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Karnataka High Court · body

2015 DIGILAW 771 (KAR)

B. Narayana Rao v. Syndicate Bank

2015-07-17

R.S.CHAUHAN

body2015
ORDER : Aggrieved by the order dated 31.12.2012 passed by the Chief Manager, Syndicate Bank, whereby the Chief Manager has reduced twothird of the pension payable to the petitioner, the petitioner has approached this Court. 2. Briefly the facts of the case are that on 22.5.1972 the petitioner was appointed as a Clerk in the Syndicate Bank. From 19722006, considering his excellent service to the bank, he was given promotions one after the other, culminating in the post of Senior Manager in Grade ScaleV in the year 2006. However, on 20.3.2009, he was suspended due to certain alleged misconducts committed by him. The petitioner filed an Appeal against the suspension order. However, by an order dated 23.4.2009, the said Appeal was rejected. Subsequently, the petitioner was issued a charge sheet. Three charges were framed against the petitioner. The petitioner filed his reply on 22.4.2010. The Enquiry Officer, after completing the departmental enquiry, concluded that all the three charges were duly proved, in their entirety, against the petitioner. The petitioner filed his statement against the findings of the Enquiry Officer. After considering the petitioner’s statement and the enquiry report, by order dated 17.2.2011, the petitioner was imposed with the punishment of compulsory retirement from service. Aggrieved by the punishment order of compulsory retirement, on 18.4.2011, the petitioner filed a department appeal. However, the authority rejected his appeal by order dated 11.8.2011. 3. Thereafter, on 16.8.2012, a show cause notice was issued to the petitioner to show the reasons as to why onethird pension should not be deducted for the alleged financial loss caused by him to the bank. The petitioner filed a detailed reply to the said notice. However, by order dated 25.10.2012, the respondent rejected the petitioner’s reply; the respondent directed that onethird of the pension, out of the twothird pension which has been paid to the petitioner, should be deducted. In terms of the order dated 25.10.2012, by order dated 31.12.2012, the petitioner is presently being paid only onethird of the pension, another onethird is being deducted towards the loss suffered by the bank and onethird stood reduced. Therefore, as the petitioner is aggrieved by the order dated 31.12.2012, he has filed the present petition before this Court. 4. In terms of the order dated 25.10.2012, by order dated 31.12.2012, the petitioner is presently being paid only onethird of the pension, another onethird is being deducted towards the loss suffered by the bank and onethird stood reduced. Therefore, as the petitioner is aggrieved by the order dated 31.12.2012, he has filed the present petition before this Court. 4. Mr.M.N.Prasanna, the learned counsel for the petitioner, has raised the following contentions before this Court : firstly, Regulation 33 of the Syndicate Bank (Employees’) Pension Regulations, 1995 (`the Regulations’ for short), deals with compulsory retirement pension. According to Regulation 33 of the Regulations, an employee who has compulsorily retired by way of penalty, may be granted either full pension or not less than twothird of the pension. Thus, according to the learned counsel, there cannot be any deduction that would reduce the pension to less than two – third of the pension required to be paid to an employee. Secondly, Chapter IX of the Regulations deals with the general conditions applicable to the payment of pension. Regulation 43 of the Regulations deals with withholding or withdrawal of the pension. Even according to the proviso attached to Regulation 43 of the Regulations, a part of pension which is to be withheld or withdrawn, the amount of such pension shall not be reduced below the minimum pension per mensem payable under the Regulations. Therefore, according to the learned counsel, twothird of the pension should not be deducted from the petitioner’s pension as it would reduce his pension to only onethird, which is far below the minimum pension as prescribed by Regulation 33 of the Regulations. Thirdly, since the respondents have claimed that they have exercised their power of reducing the pension to onethird, by relying on Regulation 48 of the Regulations, the learned counsel has argued extensively with regard to the said provision. While interpreting the said Regulation, the learned counsel has pleaded that it applies only to those departmental enquiries which were initiated prior to the retirement of the person and the enquiry has to be continued after the retirement of the employee. In such a case, the Bank is permitted to recover the loss. However, in the present case, since the petitioner was punished prior to his retirement, Regulation 48 of the Regulations would not permit the bank to recover any loss from