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Allahabad High Court · body

2003 DIGILAW 2628 (ALL)

S. C. GARG v. STATE BANK OF INDIA

2003-11-11

PRADEEP KANT, V.N.SINGH

body2003
( 1 ) THE petitioner S. C. Garg, while working as Branch Manager at one of the Branches of State Bank of India at Aligarh, was subjected to disciplinary proceedings in which he was inflicted with the punishment of removal from service and recovery of an amount of Rs. 88,934. 00, vide order dated 12/12/1994 passed by the Chief General Manager, namely, the appointing authority (Annexure-10 to the writ petition ). The statutory appeal preferred against the aforesaid punishment was also rejected by the appellate authority, namely, Deputy Managing Director and Corporate development Officer, vide order dated 17. 8. 1995. ( 2 ) AGGRIEVED by the aforesaid two orders, the present writ petition has been filed in which making a challenge to the findings recorded by the enquiry officer, the appointing authority in the order of punishment and that recorded by the appellate authority confirming the punishment order, learned counsel laid emphasis upon the scheme of working under the "janta Deposit Scheme" floated by the State Bank of India for giving door to door service to the public at large An effort has been made to expose glaring faults in implementation of the aforesaid "janta Deposit Scheme" which resulted in initiation of disciplinary proceedings against the petitioner and award of major punishment of removal from service coupled with the punishment of recovery of certain amount. The challenge has also been advanced on the ground that though there were other persons involved in the same transaction, namely, Deposit Collector under the "janta Deposit Scheme", a Clerk of the Bank and the accountant of the Bank, but the petitioner has been singled out in the matter of making recovery of the amount, though the petitioner did not admit the liability nor it could be proved by the Bank that the petitioner either used or misused or misappropriated the amount of the Bank, which has been disbursed under the loan advanced in the name of the parties, which find full description in the charge sheet. ( 3 ) AN alternative argument has been made that even if there was fault on the part of the petitioner in not verifying the signatures and genuineness of loan applications and bonafides of the transaction, as the petitioner simply relied upon the recommendations and verification made by the subordinate staff, namely, Deposit Collector, Clerk of the Bank and the accountant and, therefore, the action of the petitioner could not be termed as `misconduct but could only be taken as `negligence in the performance of his duties. The submission, therefore, is that for an act of negligence which has occurred because of the faulty scheme of the Bank itself, the petitioner could not have been saddled with major punishment nor with the punishment of recovery. ( 4 ) ANY procedural irregularity in the conduct of enquiry has not been pointed out by the learned counsel for the petitioner and, therefore, we presume that the petitioner has no grievance of procedural nature during the course of enquiry. ( 5 ) IN response to the aforesaid arguments of the petitioner, learned counsel for the Bank submitted that it was the responsibility of the petitioner, Branch Manager, to be convinced and get himself satisfied before sanctioning a loan. The Scheme under which the "janta Deposit scheme" was being run and was being implemented has also been produced before us in support of his submission that the Scheme gives detailed procedure for engagement of Deposit Collector, for opening of the account and for withdrawal of money in terms of the loan, as the money under the said Scheme could not have been withdrawn otherwise than by way of loan. He has also placed reliance upon several safeguards, which have to be taken by the Branch Manager/sanctioning authority of the loan before granting approval to the loan or sanctioning it. "janta Deposit Scheme" was introduced in the year 1971 with a view to inculcating the habit of thrift amount the low-income group of people and mobilizing their small savings/surpluses at their door-steps, through a deposit collector appointed for the purpose. Under the scheme, each depositor is provided with a small locked box, free of cost, into which he/she will deposit small coins/notes from time to time. Under the scheme, each depositor is provided with a small locked box, free of cost, into which he/she will deposit small coins/notes from time to time. The savings so accumulated will be collected by the deposit collector, during his visit to the depositors residence, on behalf of the Bank and lodged in the Janta deposit Account opened in the name of the depositor. The account should have been opened with an initial deposit in a multiple of 0. 