WA/1010/1999 of INDIAN OVERSEAS BANK Vs K.PERICHIAPPAN on 15 December 2003

:JUDGMENT

V.S. SIRPURKAR, J.

The appellant Indian Overseas Bank (hereinafter called 'theBank') challenges the judgment of the learned single Judge whereby, the writpetition filed by the respondent herein (hereinafter called 'thedelinquent-officer) was allowed by the learned single Judge.2. The delinquent-officer had joined the bank in 1968 andcontinued to serve in the various capacities. A scheme was launched providingloans in the year 1982-83 under Integrated Rural Development Programme (IRDP)to help small and marginal farmers. These loans were used to be sanctioned bythe regional office and, according to the policy, it was thedelinquent-officer who granted the loans as the Manager of the branch on therecommendations of the Panchayat Union. The loans were supposedly to be givendirectly to the recipient agriculturists and it is to them that the cheques ofthe loan amounts were being issued.2.1. Some complaints were received from the recipients in November 1983. However, they were withdrawn. In the meantime, the delinquent-officer was transferred to the Regional office of the bank at Tiruchy as an officer.After his transfer, his successor collected some material, on the basis ofwhich a charge-sheet came to be framed against him, containing charges ofmisappropriation of funds as also the irregularities in connection with thegrant of loans as also its disbursements. The charges were based on thewritten complaints received and the investigations made. The enquiry was dulyheld and completed and ultimately the delinquent-officer was ordered to bedismissed. The delinquent-officer, therefore, filed an appeal to the GeneralManager provided in the bank rules. However, the same was also dismissed,necessitating the employee to file a writ petition before the learned singleJudge.

2.2. It was the case of the delinquent-officer before the learned single Judge that the enquiry was not properly and fairly held; that he wasnot even heard on the question of punishment; that the enquiry officer hadfailed to see that the delinquent-officer was deliberately framed at theinstance of some persons, who were inimical to him. It seems that the learnedJudge found fault with the merits of the case and recorded his independentfindings, suggesting thereby that the enquiry officer had wrongly held thedelinquent-officer guilty. He also found that the appellate authority hadmechanically dismissed the appeal. The learned Judge also rewrote the findingof facts. Thus the petition was allowed and reinstatement of thedelinquent-officer was ordered, with all the attendant service benefitstogether with full backwages and the backwages also ordered to carry interestat the rate of 12% per annum from the date of dismissal till the date ofreinstatement. It is this judgment of the learned single Judge, which hasfallen for consideration in the present appeal.

3. Shri N.G.R. Prasad, learned counsel appearing for the

3. Shri N.G.R. Prasad, learned counsel appearing for the bank has pointed out that this was a case where a full-fledged and a detailedenquiry had taken place wherein both the oral as well as documentary evidencewas tendered. He pointed o re was voluminous material on record availablesuggesting the misconduct on the part of the delinquent-officer, which was inthe serious nature of misappropriation, falsification of records as also thecriminal breach of trust. He further points out that a detailed enquiryreport was given by the enquiry officer, discussing the evidence of thewitnesses threadbare and it is on this basis that the enquiry officer has cometo the conclusion that the delinquent-officer had in fact committedmisappropriation and had also cheated the bank. The learned counsel,therefore, urges that the learned single Judge travelled completely outsidehis jurisdiction under Art.226 in considering the questions of fact andupsetting the findings of facts recorded by the enquiry officer as if thelearned Judge was an appellate court. Learned counsel argues that the learnedsingle Judge has nowhere bothered even to refer to the evidence of thewitnesses which evidence was clearly incriminating evidence while settingaside the finding of the facts and coming to the conclusion that thedelinquent-officer was liable to be exonerated on all counts. With referenceto several Supreme Court decisions, the learned counsel urges that it was notpossible for the learned single Judge to enter into the arena of appreciationof evidence and to set aside the finding of facts as if he was an appellatecourt. According to him, in the writ petition, the learned single Judge was obliged to consider only whether there was incriminating material available onrecord and if such material was in fact available then, he could not take upon himself the task of appreciating the evidence and come to the contraryconclusions. Learned counsel, therefore, urges that the whole order iswithout jurisdiction and tends to be illegal.

