JUDGMENT In these appeals, the order of the learned Single Judge has been assailed mainly on the ground of non-consideration of a vital legal point raised by the appellants in their writ petitions that the order of punishment has not been passed by the competent authority and the same is wholly illegal. 2. The writ petitioners-appellants were appointed as Officers in the Bihar State Financial Corporation (for short ‘the Corporation’) and at the relevant time they were holding the post of Manager and Deputy Manager, respectively, in Plamau Branch of the Corporation. 3. A newly constituted Company, namely, M/s. Shri Katha & Chemicals negotiated with the top brass of the Corporation at its head office for grant of loan of a huge sum of Rs.46.5 lacs for taking over an ailing unit, M/s. Chandwa Wood Products at Chandwa in Plamau district. M/s. Chandwa Wood Products had taken Cash Credit facility to a limit from the State Bank of India. The outstanding due in the said account at that time was Rs.3.50 lacs, which was to be repaid by the newly constituted company out of the loan amount sanctioned to it. The negotiation for the above said loan, the terms and conditions and the arrangements and sanction were finalised by the head office of the Corporation. At that time, the appellants were kept in dark about the same. 4. After the settlement of the terms of the said agreement at the head office, a brief letter dated 23rd October, 1987 was sent to the appellants along with two bank drafts. The said bank drafts were payable in favour of the State Bank of India to the Account of Shri Katha & Chemicals. The said party approached the appellants for taking the drafts to be deposited in the account. Since the drafts were payable in favour of the State Bank of India Account, the same has to be deposited in the said account for encashment regardless of whether the appellants themselves deposit or the same is deposited by the party concerned. The appellants, therefore, handed over the said bank drafts to M/s. Shri Katha & Chemicals, to be deposited in the account, as specified in the bank drafts and the same was accordingly deposited. 5. Since the letter did not contain the description about the books of accounts, the appellants asked the party to produce the books of accounts for verification. The appellants, therefore, handed over the said bank drafts to M/s. Shri Katha & Chemicals, to be deposited in the account, as specified in the bank drafts and the same was accordingly deposited. 5. Since the letter did not contain the description about the books of accounts, the appellants asked the party to produce the books of accounts for verification. The party assured to produce the same after some time. There was no instruction in the aforesaid letter dated 23rd October, 1987 to withhold the drafts till verification of the books of accounts or to make the same a condition for handing over the bank drafts. At the time of handing over the drafts, both the appellants were the Branch Managers. They took into consideration that the amount to be disbursed was a fraction of the total sanctioned amount. Books of account can be produced for verification in case it was so required by the head office. 6. However, at that time, no objection was raised by the respondents suddenly after about lapse of ten years a charge sheet, containing charges of disobedience of the instruction of the head office, was served on the appellants. 7. The appellants filed their reply, denying the charges. 8. The reply was not found satisfactory. Departmental enquiry held and the appellants were found guilty of disobedience. They were awarded punishment of dismissal. 9. The appellants preferred appeal against the said punishment before the Board of Directors on several grounds. 10. The Board of Directors upheld the finding of the disciplinary authority regarding the guilt but modified he punishment from the order of dismissal to compulsory retirement from service with the order of recovery of Rs.4,79,974/-. 11. The appellants challenged the said orders of the disciplinary authority as well as appellate authority in writ petitions, being W.P.(S) Nos.4267 and 3367 of 2002. One of the grounds raised in the writ petitions was that the impugned order of dismissal was not passed by a competent authority. The disciplinary authority/appointing authority of the petitioners is the Managing Director. There was no appointment of a fulltime Managing Director. The appointment of Subhash Sharma as Managing Director was not in accordance with the provision of Section 17 of the State Financial Corporation Act (hereinafter to be referred as the ‘Act’). The disciplinary authority/appointing authority of the petitioners is the Managing Director. There was no appointment of a fulltime Managing Director. The appointment of Subhash Sharma as Managing Director was not in accordance with the provision of Section 17 of the State Financial Corporation Act (hereinafter to be referred as the ‘Act’). There is nothing on record to show that his appointment was in consultation with Small Industries Bank, which is a statutory requirement for such appointment. He was also not appointed as a whole time Managing Director of the Corporation. The order passed by said Subhash Sharma is, thus, wholly without jurisdiction. 