1. Disciplinary proceedings against a bank officer for misconduct involving loan sanction irregularities, failure to conduct inspections, and failure to secure collateral security. (Para 1 , 4 )
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2023 Supreme(SC) 797
SUPREME COURT OF INDIA
J.K. Maheshwari, K.V. Viswanathan, JJ.
State Bank of India – Appellant
Versus
A.G.D. Reddy – Respondent
Civil Appeal No. 11196 of 2011
Decided on : 24-08-2023
Important Points
IMPORTANT POINT
Scope of judicial review against a departmental enquiry proceeding is very limited – It is not in nature of an appeal and a review on merits of decision is not permissible – Scope of enquiry is to examine whether decision-making process is legitimate and to ensure that findings are not bereft of any evidence.
Scope of judicial review against a departmental enquiry proceeding is very limited – It is not in nature of an appeal and a review on merits of decision is not permissible – Scope of enquiry is to examine whether decision-making process is legitimate and to ensure that findings are not bereft of any evidence.
Subject
Disciplinary Proceedings - Judicial Review
Act Referred
Headnote
(A) State Bank of India (Supervising Staff) Service Rules – Rule 49 (e) – Punishment – Reversal – In charge-memo, respondent was specifically charged that respondent had recommended and obtained sanction from Branch Manager, credit limits to various units as detailed therein and permitted excess drawings on an on-going basis and respondent did not report to controlling office excess drawings and did not conduct periodical inspections as per extant instructions – In a disciplinary proceeding, question of burden of proof would depend upon nature of charge and nature of explanation put forward by respondent – In a given case, burden may be shifted to respondent depending upon explanation – Neither from records nor at hearing has it been demonstrated as to how charge of failure to conduct inspection was countered by respondent – Finding of Enquiry Officer cannot be said to be perverse or based on no evidence – Penalty as imposed in order of Appointing Authority and as confirmed by Appellate Authority, maintained. (Paras 20, 22, 23, 24, 25, 30 and 40)
(B) Service Law – Departmental enquiry – Scope of judicial review against a departmental enquiry proceeding is very limited – It is not in nature of an appeal and a review on merits of decision is not permissible – Scope of enquiry is to examine whether decision-making process is legitimate and to ensure that findings are not bereft of any evidence – If records reveal that findings are based on some evidence, it is not the function of court in a judicial review to re-appreciate the same and arrive at an independent finding on the evidence – If in a disciplinary proceeding, order of penalty can be imposed on charges proved and punishment imposed is lawfully sustainable on those charges, it is not for Court to consider whether those grounds alone would have weighed with authority in imposing punishment. (Paras 36 and 39)
Facts of the case:
By impugned judgment, Division Bench had dismissed Appeal of Bank and confirmed judgment and order of Single Judge dated 12.11.2003. Single Judge had allowed Writ Petition No. 29547 of 1997 filed by respondent and quashed order passed by Appointing Authority and granted consequential benefits to respondent. Appointing Authority had, by its order imposed a punishment of “reduction in basic pay to the lowest stage in Scale-I” as envisaged under Rule 49 (e) of State Bank of India (Supervising Staff) Service Rules and further, has treated the period spent by the delinquent officer under suspension from 18.08.1990 till the date of his reinstatement as suspension only.
Findings of Court:
Single Judge and the Division Bench were in error in allowing the writ petition and interfering with the findings of the Enquiry Officer, decision of the Disciplinary Authority, the order of the
Appointing Authority and the decision of Appellate Authority.
Result : Appeal allowed.
Legal Category Hierarchy
Advocates appeared:
For the Appellant(s) :Mr. Sanjay Kapur, Advocate Ms. Megha Karnwal, Advocate Mr. Surya Prakash, Advocate Mr. Devesh Dubey, Advocate Mr. Arjun Bhatia, Advocate Ms. Mahima Kapur, Advocate Mr. Lalit Rajput, Advocate
For the Respondent(s):Mr. Tarun Kumar Thakur, Advocate Mr. D. P. Chaturvedi, Advocate Ms. Parvati Bhat, Advocate Ms. Anuradha Mutatkar, Advocate
For the Appellant(s) :Mr. Sanjay Kapur, Advocate Ms. Megha Karnwal, Advocate Mr. Surya Prakash, Advocate Mr. Devesh Dubey, Advocate Mr. Arjun Bhatia, Advocate Ms. Mahima Kapur, Advocate Mr. Lalit Rajput, Advocate
For the Respondent(s):Mr. Tarun Kumar Thakur, Advocate Mr. D. P. Chaturvedi, Advocate Ms. Parvati Bhat, Advocate Ms. Anuradha Mutatkar, Advocate
Table of Contents
2. Whether disciplinary findings were perverse or based on no evidence, and whether the courts below exceeded the scope of judicial review. (Para 2 , 3 )
3. Findings on periodical inspections and collateral security were supported by evidence; the High Court erred by re-appreciating evidence instead of reviewing the decision-making process. (Para 18 , 19 , 20 , 21 , 22 , 24 , 25 , 26 , 27 , 28 , 29 , 30 , 31 , 33 , 35 , 36 , 37 )
4. Judicial review of departmental enquiries is limited to legality and evidence existence; courts cannot re-appreciate evidence or act as an appellate authority. (Para 35 , 36 )
