2023 INSC 908 1

REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO.8516 OF 2011

UCO BANK AND OTHERS … Appellants

VERSUS

M.B. MOTWANI (DEAD)

THR. LRS. & OTHERS …Respondents

J U D G M E N T

RAJESH BINDAL, J.

1. The challenge in the present appeal is to the judgment

1

of

the High Court

2

passed in A Writ Petition

3

. Vide the aforesaid

judgment, the Division Bench of the High Court had set aside the

order dated 03.03.1993, passed by the appellant-Bank, wherein the

1

Dated 30.07.2009.

2

High Court of Bombay

3

Writ Petition No. 15 of 1995.

2

punishment of dismissal was imposed upon the respondent no.1 and

the order dated 23.07.1993, by which the appeal filed by him was

dismissed by the Appellate Authority.

FACTS

2. Briefly the facts, available on record, are that the

respondent no.1 was appointed as an Apprentice in the appellant-

Bank

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in the year 1952. In the year 1974, he was posted as a Branch

Manager at Moradabad Branch. From there, he was transferred to

Calcutta Main Branch as an Assistant Manager. In the year 1976, the

respondent no.1 was promoted and was transferred to Bombay as

Senior Management Scale-IV Officer. Between the year 1988-90, he

served as an Assistant General Manager at Bombay Main Branch. He

attained the age of superannuation on 02.07.1991 and was due to

retire on 31.07.1991. An intimation notice for retirement was served

upon him on 07.05.1991. Immediately, thereafter on 17.06.1991, the

respondent no.1 was served with a memo requiring him to explain

the irregularities and lapses relating to certain accounts during his

tenure when he was heading the Bombay Main Branch. Vide letter

dated 20.06.1991, he sought time and certain documents to enable

4

United Commercial Bank.

3

him to reply to the show cause notice. A fresh notice was served upon

him on 06.07.1991, to which the respondent no.1 again sought time

and the documents for filing his reply. On 15.07.1991, the General

Manager (Personnel) exercising power under Regulation 12 of the

1976 Regulations

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placed the respondent no.1 under suspension and

ordered that the respondent no.1 shall not be retired from the service

of the Bank, despite attaining the age of superannuation under

Regulation 20(3)(iii) of the 1979 Regulations

6

.

3. Aggrieved by the order of suspension, the respondent

no.1 preferred an appeal which was dismissed by the Appellate

Authority on 07.11.1991. A chargesheet dated 07.12.1991 was served

upon the respondent no.1 on 10.12.1991 and he was called upon to

face the departmental enquiry. The respondent no.1 filed his reply

to the chargesheet, denying all the allegations as baseless. The order

of suspension was challenged by the respondent no.1 by filing a Writ

Petition

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before the High Court, which was disposed of on 10.01.1992,

with certain directions regarding the enquiry, while not interfering

with the order of suspension.

5

The United Commercial Bank Officer, Employees (Discipline and Appeal) Regulations, 1976.

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The United Commercial Bank Officer’s Service Regulations, 1979.

7

Writ Petition No. 3667 of 1991.

4

4. On 09.04.1992, the Inquiry Officer submitted his report.

On 03.03.1993, the Disciplinary Authority dismissed the respondent

no.1 from the service under Regulations 7(3) read with Regulation 4-

D of the 1976 Regulations. The respondent no.1, aggrieved against

the order of dismissal, preferred a statutory appeal, which was

dismissed by the Appellate Authority on 23.07.1993.

5. The aforesaid order was challenged by the respondent

no.1 by filing a Writ Petition

3

in the High Court, which was allowed

vide impugned order. Against the aforesaid order, the appellant-

Bank is in appeal before this Court.

ARGUMENTS

6. Mr. Vikramjit Banerjee, learned Additional Solicitor

General of India appearing for the appellant-Bank, submitted that the

impugned judgment of the High Court has been passed on a wrong

premise, without properly appreciating the arguments. The 1979

Regulations clearly permitted action even against a retired

employee. He submitted that Regulation 20 thereof which was duly

approved by the Reserve Bank of India and the Central Government

has to be given its full effect. However, the High Court has gone

wrong in holding that a chargesheet was required to be issued,

5

though the 1979 Regulations provide that a show cause notice was

good enough to show that proceeding has been initiated against an

employee.

