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CASE NO.: Appeal (civil)  4243-4244 of 2004

PETITIONER: State Bank of India & Ors

RESPONDENT: S.N. Goyal

DATE OF JUDGMENT: 02/05/2008

BENCH: H. K. Sema & R. V. Raveendran

JUDGMENT: J U D G M E N T CIVIL APPEAL NOS. 4243-4244 OF 2004

R.V. RAVEENDRAN, J.

       Theses appeals by special leave are filed by a defendant-employer  (State Bank of India) against the judgment dated 11.12.2003 of the Punjab &  Haryana High Court in R.S.A. No.4184 of 2002.

2.      A charge-sheet dated 28.4.1994 was issued by the Appellant Bank to  the respondent alleging that when he was posted as the Branch Manager of  appellant’s Kalanwali Branch, Sirsa, Haryana, he had received cash  payments tendered by two customers of the Bank, for being credited to their  loan accounts, and temporarily misappropriated  such amounts and had  belatedly deposited them to the borrowers’ accounts (after about five months  in one case and two and half months in another). The said acts amounted to a  misconduct, violative of Rule 50(4) of the State Bank of India Officers  Service Rules (’Service Rules’ for short). An enquiry was held in regard to  the said charge. The Enquiry Officer submitted his report dated 11.11.1994  holding that the charge was proved.  The Disciplinary Authority furnished a  copy of the said report to the respondent and gave him an opportunity to  show cause in the matter.   

3.      Rule 68(3) of the Service Rules required, where the Disciplinary  Authority was of the opinion that a major penalty is to be imposed, and  where he was lower in rank to the Appointing Authority (in respect of the  category of officers to which the delinquent officer belonged), that he should  submit to the Appointing Authority, the records of the enquiry together with  his recommendations regarding the penalty that may be imposed, and the  Appointing Authority should make the order imposing the penalty, which in  his opinion was appropriate. In view of the above rule, the Disciplinary  Authority after considering the inquiry records and the representation of the  respondent, made a recommendation on 2.5.1995 to the Appointing  Authority to impose the penalty of ’removal from service’ on the  respondent. The Appointing Authority considered the entire material and  concurred with the recommendation of the Disciplinary Authority and made  an order dated 3.5.1995 imposing the penalty of removal from service,  which was communicated to the Respondent by letter dated 30.6.1995 of the  Disciplinary Authority.

4.      The appeal and Revision (Review) filed by the Respondent were  dismissed on 29.11.1995 and 27.11.1996. The respondent thereafter filed  Civil Suit No.158 of 1998 on the file of the Civil Judge, Senior Division,  Jind, for a declaration that the order of removal dated 30.6.1995 as also the  orders of the Appellate Authority and Reviewing Authority were arbitrary   and illegal. He also prayed that the said orders be set aside with a direction  to take him back into service with all consequential benefits.  The suit was

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resisted by the appellant-bank.  After trial, the suit was decreed on  19.4.2003. The Trial Court found that there was no violation of principles of  natural justice in conducting the enquiry and the order holding the  respondent guilty of misconduct was proper. The trial court however found  that the Disciplinary Authority, by his earlier note dated 18.1.1995, had  recommended imposition of the penalty of reduction of pay of respondent by  four stages in his time scale and the Appointing Authority had agreed with  the said recommendation on 18.1.1995. According to the trail court, the said  order was a final order of punishment by the Appointing Authority; and the  Appointing Authority had thereafter sought the advice of the Bank’s Chief  Vigilance Officer, and acting on such advice, had changed his earlier  decision and imposed a higher punishment by way of removal from service,  by order dated 3.5.1995 (communicated on 30.6.1995). The trial court was  of the view that the second order imposing penalty was passed by the  Appointing Authority "on extraneous reasons after taking advice of the  Chief Vigilance Officer", and that rendered the order of removal illegal, null  and void. The trial court therefore set aside the order of removal dated  30.6.1995 as also the orders dated 29.11.95 and 27.11.1996 of the Appellate  Authority and reviewing authority affirming the order of removal. It directed  the appellant Bank to reinstate the respondent with continuity of service and  all consequential benefits except back-wages.  The Trial Court reserved  liberty to the appellant to pass a fresh order imposing appropriate penalty on  the respondent, other than the penalty of dismissal or removal from service.  

5.      Feeling aggrieved, both parties filed appeals. Before the First  Appellate Court, the respondent did not challenge the finding of the trail  court that the domestic enquiry was fair and proper and that his guilt was  established. He limited his challenge only to the quantum of punishment  (that is, reservation of liberty to the employer to pass a fresh order imposing  appropriate penalty) and the denial of back wages. The appellant, in its  appeal, contended that the Trial Court, having found that the enquiry was  fair and proper and the finding of guilt was justified, ought not to have set  aside the order imposing penalty. The two appeals were heard and disposed  of by the Additional District Judge, Jind, by a common judgment dated  20.7.2002.  The First Appellate Court upheld the decree of the Trial Court,  but in addition held that the respondent was entitled to full back wages with  interest thereon at 9% per annum. Consequently, the First Appellate Court  dismissed the appeal by the appellant and allowed in part the appeal of the  respondent.  

