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CASE NO.: Appeal (civil)  2961-2962 of 2008

PETITIONER: The Managing Director  State Bank of Hyderabad and Anr

RESPONDENT: P. Kata Rao

DATE OF JUDGMENT: 24/04/2008

BENCH: S.B. Sinha & D.K. Jain

JUDGMENT: J U D G M E N T REPORTABLE

CIVIL APPEAL NOS.   2961-2962      OF 2008 (Arising out of SLP (C) Nos. 14356-14357 of 2007)

S.B. Sinha, J.

1.      Leave granted.

2.      Appellant is aggrieved by and dissatisfied with a judgment and order  dated 4.6.2007 passed by a Division Bench of the Andhra Pradesh High  Court in Writ Appeal No. 627/628 of 2005 whereby and whereunder it  refused to interfere with the judgment and order passed by a learned Single  Judge of the said Court in WP No. 476 of 2001. 3.      Respondent at all material times was an employee in the appellant  Bank. He was placed under suspension on or about 13.8.1998. A  departmental proceeding was initiated against him.   

       12 items of charges were drawn up; charge Nos. 11 and 15 whereof  read as under:

"Charge No. 11: He authorized cash and transfer  credits to the demand loan accounts against pledge  of gold ornaments of Smt. P. Lakshmi, his wife,  from out of proceeds of loan amounts released to  two DIR and one cash credit borrowers.  Thus he  facilitated his wife to get undue pecuniary benefit by  permitting unauthorized adjustments which were  done with his prior knowledge.

Charge No. 15:  He sanctioned and released  loans to his close relatives in contravention of H.O.  Cir. No. ADV/98 of 1976 dated the 2nd December,  1976."

4.      He was also proceeded against in a criminal case.    He was acquitted  of the criminal charges.  

5.      However, the departmental proceedings continued during pendency of  the criminal proceedings as prayer for stay thereof was not acceded to.  The  Enquiry Officer found that all the charges apart from charge Nos. 1(a), 2(b),  3 were proved.

6.      The Appointing Authority passed an order of dismissal. An appeal  preferred thereagainst by the respondent was dismissed.

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7.      By an order dated 29.12.1995, the appellant was acquitted of the  charges framed against him in the criminal proceeding under Sections 120B,  420 and 468 of the Indian Penal Code.  He was also acquitted of the charges  for alleged commission of offences under Section 5(1)(d) read with Section  5(2) of the Prevention of Corruption Act.

8.      Respondent, however, was convicted under Section 477(A) of the  Indian Penal Code as also under Section 5(1)(d) and 5(2) of the Prevention  of Corruption Act.   He preferred an appeal thereagainst before the High  Court.    

A Writ Petition was also filed questioning the said order of dismissal.

9.      By an order dated 12.3.1999, a learned Single Judge of the High Court  quashed the order of punishment and directed the disciplinary authority to  issue a show cause notice indicating the modified punishment and pass an  appropriate order.

10.     A show cause notice was issued, pursuant to the said direction.

11.     Again an order of dismissal was passed on 2.7.1999. An appeal  preferred thereagainst was dismissed.  Another writ petition was filed by the  respondent aggrieved by and dissatisfied therewith.

12.     The Criminal Appeal filed by the appellant came up for consideration  before a learned Single Judge of the High Court and by a judgment and  order dated 3.10.2001, it was held:

"... In such a case, it is difficult to believe that the  appellant had any intention to benefit himself or  other persons.  It has to be noted that the above  reasoning of the trial court is most perverse and  without any material.   In my considered view the  trial court had jumped to the conclusion without  any basis."

13.     As regards, alleged commission of offence under Section 477A of the  Indian Penal Code, it was stated:

"From the above discussion, I am of the  considered opinion that the appellant could not  have made the alleged entries willfully and with  dishonest intention to defraud.   It is certainly not  the case of the prosecution that the appellant had  independently committed the offence under  Section 477-A  I.P.C. and on the contrary the  specific allegation of the prosecution was that  there was conspiracy initially and as such a  conspiracy has culminated into various offences  attributable to all the accused and in particular of  the offence under Section 477-A against the  appellant.

