State Bank Of India vs A.G.D. Reddy

2023INSC766 REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 11196 OF 2011

State Bank of India …Appellant (s)

Versus A.G.D. Reddy ...Respondent(s)

JUDGMENT

K.V. Viswanathan, J.

1. The present appeal by the State Bank of India (for short

“the Bank”), calls in question the correctness of the judgment

of the Division Bench of the High Court of Karnataka at

Bangalore dated 20.10.2010 in Writ Appeal No. 8085 of Signature Not Verified Digitally signed by 2003. By the said judgment, the Division Bench had Jayant Kumar Arora Date: 2023.08.24 16:01:13 IST Reason:

dismissed the Appeal of the Bank and confirmed the

1 judgment and order of the learned Single Judge dated

12.11.2003. The learned Single Judge had allowed the Writ

Petition No. 29547 of 1997 filed by the respondent and

quashed the order passed by the Appointing Authority and

granted consequential benefits to the respondent. The

Appointing Authority had, by its order of 31.01.1995,

imposed a punishment of “reduction in basic pay to the

lowest stage in Scale-I” as envisaged under Rule 49 (e) of the

State Bank of India (Supervising Staff) Service Rules and

further, has treated the period spent by the delinquent officer

under suspension from 18.08.1990 till the date of his

reinstatement as suspension only.

2. Being aggrieved, the Bank has filed the present Appeal.

Shri Sanjay Kapur, learned counsel for the Bank, contends

that the courts below have transgressed the limits of Judicial

Review. According to the learned counsel, the courts below

2 have erred in characterizing the orders of the Disciplinary

authorities as perverse.

3. On the contrary, the respondent represented by Shri

S.N. Bhat, learned Senior Counsel, vehemently defends the

orders impugned. Learned Senior Counsel contends that the

present was a case of “no evidence” and the enquiry officer

without any evidence on record and based only on his

personal purported knowledge has recorded the findings of

guilt. Learned Senior Counsel further contends that the

courts below have rightly set aside the order of the

Disciplinary Authorities and that the case did not call for any

interference.

Relevant Facts

4. The facts, insofar as they are necessary for the

adjudication of this Appeal, are set out hereinbelow:

a) Disciplinary proceedings were initiated against the

respondent for certain acts of misconduct allegedly

committed by him when he was working as Field Officer of 3 the Mahadevapura Branch of the Bank. Broadly stated, the

charges in the Charge Sheet dated 13.02.1992 were:

i) That he recommended and obtained sanction from the

Branch Manager, credit limits to various units as detailed

therein and permitted excess drawings on an on-going basis;

that he did not report to the controlling office the excess

drawings permitted; that he did not conduct periodical

inspections as per the extant instructions; that loan sanctions

were given and credit limit extended to entities operating in

the premises of another entity;

ii) That credit limit was recommended and sanction

obtained for M/s Saraswathi Fabricators even though the unit

was located away from the area of operation; sanction of the

advance was not reported to the Controlling Office; and

formalities for creating equitable mortgage over immovable

property offered as collateral security were not completed;

iii) That the respondent recommended and obtained

sanction of advance to M/s ACE Photo Reprographers and 4 M/s Sangeetha Refreshments both from Shivajinagar, even

though the units were non-existent and the particulars

furnished were fictitious as another firm M/s All Arts

Company was operating from the same premises; that the

sanction of these advances were not reported to the

controlling office and periodical inspection of the units were

not conducted.

iv) That the respondent had recommended and obtained

sanction on 20.05.1987 cash credit limit to M/s. Rajeswari

Enterprises and the respondent did not submit control return;

that periodical inspections were not carried out and

formalities for creation of equitable mortgage over

immovable property stipulated as pre-condition for sanction

of limit were not completed. Certain other charges set out,

which are not directly relevant for the adjudication of the

Appeal, have not been highlighted hereinabove.

