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CASE NO.:

Appeal (civil) 3433 of 2000

Appeal (civil) 1185 of 2003

PETITIONER:

Chairman and Managing Director, United Commercial Bank & Ors.

P.C. Kakkar

RESPONDENT:

P.C. Kakkar

Chairman and Managing Director, United Commercial Bank and Ors.

DATE OF JUDGMENT: 11/02/2003

BENCH:

SHIVARAJ V. PATIL & ARIJIT PASAYAT

JUDGMENT:

J U D G M E N T

ARIJIT PASAYAT J.

Heard.

Leave granted in S.L.P (C) No. 883 of 2000.

Both these appeals relate to judgment of the Allahabad

High Court dated 7.9.1999 and are, therefore, disposed of by

this common judgment. The primary question involved is the

scope of interference in the matter of punishment by the

High Court.

Factual background in a nutshell is as follows:

Disciplinary proceedings were initiated by the United

Commercial Bank (hereinafter referred to as 'the employer')

against P.C. Kakkar (hereinafter referred to as 'the

employee). It was alleged that he had committed several acts

of misconduct while functioning as Assistant Manager of

Mirzapur Branch. He was placed under suspension w.e.f.

6.7.1983. The disciplinary proceedings were initiated in

terms of United Commercial Bank Officer Employees (Conduct,

Discipline and Appeal) Regulation 1976 (hereinafter referred

to as 'the regulation'). The charges were found established

in respect of charge nos. 1, 2, 3, 6, 7 and 8. On the basis

of findings recorded by the Inquiry Officer and as endorsed

by the Disciplinary Authority, order of dismissal was passed

on 16.8.1988. Appeal preferred by the employee before the

prescribed appellate authority did not bring any relief.

Similar was the fate of the review application. Matter was

carried in writ petition before the Allahabad High Court.

As noticed by the High Court, there was no challenge to the

findings recorded, and what was urged related to the quantum

of punishment. One of the points highlighted to question

the quantum of punishment was that in a similar situation,

lesser punishment was imposed on one M.L. Keshwani though

the allegations against him were of much serious nature.

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The High Court accepted the plea and, inter alia, directed

as follows:-

"The Supreme Court has held in several

cases that there should be no discrimination

in the matter of punishment vide Sangram

Singh Versus State of Punjab (1983 (4) SCC

225).

On the facts of the case we are of the

opinion that the punishment given to the

petitioner was misappropriate and excessive.

Hence while we uphold finding of guilt. We

quash the orders dated 16.8.1988 and the

order dated 11.10.1989 and 5.2.1990 and

direct that the petitioner shall be

reinstated in service within six weeks of

production of certified copy of this order

before the authority concerned but he will be

given a lesser punishment. Since the matter

has been pending for a long time we direct

that the petitioner will be given the

punishment of being deprived of 75% of salary

for the period from the date of removal to

the date of reinstatement and he will be

given a severe warning not to make such

mistakes in future but he will get seniority

and continuity of service as if his service

had not been terminated."

According to learned counsel for the employer, after

having found that the charges were established the High

Court committed an error in interfering with the quantum of

punishment. The scope of such interference is extremely

limited. After having noted that there was no challenge to

the findings, there was no scope for interfering with the

quantum of punishment. Some of the charges were of very

serious nature and one of the charges related to fabrication

and manipulation of records. It is pointed out that even if

a co-delinquent has been given lesser punishment, same

cannot be a ground for interference. The employee was acting

as Assistant Manager in the Bank and committed the acts of

misconduct. Taking into account the higher standard of

honesty and integrity required by such employees any

interference with the quantum of punishment would amount to

misplaced sympathy. According to Mr. Ranjit Kumar, learned

counsel appearing for the employee, there were several

mitigating circumstances. It was categorically urged that

there was no embezzlement or fraud and there was no loss

caused to the Bank. The allegations of fictitious entries

were found not to have been established in a criminal case

which was initiated by the Central Bureau of Investigation

and the employee was acquitted of the charge. Further case

on which the High Court has placed reliance involved more

serious allegations and even if the allegations so far as

other officer M.L. Keshwani and the employee can be

differentiated, yet it has to be noted that the High Court

imposed more severe punishment compared to M.L. Keshwani.

The scope of interference with quantum of punishment

has been the subject-matter of various decisions of this

Court. Such interference cannot be a routine matter.

