Delhi High Court
Shri M.L. Bansal vs Punjab National Bank And Anr. on 16 January, 2015
Author: Valmiki J. Mehta
Bench: Valmiki J.Mehta
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ W.P.(C) No.824/1999
% 16th January, 2015
SHRI M.L. BANSAL ......Petitioner
Through: Mr. Rohit Gandhi, Advocate, Mr.
Varun Garg, Advocate with petitioner
in person.
VERSUS
PUNJAB NATIONAL BANK AND ANR. ...... Respondents
Through: Mr. Jagat Arora, Advocate with Mr.
Rajat Arora, Advocate.
CORAM:
HON'BLE MR. JUSTICE VALMIKI J.MEHTA
To be referred to the Reporter or not?
VALMIKI J. MEHTA, J (ORAL)
1. This writ petition under Articles 226 and 227 of the Constitution of India has been filed by the petitioner, the erstwhile employee of the respondent no.1/Punjab National Bank, impugning the enquiry officer's report dated 30.12.1994 which holds the petitioner guilty with respect to various sub charges of the first charge in terms of Article of Charges dated 11.3.1994. Petitioner also impugns the report of the disciplinary authority dated 22.6.1995 imposing the major penalty of removal from services on the petitioner and which order of the disciplinary authority has been confirmed by the appellate W.P.(C)No.824/1999 Page 1 of 16 authority's order dated 24.8.1995 and which is also challenged in this writ petition.
2. This case was originally argued in detail on various aspects, however, in view of the facts of the present case and the limited finding under Article 1 of the Memo of Charges against the petitioner, counsel for the petitioner on instructions from the petitioner who has been present in the Court during the entire course of hearing, confines the relief claimed in this writ petition to the reduction of the disproportionate punishment imposed upon the petitioner of removal from service. The ground which is urged in this regard is ground S of the writ petition and which reads as under:-
"S. Because the charge upheld against the petitioner, even if taken at its face value to be true in entirety, is very minor or procedural in nature, and in any case, the major penalty imposed on the petitioner is not communicated or proportional to the Articles of Charge upheld against him, and therefore the same suffer from vice of arbitrariness and non-application of mind. The impugned report and the orders are liable to be quashed on this ground alone."
3. In order to appreciate this ground let me reproduce at this stage the relevant part of the enquiry officer's report dated 30.12.1994 which gives the relevant Article I of Article of Charges and the findings thereon. The relevant portion of the enquiry officer's report reads as under:-
"CHARGE-I A/C PEARL LASING LTD 80-TOLSTOY MARG, NEW DELHI.W.P.(C)No.824/1999 Page 2 of 16
The company approached 80-Tolstoy Marg, New Delhi on 29.12.1986 for Cash Credit Limit of Rs.100 lacs for expansion of their business activities. However, the proposal was forwarded by 'L' Block, New Delhi, vide letter dated 13.1.1987 to Regional Office, Delhi. A copy of the proposal was also sent to Credit Department, Head Office vide letter dated 14.1.1987 containing recommendations that Cash Credit Limit of Rs.100 lacs be sanctioned in favour of the party.
While working as Dy. Chief (Credit) at Head Office, he recommended the proposal to the Board in haste in order to facilitate the party despite the following major short comings:-
a) He put up note dated 28.1.1987 to the Board recommending for sanction of the CCLimit of Rs.100 lacs without waiting for the reply/recommendations of the Regional Office for which Credit Department of Head Office had already taken up with Regional Office.
In fact, recommendations of Regional Office were not received at HO even afterwards.
b) At the time of recommending the facility in favour of the company, the conduct and operations in the accounts of its sister/associate concerns, namely M/s. Auto Links, M/s. D.N. Anand & Co. M/s Key Finance Co. and M/s. Kwality Finance Co. were not at all satisfactory. There were persisting irregularities in these accounts and limits were over-due for renewal. But these adverse features were concealed from the Board.
c) Permissible bank Finance was calculated and limit of Rs.100 lacs was recommended without obtaining complete financial data from the company.
d) At the time of recommending the facility, it was not ensured that proposed facility in adquately secured by way of collateral security. In the proposal, it was stipulated that proposed CC(H) limit of Rs.100 lacs will be collaterally secured by Equitable mortgage of property at A-12, Naraina Vihar, New Delhi, having market value of Rs.45.00 lacs only as on 8.9.1986.