6.      Feeling aggrieved the bank filed the second appeal, which was  dismissed by the judgment under appeal. The judgment is short. After  referring to the prayer in the suit and the judgments rendered by the courts  below, it contains the following reasoning :

"It is not in dispute that originally the punishment proposed against the  plaintiff was to bring him lower by four steps.  Subsequently on directions  issued by the Chief Vigilance Commissioner of the Bank, the punishment  was converted to that of dismissal. The plaintiff made a complaint that the  aforesaid orders and the material placed before the Chief Vigilance  Commissioner were never put to him and as such the order of punishment  was violative of principles of natural justice.

The learned courts below found that the contention of the plaintiff was  duly substantiated from the record. Accordingly, the punishment orders  were set aside with a liberty as noticed above.

Nothing has been shown that the findings recorded by the learned courts  below suffer from any infirmity or are contrary to law in any manner.

No question of law, much less any substantial question of law, arises in  this appeal."

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7.      We find that the High Court misread the findings of the courts below.  The Trial Court held that the Appointing Authority passed the order of  removal after taking the advice of the Chief Vigilance Officer. The first  appellate court held that the Appointing Authority imposed the penalty of  removal on the recommendations of the Chief Vigilance Officer. But the  High Court observed that ’on the directions of the Chief Vigilance  Commissioner of the Bank, the punishment was converted to that of  dismissal’. This observation contains three errors \026 firstly  the  penalty   of   removal  was  read  as dismissal; secondly the communication from the  Chief Vigilance Officer, termed as "advice/recommendation" by the courts  below, was wrongly read as ’directions’; and thirdly, the Chief Vigilance  Officer of the Bank was wrongly referred to as the Chief Vigilance  Commissioner. The High Court also erroneously assumed that plaintiff  (respondent herein) had pleaded that the Appointing Authority had placed  certain material which was never put to him (the plaintiff),  before the Chief  Vigilance Commissioner and as such the order of punishment was violative  of principles of natural justice. There was no such plea, nor did the courts  below record a finding on any such plea.    

8.      We also find that the High Court completely missed the real points  arising for determination. After a cursory wrong reference to the findings of  the court below, the High Court wrongly held that the second appeal did not  give rise to any substantial question of law, ignoring the several substantial  questions of law arising for consideration of the High Court, which were  clearly specified in the memorandum of second appeal. We find that the  second appeal gave rise to several substantial questions of law including the  following :  (i)     Whether a direction by the Civil Court to reinstate the  respondent, amounted to granting specific performance of a contract  of personal service which is barred by section 14 of Specific Relief  Act, 1963?

(ii)    In the absence of a pleading that the order imposing penalty  was invalid because the Appointing Authority acted on the advice or  recommendation of the Chief Vigilance Officer, and in the absence  of any issue in that behalf, could the Courts below hold that the  order imposing punishment was illegal on that ground?

(iii)   Whether an order recorded by the Appointing Authority on an  office note, to impose the penalty of reduction in pay, which was  neither pronounced, published or communicated, is a final decision  which could not be reconsidered or altered, by the Appointing  Authority?  

(iv)    Whether the decision of the Appointing Authority imposing  penalty can be said to have been influenced by extraneous material,  merely because the Chief Vigilance Officer of the Bank requested  him to re-examine the proposed penalty ?

(v)     Whether the Appointing Authority ought to have  communicated the advice/recommendation of the Chief Vigilance  Officer to the respondent and given him an opportunity to show  cause before imposing punishment?

If questions (iii) to (v) or any of them is answered in the affirmative and as a  consequence if it has to be held that the order of removal was illegal or  invalid, then, the second appeal would give rise to several further substantial  questions of law. One question would have been whether the civil court  could direct the authority empowered to impose penalty, to restrict the  punishment to something other than dismissal/removal. Another question  would have been whether full back wages with interest could be awarded  where the court accepts that the employee was guilty of misconduct of  misappropriation. Be that as it may.

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9.      Before examining the merits of the matter, we may briefly refer to the  scope of second appeals as also the procedure for entertaining them, as laid  down in section 100 of the Code of Civil Procedure.  What is a substantial question of law?