Therefore, in view of the above observation made  by the Apex Court and in view of peculiar facts  and circumstances, in the instant case, it is unsafe  to draw any adverse inference against the appellant  that he committed the offence under Section 477-A  I.P.C., inasmuch as the essential ingredients viz.,  ’willfulness’ and ’intention’ to defraud could not  successfully be substantiated by the prosecution  against the appellant.   Admittedly the case of the

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appellant as stated in his examination under  Section 313 Cr.P.C., that it was only a mistake  committed inadvertently and from the above facts  and circumstances and the evidence on record, the  only inference that can be drawn is that the  accused, no doubt, might have made some wrong  entries, but the same cannot be termed as acts of  willfulness and with fraudulent intention to falsify  the accounts.   Hence the appellant is entitled for  an acquittal for the offence under Section 477-A   I.P.C."

       The judgment of conviction and sentence under Sections 5(1)(d) and  5(2) of the Prevention of Corruption Act was also set aside by the High  Court opining that the prosecution had failed to prove the guilt of the  accused beyond all reasonable doubts, holding: "... In other words when the appellant was  acquitted of all the charges including the charge  under Section 477-A, I.P.C. by this Court,  it  cannot be said that he committed the offence under  the provisions of Prevention of Corruption Act."

14.     The Writ Petition filed by the appellant against the order of dismissal  passed against him came up for consideration before a learned Single Judge  of the High Court.  The High Court, while passing its judgment dated  7.02.2005,  considered the totality of the circumstances.           As regards the correctness of the order of dismissal, it was opined:

"\005.The said orders can in no way be considered to  be a reason as such for a de novo consideration on  the aspect of punishment and it is also to be  noticed that reconsideration is only in respect of  punishment and that too based on the earlier  recommendations made in appeal. Therefore,  necessarily it follows that the order of dismissal as  was imposed earlier on 23.07.1994 could not  possibly be repeated or restated much less  reimposed.   Necessarily it has to be any other  punishment other than the order of dismissal or  removal.  Further, the specific direction is only to  take a follow up action in terms of the directions  given in the appeal on the earlier occasion.   Thus,  on a conspectus reading of the said directions, the  only scope left for reconsideration is to once again  take into consideration the earlier directions given  in appeal and not otherwise, or to impose any other  punishment much less dismissal order.   Having  regard to the aforesaid circumstances and also  even taking into account totality of the  circumstances vis-‘-vis the allegations as made  against him and also the clear acquittal of the  petitioner on criminal side though it may not be  binding, necessarily the respondents had to follow  the earlier orders of this Court, since the same are  not kept in view and the impugned orders are not  in terms of the said order.   Hence, the matter  requires to be reconsidered afresh by the  authorities.   In the circumstances, it has to be held  that the impugned orders of the respondents in  dismissing the petitioner from service are not only  contrary to the directions given by this Court on  12.03.1999 in W.P. No. 16833 of 1994, but also do

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not in any way commensurate to the gravity of the  allegations as made or found against him."

       It was directed:

"In the circumstances, both the Writ Petitions are  allowed setting aside both the orders of  respondents dated 02.07.1999 and 02.02.2000 and  directing fresh consideration and disposal of the  matter in accordance with law after giving notice  and opportunity to the petitioner.   The respondents  are also directed to pay subsistence allowance and  all such other allowances to which the petitioner is  entitled during the period of his suspension from  01.08.1994 to 02.07.1999.   No costs."

15.     An intra-court appeal was preferred thereagainst.  The Division  Bench, in its impugned judgment dated 4.06.2007, opined: "In the present case, we find that the enquiry  officer had exonerated the respondent of charges  1(a), 2(b), 3 and 5, which pertain to  misappropriation and deriving of pecuniary  benefits by him. A perusal of the judgment dated  03.10.2001 passed by the learned Single Judge in  Criminal Appeal No. 12 of 1996 makes it clear that  the respondent was honourably acquitted with an  unequivocal finding that there was neither any loss  to the bank nor any pecuniary benefit was taken by  the respondent. Thus, on the crucial issue whether  the respondent is guilty of financial misfeasance  and malfeasance, there is no conflict between the  findings of the enquiry officer and the Court,  which disposed of the criminal appeal. Since the  learned Single Judge, who decided Writ Petition  No. 16833 of 1994 and the appointing authority,  which reconsidered the matter in the light of the  direction given by this Court, did not have the  benefit of considering the judgment of acquittal  rendered in Criminal Appeal No. 12 of 1996, the  only appropriate course would be to direct the  appellants to again consider the respondent’s case  and pass appropriate order in accordance with law.

