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Karnataka High Court
Judges : N.Kumar
S.G.NAYAK - Appellant
Versus
CANARA BANK - Respondent
Writ Petition 30770 Of 1995
Decided On : 12/03/2004
[N. Kumar, J]: It is one of the fundamental requirements of law that in a quasi-judicial enquiry the principles of fair-play are to be followed, and there should not be any bias in the proceedings nor there is any likelihood of bias. If the investigation is done, report is submitted or the evidence is given by Officer who is superior in rank to that of the Inquiry Officer chances are, the said Inquiry Officer would find it difficult to ignore the opinions expressed by them or record a finding contrary to their opinion of findings. At any rate that is how reasonable people might think. What is of important is what is the impression which the other people would have in such circumstances. Therefore, the question is not, in fact, whether the Inquiry Officer was carried away by such finding or opinion of the official Superiors and whether he favoured one side unfavourably. The Court would not look at the mind of the Inquiry Officer and the report. After such scrutiny if Court were to find that he was impartial that is of no consequence. The Court must look at the impression which other people have. The real test is if right -minded person would think that in the circumstances, there was a real likelihood of bias on his part then the Inquiry Officer should not function. Justice must be rooted in confidence and confidence is destroyed when right minded people go away thinking, "the Judge was biased". This follows from the principle that justice must not only be done but seen to have been done.
Cases Referred: JT 2001 (Suppl) SC 608; W. A. Nos. 68-70/2000 (S-RES).
Followed: 1978 (2) Kar. L. J. 66; 1975 (2) Kar. L. J. 88; 1997 (II) LLJ 489; AIR 1973 SC 2701; ILR 2003 Kar. 3066; AIR 1976 SC 1785; AIR 1974 SC 87; AIR 1978 SC 597; ILR 2004 Kar 4822.
NATURAL JUSTICE - Violation of
Violation of -Domestic enquiry -Non-production of documents -Employee -A bank officer -Irregularities in delaying with some customers -Charge-sheeted employee sought for relevant documents - Management did not oblige, but, by itself not a ground to deny documents - Delinquent alleged that the higher authorities approved the transactions -Delinquent sought the letter - Failed to produce -Pleaded privilege - No material produced - Explanations not convincing - Denial amounts to violation of principles of natural justice.
[N. Kumar, J]: The very fact that the bank made an attempt to get the documents or even the Inquiry Officer made any attempt to get the documents shows that those documents were relevant for the defence of the petitioners. Merely because they did not oblige, that is not reason to deny the petitioners of those documents which are relevant in disproving the case against them and to substantiate their defence. When in the chargesheet and in the investigation report, those letters finds a place, if the management wants to establish those charges they have to produce original documents. Merely because they are the documents sent by the petitioners, by producing copy of the same, originals can be denied. That is the letter by which the petitioners brought to the notice of the higher authorities about the transaction which they have done and sought for approval and if their case is to be believed, such approval was granted and necessary notings have been made in the original letters. It is only thereafter to shield themselves these enquiry proceedings are initiated against the subordinate officials, the said original letters are with-held saying that they are not available. Absolutely no material is placed before the court to show what happened to these documents, when it came to be missing and the effort in tracing the same. Whatever may be the reason, if there are any notings in the said letter which go to show that higher authorities approved the transactions then the entire case of the management would be defeated. Such as opportunity is lost by non-production of the original documents. The documents which are denied to the petitioner on the aforesaid ground makes it abundantly clear that there is an attempt to keep away the documents which probably would have supported the reference. The explanation given for non-production of those documents is not convincing and very difficult to believe. There is a clear attempt to deny these vital documentary evidence to the petitioners to defend their case. Therefore, this act of the management in denying these documents to the petitioners in violative to the principles of natural justice.
