PREMKUMAR P. PANDYA v. DENA BANK — 1991 DIGILAW 317 (GUJ)

RAY, J. ( 1 ) IN this Special Civil Application, moved under Art. 226 of the Constitution of India, the petitioner challenges the propriety, correctness and legality of the impugned order of dismissal passed against him, on 16/08/1980, as contained in Annexure h to the Special civil Application and has prayed for appropriate writs in the nature of certiorari and mandamus for quashing the said impugned order and directing the respondents to pay all arrears of salaries and allowances as admissible to him as an employee of Dena Bank and for directing the respondents to reinstate the petitioner in service as if he has never been out of service. ( 2 ) THE petitioner joined as a Clerk in Dena Bank, sometime in 1953 and was promoted as an Accountant in the said Bank in 1960. After the dena Bank was nationalised, the petitioner was promoted as Branch Manager in April, 1970 in the said Dena Bank. On 5/01/1971, the petitioner was transferred as a Branch Manager to the Palanpur Branch of the said bank. The petitioners case is that, the Regional Manager of Dena Bank at Ahmedabad asked the petitioner to sanction loans to 25 Agriculturists, mentioned in the list stated to have been prepared by a businessman Shri arvind Sakalchand Trivedi and a social worker Shri Vadilal Prahalad Choksi. The petitioner has alleged that, he was instructed by the Regional Manager to immediately sanction the loans to the said agriculturists and thereafter to complete the formalities required for sanctioning such loans. It is the case of the petitioner that, pursuant to such direction, he sanctioned such loans to the agriculturists named in the said list and the Regional Manager of the Bank, by his letter dated 28/04/1971, appreciated the petitioners services as Branch Manager at Palanpur. Sometime in November, 1971, the petitioner was transferred to the Regional Office of Hie Bank. On 2 7/05/1972, a chargeshcct was issued to the petitioner for the impropriety in advancing agricultural loans between January and March, 1971 and on the very same date, by the order of the Deputy General Manager of Dena bank at Bombay. the petitioner was placed under suspension. On 5/12/1972, the Bank appointed an Enquiry Officer Shri M. P. Vyas. On 16/06/1973, the Bank appointed another Enquiring Officer Shri doraiswami. the petitioner was placed under suspension. On 5/12/1972, the Bank appointed an Enquiry Officer Shri M. P. Vyas. On 16/06/1973, the Bank appointed another Enquiring Officer Shri doraiswami. The petitioner lias alleged that, despite requests and reminders by the petitioner, no progress was made in the proposed departmental enquiry except appointment of Enquiring Officer, at times. A Criminal proceeding was initiated against the petitioner and 5 others, for offences punishable under Sees. 420, 467, 471 read with Sec. 120-B of the Indian Penal Code and under Sec. 5 (2) read with Sec. 5 (1 ) (d) of the Prevention of Corruption act. Such case was instituted in the Court of Special Judge, Ahmedabad citv, being numbered as Special Case No. 14 of 1977. After a protracted trial, the petitioner was acquitted of all the charges levelled against him in the said criminal proceeding. Accused Nos. 3 and 4, namely, Shri Arvind sakalchand Trivedi, an Oil Engines Dealer, and his employee shri Mahendra B. Khatri were convicted of the offences alleged against them and Shri Arvind Sakalchand Trivedi was sentenced to rigorous imprisonment for three years, together with fine and accused No. 4 was also sentenced to rigorous imprisonment for six months, with fine, NO appeal was preferred by the respondents against the order of acquittal passed against the petitioner by the learned Special Judge and the order of acquittal, therefore, became final. Despite such order of acquittal against the petitioner, the petitioner continued under suspension and the petitioner requested the Bank for revoking the order of suspension. The petitioner was informed by the Bank, by its order 23/05/1978, that the order of suspension would continue until the completion of the departmental enquiry. On 16/06/1978, the Bank informed the petitioner that Shri D. A. Patel would hold the enquiry and the petitioner would be informed about the date, venue etc. of such enquiry in due course. No step for completing the enquiry proceeding at an early date was taken and the petitioner was informed sometime in September, 1978 that steps were being taken by the Bank to conduct the enquiry soon and he would be informed about the date, venue etc. The departmental enquiry was, however, not commenced, but after two years of the last communication about the proposed departmental enquiry, the petitioner was informed, by order dated 16/08/1980, that the