v) It was alleged in the charge memo that by the acts

committed, the respondent failed to comply with the extant 5 instructions with regard to sanction and follow-up of

advances and failed to take all possible steps to ensure and

protect the interest of the Bank and did not discharge his

duties with utmost diligence and integrity and thereby

violated the service rules.

b) As part of the charge, it was further alleged that he

purchased agricultural land in October 1987 ad-measuring

21.36 acres and got it registered in his name for a nominal

amount, using the influence of one Shri Ramamurthy of M/s

Bindu Enterprises who are enjoying credit facilities with the

branch and he failed to declare to the Bank the purchase of

immovable property as per the extant instructions. It was

alleged that by the above acts, he placed himself under

pecuniary obligations to the party.

c) The statement of imputations were also furnished.

Findings of the Enquiry Officer

5) The respondent filed his detailed reply denying the

allegations. An Enquiry Officer was appointed. Before the 6 Enquiry Officer, the Bank examined seven witnesses and

marked twenty four documents. The delinquent employee

did not examine any witness but had produced thirty

documents. The Enquiry Officer, after completion of the

enquiry proceedings, analyzed all the oral and documentary

evidence and found the respondent guilty for some of the

charges levelled and absolved the respondent with regard to a

few other charges. The presenting Officer did not pursue the

following charges contained in the chargesheet.

“(a) Recommendation of the loan by charged official in respect of M/s. Fotografiks.

(b) Charge vii (b) - The unit had borrowing from Central Bank of India, Avenue Road, Bangalore.

(c) Charge II - The influence of Shri Ramamurthy of M/s. Bindu Enterprises towards purchase and registration of 21.36 acres of lands.”

The following charges were held not proved:

“I. Charge No. (ii) (a) pertaining to M/s. Farooq Tanning Control forms in respect of these units were submitted.

II. Non reporting of excess drawings permitted in the case of M/s Fotografiks.

7 III. M/s Ace Photo Reprographers

The charge that the unit is not functioning is not proved.”

The remaining charges were held proved.

6) With these findings, the Enquiry Officer submitted his

report dated 23.08.1993 and the records of the enquiry to the

Disciplinary Authority. The Disciplinary Authority issued a

second show cause notice along with the copy of the Enquiry

report to which the respondent filed a detailed reply.

Thereafter, the Disciplinary Authority also issued a notice

dated 04.10.1993 setting out the points of disagreement with

regard to the Enquiry Officer’s findings to which again the

respondent furnished a reply.

Findings of the Disciplinary Authority and Imposition of

Penalty

7) The Disciplinary Authority, by his order of 28.12.1994,

elaborately considered the matter. He agreed with all the

findings of the enquiry officer and even on the aspects where

8 the enquiry officer held that the charges were not proved, the

disciplinary proceeding differed with the enquiry officer on

some of those aspects and held the charges to be proved.

For example, in the case of a unit - ACE Foto

Reprographers not functioning in the premises, while the

enquiry officer held the charge not proved, the Disciplinary

Authority held the charge to be proved.

8) These aspects need not detain the Court any further. As

it will be clear from the discussion below, ultimately the

charges with regard to not conducting periodical inspections

of the units mentioned in the charge and the non-completion

of the formalities for creating equitable mortgage over

immovable property offered as collateral security, in the case

of M/s Saraswathi Fabricators are the primary aspects that

has engaged the attention of this Court. As will be clear from

the discussion in the later part of this judgment, it is those

two charges which have ultimately been found to be proved

that have been elaborated herein below.

9

9. Pursuant to the above, the Appointing Authority passed

an order on 31.01.1995 imposing the penalty of “reduction in

basic pay to the lowest stage in Scale-I” as provided under

Rule No. 49(e) of the State Bank of India (Supervising Staff)

Service Rules and further to treat the period under suspension

from 18.08.1990 till the order of his reinstatement as

suspension only.

10. The Appellate Authority to whom the respondent

approached confirmed the orders.

11. Challenging the order of the Disciplinary Authorities

and the Appellate Authority, the petitioner moved a writ

petition, which has now resulted in the orders of the learned

Single Judge and that of the Division Bench.