e) The proposal was for sanction of limit in excess of the paid up capital and reserves of the company But while recommending the limit he did not ensure that Resolution of the General Body of the company to this effect had been obtained.
xxxx xxxx xxxx xxxx
Charge-I
W.P.(C)No.824/1999 Page 3 of 16
The Pearl and Leasing Ltd. approached Branch office & __________ New Delhi on 29.12.86 for cash credit limit of Rs. 100 lakhs for extension of their business activities. However, the proposal was forwarded by L-Block, New Delhi vide letter dated 12./ . 87(Ex. C-2) to Regional Office, Delhi. A copy of proposal was also sent to credit Department, Head office vide letter dated 14. / . 87(Ex. C-1) containing recommendations chat cash credit limit of Rs.100 lakhs be sanctioned in favour of the party. The Co, while working as Dy. Chief (Credit) at Head Office, recommended the proposal to the Board in haste in order to facilitate the party despite the following major shortcomings:-
(a) The CO put up note dated 28.1.87 (Ex.S-4) to the Board recommending for sanction of cash credit limit of Rs. 100 lakhs without waiting for the reply/recommendation of the Regional Office for which Credit Deptt. of Head Office had taken up with Regional Office (Ex.S-3). In fact, recommendations of Regional Office were not received at Head Office even afterwards. The Co, in his general examination, stated that the proposal of the party was sent to Credit Dept. on 14.1.87 of Head office for expeditious disposal by branch Office, L-Block, New Delhi as the party had to introduce deposit of Rs. 100 lakhs on sanction of the same proposal but before release of the facility. Head Office took cognizance of the same in terms of Head Office circular No. 4/87 dated 8.1.87 (Ex.D-1). It was a case of corporate decision that proposal which are backed by deposit should be considered even if the Regional Office recommendation has not come.
The Contention of the CO is not tenable. Ex.D-1 states that in order to ensure quick disposal of loan proposals at Head Office level, it has now been decided that the proposals which are beyond the discretionary powers delegated to the functionaries heading the Regional offices shall be forwarded by Branches directly to respective functional Heads at Head Office with a copy to respective Regional Offices. Such proposals shall be simultaneously scrutinized W.P.(C)No.824/1999 Page 4 of 16 and appraised at Regional Office and Head Office level, the Regional Heads would be required to forward such proposals together with their recommendations to respective functional heads at Head Office within 15 days of the date of receipt of the Copy of loan proposal at the Regional Office. The sanction note shall be put up to the competent Sanctioning Authority at Head Office only on receipt of the proposal from the concerned Regional Head. However, in case, the Regional Head's recommendations are not received by Head Office within 15 days of the date of receipt of the copy of loan proposal at the Regional office, the Regional Head would be required to explain reasons for delay. Ex.S-1 is the loan proposal forwarded by the Branch level to Head Office and Ex.S-2 is the copy of the same proposal sent to Regional Office for necessary action at their level. Ex.S-3 is the letter sent form the Head Office to Regional Office for getting their recommendation regarding the loan. This letter was sent on 24.1.87. Just after three days i.e. on 28.1.87 (Ex.S-
4), the C.O. put up the proposal to the Board for the sanction of the loan without getting the recommendation from the Regional Office. Therefore, the action on the part of the C.O. was contrary to the provisions marked in Ex.D-1 and in view of it, this part of the charge is established.
(b) At the time of recommending the facility in favour of the company the conduct and operations in the accounts of Sister/Associate concerns, namely, M/s Auto Links, M/s D.N. Anand & Co., M/s Anand Finance Corporation and M/s United Finance Co. were not at all satisfactory. There were persisting irregularities in these accounts and limits were over due for renewal. But these advance features were concealed from the Board.
The C.O. in general examination stated that no adverse features with regard to the accounts of Sister concern of the borrower were reported to H.O. by the concerned Branches or Regional Office but W.P.(C)No.824/1999 Page 5 of 16 Sr. Manager, L Block, Branch has spoken high of group enclosing the details of the facilities enjoyed by Sister concern as per Ex.S-2 and Ex.S1, page 47 The contention of the C.O. is not tenable. The Ex.S-1 and S-2 page 11 do not say anything about the conduct of the account of the sister concern of the borrowers. Before putting up the proposal to the Board for its sanction, the C.O. should have at the first instance, sought the information regarding conduct of the sister concern. In view of this, this part of the charge is established.
