Page 1

NON-REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 11975 OF 2016 (ARISING OUT OF SLP (C) NO.30710 OF 2014)

CHIEF EXECUTIVE OFFICER,  KRISHNA DISTRICT COOPERATIVE  CENTRAL BANK LTD. AND ANOTHER .....APPELLANT(S)

VERSUS

K. HANUMANTHA RAO AND ANOTHER .....RESPONDENT(S)

J U D G M E N T

A.K. SIKRI, J.

Leave granted.

2. A departmental inquiry was conducted against respondent No.1

herein,  an  employee  of  appellant,  viz.  Krishna  District

Cooperative  Central  Bank  Ltd.,  into  certain  charges  of

misconduct.  In the said inquiry, charges were proved and as a

result  the  disciplinary  authority  inflicted the  punishment  of

dismissal from service upon respondent No.1.  The High Court

vide impugned judgment has altered the said penalty of dismissal Civil Appeal No. 11975 of 2016 Page 1 of 13 (arising out of SLP (Civil) No.30710 of 2014)

Page 2

to that of stoppage of two increments for a period of three years.   

Whether it was permissible for the High Court to do so in

the facts of the present case, is the question that needs to be

determined in the instant appeal.     

3. The events leading to the filing of this appeal are recapitulated in

brief as under:

Respondent  No.  1  was  a  Supervisor  of  five  Primary

Agricultural  Cooperative  Societies  (PACS).   He  failed  in

discharging his duties properly in supervising the same, which led

to  cheating  by  the  members  of  the  Nidamanuru  Primary

Agricultural  Cooperative  Society  (PACS)  resulting  in

misappropriation of the society funds, for which disciplinary action

was initiated against him.  The precise charges against him, vide

charge memo dated 08.03.2002, were that he had derelicted his

duties as Supervisor leading to misappropriation of the funds of

the society.  Details of fifteen such accounts/instances were given

wherein frauds had taken place and the amount of fraud involved

in each such case totalling upto Rs.46,87,950.10.  Names of the

persons  who  had  misappropriated  these  amounts  were  also

given.   It  was  mentioned  that  respondent  No.1  worked  as  a

Civil Appeal No. 11975 of 2016 Page 2 of 13 (arising out of SLP (Civil) No.30710 of 2014)

Page 3

Supervisor  of  the  society  and  it  was  his  duty  to  have  close

supervision over the affairs of the society and bring to the notice

of the Bank the fraud which took place and safeguard the funds of

the society and the Bank.  However, he failed to discharge his

legitimate duties of supervision leading to huge misappropriation

that had taken place, which he could not detect and thwart.  Thus,

by  derelicting  his  legitimate  duties  he  paved  way  for  huge

misappropriation  and  thereby  committed  grave  misconduct.

Inquiry was held and charge of dereliction of duty was proved as

per the report given by the Inquiry Officer.

4. There is no dispute that this inquiry was conducted in accordance

with  the  principle  of  natural  justice  giving  fair  chance  to

respondent No.1 to defend himself.  In fact, as per the report of

Inquiry Officer, respondent No.1 had even admitted dereliction of

duties on his part.   

5. The General Manager, Krishna District Cooperative Central Bank

Ltd.,  after  examining the report  of  the Inquiry  Officer  in  detail,

observed  that  the  charged  employee  committed  grave

misconduct and acted in a way unbecoming of an employee of

the Bank and passed an order of dismissal from service of the

Civil Appeal No. 11975 of 2016 Page 3 of 13 (arising out of SLP (Civil) No.30710 of 2014)

Page 4

Bank.   Feeling  aggrieved  by  the  order  dated  05.10.2002,

respondent No. 1 herein filed an appeal/mercy petition before the

Chairman,  Person  In-charge  Committee  of  the  Krishna

Cooperative Central Bank Ltd., and prayed to consider the case

sympathetically on humanitarian grounds and issue reinstatement

orders, which was also dismissed on 22.01.2003.  Respondent

No.  1  thereafter  filed  writ  petition  bearing  W.P. No.4238/2003

before the High Court of Andhra Pradesh at Hyderabad.

6. The learned single Judge of the High Court of Andhra Pradesh at

Hyderabad, after considering the material available on record and

after hearing the arguments of the counsel for the parties, held

that respondent No.1 was negligent in performing his duties and

committed an act  prejudicial  to  the interest  of  the Bank which

resulted in serious loss to the Bank.  The Single Judge of the

High Court  further observed that  because of  the negligence of

respondent  No.1,  an  amount  of  Rs.46,87,950.10  had  been

misappropriated by the staff and members of Nidamanuru PACS.

