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2025 Supreme(Ker) 1327
IN THE HIGH COURT OF KERALA AT ERNAKULAM
P.M.MANOJ, J.
P.Sankaran Namboothiri, S/o.S.Parameswaran Namboodiri - Appellant
Versus
Kerala State Financial Enterprises Ltd - Respondent
WP(C) No. 19103 of 2014
Decided on : 11-04-2025
Advocate Appeared:
For the Appellant : ADV P.SANKARAN NAMBOODIRI
For the Appellant : ADVS. SRI.M.GOPIKRISHNAN NAMBIAR, SRI.P.BENNY THOMAS, SRI.K.JOHN MATHAI, SRI.JOSON MANAVALAN, SRI.KURYAN THOMAS, SMT. POOJA MENON, SRI. BINOY DAVIS, GOVT. PLEADER., SMT. A. ARUNA, AMICUS CURIAE
Vague charges in disciplinary proceedings violate principles of natural justice, hindering the right to a fair defense and necessitating clear evidence for findings.
Headnote:
(A) Kerala State Financial Enterprises Act - Disciplinary proceedings - The petitioner, a Senior Manager, was dismissed after allegations of sanctioning loans without adequate security and collusion with loanees. The charges were vague and lacked specificity, violating principles of natural justice. (Paras 1-49)
(B) Natural Justice - The court emphasized that vague charges hinder the ability to mount a defense, and the absence of specific allegations renders the disciplinary process unjust. (Paras 11, 12, 47)
(C) Evidence - The court found that the enquiry report did not substantiate the charges with adequate evidence, leading to arbitrary conclusions. (Paras 14, 22, 48)
Facts of the case:
The petitioner was dismissed after 29 years of service due to allegations of misconduct in loan sanctioning, which were not clearly defined.
Findings of Court:
The court found the disciplinary proceedings flawed due to vague charges and lack of evidence, warranting reinstatement.
Issues: The main issues included the clarity of charges, adherence to natural justice, and the sufficiency of evidence.
Ratio Decidendi: The court ruled that vague charges violate the right to a fair defense and that findings must be supported by evidence.
Result: The dismissal was set aside, and the petitioner was reinstated with back wages.
JUDGMENT :
P.M.MANOJ, J.
The writ petition is preferred primarily challenging Ext.P2 and related Ext.P1 memo of charges, Ext.P3 enquiry report and Ext.P5 order passed in the appeal.
2. The petitioner was an employee of the Kerala State Financial Enterprises (for short ‘KSFE’) - the 1st respondent. He entered into the service of the 1st respondent on 28.08.1978. At the time of termination, he had completed 29 years of service.
3. While initiating disciplinary proceedings, he was working as the Senior Manager. The issue involved in this case is with respect to his tenure in the Loan Unit at Kottayam. During those periods, he had sanctioned 300 loans, which amounts to Rs.3 Crores. Out of which, the dispute was raised with respect to 24 loans, which were defaulted, and on examination and verification of the documents, certain irregularities were found, and the petitioner was charge-sheeted after two years.
4. Going by the charge memo, which is produced as Ext.P1, it is stated that the petitioner, in blatant violations of the procedures in vogue, had sanctioned loans amounting to Rs.34,40,000/- to a group of persons related to Sri.M.R.Sasikumar, one of the Chitty Canvassing Agents, during a time span of six months, accepting insufficient and unacceptable properties as securities disregarding the interest of the Company. On the basis of this allegation, he was charge-sheeted for the following activities:
• wrongful gain by collusive act.
• overvaluation of mortgaged properties for a high amount, which amounts to cheating the Company.
• devolution and transfer of properties mortgaged with preplanned intention to siphon out the Company money.
• malafide intention in acceptance of entire property for the loan transactions specified in the memo of charges which are devoid of independent accessibility and separate demarcation.
• identified each property with malafide intention which is otherwise impossible to identify,
• A preplanned action plan in collusion with the Assistant Manager and Assistant concerned along with loanees and mortgagers.
• He has deliberately given high valuation to favour the loanees at the cost of Company’s interest.
• Due to high inflated valuation given and no separate access to each property, it was impossible to dispose any one of the property to realize the respective dues.
• he has an intention to defeat the claim of the Company at the stage of realisation of the dues
• In order to make wrongful gain to himself and loss to the Company he did not follow the general guidelines issued by the Company for acceptance of security property whereby siphoned off Company’s money.
• The Company has sustained heavy loss due to the activities of the petitioner. Thereby he failed to protect the interest of the Company. By his unholy alliance with loanees and mortgagees he has forsaken the interest of the Company.
• With certain ulterior motive he did not entrust the task of valuation to Kattappana Branch Manager in violation of the directions of the Head Office.
• The unholy nexus with the loanees is evident from chart submitted by Internal Audit Team.
5. In addition to that, he has committed certain other serious lapses, which are:
(i) The FSV of the properties are not even recorded in the scrutiny notes.
(ii) Even the valuation reports are missing in a No. of files.
(iii) Separate revenue records for each property, such as Location Sketch, Location Certificate, Possession certificate, upto date Encumbrance Certificate etc., were not obtained.
(iv) Almost all valuation reports are devoid of many vital information such as extent of property, Sy.No., boundaries and means of access to the property etc.
(v) The repayment capacity of Loanees has not been ascertained properly.
(vi) Almost all the loan Agreements are totally blank.
(vii) Equitable mortgage has not been created in a number of cases.”
6. On the basis of the aforementioned charges, disciplinary actions were initiated. All the charges levelled against him have been categorically denied by him
