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2005 DIGILAW 347 (KER)

The Union Bank of India v. M. Chandrasekhran Nair

2005-06-06

J.B.KOSHY, K.T.SANKARAN

body2005
Judgment :- Koshy, J. The appellant in Writ Appeal 263 of 2005 approached this Court challenging the order of dismissal confirmed by the Appellate Authority. He was employed as a Brach Manager of Nellikkode Branch of the first respondent – Union Bank. He was served with Ext. P2 statement of allegations. The allegation was that while he was serving as Branch Manager at Nellikkode Branch, the following omissions took place: 1. Failure to take all possible steps to ensure and protect the interest of the Bank and to discharge his duties with utmost integrity, honesty, devotion and diligence. 2. Acting otherwise than in his best judgment in the performance of his official duties. The relevant portion of Ext. P2 statement of allegations are as follows: “Mrs. Prasanna Bhardwajan had deposited an amount of Rs.1.00 lac for 15 months with Nellikkode branch (Deposit No. 8764054/2005 dated 06.09.96). Its maturity date was 06.03.99. In this connection, it is observed that Mrs. Prasanna Bharadwajan had requested the Bank vide her letter dated 30.11.96 to sanction a loan of Rs.85,000/- and the same to be paid to one Shri C.S. Nair, who will call on the Bank. In this letter, Shri C.S. Nair was not identified by Mrs. Prasanna by a attesting his signature. Shri M. Chandrashekaran Nair has sanctioned the loan on 13.12.96 after a lapse of nearly a fortnight though the request was made on 30.11.96. The loan amount was not paid by cash by disbursed by pay order. The pay order credit voucher as well as the loan debit voucher was prepared and signed by the branch Manager, Shri M. Chandrashekaran himself alone. Acknowledgement from shri C.S. Nair was not obtained for having delivered the pay order to him. D.P. Note obtained for the loan amount was incomplete except for the signature of the borrower i.e., Mrs. Prasnna and lien letter, i.e. FD 318 was also not available on records. The pay order that was present by Bank of India, Mavoor Road branch in clearing on 14.12.96 and honoured by Nellikkode branch was not available in the branch for verification as the entire day’s voucher bundle was missing. In this connection, on inquiring with the Bank of India, Mavoor Road branch, it is observed that the pay order was credited to the Branch Manager, Shri M. Chandrashekaran Nair’s SB a/c No. 888 maintained with them. Mrs. In this connection, on inquiring with the Bank of India, Mavoor Road branch, it is observed that the pay order was credited to the Branch Manager, Shri M. Chandrashekaran Nair’s SB a/c No. 888 maintained with them. Mrs. Prasanna is maintained SB a/c No. 5221 with Nellikkode branch. The request letter i.e. application for loan was typed one whereas in other loans was sanctioned against deposits, the request letters were either handwritten or cyclostile. It clearly indicates that the loan sanctioned in the same of Mrs. Prasanna Bhardwajan has been availed by Shri M. Chandrashekaran Nair himself and has defrauded customer/Bank by misutilising his position. Likewise, Shri P. Bhardwajan had deposited an amount of Rs.2,50,000/- with Nellikkode branch for 36 months (deposit No.8764012 NRE/DRC dated 08.07.96). The maturity date of the loan was 08.07.99 Shri Bhardwajan was first sanctioned a loan of Rs.1.00 lac and the same was credited to his NRE SE a/c No. 2454 after the sanction on the same day i.e. 29.07.96. The second loan of Rs.1.00 lac was sanctioned on 05.05.97. However, there was neither request letter nor documents in respect or the second loan. The second loan of Rs.1.00 lac was disbursed by way of pay order favouring Shri C.S. Nair on 05.05.97 and the same was credited by Bank of India, Mavoor Road branch, Calicut on 07.05.97 to the credit of Shri M. Chandrashekaran Nair’s SB a/c.No. 888 maintained with them. This loan debit and pay order credit vouchers were also prepared and signed by Shri M. Chandrashekaran Nair only and this voucher bundle dated 07.05.97 was also missing from the branch. Though both Shri Bhardwajan and Mrs. Prasanna are maintaining SB a/c with Nellikkode branch, the loan amount sanctioned as above were not credited to their accounts with Nellikkode branch. In both the cases, the loan sanctioned have been availed by Shri M. Chandrashekaran Nair himself. To avoid the detection of the same, relevant vouchers/documents were not kept on records by misutilising his position as branch Manager. The aforesaid acts on the part of Shri M. Chadrashekaran Nair are of fraudulent nature and therefore he is required to submit his explanation within 15 days on receipt thereof as to why further action should not be taken against him. The aforesaid acts on the part of Shri M. Chadrashekaran Nair are of fraudulent nature and therefore he is required to submit his explanation within 15 days on receipt thereof as to why further action should not be taken against him. In case he fails to submit his explanation within the stipulated time, it will be construed that he has no explanation to offer and further action as deemed fit will be take against him on that basis. 2. The petitioner’s explanation for the same was that the customers were not available and they had instructed him to draw the amounts and pay the same to the creditors. It is also stated that this was done in the interest of the Bank and no loss was caused to the Bank. It was also pointed out that a crime was registered at the instance of the Bank, which was referred in view of Ext. P7 final report. The bank proceeded with the matter and an enquiry was conducted. On the basis of the findings, the enquiry officer found him guilty and on the basis of the report of the enquiry officer, he was dismissed from the service of the bank. His appeal was also rejected. 