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PETITIONER:

NAGARAJ SHIVARAO KARJAGI

Vs.

RESPONDENT:

SYNDICATE BANK HEAD OFFICE MANIPAL AND ANR.

DATE OF JUDGMENT30/04/1991

BENCH:

SHETTY, K.J. (J)

BENCH:

SHETTY, K.J. (J)

YOGESHWAR DAYAL (J)

CITATION:

1991 AIR 1507 1991 SCR (2) 576

1991 SCC (3) 219 JT 1991 (2) 529

1991 SCALE (1)832

ACT:

Banking Companies (Acquisition and Transfer of

Undertakings) Act, 1970: Section 8-Policy matters-Directions

to Banks-Disciplinary matters-Awarding punishment to

delinquent officers-Uniform policy-Feasibility of-Directive

issued to comply with Central Vigilance Commission's advice-

Whether within jurisdiction-Whether contrary to Regulations

governing such matters.

Syndicate Bank Officer Employees (Disciplinary &

Appeal) Regulations, 1976:

Regulations 3, 4, 5, 6, 7, 10-Punishment for

misconduct-Consultation with Central Vigilance Commission-

Advice tendered by the Commission-Whether binding on

disciplinary authorities.

Central Vigilance Commission Manual: Articles 22 and

23-Guidelines for Banks-Major penalty cases-Consultation

with Commission-Advice tendered-Acceptance of-Whether

obligatory upon disciplinary authority.

HEADNOTE:

The appellant was a Manager in one of the branches of

the Respondent-Bank. In 1985, there was a departmental

enquiry against him on the charges that he discounted a

cheque for Rs.50,000 drawn in the name of some other person

to accommodate one of his colleagues and when the cheque

returned unpaid, he retained the same for about two months

without taking action for realisation of the amount. An

enquiry was conducted by the Commissioner for Vigilance

Inquiry from the Central Vigilance Commission, following the

procedure prescribed by the Syndicate Bank Officer

Employees' (Disciplinary & Appeal) Regulations. The Inquiry

Officer submitted his report holding that the charges were

proved against the appellant. The Respondent-Bank referred

the matter to the Central Vigilance Commission for advice

and the Commission recommended the punishment of compulsory

retirement.

After considering the Inquiry Report and after

affording opportunity to the appellant, the Disciplinary

Authority imposed on him the

577

penalty of compulsory retirement. On appeal, the appellate

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authority concurred with the findings recorded and the

punishment imposed. The appellant filed a Writ Petition

before the High Court challenging the order of his

compulsory retirement. The High Court declined to interfere

with the order. Hence the present appeal, by special leave.

The appellant also filed a Writ Petition before this

Court challenging the validity of the direction dated

21.7.1984 issued by the Finance Ministry, following which

the Respondent-Bank has imposed on him the penalty of

compulsory retirement.

On behalf of the appellant/petitioner it was contended

that the advice given by the Central Vigilance Commission

was blindly followed by the Respondent-Bank as it was made

binding on it by virtue of the directions dated 21.7.84

issued by the Ministry of Finance and in that process the

merits of the case and the statutory regulations governing

departmental inquiries were ignored. It was also contended

that the subject matter of the inquiry was only regarding

irregularities in banking practice and since the interest of

the Bank was not affected as he had the money recovered and

credited to the Bank with interest thereon, the alleged

misdemeanour did not warrant any major penalty like

compulsory retirement, which even according to the

Respondent-Bank, was too harsh.

On behalf of the Respondent-Bank it was contended that

it had independently considered the material on record

notwithstanding the advice given by the Central Vigilance

Commission and since the orders did not refer to the

circulars or to the advice of Central Vigilance Commission,

the punishment imposed on the appellant/petitioner was not

vitiated by extraneous influences.