12. The learned Single Judge classified the common heads

under Charge I as was also done by the Enquiry Officer as

being

i) Conduct of periodical inspection;

ii) Non-submission of control forms; and

10

iii) Area of operation

13. We will deal with the first limb, after we consider the

second and third limbs, for the sake of convenience.

Charge regarding non-submission of control forms and

area of operation

14. On the aspect of non-submission of the control forms,

the learned Single Judge records that the burden was wrongly

shifted on the respondent when the Enquiry Officer held that

the delinquent had not proved the submission of the control

forms. The learned Single Judge held that when the

respondent denied the charge, the onus was on the

Disciplinary Authority to prove the charge alleged against the

delinquent employee by producing relevant material and the

material must be such that it amounts to proving the guilt of

the employee in respect of the charge against him with some

degree of definiteness.

11

15. We have perused the Enquiry Report on this issue and

we are satisfied that the learned Single Judge is right on this

score. The following findings in the Enquiry Report fortify

that conclusion:-

“However, in respect of other units listed in the charge sheet regarding non-submission of control form the charges are proved. Although, it is likely that the Bank's files may be missing due to shifting of the branch, no attempt has been made by the defence to bring the control forms from the controlling authority. It only clearly indicates that the control forms have not been submitted. This is a failure on the part of the charged official.”

16. Equally with regard to the third limb, namely,

transgression of the area of operation, the learned Single

Judge rightly found that in a number of instances loans had

been sanctioned outside the area of operation and, as such, it

could not be held that there was any transgression by the

delinquent respondent. This view is independently fortified

when we peruse the Enquiry Report.

17. In the preliminary paragraphs under the head “Area of

operation”, while dealing with the relative instructions of the

Bank, the following is set out:

12

“ii) Where there are clusters of eligible units, whether SSI or Small business, situated outside the respective operational area, assistance could be rendered to them, provided the place is accessible throughout the year and is connected by the public transport. Even in such cases, the location of units should not be far beyond the operational area and the number of units should reasonably large. (sic.) Recommendations in this regard should be first got approved from the controlling authority.

iii) Lending to SSI and small business units could also be affected in adopted villages with the prior approval of the controlling authority.

iv) Care, should however, be taken that the flexible approach does not lead to scattered lending.

Approach should preferably be financing of clusters of units/growth centres.”

Nowhere in the Enquiry Report or in the evidence had it been

brought out that any of these above conditions in the

excepted categories were breached.

Charge regarding conduct of periodical inspections

18. However, we find that the learned Single Judge and the

Division Bench, which confirmed the order of the learned

Single Judge, erred in recording the following finding with

regard to the first limb, namely, about the respondent not

13 conducting the periodical inspections as required under the

extant instructions:-

“In so far as the first component of the charge is concerned, it can safely be said that none of the witnesses examined by the Bank before the enquiry officer have spoken about the truth or otherwise of the allegations made in the charge memo. However, the enquiry officer in his lengthy report based on his personal knowledge about the instructions and guidelines issued by the Head Office of the bank for conduct of inspection by Field Officers of the bank, observes that it is the duty of the Field Officer, to conduct periodical inspection and maintain proper records of those inspections. To arrive at the conclusion that the delinquent officer is guilty of this charge, he merely states in his report that Sri Krishna Murthy Urala - PW 4 has deposed that the charged official has not conducted any periodical inspection. This conclusion of the enquiry officer is based on the mis-reading of the evidence of PW-4 by the enquiry officer. In fact, PW 4 in his lengthy deposition before the enquiry officer has stated that the periodical inspections of units were carried out by the petitioner sometimes independently and some time with the Branch Manager and the relevant records were not available at the Branch. It has also come in the evidence that the Branch was shifted to new building some time in the year 1989 and during shifting, books used for recording of the inspection of units might have been misplaced and they are bit traceable. So, in my opinion picking out one stray sentence here and there in the deposition of P.W. 4 and importing his personal knowledge about the so called instructions and guidelines issued by the Bank, in my view, the enquiry officer could not have come to the conclusion that the Petitioner failed to conduct periodical inspection and therefore that part of the charge in the charge memo is proved against him.”

