C. Karunakaran Nambiar v. The Chairman, Punjab National Bank & Ors.

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** **PRESENT:** **THE HONOURABLE THE AG.CHIEF JUSTICE MR.ASHOK BHUSHAN & THE HONOURABLE MR.JUSTICE A.M.SHAFFIQUE** **THURSDAY, THE 28TH DAY OF AUGUST 2014/6TH BHADRA, 1936** **WA.No. 547 of 2013** **---------------------------** **AGAINST THE JUDGMENT IN WP(C) 5469/2004 OF THIS HONOURABLE COURT, DATED 11-01-2013** **-------------** ## **APPELLANT/PETITIONER:** **-------------------------------------** **C.KARUNAKARAN NAMBIAR, S/O.LATE GOPLAN ADIYODI, BRANCH MANAGER, CHERIYATH MANA KADIRUR - 670642, KANNUR DIST, KERALA STATE DISMISSED, PUNJAB NATIONAL BANK, VELLOOR BRANCH.** **BY ADVS.SRI.N.DHARMADAN (SR.) SMT.D.P.RENU** ## **RESPONDENTS/RESPONDENT:** **--------------------------------------------** **1. THE CHAIRMAN, PUNJAB NATIONAL BANK, HEAD OFFICE AT NO 7, BHIKHAJI CAMA PALACE, NEW DELHI-110066.** **2. THE EXECUTIVE DIRECTOR/REVIEWING AUTHORITY, HUMAN RESOURCES DEVELOPMENT DIVISION, PUNJAB NATIONAL BANK, HEAD OFFICE NO 7, BHIKHAJI CAMA PALACE, NEW DELHI-110066.** **3. THE GENERAL MANAGER** - **O/O.THE ERSTWHILE NEDUNGADI BANK LTD, REGD.OFFICE AT SHATHABDI BHAVAN, GOVINDAPURAM, CALICUT, NOW (AFTER AMALGAMATION WITH PUNJAB NATIONAL BANK) GENERAL MANAGER,** **ZONAL OFFICE, PUNJAB NATIONAL BANK, CALICUT-673016.** **4. THE DEPUTY GENERAL MANAGER (RMD), OF THE ERSTWHILE NEDUNGADI BANK LTD SHATHABDI BHAVAN, GOVINDAPURAM, CALICUT NOW (AFTER AMALGAMATION WITH PUNJAB NATIONAL BANK) DEPUTY GENERAL MANAGER, ZONAL OFFICE, PUNJAB NATIONAL BANK, CALICUT-673016.** **BY ADV.SRI.M.C.SEN** ## **BY SMT.SHAHANA KARTHIKEYAN** **THIS WRIT APPEAL HAVING BEEN FINALLY HEARD ON 23-07-2014 THE COURT ON 28-08-2014, DELIVERED THE FOLLOWING:** **PJ** **ASHOK BHUSHAN, Ag.CJ & A.M.SHAFFIQUE, J. * * * * * * * * * * * * *** W.A.No.547 of 2013 ---------------------------------------Dated this the 28[th] day of August 2014 ## **J U D G M E N T** ## Shaffique,J The writ petition is filed by the petitioner challenging the disciplinary action taken against him by the respondent bank. 2. The facts involved in the writ petition would disclose that the petitioner, while working as Branch Manager of Nedungadi Bank Ltd. at Vellore branch for a short period of eight months, was suspended from service on 28/09/2001. After conducting an investigation, petitioner was served with Ext.P4 charge memo dated 09/10/2001. He submitted a reply controverting the allegations and an enquiry was held. Ext.P7 dated 25/04/2002 is the enquiry report. He was issued memo dated Ext.P8 proposing to impose punishment for which he submitted a reply as Ext.P9 W.A.No.547/2013 2 and ultimately he was dismissed from service as per Ext.P10 memo dated 21/06/2002. He preferred an appeal which came to be dismissed by the appellate authority. Thereafter he submitted a review petition which was also dismissed. Nedungadi Bank, a scheduled bank amalgamated with Punjab National Bank with effect from 01/02/2003. 3. Petitioner impugned the aforesaid disciplinary action inter alia contending that there was no basis for the charges against him as his endeavour was only to make more business for the bank as permitted by the authorities. That apart, he joined service of Nedungadi Bank Ltd. as a clerk on 01/12/1972. He was promoted as Manager during 1987. He had an unblemished service in the bank and these issues had arisen after he was transferred to Vellore as Branch Manager on 07/08/2000. He had not involved in any activity which caused loss to the bank. Every branch of the bank was asked to improve the credit portfolio and profitability and they were all allotted a target to canvass a W.A.No.547/2013 3 minimum of 200 deposit accounts and 100 loan accounts. The subject matter involved is the grant of loans to various persons and the allegation was that the petitioner had not collected security before disposal of the loans, end use of the fund then was not ensured, sufficient security was not available and in certain cases, there was no security at all and as a result, the bank suffered a potential loss in respect of all the amounts advanced. These allegations, according to the petitioner, are absolutely baseless and merely for the reason that loans were sanctioned to various persons disciplinary action cannot be taken against him. That apart, it was contended that the punishment of dismissal from service is grossly disproportionate to the proved charges. 4. Counter affidavit is filed by the respondents supporting the stand taken by the bank. An additional counter affidavit is also filed for which the petitioner had filed a reply. 