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2015 DIGILAW 666 (CAL)

Shyama Prasad Dey v. Bangiya Gramin Vikash Bank

2015-08-07

ASHA ARORA, NISHITA MHATRE

body2015
JUDGMENT : Nishita Mhatre, J. 1. The appellant was working as a Branch Manager with the Bangiya Gramin Vikash Bank (hereinafter referred to as ‘Bank’) in 2012. By an order dated 26th November, 2012 the competent authority specified under the Bangiya Gramin Vikash Bank (Officers and Employees) Service Regulations, 2010 (hereinafter referred to as the ‘Service Regulations’) issued an order suspending the appellant as a disciplinary proceeding was contemplated against him. The misconduct mentioned in the order dated 26th November, 2012 was with respect to serious irregularities committed by the appellant while he was working in the bank at the Narajole Branch in issuing banker’s cheques. The competent authority who was the Chairman of the bank suspended the appellant with immediate effect pending the departmental enquiry and its final decision. 2. The charge-sheet was later issued to him on 4th March, 2013. The charge against the appellant was that while he was a Branch Manager at the Narajole Branch of the bank, he and his co-signatory had wilfully and deliberately issued banker’s cheques of `10 lacs to a customer without receiving any security from him. The bank was of the view that the appellant had done so in order to defraud the bank in connivance with the customer. There were several other acts of the appellant which were mentioned in the charge-sheet which, according to the bank, amounted to misdeeds and a breach of trust. This charge-sheet was signed by the disciplinary authority, namely, the General Manager. A departmental enquiry was held against the appellant after providing him all the requisite documents that he sought for. The Enquiry Officer was the Chief Manager of the bank at its head office. He submitted his report on 30th May, 2013 concluding that the appellant had committed several irregularities constituting misdeeds and had thus not discharged his duties sincerely and faithfully. The Enquiry Officer noted that the charge-sheeted employee, i.e., the appellant had denied the charges levelled against him. The Enquiry Officer also noted that there was no loss caused to the bank but that the appellant had been guilty of committing irregularities. 3. The appellant submitted his response to the enquiry report on 28th June, 2013. By an order dated 5th December, 2013 the disciplinary authority and General Manager compulsorily retired the appellant as a punishment for the misconduct committed by him. 3. The appellant submitted his response to the enquiry report on 28th June, 2013. By an order dated 5th December, 2013 the disciplinary authority and General Manager compulsorily retired the appellant as a punishment for the misconduct committed by him. The appellate authority by an order dated 5th February, 2014 dismissed the appeal of the appellant. 4. Being aggrieved by the orders of the disciplinary authority and the appellate authority compulsorily retiring him from service by way of punishment, the appellant approached this Court under Article 226 of the Constitution of India for setting aside those orders. 5. The learned single Judge has dismissed the writ petition by concluding that the appellant had admitted his guilt and therefore, the punishment imposed could not be said to be disproportionate. 6. Mr. Debabrata Saha Roy, the learned Counsel for the appellant, has raised four principal issues, namely, (i) the General Manager had issued the charge-sheet as the disciplinary authority although there was no delegation of power to him; (ii) the disciplinary authority who was the Chairman of the bank had acted as the appellate authority; (iii) the learned single Judge had incorrectly recorded that the appellant had admitted the charge when he had consistently denied the same; (iv) the punishment had been imposed by a person who is not the appointing authority of the appellant. The learned Counsel has relied on several judgments to fortify his submissions on these issues. 7. Mr. Kamalesh Bhattacharya, the learned Counsel for the respondents, drew our attention to the fact that immediately after the appellant was suspended he refunded the amounts which he had paid to the customer without the loan being sanctioned in his favour. He submitted that this in itself would indicate that the appellant had admitted his guilt. The learned Counsel pointed out that by a Gazette Notification dated 20th November, 2013 powers have been delegated to the General Manager to hold disciplinary proceedings against officers of the appellant’s rank and the Chairman of the bank was appointed as the appellate authority. The learned Counsel submits that since there was a delegation of power and the rules permit the General Manager to act as the disciplinary authority, the issues raised by the learned Counsel for the appellant are unsustainable. 8. The learned Counsel submits that since there was a delegation of power and the rules permit the General Manager to act as the disciplinary authority, the issues raised by the learned Counsel for the appellant are unsustainable. 