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2018 DIGILAW 402 (CAL)

Ramesh Singhal v. United Bank of India

2018-06-06

RAJASEKHAR MANTHA

body2018
JUDGMENT : Rajasekhar Mantha, J. 1. The writ petitioner is aggrieved by an order passed by the Disciplinary Authority on 31st July, 2015 as confirmed by the Appellate Authority on the 10th February, 2016. 2. Prior to institution of the instant application, the writ petitioner approached Delhi High Court on the self same cause of action in W.P. (C) No. 10064 of 2016. The said writ petition was allowed to be withdrawn with liberty to approach the appropriate forum, hence the instant writ application. 3. The facts of the case are that on the 4th of November, 1977 the writ petitioner joined the service of the United Bank of India (Bank) as a Clerk. Sometime around the 20th April, 2010 the writ petitioner was posted on promotion as Deputy General Manager, T.E.G. Scale (VI) of the Bank’s Southern Regional Office at Chennai. The writ petitioner thereupon came to be the Head of the Southern Region Zone of the United Bank of India. 4. About 22 days prior thereto i.e. on the 8th of April, 2010 the predecessor of the writ petitioner had sanctioned various credit facilities to the extent of Rs. 30 Crores inter-alia against a collateral security of land value at about 58 Crores, to one Ignis Technology Solutions Private Limited, Bangalore. The said loan was to be disbursed from the Bannerghata Branch of the Bank of Bangalore. 5. The said loan account was declared as a Non Performing Asset (NPA) on the 30th June, 2011. A show-cause-notice dated 2nd December, 2011 came to be issued to the petitioner for acts and omissions leading to the said account becoming NPA. The writ petitioner was also show-caused with regard to another account called Shivam Marketing to which credit facilities to the extent of 3 Crores was disbursed in November, 2010. The said loan was disbursed from the Mount Branch of the Bank at Chennai. In March, 2013, the writ petitioner dealt with a compromise proposal of one M/s. Vault Consulting Union, which was operating under the Bangalore Cantonment Branch of the Bank. The said proposed compromise for the said Shivam Marketing account was handled by the writ petitioner while he was posted at the Head Quarters of the Bank at Kolkata. 6. On the 3rd October, 2013 a Charge sheet was issued to the petitioner for misconduct, relating to the aforesaid Ignis Technologies account. The said proposed compromise for the said Shivam Marketing account was handled by the writ petitioner while he was posted at the Head Quarters of the Bank at Kolkata. 6. On the 3rd October, 2013 a Charge sheet was issued to the petitioner for misconduct, relating to the aforesaid Ignis Technologies account. On the 17th January 2014 an addendum to the original charge sheet was issued to the petitioner complaining of misconduct, in connection with the aforesaid Shivam Marketing and Vault Consulting Union, accounts. 7. The Articles of Charge in the two Charge Sheets are set out herein below: Articles of charge in the Charge Sheet dated 3rd October, 2013. During the tenure of your service as Deputy General Manager & Chief Regional Manager, Southern Region from 29.04.2010 to 07.05.2011, you had committed the under mentioned irregular acts; thereby failed to take all possible steps to ensure and protect the interest of the Bank and discharge your duties with utmost integrity, devotion and diligence, in contravention of Regulations 3(1) and 3(3) of United Bank of India Officer Employees’ (Conduct) Regulations, 1976; constituting misconduct in terms of Regulation 24 of the said Regulations. A. General Manager, Southern Region, had sanctioned a loan of Rs. 30.00 crore (Term loan of Rs. 25.00 crore and working capital limit of Rs. 5.00 crore) to M/s Ignis Technology Solutions (P) Ltd. Vide his note dated 08.04.2010, to be disbursed through Bank’s Bannerghatta Branch. Sanction terms stipulated that the term loan was to be additionally secured through Equitable Mortgage of landed property located at 23-1B, Ward No. 192, Begur, Chikkathoguru, Bangalore, valued at Rs. 57.87 crore as per valuation report dated 27.03.2010, proposed to be purchased by the Company at a price of Rs. 9.68 crore from A. Murthy and Smt. Lakshamma, utilising the Company’s cash balances and through fresh equity infusion. Subsequently, the Company vide its letters No. IGNIS/UBI/2 dated 30.07.2010 and IGNIS/UBI/5 dated 14.08.2010 informed that the aforesaid property was scheduled to be acquired by the Government and offered to substitute the same through another property located at Aradeshanahalli, Kundana Hobli, Devanahalli Taluk, Bangalore Rural District, valued at Rs. 58.44 crore, proposed to be purchased at a price of Rs. 5/6 crore from the Company’s cash balances and through fresh equity infusion. 58.44 crore, proposed to be purchased at a price of Rs. 5/6 crore from the Company’s cash balances and through fresh equity infusion. You had recommended the proposal for substitution of proposed additional securities of M/s Ignis Technology Solutions Pvt Ltd. to Head Office for approval. While recommending the proposal you had committed the under noted irregular acts:- (a) You did not obtain documentary evidence in support of the Company’s contention that the property was acquired/due to be acquired by the Government. (b) You did not take note/cognizance of the facts stated by the Company that the market value of the property, assessed at Rs. 58.44 crore, was proposed to be purchased at Rs. 5/6 crore. Despite such wide variation in purchase consideration and assessed value, the proposal was accepted by you without causing an independent verification and assessing the value of the property, thereby contravening Bank’s Circular No. CPPMI/ADV/31/OM- 0102/08-09 dated 21.05.2008 in this regard. (c) You have not highlighted the discrepancies as stated in Pt. (b) above while recommending the proposal to Head Office, thereby resulting in suppression of facts. (d) You had failed to ensure pre-sanction/pre-disbursement inspection of the property proposed to be mortgaged in substitution of originally proposed one, by any officer of Regional Office, prior to your recommending the proposal of property substitution to Head Office for sanction. B. In response to the application dated 26.09.2010 of M/s Ignis Technology Solutions Pvt. Ltd. originally addressed to the Branch Manager, Bannerghata Branch, you had issued an order dated 28.09.2010 approving transfer of loan proposal from Bannerghata Branch to Electronic City Branch without insisting and ensuring compliance of