Karnataka High Court
Ningaiah vs Cauvery Gramin Bank, Mysore on 1 July, 1994
Equivalent citations: ILR1994KAR2048, 1994(3)KARLJ140, (1995)IILLJ389KANT
Author: Tirath Singh Thakur
Bench: Tirath S. Thakur
ORDER Tirath Singh Thakur, J.
1. The petitioner was working as Manager of the Naganahalli Branch of the respondent-Bank. By an order dated 26.6.1991 passed by the Chairman of the Bank in his capacity as the disciplinary authority, he was placed under suspension, in contemplation of a domestic enquiry, into certain allegations of misconduct levelled against him. Sometime later in November, 1991, the petitioner was served with a charge-sheet, in which all told, 8 distinct charges were levelled against him, in regard to matters pertaining to Hoogia Branch while another 3 charges were levelled in regard to his functioning as Manager of Naganahalli (Mysore) Branch of the respondent-Bank.
2. The petitioner submitted his reply to the charge-sheet which was found to be unsatisfactory resulting in the initiation of an enquiry against him and the appointment of one Shri S. R. Ranganath, as an Enquiry Officer to conduct the enquiry.
3. The Enquiry Officer conducted an enquiry into the charges, during the course of which he recorded the statements of the witness produced on either side, and by his report, dated 17th September, 1993, concluded that charges Nos. 1, 2, 5 and 7 framed against the petitioner in regard to Hoogia Branch and all the three charges pertaining to Naganahalli (Mysore) Branch, were proved.
4. The findings returned by the Enquiry Officer were submitted to the disciplinary authority who upon evaluation of the same concurred with the Enquiry Officer resulting in issue of the impugned show-cause notice to the petitioner calling upon him to show cause as to why penalties mentioned in the same be not imposed upon him.
5. Aggrieved by the notice aforesaid the petitioner has filed the present writ petition seeking a writ of certiorari for quashing the notice in question.
6. I have heard the learned counsel for the parties and perused the record. Even though listed for preliminary hearing only the learned counsel have agreed to the final disposal of the writ petition, at this stage.
7. Learned counsel for the petitioner raised a short point for the success of this petition. He urged that, the disciplinary authority had not given to the petitioner any opportunity to challenge the findings returned by the Enquiry Officer against him. He submitted that the disciplinary authority was under an obligation to not only furnish a copy of the report of the Enquiry Officer, but also to give him a fair reasonable opportunity to challenge the findings of the Enquiry Officer, before, drawing any independent conclusion. This was not done in the present case which according to the learned counsel amounted to the violation of the principles of natural justice thereby rendering the impugned notice, and the proposed dismissal of the petitioner from service illegal and unsustainable. He placed heavy reliance upon the judgment of their Lordships of the Supreme Court in Managing Director, ECIL, Hyderabad v. B. Karunakaran, 1993 II CLR 1129 in support of his contention that whenever the disciplinary authority was different from the Enquiry Officer, it was imperative for the former to allow the delinquent official an opportunity to question the findings, returned by the Enquiry Officer before drawing any independent conclusion on the basis of the enquiry so conducted.
8. Learned counsel for the respondent on the other hand argued that the petitioner has the opportunity to challenge the correctness of the findings of the Enquiry Officer while submitting his reply to the impugned show-cause notice, and that to separate opportunity need be given to him for that purpose. He further submitted that the writ petition was premature at this stage.
9. The power to frame charges vests in the disciplinary authority, and so does the power to initiate or dispense with the holding of an enquiry into the same. After the disciplinary authority decides to order an enquiry, it may hold the same itself or appoint an Enquiry Officer for that purpose in the absence of a provision to the contrary in the service or discipline rules concerned. The fact that an Enquiry Officer has been appointed for the conduct of the enquiry, does not however alter the true legal position namely that the power to punish the delinquent is vested only in the disciplinary authority. That being so, the Enquiry Officer, functions only as a delegate of the disciplinary authority whose conclusions, and recommendations, may or may not find favour with the disciplinary authority. In a given case, the Enquiry Officer may absolve the delinquent of the charges framed against him but the disciplinary authority however be entitled to take a different view upon an independent evaluation of the material available against the employee or vice versa. In other words, the Enquiry Officer, is a fact finding agency who investigates the charges, framed against the employee and records its findings and may even make recommendations as to the punishment to be imposed upon him. But the decision to accept those findings or to arrive at an independent conclusion different than the one arrived at by the Enquiry Officer, is in the discretion of the disciplinary authority.
