Partly allowed

The Karnataka State Co. Operative v. Sri M B Parameshwar

Karnataka HC9 Jul 2024WP/19368/2019

Case brief

AI extract

What is this about?

A co-operative bank challenged the Registrar's order and Tribunal's confirmation setting aside compulsory retirement of its clerk for lack of evidence and natural justice violations. The court held the Section 70 dispute was not premature, upheld findings that charges were unproved, but modified back wages to 50% of last drawn salary with 6% interest.

What did the court decide?

Writ petition allowed in part; financial benefits computed at 50% of last drawn salary from suspension to superannuation, with increments, payable within 8 weeks with 6% interest.

The Karnataka State Co. Operative Vs Sri M B… — Cooperative Societies | Karnataka HC (2024)

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NC: 2024:KHC:26218 WP No. 19368 of 2019

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IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 9^TH DAY OF JULY, 2024 BEFORE

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THE HON'BLE MR JUSTICE B M SHYAM PRASAD WRIT PETITION NO. 19368 OF 2019 (S-REG)

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BETWEEN:

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THE KARNATAKA STATE CO-OPERATIVE APEX BANK LIMITED NO.1, PAMPAMAHAKAVI ROAD CHAMRAJPET BENGALURU-560018 REPRESENTED BY ITS CHIEF EXECUTIVE OFFICER.

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…PETITIONER

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(BY SRI. ABHINAV RAMANAND A., ADVOCATE)

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AND:

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Digitally signed by ANAND N Location: HIGH COURT OF KARNATAKA

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SRI M B PARAMESHWAR AGED ABOUT 69 YEARS S/O SRI BACHHA PUJARI NO.415, 7^TH MAIN ISRO LAYOUT BENGALURU-560078.

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THE ADDITIONAL REGISTRAR OF CO-OPERATIVE SOCIETIES, ALI ASKAR ROAD BENGALURU-560001.

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…RESPONDENTS

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(BY SRI.V.S. NAIK, ADVOCATE FOR R1; SRI. GOPALA KRISHNA SOODI, AGA FOR R2)

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THIS W.P. IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO QUASH THE ORDER DATED 23.8.2018 AT ANNEXURE-N PASSED BY THE KARNATKAA APPELLATE TRIBUNAL IN APPEAL NO.345/2018; QUASH THE ORDER DATED 25.4.2008 AT ANNEXURE-M OF THE W.P. PASSED BY THE R-2 AND DISMISS THE DISPUTE PREFERRED BY THE R-1 BY ALLOWING THE PRESENT W.P.

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

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ORDER

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The first respondent was in employment with the petitioner, and he is compulsorily retired after conclusion of the disciplinary proceedings. The Order dated 29.03.2004 in this regard is by the petitioner's Managing Director who is also the first respondent's Disciplinary Authority. The first respondent has raised dispute against this Order dated 29.03.2004 under Section 70 of the Karnataka Co-operative Societies Act, 1959 [for short, ' the Act' ] with the second respondent in Dispute No. A [I & M] D2/3119/2004-05.

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The second respondent, by its Order dated 25.04.2008 [Annexure-M], has quashed the Disciplinary Authority's Order dated 29.03.2004 with the direction to the petitioner to reinstate him paying all back wages and extending consequential service benefits. The petitioner has called in question the second respondent's Order dated 25.04.2008 with the Karnataka Appellate Tribunal, Bengaluru [ the Tribunal ] in Appeal No.345/2008. The Tribunal, by the impugned Order dated 23.08.2018 [Annexure-N], has confirmed the second respondent's Order. The petitioner has therefore called in question these orders by the second respondent and the Tribunal.

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The first respondent is appointed initially as a Night Watchman, and he is promoted as a Bill Collector and next as a Clerk. The petitioner on a complaint, subject to initiation of disciplinary proceedings, has kept the first respondent under suspension and has later appointed an Inquiry

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Officer. The first respondent is served with the article of charges, and these charges are that:

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[a] he has received a sum of Rs.45,000/from a certain Sri B Dhananjaya with a promise of getting him a job,

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[b] he was receiving frequent personal calls during working hours and was not attentive in his work leading to many mistakes, and

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[c] he has left headquarters during the suspension period without prior permission from the employer.