Allowing the matters, this Court

HELD: 1. The Respondent-Bank itself felt that the

compulsory retirement recommended by the Central Vigilance

Commission was too harsh and excessive on the

appellant/petitioner in view of his excellent performance

and unblemished antecedent service. The Bank made two

representations, one in 1986 and another in 1987 to the

Central Vigilance Commission for taking a lenient view of

the matter and to advise lesser punishment. Apparently,

those representations were not accepted by the Commission.

The disciplinary authority and the appellate authority

therefore had no choice in the matter. They had to impose

the punishment of compulsory retirement as advised by the

Central Vigi-

578

lance Commission. The advice was binding on the authorities

in view of the directive of the Ministry of Finance issued

on 21.7.1984, followed by two circulars issued by the

successive Chief Executives of the Bank. The disciplinary

and appellate authorities might not have referred to the

directive of the Ministry of Finance or the Bank circulars.

They might not have stated in their orders that they were

bound by the punishment proposed by the Central Vigilance

Commission. But it is reasonably foreseeable and needs no

elaboration that they could not have ignored the advice of

the Commission. They could not have imposed a lesser

punishment without the concurrence of the Commission.

Indeed, they could have ignored the advice of the Commission

and imposed a lesser punishment only at their peril. [586F-

H; 587 A-C]

2.1 But for the Finance Ministry's directive dated

21.7.1984, the advice tendered by the Central Vigilance

Commission is not binding on the Bank or the punishment

authority; it is not obligatory upon the punishing authority

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to accept the advice of the Central Vigilance Commission.

[588C]

2.2 The Ministry of Finance has no jurisdiction to

issue such a directive to Banking institutions. The

Government may regulate the Banking institutions within the

power located under the Banking Companies (Acquisition and

Transfer of Undertakings) Act, 1970. Even though Section 8

thereof empowers the Government to issue directions in

regard to matters of policy, there cannot be any uniform

policy with regard to different disciplinary matters and

much less there could be any policy in awarding punishment

to the delinquent officers in different cases. The

punishment to be imposed depends upon the nature of every

case and the gravity of the misconduct proved. The

authorities have to exercise their judicial discretion

having regard to the facts and circumstances of each case.

They cannot act under the dictation of the Central Vigilance

Commission or of the Central Government in the exercise of

their power and the imposition of punishment on the

delinquent officer. Therefore the directive of the Ministry

of Finance is wholly without jurisdiction and contrary to

the statutory Regulations governing disciplinary matters and

is quashed. [588D-H; 589A]

A.N.D'silva v. Union of India, [1962] Suppl. S.C.R.

968, relied on.

De Smith's Judicial Review of Administrative Action,

4th Edn. p. 309, referred to.

579

3. the Chairman of the Respondent-Bank is directed to

withdraw the circular letters dated 27.7.1984 and 8.9.1986

issued in furtherance of the Finance Ministry's directive

dated 21.7.1984. [589C]

[Setting aside the orders of the disciplinary authority

and the appellate authority, this Court directed the

disciplinary authority to dispose of the case in accordance

with law and observations made in the judgment.]

JUDGMENT:

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 2123 of

1991.

From the Judgment and Order dated 20.12.1988 of the

Bombay High Court in Appeal No. 1649 of 1988.

WITH

WRIT PETITION NO. 1287 OF 1989.

(Under Article 32 of the Constitution of India).

Rajinder Sachhar, R.K. Agnihotri and S.C. Paul for the

Appellant/Petitioner.

K.N. Bhat, Vineet Kumar, Lalit Bhasin and Ms. Nina

Gupta for the Respondents.

The Judgment of the Court was delivered by

K. JAGANNATHA SHETTY, J. Nagaraj Shivarao Karjagi, the

petitioner in SLP No. 4415 of 1989 has challenged his

compulsory retirement and in Writ Petition No. 1287 of 1989

he has questioned the validity of the direction dated 21

July 1984 issued by the Finance Ministry, Government of

India. Since the questions raised in both the cases are

inter looked, we grant special leave in the SLP and proceed

to dispose of the same along with the writ petition.

