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2024 Supreme(Online)(MAD) 15537
HIGH COURT OF MADRAS
Honourable Mr Justice S.M.SUBRAMANIAM
R.Veeraraghavan – Appellant
Versus
State Bank Of India – Respondent
Disciplinary actions against bank officers must adhere to internal rules and principles of natural justice, and violations can justify severe penalties even without proven motive.
Headnote:
Disciplinary - Banking Services - SBI Officers' Service Rules, 1992 - Sections 50(3), 50(4) - Summary: The court reviewed the disciplinary actions taken under the SBI Officers' Service Rules, focusing on the requirement for officers to act with integrity and follow established banking protocols. It emphasized the importance of procedural compliance in disciplinary inquiries.
Fact of the Case:
The appellant, a bank officer, was charged with multiple violations regarding loan sanctioning processes that led to considerable financial loss for the bank, resulting in his removal from service after an inquiry.
Finding of the Court:
The court confirmed that the charges were adequately substantiated, emphasizing the serious nature of the violations and the need for adherence to banking protocols.
Issues: The main issues involved whether the charges constituted misconduct under service rules, if due process was followed in conducting the inquiry, and whether the punishment was proportionate to the violations.
Ratio Decidendi: The court ruled that procedural lapses in banking compliance and failures to adhere to due diligence can constitute misconduct. The disciplinary authority's findings were upheld as they were supported by evidence and were within legal standards.
Final Decision: The court dismissed the appeal and upheld the dismissal of the appellant from the bank.
J U D G E M E N T
S.M.SUBRAMANIAM, J.
The intra Court appeal on hand has been instituted challenging the common order pronounced on 07.12.2020 in W.P.No.16246 of 2014.
FACTS OF THE CASE:
2. The writ petitioner is the appellant before us. The appellant joined the services of the State Bank of India in the Award Staff Cadre as Clerk- cum-Typist-cum-Cashier on 17.11.1988 at Thatchur Branch. He was promoted to the Officer's Cadre as JMG-I in 2004. He was posted to State Bank of India, Thiruvallur Branch.
3. A charge memorandum was issued on 13.10.2011 framing 19 charges. The nature of the charges are regarding sanctioning of loans en masse, without adhering to the procedures contemplated under the Banking Rules. Broadly, the allegations in the charge memorandum would reveal that the appellant's failure to cross check the estimates with Bank's approved valuer; failure to exercise due diligence and a track record of builder before recommending housing loan; failure to conduct pre-sanctioned survey in respect of 30 accounts; failure to verify salaries certificate/salary slips submitted by the borrowers before recommending 29 housing loans; failure to appraise/ assess housing loans proposals before recommending in respect of 17 accounts; failure to evaluate borrower's repaying capacity as the NMI (Net Monthly Income) of the borrowers were inflated to get higher quantum of loan, failure to adhere to EMI / NMI ratio, failure to verify correlation between agreement to sale and sale deed, as the amount mentioned in the sale agreement is more than the sale deed; failure to ensure submission of controlled return to Chief Manager in respect of five accounts; failure to get administrative clearance in respect of housing loans to Chief Manager Rajagopal's daughter; recommending 3 housing loans to borrowers residing in Chennai and projects also at Chennai.
4. The above acts are likely to cause loss of Rupees 4.20 Crores as 57 of 75 loans have become NPA (Non-Performing Assets). By way of an additional counter, the respondent / Bank, before the Writ Court has stated that at the time of issuance of charge sheet to the appellant, the estimated loss in respect of 75 loans disbursed in the Thiruvallur Branch, for which the petitioner was held responsible, was about Rs.4,20,00,000/-, as provided under the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act, 2002, certain loans were taken over by assets reconstruction companies. Still, as on date, the loss / NPA (Non-Performing Assets) in respect of the above loan transactions is at Rs.2,57,493.60/-. It is unlikely that there will be any drastic reduction in the said outstanding amount in the forcible future.
5. With reference to the above charge sheet, served along with the statement of allegations, the appellant submitted his written defence statement and thereafter, an inquiry was conducted. The Inquiry Officer conducted inquiry by affording an opportunity to the parties. Inquiry report was submitted on 19.07.2012. Further, an opportunity was provided to the delinquent Officer to submit his objections on the findings in the inquiry report. Thereafter, the Disciplinary Authority passed a final order of removal from service in proceeding dated 15.10.2012. The appeal filed by the appellant before the appellate authority was rejected on 08.02.2014.
Thereafter, the writ petition was instituted.
ARGUMENTS ON BEHALF OF THE APPELLANT:
6. Mr.R.Abdul Mubeen, learned counsel appearing on behalf of the appellant would raise six grounds :
“(1) Whether the charges framed against the appellant attributes to motive or misconduct as mandated under the SBIOSR, Rules 1992.
(2) Whether there was procedural irregularity in conducting the disciplinary proceedings violative of Rules 68 (6) of the SBIOSR, Rules 1992 (Common Proceedings)
(3) Whether the failure of the Appointing Authority to afford an opportunity to the appellant before disagreeing with the findings of the enquiry