the petitioner. In such a case, the Bank is permitted to recover the loss. However, in the present case, since the petitioner was punished prior to his retirement, Regulation 48 of the Regulations would not permit the bank to recover any loss from the petitioner. According to the learned counsel, the petitioner was due to retire on 31.8.2012, yet the petitioner was compulsorily retired on 7.2.2011 by way of punishment. Thus, the departmental enquiry ended prior to the petitioner’s retirement. Therefore, the power under Regulation 48 of the Regulations could not have been invoked by the respondent by further reducing the petitioner’s pension by onethird. Fourthly that, even if such power could be invoked, a finding had to be given that the petitioner had committed “grave misconduct”. However, in the present case, there is no finding that the petitioner has committed grave misconduct. Therefore, the power under Regulation 48 of the Regulations could not have been invoked by the Bank. In order to buttress this plea, the learned counsel has relied on the case of H.L.Gulati v. Union of India & others [2015 AIR SCW 2431]. 5. On the other hand, Mr.K.Radhesh Prabhu, the learned counsel for respondentBank, has pleaded that Regulation 33 of the Regulations merely quantifies the pension which is payable to an employee after he has been subjected to a penalty of compulsory retirement. Under the said Regulation, the employer is free to either pay the full pension, or to reduce it by onethird. But, while quantifying the pension, it cannot be quantified less than twothird. Secondly, after such quantification, the Bank is granted liberty to recover the pecuniary loss caused to the bank by the misconduct committed by the employee. Under Regulation 48 of the Regulations, a legal fiction is merely created, that in case departmental proceedings were initiated prior to the retirement, then, the fact that the employee has retired during the pendency of the departmental enquiry would not bring the departmental enquiry to a grinding halt. But, it could continue even after his retirement. According to the learned counsel, the interpretation given by the learned counsel for the petitioner would lead to anomalous situations. For, if Regulation 48 of the Regulations could be invoked only in those circumstances where the departmental enquiry continues beyond the postretiral period, then, even to recover the loss would be applicable only to these cases. According to the learned counsel, the interpretation given by the learned counsel for the petitioner would lead to anomalous situations. For, if Regulation 48 of the Regulations could be invoked only in those circumstances where the departmental enquiry continues beyond the postretiral period, then, even to recover the loss would be applicable only to these cases. If this interpretation were permitted, it would prevent the Bank from recovering the loss from those who have been punished prior to their retirement. This would prevent the Bank from recovering the loss in large number of cases. To prevent the recovery of loss cannot be the intention behind Regulation 48 of the Regulations. Therefore, the interpretation being given by the learned counsel for the petitioner is misplaced. According to the learned counsel for the respondent, Regulation 48 of the Regulations not only bestows the right of recovery, but further permits the Bank to recover the amount not exceeding onethird of the pension admissible on the date of retirement of the employee. It is for this reason that in the impugned order the Bank has reduced the pension only by onethird, i.e., the amount being recovered for the loss suffered by the Bank. Thirdly, a bare perusal of the charges levelled against the petitioner would show the gravity of the misconduct. For, due to the misconduct committed by the petitioner, the bank had lost crores of rupees. Thus, the gravity of the misconduct is implicit in the case. Fourthly, since the case of H.L.Gulati (supra) is distinguishable on the factual matrix itself, it does not come to the rescue of the petitioner. According to the learned counsel, in that case, the misconduct was partially and marginally proved, whereas, in the present case, the misconduct has been proved entirely. Therefore, even if the word `grave misconduct’ has not been used while imposing the penalty of compulsory retirement or while passing the impugned order, it would not deny the Bank the right to invoke its power under Regulation 48 of the Regulations. Thus, according to the learned counsel, the Bank has rightly invoked its powers under Regulation 48 of the Regulations. Hence, the impugned order is legally valid. 6. Heard the learned counsel for the parties and perused the impugned order. Regulation 33 of the Regulations is as under : 33. Thus, according to the learned counsel, the Bank has rightly invoked its powers under Regulation 48 of the Regulations. Hence, the impugned order is legally valid. 