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PETITIONER: THE DISCIPLINARY AUTHORITY-CUMREGIONAL MANAGER AND ORS.

       Vs.

RESPONDENT: NIKUNJA BIHARI PATNAIK

DATE OF JUDGMENT:       15/04/1996

BENCH: JEEVAN REDDY, B.P. (J) BENCH: JEEVAN REDDY, B.P. (J) MUKHERJEE M.K. (J)

CITATION:  JT 1996 (4)   457        1996 SCALE  (3)711

ACT:

HEADNOTE:

JUDGMENT:                       J U D G M E N T B.P. JEEVAN REDDY,J.      Leave granted.      The respondent was an officer in Scale-I in the service of the  Central Bank  of India.  While he was working as the Branch Manager,  Paradeep Branch,  he was  suspended pending enquiry on  November 21,  1988. On  January  16,  1989,  ten charges were  communicated to him. He denied all of them. An Enquiry Officer  was appointed who reported, after holding a due enquiry, that Charges Nos.1, 6, 8 and 9 were established fully while  Charges Nos.2,3,5,7  and  10  were  established partially. Charge  No.4 was  held not  established.  On  the basis  of   the  said   report,  the  appropriate  authority dismissed the  respondent from service. The appeal preferred by the  respondent was dismissed whereupon he approached the Orissa High  Court by way of a writ petition. The High Court has allowed  the writ petition holding that the charges held established  against  the  respondent  represent  errors  of judgment but  not "misconduct".  The High  Court opined that though the  respondent was  guilty of doing many acts beyond his authority,  it was not established that it was done with any ulterior  motive or  for any  extraneous  consideration. Since the  Enquiry Officer  has not  found that the Bank has actually incurred  any loss  on account  of the said acts of the  respondent,   the  High   Court  held,  the  charge  of misconduct  is   not  established.   Accordingly,  the  writ petition was  allowed, the  order of punishment imposed upon the respondent was set aside and the respondent was directed to be reinstated in service with all consequential benefits. The charges framed against the respondent are the following:      "(1) The  Petitioner took charge of      the Branch  from  29.9.86.  At  the      time of  taking over  charges there      were number of overdrafts accounts.      Instead   of    taking   care   for      adjustment  of   such  advances  by

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    constant follow up, he continued to      extend the  facility unauthorisedly      and without  any  delegated  powers      even  exceeding   the   outstanding      balance as  on 29.9.86  as a result      bank’s interest  is  likely  to  be      jeopardized.      (2) The  petitioner  allowed  clean      overdrafts   to   several   parties      without any delegated authority and      much   beyond   his   discretionary      powers,  violating  Central  Office      guidelines  as   a  result  he  has      exposed   the    bank   to   severe      financial risk.      (3) The petitioner allowed drawings      in cash credit a/cs much beyond the      sanctioned limits  and or  enhanced      the  existing   limits   in   gross      violation  of   his   discretionary      powers. As  such,  there  is  every      likelihood that the bank’s interest      may be at stake.      (4)   The   petitioner   sanctioned      number of fresh cast. credit limits      to different  parties  much  beyond      his lending  powers in violation of      bank’s norms and guidelines without      proper documents  and in some cases      without any documents.      (5)  The  petitioner  sanctioned  a      number  of   Term  Loans   directly      without observing  the bank’s rules      and guidelines.      (6) The  petitioner  unauthorisedly      issued Bank  Guarantee on behalf of      different      parties      without      intimation to  R.O. The  guarantees      were issued  and signed  by himself      as Br.Manager  though on  behalf of      the Bank.  While acting  so he  had      not   taken  counter  guarantee  in      some cases.      (7) While  allowing  unauthorisedly      advances/TOD/other    loans,    the      petitioner  had  not  taken  proper      documents. Most  of the   documents      taken    were    blank,    undated,      unstamped.   Thus    he   had   not      safeguarded  the  interest  of  the      Bank.      (8)  The   petitioner  though  made      number  of  unauthorized  irregular      advances, allowed clean overdrafts,      he had  not submitted  any  Control      Returns to  the  Regional    Office      inspite of letters/reminders.      (9) The  petitioner  allowed  clean      overdraft  in  number  of  accounts      even   after    Regional   Office’s      specific  instructions to stop such      practices and stop allowing further      overdrafts. As  such  willfully  he      violated instructions  of    higher      authorities which  was  an  act  of