14

19. To satisfy ourselves on this aspect, we examined the

enquiry report. The rationale for the inspection is set out in

the preliminary portion of the report. It is stated as follows:-

“Follow up and supervision for term loans:

Term lending particularly to small scale units, is subject to various risks due to the long period of loan and the fact that the small scale units being financially vulnerably are likely to be affected by even minor adverse changes in their fortunes, where mortgage of immovable properties are obtained, we are in a relatively better position although the process of realization in the event of default may prove to be cumbrous. Where, however, the security comprises machinery in leased, rented premises, the risks are much greater; movable machinery, particularly, being liable to felonious removal. Further, the tenancy in rented premises may sought to be terminated by the owner although the law generally protects the tenancy against unfair ejectment.

Having regard to the foregoing consideration, it is needles to add the proper selection of clients is one matter to which considerable thought should be given. The only means of forestalling and avoiding possible loss would lie in the vigilant follow up of loans after they have been granted.”

Thereafter, some guidelines have been set out. Dealing with

the charge, the Enquiry Officer records the following:-

“From the above instructions it may be observed that it is the duty of Field Officer to conduct periodical

15 inspection and maintain proper records of those inspections.

The defence merely contested the charge on the plea that inspection register has not been produced for evidence. The I is not only supposed to maintain the inspection register but also report the observations made by his (sic.) during the inspection by means of separate report. None of such reports have been produced by the defence to prove that inspections have been conducted by him.

In this connection it is pertinent to bring the following instructions of the Bank in regard to report to be submitted by the field Officer.

Accounts with borrowings of Rs.2 lacs and over should be followed up by I on the basis of a proforma marked follow up form for I (STF6). The objective underlying the form is to relate outstanding to the activity level on a continuing basis i.e. every month, and to relate the activity level to earlier projections (as indicated in the scheme or estimates based on past performance). A systematic follow-up through this form will reveal any tendency towards irregularity in an account and the probable reasons if any irregularity does occur. In either case, the situation is brought to the attention of the Manager SIB or BM, who even otherwise will be expected to check these statements every month. The abnormalities indication (sic.) in item 6 of the Notes on Form SIF 6 are illustrative. There could be other abnormalities which could be inferred on the basis of this form. Sri Krishnamurthy Urala - PW4 deposed on page 10,11 of the proceedings that the charged official has not conducted any periodical inspection. This deposition clearly proves the above charge.

16 Accordingly, I conclude that the charges levelled against him regarding conduct of periodical inspection has been amply proved.”

(In the summary of findings ‘I’ is recorded as indicating the Field Officer)

No doubt, the report records that no such report has been

produced by the defence to prove that the “inspections have

been conducted by him”. To satisfy ourselves, whether the

onus has been wrongly shifted on the employee, we perused

the evidence of PW-4 Krishnamurthy Urala to whose

deposition, copious references were made both by Mr. Sanjay

Kapur, learned Counsel and Mr. S.N. Bhat, learned Senior

Counsel.

20. In the charge memo, the respondent was specifically

charged that the respondent had recommended and obtained

sanction from the Branch Manager, credit limits to various

units as detailed therein and permitted excess drawings on an

on-going basis and the respondent did not report to the

controlling office the excess drawings and did not conduct

periodical inspections as per the extant instructions. A 17 number of units were mentioned in the charge memo to

substantiate the allegation that periodical inspections, as per

the extant instructions, were not conducted on them. The

following have emerged in the deposition of PW-4 - Shri

Krishnamurthy Urala recorded on 17.02.1993:

“PO: Mr. Urala do you by chance know who was the field officer handling this unit between June 86 to 1988.

PW4: Yes. It is Mr. AGD Reddy.

…. …..

PW4: What is the procedure for conducting inspections to units as per laid down instructions.