all terms of sanction by the Company inspite of prior intimation by Branch Manager, Bannerghata Branch informing of non compliance of sanction terms by the Company. C. You had failed to monitor the account by ensuring submission of vital reports/returns like Monthly Control Return and monthly Credit Disbursement Monitoring Sheet. The loan account has become NPA on 30.06.2011 and had to be written off on 20.06.2012 exposing the Bank to a financial loss of Rs. 29,86,66,499.00 besides applicable interest thereon. Articles of charge in the addendum Charge Sheet dated 17th January, 2014 1. During your tenure as Deputy General Manager and Chief Regional Manager from 29.04.2010 to 07.05.2011 at Bank’s Southern Region, you had sanctioned a credit limit of Rs. 300 lac (CC Rs.260 lac & BG Rs. 29,86,66,499.00 besides applicable interest thereon. Articles of charge in the addendum Charge Sheet dated 17th January, 2014 1. During your tenure as Deputy General Manager and Chief Regional Manager from 29.04.2010 to 07.05.2011 at Bank’s Southern Region, you had sanctioned a credit limit of Rs. 300 lac (CC Rs.260 lac & BG Rs. 40 lac) to M/s Shivam Marketing (proprietor Sri K. Ganapathy) on 01.11.2010 to be availed through Bank’s Mount Road Branch. While doing so, you had committed the under noted irregularities. (i) Pre-sanction inspection of the unit was not conducted by any officer of the Regional Office. (ii) Date of pre-sanction inspection of the unit by the branch, as recorded in the process note cannot be corroborated through any such report in loan file. (iii) You had accepted an unrealistic jump in growth in sales from 28.31% to 90% and subsequent drop in projected sales to 20% in the subsequent year as submitted by the borrower company, without any acceptable justification for considering the same, while sanctioning the loan. (iv) You have not ascertained and examined in the process note the relevant factors for PBT remaining constant at Rs. 4.97 lac for three consecutive years, but merely relied on the figures furnished in the Balance Sheet provided by the borrower. (v) You have accepted the valuation report on landed property proposed to be mortgaged as additional security, submitted by a valuer who was not in the Bank’s approved list of valuers. (vi) You have not ensured submission of compliance report on all observations made on the Discretionary Power statement submitted by you to the noting authority at Head Office. (vii) You have not ensured compliance of pre-disbursement covenants by the Branch before commencement of disbursement. The account turned NPA on 29.10.2012 and was subsequently categorized as loss asset from 31.12.2013 exposing the Bank to a financial loss of Rs. 2,56,29,198.25 plus applicable interest thereon. 2. During your tenure as Deputy General Manager at Bank’s Recovery Department at Head Office from 07.05.2012 to 06.05.2013, you had processed and put up a compromise proposal for approval to MCBOD, of Vault Consulting Union with Bank’s Bangalore Cantonment Branch for Rs. 3.50 crore against Bank’s exposure of Rs. 2,56,29,198.25 plus applicable interest thereon. 2. During your tenure as Deputy General Manager at Bank’s Recovery Department at Head Office from 07.05.2012 to 06.05.2013, you had processed and put up a compromise proposal for approval to MCBOD, of Vault Consulting Union with Bank’s Bangalore Cantonment Branch for Rs. 3.50 crore against Bank’s exposure of Rs. 3.89 crore while placing the said proposal for approval of MCBOD you had:- (a) Failed to pass on the information of the other group company, Vault Information Technologies Pvt. Ltd. and that it had also been declared as fraud account. (b) Incorporated an illogical rationale in the process note for accepting the offer of the borrower which was less than the reserve price of Rs. 400 crore published in the sale notice under SARFAESI Act, which was not backed by any such recommendation by Bangalore Cantonment Branch or Bangalore Region. (c) Given unduly low scores under modular approach to make the borrower’s proposal for One Time Settlement complaint with Bank’s Recovery Policy. (d) Failed to inform MCBOD that Mr. Raj Kumar Kothari had filed a suit with the DRT against Bank’s sale notice, and in the note placed before MCBOD you had also failed to discuss the likely impact on Bank’s claim due to filing of such suit. (e) Failed to communicate the decision of the MCBOD for revaluation of the property mortgaged before closure of the account through compromise settlement. Thus, acceptance of the aforesaid compromise proposal as prepared by you and placed before the MCBOD, has caused financial loss of over Rs. 39.21 lac to the bank. B. On 5th August 09, M/s. Vault Consulting Union was sanctioned a term loan limit of Rs. 5.00 crore (A/c No. 0884300024879) for purchase of software from an overseas vendor. The loan was additionally secured by equitable mortgage of property at 49, K.R. Road, Bangalore valued Rs. 5.02 crore by M/s S.S. Industrial Consultants on 21st July, 2009 and personal guarantee of Sri Prasanth Kumar, proprietor of the company. The unit is not in existence. It was classified as nonperforming asset (NPA) on 30th Sept 12. Subsequently the account was reported as fraud to RBI on 27th December, 2012 along with its group company M/s Vault Information Technology Pvt. Ltd. where Sri Prasanth Kumar was the CEO and major stake holder. The unit is not in existence. It was classified as nonperforming asset (NPA) on 30th Sept 12. Subsequently the account was reported as fraud to RBI on 27th December, 2012 along with its group company M/s Vault Information Technology Pvt. Ltd. where Sri Prasanth Kumar was the CEO and major stake holder. Bank’s guidelines, which inter-alia, permit compromise settlement on any fraud account after initiating criminal proceedings and after taking into account the status of other group concerns were ignored while considering the aforesaid compromise proposal. In their recommendations to HO, Bangalore Region had informed that (a) a term loan of Rs. 5.00 cr was sanctioned to Vault Information Technologies Pvt. Ltd. where Mr. Prasanth Kumar is major share holder and (b) both the accounts were reported as fraud by Head Office to RBI vide fraud No. UDB1204-0023 and UDB1204- 0024. But, the above facts were not mentioned in the office note placed by you before MCBOD. The rationale for selling the prime property for amount less than the reserve price (which was fixed at Rs. 4.00 cr. was mentioned under the head “justification for accepting the proposal” in page 3 under item 26(e) and under the head “head office observation” in page no 6, para