2005 Supreme(Kar) 513

Karnataka High Court
C.R.SATYANARAYANAN - Appellant
Versus
INDIAN OVERSEAS BANK, CHENNAI - Respondent
Decided On : 08-24-05
Writ Petition : 22900 of 1998

Headnote:Labour and Services - Disciplinary Proceddings - Deemed Tendency of - Deemed pendency of proceedings and continuance of service until conclusion of proceedings - Departmental enquiry taken place on 30-10-1995 -Placed under suspension on 7.10.1995 - Employee attained age of superannuation on 31.10.1995 - Held, disciplinary proceedings shall be deemed to be pending since the date of suspension - Entitlement to retirement benefits. See, Indian Overseas Bank (Officers) Service Regulations, 1979 - Regulation 20.

       Cases Referred : 1987(2) KLJ 110, 2002 (5) KLJ 437, AIR 1999 SC 1416, AIR 1997 SC 2982, AIR 1987 SC 943, 1988(2) SCC 52, 1995 Suppl. (1) SCC 321, AIR 1999 SC 1841, 2004 Lab. I. C. 3332, 2002(3) LLJ 306, 2004(1) SCC 281, 2001(2) LLJ 483, 1996(9) SCC 69, 1973(1) SCC 656, 1998 (2) SCC 544.

       Indian Overseas Bank (Employees) Pension Regulations, 1995 - Regulation 43 - Penalty for misconduct other than Grave Misconduct - Imposition of. - [B. S. Patil, J.] - The deeming fiction introduced in the first part of the second proviso to Regulation 48 would suggest that the departmental proceedings though do not fall within the purview of the Pension Regulations, they shall be deemed to be proceedings under the Pension Regulations. In which event all the provisions particularly of Chapter IX including the requirement spelt out in Regulation 43 that the pensioner shall be found guilty of Grave Misconduct as defined in Explanation (b) to Regulation 46 before he could be visited with the penalty of withholding or withdrawal of pension have to be satisfied. If this is so, then for all disciplinary enquiries initiated for any other misconduct other than Grave Misconduct , no penalty under the Pension Rules can be initiated. Consequently, though they are found guilty of any other misconduct, they cannot be punished. Prior consultation with the Board also becomes a must. This will introduce a dichotomy and runs counter to the provisions Of Regulation 20(3) (iii) of the Officers Service Regulations as the said provision mandates that the proceedings will continue as if he was in service until they are concluded. If the deeming provision is applied in the manner referred to hereinabove, the proceedings cannot be concluded unless they are initiated for Grave Misconduct . This dichotomy and ambiguity in the rules gets removed to a large extent if we examine the effect of the latter portion of the second proviso to Regulations 48(1) which reads and shall be continued and concluded by the authority by which they were commenced in the same manner as if the employee had continued in service. The continuation and the completion of the enquiry in the same manner as if the employee had continued in service would show that even after retirement, the Officer shall be deemed to be in service, in terms of what is stated in Regulations 20(3)(iii) of the Officer s Regulation and the enquiry can be continued and completed in accordance with the Discipline and Appeal Regulations and for the purpose of recovery of pecuniary loss caused to the Bank and for withholding or withdrawal of pension, they shall be deemed to be proceedings under the pension Regulations though not initiated for the grave misconduct as provided under Regulation 46(b).

       Indian Overseas Bank (Employees) Pension Regulations, 1995 - Regulation 46 (b) - Grave misconduct - Definition - Intention of. - [B. S. Patil, J.] - It is not possible to agree with the learned counsel for the petitioner that the grave misconduct alleged must be akin to those mentioned in the inclusive definition found in sub-clause (b) of Regulation 46 of the Pension Regulations. The intention of this inclusive definition is to ensure that what is listed therein shall be included in the term grave misconduct along with all others that may be characterised as such. They are not to be used to restrict the connotation of the term Grave Misconduct by applying the rule of nocitur a socis .

       Indian Overseas Bank (Employees) Pension Regulations, 1995 - Regulation 48- Removal from service - Justifiability. See, Indian Overseas Bank (officers) Service Regulations, 1979 - Regulation 20 (3).