4. Shri K. Chandru, learned senior counsel did not seriously dispute the position of law as regards the jurisdiction of the learned singleJudge as culled out from the Supreme Court judgments. He, however, tried toargue the case on merits suggesting that in fact there was no incriminatingmaterial even before the learned single Judge and, therefore, the learnedcounsel earnestly argued that on merits, there was no material availablebefore the enquiry officer and, therefore, the findings of the enquiry officerwere not only improper but perverse also and as such, the learned Judge hascommitted no error in upsetting the findings. Learned counsel urged that itis not as if the High Court cannot at all look into the findings. He pointedout that where there was no material and where there was total denial of fairtrial, the High Court certainly look into the findings as has been done by itin the present case.

5. On the backdrop of this rival submissions, it has to be seen firstly as to whether there was any material before the enquiry officerand whether his findings were perverse so as to require interference.

6. There were in all three charges which have been subdivided

further. Under the first charge, it is alleged that in respect of the numberof small loans, the borrowers alleged that they gave a sum of Rs.300/- eachthrough one Mahalingam as illegal gratification to the employee. Under thesub-heading, it is alleged that the employee had granted fresh loans to theexisting borrowers/near relatives with a view to appropriate the loan proceeds for the previous loans outstanding and also to avail the benefit ofsubsidy without ensuring the genuineness of the loans granted. By way ofsecond charge under the heading 'Agricultural Advances', it was alleged thatwhile granting sericulture advances, the officer demanded and accepted illegalgratification of Rs.500/- each from the agriculturists, whose list wasprovided in the charge-sheet, for releasing the second stage of thesericulture loan sanctioned to the borrowers. In the subheading of thischarge by way of charge No.2(b), it was alleged that the concerned officer hadnot ensured the genuineness of the loans granted in the cases listed inAnnexure to the charge-sheet. In that the employee had failed to carry outthe pre-sanction inspection to ensure the genuineness of the loansrequirements; seocndly, he failed to verify the end use of loans immediatelyafter release of the loans , and thirdly, he had released the loan proceedsonly Rs.2,900/- as against Rs.4,000/- sanctioned to the borrowers directly forpurchase of bullocks and carts leading to misutilisation of the funds by theborrowers and a portion of the balance amount of Rs.1,100/- in each case wasmisappropriated by the employee and the middlemen; fourthly, it was statedthat the borrowers have not purchased carts/animals out of the loan proceeds;and fifthly, it was alleged that the employee had not insured thecarts/animals under the master policy of United Insurance Company Limited. Byway of charge No.2(c) under the heading 'Sheep Rearing', it was alleged that

the employee opened savings bank account in the personal name of the Presidentand the loan granted to the sheep breeders society was credited to thisaccount instead of opening the account in the name of the society afterobtaining permission from the Assistant Director of Animal Husbandry. It wassecondly alleged that the employee had not utilised the services of branchAgricultural Officer for purchase of sheep and verification of utilisation.It was thirdly alleged that out of balance of Rs.1,000/- each, the employeehad appropriated Rs.200/- each for share capital of the member and Rs.130/-each towards insurance and the balance of Rs.670/- remained unacounted, whichtotalled to Rs.28,810/-. Fourthly, it was alleged that out of 43 units ofsheep financed by the employee, 17 borrowers were not having any sheep unitand out of the remaining 26 units, some of the parties did not purchaseanimals as per requirement leading to shortfall of the number of animalspurchased. Fifthly it was alleged that in respect of the above loans,Purchase Committee was not formed, pre as well as post inspection had not beendone; animals purchased were not ear-tagged, with the result insurance companywas not settling the claims; as per the sanction stipulation, 10% of the loanamount, i.e. Rs.17,200/- was not deposited in RDP, that the employee hadfailed to take registered mortgage of lands for twice the value of the loanamount by the members in favour of society as per sanction, that he had failedto obtain the veterinary Assistant Surgeon's certificate showing the purchaseof the animals. Under charge No.2(d), under the subheading 'Diary', it wasalleged that the employee had misappropriated Rs.147/- each while releasingthe first stage of diary loans and also Rs.173.75 each while releasing thesecond stage of loans in 78 cases listed in the annexure. In this behalf, itwas alleged that while disbursing the loans, he had also committed thefollowing lapses inasmuch as the loans were disbursed without any pre-sanctioninspection; loan amounts disbursed were not paid directly to vendors ofanimals; that a sum of Rs.978/- was paid to one Mr. Subbumahalingam on28-12-1983 being the amount collected from 39 borrowers for being passed on tothe Veterinary Assistant Surgeon for tatooing animals when in fact thisservice was bound to be done at free of cost by the Veterinary surgeon. Itwas also alleged that he had not formed the Purchase Committee and also hadnot properly accounted for in regard to insurance claim relating to theaccount of Mr. Karugannan. Lastly, it was suggested under the heading 'OilEngine and Tyre Cart' that the loans were granted for enjoying subsidy benefitand they were not need-based inasmuch as the borrowers were not having anytyre carts and oil engines.

