http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 1 of 5  

PETITIONER: SUDHIR VISHNU PANVALKAR

       Vs.

RESPONDENT: BANK OF INDIA

DATE OF JUDGMENT:       06/05/1997

BENCH: CJI, S. P. KURDUKAR

ACT:

HEADNOTE:

JUDGMENT: Present:                  Hon’ble the Chief Justice                  Hon’ble Mr. Justice S. P. Kurdukar K.K. Singhvi, Sr. Adv., B.N. Singhvi, Anil Kumar Gupta, Advs. with him for the appellant Raj Birbal, Sr. Adv.,  Rakesh Khanna, Anand Chandra, Surya Kant, Advs. with him for the Respondent                       J U D G M E N T The following Judgement of the Court was delivered.                       J U D G M E N T S.P. KURDUKAR, J      The appellant  on February  9, 1961 was appointed as an Officer in Grade III in the respondent Bank ( for short ‘the Bank’). He  was promoted  on April  1,  1968  to  the  Grade officer in  the Foreign  Exchange  Department  in  the  Head Office of  the Bank.  Sometime in  1964, Manoj  Co-operative Housing Society  ( for  short ‘the  Society’) was  formed of which the  appellant was  one of  the  chief  promoters  and thereafter its  Secretary. The  object of the Society was to construct residential premises for the employees of the Bank and its  other members.  It appears  that the  complaint was received in  respect of  the affairs of the Society relating to  misappropriation   of  the  funds  of  the  Society  and consequently, in  exercise of the powers under Section 83 of the Maharashtra  Co-operative Societies  Act (for short ‘the Act’), the Registrar on April 23, 1969 instituted an inquiry thereof. Mr.  A.S. Rangnekar  was appointed  the Registrar’s nominee who on October 4, 1969; submitted the report holding the appellant  and two  other office  bearers of the Society negligent in  dealing with  the funds of the Society causing a loss  to the  tune of  Rs. 3,59,000/-.  The  Registrar  on October 21,  1969, passed  an order  appointing  an  officer under Section 88 of the Act to assess the loss caused to the Society. However, the Government by its order dated November 29, 1969 annulled the Registrar’s order dated April 23, 1969 and October  21, 1969  and directed a fresh inquiry into the affairs of the Society. 2.   On December 17, 1969, the Bank issued show cause notice to the  appellant to explain within fifteen days his alleged negligent conduct in dealing with the affairs of the Society

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 2 of 5  

as revealed  in the  report dated  4th October, 1969. In the meantime, Mr. Godbole came to be  appointed by the Registrar vide his  order dated  26th July,  1969, to  make  inquiries under   Section 88 of the Act. Petitioner by his reply dated 18/22th January,  1970 submitted  his explanation  and  also challenged the  legality of  the inquiry  and  the  findings recorded therein.  On 5th  March, 1970,  Mr. M.S.  Mavalkar, treasurer of  the  Society  and  an  employee  of  the  Bank criminal complaints  in the  Court of Addl. Chief Presidency Magistrate, Bombay  alleging that  the appellant    and  two other  office   bearers  of   the  society  had  dishonestly misappropriated a  sum of  Rs. 51,000/    and  Rs.  80,000/- respectively which  was entrusted  to the  appellant in  his capacity as  Promoter  and  Secretary  of  the  Society  and thereby committed  criminal breach  of trust. The Magistrate framed the  charges against the appellant under Sections 409 and 109  of the Indian Penal Code. The Bank having regard to the serious  misconduct of  the  appellant  involving  moral turpitude vide  its order dated 3rd November, 1970 suspended the appellant  pending trial.  The appellant  protested this action of  the Bank  complaining that  he was  not given  an opportunity  of   hearing  before   passing  the   order  of suspension. In  the meantime,  Mr. Godbole,  the  authorized officer appointed  by the Registrar vide his order dated 9th October,  1971   held  the   appellant  liable  to  pay  Rs. 2,36,000/- to  the Society  in addition to the amount of Rs. 2,03,000/- for which he (the appellant) and two other office bearers of the Society were held jointly liable. The Bank in view of  this finding,  vide its  order dated 29th November, 1971 terminated  the services  of the  appellant with effect from 1st December, 1971 along with notice pay. The appellant protested  against  the  action  of  the  Bank  and  on  3rd December, 1971  filed detailed  representation  against  the order of  termination. The  Bank replied  to the appellant’s representation and  justified its  action. The  appellant on 28th December, 1971 submitted his reply to the Bank stating, inter alia,  that the  termination of  his services  was not simplicitor and  was in  violation of    the  principles  of natural justice; that no opportunity of hearing was given to him;  that   the  termination  order  attached  stigma.  The appellant aggrieved  by the   findings and order made by Mr. Godbole  preferred   appeal  No.   22  of  1972  before  the Maharashtra State  Co-operative  Tribunal,  Bombay.  In  the meantime, the  criminal proceedings ended in conviction vide order dated  27th   March, 1972  passed by  the Addl.  Chief Metropolitan Magistrate,  Bombay. The  appellant  challenged the order  of conviction  and sentence  in the  Bombay  High Court being  Criminal Appeal No. 4020 of 1972 and during the pendency of  the  said  appeal,  the  Maharashtra  State  co operative Tribunal  vide its  order  dated  April  12,  1973 dismissed the  appellant’s appeal  but reduced the liability by Rs.  72,000/-. On  November  12,  1973,  the  High  Court allowed the criminal appeal and acquitted the appellant. The High Court,  however, in  its order  observed that since the services of  the appellant  were terminated  in view  of the criminal  proceedings  and  since  the  appellant  has  been acquitted, representation, if a any, by the appellant to the Bank for  reinstatement may  be considered  sympathetically. Taking clue  from the  observations made  by the High Court, the appellant  filed three  representations, the  last being dated 3rd  May, 1975 requesting the Bank to revoke the order of termination  and    be  reinstated.  The  Bank  vide  its communication dated  May 21,  1975 refused  to reinstate the appellant. The appellant, therefore, on July 23,  1975 filed the writ  petition in the High Court for quashing the orders