(c) Permissible Bank Finance was calculated and limit of Rs. 1000.00 lakhs was recommended without obtaining complete financial data from the Company.
While denying the allegation, the C.O. stated that he obtained financial data from the Company before calculating permissible bank Finance of Ex.D-2, D-3 read with Ex.S-5.
Ex.S-4, page 2, states that the Company has not submitted the details of leased assets to be acquired, hire-purchase assets and leased rent receivables. However, on the basis of the consolidated projected balance sheet submitted by the party, the permissible Bank finance worked out as Rs. 190.85 lakhs (Ex.S-4, page 3).
As the Company did not submit the proper documents i.e. the details of leased assets to be acquired, hire purchase assets and lease rent receivable, the C.O. should have asked for it and waited and should not have recommended to the board for the sanction of the loan on the basis of the projected balance sheet. In view of the above, facts, This part of the charge is established.
(d) W.P.(C)No.824/1999 Page 6 of 16 At the time of recommending the facility, it was not ensured that the proposed facility is adequately secured by way of collateral security. In the proposal, it was stipulated proposed CC(4) limit of Rs. 100.00 lakhs will be collaterally secured by Equitable Mortgage of Property at A-12, Naraina Vihar, New Delhi having market value of Rs. 45 lakhs only as on 8.9.1986.
The value of the property proposed as collateral security was much less than the limit proposed. Not only that, the same property was already held by the Bank as collateral security in 7 other accounts of the group enjoying aggregate sanctioned limit of Rs. 53 lakhs. The C.O. stated that the limit was recommended against the security of leased assets with 30% margin in Bank's favour. For example, Bank will advance only Rs. 70 against the security of Rs. 100/-. The collateral security is not considered must in each and every case (Ex.S-4, page 3 last para). The amount form CC account is released in stages after pledged of security and that to only to the extent of 70% of the value of the security (Ex.D-7 & Ex.S-7 para 1) upto 22.5.87 Limit of Rs. 20.50 lakhs was released (Ex.D-7). There was no other collateral security available except what was mentioned in Ex. S-4, page 3, last para which was taken as further Collateral security are adequacy thereof is considered only by the sanctioning authority. In this case, the sanctioning authority was Board of Directors (Ex.S-6).
Ex.S-4, page 3, para last regarding collateral security states that the facility shall be collaterally secured against the securities charged in different accounts of the group at Tolstoy Marg, L Block and Karol Bagh Branches i.e. Property No. A-12, Naraina, New Delhi having market value of Rs. 45 lakhs. But it does not say that the collateral security is not must in each and every case. As had been stated by the C.O. that there was no other security (collateral) available except the property of A-12, Naraina, New Delhi. If there was no any other collateral security, the C.O. should not have recommended to the W.P.(C)No.824/1999 Page 7 of 16 Board for the sanction of the loan. The same property which was already taken as collateral security in different accounts should not be taken as collateral security in the instant case. In view of above, facts, this part of the charge is established.
(e) The proposal was for sanction of limit in excess of the paid up capital and reserves of the Company. But while recommending the limit, the C.O. did not ensure that Resolution of the General Body of the Company to this effect had been obtained. The C.O. stated that in all the credit proposal obtention of such resolution are obtained by Branch before release of Credit limit (Ex.S-7, page 2, item 3 read with Ex.D-7, last para). This condition was fulfilled by the Branch before release the credit facility Ex.D-7. It may be specifically mentioned that controlling office will follow for compliance of terms & conditions. He was transferred from the Credit Dptt. After five weeks of sanction on 30.3.87. Ex.D-9 and Ex.D-6, para 2, Ex.S-7, page 2, item 4, states that as the facility solicited exceeds the paid up capital and reserves of the Company resolution of the general body meeting shall be obtained and held on record. Also item No. 3 states that before release of the facility, Sr. Manager shall submit complete financial paras of the Company.
Since the proposal was for sanction of limit in excess of the paid up capital and reserves of the Company, the C.O., before recommending the limit, should have ensured that the resolution of the General Body of the Company to this effect had been obtained in the first instant. In view of the fact stated above, this part of the charge is established."