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Lord Greene said in 1948 in the famous Wednesbury case

(1948 (1) KB 223) that when a statute gave discretion to an

administrator to take a decision, the scope of judicial

review would remain limited. He said that interference was

not permissible unless one or the other of the following

conditions was satisfied, namely the order was contrary to

law, or relevant factors were not considered, or irrelevant

factors were considered; or the decision was one which no

reasonable person could have taken. These principles were

consistently followed in the UK and in India to judge the

validity of administrative action. It is equally well known

that in 1983, Lord Diplock in Council for Civil Services

Union v. Minister of Civil Service [(1983) 1 AC 768] (called

the CCSU case) summarized the principles of judicial review

of administrative action as based upon one or other of the

following viz., illegality, procedural irregularity and

irrationality. He, however, opined that "proportionality"

was a "future possibility".

In Om Kumar and Ors. v. Union of India (2001 (2) SCC

386, this Court observed, inter alia, as follows:

"The principle originated in Prussia in

the nineteenth century and has since been

adopted in Germany, France and other European

countries. The European Court of Justice at

Luxembourg and the European Court of Human

Rights at Strasbourg have applied the

principle while judging the validity of

administrative action. But even long before

that, the Indian Supreme Court has applied

the principle of "proportionality" to

legislative action since 1950, as stated in

detail below.

By "proportionality", we mean the

question whether, while regulating exercise

of fundamental rights, the appropriate or

least-restrictive choice of measures has been

made by the legislature or the administrator

so as to achieve the object of the

legislation or the purpose of the

administrative order, as the case may be.

Under the principle, the court will see that

the legislature and the administrative

authority "maintain a proper balance between

the adverse effects which the legislation or

the administrative order may have on the

rights, liberties or interests of persons

keeping in mind the purpose which they were

intended to serve". The legislature and the

administrative authority are, however, given

an area of discretion or a range of choices

but as to whether the choice made infringes

the rights excessively or not is for the

court. That is what is meant by

proportionality.

xxx xxx xxx xxx xxx

The development of the principle of

"strict scrutiny" or "proportionality" in

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administrative law in England is, however,

recent. Administrative action was

traditionally being tested on Wednesbury

grounds. But in the last few years,

administrative action affecting the freedom

of expression or liberty has been declared

invalid in several cases applying the

principle of "strict scrutiny". In the

case of these freedoms, Wednesbury principles

are no longer applied. The courts in England

could not expressly apply proportionality in

the absence of the convention but tried to

safeguard the rights zealously by treating

the said rights as basic to the common law

and the courts then applied the strict

scrutiny test. In the Spycatcher case

Attorney General v. Guardian Newspapers Ltd.

(No.2) (1990) 1 AC 109 (at pp. 283-284), Lord

Goff stated that there was no inconsistency

between the convention and the common law.

In Derbyshire County Council v. Times

Newspapers Ltd. (1993) AC 534, Lord Keith

treated freedom of expression as part of

common law. Recently, in R. v. Secy. Of

State for Home Deptt., ex p. Simms (1999) 3

All ER 400 (HL), the right of a prisoner to

grant an interview to a journalist was upheld

treating the right as part of the common law.

Lord Hobhouse held that the policy of the

administrator was disproportionate. The need

for a more intense and anxious judicial

scrutiny in administrative decisions which

engage fundamental human rights was re-

emphasised in in R. v. Lord Saville ex p

(1999) 4 All ER 860 (CA), at pp.870,872) . In

all these cases, the English Courts applied

the "strict scrutiny" test rather than

describe the test as one of

"proportionality". But, in any event, in

respect of these rights "Wednesbury" rule

has ceased to apply.

However, the principle of "strict

scrutiny" or "proportionality" and primary

review came to be explained in R. v. Secy. of

State for the Home Deptt. ex p Brind (1991) 1

AC 696. That case related to directions

given by the Home Secretary under the

Broadcasting Act, 1981 requiring BBC and IBA

to refrain from broadcasting certain matters

through persons who represented organizations

which were proscribed under legislation

concerning the prevention of terrorism. The

extent of prohibition was linked with the

direct statement made by the members of the

organizations. It did not however, for

example, preclude the broadcasting by such

persons through the medium of a film,

provided there was a "voice-over" account,

paraphrasing what they said. The applicant's

claim was based directly on the European

Convention of Human Rights. Lord Bridge

noticed that the Convention rights were not

still expressly engrafted into English law

but stated that freedom of expression was

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basic to the Common law and that, even in the

absence of the Convention, English Courts

could go into the question (see p. 748-49).

