2023INSC868 REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO.2518 OF 2012

STATE BANK OF INDIA & ORS. … APPELLANTS

VERSUS

P. ZADENGA … RESPONDENT

J U D G M E N T

SANJAY KAROL, J.

1.The instant lis presents two questions for consideration by

this Court. They are-

a)Does clause 4 of the Memorandum of Settlement

dated 10

th

April 2002 create a bar on departmental

proceedings continuing when the person subjected

thereto is being tried before a criminal court for

offences of the same origin?

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b)Does acquittal in some of the connected proceedings

entail a benefit in the surviving proceedings? Further,

inuring a right upon the delinquent employee of

automatic discharge in disciplinary proceedings?

2.This appeal, by way of special leave, is directed against the

final judgement and order dated 7

th

January 2009 passed in Writ

Appeal No.03/2006 by which the order passed in Writ Petition

(Civil) No.12 of 2005 dated 25

th

July 2005 allowing the appeal of

the Respondent herein against the order of dismissal from bank

services dated 28

th

March 2003 and the rejection of the

departmental appeal vide order 16

th

August 2004, was allowed

and the order of the Learned Single Judge confirmed.

Background

3.The facts of the instant dispute as they emanate from the

record are:-

3.1 The respondent namely P. Zadenga

1

was employed in the

State Bank of India

2

as Assistant (CAT) at the Dawrpui

Branch, Aizawl. Three government retailers lodged a

complaint with the Aizawl Police Station that their challan-

1 Hereinafter referred to as “the delinquent employee”

2 Hereinafter, the “Appellant Bank”

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deposits with the said Branch had not been entered into the

cash receipt scroll. The District Civil Supply Officer, Aizawl

West, also lodged a complaint that a certain retailer had

taken the delivery of particular food stuff using a fake

challan.

3.2 Pursuant thereto, disciplinary proceedings were initiated

against the respondent with the issuance of a Memorandum

dated 8

th

December 1999, wherein it was alleged that he had

received Rs.61,908 for a deposit on 19

th

April,1996 in respect

of which a challan was issued, but the amount never

deposited in the respective account. Two other similar

occurrences dated 21

st

February 1995 regarding Rs.24,640

and Rs.27,412 were also alleged.

3.3 Three different FIRs stood registered against him, under

which he was arrested but later released on bail. In his

written show cause to this Memorandum, the Delinquent

employee contended that the disciplinary proceedings should

be either dropped or closed since criminal cases were

pending him, arising from the same set of transactions.

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3.4 The appellant-bank proceeded to appoint an inquiry

officer who, in his report, submitted that three out of four

charges stood established. The Delinquent Employee, again

denying the charges, filed a response to that but was

eventually dismissed from the services at the bank, vide the

order of dismissal dated 28

th

March 2003. The departmental

appeal filed by him, after due opportunity of hearing, was

dismissed on 16

th

August 2004.

4.Aggrieved by the dismissal of the departmental appeal, the

delinquent employee filed Writ Petition (Civil) No.12 of 2005

before the Gauhati High Court. The question before the said

Court was: whether, in view of the Memorandum of Settlement

dated 10

th

April 2002

3

, the disciplinary proceedings against the

delinquent employee (respondent) herein ought to have been

stayed or not.

5.Having recorded that post signing of the said MoS, the

Shastri Award as confirmed by the Desai Award “ceased to exist

for all intents and purposes” the Court observed that clause 4 of

3 Hereinafter referred to as “MoS": between the Management of 52 ‘A’ Class Banks as

represented by the Indian Banks’ Association and their workmen as represented by the All

India Bank Employees’ Association, National Confederation of Bank Employees, Indian

National Bank Employees’ Federation.

Page 4 of 19

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the said document was clear and unambiguous and, therefore, it

was not correct for the bank to have subjected him to disciplinary

proceeding during the pendency of criminal proceedings.

6.However, it would be open for the disciplinary authority to

act under the clauses of the MoS after the criminal cases against

the delinquent employee having reached a conclusion, one way or

the other.

7.Dissatisfied by the order of the learned Single Judge, a Writ

Appeal was filed bearing No.03 of 2006. Having discussed the

background of the case, the Division Bench discussed the

contention on behalf of the bank regarding the applicability of the

Shastri Award and observed that the continuation of the

disciplinary proceedings during the pendency of criminal cases

would be an infraction, given para 521(3) thereof.

8.In conclusion, the Division Bench upheld the order of the

learned Single Judge and confirmed the setting aside of the

disciplinary proceedings.