6. Heard the learned counsel for the parties and perused the impugned order. Regulation 33 of the Regulations is as under : 33. Compulsory Retirement Pension: 1) An employee compulsorily retired from service as a penalty on or after 1st day of November, 1993 in term of Syndicate Bank Officer Employees’ (Discipline and Appeal) Regulations 1976 or awards/settlements may be granted by the Authority higher than the Authority competent to impose such penalty, pension at a rate not less than two thirds and not more than full pension admissible to him on the date of his compulsory retirement if otherwise he was entitled to such pension on superannuation on that date.” 2) Whenever in the case of a bank employee the Competent Authority passes an order (whether original; appellate or in exercise of power of reviews) awarding a pension less than the full compensation pension admissible under these regulations, the Board of Directors shall be consulted before such order is passed. 3) A pension granted or awarded under Subregulation (1) or as the case may be, under Subregulation (2), shall not be less than the amount of rupees three hundred and seventy five per mensem. Regulation 48 of the Regulations is as under: 48. Recovery of Pecuniary loss caused to the Bank: 1) The Competent Authority may withhold or withdraw a pension or a part thereof, whether permanently or for a specified period, and order recovery from pension of the whole or part of any pecuniary loss caused to the Bank if in any departmental or judicial proceedings the pensioner is found guilty of grave misconduct or negligence or criminal breach of trust or forgery or acts done fraudulently during the period of his service. Provided that the Board shall be consulted before any final orders are passed; Provided further that departmental proceedings, if instituted while the employee was in service, shall after the retirement of the employee, be deemed to be proceedings under these regulations and shall be continued and concluded by the authority by which they were commenced in the same manner as if the employee had continued in service. 2) No departmental proceedings, if not instituted while the employee was in service, shall be instituted in respect of an event which took place more than four years before such institution: Provided that the disciplinary proceedings so instituted shall be in accordance with the procedure applicable to disciplinary proceedings in relation to the employee during the period of his service. 3) Where the Competent Authority orders recovery of pecuniary loss from the pension, the recovery shall not ordinarily be made at a rate exceeding one third of the pension admissible on the date of retirement of the employee: Provided that where a part of pension is withheld or withdrawn, the amount of pension drawn by a pensioner shall not be less than the minimum pension payable under these regulations”. 7. A bare perusal of Regulation 33 of the Regulations clearly reveals that it deals with pension which needs to be quantified after the penalty of compulsory retirement has been imposed on an employee. According to Regulation 33(1) of the Regulations, an authority higher than the authority competent to impose such penalty, may grant pension at a rate not less than twothirds and not more than full pension admissible to such an employee. Therefore, according to Regulation 33 of the Regulations, the pension payable to the employee should be quantified at a minimum of twothird of the pension admissible to him or maximum to a full pension. 8. Having quantified the pension, three moot questions would arise: i) as to whether the Bank could recover the losses suffered by it due to the misconduct of the employee or not? ii) If so, the extent to which the recovery could be made, and most importantly, iii) whether the recovery can be ordered in those cases where the penalty of compulsory retirement was imposed prior to the retirement of the employee or not? These questions entail the interpretation of Regulation 48 of the Regulations. A bare perusal of Regulation 48 (1) reveals that it deals with two different circumstances, firstly, all those cases where the penalty of withholding or withdrawing of pension has been imposed; secondly, where recovery needs to be made from pension in order to recover the whole or part of the pecuniary loss caused to the bank. A bare perusal of Regulation 48 (1) reveals that it deals with two different circumstances, firstly, all those cases where the penalty of withholding or withdrawing of pension has been imposed; secondly, where recovery needs to be made from pension in order to recover the whole or part of the pecuniary loss caused to the bank. The power of recovery is granted in case the pensioner is found guilty of grave misconduct, or negligence, or criminal breach of trust, or forgery, or acts done fraudulently during the period of his service. The first proviso makes it