Partly allowed

Sri K G Venkatesh v. Canara Bank

Karnataka HC11 Dec 2023WP/23889/2012

Case brief

AI extract

What is this about?

The High Court substituted the petitioner's removal from service with compulsory retirement for procedural loan irregularities lacking financial motive or loss to the bank, treating the penalty as grossly disproportionate given one year of remaining service.

What did the court decide?

Petitioner compulsorily retired with effect from 13.09.2009; ordered to be paid all benefits of compulsory retirement within two months, treating the place as though removal never existed.

Sri K G Venkatesh Vs Canara Bank — Pension and Retirement Benefits | Karnataka HC (2023)

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1 - NC: 2023:KHC:44960 WP No. 23889 of 2012

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IN THE HIGH COURT OF KARNATAKA AT BENGALURU

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DATED THIS THE 11^TH DAY OF DECEMBER, 2023

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BEFORE

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THE HON’BLE MR JUSTICE N S SANJAY GOWDA WRIT PETITION NO. 23889 OF 2012 (S-DE)

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BETWEEN:

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SRI K G VENKATESH

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S/O LATE K.S.GOPALACHAR AGED 59 YEARS, EARLIER WORKING AS MANAGER, AT CANARA BANK, SINCE ILLEGALLY REMOVED FROM SERVICE, AND RESIDING AT NO.1109, III MAIN, II BLOCK, BEL LAYOUT, VIDYARANYAPURA, BANGALORE-560097.

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…PETITIONER

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(BY SRI. ANANDARAMA, ADVOCATE)

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AND:

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CANARA BANK

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Digitally signed by KIRAN KUMAR R Location: HIGH COURT OF KARNATAKA

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A BODY CONSTITUTED UNDER THE BANKING COMPANIES (ACQUISITION AND TRANSFER OF UNDERTAKINGS) ACT, 1970 HAVING ITS HEAD OFFICE AT NO.112, J.C.ROAD, BANGALORE-560002 REPRESENTED BY ITS GENERAL MANAGER.

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…RESPONDENT

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(BY SRI. P UDAYA SHANKAR PAI., ADVOCATE)

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THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA, PRAYING TO CALL FOR RECORDS QUASH THE ORDER DATED 30.9.09 PASSED BY THE DISCIPLINARY AUTHORITY VIDE ANNEXURE-H ORDER DATED 13.3.10 PASSED BY THE APPELLATE AUTHORITY VIDE

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ANNEXURE-M AND ORDER DATED 16.4.12 PASSED BY THE REVIEWING AUTHORITY VIDE ANNEXURE-Q AND CONSEQUENTLY GRANT ALL CONSEQUENTIAL BENEFITS TO THE PETITIONER INCLUDING BACKWAGES, INCREMENTS, SENIORITY PROMOTIONS ETC AS IF THE ORDER OF PENALTY WAS NEVER IN EXISTENCE.

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THIS PETITION, COMING ON FOR HEARING, THIS DAY, THE COURT MADE THE FOLLOWING:

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ORDER

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On 22.05.2008, the petitioner was charged with the

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following misconduct:

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“Till Feb.2006, you had sanctioned 47 tractor loans amounting to Rs.2.12 crores. Various irregularities/deficiencies in the sanction of the said tractor loans have come to light, which reveals that you have failed to safeguard the interests of the Bank and thus you have exposed the Bank to huge financial risk/loss. The details of the charges are more fully enumerated in the Statement of Imputations to this Articles of Charge.”

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The details of the charges, as indicated in the

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Statement of Imputations to the Articles of Charge, is as follows:

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3 - NC: 2023:KHC:44960 WP No. 23889 of 2012

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“Sri K.G.Venkatesh (21104), Manager, is presently working at our Baragur branch since 30.05.05.

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Till Feb.2006, he had sanctioned 47 Tractor Loans amounting to Rs.2.12 Crores.

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In violation of HO Circular no.232/05, Sri K.G.Venkatesh sanctioned the following Tractor Loans to parties who were residing beyond 16 Kms:

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ALFM 8810, 8808, 8761, 8833, 8832, 8958, 8802, 8902, 8634, 8630 AND 8612.

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In respect of the following loans nonsupply of accessories/implements were noticed:

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ALFM-8187, 8269, 8352, 8353, 8413, 8468, 8489, 8612, 8630, 8607, 8634, 8701, 8717, 8744, 8742, 8745, 8748, 8800, 8802, 8832, 8835, 8834, 8838, 8901, 8902, 8958, 8766, 8555, 8729, 8900 and 8612.