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The Present Appeal

9.We have heard Mr. Vikas Singh, learned senior counsel for

the appellant bank and Mr. Jitendra Bharti for the delinquent

employee.

10.Inviting attention to several decisions rendered by this

Court, it is argued on behalf of the appellant-bank that (i)

initiation of departmental proceedings binding criminal trial

would not amount to an automatic stay unless, of course, a

complicated question of law is involved in the matter; (ii) acquittal

in a criminal trial in relation to the very same impugned action

would not preclude the employer to initiate departmental

proceedings; and (iii) mere non-compliance of the provisions of

bipartite agreement, in attending facts, would not result in the

disciplinary action to be void ab initio.

11.On the other hand, it is argued on behalf of the delinquent

employee that the disciplinary proceedings, the subject matter of

the instant lis, were in gross violation of the bipartite agreement,

which has been held to have the force of law. In any case,

Respondent stand acquitted in two out of three criminal trials.

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Also, the action initiated by the employer was belated and an

afterthought only to harass the delinquent employee.

12.Before proceeding to the merits of the issue at hand, it

would be appropriate to reproduce clause 4 of the MoS dated 10

th

April 2002, which is the bone of contention in this dispute, for

the delinquent employee contends an apparent embargo on

proceedings with disciplinary enquiry when criminal cases

arising from the same transactions are pending, and the

appellant-bank submitting to the contrary of there being no such

restriction. Clause 4 reads as under: -

“If after steps have been taken to prosecute an

employee or get him prosecuted, for an offence, he is

not put on trial within a year of the commission of the

office, the management may then deal with him as if

he had committed an act of “gross misconduct” or of

“minor misconduct”, as defined below; provided that if

the authority which was to start prosecution

proceedings refuses to do so or comes to the

conclusion that there is no case for prosecution it shall

be open to the management to proceed against the

employee under the provisions set out below in Clauses

11 and 12 infra relating to discharge, but he shall out

below in Clauses 11 and 12 infra relating to discharge,

but he shall be deemed to have been on duty during

the period of suspension, if any, and shall be entitled

to the full wages and allowances and to all other

privileges for such period. In the event of the

management deciding, after enquiry, not to continue

him in service, he shall be liable only for termination

with three months’ pay and allowances in lieu of notice

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CA No. 2518/2012

as provided in Clause 3 above. If within the pendency

of the proceedings thus instituted is put on trial, such

proceedings shall be stayed pending the completion of

the trial, after which the provisions mentioned in

Clause 3 above shall apply.”

(Emphasis Supplied)

13.In respect of the interpretation of clause 4, we find this

Court to have observed in State Bank of India & Ors. v. Neelam

Nag

4

as follows:-

“21. In the plain language of Clause 4, in our opinion,

it is not a stipulation to prohibit the institution and

continuation of disciplinary proceedings, much less

indefinitely, merely because of the pendency of a

criminal case against the delinquent employee. On the

other hand, it is an enabling provision permitting the

institution or continuation of disciplinary proceedings,

if the employee is not put on trial by the prosecution

within one year from the commission of the offence or

the prosecution fails to proceed against him for want of

any material.

22. As can be culled out from the last sentence of

Clause 4, which applies to a case where the criminal

case has in fact proceeded, as in this case, for trial.

The term “completion of the trial” thereat, must be

construed as completion of the trial within a

reasonable time-frame. This clause cannot come to the

aid of the delinquent employee—who has been named

as an accused in a criminal case and more so is party

to prolongation of the trial.”

14. Against this backdrop, it is also imperative that we look into

the position of law regarding two proceedings of similar origin

continuing simultaneously.

4 (2016) 9 SCC 491

Page 8 of 19

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14.1 This Court in State of Rajasthan v. B.K. Meena and

Ors.

5

referred to some decisions on the aspect of stay on

disciplinary proceedings and observed :-

“14. It would be evident from the above decisions that

each of them starts with the indisputable proposition

that there is no legal bar for both proceedings to go on

simultaneously and then say that in certain situations,

it may not be ‘desirable’, ‘advisable’ or ‘appropriate’ to

proceed with the disciplinary enquiry when a criminal

case is pending on identical charges. The staying of

disciplinary proceedings, it is emphasised, is a matter

to be determined having regard to the facts and

circumstances of a given case and that no hard and

fast rules can be enunciated in that behalf …The

interest of the delinquent officer also lies in a prompt

conclusion of the disciplinary proceedings. If he is not

guilty of the charges, his honour should be vindicated

at the earliest possible moment and if he is guilty, he

should be dealt with promptly according to law. It is

not also in the interest of administration that persons

accused of serious misdemeanour should be continued

in office indefinitely, i.e., for long periods awaiting the

result of criminal proceedings. It is not in the interest

of administration. It only serves the interest of the

guilty and dishonest. While it is not possible to

enumerate the various factors, for and against the stay

of disciplinary proceedings, we found it necessary to

emphasise some of the important considerations in

view of the fact that very often the disciplinary

proceedings are being stayed for long periods pending

criminal proceedings. Stay of disciplinary proceedings

cannot be, and should not be, a matter of course. …”

(Emphasis supplied)

14.2 Further, this Court in M Paul Anthony v. Bharat

Gold Mines Ltd.