VIII of the same note as “it is our experience that swelling the residential property at a price of Rs. 4.00 cr. under SARFAESI Act is very difficult.” While no such justification was put forward by the branch, who had stated that “we have come out with a sale notice against the property where bid can come within 02.04.2013.” Region had stated in their processing note dated 22.03.2013 that “auction date was fixed for 03.04.2013....some enquiries have been made, but we are yet to receive any bid for the above property.” Thus illogical justifications were put forward by you to facilitate approval of the proposal by MCBOD. While calculating MRA under modular approach, 8 points were given under the head “realizable value of security” taking the property as not easily marketable where as the property being in a prime location is easily marketable and should have attracted 10 points. Therefore, under modular approach, the proposal should have scored 15 points instead of 13 and resultantly, the MRA should have been the outstanding balance of Rs. 389.16 lac instead of 70% of ledger balance as noted by you. Therefore, under modular approach, the proposal should have scored 15 points instead of 13 and resultantly, the MRA should have been the outstanding balance of Rs. 389.16 lac instead of 70% of ledger balance as noted by you. Thus, unduly low scores were awarded at the time of calculating the MRA in order to make the proposal complaint to bank’s policy/guidelines and extend undue financial benefits to the borrower. The Regional Office in its recommendation had reported that Mr. Raj Kumar Kothari, the proposed buyer had filed a suit with DRT to be heard on 27.03.2013. The ground of the suit and its likely impact were neither ascertained nor was this information furnished to the MCBOD while mentioning the name of Sri Kothari as the buyer. While approving the proposal, the MCBOD had “directed to organize a visit and to send a valuer for ascertaining the actual valuation.” But, the above direction of the competent authority to” send a valuer for ascertaining the actual valuation” was not communicated by you to Bangalore Regional Office or Bangalore Cantonment Branch and therefore it was not complied before allowing closure of the account as per settled terms. Thus, acceptance of the aforesaid compromise proposal has not only caused financial loss of over Rs. 39.16 lac to the bank, the decision of the MCBOD was also adversely influenced by providing faulty/incomplete information/data. Thus, the irregularities committed by you while performing your duties as Deputy General Manager and Chief Regional Manager at Southern Regional Office and as Deputy General Manager at Recovery Department at Head Office, have inflicted a financial loss on the Bank, aggregating Rs. 2.95 crore plus interest applicable thereon. 8. The writ petitioner submitted a detailed and comprehensive reply to the charge sheet vide his letter dated 5th March, 2014. The management relied upon 96 documents and 3 witnesses were examined in support of the charge sheet. The writ petitioner relied upon 19 documents and 2 witnesses were produced in defense. 9. On the 25th of October, 2015 the Inquiry Officer submitted a detailed Inquiry Report holding that all charges except Charge C of the Charge sheet dated 03.10.2013 to be proved. Charge A-6 and B(e) of the charge sheet dated 7th January, 2014 was held to be partially proved. 10. The writ petitioner submitted a detailed representation against the Inquiry Report dealing with each and every finding of the Inquiry Officer. Charge A-6 and B(e) of the charge sheet dated 7th January, 2014 was held to be partially proved. 10. The writ petitioner submitted a detailed representation against the Inquiry Report dealing with each and every finding of the Inquiry Officer. Violation of natural justice and or rules was not alleged by the writ petitioner. He had assailed, in about 70 pages, the findings of the Inquiry Officer on the merits. 11. By an order dated 31st July, 2015, the Disciplinary Authority after dealing with the findings of the Inquiry Officer and the detailed representation of the writ petitioner, imposed a penalty of “Removal from service” on the petitioner. The writ petitioner was not allowed any terminal benefits other than his own contribution to Provident Fund. 12. The writ petitioner preferred an appeal against the order of punishment dated 31st July, 2015 before the Appellate Authority. In the said appeal writ petitioner for the first time alleged violation of Rules 17 of the United Bank of India Officer Employees’ (Discipline and Appeal) Regulations 1976. The Appellate Authority by an order dated 10th February, 2016 confirmed the penalty of removal from service of the writ petitioner passed by the Disciplinary Authority. 13. Mr. Soumya Mazumdar and Ms. Tamali Wad, Advocates, urged that the Inquiry is vitiated by reason of non-compliance of Regulation 6(17) of the aforesaid regulation of 1976. He submitted that since the writ petitioner did not examine himself in the enquiry, the Inquiry Officer was mandatorily required to confront the writ petitioner with the circumstances appearing against him in the evidence, prior to its closure. 14. According to the petitioner by reason of such non-compliance of Regulation 6(17) which was mandatory, the entire Inquiry is liable to be set aside. To deal with the argument of the writ petitioner Regulations is 6(17) of the aforesaid 1976 Regulation set out herein-below. “6(17) The Inquiring Authority may, after the officer employee closes his evidence, and shall, if the officer employee has not got himself examined generally question him on the circumstances appearing against him in the evidence for the purpose of enabling the officer employee to explain any circumstances appearing in the evidence against him.” 15. The writ petitioner would argue that a plain reading of the Regulation and use of the expression “shall” therein, indicates that the same is mandatory, non-compliance whereof would per-se vitiate the Inquiry. The writ petitioner would argue that a plain reading of the Regulation and use of the expression “shall” therein, indicates that the same is mandatory, non-compliance whereof would per-se vitiate the Inquiry. In support of his argument, the petitioner relied upon the decision of a Single Bench of this Court in Gopal Chandra Barik vs. Punjab National Bank and Others, 1999 (2) SLR 517, the petitioner relies upon Paragraph 17 of the said decision i.e. set out herein below. 