Allowed

M.B.Motwani v. Uco Bank and Ors.

Bombay HC30 Jul 2009WP/15/1995

Case brief

AI extract

What is this about?

A retired bank officer challenged his dismissal and disqualification from future employment. The High Court held that since the charge sheet was served after his superannuation and the relevant regulation was not in force at the time of cessation of service, the disciplinary proceedings were invalid. The writ petition was allowed, and the dismissal order was set aside.

What did the court decide?

Writ Petition allowed, rule made absolute, orders of dismissal dated 3rd March, 1993 and appeal rejection dated 23rd July, 1993 set aside.

M.B.Motwani Vs Uco Bank and Ors. — Pension and Retirement Benefits | Bombay HC (2009)

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IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION WRIT PETITIOIN NO.15 OF 1995

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Shri M	.B. Motwani,	)
Adult, Residi	Indian Inhabitant, of Bombay, ng at 13, Seeta Sadan, 259,	) )
Sion R	oad (West), Bombay400 022.	)..	Petitioner
	Vs.
1.	UCO Bank, formerly known as United Commercial Bank, constituted and functioning under the provisions of Banking (Acquisition and Transfer of Undertakings) Act 5 of 1970 as amended by Banking Laws Amendment Act 1985 having its Head Office at 10, B.T.M. Sarani Road, Calcutta 700 001 and having its Zonal Office at 2^ndFloor, Mafatlal Centre, Nariman Point, Bombay – 400 021.	) ) ) ) ) ) ) ) ) ) ) ) )
2.	Competent Authority, (General Manager) UCO Bank, Head Office, Calcutta, C/o. Zonal Office, Mafatlal Centre, Bombay 400 021.	) ) ) ) )
3.	Shri S.V. Prabhu, Assistant General manager, UCO Bank, Nariman Point Branch, Mafatlal Centre, 1^stFloor,	) ) ) )
	Bombay 400 021.	)

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4.	Shri S.V. Ramanathan,	)
	Divisional Manager, UCO Bank, Divisional Office, Mafatlal Centre, 2^ndFloor, Nariman Point, Blombay - 400 021.	) ) ) )
5.	Reserve Bank of India, Department of Banking Operations And Development, New Administrati Building, Mint Road, Bombay.	) ) ve) )
6.	Central Vigilance Commission, Ayakar Bhavan, Maharishi Karve Road, Bombay 400 020.	) ) )
7.	Government of India, Ministry of Finance,	) )
	Department of Banking,	)
	Ayakar Bhavan, Maharishi Karve Road, Bombay – 400 020. --	) )..	Respond	ents
Shri Shri Asso	G.K. Masand for the Petitioner. Karl Tamboli along with Sachin ciates for Respondent No.1. --	Pandey	i/by D.H.	Law

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CORAM : SWATANTER KUMAR, C.J. & A.M.KHANWILKAR, J

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JUDGMENT RESERVED ON : 20TH JULY, 2009

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JUDGMENT PRONOUNCED ON : 30TH JULY, 2009

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JUDGMENT : ( PER SWATANTER KUMAR, CHIEF JUSTICE )

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The Petitioner was appointed as a Apprentice Officer in United Commercial Bank, (hereinafter referred to as the “Bank”) in the year 1952. In the year 1974, he was posted as Branch Manager at Moradabad Branch, U.P., whereafter he was transferred to Calcutta Main Branch as an Assistant Manager. During this period, the Petitioner claims to have served in different places including Mumbai and other important places. In the year 1976, the Petitioner was posted back to Mumbai and was promoted as Senior Management Scale No.IV Officer and was posted as Inspector of Branches with Headquarters at Mumbai. During 1988 to 1990, the Petitioner served as Assistant General Manager at Bombay Main Branch, D.N. Road, Mumbai. On 2^nd July, 1991, the Petitioner attained the age of superannuation of 60 years and was due to retire on 1^st August, 1991. He was served with an intimation notice for retirement on 7^th May, 1991, which is annexed at Exhibit-A to the Writ Petition. The same reads as under:-

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“UCO BANK Personal Department, E.R.Cell, Post Box No.12, Old Court House Street, Calcutta – 1.

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Ref. No. PER-M/ER/91/147 7^th May, 1991

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Mr. M.B. Motwani, A.G.M., (PFM No.3672), UCO BANK, Zonal Office, Bombay.

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Dear Sir,

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We find that you will be completing 60 years/58 years of age on 2.7.1991 in accordance with Regulation 19(1) of the UCO Bank (Officers’) Service Regulations, 1979 you are due to retire on the last day of July, 1991 i.e. 31.7.1991. Your retirement from the Bank’s Service will, therefore, take effect from 1.8.1991 and you will be relieved accordingly. Please send your applications for settlement of your Provident Fund and Gratuity Dues after your retirement, addressed separately to the Trustees of UCO Bank Employees’ Gratuity Fund through your branch/office.

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Yours faithfully, Sd/General Manager.”

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However, on 17^th June, 1991, the Petitioner was served

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with a Memo requiring him to explain irregularities and lapses

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relating to the opening and operation of certain accounts with the main branch during his tenure as head of the Branch, and on account of the alleged acts of omission and commission on the part of the Petitioner, the account became sticky and a sum of Rs.1.30 lacs remained outstanding against the party from April, 1991. The Petitioner was sanctioned a leave from 21^st June, 1991 to 29^th June, 1991 by the letter dated 18^th June, 1991 whereafter the Petitioner on 20^th June, 1991 acknowledged the receipt of the Memo and prayed for grant of further time which was granted. The Petitioner also made a request for inspection of the relevant files at the Zonal Office and at the head office. Certain memos were also served upon the Petitioner including the Memo dated 6^th July, 1991 in relation to different accounts of the bank. The Petitioner again demanded inspection vide his letter dated 9^th July, 1991 which was not provided to the Petitioner but another Memo dated 9^th July, 1991 was served upon the Petitioner. The General Manager (Personnel) vide his letter dated 15^th July, 1991 while exercising power of the Competent Authority under Regulation 12 of the United Commercial Bank Officer, Employees (Discipline and Appeal) Regulations, 1976, passed an order of suspension against the Petitioner. The said order

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of suspension, Exhibit-L to the Petition, was to take effect forthwith.