12. It was also argued that there was no material to prove the charges against the appellants. Initiation of the proceeding after a lapse of ten years itself is violative of principles of natural justice and the entire proceeding is bad on that ground as well. 13. Learned Single Judge allowed the said writ petitions in part by a common order dated 13th November, 2003. The order passed by the appellate authority was quashed. The matter was remitted back to the appellate authority for passing a fresh order on the quantum of punishment. In the said order learned Single Judge observed, inter alia, that while issuing the charge sheet after such inordinate delay, the respondents had predetermination to proceed against the petitioners by appointing a Conducting Officer at the time of issuing charge sheet. The Respondent-Corporation although issued the drafts in order to clear off the dues of the erstwhile firm, M/s. Chandwa Wood Product, but the drafts were issued in the name of Shri Katha & Chemicals Pvt. Ltd. Therefore, notwithstanding, the fact that the charges against the petitioners were the punishment of compulsory retirement coupled with recovery of amount, as modified by the appellate authority, is still disproportionate to the charges levelled against them and that the matter required reconsideration by the appellate authority on the quantum of punishment. 14. As aforesaid, the impugned order of punishment has been assailed on the basic ground that the same has not been passed by the competent authority. The signatory of the order, Subhash Sharma, was not the legally appointed Managing Director as required under the provision of Section 17 of the said Act. He was not appointed as a fulltime officer of the Corporation in consultation with the Small Industries Bank. The signatory of the order, Subhash Sharma, was not the legally appointed Managing Director as required under the provision of Section 17 of the said Act. He was not appointed as a fulltime officer of the Corporation in consultation with the Small Industries Bank. Any order passed by him in that capacity is not valid and legal. 15. Mr. A. K. Sinha, learned senior counsel, appearing on behalf of the appellants, referred to and relied on the decisions of the Patna High Court in CWJC No.1718 of 2006 (Jai Prakash Sinha Vs. The B.S.F.C. & Ors.), CWJC No.13529 of 2005 (Subhash Chandra Jha Vs. The B.S.F.C. & Ors.) and CWJC No.2391 of 2006 with CWJC No.2093 of 2006 (Brajendra Jha Vs. The B.S.F.C. & Ors.- in both cases). In the said cases, legality of appointment of said Shubhash Sharma, as the Managing Director, was questioned. After consideration of all the relevant aspects, it was held by the said Court that the stand taken by the respondent regarding the validity of the appointment of Subhash Sharma, as Managing Director, is not correct. 16. Mr. Rajiv Ranjan, learned counsel, appearing on behalf of the Respondent-Corporation vehemently contested the said contentions and submitted that the appointment of Subhash Sharma as Managing Director was initially made by Notification No.2546 dated 9th July, 2001, whereby he was given additional charge of the Managing Director, but by Notification No.2751 dated 28th July, 2001, he was appointed as regular Managing Director in accordance with the provision of Section 17(1) of the said Act. The contention of the appellants that he was not duly appointed in accordance with the provision of Section 17 of the said Act has no substance. Learned counsel submitted that although it has not been specifically mentioned that the said appointment was being made in consultation with the Small Industries Bank, as required under Section 17(1)(a) of the Act, there is legal presumption in favour of the consultation and observance of the prescribed legal formalities. 17. Regarding the ground of delay taken by the appellants in issuing the charge sheet and initiating departmental proceeding learned counsel submitted that the delay itself does not vitiate the entire departmental proceeding unless it is shown that prejudice has been caused to the delinquent by delay in issuing the charge sheet. 17. Regarding the ground of delay taken by the appellants in issuing the charge sheet and initiating departmental proceeding learned counsel submitted that the delay itself does not vitiate the entire departmental proceeding unless it is shown that prejudice has been caused to the delinquent by delay in issuing the charge sheet. In the instant case, there was some delay in initiating the proceeding only because the Corporation was informed by the bank later on that the drafts were not submitted to the bank and that the loan amount in the account of State Bank of India is still outstanding and the same has not been paid. It has been submitted that no prejudice has been caused to the appellants by such delay. 18. We have heard learned counsel for the parties and considered the facts and materials on record and also noticed the provisions of law. Section 17 of the said Act deals with the appointment of the Managing Director. The said section is reproduced herein below:- “17. Managing Director.