       Indian Overseas Bank (Employees) Pension Regulations, 1995 -Chapter IX - Non-supply of copy of correspondence between Bank and Central Vigilance Commission - If prejudicial. - [B. S. Patil, J.] - It is the stand of the respondent-Bank that the Bank has independently applied its mind to all the facts and circumstances of the case before coming to the conclusion that the punishment of removal was required to be inflicted on the petitioner, It has specifically contended that the disciplinary authority is not guided by any recommendation or correspondence made in this regard by the CVC. The learned counsel for the respondent Bank has also made available records pertaining to the correspondence made between the Bank and the CVC in this regard. A perusal of the same does not disclose anything to conclude that the Disciplinary Authority has followed the dictates of the CVC and has not formed its own independent opinion after evaluating the facts and circumstances as presented in the case. The allegations and assertions made in this regard have no basis. Question of furnishing copies of the correspondence that have taken place between the Bank and the CVC does not arise as the Bank has not placed any reliance on any such correspondence while imposing the punishment.

       Indian Overseas Bank (Employees) Pension Regulations, 1995 -Regulation 48(1) -Post retirement enquiry -Effect on payment of pension. - [B. S. Patil, J.] - In case of Post Retiral Inquiry, sub-clause (1) provides for withholding, withdrawing of pension and ordering recovery from pension of any pecuniary loss caused to the Bank, once the pensioner is found guilty of Grave Misconduct or negligence or criminal breach of trust - or forgery or acts done fraudulently during the period of his service provided the Board is consulted before any final orders are passed.

       Indian Overseas Bank (Employees) Pension Regulations, 1995 -Regulation 48 - Provisional pension - Non-payment of - Whether prejudicial to delinquent officer. - [B. S. Patil, J.] - The question of non-payment of provisional pension is raised by the petitioner for the first time before the Appellate Authority. Though he has filed a writ petition before this Court seeking a direction to the respondent-authorities to pay provisional pension, the said writ petition is presented after the conclusion of the enquiry. It is to be noticed in this context that the departmental enquiries came to be initiated on 30-10-1995 when the first charge-sheet was issued. The petitioner attained the age of superannuation on 31-10-1995. He was placed under suspension earlier by order dated 7-10-1995 pending enquiry. After the completion of the enquiry, the second show cause notice was issued to the petitioner on 4-1-1997. It is only thereafter on 5-3-1997 that the petitioner has filed the writ petition seeking payment of provisional pension. Therefore, it cannot be said, in the facts and circumstances of this case that the petitioner was prejudiced in effectively defending himself in the departmental enquiry on account of the non-payment of provisional pension.

       Indian Overseas Bank (Officer Employees Discipline and Appeal) Regulations, 1976 - Enquiry against retired officer - Conduct and Conclusion. - [B. S. Patil, J.] - The deeming fiction introduced in the first part of the second proviso to Regulation 48 would suggest that the departmental proceedings though do not fall within the purview of the Pension Regulations, they shall be deemed to be proceedings under the Pension Regulations. In which event all the provisions particularly of Chapter IX including the requirement spelt out in Regulation 43 that the pensioner shall be found guilty of Grave Misconduct as defined in Explanation (b) to Regulation 46 before he could be visited with the penalty of withholding or withdrawal of pension have to be satisfied. If this is so, then for all disciplinary enquiries initiated for any other misconduct other than Grave Misconduct , no penalty under the Pension Rules can be initiated. Consequently, though they are found guilty of any other misconduct, they cannot be punished. Prior consultation with the Board also becomes a must. This will introduce a dichotomy and runs counter to the provisions Of Regulation 20(3) (iii) of the Officers Service Regulations as the said provision mandates that the proceedings will continue as if he was in service until they are concluded. If the deeming provision is applied in the manner referred to hereinabove, the proceedings cannot be concluded unless they are initiated for Grave Misconduct . This dichotomy and ambiguity in the rules gets removed to a large extent if we examine the effect of the latter portion of the second proviso to Regulations 48(1) which reads and shall be continued and concluded by the authority by which they were commenced in the same manner as if the employee had continued in service. The continuation and the completion of the enquiry in the same manner as if the employee had continued in service would show that even after retirement, the Officer shall be deemed to be in service, in terms of what is stated in Regulations 20(3)(iii) of the Officer s Regulation and the enquiry can be continued and completed in accordance with the Discipline and Appeal Regulations and for the purpose of recovery of pecuniary loss caused to the Bank and for withholding or withdrawal of pension, they shall be deemed to be proceedings under the pension Regulations though not initiated for the grave misconduct .

