2026 Supreme(MP) 439

IN THE HIGH COURT OF MADHYA PRADESH AT GWALIOR
ASHISH SHROTI, J.
 
Sanjay Bansal - Petitioner 
Versus 
Madhya Pradesh Gramin Bank Thr. And Others – Respondents
Writ Petition No. 28612 of 2022  
Decided On : 04-05-2026
 

A departmental inquiry report is vitiated if a fresh report is directed based on existing evidence without a de-novo inquiry. However, if a bank officer fails to justify high-value personal transactions, the resulting punishment is sustainable due to the absolute honesty required of custodians of public funds.

Headnote:(A) Constitution of India - Article 226 - Departmental Inquiry - Non-supply of documents - An inquiry is vitiated by the non-supply of documents only when the delinquent employee establishes the relevance of the non-supplied documents and the resultant de facto prejudice caused to them. (Paras 18-20)

(B) Administrative Law - Allegations of mala fides and personal bias - When personal allegations of bias are leveled against an authority, that authority must be impleaded in their personal capacity to provide an opportunity to rebut such allegations; in the absence of such impleadment, allegations of personal bias cannot be entertained. (Paras 21-23)

(C) Departmental Inquiry - Role of Inquiry Officer - Independence and Impartiality - An Inquiry Officer acting in a quasi-judicial capacity is an independent adjudicator and must not act under the dictates of higher authorities - While a disciplinary authority may remit a matter for de-novo inquiry for cogent reasons, directing an Inquiry Officer to submit a fresh report based on the same set of evidence without conducting further inquiry is impermissible and vitiates the report. (Paras 24-32)

(D) Service Law - Bank Officers - Standard of Integrity - A bank officer, as a custodian of public funds, is required to maintain the highest degree of honesty and integrity - Failure to satisfactorily justify high-value transactions in personal accounts that do not match known sources of income constitutes grave misconduct, justifying the punishment of compulsory retirement regardless of procedural flaws in other charges. (Paras 39-44)

Facts of the case:
A bank official was imposed with the punishment of compulsory retirement following a departmental inquiry into irregularities regarding the sanctioning and disbursement of loans. The petitioner challenged the punishment and the subsequent appellate order, alleging that the inquiry was initiated due to personal bias of a senior officer and that the inquiry process was flawed because the Inquiry Officer submitted a subsequent report on the directions of higher authorities based on the same evidence without conducting a de-novo inquiry. Further, the petitioner alleged non-supply of essential documents.

Findings of Court:
The Court found that the petitioner failed to prove prejudice arising from the non-supply of documents and that the allegations of bias were not maintainable as the concerned officer was not impleaded. While the Court agreed that the procedure of submitting a fresh report based on existing evidence was flawed and vitiated the inquiry report, it observed that the petitioner could not justify high-value transactions in his personal accounts. Given the fiduciary duty of a bank officer, this single finding of misconduct was sufficient to sustain the punishment.

Issues: (i) Whether the non-supply of documents caused sufficient prejudice to vitiate the inquiry; (ii) Whether allegations of personal bias could be entertained without impleading the concerned authority; (iii) Whether directing a fresh report based on the same evidence without a de-novo inquiry vitiates the proceedings; and (iv) Whether unexplained personal financial transactions justify the punishment of compulsory retirement for a bank officer.

Ratio Decidendi: An Inquiry Officer must act independently, and a report based on a directive to rewrite findings on the same evidence is legally unsustainable. However, the high standard of integrity expected from bank officials means that an inability to justify personal funds beyond known income sources constitutes grave misconduct that overrides procedural irregularities in the inquiry process.

Result: The petition fails and is hereby dismissed.

ORDER :

ASHISH SHROTI, J.

The petitioner has invoked Article 226 of the Constitution of India, challenging the order dated 30.11.2016 (Annexure P/11), whereby the punishment of compulsory retirement has been inflicted upon him on account of misconduct found proved in the departmental inquiry. The petitioner also challenges the order dated 13.09.2022, whereby his appeal against the punishment order was dismissed. The petitioner further prays for a direction to the respondents to reinstate him in service with all consequential benefits.

2. The facts necessary for decision of this case are that the petitioner, at the relevant time, was holding the post of Scale-II Officer in the respondent bank and was posted as Branch Manager at Morar Branch, Gwalior. Certain irregularities in the matter of sanctioning and disbursement of loans were noticed in the preliminary investigation conducted by a team of three officers of the bank. Based upon the report, a charge-sheet was issued to the petitioner on 27.05.2015, wherein as many as 14 charges were levelled against him.

3. In order to conduct the departmental inquiry, one Mr. S.L. Khandelwal, Scale-III Officer, was appointed as the Inquiry Officer and Mr. Deepak Joshi, Scale-I Officer, was appointed as the Presenting Officer. The inquiry was conducted, and after inviting written briefs from the Presenting Officer and the petitioner, the Inquiry Officer submitted his report to the Disciplinary Authority.

4. The Disciplinary Authority, in turn, forwarded the inquiry report to the petitioner vide letter dated 15.09.2016 and asked him to submit his explanation to the findings recorded by the Inquiry Officer. The petitioner submitted his explanation on 28.09.2016, and thereafter the impugned punishment order came to be passed on 13.11.2016. The Disciplinary Authority awarded separate punishments for each charge and, cumulatively, imposed the punishment of compulsory retirement from service on the petitioner.

5. Being aggrieved, the petitioner filed a departmental appeal challenging the punishment order. The appeal was dismissed vide order dated 20.02.2017. The petitioner approached this Court by filing W.P. No.3215 of 2017. Vide order dated 29.07.2022, this Court found that the order passed by the Appellate Authority was cryptic and non-speaking. Accordingly, setting aside the order, the matter was remitted to the Appellate Authority for reconsideration and passing of a speaking order. The impugned order dated 13.09.2022 was thereafter passed by the Appellate Authority affirming the punishment order passed by the Disciplinary Authority. The order of punishment passed by Disciplinary Authority and the appellate order are under challenge in this petition.

Submissions of petitioner’s counsel:

6. The learned counsel for the petitioner challenges the punishment orders on the ground of mala fides on the part of one Mr. K.U. Parate, a Scale IV Officer of the Bank, who was then working as Regional Manager at the Regional Office, Gwalior. The counsel argued that on 11.07.2014, Mr. Parate called the petitioner to his residence and asked for illegal demand/gratification. However, when the petitioner did not accept such demand, Mr. Parate abused the petitioner and threatened him, stating that if he does not obey his instructions, he would implicate him in a departmental inquiry. As per his submission, Mr. Parate was later transferred and posted at the Head Office as Audit In-charge.

7. The learned counsel further submitted that Mr. Parate conducted an unscheduled inspection/audit of Morar Branch in December' 2014 along with one Mr. Neeraj Saxena and Mr. K.K. Shrivastava. As per his submission, this inspection/audit was conducted with a predetermined mindset to implicate the petitioner. He further submitted that this was not a routine audit/inspection but an unscheduled inspection designed to frame the petitioner in disciplinary proceedings. It is further submitted that, based upon the report submitted by Mr. Parate

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