Telangana High Court
L.S.R Murthy vs The Chairman And The Managing Director ... on 6 December, 2024
Author: Nagesh Bheemapaka
Bench: Nagesh Bheemapaka
1
wp_782_2011
NBK, J
THE HON'BLE SRI JUSTICE NAGESH BHEEMAPAKA
WRIT PETITION No.782 of 2011
ORDER:
The petitioner joined respondent-UCO Bank as a Clerk-cum-Typist in the year 1973 and obtained promotions over the years and reached the cadre of Senior Manager (MM Scale-III) as of 2002. It is alleged that while he was serving as Senior Manager in Sangareddy Branch in the year 2005, a case was registered in Crime No.215 of 2005 of P.S. Narayanaguda, for the offences punishable under Sections 419, 420, 468, 471, 409 read with Section 199 IPC on the allegations that he extended loans to fictitious borrowers pretended as employees of Ordnance Factory, Medak. It is alleged that the loans were given on fake salary slips, fake identity cards, and fake property documents/title deeds, without performing due diligence and proper verification procedures as per rules. A Show Cause notice dated 08.12.2005 was issued calling for his explanation. The petitioner submitted explanation dated 28.12.2005 denying all the allegations. Without considering the explanation, the respondent authority issued Charge Sheet and the petitioner submitted explanation dated 22.03.2006 requesting for verification of relevant records, vouchers and file of the accounts at Sangareddy Branch and also for supply of copy of letter addressed by Ordnance Factory Medak to the Bank authorities at Sangareddy regarding alleged fictitious persons to whom loans were sanctioned, however, no information was furnished to the petitioner. Thereafter enquiry was conducted on 04.05.2006, and thereafter in the proceedings dated 13.06.2006 the petitioner was denied the statement 2 wp_782_2011 NBK, J of Regional Manager on the ground of privileged information, and the enquiry officer also permitted the Presenting Officer to proceed with the enquiry even though files were not verified and only photocopies were produced and the Account Opening Forms and the Letters of Opening Accounts were not given. It is stated that one Mr. J.C.Pradhan, Field Vigilance Officer was examined on 09.08.2016 as MW1 who admitted that he did not verify the genuineness of borrowers. It is alleged that J.C. Pradhan made his own enquiry and he is said to have given a report but the report has neither been produced nor furnished to the petitioner. It is stated that one P. Manoj Kumar was examined as MW-2 who admitted that he was not able to procure the Defence Factory letter in the matter of fictitious persons who obtained loans. It is alleged that in the enquiry, the Presenting Officer failed to produce any material in support of the charge that loans were sanctioned to various fictitious borrowers and also failed to furnish the relevant material which have a bearing on the identity of borrowers, and the predecessor of the petitioner sanctioned the loans and the petitioner converted the loans or permitted the closure of loans when it was about to become Non-Performing Asset (NPA) and permitted the borrower to open another account. It is alleged that the enquiry proceeded in utter violation of Rule 6 of the UCO Bank Officer Employees (Discipline & Appeal) Regulations, 1976 which require the Disciplinary Authority to furnish the List of Documents and also List of Witnesses through whom charges are proposed to be proved. The Disciplinary Authority without considering the objections raised by the petitioner to the report of the Enquiry Officer held that the charges are 3 wp_782_2011 NBK, J proved, passed an order dated 16.01.2007 imposing the punishment of dismissal from bank service on the basis of the report of the Enquiry Officer, and on appeal, the Appellate Authority dismissed the Appeal. Upon filing Review petition, the Reviewing Authority modified the punishment of dismissal from service to that of Compulsory Retirement. Aggrieved by the same, the petitioner is before this Court with this writ petition urging several grounds.