BIAS AND MALA FIDES - Domestic Enquiry - Enquiry held by officer inferior to the officer who conducted investigation and submitted report based on which proceedings are initiated - Enquiry officer putting leading questions to management witnesses and acting as prosecutor - Whether proceedings reflected bias and whether as a consequence proceedings are vitiated - Tests.
[N. Kumar, J]: It is one of the fundamental requirements of law that in a quasi-judicial enquiry the principles of fair-play are to be followed, and there should not be any bias in the proceedings nor there is any likelihood of bias. If the investigation is done, report is submitted or the evidence is given by Officer who is superior in rank to that of the Inquiry Officer chances are, the said Inquiry Officer would find it difficult to ignore the opinions expressed by them or record a finding contrary to their opinion of findings. At any rate that is how reasonable people might think. What is of important is what is the impression which the other people would have in such circumstances. Therefore, the question is not, in fact, whether the Inquiry Officer was carried away by such finding or opinion of the official Superiors and whether he favoured one side unfavourably. The Court would not look at the mind of the Inquiry Officer and the report. After such scrutiny if Court were to find that he was impartial that is of no consequence. The Court must look at the impression which other people have. The real test is if right -minded person would think that in the circumstances, there was a real likelihood of bias on his part then the Inquiry Officer should not function. Justice must be rooted in confidence and confidence is destroyed when right minded people go away thinking, "the Judge was biased". This follows from the principle that justice must not only be done but seen to have been done.
Cases Referred: JT 2001 (Suppl) SC 608; W. A. Nos. 68-70/2000 (S-RES).
Followed: 1978 (2) Kar. L. J. 66; 1975 (2) Kar. L. J. 88; 1997 (II) LLJ 489; AIR 1973 SC 2701; ILR 2003 Kar. 3066; AIR 1976 SC 1785; AIR 1974 SC 87; AIR 1978 SC 597; ILR 2004 Kar 4822.
CANARA BANK EMPLOYEES (DISCIPLINARY AND APPEAL) REGULATIONS, 1976 - Regulation 6(17) - Application of mind -Domestic enquiry proceedings - Financial irregularities leveled against the officer - Proceedings initiated - Disciplinary authority accepted findings of Inquiry Officer - No reasons given - Order of dismissal passed - Held, the Order violates the principles of natural justice. See, Canara Bank Officer Empolyees (Conduct) Regulations, 1976 -Regulation 3(1).
CANARA BANK EMPLOYEES (DISCIPLINARY AND APPEAL) REGULATIONS, 1976 - Regulation 6(17) - Application of mind -Domestic enquiry proceedings - Financial irregularities leveled against the officer - Proceedings initiated - Disciplinary authority accepted findings of Inquiry Officer - No reasons given - Order of dismissal passed - Held, the Order violates the principles of natural justice. See, Canara Bank Officer Empolyees (Conduct) Regulations, 1976 -Regulation 3(1).
Cases Referred: JT 2001 (Suppl) SC 608; W. A. Nos. 68-70/2000 (S-RES).
Followed: 1978 (2) Kar. L. J. 66; 1975 (2) Kar. L. J. 88; 1997 (II) LLJ 489; AIR 1973 SC 2701; ILR 2003 Kar. 3066; AIR 1976 SC 1785; AIR 1974 SC 87; AIR 1978 SC 597; ILR 2004 Kar 4822.
CANARA BANK OFFICER EMPLOYEES (CONDUCT) REGULATIONS, 1976 -
CANARA BANK OFFICER EMPLOYEES (CONDUCT) REGULATIONS, 1976 - Regulation 3(1) - Domestic Enquiry - Application of strict Rules of evidence - Held, not applicable.
[N. Kumar, J]: A domestic enquiry is not an enquiry conducted in a court. It is well settled that strict rules of evidence is not applicable.