7. In this enquiry, the accounts of hundreds of the borrowerswere checked and their statements were also recorded. It seems that a replywas given to the charge-sheet, denying all the allegations. The enquiryofficer seems to have written an enquiry report, running into about hundredpages. He had taken into account about 158 documents tendered on behalf ofthe Management and about 24 documents tendered on behalf of the defence. Asmany as 18 witnesses were examined; 4 out of them for proving the allegedirregularities committed in grant of sericulture loans; about three witnessesfor proving the alleged irregularities in grant of loans for purchase ofbullocks and carts; one for proving the irregularities committed in grant ofdiary loan; office-bearers of the Milk Producers' Co-operative Society; onewitness representing the guarantors as also the Government officers. The

8. We have carefully seen the whole report which suggests

8. We have carefully seen the whole report which suggests that the enquiry was held for about 21 days. Each charge has been discussedseparately in the enquiry report with reference to the adduced evidence.There is a specific reference to the evidence of the witnesses and theircross-examination. The enquiry officer has then recorded his findingsvis-a-vis the each charge and the subheads thereof. We must say that theenquiry report is drawn very meticulously and the findings have beenseparately given against each charge. Lastly, the enquiry officer has giventhe gist of imputations and the findings. Ultimately, a conclusion has beenreached that the delinquent officer had granted many loans by demanding andaccepting illegal gratification; that he had misappropriated a part of theloan amount; that he did not ensure the genuineness of the loans and violatedthe norms and terms of sanction of regional office for granting the loans andthat many of the loans have become overdue. It was, therefore, concluded thatthe charge-sheeted officer had failed to ensure and protect the interests ofthe bank with utmost integrity, honesty, devotion and diligence and actedotherwise than in his best judgment.

9. All the irregularities alleged against the delinquent have been threadbare discussed on the basis of the evidence adduced by thewitnesses separately in respect of each charge. Seeing the whole charge-sheetand the enquiry officer's report, it cannot be said that this was a case wherethere was no material available or for that matter, this was a case where theenquiry officer had written perverse findings.

10. On this backdrop, when we go through the judgment of the learned single Judge, it is apparent that the first seven paragraphs merelycontain the statements of facts and the rival contentions, as they emerge fromthe affidavits filed before the learned single Judge. The learned Judge hasnot quoted the charges faced by the delinquent officer. The learned Judgehas, in paragraph 8, proceeded to again give a resume of the allegationsagainst the delinquent officer and has made a startling observation that inthe enquiry officer's report, there was no specific charge against thedelinquent officer. There is again a reference to the observations in theorder of the disciplinary authority and on the basis of those observations, itis suggested that there was no specific corruption charge or misappropriationof the large amounts of the bank by the petitioner. The learned Judge hasthen made a reference to the fact that though in the disbursement ofcart-loans, the delinquent officer had misappropriated Rs.2,000/- in eachcase, it was the admitted case of the bank that another sum of Rs.900/- hasbeen paid by the intermediary and the delinquent but at the same time acceptsthat record is there to show that entire sum of Rs.4,000/- has been receivedby the borrowers. Without naming any particular charge, the learned Judgeproceeds to hold that since the loan granted to the co-operative society wasre-paid, there will be no question of misappropriation. The learned Judgefurther proceeds to hold even if it is taken that all the proved charges as itis and has found established by the enquiry officer and confirmed by thedisciplinary authority, there is no co-relation at all in between the provedcharges and the punishment awarded. It is then suggested that the petitioner was not given the opportunity to explain his case before awarding thepunishment.

