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2000 DIGILAW 378 (CAL)

Union Bank of India v. Sanjoy Mittal

2000-08-02

H.Banerji, S.B.Sinha

body2000
Judgment S.B. Sinha, J. Both the appellants as also the respondent have filed these appeals being aggrieved by and dissatisfied with the order dated 5.1.2000 passed by a learned Single Judge of this Court, whereby and whereunder the writ applications filed by the writ petitioners/respondents were disposed of directing:- "The final order has not yet been passed. In that background and having regard to the fact that the petitioner was under a misconception that no disciplinary proceeding could be initiated against him and in order to give him an opportunity to prove innocent, I have to give appropriate directions, although the petitioner has not yet answered the charge-sheet, but those must be such which will do complete justice to the parties. In those circumstances, I allow the writ application to the extent as follows :- a) Clause (c) of the suspension order dated 19th March, 1999 is struck down. It is made clear that until the petitioner is dismissed or discharged from service, he shall be paid his salaries and allowances to which the petitioner was entitled to immediately prior to 19th March, 1999; b) The respondents, which shall include the transferee bank, though shall be at liberty to pass the final order, but shall grant a further opportunity to the petitioner to submit an answer to the charge-sheet specifying a date by which such answer has to be given. In the event, such answer is given by the petitioner, the matter must be decided afresh after holding a fresh enquiry in accordance with the principles of natural justice; c) In the event, on the basis of the enquiry report already made, the petitioner's services are terminated, from the date of such termination and until the matter is re-decided in terms of this order, it shall not be obligatory on the part of the respondent Bank to pay any salary to the petitioner." 2. Mr. Hirak Mitra, the learned Senior Counsel appearing on behalf of the appellant/Bank, inter alia, submitted that having regard to the grave charges levelled against the writ petitioner and further having regard to the fact that their contentions in the writ petitions having been rejected by the learned trial Judge, he committed an error in issuing the aforementioned directions. According to the learned Counsel, the charges levelled against the petitioners are grave in nature. According to the learned Counsel, the charges levelled against the petitioners are grave in nature. It was pointed out that despite the fact that the charges against them were grave, they did not even participate in the domestic enquiry despite notice. According to Mr. Mitter, they had no misconception in their mind, as to whether they are required to participate in disciplinary proceedings and as such the impugned order has been passed on a wrong premise. According to the learned Counsel neither and case of misconception was made out nor any argument in relation thereto was advanced and, thus, the impugned order must be held to be bad in law. 3. The writ petitioners were working in the Sikkim Bank Limited which by reason of a scheme of amalgamation made by the Reserve Bank of India vested in the appellant Bank. 4. Allegedly several irregularities in relation to conduct of the aforementioned Sikkim Bank came to the notice of Reserve Bank of India which by reason of its power conferred upon it under the Banking Regulation Act, nominated a Managing Director. The Reserve Bank of India imposed moratorium and also prepared a scheme of amalgamation. The vires of the relevant provisions of the Banking Regulation Act (hereinafter referred to as 'the said Act') as also the aforementioned actions on part of the Reserve Bank of India were the subject matter of a writ application before the Sikkim High Court. The vires of the provisions of the said Act as also the orders of the Reserve Bank of India had been upheld by a Division Bench of the said High Court. 5. According to the appellants, a large scale fraud have been practiced on the Sikkim Bank by three persons including the two writ petitioners and one Mr. Amarnath Mitra Mustafi who was the then Managing Director of Sikkim Bank. The said Mr. Amarnath Mitra Mustafi has since been dismissed. 6. On or about 14.1.99, the Reserve Bank of India admittedly appointed one Shri S.N. Kundu, an Assistant General Manager, Bank of Baroda, as the Managing Director of Sikkim Bank Limited for a period of two years with effect from 21.1.99 on deputation in terms of section 10BB of the said Act. Amarnath Mitra Mustafi has since been dismissed. 6. On or about 14.1.99, the Reserve Bank of India admittedly appointed one Shri S.N. Kundu, an Assistant General Manager, Bank of Baroda, as the Managing Director of Sikkim Bank Limited for a period of two years with effect from 21.1.99 on deputation in terms of section 10BB of the said Act. Allegedly, Shri Kundu after joining his post wrote a letter to Shri A. Ghosh, Chief General Manager, Reserve Bank of India pointing out certain alleged irregularities, committed by the writ petitioners and opined that their services should be terminated upon taking disciplinary action for causing huge loss to the Bank. Admittedly a scheme of amalgamation known as Sikkim Bank Limited (Amalgamation with Union Bank of India) Scheme, 1999 contained a clause as regard continuation of services of the employees which is in the following terms:- "Continuation of service of the employees: (1) All the employees of transferor bank shall continue in service and be deemed to have been appointed in the transferee bank at the same remuneration and on the same terms and conditions of service, as were applicable to such employees immediately before the close of business on 8th March, 1999." 