9.1)    Second appeals would lie in cases which involve substantial questions  of law. The word ’substantial’ prefixed to ’question of law’ does not refer to  the stakes involved in the case, nor intended to refer only to questions of law  of general importance, but refers to impact or effect of the question of law  on the decision in the lis between the parties. ’Substantial questions of law’  means not only substantial questions of law of general importance, but also  substantial question of law arising in a case as between the parties. In the  context of section 100 CPC, any question of law which affects the final  decision in a case is a substantial question of law as between the parties. A  question of law which arises incidentally or collaterally, having no bearing  in the final outcome, will not be a substantial question of law. Where there is  a clear and settled enunciation on a question of law, by this Court or by the  High Court concerned, it cannot be said that the case involves a substantial  question of law. It is said that a substantial question of law arises when a  question of law, which is not finally settled by this court (or by the  concerned High Court so far as the State is concerned), arises for  consideration in the case. But this statement has to be understood in the  correct perspective. Where there is a clear enunciation of law and the lower  court has followed or rightly applied such clear enunciation of law,  obviously the case will not be considered as giving rise to a substantial  question of law, even if the question of law may be one of general  importance. On the other hand, if there is a clear enunciation of law by this  Court (or by the concerned High Court), but the lower court had ignored or  misinterpreted or misapplied the same, and correct application of the law as  declared or enunciated by this Court (or the concerned High Court) would  have led to a different decision, the appeal would involve a substantial  question of law as between the parties. Even where there is an enunciation of  law by this court (or the concerned High Court) and the same has been  followed by the lower court, if the appellant is able to persuade the High  Court that the enunciated legal position needs reconsideration, alteration,  modification or clarification or that there is a need to resolve an apparent  conflict between two view points, it can be said that a substantial question of  law arises for consideration. There cannot, therefore, be a strait-jacket  definition as to when a substantial question of law arises in a case. Be that as  it may. Procedure relating to second appeals

9.2)    We may next refer to the procedure relating to second appeals as  evident from section 100 read with order 42 Rules 1 and 2, of Code of Civil  Procedure : (a)     The appellant should set out in the memorandum of appeal, the  substantial questions of law involved in the appeal.  

(b)     The High Court should entertain the second appeal only if it is  satisfied that the case involves a substantial question of law.  

(c)     While admitting or entertaining the second appeal, the High Court  should formulate the substantial questions of law involved in the case.

(d)     The second appeal shall be heard on the question/s of law so  formulated and the respondent can submit at the hearing that the second  appeal does not in fact involve any such questions of law. The Appellant  cannot urge any other ground other than the substantial question of law  without the leave of the court.  

(e)     The High Court is at liberty to reformulate the substantial questions of  law or frame other substantial question of law, for reasons to be recorded  and hear the parties or such reformulated or additional substantial questions  of law.

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9.3)    It is a matter of concern that the scope of second appeals and as also  the procedural aspects of second appeals are often ignored by the High  Courts. Some of the oft-repeated errors are :  

(a)     Admitting a second appeal when it does not give rise to a substantial  question of law.  

(b)     Admitting second appeals without formulating substantial question of  law.  

(c)     Admitting second appeals by formulating a standard or mechanical  question such as "whether on the facts and circumstances the judgment of  the first appellate court calls for interference" as the substantial question of  law.  

(d)     Failing to consider and formulate relevant and appropriate substantial  question/s of law involved in the second appeal.

(e)     Rejecting second appeals on the ground that the case does not involve  any substantial question of law, when the case in fact involves substantial  questions of law.  

(f)     Reformulating the substantial question of law after the conclusion of  the hearing, while preparing the judgment, thereby denying an opportunity  to the parties to make submissions on the reformulated substantial question  of law.  

(g)     Deciding second appeals by re-appreciating evidence and interfering  with findings of fact, ignoring the questions of law.  

These lapses or technical errors lead to injustice and also give rise to  avoidable further appeals to this court and remands by this court, thereby  prolonging the period of litigation. Care should be taken to ensure that the  cases not involving substantial questions of law are not entertained, and at  the same time ensure that cases involving substantial questions of law are  not rejected, as not involving substantial questions of law.

10.     In this case, the failure on the part of the High Court to take note of  the substantial questions of law involved, has led to unwarranted dismissal  of the second appeal and calls for interference. One alternative available to  us is to remand the matter to the High Court for formulating the substantial  questions of law and then hear and dispose of the appeal. But that is likely to  delay the matter further. The questions arising for decision are questions of  law. These had been raised in the memorandum of second appeal before the  High Court and again referred to in the special leave petition. Elaborate  arguments have been addressed on those questions (extracted in para 8  above) by both sides. We are, therefore, of the view that instead of  remanding the matter, we should ourselves consider the several questions of  law that ought to have been considered by the High Court and decide the  matter finally.  

Re :  Question (i) \026 Enforcement of a contract of personal service.  

11.     Where the relationship of master and servant is purely contractual, it  is well settled that a contract of personal service is not specifically  enforceable, having regard to the bar contained in section 14 of the Specific  Relief Act, 1963. Even if the termination of the contract of employment (by  dismissal or otherwise) is found to be illegal or in breach, the remedy of the  employee is only to seek damages and not specific performance. Courts will  neither declare such termination to be a nullity nor declare that the contract  of employment subsists nor grant the consequential relief of reinstatement.  The three well recognized exceptions to this rule are:  

(i)     where a civil servant is removed from service in contravention of

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the provisions of Article 311 of the Constitution of India (or any  law made under Article 309);

(ii)    where a workman having the protection of Industrial Disputes Act,  1947 is wrongly terminated from service; and  

(iii)   where an employee of a statutory body is terminated from service  in breach or violation of any mandatory provision of a statute or  statutory rules.   