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If the first date of hearing in the inquiry was on 10.09.2003, the first respondent, on 21.10.2003, has sought for time to file his version. The Branch Manager and the Presenting Officer are presented as witnesses. The statements filed by these persons in writing are received in evidence.

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The Inquiry Officer has deferred the

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proceedings to 30.10.2003, and the Inquiry Officer

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has finally closed the proceedings on 05.11.2003. The first respondent, on this day, has filed his written submission, and when asked to cross examine the Presenting Officer, he has informed the Inquiry Officer that he has nothing to ask the Presenting Officer in cross examination. The Inquiry Officer has filed his Report dated 07.01.2004. The Managing Director, in exercise of powers vested under Rule 33 of the petitioner's Subsidiary Rules and considering the explanation filed by the first respondent in response to the notice given, has found the first respondent guilty of misconduct and compulsorily retired him from service with immediate effect.

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The first respondent has impugned the Disciplinary Authority's Order raising a dispute under Section 70 of the Act. The second respondent, the adjudicating authority under Section 70 of the Act, has opined [i] that the Presenting Officer in presenting the petitioner's case in Inquiry and in

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introducing his statement in writing in evidence, has played dual role which is impermissible, and [ii] that though Sri B Dhananjaya is cited as witness, he is not examined and because he is not examined, the first respondent has not got the opportunity to cross examine the witness and hence the disciplinary proceedings are vitiated.

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The Tribunal, on 23.08.2018, has

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dismissed the petitioner’s appeal against the second respondent's Order answering the question whether the petitioner has made out a case for setting aside such Order. In the proceedings with the Tribunal, the petitioner has chiefly contended [i] that the first respondent could not have raised a dispute under Section 70 of the Act without first availing the appellate remedy under the Subsidiary Rules, [ii] that though the complainant [Sri B Dhananjaya] is not examined, the petitioner is able to bring on record the instrument [cheque] issued by the first respondent to

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the complainant to repay Rs.45,000/- received as consideration, as also the Promissory Note issued in these regards, [iii] that the first respondent has not let in any evidence to undermine the probative value

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of the afore documents, and [iv] that the second respondent could not have opined that the proceedings are vitiated because the Presenting Officer has himself offered his statement as evidence in the case.

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The Tribunal, insofar as the first respondent raising a dispute under Section 70 of the Act, has opined that the provisions of Rule 34 of the Subsidiary Rules do not restrict a delinquent employee from raising a dispute without availing the appellate remedy. As regards the evidence that is let in by the petitioner to establish the charges against the first respondent, the Tribunal has opined that because the complainant [ Sri B Dhananjaya ] is not examined, any conclusion on the first respondent

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receiving Rs.45,000/- as consideration for a promise to get employment with the petitioner would be based on surmises and punishment cannot be imposed on the basis of surmises. The Tribunal has also opined that the Petitioner cannot rely upon the Presenting Officer’s written statement.

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The Tribunal, as regards the other charges viz., the first respondent receiving frequent calls and the creditors creating nuisance, has observed none of those who have allegedly visited the Bank are examined. In fact, the Tribunal has observed that even the Police Constable, who allegedly visited the Bank's premises is not examined. The Tribunal, has of course, reiterated the second respondent's opinion that the Presenting Officer in offering his own statement as evidence has played a dual role and that has vitiated the proceedings.

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Sri Abhinav A Ramanand, the learned

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counsel for the petitioner, submits that the Tribunal

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has erred in opining that the petitioner could not have raised a dispute under Section 70 of the Act without availing the appellate remedy because unless the petitioner availed the appellate remedy, there would not be a dispute for adjudication under Section 70 of the Act. The learned counsel canvasses the following to buttress this contention.