                               [Emphasis supplied]

       It was directed:- "In the result, Writ Appeal No. 627 of 2005 is  dismissed and Writ Appeal No. 628 of 2005 is  disposed of with the direction that the appointing  authority shall reconsider the case of the  respondent on the issue of quantum of punishment  to be imposed on him and pass appropriate order  within six weeks from the date of receipt of copy  of this judgment."

        16.     Mr. Soli J. Sorabjee, the learned senior counsel appearing on behalf of  the appellant would submit that the  High Court committed a serious error in  passing the impugned judgment insofar as it failed to take into  consideration:- (i)     That the criminal court merely granted the benefit of doubt in  favour of the respondent; and (ii)    Even an order of acquittal may not be a bar for passing an order of

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dismissal from service particularly keeping in view the fact that a  bank employee is required to maintain strict integrity.

17.     Mr. P. Kata Rao, the respondent appearing in person, however, would  urge that both the departmental proceedings and the criminal case were  based on the same set of facts.   The charge of misconduct against him, it  was urged, was based on violation of some procedural guidelines only and,  thus, not grave in nature.   It was pointed out that the learned Single Judge  examined the entire records and it had been found that the respondent is not  guilty of any malpractice and furthermore has not derived any pecuniary  benefit.  Even the charges of misappropriation, it was urged, have not been  proved against him.  

18.     There cannot be any doubt whatsoever that the jurisdiction of superior  courts in interfering with a finding of fact arrived at by the Enquiry Officer  is limited.  The High Court, it is trite, would also ordinarily not interfere  with the quantum of punishment.  There cannot, furthermore, be any doubt  or dispute that only because the delinquent employee who was also facing a  criminal charge stands acquitted, the same, by itself, would not debar the  disciplinary authority in initiating a fresh departmental proceeding and/ or  where the departmental proceedings had already been initiated or to continue  therewith.

19.     We are not unmindful of different principles laid down by this court  from time to time.  The approach that the court’s jurisdiction is unlimited  although had not found favour with some Benches, the applicability of the  doctrine of proportionality, however, had not been deviated from.   

20.     The legal principle enunciated to the effect that on the same set of  facts the delinquent shall not be proceeded in a departmental proceedings  and in a criminal case simultaneously, has, however, been deviated from.   The dicta of this Court in Capt. M. Paul Anthony v. Bharat Gold Mines Ltd.  and Another [(1999) 3 SCC 679], however, remains unshaken although the  applicability thereof had been found to be dependant on the fact situation  obtaining in each case.

21.     The case at hand is an exceptional one.  Respondent was a responsible  officer.  He was holding a position of trust and confidence.  He was  proceeded with both on the charges of criminal misconduct as also civil  misconduct on the same set of facts, subject, of course, to the exception that  charges Nos. 11 and 15 stricto sensu were not the subject matter of criminal  proceedings, as integrity and diligence, however, were not in question.   Before us also it has not been contended that he had made any personal gain.   

22.     The High Court in its judgment categorically opined that he merely  had committed some inadvertent mistakes.  He did not have any intention to  commit any misconduct.  The purported misconduct on his part was neither  willful nor there existed any fraudulent intention on his part to falsify the  account.  The High Court opined that the prosecution had failed to bring  home the guilt of the accused beyond all reasonable doubts for the offences  punishable under the provisions under the Indian Penal Code.   

       The judgment of the High Court states a definite view.  It opined that  the finding of the learned Trial Judge holding him guilty under Section 477A  of the Indian Penal Code and the provisions of the Prevention of Corruption  Act was perverse.  The circumstances in favour of the accused, the High  Court inferred, had wrongly been attributed against him by the Trial Judge.

