BHOGILAL C SHETH v. DEENA BANK

(f)(cid:9)Mr. Dhanjibhai M. Parmar has been sanctioned second loan by you though the earlier loan was outstanding in his name. His wife Mrs Maniben has also been sanctioned loan twice. (g)(cid:9)You have granted/disbursed loans to above referred Shri Dhanjibhai Martabhai Menat, to his wife, mother & father disregarding all norms/rules under undue influence, since you have stayed in the house hired by him from Shri Dalsukhbhai Sutharia about 3 months without payment of rent. No assets are created by any of them. (h)(cid:9)You have accepted M/s Jyoti Corporation, Meghraj as supplier which has paid cash to the borrowers, to said Shri Dhanjibhai Menat and to you through Shri Dhanjibhai Menat. Thus, you have connived with loanees, supplier and Shri Dhanjibhai in misuse of loans. (i)(cid:9)You have violated the instructions/guidelines contained in HO Circular Nos.292/41/1987 dated 08th September 1987 and 289/12/89 dated 28th September, 1889 while sanctioning/granting/disbursing of above referred loans to the borrowers listed. (j)(cid:9)As a result of your acts of deliberate omissions/commissions cited in above, assets were not created by borrowers. In fact, the loan amount has been encashed due to your connivance with Shri Dhanjibhai Martabhai Menat and borrowers/suppliers.

2.(cid:9)You have embezzled an aggregate amount of Rs7000/- accepted by you as late receipts by issuing receipts in 08/09th March, 1991 and by not crediting the respective amount in three borrowers' accounts.

3.(cid:9)Your aforesaid acts of misappropriation/embezzlement of Bank's fund, committing acts of omissions and commissions in sanctioning loans and sanctioning of loans to fictitious persons, if proved will constitute the following acts of misconducts : (i) Lack of honest/integrity/deligence in discharge of your duties involving or likely to involve the bank in heavy financial loss/risk AND/OR; (ii) Misappropriation/embezzement of bank's funds, AND/OR; (iii) Violation of bank's rules/procedure, AND/OR; (iv) Doing act/s prejudicial to the interest of the bank' AND/OR; (v) Act/s unbecoming of bank's officer, AND/OR, (vi)(cid:9)Abuse/misuse of your official position.

The above act/s of misconducts if proved against you, shall reflect contravention of Regulation 3 (1) & 3 (3) read with Regulation 24 of Dena Bank Officer Employees' (Conduct) Regulation 1976 under Dena Bank Officer Employees' (Discipline & Appeal) Regulations, 1976.

You are hereby advised to submit your written explanation within 10 days from the receipt hereof, failing which, it will be presumed that you have no explanation to offer and the matter will be dealt with accordingly. "

3.(cid:9)After completion of other formalities, the inquiry was held against the petitioner and the inquiry officer submitted his findings on 10-3-1993 holding that all the charges of misconduct i.e. Charges No. (i) to (iv) mentioned in para 3 of charge sheet were proved. By the memorandum dated 24-7-1993 the Disciplinary Authority - Dy. General Manager passed the order dated 24-7-1993 dismissing the petitioner from service. The appeal was preferred under Rule 17 of the Dena Bank Regulations,

1976. The Assistant General Manager (Personnel) informed the petitioner by the letter dated 20-9-1993 that the appeal of the petitioner dated 22-8-1993 has been dismissed and hence this petition has been filed challenging the dismissal order as well as the order of the appellate authority dismissing the petitioner's appeal and confirming the order of the disciplinary authority.

4.(cid:9)The learned counsel for the petitioner submitted that in the charge sheet the petitioner is said to have committed certain irregularities regarding not following the norms and guidelines with regard to verification of the antecedents of the borrowers and/or suppliers, viability of project, genuineness of supplier/dealer. The petitioner has not carried out pre and/or post sanction visits and falsified the record on backside of the proposals to show that they have undertaken. The petitioner has not sent pay order directly to the dealer/supplier by Regd. A.D. He also sanctioned loans to the borrowers disregarding 'Unit Cost Factor' as advised by Lead Bank Officer on 30-12-1990. The loans applications rejected and filed by the predecessor in office 1988, 1989 and 1990 have been sanctioned by the petitioner and the petitioner was informed by the previous Branch Authority about cancellation of the applications. One of the borrowers Dhanjibhai Mehta was also sanctioned second loan by the petitioner though the earlier loan was outstanding in his name and his wife Ms. Maniben was also sanctioned loan twice under undue influence since the petitioner was staying in his house let out to him by Dalsukhbhai Manat about three months without payment of rent. He has accepted M/s. Jyoti Corporation, Meghraj as supplier and he has attracted and in collusion with the loanees, supplier and Shri Dhanjibhai in misuse of loans and he violated the instructions and guidelines contained in the circulars dated 8-9-1987 and 28-9-1989 while sanctioning/granting/disbursing the loans to the borrowers. By the acts of deliberate omissions or commissions the assets were not created by the borrowers and the loan amount was encashed due to his connivance with Dhanjibhai Martabhai Manat and the borrowers/suppliers and he has also embezzled the amount of Rs. 7000/- and accepted by him as late receipts by issuing receipt on 08/09-3-1991 and not credited respective amounts in the borrowers' accounts. Thus, the petitioner has misappropriated or embezzled the bank's fund by committing act of omissions and commissions in sanctioning the loans and sanctioning of loans to fictitious persons.