The events leading to these cases may briefly be

stated. In 1982, the petitioner was a Manager of the

Syndicate Bank (`the Bank') at East Patel Nagar Branch at

New Delhi. He discounted a cheque of the sum of Rs. 50,000

drawn on Punjab National Bank, Madras, after obtaining, by

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phone prior approval of the Regional Divisional Manager of

the Bank. The cheque was sent for realisation to the Punjab

National Bank at Madras, but it was returned unpaid. The

petitioner did not take prompt action to recover the amount

from the person in whose favour he discounted the cheque.

He kept the cheque

580

with him even without reporting to the higher authorities.

In 1983, the Assistant General Manager of the Bank called

upon him to explain why the amount due under the discounted

cheque has not been recovered. The petitioner in his reply

explained the circumstances under which the cheque was

discounted. He has stated that the credit was given to the

account of one Dr. N. Ramakrishnan who was a Senoir

Scientist in Indian `Agricultural Research Institute, New

Delhi but the amount was withdrawn by another person called

A. Chandrashekhar who is an officer of the Bank. He has

further stated that A. Chandrashekhar has promised to pay

the amount and therefore, he has retained the instrument

with him hoping that A. Chandrashekhar would keep up his

promise. On 6 July 1984 a sum of Rs.52,167.15 was deposited

with the Bank. A sum of Rs.36,000 towards principal sum and

Rs.16,167.15 towards interest. A suit was filed to recover

a sum of Rs.14,000 out of the principal amount. And later

on, this principal amount was also recovered and credited to

the Bank.

However, in 1985 there was a departmental inquiry

against the petitioner. The Commissioner for Vigilance

Inquiry from the Central Vigilance Commission conducted the

inquiry. The first charge against the petitioner was that

when he was functioning as Manager, he discounted under his

discretionary jurisdiction a cheque for Rs.50,000 drawn in

the name of Dr. N. Ramakrishnan in order to accommodate A.

Chandrashekhar an officer of the Bank or others known to

him. The second charge framed against him, related to the

retention of the discounted instrument with him from

December, 1982 till January 1984 without taking/causing to

be taken any action to realise the amount due under the

unpaid cheque. It was also alleged that the petitioner made

available undue financial accommodation to A. Chandrashekhar

or others to the detriment of the interests of the Bank. He

was charged with lack of the integrity, honesty devotion to

duty, diligence and conduct unbecoming of the status of Bank

Officer in contravention of Regulation No. 3(1) of the

Syndicate Bank Officer Employees' (Conduct) Regulations,

1976.

The inquiry was held as per the procedure prescribed by

Syndicate Bank Officer Employees' (Discipline & Appeal)

Regulations, 1976, (`the Regulations'). On 16 October 1986,

the Inquiry Officer submitted his report holding that the

charges were proved against the petitioner. He has held

that the petitioner has failed to take any effective steps

for recovery of the amount paid under the discounted

instrument. He has kept the instrument with himself for

unduly long period without even surrendering the same to the

custody of the Bank. It was

581

Only after the Additional General Manager reminded him by

letter dated 15 December 1983, the petitioner assured him

that he would return the cheque which he finally did on 18

January 1984. The Inquiry Officer has finally concluded that

the transaction connected with the unpaid instrument was of

an accommodative nature with a view to assist A.

Chandrashekhar by using another person as benami and it was

in clear violation of the rules of the Bank.

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It is said and indeed not disputed that the Bank

referred the matter to the Central Vigilance Commission for

advice and the Commission has recommended that the

petitioner may be compulsorily retired from service by way

of punishment.

The disciplinary authority after considering the

inquiry report and affording an opportunity to the

petitioner passed an order dated 7 October 1987 imposing on

the petitioner the penalty of compulsory retirement. The

petitioner appealed to the General Manager challenging the

punishment. On 27 August 1988 the General Manager dismissed

the appeal concurring with the findings recorded and the

punishment imposed by the disciplinary authority. The

petitioner thereupon moved the Bombay High Court for relief

under Article 226 of the Constitution. The High Court has

also dismissed the writ petition. He has now appealed to

this Court.