23.     A learned Single Judge of the High Court in his judgment dated  7.02.2005 only upon taking into consideration the observations made by the  High Court in the said criminal appeal but also the other circumstances,  brought on record, directed fresh consideration and disposal of the matter in  accordance with the law upon giving an opportunity of hearing to the  respondent.  The Division Bench of the High Court, in the first round of  litigation, noticed that the entire record had been perused by the learned

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Single Judge.  It was found that the original authority had imposed a  punishment of only stoppage of one increment with cumulative effect which  was modified by the appellate authority into one of withholding of increment  without cumulative effect and held that failure of the disciplinary and  appellate authorities to take into consideration modified punishment has  caused serious prejudice to the respondent.

24.     It was furthermore noticed that in purported compliance of the  directions issued by the learned Single Judge, the penalty of dismissal from  service was re-imposed on the respondent.

25.     The Division Bench, however, disagreed with the conclusion of  imposition of stoppage of one increment.  Even then it observed that in the  facts and circumstances of this case the issue relating to dismissal of  respondent needs reconsideration.  It was directed:

"While doing so, the concerned authority shall  keep in view the following factors: (i)     Both the disciplinary authority  and this Court in Criminal Appeal No. 12  of 1996 found the respondent not guilty  of charges of misappropriation, deriving  the personal benefit for himself and  causing loss to the bank. (ii)    The effect of the Judgment of  this Court in Criminal Appeal No. 12 of  1996 in the light of the decision of the  Supreme Court in M. Paul Anthony’s  case (supra) and G.M. Tank’s case  (supra). (iii)   Modified punishment of  withholding of increment without  cumulative effect imposed on the  respondent is a minor penalty unlike the  punishment of withholding of increment  with cumulative effect, which was held  to be a major penalty by the Supreme  Court in Kulwant Singh Gill’s case  (supra). (iv)    While considering the  proportionality of the punishment,  distinction lies between the procedural  irregularities constituting misconduct  from the acts of misappropriation of  finances, causing loss to the institution,  etc."          26.     We do not see any reason keeping in view the peculiar facts and  circumstances of the case to disagree with the said findings, although we  would like to reiterate the principles of law to which we have referred to  hereinbefore.   

27.     We may, however, notice that Mr. Sorabjee has strongly relied upon a  decision of this Court in Commissioner of Police, New Delhi v. Narender  Singh [(2006) 4 SCC 265] to contend that therein initiation of a  departmental proceeding was upheld inter alia on the ground that although a  confession made by an accused in a criminal proceeding would not be  admissible having regard to Sections 25 and 27 of the Evidence Act, the  same would not be a bar to proceed against him departmentally.   

       In that case it was held:

"13. It is now well settled by reason of a catena of  decisions of this Court that if an employee has  been acquitted of a criminal charge, the same by

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itself would not be a ground not to initiate a  departmental proceeding against him or to drop the  same in the event an order of acquittal is passed."

       This court therein considered the nature of the confessions made by  the delinquent officer and the implication thereof having regard to Sections  25 and 26 of the Evidence Act to hold that the Tribunal was not correct in  holding that the confessional statement was not admissible in the  departmental proceeding.

       In G.M. Tank v. State of Gujarat and Others [(2006) 5 SCC 446],  noticing a large number of decisions operating in the field, it was observed:

"30. The judgments relied on by the learned  counsel appearing for the respondents are  distinguishable on facts and on law. In this case,  the departmental proceedings and the criminal case  are based on identical and similar set of facts and  the charge in a departmental case against the  appellant and the charge before the criminal court  are one and the same. It is true that the nature of  charge in the departmental proceedings and in the  criminal case is grave. The nature of the case  launched against the appellant on the basis of  evidence and material collected against him during  enquiry and investigation and as reflected in the  charge-sheet, factors mentioned are one and the  same. In other words, charges, evidence, witnesses  and circumstances are one and the same. In the  present case, criminal and departmental  proceedings have already noticed or granted on the  same set of facts, namely, raid conducted at the  appellant’s residence, recovery of articles  therefrom. The Investigating Officer Mr V.B.  Raval and other departmental witnesses were the  only witnesses examined by the enquiry officer  who by relying upon their statement came to the  conclusion that the charges were established  against the appellant. The same witnesses were  examined in the criminal case and the criminal  court on the examination came to the conclusion  that the prosecution has not proved the guilt  alleged against the appellant beyond any  reasonable doubt and acquitted the appellant by its  judicial pronouncement with the finding that the  charge has not been proved. It is also to be noticed  that the judicial pronouncement was made after a  regular trial and on hot contest. Under these  circumstances, it would be unjust and unfair and  rather oppressive to allow the findings recorded in  the departmental proceedings to stand. 31. In our opinion, such facts and evidence in the  departmental as well as criminal proceedings were  the same without there being any iota of  difference, the appellant should succeed. The  distinction which is usually proved between the  departmental and criminal proceedings on the basis  of the approach and burden of proof would not be  applicable in the instant case. Though the finding  recorded in the domestic enquiry was found to be  valid by the courts below, when there was an  honourable acquittal of the employee during the  pendency of the proceedings challenging the  dismissal, the same requires to be taken note of

