IMPORTANT POINT
An employee not participating in departmental enquiry despite repeated opportunities cannot complain of violation of natural justice that too without showing how he was prejudiced.

JUDGMENT

S.B. SINHA, J.

1. Leave granted.

2. Appellant is a bank constituted and incorporated under the Regional Rural Banks Act, 1976 (for short, "the Act"). Section 30 thereof provides for a regulation making power.

On or about 13.5.1980, the Government of India circulated the model (staff service) regulations for the officers/employees of the Regional Rural Bank for adoption/approval by their respective Board of Directors. The Board of Directors of the Appellant- Bank in exercise of its powers conferred upon it under Section 30 of the Act after consultation with the State Bank of India (sponsor bank) and Reserve Bank of India and with the previous sanction of the Central Government framed regulations known as "Ganga Yamuna Gramin Bank Staff Service Regulations, 1985" laying down the terms and conditions of service of its employees. Some of the relevant provisions of the said Regulations are as under:

"10.(2)(a) The Bank may terminate the services of an

(i) Officer after giving him three month's notice of emolument in lieu thereof.

(ii) Employee after giving him one month's notice or emoluments in lieu thereof.

(30)(1) PENALTIES--

Without prejudice to the provisions of other regulations, an officer or employee who commits a breach of these regulations or who displays negligence, inefficiency or indolence, or who knowingly does anything detrimental to the interests of the Bank or in conflict with its instructions or who commits a breach of discipline or is guilty of any other act of misconduct shall be liable to the following penalties---

(a) reprimand;

(b) delay or stoppage of increments or promotion;

(c) degradation to a lower post or grade to a lower stage in his incremental scale;

(d) recovery from pay of the whole or part of any pecuniary loss caused to the Bank by the officer or employee;

(e) Removal from service which shall not be a disqualification for future employment;

(f) Dismissal.

(2) No officer or employee shall be subjected to the penalties referred to in clause (b), (c), (d), (e) or (f) of sub-regulation (1) except by an order in writing signed by the Chairman and no such order shall be passed without the charge being formulated in writing and given to the said officer or employee so that he shall have reasonable opportunity to answer them in writing or in person, as he prefers and in the latter case his defence shall be taken down in writing as read to him.

Provided that requirements of this sub- regulation may be waived. If the facts on the basis of which action is to be taken have been established in the court of law or court martial where the officer or employee has absconded or where it is for any reason impracticable to communicate with him or where there is difficulty in observing them and the requirements can be waived and the reasons for so doing shall be recorded in writing."

3. The Act was amended by Act No. 1 of 1988 which came into force with effect from 28.9.1988 in terms whereof `National Bank' was defined in Section 2(ca), to mean:

"(ca) "National Bank" means the National Bank for Agriculture and Rural Development established under Section 3 of the National Bank for Agriculture and Rural Development Act, 1981."

4. However, even prior thereto `National Bank for Agricultural and Rural Development (NABARD)' being the National Bank, which although had nothing to do with statutory functioning of the Regional Rural Banks, allegedly, on requests made by Board of Directors of several regional banks issued guidelines, stating:

"We have been receiving a number of references from Chairmen of RRBs requesting us for guidance on disciplinary procedure to be adopted by RRBs for disciplinary action against their staff. In order to meet the demands of the Chairman of RRBs, we have prepared a set of guidelines on the above subject with the help of our Legal Department and representative of some sponsor banks/RRBs. A copy of the manual is enclosed for your guidance."

Relevant portion of the said guidelines are as follows:

".....The pen