CANARA BANK OFFICER EMPLOYEES (CONDUCT) REGULATIONS, 1976 - Regulation 3(1) - Domestic enquiry - Denial of opportunity to produce document - A photocopy of vital portion of the document over which privilege was claimed, sought to be produced by delinquent - Management objected on the ground that, it is not original and it is incomplete - Inquiry Officer held that, if the document is allowed to come on record, it paves way to production of other privilege documents - Whether justified - When the defence rested on the document, he should have permitted to be produced even at a belated stage - Such shutting out material evidence vitiates the proceedings.
[N. Kumar, J]: The documents which are required and relevant for the purpose of the defence when they were summoned at the earliest point of time, they were refused to be produced by the Bank, claiming privilege. In the course of the evidence, the delinquent employee managed to secure a portion of the report and wanted to produce the same. The very management, which had claimed privilege, opposed the said document, on the ground that the documents sought to be produced is not complete, and if permitted to be produced that would result in delay in disposal of the case. A document, which is of vital importance to the defence cannot be shut out from the enquiry. If the writings in those reports negative the claim of the Bank and support the defence of the delinquent employee, it is a piece of evidence, which ought to have been allowed to come on record, notwithstanding the technical objections such as original is not produced, what is sought to be produced is only a copy and that too is not complete.
CANARA BANK OFFICER EMPLOYEES (CONDUCT) REGULATIONS, 1976 - Regulation 6(17) - Bias -Domestic enquiry - Investigation conducted and report submitted by an officer superior to the officer who had conducted enquiry - Chances are that, for the enquiry Officer it might be difficult to ignore opinions expressed by the investigating officer - But, if it is found that the enquiry was impartial, superiority of the officer who conducted investigation has no consequence - The real test is, if a right minded person would think that in the circumstances, there was a real likelihood of bias on his part then the Enquiry Officer should not function.
[N. Kumar, J]: When a disciplinary authority, on receipt of the report of the enquiring authority holding the delinquent employee guilty of the charges leveled against shim, he is expected to give a show-cause notice enclosing a copy of the report. When the delinquent employee gives his submissions or objections to the said report, he is bound to consider the enquiry report, the entire material collected during the enquiry, and then look into the objections filed by the delinquent employees, and then make up his mind agreeing or disagreeing with the finding of the enquiring authority. If the disciplinary authority agrees with the findings of the enquiring authority, it need not give detailed reasons as to why he intends to agree with the findings of the enquiring authority. But, he is bound to give reasons, in order to show his application of mind to the material which was before him coupled with the objections of the delinquent employee has urged. How the disciplinary authority should word his order, how much reasons should be given in the said order language which should be employed in the said order, cannot be laid down as a proposition of law. But, the true test is when the authority which is vested with the power to review the said order looks into the said order, that authority should be satisfied that the disciplinary authority had applied its mind to the material before him before the order was passed. Therefore, in the order of the disciplinary authority, there must be sufficient indication to show the application of mind by the disciplinary authority before it records its findings.
Cases Referred: JT 2001 (Suppl) SC 608; W. A. Nos. 68-70/2000 (S-RES).
Followed: 1978 (2) Kar. L. J. 66; 1975 (2) Kar. L. J. 88; 1997 (II) LLJ 489; AIR 1973 SC 2701; ILR 2003 Kar. 3066; AIR 1976 SC 1785; AIR 1974 SC 87; AIR 1978 SC 597; ILR 2004 Kar 4822.
CANARA BANK OFFICER EMPLOYEES (CONDUCT) REGULATIONS, 1976 - Regulation 6(17) - Clarificatory questions by Enquiry Officer - Delinquent not leading evidence nor examining himself - Enquiry Officer to put questions to the delinquent on the circumstances appearing against him in the evidence - If Enquiry officer puts leading question to the management witnesses and acts as a prosecutor in the guise of clarificatory questions and records evidence which is made basis for recording findings against the delinquent, then the proceedings are vitiated - The real test is, whether the proceedings reflected bias on the part of the Enquiry officer.