50 paise, with minimum of Rs. 2/-The account should have a minimum maturity period of 61 months from the date of its opening. The account could have been opened either singly or jointly, subject to safeguards applicable to opening of Savings Bank accounts being observed, where the accounts are in the names of minors or illiterate persons. The ceiling on balances which could be maintained in minors accounts was Rs. 10, 000/ -. Janta Deposit accounts were not ordinarily transferable from one branch to another. Where, however, the transferee branch was operating the scheme, the transfer was permitted. ( 6 ) THE Janta Deposit Collectors, who were the agents of the Bank and not its employees were to be appointed, preferably from among local residents (retired teachers/ employees, ex-servicemen, housewives, Banks pensioners etc.), the basis of selection being integrity, local influence and resourcefulness rather than high educational attainments. The ability to read and write English and the regional language and to maintain simple accounts was, however, necessary in one who applies for the agency. There was a provision for entering into an agreement as per the prescribed proforma with Janta Deposit Collector and to make security deposits. The deposit Collector was thus a person appointed on behalf of the Bank and was an agent of the Bank and not its employee. His function was to motivate the people at large for making small deposits and for that purpose he was to visit the house of the account holders and collect the money from the locked boxes. The Scheme also says about maturity, overdue deposits and repayment before maturity etc. but we are not concerned with that part of the Scheme looking to the charges on which proceedings have been initiated and impugned orders have been passed. ( 7 ) THERE are three charges, which were levelled against the petitioner, namely;1. On13. 4. 91, he sanctioned a demand loan for Rs. but we are not concerned with that part of the Scheme looking to the charges on which proceedings have been initiated and impugned orders have been passed. ( 7 ) THERE are three charges, which were levelled against the petitioner, namely;1. On13. 4. 91, he sanctioned a demand loan for Rs. 18000/-to Sri rajiv Mittal against J. D. A/c No. 55/1102 in the name of Master kamal Mittal U. N. G. of Shri Rajeev Mittal. The signatures of sri Mittal on loan documents materially differ with the signatures on bank record. Shri Mittal has also denied having raised the loan. 2. He has also not observed the formalities, which are required in case of a minor A/c while sanctioning the Demand Loan against J. D. A/c No. 55/1102. 3. On 8. 7. 91, he sanctioned a Demand Loan for Rs. 54,000/- in the fictitious name of Shri Sant Kumar against J. D. A/c no. 49/1095 of Smt. Mamta Verma which had already been closed on 5. 6. 91. The first charge is to the effect that an amount of Rs. 18,000/- was sanctioned towards loan in favour of Rajiv Mittal, J. D. account holder but the loan was sanctioned without verifying the signature of Rajiv Mittal which were available on Bank record and, therefore, the amount was misappropriated. ( 8 ) WITH respect to this charge a defence was taken and the same has been reiterated before us that it was the Deposit Collector who was mainly responsible for the sanction of the loan in favour of Rajiv Mittal and the petitioner could not be held guilty because later on it was discovered that his signature did not tally with the specimen signature with the Bank record. Learned counsel has submitted that the account was got opened by the Deposit Collector, he proposed the sanction of loan on the request being made by the account holder which was evident by the fact that he verified the signatures of the account holder on the loan application. The said signatures were also verified by the Clerk of the Bank, namely, an employee of the State Bank of India itself and also by the Accountant. The said signatures were also verified by the Clerk of the Bank, namely, an employee of the State Bank of India itself and also by the Accountant. Since the signatures were verified by all the aforesaid three persons, the petitioner sanctioned the loan, looking to the practical working of the bank, and that the petitioner was not legally or otherwise obliged to compare the signature with the specimen signature with the Bank record and, therefore, relying upon the aforesaid verification, the petitioner passed an order saying that on verifying the signatures, loan be disbursed as per rules. According to the learned counsel, this sanction or approval of the loan was subject to the verification of the signature and its confirmation from the Bank records and was not a blanket approval accorded by the petitioner, therefore, responsibility lay upon the officer who was actually to disburse the loan to verify and get the signature confirmed from the Bank record. ( 9 ) SO far as charge no. 2 is concerned, no point has been specifically urged but for the fact that the same is being denied before us also. The charge relates to the formalities, which should be taken in the matter of minor accounts. ( 10 ) THE third charge relates to sanction of loan of Rs. 54,000/-in favour of one Sant Kumar on 8. 7. 91,which account stood closed with effect from 5. 6. 91 and it was in the name of Malti Verma and not in the name of Sant kumar, whom the loan was sanctioned. As regards this charge, it has been contended by the learned counsel for the petitioner that when the ledger was placed before the petitioner, there was a different sheet which was produced before him showing a balance of Rs. 72,000/- in the said account which does not have any indication that the account has been closed and since the amount of loan was only Rs. 54,000/-, therefore, the petitioner granted and sanctioned the aforesaid loan. 72,000/- in the said account which does not have any indication that the account has been closed and since the amount of loan was only Rs. 54,000/-, therefore, the petitioner granted and sanctioned the aforesaid loan. The submission, therefore, is that this interpolation or misrepresentation was done by the Janta Deposit collector in connivance with the Clerk and Accountant of the Bank and, therefore, the petitioner could not be held liable for the same It has also been argued that there is endorsement of the Clerk and the Desk Officer saying that loan could be granted, which was sufficient to convince the petitioner, Branch Manager, that the account was operative and there was enough money for sanction of the loan. ( 11 ) UNDER the Scheme, Para 17. 