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Exhibit-L to the Petition which reads as under:-

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“UCO Bank,

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Personnel Department, Head Office: 12, Old Court House Street, Calcutta 700 001.

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Date : 15^th July, 1991

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O R D E R

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WHEREAS certain serious irregularities have been noticed in the following accounts in which credit facilities were sanctioned by Shri M.B. Motwani while he was functioning as Assistant General Manager incharge of D.N. Road (Bombay) Branch of the Bank, viz.

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1. M/s. Dipika Fabrics Pvt. Ltd.

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1. M/s. Sunil Corporation

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1. M/s. Hemakute Industrial Investment Co. Ltd.

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AND WHEREAS explanation has been called for from Shri M.B. Motwani regarding the lapses noticed in handling of the aforesaid accounts by Shri M.B. Motwani and till date his explanation has not been received.

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AND WHEREAS Shri M.B. Motwani is due to retire from the service of the Bank with effect from 1^st August, 1991.

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AND WHEREAS considering the seriousness of the irregularities it is found necessary and expedient to initiate disciplinary action against Shri M.B. Motwani by issuance of charge-sheet.

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AND WHEREAS pending completion of the Departmental Inquiry, it is necessary to ensure that Shri M.B. Motwani is continued in services of the Bank and hence it is found necessary and expedient to place him under suspension both considering the seriousness of the irregularities and also his likely retirement from the service of the bank.

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Now, therefore, in exercise of the powers conferred on the undersigned by UCO Bank Officer Employees, (Discipline & Appeal ) Regulations, 1976, I hereby place Shri M.B. Motwani under suspension with immediate effect under regulation 12 of the said Regulations. During the period of his suspension, Shri M.B. Motwani will be entitled to subsistence allowance as per rules applicable to him. Further, Shri Motwani’s head quarters during the period of suspension will be Bombay and he shall not leave the headquarter without prior permission of the Competent Authority.

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In terms of regulation 20(3)(c) of UCO Bank Officers’ Service Regulations, 1979, it is hereby ordered that Shri M.B. Motwani shall not retire from the Bank’s service with effect from 1^st August, 1991 notwithstanding that he completes the age of superannuation as on that date.

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Sd/GENERAL MANAGER (Personnel) Competent Authority,

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To, Shri M.B. Motwani, Asstt. General Manager, UCO Bank, Zonal Office, BOMBAY.

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c.c. to : D.G.M. Zonal Office, Bombay.”

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According to the Petitioner, the order of suspension was passed in a mechanical manner without any proper application of mind. Against the order of suspension, the Petitioner filed an Appeal before the Appellate Authority under the said Regulations and the Appellate Authority vide its order dated 7^th November, 1991 rejected the said Appeal. This order, in fact, was served upon the Petitioner on 7^th December, 1991.

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A charge sheet, which was primarily biased, was served upon the Petitioner on 10^th December, 1991, and the Petitioner was called upon to face domestic enquiry. After seeking some extension, the Petitioner filed reply to the charge sheet denying articles of charges and giving his explanation for the accounts mentioned in the charge sheet. According to the Petitioner, all these allegations were

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baseless.

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Being aggrieved by these orders of the Respondent Bank, the Petitioner was compelled to file a Writ Petition being Writ Petition No.3667 of 1991 challenging the order of suspension. The said Writ Petition came up for hearing before the Court and vide order dated 10^th January, 1991, the same was disposed of while issuing certain directions. Relevant part of the order reads as under:

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“Coram: K.Sukumaran & Dr.B.P. Saraf, JJ Friday, 10^th January, ‘92.

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P.C.

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The Petitioner challenges an order of suspension passed against him. The close proximity of that order to the normal date of superannuation, and other circumstances are projected to characterise the order of suspension as totally denuded of jurisdiction and justification. On an advertance to the relevant materials, we are not satisfied that the order of suspension, which has been affirmed in appeal by the appellate authority, should be interfered with by us in these proceedings, and at this stage. We decline that prayer.

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The subsidiary grievances of the Petition however, may merit some consideration. It was submitted that the petitioner should be given the facility of inspection of relevant files and accounts.

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This is a requirement of natural justice. Counsel for the Respondents did not resist that request. The petitioner will be permitted to have such inspection which shall be afforded by the Respondent-Bank. Both sides shall adopt a responsive and cooperative attitude in the matter.

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The petitioner prayed for further 15 days time to submit his detailed explanation on the basis of materials that will be collected from the inspection of files and accounts. That request is also not resisted. The petitioner will be provided an opportunity to submit his detailed explanation within 15 days of the date of completion of inspection, as afforded by us earlier.

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The third request is about necessity to have the enquiry denovo. That request is made in the background of the conduct of enquiry in the meanwhile. If the petitioner is to be afforded facility of inspection of files and accounts, and the opportunity to have a detailed explanation in relation to the allegation of misconduct, then it would automatically mean that the enquiry is to be conducted afresh. We direct that the enquiry shall be so conducted afresh after complying with the directions indicated above. We trust that this will satisfy legitimate requirements of the petitioner without causing any obstruction to the enquiry visualised by the Respondents. This writ petition is disposed of with the above directions.”

