Page 1 REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 3081 OF 2006

Oriental Bank of Commerce & Ors. … Appellant

(s)

Versus

S.S. Sheokand & Anr. …

Respondent (s)

J U D G E M E N T

H.L. Gokhale J.

This Civil Appeal seeks to challenge the judgment

and order dated 16.3.2004 rendered by a Division Bench of

Punjab and Haryana High Court in Civil Writ Petition

No.18847 of 2001, allowing the said Writ Petition filed by the

respondent, a Senior Manager in the appellant-bank. That

judgment and order quashed the disciplinary order passed by

the appellant-bank reducing him in two stages in pay scale

with cumulative effect and also directed that he be

considered for further promotion.

The facts leading to this appeal are this wise:-

Page 2 2. The respondent at the relevant time was working

as the Senior Manager in a branch of the appellant-bank at

Narwana, Bahadurgarh. It was noticed by the bank that he

had purchased third party cheques/drafts of huge amounts

beyond the discretionary powers of lending. This was done

without completing the pre-sanction formalities. The

appellant-bank, therefore, served a show cause notice to the

respondent on 26.2.1997 for committing these unauthorised

acts. The respondent filed a detailed reply dated 12.4.1997.

Therein the respondent admitted committing of the alleged

acts. He, however, stated that this was done with the

intention of increasing the profits of the bank. He also

contended that the bank had not suffered any loss in these

transactions.

3. The appellant-bank, thereafter, charge-sheeted the

respondent on 1.12.1997 for two specific irregularities, they

were as follows:-

“Charge No.1 – Respondent had

unauthorisedly purchased 3

rd

party

cheques/drafts of huge amount aggregating

to Rs.45.23 crores for a number of parties

much beyond his discretionary powers of

lending without completing pre-sanction

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Page 3 formalities in violation of head office

guidelines. Thus he violated Regulation 3(i)

of Oriental Bank of Commerce Officer

Employees (Conduct) Regulation, 1982.

Charge No.2 – Respondent had released

advance under the Prime Minister Rojgar

Yojna, and unauthorisedly insisted such

borrowers to provide collateral securities in

the shape of immovable property and

guarantee in violation of the above scheme.”

4. The charge-sheet was followed by an inquiry. The

inquiry officer gave a report dated 26.2.1999 which was

forwarded by the respondent on 17.4.1999 to make a

representation on the findings. In paragraph 4 of the report,

the inquiry officer dealt with statement of SW-1 (State Witness

No.1) which stated that as per the head office circular, the

discretionary powers of the Branch Manager at the relevant

time were up to Rs.30 lacs for purchasing bank drafts and

government cheques, and up to Rs.1.5 lacs for third party

cheques. As against this provision, the respondent had

purchased cheques/drafts aggregating to Rs.45.23 crores as

per the details produced in the inquiry report. This was done

without any authorization, and particularly when the authority

of the respondent in this behalf was placed under abeyance.

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Page 4 The respondent raised various technical objections with

respect to the production of the documents, but essentially

contended that his acts, which went beyond discretionary

powers, were ratified and confirmed by the higher authorities.

He submitted that these instruments were received from the

respectable parties to increase the profit of the branch. With

respect to the instructions issued to him by the Regional

Manager to stop purchasing these cheques and drafts, he

submitted that he had not violated these instructions.

5. The paragraph 4.3 of the Enquiry report contains

the assessment of evidence on charge No.1. It reads as

follows:-

“4.3Assessment of Evidence:-

Ex. S.27 and S.28 are head office circulars

which lay down the discretionary powers of

the branch incumbent. SW1 confirmed that

during the material time the powers of the

BM (Branch Manager) was 30 lacs for

purchase of bank draft and Rs. 1.5 lacs for

third party cheques. SW1 also confirmed

that the CO(Charged Officer) had purchased

cheques/drafts beyond his discretionary

powers. He deposed that 77 cheques/drafts

amounting to 40 crores and 153

cheques/drafts amounting to 14.63 crores

were purchased through clearing adjustment

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Page 5 account. It was confirmed that discounting of