17. The question, however, which arises for consideration is as to whether the Inquiry proceedings have been conducted fairly and in accordance with law, Before dealing with the said question, it is fruitful to note the dicta of Frankfurtar, J. in Vitarelli vs. Seaton, (1859) 359 U.S. 535 which is in the following terms:- “An executive agency must be rigorously held to the standards by which it professes its action to be judged. Accordingly, if dismissal from employment is based on a defined procedure, even though generous beyond the requirements that bind such agency, that procedure must be scrupulously observed.....This judicially evolved rule of administrative law is now firmly established and, it I may add, rightly so. He that takes the procedural sword shall perish with the sword.” However, that does not mean that even a slight deviation on the part of the Inquiry Officer in scrupulously following any provision of the rules as also if delinquent officer had not been prejudiced, in the opinion of this court, shall not vitiated the inquiry proceeding in its entirety. Keeping in view the aforementioned legal principle, the questions raised by Mr. Dutta may be considered. The Presenting Officer was required to examine the witnesses in terms of clause 13 of the Regulation 6 and after cross-examination he was also entitled to re-examine them. The Inquiry Officer was also entitled to allow the Presenting Officer to adduce additional evidence. Thereafter officer employee was required to produce his evidence. Dutta may be considered. The Presenting Officer was required to examine the witnesses in terms of clause 13 of the Regulation 6 and after cross-examination he was also entitled to re-examine them. The Inquiry Officer was also entitled to allow the Presenting Officer to adduce additional evidence. Thereafter officer employee was required to produce his evidence. Clause 17 of Regulation and reads thus:- “6(17) The Inquiring Authority may, after the officer employee closes his evidence, and shall, if the officer employee has not got himself examined generally question him on the circumstances appearing against him in the evidence for the purpose of enabling the officer employee to explain any circumstances appearing in the evidence against him.” In the instant case, as indicated hereinbefore, immediately after the two witnesses were examined by the Presenting Officer the petitioner was asked to make his submission. The Inquiry Officer, therefore, had not generally questioned the petitioner on the circumstances appearing in the evidence against him. Admittedly in this case, the petitioner did not examine himself and thus it was obligatory on the part of the Inquiry Officer to comply with the said provision. The aforementioned provision although is procedural one, keeping in view the fact that the word, “shall” has been used therein and further in view of the object and purport which is sought to be achieved thereby this Court is of the opinion that the non-grant of such an opportunity to a delinquent employee would result in violation of a procedural safeguard afforded to him by statutory regulations framed under section 19 of the Banking Companies (Acquisition and Transfer of Undertaking) Act, 1970. The aforementioned provision cannot be followed as scrupulously as is required under section 313 of the Code of Criminal Procedure, but there cannot be any doubt whatsoever that the said provision ought to have been substantially complied with. The decision of the Apex Court in Sharad Birdhichand Sarda vs. State of Maharashtra, AIR 1984 SC 1622 having been rendered in connection with a criminal case cannot be apposite in disciplinary proceeding but in the opinion of this Court, it was obligatory on the part of the Inquiry Officer to comply with the said provision generally. Furthermore, a bare perusal of the Inquiry report clearly shows that the Inquiry Officer has failed to comply with the provision of Regulation 21(i)(ii) which read thus:- .............................. .............................. 16. Furthermore, a bare perusal of the Inquiry report clearly shows that the Inquiry Officer has failed to comply with the provision of Regulation 21(i)(ii) which read thus:- .............................. .............................. 16. Learned Counsel for the petitioner next relied upon the decision of the Hon’ble Supreme Court of India in Moni Shankar vs. Union of India and Another, 2008 (3) SCC 484 . In the said decision the Hon’ble Supreme Court held that Rule 9(21) of the Railway Servants (Discipline and Appeal) Rules, 1968 which is pari materia to the Rule 17 hereinabove was stated to have been violated. 17. The petitioner next relied upon the decision of the Hon’ble Supreme Court in the case of Ministry of Finance and Others vs. S.B. Ramesh, (1998) 3 SCC 227 . In the said decision the Hon’ble Supreme Court upheld a finding of the Central Administrative Tribunal that Rule 14(18) of CCS (CCA) Rules which is once again pari materia of Rule 6(17) set out hereinabove, has been violated. By reason of such violation the Inquiry against the Government Servant therein on a charge of bigamy was set aside. 18. Mr. Malay Basu, Learned Senior Advocate, appearing for the Bank contended that notwithstanding use of the expression ‘shall’ the noncompliance of Rule 6(17) would not ipso facto vitiate the Inquiry. He argued that in the Gopal Chandra Barik decision (supra), the Moni Shankar decision (supra) and also in the Ministry of Finance vs. Ramesh decision (supra), the decision of the Hon’ble Supreme Court in the case of State Bank of Patiala and Others vs. S.K. Sharma, (1996) 3 SCC 364 has not been considered. He therefore submits that the said decisions must be understood to have been rendered in their peculiar facts. He also submits that the decisions relied upon by the writ petitioner have not laid down any conclusive precedent. 19. Let us therefore examine the Gopal Barik decision (supra). In the facts of the said case, after issuance of the charge sheet and reply thereto by the delinquent, the Presenting Officer made elaborate submission for days on end. Only thereafter out of 4 witnesses, two were examined and that too in relation to charges 5 and 6. No witnesses are examined in respect of any other charges. The delinquent in the said case did not examine himself. 20. Only thereafter out of 4 witnesses, two were examined and that too in relation to charges 5 and 6. No witnesses are examined in respect of any other charges. The delinquent in the said case did not examine himself. 