[N. Kumar, J]: The purpose and object of permitting the Inquiry Officer to put such questions by way of clarification is to ascertain the real question and the truth of the matter. However, under the guise of putting clarificatory questions. If the Inquiry Officer put leading questions to the witnesses of the management and records evidence which is made the basis for recording a finding of guilt against the charge-sheeted employees the enquiry would get vitiated. However, it is not possible to lay down as a rule of law what questions the Inquiry Officer is entitled to put in the domestic enquiry or how many questions he can put. The question whether Inquiry Officer has put questions by way of clarification or virtually he has done examination-in-chief or cross-examination, is dependant on the facts and circumstances of each case. The same has to be gathered by looking into the evidence, nature of questions put, the number of questions put and answers obtained and how the answers have been made use of in preparing the report. Therefore the material on record in any particular case demonstrates that the Inquiry Officer has acted as Prosecutor then such an enquiry gets vitiated. The real test is whether the departmental proceedings reflected bias on the part of the Inquiry Officer. If so, the enquiry could be said to be vitiated.
CANARA BANK OFFICER EMPLOYEES (CONDUCT) REGULATIONS, 1976 - Regulation 6(17) - Domestic Enquiry - Non-furnishing of documents - Whether in the facts and circumstances vitiated the proceedings. See, Canara Bank Officer Employees (Conduct) Regulations, 1976 - Regulation 3(1).
NATURAL JUSTICE - Duties of enquiry officer
Duties of enquiry officer -Domestic Enquiry proceedings - Photo copy of a privilege document sought to be produced by delinquent - Document vital for defences - Can the officer shut out the document as it is a privilege document and on the ground that much production at a belated stage delays the proceedings - His duties in the circumstances.
[N. Kumar, J]: Especially the documents, which are in possession of the parties are to be permitted to be produced in the said enquiry assuming that the other side has come into possession of the document in a questionable manner. After allowing the document to come on record considering the objections, the enquiring authority could have given a finding at the time of preparing the report, whether those documents are admissible or not, whether those documents are relevant or not, and whether those documents are proved and can be looked into for deciding the charges one way or the other. Shutting out the evidence even at the stage of production is not contemplated in a domestic enquiry. Even in judicial proceedings the documents are permitted to be produced subject to objections to be considered at the time of final hearing. That is not the stage to consider the relevancy of the document. In that view of the matter, it is yet another instance of the enquiry being vitiated for not following the principles of natural justice, i.e., preventing the documents on which the defence relies, being produced into the enquiry.
Based on the provided legal document, here are the key points regarding the judgment in S.G. Nayak vs. Canara Bank:
1. Bias Due to Rank Disparity The domestic enquiry was vitiated because the Inquiry Officer (Assistant General Manager) was of lower rank than the Investigating Officer (Deputy General Manager) who conducted the investigation and submitted the report on which the charges were based. A right-minded person would perceive a real likelihood of bias, as the lower-ranking officer could not easily ignore the opinions of his superior. * (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!)
2. Inquiry Officer Acting as Prosecutor The Inquiry Officer acted as a prosecutor rather than an impartial adjudicator. He put leading questions to management witnesses (specifically M.W-4) and cross-examined defense witnesses (DW-4) to elicit answers that substantiated the charges, rather than merely asking clarificatory questions to ascertain the truth. * (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!)
3. Denial of Relevant Documents The principles of natural justice were violated when the Bank denied the petitioners access to vital documents required for their defense. This included: * Refusing to produce 38 documents on grounds of privilege or unavailability, despite the petitioners' timely requests. * Claiming privilege over documents containing higher authority approvals which, if produced, would have negated the charges. * Rejecting a photocopy of an inspection report on technical grounds (incompleteness) when the document was vital for the defense and strict rules of evidence do not apply to domestic enquiries. * (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!)
4. Non-Speaking Order by Disciplinary Authority The order of dismissal passed by the Disciplinary Authority was invalid because it did not record reasons for accepting the Inquiry Officer's findings. The authority failed to demonstrate that it "applied its mind" to the material on record and the objections filed by the delinquent employees, violating the requirement that quasi-judicial orders must be speaking orders. * (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!)
