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REPORTABLE

IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 3081 OF 2006

Oriental Bank of Commerce & Ors.       …      Appellant  (s)

            Versus S.S. Sheokand & Anr.             …    Respondent (s)

J  U  D  G  E  M  E  N  T

H.L. Gokhale J.   

 This Civil Appeal seeks to challenge the judgment  

and order dated 16.3.2004 rendered by a Division Bench of  

Punjab  and  Haryana  High  Court  in  Civil  Writ  Petition  

No.18847 of 2001, allowing the said Writ Petition filed by the  

respondent,  a Senior Manager in the appellant-bank.  That  

judgment and order quashed the disciplinary order passed by  

the appellant-bank reducing him in two stages in pay scale  

with  cumulative  effect  and  also  directed  that  he  be  

considered for further promotion.

The facts leading to this appeal are this wise:-

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2.  The respondent at the relevant time was working  

as the Senior Manager in a branch of the appellant-bank at  

Narwana, Bahadurgarh.  It was noticed by the bank that he  

had purchased third  party  cheques/drafts  of  huge amounts  

beyond the discretionary powers of lending.  This was done  

without  completing  the  pre-sanction  formalities.   The  

appellant-bank, therefore, served a show cause notice to the  

respondent on 26.2.1997 for committing these unauthorised  

acts.  The respondent filed a detailed reply dated 12.4.1997.  

Therein the respondent admitted committing of the alleged  

acts.   He,  however,  stated  that  this  was  done  with  the  

intention  of  increasing  the  profits  of  the  bank.   He  also  

contended that the bank had not suffered any loss in these  

transactions.

3. The appellant-bank, thereafter, charge-sheeted the  

respondent on 1.12.1997 for two specific irregularities, they  

were as follows:-

“Charge  No.1  –  Respondent  had  unauthorisedly  purchased  3rd party  cheques/drafts of huge amount aggregating   to  Rs.45.23  crores  for  a  number  of  parties   much  beyond  his  discretionary  powers  of   lending  without  completing  pre-sanction  

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formalities  in  violation  of  head  office   guidelines.  Thus he violated Regulation 3(i)   of  Oriental  Bank  of  Commerce  Officer   Employees (Conduct) Regulation, 1982.

Charge  No.2  –  Respondent  had  released  advance  under  the  Prime  Minister  Rojgar   Yojna,  and  unauthorisedly  insisted  such   borrowers to  provide collateral  securities  in   the  shape  of  immovable  property  and  guarantee in violation of the above scheme.”

4. The charge-sheet was followed by an inquiry.  The  

inquiry  officer  gave  a  report  dated  26.2.1999  which  was  

forwarded  by  the  respondent  on  17.4.1999  to  make  a  

representation on the findings.  In paragraph 4 of the report,  

the inquiry officer dealt with statement of SW-1 (State Witness  

No.1) which stated that as per the head office circular,  the  

discretionary powers of the Branch Manager at the relevant  

time were up to Rs.30 lacs for  purchasing bank drafts  and  

government  cheques,  and up to  Rs.1.5  lacs  for  third  party  

cheques.   As  against  this  provision,  the  respondent  had  

purchased cheques/drafts aggregating to Rs.45.23 crores as  

per the details produced in the inquiry report. This was done  

without any authorization, and particularly when the authority  

of the respondent in this behalf was placed under abeyance.  

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The  respondent  raised  various  technical  objections  with  

respect to the production of the documents,  but essentially  

contended  that  his  acts,  which  went  beyond  discretionary  

powers, were ratified and confirmed by the higher authorities.  

He submitted that these instruments were received from the  

respectable parties to increase the profit of the branch.  With  

respect  to  the  instructions  issued  to  him  by  the  Regional  

Manager  to  stop  purchasing  these  cheques  and  drafts,  he  

submitted that he had not violated these instructions.