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[i] The provisions of Sections 28A and 28C of the Act [more particularly, the provisions of Section 28C[2] of the Act] vest the Management of any Co-operative Society in its Board, including all powers as are contemplated under the Act, Rules and the Bye-laws [Subsidiary Rules].

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[ii] The Board lays down the procedures for the conduct of disciplinary proceedings against a delinquent employee and impose proportionate penalty subject to its Bye-laws, and therefore, primacy is attached to the Board's decision.

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[ii] The provisions of Rule 33 of the Subsidiary Rules stipulate that the Managing Director is

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competent to impose punishment in respect of the employees. These Rules also provide first appeal to the President and second appeal to the Board.

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[iv] This Scheme is in consonance with the afore provisions of the Act which vests in the Board of a Co-operative Society the predominant position to exercise powers and discharge duties as is required under the Act and Rules and the Subsidiary Rules, and if the first respondent has chosen not to avail these remedies and invite the Board’s opinion, this Court must necessarily view the dispute as premature and therefore interfere with the impugned orders.

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Sri Abhinav Ramanand next submits that

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the second respondent/the Tribunal could not have drawn any inference against the petitioner on the ground that the complainant is not examined because the petitioner has brought on record a signed complaint given by the Complainant apart from the cheque issued by the first respondent and the Promissory Note signed by him. The learned

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counsel argues that the afore will constitute sufficient evidence in the light of the indisputable proposition that strict rules of evidence would not apply in the departmental proceedings and the evidence must be assessed on the scale of preponderance of probabilities.

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Sri Abhinav Ramanand argues that the first respondent cannot complain of lack of opportunity to cross examine the Presenting Officer because it is indisputable that though the first respondent was extended with such opportunity, he has not availed the same and the first respondent never raised any grievance about the lack of opportunity to cross examine the petitioner's other witness. The learned counsel also canvasses that neither the second respondent nor the Tribunal could have taken exception with the Presenting Officer examining himself as a witness or tendering his signed statement as evidence.

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Sri V S Naik, the learned counsel for the

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first respondent, on the other hand, submits that this Court must examine the petitioner's case that the dispute is premature in the light of the decision of the Full Bench of this Court in 'H S Rangaramu v. The

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Management of Karnataka State Road Transport Corporation, Mysore and Others'¹ . The learned counsel submits that this decision is an authority for the proposition that a reference under the provisions of Section 10[4-A] of the Industrial Disputes Act, 1947 cannot be denied if the regulations of an establishment are not intended, or required, to resolve the dispute between a workman and the Management.

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Sri V S Naik argues that, similarly,

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Section 70 of the Act provides a statutory resolution of a dispute between a Co-operative Society and its employees, and that this statutory remedy cannot be

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1 ILR 2002 KAR 2768

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denied only on the ground that the appellate remedy under the Subsidiary Rules are not availed when the Subsidiary Rules do not stipulate that the Orders of the Disciplinary Authority will take effect only subject to the Board’s orders.

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Sri V S Naik, on the question of the departmental proceedings being vitiated because the Presenting Officer has offered his signed statement in evidence, submits that he cannot join debate with Sri Abhinav Ramanand and that it would be open to the Management, when the circumstances so justify, to introduce the statement of a Presenting Officer in evidence or examine the Presenting Officer himself as evidence. However, the learned counsel argues that the essential aspect of the dispute in the present case is that the petitioner relies upon the evidence of a Branch Manager to prove the allegations against the first respondent that he has received money with the promise of securing job, of being a reason for

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nuisance at the Branch and leaving headquarters without permission while under suspension.

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Sri V S Naik argues that with the statement of the Branch Manager being taken on record on 21.10.2003, the first respondent was never granted an opportunity to cross examine this witness, and if the first respondent has not had the opportunity to cross examine the witness, that evidence can never be a reason for holding that the charges against the first respondent are proved. The learned counsel emphasizes that the petitioner's grievance about non-compliances with the principles of natural justice as is canvassed right from the proceedings with the second respondent must necessarily be examined in the light of these material circumstances.

