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PETITIONER: NEW BANK,OF INDIA

       Vs.

RESPONDENT: N.P. SEHGAL AND ANR.

DATE OF JUDGMENT15/02/1991

BENCH: KANIA, M.H. BENCH: KANIA, M.H. KULDIP SINGH (J)

CITATION:  1991 SCR  (1) 473        1991 SCC  (2) 220  JT 1991 (1)   498        1991 SCALE  (1)218

ACT:      Service Law-Bank-Promotion Policy-Manager-Misconduct  - Promotion   granted  while  disciplinary  proceedings   were contemplated-Charge-sheet  served and  departmental  inquiry initiated   subsequent   to   promotion-Held    contemplated disciplinary  proceedings  are no bar  for  considering  the employee  for promotion-But grant of promotion  cannot    be regarded      as     condonation     of      Pre-Promotional misconduct-Serving   of  charge-sheet  and  initiation    of departmental   inquiry   held valid.

HEADNOTE:      Clause   9   of   the   promotion   policy    of    the Appellant  Bank  provides that an officer in respect of whom disciplinary   action  is  in  process  will  be   permitted to   take  Part  in  the  promotion  process,  subject    to the  condition   that   his  promotion   will  be   withheld until  the  officer   is exonerated from the charges and  in case   such  an  officer  is  exonerated from the   charges, the   promotion   shall  take  effect  from  the   date   on which  it  would  have  been  otherwise  effective  but  for the   disciplinary action.  Respondent-1,  a  Bank  Manager, was   Promoted   from   Scale  II  to  Scale-Ill  under  the aforesaid  clause   while  disciplinary   proceedings   were contemplated  against  him.  Later  he  was also interviewed for    promotion  from    Scale    IlI  to     Scale     IV. thereafter    the    appellant-Bank charge sheeted  him  and initiated  a   departmental   inquiry   against   him.    He challenged   the   legality   of  the   bank’s   action   by filing  a  declartory  suit contending that in view  of  the promotion  granted  to  him,  the  appellant-Bank  must   be deemed  to  have  condoned   the   earner   misconduct   and subsequent  to his promotion it was not open to the Bank  to take  any action against himn. The Trial Court  allowed  the suit  and restraied the appellant-bank from Proceeding  with the  inquiry by holding the charge-sheet illegal. The  order of  the   trial   court   was   affirmed   by    the   first appellate court and the second appeal filed by the bank  was also dismissed by the High Court.      In appeal to this court, it was contended on behalf  of the  bank that the grant  of  promotion  to  the   appellant under   clause  9  cannot be regarded in law as  condonation

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of pre-promotion misconduct. On behalf of the respondent, it was contended that even if the continuation of                                                        474 disciplinary proceedings was valid, it was not a ground  for holding  up  of  his promotion from Scale Ill  to  Scale  IV because on the date of interview no charge-sheet was  served on him.      Allowing the appeal and setting aside the order of  the High Court, this Court,      HELD:  1. The mere fact that  disciplinary  proceedings are contemplated or under consideration against an  employee does  not constitute a good ground for not  considering  the employee  concerned  for promotion if he is in the  zone  of consideration  nor  would it constitute a  good  ground  for denying   the  promotion  if  the  employee  is   considered otherwise  fit  for promotion.  Clause 9  of  the  Promotion Policy  of the Bank gives rise to the implication  that  the disciplinary action is in process or initiated,  the  officer concerned,  against whom allegations of misconduct might  be made,  can  neither  be  excluded  from  consideration   for promotion  if he is entitled to be considered for  promotion otherwise nor can the promotion be denied to him.  In  these circumstances, when the promotion from Scale II to Scale III was  granted  to respondent, there could be no  question  of condonation  of the earlier acts of misconduct by reason  of this promotion because in law and in view of clause 9 of the Promotion  policy  appellant had no option but  to  consider respondent  for promotion and if he was otherwise found  fit for  promotion  to  promote  him.   Hence  the  charge-sheet submitted   against   respondent   and   the    disciplinary proceedings pursuant to the said charge-sheet cannot be said to be bad in law and cannot be interfered with on the ground of  condonation.  Therefore, the courts below were in  error in holding that the earlier alleged acts  of   misconduct of respondent  had  been condoned by the appellant  and  basing their conclusions thereon. [476G-H; 477F-H; 488A]      L.W.  Middleton v. Horry Play Fair, AIR 1925  Cal.  87; District  Council,  Amraoti  through  Secretary  v.   Vithal Vinayak  Bapat,  AER 1941 Nagpur 125 and  Audhraj  Singh  v. State of Madhya Pradesh, AIR.  M.P. 284; held inapplicable. 2.   In view of the fact that the appellant-bank has  agreed that without creating a precedent it will grant promotion to respondent  from Scale Ill to Scale IV, if the  departmental promotion  Committee  finds him fit for promotion  and  that this  promotion  will be granted from the date on  which  he would  have  been promoted but for the  departmentl  inquiry being contemplated against him, it is unnecessary to express any  opinion  on the submission that since on  the  date  of selection  for  promotion  from Scale III to  Scale  IV,  no charge-sheet was served on the                                                        475 respondent  it  was not open to the bank to hold  back   the respondent’s promotion from Scale IH to Scale IV. [479C-D]