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It is averred by the Petitioner that there were certain facts

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and documents which could not be brought to the notice of the Court at the relevant time specifically that the the Supreme Court in

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the case of United Bank of India Officers’ Association v. Abhaykant Jha Ors. struck down Regulation No.20 of the said Regulations of 1979 by its judgment dated 1^st August, 1986. However, the Bank had intended to substitute Regulation No.20. A departmental inquiry had been proceeded vide order dated 15^th January, 1992. The Chairman and the Managing Director of the Bank, in exercise of the powers conferred on him by Regulation No.5 of the Officers Service Regulations, 1976 appointed the General Manager (Service and Investment) Head Office to function as Disciplinary Authority over the Petitioner in place of General Manager (Officiating Personnel).

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In pursuance to Respondent No.1’s communication, inspection of the files of four accounts at Mumbai Main Branch was started. It is further case of the Petitioner that the order of the Court in Writ Petition No.3667 of 1991 was not followed by the Respondents. Contrary to the said order, without furnishing documents to the Petitioner, a departmental inquiry was proceeded and vide order dated 31^st January, 1992, while referring to the order of the High Court, it was stated that de-novo inquiry will be conducted against the Petitioner. The Petitioner was not paid

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subsistence allowance nor was he provided inspection of the files.

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The de novo inquiry was again conducted in an arbitrary manner

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and without providing specific inspection of files to the Petitioner. Finally, vide order dated 3^rd March, 1993, the Disciplinary Authority awarded penalty for each of the articles of charges levelled against the Petitioner stating that the same has been proved and an order of dismissal for each of the charges would ordinarily act as a disqualification for future employment. The order of dismissal of

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the Petitioner reads as under:-

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“ EXHIBIT Z-4

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UCO BANk PERSONNEL DEPARTMENT HEAD OFFICE

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12, OLD COURT HOUSE STREET, CALCUTTA-700001

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Date : 3^rd March, 1993

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Ref. No._________

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O R D E R

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In the matter of disciplinary proceedings initiated against Shri M.B. Motwani, P.E.M. No.3672, former Asstt. General Manager, Zonal Office, Bombay in respect of charge sheet dated 7.12.1991 issued to him.

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Departmental proceedings were initiated against Shri Motwani for having committed serious irregularities in the advance protfolio while he was functioning as Asstt. General Manager at D.N. Road, (Bombay) branch from 11.1.1988 to 25.1.1990. A Charge-sheet dated 7.12. 1991 was issued to Shri Motwani and subsequently an enquiry was ordered into the charges levelled against him, vide the said charge-sheet by appointing Enquiry Officer and Presenting Officer on 17.12.1991.

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Initially the enquiry was concluded by the Enquiry Officer but before the Disciplinary Authority could pass appropriate orders, Shri Motwani filed a writ petition in Bombay High Court on 23.12.1992 whereafter the Hon’ble Court Directed the bank on 10.1.1992 to hold the enqiry afresh. Accordingly, the enquiry had to be held denovo. I observe that Shri Motwani was allowed repeated opportunities to participate in the enquiry but, for reasons b est known to him, he chose not to attend the enquiry proceedings which therefore had to be held exparte by the Enquiry Officer.

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After conclusion of the enquiry, the Enquiry Officer submitted his report and findings dated 9.4.1992, a copy of which was forwarded to Shri Motwani on 20.8.1992 for making his submissions/ representation. Shri Motwani made his submissions and asked for copies of exhibits vide his letter dated 18.9.1992. Thereafter management exhibits produced in the enquiry were forwarded to Shri Motwani on 16.11.1992 for his comments on the same. Shri Motwani has replied on 23.11.1992.

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I have carefully examined the charge-sheet dated 7.12.1991 issued to Shri Motwani, his reply dated 16.12.1991 to the said charge-sheet, the Enquiry Officer’s report and findings, the statements made by

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Shri Motwani on the Enquiry Officer’s report and all other papers/documents relevant to the case. My observations are noted hereunder.

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The charges levelled against Shir Motwani are stated as follows:

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Shri Motwani sanctioned credit facilities to various parties without due processing in violation of rules and in a malafide manner. He thus failed to discharge his duties with utmost integrity and honesty which is violative of Regulation 3 of UCO Bank Officer Employees’ (Conduct) Regulation, 1976 as amended.

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Shri Motwani sanctioned credit racitlities far in excess of his sanctioning powers. He thus abused his official position and powers and acted in a manner violative or Regulation 3 of UCO Banki Officer Employees (Conduct) Regulations, 1976, as amended.

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Shri Motwani acted in a manner which has resulted in the Bank being exposed to huge loss of money. The total amount of exposure to risk of loss detected till now is Rs.2,25,25,972.87 exclusive of interest in the following accounts:

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Dipika Fabricks (p) Ltd. Rs.1,29,69,972.87 2. Mayur Industrial Corpon Rs. 17,13,000.00

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Hemakute Industrial Rs. 44,06,000.00 Investment Co. Ltd. 4. Vishal Gems. Rs. 34,37,000.00 ------------------------Rs.2,25,25,972.87 -------------------------

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He failed to ensure and protect the interests of the Bank which is violative of Regulation 3 of UCO Bank Officer Employees’ Regulations, 1976, as amended.

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Shri Motwani concealed from Head Office materials facts about a party while recommending certain credit facilities in its favour. He committed breach of faith in the performance of his duties. He thus acted in a manner unbecoming of a Bank Officer which is violative of Regulation 3 of UCO Bank Officer Employees’ (Conduct) Regulations, 1976, as amended.

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As regard to Charge No.1, it has been established in the enquiry that Shri Motwani did not obtain adequate confidential report regarding a number of parties who were sanctioned credit facilities, such as Cash Credit, Bills Purchased and Letter of Credit. Credit report were also not obtained on the drawees of usance bills submitted by different parties, although such bills were purchased by him. In fact, some of the drawees of the bills were not engaged in business at the relevant time as they were under lockout for several years.

