STATE BANK OF INDIA & Ors. v. S.N. GOYAL

Order

Pronouncement of - Held: Where judgment is reserved, mere dictation does not amount to pronouncement, but where iudgment is dictated in open court, that itself amounts to pronouncement. B Judge becoming functus officio - When - Held: When -..;...~ he pronounces, signs and dates the judgment. Quasi judicial authorities - While some quasi judicial tribunals fix a day for pronouncement and pronounce their c orders on the day fixed, many quasi judicial authorities do not pronounce their orders - Some publish or notify their orders - Some prepare. and sign orders and communicate same to party concerned - Quasi judicial authority become functus officio only when its order is pronounced, or published/notified D or communicated (put in the course of transmission) to the party concerned - When an order is made in office noting in file but is not pronounced, published or communicated, Authority can correct it or alter it for valid reasons - But once the order is pronounced or published or notified or E communicated, the Authority becomes functus officio.

F A chargesheet was issued on respondent by appellant bank on the ground of misappropriation of customer's funds. An enquiry was held and enquiry officer held that the charge was proved. A copy of the report was furnished to the respondent. In view of Rule 68(3) of State Bank of India Officers Service Rules, the Disciplinary Authority after considering the inquiry records and representation of the respondent made a recommendation on 2.5.1995 to the Appointing Authority G to impose penalty of 'removal from services'. The Appointing Authority concerned with the recommendation of Disciplinary Authority and passed order dated 3.5.1995 imposing the penalty of removal from service which was communicated to respondent by letter H " .... ~ ~ STATE BANK OF INDIA AND ORS. v.

S.N. GOYAL 635 dated 30.6.1995. The respondent unsuccessfully filed appeal and revision. He thereafter filed suit for declaration that the order of removal dated 30.6.1995 was arbitrary and illegal and should be set aside with direction to take him back with all consequential benefits. A B

The trial Court decreed the suit and held that there was no violation of principles of natural justice in conducting the enquiry and the order holding the respondent guilty of misconduct was proper. The Trial c Court however found that the Disciplinary Authority by his earlier note dated 18.1.1995 had recommended imposition of the penalty of reduction of pay of respondent by four stages in his time scale and Appointing Authority agreed with the said recommendation on 18.1.1995. The Appointing Authority had thereafter sought the advice of Bank's Chief Vigilance Officer and acting on such advice had changed earlier decision and imposed a higher punishment of removal from service dated 3.5.1995. The trial court was of the view that the second order imposing penalty was passed by the Appointing Authority on extraneous reasons after taking advice of Chief Vigilance Officer and that rendered the order of removal illegal and therefore set aside the order of removal and directed appellant Bank to pass fresh order imposing appropriate penalty other than penalty of dismissal or removal from F service. E D Both the parties filed appeals. Before the First Appellate Court, respondent did not challenge the finding of trial Court that the domestic enquiry was fair and proper and limited his challenge only to the quantum of back wages . G The First Appellate Court upheld the decree of the Trial Court, but in addition held that the respondent was entitled to full back wages with interest thereon at 9% per H ......... " .,,., 1-> I )"" ....._ l • 636 SUPREME COURT REPORTS [2008] 7 S.C.R. A annum. High Court dismissed the appeal filed by Bank holding that there was nothing to show that the findings recorded by the Courts below suffer from any infirmity or are contrary to law in any manner, thus no question of law, much less any substantial question of law, has arisen. 8 Hence these appeals. Allowing the appeals, the Court D HELD: 1.1 The High Court misread the findings of the courts below. The High Court observed that 'on the c directions of the Chief Vigilance Commissioner of the Bank, the punishment was converted to that of dismissal'. This observation contains three errors - firstly the penalty of removal was read as dismissal; secondly the communication from the Chief Vigilance Officer, termed as "advice/recommendation" by the courts below, was wrongly read as 'directions'; and thirdly, the Chief Vigilance Officer of the Bank was wrongly referred to as the Chief Vigilance Commissioner. The High Court also erroneously assumed that respondent had pleaded that the Appointing Authority had placed certain material which was never put to him, before the Chief Vigilance Commissioner and as such the order of punishment was violative of principles of natural justice. There was no such plea, nor did the courts below record a finding on any such plea. [Para 7] [652-A-E] E F G

1.2 The High Court completely missed the real points arising for determination. After a cursory wrong reference to the findings of the court below, the High Court wrongly held that the second appeal did not give rise to any substantial question of law, ignoring the several substantial questions of law arising for consideration of the High Court, which were clearly specified in the memorandum of second appeal. [Para 8] [652-E, F]

