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CASE NO.: Appeal (civil)  2739 of 2007

PETITIONER: UCO Bank & Anr

RESPONDENT: Rajinder Lal Capoor

DATE OF JUDGMENT: 18/05/2007

BENCH: S.B. Sinha & Markandey Katju

JUDGMENT: J U D G M E N T

CIVIL APPEAL NO.  2739                    OF 2007 [Arising out of S.L.P. (C) NO. 668 OF 2007]

S.B. SINHA, J :

1.      Leave granted.

        2.      This appeal is directed against a Judgment and order dated  08.09.2006 passed by a Division Bench of the High Court of  Punjab and Haryana at Chandigarh in Letters Patent Appeal No.  174 of 2006, affirming the Judgment and Order dated 11.07.2006  passed by a learned Single Judge of the said Court in CWP No.  1902 of 2001 whereby the Writ Petition filed by the respondent  herein challenging the correctness or otherwise of the orders  dated 27.09.1999 and 01.12.2000 passed  by the Disciplinary  Authority and the Appellate Authority respectively, was allowed in  part by converting  the punishment of removal from the service of  the respondent into compulsory retirement with effect from the  date of superannuation i.e. 01.11.1996.   

3.      The basic fact of the matter is not in dispute.   

       Appellant No.1 herein is a Nationalised Bank.  It framed  several regulations in exercise of its power conferred upon it  under Section 19 (2) of the Banking Companies (Acquisition and  Transfer of Undertakings) Act, 1970,  inter alia, UCO Bank Officer  Employees’ Services Regulations, 1979.   The Government of  India launched a scheme known as ’Prime Minister Rozgar Yojana’  (PMRY) with an objective to provide sustained employment to 10  lacs educated unemployed Urban Youth, the salient features  whereof, inter alia,  are as under :

"a) The scheme would cover whole of the country  from 1994-1995 onwards.

b) The educated unemployed entrepreneurs would  be given a subsidy of 15% subject to a ceiling of  Rs.7500/- each for starting the micro-enterprises.

c) The beneficiary would be required to bring 5% of  the project cost as margin money.

d) An eligible entrepreneur under the scheme could  take a composite loan upto Rs.1 lac from a bank

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without a collateral guarantee project for formal  sponsoring/recommending back to the branches for  sanction."

4.      The Reserve Bank of India issued guidelines/directions to  work out the modalities in respect of implementation of the said  scheme to the Scheduled Commercial Banks from time to time.   Pursuant to one of such directions, the Board of Directors of the  Appellant-Bank in terms of a Circular letter dated 31.07.1995  authorized the Branch Managers in Scales I & II to sanction  composite loans upto Rs.1 lac,  stating :

       " During the last year, some of the  Branch Managers in scale I & II did not  have the necessary sanctioning powers to  sanction and disburse the PMRY  applications sponsored to them.  This had  resulted in considerable delay and  Divisional Offices were required to process  these applications and advice sanctions to  those branches which could not dispose of  applications at their level.  To obviate this  difficult situation our Board of Directors  have recently vested the Branch Managers  in Scale I & II with necessary sanctioning  powers and the Branch Managers in scale I  & II are now authorized to sanction  compositors loans (both term loan and  working capital finance) upto Rs. 1 lac in  each case in respect of PMRY scheme  sponsored to them.  This delegation of  powers has already been advised vide H.O.  Circular No. CHD/SISB/18/95-96 Dt.  16.6.95."

        5.      Respondent while working in the capacity of the Branch  Manager of his Branch disbursed loan within the capacity to  various persons whose names had been recommended by the  Chairman, Task Force Committee under PMRY Scheme, 1996.   For his alleged acts of omission and commission which included  the purported irregularities committed by him in sanctioning and  disbursing the loans under the PMRY Scheme, a show cause  notice was issued upon him on 24.10.1996.  On the eve of his  retirement i.e. on 30.10.1996, another show cause notice was  issued to him purported to be in connection with the irregularities  committed by him in sanctioning and disbursing loans under the  said Scheme, while working as Branch Manager at Kohara Branch  of the appellant-Bank in 1996.  Admittedly he was allowed to  superannuate on 1.11.1996.  He was however, not paid his retiral  benefits. He made a representation therefor.  Inter alia, on the  premise that a sum of Rs. 1 lac could not be recovered from the  two borrowers, the retiral benefits were not disbursed.  The  Regional Office of the appellant-bank, however, recommended  grant of terminal benefits in favour of the respondent, by  a letter  dated 14.05.1998 addressed to the Zonal Office of the appellant-  bank stating :

       "In respect of the irregularities  committed by Sh. Capoor vide our show cause  notice dated 30.10.1996 served on Sh. Capoor  had since been replied and in view of his  request dt. 8.5.97 to keep Rs.50,000/- out of  his terminal benefits as security against the  loan advanced to Sh. Satinder Singh (PMRY

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case) and the letter was sent to you which was  enclosed with our letter No. CDO/P/PER/97- 98/1881 DT. 14.5.97.  Accordingly,  we have  kept Rs.50,000/- in the shape of FDR for a 4  years 6 months with our Kohara branch.  The  present position of the loan account of Sh.  Satinder Singh as of 20.3.98 is balance  outstanding Rs.71,064/- with overdue of Rs.  9414/-.  Sh. Satinder Singh had deposited in  the said loan account of Rs.50,000/- as  instalments upto 20.3.1998 and the last  instalment is due in June 2001.

