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2015 DIGILAW 327 (KAR)

M R NAGARAJAN v. SYNDICATE BANK

2015-03-24

L.NARAYANA SWAMY

body2015
ORDER : This petition is filed under Article 226 of the Constitution of India seeking to quash the order dated 7.11.2008 passed by the Disciplinary Authority and order dated 31.3.2009 passed by the appellate authority dismissing the petitioner from service and confirmation thereof, produced to the writ petition at Annexure-M & P respectively. 2. The facts of the case to be stated in brief are that the petitioner joined the service on 10.3.1979 as a clerk and thereafter he was promoted as an Officer in Junior Management Grade ScaleI on 11.8.1986 and as Manager in Middle Management Grade Scale-II on1.4.1997. While he was Branch Manager of Syndicate Bank, Kadugondanahalli Branch, the petitioner was placed under suspension on the allegation that he had misused his position as Branch Manager and had processed and sanctioned housing loans in the names of purported employees of SCT Institute of Technology without ensuring genuineness of the borrowers, their employment, salary etc., and without ensuring existence of the flats and released the subsequent instalments of housing loans. The petitioner had unduly accommodated Sri K A Subramanya, the promoter of SCT Institutes exceeding his authority and by the said acts the petitioner had exposed the Bank to the risk of financial loss. 3. The petitioner on receipt of the charge sheet prayed for grant of time to verify the documents, which the Bank failed to grant and thereby the petitioner only denied the charges for want of materials to give detailed defence statement to the charges. 4. The Management examined one Sri D C Bhat who was the Investigating Officer. The petitioner made representation dated 11.4.2007 followed by 30.4.2007, 1.5.2007, 14.5.2007 and 17.5.2007 seeking for certain documents but they were not made available. 5. Regular enquiry was commenced on 26.4.2007. The respondent Bank produced additional list of documents, consisting of depositions of persons and they were marked as against the objection raised by the petitioner. The representation made by the petitioner dated 10.5.2007 and 17.5.2007 and mentioned therein that his earlier request to supply the documents was also not considered. It was stated by the Presenting Officer that despite verification of records, certain vital documents sought by the petitioner were not available which goes to show that the respondent-Bank deliberately withheld the documents that were vital for the defence of the petitioner. It was stated by the Presenting Officer that despite verification of records, certain vital documents sought by the petitioner were not available which goes to show that the respondent-Bank deliberately withheld the documents that were vital for the defence of the petitioner. The cancellation and reallotment of plots to Sri Govindaraj which was the subject matter of charge were also stated to be not available/traceable in the Branch. The report of Sri D C Bhat was also not made available before the commencement of regular enquiry proceedings and the Bank claimed privilege over production of said investigation report. The said investigation report is the vital document for framing charges against the petitioner. Thus it is stated that the enquiry proceedings were conducted in violation of principles of natural justice and in total denial of reasonable opportunity to the petitioner to defend himself in the enquiry. 6. It is stated, certain documents were made available on 28.8.2007 only an hour prior to the cross-examination of MW1 Sri G C Bhat and certain vital documents were stated to be not available by the Presenting Officer. Letter of cancellation of allotment of flat to Sri Govindaraju by SCT Builders and reallocation of the same to Sri Mohan Acharya were not available at the controlling office, as per R.Ds. letter dated10.7.2007. The Review Report of reporting Register, P.O advised to take immediate steps and furnish the same to the petitioner, subject to its availability and in the event of non-availability, PO was required to obtain the necessary letter from the concerned. However, the petitioner in order to cooperate with the inquiry proceedings, proceeded with the cross-examination of the sole witness. 7. The statement of certain persons whose depositions were marked in the inquiry despite objection by the petitioner were all obtained by the Investigating Officer and were not given by those witnesses and they were not examined in the enquiry. Mere marking of documents in the inquiry would not amount to their proof unless they are examined and tendered for cross-examination. 