PO: The laid down instruction is the unit has to be

inspected normally once in a month by FO along with the stock statements to verify whether the disbursal of the funds from the a/cs has been properly utilized.

The field officer should carry branch inspection book to the units and write the observations thereon, and also he has to make the observations in the inspection book kept at the unit.”

….. …….

PO: Were the inspections conducted for these units.

PW4: No.”

18 Deposition of PW-4 recorded in the enquiry on 03.03.1993:

“DR: You said certain units have not been inspected by your predecessors. Can you tell us the basis for this allegation.

PW 4: No proper records were maintained.

DR: Did you trace/see the inspection cards relating to the period of 1988, 87 & back.

PW4: Yes.

DR: A submission to EO: We have been told by the branch that the inspection records related to 88,87 & back are not available. Kindly direct the prosecution to make available copies of the records for the defence purpose.

EO: DR to specifically mention the inspection registers in r/o which units you require to enable EO to examine your request.

DR: Inspection cards in r/o units mentioned in the charge sheet.

EO: PO may examine the request of DR and if possible records, if available may be given.

Otherwise a report may be given to EO.”

21. It transpires that there was a direction to produce the

inspection records relating to units mentioned in the

19 chargesheet. The following is found in the transcript in the

enquiry proceeding (dated 04.05.1993):-

“PO: I was requested by DR in the previous sitting to produce two documents viz. Inspection register for the relevant period and list of machinery in r/o M/s. Bindu Enterprises. I am submitting the inspection register & also a list of machineries as requested for perusal of EO & DR.

DR: We will respond after going through the said documents.” (emphasis supplied)

Onus of proof

22. Having considered the above, we are constrained to

conclude that the charge of the Bank, that the inspection was

not carried, stood established. Then it was for the respondent

to show, as undertaken by him, what his response to the

allegation was.

23. It is well settled that, in a disciplinary proceeding, the

question of burden of proof would depend upon the nature of

the charge and the nature of the explanation put forward by

the respondent. In a given case, the burden may be shifted to

the respondent depending upon the explanation. [See Orissa

20 Mining Corporation and Another vs. Ananda Chandra

Prusty, (1996) 11 SCC 600, Para 6].

24. Here the specific charge was with regard to a series of

named units, periodical inspections were not carried out. To

support the charge, witnesses were examined and on the

request through his defence representative, the Enquiry

Officer has directed the presenting officer to produce the

inspection records. The Enquiry Officer specifically asked

the defence representative to mention the inspection registers

in respect of the units which are required. The defence

representative specifically makes a request for the inspection

records in respect of the units mentioned in the charge sheet.

The Enquiry Officer directs the presenting officer to examine

the request and records, if available, be given. Thereafter, it

has come on record that the Presenting Officer produced the

inspection register for the relevant period for perusal of the

Enquiry Officer and the defence representative. On this, the

21 defence representative stated that they would respond, after

going through the documents. In the written submissions

filed, a grievance is raised that the records pertaining to

inspection were produced at the fag end of the enquiry. We

are not impressed with the submission since, it was after the

production of the inspection register that the defence

representative of the respondent had stated, that they will

respond after going through the said documents. No response

was forthcoming. Neither from the records nor at the hearing

has it been demonstrated as to how the charge of failure to

conduct the inspection was countered by the respondent. The

records sought being made available, the onus did shift to the

respondent to show that the charge was untenable.

25. In view of the above, clearly with regard to the first

limb of the first charge, namely, the failure to conduct

periodical inspection, it cannot be said that the finding of the

Enquiry Officer is on a mis-reading of the evidence or that

22 the records of the inspection of units were part of the records

that could be possibly misplaced or that a finding was based

on some stray sentence and personal knowledge was

imported by the Enquiry Officer de hors the record.

