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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

J     U     D     G     M     E     N     T   

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/  category of  post

Disciplinary authority

Appellate Authority

Reviewing  authority

xxx xxx xxx xxx b) Officers in MMG/  

Scale III &  officers in Grade  B posted at  Branches /  Offices under  jurisdiction of  Regional Offices  headed by  Regional Manager  in Senior  Management  Grade/ Scale IV /  Grade A including  officers sent on  deputation

Asst. Gen.  Manager  attached to  office of  respective  General  Manager  (Operations)

General  Manager

E.D.

xxx xxx xxx xxx c Posted at Head  

office or any  other office/  establishment  coming under  direct control of  Head Office  

Dy. General  Manager  (Personal)

G.M.  (Pers)

E.D.

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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