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In terms of Circular no.190/2003, to be eligible for Tractor loan, borrower should have not less than 4 acres of irrigated land or 8 acres of dry land. In

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NC: 2023:KHC:44960 WP No. 23889 of 2012

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violation of the guidelines, Sri. K.G.Venkatesh sanctioned the

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following loans to ineligible borrowers:

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Loan No.	Details of Land	Holdings
8493	5.5 acres –(4 acre and 1.5 acres of wet	s of dry land land)
8555	5.22 acres (3.22 acr and 2 acres of wet la	es of dry land nd)
8810	7.90 acres of dry RTC)	land (as per
8717	7.00 acres of dry RTC)	land (as per
8835	7.05 acres of dry RTC)	land (as per
8766	6.49 acres (2.30 land)	acres of wet
8833	7.14 acres (3.07 acr land)	es of irrigated
8742	5.15 acres of dry RTC)	land (as per
8720	5.70 acres of dry RTC)	land (as per
8729	5.70 acres of dry RTC)	land (as per
8834	7.14 acres (1.5 acr land and rest dry lan	es of irrigated d)

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In respect of Tractor Loan no.8353 sanctioned on 14.09.05 to Sri Boothanna, it is observed that the SB Account in the name of Sri Boothanna was opened only on 3.10.05. Besides, margin amount of Rs.70,000/- was debited to SB A/c no.14856 of one Sri Buddappa, an illiterate customer and without his knowledge, instead of recovering the

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5 - NC: 2023:KHC:44960 WP No. 23889 of 2012

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margin amount from Sri Boothanna. Only at a later date, Sri Thipeswamy, Boothanna’s son, remitted the sum of Rs.70,000/to the SB Account of Buddappa. Thus Sri. K.G.Venkatesh resorted to unauthorized debit to accommodate the Tractor Loan in the name of Sri Boothanna.

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In respect of the following Tractor Loans, margin amount was not brought in as per Bank’s guidelines:

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Tractor Loan no.8837, 8745, 8744, 8489, 8745, 8833.

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In respect of Tractor Loan 8810, the invoice was for the supply of 40 HP engine, whereas tractor with capacity of 35HP engine was supplied and thus excess finance was made to the party.

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In respect of Tractor Loan account no.8834, simple mortgage was created on 3.1.06 by obtaining LTM of one Sri.Doddamallappa, who was not the owner of the land. Thus he had failed to ascertain the true identity of the borrower while creating simple mortgage and allowed impersonation to take place,

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which act had exposed the Bank to huge financial risk. However, on 3.3.06, fresh simple mortgage was created by obtaining the signature of Sri Doddamallappa, who is the true owner of the lands.

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Sri K.G.Venkatesh had sanctioned KCC loan in respect of following parties either to meet the margin money for tractor loans or for recovery of other loans or when there were arrears under

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Installments/interest in Tractor Loans:

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Date of Tractor Loans	Date of KCC loans	Loan no.	Name of the party	Amt of KCC loan.
7.1.06	14.6.06	8835	Doddahanumanthappa	Rs.25,000/-
19.9.06	30.10.05	8358	Jayalakshmi	Rs.25,000/-
Adjusted to Tractor Loan no. 2458	9.6.06	8458	Dinesh L	Rs.50,000/-
14.09.06	8.10.05	8353	Bhoothanna	Rs.50,000/-
9.8.05	8.10.05	8187	Gundegowda	Rs.40,000/-
25.10.05	30.10.05	8509	Nagaraju	Rs.40,000/-
14.9.05	11.10.05	8352	Doddahanumakka	Rs.1,00,000/-
7.1.06	17.01.06	8832	Akalappa	Rs.50,000/-
4.2.06	14.2.06	8902	Govindappa	Rs.50,000/-
7.1.06	17.1.06	8933	Narayana Reddy	Rs.50,000/-
21.2.06	21.2.06	8958	Jhoolappa	Rs.50,000/-
20.12.06	2.1.07	8802	Ramanjappa	Rs.50,000/-

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Sri K.G.Venkatesh’s explanation was called for vide letter

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NC: 2023:KHC:44960 WP No. 23889 of 2012

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no.BLRC:HRM:1813:EP dated 14.8.07 and his reply dated 30.08.07 is not satisfactory.”

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The second charge against the petitioner was as

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follows:

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“ ARTICLES OF CHARGE-II:

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You are presently working at our Baragur

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branch since 30.5.05. You are maintaining your accounts in your individual name and/or jointly with others, wherein huge number of cash/other transactions, which are beyond known source of your income, have been observed. You have also not specifically reported transactions beyond Rs.25,000/-, but on the contrary, you have deliberately suppressed information by submitting NIL returns.

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There are, therefore, reasons to believe that you had huge disproportionate income, which information you had suppressed from the Bank.