       Sh. Capoor has since vacated the leased  accommodation provided to him when he was  posted as Manager at branch office Kohara and  he has returned all the furniture provided at  his residence less 4  regulators of fans and  about Rs.2500/- has been claimed by the  landlord as electricity bill pending against the  said occupation which will be recovered from  his terminal benefits.

       In view of the above facts, we  recommend that Sh. Capoor should be allowed  the terminal benefits after retirement and no  RDA be initiated against him."

6.      Curiously, despite the said recommendation, a charge-sheet  was issued on or about 13.11.1998.  The articles of charges  against him read as under : "1. Sh. R.L.Capoor had failed to discharge his  duties with utmost integrity, honesty, devotion  & diligence which is violative of Regulation 3(1)  of UCO Bank Officer Employees (Conduct)  Regulations, 1976 as amended.

2. Sh. R.L.Capoor in the exercise of powers  conferred on him, acted otherwise, than in his  best judgment which is violative of Regulation  3(3) of UCO Bank Officer Employees’ (Conduct)  Regulations, 1976, as amended.

3. Sh. R.L. Capoor failed to take all possible  steps to ensure the integrity and devotion to  duty of all persons under his control and  authority which is violative of Regulation 3(4)  of UCO Bank Officer Employees’ (Conduct)  Regulations, 1976, as amended."

                        7.      In the disciplinary proceedings, the Enquiry Officer in his  report dated 13.09.1999 opined that the Charges Nos.1 and 2  had been proved, whereas Charge No. 3 had not been proved.   The summary of the findings of the Enquiry Officer are as under :           Allegation No.1 First Part              proved                                 Second Part     not proved

       Allegation No.2 2(a)                    proved                                 2(b)                    proved                                 2(c)                    Not proved                                               2(d)                    Proved                                         2(e)                    Proved

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                                       2(f)                    Not proved                                         2(g)                    Not proved                                         2(h)                    Not proved                                         Second part     Not proved

               Allegation No.3                         Not proved                                                        Allegation No.4                         Not proved

               Charge No.1                  The     CSOE    had    failed   to              Proved    as   per       discharge    his     duties   with              discussions under  utmost    integrity,     honesty,               allegations 1 & 2 devotion  and  diligence which is violation  of  Regulation 3(1) of UCO Bank Officer Employees’ (Conduct) Regulation, 1976  as  amended.

               Charge No.2

               The   CSOE  in  exercise of powers              Proved   as   per                 conferred on him acted otherwise                discussions under                 than in his best judgment which is              allegations 1 & 2                 Violative of Regulation 3(3) of UCO                  Bank Officer Employees’ (Conduct)                 Regulation, 1976 as amended.                                  Charge No.3

               The   CSOE   failed   to   take  all            Not proved                 possible   steps   to  ensure   the                  integrity  and  devotion  to   duty                 of  all  persons  under his control                 and  authority  which is violative                 of   Regulation 3(4) of  the  UCO                 Bank Officer Employees’ (Conduct)                 Regulation, 1976 as amended.                     

8.      The Disciplinary Authority by an order dated 27.09.1999,  however, upon purported consideration of the findings of the  Enquiry Officer as also the comments thereupon by the  respondent, imposed upon the respondent, the penalty of  removal from service.  The appeal preferred thereagainst was  dismissed by the Appellate Authority by an order dated  01.12.2000.  Respondent filed a Writ Petition in the High Court of  Punjab and Haryana,  praying for quashing of the charge-sheet  dated 13.11.1998 as also the orders dated 27.09.1999 and  01.12.2000.  The learned  Single Judge of the said Court, as  indicated hereinbefore, allowed the Writ Petition in part opining  that the respondent was guilty of commission of procedural  irregularities in the matter of sanctioning and disbursing the  amount of loans under the PMRY Scheme.  The learned Judge  arrived at a finding that the punishment imposed upon the  respondent was grossly disproportionate, vis-‘-vis, the gravity of  charges framed against him and upon taking into consideration  the fact that the respondent had an unblemished 40 years of  service career.  It was, thus, held that imposition of the said  penalty after he attained the age of superannuation would not be  proper.  It was, therefore, opined that the penalty of removal  from service should be converted to that of compulsory  retirement.  

