Karnataka High Court
Sri K M Venkateshappa vs Canara Bank on 6 June, 2024
Author: B M Shyam Prasad
Bench: B M Shyam Prasad
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NC: 2024:KHC:19706
WP No. 47966 of 2012
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 6TH DAY OF JUNE, 2024
BEFORE
THE HON'BLE MR JUSTICE B M SHYAM PRASAD
WRIT PETITION NO. 47966 OF 2012 (S-DE)
BETWEEN:
SRI K M VENKATESHAPPA
S/O SHRI MUNIVENKATAPPA,
AGED 55 YEARS,
EARLIER WORKING AS MANAGER IN MMGS II,
SINCE ILLEGALLY DISMISSED FROM SERVICE AND
RESIDIG AT NO.350,
CHS 707, 6TH CROSS,
4TH PHASE, NEW TOWN,
YELHANKA,
BANGALORE-560 064
...PETITIONER
(BY SRI. ANANDARAMA .,ADVOCATE)
Digitally
signed by AND:
ANAND N
CANARA BANK
Location:
HIGH A BODY CONSTITUTED UNDER THE BANKING
COURT OF
KARNATAKA COMPANIES (ACQUISITION AND TRANSFER OF
UNDERTAKINGS) ACT, 1970 HAVING ITS HEAD
OFICE AT NO.112, J.C.ROAD,
BANGALORE 560 002,
REPRESENTED HEREIN BY ITS GENERAL
MANAGER.
...RESPONDENT
(BY SRI. P UDAY SHANKAR RAI.,ADVOCATE)
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NC: 2024:KHC:19706
WP No. 47966 of 2012
THIS W.P. IS FILED PRAYING TO-CALL FOR
RECORDS2.QUASH ORDER DT.30.6.2008 (ANNX-K)
PASSED BY THE DISCIPLINARY AUTHORITY,
ORDER DT.31.10.2009 (ANNX-M) PASSED BY THE
APPELLATE AUTHORITY & ORDER DT.1.10.2012
(ANNX-P) PASSED BY THE REVIEWING AUTHORITY
& REINSTATE THE PETITIONER TO THE SERVICES
OF THE RESPONDENT BANK WITH ALL
CONSEQUENTIAL BENEFITS INCLUDING BACK
WAGES, INCREMENTS, ALLOWANCES, SENIORITY,
PROMOTIONS ETC.,
THIS PETITION, COMING ON FOR FINAL
HEARING, THIS DAY, THE COURT MADE THE
FOLLOWING:
ORDER
The petitioner was working as a Manager with the respondent's branch at Bagepalli between 30.11.2001 and 16.11.2005, and the petitioner, upon issuance of the Show Cause Notice dated 11.01.2007 and the conclusion of the departmental proceedings, has suffered dismissal from service [with the stipulation that such dismissal should ordinarily be a disqualification for future employment]. The petitioner is also unsuccessful in his appeal and subsequent review with the Appellate Authority and the Reviewing Authority respectively as contemplated -3- NC: 2024:KHC:19706 WP No. 47966 of 2012 under the Canara Bank Officer Employees' [Discipline and Appeal] Regulations, 1976 [for short, 'the 1976 Regulations]. As such, the petitioner has filed this writ petition impugning the orders by the Disciplinary, Appellate and Review Authorities. The details of the impugned orders are as follows.
[A] The Disciplinary Authority's Order Dt.30.6.2008 [Annexure- K].
[B] The Appellate Authority's Order Dt.31.10.2009 [Annexure-M], and [C] The Reviewing Authority's Order Dt.1.10.2012 [Annexure-P]
2. The charges against the petitioner, generally stated, are essentially that while he was working as a Branch Manager at Bagepalli between 30.11.2001 and 16.11.2005, he has indiscriminately sanctioned 128 tractor loans amounting to 6.36 Crores ignoring the orders against disbursement of such loans and has not adhered to the prescribed procedure. The specific allegations against the -4- NC: 2024:KHC:19706 WP No. 47966 of 2012 petitioner are that he has [a] sanctioned loans to ineligible borrowers [the borrowers who do not own either 4 acres of wet land or 8 acres of dry land] without proper visits to ascertain the credibility of the borrowers, [b] permitted dealers to fill up applications for loans, [c] sanctioned loans without receiving margin money and to persons beyond branch command area, and [d] exposed the respondent [Bank] to financial losses.