6

elucidated the following principles in

5 (1996) 6 SCC 417

6 (1999) 3 SCC 679

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dealing with departmental and criminal proceedings

simultaneously:-

a. No bar exits on both proceedings continuing

simultaneously, though in an appropriate, separate

forum.

b. If said proceedings are on identical/similar facts and if

the charges levied against the delinquent employee are of

a serious nature, then it would be desirable if the

departmental proceedings are stayed till the conclusion of

the other.

c. The nature of the charge or the involvement of complex

questions of law and fact depends on the facts and

circumstances of each case, i.e., the offence, nature of the

case launched, evidence and material collected.

d. Sole consideration of the above-mentioned factors

cannot be the reason to stay the departmental

proceedings.

e. It must be remembered that departmental proceedings

cannot be unduly and unjustly delayed.

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f. If the criminal proceedings are delayed, the other,

having been stayed on account thereof, may be resumed

to conclude the same at the earliest. This may result in

two possibilities: either the vindication of the position of

the delinquent employee or he being found guilty,

enabling the department concern to show him out the

door.

14.3 The view taken in M. Paul Anthony (supra) was

referred to by this Court in Karnataka Power Transmission

Corpn. Ltd. v. C. Nagaraju

7

.

15. As is evident from the judicial pronouncements referred to

above, it may be desirable or, in certain circumstances, advisable

for disciplinary proceedings to be stayed when criminal

proceedings are ongoing; however, stay is not "a matter of course"

and is only to be given after consideration of all factors, for and

against.

16. Keeping in view Neelam Nag (supra), the following

essentialities may be culled out for the operation of clause 4 –

7 (2019) 10 SCC 367

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a. At least one year ought to have passed since

attempts to get the delinquent employee prosecuted;

b. If, after the passage of such time, no prosecution is

initiated, then the department may proceed in accordance

with its procedure for disciplinary action;

c. If the prosecution commences later in point of time

to the disciplinary proceedings, the latter shall be stayed,

but not indefinitely. Such proceedings are to be stayed

only for a reasonable period of time, which is a matter of

determination per the circumstances of each case.

17. The next aspect we must consider is whether an acquittal in

one of the proceedings entails an acquittal in the other.

17.1 In Nelson Motis v. Union of India

8

it was observed

that the question whether departmental proceedings could

have continued in the face of acquittal in criminal

proceedings had no force as “the nature and scope of a

criminal case are very different from those of a departmental

disciplinary proceeding and an order of acquittal, therefore,

cannot conclude the departmental proceeding.”

8 (1992) 4 SCC 711

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17.2 In C. Nagaraju (supra) it was observed:

“9. Acquittal by a criminal court would not debar an

employer from exercising the power to conduct

departmental proceedings in accordance with the rules

and regulations. The two proceedings, criminal and

departmental, are entirely different. They operate in

different fields and have different objectives. [Ajit

Kumar Nag v. Indian Oil Corpn. Ltd., (2005) 7 SCC 764 ]

In the disciplinary proceedings, the question is

whether the respondent is guilty of such conduct as

would merit his removal from service or a lesser

punishment, as the case may be, whereas in the

criminal proceedings, the question is whether the

offences registered against him under the PC Act are

established, and if established, what sentence should

be imposed upon him. The standard of proof, the mode

of inquiry and the rules governing inquiry and trial in

both the cases are significantly distinct and different.

[State of Rajasthan v. B.K. Meena, (1996) 6 SCC 417]

(Emphasis supplied)

17.3 This observation was quoted with profit in the State

of Karnataka v. Umesh.

9

18. It is a matter of record that concerning the incident(s) in

question, the FIR was registered sometime in 1996, and

disciplinary proceedings were initiated on 8

th

December 1999.

With the completion thereof in the year 2002 and pursuant to

further completion of formalities mandatorily required to be

complied with, including the principles of natural justice, the

9 (2022) 6 SCC 563

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CA No. 2518/2012

delinquent employee was dismissed from service with the passing

of the order dated 28

th

March 2003.