Charge regarding formalities for creation of equitable

mortgage

26. There is one other aspect which has completely escaped

the attention of the learned Single Judge and consequently

the Division Bench. One of the charges dealt with by the

Enquiry Officer was about not securing the advance to M/s

Saraswathi Fabricators by creation of an equitable mortgage

even though the equitable mortgage of immovable property

was offered by the party. The following findings were

recorded by the Enquiry Officer:-

“On page 12 para 7.2 of PEX 9, the borrower has offered equitable mortgage of building at No. 458, Viveknagar, Bangalore, a site measuring 1500 sq. ft. and built in area of 700 sq. ft. belonging to Sri K. V. Srinivasan valued at Rs. 4.5 lacs. The CO by his negligence has not stipulated this in his recommendations to the BM. In the process the advance could not be collaterally secured by 23 non-creation of equitable mortgage. Hence the charge that equitable mortgage has not been created is proved.”

27. To satisfy ourselves, we examined the record of the

enquiry proceedings on this issue. In the deposition of PW-4,

recorded in the enquiry proceeding on 17.02.1993, the

following is found:-

“PO: Looking to PEX page 12 item 7.2 of PEX 9 please tell us the collateral security offered by the unit.

PW4: …. security is a site measuring 1,500 sq. ft. & bldg.

area of 700 sq. ft. belonging to Sri KV Srinivasan at Vivek Nagar, Bangalore valued at Rs.4.5 lacs.

PO: Was the formality completed at the time of sanctioning of this loan.

PW4: No.”

Deposition of PW-4 recorded on 03.03.1993:-

“DR: Who puts the stipulations in sanctioning of a loan? At the branch level?

PW4: Field Officer in consultation with the Br. Manager.

DR: Can the Br. manager as sanctioning authority waive any stipulation?

PW4: Depends on the circumstances.

…. …..

24 DR: Showing PEX9 from pg. l to 12 constitute the application. Do you agree?

PW4: It is application cum interview form.

DR: From pg. 13 to 19 forms appraisal memorandum.

PW4: Yes.

DR: The application contains the offers of the applicant and the appraisal contains the conditions of sanction by the sanctioning authority. Do you agree?

PW4: The application cum interview form is containing information regarding the prospective borrower. Based on the information the FO in consultation with BM has to fix the credit limits and stipulations in the appraisal memorandum.

DR: On page 12 para 7. 2 though there is an offer, on pg. 18 para 9.2 there is no stipulation to the effect that the offer of the applicant should be taken as collateral security. Do you see?

PW4: I do not know.

DR: On pg.12 para 7.2 there is a mention of equitable mortgage of certain properties. Do you see?

PW4: Yes.

DR: On pg.18 para 9.2 under the stipulation the stipulation column is vacant. Do you see?

PW4: Yes.

DR: The taking of equitable mortgage of certain securities is not a condition stipulated by the sanctioning authorities i.e. BM at branch level in r/o PEX9, pg. 18, para 9.2 'stipulations'.

25 PW4: Yes,

DR: Hence the question of completion of the formalities of non-existent stipulation does not arise. Do you see?

PW4: I do not know.”

28. What is significant to note is PEX 9 pertains to the

application for working capital in respect of M/s Saraswathi

Fabricators together with the appraisal memorandum. It is

clear from the deposition that the applicant for the loan had

offered collateral security in the form of land and building

and that the formality of collateral security was not taken. It

is further borne out that it is the Field Officer in consultation

with the Branch Manager who has to fix the credit limit and

the stipulations. It appears from the records that no

stipulation was put with regard to equitable mortgage so

mentioned with regard to M/s Saraswathi Fabricators, even

though the party had offered equitable collateral security in

the form of immovable property.

26

29. The explanation of the respondent is only that there was

no stipulation in the sanction order with regard to the taking

of collateral security. The charge is that, with regard to M/s

Saraswathi Fabricators, the formalities for creating equitable

mortgage over immovable property offered as collateral

security were not completed. The evidence of PW-4 is that

the stipulation for collateral security is so made by the Field

Officer in consultation with the Branch Manager.

30. In the light of the above, the finding of the Enquiry

Officer that the respondent, by his negligence, did not

stipulate this in his recommendation to the Branch Manager

and, as such, the advance could not be collaterally secured by

creation of equitable mortgage cannot be said to be perverse

or based on no evidence.