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    insubordination.      (10)   In    number   of   borrowal      accounts, the   petitioner  had not      done proper  follow up   and had no      taken due  care either for  renewal      of  documents   or  for   obtaining      balance confirmation.  As a result,      in  number  of  borrowal  a/cs  the      documents  were  allowed to go time      barred, putting the interest of the      bank at  jeopardy. Even  in  proper      time he  had not submitted  the STF      to  Regional   Office  for   taking      legal    action     against    such      defaulters."      In support  of Charge No.1 as many as fifteen instances were cited.  While it is not necessary to refer to all those instances, it  is sufficient  to mention  that in  all these cases it  has been  found that   the respondent acted beyond his authority  in allowing  the overdrafts or in passing the cheques, as  the case  may be.  In some  cases, the Bank was benefited by  the acts of the respondent while in some other cases, the concerned amounts became sticky or irrecoverable. Charge No.2  relates to temporary overdrawals allowed by the respondent beyond  his authority  to  different  parties.  A number of  instances were  cited and  held established.  The Enquiry Officer  held the  charge proved. He also found that in some  cases the  Bank stood  to gain  while in some other cases the  concerned advances  had become sticky. Similarly, in respect  of Charge  No.3, number of instances were cited. It was  held that  in  many  cases  the  respondent  allowed drawings/enhanced limits  in excess of the sanctioned limits in violation  of his  discretionary powers.  Charges Nos.5,6 and 7  speak of  the respondent acting beyond his authority. Charge No.8  says that  inspite of reminders, the respondent failed to  send "Control  Returns" to  the Regional  Office. This charge  was held  fully established.  Charge No.9 is to the effect  that the  respondent allowed  number of accounts and clean  overdrafts even  after receiving the instructions of the  Regional Office  to stop  such practice. The Enquiry Officer found  that the  respondent had  indeed flouted  the orders of  the Regional  Manager and  committed  an  act  of disobedience of lawful orders. The substance of Charge No.10 is  that for want of proper follow up action, a number of  borrower   accounts  have  become  time-barred  and  the prospects of  the recovery of bank’s dues have become bleak. Fifteen instances were cited in support of this charge.      It may be remembered that Charges Nos.1,6,8, and 9 were held to  have been  established in  full while the remaining charges [except  charge No.4] were held to be established in part. It  is indeed a matter of surprise that inspite of the aforesaid findings,  the High Court came to the opinion that it is not a case of misconduct. Regulation 24 of the Central Bank of  India  Officer  Employees’  (Displine  and  Appeal) Regulations, 1976  defines the  acts of  misconduct  in  the following words:      "24. Acts  of misconduct:  A breach      of any  of the  provisions of these      regulations  shall   be  deemed  to      constitute a  misconduct punishable      under the  Central  Bank  of  India      Officer  Employees’(Discipline  and      Appeal) Regulations, 1976."      Regulation 3  of  the  said  Regulations  may  also  be noticed:

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    "3(1).   Every   officer   employee      shall,  at   all  times   take  all      possible  steps   to   ensure   and      protect the  interest of  the  bank      and  discharge   his  duties   with      utmost integrity, honesty, devotion      and diligence  and do nothing which      is uncoming of a bank officer.      (2) Every  officer  employee  shall      maintain    good     conduct    and      discipline and  show  courtesy  and      attention to  all  persons  in  all      transactions and negotiations.      (3) No  officer employee  shall, in      the  performance  of  his  official      duties or in the exercise of powers      conferred  on  him,  act  otherwise      than in  his best  judgment  except      when  he   is  acting   under   the      direction of his official superior.      (4) Every  officer  employee  shall      take all  possible steps  to ensure      the integrity  and devotion to duty      of all  persons for  the time being      under his control and authority."      It may  be mentioned that in the memorandum of charges, the aforesaid two regulations are said to have been violated by   the    respondent.   Regulation    3   requires   every officer/employee of  the Bank  to take all possible steps to protect 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. It  requires the  officer/employee to maintain good conduct and  discipline and  to  act  to  the  best  of  his judgment  in  performance  of  his  official  duties  or  in exercise  of  the  powers  conferred  upon  him,  Breach  of Regulation  3   is  "misconduct"   within  the   meaning  of Regulation 24.  The findings  of the  Enquiry Officer  which have been  accepted by the disciplinary authority, and which have not been disturbed by the High Court, clearly show that in number  of instances the respondent allowed overdrafts or passed cheques  involving  substantial  amounts  beyond  his authority. True,  it is  that in  some cases,  no  loss  has resulted from  such acts. It is also true that in some other instances such  acts have  yielded profit to the Bank but it is equally  true that  in some other instances, the funds of the Bank  have been  placed in  jeopardy; the  advances have become sticky  and irrecoverable. It is not a single act; it is a  course of  action spreading  over a  sufficiently long period and  involving a large number of transactions. In the case of  a Bank  - for that matter, in the case of any other organization -  every officer/employee  is supposed  to  act within  the  limits  of  his  authority.  If  each  officer/ employee  is  allowed  to  act  beyond  his  authority,  the discipline of  the  organisation/bank  will  disappear;  the functioning  of   the  Bank   would   become   chaotic   and unmanageable. Each  officer of the Bank cannot be allowed to carve out his own little empire wherein he dispenses favours and largesse. No organization, more particularly, a Bank can function  properly  and  effectively  if  its  officers  and employees  do   not  observe   the  prescribed   norms   and discipline. Such  indiscipline cannot  be  condoned  on  the specious ground that it was not actuated by ulterior motives or by  extraneous considerations.  The very  act  of  acting beyond authority  - that too a course of conduct spread over