5.(cid:9)Learned counsel for the petitioner submitted that at present the petitioner is guilty of negligence only and that would not amount to misconduct under the Dena Bank's Rules 1976 for punishment of dismissal. He also submitted that the total amount of loans sanctioned by the petitioner to 16 persons as Branch Manager was approximately Rs.1,62,000/- and that amount of loan was given to individual person in the rang of Rs.2000/- to Rs.15,000/- and there is no complaint or allegation against the petitioner that the amount of loan given to different person was not repaid or the persons to whom loan was sanctioned were not real persons. There is also no allegation in the charge sheet regarding the actual loss caused to the Bank. At the relevant time, the petitioner was Branch Manager of small village Kasana Branch Ta. Meghraj which is an Adivasi area. In the Branch of the Bank there were three employees; the petitioner as Branch Manager, one cashier and one peon. The loan papers of the Bank as well as documentation was done by the petitioner himself. As a result of over load work certain irregularities were committed and the same ought not have been viewed with seriousness and penalty of economic death ought not have been imposed to the petitioner. The petitioner was living in the small village where Kasana Branch of the Bank was running. The petitioner was knowing each and every person personally. Hence, some irregularities in the verifications have been committed out by the petitioner and all the amounts of loans have been repaid to the Bank. As such, there is no allegation against the petitioner that he has embezzled any of the amounts. Only it can be said that he was irregular in sanctioning the amount of loans and verification by himself required by the guidelines/norms/instructions under the relevant Regulation of the Bank.

6.(cid:9)The contention of learned counsel for the petitioner is that at the most the action or omission on the part of the petitioner would amount to negligence and it will not be termed as misconduct for punishment of economic death i.e. extreme penalty of dismissal from service. The disciplinary authority committed manifest error in awarding the extreme penalty. Learned counsel for the petition has relied on the decision of the Apex Court in the case of Union of India Vs. J, Ahmed, reported in AIR 1979 SC 1022, wherein it has been held as under : "Lack of efficiency, failure to attain the highest standard of administrative ability while holding a high post would not themselves constitute misconduct. There may be negligence in performing of duty and a lapse in performance of duty or error of judgment in evaluating the developing situation may be negligence in discharge of duty but would not constitute misconduct unless the consequences directly attributable to negligence would be such as to be irreparable or the resultant damage would be so heavy that the degree of culpability would be very high. "

7.(cid:9)So far as the charge of misappropriation/ embezzlement of Rs.7000/- is concerned, the petitioner has stated that the amount of Rs.7000/- was handed over to him at 7-00 O'clock in the evening and Pankajbhai Shah took the amount away in the morning which has not been considered by the Inquiry Officer. In this respect the petitioner has stated in the appeal that the amount of Rs.7000/- was deposited later on. But that fact has been disbelieved by the Inquiry Officer and it was held by the Inquiry Officer that the amount of Rs.7000/- was never deposited by the three borrowers. As such, that amount has been embezzled by the petitioner himself. In this respect, the learned counsel for the petitioner submitted that no complaint has been filed by any of three borrowers to any authority that amount of Rs.7000/given by them to the petitioner who recovered again by the Bank. During the course of arguments, learned counsel for the petitioner submitted that the amount of Rs.