5. The paragraph 4.3 of  the Enquiry report  contains  

the  assessment  of  evidence  on  charge  No.1.   It  reads  as  

follows:-

“4.3 Assessment of Evidence:-

Ex.  S.27 and S.28 are head office  circulars   which lay down the discretionary powers of   the branch incumbent.  SW1 confirmed that   during the material  time the powers of  the   BM  (Branch  Manager)  was  30  lacs  for   purchase of bank draft and Rs. 1.5 lacs for   third  party  cheques.   SW1  also  confirmed   that the CO(Charged Officer) had purchased  cheques/drafts  beyond  his  discretionary   powers.  He deposed that 77 cheques/drafts   amounting  to  40  crores  and  153  cheques/drafts  amounting  to  14.63  crores   were purchased through clearing adjustment   

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account.  It was confirmed that discounting of   cheques/drafts  through  clearing  adjustment   account  was  not  permitted  as  per  HO  guidelines.  SW1 confirmed that Ex. S2 was   HO  (Head  Office)  Circular  dated  11.12.95  which  had  placed  in  abeyance  the  discretionary powers of the BM and Regional   Heads  in  respect  of  loans  and  advances   except in the priority sector.  SW1 confirmed   that  s-15  was  HO  circular  dated  23.10.96   releasing  the  aforesaid  restrictions.   It  is,   therefore, evident that the powers of the BM  and  the  Regional  Heads  had  been  kept  in   abeyance between 11.12.95 to 23.10.96.  On  examining  Ex.  S.3,  S4  and  S.17,  SW1  confirmed  that  the  CO  had  unauthorisedly   purchased cheques/drafts during the period.   Furthermore,  SW1  confirmed  that  the  cheques  purchased  through  clearing  adjustment  account  are  that  of  sister  and  allied  concerns.   Ex.  S.27  and  28  would   evidence that this power was vested with the  GM  (General  Manager)  and  higher  officers   only.   SW1  also  confirmed  that  since  the  parties in question were also enjoying certain   credit  facilities  sanctioned  by  RO/HO  (Regional  Office/Head  Office),  the  branch  should not have purchased cheques/drafts of   the parties under its own powers.   Ex.  S-6,   S.7,  S.8  and S.9 are correspondence which   proved that the higher formation of the bank  had  raised  serious  objections  to  the  CO’s   purchase  of  cheques/drafts.   Ex.  S.10  and  S.12 are letters/replies of the CO where in he   had  admitted  his  mistakes.   SW1  also   confirmed that Ex.S.13 and S.14 are letters   from the GM Personnel giving details of the   unauthorised purchase of cheques and drafts   by  the  CO,  which  were  beyond  his   discretionary  powers  and  made  at  a  time   

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when  his  powers  were  placed  under   abeyance. His non-reporting in the matter to   RO has also been questioned.  Ex. S14 is a   letter  from the  CO accepting  the  aforesaid   matter with an assurance to not to repeat the   same  in  future.   In  view  of  the  aforesaid   evidence the contention of  the CO to treat   the  matter  as  that  of  the  priority  sector  is   naturally not tenable.  However, the CO has   stated that  there was no loss  to  the bank.   The PO (Prosecuting Officer) has not disputed  this.   Therefore,  the  act  of  omission  and   commission  of  the  CO  can  essentially  be   treated as procedural lapses. The charge of   the  lack  of  integrity  has  not  been  substantiated.

Charge-1 is held as partly proved.”  Thus, the inquiry officer had held that the acts of omission  

and  commission  on  the  part  of  the  respondent  were  

essentially in the nature of procedural lapses.  He held that  

the charge of  lack of integrity had not been substantiated.  

Thus, charge No.1 mentioned above was, partly proved.

6. As far as charge No.2 is concerned, it was alleged  

therein that the respondent had released advances under the  

Prime  Minister  Rojgar  Yojna,  and  for  that  insisted  on  the  

borrowers to provide collateral securities/guarantees of third  

party.   The  inquiry  officer,  however,  noted  that  the  

prosecution  had  not  placed  on  record  any  single  primary  

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document of the collateral securities/guarantees of third party  

to prove that part.  He, therefore, held that charge No.2 was  

not proved.

