Karnataka High Court
Smt Prem Latha Uppal vs Canara Bank on 15 February, 2023
Author: Alok Aradhe
Bench: Alok Aradhe
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WA No.6228 of 2013
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 15TH DAY OF FEBRUARY 2023
PRESENT
R
THE HON'BLE MR. JUSTICE ALOK ARADHE
AND
THE HON'BLE MR. JUSTICE VIJAYKUMAR A PATIL
WRIT APPEAL NO.6228 OF 2013 (S-DE)
BETWEEN:
1. SMT. PREM LATHA UPPAL
WIFE OF G.L. UPPAL
AGED ABOUT 62 YEARS
FORMERLY WORKING AS SENIOR MANAGER
Digitally AN OFFICER IN MIDDLE MANAGEMENT GRADE
signed by SCALE-III, CANARA BANK, ACCOUNTS SECTION
RUPA V NEW DELHI 110 001
Location: High SINCE RETIRED
Court of RESIDING AT V-1/56, RAJOURI GARDEN
Karnataka
NEW DELHI - 110 027.
...APPELLANT
(BY SRI. P.S. RAJAGOPAL, SR. COUNSEL FOR
SRI. JAYANTH DEV KUMAR, ADV.,)
AND:
1. CANARA BANK
A BODY CONSTITUTED UNDER THE BANKING
COMPANIES (ACQUISITION & TRANSFER OF
UNDERTAKINGS) ACT, 1970
HAVING ITS HEAD OFFICE AT
112, J C ROAD, BANGALORE - 560 002
REPRESENTED BY ITS EXECUTIVE DIRECTOR.
...RESPONDENT
(BY SMT. S.R. ANURADHA, SR. COUNSEL FOR
SMT. SWATHI ASHOK, ADV.,)
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WA No.6228 of 2013
THIS WRIT APPEAL IS FILED U/S 4 OF THE KARNATAKA
HIGH COURT ACT PRAYING TO SET ASIDE THE ORDER
PASSED IN THE WRIT PETITION NO.3150/2008 (S-DE) DATED
02/09/2013.
THIS APPEAL COMING ON FOR HEARING, THIS DAY,
ALOK ARADHE J., DELIVERED THE FOLLOWING:
JUDGMENT
This intra court appeal emanates from an order dated 02.09.2013 passed by Learned Single Judge by which writ petition preferred by the appellant has been dismissed. In order to appreciate the grievance of the appellant, relevant facts need mention, which are stated infra.
2. The appellant joined the services of Canara Bank (hereinafter referred to as 'the Bank' for short) in the year 1971 as clerk. The appellant for a period from 16.06.2000 till 21.08.2004 was posted as Senior Manager in Diplomatic Enclave Branch, New Delhi, which was headed by a Chief Manager. The appellant was one of the three member's of Credit Sanction Committee (hereinafter referred to as 'the Committee' for -3- WA No.6228 of 2013 short). Mr.P.P.Naik, Chief Manager, R.K.Puram Branch was the Chairman of the Committee, whereas, Sri.R.Mutturamalingam, Manager, Diplomatic Enclave Branch was the other member of the committee. The committee by a unanimous decision on 19.03.2001 sanctioned Open Cash Credit (OCC) limit of Rs.50 Lakhs to one M/s Aman Trading Company on the security of Stock and Receivables under the trader's scheme and collateral security of mortgage of immovable property, which was valued at Rs.107.21 Lakhs.
3. On 15.02.2002, one Mr.S.S.Bhat, Chief Manager of the Bank sanctioned a credit limit of Rs.50 Lakhs to M/s Creative Trading Company and on 19.04.2002, he renewed the limit of Rs.50 Lakhs sanctioned in favour of M/s Aman Trading Company. The Vigilance Department of the company on 08.04.2003, suspecting the fraud played by the borrowers viz., M/s Aman Trading Company and M/s -4- WA No.6228 of 2013 Creative Trading Company of availing credit limit on collateral security of mortgage of property with forged title deeds, ordered investigation. In the findings recorded in the vigilance investigation, it was found that borrowers had committed fraud on the bank.
4. Thereupon, on 27.06.2003, the Bank filed a complaint to the Central Bureau of Investigation (CBI). In the aforesaid complaint, the name of the appellant was not mentioned. A Final Investigation Report was submitted by Vigilance cell of the bank on 18.07.2003, in which the appellant was absolved and it was concluded that unit was in existence and was functioning and the security furnished was valid.