       Indian Overseas Bank (Officers) Service Regulations, 1979 - Regulation 20 - Deemed pendency of proceedings and continuance of service until conclusion of proceedings - Departmental enquiry taken place on 30-10-1995 -Placed under suspension on 7.10.1995 - Employee attained age of superannuation on 31.10.1995 - Held, disciplinary proceedings shall be deemed to be pending since the date of suspension - Entitlement to retirement benefits. [B. S. Patil, J.] - As per clause (iii) of sub Regulation (3) of Regulation 20, when the disciplinary proceedings are initiated against an Officer though the Officer ceases to be in service on the date of superannuation the disciplinary proceedings will continue as if newas in service until the proceedings are concluded and a final order is passed in respect thereof. The Officer however will not receive any pay and allowance after the date of superannuation and will also not be entitled for payment of retirement benefits till the proceedings are completed except his own contribution to CPF. Thus, the employee in this case continued to be in service for the purpose of the completion of the disciplinary proceedings and was not entitled for the payment of retirement benefits till the proceedings are completed.

       Indian Overseas Bank (Officers) Service Regulations, 1979 - Regulation 20(3) - Removal from service - Justifiability. - [B. S. Patil, J.] - Question of removal would arise only if the petitioner was in service at the time when the penalty was imposed. Regulation 20(3) (iii) of the Officers Service Regulations makes it clear that the Officer against whom disciplinary proceedings have been initiated will cease to be in service on the date of superannuation but the disciplinary proceedings will continue as if he was in service until proceedings ate concluded and final order is passed. The rule makes it clear that the Officer Will not receive any pay and/or allowance after superannuation. The fictional continuation of service as per Regulation 20(3) (iii) is only to authorise completion of enquiry. For all other practical purposes, the services of the officer have come to an end. There is no other act required to terminate the services of the petitioner except completion of enquiry. Any order terminating the services of an employee presupposes continued existence of the employee in service. The order of termination brings about ceazation of service with effect from the date of termination. Even according to Rule 20 (3)(iii) the services of the petitioner have came to an end on the date petitioner attained superannuation. Date of superannuation is not postponed until the date of completion of enquiry. All other indicia of continued existence of service tenure such as payment of salary and/or allowance etc., that are the necessary concomitance of the service have reached the terminal point on the date of superannuation. Hence, the penalty of removal of the employee from service could not have been imposed. Therefore, having found the petitioner guilty of misconduct, the only Course open for the authorities was to initiate action for Withholding or withdrawing the benefits due to the petitioner as per the Pension Regulations. This is what is intended by the second proviso to Rule 48 of the Pension Regulations when it states that the disciplinary enquiry initiated against an Officer before his retirement shall be deemed to be proceedings under the Pension Regulations subject however to the condition that the departmental proceedings shall be continued and completed by the same authority who had initiated it as if the petitioner had continued in service.

       Labour and Services - Misconduct of Bank employees -What amounts to. Settled Principle - The findings -of the inquiry officer which have been accepted by the disciplinary authority, and which have not been disturbed by the High Court, clearly show that in a number of instances the respondent allowed overdrafts or passed cheques involving substantial amounts beyond his authority. True, it is that in some cases, no loss has resulted from such acts. It is also true that in some other instances such acts have yielded profit to the Bank but it is equally true that in some other instances, the funds of the Bank have been placed in jeopardy; the advances have become sticky and irrecoverable. It is not a single act; it is a course of action spreading over a sufficiently long period and involving a large number of transactions. In the case of a bank for that matter, in the case of any other organisation every officer/employee is supposed to act within the limits of his authority. If each officer/employee is allowed to act beyond his authority, the discipline of the organisation/Bank will disappear, the functioning of the bank chaotic and unmanageable. Each officer of the bank cannot be allowed to carve out his own little empire wherein he dispenses favours and largesse. No organisation, more particularly, a bank can function properly and effectively if its officers and employees do not observe the prescribed norms and discipline. Such indiscipline cannot be condoned on the specious ground that it was not actuated by ulterior motives or by extraneous considerations. The very act of acting beyond authority-that too a course of conduct spread over a sufficiently long period and involving innumerable instancesis by itself a misconduct. Such acts, if permitted, may bring in profit in some cases but they may also lead to huge losses. Such adventures are not given to the employees of banks which deal with public funds. If what we hear about the reasons for the collapse of Baring Bank is true, it is attributable to the acts of one of its employees. Nick Leeson, a minor officer stationed at Singapore, who was allowed by his superiors to act for beyond his authority. As mentioned hereinbefore, the very discipline of an organisation and more particularly, a bank is dependent upon each of its employees and officers acting and operating within their allotted sphere. Acting beyond one s authority is by itself a breach of constitutes misconduct within the meaning of Regulation 24. No further proof of loss is really necessary [(1996) 9 SCC 69)].