THE CONTENTIONS OF THE PETITIONER

The petitioner has been complaining throughout and also

before us that the punishing authorities did not apply their

mind and did not exercise their power in considering the

merits of his case. They have imposed on him the penalty of

compulsory retirement in obedience to the advice of the

Central Vigilance Commission which has been made binding on

them by the direction dated 21 July 1984 issued by the

Ministry of Finance, Department of Economic Affairs (Banking

Division). They have blindly followed the advice given by

the Central Vigilance Commission without regard to the

merits of the matter and contrary to the statutory

Regulations governing the departmental inquiries. The

subject matter of inquiry was only regarding irregularities

in the banking practice and the action complained of has not

affected the interests of the Bank. The petitioner by his

own efforts has recovered the money due under the discounted

cheque and credited the same with interest to the Bank. The

findings recorded by the Inquiry Officer on the alleged

misdemeanour does not warrant any major penalty like the

compulsory retirement. Reference was also

582

made to certain representations said to have been made by

the Bank to the Central Vigilance Commission for approval to

impose a lesser punishment. It is said that the Bank

pleaded in the representations that the punishment of

compulsory retirement advised by the Commission was too

harsh.

SYNDICATE BANK OFFICER EMPLOYEES' (DISCIPLINE AND APPEAL)

REGULATION 1976

These Regulation have been framed under Section 19 of

the Banking Companies (Acquisition and Transfer

Undertakings) Act, 1970. They were framed by the Board of

Directors of the Syndicate Bank in consultation with the

Reserve Bank of India and with the previous sanction of the

Central Government. Regulation 4 prescribes penalties for

acts of misconduct. Regulation 5 specifies the authority

to institute disciplinary proceedings and impose penalties.

Regulation 6 lays down procedure for imposing major

penalties and Regulation 7 provides for action on the

inquiry report. Regulation 7 confers power to the

disciplinary authority either to agree or disagree with the

findings of the inquiry authority on any article of charge.

The disciplinary authority may reach its own conclusion on

the material on record and impose any penalty prescribed

under Regulation 4. Or if it is of the opinion that no

penalty should be imposed on the delinquent officer, it may

pass an order exonerating the delinquent officer.

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Regulation 17 provides for appeals against the order

imposing any of the penalties specified in Regulation 4.

The appellate authority has been given the power to pass any

order of penalty or remitting the case to the disciplinary

authority or to any other authority for fresh disposal.

Regulation 19 provides for consultation with the Central

Vigilance Commission. It states that "that the Bank shall

consult the Central Vigilance Commission wherever necessary,

in respect of all disciplinary cases having a vigilance

angle." There is no other Regulation requiring consultation

with Central Vigilance Commission, or providing that the

advice given by the Commission is binding on the punishing

authorities.

The Central Vigilance Commission, however, appears to

have framed guidelines for Banks to consult the Commission

in respect of cases where major penalty is prescribed under

the Regulation. Article 22 of the Central Vigilance

Commission Manual reads :

"The Scheme of consultation with the Commission in

respect of major penalty cases pertaining to such

officers envisages consultation with the Commission

at two stages.

583

The first stage of consultation arises when

initiating disciplinary proceedings while the

second consultation is taken at the conclusion of

the proceedings."

Article 23.2 of the C.V.C. Manual Chapter 10 reads:

"In all cases where C.V.C. advises initiation of

major penalty proceedings, it also nominates

simultaneously a Commissioner for Departmental

Inquiries to whom the inquiry should be entrusted."