7. With reference to the amendment in Regulation 20 of 1979

Regulations, he referred to a communication dated 01.07.1985 from

the Government of India, Ministry of Finance, Department of

Economic Affairs (Banking Division) addressed to the Chief

Executive Officers of the Nationalised Banks, wherein a direction was

issued to initiate process for amendment of Regulation 20 of the 1979

Regulations. The draft of the said amendment, as approved by the

Board of Directors in its meeting held on 31.08.1985, was forwarded

to the Government of India, Ministry of Finance and to the Reserve

Bank of India for its formal sanction. On 17.12.1985, the Reserve Bank

of India granted approval to the proposed amendment. Thereafter,

the Government of India also granted approval on 30.01.1986. After

the aforesaid approvals were received, the appellant-Bank had put

up the amendment before the Board of Directors for adoption on

12.03.1986, which was duly approved on 17.04.1986. A circular was

issued to all the branches of the Bank on 28.05.1996, informing them

about the amendment made in the 1979 Regulations.

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8. Referring to the Regulation 20(3)(b) of the 1979

Regulations, the learned counsel for the appellant-bank argued that

this clearly provides that the disciplinary proceedings against an

employee shall be deemed to be pending on the date of retirement

in case a show cause notice has been issued to him before that.

Regulation 20(3)(c) of the 1979 Regulations further provides that an

officer under suspension of a charge of misconduct shall not be

retired or permitted to retire on attaining the age of superannuation.

He shall be retained in the service till the inquiry into the charge

levelled against him is concluded and a final order passed thereon.

9. Learned counsel for the appellant-Bank further argued

that the High Court had misdirected itself while referring to the 1979

Regulations as being amended in the year 1993 i.e., after the

retirement date of the respondent no.1. Whereas the fact remains

that these were amended in the year 1986 itself. Though this Court

opined in the case of UCO Bank & Anr. v. Rajender Lal Capoor

(2007) 6 SCC 694

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that, any proceeding against an employee shall be

deemed to be pending only when a chargesheet is issued, but the

judgment was delivered while ignoring true meaning of the plain

language used in Regulation 20 of the 1979 Regulations. He further

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Rajender Lal Capoor - I.

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submitted that on the same day another judgment was delivered by

the same Bench of this Court in Ramesh Chandra Sharma v. Punjab

National Bank (2007) 8 SCALE 240, wherein this Court opined that,

the Regulation should be given full effect even with reference to the

legal fiction provided therein. Identical Regulations with reference

to the case of Punjab National Bank ( supra) were under

consideration therein. Subsequently, the matter was referred to a

three-Judge Bench of this Court for consideration in Canara Bank v.

D.R.P. Sundharam, (2016) 12 SCC 724, wherein this Court upheld

the view expressed in UCO Bank v. Rajinder Lal Capoor, (2008) 5

SCC 257

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. However, the fact remains that in that case the issue was

not considered in its entirety with reference to the 1979 Regulations

and its true spirit, especially the deeming provisions. He further

submitted that recently in Chairman-cum-Managing Director,

Mahanadi Coalfields Ltd. v. Rabindranath Choubey, (2020) 18

SCC 71, a three-Judge Bench of this Court had expressed its

reservation with reference to the view expressed in Rajender Lal

Capoor -I (supra) delivered by a Two-Judge Bench of this Court.

10. While concluding the argument, the learned counsel for

the appellant-Bank submitted that the impugned judgment of the

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Rajender Lal Cooper -II.

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High Court goes even beyond the views expressed by this Court in

Rajender Lal Capoor -I (supra). In any case, there being a conflict

of opinion among the two judgments of Three-Judge Benches each

i.e., Canara Bank (supra) and Mahanadi Coalfields Ltd. (supra),

the matter may be referred to a larger Bench.

11. In response, Mr. Aman Hingorani, learned counsel

appearing for the respondent no.1, submitted that the facts of the

case in Rajender Lal Capoor -I (supra) were totally different, as in

that case chargesheet had been issued to the employee while he was

in service. Hence, the proceeding could continue even after his

retirement. The judgment of this Court in Mahanadi Coalfields

(supra) is also not relevant as the issue involved therein was

altogether different. There also, the chargesheet was issued to the

employee during the course of his employment, after which the

employee was suspended. The suspension order was revoked,

however, the departmental inquiry remained pending till

superannuation. In any case, reference in the aforesaid judgment was

made to Rajender Lal Capoor -I (supra) and not to the views

expressed by a Three-judge Bench of this Court in Canara Bank

(supra), which upheld the views expressed by a Two-Judge Bench in

Rajinder Lal Capoor -II (supra).