It  was  held  that  there  were  no  grounds  to  interfere  with  the

punishment imposed by the disciplinary authority and confirmed

by the appellate authority.   

Civil Appeal No. 11975 of 2016 Page 4 of 13 (arising out of SLP (Civil) No.30710 of 2014)

Page 5

7. Feeling  aggrieved  by  the  order  dated  18.07.2005,  respondent

No.1 preferred Writ Appeal No. 1640/2005, which has been partly

allowed by the Division Bench of the High Court vide its impugned

order dated 17.08.2014.  The Division Bench of the High Court

has, in fact, interfered with the penalty imposed.  Reason for such

a  course  of  action  adopted  by  the  High  Court  given  in  the

impugned  judgment  is  that  there  was  no  allegation  of

misappropriation against respondent No.1.  The accusation was

lack  of  proper  supervision  which  holds  good  against  the  top

administration as well.

8. After hearing the counsel for the parties, we are of the view that

the impugned judgment of the Division Bench of the High Court is

unsustainable.  There are more than one reason for coming to

this conclusion, which are stated hereunder:

(i) The  observation  of  the  High  Court  that  accusation  of  lack  of

proper supervision holds good against the top administration as

well is without any basis.  The High Court did not appreciate that

respondent No.1 was the Supervisor and it was his specific duty,

in  that  capacity, to  check the accounts  etc.  and supervise the

work of  subordinates.   Respondent No.1,  in  fact,  admitted this

Civil Appeal No. 11975 of 2016 Page 5 of 13 (arising out of SLP (Civil) No.30710 of 2014)

Page 6

fact.   Also,  there is  an admission to  the effect  that  his  proper

supervision  would  have  prevented  the  persons  named  from

defrauding the Bank.  The High Court failed to appreciate that the

duties of the Supervisor are not identical and similar to that of the

top management of the Bank.  No such duty by top management

of the Bank is spelled out to show that it was similar to the duty of

respondent No.1.

(ii) Even otherwise, the aforesaid reason could not be a valid

reason for interfering with the punishment imposed.  It is trite that

Courts, while exercising their power of judicial review over such

matters, do not sit as the appellate authority.  Decision  qua  the

nature  and  quantum  is  the  prerogative  of  the  disciplinary

authority.  It is not the function of the High Court to decide the

same.  It is only in exceptional circumstances, where it is found

that the punishment/penalty awarded by the disciplinary authority/

employer is wholly disproportionate, that too to an extent that it

shakes the conscience of the Court, that the Court steps in and

interferes.

No doubt, the award of punishment, which is grossly in excess to

the  allegations,  cannot  claim  immunity  and  remains  open  for

Civil Appeal No. 11975 of 2016 Page 6 of 13 (arising out of SLP (Civil) No.30710 of 2014)

Page 7

interference under limited scope for judicial review.  This limited

power of judicial review to interfere with the penalty is based on

the doctrine of proportionality which is a well recognised concept

of judicial review in our jurisprudence.  The punishment should

appear  to  be  so  disproportionate  that  it  shocks  the  judicial

conscience.  (See State of Jharkhand & Ors. v. Kamal Prasad

&  Ors.1).   It  would  also  be  apt  to  extract  the  following

observations  in  this  behalf  from the  judgment  of  this  Court  in

Deputy Commissioner, Kendriya Vidyalaya Sangthan & Ors.

v. J. Hussain2:

“8.   The order  of  the  appellate  authority  while having  a  relook  at  the  case  would,  obviously, examine as to whether the punishment imposed by the disciplinary authority is reasonable or not. If the appellate authority is of the opinion that the case warrants lesser penalty, it  can reduce the penalty so imposed by the disciplinary authority. Such  a  power  which  vests  with  the  appellate authority  departmentally  is  ordinarily  not available  to  the  court  or  a  tribunal.  The  court while undertaking judicial review of the matter is not  supposed  to  substitute  its  own  opinion  on reappraisal of facts. (See UT of Dadra & Nagar Haveli  v.  Gulabhia M. Lad  [(2010) 5 SCC 775 : (2010) 2 SCC (L&S) 101] . In exercise of power of  judicial  review,  however,  the  court  can interfere with the punishment imposed when it is found to be totally irrational or is outrageous in defiance of  logic.  This  limited scope of  judicial review  is  permissible  and  interference  is available only when the punishment is shockingly

1 (2014) 7 SCC 223 2 (2013) 10 SCC 106

Civil Appeal No. 11975 of 2016 Page 7 of 13 (arising out of SLP (Civil) No.30710 of 2014)

Page 8

disproportionate,  suggesting lack  of  good faith. Otherwise, merely because in the opinion of the court lesser punishment would have been more appropriate, cannot be a ground to interfere with the discretion of the departmental authorities.