7000/- was deposited subsequently in the Bank and the petitioner has not embezzled the said amount. The time was granted to the petitioner to verify the fact as to whether the amount of Rs.7000/- has been deposited in the Bank or not, if so on what date. The petitioner himself verified from the Bank's record and filed the draft amendment wherein it is stated that the amount was deposited on 9-7-1991 by the respective loanees as appeared from the scroll register. The petitioner has stated that Rs.3000/- has been deposited by Kava Mangala, Rs.1000/- has been deposited by Khare Harji and Rs.3000/has been deposited by Kalu Mangla/Badana on 9-7-1991. In order to verify the statement of the petitioner the learned counsel for the respondent Bank was granted some time. The matter was listed again and the learned counsel for the respondent Bank made a statement that the facts stated by the petitioner the draft amendment are perfectly correct and justified and exist in the bank record.

Thus, the petitioner has not embezzled the aforesaid amount of Rs.7000//- which was actually deposited on 9-7-1991 by the different loanees more than five months prior to submission of the charge sheet against the petitioner and within four months from the date on which the amount is said to have been received and it was alleged that the amount was not deposited by the petitioner received by him. Thus, no doubt, this Court is not justified in appreciating the the evidence of the inquiry proceedings. But in the interest of justice if any wrong finding has been recorded by the Inquiry Officer in the departmental proceedings and that finding appears later on to be erroneous or wrong on the basis of the documentary evidence, in the interest of justice this Court can take cognizance of that fact that the finding recorded by the Inquiry Officer and taken into consideration by the disciplinary authority and confirmed by the appellate authority is erroneous one and is not sustainable in the eye of law. If the petitioner is not guilty of misappropriation and embezzlement the inquiry proceedings will not be read against the petitioner and is not sustainable in the eye of law at all.

8.(cid:9)Now, the question remains regarding the irregularities committed by the petitioner in sanctioning the loans and in not verifying the status of the guarantors for repayment of the loan amount. The petitioner is no doubt responsible for these irregularities. Though according to the report it is stated that the petitioner was informed that the applications of 16 loanees have already been rejected. But there is nothing on record to show that those applications have already been rejected by the appropriate authority. Except bald statement of one witness. Probability is that some loan applications were pending and those applications were not rejected by any authority as stated in the defence by the petitioner. There was sufficient amount to give facility of the loan to give different persons of small village where he was living and he was knowing each and every persons and that is why he did not take care and took precaution regarding verification of the status of the applicants and guarantors of the loans. Even it is held by the Apex Court in the case of Union of India and Others Vs. J. Ahmed (supra) that the petitioner was expected to observe high standard in compliance with the guidelines and norms of the Bank contained in the circulars issued vide certain letters. Even if it is presumed that lack of efficiency, failure to attain the highest standard of administrative ability while holding a high post would not themselves constitute misconduct in these facts, the contention of the learned counsel for the petitioner is taken into account that the petitioner is guilty of the irregularities and negligence which would not amount to misconduct and he can be penalized by any other penalty provided in Regulation of 4 of the Dena Bank Regulations, 1976, which is reproduced below.

9.(cid:9)Following are the penalties which may be imposed on the officer employee, for acts of misconduct or for any other good and sufficient reasons; Minor Penalties : (a)(cid:9)Censure; (b) Withholding of increments of pay with or without cumulative effect; (cid:9)(c)(cid:9)withholding of promotion; (cid:9)(d) Recovery from pay or such other amount as may be due to him of the whole or part of any pecuniary loss caused to the Bank by negligence or breach of orders. (cid:9)Major Penalties : (cid:9)(e) Reduction to a lower grade or post, or to a lower stage in a time scale; (cid:9)(f)(cid:9)Compulsory retirement; (cid:9)(g) Removal from service which shall not be disqualification for future employment; (cid:9) (cid:9)(h) Dismissal which shall ordinarily be a disqualification for future employment. " (cid:9)

10.(cid:9)Learned counsel for the petitioner further contended that in the interest of justice this Court has power to substitute another punishment in place of punishment of dismissal. He has also relied on the decision of the Apex Court in the case of B.C. Chaturvedi Vs. Union of India and others, reported in AIR 1996 SC 484, wherein it has been held in paragraph no. 18, as under : "A review of the above legal position would establish that the disciplinary authority, and on appeal the appellate authority, being fact finding authorities have exclusive power to consider the evidence with a view to maintain discipline. They are invested with the discretion to impose appropriate punishment keeping in view the magnitude or gravity of the misconduct. The High Court/Tribunal, while exercising the power of judicial review, cannot normally substitute its own conclusion on penalty and impose some other penalty. If the punishment imposed by the disciplinary authority or the appellate authority shocks the conscience of the High Court/Tribunal , it would appropriately mould the relief, either directing the disciplinary/appellate authority to reconsider the penalty imposed, or to shorten the litigation, it may itself, in exceptional and rare cases, impose appropriate punishment with cogent reasons in support thereof. "

11.(cid:9)The main contention of the learned counsel for the petitioner is that under the circumstances, the conduct of the petitioner including the action and omission would amount to only negligence and that will not amount to misconduct at all and extreme penalty of dismissal from service that shocks judicial conscience of this Court in view of the decision of the Supreme Court as stated above.