8. After the evidence, the petitioner was questioned from out of the charge instead of the questions on the evidence tendered in the enquiry which is in violation of Regulation 6(17). The impugned orders are in violation of principles of natural justice, without considering the submissions and contentions made by the petitioner. Thus the petitioner prays for allowing the writ petition. 9. The impugned orders are in violation of principles of natural justice, without considering the submissions and contentions made by the petitioner. Thus the petitioner prays for allowing the writ petition. 9. The respondent filed statement of objections contending that the Inquiring Authority conducted the proceedings on various dates, in which the petitioner participated along with his Defence Assistant. The Inquiring Authority, on the basis of the evidence on record, held that the charges leveled against the petitioner are proved and the Disciplinary Authority, examining the entire material on record, held guilt of the petitioner is proved and imposed penalty of dismissal from service with immediate effect. The appellate authority after an independent analysis of the matter, concurred with the findings of the Disciplinary Authority. The petitioner was made available all the available documents and furnished the reasons for non supply of certain documents. At no stage, the petitioner asserted inability to continue with the inquiry for want of any material/opportunity. The Management supplied majority of the defence documents requisitioned by the defence on 29.5.2007 and the remaining on 28.8.2007. The petitioner had ample time to study the documents and prepare for his case as the defence had to cross-examine the witness only at the conclusion of the examination in chief. If it were the case of the petitioner that examining those persons whose depositions were recorded, petitioner could have examined them. 10. It is further contended that the charge sheet was issued to the petitioner on the basis of the documents collected during the inquiry and not on the basis of investigation report. Besides, the Management did not rely on the Investigation Report for any purpose other than to determine prima facie case against the petitioner. Thus the investigation report did not have any relevance to the charge sheet or the inquiry proceedings. MW1 was extensively cross-examined and thereby the petitioner cannot complain denial of reasonable opportunity for non supply of investigation report. It is not the case of the petitioner that either MW1 or the authors of two statements had any animosity towards him to foist false allegations. 11. The questions asked to the petitioner are in conformity with Regulation No.6 (17) of the Regulations as the petitioner was given opportunity to explain his case vis-a-vis, the evidence that has been adduced against him. 11. The questions asked to the petitioner are in conformity with Regulation No.6 (17) of the Regulations as the petitioner was given opportunity to explain his case vis-a-vis, the evidence that has been adduced against him. The petitioner having done that when questioned by the Enquiring Authority, the requirements of Regulation No.6(17) of the Regulations have been met. 12. The respondent has contended that non-available and irrelevant documents not supplied to the petitioner did not vitiate the enquiry. Strict rules of evidence are not applicable to a proceeding in domestic enquiry. The Enquiry Officer has considered all relevant material on record and contrary allegations and grounds raised in the writ petition are denied. 13. I have heard the learned counsel for the parties and perused the entire records. The point that arises for consideration is, whether the impugned orders passed by Disciplinary Authority and the Appellate Authority suffer from any infirmity or illegality so as to call for interference by this Court? My answer would be in the negative for the following reasons: 14. The petitioner assumed the charge as Branch Manager of respondent Bank, Kadugondanahalli Branch, Bangalore on 18.7.2003. The allegations against the petitioner are: I. SANCTION/RELEASE OF HOUSING LOANS: (a) The petitioner abused his official position, processed and sanctioned housing loans in the names of purported employees of SCT Institute of Technology without ensuring genuineness of the borrowers, their employment, salary etc. and without ensuring existence of the flats. (b) The petitioner released subsequent instalments of the