THE DIRECTION OF THE MINISTRY OF FINANCE, DEPARTMENT OF

ECONOMIC AFFAIRS (BANKING DIVISION)

On 21 July 1984 Joint Secretary, Ministry of Finance,

Department of Economic Affairs (Banking Division) has

written a letter to all Banking Institution thus :

"Recently a case been reported where a bank has

revised the punishment awarded to an officer in a

disciplinary case contrary to the advice of the

Central Vigilance Commission. The case has figured

in the Annual Report of the CVC as a case of non-

consultation with the Commission and thus created

an embarrassing situation. You will, perhaps, be

aware of the Annual Reports of the CVC, which

contain cases where the disciplinary authorities

had not accepted its recommendations or had not

consulted it, are laid on the Tables of both the

Houses of Parliament. This may, thereafter be

discussed in the Parliament also. You will agree

that under no circumstances the advice of the CVC

should be modified except with the prior

concurrence of the commission and this Ministry.

I may mention here that revision of the penalty

imposed on a delinquent officer as a result of an

appeal filed by him before the appellate authority

against the decision of the original disciplinary

authority also amounts to non-consultation/non-

acceptance of the advice of the CVC and is included

in CVC's Annual Report.

Kindly circulate these instructions to the

concerned officers in your bank for strict

compliance. The receipt of this D.O. letter may

please be acknowledged. A copy of this D.O. letter

is being marked to CVO in your bank separately."

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584

CIRCULARS OF THE BANK

On 27 July 1984, A. Krishna Rao, Chairman and managing

Director of the Bank, issued a circular to all branches of

the Bank as follows :

"I am enclosing herewith a photostat copy of the DO

letter No.41/3/84-Vig. dated 21.7.1984 received by

me from Shri Ashok Kumar, joint Secretary, ministry

of Finance, Department of Economic Affairs,

(Banking Division), Vigilance Cell, New Delhi, in

the above connection for strict compliance of the

instructions contained therein.

As the advice in vigilance cases received from

Central Vigilance commission is communicated to the

authorities concerned by the Chief Vigilance

Officer, I advise, that the Chief Vigilance

Officer's advice, as explained in my above referred

to DO letter, should be complied with.

Even when a revision of the penalty imposed on a

delinquent officer at the advice of the Chief

Vigilance Officer by of Original Disciplinary

Authority were to be considered as a result of an

appeal filed by him before the appellate/high

authorities, such revision shall be effected only

after consulting the Chief Vigilance Officer.

Please acknowledge receipt of this and ensure

compliance of the instructions contained herein."

On 8 September 1986 P.S.V. Mallya, the succeeding

Chairman and Managing Director of the bank issued another

circular letter to all branches of the bank in the following

terms:

"All vigilance cases in bank are being

investigated/ processed at Vigilance Cell at the

HO, under the administrative control of the Chief

Vigilance Officer, who is reporting directly to me.

After processing of the reports is concluded, the

cases are referred to Central Vigilance Commission

as per the existing procedure and the advice

received from the commission is being communicated

to the Disciplinary/Appellate Authority by the

Chief Vigilance Officer.

585

If the advice tendered by the Commission is

not accepted/acted upon, it will amount to non-

acceptance of the advice of the Commission and such

instance will figure in the Annual Report of the

Central Vigilance Commission placed before the

Parliament.

This apart the non-acceptance of the advice

in vigilance cases is likely to lead to a

situation, in which, different types of decisions

are possible to be taken in similar cases, which is

sure to result in a voidable complications and

injustice to certain sections of the

Officers/employees community. Again in such a

situation, ensuring uniform stantards in finalising

action on vigilance cases will also become a very

difficult phenomenon, which is not a desirable

trend and does not augur well for the healthy

functioning of the vigilance machinery in the Bank.

I therefore, advice all Disciplinary

/Appellate Authorities to see that they refer as

hitherto all vigilance cases to Chief Vigilance

Officer and consult him on such cases and act upon

his advice.

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xxxxx xxxxx xxxxx xxxxx

If for any reasons, the authorities concerned feel

that the advice needs to be reconsidered or a

departure is called for, they may refer back the

matter to Chief Vigilance Officer for

reconsideration of the advice, with the reasons for

such disagreement and the Chief Vigilance Officer

will see whether and to what extent such

reconsideration is desirable or feasible and will

tender advice again on reconsideration.