petitioner had been dismissed from service. The departmental enquiry was, however, not commenced, but after two years of the last communication about the proposed departmental enquiry, the petitioner was informed, by order dated 16/08/1980, that the petitioner had been dismissed from service. It was informed that, by exercise of the power under Regulation 11 of the dena Bank Employees (Discipline and Appeal) Regulations, 1977 (hereinafter referred to as "the Regulations"), the said order of dismissal was passed. ( 3 ) FOR the purpose of appreciating the contentions raised in the Special civil Application for challenging the legality, propriety and validity of the order of dismissal, the charge levelled against the petitioner in the departmental enquiry may be stated as hereunder :". . . . . . . . . . . . 1. You were the Manager of our Palanpur Branch from 5-1-1971 to october, 1971. During the period from January 197 1/03/1971 you have disbursed several loans under Agricultural Advance, which are against the terms of sanction, irregular and defective. Consequently, they are likely to involve the bank in a serious financial loss. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . "since the petitioner has been dismissed from service in exercise of the power under Regulation 11 and vires of Regulation 11 is under challenge, the said Regulation requires a close scrutiny, Regulation 11 of the Regulations is to the following effect :11. Special procedure in certain cases : notwithstanding anything contained in Regulation 6 or Regulation 7 or regulations the Disciplinary Authority may impose any of the penalties specified in Regulation 4 if the officer/employee has been convicted on a criminal charge, or on the strength of facts or conclusions arrived at by a judicial trial. "the learned Counsel for the petitioner has very strongly contedcd that the petitioner has undergone a long spell of misery for no fault on his part. He was made Branch Manager only in April, 1970 and within a few months of such promotion, he was posted as Branch Manager to Palanpur in January, 1971. Under an Agricultural Advances Scheme, a target, for disbursing Rs. 10,00,000. 00 by the said Branch, had been fixed by the Bank and the branch Manager, viz. He was made Branch Manager only in April, 1970 and within a few months of such promotion, he was posted as Branch Manager to Palanpur in January, 1971. Under an Agricultural Advances Scheme, a target, for disbursing Rs. 10,00,000. 00 by the said Branch, had been fixed by the Bank and the branch Manager, viz. , the petitioner, was specifically directed by the regional Manager to expedite the advances of loans and for the said purpose, he was directed to advance loans to 25 Agriculturists mentioned in a list prepared by Shri Arvind Sakalchand Trivedi, who was accused No. 3 in the said criminal case. As there was pressure on the petitioner to expedite agricultural advances and as he was directed to make advance to the said 25 Agriculturists on the basis of the list prepared by accused No. 3, the petitioner had complied with such direction. Mr. Mohit S. Shah, learned Counsel appearing for the petitioner, has submitted that the list was not prepared by the petitioner at his own instance and credibility or otherwise of the said persons were not approved by the petitioner on his own. He has submitted that, as a matter of fact, since the petitioner very promptly complied with the direction of the higher authority, viz. The Regional Manager of the said bank at Ahmedabad, the petitioners functioning as Branch Manager at Palanpur was appreciated by the Regional Manager, by his letter, referred to hereinbefore. Mr. Shah has also contended that, the question of improper advancing of loans by the petitioner was scrutinised by the C. B. I. and ultimately, a criminal case was instituted against the petitioner and other accused, including shri Arvind Sakalchand Trivedi (accused No. 3) and his employee Mahendra b. Khatri (accused No. 4 ). The learned Special Judge inter alia, came to the finding that, on the basis of the materials on record and evidence adduced in the criminal proceeding, the charges levelled against the petitioner could not be sustained and on the basis of such finding, the learned Special Judge acquitted the petitioner of all the charges. The learned Judge had come to the finding that the work concerning the loan account was handled by two clerks, Shri S. G. Gangwal and Shri Ramesh Upadhyay and the petitioner entrusted such work of opening account to the said two Clerks. Mr. The learned Judge had come to the finding that the work concerning the loan account was handled by two clerks, Shri S. G. Gangwal and Shri Ramesh Upadhyay and the petitioner entrusted such work of opening account