5. The appellant thereafter was promoted to a selection post viz., Senior Management Grade IV on 19.07.2004. In the year 2005, CBI sought sanction to prosecute several officers of the bank. Eventually, CBI agreed to give up the prosecution subject to bank's -5- WA No.6228 of 2013 taking regular departmental action against its officers for imposing major penalty. The appellant who was posted as Chief Manager, Alwar Road, Gurgaon Branch of the bank alone, was placed under suspension on 12.05.2005 in contemplation of a disciplinary proceeding.
6. On 27.07.2005, a disciplinary proceeding was initiated against the appellant and a charge sheet along with two documents was served on the appellant. The appellant submitted a reply to the aforesaid charge sheet on 02.08.2005. In the departmental enquiry, 3 witnesss viz., Sri.M.K.Gupta (Investigating Officer, MW1) Sri.B.S.Bhat (Manager, MW2) and Sri.R.Chandra, (Government Examiner of Questioned Document, MW3) were examined. The bank produced 53 documents in support of the charges. The enquiry officer submitted a report on 14.02.2006 in which charges levelled against the appellant were found to be proved. -6- WA No.6228 of 2013
7. The disciplinary authority by an order dated 31.05.2006 imposed major penalty of punishment of reduction to a lower grade from SMG-IV to MMG-III and the basic pay of the appellant was fixed at Rs.21,660/-. The appellant filed an appeal, which was dismissed by an order dated 02.06.2007. The appellant filed a review petition and filed a writ petition on 22.02.2008 challenging the order passed by the disciplinary authority as well as the appellate authority. During the pendency of the writ petition, the review petition filed by the appellant was dismissed on 10.08.2009. The appellant thereafter attained the age of superannuation on 31.11.2010.
8. The Learned Single Judge by an order dated 02.09.2013 inter alia held that Regulation 10 of Canara Bank Officers, Employees (Discipline and Appeal) Regulation, 1976 (hereinafter referred to as 'the Regulations' for short) uses the expression 'may' and -7- WA No.6228 of 2013 therefore, it is not necessary for the bank to order a joint enquiry. It was further held that charges levelled against the officers were different and they were tried in different proceedings. It was further held that substantial opportunity was given to the appellant to defend herself and the charges levelled against the appellant as well as other officers cannot be said to be identical in the absence of any material. Accordingly, the writ petition was dismissed. In the aforesaid factual background, this appeal has been filed.
9. Learned Senior Counsel for the appellant submitted that the Bank had initiated disciplinary action against 7 officers, who were involved in the same transaction and therefore, in view of mandate contained in Regulation 10 of the Regulations, a joint enquiry ought to be held against all the officers including the appellant. It is further submitted that the expression 'may' used in Regulation 10 of the Regulations has been -8- WA No.6228 of 2013 held to be mandatory by this court. It is also submitted that the appellant on 16.03.2010 had participated in the meeting of the Committee and had not sanctioned a single loan.
10. It is pointed out that the statements of Mr.S.S.Bhat and Mr.R.Chandramouli, which were recorded by the Investigating Officer were relied by enquiry officer without producing them in the enquiry. It is argued that the decision of the committee, the appellant alone cannot be held responsible. It is contended that the appellant is entitled to parity in the matter of imposition of punishment inasmuch as a major penalty has been inflicted on the appellant, whereas, a minor penalties have been awarded to the remaining officers. It is urged that even though the documents were marked with the consent of the parties, yet the bank was under an obligation to prove its contents. It is also urged that initiation of departmental -9- WA No.6228 of 2013 proceeding and imposition of penalty was a matter which was within the special knowledge of the bank and therefore, the burden could not have been cast on the appellant to produce the material. It is contended that even though no vigilance angle was involved, yet, the Central Vigilance Commission was consulted, which amounts to submission to external dictation.
11. It is also contended that copy of the first stage advise of CVC was not supplied to the appellant. In this connection, reference has been made to office memorandum dated 28.09.2000. It is also contended that the penalty imposed on the appellant is not in conformity with the Regulations. In support of aforesaid submissions, reliance has been placed on decision of Hon'ble Supreme Court in 'CENTRAL BANK OF INDIA LTD. VS. PRAKASH CHAND JAIN', AIR 1969 SC 983 and 'M/S BAREILLY ELECTRICITY SUPPLY CO. LTD. VS. THE WORKMEN AND OTHERS', AIR 1972 SC
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WA No.6228 of 2013330, 'BONGAIGAON REFINERY & PETROCHEMICAL LIMITED VS. GIRISH CHANDRA SARMA', (2007) 7 SCC 206, 'ARUN KUMAR ALVA VS. VIJAYA BANK AND OTHERS', (2006) 3 KLJ 610 and 'DIPANKAR SENGUPTA & ANOTHER VS. UNITED BANK OF INDIA AND OTHERS', (1999) 1 LLJ 208.