12.(cid:9)On the other hand, learned counsel for the Bank has submitted that it is not necessary that actual loss should be caused to the Bank for holding negligence amounting to misconduct. The petitioner is guilty of gross negligence and he has ignored the norms and guidelines prescribed by the various circulars. Hence, the disciplinary authority fully justified in holding that the petitioner is guilty of misconduct and the punishment of dismissal imposed by the disciplinary authority which has been affirmed by the appellate authority and hence this Court should not interfere with the finding recorded by the Inquiry Officer and considered by the disciplinary authority and affirmed by the appellate authority in 1994.

13.(cid:9)I have considered thoroughly the rival contentions raised by the learned counsel for the parties. From the charges it appears that the petitioner has undoubtedly committed certain irregularities in verifying the status of the loanees, guarantors and borrowers. It is true that one witness has stated in the inquiry proceeding that the petitioner was informed that the applications of the borrowers were rejected earlier but there is no documentary evidence in support thereof. Even the applications for loans were rejected at the relevant time and were reviewed by the petitioner at the time when the loans were sanctioned considering the availability of required amounts the need of the borrowers and in the interest of the Bank. The petitioner has sanctioned the loans and the amount of loan is not huge quantum of money but it is for about Rs.1,62,000/- and that has been distributed to 16 persons ranging from Rs.2,000/- to Rs.15,000/- for specific purpose of small business purposes and it has not been established by the Bank in the departmental inquiry that the petitioner was not authorized to grant loans to the needy persons.

If such amount of loans has been granted by the petitioner being Branch Manager of small village, the act of the petitioner cannot be said without jurisdiction or amounting to misconduct. At the most it can be said that he was negligent in verifying the status of the borrowers and their guarantors and the suppliers. That was the only negligence which may be due to the fact that he residing in that small village and he was knowing each and every persons. That negligence is also not of such nature which can be designated as gross negligence amounts to misconduct. Moreover, the amount of loans granted to all the loanees have already been recovered and there is no allegation in the charge sheet filed against the petitioner that the amount of loans sanctioned by the petitioner has not been recovered due to the negligence or lack of efficiency on the part of the petitioner. So far as second charge regarding misappropriation or embezzlement of Rs.7,000/- is concerned, it has been handed over to the petitioner at 7-00 p.m. and the petitioner issued receipt in respect of the said amount of Rs.

7000/- then and there. According to the petitioner, that amount was also deposited by three borrowers on 9-7-1991 within four months. According to the petitioner that amount was taken back in the next morning by Pankajbhai Shah and later on the same was deposited in the Bank by the borrowers themselves on 9-7-91. According to the charge sheet that amount was never deposited. But that fact has been proved by the petitioner by filing draft amendment and that fact has been admitted by the learned counsel for the Bank in this Court that the amount of Rs.7000/was deposited in the Bank on 9-7-1991 by the borrowers within four months from the date of which it is said to have been given and it has been deposited more than 5 months prior to submission of the charge sheet against the petitioner. As such, this charge is not proved at all. Though this Court has no jurisdiction to appreciate the evidence on record.

But if the fact itself found false or wrong on the basis of certain evidence in the interest of justice this Court can certainly interfere with and hold otherwise on the basis of the fact found lack of genuineness. As such charge regarding misappropriation and embezzlement of amount of Rs.7000/is not proved against the petitioner.

14.(cid:9)Now, the question remains only with regard to negligence and irregularities committed in discharge of the duties. As stated above, in my opinion. for such negligence which is not amounting to misconduct, punishment of dismissal is harsh and extreme penalty shocks the judicial conscience of this Court in view of the decision of the Supreme Court in the case of B. C. Chaturvedi (supra) this Court is empowered to substitute any other punishment in place of punishment of dismissal. In Rule 4 of the said Rule itself as stated above, the major penalty of compulsory retirement is also provided. In my opinion, punishment of compulsory retirement can be inflicted for alleged negligence committed in discharge of his duties. Accordingly, punishment of dismissal without notice is substituted in order to shorten litigation by punishment of compulsory retirement provided under Rule 4 (e) of the Dena Bank Regulation