2. Ms. Pratusha Boppana, learned Senior Counsel appearing for Mr. B. Nalin Kumar, learned counsel on record for the petitioner, would contend that the petitioner was not provided with certain documents before commencement of enquiry on the ground of privileged documents; and that the Departmental enquiry was instituted at the instance of Disciplinary Authority (respondent No.5) who gave evidence against the petitioner as LW- 10 in Crime No.215 of 2005 at P.S. Narayanguda Hyderabad and caused judicial remand of the petitioner and suspended him on 05.07.2005 and continued the same till 16.01.2007 and thus it is clear that he also acted as Presiding Officer while being Disciplinary Authority. It is contended that the top management of the Bank on 27.06.2010 directed respondent No.5 to transfer the petitioner to Hyderabad and consider normal disciplinary proceedings as per Rule 6 of the UCO Bank Officer Employees (Discipline and Appeal) Regulations 1976 but respondent No.5 defied the directives of top management. It is contended that the petitioner was denied the copies of proceedings relating to sanction of loans and other documents which are subject matter of enquiry on the premise that they are privileged documents 4 wp_782_2011 NBK, J without any basis, and letters addressed by Ordnance Defence Factory to the Bank on 25.09.2003, 07.10.2003 and 09.10.2003 which disclose the origin and modus operandi of the episode as privileged, and the statement given by the Disciplinary authority as LW-10 before PS Narayanaguda, thereby the petitioner was denied the opportunity to defend himself in the departmental enquiry. It is contended that insofar as the charge relating to conversion of UCO Mega Cash Loan of Rs.5.5 lakhs is concerned, the predecessor of the petitioner sanctioned the loan on 12.11.2003 and the petitioner permitted the borrower to convert the said loan into UCO Shelter Loan on 03.03.2005 and as such there was no warrant for the petitioner to subject the account to scrutiny as they were subjected to scrutiny earlier by his predecessor and the advocate and the Inspecting Officer. Further there was no occasion for the petitioner to doubt the genuineness or otherwise of the title deeds and other documents on the basis of which the original Mega Cash Loan was sanctioned. The allegation relating to sanction of loans to various fictitious persons, the respondents failed to appreciate that the Ordnance Defence Factory being a Defence Establishment refused access to the Branch Manager (petitioner) to make personal enquiry at Ordnance Defence Factory leaving him no option except to rely on the certificates produced by them which were in the proper format and there was no reason or occasion for the petitioner to doubt the certificates of Ordnance Defence Factory produced for obtaining from Sangareddy Branch of UCO Bank. It is contended that the petitioner has not opened any S.B. account as opening of S.B. account is the function delegated to the deputy i.e., Mr. PSN Murthy, Assistant Manager, 5 wp_782_2011 NBK, J who was not charged. It is contended that insofar sanction of advances to Mrs. D. Sarala and Mr. Vignodan Reddy is concerned, the loans were sanctioned on the basis of documents produced by them after subjecting them to legal scrutiny and obtaining and obtaining necessary documents and statement in ST-47s submitted by the petitioner to the Regional Manager did not evoke any query by the Regional Manager. It is contended that the petitioner purchased two cheques dated 18.02.2005 for Rs.2.15 lakhs and on 28.05.2005 for Rs.2.15 lakhs, respectively, even before the cheques were dishonoured which is the normal practice, and thus no loss is caused to the Bank, and that receiving cash against dishonoured cheque is a routine practice and it cannot be termed as misconduct. It is contended that the statement submitted by the petitioner in ST-47s relating to loan sanctioned by him were not produced in the disciplinary proceedings and the petitioner was not permitted to see them. It is contended that even though charges allege omissions and commissions in sanction of loans to fictitious persons there is absolutely no evidence produced from the Ordnance Defence Factory to show that the persons to whom loans were sanctioned were not the employees of Ordnance Defence Factory and the Salary certificates produced by them are fake service certificates. It is also submitted that the Disciplinary Authority also gave evidence against him in Crime No.215/2005 of PS Narayanguda Hyderabad and also filed CBI case, thereby the Disciplinary Authority acted as both Disciplinary Authority as well as Presenting Authority thereby vitiating the enquiry proceedings. It is contended that Rule 6 of the UCO Bank Officer Employee Regulations 1976 was violated as no list of 6 wp_782_2011 NBK, J documents and list of witnesses proposed to be relied on/examined was furnished to the petitioner in respect of the allegations. It is contended that on 20.12.2006, the Disciplinary Authority addressed a letter to the Vigilance Officer for his advice on the proposed punishment, whereupon the Vigilance Officer gave reply dated 20.12.2006 advising dismissal of service from Bank after issuing Show Cause notice, and the Disciplinary Authority passed orders of dismissal and therefore the Disciplinary Authority has not applied its mind independently and the Authority acted at the behest of Assistant General Manager, Vigilance.
Learned counsel for the petitioner relied on State Bank of India v. D.C.Aggarwal 1; Mohd. Yunus Khan v. State of Uttar Pradesh 2; Life Insurance Corporation of India v. Ram Pal Singh Bisen 3.
3. Heard Mr. E. Sambasiva Pratap, learned counsel for the respondents- UCO Bank; and Ms. M. Shalini, learned counsel for respondent No.4- Disciplinary authority.