cheques/drafts through clearing adjustment

account was not permitted as per HO

guidelines. SW1 confirmed that Ex. S2 was

HO (Head Office) Circular dated 11.12.95

which had placed in abeyance the

discretionary powers of the BM and Regional

Heads in respect of loans and advances

except in the priority sector. SW1 confirmed

that s-15 was HO circular dated 23.10.96

releasing the aforesaid restrictions. It is,

therefore, evident that the powers of the BM

and the Regional Heads had been kept in

abeyance between 11.12.95 to 23.10.96. On

examining Ex. S.3, S4 and S.17, SW1

confirmed that the CO had unauthorisedly

purchased cheques/drafts during the period.

Furthermore, SW1 confirmed that the

cheques purchased through clearing

adjustment account are that of sister and

allied concerns. Ex. S.27 and 28 would

evidence that this power was vested with the

GM (General Manager) and higher officers

only. SW1 also confirmed that since the

parties in question were also enjoying certain

credit facilities sanctioned by RO/HO

(Regional Office/Head Office), the branch

should not have purchased cheques/drafts of

the parties under its own powers. Ex. S-6,

S.7, S.8 and S.9 are correspondence which

proved that the higher formation of the bank

had raised serious objections to the CO’s

purchase of cheques/drafts. Ex. S.10 and

S.12 are letters/replies of the CO where in he

had admitted his mistakes. SW1 also

confirmed that Ex.S.13 and S.14 are letters

from the GM Personnel giving details of the

unauthorised purchase of cheques and drafts

by the CO, which were beyond his

discretionary powers and made at a time

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Page 6 when his powers were placed under

abeyance. His non-reporting in the matter to

RO has also been questioned. Ex. S14 is a

letter from the CO accepting the aforesaid

matter with an assurance to not to repeat the

same in future. In view of the aforesaid

evidence the contention of the CO to treat

the matter as that of the priority sector is

naturally not tenable. However, the CO has

stated that there was no loss to the bank.

The PO (Prosecuting Officer) has not disputed

this. Therefore, the act of omission and

commission of the CO can essentially be

treated as procedural lapses. The charge of

the lack of integrity has not been

substantiated.

Charge-1 is held as partly proved.”

Thus, the inquiry officer had held that the acts of omission

and commission on the part of the respondent were

essentially in the nature of procedural lapses. He held that

the charge of lack of integrity had not been substantiated.

Thus, charge No.1 mentioned above was, partly proved.

6. As far as charge No.2 is concerned, it was alleged

therein that the respondent had released advances under the

Prime Minister Rojgar Yojna, and for that insisted on the

borrowers to provide collateral securities/guarantees of third

party. The inquiry officer, however, noted that the

prosecution had not placed on record any single primary

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Page 7 document of the collateral securities/guarantees of third party

to prove that part. He, therefore, held that charge No.2 was

not proved.

7. After receiving the inquiry report the respondent

made his representation dated 4.5.1999, and pleaded that he

deserved to be exonerated. The bank, thereafter, submitted

all these papers to the Chief Vigilance Officer of the Bank to

forward the same to the Chief Vigilance Commissioner (CVC).

The respondent at that stage wrote to the appellant-bank on

28.6.1999 seeking this correspondence with the CVC. In that

he stated as follows:-

“Now, after giving representation dated

4.5.99 on the findings of inquiry officer dated

26.2.99, the stage has come where second

stage advice has to be remitted to the CVC

through Chief Vigilance Officer of Oriental

Bank of Commerce and I also understand

that the case has been remitted or the same

is in the process of remitting to the Chief

Vigilance Officer alongwith recommendations

of action proposed for onward submission to

the Chief Vigilance Commissioner (CVC). In

the light of above facts, you are requested to

kindly supply me the copies of all such

recommendations meant for second stage

advice and the advice so received or likely to

be received from the CVC for my

representation on these recommendations

prior to the stage of final disposal under

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Page 8 Regulation ‘7’ of Discipline & Appeal

Regulations, 1982 so that the interest of my

defence is not jeopardized.”

