JUDGMENT
D.K. Jain, J.
1. Rule.
2. With the consent of counsel for the parties
the petition is being disposed of at this stage itself.
3. The petitioner, an employee of State Bank of
India, respondent No. 1 herein, has filed this writ
petition under Article 226 of the Constitution of India
seeking a writ of certiorari, calling for the records
of the disciplinary proceedings held against him and
quashing of order dated 8 August, 1994, whereby the
appellant authority, respondent No. 2 herein, has
directed that by way of penalty the petitioner be
“brought down by one stage in the basic pay in the time
scale”. He also seeks a writ of mandamus directing
respondent No. 2 to give effect to the order of his
promotion dated 1 November 1992, with all consequential
benefits.
4. The petitioner was appointed as Rural
Development Officer on 21 April 1973 at Bulandshahar.
Subsequently he was transferred to Kapashera branch,
New Delhi in July 1981, where he took charge some time
in August 1982. In June 1989, nearly four years after
petitioner’s transfer from Kapashera branch, a study of
advances given by the said branch was conducted as it
was noticed that the bank had performed poorly. On the
basis of the said study on explanation was called from
the petitioner by the Regional Manager. The petitioner
furnished his reply on 21 July 1989. However, not
satisfied with the explanation, Departmental inquiry
was ordered against him, by issuing charge sheet vide
memo dated 13 July 1990, for commission of alleged
misconduct. The charge-sheet contained eight
imputations. On conclusion of the inquiry proceedings
the inquiry officer held that out of eight imputations
three were proved, three more were partly proved and
the remaining two were not proved. Agreeing with the
findings of the inquiry officer the disciplinary
authority found the petitioner guilty of committing the
following lapses:
(1) He recommended for sanction of an A.T.L.
for Rs. 2,850/- to Shri Ram Singh for
purchase of a buffalo. The Installments were
not being received regularly. He did not
initiate legal action against the borrower
and the outstanding went up to Rs. 7,912.25.
(ii) He granted a loan of Rs. 3,000/- to Shri
Mahender Singh for purchase of a buffalo.
The borrower expired and the documents
became time-barred during his incumbency.
He failed to get the documents revived well
in time and did not take suitable steps to
initiate legal action against the
borrower/guarantors.
(iii) He did not conduct pre-sanction survey
in respect of 14 accounts wherein he
granted/recommended loans. He failed to
file suits against these borrowers.
(iv) He granted a loan of Rs. 75,000/- to
Shri Pradeep Khanna, resident of Janpura
Extension (New Delhi) for purchase of a mini
bus and did not obtain prior administrative
clearance from his controlling authority for
financing beyond the area of operation of
the Branch.
(v) He granted a loan of Rs. 1,42,000/- to
Shri Ashok Kumar for purchase of truck
whereas Shri Kumar was already granted cash
credit limit of Rs. 8,000/-. Both these
accounts were running irregular. As both
the activities ursued by the borrower were
unconnected making supervision difficult, he
should not have granted second loan without
seeking approval from his controlling
authority.
(vi) He granted a cash credit limit of
Rs. 20,000/- to M/s. Tarun Electrical
contractors for the electric shop, while a
buffalo loan for Rs. 4,000/- granted to the
firm was already running irregular. The
outstanding in Cash Credit Account went
up to Rs. 61,601.00.”
5. The appointing authority, accordingly, accepted
the recommendations of the disciplinary authority and
imposed penalty of “reduction in basic pay by two stages
in the time scale” on the petitioner. Aggrieved, the
petitioner preferred appeal to the appellate authority.
Accepting the stand of the petitioner with regard to the
extent of loss which bank might have suffered, the
appellate authority broadly agreed with the findings
recorded by the disciplinary authority. However,
noticing that irregularities were procedural in nature
and no malafides could be attributed to the petitioner
as also the fact that the loss likely to be suffered by
the bank was only, marginal, the appellate authority held
that the ends of justice would be adequately met if the
aforenoted penalty is imposed on the petitioner.