9. When  the  punishment  is  found  to  be outrageously  disproportionate  to  the  nature  of charge,  principle  of  proportionality  comes  into play. It is, however, to be borne in mind that this principle would be attracted, which is in tune with the  doctrine  of  Wednesbury  [Associated Provincial  Picture  Houses  Ltd.  v.  Wednesbury Corpn., (1948) 1 KB 223 : (1947) 2 All ER 680 (CA)]  rule of reasonableness, only when in the facts  and  circumstances  of  the  case,  penalty imposed is so disproportionate to the nature of charge that it shocks the conscience of the court and the court is forced to believe that it is totally unreasonable  and  arbitrary.  This  principle  of proportionality was propounded by Lord Diplock in  Council of Civil Service Unions v. Minister for the Civil Service  [1985 AC 374 : (1984) 3 WLR 1174 : (1984) 3 All ER 935 (HL)] in the following words: (AC p. 410 D-E)

“...Judicial  review has I  think developed to a stage  today  when  without  reiterating  any analysis  of  the  steps  by  which  the development  has  come  about,  one  can conveniently classify under three heads of the grounds  upon  which  administrative  action  is subject to control by judicial  review. The first ground  I  would  call  ‘illegality’,  the  second ‘irrationality’  and  the  third  ‘procedural impropriety’.  This  is  not  to  say  that  further development on a case by case basis may not in course of time add further grounds. I have in mind particularly the possible adoption in the future of the principle of ‘proportionality’.”

10. An  imprimatur  to  the  aforesaid  principle was  accorded  by  this  Court  as  well  in  Ranjit Thakur  v.  Union of  India  [(1987)  4  SCC 611 : 1988  SCC  (L&S)  1  :  (1987)  5  ATC  113]  .

Civil Appeal No. 11975 of 2016 Page 8 of 13 (arising out of SLP (Civil) No.30710 of 2014)

Page 9

Speaking for the Court, Venkatachaliah, J. (as he then  was)  emphasising  that  “all  powers  have legal limits” invoked the aforesaid doctrine in the following words: (SCC p. 620, para 25)

“25...The question of the choice and quantum of  punishment  is  within  the  jurisdiction  and discretion  of  the  court  martial.  But  the sentence  has  to  suit  the  offence  and  the offender. It should not be vindictive or unduly harsh. It should not be so disproportionate to the offence as to  shock the conscience and amount in itself to conclusive evidence of bias. The doctrine of proportionality, as part of the concept  of  judicial  review, would ensure that even on an aspect which is, otherwise, within the exclusive province of the court martial,  if the decision of the court even as to sentence is  an  outrageous  defiance of  logic,  then the sentence  would  not  be  immune  from correction.  Irrationality  and  perversity  are recognised grounds of judicial review.”

No such finding is arrived at by the High Court to the effect

that the punishment awarded to respondent No.1 was shockingly

disproportionate.

Even otherwise, we do not find it to be so having regard to

the fact that respondent No.1 did not perform his duties with due

diligence  and  his  negligence  in  performing  the  duties  as  a

Supervisor has led to serious frauds in number of accounts by the

subordinate staff.  It was, therefore, for the disciplinary authority

to consider as to whether respondent No.1 was fit to continue in

the post of Supervisor.   

Civil Appeal No. 11975 of 2016 Page 9 of 13 (arising out of SLP (Civil) No.30710 of 2014)

Page 10

(iii) The impugned order is also faulted for the reason that it is not the

function of the High Court to impose a particular punishment even

in those cases where it was found that penalty awarded by the

employer  is  shockingly  disproportionate.   In  such  a  case,  the

matter  could,  at  the  best,  be  remanded  to  the  disciplinary

authority for  imposition of  lesser punishment leaving it  to  such

authority  to  consider  as  to  which  lesser  penalty  needs  to  be

inflicted  upon  the  delinquent  employee.   No  doubt,  the

administrative  authority  has  to  exercise  its  powers  reasonably.