3. The petitioner has participated in the inquiry that is commenced with service of Articles of Charge after the issuance of Show Cause Notice dated 11.01.2007. The Inquiry Officer has found the petitioner guilty of all charges, including the charge that the petitioner has exposed the Bank to financial loss/risks. The Inquiry Officer has also concluded that 4 loans [of all the 128 loans sanctioned by the petitioner] were standard assets with some dues. The Disciplinary Authority, considering the petitioner's -5- NC: 2024:KHC:19706 WP No. 47966 of 2012 response to the Inquiry Officer's findings, has imposed the punishment of dismissal as aforesaid by the impugned order dated 30.06.2008. The Appellate Authority has confirmed the Disciplinary Authority's orders opining that it does not find any reason to interfere either with the findings of the Inquiry Officer or with the orders of the Disciplinary Authority. The petitioner's request for review of these orders is also not accepted.
4. Sri. Anandarama K., the learned counsel for the petitioner, though initially endeavored to persuade this Court to interfere with the impugned orders on the ground that there is no evidence of the imputations against the petitioner and while fairly conceding that the petitioner cannot complain of fairness in the procedure, submits that the petitioner may not be in a position to say that there is no evidence against the petitioner as there is some breach in the Bank's Regulations on sanction and -6- NC: 2024:KHC:19706 WP No. 47966 of 2012 disbursement of loans. However, Sri. Anandarama K. argues that this Court must interfere with the punishment imposed by the Disciplinary Authority and confirmed by the Appellate Authority on the ground of dis-proportionality. Sri. P. Udaya Shankar Rai, the learned counsel for the respondent, is heard in the light of this submission.
5. The fact that the petitioner has sanctioned 128 tractor loans is not in dispute, and that these loans were sanctioned over a period of four years is also not disputed. The article of charges refers to the instructions by the Controlling Office against the sanction of tractor loans, but it remains undisputed that though such instructions were issued on 10.08.2005, within the next two weeks General Circulars are issued to all the Branch Managers to hold Loan Melas, including Melas for grant of loans to purchase tractors. The petitioner has sanctioned some of the loans prior to the -7- NC: 2024:KHC:19706 WP No. 47966 of 2012 instructions against sanctioning and after the afore General Circulars to hold the aforesaid Mela.
6. The petitioner's specific case is that, he has, given the general instructions to increase credits and the respondent's Memorandum of Understanding with the tractor manufacturer on 22.09.2003, availed the assistance of the concerned dealers to fill up the application form. In filling up the application form, the dealers may have not completely ensured due adherence, but the petitioner has, in most cases, visited the borrower's place to ascertain their credibility. If the loans have been sanctioned in some instances beyond the command area or without taking the initial deposit, it would only be under the aforesaid circumstances and not with an intention to expose the Bank to any financial loss/risks.
7. Sri. Anandarama K., relying upon the afore case, submits that the Disciplinary, -8- NC: 2024:KHC:19706 WP No. 47966 of 2012 Appellate and Review Authorities should have considered the proportionality of imposing punishment of dismissal from service with disqualification for future employment in the light of the fact that:
[i] the petitioner had rendered 23 years of service without any blemish, [ii] the Bank had initiated disciplinary proceedings not just against the petitioner but also the Branch Managers of other branches, including the Manager, who succeeded the petitioner at the same Branch, [iii] in almost all these cases, though there was substantial compliance with the terms for loan sanction, as in the present case, there are certain failures to comply with certain Regulations, -9- NC: 2024:KHC:19706 WP No. 47966 of 2012 [iv] the allegations against the petitioner does not include entering into a fraudulent transaction for personal gain or allegations of misappropriation, and [v] where enquiries were conducted against other similarly placed Managers with charges not very different from the charges against the petitioner, the Appellate Authority has intervened modifying the penalty from dismissal to reduction in lower grade subject to certain conditions.