5. The learned Single Judge, after examining the rival W.A.No.547/2013 4 contentions, dismissed the writ petition. The learned Single Judge found that there was no violation of principles of natural justice and there is no material to indicate that the enquiry report or the findings of the disciplinary authority was in any way perverse to exercise power of judicial review under Article 226 of the Constitution of India. On proportionality of the punishment, the learned Single Judge opined that the punishment was not shockingly disproportionate to the gravity of the misconduct committed and therefore did not interfere with the punishment imposed by the disciplinary authority. 6. The scope of judicial review in matters relating to disciplinary enquiry is very limited. The learned senior counsel appearing for the appellant Sri.N.Dharmadan relied upon a judgment of this Court in **K.Prabhakaran v. Punjab National Bank** [W.P.C.No.1162 of 2004 dated 10/07/2008], in which this Court had analysed the entire case law on the subject and had come to the conclusion, that the writ W.A.No.547/2013 5 petition was maintainable against Punjab National Bank since Nedungadi Bank, a scheduled bank amalgamated with Punjab National Bank with effect from 01/02/2003. The learned Single Judge also found that the enquiry in that case was conducted ex parte and in gross violation of the principles of natural justice. That apart, it is found that the punishment imposed was grossly disproportionate to the proved charges. It is argued that the said judgment had become final and therefore the same principle will have to be adopted. It is true that in the said judgment, this Court had interfered with the disciplinary proceedings on a peculiar set of facts wherein it was found that there is violation of principles of natural justice. It is settled proposition of law that an enquiry proceedings can be interfered if there is violation of the principles of natural justice. Each case has to be evaluated on its own facts and therefore we have to consider whether any such eventuality had occurred in the present case for interference. W.A.No.547/2013 6 7. Perusal of the enquiry report as well as the findings of the disciplinary authority do not tend us to observe that there is violation of the principles of natural justice. 8. The main argument raised by the learned senior counsel is with reference to the findings of the disciplinary authority in regard to the potential loss allegedly caused to the bank for an amount of Rs.1,00,52,625/- This, according to the learned Senior counsel, is absolutely baseless. In so far as there cannot be any memo of charges and findings in the enquiry on the basis of “potential loss”, it is argued that when necessary reply had been given to the memo of charges, the findings of the Enquiry Officer which is confirmed by the disciplinary authority is absolutely perverse. 9. However, with reference to the merits of the case, especially regarding the allegation of potential loss, the charge alleged against the petitioner was that he has W.A.No.547/2013 7 exposed the bank to a potential loss of more than Rs.1,00,00,000/-. The main allegation against the petitioner was that he had given personal loans as well as business loans to various persons violating the terms and stipulations for the grant of such loans and intentionally not ensuring the end use of funds. 10. Learned Senior counsel referred to the Nedungadi Bank Officers' Service Rules, especially Rule 35 to indicate that the allegations raised do not come under any of the misconducts stated therein. That apart, punishment has to be given in terms of Rule 38, after taking into consideration the extent and gravity of misconduct, previous record of the personal staff and any other circumstances. Such a consideration has not been made in the case on hand, is another argument. 11. It is borne out from the records that when the bank alleges that the petitioner has granted loans without complying with the procedure, he is under obligation to W.A.No.547/2013 8 explain that the loans granted were in accordance with the procedure prescribed and as per the directions issued by the bank. A perusal of the enquiry report at Ext.P7 would show that the Enquiry Officer had taken into consideration the materials made available by the bank and formed an opinion that the charges were proved. The main contention urged by the petitioner is regarding the potential loss of the bank. Evidence was adduced by the bank to indicate that the balance outstanding with the bank with reference to the loan granted by the petitioner would come to 1,00,52,625/-. There is no material to indicate that the Bank was in a position to recover the entire loan or at least a substantial portion thereof. 