7. The petitioners thereafter was placed under suspension. A show-cause notice was issued to the writ petitioners to which they replied. Therefore Shri Kundu issued a charge-sheet describing himself as Dsiciplinary Authority on 11.6.99. 8. The validity of the said charge-sheet as also the order of suspension were the subject matter of the writ applications. An interim order of injunction was passed on 22.6.99 which was directed to be continued by order dated 6.7.99, but on an appeal filed there against a Division Bench of this Court by an order dated 14.8.99, inter alia, held that no case for granting interim stay was made out. Liberty, however, was given to the writ petitioners to file supplementary affidavit for the purpose of bringing on record subsequent events as also to file an application for interim relief upon notice to the Sikkim Bank. Such supplementary affidavit was filed on 10.8.99 wherein a prayer for passing an interim order was made. The petitioners have contended that despite pendency of the aforementioned application for passing interim orders before the learned Single Judge of this Court, they were not permitted to join their duties. Such supplementary affidavit was filed on 10.8.99 wherein a prayer for passing an interim order was made. The petitioners have contended that despite pendency of the aforementioned application for passing interim orders before the learned Single Judge of this Court, they were not permitted to join their duties. The writ petitioners/respondents have further brought on record a resolution adopted by the Board of Directors withdrawing the order of suspension as also the charge-sheet. A suit was filed by the Bank before this Court questioning the resolution dated 16.7.99 passed in a General Meeting as also the resolution of the Board in its meeting dated 27.6.99. In the said suit the defendants thereof had been directed to maintain status quo with regard to the resolutions in question. 9. In the disciplinary proceedings, one Shri M.R. Sarbadhikari, an Advocate of this Court, was appointed as Enquiry Officer. By a letter dated 30.10.99, the petitioners requested Shri Kundu not to proceed with the enquiry proceedings as the writ petition had been pending. The said letter was not replied to. The Enquiry Officer by a letter dated 2.11.99 informed the writ petitioners that an enquiry in relation to the charges against them would be held on 11.11.99. The petitioners contended that the said letter was issued when the High Court was closed for Puja Vacation for the period 15.10.99 to 15.11.99. On 9.11.99 Shri Sarbadhikari was requested not to hold any enquiry, keeping in view the fact that the application for interim order had been filed, which had not come up for hearing. The ld. Advocate of the writ petitioners also informed him that the matter would be mentioned before the learned trial Judge on 15.11.99 for early hearing of the application for interim order. Despite the same the Enquiry Officer held and enquiry on 11.11.99 and on the same day completed the same. A copy of the enquiry report was sent to the petitioners by Shri Kundu on 8.11.99. The learned Counsel appearing on behalf of the writ petitioner by a letter dated 24.11.99 requested Sri Kundu not to pass a final order as the prayer for interim order would be pressed on 15.11.1999 that is the re-opening day of this Court. The petitioner, submitted his comments to the enquiry officer on 25.11.99. 10. The learned Counsel appearing on behalf of the writ petitioner by a letter dated 24.11.99 requested Sri Kundu not to pass a final order as the prayer for interim order would be pressed on 15.11.1999 that is the re-opening day of this Court. The petitioner, submitted his comments to the enquiry officer on 25.11.99. 10. However, in the meantime, the amalgamation scheme was finalised by the Government of India and was published on 21.12.1999, by reason whereof the petitioners have now become the employees of the appellant. Before the learned trial Judge, the writ petitioner, inter alia, raised the following contentions:- 1) That having regard to the provisions of the said Act, Shri Kundu could not have been appointed as a Managing Director. 2) The Board of Directors of the Bank having withdrawn the order of suspension and the disciplinary proceeding, Shri Kundu could not proceed with the enquiry proceeding. The learned trial Judge has rejected both the aforementioned contentions. 11. Having regard to the submissions made at the bar, the following questions will arise for consideration:- 1) Whether the learned trial Judge erred in rejecting the contentions of the writ petitioners? 2) Whether the learned trial Judge erred in issuing the directions as quoted supra despite holding that the writ petitioners have not been able to make out any case in the writ application? Re. Question 1: It is not in dispute that Reserve Bank of India has not only a power to appoint a Managing Director but also other Directors and such action on its part have been upheld by a Division Bench of Sikkim High Court. Several litigations are, however, pending between Sikkim Bank and the Reserve Bank of India. The Board of Directors allegedly have been passed a resolution on 27.6.99, withdrawing the order of suspension as also the charge-sheet. 