8. Sri. Anandarama K. submits that if the Disciplinary Authority could not have imposed the penalty of dismissal without considering these circumstances, the Appellate Authority was under a higher obligation in law to consider the aforesaid circumstances in view of the provisions of Regulation 17[ii] of the 1976 Regulations, and the Review
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NC: 2024:KHC:19706 WP No. 47966 of 2012 Authority has not considered any of the above. The learned counsel emphasizes that the aforesaid provisions stipulate that the Appellate Authority shall consider whether the findings are justified while also specifically stipulating that the Appellate Authority must consider whether the penalty is excessive or inadequate and pass appropriate orders.
9. Sri. Anandarama K. next contends that though this Court may not restore the proceedings to the Appellate Authority to reconsider because of the time span of this litigation, this Court must consider the circumstances and impose proportionate penalty. In this regard, the learned counsel relies upon the decision of the Hon'ble Supreme Court in S. R. Tewari Vs. Union of India and Another1 drawing support from paragraph No.25, which reads as under:
1 [2013] 6 SCC 602
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NC: 2024:KHC:19706 WP No. 47966 of 2012 "25. In B.C. Chaturvedi v. Union of India, this Court after examining its various earlier decisions has observed that in exercise of the power of judicial review, the court cannot "normally" substitute its own conclusion or penalty. However, if the penalty imposed by an authority "shocks the conscience" of the court, it would appropriately mould the relief either directing the authority to reconsider the penalty imposed and in exceptional and rare cases, in order to shorten the litigation, itself impose appropriate punishment with cogent reasons in support thereof. While examining the issue of proportionality, the court can also consider the circumstances under which the misconduct was committed. In a given case, the prevailing circumstances might have forced the accused to act in a certain manner though he had not intended to do so. The court may further examine the effect, if the order is set aside or substituted by some other penalty. However, it is only in very rare cases that the court might, to shorten the litigation, think of substituting its own view as to the quantum of punishment in place of punishment awarded by the competent authority."
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NC: 2024:KHC:19706 WP No. 47966 of 2012
10. On the question of penalty that could be proportionate to the allegations against the petitioner, Sri. Anandarama K. submits that parity in punishment must be applied, and relying upon the decisions of the Hon'ble Supreme Court in Rajendra Yadav V. Vs. State of Madhya Pradesh and Others2 and Life Insurance Corporation of India and Others Vs. Triveni Sharan Mishra3, he submits that the petitioner's successor in the office against whom similar charges are made has ultimately suffered only reduction to a lower grade with the concerned Appellate Authority interfering with the Disciplinary Authority's order for imposition of penalty of dismissal.
11. Sri. Anandarama K. clarifies that parity in punishment, though a proposition that is applied in the case of co-delinquent, should be applied where 2 [2013] 3 SCC 73 3 [2014] 10 SCC 346
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NC: 2024:KHC:19706 WP No. 47966 of 2012 similar charges are made against others, and the learned counsel also relies upon the orders of the concerned Appellate Authority in the appeal filed by Sri. N. K. Krishnappa, who had to face similar charges for the alleged irregularities when he was working as a Manager with the respondent's branch at Chintamani. Finally, Sri. Anandarama K. submits that this Court, while considering the grievance of similarly placed persons who were dismissed from service in W.P.No.23889/2012 [S-DE] and W.P.No.39933/2012 [S-DE], has interfered on the ground of proportionality and modified the punishment of dismissal to compulsory retirement.
12. Sri. P. Uday Shankar Rai submits that the petitioner cannot contend that the imputation against him does not relate only to irregularities in sanctioning loans because the Inquiry Officer has categorically found that the petitioner, in failing to follow the prescribed Regulations, has exposed the
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NC: 2024:KHC:19706 WP No. 47966 of 2012 Bank to financial loss/risks. In fact, the learned counsel proposes to place on record that the respondent had to write off loans sanctioned by the petitioner to the extent of 4.4 Crores.