4. The sum and substance of the contentions of learned counsel for respondent-Bank, insofar it touches the material allegations in the writ affidavit, is that out of 31 fictitious loans, the petitioner, as a Senior Manager of the Bank, sanctioned 25 loans amounting to Rs.50.20 lakhs to fictitious and non-existing employees of Ordnance Factory, Yeddumailaram, without following basic norms of verification, on fake salary slips, fake addresses, fake 1 AIR 1993 SC 1197 2 (2010) 10 SCC 539 3 (2010) 4 SCC 491 7 wp_782_2011 NBK, J identity cards, and exposed the bank to a great financial loss. A case in Crime No.215 of 2005 for the offences punishable under Sections 419, 420, 468, 471 and 409 read with 199 IPC was registered in P.S. Narayanaguda, and also a CBI case is registered against the petitioner. Based on the allegations, a Show Cause notice was issued on 08.12.2005, and thereafter a Charge Sheet was issued to the petitioner on 13.03.2006 with very specific allegations that the petitioner sanctioned 25 loans to fictitious borrowers and non-existent employees of Ordnance Factory, Yeddumailaram, and thus he failed to exercise due diligence and violated the Regulation 3(1) of UCO Bank Officer Employees (Conduct) Regulations 1976, and that he acted otherwise than his best judgment in violation of Regulation 3(3). It is also contended that the enquiry proceedings at Page No.67 would show that the petitioner himself waived off verification of files, vouchers at Sangareddy Branch and further stated that he wanted to proceed with presentation of his case further. It is also contended that a person from the Bank had visited the address of all the borrowers mentioned in the charge sheet and found that the said borrowers were not staying at the addresses given, instead some other employees of Ordnance Factory are staying in the same addresses for almost ten years and that when the person went to J. Aruna's quarters it was found locked, and when interacted with neighbours, it was informed that J. Aruna was arrested by police and thereafter she is not seen. It is also contended that during the interaction with some other employees of Ordnance Factory, it was reported that the above said borrowers are not employees of Ordnance Factory. It is also contended that, when there are other course of actions available, there 8 wp_782_2011 NBK, J is no necessity for the petitioner to convert the UCO Mega Cash loan account of J. Aruna into a Housing loan when that Mega Cash loan is a high-interest loan and moreover when the instalment payments are overdue, and there is no justifiable response forthcoming from the petitioner. It is contended that the petitioner's negligence in observing due diligence is revealed in his statement that he did not verify all other things with an impression that all other things must have been verified at the time of sanction of mega cash loan. It is also contended that for the query of the Enquiry Officer with regard to fake Sale Deed No.13459 of 2003 (stated to have been executed on 22.12.2003) whereas on the back page of the Sale Deed, the scanning date is mentioned as 22.10.2003, the reply of the petitioner was that he did not verify the sale deed. It is also contended that with regard to the query of Enquiry Officer regarding loan to B. Sarala, he stated that he did not verify the payslip or employment particulars of B. Sarala as the Ordnance Factory did not permit such verification; and to the query of Enquiry Officer as to why did he not verify the documents, the petitioner stated that the Ordnance Factory does not have a system of allowing for such verifications; and to the query of Enquiry Officer as to whether the petitioner has any proof that he approached the Ordnance Factory authorities for verification of employee particulars and their refusal of his request, the petitioner stated that he has no documentary proof of such refusal for verification. It is contended that the reply to various queries of Enquiry Officer are against the usual bank practices and also against Rules without following due diligence characteristic of a Bank Manager. Learned counsel would contend that the Reviewing 9 wp_782_2011 NBK, J Authority has modified the punishment to that of Compulsory Retirement and the petitioner received all the retirement benefits, without protest, and even filed writ petitions seeking release of those benefits, and therefore there is no illegality in the impugned order and the writ petition is liable to be dismissed.
Learned counsel for the respondent-Bank would rely on Canara Bank v. VK Awasthy 4; State Bank of India v. S.N. Goyal 5
5. It may be noted that it is the specific recording in the Departmental Enquiry Report with regard to the allegation - 1(B), filed at page No.93 of the material papers of the writ petition, which reads as follows:
"The MW-1 Sri J.C. Pradhan, during his examination in the enquiry proceedings, has stated that during his investigation, into the irregularities in the loans sanctioned by CSO to the persons named in the above said charge sheet, MW-1 has visited the available addresses of the said persons and it is reported by the inhabitants that D. Sarala and others were not staying in those addresses and instead some other persons have been staying since long i.e., 10 year or so.
Even MW-2 Sri P. Manoj, during the enquiry proceedings, has stated that during his investigation conducted at the instructions of Regional Office, Hyderabad, it is found that 4 (2005) 6 SCC 487 5 (2008) 8 SCC 92 10 wp_782_2011 NBK, J one J. Sucharitha close relative of J. Aruna had availed a loan from UCO Bank, Sangareddy branch in the fictitious name of D. Sarala. MW-2 also confirmed the Photograph of D. Sarala with that of J. Sucharitha in person as one and the same person."