11. Now, in fact, the enquiry report itself is dated

27-7-1988 and the disciplinary authority's order is also dated 18-8-1988before the law was laid down in Ramzan'khan s case. However, the learnedJudge has found fault with the whole enquiry report solely on the ground thatthe bank was not put to any loss. Very strangely, it is observed that thereis no complaint against the delinquent-officer, alleging misappropriation ofloan amount or demanding gratification. In fact, the whole report is repletewith such complaints. Even if it is true that the co-operative society hadmade good the loss caused to the bank but, in the process of disbursing theloans, the delinquent officer had earned illegal gains. It is then suggestedthat the investigating officer has coerced the witnesses to give falsestatements after the delinquent officer was transferred from his station. Ageneral statement is to be found to the effect that there is no specificinstance that the petitioner has caused loss or damage to any amount of thebank. Then the learned Judge has very strangely written a finding in internalpage 15 of the judgment in the following words:

"From all the above aspects of this case, it is very clear that in relation tothe gravity of the proved charges, the punishment of dismissal from serviceawarded to the petitioner herein is highly disproportionate and against theaccepted norms and also the principles of natural justice. ... ... ...

Therefore, I am of the view that this is a clear case wherein great and graveinjustice has been done to the petitioner and the award of punishment in thiscase is highly disproportionate to the proved charges and for this singlereason itself the impugned orders of the respondents have to be quashed."It is then quoted:

"Further even though a number of decisions have been cited by the bank insupport of their case, because of the above clear finding arrived at by thisCourt, and also due to the peculiar facts and circumstances of the case, theyare not helpful to the bank."

Needless to say, not a single decision relied upon has either been consideredor even mentioned in the judgment. Ultimately, the learned Judge has allowedthe writ petition and has directed the bank to reinstate the petitioner withinthirty days from the date of judgment with all attendant service benefitstogether with full backwages and also granted 12% interest per annum on thosebackwages from the date of dismissal till the date of reinstatement. It is,therefore, obvious that the learned Judge has treaded into the dangerous areaof appreciation of evidence and even without quoting the names of thewitnesses has straight away disproved the evidence. Likewise, even withoutnaming the charges in particular has discarded the findings which were sopainstakingly given on the basis of the evidence. We have deliberately giventhe break-up of the witnesses and the points on which they were examined. Itis apparent from that, all the witnesses examined, though some of them werepartly disbelieved, had supported the case of the Management and it is only onthat basis that the finding of guilt was reached by the enquiry officer on thecharges. We cannot see any justification to the order of the learned singleJudge in setting aside those findings even without discussing them. We havedeliberately quoted the kind of discussion that is discerned from thejudgment. We are unable to agree with the learned Judge that in this case the

12. Again, we fail to follow as to how firstly when the learned Judge had held that the charges were not proved, the question ofquantum of punishment could be discussed. The learned Judge has clearly heldthat the punishment of dismissal for the proved charges was disproportionate.Such being the state of affairs, it is not possible for this Court to agreewith the judgment of the learned single Judge.

13. In this behalf, the law stated by the Supreme Court is

well settled. In the celebrated decision in HIGH COURT OF JUDICATURE ATBOMBAY THROUGH ITS REGISTRAR v. SHRI UDAYSINGH (JT 1997 (5) 298), the SupremeCourt had examined the question regarding the jurisdiction of the High Courtor the Tribunal, as the case may be, while dealing with the disciplinarymatters. The learned Judges referred to the decision in B.D. Chaturvedi v.Union of India & others (JT 1995 (8) SCC 65) and relied upon the observationstherein to the following effect:

Judicial review is not an appeal from a decision but a review of the mannerin which the decision is made. Power of judicial review is meant to ensurethat the individual receives fair treatment and not to ensure that theconclusion which the authority reaches is necessarily correct in the eye ofthe court. When an enquiry is conducted on charges of misconduct by a publicservant, the Court/Tribunal is concerned to determine whether the inquiry washeld by a competent office or whether rules of natural justice are compliedwith. Whether the findings or conclusions are based on some evidence, theauthority entrusted with the power to hold inquiry has jurisdiction, power andauthority to reach a finding to fact or conclusion.