housing loans without ensuring construction of apartments in accordance with the sanctioned plan. (c) The petitioner delivered original title deeds deposited with the branch to the builder thereby facilitated him to avail multiple finance. (d) The petitioner allowed creation of UREM of flats by depositing non genuine sale deeds and unduly accommodated Sri K A Subramanya and facilitated him to commit fraud on the bank. II. The petitioner sanctioned furniture loans to housing loan borrowers without collecting margin money and ensuring end utilization and unduly accommodated Sri K A Subramanya. III. The petitioner sanctioned demand loans under PBS in the names of purported employees of SCT Institute of Technology and SCT College of Nursing without confirming their employment/salary and unduly accommodated Sri K S Subramanya. IV. The petitioner sanctioned furniture loans to housing loan borrowers without collecting margin money and ensuring end utilization and unduly accommodated Sri K A Subramanya. III. The petitioner sanctioned demand loans under PBS in the names of purported employees of SCT Institute of Technology and SCT College of Nursing without confirming their employment/salary and unduly accommodated Sri K S Subramanya. IV. The petitioner discounted cheques to Sri K A Subramanya and M/s. Kapital Deeds in an authorized manner by exceeding his authority and without submitting Annexure IID to RO seeking approval. V. The petitioner has sanctioned Rs.8 lac OD limit to M/s. M R Traders, converted the same to term loan, when the account became overdue, the petitioner made payment of Rs.1.85 lac from his ODC a/c on 31.3.2006 by routing the transactions through the guarantor’s account to avoid the account slipping into NPA. VI. The petitioner has exposed huge funds of the Bank to the risk of loss due to various above referred irregularities. VII. The petitioner purchased site at Nagarbhavi, Bangalore constructed a house thereon by availing housing loan of Rs.8 lac from Bangalore Housing Finance branch and to meet the shortfall he demanded and received Rs.2 lac from Sri K A Subramanya and petitioner used Institute’s vehicle for his personal purpose. 15. While availing housing loans during 2003, 31 accounts were closed by K A Subramanya and 8 accounts were outstanding as per Document No.MEX68. A cheque was issued by Sri K A Subramanya on CA 980 for Rs.1,84,755/- which was adjusted towards DL accounts of G B Kittur and V V Ramana. Proceeds of cheque for Rs. 2,52,000/- issued by Sri K A Subramanya was used for closure of DL accounts in the names of M V Sheshadri, Sri K A Ashwathanarayana. Sri K A Subramanya closed DL Account Nos.4/03, 5/03, 6/03, 15/03, 51/03 from the proceeds of his cheque for Rs.5,11,476/-. Loan ledger extracts showed several credit transfer entries from the above referred Current Accounts to the loan accounts. Thereby Sri K A Subramanya paid the loan amounts through his current accounts, not by the borrowers. 16. Out of the 87 housing loans sanctioned between 25.4.2003 and 10.9.2004, 33 housing loans were sanctioned by the petitioner. Loan ledger extracts showed several credit transfer entries from the above referred Current Accounts to the loan accounts. Thereby Sri K A Subramanya paid the loan amounts through his current accounts, not by the borrowers. 16. Out of the 87 housing loans sanctioned between 25.4.2003 and 10.9.2004, 33 housing loans were sanctioned by the petitioner. It was found that well before the licence from CMC, K R Puram for construction of 26 additional flats and well before the lawyer‘s opinion on the same, the petitioner had sanctioned/released four housing loans of four more flats. The petitioner agreed in MEX1197 that he did not refer this issue of additional flats to Regional Office. It was further noticed that number of housing loans sanctioned/released for number of flats to be purchased were more than the actual number of flats constructed. The evidence of MW1, MEX665, 683, 709, 717, 726, 735, 744, 753, 763, 773, 793, 803, 813 revealed that 13 housing loans were sanctioned and released in different names and the flats sold to them as per the said agreements of sale of undivided share were in 5th floor i.e., a non-existing floor. The visit of MW1 to CMC, K R Uram revealed, plans vide MEX838, 839, licence/permissions/letter of CMC K R Puram viz., MEX 840, 107, 92 vide MEX843 informed that they are bogus and no such approvals/licences were given by their office. 