".....whether the Secretary of State,

in the exercise of his discretion, could

reasonably impose the restriction he has

imposed on the broadcasting

organisations"

and that the courts were

"not perfectly entitled to start from

the premise that any restriction of the

right to freedom of expression requires

to be justified and nothing less than an

important public interest will be

sufficient to justify it".

Lord Templeman also said in the above case

that the courts could go into the question

whether a reasonable minister could

reasonably have concluded that the

interference with this freedom was

justifiable. He said that "in terms of the

Convention" any such interference must be

both necessary and proportionate (ibid pp.

750-51).

In the famous passage, the seeds of the

principle of primary and secondary review by

courts were planted in the administrative law

by Lord Bridge in the Brind case (1991) 1 AC

696. Where Convention rights were in

question the courts could exercise a right of

primary review. However, the courts would

exercise a right of secondary review based

only on Wednesbury principles in cases not

affecting the rights under the Convention.

Adverting to cases where fundamental freedoms

were not invoked and where administrative

action was questioned, it was said that the

courts were then confined only to a secondary

review while the primary decision would be

with the administrator. Lord Bridge explained

the primary and secondary review as follows:

"The primary judgment as to

whether the particular competing public

interest justifying the particular

restriction imposed falls to be made by

the Secretary of State to whom

Parliament has entrusted the discretion.

But, we are entitled to exercise a

secondary judgment by asking whether a

reasonable Secretary of State, on the

material before him, could reasonably

make the primary judgment."

But where an administrative action is

challenged as "arbitrary" under Article 14

on the basis of Royappa (1974) 4 SCC 3 (as in

cases where punishments in disciplinary cases

are challenged), the question will be whether

the administrative order is "rational" or

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"reasonable" and the test then is the

Wednesbury test. The courts would then be

confined only to a secondary role and will

only have to see whether the administrator

has done well in his primary role, whether he

has acted illegally or has omitted relevant

factors from consideration or has taken

irrelevant factors into consideration or

whether his view is one which no reasonable

person could have taken. If his action does

not satisfy these rules, it is to be treated

as arbitrary. In G.B. Mahajan v. Jalgaon

Municipal Council (1991) 3 SCC 91 at p. 111

Venkatachaliah, J. (as he then was) pointed

out that "reasonableness" of the

administrator under Article 14 in the context

of administrative law has to be judged from

the stand point of Wednesbury rules. In Tata

Cellular v. Union of India (1994) 6 SCC 651

at pp. 679-80), Indian Express Newspapers

Bombay (P) Ltd. v. Union of India (1985) 1

SCC 641 at p.691), Supreme Court Employees'

Welfare Assn. V. Union of India (1989) 4 SCC

187 at p. 241) and U.P. Financial Corpn. V.

Gem Cap(India) (P) Ltd. (1993) 2 SCC 299 at

p. 307) while judging whether the

administrative action is "arbitrary" under

Article 14 (i.e. otherwise then being

discriminatory), this Court has confined

itself to a Wednesbury review always.

The principles explained in the last

preceding paragraph in respect of Article 14

are now to be applied here where the question

of "arbitrariness" of the order of

punishment is questioned under Article 14.

xxx xxx xxx xxx xxx

Thus, from the above principles and

decided cases, it must be held that where an

administrative decision relating to

punishment in disciplinary cases is

questioned as "arbitrary" under Article 14,

the court is confined to Wednesbury

principles as a secondary reviewing

authority. The court will not apply

proportionality as a primary reviewing court

because no issue of fundamental freedoms nor

of discrimination under Article 14 applies in

such a context. The court while reviewing

punishment and if it is satisfied that

Wednesbury principles are violated, it has

normally to remit the matter to the

administrator for a fresh decision as to the

quantum of punishment. Only in rare cases

where there has been long delay in the time

taken by the disciplinary proceedings and in

the time taken in the courts, and such

extreme or rare cases can the court

substitute its own view as to the quantum of

punishment."

