State Bank Of India vs T. J. Paul - 1999 Supreme(SC) 586

Judicial Analysis Court Copy Headnote Facts Arguments Court observation

1999 Supreme(SC) 586

1999(5) Supreme 1
Supreme Court of India
(From Kerala High Court)
M. Jagannadha Rao, S.N. Phukan, JJ.
State Bank of India & Ors. -Appellants
versus
T.J. Paul -Respondent
Civil Appeal No. 2690 of 1999
(Arising out of S.L.P. (Civil) No. 15271 of 1998)
Decided on 4-5-1999
Counsel for the Parties :
For the Appellants : Mr. T.R. Andhyarujina, Sr. Advocate, Mr. Sanjay Kapur and Ms. Shubhra Kapur, Advocates.
For the Respondent : Mr. P.P. Rao, Sr. Advocate, Mr. M.P. Raju, Ms. Meeta Prasad and Mr. S.P. Sharma, Advocates.

Headnote:Service Law - Disciplinary enquiry-Punishment of removal from service-Bank of Cochin Service Code Chapter VII Para 22(iv) and (v)-State Bank of India (Supervising Staff) Service Rules-Rule 49(g) -Respondent Manager of Bank of Cochin at material time-Bank got amalgamated with SBI-Disciplinary proceedings for during period relevant to service in Bank of Cochin - Non-obtaining adequate security for loan granted by respondent-Likelihood of serious loss coupled with negligence-Sufficient to bring case within gross misconduct falling under Para 22(iv) Clause (1)-Proof of loss not necessary-Dismissal from service by disciplinary authority-Alteration of punishment into one of removal from service by appellate authority on the view dismissal not warranted-No punishment as removal prescribed in Cochin Bank Service Code-Punishment of removal prescribed in SBI Rules cannot be resorted to-Order of removal rightly set aside by High Court-Matter remanded to appellate authority of management for imposition of punishment other than dismissal.
       Held : Taking up the definition of ‘gross misconduct’ in para 22(iv), it is obvious that clause (h) does not apply because the charge is not one of insubordination or disobedience of specific orders of any superior officer. Coming to clause (1) of para 22(iv), the doing of any act prejudicial to the interests of the bank, or gross negligence or negligence involving or likely to involve the Bank in serious loss is gross misconduct. In other words likelihood of serious loss coupled with negligence is sufficient to bring the case within gross misconduct. The Inquiry Officer’s finding of ‘gross misconduct’ on the ground of not obtaining adequate security is, therefore, correct and cannot be said to be based on no evidence as held by the High Court. This can be contrasted with para 22(iv)(o) under minor misconduct which deals with ‘neglect of work and negligence in performing of duties’. In our view, the contention of the learned senior counsel for the appellants Sri T.R. Andhyarujina is, therefore, entitled to be accepted. Even assuming that there is no gross negligence, simple negligence will come under major misconduct if accompanied by ‘likelihood’ of serious loss and this is clear from para 22(iv)(1). Hence the finding of the Inquiry Officer regarding gross misconduct is correct and could not have been set aside by the High Court. The findings of the Inquiry Officer clearly bring the case under ‘major misconduct’. (Paras 12 & 13)
       However, the appellate authority, once it came to the conclusion that the punishment of dismissal was not warranted in the facts of the case, it could not have awarded the punishment of “removal” which was not one of the enumerated penalties under para 22(v) of the Rules. In fact, the learned Single Judge also adverted to this aspect. If one reads the order of the appellate authority, it is clear that the said authority went by Rule 49(g) of the State Bank of India (Supervising Staff) Service Rules which admittedly, is not applicable to charges pertaining to the period 1977-1981 when the Rules of Cochin Bank applied. The amalgamation of the Bank of Cochin with the State Bank of India took place only on 27.4.85. It may be that the Rules of the State Bank of India provided for a punishment of removal, but in the Rules relating to penalties for “major misconduct” in para 22(v) of the Rules applicable to the employees of the Bank of Cochin, removal is not one of the enumerated punishments which could be imposed. The said punishment is not the same thing as “condoning misconduct and merely discharging from service” as provided in para 22(v)(e) of the said Rules. The gradation of the punishments has been fixed by the rules themselves, namely, the Rules of the Bank of Cochin and the Court is merely insisting that the authority is confined to the limits of its discretion as restricted by the Rules. Inasmuch as the Rules of the Bank of Cochin have enumerated and listed out the punishments for ‘major misconduct’, we are of the view that the punishment of ‘removal’ could not have been imposed by the appellate authority and all that was permissible for the Bank was to confine itself to one or the other punishments for major misconduct enumerated in para 22(v) of the rules, other than dismissal without notice. This conclusion of ours also requires the setting aside of the punishment of ‘removal’ that was awarded by the appellate authority. Now that other punishments enumerated under para 22(v) are ‘warning or censure or adverse remark being entered; or fine; or stoppage of increments/reduction of basic pay or to condone the misconduct and merely discharge from service. The setting aside of the removal by the High Court and the relief of consequential benefits is thus sustained. The matter has, therefore, to go back to the appellate authority for considering imposition of one of the other punishment in para 22(v) other than dismissal without notice. (Paras 15 & 16)