to the said two Clerks. Mr. Shah has contended that, although the learned Judge had acquitted the petitioner of all the charges levelled against him, and, as aforesaid convicted accused nos. 3 and 4, viz. , Arvind Sakalchand Trivedi and his employee, Mahendra b. Khatri, the learned Judge made observations that, the petitioner was negligent in not supervising the opening of accounts and other functions of the Bank and he erred in relying on the Clerks of the Bank and also on the said shri Arvind Sakalchand Trivedi. Mr. Shah has contended that such observation by the learned Special Judge was a passing observation, not necessary for the purpose of convicting the petitioner and/or the other accused. For all intent and purpose, such observation and/or finding was obiter dictum and the same could not be taken into account for dispensing with the departmental proceeding initiated against the petitioner. Mr. Shah has. submitted that, although, long after the said judgment, the Bank authorities had decided to continue with the departmental proceedings and changed the Enquiring Officer one after the other, suddenly, after a long lapse, dismissed the petitioner from service, by taking recourse to special procedure in certain cases, as contained in the said Regulation 11 of the Regulations. Mr. Shah has submitted that, Regulation 11 envisages that, if a Bank employee is convicted, either on a criminal charge or on the strength of facts or conclusions arrived at in the judicial trial, for such conviction, the Bank may dispense with a regular departmental enquiry and by resorting to the special procedure, as contained in Regulation 11, may impose penalties specified in Regulation 4. Mr. Shah has contended that, such power under Regulation 11 can only be exercised, if the employee is ultimately convicted on a criminal charge or on the strength of facts or conclusions arrived at in a judicial trial. If the Bank employee is not ultimately convicted, either on the criminal charge or on the strength of facts or conclusions arrived at in a judicial trial, Regulation 11 cannot be pressed into action. If the Bank employee is not ultimately convicted, either on the criminal charge or on the strength of facts or conclusions arrived at in a judicial trial, Regulation 11 cannot be pressed into action. He has submitted that the sine qua non for application of Regulation 11 of the said Regulations is that, the Bank employee is ultimately convicted in a judicial trial. As, admittedly, the petitioner has been acquitted of all the charges levelled against him, the said Regulation 11 has no manner of application in the facts and circumstances of the case. He has contended that, as a matter of fact, the Bank authorities had also proceeded, initially, on the basis that, departmental enquiry should be made and for the said purpose, appointed Enquiring Officers from time to time and informed the petitioner that he would be intimated about the date, venue etc. of the departmental enquiry by the concerned Enquiring Officer. He has contended that, it is extremely unfortunate that, illegally and mala fide, the Bank administration purported to rely on the said Regulation 11 of the Regulations, when such regulation is not attracted in the facts and circumstances of the case and without making any enquiry whatsoever purported to dismiss the petitioner from service, inter alia, on the footing that, some observations had been made against the petitioner about his negligence in discharging duties and functions as Branch Manager. ( 4 ) MR. Shah has further contended that. if Regulation 11 of the Regulations is sought to be interpreted to the effect that, although an employee is not convicted on a criminal charge in a judicial trial, but if there is any observation or conclusion made by the Judge in the criminal trial, then on the basis of such observation or on the strength of the facts arrived at in the judicial trial, the Bank employee is liable to be penalised without holding any enquiry against him, then Regulation 11 of the Regulations must be held to be ultra vires, inasmuch as, the same is wholly arbitrary, unconscionable and opposed to all reasons and basis postulates of natural justice. Mr. Shah has submitted that, the charges levelled against the petitioner and other accused in the criminal trial were to the effect that the said accused persons, including the petitioner, had indulged in activities of cheating, forging and fabricating documents of the Bank. Mr. Shah has submitted that, the charges levelled against the petitioner and other accused in the criminal trial were to the effect that the said accused persons, including the petitioner, had indulged in activities of cheating, forging and fabricating documents of the Bank. The petitioner