5. Final Ruling The High Court quashed the orders of dismissal passed by both the Disciplinary Authority and the Appellate Authority. The Court reserved liberty for the Bank to conduct a fresh enquiry that complies with the principles of natural justice, ensuring an independent Inquiry Officer, production of all relevant documents, and proper cross-examination opportunities. * (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!)
( 1 ) AS Identical charges are levelled against the petitioners, common enquiry was conducted, common evidence adduced, though separate orders are passed, common questions of law and facts arise for consideration in these two writ petitions, they are disposed of by a common order.
( 2 ) THE petitioner is W. P. No. 30770/95 is one Sri S. G. Nayak who was at the relevant point of time working as Divisional Manager at Mandvi Branch of Canara Bank, Bombay, during the period May 1986 to July 1989. The petitioner in W. P. No. 30391/95 is one Sri P. L. Prabhu, who was working as Senior Manager in the same Branch during the period from 31. 01. 1988 to 21. 01. 1989. Against these two officers on 31st August, 1990, separate Article of Charges were issued accompanied by statement of imputation. Broadly, the charges levelled against these two petitioners are: sai Group of Concerns had three accounts. One in the name of M/s. Sri Overseas International, second in the name of M/s. Sai Chemicals and third in the name of M/s. Ganapati International. They were enjoying various credit facilities. M/s. Sai Group of Concerns were tendering cheques drawn on RBI for credit to their account with the branch. The petitioners permitted drawings against these cheques and in turn the branch was issuing RBI cheques favouring various banks. They have permitted these customers to over draw the amount beyond the permitted limit and the same was not reported in F. 637. They did not ensure that parties submitted stock statement in time and that value furnished in the stock statement were not properly verified for their correctness resulting in inadequate securities to cover the liability. Further it was alleged that the amounts received from M/s. Kantilal and Co. , for investment through Canfina and investment in short term deposits with the Bank were diverted to Sai Group of Concerns and petitioners were parties to the conversion. The said facts were concealed from Circle Office and they permitted mis-utilization of the amounts received from M/s. Kantilal and Co. , which amounts were meant for crediting to Can Bank Financial Services Ltd. , The aforesaid amounts were received from M/s. Kantilal Co. , agreeing to pay interest ranging from 24% to 27% and the said transactions were confirmed in violation of RBI directives on interest rates on deposits. No deposit receipt was issued and instead pay orders favouring different companies were issued thereby allowing the amount deposited with the bank to be misutilised. Subsequently, the period of deposit ws extend thus allowing the amount tendered by M/s. Kantilal and Co. , being misutilized by M/s. Sai Group of Concerns which amounts to conversion. They permitted such drawings without sanction continuously. On account of over-drawings the liability in the account of M/s. Sai Overseas international want up to Rs. 216 lakhs as on 28. 02. 1989. The liability went up to Rs. 20 lakhs in the account of M/s. Sai Chemicals and Rs. 15 lakhs in the account of M/s. Ganapati international, as against sanction limit of Rs. 3 lakhs and Rs. 10 lakhs respectively. Therefore, these petitioners were accused of violating RBI guidelines and by channellising the funds of one party to another party, misutilization, conversion of funds and thus they have failed to perform their duties with utmost honestly, integrity, devotion and diligence and thus contravening regulation 3 (1) read with Regulation 24 of the Canara Bank Officer Employees' (Conduct) regulations 1976.
( 3 ) BOTH the petitioners on receipt of aforesaid charge-sheets have submitted separate replies. The said reply is substantially the same. They contend that RBI cheques were not presented through the clearing process within the branch. RBI cheques were sent to Funds and Investment Section for direct credit into Bank's account with. The credits to the parties account are given against the cleared RBI cheques. These transactions were well within the bonafide pra
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