7. After  receiving  the  inquiry  report  the  respondent  

made his representation dated 4.5.1999, and pleaded that he  

deserved to be exonerated.  The bank, thereafter, submitted  

all these papers to the Chief Vigilance Officer of the Bank to  

forward the same to the Chief Vigilance Commissioner (CVC).  

The respondent at that stage wrote to the appellant-bank on  

28.6.1999 seeking this correspondence with the CVC.  In that  

he stated as follows:-

“Now,  after  giving  representation  dated  4.5.99 on the findings of inquiry officer dated  26.2.99,  the stage has come where second  stage advice has to be remitted to the CVC   through  Chief  Vigilance  Officer  of  Oriental   Bank  of  Commerce  and  I  also  understand  that the case has been remitted or the same   is  in  the  process  of  remitting  to  the  Chief   Vigilance Officer alongwith recommendations   of action proposed for onward submission to   the Chief Vigilance Commissioner (CVC).  In   the light of above facts, you are requested to   kindly  supply  me  the  copies  of  all  such   recommendations  meant  for  second  stage  advice and the advice so received or likely to   be  received  from  the  CVC  for  my  representation  on  these  recommendations  prior  to  the  stage  of  final  disposal  under   

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Regulation  ‘7’  of  Discipline  &  Appeal   Regulations, 1982 so that the interest of my  defence is not jeopardized.”  

8. The  appellant  declined  that  request  of  furnishing  

the correspondence of papers exchanged with the CVC.  The  

Chief  Vigilance  Officer  thereafter  sent  a  letter  to  the  

disciplinary authority that the Central Vigilance Commission  

had advised to impose a major penalty of reduction of two  

stages  in  pay  scale,  and  thereupon  the  order  came to  be  

passed on 27.10.1999 imposing the punishment of reduction  

of  two  stages  in  pay  scale.   The  respondent  filed  a  

departmental  appeal,  and the  appeal  came to  be rejected.  

The  review  thereof  was  also  rejected  by  the  Board  of  

Directors.  The appellate order dated 26.5.2000 passed by the  

General  Manager  (Personnel)  who  was  the  disciplinary  

authority at the end of it stated as follows:-

“……In  this  connection  it  is  submitted  that   awarding  of  punishment  with  cumulative  effect  falls  within  Regulation  4(f)  and  the  Disciplinary  Authority  has  independently   applied  its  mind  while  awarding  the  punishment.  It is further submitted that the   advice  of  the  CVC  is  not  binding  on  the  Disciplinary  Authority.   Since  the  CVC  is   rendering advice to the Disciplinary authority   the  correspondence  exchanged  is  not   

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required  to  be  provided  to  the  charge  sheeted employee. The punishment has been  awarded keeping in view the gravity of the   misconduct  committed  by  the  officer   employee  alongwith  the  submissions  made  by the employee. Submitted for orders please.  SD/- General Manager (Per.)  Disciplinary Authority.”

The Chairman & Managing Director,  who was the appellate  

authority, passed his orders into following words:-

“I don’t wish to entertain” Sd/-

    2.6.2000”

9. Being  aggrieved  by  the  imposition  of  this  

punishment,  the  respondent  filed  one  Writ  Petition  earlier  

bearing  No.4116  of  2001  to  the  Punjab  and  Haryana  High  

Court on which an order came to be passed that the reviewing  

authority  may  consider  the  review  application  of  the  

respondent. Time to take the decision was also extended on  

one occasion, and the High Court was informed that the Bank  

was considering commutation of the major penalty. The Chief  

Vigilance  Officer  of  the  bank  wrote  to  the  Chief  Vigilance  

Commission on 18.8.2001 that the penalty imposed deserved  

to be modified to a minor penalty.  It, however, appears that  

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the  request  was  not  accepted  and,  the  appellant-bank  

informed  the  respondent  that  the  review  petition  was  

rejected.   This  led the respondent to  file  Civil  Writ  Petition  

No.18847 of 2001.  Apart from the prayer to quash the order  

of punishment, the respondent also sought a direction that he  

be considered for further promotion from the post which he  

was then holding viz. that of MMGS-III to SMGS-VI.  It was his  

contention that  his  turn  had come up for  consideration for  

promotion, and it was declined because of this departmental  

action.  The  High  Court  allowed  the  Writ  Petition  by  the  

impugned judgment and order.   