JUDGMENT:      CIVIL  APPELLATE JURISDICTION: Civil Appeal No. 739  of 1991.      From   the   Judgment   and   Order   dated   16.3.1990 of   the   Punjab and Haryana High Court in  Regular  Second Appeal No. 405 of 1990.      G.B. Pai, and P.N. Gupta for the Appellant.      Ashok K. Mahajan for the Respondent.      The Judgment of the Court was delivered by

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    KANIA, J. Leave granted.  Counsel heard.      This  is  an  appeal  by  Special  Leave  against   the decision    of    a learned Single Judge of the  Punjab  and Haryana  High  Court, dismissing  summarily  Regular  Second appeal No. 405 of 1990 in that Court.      The relevant facts can be stated very shortly.      At  the relevant time respondent no. 1 was  an  officer being  the  Manager in the Hardwar Branch of  the  appellant Bank, a Government of India Undertaking. On April 2, 1982  a show cause notice was served on respondent no. 1 in  respect of  several irregularities, lapses, acts, omissions  and  so on.   On  May 4,1982  respondent  no.   I   submitted    his reply to the said show cause notice denying the charges made against  him and asking for the holding of an  enquiry  into the  allegations.   On July 17, 1984 respondent  no.  1  was promoted  from Scale II to Scale Ill by the  appellant.   It appears  from  the  record  that  disciplinary  action   was contemplated against respondent no.  I but in November 1984, the disciplinary proceedings contemplated against respondent No.  1  were  kept in abeyance as some  of  the  allegations against  him were under investigation by the Central  Bureau of  Investigation  (CBI)- On March 11, 1988  interviews  for promotion  from  Scale III to Scale IV  were  conducted  and respondent  no.  1 was one of the officers  interviewed  for promotion.   On April 27, 1988 a charge-sheet was served  on respondent  no.  1. On May 27, 1988 an enquiry  was  ordered against him and the Commissioner of Departmental  Enquiries, Government  of India, was appointed as the Enquiry  Officer. On  June  30,  1988, respondent no. 1 filed a  suit  in  the Court of Sub-Judge, Second Class, Jallandhar                                                        476 for  a  declaration that the Order dated  April  27,1988  by which  respondent  no.  I was served with  charge-sheet  was illegal  and  in violation of the  Service  Regulations  and unsustainable  in law and prayed for   permanent  injunction restraining  the appellant and others from  proceeding  with the  enquiry on the basis of the said charge-sheet.  One  of the main contentions urged on behalf of respondent no. 1  in the said suit was that by reason of the promotion granted to him  from  Scale  II  to  Scale Ill  on  July  17,  1984  as aforestated,   which  was  after  the   irregularities   and misconduct  aileged  against him had been committed  and  in view  of the said promotion the appellant must be deemed  to have condoned the earlier misconduct, if any, of  respondent no.  1  and thereafter it was not open to the  appellant  to take any action against respondent no.  I in respect of  the said misconduct.  This contention found favour with  learned Trial  Judge who gave a declaration that the order,  serving the  charge-sheet  on  respondent  no.  1  was  illegal  and restrained the appellant and others from proceeding with the enquiry  on the basis of the said charge-sheet.   An  appeal was preferred by the appellant against the said order in the court  of learned Additional District Judge, Jallandhar  but it  was  dismissed  as  learned  Additional  District  Judge accepted the reasoning and conclusions of the learned  Trial Judge.   The second appeal against the decision  of  learned Additional  District Judge was dismissed by the  High  Court and  this is an appeal directed against the judgment of  the High Court.      It was submitted before us by Mr. Pai, learned  Counsel for  the appellant that the promotion granted to  respondent no. 1 from Scale II to Scale Ill on July 17, 1984, could not be  regarded  in law as condonation of the earlier  acts  of misconduct  committed by respondent no. 1. It was  urged  by him  that at that time no disciplinary proceedings had  been

