High Court of KeralaDivision Bench2013-03-13Disposal: W.A. disposed; upholding the Single J...

W.A.No.408 of 2013

Case / Petition Number:W.A.No.408 of 2013

Case Details & Bench

Court: High Court of Kerala
Hon'ble Judges: Manjula Chellur
K. Vinod Chandran
Judgment Date: 2013-03-13
Court Decision / Holding: The High Court disposed of the appeal by upholding the Single Judge’s finding of violation of the principles of natural justice and setting aside the enquiry report and the consequent dismissal. However, it leaves open the liberty for the appellant Bank to proceed with the enquiry again, if it deems fit and in accordance with law. No costs.
Final Disposition: Disposal: W.A. disposed; upholding the Single Judge’s order; liberty to Bank to proceed with enquiry; no costs.

Parties to the Case

Appellants / Petitioners

The Chairman, North Malabar Gramin Bank
The Appellate Authority & Board of Directors, North Malabar Gramin Bank
North Malabar Gramin Bank, represented by its Chairman

Respondents

K.V. VENKATESH

Legal Representation & Advocates

Counsels for Petitioners

• Sri. Devan Ramachandran

Counsels for Respondents

• Sri. Bechu Kurian Thomas

Case Synopsis & Summary

This writ appeal challenges the judgment in W.P.(C).No.25876/2003 (dated 09.01.2013) by a Single Judge who set aside the domestic enquiry and the consequent dismissal of an employee of the North Malabar Gramin Bank on grounds of violation of natural justice. The Bank, as the appellant, argues that the standard of proof in domestic enquiries differs from criminal trials and that the mere acquittal in criminal court does not bar action for misconduct defined in the Bank’s Regulations; it relies on the proposition and a case cited by counsel (Divisional Controller, KSRTC v. M.G. Vittal Rao) to justify proceeding with the enquiry and dismissing the employee if proven. It contends that Clause 42 of the Bank’s Regulations grants discretion to refer serious allegations to external agencies (CBI/CVC) when necessary, but does not mandatorily preclude internal enquiry. The respondent employee contends that the initiation of the enquiry itself violated the Regulations, especially Clause 42, as it required external investigation in certain categories; he points to non-supply of documents sought by him and the prolonged delay, which prejudiced his defence and tainted the proceedings. The High Court ultimately holds that while the standard of proof in domestic enquiries is different, Clause 42 is discretionary and not a mandatory bar to domestic enquiry; it finds clear violation of natural justice due to non-supply of documents. The appeal is disposed with liberty to the Bank to proceed with a new enquiry if lawful, and with no costs.

Provisions of Law Cited

Clause 42 of the Regulations (Corrupt Practices) – North Malabar Gramin BankRegulations applicable to the employees of the North Malabar Gramin Bank

Legal Doctrines & Maxims

Perish by that sword
Principles of natural justice
Standard of proof in domestic enquiry vs criminal trial

Submissions & Arguments

Contentions of Appellants / Petitioners

The appellants contend that it is well settled that the standard of proof in a domestic enquiry is different from that in a criminal trial, and that after a criminal trial ends in acquittal, action for misconduct under the Bank Regulations can still be initiated if the conduct constitutes a ‘misconduct’ within the Regulations. They rely on the Divisional Controller, KSRTC v. M.G. Vittal Rao to support that a domestic enquiry can proceed and a disciplinary order may be sustained if supported by cogent evidence. They argue that Clause 42 grants the Chairman discretion to refer allegations to external agencies such as CBI/CVC when required and does not render internal enquiry void; the investigation had initially been referred to CBI but later, the accused was deleted, and the Bank should be permitted to proceed with the internal enquiry if legally permissible. They assert that the documents sought by the defence were either irrelevant or properly defended as not required, and that the enquiry was conducted without prejudice and in a reasonable time frame. The bank therefore prays for setting aside the Single Judge’s order and restoring the dismissal as a valid disciplinary action.