3. The learned Single Judge without going to the contentions raised regarding the conduct of the domestic enquiry, disposed of the Writ Petition on a short ground. Learned Judge held that the appellate authority ought to have granted him an opportunity for personal hearing as Appellate Authority is bound to hear the appellant in view of the decision of the Apex Court in B. Ram Chander vs. Union of India (AIR 1986 SC 1173). Therefore the Appellate Authority was directed to re-hear the matter and dispose of the same afresh. Aggrieved by the above, the bank filed W.A. 3063 of 2002. Contending that disciplinary proceeding should have been set aside, the petitioner filed W.A.263 of 2005. 4. We have heard both sides. Proceedings of the enquiry and charge sheet would show that one customer, Prasanna Bharadwajan deposited an amount of Rs.1 lakh for 15 months on 06.09.1996. On 30.11.1996, she requested for sanctioning a loan of Rs.85,000/- and the same to be paid to one C.S. Nair. The petitioner had sanctioned the loan and loan amount was not disbursed by pay order to the customer. On 30.11.1996, she requested for sanctioning a loan of Rs.85,000/- and the same to be paid to one C.S. Nair. The petitioner had sanctioned the loan and loan amount was not disbursed by pay order to the customer. It was also not debited in her own account maintained in the same branch. But pay orders were issued in petitioner’s name and he encashed the same from his account at Movoor Branch. The amount was credited in the SB a/c No. 888 maintained by the petitioner at the Mavoor Road branch. Similarly Shri Bhardwajan who deposited an amount of Rs.2,50,000/- with Niellikkode Branch for 36 months on 08.07.96 was sanctioned a loan of Rs.1 lakh which was disbursed by pay order and it was credited in the petitioner’s SB a/c No. 888 maintained at the Mavoor Road branch, Kozhikode. It is the case of the bank that the customers who were not aware of these things and it was a fraudulent transaction; as a manager, he should not have done this. The customers were working abroad. 5. The domestic enquiry was challenged by the petitioner on the ground that he was not granted an opportunity to be represented by a lawyer, even though the presenting officer was a legally qualified persons. The petitioner relied on the decision of the Apex Court in Board of Trustees of the Port of Bombay vs. Dilipkumar Raghavendranath Nadkarni & others (AIR 1983 SC 109). The above decision was considered and explained by the subsequent decision of the Apex Court in Crescent Dyes and Chemicals Ltd. V. Ram Naresh Tripathi (1993 (1) LLJ 907 SC), it was held by the Supreme Court that right to be represented by a counsel or agent of one’s own choice is not an absolute right and can be controlled or restricted or regulated by law, rules or resolution. Merely because the presenting officer was holding a law degree, it does not mean that he is a practicing lawyer. However, when the request was made, the appellant was allowed to defend the case by a representative of his union. He was actively represented by the General Secretary of the Union Bank Officer’s Association (Kerala) who was having vast experience in defending the departmental enquiries. The proceeding of the enquiry would show that the presenting officer engaged for the petitioner was present throughout the enquiry and he was assisting the petitioner. He was actively represented by the General Secretary of the Union Bank Officer’s Association (Kerala) who was having vast experience in defending the departmental enquiries. The proceeding of the enquiry would show that the presenting officer engaged for the petitioner was present throughout the enquiry and he was assisting the petitioner. The enquiry officer allowed the petitioner to cross-examine the witnesses and to adduce evidence on his behalf. He was also allowed to cross-examine the witnesses on the side of the management. All principles of natural justice were complied with. On consideration of the evidence, the enquiry officer found him guilty. 6. Under Article 226 of the Constitution of India, we are not sitting in Appeal over the findings of the enquiry officer, accepted by the disciplinary authority and re-affirmed by the appellate authority. All procedures have been complied with. Therefore, we are unable to accept the contention of the appellant that enquiry proceedings is liable to be set aside for violation of principles of nature justice. The findings of the enquiry officer are also not perverse and based on evidence adduced in the enquiry. 