There is thus a clear distinction between public employment governed by  statutory rules and private employment governed purely by contract. The test  for deciding the nature of relief \026 damages or reinstatement with  consequential reliefs \026 is whether the employment is governed purely by  contract or by a statute or statutory rules. Even where the employer is a  statutory body, where the relationship is purely governed by contract with no  element of statutory governance, the contract of personal service will not be  specifically enforceable. Conversely, where the employer is a non-statutory  body, but the employment is governed by a statute or statutory rules, a  declaration   that  the  termination  is  null  and  void  and  that  the   employee should be reinstated can be  granted  by  courts. (Vide : Dr. S.   Dutt  vs. University of Delhi \026 AIR 1958 SC 1050; Executive Committee of  UP State Warehousing Corporation Ltd. Vs. Chandra Kiran Tyagi \026 1970  (2) SCR 250; Sirsi Municipality vs. Cecelia Kom Francies Tellis \026 1973 (3)  SCR 348; Executive Committee of Vaish Degree College vs. Lakshmi Narain  \026 1976 (2) SCR 1006; Smt. J. Tiwari vs. Smt. Jawala Devi Vidya Mandir \026  AIR 1981 SC 122; and Dipak Kumar Biswas vs. Director of Public  Instruction \026 AIR 1987 SC 1422).  

12.     In this case the appellant is a statutory body established under the  State Bank of India Act, 1955 and the contract of employment was governed  by the State Bank of India Officers Service Rules, which are statutory rules  framed under section 43(1) of the said Act. The respondent approached the  civil court alleging that his removal from service was in violation of the said  statutory rules. When an employee of a statutory body whose service is  terminated, pleads that such termination is in violation of statutory rules  governing his employment, an action for declaration that the termination is  invalid and that he is deemed to continue in service is maintainable and will  not be barred by section 14 of the Specific Relief Act.  

Re : Question (ii) \026 Effect of absence of pleading.  

13.     The plaint did not contain any plea that the order of removal by the  Appointing Authority (Chief General Manager) was vitiated on account of  his consulting and acting on the advice of the Chief Vigilance Officer of the  Bank. Nor did it contain any allegation that the Appointing Authority acted  on extraneous material in passing the order of removal. In the plaint, the  challenge to the order of removal was on the ground that the enquiry by the  Enquiry Officer was opposed principles of natural justice that is : (i) the  charge was vague and not established; (ii) he was not given reasonable  opportunity to defend himself; (iii) material witnesses were not examined;  (iv) documents relied on were not formally proved; (v) burden of proof was  wrongly placed on him; (vi) findings in the enquiry report were based on  surmises and conjectures; and (viii) the enquiry officer was prejudiced.  The  respondent had also averred that the Appointing Authority had approved the  recommendation made by the Disciplinary Authority for imposition of  penalty of removal, without application of mind and without giving him a  hearing. He alternatively contended that the punishment imposed was severe  and disproportionate to the gravity of the proved charge. But there was  absolutely no plea with reference to the advice/recommendation of the Chief  Vigilance Officer of the Bank. However, during the examination of the  Bank’s witness DW-1 (T.S. Negi, Deputy Manager) it was elicited that on  18.1.1995, the Disciplinary Authority had put up a recommendation to  impose the penalty of reduction of pay by four stages by taking a lenient

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view; that the Appointing Authority had by his note dated 18.1.1995  accepted the said recommendation; that subsequently, on 2.2.1995, the  Appointing Authority had informed the Chief Vigilance Officer of the Bank  about the enquiry and proposed punishment; and that after receiving the  comments of the Chief Vigilance Officer, the Appointing Authority on the  recommendations of the disciplinary authority had reconsidered the question  of punishment and imposed the penalty of removal. The respondent \026  plaintiff did not amend the plaint to include the averments and grounds to  challenge the order of removal on the said additional ground. No issue was  framed in that behalf. No amount of evidence on a plea that was not put  forward in the pleadings can be looked into. In the absence of necessary  pleading and issue, neither the trial court nor the appellate court could have  considered the contention and recorded a finding thereon.  