13. Sri. P. Uday Shankar Rai, as regards the Appellate Authority's failure to consider the proportionality of punishment in imposing the penalty of dismissal from service [which is to act as disqualification for future employment] and the petitioner's claim for parity with his successor or with Sri. N. K. Krishnappa, submits that the Appellate Authority has interfered in the case of the petitioner's successors because he had only sanctioned the proposals identified by the petitioner, and that in the case of Sri. N. K. Krishnappa, he had sanctioned 25 loans with the necessary permission from the concerned and the petitioner cannot contend that there was any permission in his case. However, the learned counsel does not dispute that
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NC: 2024:KHC:19706 WP No. 47966 of 2012 the Appellate Authority has not considered in specific terms the proportionality of dismissal from service.
14. As regards the reliance upon the orders of this Court in W.P.No.23889/2012 [S-DE] and W.P.No.39933/2012 [S-DE], Sri. P. Uday Shankar Rai submits that the Bank has filed appropriate appeals, and these appeals are pending consideration. In rejoinder, Sri. Anandarama K. submits that the Inquiry Officer has categorically recorded that the petitioner has not committed lapse that is subversive of the organizational discipline. Sri Anandaram K. argues that the petitioner has acted in a bonafide manner with utmost honesty and that the Inquiry Officer's report is categorical that out of all the loans that is sanctioned, only 4 loan accounts were dodgy with these accounts being classified as standard assets with some dues.
15. In the light of the rival submissions, the questions for consideration are,
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NC: 2024:KHC:19706 WP No. 47966 of 2012 a] Whether this Court can opine that the Appellate Authority, in confirming the Disciplinary Authority's decision on penalty, should have, and has, considered all circumstances to arrive at an independent decision in view of the provisions of Regulation 17[ii] of the 1976 Regulations.
b] If the answer to the afore question is in the negative, whether this Court must remit the matter for reconsideration by the Appellate Authority interfering with the impugned orders of the Appellate and review Authorities' orders or this Court must itself consider the question of proportionality in imposing the punishment, and c] If this Court does consider such question, what would be the proportional punishment.
16. The first question must be answered in the light of the provisions of Regulation 17[ii] of the 1976 Regulations and the law as is exposited. The
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NC: 2024:KHC:19706 WP No. 47966 of 2012 provisions of Regulation 17[ii] of the 1976 Regulations read as under:
17 [ii] An appeal shall be preferred within 45 days from the date of receipt of the order appealed against. The appeal shall be addressed to the Appellate Authority and submitted to the authority whose order is appealed against. The Authority whose order is appealed against shall forward the appeal together with its comments and the records of the case to the Appellate Authority. The Appellate Authority shall consider whether the findings are justified or whether the penalty is excessive or inadequate and pass appropriate orders. The Appellate Authority may pass an order confirming, enhancing, reducing or setting aside the penalty or remitting the case to the authority which imposed the penalty or to any other authority with such directions as it may deem fit in the circumstances of the case.
The underlining is by this Court
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NC: 2024:KHC:19706 WP No. 47966 of 2012 It follows from the afore Regulation that the authority whose decision is appealed against must forward the appeal and the records with comments, and the Appellate Authority must not only consider whether the Disciplinary Authority's findings are justified, but also consider whether the penalty imposed is excessive or inadequate and then pass appropriate orders.
17. The Hon'ble Supreme Court in Deputy Commissioner, Kendriya Vidyalaya Sangthan and others vs. J.Hussain4 has observed:
7. When the charge is proved, as happened in the instant case, it is the disciplinary authority with whom lies the discretion to decide as to what kind of punishment is to be imposed. Of course, this discretion has to be examined objectively keeping in mind the nature and gravity of the charge. The disciplinary authority is to decide a particular penalty specified in the relevant Rules. A host of factors go into the decision making while 4 [2013] SCC 106.
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NC: 2024:KHC:19706 WP No. 47966 of 2012 exercising such a discretion which include, apart from the nature and gravity of misconduct, past conduct, nature of duties assigned to the delinquent, responsibility of duties assigned to the delinquent, previous penalty, if any, and the discipline required to be maintained in the department or establishment where he works, as well as extenuating circumstances, if any exist.