8. The appellant declined that request of furnishing

the correspondence of papers exchanged with the CVC. The

Chief Vigilance Officer thereafter sent a letter to the

disciplinary authority that the Central Vigilance Commission

had advised to impose a major penalty of reduction of two

stages in pay scale, and thereupon the order came to be

passed on 27.10.1999 imposing the punishment of reduction

of two stages in pay scale. The respondent filed a

departmental appeal, and the appeal came to be rejected.

The review thereof was also rejected by the Board of

Directors. The appellate order dated 26.5.2000 passed by the

General Manager (Personnel) who was the disciplinary

authority at the end of it stated as follows:-

“……In this connection it is submitted that

awarding of punishment with cumulative

effect falls within Regulation 4(f) and the

Disciplinary Authority has independently

applied its mind while awarding the

punishment. It is further submitted that the

advice of the CVC is not binding on the

Disciplinary Authority. Since the CVC is

rendering advice to the Disciplinary authority

the correspondence exchanged is not

8

Page 9 required to be provided to the charge

sheeted employee. The punishment has been

awarded keeping in view the gravity of the

misconduct committed by the officer

employee alongwith the submissions made

by the employee.

Submitted for orders please.

SD/- General Manager (Per.)

Disciplinary Authority.”

The Chairman & Managing Director, who was the appellate

authority, passed his orders into following words:-

“I don’t wish to entertain”

Sd/-

2.6.2000”

9. Being aggrieved by the imposition of this

punishment, the respondent filed one Writ Petition earlier

bearing No.4116 of 2001 to the Punjab and Haryana High

Court on which an order came to be passed that the reviewing

authority may consider the review application of the

respondent. Time to take the decision was also extended on

one occasion, and the High Court was informed that the Bank

was considering commutation of the major penalty. The Chief

Vigilance Officer of the bank wrote to the Chief Vigilance

Commission on 18.8.2001 that the penalty imposed deserved

to be modified to a minor penalty. It, however, appears that

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Page 10 the request was not accepted and, the appellant-bank

informed the respondent that the review petition was

rejected. This led the respondent to file Civil Writ Petition

No.18847 of 2001. Apart from the prayer to quash the order

of punishment, the respondent also sought a direction that he

be considered for further promotion from the post which he

was then holding viz. that of MMGS-III to SMGS-VI. It was his

contention that his turn had come up for consideration for

promotion, and it was declined because of this departmental

action. The High Court allowed the Writ Petition by the

impugned judgment and order.

10. The High Court essentially relied upon the judgment

and order rendered by this Court in the case of Nagaraj

Shivarao Karjagi vs. Syndicate Bank Head Office,

Manipal reported in AIR 1991 SC 1507 . In that matter also

the bank had acted as per the advice of the Central Vigilance

Commission. The punishment was interfered by this Court. In

paragraph 19 of its judgment, this Court observed as follows:-

“19………..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

1

Page 11 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

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.”

11. The High Court relied upon another judgment of this

Court in the case of State Bank of India vs. D.C. Aggarwal

reported in AIR 1993 SC 1197 . In that matter also, the High

Court had quashed the punishment imposed on the

respondent, since the CVC report had not been furnished to

him. In paragraph 5 of the judgment this Court observed as

follows:-

“5…… May be that the Disciplinary Authority

has recorded its own findings and it may be

coincidental that reasoning and basis of

returning the finding of guilt are same as in

the CVC report but it being a material

obtained behind back of the respondent

1

Page 12 without his knowledge or supplying of any

copy to him the High Court in our opinion did

not commit any error in quashing the order.”

