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CASE NO.: Appeal (civil)  4573 of 2006

PETITIONER: Suresh Pathrella

RESPONDENT: Oriental Bank of Commerce

DATE OF JUDGMENT: 19/10/2006

BENCH: H.K. SEMA & P.K.BALASUBRAMANYAN

JUDGMENT: JUDGMENT (Arising out of S.L.P.( C ) Nos.26084-26085 of 2005)

        H.K.SEMA,J

                Leave granted.

               The challenge in these appeals is to the order dated  7.12.2005 passed by the Division Bench of the High Court of  Delhi, whereby the appeal preferred by the respondent-bank  was allowed by setting aside the order dated 28.4.2005 of the  learned Single Judge passed in W.P.( C ) No.6805 of 2002.                 We have heard the parties.                  The appellant was appointed by the respondent- bank as Officer Grade Scale-I.  Thereafter, he was promoted to  Officer Grade Scale-II, Scale-III and Scale-IV.  At the relevant  time, he was working as Chief Manager at Gurgaon branch of  the respondent-bank.                 By an order dated 23.12.1995, the appellant was  placed under suspension in contemplation of the drawing up  of the disciplinary proceedings.  By the memorandum dated  20th August, 1998 he was served with the charge memo on the  ground that he has violated Regulation 3(1) of Oriental Bank of  Commerce Officer Employees (Conduct) Regulations, 1982 ( in  short the Regulations, 1982).                   The statement of imputation of misconduct in  respect of article of charge framed against the appellant are as  follows:-                                                 "Sh.Suresh Pathrella, Chief Manager (under  suspension) while posted and functioning as  Incumbent-in-charge at B/O Gurgaon had  misappropriated an amount of Rs.10.00 lac of  a customer namely Sh.G.C. Luthra without his  authority/consent.

On 27.1.1994, one party of B/O, Saket, New  Delhi namely M/s Moradabad Builders Pvt.  Ltd., had sent a Pay Order No.536966/128/94  of Rs. 10.00 lacs in favour of Sh.G.C. Luthra to  our B/O Gurgaon for crediting to his account .   Sh.Suresh Pathrella while functioning as  Incumbent-in-Charge at B/O. Saket,New Delhi  with an endorsement to the effect that ’Payee’s  account will be credited on realisation’  and  also instructed vide his letter dated 27.1.94 to  issue TPO in favour of Sh.G.C.Luthra for the

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proceeds.  Accordingly, a TPO  No.153935/22/94 dated 28.1.94 for Rs.10.00  lac favouring Sh.G.C. Luthra was issued and  sent by B/O Saket to B/O Gurgaon.   On  29.1.94, Sh. Suresh Pathrella opened a new  saving bank account No.13392 with the  malafide intention in the name of Shri  G.C.Luthra without obtaining any account  opening form and without the  consent/authority of Sh.G.C.Luthra who was  already maintaining his saving bank account  No.12154 at B/O. Gurgaon since January,  1993.  The proceeds of the said instrument  amounting to Rs.10.00 lac was credited to  newly opened-saving bank account No.13392  of Sh.Luthra and Sh.Suresh Pathrella himself  with his own hand writing prepared and signed  following three transfer vouchers by debiting  Rs.10.00 lacs to the said account on the same  day i.e. on 29.1.1994 without any authority;

a)      Rs.2.00 lac transferred to Cash Credit A/C of  M/s. M.K.Fertilizers.

b)      Rs.3.00 lac transferred to current Account  No.1408 of M/s. Maharishi Aurvedic  Corporation.  

c)       Rs.5.00 lac transferred to Cash Credit  Account of M/s. Agro Chemicals.  

Thereafter the newly opened saving bank  account No.13392 was closed on the same day  leaving nil balance.  Thus, Sh.Suresh Pathrella  had misappropriated an amount of Rs.10.00  lac without the consent and authority of the  beneficiary.    By his above acts Sh.Suresh  Pathrella has violated Regulation 3(1) of  Oriental Bank of Commerce Officer Employees  (Conduct) Regulations, 1982 which is  punishable under Officers’ Discipline and  Appeal Regulations."