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9.      The Letters Patent Appeal preferred against there has been  dismissed by a Division Bench of the said Court.   10.     Appellants are, thus, before us.   11.     Mr. Raju Ramachandran, learned Senior Counsel appearing  on behalf of the appellant, would submit :

i)      The High Court committed a manifest error in passing  the impugned  judgment so far as it interfered with  the quantum of punishment imposed upon the  respondent by the Disciplinary Authority and the  Appellate Authority.

(ii)    Interference with the finding of fact arrived at in a  departmental enquiry being impermissible, the High  Court committed a manifest error in passing the  impugned judgment.

(iii)   Validity of the charge-sheet having not been  interfered with,  the learned Single Judge committed  a serious  error in interfering with the quantum of  punishment.

12.       Strong reliance, in this behalf, has been placed on   Disciplinary Authority-cum-Regional Manager & Ors. v. Nikunja  Bihari Patnaik, [(1996) 9 SCC 69]; Bank of India & Anr. v. Degala  Suryanarayana, [(1999) 5 SCC 762]; Chairman and Managing  Director, United Commercial Bank & Ors. v. P.C. Kakkar, [(2003)  4 SCC 364], Damoh Panna Sagar Rural Regional Bank and Anr. v.  Munna Lal Jain, [JT 2005 (1) SC 70] and [(2006) 10 SCC 572].

13.     Mr. Deepak Sibbal, learned counsel appearing on behalf of  the respondent, on the other hand, contended :  

(i)     The appellant bank having not suffered any financial    loss,  the purported irregularities committed by the respondent were  trivial in nature.

(ii)     A target having been fixed to be achieved by the  Appellant-Bank in respect of the PMRY Scheme and  emphasis  was laid upon every Branch Manager to achieve the same,  it  cannot be said that the respondent exceeded his jurisdiction in  the matter of sanctioning and disbursing the loans.

(iii) Only because  the purpose for grant of loan was changed and  recommendation of the Task Force Committee was not strictly  adhered to, cannot by itself be a ground for imposition of such a  harsh punishment, particularly when no ill will or motive on his  part was alleged or established. 14.     It is evident from the report of the Enquiry Officer that the  illegalities which are said to have been committed are  principally  two being :

1)  The proposal of the Task Force for grant of loan for  Rs.50,000/- for the purpose of setting up a  cream separator was  altered to dairy and a sum of  Rs. 95,000/- was sanctioned  therefor.

2)      Two cheques for a sum of Rs.19,5000/- and Rs. 5,000/-   were issued in favour of Shri Paramjit Singh, who is the real  brother of the borrower Satinder Singh.

15.     The charges of forgery and interpolation also are said to  have been restricted to the said transactions only.

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16.     We agree with the contention of Mr Raju Ramachandran  that ordinarily the High Court should not interfere with the  quantum of punishment imposed by the Disciplinary Authority.  It  is also true that the officers of the bank enjoys a part of  confidence in them event a Manager of a Bank is found to have   embezzled or misappropriated any amount, or exceeded the  jurisdiction in the matter of grant of sanction of loans, the Court  takes a strict view of the matter.

17.     The High Court, therefore, may not be correct in arriving at  its opinion.  However, as would appear from the discussions made  hereinafter, initiation of the departmental proceedings itself, in  our considered opinion, was wholly illegal and without  jurisdiction.             18.     The fact that charge-sheet was issued only on 13.11.98 was  not in dispute.  It also stands admitted that the respondent  attained the age of superannuation on or before 01.11.1996.   Disciplinary Proceedings admittedly were initiated against the  respondent in terms of Regulation 20 (3) (iii) of UCO Bank Officer  Employees Services Regulations, 1979 which reads as under:    "The officer against whom disciplinary  proceedings have been initiated will cease to  be in service on the date of superannuation but  the disciplinary proceedings will continue as if  he was in service until the proceedings are  concluded and final order is passed in respect  thereof.  The concerned officer will not receive  any pay and/or allowance after the date of  superannuation.  He will also not be entitled for  the payment of retirement benefits till the  proceedings are competed and final order is  passed thereon except his own contributions to  CPF."

19.     A bare perusal of the said provision would clearly show that  by reason thereof a legal fiction has been created.  We are not  oblivious of the legal principle that a legal fiction must be given  full effect but it is equally well-settled that the scope and ambit of  a legal fiction should be confined to the object and purport for  which the same has been created.