20. The Inquiry Officer also relied upon circulars and evidence that did not form part of the enquiry. The delinquent therein also admitted all the charges against him. Based on the above, the Court found that the delinquent ought to have been confronted with the circumstances appearing against him. 21. In the facts of the instant case, the writ petitioner has not at any point of time allege that he had not understood the charges or the evidence that has emerged in the Inquiry. He had also not contended as such before the Disciplinary Authority after the Inquiry report was submitted. He had also not sought a remand of the matter back to the Inquiry Officer for non-compliance of Rule 6(17). He has raised the issue of Rule 6(17) having been violated for the first time before the Appellate Authority. The writ petitioner has not indicated, any prejudice suffered by him by reason of non-compliance of Rule 6(17) nor has he contended even before the Appellate Authority that he had not understood the circumstances appearing against him in the evidence that emerged before the Inquiry Officer. The writ petitioner has also not shown, before the Disciplinary Authority, Appellate Authority or even before this Court as to how he has been prejudiced by non-compliance of Regulation 6(17). 22. While it is true that the Single Bench in the Gopal Chandra Barik case (Supra) has sought to hold, albeit feebly, that the expression ‘shall’ used in Regulation 6(17), is mandatory, in the same breath also held that the provision ought to have been substantially applied with. (Emphasis applied) 23. In the Gopal Chandra Barik Case (supra) the Court also stated that however, that does not mean that even a slight deviation on the part of the Inquiry Officer in scrupulously following any provision of the rules as also if delinquent officer had not been prejudiced, in the opinion of this court, shall not vitiated the inquiry proceeding in its entirety. (Emphasis supplied) 24. In the Context it would be appropriate to refer to the decision of the Supreme Court in the State Bank of Patiala decision (supra). (Emphasis supplied) 24. In the Context it would be appropriate to refer to the decision of the Supreme Court in the State Bank of Patiala decision (supra). At Paragraph 28 it was held as follows:- “28. The decisions cited above make one thing clear, viz. principles of natural justice cannot be to reduced to any hard and fast formulae. As said in Russell vs. Duke of Norfolk, 1949 (1) All ER 109 way back in 1949, these principle cannot be put in a straight-jacket. Their applicability depends upon the context and the facts and circumstances of each case. Mahender Singh Gill vs. Chief Election Commissioner, 1978 (2) SCR 272 . The objective is to ensure a fair hearing, a fair deal, to the person whose rights are going to be affected. A.K. Roy vs. Union of India, 1982 (1) SCC 271 and Swadeshi Cotton Mills vs. Union, 1981 (1) SCC 664 . As pointed out by this Court in A.K. Kraipak and Others vs. Union of India and Others, 1969 (2) SCC 262 , the dividing line between quasi-judicial function and administrative function [affecting the rights of a party] has become quite thin and almost indistinguishable a fact also emphasized by House of Lords in C.C.C.U. vs. Civil Service Union (supra) where the principles of natural justice and a fair hearing were treated as synonymous. Whichever the Cases it is from the standpoint of fair hearing - applying the test of prejudice, as it may be called - that any and every complaint of violation of the rule of audi alteram partem should be examined. Indeed, there may be situations where observance of the requirement of prior notice/no hearing may defeat the very proceeding - which may result in grave prejudice to public interest. It is for this reason that the rule of post-decisional hearing as a sufficient compliance with natural justice was evolved in some of the cases, e.g. Liberty Oil Mills vs. Union of India, 1984 (3) SCC 465 . There may also be cases where the public interest or the interests of the security of State or other similar considerations may make it inadvisable to observe the rule of audi alteram partem altogether [as in the case of situations contemplated by clauses (b) and (c) of the proviso to Article 311(2)] or to disclose the material on which a particular action is being taken. There may indeed be any number of varying situations which it is not possible for anyone to foresee. In our respectful opinion, the principles emerging from the decided cases can be stated in the following terms in relation to the disciplinary orders and enquiries: a distinction ought to be made between violation of the principle of natural justice, audi alteram partem, as such and violation of a facet of the said principle. In other words, distinction is between "no notice" and "no hearing" and "no adequate hearing" or to put it in different words "no opportunity" and "no adequate opportunity". To illustrate - take a case where the person is dismissed from service without hearing him altogether [as in Ridge vs. Baldwin]. It would be a case falling under the first category and the order of dismissal would be invalid or void, if one chooses to use that expression [Calvin vs. Carr]. But where the person is dismissed from service, say, without supplying him a copy of the Inquiry Officer's report [Managing Director, E.C.I.L. vs. B. Karunkar] or without affording him a due opportunity of cross-examining a witness [K.L. Tripathi] it would be a case falling in the latter category - violation of a facet of the said rule of natural justice - in which case, the validity of the order has to be tested on the touch-stone of prejudice, i.e. whether, all in all, the person concerned did nor did not have a fair hearing. It would not be correct - in the light of the above decisions to say that for any and every violation of a facet of natural justice or of a rule incorporating such facet, the order passed is altogether void and ought to be set aside without further enquiry. In our opinion, the approach and test adopted in B. Karunkar should govern all cases where the complaint is not that there was no hearing [no notice, no opportunity and no hearing] but one of not affording a proper hearing [i.e. adequate or a full hearing] or of violation of a procedural rule or requirement governing the enquiry; the complaint should be examined on the touch-stone of prejudice as aforesaid. 