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In B.C. Chaturvedi vs. Union of India and Ors. (1995

[6] SCC 749) it was observed:

"A review of the above legal position

would establish that the disciplinary

authority, and on appeal the appellate

authority, being fact-finding authorities

have exclusive power to consider the evidence

with a view to maintain discipline. They are

invested with the discretion to impose

appropriate punishment keeping in view the

magnitude or gravity of the misconduct. The

High Court/Tribunal, while exercising the

power of judicial review, cannot normally

substitute its own conclusion on penalty and

impose some other penalty. If the punishment

imposed by the disciplinary authority or the

appellate authority shocks the conscience of

the High Court/Tribunal, it would

appropriately mould the relief, either

directing the disciplinary/appellate

authority to reconsider the penalty imposed,

or to shorten the litigation, it may itself,

in exceptional and rare cases, impose

appropriate punishment with cogent reasons in

support thereof."

In Union of India and Anr. vs. G. Ganayutham (1997 [7]

SCC 463), this Court summed up the position relating to

proportionality in paragraphs 31 and 32, which read as

follows:

"The current position of

proportionality in administrative law in

England and India can be summarized as

follows:

(1) To judge the validity of any

administrative order or statutory

discretion, normally the Wednesbury test

is to be applied to find out if the

decision was illegal or suffered from

procedural improprieties or was one

which no sensible decision-maker could,

on the material before him and within

the framework of the law, have arrived

at. The court would consider whether

relevant matters had not been taken into

account or whether irrelevant matters

had been taken into account or whether

the action was not bona fide. The court

would also consider whether the decision

was absurd or perverse. The court would

not however go into the correctness of

the choice made by the administrator

amongst the various alternatives open to

him. Nor could the court substitute its

decision to that of the administrator.

This is the Wednesbury (1948 1 KB 223)

test.

(2) The court would not interfere

with the administrator's decision unless

it was illegal or suffered from

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procedural impropriety or was irrational

in the sense that it was in outrageous

defiance of logic or moral standards.

The possibility of other tests,

including proportionality being brought

into English administrative law in

future is not ruled out. These are the

CCSU (1985 AC 374) principles.

(3)(a) As per Bugdaycay (1987 AC

514), Brind (1991 (1) AC 696) and Smith

(1996 (1) All ER 257) as long as the

Convention is not incorporated into

English law, the English courts merely

exercise a secondary judgment to find

out if the decision-maker could have, on

the material before him, arrived at the

primary judgment in the manner he has

done.

(3)(b) If the Convention is

incorporated in England making available

the principle of proportionality, then

the English courts will render primary

judgment on the validity of the

administrative action and find out if

the restriction is disproportionate or

excessive or is not based upon a fair

balancing of the fundamental freedom and

the need for the restriction thereupon.

(4)(a) The position in our country,

in administrative law, where no

fundamental freedoms as aforesaid are

involved, is that the courts/tribunals

will only play a secondary role while

the primary judgment as to

reasonableness will remain with the

executive or administrative authority.

The secondary judgment of the court is

to be based on Wednesbury and CCSU

principles as stated by Lord Greene and

Lord Diplock respectively to find if the

executive or administrative authority

has reasonably arrived at his decision

as the primary authority.

(4)(b) Whether in the case of

administrative or executive action

affecting fundamental freedoms, the

courts in our country will apply the

principle of "proportionality" and

assume a primary role, is left open, to

be decided in an appropriate case where

such action is alleged to offend

fundamental freedoms. It will be then

necessary to decide whether the courts

will have a primary role only if the

freedoms under Articles 19, 21 etc. are

involved and not for Article 14.

Finally, we come to the present case.

It is not contended before us that any

fundamental freedom is affected. We need not

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therefore go into the question of

"proportionality". There is no contention

that the punishment imposed is illegal or

vitiated by procedural impropriety. As to

"irrationality", there is no finding by the

Tribunal that the decision is one which no

sensible person who weighed the pros and cons

could have arrived at nor is there a finding,

based on material, that the punishment is in

"outrageous" defiance of logic. Neither

Wednesbury nor CCSU tests are satisfied. We

have still to explain "Ranjit Thakur (1987

[4] SCC 611)".