1 deals with the safeguards against misappropriation. Sub-clause (ii) specifically provides that when the list of deposit is furnished by the deposit collector together with the duplicate copies of receipts serving as vouchers, the concerned supervising official at the branch should satisfy himself that (a) the sequence of printed numbers on vouchers is unbroken; (b)the vouchers contain signatures of the depositors/their representatives, (c)the dates thereof do not indicate delay in depositing the amounts and (d) the alterations and over-writings therein, if any, are genuine and have been duly authenticated by both the depositor and the Janta Deposit Collector. Cases of doubt should be fully investigated by the operating staff at the branch including verification of the receipts with the depositor or enquiries personally or by means of letters. ( 12 ) STRESSING upon the aforesaid provision, learned counsel for the petitioner submitted that the petitioner being supervising official, namely, branch Manager, was only under duty to see that the ingredients or conditions as mentioned in sub-clause (a), (b), (c) and (d) were satisfied and for that matter it was sufficient to see that vouchers contain the signatures of the depositors or their representatives. Placing such safeguards and particularly, the responsibility upon the supervising officer to see that vouchers contain signatures of depositors or their representatives would inherently mean and include that the supervising officer had to be convinced and satisfied that the signatures of the depositors are genuine. Placing such safeguards and particularly, the responsibility upon the supervising officer to see that vouchers contain signatures of depositors or their representatives would inherently mean and include that the supervising officer had to be convinced and satisfied that the signatures of the depositors are genuine. It is not a routine task for the sanctioning authority or the supervising officer to approve the loan simply because the signatures of depositor appear to be on the vouchers and they have been verified by the subordinate staff. The responsibility still lies upon the officer concerned to verify and be sure about the genuineness of the claim of the person and to confirm that the signatures are of the person in whose name the account is running. ( 13 ) THE petitioner admittedly, was the Branch Manager. The purpose of processing of a loan application is that when such an application reaches the final authority, namely, the approving authority, all requirements, as may be necessary, for grant of such loan, stand complied with. Putting of signature of Deposit Collector, verification of signature of account holder asking for the loan, verification of signature of account holder by the Clerk of the Bank and may be by the Accountant himself, may be a ground for not rejecting the application for loan at the initial stage but that would not in itself be taken to mean that the loan prayed for stand sanctioned without there being approval of the sanctioning authority. ( 14 ) THE sanctioning authority is duty bound to verify not only the signatures but also the accounts and to be convinced that the application for loan has been filed by the genuine account holder and that there is money in his account against which loan can be advanced. The Bank record contains specimen signature of the account holder, as was in the instant case also, and the very object of having an authority of the status of sanctioning authority is to safeguard the Banks interest and also to protect the account holders interest from any such calculated fraud or interpolation in any document so that Banks money or genuine account holders money is not withdrawn by some third person. The essential requirement thus would be that there should be an account of the account holder who claims for advancement of loan, that account must have that much of money which would be sufficient for sanction of such loan, as demanded and that the sanctioning authority must satisfy himself about the genuineness of the application by the account holder and the required amount being in deposit. Of course, there may be many more formalities or documentation, which may be required for the purpose, but these are the two essential conditions for sanctioning the loan. The sanctioning authority cannot claim exemption from the liability in case of fraud or wrongful withdrawal of money, may be under calculated scheme or otherwise by saying that he has relied upon the verification made by the subordinate officers or officials. The argument of the learned counsel for the petitioner, if accepted, would completely negative the authority of the sanctioning officer or approving authority and, therefore, if the subordinate officer or officials verify the account and signature, the loan would be deemed to have been sanctioned. The sanctioning authority is not a rubberstamp nor he should act as rubberstamp. He should apply his mind and get himself convinced about the genuineness of the claim of the account holder. ( 15 ) THE enquiry report is also on record, which shows that the enquiry officer has given full opportunity to the petitioner for putting his defence. The enquiry officer has found that the theory regarding ledger sheet being interpolated and changed with respect to charge no. 3 could not be proved or established by the petitioner. To the contrary, a finding has been recorded that even the marking lien noted appears to be subsequent writing. ( 