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Shri Motwani has contended that credit facilities were granted to different parties by him within his sanctioning powers and these were informed to Zonal Office, Bombay as well as Head Office, Calcutta, who did not raise any objection and, therefore his action can be construed as having been ratified. Further, he has claimed that in credit reports prepared jointly by Sr. Manager and Chief Cashier of the branch, parties

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were shown as respectable persons having good commercial reputation and good financial resources. This argument cannot be accepted, as Shri Motwani being a Senior Officer of the Bank and holding overall charge of a branch, is expected to make himself aware about the credit worthiness of the parties while sanctioning/disbursing advances to them, so that Bank’s interests are protected. The fact that large amounts were advanced to different parties without verifying the credentials or their financial statements or obtaining confidential reports about the Directors of the Companies who were granted advances clearly proves that Shri Motwani acted with malafide intentions, and without proper processing of proposals and in violation of rules.

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Relating to Charge No.2, it is established from documentary evidence that Shri Motwani exceeded his powers in sanctioning credit facilities to different parties. He purchased bills amounting to Rs.99.33 lacs in the account of M/s. Dipika Fabrics Pvt. Ltd. And even though bills amounting to Rs.39.36 lacs were overdue, he continued to purchase further bills in the said account. Besides, he sanctioned bills purchase limit of Rs.30.00 lacs and Rs.40.00 lacs to M/s. Hemakute Industrial Investment Co. and Vishal Gems respectively which were beyond his sanctioning powers. Shri Motwani claims that, after sanctioning bills purchase limit to M/s.Vishal Gems, papers were forwarded to Head Officer for confirmation but he was not directed to stop or suspend the limit. The argument of Shri Motwani can not absolve him from the irregularity committed by him in extending the bills purchase facility to the parties against the interests of the Bank. It is thus clear that he abused that he abused his official position and financial vested in him.

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As to Charge No.3, Shri Motwani did not ensure

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adequate security from the parties who were granted credit facilities and/or arrange for creation of charge on security offered by the parties. Equitable mortgage on properties of borrowers were not created before disbursement of credit facilities to them, though creation on such equitable mortgage was one of the stipulations for sanction of such credit facilities. Moreover, he continued purchasing bills offered by parties, though payment for earlier bills purchased were not fothcoming. He also did not initiate steps for taking possession of the goods covered under the bills or informing the Transport Companies to note Bank’s lien on the goods. It has also been established that large suns of Bank’s money were exposed to risk while disbursing under this purchase limit, guarantee limit and letters of credit enquiry and analysis of the financial and other books of the parties. Shri Motwani’s contention in this regard is that the officers at lower levels working under him were required to comply with the sanction stipulation, such as creation of equitable mortgage and they were responsible for the entire procedural and routine work of the Department. According to him, the Asstt. General Manager of a branch cannot be responsible for procedural lapses. This argument of Shri Motwani is not at all acceptable, since the credit facilities were granted to various parties at the branch by him and when he was in overall control of the branch. It was his duty to ensure that credit facilities were granted as per sanction norms and within banking rules, which he failed to do. I therefore hold that he failed to ensure and protect the interest of the Bank and his actions resulted in the Bank being exposed to huge loss of money.

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Documents produced in the equity show that Shri Motwani while recommending credit facilities in favour of a particular party, did not disclose material information that quite a large number of bills of the

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party purchased remained overdue and in fact fave wrong/misleading information that none of the bills of the party purchased was returned unpaid. He thus committed breach of faith in the performance of his duties as alleged in Charge No.4.

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Shri Motwani has claimed that he has retired from the Bank’s service with effect from 1.8.1991 and that it is beyond the competence of the Bank to initiate action after his retirement. This contention of Shri Motwani is not acceptable as vide order dated 15.7.1991 he has been informed that he will retire from the Bank’s service with effect from 1.8.1991.

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After careful examination of the matter in entirety, I am of the opinion that Shri Motwani had indulged in serious irregularities and had embarked on a spree of granting huge credit facilities to different parties without caring for the Bank’s interest and with malafide intentions Shri Motwani, being a senior officer of the Bank, was expected to be prudent/careful in handling the advances portfolio, but he failed to do so as is clearly evident from the enquiry and the documents produced therein. The seriousness of the irregularities committed by Shri Motwani deserves a deterrent punishment. Accordingly, in exercise of the powers vested in me as Disciplinary Authority and in terms of Regulations 7(3) read with 4(h) of the UCO Bank Officer Employees (Discipline & Appeal ) Regulations, 1976, I award Shri Motwani the folliwng penalities for each of the charges is levelled against him, vide the said charge-sheet, and proved in the enquiry:

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Charge No.1 Shri M.B. Motwani is dismissed from the Bank’s service which shall ordinarily be a disqualification for future employment.

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Charge No.2	Shri M.B. from the B ordinarily future emp	Motwani is dismissed ank’s service which shall be a disqualification for loyment.
Charge No.3	Shri M.B. from the B ordinarily future emp	Motwani is dismissed ank’s service which shall be a disqualification for loyment.
Charge No.4	Shri M.B. from the B ordinarily future emp	Motwani is dismissed ank’s service which shall be a disqualification for loyment.

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Sd/-

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General Manager (Personnel) Disciplinary Authority.”

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According to the Petitioner, this order would debar him from future employment.

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Being aggrieved by the said order, he also preferred an appeal before the Appellate Authority. Since the said appeal was not taken up for hearing for a considerable time, the Petitioner wrote various letters. Finally the appeal was heard and rejected on 23rd July, 1997 vide Order Exhibit – Z-6. It is this order, along with

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other two orders, the Petitioner has challenged in the present Writ

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Petition.

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The legality, correctness of the order imposing penalty and the order of Appellate Authority has been challenged in the present Writ Petition, inter alia, but primarily on the following grounds :

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(a) Regulation 20(3)(iii)(c) of the Regulations suffers from serious infirmities and is ultra vires and in any case the provisions thereof could not have been invoked against the Petitioner in the facts and circumstances of the case. Furthermore, the exercise of power under the said Regulation is arbitrary and without proper application of mind.