has been found not guilty of any of the charges levelled against him and he was acquitted of all the said charges. There was no necessity of making any finding as to whether or not the petitioner was negligent in performing his duties as Branch Manager of the Bank and the learned Judge would have been quite justified in not entering into the question of negligence of duty of the petitioner as Branch Manager and such criminal trial could have been disposed of couching the judgment in a different manner. The observation of the learned Judge about the negligence of the petitioner as Branch Manager was essentially as obiter dictum and on account of such obiter dictum, no penalty can be imposed against the petitioner. To the extent, Regulation 11 of the Regulations purports to authorise the Bank to impose penalty on a Bank employee, merely "on the strength of facts or conclusions arrived at in a judicial trial", although the employee has not been convicted on a criminal charge levelled against him in the judicial trial, is ultra vires Art. 14 of the Constitution of India. Mr. Shah has contended that the petitioner had no occasion to challenge such observations made by the learned Special Judge in the criminal trial in view of the fact that he was acquitted of all the charges levelled against him and a proceeding for quashing observations in the judgment is unwarranted. He has submitted that the petitioner has been dismissed from service without getting any opportunity to defend himself in the departmental proceeding initiated against him. Accordingly, the order of dismissal is per se illegal and should be set aside and the petitioner must be deemed to be in service all along being entitled to arrears of salaries and all other allowances and consequential benefits as would have been admissible to him had he been in regular service. ( 5 ) MR. K. J. Thakkar, for Mr. ( 5 ) MR. K. J. Thakkar, for Mr. K. S. Nanavati, learned Counsel appearing for the Bank, has, however, contended that, although the learned Special Judge had come to the finding that the charges levelled against the petitioner could not be proved, the learned Judge had made specific finding about his gross negligence in discharging his duties and functions as a Branch Manager, for which the Bank had sufferred pecuniary loss because of improper advances of agricultural loan made by the Bank. He has contended that, such finding was required to be made for the disposal of the criminal trial and the same cannot be held to be an obiter dictum. He has also contended that, if, in a judicial trial, on the basis of the evidence adduced in such trial, a finding of fact is made and a conclusion is arrived at by the learned Judge, such finding of fact and/or the conclusion made by the Judge in the criminal trial must be held to have been made after affording the accused in the criminal trial all reasonable opportunities of being heard. Hence, such Bank employee, who was an accused in a criminal trial, cannot be permitted to complain that, the finding of fact or conclusion arrived at by the learned judge in the criminal trial was made without affording the concerned Bank employee an opportunity of being heard. As, in a regular criminal trial, the fact has been found or a conclusion has been arrived at by the learned Judge, it will he quite just and proper for the Bank authorities not to make any attempt to arrive at such a conclusion and/or to establish such fact in a departmental enquiry. If, on the basis of such fact found by the learned judge and/or the conclusion arrived at by the learned Judge in the criminal trial, the charge levelled in the departmental proceeding can be sustained, regulation 11 of the said Regulations is attracted. In order to avoid unnecessary departmental enquiry for establishing such fact or arriving at, such conclusion, Regulation 11 has been incorporated in the Regulations. He has, therefore, submitted that, such Regulation is not at all ultra vires, but the same is quite reasonable. In order to avoid unnecessary departmental enquiry for establishing such fact or arriving at, such conclusion, Regulation 11 has been incorporated in the Regulations. He has, therefore, submitted that, such Regulation is not at all ultra vires, but the same is quite reasonable. Accordingly, on the observations and/or conclusions made by the learned Special Judge in the criminal trial, which have been elaborately indicated in the affidavit-in-reply filed by the Bank, the order of punishment of dismissal from service, by resorting to Regulation 11 of the said Regulations, is wholly justified and the challenge to the said order must fail and the Special Civil Application should be dismissed. ( 6 ) AFTER giving our anxious consideration to the facts and