17. Evidence of MW1, MEX852, 853, 854 show that Sri Muniraj and Sri T K Devendran (Inspectors) during their inspection at K G Halli branch from 12.7.2004to 2.8.2004, while verifying the loan documents, noticed that mother document (sale deed dated 14.12.2001 in respect of Sy.No.49/02 of Kaggadasapura) held by the branch was a fabricated colour Xerox, that was not the original sale deed on pointing out the same to CSOE he agreed with the same and assured to produce the original and next day he produced the original sale deed. All 70 sale deeds submitted to the bank except that of Sri Mohan Acharya are non genuine/fabricated and original sale deeds in respect of some/same flats, against which Syndicate Bank also released housing loans, were held by Bank of India, Vijaya Bank etc., due to which the bank faced enormous difficulties in recovering its dues and thus bank funds are exposed to risk of financial loss. 18. 18. Smt. Kanakalaxmi is the wife of Sri K A Ashwathanarayana and as per his statement (MEX1234) his wife is not an employee but only a house wife. However, loan was sanctioned in her name. However, MEX 186 stated that she is working as lecturer and her net salary was shown as Rs.18,500/-. So also Smt. K N Sumalatha who is the wife of K A Subramanya. She was shown as Secretary and her net salary was shown to be Rs.24,220/. The Bank sanctions loans to her and also Sri K A Ashwathanarayana and Sri K A Bhadrinarayana. It is no doubt true that there is no bar to employ the relatives but in the instant case, the Management had shown some of their relatives as employees of the Institute without employing them in reality. It is not the case of the petitioner that he did not process/sanction said housing loans. Therefore, the petitioner has sanctioned housing loans to non employees of the Institute, who are relatives of Sri K A Subramanya. 19. Random comparison of details with salary details of SCT institute of Technology for June, 2003 vide DEX9 and the relevant loan applications disclosed that the borrowers were not genuine, their employment was not genuine and salary details were also not genuine. 20. The ledger extracts of the borrowers revealed that different amounts were transferred from various current accounts opened at the branch by Sri K A Subramanya in one or the other names. Some of the borrowers told MW1 that they have signed the papers but the loan amounts were utilized by the college management. 21. On the basis of the above documentary and oral evidence, it is clear that the petitioner has abused his official position in sanctioning the housing loans to employees and purported employees of SCT institute of Technology, without ensuring the genuineness of the borrowers, their employment, their salary and without ensuring the existence of the flats. 22. It was also pointed out that without completion of the flats, flats not being ready for possession till the end of 2005, the petitioner has released full amount of the loan in respect of all loan borrowers by March, 2004 without complying the terms of the agreement for construction. 23. 22. It was also pointed out that without completion of the flats, flats not being ready for possession till the end of 2005, the petitioner has released full amount of the loan in respect of all loan borrowers by March, 2004 without complying the terms of the agreement for construction. 23. The evidence of MW1 and MEX859, 854 establish that at the instance of petitioner original sale deed was given and petitioner returned the same in the evening to the custodians. The statements of Sri K A Subramanya and Sri Ashwathanarayana revealed that petitioner handed over them original sale deed etc., and they showed the same documents to other banks and availed multiple finance from other banks. Thus the petitioner facilitated Sri K A Subramanya to commit fraud and thereby failed to protect the bank’s interest. 24. The evidence of MW1 revealed that all the 69 registered sale deeds submitted to the bank are not genuine and only in respect of Sri Mohan Acharya, genuine registered sale deed was submitted. The petitioner has not ensured end utilization of the loan amount by the borrowers. The amounts pertaining to registration were released to the builder/borrower giving scope to them to commit fraud. Even the signatures of borrowers on the loan applications were found to be not tallying. Thus the petitioner unduly accommodated Sri K A Subramanya. 