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12. He further submitted that the 1979 Regulations do not

provide for any procedure to be followed for inquiry or the

punishment which can be imposed. For this, the disciplinary

authority will have to refer to the 1976 Regulations, which provide

that after retirement of an employee, the only punishment which

could be awarded is with reference to the retiral benefits and not

termination from service.

13. It was further submitted by learned counsel for the

respondent no.1 that even if the amendment to Regulation 20 of the

1979 Regulations as proposed by the Bank had been approved by the

Reserve Bank of India and thereafter by the Government of India and

adopted by the appellant-Bank on 17.04.1986, however, any

amendment in the Regulations would take effect only after its

publication in the Official Gazette in terms of the amendment made

in Section 19(1) of the 1970 Act.

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Admittedly, the idea behind the

publication in the Official Gazette is to make the affected people

aware about the changes in law. Admittedly, there was no

publication in the Official Gazette and for the first time, the appellant-

bank had issued a circular to all the branches on 28.05.1986,

regarding the amendment carried out in Regulation 20 of the 1979

10

The Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970.

10

Regulations. After the amendment in Section 19(1) of 1970 Act, the

pre-requisite of the publication through gazette notification was

required to be complied with. On failure of publication in the Official

Gazette, the amended provisions of Regulation 20 could not be

enforced against the respondent no.1. The counsel for the

respondent no.1 referred to the judgment of this Court in B.K.

Srinivasan v. State of Karnataka, (1987) 1 SCC 658 and Rajendra

Agricultural University v. Ashok Kumar Prasad, (2010) 1 SCC

730. He further submitted that even prior to the judgment of this

Court in Rajender Lal Capoor -II (supra), this Court in United Bank

of India Officers Association v. United Bank of India, 1987 (1) LLJ

104, had struck down the 1979 Regulations.

14. He further submitted that even the Government of India

vide letter dated 15.12.1988, addressed to all Nationalised Banks,

requested that the Regulation 20 of the 1979 Regulations having been

held to be ultra vires by this Court in United Bank of India Officers

Association’s case (supra), the same should not be invoked by the

Banks.

15. While concluding the argument, counsel for the

respondent no.1 submitted that, the respondent no.1 had expired on

30.12.2012. He is now represented by his legal representatives. No

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retiral dues were paid to the employee (i.e., respondent no. 1)

concerned. Hence, on account of delay, direction should be issued

to the appellant-Bank for payment thereof, along with interest.

16. We have heard learned counsel for the parties and

perused the relevant referred record.

DISCUSSION

17. Before we proceed to consider the arguments raised by

the learned counsel for the parties, we deem it appropriate to refer

to the legal position with reference to the arguments raised

regarding Regulation 20 of the 1979 Regulations.

18. The undisputed facts on record are that the respondent

no.1 while serving as Assistant General Manager at Bombay Main

Branch, had attained the age of superannuation on 02.07.1991 and

was due to retire on 31.07.1991. An intimation notice for retirement

was served upon him on 07.05.1991. Immediately, thereafter on

17.06.1991, the respondent no. 1 was served a memo, requiring him

to explain the irregularities and lapses related to certain accounts

during his tenure, when he was heading the Bombay Main Branch.

The aforesaid notice was served upon the respondent no.1 on

20.06.1991. He sought time and certain documents to enable him to

12

reply to the show cause notice. A fresh notice was served upon him

on 06.07.1991, to which the respondent no.1 again sought time and

the documents for final reply. On 15.07.1991, the General Manager

(Personnel) exercising power under Regulation 12 of the 1976

Regulations placed the respondent no.1 under suspension and

ordered that he shall not be retired from the service of the bank,

despite attaining the age of superannuation under Regulation

20(3)(iii) of the 1979 Regulations. The respondent no.1, aggrieved

against the order of suspension, preferred an appeal, which was

dismissed by the Appellate Authority. Thereafter, the chargesheet

was served upon the respondent no.1 on 07.12.1991. The respondent

no.1 filed his reply to the chargesheet denying all the allegations

being baseless. The order of suspension was challenged by the

respondent no.1 by filing a Writ Petition before the High Court, which

was disposed of on 10.01.1992, with certain directions regarding the

inquiry, while not interfering with the order of suspension. On

03.03.1993. the Disciplinary Authority dismissed the respondent no.1

from service under Regulations 7(3) read with 4(d) of the 1976

Regulations. The respondent no.1, aggrieved against the order of

dismissal, preferred a statutory appeal, which was dismissed by the

Appellate Authority on 23.07.1993. The aforesaid order was

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challenged by the respondent no.1 by filing a writ petition in the High

Court, which was allowed by the impugned order.