12. On the other hand, Learned Senior counsel for the respondent submitted that no material has been produced by the appellant to show that the charges levelled against the appellant as well as the other officers were the same. It is contended that the word 'may' used in Regulation 10 of the Regulations is directory. It is further contended that decision in ARUN KUMAR ALVA's case supra does not apply to the fact situation of the case as in the aforesaid case, it was admitted that the charges levelled against the officers were identical. It is also urged that Ex.P41 and Ex.P44 are not statements of individuals but reports of
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WA No.6228 of 2013Mr.S.S.Bhat and Mr.R.Chandramouli. It is urged that reliance placed by the enquiry officer on reports of aforesaid officers has not caused any prejudice to the appellant.
13. It is argued that the vigilance report is not against the appellant. Therefore, it is not necessary to supply copy of the vigilance report. It is contended that the penalty imposed on the appellant is in consonance with the Regulations and a minor penalty has been imposed on the appellant. It is submitted that the enquiry held against the appellant does not suffer from any infirmity.
14. We have considered the rival submissions and have perused the record. The main issues, which arise for consideration in this appeal are as follows:
(i) The nature of Regulation 10 of the Regulations and the effect of its non compliance, in the facts of the case?
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WA No.6228 of 2013
(ii) Whether the findings recorded by
the enquiry officer are vitiated in law as
statements of Mr.S.S.Bhat and
Mr.R.Chandramouli recorded by the
Investigating Officer were relied upon by the Enquiry officer in the absence of their examination as witnesses in the departmental enquiry proceeding?
(iii) Whether the Central Vigilance Commission was required to be consulted, in the facts of the case?
15. We shall now advert to the issues ad seriatum. Regulation 10 of the Regulations reads as under:
10. Common Proceedings:
Where two or more officer employees are concerned in a case, the authority competent to impose a major penalty on all such officer employee may make an order directing that disciplinary proceedings against all of them may be taken in a common proceedings.
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WA No.6228 of 2013The aforesaid Regulation provides that where two or more officer employees are concerned in a case, the authority competent to impose a major penalty on such officer or employees may make an order directing that disciplinary proceedings against all of them may be taken in a common proceeding.
16. Prima facie, the word 'may' used in a provision indicates a directory requirement, whereas, the word 'shall' indicates a mandatory requirement. The word 'may' is an enabling word and it confers capacity power of authority and imply discretion. [See: 'MADAN LAL FAKRI CHAND DUDHEDIYA VS. S.CHANGDEO SUGAR MILLS', AIR 1962 SC 1543]. The word 'may' in the legal and factual context, in which power is to be exercised may combine the power with an obligation to exercise it and the same may mean must. In other words, it may be treated as mandatory. The Hon'ble Supreme Court in 'STATE OF UTTAR PRADESH VS.
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WA No.6228 of 2013JOGINDER SINGH', AIR 1963 SC 1618, has held that the word 'may' is capable of meaning 'must' or 'shall' in the light of the context and where a discretion is conferred on a authority coupled with an obligation the word 'may' which denotes discretion should be construed to mean a command. The aforesaid principle was reiterated by Hon'ble Supreme Court in 'SRI.RANGASWAMY, THE TEXTILE COMMISSIONER AND OTHERS VS. SAGAR TEXTILE MILLS (P.) LTD. AND ANOTHER', AIR 1977 SC 1516 AND ORISSA STATE (PREVENTION & CONTROL OF POLLUTION) BOARD VS. ORIENT PAPER MILLS AND ANOTHER', (2003) 10 SCC 421.
17. Regulation 10 of the Regulations has been enacted with an object to ensure parity in treatment to employees who are involved in a case and provides that the disciplinary proceeding against all of them may be taken in a common proceeding. The Regulation
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WA No.6228 of 2013stipulates that a well informed and consistent view has to be taken by an authority while dealing with cases of two or more employees who are involved in a case. The aforesaid Regulation also takes into account the salutary principal of maintaining parity in the matter of punishment with co-delinquents. Therefore, Regulation 10 of the Regulations creates an obligation on the authority to proceed against such employees by way of a common proceeding. It, thus, creates an obligation on an authority and therefore, the expression 'may' used in Regulation 10 of the Regulations has to be construed as 'shall'. In any case, if an authority decides to proceed against two or such employees separately, it has to record reasons for the same. The aforesaid Regulation does not envisage that charges against the employees should be identical.