31. The answer given by the respondent in the writ petition

that personal guarantee was available; that the sanction did

not contain any condition regarding equitable mortgage of the

27 property; that documents of title were traced only in

September, 1988 after he left the Branch in June, 1988; that

as required by the successor of the respondent and the then

Branch Manager, the respondent had identified the

documents and suggested that they complete the work

connected with the creation of equitable mortgage, are not

matters on which the view of the Disciplinary Authority can

be substituted. In the written submissions filed, the

respondent claims that, after the papers were traced, the

mortgage was, in fact, effected. Even this would not make

any difference to the charges and the findings recorded,

which themselves were based on the evidence on record.

Scope of judicial review in disciplinary proceedings

32. From the above discussion, it is clear that it could not

be said that the Enquiry Report, the findings of the

28 Disciplinary Authority and the order of the Appointing

Authority are based on no evidence or are perverse. Even if

we eschew the report insofar as the aspect of non-submission

of control form, the transgression of the area of operation and

non-declaration of the immovable property and certain other

charges are concerned, the order of penalty can be sustained.

33. As has been demonstrated above, the aspects of failure

to conduct periodic inspection and the negligence in not

stipulating the taking of immovable property as collateral

security in the case of M/s Saraswathi Fabricators in spite of

the party offering it, constrain us to conclude that there was

material on record for the appellant to pass the order of

penalty.

34. Mr. S.N. Bhat, learned Senior Counsel, relying upon the

judgments of this Court in Nand Kishore Prasad vs. State of

Bihar and Others, (1978) 3 SCC 366 and Anil Kumar vs.

Presiding Officer and Others, (1985) 3 SCC 378 contends

that the Disciplinary Authority should arrive at its conclusion 29 on the basis of some evidence with some degree of

definiteness pointing to the guilt of the delinquent in respect

of the charge against him. He would contend that a suspicion

cannot be allowed to take the place of proof and scrupulous

care must be taken to see that the innocent are not punished

by recording findings merely based on ipse dixit of the

Enquiry Officer. We are unable to accept the contention that

the principles laid down in the above judgments are attracted

to the present case. The judgments cited are clearly

distinguishable, for the reasons that we have set out

hereinabove, while analyzing the facts of the present case.

35. Shri Sanjay Kapur, learned counsel for the Bank relies

on State Bank of India vs. Ram Lal Bhaskar and Another,

(2011) 10 SCC 249. In that judgment the scope of judicial

review of departmental proceedings was set out and the

principle laid down in State of A.P. vs. S. Sree Rama Rao,

AIR 1963 SC 1723, was reiterated, which reads as follows:- 30

“This Court has held in State of A.P. and Others v. S. Sree Rama Rao (AIR 1963 SC 1723, para 7):

"7. … The High Court is not constituted in a proceeding under Article 226 of the Constitution a Court of appeal over the decision of the authorities holding a departmental enquiry against a public servant: it is concerned to determine whether the enquiry is held by an authority competent in that behalf, and according to the procedure prescribed in that behalf, and whether the rules of natural justice are not violated. Where there is some evidence, which the authority entrusted with the duty to hold the enquiry has accepted and which evidence may reasonably support the conclusion that the delinquent officer is guilty of the charge, it is not the function of the High Court in a petition for a writ under Article 226 to review the evidence and to arrive at an independent finding on the evidence."

13. Thus, in a proceeding under Article 226 of the Constitution, the High Court does not sit as an appellate authority over the findings of the disciplinary authority and so long as the findings of the disciplinary authority are supported by some evidence the High Court does not re-appreciate the evidence and come to a different and independent finding on the evidence. This position of law has been reiterated in several decisions by this Court which we need not refer to, and yet by the impugned judgment the High Court has re- appreciated the evidence and arrived at the conclusion that the findings recorded by the enquiry officer are not substantiated by any material on record and the allegations leveled against the respondent no.1 do not constitute any misconduct and that the respondent no.1 was not guilty of any misconduct.”