Legal Position

19. Vide judgment of this Court in United Bank of India

Officers Association’s case (supra), Regulation 20 of the United

Bank of India Regulations 1979 which was identical, was held to be

unconstitutional and void.

20. The matter was considered subsequently by this Court in

Rajender Lal Capoor -I (supra). In that case, the employee

concerned had attained the age of superannuation on 30.10.1996.

Show cause notice was issued to him on 24.10.1996. Chargesheet

was issued on 13.11.1998. Finally, after the enquiry, he was removed

from service. The statutory appeal filed against the order of

punishment of removal, was dismissed by the Appellate Authority. In

a challenge to the aforesaid order, the High Court opined that the

punishment of removal was disproportionate vis-à-vis the gravity of

charge framed against him. Finally, it was directed that the

punishment of removal be converted into compulsory retirement.

The intra-court appeal against the aforesaid appeal was dismissed by

the High Court. The matter was agitated before this Court.

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20.1. While interpreting the 1979 Regulations, this Court

opined that the legal fiction created in clause (iii) of Sub-Regulation

20(3) of the 1979 Regulations, must be given full effect, but it is well-

settled that the scope and ambit of the legal fiction should be

confined to the object and purport for which the same has been

created. It was opined that the 1979 Regulations could be invoked

only when the disciplinary proceeding had been initiated prior to the

ceasing of the employees service. The delinquent employee would

be deemed to be in service, although he has reached the age of

superannuation, only if a valid departmental proceeding had been

initiated. The departmental proceeding was not initiated merely on

issuance of a show cause notice. It is initiated only when a

chargesheet is issued. That is the date of application of mind on the

allegations levelled against an employee by the competent authority.

Pendency of a preliminary disciplinary inquiry by itself cannot be a

ground for invoking Regulation 20 of the 1979 Regulations. On an

employee having been allowed to superannuate, only proceeding

inter alia including, withdrawal of his pension or any other retiral

dues under the applicable regulation, could have been initiated. As

in that case, the chargesheet was issued after the employee had

already superannuated, the same along with inquiry report and the

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order of punishment was set aside. The order of removal or dismissal

from service can be passed only when an employee is in service. If

a person is not in employment, the question of terminating his service

ordinarily would not arise unless there exists a specific rule in this

behalf. In the aforesaid case, even though the employee was not in

appeal before this Court against the order of his compulsory

retirement but still this Court invoking the principles, as contained in

Order XLI Rule 33 CPC, granted relief to the respondent.

21. The Bank, being aggrieved against the aforesaid

judgment of this Court, filed a review petition, which was decided by

this Court in Rajinder Lal Capoor -II (supra). While harmoniously

construing the 1976 and 1979 Regulations, this Court opined that

Clause (iii) of Sub-Regulation 20 (3) of the 1979 Regulations is an

independent provision. It provides for continuation of disciplinary

proceeding which must have been initiated in terms of the 1976

Regulations. The 1979 Regulations will be applicable only in a case

where proceeding has been initiated for the purpose of taking

disciplinary action against a delinquent officer for the purpose of

imposition of punishment on him. The disciplinary proceeding, thus,

is initiated only in terms of the 1976 Regulations and not in terms of

the 1979 Regulations. The complete procedure for holding the

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disciplinary proceeding is provided only in the 1976 Regulations.

The 1979 Regulations would be attracted independently where no

disciplinary proceeding is to be initiated. However, when read in

context of Regulation 20(3), initiation and pendency of disciplinary

proceeding is a must. The 1976 Regulations provided for the mode

and manner in which the disciplinary proceeding is initiated. It

expressly provides for service of chargesheet which is a sine qua non

for disciplinary proceeding. While putting the tools for

interpretation and giving a harmonious construction to the provisions

of the 1976 and the 1979 Regulations, this Court opined that if the

intention of the Regulation making authority had been that the legal

fiction as created in Clause (ii) of Sub-Regulation (3) of Regulation 20

of the 1979 Regulations would cover both clauses (i) and (iii), the

same should have been placed only after clause (iii). In such an

event, clause (ii) of Sub-Regulation (3) of Regulation 20 should have

been differently worded. With these observations, the review

petition filed by the Bank was dismissed.

