Gujarat High Court
J M Parekh vs Chief Manager on 22 April, 2016
Author: J.B.Pardiwala
Bench: J.B.Pardiwala
C/SCA/20248/2005 ORDER
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
SPECIAL CIVIL APPLICATION NO. 20248 of 2005
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J M PAREKH, EX SENIOR MANAGER EC NO.4277 B O B....Petitioner(s)
Versus
CHIEF MANAGER, BANK OF BARODA & 3....Respondent(s)
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Appearance:
MR NIKUL K SONI, ADVOCATE for the Petitioner(s) No. 1
MR DARSHAN M PARIKH, ADVOCATE for the Respondent(s) No. 2
NOTICE SERVED for the Respondent(s) No. 1
RULE SERVED for the Respondent(s) No. 1 - 4
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CORAM: HONOURABLE MR.JUSTICE J.B.PARDIWALA
Date : 22/04/2016
ORAL ORDER
By this writ-application under Article 226 of the Constitution of India, the petitioner, a former Senior Manager (Credit), Bank of Baroda, has prayed for the following reliefs :
"(a) Quashing and setting aside the order of punishment dated 29.3.2003 made by the Respondent no.2 as per Annexure-C and also the order dated 8.12.2003 of appellate authority, the respondent no.3 rejecting the appeal as per Annexure-E and the order rejecting the review application by the respondent no.4 vide intimation as per Annexure-H as illegal, unjust, unconstitutional, null and void.
(b) Quashing and setting aside the order rejecting application for compassionate allowance made by the petitioner as per Annexure-J vide intimation dated 27.7.2004 as per Annexure-K as illegal, unjust, unconstitutional, null and void and to direct the respondents to atleast grant compassionate allowance maximum available to the petitioner forthwith and to pay the arrears with appropriate interest;
(c) Pending the admission, hearing and final disposal of this petition, be pleased to direct the respondents to fix up and pay adhoc allowance to the petitioner, as per Pension Regulations;Page 1 of 12
HC-NIC Page 1 of 12 Created On Tue Apr 26 01:48:21 IST 2016 C/SCA/20248/2005 ORDER
(d) To grant the cost of this petition and also to grant any other relief/s which may be deemed just and necessary in the facts of the case."
The facts of this case may be summarised as under :
The petitioner was serving as a Senior Manager (Credit) with the Bank of Baroda, Gandhi Road Branch, Ahmedabad, during the period between May 1994 and September 1997. It is his case that during the said period, he was working under the Branch Head of the level of Assistant General Manager/Deputy General Manager, who had the authority to sanction advances and run the branch. It is also his case that he was assisted by six Credit Officers under him who were looking after the work of raising proposals, appraising proposals and carrying out the necessary inspections of the accounts and other miscellaneous work. It is his case that his duty was to supervise their work and guide them. He was served a departmental charge-sheet, containing the following charges :
(1) He did not take steps to ensure and protect the interest of the Bank.
(2) He adopted such steps and took such actions as were derogatory, prejudicial, detrimental and injurious to the interest of the Bank.
(3) He did not discharge his duties with integrity and honesty and took such actions and committed such omissions which showed a lack of probity, integrity and honesty.
(4) He did not discharge his duties with devotion and diligence and took such actions and committed such omissions which showed a lack of care and caution and which were grossly negligent in nature.
(5) He accommodated certain groups/borrowers by way of suppressing material facts while preparing appraisal note and recommending various credit facilities by violating Bank's rules, norms and prescribed procedures, thereby he put Bank's huge funds to jeopardy.
(6) He acted in a manner unbecoming of a Bank Officer.Page 2 of 12
HC-NIC Page 2 of 12 Created On Tue Apr 26 01:48:21 IST 2016 C/SCA/20248/2005 ORDER On conclusion of the departmental inquiry, the Inquiry Officer reached to the conclusion that some of the charges were held to be established. The Inquiry Officer held as under :
"ALLEGATION - A PARTLY PROVED
ALLEGATION - B (i) PARTLY PROVED
ALLEGATION - B (ii) NOT PROVED
ALLEGATION - B (iii) NOT PROVED
ALLEGATION - B (iv) NOT PROVED
ALLEGATION - B (v) PROVED
ALLEGATION - C PARTLY PROVED
The allegations which have been proved and partly proved as above establish that (1) he did not take steps to ensure and protect the interest of the Bank. (2) he adopted such steps and took such actions as were derogatory, prejudicial, detrimental and injurious to the interest of the Bank. (3) he accommodated certain groups/borrowers by way of suppressing material facts while preparing appraisal note and recommending various credit facilities by violating Bank's rules, norms and prescribed procedures, thereby, he put Bank's huge funds to jeopardy. (4) he acted in a manner unbecoming of a Bank Officer."