8. The order of the appellate authority while having a relook at the case would, obviously, examine as to whether the punishment imposed by the disciplinary authority is reasonable or not. If the appellate authority is of the opinion that the case warrants lesser penalty, it can reduce the penalty so imposed by the disciplinary authority. Such a power which vests with the appellate authority departmentally is ordinarily not available to the court or a tribunal.
18. In the light of the express provisions of Regulation 17[ii] of the 1976 Regulations and the law exposited, this Court must opine that an Appellate Authority will have to relook at the case to examine
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NC: 2024:KHC:19706 WP No. 47966 of 2012 whether the punishment imposed by a Disciplinary Authority is reasonable and if the Appellate Authority is of the opinion that the case warrants lesser penalty, it can, in its discretion, reduce penalty. If an Appellate Authority exercises this power reasonably, the Courts will not interfere. However, the Appellate Authority's reasoning in this regard reads as under:
In view of the foregoing, I do not find any reason to interfere either with the findings of the inquiring Authority or with the orders of the Disciplinary Authority. The Appeal lacks merits and the same is disposed of accordingly.
The Appellate Authority's conclusions are of course after a detailed discussion of the charges and the respective averments thereon, but there is no discussion whatsoever on whether the penalty imposed by the Disciplinary Authority is either excessive or inadequate.
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NC: 2024:KHC:19706 WP No. 47966 of 2012
19. The authorities should have considered the material circumstances i.e., [a] the nature and gravity of the proven misconduct, [b] the nature of duties assigned to the delinquent, [c] the responsibilities and duties assigned, and [d] the discipline required to be maintained in the concerned establishment. Therefore, this Court must answer the first question in favour of the petitioner and hold that the Appellate Authority, which should have considered all the circumstances as aforesaid, has not considered them at all.
20. The second question viz., whether this Court must remand the matter for reconsideration by the Appellate Authority will have to be essentially considered in the peculiarities of this case and the decision of the Hon'ble Supreme Court in S .R. Tewari [supra] relied upon by Sri Anandarama K. There is no gainsaying that the Rule, when an Appellate Authority has not considered the relevant
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NC: 2024:KHC:19706 WP No. 47966 of 2012 circumstances in deciding on the proportionality of punishment, is to remand the matter back for consideration as the Appellate Authority concerned will have to reconsider all the circumstances and take a decision in its discretion with the judicial review being limited to those cases where it can be said that the penalty imposed is so disproportionate that the judicial conscience is shocked.
21. However, in exceptional and rare cases, the Courts can also, in exercise of powers of judicial review, consider the question of proportional punishment to shorten the litigation imposing appropriate punishment with cogent reasons supporting the same. In this regard, this Court must refer to the decision in Union of India v. Ex. Constable Ram Karan5 where the declaration is thus:
5 (2022) 1 SCC 373
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NC: 2024:KHC:19706 WP No. 47966 of 2012 Even in cases where the punishment imposed by the disciplinary authority is found to be shocking to the conscience of the court, normally the disciplinary authority or the appellate authority should be directed to reconsider the question of imposition of penalty. The scope of judicial review on the quantum of punishment is available but with a limited scope. It is only when the penalty imposed appears to be shockingly disproportionate to the nature of misconduct that the courts would frown upon. Even in such a case, after setting aside the penalty order, it is to be left to the disciplinary/appellate authority to take a call and it is not for the court to substitute its decision by prescribing the quantum of punishment. However, it is only in rare and exceptional cases where the court might to shorten the litigation may think of substituting its own view as to the quantum of punishment in place of punishment awarded by the competent authority that too after assigning cogent reasons.
22. In the present case, it is undisputed that the petitioner, if he is continued in service, would have retired on attaining the age of superannuation in the year 2017. This petition has been pending over a dozen years now, and there must be a decision without protraction. These would be very
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NC: 2024:KHC:19706 WP No. 47966 of 2012 material circumstances as also the fact that in similar circumstances, this Court has examined the factual matrix to modify the punishment. Further, this Court also has the advantage of the Disciplinary Authority's decision on the quantum of punishment in the case of other similarly placed Managers, including the petitioner's own successors. As such, the second question is answered holding that it would be just and reasonable, in the facts of this case, for this Court to consider the petitioner's grievance with the punishment of dismissal being disproportionate with a remand.