14.     The learned counsel for the respondent submitted that the order of  removal was challenged on the ground that it was opposed to principles of  natural justice, and the averments in the plaint were sufficient to enable the  plaintiff    to    establish    any    ground   in    support  of    it    and    it      was not necessary to separately   plead   each  and  every    fact  or   ground     in   support   of   his  contention     that    the    order of removal was vitiated.   While there is no  need  to  plead   evidence, the   grounds   of   challenge  and   the   facts   in   support   of    each   ground, will  have to be pleaded. In  this case, the minimum pleading that was necessary was that the Appointing  Authority acted on extraneous material in arriving the decision or acted on  the advice or recommendation of an Authority who was not concerned with  the Enquiry. In the absence of appropriate pleading on a particular issue,   there can be no adjudication of such issue. Adjudication of a dispute by a  civil court is significantly different from the exercise of power of judicial  review in a writ proceedings by the High Court. In a writ proceedings, the  High Court can call for the record of the order challenged, examine the same  and pass appropriate orders after giving an opportunity to the State or the  statutory authority to explain any particular act or omission. In a civil suit  parties are governed by rules of pleadings and there can be no adjudication  of an issue in the absence of necessary pleadings. The learned counsel for  the respondent submitted that the respondent was unaware of the earlier  order dated 18.1.1995 or about the consultation with the Chief Vigilance  Officer when he filed the suit and therefore, could not make necessary  averments in the plaint in that behalf. But that is no answer. Code of Civil  Procedure contains appropriate provisions relating to interrogatories,  discovery and inspection (Order XI Rules 1, 12 and 15) to gain access to  relevant material available with the other party. A party to a suit should avail  those provisions and if any new ground becomes available on the basis of  information secured by discovery, a party can amend his pleadings and  introduce new facts and grounds which were not known earlier. The  difficulty in securing relevant material or ignorance of existence of relevant  material will not justify introduction of such material at the stage of  evidence in the absence of pleadings relating to a particular aspect to which  the material relates. If a party should be permitted to rely on evidence led on  an issue/aspect not covered by pleadings, the other side will be put to a  disadvantage. For example, in this case, if there had been a plea and issue on  the question whether extraneous material was taken into account, the Bank  could have examined the Appointing Authority to explain the context in  which he informed the Chief Vigilance Officer about the matter or explain  how his decision was not dependant upon any extraneous material.  Therefore, the courts below committed a serious error in holding that the  order of removal was based on an extraneous material (the  advice/recommendation of Chief Vigilance Officer) and therefore, invalid.  

15.     Where the enquiry was found to be fair and proper and the finding of  guilt in the enquiry in respect of a serious charge was found to be valid, in  the absence of any other valid ground of challenge, the courts below ought  to have held that the penalty of removal from service did not warrant any  interference and dismissed the suit. Be that as it may. We will now consider  the matter on merits, on the assumption that the averments in the plaint were  sufficient to enable the court to consider this issue.

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Re : Questions (iii) \026 When did the Appointing Authority became  functus officio.   

16.     Ex.P24 is the note dated 18.1.1995 by which the Disciplinary  Authority accepted the finding of guilt recorded arrived at by the Enquiry  Officer in regard to the charge against the respondent that he temporarily  misappropriated the funds of the customers of the Bank. The Disciplinary  Authority though of the view that the respondent deserved a severe  punishment, felt that having regard to the length of his service, he should be  shown leniency, and therefore, recommended imposition of a lesser  punishment of reduction of pay by four stages in the time scale. The  Appointing Authority made a note on the same day (18.1.1995) agreeing  with the said recommendation. But the said order was not communicated to  the respondent. On the other hand, the Disciplinary Authority on  reconsideration of the matter put up a fresh note dated 2.5.1995  recommending the penalty of removal and that was accepted by the  Appointing Authority on 3.5.1995 and communicated to the respondent on  30.6.1995.  17.     The learned counsel for respondent contended that the Appointing  Authority became functus officio once he passed the order dated 18.1.1995  agreeing with the penalty proposed by the Disciplinary Authority and cannot  thereafter revise/review/modify the said order. Reliance was placed on the  English decision Re : VGM Holdings Ltd, reported in 1941 (3) All. ER page  417 wherein it was held that once a Judge has made an order which has been  passed and entered, he becomes functus officio and cannot thereafter vary  the terms of his order and only a higher  court, tribunal can vary it. What is  significant is that decision does not say that the Judge becomes functus  officio when he passes the order, but only when the order passed is  ’entered’. The term ’entering judgment’ in English Law refers to the  procedure in civil courts in which a judgment is formally recorded by court  after it has been given.  

18.     It is true that once an Authority exercising quasi judicial power, takes  a final decision, it cannot review its decision unless the relevant statute or  rules permit such review. But the question is as to at what stage, an  Authority becomes functus officio in regard to an order made by him.          P. Ramanatha Aiyar’s Advance Law Lexicon (3rd Edition, Vol.2 Pages  1946-47) gives the following illustrative definition of the term ’functus  officio’ :  "Thus a Judge, when he has decided a question brought before him, is  functus officio, and cannot review his own decision."  

Black’s Law Dictionary (Sixth Edition Page 673) gives its meaning as  follows :  "Having fulfilled the function, discharged the office, or accomplished the  purpose, and therefore, of no further force or authority".  

19.     We may first refer to the position with reference to civil courts. Order  XX of Code of Civil Procedure deals with judgment and decree. Rule 1  explains when a judgment is pronounced. Sub-rule (1) provides that the  Court, after the case has been heard, shall pronounce judgment in an open  court either at once, or as soon thereafter as may be practicable, and when  the judgment is to be pronounced on some future day, the court shall fix a  day for that purpose of which due notice shall be given to the parties or their  pleaders. Sub-rule (3) provides that the judgment may be pronounced by  dictation in an open court to a shorthand writer (if the Judge is specially  empowered in this behalf). The proviso thereto provides that where the  judgment is pronounced by dictation in open court, the transcript of the  judgment so pronounced shall, after making such corrections as may be  necessary, be signed by the Judge, bear the date on which it was pronounced  and form a part of the record.  Rule 3 provides that the judgment shall be  dated and signed by the Judge in open court at the time of pronouncing it  and when once signed, shall not afterwards be altered or added to save as  provided by section 152 or on review. Thus where a judgment is reserved,