6. The petition is resisted by the respondents by
filing affidavit in reply. By way of preliminary
submissions it has been explained that the petitioner
who was MMGS-II, and was officiating on the post of
MMGS-III, was due for promotion for MMGS-III withe effect
from 1 August 1988. While the petitioner did not
qualify for selection for the years 1988 to 1990, he was
considered for promotion with effect from 1 November
1991 and the result in respect of the interview was kept
in a sealed cover as the disciplinary proceedings were
pending against him. The petitioner was again called
for promotion in the year 1992 and inadvertently his
result was declared vide letter dated 6 November 1992
and on the error coming to light, a show cause notice
was issued to the petitioner asking why the promotion
letter be not withdrawn. It is pointed out that in view
of the order of the appellate authority petitioner was
finally brought down by one stage in time scale in 1994
and he has become eligible for promotion only with
effect from 1 November 1995. On merits the decision of
the appellate authority is sought to be supported.
7. I have heard learned counsel for the parties.
Though initially Mr. Kavin Gulati, learned counsel for
the petitioner had raised the issue of legality of
retrospective withdrawal of letter of promotion dated 6
November 1992, but during the course of hearing he did
not press the same. However, in support of the
submission that the penalty order is unsustainable,
learned counsel has vehemently urged two points, namely,
(i) even assuming all the imputation against the
petitioner to be correct, no case of “misconduct” could
be made out against him as admittedly the petitioner has
not been found guilty of committing the alleged acts
with malafide or ill motive and (ii) punishment imposed
is excessive and disproportionate to the alleged
misconduct committed by him particularly when the
penalty imposed is likely to have cascading effect on
his promotions. In support of his first proposition,
reliance is placed on the decisions of the Supreme Court
in Union of India and Ors. v. J. Ahmed ,
State of Punjab and Ors. v. Ram Singh Ex-Constable
, D.D. Choudhari v. H.I. Kalyani , Zunjarrao Bhikaji Nagarkar v. Union of India and
Ors. and a decision of the Calcutta
High Court in Dipankar Sengupta v. United Bank of India
and Ors. 1998 (79) FLR 212.
8. Mr. Sanjay Kapur, learned counsel for the
respondents, on the other hand, has submitted that since
it has been found by the disciplinary authority as well
as appellate authority steps to ensure and protect the
interests of the Bank, in terms of Rule 32(4) of the
State Bank of India (Supervising Staff) Service Rules
(for short ‘the service rules’), it was a clear case of
misconduct. It is also contended that keeping in view
the fact that the petitioner has been found guilty of
some charges, it cannot be said that the impugned
punishment is excessive. In support of the first
contention, learned counsel has placed reliance on
decision of the Supreme Court in Disciplinary
Authority-cum-Regional Manager and Ors. v. Nikunja
Bihari Patnaik . Heavily relying on the
decisions of the Apex Court in B.C. Chaturvedi v. Union
of India and Ors. , Nikunja Bihari
Patnaik (supra) and Apparel Export Promotion Council v.
A.K. Chopra , it is also urged that the
scope of judicial review in disciplinary proceedings
being very limited it is not a fit case where this Court
should interfere, particularly when the punishment
imposed is not such, which would shock the conscience of
the Court.
9. Thus, the first and the foremost question that
arises for consideration in the instant case is whether
the petitioner could be said to have committed any
misconduct on the basis of the findings returned by the
inquiry officer?
10. The term “misconduct” has not as such been
defined in the service rules. However, Rule 48 of the
service rules provides that breach of any of the
provisions of these rules shall be deemed to constitute
misconduct punishable under Rule 49, which in turn
provides for imposition of minor and major penalties,
prescribed there under, for act of misconduct. Rule
32(4) requires that every employee shall, at all times,
take all possible steps to ensure and protect the
interests of the bank and discharge his duties with
almost integrity, honesty, devotion and diligence and do
nothing which is unbecoming of bank official. In this
view of the matter, it will have to be ascertained as to
what constitutes misconduct in the context of
disciplinary proceedings, especially when the said
deeming provision applies equally to both minor as well
as major penalties.