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(b) The entire departmental proceedings are vitiated for non-payment of the subsistence allowance during the relevant period and in terms of Regulation 14(4) of the Regulations, the proceedings and the order passed by the Respondents including the order of suspension and order under Regulation 20(3)(iii)(c) is bad in law.

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(c) The departmental proceedings are also vitiated as requisite inspection of files and documents were not furnished to the Petitioner and there have been violation of principles of natural justice as adequate opportunity was not awarded to the Petitioner during the commencement of departmental proceedings.

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(d) In terms of Rule 6 of the United Commercial Bank Officers Employees’ (Discipline and Appeal) Regulations, 1976 for imposing any penalty it is a condition precedent that there should be employeremployee relationship. Charge sheet was served upon the Petitioner on 7^th December 1991 when the Petitioner had ceased to be an officer employed by the Bank as he had retired in fact and in law with effect from 1^st August 1991. The letter of 7^th May 1991 declaring and indicating to the Petitioner that he would stand retired from service with effect from 1^st August 1991 had never been superseded and continued to be in force in furtherance to which the Petitioner ceased to be employee of the Respondent Bank. Thus, no order imposing punishment could be passed against the Petitioner.

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In reply to this case of the Petitioner, an affidavit had

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been filed on behalf of the Respondents where the allegation of bias and arbitrariness had been specifically denied. It is averred that the order of suspension, serving of charge sheet and order of punishment have been passed upon due application of mind and in accordance with law. It is denied that the inspection of the relevant files and documents were not provided to the Petitioner to prepare his reply. They were available at the Branch office. It is stated that the service of the Petitioner was extended for limited purpose of completion of the inquiry and subsistence allowance is to be paid to

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an officer who is suspended only till the date of his retirement as is provided under Section 14(4) of the Regulations and it was in these circumstances that the letter dated 3^rd March 1992 was sent to the Petitioner to recover the excess amount of subsistence allowance paid to the Petitioner from 1^st August 1992 as the Petitioner was not entitled to the same.

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In view of the approach that we are proposing to adopt for disposal of this Writ Petition, it may not be necessary to decide all the issues and contentions raised before us. We propose to deal with the question of law at the first instance. The Supreme Court vide its order dated 1^st August 1986 had in unambiguous terms declared Regulation 20 of the United Bank of India (Officers) Regulation, 1979 as unconstitutional and void. The Petitioners involved in those cases were reinstated with full wages. Vide letter dated 28^th May 1986 it was said that in furtherance to the directions of the Government and with the approval of the Board of Directors

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of the Bank, Regulation 20 was proposed to be amended. In the said proposed amended Regulation 20, sub-clause (3c) reads as under :-

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(3c) An officer under suspension on a charge of misconduct shall not be retired or permitted to retire on his reaching the date of compulsory retirement, but shall be retained in service until the enquiry into the charge is concluded and final order is passed thereon.”

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It is on the strength of this provision that the Petitioner was stated to be in deemed service of the Bank and, therefore, liable to face the disciplinary proceedings. Date of retirement of the Petitioner was 1^st August 1991 while the charge sheet itself was prepared and sent to the Petitioner on 7^th December 1991. Vide order dated 15^th July 1991, the Respondents directed that in terms of Regulation 20(3c), the Petitioner shall not retire irrespective of the fact that he had completed the age of superannuation on 1^st August 1991. The Circular which amended Regulation 20(3c) itself pre-supposes that an officer who is under suspension on a charge of misconduct shall not retire or permitted to retire on his attaining the age of superannuation until the enquiry is completed into the charge and final order is passed. In other words, this Regulation is intended to protect the Bank against an employee who is charged

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with misconduct that he may not be permitted to take benefit of retirement till the conclusion of the departmental enquiry. The Circular vests the Bank with a power to pass such an order but the order so passed must satisfy the conditions existing in the order. Regulation 20(3c) has to be examined in contrast to Regulation 20(3a) which requires that where a disciplinary proceedings are pending, the delinquent will not be permitted to resign except with the specific permission of the authorities. The resignation if given would not take effect unless specifically accepted by the authority. This is a limitation imposed on an officer against whom disciplinary

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proceedings are pending preventing him from resigning from service. In the present case, no order of suspension had been passed against the Petitioner till 15^th July 1991 and no charge sheet had been served upon the Petitioner which in fact was served upon him after 7^th December 1991. It, therefore, cannot be said that the Petitioner was placed under suspension by invoking the power under Regulation 20(3c) by the Bank.

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The basic issue that requires consideration is as to whether Regulation 20(3) came in force and if so what is its effect

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on the service conditions of the Petitioner. As already noticed, the existing Regulation 20 was declared ultra vires and unconstitutional by the Supreme Court vide its order dated 1^st August, 1986 (Ref. United Bank of India Officers’ Association and United Bank of India Between United Bank of India and Abhai Kant Jha & Ors., reported in 1987 ILLJ 104 (SC)). Ostensibly the Regulation was sought to be amended vide Circular dated 25^th May 1986 vide which a provision empowering the authorities to continue a person superannuated in employment was proposed to be introduced into the Regulations. The learned Counsel appearing for the Respondents could hardly dispute the fact that it was never given effect to much less it being implemented. It was not even brought to the notice of the Supreme Court before passing of the judgment [( Ref: UCO Bank v. Rajendralal Capoor, (2007)2 SCC 694.]. On the contrary, vide letter dated 21^st October 1987, Ministry of Finance, Government of India, Department of Economic Affairs (Banking Division) noticed:-

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“..... An alternative regulation in place of the one struck down by the Supreme Court is under consideration of the Government. As and when final decision is taken in this regard, this will be communicated to the Banks. Until then no reference

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regarding 20 of the Officers Service Regulations need be made to Government”.