If the authority concerned is still not

disposed to act on the advice, the disinclination

on the part of the authority concerned will have to

be brought to my notice and the advice given by me

in respect of such cases shall be treated as final.

It is also necessary that the authorities concerned

should for obvious reasons keep the advice in

strict confidence and see that no reference thereof

is made in any of the correspondence communication,

whether emanating from their end."

586

The petitioner being aware of the directions of the

Ministry of Finance and the circulars issued by the Bank has

in his memo of appeal before the appellate authority inter

alia complained that the system and procedure adopted by the

Bank in dealing with vigilance cases, is totally against the

principles of natural justice. The Bank has no control over

such cases. The Disciplinary Authority and Appellate

Authority are required to carry into effect the punishment

advised by the Central Vigilance commission without change.

He has also pointed out that his appeal could be nothing but

an empty formality as the appellate authority would be also

bound by the decision of the Central Vigilance commission.

The petitioner has also added post script to his appeal Memo

stating thus "This appeal has been filed without prejudice

to my contention that this appeal is an exercise in futility

as the appellate authority also is not the deciding

authority and this appeal also will be decided by the

CVO/CVC, who has already decided and whose decision is

binding on you. There is in fact no effective right of

appeal."

Counsel for the Bank however, submits that

notwithstanding the advice of the Central Vigilance

Commission and the directive dated 21 July 1984 of the

Ministry Finance, Department of Economy Affairs (Banking

Division), the case of the petitioner has received the

fullest consideration from the disciplinary and

appellate authorities. They have independently considered

the material on record both on the articles of charges and

also on the appropriate punishment of compulsory retirement

imposed on the petitioner. The orders of the authorities do

not refer to the circulars of the Bank, nor to the

punishment proposed by the Central Vigilance Commission. It

is therefore, illegitimate, to contend that the punishment

imposed on the petitioner has been vitiated by extraneous

influences.

We are not even remotely impressed by the arguments of

counsel for the Bank. Firstly, the Bank itself seems to

have felt as alleged by the petitioner and not denied by the

Bank in its counter that the compulsory retirement

recommended by the Central Vigilance Commission was too

harsh and excessive on the petitioner in view of his

excellent performance and unblemished antecedent service.

The Bank appears to have made two representations; one in

1986 and another in 1987 to the Central Vigilance Commission

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for taking a lenient view of the matter and to advise lesser

punishment to the petitioner. Apparently, those

representations were not accepted by the Commission. The

disciplinary authority and the appellate authority therefore

have no choice in the matter. They had to impose the

punishment of com-

587

puslory retirement as advised by the Central Vigilance

Commission. The advice was binding on the authorities in

view of the said directive of the Ministry of Finance,

followed by two circulars issued by the successive Chief

Executive of the Bank. The disciplinary and appellate

authorities might not have referred to the directive of the

Ministry of Finance or the Bank circulars. They might not

have stated in their orders that they were bound by the

punishment proposed by the Central Vililance Commission.

But it is reasonably foreseeable and needs no elaboration

that they could not have ignored the advice of the

Commission. They could not have imposed a lesser punishment

without the concurrence of the Commission. Indeed, they

could have ignored the advice of the Commission and imposed

a lesser punishment only at their peril.

The power of the punishing authorities in departmental

proceedings is regulated by the statutory Regulations.

Regulation 4 merely prescribes diverse punishment which may

be imposed upon delinquent officers. Regulation 4 does not

provide specific punishments for different misdemeanours

except classifying the punishments as minor or major.

Regulations leave it to the discretion of the punishing

authority to select the appropriate punishment having regard

to the gravity of the misconduct proved in the case. Under

Regulation 17, the appellate authority may pass an order

confirming, enhancing, reducing or completely setting aside

the penalty imposed by the disciplinary authority. He has

also power to express his own views on the merits of the

matter and impose any appropriate punishment on the

delinquent officer. It is quasi-judicial power and is

unrestricted. But it has been completely fettered by the

direction issued by the Ministry of Finance. The Bank has

been told that the punishment advised by the Central

Vigilance Commission in every case of disciplinary

proceedings should be strictly adhered to and not to be

altered without prior concurrence of the Central Vigilance

Commission and the Ministry of Finance.