(emphasis is mine)
4. A reading of the aforesaid portions of the enquiry officer's report leads to the following conclusions:-
W.P.(C)No.824/1999 Page 8 of 16
(i) Petitioner was only one of the four stage officer ie the third step stage officer with respect to sanctioning of the loan in the account of M/s Pearl and Leasing Ltd and he was at the third stage inasmuch as two stages are in the branch which recommended the loan being the first stage of the dealing officer in the branch and the second stage of the branch manager and the fourth stage is the loan sanctioning authority above the petitioner; who was posted as a Deputy Chief Manager (Credit) in the head office (of the erstwhile New Bank of India which has merged with the respondent no.1/Punjab National Bank).
(ii) There is no finding nor are there any allegations against the petitioner that the petitioner has in any manner manipulated facts, misreported the facts, concealed the facts or did any other impropriety while forwarding the note pursuant to the recommendations made at the branch level to the higher authority for sanction of the loan ie the petitioner only forwarded the loan proposal from the branch as it is.
(iii) The sum and substance of the charges and the findings/conclusions against the petitioner is that he has put up the documents for sanction of the loan of amount of Rs.100 lacs in the account of M/s. Pearl and Leasing Ltd as was forwarded and in the same position by the branch without giving his effective comments and inputs thereupon.W.P.(C)No.824/1999 Page 9 of 16
(iv) Qua sub charge 1(a) and which pertains to putting up the note dated 28.1.1987 in haste, the only finding against the petitioner is that the proposal dated 28.1.1987 was put up to the Board without waiting for the recommendations from the regional office i.e it is not the charge against the petitioner that the Board which recommended the sanctioning of the loan did not know that they ought to have waited and should not have sanctioned the proposal till the recommendations were received from the regional office.
(v) Qua charges 1 (b) & (c) of the petitioner being guilty of not checking up the loan accounts of the sister concerns of M/s Pearl and Leasing Ltd which had irregularities, the only finding against the petitioner in the enquiry officer's report is that the petitioner has not given details of facilities enjoyed by the sister concerns and that no details were given by the petitioner of the leased assets which were to be acquired from the sanctioned loan i.e the charge against the petitioner is not that he was the person who was responsible for directly/himself getting the details of the sister concern accounts and petitioner had to get the details with respect to assets to be purchased from the sanctioned loan, and which requirements were admittedly to be done at the branch level and that the petitioner only forwarded the note and proposal of the branch as it is.
W.P.(C)No.824/1999 Page 10 of 16
It is not the case against the petitioner that the petitioner had to take the details of the leased assets to be purchased by the borrower from the loan which was to be sanctioned or that the petitioner had to find out the details with respect to sister concerns and which was admittedly within the scope of duties of the branch officer and the branch manager had to satisfy these aspects at the time of giving recommendations for sanctioning of the loan in question.
(vii) So far as charge 1(d) of having a security of mortgaged property which was much less than the limit to be sanctioned and which mortgaged property was also charged with respect to other accounts of the borrower, once again there is no finding nor are there allegations against the petitioner that it was the petitioner who should have ensured that another security of a mortgaged property was taken at the branch level inasmuch as this was essentially the duty at the branch level and the only allegation against the petitioner is forwarding the note of the branch as it is to the Board for sanctioning of the loan. More importantly, and as will be discussed below, the Board itself winked with respect to so called shortcomings and which are alleged against the petitioner. There is nothing on record that as against any member of the Board which sanctioned the loan any action was taken by the respondent no.1-bank with respect to irregularities alleged against the petitioner and which Board is the final and real loan sanctioning authority.
W.P.(C)No.824/1999 Page 11 of 16
(viii) The only charge with respect to sub charge 1(e) against the petitioner was that the petitioner forwarded the proposal without taking the resolution of the company for increase of paid up capital to meet the higher sanctioned loan amount, and once again there is no allegation against the petitioner that it is the petitioner at his level who was to contact the borrower and take the resolution, because admittedly this was a duty to be performed at the Board level and finally to be examined with respect to the irregularity being a major one for non-sanction of the loan at the Board level of the erstwhile New Bank of India and which in fact sanctioned the loan.