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initiated against respondent no.  I and in view of this, the appellant had no option but to consider respondent no. 1 for promotion for which he was entitled to be considered and  to promote  him if he was found fit for promotion.  It was,  on the other hand, contended by Mr.Rao, learned counsel for the respondent  that the earlier acts of respondent no. 1,  even if they constituted misconduct, could not be relied upon  to take  any  disciplinary  action against  respondent  no.   I because  they  were  condoned by  reason  of  the  aforesaid promotion.      In  considering  the  submissions  of  the   respective parties, we have to bear in mind that it is accepted  before us  that in law the mere fact that disciplinary  proceedings are contemplated or under consideration against an  employee does  not constitute a good ground for not  considering  the employee concerned for promotion if he is in the zone of                                                        477 consideration  nor  would  it  constitute  a   good   ground for  denying  the promotion if the  employee  is  considered otherwise  fit  for  promotion. In the present case, we find that this  legal  position  is  reinforced  by clause (9) of the   Promotion  Policy  of  the  appellant   Bank.   Clause (9) reads as follows:           "Clause   9.  Officers  in   respect    of    whom           disciplinary    action  is  in  process  will   be           permitted to take part in  the  promotion process,           subject to  the  condition  that  the   promotions           (if  they are selected) will  be  withheld   until           the  Officer  is exonerated from the  charges.  In           such   an   event  the  promotion  will  be  given           effect to from the date on  which  it  would  have           been    otherwise   effective   but    for     the           disciplinary   action. The officer will   not   be           eligible   for  promotion  if  punishment,  except           censure,  was  awarded   as  a   result   of   the           disciplinary action."      On a plain reading of this clause it is clear that even if  disciplinary action is in process against an officer  of the  appellant  Bank,  that would not entitle the  appellant Bank   to  exclude  from  consideration  for  promotion  the officer  concerned  if  he  is  otherwise  entitled  to   be so  considered.  The only right given to  the  appellant  in such   cases   is   that, in  case  such   an   officer   is otherwise   found  fit  for  promotion   and  selected   for promotion,   that   promotion  can   be    withheld    until the   officer  is  exonerated  from  the  charges.  It    is significant   that  the  said clause goes to state  that  in case  such  an officer  is  exonerated  from   the  charges, promotion  will have  to  be  given  effect  to   from   the date   on  which it would have  been   otherwise   effective but  for  the  disciplinary action. This rule gives rise  to the   implication   that  till  disciplinary  action  is  in process  or  initiated,  the  officer   concerned,   against whom  allegations   of  misconduct  might   be   made,   can neither    be   excluded from consideration  for   promotion if   he  is  entitled  to  be  considered otherwise nor  can the    promotion    be    denied   to    him.    In    these circumstances, when the promotion from  Scale  II  to  Scale Ill   was   granted  to respondent  no.  1   on   July   17, 1984,  there  could  be  no  question  of condonation of the earlier acts of  misconduct  by  reason  of  this  promotion because in law and in view of the said  Regulation  (9)  the appellant  had no option but to consider respondent  no.   1 for   promotion   and  if  he was otherwise  found  fit  for promotion  to  promote  him.  In  view  of  this conclusion,