29. The matter can be looked at from the angle of justice or of natural justice also. 29. The matter can be looked at from the angle of justice or of natural justice also. The object of the principles of natural justice which are now understood as synonymous with the obligation to provide a fair hearing - is to ensure that justice is done, that there is no failure of justice and that every person whose rights are going to be affected by the proposed action gets a fair hearing. The said objective can be tested with reference to sub-clause (iii) concerned here. It says that copies of statements of witnesses should be furnished to the delinquent officer "not later than three days before the commencement of the examination of the witnesses by the Inquiring Authority." Now take a case - not the one before us - where the copies of statements are supplied only two days before the commencement of examination of witnesses instead of three days. The delinquent officer does not object; he does not say that two days are not sufficient for him to prepare himself for cross-examining the witnesses. The Inquiry is concluded and he is punished. Is the entire Inquiry and the punishment awarded to be set aside on the only ground that instead of three days before, the statements are supplied only two days before the commencement of the examination of witnesses? It is suggested by the appellate Court that sub-clause (iii) is mandatory since it uses the expression ‘shall’. Merely because the word ‘shall’ is used, it is not possible to agree that it is mandatory. We shall, however, assume it to be so for the purpose of this discussion. But then even a mandatory requirement can be waived by the person concerned if such mandatory provision is conceived in his interest and not in public interest, vide Dhirendra Nath Gorai V. Sudhir Chandra Ghosh. Subba Rao, J. for the Court, held: “Where the court acts without inherent jurisdiction, a party affected cannot by waiver confer jurisdiction on it which it has not. Where such jurisdiction is not wanting, a directory provision can obviously be waived. But a mandatory provision can only be waived if it is not conceived in the public interests, but in the interests of the party that waives it. In the present case the executing court had inherent jurisdiction to sell the property. We have assumed that Section 35 of the Act is a mandatory provision. But a mandatory provision can only be waived if it is not conceived in the public interests, but in the interests of the party that waives it. In the present case the executing court had inherent jurisdiction to sell the property. We have assumed that Section 35 of the Act is a mandatory provision. If so, the question is whether the said provision is conceived in the interests of the public or in the interests of the person affected by the non-observance of the provision. It is true that many provisions of the Act were conceived in the interests of the public, but the same cannot be said of Section 35 of the Act, which is really intended to protect the interests of a judgment-debtor and to see that a larger extent of his property than is necessary to discharge the debt is not sold. Many situations may be visualized when the judgment-debtor does not seek to take advantage of the benefit conferred on him under Section 35 of the Act.” 25. It follows from the above decisions that not every infraction or noncompliance of rule would vitiate quasi judicial proceedings. The consequences of such infraction must be tested on the prejudice principle i.e. as to how a delinquent is prejudiced by reason of such infraction. A presumption of violation of natural justice can only be drawn in the case of a no hearing no opportunity to defend, situation. The infraction of other provisions and rules must be tested from a prejudice point of view. Not every provision containing the expression “shall” violation whereof or non-compliance whereof, would amount to a violation of natural justice. It must be seen in the facts of each case as to whether the delinquent has been prejudiced or not. 26. Applying the above tests in the facts of the case, it is stated at the risk of repetition that the petitioner has not demonstrated either before the Inquiry Officer or the Disciplinary Authority or the Appellate Authority or even before this Court as to how he has been prejudiced by reason of non-compliance with Regulation 6(17). If there was any circumstance against the petitioner appearing in the Inquiry that the petitioner was not aware of, he could have contended as such before the Disciplinary Authority or Appellate Authority. He has not done so. If there was any circumstance against the petitioner appearing in the Inquiry that the petitioner was not aware of, he could have contended as such before the Disciplinary Authority or Appellate Authority. He has not done so. The Gopal Barik decision (Supra) must therefore be deemed to have been rendered in the peculiar facts of the case. 27. In the Moni Shankar case (Supra), the Apex Court found that the Examination in Chief was conducted by the Inquiry Officer. The questions were leading. Vital evidence as regards return of money was held to be proved despite contradictory evidence. Documents stated to be admitted by the delinquent were admittedly in a language not known to the him. It is in those circumstances that the Supreme Court at Paragraph 28 had held in the last line “in this case he has been denied the said opportunity” (Emphasis supplied), (an opportunity to explain circumstances in the evidence against him). That apart, no detailed discussion or exposition on the application of Rule 9(21) of the Railway Rules of 1968 is available. The said decision by itself therefore cannot come to the aid of the writ petitioner herein. It would be more apposite to apply the State Bank of Patiala (supra) in the instant case. 28. In the Ministry of Finance Case (supra) once again there is no clear discussion on the scope of and purport of Rule 14(18) of CCS (CCA) Rules. At Paragraph 15 of the said judgment, the Apex Court held as follows:- “15. On a careful perusal of the above findings of the Tribunal in the light of the materials placed before it, we do not think that there is any case for interference, particularly in the absence of full materials made available before us in spite of opportunity given to the appellants. (Emphasis added) On the facts of this case, we are of the view that the departmental Inquiry conducted in this case is totally unsatisfactory and without observing the minimum required procedure for proving the charge. The Tribunal was, therefore, justified in rendering the findings as above and setting aside the order impugned before it.” 29. It is therefore once again clear that the said decision was rendered in the peculiar facts of the said case. The Tribunal was, therefore, justified in rendering the findings as above and setting aside the order impugned before it.” 29. It is therefore once again clear that the said decision was rendered in the peculiar facts of the said case. The same cannot be cited as a precedent for the proposition that Rule 14(18) of CCS (CCA) Rules which is pari materia of Regulation 6(17) herein is mandatory or that its non-compliance would automatically vitiate an enquiry. 