10. The High Court essentially relied upon the judgment  

and  order  rendered  by  this  Court  in  the  case  of  Nagaraj  

Shivarao  Karjagi  vs.  Syndicate  Bank  Head  Office,  

Manipal reported in AIR 1991 SC 1507. In that matter also  

the bank had acted as per the advice of the Central Vigilance  

Commission. The punishment was interfered by this Court.  In  

paragraph 19 of its judgment, this Court observed as follows:-  

“19………..The  punishment  to  be  imposed  whether  minor  or  major  depends  upon  the  nature of every case and the gravity of the   misconduct proved.  The authorities have to   

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exercise  their  judicial  discretion  having   regard  to  the  facts  and  circumstances  of   each  case.   They  cannot  act  under  the  dictation of the Central Vigilance Commission   or of the Central Government.  No third party   like the Central Vigilance Commission or the  Central  Government  could  dictate  the   disciplinary  authority  or  the  appellate   authority  as  to  how  they  should  exercise  their  power  and  what  punishment  they   should  impose  on  the  delinquent  officer.   (See.  De  Smith’s  Judicial  Review  of   Administrative Action, Fourth Edition, p. 309).   The  impugned  directive  of  the  Ministry  of   Finance  is,  therefore,  wholly  without   jurisdiction  and  plainly  contrary  to  the  statutory  Regulations  governing  disciplinary   matters.”  

11. The High Court relied upon another judgment of this  

Court in the case of State Bank of India vs. D.C. Aggarwal  

reported in AIR 1993 SC 1197.  In that matter also, the High  

Court  had  quashed  the  punishment  imposed  on  the  

respondent, since the CVC report had not been furnished to  

him.  In paragraph 5 of the judgment this Court observed as  

follows:-

“5…… May be that the Disciplinary Authority   has recorded its own findings and it may be   coincidental  that  reasoning  and  basis  of   returning the finding of guilt are same as in   the  CVC  report  but  it  being  a  material   obtained  behind  back  of  the  respondent   

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without  his  knowledge  or  supplying  of  any  copy to him the High Court in our opinion did   not commit any error in quashing the order.”

12. Therefore, in the present case, the High Court set  

aside  the  punishment  imposed  on  the  respondent.  It  also  

issued  a  Mandamus  to  the  appellant-bank  to  consider  the  

respondent  for  promotion,  which  he  had  sought.   Being  

aggrieved by that judgment and order, this appeal has been  

filed.  Mr. K.N. Bhatt, learned senior counsel appeared for the  

appellants  and  Mr.  Nidhesh  Gupta,  learned  senior  counsel  

appeared for the respondent.

Submissions on behalf of the parties:-

13. It  was submitted on behalf  of  the appellants that  

the High Court had erred in interfering with the punishment,  

and in any case, directing consideration of the respondent for  

promotion.  Mr. Bhatt, learned senior counsel for the appellant  

submitted that the bank was required to refer the matter to  

the  CVC  which  is  constituted  under  the  Central  Vigilance  

Commission  Act,  2003.  Regulation  19  of  1982  Regulations  

framed thereunder makes it  obligatory whenever there is a  

vigilance angle involved.  This regulation reads as follows:-

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“19. Consultation with the Central Vigilance   Commission:  The  Bank  shall  consult  the   Central  Vigilance  Commission  wherever   necessary, in respect of all disciplinary cases   having a vigilance angle.”