1.3 Second appeals would lie in cases which involve H substantial questions of law. The word 'substantial' """·. , ~ .• \ ~ I - •:y ,__ _ _,,,. ~- ·'" ...... STATE BANK OF INDIA AND ORS. v. S.N. GOYAL 637 prefixed to 'question of law' does not refer to the stakes A involved in the casf,t, nor intended to refer only to questions of law of general importance, but refers to impact or effect of the question of law on the decision in the lis between the parties. 'Substantial questions of law' means not only substantial questions of law of general B importance, but also substantial question of law arising in a case as between the parties. In the context of s.100 CPC, any question of law which affects the final decision in a case is a substantial question of law as between the parties. A question of law which arises incidentally or c collaterally, having no bearing in the final outcome, will not be a substantial question of law. Where there is a clear and settled enunciation on a question of law, by this Court or by the High Court conc9rned, it cannot be said that the case involves a substantial question of law. It is said that a substantial question of law arises when a question of law, which is not finally nettled by this court (or by the concerned High Court so far as the State is concerned), arises for consideration in the case. But this statement has to be understood in the correct perspective. Where there is a clear enunciation of law and the lower court has followed or rightly applied such clear enunciation of law, obviously the case will not be considered as giving rise to a substantial question of law, even if the question of law may be one of general importance. On the other hand, if there is a clear enunciation of law by this Court (or by F the concerned High Court), but the lower court had ignored or misinterpreted or misapplied the same, and correct application of the law as declared or enunciated by this Court (or the concerned High Court) would have led to a different decision, the appeal would involve a G substantial question of law as between the parties. Even where there is an enunciation of law by this court (or the concerned High Court) and the same has been followed by the lower court, if the appellant is able to persuade the High Court that the enunciated legal position needs H D E 638 SUPREME COURT REPORTS [2008] 7 S.C.R. A reconsideration, alteration, modification or clarification or that there is a need to resolve an apparent conflict between two view points, it can be said that a substantial question of law arises for consideration. There cannot, therefore, be a strait-jacket definition as to when a substantial B question of law arises in a case. [Para 9.1] [654-A-H; 655-A] C

1.4. It is a matter of concern that the scope of second appeals and as also the procedural aspects of second appeals are often ignored by the High Courts. Some of the oft-repeated errors are : (a) Admitting a second appeal when it does not give rise to a substantial question of law; (b) Admitting second appeals without formulating substantial question of law; (c) Admitting second appeals by formulating a standard or mechanical question such o as "whether on the facts and circumstances the judgment of the first appellate co1,1rt calls for interference" as the substantial question of law; (d) Failing to consider and formulate relevant and appropriate substantial questionn/ s of law involved in the second appeal; (e) Rejecting E second appeals on the ground that the case does not involve any substantial question of law, when the case in fact involves substantial questions of law; (f) Reformulating the substantial question of law after the conclusion of the hearing, while preparing the judgment, thereby denying an opportunity to the parties to make F submissions on the reformulated substantial question of law; (g) Deciding second appeals by re-appreciating evidence and interfering with findings of fact, ignoring the questions of law; These lapses or technical errors lead to injustice and also give rise to avoidable further appeals G to this court and remands by this court, thereby prolonging the period of litigation. Care should be taken to ensure that the cases not involving substantial questions of law are not entertained, and at the same time ensure that cases involving substantial questions of law H are not rejected, as not involving substantial questions "",,- ... ~ ,. STATE BANK OF INDIA AND ORS. v. S.N. GOYAL 639 of law. [Para 9.3] [655-G; 656-A-G] A

1.5 The failure on the part of the High Court to take note of the substantial questions of law involved, has led to unwarranted dismissal of the second appeal and calls for interference. [Para 1 O] [656-G, H] B

2.1. Where the relationship of master and servant is purely contractual, it is well settled that a contract of personal service is not specifically enforceable, having regard to the bar contained in s.14 of the Specific Relief Act, 1963. Even if the termination of the contract of c employment (by dismissal or otherwise) is found to be illegal or in breach, the remedy of the employee is only to seek damages and not specific performance. Courts will neither declare such termination to be a nullity nor declare that the contract of employment subsists nor grant the consequential relief of reinstatement. The three well recognized exceptions to this rule are: where a civil servant is removed from service in contravention of the provisions of Article 311 of the Constitution of India (or any law made under Article 309); where a workman having the protection of Industrial Disputes Act, 1947 is wrongly E terminated from service; and where an employee of a statutory body is terminated from service in breach or violation of any mandatory provision of a statute or statutory rules. [Para 11] [657-C-H] D