16 ) THE negligence as pleaded by the petitioner has obviously resulted into the loss of substantial amount of money of the Bank. It would not be of much relevance that this act of sanctioning or approving loan of the genuine person without getting the signature verified from the Bank record would amount to simple negligence or dereliction of duty or may form part of a conspiracy defrauding the Bank, as in either case the result in such cases would be and has been the loss of money of the Bank. The sanctioning authority cannot in defence plead that it has relied upon the endorsement made by the subordinate officer or officials and, therefore, the liability cannot be fastened upon him. In the case of State Bank of indore v. Govindrao, JT 1997 (1) S. C. 655, the Supreme Court considered the plea of defaulting employee, who informed the disciplinary authority that the Development Officer was primarily responsible for granting of the irrecoverable loan and that he had acted only in supervisory capacity but rejecting the said defence the Supreme Court observed "this lack of supervision or negligence resulted in grant of huge irrecoverable loans by the Bank. The higher the position of an officer the greater is his responsibility. The power conferred on Sharda in the matter of granting of loans cannot absolve Govindrao in any way. Learned counsel for the petitioner has admitted that the petitioner was supplied a copy of the enquiry report before passing of the punishment order. ( 17 ) THE disciplinary authority/appointing authority has passed the punishment order taking into consideration the enquiry report and the material on record. The petitioner preferred an appeal raising his grievance against the order of punishment. The order passed by the appellate authority indicates that whatever points were formulated by the petitioner in appeal have been given thoughtful consideration and being satisfied that the impugned order of punishment does not suffer from any error, the appeal has also been rejected. ( 18 ) LEARNED counsel for the petitioner then argued that award of two penalties, namely, one major and the other, minor penalty, is itself bad in law. According to him, penalty of removal from service is a major penalty and after inflicting this punishment, the penalty of recovery of amount (minor penalty) could not have been imposed. In support of the submission, he has placed reliance upon Swamys Manual on Disciplinary proceedings which relates to Central Civil Services (Classification, Control and Appeal)Rules, applicable to the government servants. ( 19 ) THE government servants stand on a slightly different footing as against the Bank employees. The money of public is kept in the Bank in its trust and confidence is reposed in the Bank itself. Any sort of distrust and fiddling with the customers money by the Bank officers/officials would defeat the very purpose of banking institutions. ( 19 ) THE government servants stand on a slightly different footing as against the Bank employees. The money of public is kept in the Bank in its trust and confidence is reposed in the Bank itself. Any sort of distrust and fiddling with the customers money by the Bank officers/officials would defeat the very purpose of banking institutions. Apart from the fact that in the instant case, the petitioner has been held responsible for the loss of Banks money, it is also established that it was a case of his negligent action and failure to perform his duties in accordance with the Scheme itself and the guidelines issued for the purpose. The Bank was fully empowered to order for recovery of the amount of the loss so occasioned. ( 20 ) THE punishment of removal from service is a punishment, which has been awarded because of the misconduct of the petitioner in discharging his duties, whereas the recovery has been ordered for making good the loss thus occasioned to the Bank. In our opinion, there is no illegality in the two orders being passed, as the Bank has to be compensated of the loss of money thus occasioned. ( 21 ) THE argument, that Deposit Collector, Clerk and Accountant were equally responsible in the same transaction and, therefore, responsibility could not have been solely fixed upon the petitioner, has been responded to by the learned Counsel for the Bank by asserting that so far as Deposit collector is concerned, his contract has been terminated and a criminal case has been lodged against him; Clerk and Accountant have been dismissed after disciplinary proceedings from service and the petitioner has been awarded the punishment of removal from service keeping into consideration that he is not deprived of his legitimate dues on retirement which has accrued to him by virtue of service rendered in the Bank. We have also been informed by the learned counsel for the respondent that the petitioner has been paid his balance gratuity and other post retiral l dues and is also being paid pension regularly. We thus do not find any force in the argument that there has been discrimination with respect to the action taken against the persons who have been found guilty in the aforesaid loan transaction. We thus do not find any force in the argument that there has been discrimination with respect to the action taken against the persons who have been found guilty in the aforesaid loan transaction. ( 22 ) LEARNED counsel for the petitioner has lastly submitted that though the petitioner was charged for loss of an amount of Rs. 72,000/- in all, namely, Rs. 18,000/- in the first charge and Rs. 54,000/- in the third charge but the punishment has been awarded for recovery of Rs. 88,934/-, which, according to the learned