25. During the period between 13.5.2004 and 5.7.2004 the petitioner sanctioned 42 furniture loans for furnishing the flats of purported employees of SCT Institute of Technology, as against the quotation of Rs.1.84 lakhs of M/s. Uday Engineers. M/s. Uday Engineers is found to be proprietary concern of Sri K A Subramanya. The petitioner released loan amount of Rs.1 lakh to each borrower in a single instalment. No margin money from the borrowers was collected. Sri K A Subramanya admitted that above loans were availed by the Trust for running various educational institutions and he took full responsibility of repayment. The construction of flats was not completed and that the furnitures were not supplied even after two years of releasing the loans. Thus the petitioner released the 42 furniture loans without the supply of furniture and without ensuring end use thereby facilitated the Management of SCT Institute to utilize the said loan proceeds. 26. The construction of flats was not completed and that the furnitures were not supplied even after two years of releasing the loans. Thus the petitioner released the 42 furniture loans without the supply of furniture and without ensuring end use thereby facilitated the Management of SCT Institute to utilize the said loan proceeds. 26. Perusal of the loan applications, indicated that most of the applications were written by a single person, and different purposes were written in the loan application. There are no transactions except the loan transaction. The borrowers’ salary was not credited to the S B Account. The petitioner has sanctioned 31 DL PBS loans in the names of employees of SCT College of Nursing during the period between 15.3.2005 and 21.3.2005. The proceeds of 9 D L PBS loans amounting to Rs.14,00,50/- was credited to the CA 980 of Sri K A Subramanya in cash and so also other loan amounts. Sri K A Subramanya, Chairman of the Trust accepted vide MEX1230 for having utilized the loan amounts of the borrowers to run various educational institutions and took full responsibility for repayment. 27. The evidence of MW1 and MEX1153 showed that petitioner discounted cheque for Rs.25 lakhs drawn on Bank of India, Jeevan Bheema Nagar Branch, Bangalore to SCT Institute of Technology on 28.3.2006 under CDD 143 and the same was realized on 31.3.2006. MEX – 23 revealed that proceeds of the said discounted cheque was credited to CA 977 of SCT Institute of Technology on 28.3.2006 and the balance in the account before such credit was Rs.541/. On 29.3.2006 and 31.3.2006 several overdue loan instalments of DL (Gen), OSL loan accounts of various employees were debited to the said Current Account out of said CDD amount. The petitioner found to have exceeded his delegated powers and without seeking approval from RO, proceeds of CDD 143 and 150 were utilized for payment of various DL and OSL loan instalments of purported employees of SCT Institute. 28. Initially M/s. M R Traders was sanctioned Rs.8 lac OD limit which was later converted to OSL 11/05 for Rs.10 lakh in order to avoid that loan account slipping into NPA, thereby the petitioner transferred Rs.1.85 lakhs from his account to the surety’s account and thereafter same amount was transferred to OSL account of M/s. M R Traders, thereby the liability was brought down to Rs.9.06 lakhs. 29. 29. The petitioner sold his Hossur house for Rs.6 lakh, of which Rs.50,000/- was adjusted to existing housing loan, Rs.3.50 lakhs paid by the purchaser through Demand Draft and the balance cash of Rs.2 lakh was unaccounted. He purchased the site at Nagarbhavi for Rs.8.30 lakhs. Said unaccounted cash of Rs.2 lakhs to Rs.2.50 lakhs and Rs.3.30 lakhs was paid and he fell short of Rs.2 lakh to Rs.2.50 lakhs in order to complete the purchase. It is the case of the petitioner that he borrowed Rs.2 lakhs from his brother to fill the shortfall and Sri K A Subramanya assisted him in taking time for paying balance amount of Rs.2.20 lakhs to the seller and he stood as guarantor. Sri K A Subramanya stood and signed as witness to the sale deed. The attendant circumstances only indicate that the petitioner unduly accommodated Sri K A Subramanya and his team and Sri K A Subramanya in turn paid Rs.2 lakh to the petitioner when he was in dire need of funds to purchase the site. 30. In view of the above documentary and oral evidence on record, the Disciplinary Authority imposed a major penalty of dismissal from service with immediate effect. The Appellate Authority dismissed the appeal filed by the petitioner. 