5. Appeal allowed; High Court orders set aside; disciplinary penalty restored. (Para 41 )
6. What is the scope of judicial review in departmental enquiry proceedings?
Judicial review is limited to examining whether the decision-making process was legitimate and ensuring findings are not bereft of evidence. Courts cannot act as an appellate authority or re-appreciate evidence to arrive at independent findings if some evidence reasonably supports the conclusion of guilt. (Para 35 , 36 , 37 )
7. How is the burden of proof determined in disciplinary proceedings?
The burden of proof depends on the nature of the charge and the explanation put forward by the respondent. Depending on the explanation provided, the burden may shift to the respondent to prove their defense. (Para 14 , 23 , 24 )
8. Can a penalty be sustained if some charges are found unproved while others are proved?
Yes. If the penalty is lawfully sustainable based on the charges that were proved, it cannot be set aside simply because other grounds were found wanting, provided the punishment is not solely co-relatable to the charges found not proved. (Para 38 , 39 )
9. What is the test for determining if a disciplinary penalty is disproportionate?
The primary test is whether the delinquent employee observed the prescribed norms of the institution, rather than whether actual financial loss occurred. A penalty is only interfered with if it is so disproportionate as to shock the conscience of the court. (Para 40 )
JUDGMENT
K.V. Viswanathan, J.
The present appeal by the State Bank of India (for short "the Bank"), calls in question the correctness of the judgment of the Division Bench of the High Court of Karnataka at Bangalore dated 20.10.2010 in Writ Appeal No. 8085 of 2003. By the said judgment, the Division Bench had dismissed the Appeal of the Bank and confirmed the judgment and order of the learned Single Judge dated 12.11.2003. The learned Single Judge had allowed the Writ Petition No. 29547 of 1997 filed by the respondent and quashed the order passed by the Appointing Authority and granted consequential benefits to the respondent. The Appointing Authority had, by its order of 31.01.1995, imposed a punishment of "reduction in basic pay to the lowest stage in Scale-I" as envisaged under Rule 49 (e) of the State Bank of India (Supervising Staff) Service Rules and further, has treated the period spent by the delinquent officer under suspension from 18.08.1990 till the date of his reinstatement as suspension only.
2. Being aggrieved, the Bank has filed the present Appeal. Shri Sanjay Kapur, learned counsel for the Bank, contends that the courts below have transgressed the limits of Judicial Review. According to the learned counsel, the courts below have erred in characterizing the orders of the Disciplinary authorities as perverse.
3. On the contrary, the respondent represented by Shri S.N. Bhat, learned Senior Counsel, vehemently defends the orders impugned. Learned Senior Counsel contends that the present was a case of "no evidence" and the enquiry officer without any evidence on record and based only on his personal purported knowledge has recorded the findings of guilt. Learned Senior Counsel further contends that the courts below have rightly set aside the order of the Disciplinary Authorities and that the case did not call for any interference.
Relevant Facts
4. The facts, insofar as they are necessary for the adjudication of this Appeal, are set out hereinbelow:
a) Disciplinary proceedings were initiated against the respondent for certain acts of misconduct allegedly committed by him when he was working as Field Officer of the Mahadevapura Branch of the Bank. Broadly stated, the charges in the Charge Sheet dated 13.02.1992 were:
i) That he recommended and obtained sanction from the Branch Manager, credit limits to various units as detailed therein and permitted excess drawings on an on-going basis; that he did not report to the controlling office the excess drawings permitted; that he did not conduct periodical inspections as per the extant instructions; that loan sanctions were given and credit limit extended to entities operating in the premises of another entity;
ii) That credit limit was recommended and sanction obtained for M/s Saraswathi Fabricators even though the unit was located away from the area of operation; sanction of the advance was not reported to the Controlling Office; and formalities for creating equitable mortgage over immovable property offered as collateral security were not completed;
iii) That the respondent recommended and obtained sanction of advance to M/s ACE Photo Reprographers and M/s Sangeetha Refreshments both from Shivajinagar, even though the units were non-existent and the particulars furnished were fictitious as another firm M/s All Arts Company was operating from the same premises; that the sanction of these advances were not reported to the controlling office and periodical inspection of the units were not conducted.
iv) That the respondent had recommended and obtained sanction on 20.05.1987 cash credit limit to M/s. Rajeswari Enterprises and the respondent did not submit control return; that periodical inspections were not carried out and formalities for creation of equitable mortgage over immovable property stipulated as pre-condition for sanction of limit were not completed. Certain other charges set out, which are not directly relevant for the adjudication of the Appeal, have not been highlighted