We are indeed surprised to see the impugned directive

issued by the Ministry of Finance, Department of Economic

Affairs (Banking Division). Firstly, under the Regulation,

the Bank's consultation with Central Vigilance Commission in

every case is not mandatory. Regulation 20 provides that

the Bank shall consult the Central Vigilance Commission

wherever necessary, in respect of all disciplinary cases

having a vigilance angle. Even if the Bank has made a self

imposed rule to consult the Central Vigilance Commission in

every disciplinary matter, it does not make the Commission's

advice binding on the punishing authority. In this context,

reference may be made to Article

588

320(3) of the Constitution. The Article 320 (3) like

Regulation 20 with which we are concerned provides that the

Union Public Service Commission or the State Public

Commission, as the case may be, shall be consulted-on all

disciplinary matters affecting a civil servant including

memorials or petitions relating to such matters. This Court

in A.N. D'Silva v. Union of India, [1962] Suppl; 1 SCR 968

has expresed the view that the Commission's function is

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purely advisory. It is not an appellate authority over the

inquiry officer or the disciplinary authority. The advice

tendered by the Commission is not binding on the Government.

Similarly, in the present case, the advice tendered by the

Central Vigilance Commission is not binding on the Bank or

the punishing authority. It is not obligatory upon the

punishing authority to accept the advice of the Central

Vigilance Commission.

Secondly, the Ministry of Finance, Government of India

has no jurisdiction to issue the impugned directive to

Banking institutions. The government may regulate the

Banking institutions within the power located under the

banking Companies (Acquisition and Transfer of Undertakings)

Act, 1970. So far as we could see, Section 8 is the only

provision which empowers to the Government to issue

directions. Section 8 reads:

"Every corresponding new bank shall, in the

discharge of its function, be guided by such

directions in regard to matters of policy involving

public interest as the Central Government may,

after consultation with the Governor of the Reserve

bank, give."

The corresponding new bank referred to in Section 8 has

been defined under Section 2(f) of the Act to mean a banking

company specified in column 1 of the First Schedule of the

Act and includes the Syndicate Bank. Section 8 empowers the

Government to issue direction in regard to matters of policy

but there cannot be any uniform policy with regard to

different disciplinary matters and much less there could be

any policy in awarding punishment to the delinquent officers

in different cases. The punishment to be imposed whether

minor or major depends upon the nature of every case and the

gravity of the misconduct proved. the authorities have to

exercise their judicial discretion having regard to the

facts and circumstances of each case. They cannot act under

the dictation of the Central Vigilance Commission or of the

Central Government. No third party like the Central

Vigilance Commission or the Central Government could dictate

the disciplinary authority or the appellate authority as to

how they should exercise

589

their power and what punishment they should impose on the

delinquent officer. (See: De Smith's Judicial Review of

Administrative Action, Fourth Edition, p. 309). The

impugned directive of the Ministry of Finance, is therefore,

wholly without jurisdiction, and plainly contrary to the

statutory Regulations governing disciplinary matters.

For the foregoing reasons, we allow the appeal and the

writ petition quashing the directive issued by the Finance

Ministry, Department of Economic Affairs, (Banking Division)

dated 21 July 1984. We also issue a direction to the

Chairman of the Syndicate Bank to withdraw the circular

letters dated 27 July 1984 and 8 September 1986. We

further set aside the impugned orders of the disciplinary

authority and appellate authority with a direction to the

former to dispose of the petitioner's case in accordance

with law and in the light of the observation made.

The petitioner is entitled to costs which we quantify

in both the cases at Rs. 15,000 which shall be paid by the

Central Government.

G.N. Appeal and petition allowed.

590