2.2. There is a clear distinction between public F employment governed by statutory rules and private employment governed purely by contract. The test for deciding the nature of relief - damages or reinstatement with consequential reliefs - is whether the employment is governed purely by contract or by a statute or statutory G rules. Even where the employer is a statutory body, where the relationship is purely governed by contract with no element of statutory governance, the contract of personal service will not be specifically enforceable. Conversely, where the employer is a non-statutory body, but the H 640 SUPREME COURT REPORTS [2008] 7 S.C.R. A employment is governed by a statute or statutory rules, a declaration that the termination is null and void and that the employee should be reinstated can be granted by courts. [Para 11] [658-A, B, C] B Dr. S. Dutt v. University of Delhi - AIR 1958 SC 1050; Executive Committee of UP State Warehousing Corporation Ltd. v. Chandra Kiran Tyagi - 1970 (2) SCR 250; Sirsi Municipality vs. Cecelia Kam Francies Tellis - 1973 (3) SCR 348; Executive Committee of Vaish Degree College v. Lakshmi Narain - 1976 (2) SCR 1006; Smt. J. Tiwari v. Smt. c Jawala Devi Vidya Mandir - AIR 1981 SC 122; Dipak Kumar Biswas v. Director of Public Instruction -AIR 1987 SC 1422 - relied on. D

2.3. The appellant is a statutory body established under the State Bank of India Act, 1955 and the contract of employment was governed by the State Bank of India Officers Service Rules, which are statutory rules framed under s.43(1) of the said Act. The respondent approached the civil court alleging that his removal from service was in violation of the said statutory rules. When an employee E of a statutory body whose service is terminated, pleads that such termination is in violation of statutory rules governing his employment, an action for declaration that the termination is invalid and that he is deemed to continue in service is maintainable and will not be barred by s.14 F of the Specific Relief Act. [Para 12] [658-E, F, G]

3.1. The plaint did not contain any plea that the order of removal by the Appointing Authority (Chief General Manager) was vitiated on account of his consulting and acting on the advice of the Chief Vigilance Officer of the G Bank. Nor did it contain any allegation that the Appointing Authority acted on extraneous material in passing the order of removal. In the plaint, the challenge to the order of removal was on the ground that the enquiry by the Enquiry Officer was opposed to principles of natural justice. The respondent had also averred that the H f• ~ ... . ' ....._ ''T t-A- )" STATE BANK OF INDIA AND ORS. v. S.N. GOYAL 641 Appointing Authority had approved the recommendation A made by the Disciplinary Authority for imposition of penalty of removal, without application of mind and without giving him a hearing. But there was absolutely no plea with reference to the advice/recommendation of the Chief Vigilance Officer of the Bank. The respondent- B plaintiff did not amend the plaint to include the averments and grounds to challenge the order of removal on the said additional ground. No issue was framed in that behalf. No amount of evidence on a plea that was not put forward in the pleadings can be looked into. In the absenre of c necessary pleading and issue, neither the trial court nor the appellate court could have considered the contention and recorded a finding thereon. [Para 13] [658-H; 659- A-D, G, H; 660-A]

3.2. The minimum pleading that was necessary was D that the Appointing Authority acted on extraneous material in arriving the decision or acted on the advice or recommendation of an Authority who was not concerned with the Enquiry. In the absence of appropriate pleading on a particular issue, there can be no adjudication of such E issue. [Para 14] [660-C, DJ

3.3 Adjudication of a dispute by a civil court is significantly different from the exercise of power of judicial review in a writ proceedings by the High Court. In a writ proceedings, the High Court can call for the record of the F order challenged, examine the same and pass appropriate orders after giving an opportunity to the State or the statutory authority to explain any particular act or omission. In a civil suit parties are governed by rules of pleadings and there can be no adjudication of an issue G in the absence of necessary pleadings. [Para 14] [660-D, E, F]

3.4 Code of Civil Procedure contains appropriate provisions relating to interrogatories, discovery and H 642 SUPREME COURT REPORTS [2008] 7 S.C.R. A C inspection (Order XI Rules 1, 12 and 15) to gain access to relevant material available with the other party. A party to a suit should avail those provisions and if any new ground becomes available on the basis of information secured by discovery, a party can amend his pleadings and B introduce new facts and grounds which were not known earlier. The difficulty in securing relevant material or ignorance of existence of relevant material will not justify introduction of such material at the stage of evidence in the absence of pleadings relating to a particular aspect to which the material relates. If a party should be permitted to rely on evidence led on an issue/aspect not covered by pleadings, the other side will be put to a disadvantage. Therefore, the courts below committed a serious error in holding that the order of removal was based on an extraneous material (the advice/recommendation of Chief D Vigilance Officer) and therefore, invalid. Where the enquiry was found to be fair and proper and the finding of guilt in the enquiry in respect of a serious charge was found to be valid, in the absence of any other valid ground of challenge, the courts below ought to have held that the E penalty of removal from service did not warrant any interference. [Paras 14, 15] [660-G; 661-A-E]