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Detains of such huge cash/other transactions are furnished in the

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8 - NC: 2023:KHC:44960 WP No. 23889 of 2012

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Statement of Imputations to this Articles of Charge-II.

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By your actions, you have failed to perform your duties with utmost honesty, integrity, devotion and diligence and thus acted in manner, which is unbecoming of an officer of the Bank. Thus you have contravened Regulation 20(4) and 3(1) read with Regulation 24 of Canara Bank Officer Employees’ (conduct) Regulations, 1976, which is a misconduct punishable under Canara Bank Officer Employees’ (Discipline & Appeal) Regulations, 1976.”

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The petitioner submitted his defence contending that

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he had not deviated from any procedure and he had sanctioned the loans on the basis of the oral permission granted from the Bangalore Circle Office and also due to pressure from the head office. He did admit that he had gone beyond 16 km and did only with the intent of improving the scheme of advances. He also contended that there were no other banks nearby and therefore, the loans were granted even in respect of the areas beyond 16 km.

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9 - NC: 2023:KHC:44960 WP No. 23889 of 2012

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He also contended that he had taken permission of

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the then AGM and before disbursing the loans, he had also taken a copy of the CR (Credit Report) and submitted the same to the Senior Manager.

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As for the loans granted in respect of the borrowers with ineligible holdings, he contended that at the time of inspection, the lands were irrigated and were having a good supply of water from the bore-wells and therefore, he had treated them as irrigated lands and advanced the loans.

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As far as the allegation that the margin money was debited to the account of Buddappa, he stated that Buddappa was none other than the brother of Boothanna and with his consent, the margin money was debited. He also stated that this margin money was subsequently remitted to the son of Boothanna and therefore, there was no irregularity in the transactions.

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NC: 2023:KHC:44960 WP No. 23889 of 2012

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As regards the second charge of having a large number of cash transactions in his accounts, he stated that he had a joint account with his brother and the sums received by his brother from the KSFC has been debited to his account and that was the reason for the large number of transactions.

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After an enquiry was conducted, the charges mentioned at Sl.Nos.1, 2, 3, 4 and 7 of the statement of imputations were held to be proved.

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The second article of charge was also held to be proved.

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The petitioner was asked to show cause to the enquiry report and after considering the cause shown by the petitioner, the Disciplinary Authority proceeded to accept the enquiry report and proceeded to impose the punishment of removal from service, which should not be a disqualification for future employment.

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NC: 2023:KHC:44960 WP No. 23889 of 2012

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12. Being aggrieved, the petitioner preferred an appeal

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which was also dismissed.

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Hence, the present writ petition.

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As could be seen from the statement of imputations,

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in respect of the charges that were held to be proved, none of the allegations relate to any financial loss caused to the Bank or that the petitioner was guilty of misappropriating any sums or acting with the financial motive.

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The charges, even if held to be proved, basically relate to the irregularities in the sanctioning of the loans. The Bank has, however, not made any allegations that the loans that had been sanctioned by the petitioner became bad loans and the bank suffered any financial loss, though the charge-sheet was laid nearly three years after the loans were granted.

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The second Article of charge, which was also held to be proved against the petitioner, is in relation to the

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12 - NC: 2023:KHC:44960 WP No. 23889 of 2012

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transactions that happened in his savings bank. There is, however, no allegation that the amounts which were deposited in his account were the proceeds of any illegality.

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The petitioner has also defended himself by stating that the said account was a joint account with his brother and due to his brother’s transactions with the KSFC, there were a large number of transactions.

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The petitioner was admittedly given a fair opportunity of hearing and also permitted to put forth his defence. Therefore, the finding of guilt recorded by the enquiry officer cannot really be found fault with. However, as already noticed above, since none of the charges imputed any financial benefit to the petitioner or indicated that there is any financial loss to the Bank and only relate to the irregularities in the sanctioning of the loan, in my view, the punishment of removal from service when he had just one year of service left, was grossly

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NC: 2023:KHC:44960 WP No. 23889 of 2012

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disproportionate to the charges, which are held to be proved against the petitioner.

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In my view, therefore, it would be appropriate to substitute the punishment of removal from service with that of compulsory retirement.

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The petitioner shall stand compulsorily retired from service with effect from 13.09.2009.

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He shall, consequently, be paid all other benefits that

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arise out of him being compulsorily retired from service, within a period of two months from the date of receipt of a copy of this order.

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22. The writ petition is accordingly allowed in part.

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Sd/JUDGE

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List No.: 2 Sl No.: 2

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Sri K G Venkatesh v. Canara Bank

Case brief

What is this about?

What did the court decide?

Sri K G Venkatesh v. Canara Bank

Case brief

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