Relying on the report of the Inquiry Officer, the disciplinary authority, by order dated 29th March 2003, thought fit to pass an order of removal from the Bank's service with a stipulation that the same shall not be a disqualification for future employment.
While passing the order of penalty referred to above, the disciplinary authority observed as under :
"From the above, it could be summed up that while working as a Senior Manager (Credit) and performing his duties as a processing/recommending authority in respect of various credit proposals, Mr.Parekh did not take all possible steps to protect the interest of the Bank. This could be reflected from the fact that Mr.Parekh recommended credit facilities to new customers immediately after opening Current A/cs. and without going into their financial background. In some of the a/cs., credit facilities were recommended by deliberately suppressing the material facts regarding unsatisfactory conduct/negative features in respect of the associate firms of the borrowing company. Mr.Parekh also did not exercise adequate care for creation of valid equitable mortgage i.e. he did not obtain full sets of documents under Equitable Mortgage and even in some cases, original documents were not obtained. Such serious omissions on his part resulted Page 3 of 12 HC-NIC Page 3 of 12 Created On Tue Apr 26 01:48:21 IST 2016 C/SCA/20248/2005 ORDER into loss of bank's prime security and Bank's funds have been exposed to great risk.
Thus, above various acts of commission & omissions on the part of Mr.Parekh adequately prove lack of integrity, probity and honesty on his part in discharge of his duties as Senior Manager (Credit) and the gross negligence on his part is likely to cause substantial financial loss to the Bank, I have carefully considered the nature of charges, the factual allegation levelled and proved/partly proved against Mr.Parekh, the written statement of defence, the findings report and submission of Mr.Parekh, oral as well as written submission during personal hearing on disagreement order. Taking into consideration the seriousness of the allegation against Mr.Parekh such as his acts prejudicial, detrimental to the bank, misuse/abuse of his position as Sr. Manager (Advances), knowingly and willfully violated the bank's norms, suppressing the material facts and omission and commission on the part of Mr.Parekh showed lack of probity and integrity which has caused substantial financial loss to the bank, acting in a manner of unbecoming of a Bank Officer which were proved against Mr.Parekh."
Being dissatisfied with the order of the disciplinary authority referred to above, the petitioner preferred an appeal before the appellate authority and Executive Director, Bank of Baroda. The appellate authority, by order dated 8th December 2003, dismissed the appeal. While dismissing the appeal, the appellate authority observed as under :
"It is proved during the inquiry proceedings that the equitable mortgage is either defective or not created in -9- accounts.
The periodical inspections of the account and monthly stock statement have a vital role in deciding the limit/drawing power in the account. Being in- charge of the department, Shri Parekh is held responsible for not supervising in the matter.
DEX 149 is the letter addressed to the Zonal Head by the branch is taken into consideration by IA and it is not the document which has proved the charge of actions which were derogatory, prejudicial to the interest of the Bank. In fact he did not mention the adverse features of adhoc facility to associate concerns and non-payment of L/Cs in time while recommending/processing the regular limits to same borrowers for huge limits, which had been proved in the inquiry.
As per the records and documents presented during the inquiry proceedings, in -6- accounts in which adhoc facilities for LCs granted, were not retired on due date or retired by allowing excess over limits or by debiting to Advance Bills A/c of the branch. Moreover the adhoc facility for Page 4 of 12 HC-NIC Page 4 of 12 Created On Tue Apr 26 01:48:21 IST 2016 C/SCA/20248/2005 ORDER LCs are granted by opening LCs in favour of associate concerns without verifying the business activity and genuineness of the need. Thus the Lcs are opened to accommodate financial needs of the Cos.
The allegations in respect of M/s Astron Drugs & Ind Ltd, M/s R K Enterprises, M/s Zillion Pharma Chem Ltd proved by IA during the inquiry proceedings evidence that Shri Parekh did not discharge his duties with integrity and honesty and showed lack of probity, integrity and honesty.
Regarding not to initiate disciplinary action against other officers, it has no relevance with the acts of omission & commission committed by Shri Parekh in said -4- advance A/cs as pointed out by him. I find that a thorough investigation was carried out by -2- senior advances officers in the irregularities of advances a/cs of Gandhi Road Branch. After scrutinizing the investigation, disciplinary action was initiated after concurrence of CVO and General Manager (Vigilance). He had been held liable for a/cs turning in to NPA by I.A. to the extent of the allegations held proved/ partly proved against him during the inquiry proceedings.