4.1 The Disciplinary Authority though was of the view that the respondent deserved a severe punishment, felt that having regard to the length of his service, he should F be shown leniency, and therefore, recommended imposition of a lesser punishment of reduction of pay by four stages in the time scale. The Appointing Authority made a note on the same day (18.1.1995) agreeing with the said recommendation. But the said order was not G communicated to the respondent. On the other hand, the Disciplinary Authority on reconsideration of the matter put up a fresh note dated 2.5.1995 recommending the penalty of removal and that was accepted by the Appointing Authority on 3.5.1995 and communicated to the H respondent on 30.6.1995. [Para 16] [661-G; 662-A-C] STATE BANK OF INDIA AND ORS. v. S.N. GOYAL 643 VGM Holdings Ltd 1941 (3)All. ER page 417- referred A to. 1

4.2. It is true that once an Authority exercising quasi judicial power, takes a final decision, it cannot review its decision unless the relevant statute or rules permit such review. [Para 18] [662-F] B P Ramanatha Aiyar's Advance Law Lexicon 3rd Edition, Vol.2 Pages 1946-47; Black's Law Dictionary Sixth Edition Page 673 - referred to.

5.1 Order XX of Code of Civil Procedure deals \Vith C judgment and decree. Where a judgment is reserved, mere dictation does not amount to pronouncement, but where the judgment is dictated in open court, that itself amounts to pronouncement. But even after such pronouncement by open court dictation, the Judge can make corrections D before signing and dating the judgment. Therefore, a Judge becomes functus officio when he pronounces, signs and dates the judgment (subject to section 152 and power of review). The position is different with reference to quasi judicial authorities. While some quasi judicial tribunals fix E a day for pronouncement and pronounce their orders on the day fixed, many quasi judicial authorities do not pronounce their orders. Some publish or notify their orders. Some prepare and sign the orders and communicate the same to the party concerned. A quasi F judicial authority becomes functus officio only when its is pronounced, or published/notified or communicated (put in the course of transmission) to the party concerned. When an order is made in an office noting in a file but is not pronounced, published or G communicated, nothing prevents the Authority from correcting it or altering it for valid reasons. But once the _.... order is pronounced or published or notified or communicated, the Authority will become functus officio. The order dated 18.1.1995 made on an office note, was H )-- order • . • 644 SUPREME COURT REPORTS (2008] 7 S.C.R. A neither pronounced, nor published/notified nor communicated. Therefore, it cannot be said that the Appointing Authority became functus officio when he signed the note on dated 18.1.1995. [Para 19] (663-C, F-H; 664-A-D] B

5.2 A careful examination shows that the order dated 18.1.1995 was intended only to be tentative and not final. Firstly, the said decision was not communicated to the respondent, nor was any letter or order issued to the respondent imposing the penalty mentioned in the order C dated 18.1.1995. Secondly, the Appointing Authority by letter dated 2.2.1995 informed the Chief Vigilance Officer of the Bank about the enquiry against respondent, his decision accepting the findings of the Enquiry Officer, and the proposal to show leniency by imposing only a D punishment of reduction of pay by four stages. The Chief Vigilance Officer sent a reply dated 7.2.1995 wherein he observed that "by pocketing the money of the customers Sri Goyal has exposed the Bank's faith reposed in him" and there was no ground for showing leniency. He also E expressed the view that the respondent deserved a more severe punishment and requested the appointing authority to re-examine whether respondent should be continued in the post. Thereafter the Disciplinary Authority reconsidered the entire issue again and put up F another note dated 23.3.1995/2.5.1995 to the Appointing Authority proposing the punishment of removal from service. [Para 20] (664-E-H; 665-A]

5.3 It is thus clear that on 18.1.1995, the Appointing Authority had only tentatively approved the proposal of G the disciplinary authority that a lenient view be taken by imposing a penalty of reducing the pay by four stages in the time scale; and that on 3.5.1995, a final decision was taken in regard to the penalty and that final order was communicated to the respondent as per letter dated H 30.6.1995. Therefore, the contention that the Appointing , .. STATE BANK OF INDIA AND ORS. v. S.N. GOYAL 645 Authority had earlier passed a final order on 18.1.1995 and A had become functus officio and therefore, he could not change the said order dated 18.1.1995 is liable to be rejected. [Para 21] [665-D, E]

