1. Bank manager dismissed for fraudulent debits and misappropriation — Challenge to dismissal based on natural justice and lack of evidence — Writ appeal. (Para 1 , 2 , 3 )
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2025 Supreme(SC) 134
SUPREME COURT OF INDIA
ABHAY S. OKA, AUGUSTINE GEORGE MASIH, JJ.
The General Manager Personnel Syndicate Bank & Ors. – Appellants
Versus
B.S.N. Prasad – Respondent
Civil Appeal No. 6327 of 2024
Decided On : 21-01-2025
Advocates appeared:
For the Appellant(s) : Ms. Hetu Arora Sethi, AOR Mr. Rahul Jain, Adv.
For the Respondent(s): Mr. Seshagiri Vadlamani, Adv. Mrs. Bela Maheshwari, AOR Mr. Ananya Kukreti, Adv.
For the Appellant(s) : Ms. Hetu Arora Sethi, AOR Mr. Rahul Jain, Adv.
For the Respondent(s): Mr. Seshagiri Vadlamani, Adv. Mrs. Bela Maheshwari, AOR Mr. Ananya Kukreti, Adv.
The court upheld the disciplinary findings against the employee but modified the penalty to a minor one, emphasizing the need for proportionality in disciplinary actions.
Headnote:(A) Syndicate Bank Officer Employees’ (Conduct) Regulations, 1976 - Regulation 3(1) and Regulation 24 - Disciplinary proceedings - Dismissal of employee for misconduct involving financial irregularities - Inquiry found misconduct established, but dismissal deemed disproportionate; modified to a minor penalty. (Paras 24, 25)
(B) Judicial review - Scope of judicial review in disciplinary proceedings - Court cannot reappreciate evidence; must ensure fair treatment and adherence to natural justice. (Paras 16, 17)
Facts of the case:
The respondent, a branch manager, was dismissed for financial misconduct involving fictitious debits and misappropriation of funds. He was exonerated in criminal proceedings but challenged the dismissal in court, which was initially set aside due to procedural irregularities.
Findings of Court:
The court restored the finding of misconduct but modified the penalty to a minor one, emphasizing the need for proportionality in disciplinary actions.
Issues: The main issues were the adequacy of evidence in the disciplinary inquiry and the appropriateness of the penalty imposed.
Ratio Decidendi: The court ruled that while misconduct was established, the penalty of dismissal was disproportionate given the respondent's long service and the nature of the misconduct.
Result: Appeal partly allowed; dismissal modified to a minor penalty.
Legal Category Hierarchy
Table of Contents
2. Bank contends admitted documentary evidence suffices and criminal acquittal is irrelevant — Employee argues recovery of funds and prior caution bar disciplinary action. (Para 4 , 5 , 6 , 7 , 8 , 9 , 10 , 11 )
3. Respondent admitted lapses; documentary evidence exists; criminal acquittal does not mandate exoneration in departmental inquiries; bank officers must maintain high integrity standards. (Para 12 , 13 , 14 , 15 , 16 , 17 , 18 , 19 , 20 , 21 , 22 )
4. Judicial review of disciplinary proceedings is limited to checking for perversity or absence of evidence, not adequacy; penalties must be proportionate to misconduct and service record. (Para 16 , 23 , 24 )
5. High Court orders set aside; misconduct restored; penalty modified to a minor penalty of reduction in pay for one year without cumulative effect. (Para 25 )
6. Does acquittal in a criminal case automatically lead to exoneration in disciplinary proceedings?
No, an acquittal in a criminal case is not a ground to exonerate a delinquent in disciplinary proceedings because the standard of proof differs between the two types of proceedings. (Para 16 )
7. To what extent can a writ court interfere with the findings of a disciplinary authority?
A writ court reviews the manner of the decision, not the adequacy of evidence. It may interfere only if the proceedings violated natural justice, statutory rules, or if findings are perverse or based on no evidence. (Para 16 )
8. What standard of conduct is expected from bank officers regarding honesty and integrity?
Bank officers are required to exercise higher standards of honesty and integrity as they deal with depositors' money and must protect the bank's interests with utmost devotion and diligence. (Para 17 )
9. How should the disciplinary authority determine the appropriateness of a penalty?
The exercise of power must be subject to principles of proportionality and fair play, considering the nature of misconduct, the employee's past record, and whether financial losses were reimbursed. (Para 23 , 24 )
JUDGMENT :
(Abhay S. Oka, J.)