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Furthermore, vide letter dated 15^th December 1988, this stand was reiterated and the Banks were requested not to invoke the provisions of Regulation 20 of the Officers Regulations. These letters have been annexed to the Petition as Exhibits “Y” and “Z” respectively. Finally, vide letter dated 31^st March 1993 of the Personnel Department, it was informed to the concerned quarters that Regulation 20 has been amended and it should be given effect to. In this letter, it was specifically stated that pursuant to the directives of the Government and with approval of the Board of Directors of the Bank accorded in its meeting dated 1^st February 1993, the Regulation has been amended in terms of Section 19(1) of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 with effect from 3^rd June 1992. The amended Regulation 20(3)(iii) stated that a person against whom disciplinary proceedings has been initiated will cease to be in service on the date of superannuation and the disciplinary proceedings will continue. The said Regulation also provided that

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¶140

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 notice has been issued to show cause as to why disciplinary proceedings should not be instituted against him.

¶141

The circular/letter dated 28^th May 1986 issued was only at the proposal stage as it does not give any reference to directions of the Government as well as the date when it was approved by the Board of Directors of the Bank. This proposal in fact and in law was never given effect to and this fact is confirmed by subsequent acts of the Respondents in writing to the Government and not giving effect to the said Circular.

¶142

Even in the reply filed by the Respondents it has no where been averred that the 1986 Circular was taken recourse to at any point of time. Furthermore, the subsequent documents completely put the matter beyond doubt that the Regulation was amended only in 1993.

¶143

¶144

It is clear from the above noticed dates that with effect

¶145

from the date of pronouncement of judgment by the Supreme Court i.e. 1^st August, 1986 till 3^rd June 1992, the date of grant of approval

¶146

by the Board of Directors of the Bank to the Regulations, no such provision was in force. Admittedly, the Petitioner superannuated on 1^st August 1991 and the charge sheet was served upon him on 7^th December 1991.

¶147

In the case of UCO Bank and another vs Rajinder Lal Capoor , (2007) 2 SCC 694, the Supreme Court was dealing with some what similar case. The delinquent had retired on superannuation on 1^st November 1996 from service of the Bank. After two years a charge sheet was issued to him and thereafter penalty of removal from service was imposed. Noticing Regulation 20(3)(iii) of the Regulations, Supreme Court observed that it created a legal fiction and an employee against whom disciplinary proceedings were initiated while he was in service will be deemed to have been continued in service for the purposes of those proceedings even though he actually ceased to be in service after his retirement on superannuation. The Court held as under :-

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“18. The fact that charge-sheet was issued only on 13-11-1998 is not in dispute. It also stands admitted that the respondent attained the age of superannuation on or before 1.11.1996. Disciplinary proceedings admittedly were initiated against the respondent in terms of Regulation 20(3) (iii) of the UCO Bank Officer Employees’ Services Regulation, 1979 which reads as under :-

¶150

“20. (3)(iii) The officer 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 officer concerned will not receive any part and/or allowance after the date of superannuation. He will also not be entitled for the payment of retirement benefits till the proceedings are completed and final order is passed thereon except his own contributions to CPF.”

¶151

A bare perusal of the said provision would clearly show that by reason thereof a legal fiction has been created. We are not oblivious of the legal principle that a legal fiction must be given full effect but it is equally well-settled that the scope and ambit of a legal fiction should be confined to the object and purport for which the same has been created.

¶152

In Dilip S Dahanukar v Kotak Mahindra Co. Ltd, (2007) 6 SCC 528 it was observed: (SCC p 546, para 47)

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“47[46]. Legal fiction, it is well settled, must be construed having regard to the purport of the statute. (See Sadashiv Dada Patil v Purushottam Onkar Patil, (2006) 11 SCC 161, M.P. SEB v Union of India (2006) 10 SCC 736; Maruti Udyog Lad v Ram Lal (2005) 2 SCC 638; Barat Petroleum Corpn. Ltd v P. Kesavan (2004) 9 SCC 772).”

¶155

The aforementioned Regulation, however, could be invoked only when the disciplinary proceedings had clearly been initiated prior to the respondent’s ceasing to be in service. The terminologies used therein are of seminal importance. Only when a disciplinary proceeding has been initiated against an officer of the bank despite his attaining the age of superannuation, can the disciplinary proceeding be allowed on the basis of the legal fiction created thereunder i.e. continue “as if he was in service”. Thus, only when a valid departmental proceeding is initiated by reason of the legal fiction raised in terms of the said provision, the delinquent officer would be deemed to be in service although he has reached his age of superannuation. The departmental proceeding, it is trite law, is not initiated merely by issuance of a show-cause notice. It is initiated only when a charge-sheet is issued (see Union of India v K.V. Jankiraman (1991) 4 SCC 109). This aspect of the matter has also been considered by this Court recently in Coal India Ltd. V Saroj Kumar Mishra (2007) 9 SCC 625 wherein it was held tht date of application of mind on the allegations levelled against an officer by the competent authority as a result whereof a charge-sheet is issued would be the date on which the disciplinary proceedings are said to have been initiated and not prior thereto.

¶156

¶157

Pendency of a preliminary enquiry, therefore, by itself cannot be a ground for invoking Clause 20 of the Regulations. Albeit in a different fact situation but involving a similar question of law in Coal India Ltd. this Court held :

¶158

“13. It is not the case of the appellants that pursuant to or in furtherance of the complaint received by the Vigilance Department, the competent authority had arrived at a satisfaction as is required in terms of the said circulars that a chargesheet was likely to be issued on the basis of a preliminary enquiry held in that behalf or otherwise.

¶159

The circular letters issued by the appellants put restrictions on a valuable right of an employee. They, therefore, are required to be construed strictly. So construed there cannot be any doubt whatsoever that the conditions precedent contained therein must be satisfied before any action can be taken in that regard.”

