Virinder Pal Singh v. Punjab and Sind Bank

6. It was next contended that the appellant had taken multiple other grounds (i.e., (a) the concerned charge was not proved; (b) the concerned charge was not relatable to any specified misconduct; and

(c) the punishment as well as the appellate order was a non-speaking one), which the High Court failed to address. To buttress the submission that disciplinary /Appellate Authority’s order must carry reasons, reliance was placed on decisions of this Court in A.L. Kalra v. Project and Equipment Corporation of India Limited[8] and Allahabad Bank and others v. Krishna Narayan Tewari[9].

7. It was also contended that even if the merits of the finding(s) returned by the Inquiry Officer, Disciplinary Authority and Appellate Authority was not specifically questioned before the High Court, it being a pure question of law can be raised at any stage. In this regard, reliance was placed on decisions of this Court in Securities and Exchange Board of India through its Chairman v. Roofit Industries Limited10 and Chittoori Subbanna v. Kudappa Subbanna and others11.

SUBMISSIONS ON BEHALF OF THE BANK

8. Per contra, the learned counsel for the Bank submitted that the general principle that there could be no disciplinary action post termination of master-servant relationship, consequent to attaining the age of superannuation, has an exception, which is, that if the extant Service Rules/Regulations permit continuance of disciplinary proceedings post attainment of the age of superannuation, the proceedings can continue and brought to its logical conclusion. Regulation 20(3)(iii) of the Service Regulations permits continuance of disciplinary proceedings against the charged-officer even post-superannuation, if those

AIR 1965 SC 1325: 1964 SCC OnLine SC 322 were initiated prior to incumbent’s superannuation, as is the case here. It was contended that in Ramesh Chandra Sharma (supra), this Court held that in view of the provisions of Regulation 20(3)(iii) it is permissible to continue with the disciplinary proceedings post-retirement. Same view has been taken by a three-Judge Bench of this Court in Canara Bank v. D.R.P. Sundharam12. On the other hand, Pension Regulations become applicable when proceedings are initiated under the

9. It was next contended that the decision in Prabhakar Sadashiv Karvade (supra) relied by the appellant is distinguishable on facts inasmuch as in that case the charged-officer had retired before service of charge-sheet. In that context, it was held that extant Regulations would apply to only serving employees.

10. On merits of the charge and the orders passed by the Disciplinary/Appellate Authority, it was

12. (2016) 12 SCC 724 submitted that the Inquiry Officer in his report dated 20.12.2012 found Charge No. 2 partly proved because the borrower had made cash withdrawals of several lacs of rupees without supporting bills. In that context, the Inquiry Officer concluded that the charged officer had failed to ensure end-use of the loan amount. The said conclusion is logical and cannot be held perverse. More so, when the loan account had turned Non-Performing Asset (for short, NPA). It was submitted that diversion of loan is best prevented by ensuring that it is used for the purpose intended. Withdrawal by cash, without supporting bills, is a clear indication of misuse of loan amount. Moreover, the appellant had never questioned the finding qua cash withdrawals without supporting bills.

11. Besides, the punishment imposed on the appellant had resulted in reduction of pension by a meagre sum of Rs. 302 per month. Thus, the punishment is not shockingly disproportionate to the gravity of the proven misconduct. Further, as to what punishment is to be imposed, the discretion vests with the disciplinary authority. In this regard decision of this Court in Union of India And Others v. Ram Karan13 was relied upon. Based on the aforesaid submissions, it was prayed on behalf of the Bank that the appeal be dismissed.

ANALYSIS

12. We have heard the learned counsel for the parties and have perused the materials on record.

13. On consideration of the rival submissions, in our view, following issues arise for our determination:

(i) Whether post-retirement of the appellant, punishment of reduction of three stages in the scale of pay, as imposed by the respondent, was permissible under the extant Service Regulations, or action under the Pension Regulations was the only way forward?

(ii) Whether there is any perversity/infirmity in the enquiry report and the order(s) passed by the Disciplinary/Appellate Authority? If yes, whether it could be raised as a ground when it was not pressed before the High Court?

14. Before proceeding to address Issue No. (i), we would address Issue No.

(ii) as it turns on facts. Issue No.

(ii) relates to the merits of the Inquiry Report and the order(s) of the Disciplinary/Appellate Authority. It also relates to the consequence of High Court not addressing the same. In this regard, it be noted that the charge which stood proved was in respect of appellant’s failure to ensure end use of the loan disbursed by the Bank. The Inquiry Officer held the charge as partly proved because Bills in respect of cash payments of up to Rs. 27.25 lacs were not on record, and it was reported that the account had turned NPA.