               An Enquiry Officer was appointed, who submitted a  Report that the charge is proved.  The disciplinary authority  accepted the findings of the Enquiry Officer and the appellant  was removed from service by an order dated 28.5.1998.   Aggrieved thereby, the appellant challenged the order by filing  Writ Petition.  The learned Single Judge was of the view that  the main allegation of misappropriation of Rs.10 lacs is  unfounded and the amount actually went to the account of the  Bank to be set off against overdrafts of the three firms.  In  other words, no loss thereby was occasioned to the Bank.  He  was further of the view that the main allegation of  misappropriation of Rs.10 lacs was the crux in both  departmental proceedings and the criminal charge and that  the Gurgaon police after investigation has closed the case as  unfounded before the CJM, Gurgaon, therefore, nothing  substantial remains in the matter for proceedings against the  appellant.     The learned Single Judge was of the view that the  argument of the Bank that departmental proceedings and the  criminal case are different does not hold good and his removal  from service was incorrect.                  The Division Bench of the High Court pointed out

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that on 27.1.1994 one party, namely, M/s. Moradabad  Builders Pvt. Ltd. had sent a pay order of Rs.10.00 lacs to Shri  G.C. Luthra to the branch office Gurgaon for crediting it to his  account.  The appellant while working as Chief Manager at  Gurgaon branch of the respondent-bank sent the said pay  order to the branch office Saket, New Delhi, with an  endorsement to the effect that payee’s account will be credited  on realization and also instructed vide his letter dated  27.1.1994 to issue TPO in favour of Shri G.C. Luthra for the  proceeds.  Accordingly, a TPO No.153925/22/94 dated  28.1.1994 for Rs.10.00 lacs favouring Shri G.C. Luthra was  issued and sent by branch office Saket to branch office  Gurgaon on 29.1.1994 and the appellant opened a saving  bank account No.13392 with malafide intent in the name of  Shri G.C.Luthra without obtaining his authority and consent.   Shri G.C. Luthra was already having a saving bank account  No.12154 at the branch office Gurgaon since 1993.   The  proceeds amount of Rs.10.00 lacs was credited to the newly  opened saving bank account No.13392 of Shri G.C. Luthra  and the appellant himself prepared and signed three transfer  vouchers and debited Rs.10.00 lacs from the said account on  29.1.1994 without any authority from Shri G.C. Luthra.  It  was also pointed out that the saving bank account No.13392  was closed on the same day leaving a nil balance.  It is in  these circumstances, the Division Bench was of the opinion  that the transfer of amounts to the credit of three parties  without any instruction from the beneficiary amounts to  misappropriation of funds and, in any event, it was a grave  irregularity in financial transactions indulged in by the  appellant.  It was also pointed out that the appellant had been  indulging in all sorts of irregularities, which were totally  inconsistent with his duties as a bank officer.  The Division  Bench held that the factum of crediting the proceeds of the  pay order to a newly opened saving bank account of Shri   G.C.Luthra without his consent or authority and thereafter  withdrawing the same and transferring into three different  accounts shows lack of devotion to duty and integrity on the  part of the appellant.                 The Division Bench further said that Shri  G.C.Luthra appeared as a witness before the Enquiry Officer.   The appellant was given an opportunity to cross-examine Shri  G.C.Luthra.  In his complaint dated 10.1.1996 he denied his  signature on the letter dated 27.1.1994.  The Division Bench  was of the view that all these disputed questions of fact have  been considered by the disciplinary authority and the  reviewing authority and it is not open to the Court in writ  jurisdiction to interfere with the findings of fact.  The Division  Bench was of the view that the subsequent statements made  by Shri G.C. Luthra in criminal cases would have no bearing  on the concluded inquiry against the appellant.                  It was also brought to the notice of the Division  Bench that there are three other criminal cases pending  against the appellant being RC1(E)/97 SIU (X), RC 2(E)/96- SIU(X) and RC6(E)/96 SIU(X) where the amount of loss  involved to the bank is stated to be Rs.1.64 crores, Rs.1.77  crores and Rs.2.55 crores, respectively.                             In our view, the findings recorded by the learned  Single Judge are fallacious.  This Court has taken the view  consistently that acquittal in a criminal case would be no bar  for drawing up a disciplinary proceeding against the  delinquent officer.  It is well settled principle of law that the  yardstick and standard of proof in a criminal case is different  from the disciplinary proceeding.  While the standard of proof  in a criminal case is a proof beyond all reasonable doubt, the  proof in a departmental proceeding is preponderance of