Contentions of Respondents

The respondent employee submits that the initiation of the domestic enquiry itself violated the Bank’s Regulations, particularly Clause 42, which requires external investigation for certain allegations or when third-party evidence is indispensable. He argues there was a clear breach of natural justice because documents sought by the defence were not supplied, and the Bank’s response (Exhibits P5 and P6) failed to establish relevant connection of those documents to the charges. The di-lemma of long pendency and suspension since 2001 caused substantial stigma, and the delay cannot be cured by mere post hoc compliance. Hence, the respondent seeks quashing of the enquiry and restoration of his service or at least a fresh enquiry with due compliance to natural justice and statutory provisions.

Cited Precedents (1)

Case Name	Citation	Treatment	Explanation
Divisional Controller KSRTC v. M.G. Vittal Rao	JT 2011 (13) SC 247	Mentioned Only	Cited by counsel to support the argument on standard of proof in domestic enquiries; however, the High Court did not rely on the KSRTC rule to sustain the bank’s position and instead emphasized discretionary nature of Clause 42 and violation of natural justice.

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Extracted Judgment Text

Exact text extracted from official judgment records.

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT:- THE HON'BLE THE CHIEF JUSTICE DR. MANJULA CHELLUR & THE HONOURABLE MR.JUSTICE K.VINOD CHANDRAN WEDNESDAY, THE 13TH DAY OF MARCH 2013/22ND PHALGUNA 1934 ## **W.A.No.408 of 2013** ------------------------------------- AGAINST THE JUDGMENT IN W.P.(C).No.25876/2003, OF HIGH COURT OF KERALA, DATED 09.01.2013. --------------- ## **APPELLANT/** RESPONDENTS:- -------------------------------------------- ## 1. THE CHAIRMAN, - NORTH MALABAR GRAMIN BANK, HEAD OFFICE, KANNUR - 1. 2. THE APPELLATE AUTHORITY & BOARD OF DIRECTORS, NORTH MALABAR GRAMIN BANK, HEAD OFFICE, KANNUR - 1. 3. NORTH MALABAR GRAMIN BANK, REPRESENTED BY ITS CHAIRMAN, HEAD OFFICE, PB NO.1424, PALLIKUNNU, KANNUR - 670 004. BY ADV.SRI.DEVAN RAMACHANDRAN. ## **RESPONDENT/** PETITIONER:- ------------------------------------------- K.V. VENKATESH, AJJARKODY HOUSE, P.O.NEERCHAL, VIA. KUMBLA - 671 321 KASARAGOD DISTRICT. BY ADV. SRI.BECHU KURIAN THOMAS. THIS WRIT APPEAL HAVING COME UP FOR ADMISSION ON 13-03-2013, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:- W.A.NO.408 OF 2013 ## **APPENDIX** APPELLANT'S ANNEXURES:-------------------------------------------- NIL. ## RESPONDENT'S ANNEXURES:- -------------------------------------------- ANNEXURE A1 - TRUE COPY OF RELEVANT PAGES OF THE SERVICE CONDITIONS OF THE APPELLANT BANK. ANNEXURE A2 - COPY OF THE DELETION REPORT FILED BEFORE THE CBI COURT, ERNAKULAM. ANNEXURE A3 - COPY OF THE CHARGE SHEET IN RC 22(A)/2001 FILED BEFORE THE CBI COURT, ERNAKULAM. ( TRUE COPY ) Manjula Chellur, C.J. & K.Vinod Chandran, J. ------------------------------------W.A.No.408 of 2013 -------------------------------------- Dated this, the 13[th] day of March, 2013 ## JUDGMENT ## K.Vinod Chandran,J. The respondent was working as an Officer of the North Malabar Gramin Bank, Melparamba Branch, when serious discrepancies were noticed, _inter alia_ , in the gold loans sanctioned from the Melparamba Branch with the active connivance of the appellant, the Manager, the Appraiser and the Field Officer of Melparamba Branch of the Bank. With respect to certain transactions, it was alleged that the officials referred to above, have conspired together to enable pledging of fake ornaments with the Bank and thus engaged in criminal conspiracy resulting in huge financial loss to the Bank. The matter was referred to the Central Bureau of Investigation (CBI) and as per Exhibit P18 report dated 3.11.2003 of the Inspector of Police, CBI/SPE/Kerala Branch, Cochin, the name of the appellant and the Field Officer were deleted. The Appraiser having been deceased, the charge against him too, was dropped for reason of abatement. - 2 - W.A.No.408 of 2013 2. However, in the meanwhile, disciplinary proceedings were initiated against the respondent, and the order of dismissal, Exhibit P14, passed by the disciplinary authority on conclusion of such proceedings, was challenged in the writ petition. The learned Single Judge noticed the