8. Before proceeding further it is necessary to deal with the finding recorded by the learned single Judge that the appellant had admitted his guilt. Mr. Saha Roy has drawn our attention to the noting of the enquiry officer that the charge-sheeted officer had not admitted the charge. The submission of Mr. Bhattacharya that, since the money had been returned by the appellant we should presume that he is guilty is untenable. There must be a clear and unambiguous admission of guilt of the delinquent employee. No conjectures and surmises can be drawn by the Court regarding the acceptance of guilt by the charge-sheeted employee. The learned single Judge has erred in recording that the appellant has admitted that he is guilty of the misconducts alleged against him. 9. To appreciate the controversy it is necessary to consider some of the Service Regulations. Under the Service Regulations major penalties such as compulsory retirement can be imposed only after holding a departmental enquiry. The competent authority may under Regulation 41 delegate the power to an Officer who is higher in grade to the Officer against whom the proceeding is instituted to conduct an enquiry under Regulation 39. Regulation 46 speaks of a suspension order being issued by the competent authority. The competent authority has been defined in Regulation 2(g) and means the Chairman in respect of Officers and the General Manager in respect of other employees. Officers have been classified in Regulation 3. The appellant fell within Group ‘A’ – Officer (i) Scale I (Assistant Manager). The appointing authority is the Chairman for Officers under Regulation 5 whereas the General Manager is the appointing authority for other employees. Thus, the Service Regulations specified that the Chairman is the appointing authority and the disciplinary authority can only be the competent authority which means the Chairman in the case of an Officer such as the appellant. 10. Mr. Bhattacharya submitted that there is a notification issued on 12th August, 2013 amending the provisions of the Service Regulation of 1990. Thus, the Service Regulations specified that the Chairman is the appointing authority and the disciplinary authority can only be the competent authority which means the Chairman in the case of an Officer such as the appellant. 10. Mr. Bhattacharya submitted that there is a notification issued on 12th August, 2013 amending the provisions of the Service Regulation of 1990. He pointed out that under this amendment the competent authority has been redefined to mean the Chairman in respect of Officers Scale III and IV while the General Manager is the competent authority for Class 1 and 2 Officers. The competent authority for the appellant therefore was the General Manager and not the Chairman according to Mr. Bhattacharya. 11. The appellant was suspended in the year 2012 and the enquiry was initiated by issuing him a charge-sheet on 26th November, 2012. Therefore, the amended rules would not apply to the appellant’s case. The bank was bound to follow the unamended rules where the Chairman was the competent authority and action was required to be taken by him under the Regulations. However, Regulation 41 empowers the competent authority to delegate, in writing, the task of conducting an enquiry. The competent authority could have delegated the power to an Officer who is higher in scale to the appellant to proceed with the enquiry. There is no material on record to show that such a delegation was made. It is no doubt true that the Enquiry Officer who conducted the enquiry as well as the General Manager who imposed the punishment were higher in rank than the appellant. However, unless there is a specific delegation of the power in their favour by the competent authority, they could not have held the enquiry. The power to delegate is limited only to the conduct of the departmental enquiry. There is no power to delegate the responsibility to act as the disciplinary authority. We have noted that the appellant did not object to the Enquiry Officer or to the General Manager acting as the disciplinary authority during the enquiry proceedings and he preferred an appeal to the Chairman as directed in the order of punishment. This issue regarding the competence of the General Manager to act as the disciplinary authority and the Chairman as the appellate authority has been raised in the writ petition and the present appeal. 12. Mr. This issue regarding the competence of the General Manager to act as the disciplinary authority and the Chairman as the appellate authority has been raised in the writ petition and the present appeal. 12. Mr. Saha Roy has submitted that there can be no waiver or estoppel against the statute. He submitted that if a statutory rule has not been followed, the entire action taken in breach of that statutory rule should be set aside. He has relied on the judgments of the Supreme Court in the case of A. C. Jose vs. Sivan Pillai & Ors reported in AIR 1984 SC 921 and K. K. Parmar & Ors vs. High Court of Gujarat & Ors reported in (2006) 5 SCC 789 . 13. In A. C. Jose (supra) the Supreme Court held that there can never be any estoppel against a statute. In K. K. Parmar (supra) the Supreme Court held that a superior Court can always permit a jurisdictional question to be raised although it had not been raised earlier. Considering these judgments, the appellant is entitled to challenge the jurisdiction of the General Manager and the Chairman to act as the disciplinary authority and the appellate authority respectively even in the writ petition as there can be no estoppel against a statute. 