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it   must   follow   that   the   charge-sheet     submitted against respondent no. 1 and the  disciplinary   proceedings pursuant   to  the  said charge-sheet cannot be said  to  be bad  in  law  and  cannot  be  interfered with on the ground of condonation.  In  our  view,  the  courts  below  were                                                        478 in  error  in  holding  that the  earlier  alleged  acts  of misconduct   of respondent no.  I had been condoned  by  the appellant and basing their conclusions thereon.      In support of his submissions relating to the  question of  condonation,  Mr.  Rao relied upon  the  decision  of  a Division Bench of the Calcutta High Court in L. W. Middleton v.Horry   Playfair,  AIR  (1925)  Calcutta   87   and    the decision   of   a learned  Single  Judge  of   the    Nagpur High Court in District Council, Amraoti through Secretary v. Vithal,  Vinayak Bapat, AIR (1941) Nagpur 125.   Both  these cases  lay  down  that  once  a  master  has  condoned   any misconduct on the part of servant which would have justified dismissal  or a fine, he cannot, after such condonation,  go back  upon  his  election to condone and claim  a  right  to dismiss  him  or impose a fine or any  other  punishment  in respect  of  the offence which has been  condoned.   In  our view,  these  decisions are of no relevance in  the  present case.   At the time these decisions were rendered under  the general law of master and servant it was open to the  master to  dismiss  his  servant  or fine  him  on  the  ground  of misconduct.  On the facts of both these cases the master had the  option of dismissing the servant or finding him on  the ground of misconduct but voluntarily did not take the action of dismissing or fining him on the ground of misconduct  and it was held that thereby the master had condoned the earlier misconduct  and  could  not  thereafter  rely  on  the  said misconduct  for punishing the servant.  In the  case  before us, however,  at the time when the promotion was granted  to respondent  no.   I on July 17, 1984, the appellant  had  no option  but to consider respondent no.  I for promotion  and to  promote  him  if he was found  fit  as  no  disciplinary proceedings had been initiated against him or could be  said to  be in process against him, as we have set  out  earlier. In such a case, no question of condonation could arise.  The ratio  of decision in Lal Audhraj Singh v. State  of  Madhya Pradesh, AIR 1967 M.P. 284 is also of no application to  the case before us as that again was a case where the  employer, namely, the State, had the option of punishing the  employee and voluntarily refrained from doing so.      It  was  next  contended by Mr. Rao that  even  if  the disciplinary  proceedings  against  respondent  no.  1  were liable  to  be  continued that  constitutes  no  ground  for holding up the promotion of respondent no. 1 from Scale  III to Scale IV if he was otherwise found fit for promotion, as, on  the  date when the selections for  that  promotion  were made,  no charge-sheet had been served on respondent no.   I and  it is the accepted position here that till the  charge- sheet  was submitted it could not be said that  disciplinary proceedings were in process or                                                        479 had been  initiated. It  was  submitted  by  Mr.  Rao   that this  contention was fortified by the provisions  of  Clause (9)  of the Promotional    Policy of the  appellant,   which we have discussed  earlier.  It  was  urged  by  him that it was on this ground that the appellant  had  based  its  case regarding the  validity  of  the  disciplinary   proceedings against  respondent   no. 1 and on the same basis respondent no.   I was entitled to be promoted from Scale Ill to  Scale IV as from March 1988 if he was found fit.  It was submitted

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by him that since the charge-sheet was served on  respondent no.  1  over a month after he was considered  for  promotion from Scale Ill to Scale IV, it was not open to the appellant to hold back the consideration of the case of respondent no. I  for promotion from Scale III to Scale IV or to  deny  him the promotion if he was found fit.      It  appears to us prima facie that the  submissions  of Mr.  Rao  in connection with promotion of respondent  no.  1 from  Scale  Ill  to Scale IV  are  not  without  substance. However,  it is unnecessary for us to decide  this  question because  Mr.  Pai,  learned counsel for  the  appellant  has agreed  that  without creating a  precedent,  the  appellant will  grant promotion to respondent no. 1 from Scale Ill  to Scale  IV  if it is found that  the  Departmental  Promotion Committee  found  him  fit  for  promotion  and  that   this promotion  will be granted from the date on which  he  would have  been promoted but for the departmental  enquiry  being contemplated against him.      In  the  result, the appeal is allowed  to  the  extent aforestated    and the impugned order of  the   High   Court quashing   the   departmental proceedings is set aside.  The departmental   enquiry   shall    be    proceeded  with  and completed  within a period of six months according  to  law. As  far  as question of promotion of respondent no.  1  from Scale  III to Scale IV is concerned, that question  will  be considered in the light what has been agreed to by Mr.  Pai, as set out earlier.      Parties shall bear and pay their own costs throughout. T. N. A.                                Appeal     allowed.                                                        480