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mere dictation does not amount to pronouncement, but  where  the  judgment  is dictated in open court, that itself amounts to pronouncement. But even  after such  pronouncement by open court dictation, the Judge can make  corrections before signing and dating the judgment. Therefore, a Judge  becomes functus officio when he pronounces, signs and dates the judgment  (subject to section 152 and power of review). The position is different with  reference to quasi judicial authorities. While some quasi judicial tribunals fix  a day for pronouncement and pronounce their orders on the day fixed, many  quasi judicial authorities do not pronounce their orders. Some publish or  notify their orders. Some prepare and sign the orders and communicate the  same to the party concerned. A quasi judicial authority will become functus  officio only when its order is pronounced, or published/notified or  communicated  (put in the course of transmission)  to the party concerned.  When an order is made in an office noting in a file but is not pronounced,  published or communicated, nothing prevents the Authority from correcting  it or altering it for valid reasons. But once the order is pronounced or  published or notified or communicated, the Authority will become  functus  officio. The order dated 18.1.1995 made on an office note, was neither  pronounced, nor published/notified nor communicated. Therefore, it cannot  be said that the Appointing Authority became functus officio when he signed  the note on dated 18.1.1995.  

20.     Let us next consider whether the decision taken on 18.1.1995 is a final  decision. A careful examination shows that the order dated 18.1.1995 was  intended only to be tentative and not final. Firstly, the said decision was not  communicated to the respondent, nor was any letter or order issued to the  respondent imposing the penalty mentioned in the order dated 18.1.1995.  Secondly, the Appointing Authority by letter dated 2.2.1995 (Ex.P23)  informed the Chief Vigilance Officer of the Bank about the enquiry against  respondent, his decision accepting the findings of the Enquiry Officer, and  the proposal to show leniency by imposing only a punishment of reduction  of pay by four stages. The Chief Vigilance Officer sent a reply dated  7.2.1995 (Ex.D2) wherein he observed that "by pocketing the money of the  customers Sri Goyal has exposed the Bank’s faith reposed in him" and there  was no ground for showing leniency. He also expressed the view that the  respondent deserved a more severe punishment and requested the appointing  authority to re-examine whether respondent  should be continued in the post.  Thereafter the Disciplinary Authority reconsidered the entire issue again and  put up another note dated 23.3.1995/2.5.1995 to the Appointing Authority  proposing the punishment of removal from service. After considering the  said recommendation, the Appointing Authority passed the following order  on the said note on 3.5.1995 : "On a dispassionate and objective evaluation of the facts, circumstances of  the case, inquiry proceedings and evidence available, I concur with the  recommendations of the disciplinary authority mentioned at serial no.4 of  the note and have come to the conclusion that the penalty of "removal  from Bank’s service" proposed to be inflicted on Sri S.L. Goyal, Officer  JMGS-I, is just and appropriate and I, therefore, order imposition of this  penalty on the official."  

21.     It is thus clear that on 18.1.1995, the Appointing Authority had only  tentatively approved the proposal of the disciplinary authority that a lenient  view be taken by imposing a penalty of reducing the pay by four stages in  the time scale; and that on 3.5.1995, a final decision was taken in regard to  the penalty and that final order was communicated to the respondent as per  letter dated 30.6.1995. Therefore, the contention that the Appointing  Authority had earlier passed a final order on 18.1.1995 and had become  functus officio and therefore, he could not charge the said order dated  18.1.1995 is liable to be rejected.  

Re : Questions (iv) and (v) \026 Whether the Appointing Authority was  influenced by extraneous material.

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22.     A perusal of the letter dated 2.2.1995 sent by the Appointing  Authority  to  the  Chief  Vigilance  Officer  clearly  demonstrates   that    the  Appointing Authority did not seek any guidance or advice or directions from  the Vigilance Department and that the letter was only by way of   ’intimation’ of factual position. For convenience, we extract below the said  letter in entirely "  "The Chief Vigilance Officer,  State Bank of India, Central Office, Bombay.  

Dear Sir,  Staff : Supervising Shri S.N. Goyal : Officer JMGS I, Kaluana Branch Disciplinary Action.  

Further to our letter No.CO/VIG/4266 dated the 19th November, 1994, we  advice that the Disciplinary Authority has examined the enquiry  proceedings and findings of the Inquiring Authority in the case initiated  against Shri S. N. Goyal, Office JMGS I and has agreed with the same.  

2.      In this connection, copies of the following documents are enclosed  for your perusal and record : (i)     Chargesheet issued to the official (ii)    Enquiry proceedings (iii)   Findings of the Inquiring Authority (iv)    Tabular statement showing the charges leveled against the official,  findings of the Inquiring Authority, official’s submissions on the  findings and Disciplinary Authority’s comments thereon.  (v)     Note put up by the Disciplinary Authority to the Appointing  Authority viz., the Chief General Manager.  (vi)    Bio-data of the Official.  