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In the light of the rival submissions, the questions for consideration are as follows:

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[a] Whether this Court can opine that the first respondent's dispute under Section 70 of the Act is premature and if it is so, whether the entire proceedings before the second respondent and the Tribunal resulting in the impugned orders are vitiated.

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[b] Whether this Court can opine that the second respondent and the Tribunal have erred in concluding that there is violation of principles of natural justice and there is no evidence of the imputation against the first respondent.

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[c] If the Court can opine in the affirmative on the afore, what order would be reasonable and just in the light of the fact that the first respondent has completed his age of superannuation during the year 2010 and the second respondent has directed reinstatement with payment of full

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back wages and consequential benefits?

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The provisions of Rule 33 of the

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Subsidiary Rules read as under:

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"PUNISHMENTS:

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Without prejudice to the provisions of other regulations an employee, who commits a breach of the provisions of the bye-laws/subsidiary rules/business rules of the Bank or who displays negligence, inefficiency or insolence or who knowingly does anything detrimental to the interests of the Bank or who commits breach of discipline or is guilty of any other act of misconduct shall be liable to the following penalties as may be decided by the competent authority.

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a. Censure or reprimand;

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b. Fine;

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c. Stoppage of increment with or without cumulative effect or with holding of promotion; d. Demotion to a lower place or grade for specific period or to a lower stage in his/her incremental scales;

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e. Suspension;

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f. Dismissal;

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g. Compulsorily retired from service for proved mis-conduct:

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i) The Managing Director is competent to inflict punishment/punishments in respect of all the employees and the 1^st appeal lies with the Presidents and 2^nd appeal to the Board of Directors.

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ii) However, the Board is competent to confirm punishment decrease revise or revert punishment imposed by the president;"

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The Managing Director is competent to inflict punishment and against his order, the first appeal lies to the President and the second appeal lies to the Board of Directors. The Board is also competent to confirm punishment or decrease or revise or revert punishment imposed by the first appellate authority, the President. Undoubtedly, this Scheme will be in tandem with the primacy in decision making that is assigned to the Board under Section 28A of the Act in discharge of duties and functions as is contemplated under the Act and the Subsidiary Rules as also the

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power to lay down Conduct and Disciplinary Rules and imposition of the penalties proportionate to the gravity of the charges against a delinquent employee.

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This primacy to the Board, however, cannot be construed as rendering the decision of the Disciplinary Authority as being inconsequential unless that Order is affirmed in the first appeal by the President or in the second appeal by the Board. Firstly, the reading of the provisions of Sections 28A and 28C of the Act or the reading of the provisions of Rules 33 or 34 of the Subsidiary Rules cannot justify such proposition. The provisions of Rule 34 of the Subsidiary Rules only stipulate the manner which the appellate remedy must be availed.

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Secondly, Sri Abhinav Ramanand is unable to point out any provision in Subsidiary Rules which stipulate that the decision of the Managing Director cannot be given effect to unless such decision is affirmed in appeal. This must be a crucial

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circumstance. Thirdly, this Court must opine that the proposition that decision of the Managing Director, unless challenged in the first and second appeals, would not lead to a dispute will be deleterious in its effect. If this proposition is accepted, the petitioner, a Co-operative Bank must, even if the decision of the Managing Director is in its favour, must necessarily file an appeal with the President to get a confirmation and that is not the import of the Regulations.

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The expanse of the jurisdiction to examine

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the grievance with the Managing Director/Disciplinary Authority's Order in the appellate authority and the expanse of jurisdiction under Section 70 of the Act could be different with the jurisdiction under Section 70 of the Act being narrow. This is another aspect, but in this Court's considered view the failure to exercise appellate remedy cannot render the dispute premature

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foreclosing the remedy under the Act. The first question is answered accordingly while opining that the Tribunal has rightly appreciated the petitioner's grievance in this regard.

