IN THE HIGH COURT OF JUDICATURE AT BOMBAY
A.A. SAYED AND M.S. KARNIK, JJ.
A.D. Padhey of Mumbai Indian Inhabitant - Petitioner
Vs.
State Bank of India - Respondent
WRIT PETITION NO. 1883 OF 2003
Decided On : 31-07-2017
It is well-settled that the proceedings in criminal case and departmental proceedings operate in different fields. The standards of proof and evidence required in the two proceedings are also different. The disciplinary proceedings are concerned with ensuring that the employees conform to the rules of conduct which are prescribed by the employer and maintain discipline in relation to their employment. The disciplinary proceedings are to weed out persons who are considered unworthy of being a part of the employer organization. The criminal proceedings are with an object to punish the offender. The law is well-settled. Acquittal by a Criminal Court would not debar an employer from exercising disciplinary power in accordance with the rules and regulations in force. In a criminal trial, incriminating statement made by the accused in certain circumstances or before certain officers is totally inadmissible in evidence. Such strict rules of evidence and procedure would not apply to departmental proceedings. The degree of proof which is necessary to order a conviction is different from the degree of proof necessary to record the commission of delinquency. The rule relating to appreciation of evidence in the two proceedings is also not similar. In criminal law, burden of proof is on the prosecution and unless the prosecution is able to prove the guilt of the accused "beyond reasonable doubt", he cannot be convicted by a Court of law. In departmental inquiry, on the other hand, penalty can be imposed on the delinquent officer on a finding recorded on the basis of "preponderance of probability". Acquittal of the petitioner in the criminal case by the Special Court, therefore, does not ipso facto absolve him from the liability under the disciplinary jurisdiction of the Bank. Court is, therefore, unable to uphold the contention of the petitioner that since he was acquitted by a Criminal Court, the impugned order dismissing him from service deserves to be quashed and set aside.
Constitution of India, 1950-Article 226-Disciplinary proceedings/criminal proceedings.-Since criminal proceedings and disciplinary proceedings operates in different fields hence acquittal by Criminal Court would not debar employer to exercise disciplinary power.
It is well-settled that the proceedings in criminal case and departmental proceedings operate in different fields. The standards of proof and evidence required in the two proceedings are also different. The disciplinary proceedings are to weed out persons who are considered unworthy of being a part of the employer organization. The criminal proceedings are with an object to punish the offender. The law is well-settled. Acquittal by a Criminal Court would not debar an employer from exercising disciplinary power in accordance with the Rules and Regulations in force. In a criminal trial, incriminating statement made by the accused in certain circumstances or before certain officers is totally inadmissible in evidence. Such strict rules of evidence and procedure would not apply to departmental proceedings. The degree of proof which is necessary to order a conviction is different from the degree of proof necessary to record the commission of delinquency. The rule relating to appreciation of evidence in the two proceedings is also not similar. In criminal law, burden of proof is on the prosecution and unless the prosecution is able to prove the guilt of the accused "beyond reasonable doubt", he cannot be convicted by a Court of law. In departmental inquiry, on the other hand, penalty can be imposed on the delinquent officer on a finding recorded on the basis of "preponderance of probability."
Acquittal of the petitioner in the criminal case by the Special Court, therefore, does not ipso facto absolve him from the liability under the disciplinary jurisdiction of the Bank. The charges against the petitioner were not casual in nature but were serious. The Disciplinary Authority has taken all these aspects into consideration and the findings of the Inquiry Officer are based on the evidence on record. The inquiry has been conducted in due observance of the principle of natural justice. In these circumstances, therefore, there is no infirmity or perversity with the view taken by the authorities.
M.S. KARNIK, J.
1. The petitioner was working as Assistant General Manager with the respondent-bank and was heading Personal Banking Division. The petitioner is challenging the order dated 8th March, 2000 compulsorily retiring the petitioner pursuant to the Departmental Inquiry held against him in respect of the transactions relating to the Securities Scam of 1991-92. The transactions in question were carried out by the Securities Division, Mumbai Main Branch of the respondent-bank and the bank alleges that the same resulted in loss of Rs.812 crores to the bank which may be very difficult to recover. The petitioner was served with a charge-sheet dated 23rd November, 1993 as regards irregularities and malpractices at Securities Division, Mumbai Main Branch, Mumbai. The petitioner while working as Assistant General Manager of PBD has committed certain serious irregularities in discharge of his duties which as per the Articles of Charge are as under :-
ARTICLE-I
Shri Harshad S. Mehta, a broker was maintaining his personal account Current A/c.No.4/87/10 in the Personal Banking Division of Bombay Main Branch. Debit/Credit vouchers emanating from the Investment Cell of the Securities Division of the Branch were allowed to be put through the aforesaid account maintained in the Division of Sh. A.D. Padhye despite the following unsatisfactory features :
(a) If Shri H.S. Mehta or his firm was/were to sell or purchase securities and transactions were to be routed through his current account, for purchases, his account was to be debited and full particulars should have been noted/written on the vouchers and similarly for sales. The relative Bankers cheques were to be issued or received and these were to be dealt with by the Section of the Securities Department at Bombay Main Branch who were dealing with the sale and purchase transactions for the Bank's customers. Instead, debit/credit vouchers with incomplete details originated by the Bank's Investment Cell in the Securities Division (who were to deal with Bank's own purchase and sale of securities) representing payments made to counterparty Banks on account of purchase of securities from them or receipts from counterparty Banks on account of sale of securities to them were freely allowed to be routed through the said account. A few instances of such transactions are given in Annexure 'A' of the charge-sheet.
(b) The vouchers referred to above which were passed by Shri R. Sitaraman, Officer JMGS I (now under suspension) at the Investment Cell for debit of the said account maintained in his Division were put through without any verification and/or scrutiny by his Division.
(c) Shri R. Sitaraman, Officer JMGS I who was posted in the Investment Cell of the Securities Division was vested with passing powers upto Rs.25,000/- only. Sh. Padhye, however, allowed the debits passed by Shri Sitaraman, an official from another Department, much in excess of the passing powers delegated to him, to be debited to the Current Account of Shri H.S. Mehta, maintained in his Division. He thus abdicated the control expected to be exercised by him as Manager of P.B. Division over the transactions passing through his Department and he had allowed Shri R. Sitaraman to continue his nefarious activities without any check. A few instances of such transactions are given in Annexure 'A' of the charge-sheet.
ARTICLE2
He failed to scrutinise daily the vouchers routed through his Division as required in terms of paragraph 47 of Chapter II of the Bank's Book of Instructions, Vol. I. Had he done this, as expected of him, the fraudulent transactions put through by Shri R. Sitaraman could have been detected in time.
ARTICLE3
He recommended to the Dy. General Manager, Bombay Main Branch on the letter dated 10.1.92 (a copy of which is enclosed at Annexure 'B' of the charge-sheet) addressed by Shri Pankaj V. Shah for Shri Harshad Mehta to the SBI Main Branch, Personal Banking Division (for attention of Mr. Padhye) requesting th
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