¶160

It was furthermore observed that :

¶161

“20. A departmental proceeding is ordinarily said to be initiated only when a charge-sheet is issued”.

¶162

(See also Union of India v Sangram Keshari Nayak (2007) 6 SCC 704)

¶163

The respondent, therefore, having been allowed to superannuate, only a proceeding, inter alia, for withholding of his pension under the Pension Regulations could have been initiated

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against the respondent. Discipline and Appeal Regulations were, thus not attracted. Consequently the charge-sheet, the enquiry report and the orders of punishment passed by the disciplinary authority and the appellate authority must be held to be illegal and without jurisdiction.

¶166

An order of dismissal or removal from service can be passed passed only when an employee is in service. If a person is not in employment, the question of terminating his services ordinarily would not arise unless there exists a specific rule in that behalf. As Regulation 20 is not applicable in the case of the respondent, we have no other option but to hold that the entire proceeding initiated against the respondent became vitiated in law.”

¶167

Again, the above case came in review before the Supreme Court in (2008) 2 SCC 257 , where the Court clarified

¶168

the principle applicable and held as under :-

¶169

“4. A writ petition filed by him was allowed. The petitioner Bank filed an appeal upon grant of special leave thereagainst. One of the questions which arose for consideration before this Court was whether in absence of any charge-sheet having been issued, the disciplinary proceedings could be said to have been initiated in view of the decisions of this Court in Union of India v K.V. Jankiraman, (1991) 4 SCC 109, Union of India v Sangram Kehsari Nayak (2007) 6 SCC 704 and Coal India Ltd v Saroj Kumar Mishra (2007) 9 SCC 625.”

¶170

¶171

xxxxx xxxxx xxxxx

¶172

It is worth noticing that the 1979 Regulations would be attracted when no disciplinary proceeding is possible to be initiated The 1976 Regulations, however, on the other hand, would be attracted when a disciplinary proceeding is initiated, Both operate in separate fields. We do not see any nexus between Regulations 20(1) and 20(2) of the 1979 Regulations and the 1976 Regulations.

¶173

The 1976 Regulations provide for the mode and manner in which a disciplinary proceeding is initiated. It expressly provides for service of charge-sheet. Service of charge-sheet is a necessary ingredient for initiation of disciplinary proceedings. A preliminary enquiry is not contemplated under the 1976 Regulations. If such an enquiry is held, the same is only for the purpose of arriving at a satisfaction on the part of the disciplinary authority to initiate a proceeding and not for any other purpose.

¶174

If it is found that a disciplinary proceeding can be and should be initiated, recourse to the 1976 Regulations would have to be taken, if not, the 1979 Regulations may be resorted to if the conditions precedent therefor are satisfied. It is only with a view to put an embargo on the officer to leave his job. Clause (ii) of sub-regulation (3) of Regulation 20 of the 1979 Regulations has been made. It’s scope is limited.

¶175

We have noticed hereinbefore that each regulations operate in different fields. When a proceeding is initiated for the purpose of taking any disciplinary action on the ground of any misconduct

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which might have been committed by the officer concerned indisputably the procedures laid down in the 1976 Regulations are required to be resorted to.

¶178

The 1979 Regulations would be attracted only for the purpose of termination of service. Had the intention of the regulation-making authority been that the legal fiction created under Clause (ii) of sub-regulation (3) of Regulation 20 would cover both Clauses (i) and (iii), the same should have been placed only after Clause (iii). In such an event, Clause (ii) of sub-regulation (3) of Regulation 20 should have been differently worded. Some non-obstante clause would have been provided for making an exception to the applicability of the 1976 Regulations when a legal fiction is created, although it is required to be taken to the logical conclusion (see East End Dwellings Co Ltd v Finsbury Borough Council 1952 AC 109), but the same would not mean that the effect thereof would be extended so as to transgress the scope and purport for which it is created.

¶179

xxxxx xxxxx xxxxx

¶180

In terms of the 1976 Regulations drawing up of a charge-sheet by the disciplinary authority is the first step for initiation of a disciplinary proceeding. Unless and until, therefore, a charge-sheet is drawn up, a disciplinary proceeding for the purpose of the 1976 Regulations cannot be initiated. Drawing up of a charge-sheet, therefore, is the condition precedent for initiation of a disciplinary proceeding. We have noticed in para 15 of our judgment that ordinarily no disciplinary proceedings can be continued in absence of any rule after an employee reaches his age of superannuation. A rule which would enable the disciplinary authority to continue a disciplinary

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proceeding despite the officers reaching the age of superannuation must be a statutory rule. A fortiori it must be a rule applicable to disciplinary proceedings.

¶183

There cannot be any doubt whatsoever that the employer may take resort to a preliminary inquiry, but it will bear repetition to state that the same has a limited role to play. But, in absence of the statutory rules operating in the field, resorting to a preliminary enquiry would not by itself be enough to hold that a departmental proceeding has been initiated.”

¶184

In the above cases, the Supreme Court also held that 1979 Regulations and the 1976 Regulations operate in different fields and Regulation 20(1) and Regulation 20(2) of the respective years do not operate in the same field. 1979 Regulation are attracted in the case of a termination, which creates a legal fiction as noticed above. Scope of either of them cannot be extended by interpretative process.