6.1. A perusal of the letter dated 2.2.1995 sent by the Appointing Authority to the Chief Vigilance Officer clearly demonstrates that the Appointing Authority did not seek any guidance or advice or directions from the Vigilance Department and that the letter was only by way of 'intimation' of factual position. [Para 22] [665-F, G] B c D

6.2 The reply dated 7.2.1995 from the Chief Vigilance Officer also makes it clear that he neither issued any direction to the Appointing Authority to impose a higher punishment nor altered the finding regarding guilt. He merely gave his opinion that the gravity of the proved charge did not warrant leniency and therefore, suggested that the quantum of penalty may be examined again. The subsequent note put up by the disciplinary authoriu; on 2.5.1995 and the order passed thereon by the appoinhhg authority on 3.5.1995 imposing the penalty of removal, show that they were on independent consideration of the question. Neither the note dated 2.5.1995 nor the order dated 3.5.1995 refer to the opinion or the view expressed by the Chief Vigilance Officer of the Bank. Nor is there any material to show that the order imposing punishment was on the dictates of the Chief Vigilance Officer. There F was no mechanical acceptance of any suggestion or advice by the Chief Vigilance Officer nor consideration of any extraneous material as assumed by the courts below. The Appointing Authority is required to inform the vigilance department in regard to cases involving vigilance G angle. The Appointing Authority did so. But he did notseek any instruction, direction, suggestion or advice from the Vigilance Department. There was also no direction or circular or instruction requiring the Appointing Authority to accept or act upon the. suggestions or views of the H E ,...,,_ .... --t-' _, ~. • .. " fi4G SUPREME COURT REPORTS (2008) 7 S.C.R. iJl1ief Vigilance Officer. The Vigilance Department merely gave its comment or view that it was not a fit case for showing leniency and left it to the concerned authority to take a decision on the punishment to be imposed. So long as the decision was not on the dictates of the Vigilance B Department or other outside authority, but on independent consideration, the order of removal cannot be faulted. It cannot be said that either the act of intimating the Vigilance Department about the enquiry or independently re-considering the issue of penalty after receiving the c views of the Vigilance Department amounted to be acting on extraneous material, or acting on the advice or recommendation or direction of the Chief Vigilance Officer. [Para 23] [667-B-H; 668-A]

#7. The assumption made by the High Court that the D Appointing Authority had placed some undisclosed additional material before the Chief Vigilance Officer is without any basis. The issue relating to the respondent's guilt was neither referred to the Vigilance Department nor did the Vigilance Department give any finding on the E question of guilt. When the Disciplinary Authority and the Appointing Authority accepted the find1ing of guilt recorded by the Enquiry Officer on examining the facts, even before the matter was informed to Vigilance Department, it cannot be said that the said d1:!cision was influenced by any extraneous advice from Vigilance Department. The issue on which the Vigilance Department made its comment was on the limited ground whether any leniency should be shown in imposing punishment. No additional facts or material were placed by the Appointing G Authority before the Vigilance Department for this purpose. Further the Vigilance Department merely expressed the view that the gravity of the charue did not warrant leniency and the authority should examine the matter. [Para 24] [668-B-F] F H

#8. The Disciplinary Authority made available the . ,, . ~ .... ) ...._ STATE BANK OF INDIA AND ORS. v. S.N. GOYAL 647 Enquiry Report to the respondent to enable him to make A his submissions on the findings of the Enquiry Officer. The respondent made his submissions in regard to the Enquiry Report. The correspondence between the Appointing Authority and Chief Vigilance Officer of the Bank was not 'material' on which the finding regarding B guilt/misconduct was based. Such correspondence was subsequent to the Enquiry Report. There was no compulsion or requirement that the Appointing Authority should consult the Chief Vigilance Officer or act as per his recommendations or directions. Nor was there any c direction by the Chief Vigilance Officer to impose any specific direction. Therefore non furnishing of copies of the correspondence between the Appointing Authority and the Chief Vigilance Officer to the respondent, did not violate principles of natural justice nor vitiate the order of penalty. [Para 25] [668-G, H; 669-A, B, C] D UP State Agro Industrial Corporation Ltd. v. Padam Chand Jain - 1995 SCC L&S 1011 - distinguished.