18. In the instant case, the following two charges were framed against the appellant. The first charge is
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WA No.6228 of 2013with regard to sanction of Rs.50,00,000/- on 19-3-2001 against the hypothecation of stocks, collateral security of house property, bank guarantee of Sri. Sanjay Jain and Sri. B.K. Jain was stipulated. The second charge was to the effect that one M/s. Creative Trading Company, a proprietory concern of Sri. Ashok Jain as proprietor and trading in Copper Winding Wires, was sanctioned OCC limit of Rs.50,00,000/- against hypothecation of stocks book debts, collateral security of house property and personal guarantee of Sri. Sanjay Jain and Sri. Rajeev Jain was stipulated.
19. The bank in para 4 of statement of objections has stated as follows:
It is submitted that the CBI after investigation sought permission/sanction for prosecuting the petitioner. But after analysing the CBI report, the D.A. did not find any criminal connivance on the part of the petitioner and hence, decided not to give sanction for prosecution, thereby not
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WA No.6228 of 2013
putting the petitioner to undue
harassment. But at the same time D.A.
was of the view that the gross/blatant lapses/irregularities observed on the part of the petitioner in safeguarding and protecting the interest of the bank and ensuring financial discipline particularly considering the position she holds in the bank cannot be absolved and hence decided to proceed Departmentally.
20. The relevant extract of para 15 of the statement of objections filed by the bank is reproduced below:
Apart from the petitioner six other officials, including a pensioner were proceeded against departmentally and considering their role in the matter appropriate punishment were imposed on them.
Thus, the charges levelled against the appellant and six other officials arise out of the two transactions of loan. The appellant was one of the three member's of the Committee, which had unanimously recommended
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WA No.6228 of 2013the grant of loan. The appellant had not individually sanctioned any loan. The appellant as well as 6 other officers were involved in the same transactions though their role was different. Therefore, in view of mandate contained in Regulation 10 of the Regulations, the authority ought to have directed a common enquiry. Therefore, the departmental enquiry proceeding initiated against the appellant is vitiated in law as the same was initiated in violation of Regulation 10 of the Regulations. Accordingly, the first issue is answered.
21. So far as second issue is concerned, we may refer to cross-examination of MW1- Sri.N.K.Gupta. The relevant of the cross-examination reads as under:
9 DR Please peruse M.Ex.41 again and confirm that branch officials including Smt. Uppal again visited business premises of the party on 07-12-2001.
MW1 Yes. As per the information provided by Sri. S.S. Bhat in his statement the business place of Aman Trading Co., was visited by him alongwith Smt. Prem Lata Uppal and normal business activities was observed by them.
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WA No.6228 of 201313 DR Please peruse statement of Sri. R.C. Mouli dated 17.07.2003 [M.Ex.44/1] and confirm that Sri. P.P. Nayak had instructed Sri. Mouli to place office note for sanction to him. MW1 M.Ex.44/1 is the statement given by Sri. R.C. Mouli during the course of investigation wherein he mentioned that the office note was typed by him when the Chief Manager asked him to prepare the proposal for sanction. However, this aspect was not apparent/substantiated in the Office Note. From perusal of the record, it is evident that the aforesaid witnesses were not examined as witnesses in the enquiry. However, their statements have been relied upon by the enquiry officer in its report while recording a finding that charges levelled against the appellant are partly proved. Thus, the enquiry officer relied upon a material in respect of which no opportunity was afforded to the appellant to rebut the same. Therefore, the findings recorded by the enquiry officer are vitiated. Accordingly, the second issue is answered.
22. From perusal of the charges levelled against the appellant supra, it is evident that no vigilance angle was involved. Therefore, it was not necessary to consult
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WA No.6228 of 2013the Central Vigilance Commission. However, the Central Vigilance Commission was consulted, which was not required in the facts of the case. Accordingly, third issue is answered.
23. For the aforementioned reasons, the order dated 02.09.2013 passed by Learned Single Judge cannot be sustained in the eye of law. Accordingly, the orders dated 02.09.2013 passed by Learned Single Judge, the order dated 31.05.2006 passed by the disciplinary authority and the order dated 02.06.2009 passed by appellate authority are quashed. Ordinarily we would have granted the liberty to the bank to proceed against the appellant afresh. However, in peculiar facts of the case, we refrain from doing so for more than one reason. Firstly, it will have an impact on other officers of the bank who are not before us. Secondly, in view of the stand taken by the bank itself in para 4 of the statement of objection that no criminal
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WA No.6228 of 2013connivance on the part of the appellant was found by the bank. Thirdly, the appellant was appellant was subsequently promoted on 19.07.2004 and lastly, for the reason that the appellant has already attained the age of superannuation on 31.11.2010. For the aforementioned reasons, we are not inclined to grant the liberty to the bank to proceed afresh against the appellant.
Accordingly, the appeal is allowed.
Sd/-
JUDGE Sd/-
JUDGE SS