charges as also the reply and then considered the contention raised by the delinquent employee with respect to violation of principles of natural justice. The learned Single Judge noticed that by Exhibit P5 letter, addressed to the Chairman of the Bank, the delinquent employee had requested for certain documents which obviously were not supplied to him, as is clear from Exhibit P6 reply. The delinquent employee's contention was that the documents, if supplied to him, would have facilitated his defence in the enquiry proceedings and the same would have eminently shown that he was not in any manner involved in the transactions and would also have helped him to prove that it was an organized attempt to cheat the Bank in which he also was a victim. The learned Single Judge, finding that there was apparent violation of principles of natural justice and also taking note of the fact that the delinquent employee was deleted from the array of accused - 3 - W.A.No.408 of 2013 by the CBI, held that Exhibit P10 enquiry report is bad in law and as a consequence, held the imposition of punishment as illegal and set it aside. The employer-Bank is before us in appeal. 3. The learned counsel appearing for the Bank would contend that it is the accepted position that the standard of proof required in the domestic enquiry is different from that required in a criminal case. Even in a case wherein, after trial, the criminal prosecution ends in acquittal, it has been held that there is no bar in proceeding against the acquitted employee for the very same transaction which was the subject matter of the criminal prosecution, if such transaction or conduct comes within the ambit of a “misconduct” as defined in the Regulations. The learned counsel would also place before us the judgment of the Hon'ble Supreme Court reported in _**The Divisional Controller, KSRTC v. M.G.Vittal Rao**_ **[JT 2011 (13) SC 247]** to buttress his contention. It is the contention of the learned counsel on behalf of the appellant-Bank, that a plain reading of Exhibits P5 and P6 would show that no prejudice was caused to the delinquent employee and the overwhelming evidence adduced at the enquiry would amply demonstrate the clear proof - 4 - W.A.No.408 of 2013 with respect to the charges levelled against the delinquent employee. The learned counsel urges for setting aside the judgment of the learned Single Judge, to uphold the punishment of dismissal from service. 4. The learned counsel for the respondent/delinquent employee, however, would contend that the initiation of the domestic enquiry itself is bad, going by the Regulations applicable to the employees of the North Malabar Gramin Bank. The learned counsel specifically points to Clause 42 dealing with “Corrupt Practices” and contend that if the allegation is of possession of disproportionate assets or an act of criminal misconduct and when proof of allegation require evidence from third parties, meaning, persons who are not employees in the Bank; then the same has to be entrusted to the Central Bureau of Investigation or the Central Vigilance Commission or such Authority as approved by the Chairman and the disciplinary enquiry deferred till a finality is reached in the enquiry so ordered. The learned counsel would also support the judgment of the learned Single Judge on the ground that the disciplinary enquiry was concluded long before and over a period of 13 - 5 - W.A.No.408 of 2013 years, the delinquent employee had been living with the stigma, he having been initially suspended on 11.6.2001. 5. We have anxiously considered the arguments addressed on both sides. The proposition that the standard of proof required in the domestic enquiry is different from that required in a criminal case does not require any reiteration and the same is unassailable. The only question is whether the Regulations mandated that in the event of an allegation in the nature of the charge-sheet against the delinquent employee, whether the matter has to be necessarily referred to the agencies specified under Clause 42 of the Regulations and the domestic enquiry deferred thereon. We are not convinced, on reading the above clause, that the same is a necessary requirement. The clause confers discretion on the Chairman and only when the allegations fall under any of the above categories or the Chairman forms an