31

36. It is now well settled that the scope of judicial review

against a departmental enquiry proceeding is very limited. It

is not in the nature of an appeal and a review on merits of the

decision is not permissible. The scope of the enquiry is to

examine whether the decision-making process is legitimate

and to ensure that the findings are not bereft of any evidence.

If the records reveal that the findings are based on some

evidence, it is not the function of the court in a judicial

review to re-appreciate the same and arrive at an independent

finding on the evidence. This lakshman rekha has been

recognized and reiterated in a long line of judgments of this

Court.

37. In the present case, it could certainly not be said that the

report is based on no evidence or that it is perverse. The

learned Single Judge transgressed the limits of judicial

review in setting aside the enquiry proceedings and the

punishment imposed. The Division Bench, in a short order

32 has, after extracting a part of the learned Single Judge’s

judgment, gone on to hold that having perused the records of

the enquiry they do not find that the charges have been dealt

with in any manner of specificity. Thereafter they conclude

that the learned Single Judge was justified in arriving at its

conclusion. We are not able to sustain the orders of the

learned Single Judge and the Division Bench.

Severability of charges

38. The question that remains is, in the light of the findings

above, does the order of penalty imposed call for any

interference?

39. The law is well-settled that if in a disciplinary

proceeding, the order of penalty can be imposed on the

charges proved and the punishment imposed is lawfully

sustainable on those charges, it is not for the Court to

consider whether those grounds alone would have weighed

with the authority in imposing the punishment. No doubt, on

the facts of the present case, on some aspects of the charge, 33 the proof may have been found wanting. However, since the

law laid down by this Court is that unless punishment

imposed is only co-relatable to any of those charges found

not proved, the penalty cannot be set aside. In this case, the

punishment can be sustained even if the charges held not

proved are severed. [See State of Orissa vs. Bidyabhushan

Mohapatra [1963] Supp. 1 SCR 648 and Deputy General

Manager (Appellate Authority) and Others. vs. Ajai Kumar

Srivastava, (2021) 2 SCC 612].

40. Then the only question is does the penalty imposed

shock the conscience of the Court? In the oral arguments as

well as in the written submissions, the respondent contended

that there was no charge of financial misappropriation or of

causing any financial loss to the Bank. This submission was

countered by the appellant by placing reliance on the

judgment of this Court in Disciplinary Authority-cum-

Regional Manager and Others vs. Nikunja Bihari Patnaik,

(1996) 9 SCC 69, particularly, the holding of the Court in 34 para seven thereof to contend that the test is really not of loss

having been resulted or profit having been made. The test is

whether the delinquent employee, has observed the

prescribed norms of the Bank. The penalty imposed in this

case is “reduction in basic pay to the lowest stage in Scale-I”

as envisaged under Rule 49 (e) of the State Bank of India

(Supervising Staff) Service Rules and further, to treat the

period spent by the delinquent officer under suspension from

18.08.1990 till the date of his reinstatement as suspension

only. Since the charge of not conducting periodical

inspection and the failure to complete the formalities for

creating equitable mortgage with regard to M/s Saraswathi

Fabricators are supported by evidence, we do not think that

the penalty as imposed is disproportionate so as to shock the

conscience of the Court. We maintain the penalty as imposed

in the order of the Appointing Authority dated 31.01.1995

and as confirmed by the Appellate Authority. 35

41. For the reasons stated above, we have no hesitation in

holding that both the learned Single Judge and the Division

Bench were in error in allowing the writ petition and

interfering with the findings of the Enquiry Officer, the

decision of the Disciplinary Authority, the order of the

Appointing Authority and the decision of the Appellate

Authority. We, therefore, set aside the order of the learned

Single Judge and that of the Division Bench and dismiss the

Writ Petition No. 29547 of 1997 filed by the respondent.

Accordingly, the Appeal is allowed, with no order as to costs.

…..…………………J. (J.K. Maheshwari)

…..…………………J. (K.V. Viswanathan) New Delhi;

August 24, 2023.

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