12. On the other hand, learned Senior counsel Sri.M.C.Sen appearing on behalf of the respondents would contend that petitioner had clearly violated the norms, rules and regulations of the bank in the matter relating to grant of loans. He had given loans to persons, who were involved in W.A.No.547/2013 9 large scale fraudulent activities. He had granted loan without adequate securities. He had granted loan without security at all and as a result, for a short period, the total loan granted had come to more than Rs.1 Crore and despite the long lapse of time the bank was unable to recover the entire loan and not even 25% of the loan amount. Therefore it is argued that the punishment imposed was proportionate to the proved charges. It is contended that, being an Officer of the bank, even assuming that no financial loss is caused, still, if a person like the Manager fails to perform in accordance with the rules and regulations of the Bank, and it is found that his actions were irregular, bank is entitled to dismiss him from service. In the absence of any violation of principles of natural justice or any perversity in the proceedings of the disciplinary authority, there is no necessity to interfere with the disciplinary action or the punishment imposed. 13. The learned senior counsel for the appellant relies W.A.No.547/2013 10 upon the judgment of the Supreme Court in **Jai Bhagwan v. Commissioner of Police** _[AIR 2013 SC 2908]_ . The judgment is relied upon for the proposition that the Courts could interfere with the punishment when it is outrageously disproportionate to the gravity of misconduct. According to the counsel, if the issues relating to potential loss is found to be bad, the punishment is disproportionate to the proved charges. Another judgment relied upon is **State of Jharkhand v. Jitendra Kumar Srivastava** _[AIR 2013 SC 3383]_ wherein it is held that the hard earned benefit which accrues to an employee is in the nature of property which cannot be taken away without the due process of law. It is argued that the petitioner had an unblemished service for more than 30 years and whatever goodwill he has earned while in service is now taken away on the basis of an alleged potential loss, which according to the counsel, is clearly bad. Reference is also made to a Division Bench judgment of this Court in **Federal Bank Employees' Union v. Federal** W.A.No.547/2013 11 **Bank Ltd.** _[2008(2) KLT 612]_ for the proposition that even if proper enquiry is conducted and misconduct is proved, the Court has jurisdiction to interfere with the punishment, if the punishment is shockingly disproportionate and to suggest as an act of victimization. It is argued that, by the end of the career, petitioner was charge sheeted for an act which he has not committed whereas he was acting only in accordance with the Scheme framed by the bank for increasing the deposit as well as loan for which there was no reason to impose a punishment by way of dismissal from service. 14. Sri.M.C.Sen, learned senior counsel appearing on behalf of the respondents relied upon the following judgments. i) **Tara Chand Vyas v. Chairman & Disciplinary Authority and Others** _[(1997) 4 SCC 565]_ in which it is held that employees and Officers working in the banks are not merely trustees of the society; but also bear W.A.No.547/2013 12 responsibility and owe duty to the society for effectuation of socio-economic empowerment. Their acts and conduct should be in discharge of that constitutional objectives and if they derelict in the performance of the duty, it impinges upon the enforcement of the constitutional philosophy, objectives and the goals under the rule of law. It is further held that the disciplinary measures should, therefore, aim at eradication of corruption on the part of employees/officers of the bank. It further held that any conduct that damages, destroys, defeats or tends to defeat the purpose of banking should result in disciplinary action. ii) **Janatha Bazar (South Kanara Central Cooperative Wholesale Stores Ltd.) v. Secretary, Sahakari Nowkarara Sangha and others** _[2000 (7) SCC 517]_ in which it is held that in case of proved misappropriation, there is no question of considering past records and it is the discretion of the employer to consider the same in appropriate cases and the Labour court cannot W.A.No.547/2013 13 ## substitute the punishment imposed by the bank. Iii) In **Disciplinary Authority-cum-Regional Manager v. Nikunja Bihari Patnaik** _[1996(9) SCC 69]_ it was held that proof of any loss is not necessary for taking disciplinary action if a person acts beyond his authority or by itself a breach of discipline and a breach of Regulation. iv) **Union Bank of India. v. Vishwa Mohan** _[(1998) 4 SCC 310]_ is relied upon to indicate that in the banking business, unless they maintain devotion to duty, diligence, integrity and honesty, confidence of public/depositors would be impaired. If the person acts accordingly, it amounts to misconduct, entitles disciplinary action. 