14. Mr. Bhattacharya has submitted that unless the appellant demonstrates that he has been caused prejudice by the General Manager acting as a disciplinary authority, there is no need to set aside the enquiry and the punishment imposed by the bank of compulsory retirement. He submitted that the appellant had never objected to the appointment of the enquiry officer or to the General Manager acting as the disciplinary authority. He indicated that on 27th November, 2013 the bank, in exercise of powers conferred under Section 30 of the Regional Rural Banks Act, 1976 to Board of Directors of the bank, had resolved to amend the Service Regulations with respect to the competent authority and the appellate authority. These Regulations came into effect on the date they were published in the Official Gazette. The learned Counsel urged that since the disciplinary proceedings were initiated by the General Manager and the appeal had been heard by the Chairman who are the competent authority and the appellate authority under the amended Service Regulations, it would be futile to quash the enquiry. 15. The learned Counsel urged that since the disciplinary proceedings were initiated by the General Manager and the appeal had been heard by the Chairman who are the competent authority and the appellate authority under the amended Service Regulations, it would be futile to quash the enquiry. 15. The Service Regulations as mentioned earlier were amended and notified in the Official Gazette of India on 12th August, 2013. These amendments to the Service Regulations were introduced after the enquiry proceedings were initiated against the appellant. Therefore, the enquiry ought to have been conducted against the appellant in accordance with the existing rules and not the amended rules. The submission of Mr. Bhattacharya that since the Board had circulated a note indicating the model draft notification where the competent authority was changed it must be presumed that there was a delegation in favour of the General Manager, cannot be accepted. Unless the Service Regulations which came into force in 2010 had been amended by a Gazette Notification, they could not be said to have been amended nor can be presumed that there was a delegation of power made by the Chairman in terms of Regulation 41. The delegation is required to be specific and must be made by a person who is authorised to delegate. The resolution has been signed by three Officers, i.e., two General Managers and the Chairman. Thus the delegate has delegated to himself the power which is to be exercised by another Officer. We cannot accept that such a resolution delegated the power in consonance with Regulation 41 to initiate an enquiry proceeding. Therefore, in our opinion, the initiation of the enquiry against the appellant on the basis of a charge-sheet issued by the General Manager is illegal. 16. In the case of A. K. Roy & Anr vs. State of Punjab & Ors reported in (1986) 4 SCC 326 the Supreme Court held that when a person is empowered to do a certain thing in a certain way, it must be done in that way or not at all. The Court observed that other modes of performance are necessarily forbidden. If the intention of the legislature was to confer the power on the authorities specified, the power had to be exercised in the manner provided and not at all. 17. The Court observed that other modes of performance are necessarily forbidden. If the intention of the legislature was to confer the power on the authorities specified, the power had to be exercised in the manner provided and not at all. 17. Similarly, in the case of Joint Action Committee of Air Line Pilots’ Association of India (ALPAI) & Ors vs. Director General of Civil Aviation & Ors reported in (2011) 5 SCC 435 the Supreme Court observed that it was a settled legal proposition that the authority which has been conferred with the competence under a statute alone can pass an order. No other person, not even a superior authority, can interfere with the functioning of the statutory authority. A decision taken by a statutory authority at the behest or on the suggestion of a person, who has no statutory role to play the same, would be patently illegal. The Court has considered its earlier decisions and reiterated that even a senior official cannot provide for any guideline or direction to the authority under the statute to act in a particular way. 18. The learned Counsel Mr. Saha Roy submitted that the Service Regulations have a statutory force of law and a similar view was taken in the Bank of Baroda vs. S. K. Kool & Anr reported in (2014) 2 SCC 715 , P. V. Srinivasa Sastry & Ors vs. Comptroller and Auditor General & Ors reported in (1993) 1 SCC 419 , Union of India & Ors vs. Paul George reported in (2014) 1 SCC 352. After perusing these judgments it is evident that only the person authorised by the Service Regulations can take disciplinary action against an employee, be it an Officer or a person who is lower in status. 19. The delinquent is not required to demonstrate the prejudice caused to him when a person other than the competent authority specified in the Service Regulations initiates disciplinary proceedings against him. The Service Regulations which have the force of law must be followed rigorously. In the present case the disciplinary proceedings have been initiated by the General Manager who was not the competent authority under the Service Regulations. The appeal has been heard by the Chairman who had suspended the appellant for the alleged acts of misconduct committed by him. Therefore the entire action against the appellant is invalid and illegal. 