7. The contention is that the appellate order is liable to be set aside as the appellate authority did not grant the appellant an opportunity for personal hearing. The Apex Court in Ramchander’s case (supra) decided the matter on the basis of the relevant rules and regulations applicable in that case. We shall refer to the rules regarding appeal applicable in this case. Rule 17 of Union Bank of India Officer Employee’s (Discipline & Appeal) Regulation 1976 provides for appeal, which reads as follows: “Appeals: (i) An officer Employee may appeal against an order imposing upon him any of the penalties specified in Regulation 4 or against the order of suspension referred to in Regulation 12. The appeal shall lie to the Appellate Authority. (ii) An appeal shall be preferred within 45 days from the date of receipt of the order appealed against. The appeals shall be addressed to the Appellate Authority and submitted to the authority whose order is appealed against. The authority whose order is appealed against shall forward the appeal together with its comments and the records of the case to the Appellate Authority. The Appellant Authority shall consider whether the penalty is excessive or inadequate and pass appropriate orders. The appeals shall be addressed to the Appellate Authority and submitted to the authority whose order is appealed against. The authority whose order is appealed against shall forward the appeal together with its comments and the records of the case to the Appellate Authority. The Appellant Authority shall consider whether the penalty is excessive or inadequate and pass appropriate orders. The Appellate Authority may pass an order confirming, enhancing, reducing or setting aside the penalty or remitting the case to the authority which imposed the penalty or to any other authority with such direction as it may deem fit in the circumstances of the case: Provided that- (i) if the enhanced penalty which the Appellate Authority proposed to impose is a major penalty specified in clauses (e), (f), (g) and (h) of Regulation 4 and the inquiry as provided in Regulation 6 has not already been held in the case, the Appellate Authority shall direct that such an enquiry be held in accordance with the provisions of Regulation 6 and thereafter consider the record of the inquiry and pass such orders as it may deem proper; (ii) if the Appellate Authority decided in enhance the punishment but an enquiry has already been held as provided in Regulation 6, the Appellate Authority shall give a show-cause notice to the Office Employee as to why the enhanced penalty should not be imposed upon him and shall pass final order after taking into account the representation, if any, submitted by the Officer Employee.” The said rule shows that the appellate authority is bound to hear the petitioner only when there is proposal to enhance the penalty, otherwise, if he confirms the penalty, no oral hearing is necessary. Petitioner also did not request for a personal hearing in his appeal memorandum. 8. Whether personal hearing was necessary, when appellate authority is confirming the order was considered by the Supreme Court in a recent decision, viz. Ganesh Santa Ram Sirur vs. State Bank of India (AIR 2005 SC 314). In that case a bank manager was removed from service for sanctioning a loan to his spouse in contravention of rules. Cheque was not enchased and hence bank suffered no loss. Similar contentions raised by the petitioner herein were rejected by the Apex Court. Ganesh Santa Ram Sirur vs. State Bank of India (AIR 2005 SC 314). In that case a bank manager was removed from service for sanctioning a loan to his spouse in contravention of rules. Cheque was not enchased and hence bank suffered no loss. Similar contentions raised by the petitioner herein were rejected by the Apex Court. After considering the decision in Ram Chander’s (supra) and various other decisions, the Supreme Court held that right of oral hearing is not compulsory. The Supreme Court relied on the decision of the Apex Court in Union of India and another vs. Jesus Sales Corporation (1996 (4) SCC 69), and held as follows: “…The courts cannot insist that under all circumstances and under different statutory provisions personal hearing have to be afforded to the persons concerned. If this principle of affording personal hearing is extended whenever statutory authorities are vested with the power to exercise discretion in connection with statutory appeals, it shall lead to chaotic conditions. Many statutory appeals and applications are disposed of by the competent authorities who have been vested with powers to dispose of the same. Such authorities which shall be deemed to be quasi-judicial authorities are expected to apply their judicial mind over the grievances made by the appellants or applicants concerned, but it cannot be held that before dismissing such appeals of applications in all events the quasi-judicial authorities must hear the appellants or the applicants as the case may be. When principles of natural justice require an opportunity to be heard before an adverse order is passed on any appeal or application, it dose not in all circumstances mean a personal hearing. The requirement is complied with by affording an opportunity to the person concerned to present his case before such quasi-judicial authority who is expected to apply his judicial mind to the issues involved”. 9. In Ganesh Santa Ram Sirur’s case (supra), the Supreme Court also considered the decision of the Constitution Bench of the Supreme Court in Managing Director, ECIL vs. B. Karunakar (1993 (4) SCC 727) and held that principles of natural justice cannot be reduced to any hard and fast formulae and these principles cannot be put in a strait jacket. Their applicability depends upon the context and the facts and circumstances of each case. Their applicability depends upon the context and the facts and circumstances of each case. The Supreme Court was considering a similar rule providing for appeal and relied on the decision of the Supreme Court in State Bank of Patiala & others vs. S.K. Sharma (1996 (3) SCC 364) and held that the right of personal hearing is not mandatory except in the cases specifically provided for in the rules. 