14. That apart, he submitted that the bank had arrived  

at its decision on its own, and not because of any dictate by  

the CVC.  Charge No.1 was a serious charge.  It was already  

proved in the Departmental Enquiry, and although it is true  

that  at  some stage the  bank management  thought  that  a  

lenient view may be taken, it specifically arrived at its own  

decision  as  can be seen from the appellate  order.   In  his  

submission, there was no prejudice caused to the respondent  

by  not  making  the  report  of  the  CVC  available  to  him.  

Conduct of this type required a stringent action to be taken.  

He  relied  upon  the  judgment  of  this  Court  in  the  case  of  

Disciplinary  Authority-Cum-Regional  Manager vs.  

Nikunja Bihari Patnaik  reported in 1996 (9) SCC 69.  This  

Court has held in that matter that when the bank officer acts  

beyond his authority, it is a misconduct, and a proof of any  

loss to the bank is not necessary.  That was a case where  

also a senior officer of the Central Bank of India had allowed  

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over-drafts  and  passed  cheques  involving  substantial  

amounts beyond his authority, and the respondent had been  

dismissed from his service.  Mr. Bhatt, submitted that in the  

instant case, the appellant-bank had, in fact, been lenient in  

imposing the punishment of merely reducing the respondent  

by two grades.

15. It  was then submitted by Mr.  Bhatt,  that  in  any  

case  the  direction  to  consider  the  respondent  for  the  

promotion could not be sustained.  He pointed out to us that  

the respondent had been punished earlier for similar conduct  

on 27.10.1999.  He was considered for promotion in the year  

2002, and subsequent to the impugned judgment in the year  

2005 also but was not found fit.  The learned counsel for the  

appellant-bank submitted that the question of promotion to  

such a senior post had to be decided on merits and suitability  

of the candidate.  Mr. Bhatt, further submitted that even if  

the punishment was to be interfered with, there was no case  

for direction for promotion.

16. It  was submitted on behalf  of the respondent on  

the other hand, that there was no loss suffered by the bank,  

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and  at  the  highest  it  was  a  technical  lapse.  The  bank  

management had also decided that a minor punishment was  

required, and it was only because of the dictate of the CVC  

that  the  disputed punishment  had been imposed.   Firstly,  

there was mo reason to refer the issue to the CVC since there  

was  no  vigilance  angle  involved  therein.  That  apart,  the  

report of CVC was not made available to the respondent, and  

it clearly amounted to denial of fair opportunity to defend.  

Mr.  Gupta  submitted  that  the  denial  of  promotion  was  

essentially  because  of  this  punishment,  or  else  the  

respondent  would  have  been  promoted.  He,  therefore,  

submitted that there was no occasion to interfere with the  

impugned judgment and order.  Mr. Gupta submitted that the  

two judgments relied upon by the High Court in the case of  

Nagaraj  Shivarao  (supra)  and State  Bank  of  India  

(supra) squarely applied to the present case, and there was  

no  occasion  for  this  Court  to  take  a  different  view  or  to  

interfere with any part of the judgment.

Consideration of the submissions:-

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17. We have considered the submissions of both the  

counsel.   When we come to the question of  imposition of  

punishment  on  the  respondent,  what  we  find  is  that  

undoubtedly, there was a serious allegation against him, and  

as it  has been held in the case of Disciplinary Authority-

Cum-Regional Manager (supra),  such acts could not be  

condoned.  At the same time, we have also to note that the  

bank  management  itself  had  taken  the  view in  the  initial  

stage that the action did not require a major penalty.  It is  

also relevant to note that the High Court was also informed  

at  the  stage  of  review  that  the  Bank  was  considering  

imposition of a minor penalty. It is quite possible to say that  

the bank management did arrive at its decision to maintain a  

major penalty at a later stage on its own, and not because of  

the dictate of the CVC, but at the same time it has got to be  

noted  that  the  CVC  report  had  been  sought  by  the  

management of the bank, and thereafter the punishment had  

been imposed.  As observed in the case of  State Bank of  

India (supra), may be that the Disciplinary Authority had  

recorded  its  own  findings,  and  had  arrived  at  its  own  

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decision, but when this advise from CVC was sought, it could  