imperative that before a recovery can be ordered, the Board has to be consulted. The second proviso is an enabling provision. It creates a legal fiction that in case the departmental proceedings were initiated while the employee was in service, but during the pendency of the departmental proceedings, the employee has retired, then the said departmental proceeding is deemed to continue and can be concluded by the authority as though the employee has continued in his service. Thus, this proviso merely creates a legal fiction, and nothing more than that. Further SubRegulation (3) limits the extent of recovery by stipulating that the said recovery shall not be less than the minimum pension payable/admissible on the date of retirement of the employee. Therefore, the upper limits ordinarily would be onethird of the pension admissible. 9. Considering the title of the Regulation that it deals with “recovery of pecuniary loss caused to the bank,” considering the ambit and scope of the Regulation that it bestows a power of recovery upon the bank and that the power is limited to the extent of deducting onethird of the pension of an employee, the argument raised by the learned counsel for the petitioner are clearly untenable. Merely because the second proviso to Regulation 48 (1) of the Regulations enables the bank to continue the departmental enquiry even after the retirement, it cannot be argued that the entire Regulation 48 is limited to only those cases where an employee has retired during the pendency of the departmental enquiry. To accept this contention would to lead to absurd results: firstly, it would mean that the proviso overrides the Regulation 48, subregulation (1), of the Regulations. It would also mean that the said proviso controls the entire provision. To accept this contention would to lead to absurd results: firstly, it would mean that the proviso overrides the Regulation 48, subregulation (1), of the Regulations. It would also mean that the said proviso controls the entire provision. To give such an extended interpretation to the proviso would be to violate the rules of interpretation itself. For a proviso is an exception to the main provision; the exception cannot be paramount to the rule itself. Secondly, if the power to recover was limited to only those cases where the departmental enquiry continues even after the retirement, it would ipso facto limit the power of recovery of the Bank in respect of those employees who have been subjected to a penalty prior to the retirement. This certainly would lead to a very analomous situation; the power of the bank will certainly stand curtailed. Under such an interpretation the bank cannot recover any amount from an employee who has been punished prior to his retirement. Thirdly, it would lead to a dangerous trend that in order to recover the loss, the Bank will continue the departmental enquiry endlessly till the delinquent employee retires. Any interpretation of a provision which leads to absurdity situation has to be avoided by the Court. Therefore, the interpretation placed by the learned counsel for the petitioner cannot be accepted. 10. The learned counsel for the petitioner has relied on the case of H.L.Gulati (supra) in order to argue that there is no evidence in the present case that ’a grave misconduct’ had been committed by the petitioner. According to him, unless and until “grave misconduct” is proven, the power under Regulation 48 of the Regulations could not be invoked. A bare perusal of the case of H.L.Gulati (supra) reveals that, in that case, the charges levelled against Mr.H.L.Gulati were either partially or marginally proved. Therefore, the delinquency that was established was that of “negligence” and “not of misconduct”. Hence, the conclusion drawn was that there has been “a grave negligence”, but not “grave misconduct”. Thus, the Apex Court was of the opinion that when such a finding has been given by the Enquiry Officer, the Disciplinary Authority could not have concluded that Mr.H.L.Gulati was guilty of “grave misconduct”. Hence, the conclusion drawn was that there has been “a grave negligence”, but not “grave misconduct”. Thus, the Apex Court was of the opinion that when such a finding has been given by the Enquiry Officer, the Disciplinary Authority could not have concluded that Mr.H.L.Gulati was guilty of “grave misconduct”. However, in the present case, the three charges which were levelled against the petitioner which are as under : “ Article of Charge No.1 :You were functioning as Asst.General Manager at out CAO, Kolkata during the period from 22.12.2008 till you were placed under suspension vide order dated 20.03.2009. Prior to that you were functioning as Asst.General Manager at out Banjara Hills Branch, Hyderabad during the period from 02.06.2007 to 24.11.2008. While functioning in your above position, you colluded with one Sri E.Satish Kumar Reddy, Director of M/s.Heritage Mines Pvt.Ltd., and : (a)recommended for renewal and enhancement of credit facilities for substantial amount to M/s.Heritage Mines Pvt.Ltd without ensuring proper presaction appraisal, verifying the nature of business/ antecedents of the Directors of the company and despite their past unsatisfactory dealings and by abusing your official position facilitated Sri E.Satish Kumar Reddy/company to avail finance from the Bank to a nonexisting unit. In the process, you facilitated Sri E.Satish Kumar Reddy to siphon off funds of the Bank to the extent of Rs.1148.08 lakh by perpetrating fraud on the Bank and thereby exposed the Bank to risk of loss to that extent. (b)And discounted cheques for the company and allowed debit balance in their Current A/c beyond the powers delegated to you without obtaining prior permission/ approval from the Competent Authority and thereby colluded with Sri E.Satish Kumar Reddy and unduly accommodated the above party/company at the cost of the Bank. (b)And discounted cheques for the company and allowed debit balance in their Current A/c beyond the powers delegated to you without obtaining prior permission/ approval from the Competent Authority and thereby colluded with Sri E.Satish Kumar Reddy and unduly accommodated the above party/company at the cost of the Bank. Article of Charge No.2 : While functioning in your position as Asst.General Manager at Banjara Hills Branch, Hyderabad, during the period between 02.06.2007 and 24.11.2008, you: (a) caused release of Rs.266.43 lakh out of the term loan for Rs.1355.00 lakh sanctioned to M/s.Metro Silicon Pvt.Ltd. without ensuring end utilization and (b) released Rs.700.00 lakh of Fixed Deposit obtained as collateral security for the said loan despite the fact that RO (City), Hyderabad had declined company’s request for substitution of the said security with mortgage of property and thus not only to comply with the terms and conditions of sanction but also colluded with the borrower and acted in an unauthorized manner and unduly accommodated the party at Bank’s cost and exposed the Bank to risk of loss to the extent of Rs.1494.00 lakh. Article of Charge No.3 : While functioning in your position as Asst.General Manager at Banjara Hills Branch, Hyderabad during the period between 02.06.2007 and 24.11.2008, you allowed debit balance in the Current Accounts of 5 fictitious proprietorship concerns of Sri K.Sridhar Reddy, an associate/employee of Sri E.Satish Kumar Reddy, who was the ultimate beneficiary, for an amount aggregating to Rs.174.91 lakh which was beyond the authority delegated to you, without obtaining prior permission/approval from the Competent Authority and failed to recover the said debit balance. Thus, by acting in an unauthorized manner/beyond the authority vested with you, you colluded with Sri E.Satish Kumar Reddy and unduly accommodated him by exposing the Bank to risk of financial loss to the extent of Rs.136.15 lakh as the amount has stuck to the books of the Bank. The details of the above and the irregularities committed by you are more fully explained in the Statement of Imputations of Misconduct on your part appended here below. The details of the above and the irregularities committed by you are more fully explained in the Statement of Imputations of Misconduct on your part appended here below. By your above acts, you failed to take all possible steps to ensure and protect the interest of the Bank and discharge your duties with utmost integrity, honesty, devotion and diligence and acted in a manner unbecoming of an Officer Employee and thereby contravened Reg.No.3(1) read with Regulation No.24 of Syndicate Bank Officer Employees’ (Conduct) Regulations, 1976. 11. The finding of the Enquiry Officer was that the misconduct has been proved in its entirety. Therefore, even if the word `grave misconduct’ has not been used, it would hardly make any difference. Considering the fact that the Bank had suffered great loss, considering the fact that the misconduct was proved in its entirety, the same clearly indicates that “grave misconduct” had been committed by the petitioner. In fact, keeping in view the grave misconduct, the petitioner was imposed with a penalty short of termination and dismissal. In deed, if the petitioner had not committed a grave misconduct, there was no reason to punish him with a major penalty. Therefore, the learned counsel for the petitioner is not justified in claiming that there is no evidence to show that any “grave misconduct” had been committed by the petitioner. Hence, in the absence of grave misconduct, the power under Regulation 48 of the Regulations could not have been invoked by the bank. The “grave misconduct” of the petitioner is writ large. Hence, the respondentbank was justified in invoking its powers under Regulation 48 of the Regulations. For the reasons stated above, this Court does not find any illegality in the impugned order. This Petition, being devoid of any merit, is hereby dismissed.