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probabilities.                  It is not the case of the appellant that the enquiry  has been conducted without affording an opportunity to the  appellant or behind the back of the appellant and thereby  violated the principle of natural justice.  It is, however,  contended by the counsel for the appellant that the opinion of  hand writing expert in respect of the complainant-GC Luthra  said to have been procured by the Enquiry Officer after the  enquiry was closed had not been furnished to the appellant,  despite request and, therefore, a reasonable opportunity has  been denied to him.                   Mr.G.C.Luthra went to the box as PW-2.  He denied  to have received the amount of Rs.10 lacs.  In cross- examination he denied to have given any letter of authority for  transfer of funds from one account to another account.  He  also denied to have issued any receipt for Rs.10 lacs towards  the disposal of any property to M/s Moradabad Builders.  Mr.  G.C.Luthra in cross-examination further denied that he either  collected the TPO for Rs.10 lacs or gave instructions to the  appellant for crediting to various accounts.  The appellant  after obtaining adverse statement against him in cross- examination did not further cross-examine Mr. G.C.Luthra by  confronting him with the alleged signature of Mr.G.C.Luthra.   At the close of the enquiry, the appellant himself requested the  enquiry officer to obtain the opinion of a handwriting expert.   It was done by him to test the denial of the statement of Mr.  G.C.Luthra in cross-examination.  The report so obtained  confirmed the statement of Mr.G.C.Luthra in cross- examination.  The appellant could not impeach the statement  of Mr.G.C.Luthra in cross-examination that he never gave any  letter of authority for transfer of funds from one account to  another account.  He had never issued any receipt of Rs.10  lacs towards the disposal of any property to M/s Moradabad  Builders.  The appellant has accepted the statement of  Mr.G.C.Luthra.  The handwriting expert confirmed the  statement of Mr. G.C.Luthra in cross-examination. No  prejudice, whatsoever, has been caused to the appellant by  non-furnishing of the copy of the handwriting expert  confirming the statement of Mr.G.C.Luthra in cross-  examination.  There is no allegation of malafides, bias or  violation of principles of natural justice, which has been  brought to our notice.                 The next contention of counsel for the appellant is  that the Board has decided the memo filed by the appellant  without considering the subsequent events.  According to him,  the disclosure statement made by Mr. G.C.Luthra  subsequently on 19.7.2001 under Sections 406/420 IPC  should have been considered.  This contention deserves to be  rejected outright.  The disciplinary enquiry was completed on  3.2.1998.  The appellant was removed from service by an order  dated 28.5.1998.  In the alleged disclosure statement made on  19.7.2001 under Sections 406/420 IPC Mr.G.C.Luthra is seen  to have stated that he got a typed letter issued to the Senior  Manager, Oriental Bank of Commerce to open a new saving  bank account and credited in that new bank account the  amount of Rs.10 lacs.          Counsel has referred to the decision of this Court in  Sohan Singh   vs.  Union of India, AIR 1984 SC 498.  In that  case, the appellant was accused in a criminal case and was  likely to be convicted of the charge of theft and on that ground  he was discharged considering him to be unsuitable.   Subsequently, he was acquitted of the charge of theft and in  that connection this Court held that he was entitled to be  compensated by a lump sum amount in lieu of the benefits to  which he would have been otherwise entitled, had he