not be said that this additional material was not a part of the  

decision making process.  When this report was not made  

available  to  the  respondent,  it  is  difficult  to  rule  out  the  

apprehension about the decision having been taken under  

pressure. Any material, which goes into the decision making  

process against an employee, cannot be denied to him.  In  

view of the judgment in the case of Disciplinary Authority-

cum- Regional Manager (supra), the decision of the Bank  

could  have  been  approved  on  merits,  however,  the  two  

judgments  in  the  cases  of  Nagaraj  Shivaraj  Karajgi  

(supra) and  State Bank of India (supra) lay  down the  

requisite procedure in such matters, and in the facts of this  

case,  it  will  not  be  appropriate  to  depart  from  the  dicta  

therein. On this yardstick alone, a part of the judgment of the  

High Court interfering with the punishment will  have to be  

sustained.   

18. Then, we come to the issue of direction of the High  

Court  to  consider  the  respondent  for  promotion.  The  

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respondent was already in a post of a Senior Manager.  He  

was seeking a promotion to a still higher position.  Promotion  

as such, and in any case, to a higher post cannot be insisted  

as a matter of right.  In the instant case, it has been brought  

to  our  notice  that  the  respondent  was  considered  for  

promotion in 2002 and was not found fit.  It was pointed out  

by Mr. Bhatt that this was not merely on the basis of the  

punishment that was imposed on the respondent.  He had  

previous adverse entry also in his record in the year 1999.  

Besides,  even  if  we  look  to  the  charge  independently,  

purchasing third party cheques and drafts of huge amounts  

beyond his authority of lending has been held to be proved  

against  the  respondent,  and  that  finding  has  not  been  

seriously contested and dislodged. Whether he deserved a  

major punishment or not, or whether a lenient view of the  

allegations should be taken by considering his conduct as a  

procedural lapse is another aspect.  In the instant case, the  

decision to impose a major punishment had to be interfered  

with because of the manner in which the decision was taken.  

It has also been submitted that the High Court should have  

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referred  the  matter  back  to  the  appropriate  authority  for  

reconsideration and imposition atleast of a minor penalty. It  

is apparent that it was not a case for complete exoneration,  

however, it will not be desirable to give such direction after  

so many years, particularly, when the respondent has since  

retired.  That being so,  the order quashing the punishment  

will  remain.   That,  however,  would  not  mean  that  the  

direction of the High Court to the appellant to consider the  

respondent for promotion should be sustained.   

19. We have also been informed that the respondent  

was considered for promotion once again in the year 2005,  

and not  found fit  for  the promotion.   Thus,  the bank had  

considered  the  respondent  after  the  impugned  judgment  

which was in favour of the respondent. We are not concerned  

as such with this subsequent consideration, but this is only to  

point out that the bank had not declined to consider him.  We  

are of course concerned with the direction in the impugned  

judgment to consider  him once again,  on the basis  of the  

material prior to the judgment.  Inasmuch as the record of  

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the respondent was not satisfactory, in our view, there was  

no occasion for the High Court to give any such direction on  

the footing that the respondent was denied the consideration  

only because he had suffered a punishment. That inference  

was not called for.

20. In the circumstances, we allow this appeal only in  

part.   Whereas the judgment and order  of  the High Court  

setting  aside  the  punishment  will  remain,  the  direction  to  

consider him for promotion, and give him benefits on that  

footing will  have to be set  aside,  which we hereby direct.  

The respondent will however get the monetary benefits on  

the footing that the said punishment is quashed.

21. Appeal  is,  therefore,  allowed  in  part  as  above.  

Parties will bear their own costs.

…………..…………………..J.  [  H.L. Gokhale  ]

                                   ……………………………… J.

[ J. Chelameswar ] New Delhi

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Dated : February  26, 2014   

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