       Cases Referred : 1987(2) KLJ 110, 2002 (5) KLJ 437, AIR 1999 SC 1416, AIR 1997 SC 2982, AIR 1987 SC 943, 1988(2) SCC 52, 1995 Suppl. (1) SCC 321, AIR 1999 SC 1841, 2004 Lab. I. C. 3332, 2002(3) LLJ 306, 2004(1) SCC 281, 2001(2) LLJ 483, 1996(9) SCC 69, 1973(1) SCC 656, 1998 (2) SCC 544.

       Indian Overseas Bank (Employees) Pension Regulations, 1995 - Regulation 48(2) - Pre-retirement enquiry - Imposition of penalty - Dichotomy runs counter to regulation 20 (3) (iii) of Indian Overseas Bank (Officers) Service Regulations, 1979. - [B. S. Patil, J.] - The deeming fiction introduced in the first part of the second proviso to Regulation 48 would suggest that the departmental proceedings though do not fall within the purview of the Pension Regulations, they shall be deemed to be proceedings under the Pension Regulations. In which event all the provisions particularly of Chapter IX including the requirement spelt out in Regulation 43 that the pensioner shall be found guilty of Grave Misconduct as defined in Explanation (b) to Regulation 46 before he could be visited with the penalty of withholding or withdrawal of pension have to be satisfied. If this is so, then for all disciplinary enquiries initiated for any other misconduct other than Grave Misconduct , no penalty under the Pension Rules can be initiated. Consequently, though they are found guilty of any other misconduct, they cannot be punished. Prior consultation with the Board also becomes a must. This will introduce a dichotomy and runs counter to the provisions of Regulation 20(3) (iii) of the Officers Service Regulations as the said provision mandates that the proceedings will continue as if he was in service until they are concluded. If the deeming provision is applied in the manner referred to hereinabove, the proceedings cannot be concluded unless they are initiated for Grave Misconduct . This dichotomy and ambiguity in the rules gets removed to a large extent if we examine the effect of the latter portion of the second proviso to Regulations 48(1) which reads and shall be continued and concluded by the authority by which they were commenced in the same manner as if the employee had continued in service. The continuation and the completion of the enquiry in the same manner as if the employee had continued in service would show that even after retirement, the Officer shall be deemed to be in service, in terms of what is stated in Regulations 20(3)(iii) of the Officer s Regulation and the enquiry can be continued and completed in accordance with the Discipline and Appeal Regulations and for the purpose of recovery of pecuniary loss caused to the Bank and for withholding or withdrawal of pension, they shall be deemed to be proceedings under the pension Regulations though not initiated for the grave misconduct as provided under Regulation 46(b). The grave misconduct referred to herein refers to those who have already retired and against whom proceedings are initiated after retirement. The second proviso of Regulation 48(1) which by a legal fiction treats even the proceedings initiated while the Officer was in service as proceedings under the Pension Regulations cannot be construed to require satisfaction of all the pre-requisites or qualifications prescribed under Chapter IX of the Pension Regulations to be characterised as proceedings under those Regulations. Even though they do not satisfy these pre-requisites, they shall be deemed to be proceedings under the Pension Regulations is how it has to be understood.

       Cases Referred : 1987(2) KLJ 110, 2002 (5) KLJ 437, AIR 1999 SC 1416, AIR 1997 SC 2982, AIR 1987 SC 943, 1988(2) SCC 52, 1995 Suppl. (1) SCC 321, AIR 1999 SC 1841, 2004 Lab. I. C. 3332, 2002(3) LLJ 306, 2004(1) SCC 281, 2001(2) LLJ 483, 1996(9) SCC 69, 1973(1) SCC 656, 1998 (2) SCC 544.

       Indian Overseas Bank (Employees) Pension Regulations, 1995 - Regulation 48 - Departmental proceedings against employee - Initiated while in service - Retirement - Effect of. - [B. S. Patil, J.] - The second proviso to Regulation 48 makes it clear that where departmental proceedings were initiated while the employee was in service, then, after retirement of the employee they shall be deemed to be proceedings under the pension regulations and shall be continued and conducted by the authority which they were commenced in the same manner as if the employee had continued in service.