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continued in service for the extended period of 6 years.             He has also referred to the decision of this Court  rendered in Narinder Mohan Arya   v.  United India  Insurance Co. Ltd., JT 2006 (4) SC 404.  In that case, the  appellant was an employee of insurance company.  The  disciplinary proceeding was initiated against him on the  ground of antedating an insurance cover, which was decided  against him.  His appeal was dismissed by the appellate  authority.  The firm whose goods were destroyed in fire filed a  suit against the insurance company impleading the appellant  as a defendant.  The Trial Court decreed the suit holding that  there was no antedating of the cover note.  The appeal filed by  the insurance company was dismissed by the High Court.   Thereafter, the matter attained finality, since no further appeal  was preferred by the insurance company.  It is in that given  facts this Court held that the Managing Director when  approached by the appellant ought to have applied his mind to  the subsequent event namely the decision of the civil court  rendered in the suit filed by the firm.  It is in these  circumstances, this Court was of the view that since the  proceedings were initiated as late as in 1976, instead of  remitting the matter to the disciplinary authority, the  appellant was directed to be reinstated with only 50 per cent of  back wages.  The facts of that case are distinguishable from  the facts of the present case.  In the present case there was no  such civil suit filed in which the decree was passed in favour  of the appellant.  This decision, therefore, would be of no help  to the appellant.               The third contention of the appellant is that the  charge as framed was for misappropriation of Rs.10 lacs.  But  during the enquiry misappropriation of Rs.10 lacs was not  established and in fact no loss was occasioned to the bank  thereby.  Therefore, the punishment of removal is  disproportionate to the offence charged and proved.           It will be noticed that the appellant was charged for  the alleged violation of Regulation 3 (1) of the Regulations  1982.  Regulation 3(1) reads:

"Every officer employee shall, at all times take  all possible steps to ensure and protect the  interests of the bank and discharge his duties  with utmost integrity, honesty, devotion and  diligence and do nothing which is unbecoming  of a bank officer".   

The Regulation ensures that every officer at all times take all  possible steps to protect the interests of the bank and  discharge his duties with utmost integrity, honesty, devotion  and diligence and do nothing which will be unbecoming of a  bank officer.  Such regulations are made to instill the public  confidence in the bank so that the interests of  customers/depositors are well safeguarded. In such a  situation the fact that no amount was lost to the bank would  be no ground to take a lenient view for the proved misconduct  of a bank officer.          In Disciplinary Authority-cum-Regional Manager   vs.  Nikunja Bihari Patnaik, (1996) 9 SCC 69 this Court held  that a bank officer’s acting beyond his authority constituted  misconduct and no further proof of loss is necessary.            In the case of Regional Manager, U.P.SRTC.   vs.   Hoti Lal,  (2003) 3 SCC 605, this Court held in paragraph 10  at scc p.614 as under:

"If the charged employee holds a position of  trust where honesty and integrity are inbuilt

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requirements of functioning, it would not be  proper to deal with the matter leniently.  Misconduct in such cases has to be dealt with  iron hands. Where the person deals with public  money or is engaged in financial transaction or  acts in a fiduciary capacity, the highest degree  of integrity and trust-worthiness is a must and  unexceptionable. Judged in that background,  conclusions of the Division Bench of the High  Court do not appear to be proper. We set aside  the same and restore order of the learned Single  Judge upholding order of dismissal".   

                     In the case of Chairman and Managing Director,  United Commercial Bank   vs.  P.C.Kakkar, (2003) 4 SCC  364, this Court said in paragraph 14  at scc p.376 as under: "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 project  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. As was observed by this Court In  Disciplinary Authority-cum-Regional Manager v.  Nikunja Bihari Patnaik, (1996) 9 SCC 69. It is  no defence available to say that there was no  loss or profit resulted in case, when the  officer/employee acted without authority. 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. The charges  against the employee were not casual in nature  and were serious. These aspects do not appear  to have been kept in view by the High Court".  

               In the present case the appellant acted beyond his  authority in breach of bank’s Regulation.  Regulation 3(1) of  the bank’s Regulation required that every officer of the bank at  all times take all possible steps to protect the interest of the  bank and discharge his duties with utmost integrity, honesty,  devotion and diligence and do nothing which will be  unbecoming of a bank officer.  It is a case of loss of confidence  in the officer by the bank.  In such a situation, it would be a  futile exercise of judicial review to embark upon the decision of  the disciplinary authority removing the officer from service,  preceded by an enquiry, and to direct the bank to take back  the officer in whom the bank has lost confidence, unless the  decision to remove the officer is tainted with malafide, or in  violation of principles of natural justice and prejudice to the  officer is made out.  No such case is made out in the present  case.                            In the result, these appeals being devoid of merits  are, accordingly, dismissed.  There will be no order as to costs.