-(1) The Managing Director shall- (a)be appointed, in consultation with the Small Industries Bank, by the State Government; (b)be a whole-time officer of the Financial Corporations; (c)perform such duties as the Board, by regulations, entrust or delegate to him; (d)hold office for such term not exceeding three years as the State Government may specify and shall be eligible for reappointment; (e)receive such salary and allowances and be subject to other terms and conditions of service as the Board may, with the previous approval of the State Government, determine. (2) The State Government may, after consulting the Board, remove the Managing Director from office: Provided that no managing director shall be so removed unless he has been given an opportunity of showing cause against his removal. (2) The State Government may, after consulting the Board, remove the Managing Director from office: Provided that no managing director shall be so removed unless he has been given an opportunity of showing cause against his removal. (3) Notwithstanding anything contained in sub-section (1), the State Government, with prior consultation of the Small Industries Bank, shall have the right to terminate the term of office of the managing director at any time, before the expiry of the term specified under clause (d) of sub-section (1) by giving him notice of not less than three months in writing or three months’ salary and allowances in lieu of such notice and the managing director shall also have right to relinquish his office at any time before the expiry of term specified under clause (d) of sub-section (1) by giving to the State Government notice of not less than three months in writing. “ 19. On reading of the said provision, we find that for the appointment of the Managing Director, there must be consultation with the Small Industries Bank and that the Managing Director must be a whole-time officer of the Corporation. 20. From the record, we do not find any consultation with the Small Industries Bank before the appointment of Subhash Sharma. Further, from the letters of appointment produced before us, we do not find that Subhash Sharma was appointed as a whole-time officer of the Corporation. 21. Mr. Rajiv Ranjan, learned counsel, heavily relied on Notification No.2751 dated 28th July, 2001 for impressing upon us that the appointment was in accordance with the provision of Section 17(1) of the said Act. 22. After going through the said notification, we do not find that Subhash Sharma was appointed in consultation with the Small Industries Bank. 23. In our opinion, the said notification had been issued in continuation of Notification No.2546 dated 9th July, 2001, whereby the said Subhash Sharma was given only the additional charge simultaneously with the charge of the Administrator, Bihar School Examination Board, Patna. The said notification at the face of it suggests non-compliance of the mandatory provision of Section 17(1) of the Act. Subsequent letter of the Corporation issued on the basis of the resolution taken in the meeting of the Board dated 21st August, 2001 also does not mention that he was appointed as a whole-time Managing Director. The said notification at the face of it suggests non-compliance of the mandatory provision of Section 17(1) of the Act. Subsequent letter of the Corporation issued on the basis of the resolution taken in the meeting of the Board dated 21st August, 2001 also does not mention that he was appointed as a whole-time Managing Director. In the said resolution, rather it was expected of the State Government to appoint a whole-time Managing Director. The said resolution dated 21st August, 2001 does not support the stand taken by learned counsel for the respondents that by Notification No.2751 dated 28th July, 2001 said Subhash Sharma was appointed as a whole-time Managing Director. 24. We, therefore, find substance in the contention of the learned counsel for the appellants that Subhash Sharma being not a legally appointed Managing Director, as required by Section 17(1) of the Act, was not competent to pass the impugned orders of punishment. Almost same view has been taken by the Patna High Court in the case of Jai Prakash Sinha, Subhash Chandra Jha and Brajendra Jha (Supra). 25. Although the said point was specifically taken in the writ petitions, learned Single Judge has not considered the same and has erred in arriving at the conclusion in the impugned order. 26. We, therefore, set aside the impugned order of the learned Single Judge. It is held that the order of punishment passed by the disciplinary authority and subsequent orders, including the order of the appellate authority, are wholly without jurisdiction and are ineffective. The order of punishment dated nd August, 2001 passed by the Managing Director and the order of the appellate authority dated 18th May, 2002 are also consequently quashed. It goes without saying that any subsequent action or order passed on the basis of the order of the learned Single Judge would be ineffectual. 27. These appeals are, accordingly, allowed. 28. No order as to cost.