12. Therefore, in the present case, the High Court set

aside the punishment imposed on the respondent. It also

issued a Mandamus to the appellant-bank to consider the

respondent for promotion, which he had sought. Being

aggrieved by that judgment and order, this appeal has been

filed. Mr. K.N. Bhatt, learned senior counsel appeared for the

appellants and Mr. Nidhesh Gupta, learned senior counsel

appeared for the respondent.

Submissions on behalf of the parties:-

13. It was submitted on behalf of the appellants that

the High Court had erred in interfering with the punishment,

and in any case, directing consideration of the respondent for

promotion. Mr. Bhatt, learned senior counsel for the appellant

submitted that the bank was required to refer the matter to

the CVC which is constituted under the Central Vigilance

Commission Act, 2003. Regulation 19 of 1982 Regulations

framed thereunder makes it obligatory whenever there is a

vigilance angle involved. This regulation reads as follows:-

1

Page 13 “19. Consultation with the Central Vigilance

Commission: The Bank shall consult the

Central Vigilance Commission wherever

necessary, in respect of all disciplinary cases

having a vigilance angle.”

14. That apart, he submitted that the bank had arrived

at its decision on its own, and not because of any dictate by

the CVC. Charge No.1 was a serious charge. It was already

proved in the Departmental Enquiry, and although it is true

that at some stage the bank management thought that a

lenient view may be taken, it specifically arrived at its own

decision as can be seen from the appellate order. In his

submission, there was no prejudice caused to the respondent

by not making the report of the CVC available to him.

Conduct of this type required a stringent action to be taken.

He relied upon the judgment of this Court in the case of

Disciplinary Authority-Cum-Regional Manager vs.

Nikunja Bihari Patnaik reported in 1996 (9) SCC 69. This

Court has held in that matter that when the bank officer acts

beyond his authority, it is a misconduct, and a proof of any

loss to the bank is not necessary. That was a case where

also a senior officer of the Central Bank of India had allowed

1

Page 14 over-drafts and passed cheques involving substantial

amounts beyond his authority, and the respondent had been

dismissed from his service. Mr. Bhatt, submitted that in the

instant case, the appellant-bank had, in fact, been lenient in

imposing the punishment of merely reducing the respondent

by two grades.

15. It was then submitted by Mr. Bhatt, that in any

case the direction to consider the respondent for the

promotion could not be sustained. He pointed out to us that

the respondent had been punished earlier for similar conduct

on 27.10.1999. He was considered for promotion in the year

2002, and subsequent to the impugned judgment in the year

2005 also but was not found fit. The learned counsel for the

appellant-bank submitted that the question of promotion to

such a senior post had to be decided on merits and suitability

of the candidate. Mr. Bhatt, further submitted that even if

the punishment was to be interfered with, there was no case

for direction for promotion.

16. It was submitted on behalf of the respondent on

the other hand, that there was no loss suffered by the bank,

1

Page 15 and at the highest it was a technical lapse. The bank

management had also decided that a minor punishment was

required, and it was only because of the dictate of the CVC

that the disputed punishment had been imposed. Firstly,

there was mo reason to refer the issue to the CVC since there

was no vigilance angle involved therein. That apart, the

report of CVC was not made available to the respondent, and

it clearly amounted to denial of fair opportunity to defend.

Mr. Gupta submitted that the denial of promotion was

essentially because of this punishment, or else the

respondent would have been promoted. He, therefore,

submitted that there was no occasion to interfere with the

impugned judgment and order. Mr. Gupta submitted that the

two judgments relied upon by the High Court in the case of

Nagaraj Shivarao (supra) and State Bank of India

(supra) squarely applied to the present case, and there was

no occasion for this Court to take a different view or to

interfere with any part of the judgment.