10. In General Manager, Eastern Railways & Anr. v. Jawala Prasad Singh 1970 (3) SCR 271, their Lordships of the Supreme Court, were dealing with an almost similar question though in the context of Article 311 of the Constitution. Their Lordships, held that the duty of an Enquiry Officer ends with the making of a report by him, and that the disciplinary authority has to consider the record of the enquiry and arrive at its own conclusion in respect of each charge framed against the employee. It is in this regard instructive to quote the following passage from the said judgment :
"The members of the Inquiry Committee cannot record their findings separately but it is their duty to record findings on each of the charges together with the reasons therefor. It is to be noted that the duty of the Inquiry Committee ends with the making of the report. The disciplinary authority has to consider the record of the inquiry and arrive at its own conclusion on each charge. Whatever may be the impression created by a particular witness on the mind of the member of the committee, the same is never translated into writing and the Disciplinary Committee merely goes by the written record after giving a personal hearing to the railway servant if he asks for it. Even if the Inquiry Committee makes a report absolving the railway servant of the charges against him, the disciplinary authority may, on considering the entire record come to a different conclusion and impose a penalty. This is amply borne out by a judgment of this Court in Union of India v. H. C. Goel, where it was said that neither the findings nor the recommendations of the Inquiry Committee are binding on the Government."
11. Now if the disciplinary authority has to draw its own conclusions from the record, then the question is what material and record does it consider while doing so? Is it the evidence - documentary and/or oral adduced before the Enquiry Officer which alone is considered or the report of the Enquiry Officer also? The answer to these questions assumes importance because if it is the material produced before the Enquiry Officer which alone is considered then the delinquent may well be said to have had an opportunity to defend himself against the same, during the course of the enquiry itself, even though he may still be entitled to be heard by the disciplinary authority against the charges, for the said authority would be examining the matter independently for drawing its own conclusions. But, if the disciplinary authority has, before it the report of the Enquiry Officer, which has drawn conclusions adverse to the petitioner then the same would also constitute, material adverse to the delinquent upon which he would doubtless be entitled to an opportunity of being heard. This opportunity would require in the minimum, furnishing a copy of the report of the delinquent and an opportunity to him to say whatever he may have to against the same. It is only after the disciplinary authority has furnished a copy of the report to the employee concerned, and also given him an opportunity of making his representation against the same, questioning his findings that the disciplinary authority may set the stage for an independent assessment, and evaluation of the material, available against the employee. Conversely the failure of the disciplinary authority to either furnish a copy of the report to the employee or give him an opportunity to question the findings returned in the same, before it embarks upon an exercise for arriving at its own conclusions would invalidate the proposed action by reason of violation of the principles of natural justice.