23. Sri Anandarama K. relies upon the proposition of parity in punishment/penalty to assert that the appropriate Appellate Authority in the case of similarly placed Managers, has modified the concerned Disciplinary Authority's orders for dismissal to reduction to a lower grade with certain conditions, but the merits of this contention will
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NC: 2024:KHC:19706 WP No. 47966 of 2012 have to be necessarily examined discerning the similarities in the allegations. This Court is of considered view that the proposition that there must be parity in punishment/penalty, though evolved in cases where the concerned are co-delinquents, must be applied even in those cases where the delinquents in different proceedings face similar charges, and this must be, without the need for further elaboration for the very reasons from which this proposition stems, but to similarity in charges as emphasized by the Supreme Court in Union of India v. Ram Karan [supra].
24. It is seen on perusal of the Disciplinary Authority's order in the case of the petitioner's successors, the Appellate Authority has categorically recorded that the concerned officer had not entertained any fresh proposals other than those proposals recorded by the petitioner and therefore this Officer's role in identifying the borrowers is
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NC: 2024:KHC:19706 WP No. 47966 of 2012 minimal. The Bank's contention that these two vital circumstances have prevailed with the concerned Appellate Authority in the case of the petitioner's successor while reducing the punishment, is justified and therefore parity cannot be applied.
25. As regards the decision of the concerned Appellate Authority's order in the case of another officer, Sri N. K. Krishnappa, it is seen that the charges related to sanction of 52 tractor loans as against 128 tractor loans sanctioned by the petitioner, that the Regional Office had permitted the branch to consider 25 applications for tractor loans that were pending disposal, and the Appellate Authority in modifying the penalty to reduction to a lower grade, has considered this and opined that this will not be in favour of the officer. These are the very material circumstances and therefore parity cannot be drawn. If the petitioner cannot, on the ground of parity of punishment, be granted the
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NC: 2024:KHC:19706 WP No. 47966 of 2012 benefit of modification of the punishment from dismissal to reduction to a lower grade, the question would be whether there can be punishment of compulsory retirement.
26. This Court in W.P. No.23889/2012, in the case of irregularities in sanctioning tractor loan, has recorded that the Bank had not made any allegations about the loans turning sour leading to financial losses to the Bank and that if no charges of misappropriation or causing loss to the Bank is imputed, the removal from service would be harsh and disproportionate. In the present case, the Inquiry Officer, as emphasized by Sri Anandarama K, has recorded that 40 tractor loans were rephased as per the Guidelines of the Bank and after that, 4 accounts were strong though with some over dues. It is now contended that the Bank had to waive off the substantial part of the loan. The circumstances under which those loans were waived off are not
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NC: 2024:KHC:19706 WP No. 47966 of 2012 brought on record and the finding that the accounts are rephased is not contested. Further, the petitioner had rendered 23 years of service without any blemish.
27. This Court, because there are no financial losses and there is no imputation of fraudulent transactions or financial impropriety in such transactions against the petitioner, is of the considered view that the imposition of compulsory retirement will be proportionate and conscionable. Therefore, the orders of the Appellate Authority must be quashed insofar as the imposition of penalty. Hence, the third question is answered accordingly and the following:
ORDER [a] The petition is allowed in part. The Appellate Authority's Order dated 31.10.2009 [Annexure-M] is quashed insofar as it relates to confirmation of
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NC: 2024:KHC:19706 WP No. 47966 of 2012 the Disciplinary Authority's order dated 30.06.2008 to impose the penalty of dismissal from service with disqualification for future employment is modified and the petitioner is imposed with the punishment of compulsory retirement with effect from the date of the Appellate Authority's order.
[b] Consequently, the respondent [Bank] shall pay all benefits that would arise to the petitioner upon there being compulsory retirement from service. These benefits shall be paid to the petitioner within a period of eight [8] weeks from the date of receipt of a copy of this order.
[c] The petitioner would be at liberty to furnish a certified copy of this order
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NC: 2024:KHC:19706 WP No. 47966 of 2012 within four weeks from the date of receipt of a copy of this order.
Sd/-
JUDGE RB, NV