Being incharge of the advance department it was duty of Shri Parekh to look after/supervise to work allotted to officers working under him. Therefore, Shri Parekh is held liable for non-submission of various returns/documents and sanctions for PSS.
Chief Manager of Nariman Point branch, Mumbai had discussed the default of M/s Angle Medicines Pvt Ltd with branch head as well as Shri Parekh and cautioned in respect of the Co and its Directors during his personal visit in the month. of May, 1997 at Gandhi Road Branch. As evidence from inquiry, Mr. Parikh was aware of the defaulting Co. &. it's director, who was also a Managing Director of M/s Astron Drugs & India Ltd. Even then, Shri Parekh recommended and processed the request to increase limit from Rs.115/- lakhs to Rs.255/- lakhs in the a/c of M/s Astron Drugs & India Ltd.
While processing/recommending the original proposal for Rs.115/- lakhs Shri Parekh has suppressed the material adverse features of the Company mentioned in the Annual Report. Thereafter, proposal of Group companies were also processed and recommended by ignoring the above mentioned facts.
I found from record that a special observation letter was issued for major serious irregularities reported during the inspection of the branch as on 07.07.1997 and as such I do not agree that no major irregularities were pointed out by the auditors. "
Being dissatisfied with the order passed by the appellate authority, the petitioner preferred an application for review of the order passed by the appellate authority before the Chairman and Managing Director of the Bank. The Chairman and Managing Director Page 5 of 12 HC-NIC Page 5 of 12 Created On Tue Apr 26 01:48:21 IST 2016 C/SCA/20248/2005 ORDER thought fit to reject the review application having found no merit in the same.
Being dissatisfied, the petitioner has come up with this writ- application.
Mr.Nikul Soni, the learned counsel appearing for the petitioner, submitted that the authorities committed a serious error in holding that the petitioner was guilty of the misconduct alleged. He submitted that his client has nothing to do so far as the allegations are concerned. He further submitted that the appellate authority failed to give his client an opportunity of hearing in person. He submitted that the appellate authority ought to have given hearing in person, and having not done so, the principles of natural justice could be said to have been violated. He submitted that the officers who were working under the petitioner were also departmentally proceeded and against those officers also the charges were held to be established. However, the authorities thought fit to impose penalty of withholding of increments. He submitted that one of the delinquents later on was promoted. According to the learned counsel, the authority should not have imposed such a harsh punishment of removal from service.
Mr.Soni, the learned counsel appearing for the petitioner, placed strong reliance on the decision of the Supreme Court in the case of Bank of Baroda v. S.K.Kool (Dead) through legal representatives, and another, (2014)2 SCC 715, in support of his submissions.
On the other hand, this writ-application has been vehemently opposed by Mr.Darshan Parikh, the learned counsel appearing for the Bank. He submitted that serious charges were levelled against the petitioner and most of those were held to be established. He Page 6 of 12 HC-NIC Page 6 of 12 Created On Tue Apr 26 01:48:21 IST 2016 C/SCA/20248/2005 ORDER submitted that having regard to the position in the Bank, he ought to have exhibited lot of diligence in discharge of his duty. He submitted that all relevant aspects of the matter were considered and thereafter the order of penalty of removal from service was passed. Mr.Parikh submitted that there is no question of giving any hearing in person by the appellate authority. The appellate authority considered all the grounds which were raised in the memo of the appeal and thereafter thought fit to dismiss the appeal. He submitted that having regard to the limited scope of interference in these type of matters, this Court may not disturb the order in exercise of its extraordinary jurisdiction under Article 226 of the Constitution of India.
Having heard the learned counsel appearing for the parties and having considered the materials on record, the only question that falls for my consideration is, whether the authorities committed any error in passing the impugned order.
It is now well-settled that this Court should not re-appreciate the evidence led in the course of a domestic inquiry and take a different view in exercise of its extraordinary jurisdiction under Article 226 of the Constitution of India. The limited scope of interference is permissible only in cases where it is pointed out that the entire inquiry was vitiated on account of a very serious lapse or irregularity in the conduct of the same. I also do not find any merit so far as the submission as regards not giving personal hearing by the appellate authority is concerned. That by itself would not vitiate the order.
I am not impressed by the submission of Mr.Soni that even if the rule does not specifically say that the delinquent employee should be given personal hearing by the appellate authority, the same may be read into the provisions and the delinquent employee should be given an opportunity of personal hearing by the appellate authority.