15. Having regard to these factual circumstances, it is relevant to note that misconduct as per Rules includes any act which contravenes the provisions of service rules or of any instructions issued regarding transaction of business or administration of the bank. Even if there is no loss caused W.A.No.547/2013 14 to the bank, the bank is entitled to take disciplinary proceedings which may also include major punishment of dismissal from service. Out of the seven charges enquired by the Enquiry Officer, all of them are found to be proved. The memo of charges were very specific in so far as the details of the loan which was granted in violation of the norms, rules and regulations of the bank has been clearly mentioned. Petitioner was given sufficient opportunity to adduce evidence in support of his contentions. If the petitioner had a case that he had given the loans in compliance with the rules and regulations and the applicable norms, petitioner could have as well adduced evidence in that regard. One major allegation is that loans were granted to fictitious persons or to persons who had committed fraud on the bank. No evidence was adduced to controvert the said allegations. Yet another misconduct alleged was granting of loans without adequate security or without any security and also without verifying the end use of the loan. W.A.No.547/2013 15 These are all material facts which were alleged and if the petitioner wanted to controvert the same, he was given sufficient opportunity to place materials to controvert such allegations in the memo of charges. The petitioner was unsuccessful in proving otherwise whereas sufficient materials were available to prove the charges against the petitioner. 16. As far as the charge relating to potential loss is concerned, the amount was arrived at in respect of the loans granted which was remaining overdue. Probably, over a period of time, it was open for the bank to recover some amount. But, that does not mean that the loans were granted in accordance with the rules, regulations and norms prescribed by the bank. Under such circumstances, when after detailed enquiry and giving sufficient opportunity to the petitioner to adduce evidence, the enquiry officer finds that charges were proved, in the absence of any other material, the disciplinary authority had no other option other W.A.No.547/2013 16 than to accept the said findings. In such circumstances, it may not be possible for this Court to sit in appeal on the said finding of the disciplinary authority and therefore the learned Single Judge was justified in not interfering with the findings of fact by the disciplinary authority. 17. Sri.Dharmadan, the learned senior counsel, however, submitted that the punishment of dismissal from service was grossly disproportionate to the charges proved and that the previous conduct of the petitioner was not considered by the bank while dismissing him from service. It is contended that the petitioner had an unblemished service of about 30 years and one fine morning he was dismissed from service on allegations which are not proved. As far as the proof of allegations against him, we have already held that the disciplinary authority was justified in coming to the finding that the memo of charges stands proved. In regard to the punishment, it is a settled proposition of law that the Courts shall interfere only if the punishment is shockingly W.A.No.547/2013 17 disproportionate to the proved charges. In the case on hand, there is material to indicate that the petitioner was dismissed from service for giving loans which ultimately was found to be not in accordance with the norms followed by the bank. This finding itself is enough to come to a conclusion that such a person is not fit to remain in office. Loss caused to the bank is an additional factor and is a consequence of such irregular loans being granted. Going by the judgments of the Supreme Court, as narrated above, officers of the bank is in the form of a trustee and they deal in public money. If they do not comply with the norms prescribed by the bank in relation to the grant of loan, it will amount to misutilisation of public fund. Such an officer, if dismissed from service, this Court cannot interfere with the punishment by exercising power of judicial review. His past service in the Bank are matters to be considered by the Disciplinary Authority and we do not think that such matters were ignored while imposing punishment. Therefore, we do W.A.No.547/2013 18 not think, the punishment imposed is in any way disproportionate with reference to the proved charges. Having found so, we confirm the judgment of the learned Single Judge in that regard also. In the result, this Writ Appeal is dismissed. (sd/-) **(ASHOK BHUSHAN, ACTING CHIEF JUSTICE)** (sd/-) **(A.M.SHAFFIQUE, JUDGE)** jsr W.A.No.547/2013 19 W.A.No.547/2013 20