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 3 of 5  

dated 29th  November 1971, 27th December, 1971 and 21st May, 1975 passed by the Bank. 3.   The learned  Single Judge  of the  High  Court  by  his judgment and  order dated December 6/7, 1979 granted desired relief to  the appellant. The Bank aggrieved by the judgment and order  passed by  the learned  Single Judge preferred an appeal under Clause 15 of the Letters Patent. The appeal was heard by  the Division Bench. The Division Bench of the High Court did  not agree with the judgment passed by the learned Single Judge  and consequently  by its  judgment  and  order dated April  16 1985  allowed the  appeal and  dismissed the writ petition the ground of laches and also on merits. It is this judgment  and order of the High Court which is impugned in this appeal. 4.   Mr.  K.K.   Singhvi,  the   learned   Senior   Advocate appearing in  support of  this  appeal  contended  that  the Division Bench  of the High Court was wholly  unjustified in rejecting the claim of the appellant on the grounds of delay and laches.  The learned  Single Judge  while  granting  the relief to  the appellant  had condoned  the delay  and  this being the  discretionary exercise  power, the Division Bench committed  serious   error  in   interfering  with   such  a discretionary     order.  It  is  common  premise  that  the termination order  was made by the Bank on November 29, 1971 whereas the  writ petition  was  filed  on  July  23,  1975. Obviously, there  was a delay of about three and half years. The only justification sought to be pleaded by the appellant was  the   pendency  of   the  criminal   proceedings  which ultimately ended  in his  acquittal vide order dated 24/25th July, 1974. Mr. Singhvi, therefore, contended that there was no  delay  whatsoever  on  the  part  of  the  appellant  in approaching the High Court by way of writ petition. 5.   Mr. Raj  Birbal, learned  Senior Advocate appearing for the Bank  contested this  contention and    urged  that  the termination order  was the  simplicitor  termination without being influenced  by the  criminal proceedings and there was no reason  for the  appellant to  wait until the disposal of the criminal  proceedings. Delay  of three and half years in the event of a reinstatement involves financial implications relating to  back wages.  On perusal of judgments of learned Single Judge as well as the Division Bench on this issue, we are of  the considered  view that having regard to the facts and circumstances  of the  present case,  the Division Bench was right  in holding  that the  writ petition suffered from the vice  of delay and laches. At this stage, it needs to be stated  that   the  termination   order  was  a  simplicitor termination. However,  the appellant  who insisted  for  the reasons for  his termination  and, therefore,  the bank  was constrained to inform the appellant that the termination was resorted to  because of loss of confidence. It also needs to be emphasised  that the  appellant was  grade III officer in the Bank  who was  required to  deal with the customers and, therefore, if  the Bank  thought it  fit  to  terminate  the services  of   the  appellant  on  the  ground  of  loss  of confidence, Such an action could not be said to be unwise or malafide  action.  We,  therefore,  find  no  illegality  in upholding the  finding of  the Division  Bench that the writ petition filed  by the  appellant suffered  from the vice of delay and laches. 6.   It is  an admitted  position that  appellant’s services were  terminated,  the  Bank  though  nationalised  had  not prescribed   the   conduct   and   Disciplinary   Rules   or Regulations. It  is  in  these  circumstances,  the  general principles of  natural justice  held the  field. Mr. Singhvi contended that  the appellant  be a  permanent employee, his