Consideration of the submissions:-

1

Page 16 17. We have considered the submissions of both the

counsel. When we come to the question of imposition of

punishment on the respondent, what we find is that

undoubtedly, there was a serious allegation against him, and

as it has been held in the case of Disciplinary Authority-

Cum-Regional Manager (supra), such acts could not be

condoned. At the same time, we have also to note that the

bank management itself had taken the view in the initial

stage that the action did not require a major penalty. It is

also relevant to note that the High Court was also informed

at the stage of review that the Bank was considering

imposition of a minor penalty. It is quite possible to say that

the bank management did arrive at its decision to maintain a

major penalty at a later stage on its own, and not because of

the dictate of the CVC, but at the same time it has got to be

noted that the CVC report had been sought by the

management of the bank, and thereafter the punishment had

been imposed. As observed in the case of State Bank of

India (supra), may be that the Disciplinary Authority had

recorded its own findings, and had arrived at its own

1

Page 17 decision, but when this advise from CVC was sought, it could

not be said that this additional material was not a part of the

decision making process. When this report was not made

available to the respondent, it is difficult to rule out the

apprehension about the decision having been taken under

pressure. Any material, which goes into the decision making

process against an employee, cannot be denied to him. In

view of the judgment in the case of Disciplinary Authority-

cum- Regional Manager (supra) , the decision of the Bank

could have been approved on merits, however, the two

judgments in the cases of Nagaraj Shivaraj Karajgi

(supra) and State Bank of India (supra) lay down the

requisite procedure in such matters, and in the facts of this

case, it will not be appropriate to depart from the dicta

therein. On this yardstick alone, a part of the judgment of the

High Court interfering with the punishment will have to be

sustained.

18. Then, we come to the issue of direction of the High

Court to consider the respondent for promotion. The

1

Page 18 respondent was already in a post of a Senior Manager. He

was seeking a promotion to a still higher position. Promotion

as such, and in any case, to a higher post cannot be insisted

as a matter of right. In the instant case, it has been brought

to our notice that the respondent was considered for

promotion in 2002 and was not found fit. It was pointed out

by Mr. Bhatt that this was not merely on the basis of the

punishment that was imposed on the respondent. He had

previous adverse entry also in his record in the year 1999.

Besides, even if we look to the charge independently,

purchasing third party cheques and drafts of huge amounts

beyond his authority of lending has been held to be proved

against the respondent, and that finding has not been

seriously contested and dislodged. Whether he deserved a

major punishment or not, or whether a lenient view of the

allegations should be taken by considering his conduct as a

procedural lapse is another aspect. In the instant case, the

decision to impose a major punishment had to be interfered

with because of the manner in which the decision was taken.

It has also been submitted that the High Court should have

1

Page 19 referred the matter back to the appropriate authority for

reconsideration and imposition atleast of a minor penalty. It

is apparent that it was not a case for complete exoneration,

however, it will not be desirable to give such direction after

so many years, particularly, when the respondent has since

retired. That being so, the order quashing the punishment

will remain. That, however, would not mean that the

direction of the High Court to the appellant to consider the

respondent for promotion should be sustained.

19. We have also been informed that the respondent

was considered for promotion once again in the year 2005,

and not found fit for the promotion. Thus, the bank had

considered the respondent after the impugned judgment

which was in favour of the respondent. We are not concerned

as such with this subsequent consideration, but this is only to

point out that the bank had not declined to consider him. We

are of course concerned with the direction in the impugned

judgment to consider him once again, on the basis of the

material prior to the judgment. Inasmuch as the record of

1

Page 20 the respondent was not satisfactory, in our view, there was

no occasion for the High Court to give any such direction on

the footing that the respondent was denied the consideration

only because he had suffered a punishment. That inference

was not called for.

20. In the circumstances, we allow this appeal only in

part. Whereas the judgment and order of the High Court

setting aside the punishment will remain, the direction to

consider him for promotion, and give him benefits on that

footing will have to be set aside, which we hereby direct.

The respondent will however get the monetary benefits on

the footing that the said punishment is quashed.

21. Appeal is, therefore, allowed in part as above.

Parties will bear their own costs.

………… ..…………………..J.

[ H.L. Gokhale ]

………………………………

J.

[ J. Chelameswar ]

New Delhi

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