counsel for the petitioner, cannot be justified, as firstly the petitioner was not afforded any opportunity with respect to the enhanced amount in the disciplinary proceedings and secondly, there is nothing on record to establish or indicate as to how this figure 88,934/- has been reached when the specific amount has been mentioned in the charge sheet itself. ( 23 ) LEARNED counsel for the Bank in response, however, could not dispute that there is nothing on record to show as to how this figure has been reached but made an attempt to justify the said recovery by advancing the argument that the quantum of punishment or the nature of punishment cannot be looked into by the High Court. For supporting his submission, reliance has been placed upon the case of Chairman and managing Director, United Commercial Bank and others v. P. C. Kakkar, JT 2003 (2) SC 78. We have gone through the aforesaid judgment and we find that the Supreme Court has observed as under:"unless the punishment imposed by the disciplinary authority or the appellate authority shocks the conscience of the court/tribunal, there is no scope for interference. Further to certain limitations, it may, in exceptional and rare cases, impose appropriate punishment by recording cogent reasons in support thereof. In a normal course if the punishment imposed is shockingly disproportionate, it would be appropriate to direct the disciplinary authority or the appellate authority to reconsider the penalty imposed. "the apex court in that case remanded the matter to the High Court. ( 24 ) AN alternative argument has been made by the learned counsel for the Bank that if this amount has been found to be excessive, the matter should be remitted to the Bank for reconsideration. "the apex court in that case remanded the matter to the High Court. ( 24 ) AN alternative argument has been made by the learned counsel for the Bank that if this amount has been found to be excessive, the matter should be remitted to the Bank for reconsideration. The legal proposition regarding modification or change of punishment looking to the gravity of the charges and the principle that the punishment should commensurate to the gravity of charges cannot be disputed, as it is the domain of the disciplinary authority/appointing authority to pass appropriate order of punishment, as per charges proved and according to his own wisdom. The discretion so exercised is not normally to be interfered with and in case the punishment is so shockingly disproportionate that it pricks the conscience of the court, the matter may be referred back to the disciplinary authority/appointing authority, as the case may be but in a case where on the face of it the charge levelled is only with respect to certain amount and if there is no charge that this amount could increase by some calculations or there is no finding to that effect either in the enquiry report or in the order passed by the disciplinary authority or the appellate authority as to how the amount which is said to have been misappropriated or lost, has increased or enhanced,, the court would certainly have power to rectify the said amount. Relegating to the appointing authority/disciplinary authority would only prolong the agony of the parties, particularly when the order can be modified on the established facts and admitted case of both the parties. ( 25 ) IN the instant case, charge no. 1 and charge no 3. made a specific case of loss of Rs. 18,000/- and 54,000/-,total Rs. 72,000/ -. The enquiry report does not say anywhere that this amount of Rs. 88,934/- is the actual loss occurred to the Bank The disciplinary authority in his order has stated that the Bank has suffered or was likely to suffer a loss of Rs. 88934/ -. made a specific case of loss of Rs. 18,000/- and 54,000/-,total Rs. 72,000/ -. The enquiry report does not say anywhere that this amount of Rs. 88,934/- is the actual loss occurred to the Bank The disciplinary authority in his order has stated that the Bank has suffered or was likely to suffer a loss of Rs. 88934/ -. Learned counsel for the Bank has not been able to indicate as to on what material this observation has been made by the disciplinary authority, particularly, when such material is not to be found either in the enquiry report or in the order passed by the disciplinary authority and no opportunity has been given while enhancing the amount of recovery, as mentioned in the charge sheet. The said amount cannot be ordered to be recovered for the simple reason that this amount of 88,934/- does not have any basis nor the enhanced amount was the subject matter of enquiry in the charge sheet and no opportunity has been given by the disciplinary authority before enhancing the amount. The amount which could be ordered to be recovered from the petitioner was Rs. 72,000/-,as per the charges levelled against the petitioner and which were found to have been proved. The order passed by the disciplinary authority deserves to be modified to that extent. ( 26 ) WE, therefore, while holding that the petitioner could not be absolved of his responsibility in the matter of sanctioning of loan and that charges levelled against him stand fully proved from the evidence on record in which no fault could be attributed either in holding the enquiry in passing the order of punishment, but we modify the order to the extent that instead of recovery of Rs. 88,934/-, the recovery of an amount of rs. 72,000/- be made from the petitioner. In case the recovery of rs. 88,9234/- has already been made from the petitioner, the excess amount so recovered shall be refunded to the petitioner. Subject to above, the writ petition is dismissed. .