30. For the reasons stated hereinabove, I am constrained to reject the contention of the writ petitioner, and hold that non-compliance of Regulation 6(17) in the instant case, will not ipso facto vitiate an Inquiry. 31. The writ petitioner next argued that the findings of the Inquiry, Disciplinary and Appellate Authority are perverse. The facts proved in respect of first charge are inter-alia that the predecessor of the writ petitioner had sanctioned a term loan for Rs. 25 crores and a working capital of limit of Rs. 5 crores the said “Ignis Technologies.” The security of land, offered to and approved by the Bank was valued Rs. 57.87 crores. After the petitioner took over as in-charge of the Southern Zone, he recommended replacement of the said original security on the ground that it was going to be acquired by the Government. The petitioner also recommended replacement of the original security with another land valued at 58.44 Crores to be purchased at prices of Rs. 5 Crores out of the company’s cash balances. The security was replaced at the recommendation of the writ petitioner. The loan account was transferred from the Bannerghata Branch to the Electronic City Branch of the Bank at Bangalore, despite the former branch’s Manager reporting noncompliance of sanction terms by the borrower. The security was replaced and loan disbursed without the “mandatory independent physical verification of the land” by the officials from the Regional Office at Chennai. 32. The account became a Non Performing Asset within a year and a sum of Rs. 22.87 crores was lost by the bank. The new security was found to be actually valued at about 3 crores. Every ingredient of the above charge was proved. The purport of the charge and the evidence and circumstances appearing against the petitioner therefrom was clearly understood by the petitioner. 22.87 crores was lost by the bank. The new security was found to be actually valued at about 3 crores. Every ingredient of the above charge was proved. The purport of the charge and the evidence and circumstances appearing against the petitioner therefrom was clearly understood by the petitioner. This is so as the petitioner has very clearly replied to the same and dealt with the relevant evidence in his representation. 33. The consequence of the petitioner’s acts and or omissions are inter alia a software company was advanced about 30 crores worth of loans on security that eventually prove to be worth only 3 crores. The said 3 Crores was out of funds of the bank itself. The balance 25 crores was siphoned off by the Company. The loss could have been avoided but for infraction of the rules by the petitioner. The property originally recommended as security was replaced without any evidence or proof in the file or records that it was going to be acquired by the State Government. Even if such acquisition was proposed, the market value of the said property payable as to the compensation to the owner could have been payable to the Bank as a mortgagee. The net result was the property that the Bank eventually got as a security for the loan although stated to be 58 Crores was worth only 3 Crores. About 29 Crores was lost by the Bank and the account had to be written off. The consequences that arose out of the lapses of the petitioner are indeed grave. 34. Violation of the rules and norms by the officials of Bank has been stated to be per-se misconduct, by the Hon’ble Supreme Court in the case of Disciplinary Authority and Regional Manager vs. Nikunja Bihari Patnaik, (1996) 9 SCC 69 . 5. It may be remembered that Charges 1, 6, 8 and 9 were held to have been established in full while the remaining charges (except Charge 4) were held to be established in part. It is indeed a matter of surprise that in spite of the aforesaid findings, the High Court came to the opinion that it is not a case of misconduct. Regulation 24 of the Central Bank of India Officer Employees' (Discipline and Appeal) Regulations, 1976 defines the acts of misconduct in the following words: “24. It is indeed a matter of surprise that in spite of the aforesaid findings, the High Court came to the opinion that it is not a case of misconduct. Regulation 24 of the Central Bank of India Officer Employees' (Discipline and Appeal) Regulations, 1976 defines the acts of misconduct in the following words: “24. Acts of misconduct - A breach of any of the provisions of these regulations shall be deemed to constitute a misconduct punishable under the Central Bank of India Officer Employees' (Discipline and Appeal) Regulations, 1976.” 6. Regulation 3 of the said Regulations may also be noticed: “3. (1) Every officer employee shall, at all times take all possible steps to ensure and protect the interest of the Bank and discharge his duties with utmost integrity, honesty, devotion and diligence and do nothing which is unbecoming of a bank officer. (2) Every officer employee shall maintain good conduct and discipline and show courtesy and attention to all persons in all transactions and negotiations. (3) No officer employee shall, in the performance of his official duties or in the exercise of powers conferred on him, act otherwise than in his best judgment except when he is acting under the direction of his official superior. (4) Every officer employee shall take all possible steps to ensure the integrity and devotion to duty of all persons for the time being under his control and authority.” 