Judgment

M. Jagannadha Rao, J. - Leave granted.

2. This appeal is preferred by the State Bank of India, Bombay, its Deputy Managing Director (Appellate Authority), Bombay and the Chief General Manager (Disciplinary Authority), Madras against the judgment of the Division Bench of the Madras High Court in W.A. No. 490 of 1998. By that judgment, the Division Bench confirmed the judgment of the learned Single Judge in O.P. No. 10222 of 1991 dated 7.1.1998.

3. The brief facts of the case are as follows:

The respondent joined service in the Bank of Cochin (the Bank has since been amalgamated with the State Bank of India w.e.f. 27.4.85) on 1.11.1996 and was promoted as an officer and then as Manager of the Madras Branch of the Bank of Cochin. The disciplinary action initiated against him related to 1977-1981 when he was working as Manager at Madras. On 25.8.81, he was transferred to Calcutta. He received letters of commendation dated 10.3.83 and 16.4.84 and his Branch at Calcutta stood at No. 1 in the matter of mobilisation of advances. It appears that some advances given by him while working as Manager at Madras during 1977-1981 could not be recovered and hence on 4.2.84, he was reposted at Madras for the purpose of recovering the advances. The respondent made substantial recoveries after his reposting in Madras but he was suspended on 13.7.1984 and served with a charge sheet on 18.9.1984 stating that he had given advances unauthorisedly without discretionary power/prior permission/observing lending norms and that his actions amounted to ‘serious misconduct’ which involved financial loss and violation of Head Office prescriptions with vested interest and causing wilful damage to the interests and affairs of the Bank. The respondent denied the charges in his reply dated 20.10.1984. A domestic inquiry was held by appointing an Advocate as Inquiry Officer. The respondent submitted his final explanation on 15.5.1985. On 3.8.1985 the Inquiry Officer submitted his report. He held that the allegations under “items 1, 5, 7, 8, 9 (A/c No. 20/79, 50/80, 62/80, 63/80, 64/80, 2/81, 37/81; 10, 11, 12 (a, b), 13, 14 (A/c 99, 137, 168, 183, 299, 405 and S. Item Nos. 554 and 518); 15, 16, 17(b), 18, 19, 20, 21, 22, 23 (a, b, g, i, k, m), 24 and 25(9)” were not proved. He further said that so far as the remaining items 2, 3, 4, 6, 9 (A/c 18/81, MTL 1/80), 12, 14 (A/c 123, 199, 397 and 432), 17(a), 23(c, d, e, f, h, j, l, n) were concerned, the main irregularity found was that there was no proper sanction or ratification from the Head Office. (Item 25 is a summary of the items).

3.1 He accepted by referring to the evidence of AW1 and AW2 (Inspectors of Branches) that there was a practice, in certain Branches, of giving advances without sanction from the Head Office (as seen from Exhibits B6, B10 to B15 of Head Office) and in such cases subsequent ratification was granted to such advances given without sanction. He stated that Exhibits B18 to B22 were the letters of appreciation received by the respondent from the Department to the effect that his performance was ‘best’. He found, in favour of the officer and in rejection of the language employed in the charge-memo as follows :

“In the circumstances, no reasonable man would be able to conclude that, in connection with the said transactions, Sri Paul acted with vested interest and with the intention of causing wilful damage and financial loss to the Bank. He might have allowed the said transactions with the good intention of developing the business of the Bank and also with a bona fide belief that the said transactions would be ratified by the Head Office in the normal course.”

To the above extent, the finding is in favour of the respondent.

He further concluded in favour of the respondent as follows :

“My conclusion is that, in the light of the evidence adduced before me, it would be wrong to allege that Sri Paul had any intention to cause wilful damage or financial loss to the Bank as regards the said

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1999 Supreme(SC) 586

Cases Referred (2)