20. In the present case the disciplinary proceedings have been initiated by the General Manager who was not the competent authority under the Service Regulations. The appeal has been heard by the Chairman who had suspended the appellant for the alleged acts of misconduct committed by him. Therefore the entire action against the appellant is invalid and illegal. 20. The next issue raised by Mr. Saha Roy was that the appellate authority’s order shows no application of mind and is a mere reproduction of the order of the disciplinary authority. According him, it is necessary for any order to have reasons so that they can be scrutinised by the Court and be subjected to judicial review. In S. N. Mukherjee vs. Union of India reported in (1990) 4 SCC 594 the Constitution Bench of the Supreme Court held thus: 35. The decisions of this Court referred to above indicate that with regard to the requirement to record reasons the approach of this Court is more in line with that of the American courts. An important consideration which has weighed with the court for holding that an administrative authority exercising quasi-judicial functions must record the reasons for its decision, is that such a decision is subject to the appellate jurisdiction of this Court under Article 136 of the Constitution as well as the supervisory jurisdiction of the High Courts under Article 227 of the Constitution and that the reasons, if recorded, would enable this Court or the High Courts to effectively exercise the appellate or supervisory power. But this is not the sole consideration. The other considerations which have also weighed with the Court in taking this view are that the requirement of recording reasons would (i) guarantee consideration by the authority; (ii) introduce clarity in the decisions; and (iii) minimise chances of arbitrariness in decision-making. In this regard a distinction has been drawn between ordinary courts of law and tribunals and authorities exercising judicial functions on the ground that a Judge is trained to look at things objectively uninfluenced by considerations of policy or expediency whereas an executive officer generally looks at things from the standpoint of policy and expediency. 36. Reasons, when recorded by an administrative authority in an order passed by it while exercising quasi-judicial functions, would no doubt facilitate the exercise of its jurisdiction by the appellate or supervisory authority. 36. Reasons, when recorded by an administrative authority in an order passed by it while exercising quasi-judicial functions, would no doubt facilitate the exercise of its jurisdiction by the appellate or supervisory authority. But the other considerations, referred to above, which have also weighed with this Court in holding that an administrative authority must record reasons for its decision, are of no less significance. These considerations show that the recording of reasons by an administrative authority serves a salutary purpose, namely, it excludes chances of arbitrariness and ensures a degree of fairness in the process of decision-making. The said purpose would apply equally to all decisions and its application cannot be confined to decisions which are subject to appeal, revision or judicial review. In our opinion, therefore, the requirement that reasons be recorded should govern the decisions of an administrative authority exercising quasi-judicial functions irrespective of the fact whether the decision is subject to appeal, revision or judicial review. It may, however, be added that it is not required that the reasons should be as elaborate as in the decision of a court of law. The extent and nature of the reasons would depend on particular facts and circumstances. What is necessary is that the reasons are clear and explicit so as to indicate that the authority has given due consideration to the points in controversy. The need for recording of reasons is greater in a case where the order is passed at the original stage. The appellate or revisional authority, if it affirms such an order, need not give separate reasons if the appellate or revisional authority agrees with the reasons contained in the order under challenge. *** *** 39. The object underlying the rules of natural justice “is to prevent miscarriage of justice” and secure “fair play in action”. As pointed out earlier the requirement about recording of reasons for its decision by an administrative authority exercising quasi-judicial functions achieves this object by excluding chances of arbitrariness and ensuring a degree of fairness in the process of decision-making. Keeping in view the expanding horizon of the principles of natural justice, we are of the opinion, that the requirement to record reason can be regarded as one of the principles of natural justice which govern exercise of power by administrative authorities. The rules of natural justice are not embodied rules. Keeping in view the expanding horizon of the principles of natural justice, we are of the opinion, that the requirement to record reason can be regarded