3.      In view of the seriousness of the charge proved against Shri S.N.  Goyal, Officer JMGS I, he deserves a severe punishment. The  Disciplinary Authority is, however, inclined to take a lenient view in the  matter considering the length of service put in by the official in the Bank  and also to provide him a chance to reform himself. The Disciplinary  Authority is of the view that the ends of justice will be met if the official is  brought down by four stages in his time scale in terms of Rule 67 (e) of  State Bank of India Officers Service Rules to which I concur in the  capacity as the Appointing Authority of the official.  

Yours faithfully,  Chief General Manager."  

23.     The reply dated 7.2.1995 from the Chief Vigilance Officer also makes  it clear that he neither issued any direction to the Appointing Authority to  impose a higher punishment nor altered the finding regarding guilt. He  merely gave his opinion that the gravity of the proved charge did not warrant  leniency and therefore, suggested that the quantum of penalty may be  examined again. The subsequent note put up by the disciplinary authority on  2.5.1995 and the order passed thereon by the appointing authority on  3.5.1995 imposing the penalty of removal, show that they were on  independent consideration of the question. Neither the note dated 2.5.1995  nor the order dated 3.5.1995 refer to the opinion or the view expressed by  the Chief Vigilance Officer of the Bank. Nor is there any material to show  that the order imposing punishment was on the dictates of the Chief  Vigilance Officer. There was no mechanical acceptance of any suggestion or  advice by the Chief Vigilance Officer nor consideration of any extraneous  material as assumed by the courts below. The Appointing Authority is  required to inform the vigilance department in regard to cases involving  vigilance angle. The Appointing Authority did so. But he did not seek any  instruction, direction, suggestion or advice from the Vigilance Department.  There was also no direction or circular or instruction requiring the  Appointing Authority to accept or act upon the suggestions or views of the  Chief Vigilance Officer. The Vigilance Department merely gave its

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comment or view that it was not a fit case for showing leniency and left it to  the concerned authority to take a decision on the punishment to be imposed.  So long as the decision was not on the dictates of the Vigilance Department  or other outside authority, but on independent consideration, the order of  removal cannot be faulted. It cannot be said that either the act of intimating  the Vigilance Department about the enquiry or independently re-considering  the issue of penalty after receiving the views of the Vigilance Department  amounted to be acting on extraneous material, or acting on the advice or  recommendation or direction of the Chief Vigilance Officer.  

24.     The assumption made by the High Court that the Appointing  Authority had placed some undisclosed additional material before the Chief  Vigilance Officer is without any basis. The Enquiry Officer had found the  respondent guilty of the charge on consideration  of the evidence. The  finding of guilt was accepted by the Disciplinary Authority and the  Appointing Authority. This is not a case where any evidence or other  material was sent to the vigilance department seeking their decision or views  on the question of guilt of the respondent. The issue relating to the  respondent’s guilt was neither referred to the Vigilance Department nor did  the Vigilance Department give any finding on the question of guilt. When  the Disciplinary Authority and the Appointing Authority accepted the  finding of guilt recorded by the Enquiry Officer on examining the facts, even  before the matter was informed to Vigilance Department, it cannot be said  that the said decision was influenced by any extraneous advice from  Vigilance Department. The issue on which the Vigilance Department made  its comment was on the limited ground whether any leniency should be  shown in imposing punishment. No additional facts or material were placed  by the Appointing Authority before the Vigilance Department for this  purpose. Further the Vigilance Department merely expressed the view that  the gravity of the charge did not warrant leniency and the authority should  examine the matter. Therefore the assumption by the High Court that the  Appointing Authority had placed some material not put to the respondent,  before the Chief Vigilance Officer and that the Chief Vigilance Officer had  issued any direction to the Appointing Authority on the basis of such  material, is baseless.  

25.     The Disciplinary Authority made available the Enquiry Report to the  respondent to enable him to make his submissions on the findings of the  Enquiry Officer. The respondent made his submissions in regard to the  Enquiry Report. The correspondence between the Appointing Authority and  Chief Vigilance Officer of the Bank was not ’material’ on which the finding  regarding guilt/misconduct was based. Such correspondence was subsequent  to the Enquiry Report. There was no compulsion or requirement that the  Appointing Authority should consult the Chief Vigilance Officer or act as  per his recommendations or directions. Nor was there any direction by the  Chief Vigilance Officer to impose any specific direction. Therefore non  furnishing of copies of the correspondence between the Appointing  Authority and the Chief Vigilance Officer to the respondent, did not violate  principles of natural justice nor vitiate the order of penalty.     

26.     The decisions relied on by the respondent do not lay down any  proposition of law which requires us to take a different view in the matter.  

26.1)   In Nagaraj Shivarao Karjagi vs. Syndicate Bank - 1991 (3) SCC 219,  this Court considered a case where the employer Bank referred the matter to  the Chief Vigilance Commissioner (for short ’CVC’) for advice and the  Commissioner made a specific recommendation that the employee may be  compulsorily retired from service by way of punishment. The impugned  directive of the Ministry of Finance directed that the disciplinary authority  and appellate authority could not impose a lesser punishment than what was  suggested by CVC without its concurrence. The Bank accordingly imposed  the penalty of compulsory retirement. This Court held that the advice  tendered by the CVC was not binding on the punishing authority and it was  not obligatory upon the punishing authority to accept the advice of the CVC.