5. Learned counsel for the petitioner therefore very passionately and vehemently argued that the procedural irregularities alleged against the petitioner are by a person who is only a middle link in the chain and just an administrative officer with respect to putting up a note inasmuch as neither he had forwarded the proposal at the first/original stage and nor he had sanctioned the proposal at the final stage ie the charges which are proved against the petitioner amount to simply forwarding of the note dated 28.1.1987 and the same cannot in the facts of this case result in extreme punishment of removal from service especially because there is no charge of any financial irregularity or misappropriation by the petitioner. It is argued on behalf of the petitioner that not only there is no charge of financial irregularity or misappropriation by W.P.(C)No.824/1999 Page 12 of 16 the petitioner, and since petitioner had served the bank for as many as 28 years, the effect of the dismissal order; instead of a lesser punishment; has the effect of totally wiping out the service record and consequent denial of all retirement benefits to the petitioner including the gratuity, provident fund/pension etc. It is argued that the petitioner at best could have been imposed, in view of the facts of the present case as the charge essentially is only of forwarding of the note dated 28.1.1987, of a reprimand or some reduction in monetary emoluments, but, the harshest punishment of removal from service could/should not have been imposed, and which is grossly disproportionate and which should shock the judicial conscience of this Court.
6. In response to the argument of disproportionate punishment, learned counsel for the respondents argued that it is not as if the petitioner had not been imposed punishment earlier inasmuch as petitioner pursuant to the chargesheet dated 16.3.1994 was given a minor penalty of withholding of promotion for one year in terms of the disciplinary authority order dated 10.3.1995 and therefore it could not be argued by the petitioner that he has an unblemished service record of 28 years.
7. No doubt, petitioner has been once given the punishment of minor penalty of withholding of promotion for one year, however, in the facts of the present case where the petitioner is only a third stage administrative link out of W.P.(C)No.824/1999 Page 13 of 16 the four stages of sanctioning of the loan and the petitioner neither forwarded the loan proposal at the original stage and nor he was the authority which had sanctioned the loan at the final stage and the petitioner had not in any manner misrepresented any fact or concealed any fact or committed any other irregularity while forwarding the note as it is vide his note dated 28.1.1987, petitioner in the opinion of this Court should have been imposed any other major penalty but definitely not the harshest penalty of removal from service.
8. I have found merits in the arguments urged on behalf of the petitioner not only because only procedural improprieties are alleged against the petitioner but also because the petitioner was neither the original forwarding authority with respect to the loan nor the final loan sanctioning authority inasmuch as he was only a person who puts up the note and that nothing has been placed before me on behalf of the respondent no.1-bank that any or all officer(s) of the higher authority which sanctioned the loan have been proceeded against by the respondent no.1-bank departmentally.
9. I thus put to the counsel for the petitioner in the presence of the petitioner that whether the petitioner will be satisfied if he is imposed the punishment of compulsory retirement from service in terms of the impugned order of the disciplinary authority, and in reply to which query the counsel for the petitioner on instructions from the petitioner who is present in person, W.P.(C)No.824/1999 Page 14 of 16 agrees that punishment imposed in the present case of removal from service be changed to one of compulsory retirement.
10. No doubt, Courts themselves do not impose punishment and ordinarily matters are remanded back to the departmental authorities which impose punishment, but, simultaneously there are judgments of the Supreme Court that considering the large number of years which pass from the date of passing of the penalty order by the departmental authorities and till the year when the case comes up for final decision in the Court, Courts can in order to avoid any further delay themselves direct imposition of a particular punishment. In the present case, chargesheet is of the year 1994 and today we are in the year 2015 i.e around 21 years later on. This huge period of 21 years persuades me that any procedural irregularity of forwarding a note dated 28.1.1987 which is found against the petitioner, the petitioner not being either the original forwarding authority or the final loan sanctioning authority, and considering that the petitioner had 28 years of service record which will get wiped out on his removal from service thus resulting in his not getting any monetary emoluments of a retired employee as per rules, I order that the petitioner instead of being imposed the penalty of removal from service will be imposed the penalty of compulsory retirement in terms of the disciplinary authority's order dated 22.6.1995.
W.P.(C)No.824/1999 Page 15 of 16
11. Writ petition is therefore allowed to the limited extent of changing the punishment imposed upon the petitioner to that to be one of compulsory retirement instead of removal from service. I however hasten to clarify that I am not in one way or the other opining with respect to entitlement of the respondents to continue with respect to any other chargesheets which the respondent no.1-bank feels are required to be proceeded with against the petitioner. Whatever monetary emoluments which will become due to the petitioner on his standing compulsory retired, in terms of the present judgment, will as per rules be paid to the petitioner within a period of three months from today.
JANUARY 16, 2015 VALMIKI J. MEHTA, J
Ne
W.P.(C)No.824/1999 Page 16 of 16