opinion that an investigation into the allegations cannot be conveniently carried on by the Bank; the investigation should be entrusted to any one of the abovementioned agencies. That does not bar the disciplinary proceedings and the said clause cannot by any stretch of - 6 - W.A.No.408 of 2013 imagination be interpreted as one conferring benefit on the delinquent employee. On the other hand, the said clause is with the intention of protecting the interest of the Bank in conducting a comprehensive investigation into the transactions which would require the assistance of a seasoned agency, well-versed with the procedure involving criminal investigations. We should further notice that in fact the proceedings were first referred to the Central Bureau of Investigation and after investigation, the name of the respondent-delinquent employee along with two others were deleted. That does not, however, preclude the Bank from proceeding with the domestic enquiry for misconducts alleged against the delinquent employee, the respondent, who was deleted from the array of accused by the Central Bureau of Investigation. 6. We are also not impressed with the contention of the Bank that the violation of principles of natural justice alleged by the delinquent employee does not prejudice him. Looking at Exhibits P5 and P6, we see that certain documents were sought for from the Chairman of the Bank by Exhibit P5. The Senior Manager, who has replied by Exhibit P6 to Exhibit P5, under - 7 - W.A.No.408 of 2013 many of the heads finds that it is not relevant to the charges. It does not lie in the mouth of either the person who has signed Exhibit P6 or even the Chairman to decide as to the relevance of documents sought for by the delinquent employee. Having appointed an Enquiry Officer, who has forwarded the request Exhibit P5 made by the Defence Representative in the enquiry proceedings, it was incumbent upon the Bank to have supplied the documents or through its presenting officer apprised the Enquiry Officer, the reasons as to why the same could not be produced. We do not find any reason to interfere with the finding of the learned Single Judge that there is clear violation of principles of natural justice. When a certain procedure is adopted by the Bank to enquire into the misconducts alleged against an employee, needless to say that the principles of natural justice are ingrained in such procedure. Having taken up the procedural sword, it is incumbent upon the employer to stick scrupulously to such procedure or “perish by that sword” (quote). 7. However, when the employer proceeds against an employee for alleged misconducts and there is a clear violation of principles of natural justice, it does not automatically lead to - 8 - W.A.No.408 of 2013 setting aside of the entire proceedings. The employer too has rights conferred on it by law to proceed against an erring employee and to penalise him in accordance with the gravity of the offence, which right vested in the employer cannot be curtailed or totally taken away by the Courts sitting in judicial review. Trite that in such proceedings, the Courts would be loathe to enter into the merits. 8. The delay too, as contended by the delinquent employee, would have caused much hardship to the employee. But, that is not to say that the entire proceedings are vitiated for reason of the violation of the principles of natural justice and the delay caused. We notice that the charge-sheet issued in the year 2001 had concluded with Exhibit P14 order in the year 2003. The appeal filed had ended in failure, also in the year 2003 and the delay now projected by the respondent is only by reason of the pendency of the writ petition before this Court, which cannot be a reason for remanding the matter for fresh consideration in accordance with law and in compliance with the principles of natural justice. - 9 - W.A.No.408 of 2013 In the circumstances detailed above, we dispose of the appeal, upholding the judgment of the learned Single Judge setting aside the enquiry report and the consequential dismissal from service on the ground of violation of principles of natural justice but, however, reserve liberty to the appellant-Bank to proceed with the enquiry, if it deems fit, in accordance with law. No costs. Sd/Manjula Chellur, Chief Justice vku/ Sd/K.Vinod Chandran, Judge ( true copy )