12. In Karunakar's case, a Constitution Bench of the Supreme Court, drew a distinction between the right of a delinquent employee to receive the Inquiry Officer's report and show cause against the findings returned in the same and the right to show cause against the penalty proposed. Their Lordships found that the two rights came to be confused with each other because, as the law stood prior to the 42nd Amendment of the Constitution the two rights arose simultaneously only at the stage when a show-cause notice against the proposed penalty was issued. The right to receive the report and to represent against the findings recorded in the same was inextricably connected with the acceptance of the report by the disciplinary authority and the nature of the penalty proposed. The court pointed out that some courts in the country had subsequent to the 42nd Amendment to the Constitution, erroneously taken the view that the right to represent against the proposed penalty having been taken away the Government servant was deprived even of his right to represent against the findings of guilt. The error their Lordships held was because of the failure to distinguish the two rights which were independent of each other. Their Lordships proceeded to observe thus :
"While the right to represent against the findings in the report is part of the reasonable opportunity available during the first stage of the inquiry, viz., before the disciplinary authority takes into consideration the findings in the report, the right to show cause against the penalty proposed belongs to the second stage when the disciplinary authority has considered the findings in the report and has come to the conclusion with regard to the guilt of the employee and proposes to award penalty on the basis of its conclusions. The first right is the right to prove innocence. The second right as to plead for either no penalty or a lesser penalty although the conclusion regarding the guilt is accepted. It is the second right exercisable at the second stage which was taken away by the 42nd Amendment.
The reason why the right to receive the report of the Inquiry Officer is considered an essential part of the reasonable opportunity at the first stage and also a principle of natural justice is that the findings recorded by the Inquiry Officer form an important material before the disciplinary authority which alongwith the evidence is taken into consideration by it to come to its conclusions. It is difficult to say in advance, to what extent the said findings including the punishment, if any, recommended in the report would influence the disciplinary authority while drawing its conclusions. The findings further might have been recorded without considering the relevant evidence on record, or by mis-construing it or unsupported by it. If such a finding is to be one of the documents to be considered by the disciplinary authority, the principles of natural justice require that the employee should have a fair opportunity to meet, explain and controvert it before he is condemned. It is the negation of the tenets of justice and a denial of fair opportunity to the employee to consider the findings recorded by a third party like the Inquiry Officer without giving the employee an opportunity to reply to it. Although it is true that the disciplinary authority is supposed to arrive at its own findings on the basis of the evidence recorded in the inquiry, it is also equally true that the disciplinary authority takes into consideration the findings recorded by the Inquiry Officer along with the evidence on record. In the circumstances, the findings of the Inquiry Officer do constitute an import material before the disciplinary authority which is likely to influence its conclusions. If the Inquiry Officer were only to record the evidence and forward the same to the disciplinary authority, that would not constitute any additional material before the disciplinary authority of which the delinquent employee has no knowledge. However, when the Inquiry Officer goes further and records his findings, as stated above, which may or may not be based on the evidence on record or are contrary to the same or in ignorance of it, such findings are an additional material unknown to the employee but are taken into consideration by the disciplinary authority while arriving at its conclusions. Both the dictates of the reasonable opportunity as well as the principles of natural justice, therefore, require that before the disciplinary authority comes to its own conclusions, the delinquent employee should have an opportunity to reply to the Inquiry findings. The disciplinary authority is then required to consider the evidence, the report of the Inquiry Officer and the representation of the employee against it."
13. In applying the above principle to the present case, there is no difficulty at all; for it is admitted that after the submission of the report and the findings of the Inquiry Officer, to the disciplinary authority, no opportunity was afforded to the petitioner to question the same. On the contrary the disciplinary authority, proceeded to evaluate the evidence produced against the employee, and concurred with the findings of the Inquiry Officer, as is apparent from the show-cause notice served upon the petitioner. The disciplinary authority in doing so, violated the principle of natural justice thereby vitiating the process leading to the issue of the impugned show-cause notice.
14. Learned counsel for the respondent however argued that the petitioner can even now avail of the opportunity to challenge the findings returned to the Inquiry Officer. He submitted that the show-cause notice may be read down so as to include in it an opportunity to the petitioner to challenge the findings of the Inquiry Officer. I am not impressed by this argument. The disciplinary authority has already expressed its mind and in unequivocal terms stated that it concurs with the conclusions arrived at by the Inquiry Officer. In this regard it is fruitful to quote the following from the show-cause notice.
"On a careful evaluation of the enquiry proceedings and the evidences produced/recorded in the enquiry in support of the charges, I concur with the finds of the Enquiry Officer."