15. The enquiry report14 takes note of the evidence produced and the submissions made by both sides. After analyzing the same, it holds Charge No. 2 Which is contained in Annexure P-6 partly proved. The enquiry report is in respect of two charges. Charge No. 1 is held not proved whereas Charge No. 2 is held partly proved because there existed no Bills on record to demonstrate as to how the cash was spent. Based on that, the Inquiry Officer concluded that there was failure on part of the appellant to ensure end-use of the loan amount.

16. The appellant was given opportunity to submit his comments on the Inquiry Report. In his comments to the Inquiry Report, the appellant did not claim that he was not given due opportunity of hearing or that a faulty procedure was adopted by the Inquiry Officer. In fact, he did not even challenge the finding of the Inquiry Officer that no Bills were there on record. Rather his stand was that his predecessor-in-office had also not taken Bills, but no objection was taken to his predecessor’s conduct. In that backdrop, the disciplinary authority, while accepting the finding of the Inquiry Officer, imposed the punishment in question.

17. Ensuring end-use of loan disbursals serves multiple purposes. First, it ensures that loan is not diverted for purposes other than the one for which it is sanctioned/ disbursed. Often loans are prioritized for a particular purpose. Ensuring end use safeguards that purpose. Second, it secures recovery. For example, if loan is for purchase of a machine to run a business, if the machine is purchased, possibility of business yielding profits is greater than where the loan is diverted for purposes other than to serve the business. Besides, it is a matter of common knowledge that loan is sanctioned after appraisal of the project or the business in respect of which the loan is sought. Appraisal is often to ascertain the feasibility and viability of the project / business for which the loan is sought. Failure to ensure end use would render the appraisal meaningless. In such circumstances, if end use of the loan is not ensured, the Bank would be exposed to financial risk.

18. In the instant case, as there was no challenge to the indictment that huge amount of cash withdrawals was allowed without taking supporting bills/receipts, the charge that the appellant had failed to ensure end use of the loan stood proved. It was in this context, probably, the learned counsel for appellant while assailing the disciplinary action pressed only one ground i.e., that the extant Discipline and Appeal Regulations/Service Regulations under which the punishment was imposed, applied to serving employees only. Even before the Division Bench of the High Court, it appears, no argument was raised on the merit of the finding that Charge No. 2 was partly proved.

19. Besides, a bank officer holds a position of trust as he deals with public funds. Sanction of loan beyond one’s power, or not ensuring end-use of the loan, amounts to financial irregularity which exposes the Bank to financial risk. Therefore, penal action on proof of such a charge cannot be questioned merely because no loss is suffered by the Bank15.

20. Moreover, where an employee of a Bank handles money of depositors /customers/investors, it is most essential for him to be cautious and not reckless in discharge of his duties because he deals with the money for and on behalf of his employer. Every such employee/officer is, therefore, required to take all possible steps to protect the interests of his employer. He must, therefore, discharge his duties with utmost sense of integrity, honesty, devotion and diligence and must ensure that he does nothing, which is unbecoming of an employee/officer. Although good conduct and discipline is expected from every employee/officer of an institution, but it is required more when the institution deals with money of customers/ depositors/investors. Any dereliction in discharge of duties by such an employee or officer, whether by Disciplinary Authority-Cum-Regional Manager and others v. Nikunja Bihari Patnaik, (1996) 9 SCC 69 way of negligence/casualness, or with deliberate intention, constitutes misconduct16.

21. In that backdrop, we find neither any perversity in the finding(s) returned by the Inquiry Officer nor do we deem it appropriate to permit the appellant to question the merit of the finding(s) that Charge NO. 2 was partly proved, particularly when no such plea was pressed before the High Court.

22. For the aforesaid reasons, we decline to accept appellant’s submissions that the Writ Court and the Division Bench of the High Court failed in their obligation to examine the merits of the disciplinary action. Moreover, upon consideration of the enquiry report and the comments of the appellant to the same, we do not find any good ground to hold that Charge No. 2, as discussed above, was not partly proved, or that the punishment awarded was shockingly disproportionate to the gravity of proven misconduct. Issue No.

(ii) is decided in the above terms. Mihir Kumar Hazara Choudhury v. Life Insurance Corporation and another, (2017) 9 SCC 404; Chairman and Managing Director, United Commercial Bank and others v. P.C. Kakkar, (2003) 4 SCC 364.

23. Now, we shall address Issue No. (i) i.e., whether, post-retirement, the punishment as imposed upon the appellant is permissible in law.

24. In support of his contention on the issue, the learned counsel for the appellant had placed reliance on Regulation 2 of the Service Regulations which reads as under:

25. On the other hand, the learned counsel for the Bank relied on Regulation 20 (3), more particularly Clause (iii) of Sub-regulation (3) of Regulation 20, of the Service Regulations. Sub-regulation (3) of Regulation 20 reads as under: “20.