However, the doctrine that powers must be exercised reasonably

has to be reconciled with the doctrine that  the Court  must not

usurp the discretion of the public authority.  The Court must strive

to  apply  an  objective  standard  which  leaves  to  the  deciding

authority the full range of choice.  In Lucknow Kshetriya Gramin

Bank & Anr.  v.  Rajendra Singh3, this principle is formulated in

the following manner:

“13.  Indubitably, the well-ingrained principle of law is that it  is the disciplinary authority, or the appellate authority in appeal, which is to decide the  nature  of  punishment  to  be  given  to  a delinquent  employee  keeping  in  view  the seriousness  of  the  misconduct  committed  by such an employee. Courts cannot assume and usurp the function of the disciplinary authority. In

3 (2013) 12 SCC 372

Civil Appeal No. 11975 of 2016 Page 10 of 13 (arising out of SLP (Civil) No.30710 of 2014)

Page 11

Apparel  Export  Promotion  Council  v.  A.K. Chopra  [(1999) 1 SCC 759 :  1999 SCC (L&S) 405] this principle was explained in the following manner: (SCC p. 773, para 22)

“22...The High Court in our opinion fell in error in interfering with the punishment, which could be  lawfully  imposed  by  the  departmental authorities  on  the  respondent  for  his  proven misconduct.  …  The  High  Court  should  not have substituted its own discretion for that of the authority. What punishment was required to be imposed, in the facts and circumstances of the case, was a matter which fell exclusively within  the  jurisdiction  of  the  competent authority and did not warrant any interference by the High Court. The entire approach of the High  Court  has  been  faulty.  The  impugned order of  the High Court  cannot be sustained on this ground alone.”

14.  Yet again, in State of Meghalaya v. Mecken Singh N. Marak  [(2008) 7 SCC 580 : (2008) 2 SCC (L&S) 431], this Court reiterated the law by stating: (SCC pp. 584-85, paras 14 and 17)

“14.  In the matter of imposition of sentence, the scope of  interference is  very limited and restricted to exceptional cases. The jurisdiction of  the  High  Court,  to  interfere  with  the quantum of punishment is limited and cannot be  exercised  without  sufficient  reasons.  The High  Court,  although  has  jurisdiction  in appropriate case, to consider the question in regard to  the  quantum of  punishment,  but  it has a limited role to play. It is now well settled that  the  High  Courts,  in  exercise  of  powers under  Article  226,  do  not  interfere  with  the quantum  of  punishment  unless  there  exist sufficient  reasons  therefor.  The  punishment imposed  by  the  disciplinary  authority  or  the appellate  authority  unless  shocking  to  the conscience of the court, cannot be subjected

Civil Appeal No. 11975 of 2016 Page 11 of 13 (arising out of SLP (Civil) No.30710 of 2014)

Page 12

to judicial review. In the impugned order of the High Court no reasons whatsoever have been indicated  as  to  why  the  punishment  was considered  disproportionate.  Failure  to  give reasons  amounts  to  denial  of  justice.  The mere  statement  that  it  is  disproportionate would not suffice.

xx xx xx

17.   Even  in  cases  where  the  punishment imposed by the disciplinary authority is found to be  shocking  to  the  conscience  of  the  court, normally  the  disciplinary  authority  or  the appellate  authority  should  be  directed  to reconsider the question of imposition of penalty. The  High  Court  in  this  case,  has  not  only interfered with the punishment  imposed by the disciplinary  authority  in  a  routine  manner  but overstepped  its  jurisdiction  by  directing  the appellate  authority  to  impose  any  other punishment  short  of  removal.  By  fettering  the discretion  of  the  appellate  authority  to  impose appropriate punishment for serious misconducts committed  by  the  respondent,  the  High  Court totally  misdirected  itself  while  exercising jurisdiction  under  Article  226.  Judged  in  this background,  the  conclusion  of  the  Division Bench of the High Court cannot be regarded as proper at all. The High Court has interfered with the  punishment  imposed  by  the  competent authority in a casual manner and, therefore, the appeal will have to be accepted.”

9. In any case, insofar as the instant matter is concerned, since we

find  that  the  punishment  imposed  was  not  shockingly

disproportionate,  no  question  of  remitting  the  case  to  the

disciplinary authority arises.  We,  thus,  allow this appeal and set

Civil Appeal No. 11975 of 2016 Page 12 of 13 (arising out of SLP (Civil) No.30710 of 2014)

Page 13

aside the impugned judgment of the Division Bench of the High Court.

.............................................J. (A.K. SIKRI)

.............................................J. (ABHAY MANOHAR SAPRE)

NEW DELHI; DECEMBER 09, 2016.

Civil Appeal No. 11975 of 2016 Page 13 of 13 (arising out of SLP (Civil) No.30710 of 2014)