6. It is relevant to refer to the observations of the Reviewing Authority vide Order dated 19.04.2010, at page No.166 of the writ petition, which read as follows:
"It is true that certain documents were not provided to Shri Murthy before commencement of the enquiry as they were considered as privileged documents, but the Enquiry Officer provided reasonable opportunity to him during the enquiry to verify other documents desired by him. He was also given opportunity to defend his case during the enquiry. Therefore, contention of Shri Murthy that enquiry was conducted against him by not following the principle of natural justice is not correct."
7. Similarly, at page No.167, it is observed as follows:
"During his first spell of posting, one Smt. J. Aruna, a permanent staff of Ordnance Defence Factory approached him for opening of a fixed deposit account for a considerable amount, which she had received as Terminal Benefit of her deceased husband. Further, the said lady got 2 loans 11 wp_782_2011 NBK, J sanctioned by Shri Murthy against her guarantee and FDR. This way the lady got the confidence of Shri Murthy. During his second spell of posting, the said lady approached Shri Murthy for sanction of several loans in favour of different persons, whom she introduced as permanent employee of Ordnance Defence Factory. Shri Murthy sanctioned the loans to those persons under UCO Cash Scheme, relying on the introduction and guarantee of Smt. Aruna. Shri Murthy relying on the introduction of Smt. Aruna failed to verify the genuineness of the identity of the persons who got the loan sanctioned by impersonating them to be permanent employee of Ordnance Defence Factory. It appears that Shri Murthy being over-enthusiatic sanctioned the loans to the persons, who impersonated themselves as Defence employees but not with a malafide intention. Perhaps Shri Murthy fell onto the trap of Smt. J. Aruna.
I have applied my independent mind and observe that the above fact merits some consideration. Therefore, I am inclined to take a lenient view in the matter and intend to modify the penalty imposed on Shri Murthy by the Disciplinary Authority, which was subsequently upheld by the Appellate Authority."12
wp_782_2011 NBK, J
8. It is to be noted that it is the specific replies of the petitioner during the course of enquiry that he did not verify the genuineness as it is the predecessor who could have done it already and he is merely converting the loan from a high-interest Mega Cash loan to Housing loan, and further he did not verify the authenticity of the customers and their documents for the mere reason that Ordnance Defence Factory has no system of verifying.
9. It may be noted that it is a matter of record that the Management Witness MW-1 has visited the premises of Ordnance Defence Factory and it came to light during the enquiry with the authorities there that the so-called employees who applied for various loans are not residing in the addresses shown in their applications, and that the present inmates of those residences have been residing there for almost ten years as on the date of enquiry by MW-1. It cannot stand to reason that the Ordnance Defence Factory has permitted and has a system in place for verification when a witness comes in a Departmental Enquiry but refuses a Bank Manager to verify the genuineness and authenticity of the documents furnished by an employee of the Ordnance Factory at the time of processing their loan applications. Mere non-furnishing of a couple of privileged documents would not ipso facto water-down the case of the petitioner. It is to be noted that the gravamen of the charges is that the petitioner sanctioned loans to the tune of Rs.50.20 lakhs which is a huge amount as of the year 2005 and such a massive loss couldn't have happened except for non-exercising of due diligence.
13wp_782_2011 NBK, J
10. At this juncture, it is relevant to note that the monies loaned by the petitioner on behalf of the respondent-Bank is not personal property but public money stationed with the respondent Bank with the hope that it would grow and would be safe in the hands of respondent Bank, which task is executed by the Bank through its Managers.
11. It would relevant to refer to the observation of Hon' ble Supreme Court in S.N. Goyal (supra).
"At the relevant point of time the respondent was functioning as a Branch Manager. A bank survives on the trust of its clientele and constituents. The position of the Manager of a bank is a matter of great trust. The employees of the bank in particular the Manager are expected to act with absolute integrity and honesty in handling the funds of the customers/borrowers of the bank."
"If the matter is to be viewed lightly or leniently it will encourage other bank employees to indulge in such activities thereby undermining the entire banking system. The request for reducing the punishment is misconceived and rejected."
12. A perusal of the impugned order passed by the Reviewing Authority would show that the Reviewing Authority has modified the dismissal order, perhaps as humanitarian gesture to a case which was turned down by both the Disciplinary Authority and the Appellate Authority, with an observation 14 wp_782_2011 NBK, J that the petitioner might have fell into the trap of J. Aruna who introduced several fake customers with fake addresses and identities.
13. In the facts and circumstances of the case, this Court does not find any merit in the challenge laid against the impugned order, and the writ petition is liable to be dismissed.
14. Accordingly, the writ petition is dismissed. No costs. Miscellaneous petitions, if any pending, shall stand closed.
__________________________ JUSTICE NAGESH BHEEMAPAKA 6th December, 2024 ksm