12. But an order of status quo admittedly had been passed in relation thereto by a competent Court of law. The effect of such resolution might or might not have been wiped off as submitted by Mr. Mukherjee, but evidently in view of the said order no action pursuant thereto or in furtherance thereof could have been taken. In any event, after approval of the amalgamation scheme on 21.12.99, the appellant Bank is entitled to initiate and/or continue the departmental proceedings against the writ petitioners. Mukherjee, but evidently in view of the said order no action pursuant thereto or in furtherance thereof could have been taken. In any event, after approval of the amalgamation scheme on 21.12.99, the appellant Bank is entitled to initiate and/or continue the departmental proceedings against the writ petitioners. The learned trial Judge in our opinion has, thus, rightly negatived the aforementioned contention of the writ petitioners. 13. The other question which falls for consideration is as to whether the appointment of Shri Kundu as Managing Director was valid. Our attention in this connection has been drawn to section 10(c), section 10B and section 10BB of the said Act. Section 10 provides for a prohibition of employment of managing agent and restrictions on certain forms of employment. 14. In term of sub-clause (ii) of clause (c) of section 10, no banking company shall be managed by a person who is engaged in any other business or vocation. Sub-section (4) of section 10BB reads thus :- "Power of Reserve Bank to appoint Chairman of a banking company:- (1) ..................... (4) Save as otherwise provided in this section, the provisions of section 10-B shall, as far as may be, apply to the (Chairman of the Board of Directors who is appointed on a whole-time basis or a Managing Director) appointed by the Reserve Bank under sub-section (1) as they apply to the (Chairman of the Board of Directors who is appointed on a whole-time basis or a Managing Director) appointed by the banking company." Section 10B(4) and the proviso (e) appended thereto read thus :- "Banking company to be managed by whole time Chairman:- Every Chairman who is appointed on a whole-time basis and every Managing Director of a banking company appointed under sub-section (1-A) shall be a person who has special knowledge and practical experience of:- (a) .................. (e) is not engaged in any other business or vocation." 15. The short question which, thus, arises for consideration is as to whether Shri Kundu having been holding the post of Assistant General Manager, Bank of Baroda, (Inspection Department) at Surat can be said to be engaged in any other business or vocation. The answer to the aforementioned question must be rendered in the negative. Admittedly Shri Kundu has been appointed a full time Managing Director (on deputation). Such transfer of services on deputation is an incidence of service. The answer to the aforementioned question must be rendered in the negative. Admittedly Shri Kundu has been appointed a full time Managing Director (on deputation). Such transfer of services on deputation is an incidence of service. A deputationist merely holds lien to the parent post. He will be acting as a whole time employee of the Bank, although he is a deputationist. He, thus, cannot be said to be engaged in any other vocation. The deputationist, after joining the new post cannot work in his parent post, so long as the deputation exists. A deputationist may remain the employee of the lending organisation but he cannot, by any stretch of imagination, be said to be, by holding such lien, engaged in another vocation. Having regard to the scheme of the provisions of the said Act in the context of the provisions as noted supra, we have no doubt in our mind that thereby a prohibition has been imposed only in respect of a person to hold the post of the Chairman or the Managing Director, who is engaged in any other vocation or in other business, meaning thereby earning profit or remuneration from any other source. Such is not the position so far as a deputationist is concerned. 16. For the said reasons we are of the opinion that the contention of the writ petitioner that Shri Kundu was disqualified from holding the said post is not tenable in law. The delinquent employees against whom grave charges have been made, may be placed under suspension. An order of suspension normally is not interfered with by the Court, unless the same has been passed by a person having no jurisdiction in that regard or the same is perverse or mala fide. 17. In the instant case it has not been held that a case has been made out that the order of suspension was passed mala fide. Thus, in our opinion, having regard to the fact that the charges against the petitioners are grave in nature and have been prima facie held to be proved by the Enquiry Officer, no case had been made out for quashing the order of suspension. The only question which survives for consideration is as to whether the writ petitioners should have been given another opportunity of defending themselves in the disciplinary proceedings. 18. The only question which survives for consideration is as to whether the writ petitioners should have been given another opportunity of defending themselves in the disciplinary proceedings. 