22. In Canara Bank’s case (supra), this Court noticed that

the earlier judgments of this Court in the cases of Rajender Lal

Capoor -I & Rajender Lal Capoor -II (supra) were delivered by the

Division Bench of this Court. When the matter came up for hearing,

17

having a doubt on the view expressed, reference was made to a

larger Bench of this Court vide order dated 04.08.2010. A Bench

consisting of Three Judges of this Court found that the provisions of

the 1976 Regulations with reference to initiation of the disciplinary

proceeding has been correctly appreciated and interpreted,

especially with reference to the departmental proceeding. This

Court had quoted with approval paras 14 to 23 of the aforesaid

judgment of this Court in Rajender Lal Capoor-II (supra) by which

the review petition, filed by the Bank in Rajender Lal Capoor -I

(supra), was dismissed. Para 8 thereof is extracted below:

“8. On an exhaustive consideration of the

manner in which the provisions have been analysed

and the clear and unambiguous language of the same

and also having regard to the provisions of the 1976

Regulations of the Bank with regard to initiation of

disciplinary proceeding we have no doubt in our mind

that the meaning given to the provisions of the

Regulations in the said case is correct and does not

require any reconsideration. From the above it would

follow that by virtue of the provisions contained in

Regulation 20(3)(iii), a disciplinary proceeding

initiated by means of a charge-sheet prior to the

retirement of a bank employee would continue even

after his retirement in view of the deeming provision

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contained in the said Regulation 20(3)(iii) by which the

officer is deemed to continue in service till completion

of the proceedings.”

23. From the aforesaid referred judgments of this Court

especially by a larger Bench consisting of Three Judges, in our

opinion, there is no merit in the present appeal as the principles laid

down therein have been followed by the High Court. In the case in

hand, the deceased employee had attained the age of

superannuation on 31.07.1991, whereas the chargesheet was issued

to him on 07.12.1991. Meaning thereby that on the date of his

superannuation, no disciplinary proceeding was pending against

him.

24. The arguments raised by the learned counsel for the

appellant-Bank that the matter needs to be referred to a larger Bench

as the legal fiction and true spirit of the 1976 and the 1979 Regulations

have not been considered by this Court, is merely to be noticed and

rejected, as the larger Bench consisting of Three-Judges in Canara

Bank’s case (supra) had already considered the judgment of the

Division Bench of this Court in Rajender Lal Capoor -I and

Rajender Lal Capoor -II cases (supra) and had reiterated the same

legal position.

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25. The observation made in para 38 of the Mahanadi

Coalfields Limited (supra), as relied upon by the learned counsel

for the appellant-Bank, will also not come to its rescue for the reason

that the observation was made while referring to the judgment of this

Court in Rajender Lal Capoor -I (supra) and not the Rajender Lal

Capoor -II (supra) and also in Canara Bank’s case (supra) where

on a reference to a Larger Bench the law laid down in Rajender Lal

Capoor’s (II) case (supra) was reiterated.

26. The judgment of this Court in Punjab National Bank’s

case (supra), as relied upon by the learned counsel for the appellant-

Bank, is also distinguishable on facts as in that case the chargesheet

was issued to the employee concerned before his retirement.

CONCLUSION

27. For the reasons mentioned above, in our opinion, the

appeal filed by the appellant-Bank is meritless and the same is

accordingly dismissed with costs, quantified at ₹25,000/-.

28. At the time of hearing, it was pointed out by the learned

counsel for the respondent no.1 that the employee had expired

during the pendency of this appeal on 30.12.2012. It has been

noticed by the Division Bench in the impugned judgment of the High

20

Court that the subsistence allowance was not paid to the deceased

employee. As we have set aside the punishment order inflicted on

the deceased employee, all the service benefits due to him along

with interest @ 7% per annum from the date of his retirement till the

payment is made, shall be paid by the appellant-Bank to his legal

heirs within a period of three months from the date of receipt of copy

of this judgment.

29. The appeal is accordingly dismissed

…..…………… ….J

(HIMA KOHLI)

…………………..J

(RAJESH BINDAL)

New Delhi

October 12, 2023.