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This Court held that no third party like CVC or Central Government could  dictate the disciplinary authority or the appellate authority as to how they  should exercise their power and what punishment they should impose on the  delinquent officer. This Court also held that the Finance Ministry directive  that a punishment lesser than what was recommended by the CVC could not  be imposed, was without jurisdiction and contrary to the statutory  regulations governing disciplinary matters. The said decision is of no  assistance in this case, as there is no directive that the recommendation of  the Vigilance Department is mandatory and should be followed while  imposing punishment; nor has the Vigilance Department directed the  punishing  authority to impose any specific punishment; nor has the  appointing authority acted on the dictates of the Vigilance Department.  

26.2)   The next decision relied upon by the respondent is the decision  rendered by this Court in State Bank of India vs. D.C. Aggarwal [1993 (1)  SCC 13]. In that case, the Enquiry Officer recommended exoneration of the  employee. Instead of acting on the recommendation, the Bank directed the  Enquiry Officer to submit the report through CVC. The CVC disagreed with  the finding of the Enquiry Officer and recorded a finding of guilt and  recommended the imposition of major penalty of removal. A copy of the  CVC’s recommendation was not furnished to the employee. The disciplinary  authority acting on the recommendation of the CVC and agreeing with  CVC’s finding of guilt, passed an order but imposed a punishment lesser  than what was directed by CVC. This Court held that the order of the  disciplinary authority imposing punishment was vitiated as it violated the  principles of natural justice by denying the copy of the recommendation of  the CVC which was prepared behind his back. The said  decision therefore   related to CVC examining the facts of the case and arrived at a finding  relating to guilt contrary to the finding of the Enquiry Officer and such  finding being accepted by the Disciplinary Authority without giving  opportunity to the employee to comment upon the CVC Report finding him  guilty. In this case as noticed above, the Enquiry Report relating to guilt was  not referred to the opinion of the Vigilance Department at all. The Vigilance  Department neither expressed any view in regard to the finding of guilt  recorded by the Enquiry Officer nor did it re-assess the evidence or arrive  at  a finding different from that of the Enquiry Officer. It merely opined that the  case was not a fit one for showing leniency while imposing punishment and  left it to the Appointing Authority to take his own decision in the matter.  Therefore, this decision is also of no assistance.  

26.3)   Reference was next made to the decision of this Court in Mohd.  Quaramuddin (dead) By LRs. vs. State of AP [1994 (5) SCC 118]. In that  case, the Chief Vigilance Commissioner’s report which formed part of the  report of the enquiry and which was taken into consideration by the  disciplinary authority was not supplied to the employee. It was held that the  omission has vitiated the order of dismissal. The said decision is also of no  assistance.  

26.4)   The last decision relied on by the respondent was UP State Agro  Industrial Corporation Ltd. Vs. Padam Chand Jain \026 1995 SCC (L&S  1011). In that case, the report of the Enquiry Officer was in favour of the  employee exonerating him of all charges. The Disciplinary Authority invited  the comments of the Accounts Officer and relying on the basis of the  adverse comments made by such officer, held the employee guilty and  terminated him from service. This Court upheld the view of the High Court  that the decision of the Disciplinary Authority was vitiated on account of the  same being influenced  by some extraneous material in the form of adverse  comments of the Accounts Officer. That is not the case here.  

27.     The learned counsel for respondent submitted that as the order of  removal was set aside and as the employer’s second appeal was rejected, he  should be permitted to support the decision of the courts below by  demonstrating that the Enquiry Officer had violated the principles of natural  justice and therefore, the order of removal deserves to be set aside. This is  not permissible. Though in the suit, the respondent had challenged the

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enquiry as being opposed to principles of natural justice, and the finding  guilt recorded by the Enquiry Officer as being erroneous, he gave up those  contentions before the first appellate court, and restricted the challenge to  the quantum of punishment and non-grant of back wages. He cannot  therefore be permitted to revive the contention that the Enquiry Officer  violated the principles of natural justice in conducting the enquiry.  

28.     At the relevant point of time the respondent was functioning as a  Branch Manager. A Bank survives on the trust of its clientele and   constituents. The position of the Manager of a Bank is a matter of great trust.  The employees of the Bank in particular the Manager are expected to act  with absolute integrity and honesty in handling the funds of the  customers/borrowers of the Bank. Any misappropriation, even temporary, of  the funds of the Bank or its customers/borrowers constitutes a serious  misconduct, inviting severe punishment. When a borrower makes any  payment towards a loan, the Manager of the Bank receiving such amount is  required to credit it immediately to the borrower’s account. If the matter is to  be viewed lightly or leniently it will encourage other Bank employees to  indulge in such activities thereby undermining the entire banking system.  The request for reducing the punishment is misconceived and rejected.  

29.     In view of the above we allow these appeals and set aside the  judgments and decrees of the courts below and dismiss the respondent’s suit.