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and the decision in Paul Anthony case1 will apply.  We, therefore, hold that the appeal filed by the  appellant deserves to be allowed."

       Each case, therefore, must be determined on its own facts.  

28.     However, we may notice that this Court, in State Bank of India and  Others v. T.J. Paul [(1999) 4 SCC 759], noticed:

"7. The above orders were questioned in a writ  petition. The learned Single Judge while allowing  the writ petition held that the finding of the  enquiry officer on Item 23 was that no financial  loss was proved and if it was a case of not taking  adequate "security" from the loaners and in not  obtaining ratification as per Head Office  instructions, these charges were not sufficient \027 in  view of Rules 22(vi)(c) and (d) read with sub-rule  (vii) \027 for imposing a penalty of dismissal or  removal. Only a minor penalty could be imposed .  As per the enquiry officer’s report there was no  actual loss caused by reason of any act of the  employee wilfully done. There was no evidence of  financial loss adduced before the enquiry officer.  The finding that the respondent jeopardised the  Bank’s interest was based on no evidence. Penalty  must have been only for minor misconduct. The  SBI Rules were not applicable since the  misconduct alleged related to the period of service  in Bank of Cochin. The learned Judge observed  that "punishment of removal" could not have been  imposed as it was not one of the enumerated  punishments under Bank of Cochin Rules. The  writ petition was allowed, the impugned order was  quashed. It was, however, observed that the Bank  could impose punishment for minor misconduct as  per rules of Bank of Cochin."

       T.J. Paul (supra) was a case involving violation of the instructions of  the Head Office as also gross negligence on the part of the delinquent  officer.  While holding that the same would constitute major misconduct  referring to the case of Union of India v. G. Ganayutham [(1997) 7 SCC  463], it was opined:

"19\005In our view, this decision is not applicable to  the facts of the case. Here the Court is not  interfering with the punishment awarded by the  employer on the ground that in the opinion of the  Court the punishment awarded is disproportionate  to the gravity of the misconduct. Here, the  gradation of the punishments has been fixed by the  rules themselves, namely, the rules of Bank of  Cochin and the Court is merely insisting that the  authority is confined to the limits of its discretion  as restricted by the rules. Inasmuch as the rules of  Bank of Cochin have enumerated and listed out the  punishments for "major misconduct", we are of the  view that the punishment of "removal" could not  have been imposed by the appellate authority and  all that was permissible for the Bank was to  confine itself to one or the other punishment for  major misconduct enumerated in para 22(v) of the  rules, other than dismissal without notice. This  conclusion of ours also requires the setting aside of  the punishment of "removal" that was awarded by

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the appellate authority. Now the other punishments  enumerated under para 22(v) are "warning or  censure or adverse remark being entered, or fine,  or stoppage of increments/reduction of basic pay  or to condone the misconduct and merely  discharge from service". The setting aside of the  removal by the High Court and the relief of  consequential benefits is thus sustained. The  matter has, therefore, to go back to the appellate  authority for considering imposition of one or the  other punishment in para 22(v) other than  dismissal without notice."

29.     As the respondent has merely been found to be guilty of commission  of procedural irregularity, we are of the opinion that it is not a fit case where  we should exercise our discretionary jurisdiction under Article 136 of the  Constitution of India, particularly in view of the fact that the respondent has  now reached his age of superannuation, and the appropriate authority of the  appellant would be entitled to impose any suitable penalty upon him.

35.     The appeals are dismissed.  No costs.