11. In J. Ahmed’s case (supra) dealing with All
India Service (Conduct) Rules, 1954 and some other
Central rules, similar in substance to Rule 58 of the
Service Rules and taking note of the dictionary meaning
of the word misconduct, the Apex Court observed as
under:
“It is, however, difficult to believe that
lack of efficiency or attainment of highest
standards in discharge of duty attached to
public office would ipso facto constitute
misconduct. There may be negligence in
performance of duty and a lapse in
performance of duty or error of judgment in
evaluating the developing situation may be
negligence in discharge of duty but would
not constitute misconduct unless the
consequences directly attributable to
negligence would be such as to be
irreparable or the resultant damage would be
so heavy that the degree of culpability
would be very high. An error can be
indicative of negligence and the degree of
culpability may indicate the grossness of
the negligence. Carelessness can often be
productive of more harm than deliberate
wickedness or malevolence.”
12. In Ram Singh’s case (supra) again the Supreme
Court while observing that the “misconduct” is not
capable of precise definition and receives its
connotation from the context, said that mere error of
judgment, carelessness or negligence in performance of
the duty is not misconduct.
13. Similarly, in the case of Dipankar Sengupta
(supra) heavily relied upon by learned counsel for the
petitioner, a Division Bench of the Calcutta High Court,
headed by S.B. Sinha, J (as his Lordship then was),
dealing with the case of a bank employee placed in a
similar situation, said that some sort of ill-motive or
bad motive is an essential ingredient in imputing
misconduct unto an individual.
14. At this stage, however, it would be necessary
to notice the decision of the Supreme Court in the case
of N.B. Patnaik (supra), heavily relied upon by counsel
for the respondents. In the said decision, dealing with
regulations 24 and 3(1) of the Central Bank of India
Officer Employees’ (Discipline and Appeal) Regulations
1976, which are pari materia to Rule 48 and Rule 32(4)
of the service rules respectively, the Supreme Court
observed that breach of regulation 3 is misconduct
within the meaning of regulation 34. It was further
observed that every officer/employee is supposed to act
within the limits of his authority and that acting
beyond one’s authority is by itself breach of discipline
and normally breach of regulation 3. It constitutes
misconduct within the meaning of regulation 24. No
further proof of loss is really necessary.
15. Thus, from the aforenoted decisions, it would
appear that the word “misconduct” is a relative term,
incapable of a precise definition and has to be
construed with reference to the subject-matter and the
context wherein the term occurs, having regard to the
scope of the Act or Stature, which is being construed.
It has been held that in the context of disciplinary
proceedings against a person in public office, a mere
negligence in performance of duty or lack of efficiency
or attainment of highest standards in the discharge of
duties would not constitute misconduct, unless the act
complained of arises from an ill-motive. However, it
seems that in the case of an employee of a bank, the
Supreme Court in case of N.B. Patnaik (supra) has carved
out a distinction to hold that since the employees of
the bank deal with public funds, any indiscipline on
their part cannot be condoned on the specious ground
that it was not actuated by ulteriro motives or by
extraneous considerations. It may be noted that in
N.B. Patnaik’s case (supra) the earlier decision in
J. Ahmed’s case (supra) was not noticed by the Apex
Court, though the provision under consideration in that
case was almost similar to that in N.B. Patnai’s case.
16. In view of the clear observations of the Apex
Court in N.B. Patnaik’s case, a later decision, to the
effect that failure to observe the prescribed norms and
discipline by any official/employee amount to breach of
regulation 3 and it cannot be condoned on the ground
that it was not actuated by ulterior motives, I find it
difficult to accept the argument of learned counsel for
the petitioner that the said decision is based on its
own peculiar facts and may not be applied. I,
therefore, reject the first contention of learned
counsel for the petitioner.