7. It may be mentioned that in the memorandum of charges, the aforesaid two regulations are said to have been violated by the respondent. Regulation 3 requires every officer/ employee of the bank to take all possible steps to protect the interests of the bank and to discharge his duties with utmost integrity, honesty, devotion and diligence and to do nothing which is unbecoming of a bank officer. It requires the officer/employee to maintain good conduct and discipline and to act to the best of his judgment in performance of his official duties or in exercise of the powers conferred upon him. Breach of Regulation 3 is ‘misconduct’ within the meaning of Regulation 24. The findings of the Inquiry Officer which have been accepted by the disciplinary authority, and which have not been disturbed by the High Court, clearly show that in a number of instances the respondent allowed overdrafts or passed cheques involving substantial amounts beyond his authority. Breach of Regulation 3 is ‘misconduct’ within the meaning of Regulation 24. The findings of the Inquiry Officer which have been accepted by the disciplinary authority, and which have not been disturbed by the High Court, clearly show that in a number of instances the respondent allowed overdrafts or passed cheques involving substantial amounts beyond his authority. True, it is that in some cases, no loss has resulted from such acts. It is also true that in some other instances such acts have yielded profit to the Bank but it is equally true that in some other instances, the funds of the Bank have been placed in jeopardy; the advances have become sticky and irrecoverable. It is not a single act; it is a course of action spreading over a sufficiently long period and involving a large number of transactions. In the case of a bank for that matter, in the case of any other organisation - every officer/employee is supposed to act within the limits of his authority. If each officer/employee is allowed to act beyond his authority, the discipline of the organisation/bank will disappear; the functioning of the bank would become chaotic and unmanageable. Each officer of the bank cannot be allowed to carve out his own little empire wherein he dispenses favours and largesse. No organisation, more particularly, a bank can function properly and effectively if its officers and employees do not observe the prescribed norms and discipline. Such indiscipline cannot be condoned on the specious ground that it was not actuated by ulterior motives or by extraneous considerations. The very act of acting beyond authority - that too a course of conduct spread over a sufficiently long period and involving innumerable instances - is by itself a misconduct. Such acts, if permitted, may bring in profit in some cases but they may also lead to huge losses. Such adventures are not given to the employees of banks which deal with public funds. If what we hear about the reasons for the collapse of Barings Bank is true, it is attributable to the acts of one of its employees, Nick Leeson, a minor officer stationed at Singapore, who was allowed by his superiors to act far beyond his authority. If what we hear about the reasons for the collapse of Barings Bank is true, it is attributable to the acts of one of its employees, Nick Leeson, a minor officer stationed at Singapore, who was allowed by his superiors to act far beyond his authority. As mentioned hereinbefore, the very discipline of an organisation and more particularly, a bank is dependent upon each of its employees and officers acting and operating within their allotted sphere. Acting beyond one's authority is by itself a breach of discipline and a breach of Regulation 3. It constitutes misconduct within the meaning of Regulation 24. No further proof of loss is really necessary though as a matter of fact, in this case there are findings that several advances and overdrawals allowed by the respondent beyond his authority have become sticky and irrecoverable. Just because, similar acts have fetched some profit - huge profit, as the High Court characterises it - they are no less blameworthy. It is wrong to characterise them as errors of judgment. It is not suggested that the respondent being a Class I Officer was not aware of the limits of his authority or of his powers. Indeed, Charge 9, which has been held established in full is to the effect that in spite of instructions by the Regional Office to stop such practice, the respondent continued to indulge in such acts. The Inquiry Officer has recorded a clear finding that the respondent did flout the said instructions and has thereby committed an act of disobedience of lawful orders. Similarly, Charge 8, which has also been established in full is to the effect that in spite of reminders, the respondent did not submit “Control Returns” to the Regional Office. We fail to understand how could all this be characterised as errors of judgment and not as misconduct as defined by the Regulations. We are of the opinion that the High Court has committed a clear error in holding that the aforesaid conduct of the respondent does not amount to misconduct or that it does not constitute violation of Regulations 3 and 24. 35. From the above, it appears that in bank service, compliance of rules and norms is vital importance. Such importance of compliance of rules and norms can never be overstated as officials of Bank handle public money. 35. From the above, it appears that in bank service, compliance of rules and norms is vital importance. Such importance of compliance of rules and norms can never be overstated as officials of Bank handle public money. By reason of acts and omission proved against the petitioner, a public-sector Bank has lost about 30 Crores. The writ petitioner being the Head of the Southern Region and Controlling Officer was ultimately responsible for the loan itself. He cannot escape liability by relying upon reports of his sub-ordinates. Checks and balances in the form of norms and rules are laid down at various stages in the hierarchy to ensure maximum care and caution in dealing with public money. Any infraction at any stage can lead to disastrous consequences as in the instant case. The writ petitioner’s roles, acts and omission as Head of the Region in recommending such a loan for replacement of security and that too in violation and noncompliance of norms is indeed grave and an extremely serious matter that has exposed and or caused loss of about Rs. 30 Crores to the respondent Bank. 36. There is according to me sufficient evidence to prove the charges against the petitioner and the punishment imposed is indeed warranted. 37. In respect of the other two accounts i.e. M/s. Shivam Marketing and M/s Vault Consulting Union, the charge against the petitioner was that he misled the Managing Committee of the Board of Directors (MCBOD) to recommend ‘One Time Settlement’ (OTS) in respect of the said account. The writ petitioner only argues that the person who claimed to have been misled was himself acting as the Disciplinary Authority. The writ petitioner has not been able to show any prejudice as a consequence of the same. The charges have been clearly proved by the evidence on record. In any event the proof of the first charge by itself would warrant a major penalty against the petitioner. 38. The arguments of the petitioner in this regard was also rather casual and or a passing shot. 39. For the reasons stated hereinabove W.P. No. 25973 (W) of 2016 is hereby dismissed. 40. There shall be no order as to costs.