circumstances of the case and the respective contentions made by the learned Counsels for the parties, it appears to us that, there is enough force in the contention of the learned Counsel for the petitioner that Regulation 11 of the said Regulations must relate to the ultimate conviction of a Bank employee in a criminal trial on a criminal charge or on the strength of facts or conclusions arrived at in a judicial trial. If the said Regulation is sought to be interpreted disjunctively, viz. , even apart from being convicted in a criminal trial, a Bank employee involved in a criminal trial, can be awarded with penalties specified in regulation 4, simply on the strength of some facts or some conclusions arrived at in a judicial trial, as sought to be interpreted by the Bank administration, regulation 11 must be held to be wholly unconscionable and repugnant to basic principle of natural justice and, therefore, ultra vires to the aforesaid extent. Otherwise, it will be open to the Bank administration to rely on any fact found and/or any conclusion arrived at in a judicial trial, irrespective of the consideration whether such fact found or conclusion arrived at in the judicial trial had a bearing on the departmental enquiry. It has nut been indicated in Regulation 11 that, the strength of fact or conclusion arrived at in a judicial trial must have a relation or nexus with the charge levelled in the dcpartmenlal proceeding. It has nut been indicated in Regulation 11 that, the strength of fact or conclusion arrived at in a judicial trial must have a relation or nexus with the charge levelled in the dcpartmenlal proceeding. In the absence of any provision to that effect, the provision of regulation 11 insofar as it may purport to enable the departmental authorities to impose penalties, simply on the basis of the strength of facts or conclusions arrived at in a judicial trial without holding any departmental enquiry, must be held to be arbitrary, without any reason and absolutely unconscionable. The principle of natural justice will be shockingly violated, if such an interpretation is given to Regulation 11 of the Regulations. The well-established principles laid down in the case of Ridge v. Baldwin and Ors. , reported in 1964 Appeal Cases 40, which have been relied on by the various High Courts and Supreme Court of India, are clearly attracted if de hors conviction, regulation 11 is attempted to be interpreted in a very wide manner. There is also enough force in the contention of Mr. Shah that, it is quite likely that some facts may be found and conclusions may be arrived a at in a judicial trial when. finding of some facts or conclusions arrived at may not be necessary for disposing of the criminal trial. As a matter of fact, the learned Special judge could very well dispose of the criminal trial by couching the judgment to the following effect :"that, even assuming that the accused (the petitioner herein) was guilty of negligence of his duties, by entrusting some of the important functioning to the clerks and other persons, including co-accused, the charges levelled against the said accused (petitioner) not having been proved, he is liable to be acquitted. "in that event, there would not have been any scope to proceed on the footing that, there has been some facts or conclusions arrived at in a judicial trial relating to the accused (petitioner ). "in that event, there would not have been any scope to proceed on the footing that, there has been some facts or conclusions arrived at in a judicial trial relating to the accused (petitioner ). In the facts of the case, it appears to us that observations made against the petitioner by the learned Special judge about negligence of duties were not essentially necessary for the disposal of the criminal trial on the charge of cheating, forgery or fabrication of document and as such, the same were in the nature of some passing adverse observations and/or in the nature of obiter dictum, as contended by the learned Counsel for the petitioner. It also appears to us that, if any observation or conclusion, arrived at in a judicial trial, even if such observation or conclusion may have a bearing on the charge levelled against the delinquent employee, is taken into consideration and by exercising the power under regulation 11 of the Regulations a penalty is imposed on the delinquent bank employee, without proceeding with the departmental enquiry, thereby depriving him to rebut the charge, a delinquent employee cannot but suffer a serious prejudice. Since the petitioner was acquitted of all the charges, there was no occasion for him to prefer an appeal for challenging the correctness and propriety of the observations or conclusions made by the learned Special Judge, relating to