¶185

Even in the case of U.P. State Sugar Corporation Ltd and others v Kamal Swaroop Tandon, (2008) 2 SCC 41, the Supreme Court while dealing with the case of Resident Engineer with the said Corporation and where the show cause notice was issued

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¶187

against him proposing to initiate departmental proceedings on allegation of Corporation having suffered losses, and which was served upon the officer on the last day of his superannuation after office hours, Supreme Court held that disciplinary proceedings could be continued, observing as follows:-

¶188

“Considering the facts and circumstances in their entirety, in our considered opinion, the High Court was wrong in holding that the proceedings were initiated after the respondent retired and there was no power, authority or jurisdiction with the Corporation to take any action against the writ petitioner and in setting aside the orders passed against him. In our judgment, proceedings could have been taken for the recovery of financial loss suffered by the Corporation due to negligence and carelessness attributable to the respondent employee. The impugned action, therefore, cannot be said to be illegal or without jurisdiction and the the High Court not right in quashing the proceedings as also the orders issued by the Corporation. The appeal, therefore, deserves to be allowed by setting aside the order of the High Court.”

¶189

The above judgment on facts would not apply to the

¶190

facts in hand as in the present case charge sheet was not served on or before the date of superannuation and was served subsequently

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on 7^th December, 1991.

¶193

A Bench of Delhi High Court in the case of D.B. Madan v Punjab National Bank and another , (LPA 754 of 2008 and CM Appl. No. 17396 of 2008 dated 16^th December 2008), while dealing with some what similar provisions relating to the Punjab National Bank Officers Service Regulations, 1979 referred the position of law reiterated by the Supreme Court in Rajinder Lal Capoor-II (supra), where it was explained that 1979 Regulations would be attracted when no disciplinary proceeding is possible to be initiated, whereas 1976 Regulations would be attracted when disciplinary proceeding is initiated. The Court while, prima facie, holding that the Appellant therein had made out a case for grant of stay of further disciplinary proceedings observed as under :-

¶194

“7. The relevant applicable regulations are the Punjab National Bank (Officers) Service Regulations 1979 (Regulations). Regulation 20(3) (ii) and (iii) which are relevant for the present purpose reads as under : 20(3)(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

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¶196

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 officer 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 payment of retirement benefits till the proceedings are completed and final order is passed thereon except his own contribution to CPF.

¶197

On the strength of the judgment of the Supreme Court in Ramesh Chandra Sharma v Punjab National Bank 2007 (8) Scale 240, it is contended by learned counsel for the Respondent that it was permissible for the Respondent Bank to continue the disciplinary proceedings in the instant case in terms of Regulation 20(3)(iii). On the other hand learned counsel for the Appellant sought to place reliance on the judgment in UCO Bank v Rajinder Lal Capoor-I (2007) 6 SCC 694 which has been reiterated in the subsequent judgment in UCO Bank v Rajinder Lal Capoor-II (2008) 5 SCC 257.

¶198

At the outset we notice that the judgment in Ramesh Chandra Sharma has no application as the present cae is concerned. The question there was whether the disciplinary proceedings which commenced prior to the superannuation of the employee in the said case on 31^st January 1997 could be continued thereafter. The question in the present case however is whether the disciplinary proceedings had in fact been initiated against the Appellant in terms of

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Regulation 20(3)(iii) read with Section 20(3)(ii) of the Regulation prior to his superannuation. This question appears to have been considered by the Supreme Court in UCO Bank v Rajinder Lal CapoorI (supra) while interpreting the identically wording regulation governing the Officers of the UCO Bank. It was explained that the departmental proceeding, it is trite law, is not initiated merely by issuance of a show cause notice. It is initiated only when a charge sheet is issued. Consequently it was held that the respondent having been allowed to superannuate, only a proceeding, inter alia, for withholding of his pension under the Pension Regulations could have been initiated against him. Discipline and Appeal Regulation were not attracted.

¶201

This was reiterated by the Supreme Court in Rajinder Lal Capoor-II where it was explained that 1979 Regulations would be attracted when no disciplinary proceeding is possible to be initiated. It was explained that the 1976 Regulations would however be attracted when disciplinary proceeding is initiated. In terms of 1976 Regulations drawing up of a charge sheet by the disciplinary authority is the first step for initiation of a disciplinary proceeding, and that unless and until, a charge sheet is drawn up, a disciplinary proceeding for the purpose of the 1976 Regulations cannot be initiated.

¶202

In the instant case it is an admitted position that the charge-sheet as not drawn up prior to the superannuation of the Appellant. Prima facie therefore it appears that the Appellant is made out a case for grant of stay of further disciplinary proceedings.”

¶203

¶204

From the judgment afore-noticed in the case of UCO Bank v. Rajendralal Capoor, where the Supreme Court has considered this very Regulation, it is clear that departmental proceedings shall be deemed to have been initiated only with the service of the charge sheet. In other words, as no charge sheet was served upon the Petitioner till the date of his superannuation, no disciplinary proceedings could be deemed to have been commenced against him in law. Firstly, no Regulation was in force right from 1986 till 1992 and, secondly, even if it is assumed that the old Regulation of 1986 was in force, still the Respondents can hardly take any advantage therefrom as the disciplinary proceedings by issuing actual charge sheet had not been initiated against the delinquent officer prior to his retirement.

¶205

It is also argued before us that the departmental enquiry is vitiated being in violation of the principles of natural justice, subsistence allowance has not been paid to the Petitioner in accordance with the Rules and the entire proceedings were commenced and concluded because of personal bias of the

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concerned authorities. In view of our finding above, it is not necessary for us to go into these disputed questions of facts as well as the question of constitutionality of Regulation 20(3)(iii)(c) or it being ultra vires. We leave this question of law also open to be gone into in an appropriate case. On facts, we are not prepared to accept the arguments raised on behalf of the Respondents that departmental proceedings have commenced prior to the retirement of the Petitioner. It is more so when Regulation No.20 was not in force during the relevant period.

¶208

In view of our above discussion, we allow the Writ Petition, make the Rule absolute and set aside the orders dated 3^rd March, 1993 and 23^rd July, 1993. The Petitioner would be entitled to full salary and benefits till the date of his retirement i.e. 1^st August 1991.

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CHIEF JUSTICE

¶210

A.M. KHANWILKAR, J

M.B.Motwani v. Uco Bank and Ors.

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