The charges proved in the enquiry denote that :
(i) in gross disregard of the interest and instructions of the Bank, the charged official misappropriated large sums of money out of the loan proceeds and subsidy amounts of several IRDP advances sanctioned under Special Component Plan by partially crediting proceeds thereof to the third party accounts, instead of purchasing the assets for which loan and subsidy amounts were intended and misappropriating the balance amounts;
(ii) to cover-up his acts of above misconduct he created a false records such as recordings in the Branch movement register, sale invoices, purporting purchase of animals;
(iii) he failed to ensure end-use of loan released by way of cash credit limit;
(iv) claimed subsidy from the Government under Anthyodaya Scheme although no such loan was released and appropriated the said subsidy amount of Rs. 1,000/- to the account of unconnected person; and thus passed on undue pecuniary gain resulting in misutilisation of the Government subsidy amount;
(v) recommended to Head Office for auction of higher limit to a party although the conduct of the previous advance was not sastisfactory, and also suppressing information relating to existence of the borrower's indirect liabilities to Bank, and he sanctioned SBF advances to the same party, even though the recommended proposal was pending with Head Office;
(vi) the sanctioned loan against Bank deposit without obtaining the deposit receipts duly discharged from the parties, and exceeding the discretionary powers vested with the Branch Manager, and released the proceeds of the loan to a third party unconnected with the depositors, and thus accommodated without authority the party with funds to whom he has recommended credit limits.
The charges proved are very grave in nature and they cast serious reflections on the integrity and honesty of the charged official. On account of the misconduct proved against the charged official in the enquiry, the Bank is likely to incur a financial loss of about Rs. 65,000/- in addition to misutilisation of Government subsidy to the extent of Rs. 30,730/-.
15. The above observations made by the disciplinary authority in my opinion, leave no room for it to take a different view, even if the notice is read down as suggested by learned counsel for the respondent. The disciplinary authority will have to give a fresh look to the entire material assembled against the petitioner at the enquiry, and arrive at his conclusions afresh, after taking into consideration the representation which the petitioner may make, against the findings returned by the Enquiry Officer.
16. It was lastly argued by the learned counsel for the respondent that the principle enunciated in Karunakar's case, (supra), has no application to the case in hand as in Karunakar's case, the Supreme Court was considering the issue in the context of Article 311 of the Constitution of India, which is not applicable to the petitioner. I do not find any merit even in this submission of the learned counsel. It is true that in Karunakar's case, Article 311 was also involved but, the right to challenge the findings of the Enquiry Officer was founded not on the touchstone of Article 311 but on the requirements of a fair opportunity to defend and the principles of natural justice. That these principles are applicable even to the petitioner in the present case is not in dispute before me, and it is on these principles alone that the petitioner has made out a case. That apart, their Lordships of the Supreme Court, specifically ruled that the principle should apply to all Government, non-Government, Public or Private establishments, as is apparent from the following passage from their Lordships judgment :
"In the view that we have taken, viz., that the right to make representation to the disciplinary authority against the findings recorded in the inquiry report is an integral part of the opportunity of defence against the charges and is a breach of principles of natural justice to deny the said right, it is only appropriate that the law laid down in Mohd. Ramzan Khan's case should apply to employees in all establishments whether Government or non-Government, public or private. This will be the case whether there are rules governing the disciplinary proceedings or not and whether they expressly prohibit the furnishing of the copy of the report or are silent on the subject. Whatever the nature of punishment, further, whenever the rules require an inquiry to be held, for inflicting the punishment in question, the delinquent employee should have the benefit of the report of the Inquiry Officer before the disciplinary authority records its findings on the charges levelled against him. Hence question (iv) is answered accordingly."
17. The argument of the learned counsel for the respondent therefore must fail.
18. In the result this petition succeeds and is accordingly allowed. The impugned show-cause notice issued by Chairman (Disciplinary Authority) of the respondent-Bank dated 1.3.1994 is quashed; reserving liberty to it to issue a fresh notice, in accordance with law and keeping in view the observations made in this judgment.
19. There will be no orders as to costs.