31. The gist of the contentions raised by the petitioner in the present petition, are that the petitioner was denied reasonable opportunity of preparing the defence by not serving copies of the documents and report of the Investigating Officer. The respondent contends that all the available documents were furnished to the petitioner and in respect of unavailable documents the petitioner was informed furnishing reasons. It is not suffice just to say want of reasonable opportunity without stating how it has prejudiced his case. It is further contended that the Inquiry Officer asked only one question after the inquiry which is contrary to Regulation 6(17). Looking to the answers given by the petitioner, it is clear that they are based on the evidence on record. Thus the petitioner has been given opportunity to explain his case as per the requirement of Regulation No.6 (17) of the Regulations. 31. The third contention raised by the petitioner is that complaints made by persons outside the inquiry could not have been identified by MW1 the Investigating Officer. Thus the petitioner has been given opportunity to explain his case as per the requirement of Regulation No.6 (17) of the Regulations. 31. The third contention raised by the petitioner is that complaints made by persons outside the inquiry could not have been identified by MW1 the Investigating Officer. The Inquiry Officer could not have relied on those complaints which were not produced through the makers. It is clear from the enquiry that the petitioner was given opportunity to examine the said witnesses which the petitioner did not avail, which is available at Page No.107 of the enquiry report. Therefore, the said contention is not available to the petitioner. 32. The learned counsel for the petitioner has relied upon the following decisions. (a) AIR 1969 SC 983 (Central Bank of India Ltd., Vs., Prakash Chand Jain) to contend that substantive rules, which form part of principles of natural justice, cannot, however, be ignored by domestic tribunals. (b) (2013) 4 SCC 301 (Nirmala J Jhala vs., State of Gujarat & another) to contend that though charges in a departmental proceedings are not required to be proved like a criminal trial i.e. beyond all reasonable doubts, we cannot lose sight of the fact that the enquiry officer performs a quasi-judicial function, who upon analyzing the documents must arrive at a conclusion that there had been a preponderance of probability to prove the charges on the basis of materials on record. (c) Roop Singh Negi vs., Punjab National Bank & others, (2009) 2 SCC 570 to contend that confession itself is not an evidence without actual proof of facts stated therein. 33. There is no quarrel about the principles laid down in the aforesaid decisions but they cannot be pressed into service to extend relief to the petitioner in view of series of documentary evidence which proved the guilt of the petitioner in the instant case. 34. 33. There is no quarrel about the principles laid down in the aforesaid decisions but they cannot be pressed into service to extend relief to the petitioner in view of series of documentary evidence which proved the guilt of the petitioner in the instant case. 34. The learned counsel for the respondent has relied upon the following decisions: (a) Chandrama Tewari vs., Union of India (Through General Manager) Eastern Railways) 1987 (Supp) SCC 518 and Syndicate Bank & others vs., Venkatesh Gururao Kurati (2006) 3 SCC 150 to contend that the documents mentioned in the memo of charge but neither relevant to charge nor referred to nor relied upon by the authorities nor necessary for cross-examination, non-supply of such a document, is not violative of principles of natural justice and not vitiative of the proceedings. (b) AIR 1974 SC 1589 (Krishna Chandra Tandon v. The Union of India) to contend that investigation report and such other interdepartmental communications between officers preliminary to the holding of enquiry have really no importance unless the Enquiry Officer wants to rely on them for his conclusion. 35. In view of the above facts and circumstances, I am of the view that the above two citations relied upon by the learned counsel for the respondent aptly apply to the facts of the case and thereby no prejudice is caused to the petitioner by not supplying certain documents which were not available, on which no reliance is placed by the Inquiry Officer to reach his conclusions and there is no violation of principles of natural justice in conducting the domestic enquiry. 36. Both the Disciplinary Authority and the Appellate Authority have considered the case of the petitioner in proper perspective and have arrived at inevitable conclusion that the petitioner has committed the guilt of the charges leveled against him and imposed a major penalty of dismissal from service. In the circumstances, this court is of the view that there is no merit in the writ petition and the writ petition is accordingly dismissed. Rule is discharged.