  

proceedings invalid nor affect the validity of the finding  

of guilt or consequential punishment. The standard of proof  

required in criminal proceedings being different from the  

standard of proof required in departmental enquiries, the  

same charges and evidence may lead to different results in  

the  two  proceedings,  that  is,  finding  of  guilt  in  

departmental proceedings and an acquittal by giving benefit  

of doubt in the criminal proceedings. This is more so when  

the  departmental  proceedings  are  more  proximate  to  the  

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incident, in point of time, when compared to the criminal  

proceedings. The findings by the criminal court will have  

no  effect  on  previously  concluded  domestic  enquiry.  An  

employee who allows the findings in the enquiry and the  

punishment by the disciplinary authority to attain finality  

by non-challenge, cannot after several years, challenge the  

decision  on  the  ground  that  subsequently,  the  criminal  

court has acquitted him.  

10. We are, therefore, of the view that the High Court was  

not  justified  in  quashing  the  punishment  and  directing  

reinstatement  with  backwages  and  consequential  benefits.  

In fact, the order of the High Court directing back wages  

amounts to rewarding a person who has been found guilty of  

a misconduct.  

11. However  having  regard  to  the  fact  that  the  proven  

charge  did  not  involve  either  misappropriation  or  

fraudulent conduct and the other circumstances of the case,  

we are of the view that the punishment of dismissal should  

be substituted by compulsory retirement, which does not  

involve reinstatement.  

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12.   We, accordingly, allow the appeal and set aside the  

judgment of the High Court. We uphold the finding of guilt  

recorded  by  the  disciplinary  authority,  but  modify  the  

punishment  from  ‘dismissal’  to  ‘compulsory  retirement’.  

There is therefore no question of grant of any back-wages.

  ......................J.             ( R.V. RAVEENDRAN  

)

New Delhi;    ......................J. March 01, 2011.                    ( A.K. PATNAIK )

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