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2006 Supreme(Cal) 448
High Court Of Calcutta
Present: Ashim Kumar Banerjee, Tapan Mukherjee, JJ.
JAGDISH LAL GAMBHIR - Appellant
Versus
PUNJAB NATIONAL BANK - Respondent
FMA 1446 Of 2000
Decided On : 07/24/2006
Disciplinary proceedings against employees excluded from employment due to alleged misconduct during a bank merger are valid if permitted by the Apex Court and conducted without illegalities. However, the disciplinary authority's failure to issue a second show cause notice or record reasons for disagreeing with the enquiry report vitiates the proceedings, denying the employee the opportunity to offer their views on the enquiry report and proposed punishment.
Headnote:
K. I. SHEPHARD AND ORS. - DISCIPLINARY PROCEEDINGS - BANKING - SERVICE - ACT-SECTION REFERRED : Not Applicable SUMMARY: Two former employees of Hindustan Commercial Bank, Gambhir and Prabuddha, challenged their dismissals following disciplinary proceedings initiated by Punjab National Bank (PNB) after the merger of their bank with PNB. The Apex Court, in K. I. Shephard and Ors. vs. Union of India, had earlier directed reinstatement of employees excluded from employment due to alleged misconduct during the merger. The court analyzed the Apex Court's decision and the subsequent proceedings against Gambhir and Prabuddha. It held that the disciplinary proceedings against Gambhir were valid as the Apex Court had permitted the bank to proceed, and no illegalities were found. However, for Prabuddha, the court set aside the dismissal order as the disciplinary authority had not issued a second show cause notice or recorded reasons for disagreeing with the enquiry report. The court directed PNB to reinstate Prabuddha under deemed suspension and start proceedings de novo from the enquiry report stage.
Fact of the Case:
Gambhir and Prabuddha, former employees of Hindustan Commercial Bank, were dismissed following disciplinary proceedings initiated by Punjab National Bank (PNB) after the merger of their bank with PNB. They challenged their dismissals, arguing that the proceedings were invalid in light of the Apex Court's decision in K. I. Shephard and Ors. vs. Union of India, which had directed reinstatement of employees excluded from employment due to alleged misconduct during the merger.
Finding of the Court:
The court analyzed the Apex Court's decision in K. I. Shephard and Ors. vs. Union of India and the subsequent proceedings against Gambhir and Prabuddha. It held that the disciplinary proceedings against Gambhir were valid as the Apex Court had permitted the bank to proceed and no illegalities were found. However, for Prabuddha, the court set aside the dismissal order as the disciplinary authority had not issued a second show cause notice or recorded reasons for disagreeing with the enquiry report.
Issues: 1. Whether the disciplinary proceedings against Gambhir and Prabuddha were valid in light of the Apex Court's decision in K. I. Shephard and Ors. vs. Union of India? 2. Whether the disciplinary authority's failure to issue a second show cause notice or record reasons for disagreeing with the enquiry report vitiated the proceedings against Prabuddha?
Ratio Decidendi: 1. The Apex Court's decision in K. I. Shephard and Ors. vs. Union of India permitted the transferee bank (PNB) to initiate disciplinary proceedings against employees who were excluded from employment due to alleged misconduct during the merger. 2. The disciplinary proceedings against Gambhir were valid as the Apex Court had specifically permitted the bank to proceed, and no illegalities were found in the proceedings. 3. The disciplinary authority's failure to issue a second show cause notice or record reasons for disagreeing with the enquiry report vitiated the proceedings against Prabuddha, as it denied him the opportunity to offer his views on the enquiry report and the proposed punishment.
Final Decision: The court dismissed Gambhir's appeal and allowed Prabuddha's appeal in part. It set aside the dismissal order against Prabuddha and directed PNB to reinstate him under deemed suspension. PNB was directed to start proceedings de novo against Prabuddha from the stage of submission of the enquiry report, issue a second show cause notice, communicate reasons for disagreement with the enquiry report, and consider the issue of back wages in the final order.
( 1 ) THE controversies being the subject matter of the above two appeals flow from one Apex Court decision in the case of K. I. Shephard and Ors. vs. Union of India, reported in All india Reporter, 1987, Supreme Court Page 686.
( 2 ) THREE private banks were amalgamated with Punjab National Bank (hereinafter referred to as "pnb"), Canara Bank and State Bank of India respectively. One of them Hindustan Commercial Bank was merged with pnb. At the time of merger those three nationalized banks refused to give appointment to some of the officers of those three private banks. 29 officials of Hindustan Commercial Bank were amongst them. According to the nationalized banks as well as Reserve Bank of India they could not be absorbed and given employment in the nationalised bank at the time of amalgamation in view of specific allegations against them. One K. I. Shephard and others being the officers who were not taken in by the nationalised banks approached the Apex Court by filing writ petition under Article 32 of the Constitution of India which was disposed of by the Apex Court, inter alia, observing that the banks were not entitled to refuse employment to the erstwhile employees of the private banks. The Apex Court directed their reinstatement, however gave liberty to the banks to initiate proceedings if they so like. There were connected appeals from the High Court judgments, those were also disposed of by the said common judgment.
( 3 ) THE writ petitioners in both the above two appeals were two officers of Hindustan Commercial Bank. Against both of them there were existing allegations of misconduct. However, the erstwhile bank did not initiate any disciplinary proceeding as against them. After the decision of the apex Court they were formally given employment and simultaneously put under suspension and disciplinary proceedings were also initiated as against both of them which resulted in-order of dismissal/removal in both the cases.
( 4 ) GAMBHIR: in the case of Gambhir the writ petition was filed initially before the apex Court under Article 32 challenging the disciplinary proceedings. The apex Court permitted the authority to proceed with the disciplinary proceedings and thereby rejected the pleas of Gambhir along with others raised in the said writ petition by an order dated April 22, 1988. After fine aider of the Apex Court Gambhir filed his reply to the charge sheet. An Enquiry Officer was appointed and Gambhir participated in the enquiry proceeding. On September 27, 1988 Gambhir filed the above writ petition for quashing of the charge sheet as well as the proceeding. The Learned single Judge by an order dated September 30, 1988 permitted the bank to proceed with the enquiry, however, not to give any effect to the said enquiry until further orders. His Lordship further granted liberty to file a. representation before the disciplinary authority with a corresponding diection to disciplinary authority to dispose of such representation. Accordingly Gambhir made a representation on October 18, 1988 which was rejected by the disciplinary authority by reasoned order dated november 16, 1988. On July 20, 1989 the respondent bank applied for vacating the interim order. The learned Single Judge vacated the interim order granting liberty to the respondent. bank to pass the final order coupled with a direction not to implement the same for a period of 10 days. The bank was also directed to supply copy of the enquiry report and the final order so that the writ petitioner could take appropriate step on that basis. The writ petition was ultimately heard by the learned single Judge on December 7, 2000 when the writ petition was dismissed by the judgment impugned.
( 5 ) PRABUDDHA Roy: prabuddha Roy (hereinafter referred to as "prabuddha") was an officer of hindustan Commercial Bank. By a letter dated July 9, 1985, the said bank advised him not to extend any credit facility to one of the constituents of the Bank D
