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CASE NO.: Appeal (civil)  1641 of 2004

PETITIONER: Canara Bank & Ors.                                               

RESPONDENT: Swapan Kumar Pani  & Anr.                                        

DATE OF JUDGMENT: 24/02/2006

BENCH: S.B. Sinha & Dalveer Bhandari

JUDGMENT: J U D G M E N T WITH  

CIVIL APPEAL NO. 1642 OF 2004

S.B. Sinha,  J.

                These are two cross appeals between the parties.   Canara Bank  is  appellant in Civil Appeal No. 1641 of 2004 and respondent in Civil Appeal   No. 1642 of 2004.  Shri Swapan Kumar Pani (hereinafter referred to as "the  first respondent") is appellant in Civil Appeal No. 1642 of 2004 and first  respondent  in Civil Appeal  No. 1641 of 2004.          The first respondent at all material time  was working as Accountant,  in Jajpur Road, Orissa  Branch of Canara Bank, Calcutta (hereinafter  referred to as ’the Bank’).  It is stated that in the said capacity he used to  hold one set of keys of the locker of the bank.  Another set of keys used to  be in the custody of the Manager of the Bank.  Admittedly on the ground  that he had committed a misconduct;  a departmental proceeding was  proposed to be held in terms of  Regulation 6 of the Canara  Bank Officer  Employees’ (Discipline &Appeal) Regulations, 1976 (Regulations) wherefor  the following Articles of Charge  were served on the first respondent:  

"M/s Utkal Iron & Steel Industries is a Constituent  of our Jajpur road Branch.  They were sanctioned  an M.L. Limit of Rs. 10.00 lakhs vide advances  Section \026I, C.O. Calcutta, letter CC: ADV- I:0069:84T dated 6.1.1984.  the loan was  sanctioned on Collateral Security of Bearer Bonds  of Rs. 2.00 lacs besides other securities.  The  details of the bearer bonds are given in the  statement of imputations.

The bearer bonds were put in a loan paper cover  and kept in double lock on 20.1.1984.  

On 23.1.1986, M/s S.K. Sahu & Brothers, the  Statutory auditors, requisitioned the bonds for  verification.  It was found, on verification, that the  bonds were missing and the cover contained a few  blank sheets of B-2, attendance marking register.  

There are reasons to believe that you had  unathorisedly and with ulterior motive removed  the aforesaid bearer bonds from safe custody.  

You have, thereby, failed to protect the interests of  the Bank and have exposed the Bank to financial

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loss.  

By your above action, you have failed to perform  your duties with utmost honesty, integrity,  devotion and diligence and thereby committed a  misconduct within the meaning of Regulation-3 (1)  read with Regulation 24 of the Canara Bank  Officer Employees (Conduct) Regulations, 1976,  which is punishable under the provisions of Canara  Bank Officer Employees’ (Discipline Appeal)  Regulations, 1976."

       The gist of the charge contained in the said article of charge, thus,   was that the first respondent had unauthorisedly  and with  ulterior motive  removed  the special bearer bonds worth Rs. 2 lacs from the bank’s  safe  custody on 6.11.1985 on which date  he was holding the second set of keys  of the double lock having obtained the keys from the Manager’s drawers   and while removing the said bonds kept blank sheets of B-2 register therein.    The said bearer bonds had been taken as collateral security from  M/s Utkal  Iron and Steel Industries  towards sanctioning of M.L. Limit of Rs. 10 lacs.  

In the departmental proceedings he was found to be not guilty of the  said charges pursuant whereto he was exonerated by an order of the  Disciplinary Authority dated 29.3.1989.  Again a charge-sheet containing  almost identical charges was issued on 31.3.1989.   The allegations made  against the first respondent  in the said charge sheet were that the said bearer  bonds had been last seen by him in July, 1985 and thereafter he failed to  verify the existence thereof.  Though he was one of the holders of the keys  the bank double lock and a certificate was issued by him as regards the  existence of the said bearer bonds without actually verifying their  availability he committed a misconduct.  The charge against him in short  was that he had failed to protect the bank’s interest and exposed it to  financial loss and that he had failed to discharge his official duties with  devotion and diligence.  Another departmental proceeding was initiated  whereupon the Inquiry Officer submitted a report.  It is, however, accepted  that the said matter was not further proceeded against.   

