Adverse Remarks On Employee's Integrity Must Be Based On Conclusive Evidence In Disciplinary Proceedings : Calcutta High Court

Background Facts

The petitioner was appointed as a Branch Manager in the Central Bank of India on 29.03.2010. He was issued a notice dated 26.03.2015 alleging irregularities in his savings account, his wife's account, and in ten loan accounts sanctioned under the Swami Vivekananda Swanirbhar Karmasansthan Prakalpa (SVSKP) scheme. The petitioner submitted replies to the allegations. But later he was issued a charge sheet on 15.10.2015 under the provisions of Regulations 3 and 24 of Central Bank of India Officers' Conduct Regulations and Discipline and Appeal Regulations, 1976. Therefore, he was placed under suspension on 31.03.2015. A criminal complaint was lodged against him, registered as FIR No. 402 of 2015. He obtained anticipatory bail on 21.09.2015. The disciplinary proceedings were initiated against him. The Inquiry Authority (IA) found that only Charge No.1 was partially proved but Charges 2, 3, and most parts of Charge 4 were not proved. However, the Disciplinary Authority (DA) disagreed with the IA's findings. The DA treated Charge No.1 as fully proved and parts of Charge No.4 as partly or fully proved. Therefore, DA imposed a major penalty of dismissal. Further this penalty was affirmed by the Appellate Authority (AA) on 03.11.2016.

Aggrieved by the imposition of penalty, the petitioner filed a writ petition. The Single Judge modified the major penalty to a minor penalty. Further single judge made adverse observations about the petitioner's integrity. Therefore, an appeal was filed by the petitioner requesting that the observations made by the single judge be removed from the record. Further a second appeal was filed by the Bank challenging the reduction of punishment.

It was submitted by the petitioner that the amount of ₹25,000 transferred to his wife's account was done in consonance with the terms of loan transaction and to avoid payment by cash. It was not an act of misappropriation. It was a genuine transaction routed on behalf of a vendor, who had confirmed the receipt and issued an acknowledgment. It was further submitted by the petitioner that the IA had rightly found that there was no misappropriation and only one charge was partially proved. However, the DA disagreed with the said findings without assigning any proper reasons. Further this penalty was affirmed by the AA without independent application of mind. It was further contended that the Single Judge erred in law by observing that 'the writ petitioner's honesty and integrity are found to be very much questionable'. These observations would seriously affect his service career and future prospects.

On the other hand, it was contended by the respondents that the petitioner had diverted ₹25,000 from the Bank's internal account to his wife's account, which amounted to misappropriation of public funds. It was argued that such an act, even if involving a small amount, constituted serious misconduct. Such act did not warrant any leniency, especially from a person holding a position of trust like a Branch Manager.

It was further pointed out by the respondents that the once Single Judge had observed that the petitioner's integrity and honesty were questionable, then the penalty should not have been reduced. It was contended that reinstating the petitioner would amount to placing an untrustworthy officer back into service. Further the respondents relied upon the judgment of the Supreme Court in Janatha Bazar v. Secretary, Sahakari Noukarara Sangha, wherein it was held that once misappropriation is proved, quantum or repayment is immaterial, and punishment cannot be reduced merely on the basis of sympathy.

Findings of the Court

It was observed by the Court that the disciplinary proceedings against the petitioner suffered from procedural irregularities. It was noted that the Disciplinary Authority disagreed with the Inquiry Authority's findings without giving proper reasons. It was further observed by the Court that the charge of misappropriation regarding the transfer of ₹25,000 to the petitioner's wife's account was not substantiated by any evidence of loss to the bank or personal benefit.

It was further observed by the court that there was no evidence to allege that petitioner's integrity was questionable. The right to reputation comes within the purview of fundamental right. The petiitoner had rendered service in the Bank since the year 2015 without any sort of misconduct in course of his past service and a person who has earned reputation cannot be ousted through imposition of a stigma on the basis of perverse findings. It was further observed that an employer also has an obligation to protect its employees from being victimised and from being ousted from his service which is the highest punishment in the service jurisprudence. It was held by the Court that the observations made by the Single Judge were liable to be quashed, therefore they were quashed.

It was further held by the Court that the Appellate Authority had acknowledged shortcomings in the inquiry process. There was poor conduct of the Presenting Officer and lack of supporting documents. Therefore, it was held by the court that the reduction of the penalty from dismissal to a minor penalty by the Single Judge was justified.

With the aforesaid observations, the petitioner's appeal was allowed, while the Bank's appeal was dismissed.

Case Name : Shri Rajat Kumar Varshney v. Central Bank of India & Ors.

Case No. : FMA 327 of 2024 with IA No. CAN 2 of 2023

Counsel for the Petitioner : Indranil Chakraborty, Apurba Ghosh, Apurna Ghosh, Baskar Pal

Counsel for the Respondents : Devajyoti Barman, S.K. Sengupta