18. Keeping in view the entirety of the facts and circumstances of the case, we are of the opinion that it cannot be said, that the learned trial Judge committed an error in issuing the said direction on the ground that the petitioners were under a misconception. There is no charm in the said term 'misconception'. The question as to whether the petitioners had been given enough opportunity to appear before the Enquiry Officer during the pendency of the writ application being a question of fact, the Court was entitled to arrived at its own finding in that regard. It is not in dispute that at one point of time an interim order had been passed. It is also not in dispute that even pursuant to the order of the Appellate Court, the writ petitioners become entitled to pray for an interim order upon filing a supplementary affidavit. Such supplementary affidavit had been filed and a prayer for interim injunction was pending consideration. The said application could not be taken up for hearing, which may be by reason of laches on the part of the petitioner or because the Court was otherwise busy. The fact remains that the said application was pending. Furthermore, the petitioners were legally advised to raise the question of jurisdiction of Shri Kundu to issue the said charge-sheet and appoint an enquiry officer. The appointment of Shri Kundu as Managing Director and consequently his right to act as the disciplinary authority was, thus, in question in the writ petition. It is true that the enquiry officer in his notice dated 2nd November, 1999 stated that the same was a final notice and in absence of the petitioner, the enquiry would be held exparte but the said notice was only the first one. The letter of the petitioner requesting the enquiry officer not to proceed with the matter and to grant an adjournment had not been replied to nor any refusal to grant such adjournment had been communicated. In this situation the order passed by the learned trial Judge in the opinion of this Court cannot be said to be wholly unreasonable. 19. It may be as has been urged by Mr. In this situation the order passed by the learned trial Judge in the opinion of this Court cannot be said to be wholly unreasonable. 19. It may be as has been urged by Mr. Mitter that the procedures adopted by the writ petitioners was on a wrong premise inasmuch as at the point of time when the adjournment had been sought for, no order of injunction was operative and in any event, the resolution passed by the Board of Directors had been stayed in the suit filed by the Sikkim Bank, but it must also be borne in mind that the writ petitioner as also the prayer for interim order had been pending. In that situation, the enquiry officer ought to have granted another opportunity to the petitioner to appear before him. In any event the Enquiry Officer ought to have informed the petitioners before proceeding to hold the enquiry that such adjournment was refused. There was apparently no reason as to why the disciplinary proceeding was to be concluded in undue haste, particularly, when it was clearly stated that the matter would be mentioned on the re-opening date of this court i.e. immediately on the reopening of the Court after the Annual Vacation. 20. An undue haste may be held to be a mala fide act (See: Dr. S.P. Kapoor vs. State of Himachal Pradesh & Ors. and Dr. Jiwan Lal vs. State of Himachal Pradesh, reported in AIR 1981 SC 2181 ). In Union of India vs. I.S. Singh, reported in AIR 1994 Supp (2) SC 518, the Apex Court held :- "So far as the first ground is concerned, it stands negatived by the recent decision of this Court in Managing Director, ECIL, Hyderabad vs. B. Karunakar, inasmuch as the order of punishment is of the year 1980. So far as the second ground is concerned, a few facts need be stated. An inquiry was held, in the first instance, which was not found to be in order by the disciplinary authority who directed a fresh inquiry. When notices were issued in the second inquiry, they could not be served on the respondent. On a later date, the respondent sent an application stating that he is suffering from unsoundness of mind and that the inquiry may be postponed till he regains his mental health. When notices were issued in the second inquiry, they could not be served on the respondent. On a later date, the respondent sent an application stating that he is suffering from unsoundness of mind and that the inquiry may be postponed till he regains his mental health. The respondent also states that he sent his medical certificate along with his application. (Indeed, according to him, he sent not one but three letters to the said effect.) The report of the Enquiry Officer, however, does not show that he paid any attention to these letters. If, indeed, the letters were not accompanied by medical certificates, as is now asserted by Shri Mahajan, learned counsel for the appellants, the proper course for the Enquiry Officer was to have called upon the respondent either to produce a medical certificate or to direct him to be examined by a medical officer specified by him. The inquiry report does not even refer to the request contained in the said application nor does it mention why and for what reasons did he ignore the said plea of the respondent. The Enquiry Officer proceeded exparte, in spite of the said letters and made his recommendation on the basis of which the aforesaid penalty was imposed. It is evident from the facts stated above that the Enquiry Officer has not only conducted the inquiry in a manner contrary to the procedure prescribed by Rule 14(2) of CCS (CCA) Rules but also in violation of the principles of natural justice." 