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The petitioner relies upon the statement signed by the Branch Manager, a signed copy of the complaint, an instrument and a Promissory Note purportedly signed by the first respondent, to justify its case that he had received Rs.45,000/- with a promise of securing employment. These documents are essentially introduced, as canvassed by Sri V S Naik, through the Branch Manager at the relevant time. Perhaps, the Complainant need not have been examined, but there should have been material to indicate that the first respondent's transaction with the Complainant could not have been a loan transaction.

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The Promissory Note and the cheque could only indicate an assurance to pay the money but

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does not indicate the purpose for which this transaction was entered into and that could have only come about if the complainant was examined. The Branch Manager may have spoken about how the complaint in writing is received and such evidence will not suffice. Further, there is considerable force in Sri V S Naik’s canvass that with the Branch Manager's statement being taken as witness on 21.10.2003, the opportunity is not extended to cross examine this witness.

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In the aforesaid circumstances, this Court cannot opine that the Tribunal’s reasoning as regards the first charge is perverse to justify interference. Similarly, even on the second and third charges viz., the first respondent is responsible for nuisance at the Branch and going out of the headquarters while under suspension without permission are without evidence as the petitioner has not even examined the persons who created such nuisance. The Tribunal

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has rightly considered these aspects. Therefore, the second question is answered in favour of the first respondent holding that there is no occasion even otherwise for interference with the impugned orders.

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The first respondent has been paid gratuity and leave encashment as a consequence of his compulsory retirement. These amounts have been paid in the months of April and September 2004, and this is seen from the details furnished in the course of hearing. The first respondent, in terms of the second respondent's Order and as confirmed by the Tribunal by its impugned order, would be entitled for back wages [salary and consequential benefits]. It is trite that the relief insofar as back wages [salary and other consequential benefits] are granted considering the circumstance such as the first respondent’s case in this regard and whether the petitioner is unable to place material to indicate that

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the first respondent was not in any other employment.

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This relief is granted to the first respondent without examining whether he has brought on record any circumstances to justify that he was without employment during the pendency of the proceedings. This Court, therefore, must interfere to this limited extent and direct the petitioner to compute all the benefits payable as of the date the first respondent is kept under suspension till the date of superannuation taking 50% of the first respondent's last drawn salary.

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At this stage, Sri V S Naik submits that this Court must grant just orders on interest because the petitioner has not been diligent in prosecuting the proceedings before the Tribunal, and the learned counsel emphasizes that the appeal was dismissed by the Tribunal twice because there was no representation, and on each occasion, these orders

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are recalled restoring the proceedings for due consideration. The learned counsel emphasizes that petitioner has caused this litigation to prevail for about two decades. This Court, on a careful consideration of the circumstances, is of the considered view that the petitioner must pay the first respondent the amount due as aforesaid along with interest at 6% per annum. Hence the following:

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ORDER

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[a] The petition is allowed in part and the second respondent's Order dated 25.04.2008 [Annexure-M] as confirmed by the Tribunal's impugned Order dated 23.08.2018 in Appeal No.345/2008 [Annexure-N] are modified directing the petitioner to compute all financial benefits payable to the first respondent from the date the first respondent was kept under suspension till the date the petitioner

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attained the age of superannuation taking

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50% of the last drawn salary.

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[b] It is clarified that the first respondent shall be entitled to all consequential benefits including increments based on 50% of the last drawn salary which amount shall be paid to the first respondent within eight [8] weeks from the date of receipt of a certified copy of this order along with interest at the rate of 6% for the period between the date of suspension till the date of payment.

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[c] The first respondent, to avail the benefit of the timeline now fixed, shall be at liberty to file a certified copy of this order with the petitioner within four [4] weeks from the date of receipt thereof.

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[d] The pending applications stand disposed

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of.

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Sd/JUDGE

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AN/-

The Karnataka State Co. Operative v. Sri M B Parameshwar

Case brief

What is this about?

What did the court decide?

The Karnataka State Co. Operative v. Sri M B Parameshwar

Case brief

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