10. A reading of the order of the appellate authority would show that he had considered the representation and applied his mind. In Madhya Pradesh Industries Ltd. V. Union of India (AIR 1966 SC 671), it was held as follows: “Ordinarily, the appellate or revisional authority shall give its own reasons succinctly; but in a case of affirmance where the original tribunal gives adequate reasons, the Appellate Tribunal may dismiss the appeal or the revision as the case may be, agreeing with those reasons” The above view was also expressed by the Constitution Bench of the Supreme Court in Som Datt Datta v. Union of India (AIR 1969 SC 414). In this case, the appellate authority has approved the findings of the enquiry officer, with application of mind and considered all his contentions. 11. There is no merit in the contention that disciplinary action cannot be taken if no loss is caused to the employer. In this case, the fact that the loan was availed of in the name of two customers and bank has given two pay orders in the appellant’s name and it was credited in the appellant’s account in another branch, is not disputed. It is a very serious misconduct. When the matter was found out, the loan was repaid will not in anyway reduce the seriousness of the misconduct. In para 32 of the judgment in Ganesh Santa Ram Sirur’s case (supra) it was observed as follows: “32. The learned senior counsel also relied on para 14 of the above judgment. Replying on the above passage, Mr. When the matter was found out, the loan was repaid will not in anyway reduce the seriousness of the misconduct. In para 32 of the judgment in Ganesh Santa Ram Sirur’s case (supra) it was observed as follows: “32. The learned senior counsel also relied on para 14 of the above judgment. Replying on the above passage, Mr. Salve submitted that the appellant, the Branch Manager of a Bank is required to exercise higher standards of honesty and integrity when he deals with the money of the depositors and the customers and, therefore, he is required to take all possible steps to protect the interest of the bank and to discharge his duties with utmost integrity, honesty, devotion and diligence and to do nothing which is unbecoming of the Bank Officer. According to Mr. Salve, good conduct and discipline are inseparable for the functioning of every officer, Manager or employee of the Bank, who deals with public money and there is no defence available to say that there was no loss or profit resulted in the case, when the Manager acted without authority and contrary to the rules and the scheme which is formulated to help the Educated Unemployed Youth. Mr. Salve’s above submissions is well merited acceptance and we see much force in the said submissions. The fact that customer in whose favour loan was granted, was not examined is not a ground for setting aside the proceedings. Allegations were proved by documentary evidence. The Apex Court considered a similar question in J.D. Jain vs. Management of State Bank of India and another (1982 (1) LLJ 54 SC) and held that when allegations are proved by documentary evidence, customer was not examined is not a ground for quashing the findings. Even hearsay evidence can be accepted in domestic enquiry if the evidence is believable and supported by documentary evidence. Strict rules of Evidence Act are not applicable in domestic enquiry. He was also free to produce them as his witnesses, if their evidence is helpful to his defence. Merely because police did not proceed with criminal complaint, enquiry proceedings cannot be quashed. Merely because police in the final report stated that there is no evidence of misappropriation and forgery, the disciplinary action cannot be withdrawn. Charge in the disciplinary action were not the same or identical as in the criminal case. Merely because police did not proceed with criminal complaint, enquiry proceedings cannot be quashed. Merely because police in the final report stated that there is no evidence of misappropriation and forgery, the disciplinary action cannot be withdrawn. Charge in the disciplinary action were not the same or identical as in the criminal case. Disciplinary action was not taken merely for forgery, misappropriation or destruction of documents etc. nature of allegations were different. Standard of evidence, requirement of proof etc, are different in criminal proceedings and enquiry as held in State of Rajasthan vs. B.K. Meena & others (1997 (1) LLJ 746). 12. Finally it is submitted that the appellant had rendered long service and considering the nature of the misconduct the order of punishment of dismissal should not have been issued. Unless punishment is shockingly disproportionate, this court cannot interfere in the order as we are not sitting in appeal over the punishments. Proportionality of the punishment is to he decided by the disciplinary authority and then by the appellate authority. Petitioner was employed in a managerial capacity in a nationalized bank. He was holding a position of trust where honesty and integrity are essential requirements. Considering the position held by the appellant and nature of the employment he was holding, it cannot be said that the punishment is a shocking one and it is disproportionate with the gravity of charges alleged against the appellant. In this context we refer to the decision of the Apex Court in Chairman & Managing Director, United Commercial Bank and others vs. P.C. Kakkar (2003 (4) SCC 364) In the circumstance, we are of the view that there is no merit in the Writ Appeal 263 of 2005 filed by the petitioner in O.P.No.18696 of 2001 and it is dismissed. There is no ground to quash Ext.P9 order of the appellate authority and hence judgment of the learned single Judge is set aside and Writ Appeal 3063 of 2002 filed by the respondents in the above O.P. is allowed.