17. Now I take up the second contention of learned
counsel for the petitioner with regard to
proportionality of the punishment awarded to the
petitioner. It is well settled that the disciplinary
authority and on appeal, the appellate authority being
fact finding authorities, are invested with the
discretion to impose appropriate punishment keeping in
view the magnitude or gravity of the misconduct and the
High Court, while exercising the power of judicial
review, cannot normally substitute its own conclusion on
penalty and impose some other penalty. However,
irrationality and perversity are recognised grounds of
judicial review. Similarly, the doctrine of
proportionality is also part of the concept of judicial
review. If the punishment imposed is so
disproportionate to the offence as to shock the
conscience of the Court, the Court may appropriately
mould the relief either directing the
disciplinary/appellate authority to reconsider the
penalty imposed or to shorten the litigation, it may
itself, in exceptional and rare cases, impose
appropriate punishment with cogent reasons in support
thereof (See : B.C. Chaturvedi v. Union of India and Ors.
and Zunrajrao Bhikaji Nagarkar
v. Union of India and Ors. .
18. Therefore, the question for consideration is
whether the punishment awarded in the instant case can
be said to be excessive or disproportionate so as to
shock the conscience of the Court? I feel that the
issue can best be considered in the light of the
relevant service rule providing for imposition of
penalties. The rule reads as under:
“49. Without prejudice to any other
provisions contained in these rules, any one
or more of the following penalties may be
imposed on an employee, for an act of
misconduct or for any other good and
sufficient reasons:-
Minor Penalties:
(a) censure;
(b) withholding of, increments of pay
with or without cumulative
effect;
(c) Withholding of promotion;
(d) Recovery from pay or such other
amount as may be due to him of
the while or part of any
pecuniary loss caused to the
Bank by negligence or breach of
orders.
Major Penalties:
(e) reduction to a lower grade or
post, or to a lower stage in a
time scale;
(f) compulsory retirement;
(g) removal from service;
(h) dismissal.”
19. The rule does not specify as to what kind of
misconduct is to be visited with a minor or major
punishment. The service rules only fix the gradation of
the punishment but evidently leave the discretion in
this regard to the disciplinary authority an din appeal
to the appellate authority. Since the service rules
enumerate and list out various punishments by way of
minor and major penalty and the effect of both the
penalties is materially different, the provision casts a
duty on the authority concerned to record its reasons
while awarding a particular punishment, more so when a
major penalty is proposed. Recording of reasons would
otherwise be necessary because unless the reasons are
indicated, the higher authority cannot find out as to
what weighed with the concerned authority to inflict a
particular punishment. Needless to say that a penalty
has to be commensurate with the gravity of the
misconduct for that any penalty disproportionate to the
gravity of the misconduct would be violative of Article
14 of the Constitution of India, warranting interference
by this Court.
20. In the instant case, it would appear that both
the authorities below have failed to consider the said
aspect of the matter in its correct perspective. As
noticed above, though the appellate authority has come
to the conclusion that the irregularities committed by
the petitioner were of procedural nature and that no
malafides could be attributed to him as also the loss
likely to be suffered by the bank was only marginal but
the penalty order does not indicate as to why the
appellate authority still chose to impose a major
penalty on the petitioner. As noted above, the service
rules do not specify as to which kind of misconduct
would attract a minor penalty. Therefore, while
imposing a major penalty the order of punishment must
indicate that the authority concerned has applied its
mind on the question of punishment, although no detailed
reasons are required to be assigned. In my view, in the
present case the appellate authority has failed to
address itself to the question as to whether in view of
his aforenoted findings about the nature of irregularity
and the conduct of the petitioner a major penalty was
still called for. This, I feel, amounts to
non-application of mind on the part of the disciplinary
as well as appellate authority, vitiating the order of
punishment.
21. Under the circumstances, I am of the opinion
that the matter deserves to be sent back to the
appellate authority for fresh decision on the question
of appropriate punishment in the light of his own
finding about the conduct of the petitioner.
Accordingly, to that extent the rule is made absolute.
The writ petition is allowed to the extent that the
appellate authority shall consider afresh whether, in
the facts and circumstances of the case, a minor penalty
would suffice. Order in this behalf shall be passed as
expeditiously as practicable but not later than eight
weeks of the receipt of this order. There will,
however, be no order as to costs.