The Managing Director of the bank, who was the Reviewing   Authority, allegedly came to know that the matter regarding missing of the  bearer bonds had been investigated into by the CBI and from its report it was  revealed  that the same were removed by the respondent on 6.11.1985 and  out of the 20 bonds, 5 were disposed of at Calcutta through a private person  for a sum of Rs. 59,500/-.  The Reviewing Authority, on the aforementioned  premise,  in purported exercise of his powers under Regulation 18 of the  Regulations called upon the first respondent to show cause within 15 days as  to why action should not be taken against him in the light of the fresh  evidence; and  as to why the Reviewing Authority should not set aside the  findings of the Inquiring Authority dated 17.6.1988 and consequently the  orders dated 29.03.1989 passed by the Disciplinary Authority should not be  set aside.  No show cause was filed by him.   No explanation was submitted  by him and consequently the Reviewing Authority passed an order dated  26.10.1995 setting aside the findings of the Inquiring Authority and  consequent order dated 29th March, 1989. Pursuant to and in furtherance  of  the said order dated  26.10.1995  passed by the Managing Director of the  appellant bank issued a fresh charge sheet on 31.01.1996  on the following  terms :   

"You are working as officer at our Rourkela  branch since 20.6.1974.  

Earlier you were working as accountant at our  Jajpur Road, Orissa branch from 1.5.1985 to  3.5.1986.

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M/s Utkal Iron & Steel Industries is a constituent  of our Jajpur  Road branch.  They were sanctioned  an ML limit of Rs. 10 lacs vide advances section I,  circle office.  Calcutta letter CC/ADV-1/0069/84T  dated 6.1.1984.  the loan was sanctioned on  collateral security of Bearer bond of Rs. 2 lacs  besides other securities.  The details of the bearer  bonds are given in the statement  of imputation .  

       The bearer bonds were put in a loan paper  cover and kept in double lock on 20.1.84.           On 23.1.86, M/s S.K. Sahu & Brothers the  statutory auditors requisitioned the bonds for  verification.  It was found, on verification, that the  bonds were missing and the cover contained a few  blank sheets of B-2, attendance marking register.  

Investigation has revealed that you had on  6.11.1985 removed the 20 special bearer bonds  1991 pledged by Shri R.K. Taparia, Managing  Director of M/s. Utkal Iron & Steel Industries from  the strong room and out of these bearer bonds get  bearer bonds bearing Nos. A 160112. A 160136. A  160491 disposed of at Calcutta through a private  person Sri Debipada Bhattacharya of Balasore  town for Rs. 59,500/-."

       The first respondent questioned the legality and validity of the said  charge sheet  by filing a writ petition in the  High Court of Calcutta.  A  learned Single Judge of the said High Court refused to pass an order of stay.  During pendency of the said writ petition disciplinary proceedings were held  by the Inquiry Officer.   A report was submitted finding him guilty of the  charges; and pursuant thereto the disciplinary authority imposed a  punishment of dismissal from service upon the first respondent by an order  dated 4.12.1995.  The said order, however,  was not given effect to in view  of the pendency of the writ petition.   

The learned Single Judge dismissed the said writ petition by an order  dated 12.4.2000.  Aggrieved by and dissatisfied  therewith the first  respondent preferred a Letters Patent Appeal which has been allowed  by a  Division Bench of the said High Court by reason of the impugned judgment   holding (1) The Managing Director of the Bank could not have taken  recourse to Regulation 18, as no punishment had been imposed upon the first  respondent.  (2) In any event the power under Regulations 18 could have  been exercised within a period of six months only and not thereafter.(3)    Regulation 21 which empowers the bank to  extend the time could not have  been invoked in the fact of the case. (4) As the charge sheet was issued  in  terms of the said order of review, the same was liable to be quashed.  

However, having regard to the seriousness of charges, the first  respondent was denied the back wages.  The bank was further given liberty  to initiate fresh  proceedings on proper materials, if any.  Both the parties  have, thus, filed appeals before us.  

Mr. Ravindra Kumar, learned counsel appearing on behalf of the  appellant bank assailing the judgment of the High Court would contend that  in view of the fact that the third charge sheet was issued on new grounds, the  Division Bench of the High Court committed a manifest error. In view of the  fact that Regulation 21 of the Regulations, it was submitted, confers  power   upon the bank to enlarge the time for taking any action in terms thereof,  the  time for initiating the proceedings of review must be held to have been  extended and, thus, it was not necessary to pass an order within a period of  six months from the date of the first order, as has been held by the High

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Court.   

Mr. S. Murlidhar, learned counsel appearing on behalf of the first  respondent, on the other hand, would urge that the Reviewing Authority was  bound to exceed his jurisdiction under Regulation 18 of the Regulations  while issuing the show cause notice dated 31.1.1996.  In respect of the  appeal preferred by the first respondent  herein it was submitted that the  High Court having found that the bank could not have initiated any  disciplinary inquiry afresh, committed a patent  illegality by granting liberty  to the appellant to initiate fresh inquiry on fresh materials and denying back  wages to the first respondent.  