his alleged negligence of duty as a Branch manager. The petitioner, in the aforesaid facts, is bound to suffer serious prejudice if on the strength of some facts found or conclusions made in the criminal trial about negligence in discharging his duties as Branch Manager, the departmental proceeding is disposed of against the petitioner without affording him any chance to establish that such conclusions should not have been arrived at or facts should not have been found and/or the learned judge had not been posted with proper facts and circumstances of the case and/or he had failed to consider some other relevant material warranting a different conclusion or finding of facts. It, therefore, appears to us that, without conducting a departmental enquiry, the penalty of dismissal imposed on the petitioner was illegal and improper and the same has resulted in gross failure of justice. Accordingly, we have no hesitation in allowing this special Civil Application and setting aside the order of dismissal passed against the petitioner. It, therefore, appears to us that, without conducting a departmental enquiry, the penalty of dismissal imposed on the petitioner was illegal and improper and the same has resulted in gross failure of justice. Accordingly, we have no hesitation in allowing this special Civil Application and setting aside the order of dismissal passed against the petitioner. The petitioner, therefore, must be deemed to be in service of the Bank all along and from the date of the order of dismissal till today, he will be entitled to full salary, all other allowances and all consequential benefits, as may be admissible to him had he been in active service of the Bank. The Bank administration is directed to make payments of all arrears of salary, and other allowances as expeditiously as preferably by 30/09/1991, in view of the fact that, the petitioner is going to retire from the service of the Bank on superannuation, with effect from 1/10/1991. ( 7 ) BY way of abundant caution, it is made clear that we have not quashed the chargesheet issued against the petitioner and the Bank administration will be entitled to proceed afresh on the basis of such chargesheet, if the Bank administration so desires, ( 8 ) IT has been submitted before us by the learned Counsel for the petitioner that, two other Bank employees, against whom strong observations were made by the learned Special Judge, have not been proceeded with departmentally, but they have been promoted as Managers from the post of Clerks. But only because the petitioner was the Branch Manager and was accused in the criminal trial, the petitioner was not only placed under suspension, since 27/05/1972, but was sought to be dismissed from service, by resorting to the said Regulation 11 of the Regulations. Mr. Shah has submitted that the petitioner, by dint of his meritorious service, got promotion as Branch Manager only in 1970, but, within a short time, he was placed under suspension and almost the entire period of his tenure after promotion has been spent in agony, by remaining under suspension, facing criminal trial and then dismissal from service. The petitioner has not only suffered social disrepute but has also suffered serious financial difficulties, by remaining under suspension and ultimately being dismissed from service, in 1980. The petitioner has not only suffered social disrepute but has also suffered serious financial difficulties, by remaining under suspension and ultimately being dismissed from service, in 1980. In view of such prolonged and unmerited agony and suffering undergone by the petitioner, it will be wholly unjust and unreasonable for the Bank to make any attempt to proceed further with the departmental proceeding, more so when the petitioner is going to retire from service on attaining the age of superannuation within a few days, namely, with effect from 1/10/1991. ( 9 ) IT is not necessary for us to make any observation on the said submissions of Mr. Shah, but we may reasonably expect that the Bank administration will give anxious and sympathetic consideration on the aforesaid submissions made by the learned Counsel for the petitioner in deciding as to whether or not it will be expedient and proper to proceed with the departmental proceedings, just a few days prior to the superannuation of the petitioner. ( 10 ) RULE is made absolute to the extent indicated hereinabove. In the facts and circumstances of the case, we, however, make no order as to costs. ( 11 ) AFTER the pronouncement of the judgment today, Mr. K. J. Thakkar, learned Counsel for the respondents, made a prayer for stay of the judgment. In the facts and circumstances of the case, we are not inclined to pass any order at this stage and hence, the prayer is rejected. .