The Court further cautions that such finding must be based on some evidence.The Court then points out that the technical rules of Evidence Act do notapply to the disciplinary proceedings and, therefore, when the authorityaccepts the evidence and the conclusions receive support therefrom, thedisciplinary authority is entitled to hold that the delinquent officer isguilty of charge. The Court further stated that the court/tribunal, in itspower of judicial review, does not act as the appellate authority tore-appreciate the evidence and to arrive at its' own independent findings onthe basis of the evidence. The Court had cautioned that the court/tribunalmay interfere where the authority held the proceedings against the delinquentofficer in a manner inconsistent with the rules of natural justice or inviolation of statutory rules prescribing the mode of inquiry or where theconclusion or finding reached by the disciplinary authority is based on noevidence. A further reference has been made to a number of other decisionsand ultimately the Court went on to record:"When the conclusion reached by the authority is based on evidence, Tribunalis devoid of power to reappreciate the evidence and would ( sic) come to itsown conclusion on the proof of the charge. The only consideration theCourt/Tribunal has in its judicial review is to consider whether theconclusion is based on evidence on record and supports the finding or whetherthe conclusion is based on no evidence."

Seeing these authorities, it is not possible for us to agree with the learnedJudge as the learned Judge has travelled outside his jurisdiction in settingaside the findings, re-appreciating the evidence and in substituting his own

14. Shri Chandru, however, relied on the decision in KAILASH

NATH GUPTA v. ENQUIRY OFFICER (R.K. RAI) ALLAHABAD BANK AND OTHERS (2003 SCC(L&S) 1137) to suggest that the courts always have the power to interfere withthe quantum of punishment and that where the punishment was disproportionateto the charges, it is always open for the High Court to consider the question.From the aforementioned judgment, learned senior counsel argues that this wasalso a case where there were irregularities in disbursement of the loans but,however, the Supreme Court took a lenient view on the ground that they weremere " irregularities" in disbursement of loans more particularly in the ruralatmosphere. It is pointed out that the Supreme Court had remanded the matterto the High Court to consider the question of quantum of punishment. Thisargument is advanced by the learned senior counsel particularly because we arealso concerned here in this case with the disbursement of loans to the smalland marginal farmers.

15. We have gone through the reported decision carefully and find that there is an essential difference in the facts. In the reporteddecisions, under the five charges, what is alleged is only irregular nature ofloan and the procedural la bursement of the loans. There are no allegationsof bribery, misappropriation, cheating, breach of trust, etc. in the saiddecision. It is on this backdrop that the Supreme Court has found fault thatthe punishment was disproportionate. In paragraph 11, it is clearly mentionedby the Supreme Court that the power of interference with the quantum ofpunishment was extremely limited. But when relevant factors were not takennote of, which have some bearing on the quantum of punishment, certainly theCourt can direct re-reconsideration or in an appropriate case to shortenlitigation, indicate the punishment to be awarded. It is apparent that theSupreme Court has noted that in that case there was no occasion in the longpast service indicating either irregularity or misconduct of the appellantexcept the charges which were the subjectmatter of his removal from service.The Court has specifically noted that there was nothing to indicate that theappellant had misappropriated any money or committed any act of fraud and thatthere were some procedural irregularities which cannot be termed to benegligence to warrant the extreme punishment of dismissal from service.

16. That is precisely the case here and the fraudulent acts of the delinquent officer have been brought home in the enquiry and the chargeof demanding and accepting illegal gratification has also been held to beproved. Under the circumstances, we cannot accept the contention of thelearned counsel that we should take a lenient view on the question of quantumof punishment or for that matter remand the case back to the appellateauthority or the disciplinary authority. In our view, a correct punishmenthas been given considering the gravity of the charges held to be proved on thebasis of the available material before the enquiry officer. We, therefore,allow this appeal, set aside the judgment of the learned single Judge andorder the dismissal of the writ petition. Under the circumstances, there shall be no order as to the costs. C.M.P. No.10107 of 1999 is closed.

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