as one of the principles of natural justice which govern exercise of power by administrative authorities. The rules of natural justice are not embodied rules. The extent of their application depends upon the particular statutory framework whereunder jurisdiction has been conferred on the administrative authority. With regard to the exercise of a particular power by an administrative authority including exercise of judicial or quasi-judicial functions the legislature, while conferring the said power, may feel that it would not be in the larger public interest that the reasons for the order passed by the administrative authority be recorded in the order and be communicated to the aggrieved party and it may dispense with such a requirement. It may do so by making an express provision to that effect as those contained in the Administrative Procedure Act, 1946 of U.S.A. and the Administrative Decisions (Judicial Review) Act, 1977 of Australia whereby the orders passed by certain specified authorities are excluded from the ambit of the enactment. Such an exclusion can also arise by necessary implication from the nature of the subject matter, the scheme and the provisions of the enactment. The public interest underlying such a provision would outweigh the salutary purpose served by the requirement to record the reasons. The said requirement cannot, therefore, be insisted upon in such a case. 40. For the reasons aforesaid, it must be concluded that except in cases where the requirement has been dispensed with expressly or by necessary implication, an administrative authority exercising judicial or quasi-judicial functions is required to record the reasons for its decision. 21. A similar view was taken by the Supreme Court in Ravi Yashwant Bhoir vs. District Collector, Raigad & Ors reported in (2012) 4 SCC 407 where the Supreme Court observed thus: 46. The emphasis on recording reason is that if the decision reveals the “inscrutable face of the sphinx”, it can by its silence, render it virtually impossible for the courts to perform their appellate function or exercise the power of judicial review in adjudging the validity of the decision. Right to reason is an indispensable part of a sound judicial system, reasons at least sufficient to indicate an application of mind of the authority before the court. Right to reason is an indispensable part of a sound judicial system, reasons at least sufficient to indicate an application of mind of the authority before the court. Another rationale is that the affected party can know why the decision has gone against him. One of the salutary requirements of natural justice is spelling out the reasons for the order made, in other words, a speaking out. The inscrutable face of the sphinx is ordinarily incongruous with a judicial or quasi-judicial performance. 22. In Oryx Fisheries Private Limited vs. Union of India & Ors reported in (2010) 13 SCC 427 the Supreme Court observed that the absence of reasons in the original order cannot be compensated by disclosure of reasons in the appellate order. 23. It is trite therefore that an order passed by a quasi-judicial authority must disclose reasons for arriving at a particular conclusion. Unless the reasons are revealed it is difficult to judicially review the order. It would be almost impossible to decipher the rationale for the order or the cognitive process. The Chairman has acted as the appellate authority in breach of the Service Regulations and has only restated the factual matrix of the case and accepted the decision of the General Manager without disclosing the reasons for doing so. The order is therefore unacceptable. 24. In the present case even if we set aside the enquiry proceedings and the decision of the disciplinary authority and the appellate authority, we would naturally be obliged to direct the bank to hold an enquiry afresh considering the gravity of the charges levelled against the appellant. After the amendment, however, this would now be an empty formality as the Regulations have been modified and the General Manager is now the competent authority for initiating disciplinary action against officers of the appellant’s rank. The Chairman who was the appointing authority had suspended the appellant as he was also the competent authority under the unamended Service Regulations had acted as the appellate authority. Even if we were to direct the Chairman at this stage to initiate the proceedings afresh it would be futile exercise. He has already disclosed his mind while acting without being empowered as the appellate authority. 25. We therefore, in the instant case, direct the Board to consider the appeal preferred by the appellant and to pass appropriate orders. Even if we were to direct the Chairman at this stage to initiate the proceedings afresh it would be futile exercise. He has already disclosed his mind while acting without being empowered as the appellate authority. 25. We therefore, in the instant case, direct the Board to consider the appeal preferred by the appellant and to pass appropriate orders. This exercise shall be carried out within four months from today. The impugned order of the learned single Judge is set aside. The appeal is allowed accordingly. 26. Urgent certified photocopies of this judgment, if applied for, be given to the learned Advocates for the parties upon compliance of all formalities.