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a  sufficiently   long  period   and  involving  innumerable instances -  is  by  itself  a  misconduct.  Such  acts,  if permitted, may  bring in profit in some cases but they   may also lead  to huge losses. Such adventures are not  given to the employees  of Banks  which deal  with public   funds. If what we  hear about the reasons for the  collapse of Barings Bank is  true, it  is attributable to the acts of one of its employees,  Nick   Leeson,  a  minor  officer  stationed  at Singapore, who  was allowed  by his  superiors  to  act  far beyond his  authority. As  mentioned hereinbefore,  the very discipline of  an organization and more particularly, a Bank is dependent  upon each of its employees and officers acting and operating  within their  allotted sphere.  Acting beyond one’s authority  is by  itself a  breach of discipline and a breach of Regulation 3. It constitutes misconduct within the meaning of Regulation 24. No further proof of loss is really necessary though  as a  matter of  fact, in  this case there are findings  that several advances and over-drawals allowed by the  respondent beyond  his authority  have become sticky and irrecoverable.  Just because, similar  acts have fetched some profit  - huge  profit, as the High Court characterizes it  -   they  are  no  less  blameworthy.  It  is  wrong  to characterize them as errors of judgment. It is not suggested that the respondent being a Class-I officer was not aware of the limits of his authority or of his powers. Indeed, Charge No.9, which  has been  held established  in full   is to the effect that  inspite of  instructions by the Regional Office to stop  such practice,  the respondent continued to indulge in such  acts. The  Enquiry Officer  has  recorded  a  clear finding that  the respondent did flout the said instructions and has  thereby committed  an act of disobedience of lawful orders.  Similarly,   Charge  No.8,   which  has  also  been established in  full  is  to  the  effect  that  inspite  of reminders, the  respondent did  not submit "Control Returns" to the  Regional Office. We fail to understand how could all this be  characterized as  errors of  judgment  and  not  as misconduct as  defined by  the regulations.  We are  of  the opinion that  the High  Court has committed a clear error in holding that  the aforesaid  conduct of  the respondent does not amount  to misconduct  or that  it does  not  constitute violation of Regulations 3 and 24.      We must mention that Sri V.A.Mohta, learned counsel For the respondent,  stated fairly  before us  that  it  is  not possible for  him to  sustain the  reasoning and approach of the High  Court in  this case.  His only submission was that having regard  to the  age of  the respondent [37 years] and the facts  and circumstances  of the  case, this  Court  may substitute the  punishment awarded  to the  respondent by  a lesser punishment.  The learned  counsel suggested  that any punishment other  than dismissal  may  be  imposed  by  this Court. We considered this request with the care it deserves, but we  regret that  we are  unable to accede to it. Learned counsel for  the Bank,  Sri V.R.Reddy,  Additional Solicitor General, also  stated, on  instructions of the Bank, that it is not  possible for  the Bank to accommodate the respondent in its service in view of his conduct.      The appeal  is accordingly  allowed and the judgment of the High  Court is  set aside. There shall be no order as to costs.