Regulations have been framed under Section 19 of the Banking  Companies (Acquisition & Transfer of Undertakings) Act, 1970.   Regulations 18 and 21 read as under :   "18 \026 Review:  Notwithstanding anything  contained in these regulations, the Reviewing  Authority may at any time within six months from  the date of the final order, either on his own  motion or otherwise review the said order, when  any new material or evidence which could not be  produced or was not available at the time of  passing the order under review and which has the  effect of changing the nature of the case, has come  or has been brought to his notice and pass such  orders thereon as it may deem fit:    

Provided that:  

(i)     If any enhanced penalty, which the  Reviewing Authority proposes to impose, is  a major penalty specified in Clauses (f), (g),  (h), (i) or (j) of Regulation 4 and an enquiry  as provided under Regulation 6 has not  already been held in the case, the Reviewing  Authority shall direct that such an enquiry  be held in accordance with the provisions of  Regulation 6 and thereafter consider the  record of the enquiry and pass such orders as  it may be deem proper;  

(ii)    If the Reviewing Authority decides to  enhance the punishment but an enquiry has  already been held in accordance with the  provisions of Regulation  6, the Reviewing  Authority shall give show cause notice to  the officer employee as to why the enhanced  penalty should not be imposed upon him and  shall pass an order after taking into account  the representation, if any, submitted by the  officer employee."  

"21. Power to relax time-limit and to condone  delay:  

Save as otherwise expressly provided in  these regulations the authority competent under  these regulations to make any order may, for good  and sufficient reasons or if sufficient cause is  shown, extend the time specified in these  regulations for anything required to be done under  these regulations or condone any delay."                                          (Emphasis supplied)

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       The said Regulations have statutory force.  An authority exercising  such statutory power was required to act within the four corners thereof.  He  was bound by the limitations prescribed therein.  Regulation 18 could have  been applied in a case where  the power of review is exercised in respect of a  proceeding which has not attained finality. In this case, however, admittedly  two charge sheets were issued and at least  in one of them the first  respondent was exonerated.  The said order attained finality. The second one  was not pursued despite a report having been submitted by the Inquiry  Officer evidently because of the first disciplinary proceeding. As the first  respondent was exonerated there was no question of enhancement of  punishment and in that view of the matter second part of Regulation 18  had  also no application.  As no order had been passed extending the time,  evidently the power under Regulation 21 had also not been exercised.  We  may notice that the first respondent was exonerated by an order dated  29.3.1989 whereas the purported order of review was passed on 25.7.1995,  i.e. after a period of 6 years, which was much beyond  the period of  limitation. The power was also not exercised within a reasonable time.  

       Furthermore, the charges levelled against the first  respondent herein  are in 2 parts; (i) that he had on 6.11.1985 removed 20 special bearer bonds  pledged by the Managing Director of M/s Utkal Iron & Steel Industries from  the strong room of the bank; and (ii) out of those special bearer bonds five  bearer bonds were disposed of  at Calcutta for Rs. 59,500/-.  Admittedly, the  first part of the charge was covered by the first charge sheet dated 20.5.1987.    He having been exonerated therfrom, no fresh charge sheet could have been  issued in absence of any statutory power in this behalf.  Only the second part  of the said charge sheet, is said to be based on new materials purported to  have been discovered by the Managing Director of the bank.  An inquiry  in  the second part of the charge sheet could have been possible, if the first part  thereof charge viz. the  respondent had removed the said bonds pledged by  M/s Utkal Iron & Steel Industries was not required to be proved.   As the  bank cannot be permitted to reopen the first part of the charge, it a fortiori  cannot be allowed to enquire into the second part also as both the parts of the  charge are interlinked with each other.  In other words, proof of first part of  the charge was wholly dependent upon the first part. The impugned  judgment to that extent is unassailable.  

The High Court, however, committed an error in granting liberty to  the bank to initiate a fresh inquiry.  If the High Court was of the opinion   that the new materials purported to have been found  were not sufficient for  initiation of the enquiry in question, we fail to understand as to on what basis   liberty was given to the bank to initiate a fresh inquiry, more so when the  misconduct, if any, was committed as far back as in the year 1985.  

We are, however, of the opinion  that in the facts and circumstances  of this case the discretion exercised by the High Court in refusing back  wages to the first respondent herein need not be interfered with .            For the aforementioned reasons, the appeal filed by the appellant bank  being Civil Appeal No. 1641 of 2004 is dismissed.  The appeal filed by the  first respondent being Civil Appeal No. 1642 of 2004 is allowed in part and  to the extent mentioned hereinbefore.  There shall be no order as to costs.