Page 7 of 12HC-NIC Page 7 of 12 Created On Tue Apr 26 01:48:21 IST 2016 C/SCA/20248/2005 ORDER In the case of Ganesh Santa Ram Sirur v. State Bank of India and another, (2005)1 SCC 13, the Supreme Court made the following observations :
"30. Union of India and Anr. v. Jesus Sales Corporation was cited for the proposition as to taking into consideration the facts and circumstances of each case to exercise discretion and that it does not flow from the rule that before exercising such discretion the appellate authority should hear the appellant and that this discretion can be exercised by the appellate authority as the said authority may deem think proper. He further contended that whenever a statute vest discretion in an authority to exercise the statutory power, such authority can exercise the same in an unfettered manner and that whenever an unfettered discretion has been exercised, courts have refused to countenance the same. He also invited our attention to para 5 of the above judgment which is to the following effect :-
"...The courts cannot insist that under all circumstances and under different statutory provisions personal hearings have to be afforded to the persons concerned. If this principle of affording personal hearing is extended whenever statutory authorities are vested with the power to exercise discretion in connection with statutory appeals, it shall lead to chaotic conditions. Many statutory appeals and applications are disposed of by the competent authorities who have been vested with powers to dispose of the same. Such authorities which shall be deemed to be quasi-judicial authorities are expected to apply their judicial mind over the grievances made by the appellants or applicants concerned, but it cannot be held that before dismissing such appeals or applications in all events the quasi-judicial authorities must hear the appellants or the applicants, as the case may be. When principles of natural justice require an opportunity to be heard before an adverse order is passed on any appeal or application, it does not in all circumstances mean a personal hearing. The requirement is complied with by affording an opportunity to the person concerned to present his case before such quasi-judicial authority who is expected to apply his judicial mind to the issues involved."
31. Mr. Salve invited our attention to Para 17 of the Judgment in State Bank of Patiala & Ors. vs. S.K. Sharma, 1996(3) SCC 364, which deals with the opinion of the House of Lords in United Kingdom. He also drew our attention to S.L. Kapoor vs. Jagmohan, 1980) (4) SCC 379 and Managing Director ECIL vs B. Karunakar's, 1993 (4) SCC 727 in para 25, 26 and 28. The decisions relied on and cited above make one thing clear namely principles of natural justice cannot be reduced to any hard and fast formulae and as said in Russel v. Duke of Norfold (1949) 1 All ER 109, these principles cannot be put in a strait jacket. Their applicability depends upon the context and the facts and circumstances of each case. The objective is to ensure a fair hearing, a fair deal to a person whose rights are going to be affected. In our opinion, the approach and test adopted in Karunakar's case (supra) 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 that is Page 8 of 12 HC-NIC Page 8 of 12 Created On Tue Apr 26 01:48:21 IST 2016 C/SCA/20248/2005 ORDER adequate or a full hearing or violation of a procedural rule or requirement governing the enquiry."
So far as the decision of the Supreme Court is concerned, I am of the view that it has no application in the facts of the present case.
In the case before the Supreme Court, the respondent was working as a Clerk with the bank. A departmental inquiry was initiated, and as a measure of punishment, he was visited with the penalty of "removal from service with superannuation benefits as would be due otherwise and without disqualification from future employment". After such penalty was imposed, the respondent made a request for leave encashment, which was declined by the bank. The pensionary benefits were also declined. In such circumstances, a dispute was raised before the Industrial Tribunal. The respondent succeeded before the Tribunal. Being dissatisfied, the bank preferred a petition in the High Court. The writ-application of the bank was rejected by the High Court. Being dissatisfied, the bank approached the Supreme Court. Before the Supreme Court, reliance was placed on regulation 22 of the Bank of Baroda (Employees) Pension Regulation, 1995, which provides for forfeiture of service. The Supreme Court rejected the contention of the bank as regards the regulation 22 considering a Bipartite Settlement. I may quote the relevant observations of the Supreme Court as contained in paragraphs 11 to 15 as under :
"11. The terms and conditions of service of the employees are governed and modified by the Bipartite Settlement. Various punishments have been provided under the Bipartite Settlement which can be inflicted on the employee found guilty of gross misconduct.