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 4 of 5  

services could  not have  been terminated  without holding a departmental enquiry.  Merely because  the services  of  the employees of  the Bank  were not governed by any Conduct and Disciplinary rules  or Regulations, an employee could not be put to a greater disadvantage and the disciplinary authority could be  permitted to  violate the  principles of   natural justice. The  main thrust  of the  contention of Mr. singhvi was that  the termination order of the appellant was totally in violation  of principles  of natural  justice and also an arbitrary action  on the  part of  the Bank.  The  order  of termination was thus violative  of Articles 14 and 16 of the Constitution. In  Support of  this submission,  Mr.  singhvi relied  upon   various  decisions   of  this  Court  and  in particular, the  decisions  in West Bengal State Electricity Board and  others. Vs.  Desh Bandhu Ghosh and others 1985(3) SCC  166, Central Inland Water Transport Corporation Limited and anr.  vs. Brojo  Nath Ganguly  and anr 1986 (3)  SCC 156 and Delhi Transport Corporation  vs. D.T.C. Mazdoor Congress and others  1991 Suppl(1)  SCC 600.  We have  very carefully gone  through   these  decisions.   In  all  these  reported decisions, the  Rules and/or Regulations relating to conduct and Disciplinary  matters, fell  for  consideration  in  the context of  Articles 14 and 16 of the Constitution of India. As Indicated  earlier, the  Bank had  framed  no  Rules  and Regulations in  regard to the service conditions etc. of its employees. It  is in these circumstances, we do not think it necessary to  refer to  these decisions in detail since they are not  applicable to  the facts  of the  present case. The Division Bench  of  the  High  Court  in  its  judgment  has exhaustively dealt  with the various decisions of this Court and the High Courts and very succinctly drew the distinction and pointed  out how those decisions were not  applicable to the facts  of the present case. We are in complete agreement with the reasons given by the High Court. 7.   The only  ground that survives for our consideration is as to  whether the  Bank was  justified in  terminating  the services  of   the  appellant  on  the  ground  of  loss  of confidence and  in the  facts and circumstances of the case, whether any-such inquiry was necessitated. From the material placed on  record before  us, it  is quite  clear  that  the appellant was  involved  in  misappropriation  of  Society’s funds. The proceedings initiated under Section 88 of the Act went upto  the Maharashtra  Co-operative Tribunal  and after contest by  the parties,  the Tribunal  held  the  appellant guilty of certain charges involving moral turpitude relating to  misappropriation   of  Society’s   funds.  Mr.  Singhvi, however, urged  that some  of these  documents were  not the subject matter  of proceedings  before the  High Court  and, therefore, they  cannot be  relied upon  by the Bank in this appeal. He  also urged  that these documents/papers are from the proceedings  before the  Registrar and that they have no bearing upon  the issue involved in this case. He also urged that the  Bank had  not produced  the entire  correspondence before this  Court for its appreciation and proper decision. Ordinarily, this  plea could  have  been  sustained  but  no stateable reasons  could be given on behalf of the appellant nor the  correctness thereof  could be challenged. All these documents were  filed by  the Bank  along with  its  counter affidavit of which the copy and the documents were furnished to the appellant long time back. Although, the rejoinder was filed  by  the  appellant  but  he  could  not  dispute  the correctness  of   all  these   documents.  It  is  in  these circumstances, we are of the view that these documents could be  relied  upon  by  the  Bank  to  justify  the  order  of termination on  the ground of loss of confidence. On perusal

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 5 of 5  

of the  material produced  before us,  we are of the opinion that the  order of  termination passed  by the Bank does not suffer from  any vice  and the  Division Bench  of the  High Court was right in upholding the termination order. 8.   In the  result, we find no merit in this appeal and the same is  dismissed. Parties  are directed  to bear their own costs.