FACTUAL ASPECT
1. The respondent was employed with the appellants (Syndicate Bank) as a clerk. In due course, he was promoted as a branch manager. He worked as the branch manager of the Mudigubba branch between 11th June 2007 and 03rd November 2008. An investigation was conducted against the appellant. On 02nd December, 2010, the Investigating Officer submitted a report against the appellant. After issuing notices, the Syndicate Bank issued a chargesheet to the respondent on 17th October, 2011. The allegation, in short, in the chargesheet was that while working as the branch manager in the Mudigubba branch during the period between 11th June, 2007 and 03rd November, 2008, the respondent abused his position by making fictitious debits to crop insurance account narrating the credit to various Syndicate Kisan Credit Cards (SKCC) accounts. He fraudulently withdrew the amounts by debiting the SKCC head without the borrowers' knowledge. The allegation against him was that he made fictitious debits/releases under SKCC accounts and, in certain cases, exceeded the sanctioned limit. He dishonestly obtained additional withdrawals from certain customers by deceiving them. Another allegation is that he sanctioned a vehicle loan to a borrower, which was a Non-Performing Asset (in short, ‘NPA’), in violation of the guidelines. In collusion with two other persons (Shri A Nagireddy and Shri M Ramakrishna), he fraudulently siphoned off Rs. 70,000/-. He misappropriated a sum of Rs. 9,000/- received by the branch under the debt waiver scheme to the SKCC account of one Shri D. Nagaraju. It was alleged that the respondent had committed many illegalities and irregularities, which tarnished the fair image of the Syndicate Bank. The statement of imputations was also served upon the respondent.
2. A disciplinary inquiry was conducted against the respondent. The inquiry officer submitted a report on 15th March, 2012. He held that the charges against the respondent were proved. After receiving a copy of the inquiry report, the respondent submitted a written response on 18th April, 2012. By order dated 03rd May, 2012, the Disciplinary Authority dismissed the respondent from the service of Syndicate Bank with immediate effect for committing the breach of Regulation 3(1) read with Regulation 24 of Syndicate Bank Officer Employees’ (Conduct) Regulations 1976 (for short ‘the Regulations’). The respondent preferred an appeal. The Appellate Authority, by an order dated 30th March 2013, confirmed the order of the Disciplinary Authority.
3. As the respondent was exonerated in criminal proceedings, he made representations on 28th August, 2013 and 24th November, 2014 requesting the Bank to set aside the penalty of dismissal. Thereafter, the respondent filed a writ petition to challenge the order of dismissal. Learned Single Judge on 15th June, 2022 set aside the orders of the Disciplinary Authority and Appellate Authority on the ground that principles of natural justice were not followed in the inquiry and ordered the reinstatement of the respondent and since he had superannuated, the Court held that he would be entitled to all consequential benefits from the date of dismissal from service till the date of his superannuation. The appellant challenged the decision of the learned Single Judge by preferring a Writ Appeal before the Division Bench. By the impugned judgment, the Division Bench dismissed the appeal by holding that it was a case of no evidence against the respondent.
SUBMISSIONS
4. Learned senior counsel appearing for the appellants invited our attention to the allegations against the respondent in the chargesheet served upon him. Learned senior counsel submitted that during vigilance investigation and disciplinary inquiry, the respondent admitted the transactions in respect of which allegations were made in the charge sheet. He submitted that the officer who conducted the preliminary inquiry was examined as a witness in the discip