21. It is well settled that justice is not only to be done but manifestly seem to be done. In Management of M/s. M. S. Nally Bharat Engineering Co. Ltd. vs. State of Bihar & Ors., reported in 1990 (2) SCC 48 , it was observed :- "The concept of rule of law would lose its vitality if the instrumentalities of the State are not charged with the duty of discharging their functions in a fair and just manner. The requirement of acting judicially in essence is nothing but a requirement to act justly and fairly and not arbitrarily or capriciously. The requirement of acting judicially in essence is nothing but a requirement to act justly and fairly and not arbitrarily or capriciously. The procedures which are considered inherent in the exercise of a judicial power are merely those which facilitate if not ensure a just and fair decision." The Apex Court further held :- "Such phrases may sometimes be used to refer not to the obligation to observe the principles of natural justice but, on the contrary, to refer to a stand of behaviour which, increasingly, the courts require to be followed even in circumstances where the duty to observe natural justice is inapplicable." 22. In Priddle vs. Fisher & Sons, reported in 1968(3) All England Law Reports 506, it was held that an adjournment should have been granted although the same had not expressly been prayed for whence the Tribunal knew that the appellant before it had all along intended to turn up and adduce evidence in support of his claim and being satisfied, as they must have been, that he was unable for one reason or another to attend. Such a refusal to grant adjournment was held to be violative of the principles of natural justice. It was observed: "Before deciding to continue the Tribunal should be satisfied that he was inviting them to continue in his absence. The matter is even more clear when one realises here that the burden is on the employers and the appellant has a right to cross-examine them to show if he can that the reason given for dismissal was a disguise for a dismissal on the ground of redundancy." 23. In Rose vs. Humbles (Inspector of Taxes), reported in 1972(1) All England Law Report 314, the Court of appeal in the fact that the tax-payer had been wrongfully deprived of the opportunity of giving oral evidence before the Commissioners on an appeal against the assessments under Schedule 'E' which had been made against him, did not justify the making of an order discharging the assessments; such an order could only have resulted if the tax-payer had been allowed (by an adjournment) to give evidence and the Commissioners had been satisfied by that evidence that the increase in assets was attributable to betting gains. 24. 24. In R. vs. Thames Magistrates' Court, ex parte Polemis, reported in 1974(2) All England Law Report 1219, it was held :- "It was a requirement of the rules of natural justice that a party to proceedings, and particularly the defendant in a criminal case, should be given a reasonable opportunity to present his case, and that included a reasonable opportunity to prepare his case before being called on to present it. On the facts the applicant had not been given such an opportunity (See: p. 1223 a to f and p. 1225 j, post) ; dictum of Viscount Haldane LC in Local Government Board vs. Arlidge, (1914-15) All E.R. Rep. at 6 applied. There was no general rule that certiorari could never be used to correct a breach of the rules of natural justice when the manifestation of that breach took the form of a refusal to grant an adjournment. When the central allegation was that the applicant had not been given a reasonable time to prepare his case, the mere fact that that had become apparent as the result of a refusal of an adjournment did not prevent the court from treating the basic cause of complaint, i.e. the failure to provide the applicant with adequate time, as being a ground on which certiorari should be granted." 25. In Gram Panchayat, Manekwada vs. Patel Bhura Ramji Bhensania, reported in AIR 1977 Gujarat 206, it has been held that an order refusing to adjourn a case may be revised by the High Court in exercise of its jurisdiction under section 115 of the Code of Civil Procedure. 26. For the reasons aforementioned, we uphold that portion of the order passed by the learned Trial Judge, whereby a further opportunity has been directed to be granted to the petitioner to submit explanation to the charge-sheet. We, however, direct that the reply to the charge-sheet must be submitted within two weeks from date. The enquiry officer shall thereafter fix a date for hearing and on the date so fixed, the witness examined on behalf of the bank may be cross-examined by or on behalf of the writ petitioners where after the enquiry officer would submit a fresh report, without in any way being influenced by his earlier report, before the appropriate disciplinary authority who may thence proceed in accordance with law. The Enquiry Officer should complete the enquiry proceeding expeditiously and preferably within a period of two months from the date of communication of this order. 27. However, the petitioner having regard to the facts and circumstances of this case and further having regard to the decision of the Apex Court in Managing Director, ECIL, Hyderabad & Ors. vs. B. Karunakar & Ors., reported in 1993 (4) SCC 727 , shall continue to remain under suspension. 28. These appeals are disposed of with the aforementioned directions without any order as to costs. H. Banerji, J.: I agree. Appeals are disposed of with directions.