Departmental Proceeding Against Bank Official Time-Barred If No Fraud Alleged, Gauhati High Court Rules - 2025-04-28

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Gauhati High Court Upholds Setting Aside of Bank Official's Penalty, Citing Time-Bar and Lack of Specific Misconduct

Guwahati: The Gauhati High Court, in an intra-court appeal, has affirmed the decision of a Single Judge setting aside a penalty imposed by the Assam Gramin Vikash Bank on a retired Chief Manager. The Division Bench ruled that the departmental proceeding initiated against the official was time-barred under the bank's Staff Accountability Policy, as the charge sheet did not allege fraud or collusion on his part, a prerequisite for bypassing the policy's time limits.

The judgment, delivered by the bench of HONOURABLE THE CHIEF JUSTICE and HONOURABLE MR. JUSTICE N. UNNI KRISHNAN NAIR on March 17, 2025, dismissed the appeal filed by the Assam Gramin Vikash Bank.

Background of the Case

The case originated from a departmental proceeding initiated against the respondent, Ramkrishna Sarma , a retired Chief Manager, concerning allegations of negligence in recommending loans and credit limit enhancements as a member of a committee between 2007 and 2014. A charge sheet dated August 30, 2022, listed six allegations related to specific loan accounts.

Following an inquiry where three charges were partially proved, the Disciplinary Authority (Chairman of the Bank) imposed a penalty of "Reduction of Basic Pay by 1 (one) stage with cumulative effect" and debarred him from promotional interviews for one year, effective from February 1, 2023. Sarma 's appeal to the Board of Directors was rejected.

Aggrieved, Sarma filed a writ petition (WP(c)1525/2023) before the Single Judge, who, vide judgment dated November 23, 2023, allowed the petition and set aside the penalty order.

Single Judge's Reasoning

The Single Judge found that the charge sheet, while listing allegations, did not frame a specific charge of misconduct under Regulation 39 of the Assam Gramin Vikash Bank Officers and Employees Service Regulations, 2010. The allegations at best indicated lapses, not misconduct like violating regulations, acting against the bank's interest, or inefficiency leading to loss. Crucially, the Single Judge noted that Sarma was part of a recommending committee, not solely responsible, and other bank organs were also involved. No individual role causing loss was ascribed to him.

Furthermore, the Single Judge held that the proceeding was time-barred under Clause 10.2(b) of the Assam Gramin Vikash Bank Staff Accountability Policy, 2021. This clause imposes a time limit for initiating inquiries into pre-sanction lapses after two regular inspections unless there is an element of fraud or collusion. As no fraud or collusion was alleged against Sarma , the timeline applied, rendering the proceeding invalid.

Bank's Appeal and Arguments

The Bank appealed the Single Judge's order, arguing that the Single Judge had exceeded jurisdiction by re-appreciating evidence, which is not permissible in judicial review of disciplinary proceedings. They contended that the review should be limited to ensuring compliance with natural justice and checking for "some evidence" supporting the findings.

The Bank also argued that the Single Judge erred in applying the time limit. They asserted that the loan accounts were found to be "actuated by fraud" by the Head Office Vigilance Committee, which, under Clause 10.2(b) of the 2021 Policy (or the corresponding Clause 14.2(b) of the superseding 2022 Policy), exempted the case from the timeline. They contended the 2022 Policy was applicable when the charge sheet was issued.

Respondent's Counter-Arguments

The respondent, represented by senior counsel, countered that the charge sheet and the Inquiry Officer's report did not allege or find any fraud or collusion on the part of the respondent . He argued that both the 2021 and 2022 Policies contained similar time limits with an exception only for cases involving fraud by staff members or collusion. Since this was not alleged against him, the proceeding was indeed time-barred. He submitted that the allegations merely pointed to negligence, which did not amount to misconduct for personal gain, and that he was unfairly singled out while others involved were not proceeded against.

He also relied on the Supreme Court decision in Airport Authority of India v. Pradip Kumar Banerjee , which held that an intra-court appeal bench should not disturb a Single Judge's finding of fact unless it is found to be perverse.

High Court's Decision

The Division Bench carefully considered the arguments and the judgment of the Single Judge. It clarified that the Single Judge did not re-appreciate evidence but instead examined whether the allegations and findings amounted to "misconduct" under the relevant service regulations (Regulation 39) and whether the proceeding adhered to the bank's own policies (Staff Accountability Policy).

The bench agreed with the Single Judge's conclusion that the allegations, reflecting mere lapses as part of a committee process without any ascribed individual role leading to loss or a finding of intent, did not constitute misconduct as defined in the regulations.

On the crucial issue of the time bar, the High Court acknowledged that the Assam Gramin Vikash Bank Staff Accountability Policy, 2022 (Clause 14.2(b)), was applicable, superseding the 2021 Policy. However, it noted that Clause 14.2(b) was pari materia (identical in material respects) to Clause 10.2(b) of the 2021 policy. The bench highlighted that the exception to the timeline in this clause applies only "in case of malafide action or collusion of staff with the borrower or fraud is perpetrated on bank by the staff members". Since the charge sheet and inquiry report did not contain any allegation or finding of fraud or collusion against the respondent , the general timeline mandated by the policy applied. Consequently, the proceeding, initiated beyond this timeline, was invalid.

Citing the Pradip Kumar Banerjee judgment, the Court found no perversity in the Single Judge's conclusions, which were based on a plausible interpretation of the regulations and the bank's policies.

In light of these findings, the Gauhati High Court dismissed the appeal, upholding the Single Judge's order that had set aside the penalty imposed on the retired Chief Manager.

Conclusion

This judgment reinforces that bank disciplinary proceedings must strictly adhere to service regulations and internal policies, including timelines for initiation. The exception to time limits for fraud cases under staff accountability policies is not automatic merely because the loan accounts are later deemed fraudulent; it requires a specific allegation or finding of fraud or collusion on the part of the charged employee. The ruling also underscores the limited scope of interference in intra-court appeals against findings that are plausible and not perverse.