20.     In Dilip S. Dahanukar v. Kotak Mahindra Co. Ltd. and Anr.  [2007 (5) SCALE 452], it was observed :

       "46.Legal fiction, it is well-settled, must  be construed having regard to the purport of  the statue. {See Sadashiv Dada Patil vs.  Purushottam Onkar Patil (D) By Lrs. [2006  (10) SCALE 21]; M.P. State Electricity Board  vs. Union of India & Ors. [2006 (9) SCALE  194]; Maruti Udyog Ltd. vs. Ram lal & Ors.  [(2005) 2 SCC 638]; Bharat Petroleum Corpn.  Ltd. vs. P. Kesavan & Anr. [(2004) 9 SCC  772]}"

21.     The aforementioned Regulation, however, could be invoked  only when the Disciplinary Proceedings had clearly been initiated  prior to the respondent’s ceases to be in service. The  terminologies used therein are of seminal importance. Only when  a disciplinary proceeding has been initiated against an officer of

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the bank despite his attaining the age of superannuation, can the  disciplinary proceeding be allowed on the basis of the legal fiction  created thereunder, i.e., continue "as if he was in service".  Thus,  only when a valid departmental proceeding is initiated by reason  of the legal fiction raised in terms of the said provision, the  delinquent officer would be deemed to be in service although he  has  reached  his age of superannuation.  The departmental   proceeding, it is trite law, is not initiated merely by issuance of a  show cause notice.  It is initiated only when a chargesheet is  issued (See Union of India etc. etc. v. K.V. Jankiraman, etc.  etc. reported in AIR 1991 SC 2010).  This aspect of the matter  has also been considered by this Court recently in Coal India  Limited & others v. Saroj Kumar Mishra [2007 (5) SCALE  724]  wherein it was held that date of application of mind on the  allegations levelled against an officer by the Competent Authority  as a result whereof a chargesheet is issued would be the date on  which the disciplinary proceedings said to have been initiated and  not prior thereto.  Pendency of a preliminary enquiry, therefore,  by itself cannot be a ground  for invoking Clause 20 of the  Regulations.  Albeit in a different fact situation but involving a  similar question of law in  Coal India Ltd. (supra) this Court held :

"13. It is not the case of the appellants that  pursuant to or in furtherance of the complaint  received by the vigilance department, the  competent authority had arrived at a  satisfaction as is required in terms of the said  circulars that a chargesheet was likely to be  issued on the basis of a preliminary enquiry  held in that behalf or otherwise.

14. The circular letters issued by the  appellants put restrictions on a valuable right  of an employee. They, therefore, are required  to be construed strictly.  So construed there  cannot be any doubt whatsoever that the  conditions precedent contained therein must  be satisfied before any action can be taken in  that regard."   

       It was further more observed that :   

"20. A departmental proceeding is ordinarily  said to be initiated only when a chargesheet is  issued."

(See also Union of India v. Sangram  Keshari Nayak 2007 (6) SCALE 348)

22.     Respondent, therefore, having been allowed to  superannuate, only a  proceeding, inter alia, for withholding of his  pension under the Pension Regulations could have been initiated  against the respondent. Discipline and Appeal Regulations were,  thus not attracted.  Consequently the chargesheet, the enquiry  report and the orders of punishment passed by the Disciplinary  Authority and the Appellate Authority must be held to be illegal  and without jurisdiction.

23.     An order of dismissal or removal from service can be  passed only when an employee is in service.  If a person is not in  employment, the question of terminating his services ordinarily  would not arise unless there exists a specific rule in that behalf.   As Regulation 20 is not applicable in the case of the respondent,

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we have no other option but to hold that the entire proceeding  initiated against the respondent became vitiated in law.

24.     We are not oblivious of the peculiar legal position obtaining  in this case.  A gross illegality has been committed by the  appellant in initiating a departmental proceeding against the  respondent but he did not question the same.  The learned Single  Judge of the High Court held him guilty of commission of some  irregularities.  He did not question the correctness or otherwise of  the said order also.

25.     However, the legal effect of the order passed by the learned  Single Judge could be that he became entitled to receive all retiral  benefits.   Thus, in our opinion, it is  permissible for him to raise  all contentions in support of the order passed by the learned  Single Judge, in terms of  the provisions contained in Order 41,  Rule 33 of the Code of Civil Procedure and the principles akin  thereto.   

26.     Furthermore, the respondent has retired as far back as on  01.11.1996.  At this late stage, we are of the opinion that we  should not allow an illegality to be perpetuated which is otherwise  apparent on the face of his record.     

27.      We, therefore, are of the opinion that although the learned  Single Judge and  also the Division  Bench of the High Court may  not be correct in passing the impugned judgments, we should  in  exercise of discretionary jurisdiction under Article 142 of the  Constitution of India, should allow the Writ Petition of the  respondent to do complete justice to the parties.    

28.     We direct the appellant to pay all retiral benefits to the  respondent expeditiously.          29.     The Appeal is dismissed with aforementioned directions.  However, in the facts and circumstances of the case, there shall  be no order as to costs.