State Bank Of India vs P. Zadenga

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

JUDGMENT

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 10th April 2002 create a bar on departmental

proceedings continuing when the person subjected

thereto is being tried before a criminal court for Signature Not Verified Digitally signed by offences of the same origin?

NITIN TALREJA Date: 2023.10.03 18:03:08 IST Reason:

Page 1 of 19 CA No. 2518/2012

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 7th January 2009 passed in Writ

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

(Civil) No.12 of 2005 dated 25th July 2005 allowing the appeal of

the Respondent herein against the order of dismissal from bank

services dated 28th 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 India2 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”

Page 2 of 19 CA No. 2518/2012 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 8th 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 21st 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.

Page 3 of 19 CA No. 2518/2012 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 28th March 2003. The departmental

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

dismissed on 16th 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 10th April 20023, 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 CA No. 2518/2012 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.

Page 5 of 19 CA No. 2518/2012 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.

Page 6 of 19 CA No. 2518/2012 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

Page 7 of 19 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

Nag4 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 CA No. 2518/2012 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

Page 9 of 19 CA No. 2518/2012 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.

Page 10 of 19 CA No. 2518/2012 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. Nagaraju7.

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

Page 11 of 19 CA No. 2518/2012 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

Page 12 of 19 CA No. 2518/2012 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

Page 13 of 19 CA No. 2518/2012 delinquent employee was dismissed from service with the passing

of the order dated 28th 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 CA No. 2518/2012 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 3rd

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

Page 15 of 19 CA No. 2518/2012

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

Page 16 of 19 CA No. 2518/2012 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 7th 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 :

Page 17 of 19 CA No. 2518/2012 29.1 Clause 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 28th 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;

Page 18 of 19 CA No. 2518/2012 Place : New Delhi.

Page 19 of 19 CA No. 2518/2012