The common thread running through in all these

decisions is that the Court should not interfere with the

administrator's decision unless it was illogical or suffers

from procedural impropriety or was shocking to the

conscience of the Court, in the sense that it was in

defiance of logic or moral standards. In view of what has

been stated in the Wednesbury's case (supra) the Court would

not go into the correctness of the choice made by the

administrator open to him and the Court should not

substitute its decision to that of the administrator. The

scope of judicial review is limited to the deficiency in

decision-making process and not the decision.

To put difference unless the punishment imposed by the

Disciplinary Authority or the Appellate Authority shocks the

conscience of the Court/Tribunal, there is no scope for

interference. Further to certain litigations it may, in

exceptional and rare cases, impose appropriate punishment by

recording cogent reasons in support thereof. In a normal

course if the punishment imposed is shockingly

disproportionate it would be appropriate to direct the

Disciplinary Authority or the Appellate Authority to

reconsider the penalty imposed.

In the case at hand the High Court did not record any

reason as to how and why it found the punishment shockingly

disproportionate. Even there is no discussion on this

aspect. The only discernible reason was the punishment

awarded in M.L. Keshwani's case. As was observed by this

Court in Balbir Chand vs. Food Corporation of India Ltd. and

Ors.(1997 [3] SCC 371), even if a co-delinquent is given

lesser punishment it cannot be a ground for interference.

Even such a plea was not available to be given credence as

the allegations were contextually different.

A Bank officer is required to exercise higher standards

of honesty and integrity. He deals with money of the

depositors and the customers. Every officer/employee of the

Bank is required to take all possible steps to protect the

interests of the Bank and to discharge his duties with

utmost integrity, honesty, devotion and diligence and to do

nothing which is unbecoming of a Bank officer. Good conduct

and discipline are inseparable from the functioning of every

officer/employee of the Bank. As was observed by this Court

in Disciplinary Authority-cum-Regional Manager v. Nikunja

Bihari Patnaik (1996 (9) SCC 69), it is no defence available

to say that there was no loss or profit resulted in case,

when the officer/employee acted without authority. The very

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discipline of an organization more particularly a Bank is

dependent upon each of its officers and officers acting and

operating within their allotted sphere. Acting beyond one's

authority is by itself a breach of discipline and is a

misconduct. The charges against the employee were not casual

in nature and were serious. These aspects do not appear to

have been kept in view by the High Court.

It needs no emphasis that when a Court feels that the

punishment is shockingly disproportionate, it must record

reasons for coming to such a conclusion. Mere expression

that the punishment is shockingly disproportionate would not

meet the requirement of law. Even in respect of

administrative orders Lord Denning M.R. in Breen v.

Amalgamated Engineering Union (1971 (1) All E.R. 1148)

observed "The giving of reasons is one of the fundamentals

of good administration". In Alexander Machinery (Dudley)

Ltd. v. Crabtree (1974 LCR 120) it was observed: "Failure

to give reasons amounts to denial of justice". Reasons are

live links between the mind of the decision taker to the

controversy in question and the decision or conclusion

arrived at". Reasons substitute subjectivity by

objectivity. The emphasis on recording reasons is that if

the decision reveals the "inscrutable face of the sphinx",

it can, by its silence, render it virtually impossible for

the Courts to perform their appellate function or exercise

the power of judicial review in adjudging the validity of

the decision. Right to reason is an indispensable part of a

sound judicial system. Another rationale is that the

affected party can know why the decision has gone against

him. One of the salutary requirements of natural justice is

spelling out reasons for the order made, in other words, a

speaking out. The "inscrutable face of a sphinx" is

ordinarily incongruous with a judicial or quasi-judicial

performance. But as noted above, the proceedings commenced

in 1981. The employee was placed under suspension from 1983

to 1988 and has superannuated in 2002. Acquittal in the

criminal case is not determinative of the commission of

misconduct or otherwise, and it is open to the authorities

to proceed with the disciplinary proceedings,

notwithstanding acquittal in criminal case. It per se would

not entitle the employee to claim immunity from the

proceedings. At the most the factum of acquittal may be a

circumstance to be considered while awarding punishment. It

would depend upon facts of each case and even that cannot

have universal application.

In the peculiar circumstances of the case, it would be

appropriate to send the matter back to the High Court for

fresh consideration. The High Court shall only consider the

punishment aspect, treating all other matters to be closed

and to have become final. The appeal filed by the employer

is accordingly disposed of while that filed by the employee

is dismissed.