19.An appeal preferred by the delinquent employee was also

dismissed in 2004. It is only after the completion of the entire

process of disciplinary proceedings that the delinquent employee,

in February 2005, seeking reliance upon clause 4 of the MoS,

filed a writ petition challenging the action, which, to our mind,

was a belated attempt, only to forestall its implementation.

20. Repetitive as it may sound, we reiterate the principle of law

enunciated in Neelam Nag (supra) that the completion of trial

must be construed as completion “within the reasonable time

frame” and that the clause cannot come to the aid of the

employee “more so”, for “prolongation on the trial”. In the instant

case, the completion of the trial concerning the crime registered

in the year 1996 is nowhere nearing completion.

21. As a principle of law, we have already observed that a

departmental proceeding pending criminal trial would not

warrant an automatic stay unless, of course, a complicated

question of law is involved. Also, acquittal in a criminal case ipso

Page 14 of 19

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facto would not be tantamount to closure or culmination of

proceedings in favour of a delinquent employee.

22. Having perused the delinquent employee’s response to the

initiation of inquiry proceedings, most significantly, we notice

that no plea of MoS was ever taken. No specific plea of

postponement of disciplinary proceedings awaiting conclusion of

a criminal trial was made.

23. It is seen that the officer neither pleaded nor indicated the

prejudice caused to him as a consequence of the initiation of

criminal proceedings or simultaneous continuation of both

proceedings.

24. Applying all of the above-noted principles to the facts of the

case, we find that neither was it the case of the delinquent

employee that the trial to which he was subjected to begin within

one year of the commission of the offence nor does the record

speak to this effect. It is in the inquiry report

10

, dated 3

rd

December 2001, that an objection to the disciplinary

proceedings being conducted while a criminal case was being

tried is registered, but even there, no date stands specified.

10 Annexure P-4 Pg.109 of the Paperbook

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25. Further, it is not the case of the delinquent employee that

the principles of natural justice were not complied with in the

disciplinary proceedings of the bank.

26. Both these aspects, taken along with the fact that it is not

mandatory to stay the disciplinary proceedings, particularly

when they have been initiated after the prescribed period of one

year, we cannot bring ourselves to agree with the courts below.

The restriction within clause 4 is not complete and is to be

applied on facts. In such a situation, the Division Bench’s

reliance on United Commercial Bank & Ors. v. P.C. Kakkar ,

11

is entirely misconceived. Contrary to the conclusion arrived at by

the High Court in Writ Appeal, Kakkar (supra) furthers the

position of the appellant-bank as it states, “acquittal in the

criminal case is not determinative of the commission of

misconduct or otherwise, and it is open to authorities to proceed

with the disciplinary proceedings, notwithstanding acquittal in

the criminal case.”

27. Surprisingly, having referred to Kakkar (supra), which

takes the above-mentioned position, the High Court, in the very

11 (2003) 4 SCC 364

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next paragraph, takes a diametrically opposite view without any

reasoning to that. We may, in fact, refer to Kakkar (supra) to

reiterate what is expected of persons employed in a bank while

also observing that the conduct of the delinquent employee

herein flies in the face of these principles. This Court noted : -

“14. A bank officer is required to exercise higher

standards of honesty and integrity. He deals with the

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… The very 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.”

(Emphasis Supplied)

28. Given the foregoing discussion and in the light of judicial

pronouncements discussed supra, the appeal succeeds. We set

aside the judgment and order dated 7

th

January 2009 passed in

Writ Appeal No.03/2006, and consequentially, the order passed

in Writ Petition (Civil) No.12 of 2005 dated 25

th

July 2005.

29.The questions presented in this appeal are answered as

under :

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29.1Clause 4 of the MoS dated 10

th

April 2002 does not

envisage a complete standstill of departmental proceedings

as a result of the pendency of criminal proceedings. The

position of law is that the stay of the latter is desirable, but

the same is to be affected only for a reasonable period of

time.

29.2 The nature of proceedings being wholly separate and

distinct, acquittal in criminal proceedings does not entitle

the delinquent employee for any benefit in the latter or

automatic discharge in departmental proceedings.

30. Consequently, Mr. P. Zadenga’s dismissal from service as

per the Memorandum dated 28

th

March 2003 (D.P.S.No.2003/02)

is restored.

31. Interlocutory Applications, if any, stand disposed of.

32. Parties to bear their own costs.

…………….…………J.

(HRISHIKESH ROY)

………...….…………J.

(SANJAY KAROL)

Date : 03 October, 2023;

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Place : New Delhi.

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