TERMINATION OF SERVICE (3) (i) An officer against whom disciplinary proceedings are pending shall not leave/discontinue or resign from his service in the bank without the prior approval in writing of Competent Authority and any notice or resignation given by such an officer before or during the disciplinary proceedings shall not take effect unless it is accepted by the Competent Authority.

(ii) Disciplinary proceedings shall be deemed to be pending against any employee for the purpose of this regulation if he has been placed under suspension or any notice has been issued to him to show cause why disciplinary proceedings shall not be instituted against him and will be deemed to be pending until final orders are passed by the Competent Authority.

(iii) The officers against whom disciplinary proceedings have been initiated will cease to be in service on the date of superannuation, but the disciplinary proceedings will continue as if he was in service until the proceedings are concluded and final order is passed in respect thereof. The concerned officer will not receive any pay and/or allowance after the date of superannuation. He will also not be entitled for the payments of retirement benefits till the proceedings are completed and final order is passed thereon except his own contribution to CPF.”

26. The contention on behalf of the appellant is that the Service Regulations, of which Regulation 20 (3) (iii) is a part, would apply to all officers of the Bank. However, once an officer superannuates, he is no longer an officer of the Bank therefore, Regulation 20 (3) (iii) cannot rescue disciplinary proceedings post-retirement. Thus, it is contended, postretirement, action can be taken only under the

27. At this stage, it would be useful to refer to two decisions placed on behalf of the appellant, namely, “UCO Bank and Others vs. Prabhakar Sadashiv Karvade” (supra) (for short, Prabhakar Sadashiv Karvade) and “Ramesh Chandra Sharma vs. Punjab National Bank and Another” (supra) (for short, Ramesh Chander Sharma).

28. In Prabhakar Sadashiv Karvade, based on a charge sheet served on 09.09.2000, the incumbent was dismissed from service on 12.10.2004 while he had retired from service on 13.12.1993. In that context, this Court considered various service Rules/ Regulations which were extracted in Paragraph 8 of the judgment. Relevant portion of which is reproduced below: “8. ….. Discipline and Appeal Regulations

4. Penalties—The following are the penalties which may be imposed on an officer employee, for acts 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 whole or part of any pecuniary loss caused to the Bank by negligence or breach of orders. (e) reduction to a lower stage in the timescale of pay for a period not exceeding 3 years, without cumulative effect and not adversely affecting the officer's pension. Major penalties — (f) save as provided for in (e) above, reduction to a lower stage in the timescale of pay for a specified period, with further directions as to whether or not the officer will earn increments of pay during the period of such reduction and whether on the expiry of such period the reduction will or will not have the effect of postponing the future increments of his pay. (g) reduction to a lower grade or post, (h) compulsory retirement;

(i) removal from service which shall not be a disqualification for future employment; (j) dismissal which shall ordinarily be a disqualification for future employment.”

29. In Ramesh Chandra Sharma (supra), the issue was whether punishment of dismissal could be inflicted on an employee who has already retired on attaining the age of superannuation. In that context, this Court considered Regulation 20(3)(iii) of the Service Regulations (which is in same terms as Regulation 20(3) (iii) of 1979 Regulations extracted in the preceding paragraph) and Regulations 22, 43 and 48 of the Pension Regulations, which are reproduced below: “22.

(i) Resignation or dismissal or removal or termination of an employee from the services of the Bank shall entail forfeiture of his entire past service and consequently shall not qualify for pensionary benefits.

43. Withholding or withdrawal of pension.—The competent authority may, by order in writing, withhold or withdraw a pension or a part thereof, whether permanently or for a specified period, if the pensioner is convicted of a serious crime or criminal breach of trust or forgery of (sic or) acting fraudulently or is found guilty of grave misconduct. withdrawn, the amount of such pension shall not be reduced below the minimum pension per mensem payable under these Regulations.

48. Recovery of pecuniary loss caused to the Bank.— (1) The competent authority may withhold or withdraw a pension or a part thereof, whether permanently or for a specified period and order pecuniary loss caused to the Bank if in any departmental or judicial proceedings the pensioner is found guilty of grave misconduct or negligence or fraudulently during the period of his service: Provided that the Board shall be consulted before any final orders are passed; Provided further that departmental proceedings, if instituted while the employee was in service, shall, after the retirement of the employee, be deemed to be proceedings under these Regulations and shall be continued and concluded by the authority by which they were commenced in the same manner as if the employee had continued in service; (2) No departmental proceedings, if not instituted while the employee was in service, shall be instituted in respect of an event which took place more than four years before such institution: Provided that the disciplinary proceedings so instituted shall be in accordance with the procedure applicable to disciplinary proceedings in relation to the employee during the period of his service. (3) Where the competent authority orders recovery of pecuniary loss from the pension, the recovery shall not ordinarily be made at a rate exceeding one-third of the pension admissible on the date of retirement of the employee: withdrawn, the amount of pension drawn by a pensioner shall not be less than the minimum pension payable under these Regulations.” Construing the object of Regulation 20(3)(iii) (supra), this Court observed:

Thereafter, upon considering Regulations 22, 43 and 48 of the Pension Regulations, it was held:

30. In Chairman-cum-Managing Director, Mahanadi Coalfields Ltd. vs. Rabindranath Choubey (supra) (for short, Mahanadi Coalfields Ltd.), the issue, inter alia, under consideration was, ‘whether, in view of Rule 34.[2] of the 1978 Rules, the punishment of dismissal can be imposed upon finding one guilty of misconduct, where departmental enquiry is instituted while the employee is in service and continued after he attains the age of superannuation?’

31. Rule 34.[2] and 34.[3] of CDA Rules, which were considered by this Court in Mahanadi Coalfields Ltd., read as under: “34.2. Disciplinary proceeding, if instituted while the employee was in service whether before his retirement or during his re-employment shall, after the final retirement of the employee, be deemed to be proceeding and shall be continued and concluded by the authority by which it was commenced in the same manner as if the employee had continued in service.

34.3. During the pendency of the disciplinary proceedings, the Disciplinary Authority may withhold payment of gratuity, for ordering the recovery from gratuity of the whole or part of any pecuniary loss caused to the Company if have been guilty of offences /misconduct as mentioned in sub-section (6) of Section 4 of the Payment of Gratuity Act, 1972 or to have caused pecuniary loss to the Company by misconduct or negligence, during his service including service rendered on deputation or on reemployment after retirement. However, the provisions of Sections 7(3) and 7(3-A) of the Payment of Gratuity Act, 1972 should be kept in view in the event of delayed payment, in the case the employee is fully exonerated.”

32. In that context, in Mahanadi Coalfields Ltd., this Court held:

33. What is important to note is that in Mahanadi Coalfields Ltd., this Court had the occasion to consider its earlier decision in Ramesh Chandra Sharma, and the same was approved.

34. The ratio of Mahanadi Coalfields Ltd. is found in paragraphs 47 and 48 of the judgment, which are reproduced below:

35. In Mahanadi Coalfields Ltd., Ajay Rastogi, J. wrote a separate opinion partly concurring and partly dissenting with the majority view. In respect of the first question, Ajay Rastogi, J. concurred with the majority view whereas in respect of the second question, that is, whether the penalty of dismissal could be imposed after the employee had retired from service, Ajay Rastogi, J. opined thus: “78.2.Que. 2—Whether the penalty of dismissal could be imposed after the employee stood retired from service? Ans. In my considered view, after conclusion of the disciplinary inquiry, if held guilty, indeed a penalty can be inflicted upon an employee/delinquent who stood retired from service and what should be the nature of penalty will always depend on the relevant scheme of the Rules and on the facts and circumstances of each case, but either of the substantive penalties specified under Rule 27 of the 1978 Rules including dismissal from service are not open to be inflicted on conclusion of the disciplinary proceedings and the punishment of forfeiture of gratuity commensurate with the nature of guilt may be inflicted upon a delinquent employee provided under Rule 34.[3] of the 1978 Rules read with subsection (6) of Section 4 of the 1972 Act.”

36. On a survey of the decisions cited and discussed above, in our view, what is settled is that if the extant service Rules/Regulations permit continuance of the disciplinary proceedings, initiated against an officer/ employee before he had attained the age of superannuation, those can be continued and brought to its logical conclusion even after he had attained the age of superannuation. And where, pursuant to such proceedings, the ultimate penalty imposed is of dismissal, there may be no technical difficulty in its implementation as it may result in forfeiture of pension and other retiral dues. Therefore, in such an event, the question of entitlement to pensionary benefits may not arise. However, where the punishment imposed is such which may, instead of forfeiture of pension in its entirety, result in mere reduction or adjustment of pension, or recovery from post retiral dues, the Court may have to consider whether such punishment is implementable or not, postretirement.

37. In the instant case, the punishment awarded is of reducing the pay scale by three stages on permanent basis. Such reduction in the pay scale would relate back to the date the incumbent superannuated from service. Ordinarily, pension is computed based on salary last drawn/payable. Therefore, in our view, it would not be difficult to implement such a punishment as pension can be computed accordingly.

38. For the foregoing reasons, in our view, the Division Bench of the High Court was justified in allowing the writ appeal by properly construing Regulation 20(3)(iii) of the Service Regulations.

39. The appeal therefore lacks merit and is accordingly dismissed. Pending applications, if any, shall stand disposed of. There shall be no order as to costs. … ............................................. J. (Pamidighantam Sri Narasimha) ................................................ J. (Manoj Misra) New Delhi; March 19, 2026