Suppression of material facts by a bank employee by offering already encumbered property as security for multiple loans constitutes gross misconduct under the 'prejudicial to interest of bank' clause, justifying dismissal regardless of actual loss, as it creates a potential for serious financial prejudice.

THIS PETITION HAVING BEEN HEARD AND RESERVED FOR ORDERS ON 10TH MARCH, 2026 AND COMING ON FOR PRONOUNCEMENT THIS DAY, THE COURT PRONOUNCED THE FOLLOWING:

CORAM: HON'BLE MR. JUSTICE ANANT RAMANATH HEGDE

CAV ORDER

1. This petition is filed assailing the award dated 27/04/2015 in C.R. No. 16/2010 passed by the Central Government Industrial Tribunal-cum-Labour Court. In terms of the award, the penalty of dismissal imposed on the respondent-employee is set aside. Hence, the petitioner-employer is before this Court.

2. The respondent was an employee of the petitioner Bank, and she joined the petitioner’s Bank on 17.07.1978 as a clerk. A disciplinary enquiry was initiated against the respondent on certain charges. It is alleged that the respondent had borrowed a loan of Rs.3,00,000/- from UCO Bank on 28.02.2002 by mortgaging her property, and the respondent had suppressed the fact that the said property was already offered as security on 31.12.2001, for the loan availed by her husband from Indian Bank.

3. The further allegation is that, the same property was mortgaged by depositing the original gift deed dated 22.12.2001, in the year 2004, to the loan availed by a third party from The Grain Merchant's Co-operative Bank Ltd.

4. The petitioner also alleged that the respondent employee was required to obtain prior permission from the Competent Authority while borrowing a loan from other financial institutions, and same was not done and the respondent cheated the financial institutions by fraudulently mortgaging the property as security for different loans availed by her and her relatives.

5. The charge memo dated 02.02.2007 issued to the respondent refers to misconduct in terms of Paragraph No. 5(j) of the Memorandum of Settlement dated 10.04.2002.

6. The respondent disputed the charges. A domestic enquiry was held, and the Enquiry Officer found that the charges were proved and proposed the penalty of dismissal. The Disciplinary Authority dismissed the respondent.

7. Aggrieved by the order of dismissal, the respondent raised an industrial dispute. The Labour Court held that the enquiry was fair and proper. Evidence was led on the plea of victimization.

8. The Labour Court also recorded a finding that the allegations are proved but concluded that the misconduct under Section 5(j) of the Memorandum of Settlement dated 10.04.2002 was not established. Thus, the Labour Court set aside the penalty of dismissal, directed reinstatement with full back wages and all consequential benefits, along with continuity of service.

9. Learned counsel appearing for the petitioner submitted that the petitioner is a nationalised bank and the respondent was its employee. Without disclosing the fact that the property was already mortgaged in favour of other financial institutions as a security for the loans borrowed by her husband, the respondent also borrowed a loan in her own name by offering the said property.

10. It is urged that the conduct of the respondent is unbecoming of an employee of a bank, and it has tarnished the image of the bank, and under Section 5(j) of the Memorandum of Settlement dated 10.04.2002, it amounts to misconduct on the part of the respondent.

11. It is also urged that the Labour Court, after having recorded a finding that the charges were proved, could not have interfered with the penalty of dismissal, as the scope for interfer