12. In 2002, a Bipartite Settlement was signed by the Indian Banks' Association and the Banks' Workmen's Union with regard to disciplinary action procedure. It is common ground that in the light of the said Bipartite Settlement, clause 6(b) was inserted as one of the punishments which can be inflicted on an employee found guilty of gross misconduct and the same reads as follows:Page 9 of 12
HC-NIC Page 9 of 12 Created On Tue Apr 26 01:48:21 IST 2016 C/SCA/20248/2005 ORDER "6. An employee found guilty of gross misconduct may;
a) *** .
b) be removed from service with superannuation benefits i.e. Pension and/or Provident Fund and Gratuity as would be due otherwise under the Rules or Regulations prevailing at the relevant time and without disqualification from future employment, or"
The employee undisputedly has been visited with the aforesaid penalty in terms of the Bipartite Settlement.
13. Article 22 of the Regulation, which is relied on to deny the claim of the employee reads as follows:
"22. Forfeiture of service: (1)Resignation or dismissal or removal or termination of an employee from the service of the Bank shall entail forfeiture of his entire past service and consequently shall not qualify for pensionary benefits."
From a plain reading of the aforesaid Regulation, it is evident that removal of an employee shall entail forfeiture of his entire past service and consequently such an employee shall not qualify for pensionary benefits. If we accept this submission, no employee removed from service in any event would be entitled for pensionary benefits. But the fact of the matter is that the Bipartite Settlement provides for removal from service with pensionary benefits "as would be due otherwise under the Rules or Regulations prevailing at the relevant time". The consequence of this construction would be that the words quoted above shall become a dead letter. Such a construction has to be avoided.
14. The Regulation does not entitle every employee to pensionary benefits. Its application and eligibility is provided under Chapter II of the Regulation whereas Chapter IV deals with qualifying service. An employee who has rendered a minimum of ten years of service and fulfills other conditions only can qualify for pension in terms of Article 14 of the Regulation. Therefore, the expression "as would be due otherwise" would mean only such employees who are eligible and have put in minimum number of years of service to qualify for pension. However, such of the employees who are not eligible and have not put in required number of years of qualifying service shall not be entitled to the superannuation benefit though removed from service in terms of clause 6(b) of the Bipartite Settlement. Clause 6(b) came to be inserted as one of the punishments on account of the Bipartite Settlement. It provides for payment of superannuation benefits as would be due otherwise.
15. The Bipartite Settlement tends to provide a punishment which gives superannuation benefits otherwise due. The construction canvassed by the employer shall give nothing to the employees in any event. Will it not be a fraud Bipartite Settlement? Obviously it would be. From the conspectus of what we have observed we have no doubt that such of the employees who are otherwise eligible for superannuation benefit are removed from service Page 10 of 12 HC-NIC Page 10 of 12 Created On Tue Apr 26 01:48:21 IST 2016 C/SCA/20248/2005 ORDER in terms of clause 6(b) of the Bipartite Settlement shall be entitled to superannuation benefits. This is the only construction which would harmonise the two provisions. It is well settled rule of construction that in case of apparent conflict between the two provisions, they should be so interpreted that the effect is given to both. Hence, we are of the opinion that such of the employees who are otherwise entitled to superannuation benefits under the Regulation if visited with the penalty of removal from service with superannuation benefits shall be entitled for those benefits and such of the employees though visited with the same penalty but are not eligible for superannuation benefits under the Regulation shall not be entitled to that."
What did not appeal to the Supreme Court was that once by way of a bipartite settlement a particular punishment is inserted and such punishment is imposed, such clause should not be permitted to be defeated by virtue of clause 22 of the Regulations for forfeiture of service. The Supreme Court took notice of the fact that the bipartite settlement provided for removal from service with pensionary benefits "as would be due otherwise under the rules or regulations prevailing at the relevant time". Such is not the case in hand. In the case in hand, the penalty of removal has been imposed with the only stipulation that it shall not be disqualification so far as the future employment is concerned. Thus, in my view, the decision of the Supreme Court is of no avail to the petitioner. No other contentions have been raised. I see no good reason to disturb the order imposed by the disciplinary authority, which was affirmed by the appellate authority.
So far as the quantum of punishment is concerned, the law is well-settled having regard to the Wednesbury principles. It is only after this Court reaches to a conclusion that the punishment is not in commensurate with the gravity of the charge and is shockingly disproportionate. In such circumstances, the High Court would be justified in asking the authority to look into the quantum of penalty. However, such is not the case in hand.
Page 11 of 12HC-NIC Page 11 of 12 Created On Tue Apr 26 01:48:21 IST 2016 C/SCA/20248/2005 ORDER For the reasons aforesaid, this writ-application fails and is hereby rejected. Rule discharged.
(J.B.PARDIWALA, J.) MOIN Page 12 of 12 HC-NIC Page 12 of 12 Created On Tue Apr 26 01:48:21 IST 2016