The High Court
Case Details
IN THE HIGH COURT OF ORISSA AT CUTTACK W.P.(C) No. 17789 of 2016 (In the matter of an application under Articles 226 and 227 of the Constitution of India, 1950). Prafulla Kumar Sarangi …. Petitioner(s) -versus- Union Bank of India & Ors. …. Opposite Party (s) Advocates appeared in the case through Hybrid Mode: : For Petitioner(s) Mr. Manoranjan Das, Adv. For Opposite Party (s) : Mr. Sarat Kumar Behera, Adv. CORAM: DR. JUSTICE S.K. PANIGRAHI DATE OF HEARING:-22.04.2024 DATE OF JUDGMENT: -24.07.2024 Dr. S.K. Panigrahi, J. 1. The Petitioner, through this Writ Petition, seeks to challenge the domestic inquiry conducted against him in relation to the Charge Sheet No.0244/20/V/T-1585/CS/602 dated 31.10.2014 on the grounds of gross violation of the principles of natural justice and in breach of the bank’s declared policy and procedure of fixing staff accountability for slippage of loan accounts to NPA. 2. The Petitioner further challenges the order No.666/20/V/T-1585/501 dated 06.11.2015 passed by the Deputy General Manager & Disciplinary Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 14-Aug-2024 15:46:29 Page 1 of 32 Authority, O.P.No.2, imposing major penalty of Reduction of Pay by four stages for two years with a further direction that the Petitioner shall not earn increments during the rigour period. I. FACTUAL MATRIX OF THE CASE: 3. The brief facts of the case are as follows: (i) Prafulla Kumar Sarangi (“the petitioner”), Staff Code No.8773, had joined the O.P. Andhra Bank on 01.06.1981 as a clerk and was promoted to officer cadre on 04.02.2001. The petitioner, while working as the Branch Manager at Gothapatna branch was promoted to the next higher grade i.e. Middle Management Grade-II on dated 23.05.2012. (ii) The petitioner, while he was serving at Gothapatna and Acharya Vihar Branches, in Bhubaneswar Zone as Branch Manager, is alleged to have committed certain irregularities in the SOD accounts of M/s.Raj Agency and Mr.Swopnendu Mohanty. In both the accounts, he is accused to have failed to conduct the "Due Diligence" and "Credit Investigation" as per laid down policy guidelines. Further, it was also alleged that the securities mortgaged to the Bank were fake and not identifiable due to which the Bank was exposed to financial loss. Resultantly, both the accounts are classified as NPAs, and SARFAESI action also could not be initiated. (iii) After classification of accounts as NPAs, an Impaired Asset Study, (hereinafter referred as IAS) was conducted into the account of Mr. Swopnendu Mohanty and an internal investigation was conducted into the account of M/s. Raj Agency. In the IAS and Investigation reports, it was concluded that the petitioner was accountable for the accounts Page 2 of 32 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 14-Aug-2024 15:46:29 classified as NPAs and for the loss caused to the Bank. On the basis of IAS report and investigation reports, the petitioner was served with a Charge Sheet dated 31.10.2014 by the Opp. Party No.2. The particulars of the allegations as mentioned in the charge sheet are as follows: Allegations for M/s. Raj Agency - Account of Gothapatna Branch a) The Officer (petitioner) did not conduct a Due Diligence Study of the partners of M/s.Raj Agency. It came to the light that M/s. Raj Agency
Legal Reasoning
has mortgaged the property of land and building of one, Mr.Raj Kishore Misra for availing the SOD-RE limit of Rs.75.00 lakhs. The original sale deed and certified copies of title deeds are deposited by Mr.Raj Kishore Misra. Subsequently, the account became NPA and SARFAESI was invoked. During symbolic possession of the house, it came to notice that the actual owner was someone else and that the title deeds deposited for creation of EM are fabricated. b) The officer (petitioner) accepted the Certified Copy of “Title Deed” submitted by the partner instead of obtaining the same from the SRO and failed to get it verified by the Advocate with original title deeds. c) The officer (petitioner) did not obtain a Search Report. d) The officer (petitioner) did not obtain the Auditor’s Certificate for Book Debts. Allegations for Mr. Swopnendu Mohanty - Account of Acharya Vihar Branch a) The officer did not obtain the Registration of the Memorandum of Title Deeds with SRO. When the Branch initiated the proceedings under SARFAESI Act; during the symbolic possession, it was Page 3 of 32 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 14-Aug-2024 15:46:29 revealed that the property valued as per EVR is different from that of the actual property and hence, its physical possession could not be taken. b) It was further observed that as per the map of Bhubaneswar Development Authority (BDA), the property situated at Plot No.1050 with 2.549 decimals is falling under BDAs Comprehensive Development Plan for the construction of the proposed 200 ft. wide road. ZO advised Branch to collect information from Revenue Officials and BDA and stake claim of the bank before the competent authority and take their help for identifying the property. Branch stated that as the property could not be identified and thus, SARFAESI could not be enforced. c) The officer did not obtain compliance certificate for the latest renewal and kept on record. d) The officer did not maintain, on record, original conversion premium receipt No. 911663 dated 19.01.2010. e) The officer did not maintain, on record, the original ground rent receipt no. 231235 dated 28.01.2010. f) The officer has not obtained the EC from 04.01.2010 till date of creation of mortgage. g) Identification of property was not proper during pre-sanction unit visit and subsequent verification of the plot. h) Settlement of Patta in original is not available and identifying the plot was not made. Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 14-Aug-2024 15:46:29 Page 4 of 32 (iv) The petitioner denied all the charges alleged against him. On denial of charges, the Disciplinary Authority ordered for a regular departmental enquiry into the charges by appointing Mr. Ajaykumar Das Gupta, the then Senior Manager (HR) at Zonal Office, Kolkata of the Bank as an Enquiry Officer and the case was presented by Mr. J. Simhachalam, the then Senior Manager (HR) at Zonal Office, Visakhapatnam of the Bank. At the protest of the petitioner, the Enquiry Officer was replaced with one Mr. L.V. Ramana, Senior Manager, working at Head Office, Hyderabad. The Petitioner defended his case on his own. (v) The Preliminary Hearing was held on 27.04.2015 in which the Petitioner did not participate. The proceedings of the preliminary hearing and a set of relied upon documents were forwarded to the Petitioner. The regular hearing was held on 10.08.2015 and concluded on the same day. (vi) On behalf of the Management, Mr. Rebathy Raman Panda, Manager, Zonal Office, Bhubaneswar and Mrs. Chinmayee Kar, the then Branch Manager, Acharya Vihar Branch were examined as Management Witnesses (MW). Exhibits MEX-1 to MEX-35 were marked as Documentary Evidences on behalf of the Management. (vii) The Exhibits DEX-1 to 25 were marked as documentary evidences on behalf of the Defense i.e., petitioner. The MWs were duly cross examined by the Petitioner on 10.08.2015. On conclusion of cross- examination the EO directed both the parties to submit their respective written briefs. (viii) After consideration of the Written Briefs, the Enquiry Officer submitted his findings of enquiry holding that out of 11 allegations mentioned in Page 5 of 32 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 14-Aug-2024 15:46:29 the charges, only 02 were maintainable, 09 allegations were not maintainable. The enquiry report was submitted on 24.09.2015. (ix) Concurring with the findings of the Enquiry Officer, the Disciplinary Authority imposed on the Petitioner the major penalty of "Reduction of Pay by 4 stages for 2 years with further direction that he will not earn increments during the rigor period and on the expiry of such rigor period, the reduction will have the effect of postponing his future increments of pay" vide orders dated 06.11.2015. (x) The Petitioner preferred an appeal dated 24.12.2015 against the penalty imposed to the Appellate Authority which was eventually rejected. II. SUBMISSIONS ON BEHALF OF THE PETITIONER: 4. Learned counsel for the Petitioner earnestly made the following submissions in support of his contentions: (i) The O.P. bank has set up Credit Committees in its Zonal Offices for sanctioning of loans and credit proposals which are for higher amounts; particularly the ones which are beyond the discretionary powers vested in Branch Managers. The Credit Committee at Zonal Office, Bhubaneswar comprised the senior officials of the bank at Zonal Office inter alia O.P. No.2, as Zonal Manager, and the Assistant General Manager. The said credit committee, at the Zonal Office of the O.P. Bank, had sanctioned the loan to Mr. Swopnedu Mohanty of Acharya Vihar Branch vide sanction on 31.03.2010 and had also renewed the loan on 18.06.2011. Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 14-Aug-2024 15:46:29 Page 6 of 32 (ii) The aforesaid loan account slipped into NPA in the year 2013 i.e. more than 3 years after the petitioner was transferred from Acharya Vihar Branch in July, 2010. (iii) The O.P. bank has a declared policy that whenever any loan account becomes NPA; an internal investigation to fix staff accountability called as “Impaired Asset Study” or “IAS” is to be conducted to find out the reasons for the account becoming NPA and to fix the staff accountability, if any, for the said loan becoming bad or NPA and to initiate suitable disciplinary action against the staff found accountable for the slippage. (iv) The petitioner made written representations pointing out that the Zonal Manager, being the sanctioning and reviewing authority, was involved in the process which was to be investigated in IAS and requested to conduct IAS as per the rules of the bank. But his request was not considered. (v) On 10.08.2015, the domestic enquiry proceeding was held and was concluded in a single sitting on the same day. The Enquiry officer in his findings has held Two out of the Four allegations relating to the account of M/s Raj Agency, i.e. allegations No.1(a) and No. 1(c) as not maintainable but held the other two allegations, viz: 1(b): that the petitioner had accepted the Certified Copy of Title deed submitted by the partner instead of obtaining the same directly from SRO and 1(d): that the petitioner had not obtained the Auditor’s Certificate for book debt, as maintainable. Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 14-Aug-2024 15:46:29 Page 7 of 32 (vi) The inquiry officer observed that full details with regard to the activities of the partners and business capabilities and other required information were gathered and sufficient due diligence of the partners was done. It was also observed that the petitioner followed the guidelines of the bank while entertaining the above credit proposal. In spite of this, it came to light subsequently that the collateral security offered for the above loan was found fake and fabricated. Therefore, the reasons for accounts becoming NPA and its consequential result of financial loss to the bank, cannot be totally attributable to the petitioner. (vii) Since the sanction and subsequent renewal process has undergone various stages like, attention of legal opinion from approved legal advisor and valuation by approved Engineer, availability of RF-216 dated 14.02.2012 (Mex-6). RF 216 dated 20.08.2013 (Mex-7), Certificate of Inspection of collateral security dated 20.08.2013 (Mex-10 & Mex-18) Pre sanction unit inspection report (Mex- 11) Legal Audit Report by Mr. P.C. Rath, Advocate (Mex-17) dated 07.04.2012, the petitioner cannot be held solely liable for the confusion. (viii) At no stage, the genuineness of the title deeds of collateral security was suspected till the accounts became NPA. The Guarantors (Partners of the firm) have cheated the Bank with the connivance (of) Registration Department officials. (ix) The petitioner in his written submission before the Disciplinary Authority, pleaded that the enquiry officer’s findings on the two allegations held as maintainable is just a presumption not based on evidence and prayed to exonerate him of those two allegations also. Page 8 of 32 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 14-Aug-2024 15:46:29 (x) The O.P.No.2, Disciplinary Authority, did not consider the pleas raised and submissions made by the petitioner and in a mechanical manner concurred with the findings by the enquiry officer and passed the final order No. 666/20/V/T-1585/CS/501 dated 06.11.2015 and imposed a major penalty.
Decision
(xi) The Appellate Authority (“O.P.No.3”) also disposed of the appeal in a mechanical manner, confirming the punishment, without any application of mind to the pleadings and defence submissions. (xii) After the disposal of the departmental appeal, the petitioner learnt that through the letter No.666/20/V/T-1585/483 dated 16.10.2015, one Mr. P.V. Joga Rao, Chief Manager (IR), Human Resources Department (IR), Head Office of the O.P.bank, had dictated the decisions contained in the final order No. 666/20/V/T-1585/CS/501 dated 06.11.2015 signed by the O.P.No.2. Though as per the principles and procedure governing domestic enquiry, it was the O.P.No.2, Disciplinary Authority, who was supposed to peruse the records of the enquiry proceedings and the pleadings made by the petitioner and the findings by the enquiry officer and come to the conclusion about the guilt of the delinquent and decide the punishment independently; but, the O.P.No.2 instead of acting as per laid down procedure and deciding the case independently, had surrendered his authority and independence before the said Mr.P.V. Joga Rao. Therefore, it is revealed that the decision by the O.P.No.2/ Disciplinary Authority to concur with the findings of the Enquiry Officer and the decision to impose the major penalty of Reduction is taken by Mr. P.V. Joga Rao. Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 14-Aug-2024 15:46:29 Page 9 of 32 (xiii) Now, the petitioner seeks to challenge the perverse finding returned by the enquiry officer on the two allegations relating to the account of M/s Raj Agency and the punishment imposed on the petitioner. (xiv) In the Revised Policy of conducting Impaired Asset Study, it is prescribed that: “On receipt of Reports, IAS Cell, CMRD has to process the report and place a note to the General Manager, CMRD for deciding Staff Accountability, if any. The necessary disciplinary action shall be initiated against erring officials by competent Disciplinary Authorities, after vigilance angle has been examined by CVO. XXX For the purpose of examining the vigilance / non vigilance angle, CMRD shall submit the IAS Reports along with all enclosures including General Manager’s decision on accountability to is Vigilance Department as and when the IAS Process completed." But the petitioner has been charge sheeted for the slippage of the account of M/s Raj Agency into NPA without conducting any Impaired Asset Study as required under Para: 2 of the Circular No.095 dated 29.06.2011 and without the petitioner being held accountable by the General Manager, CMRD of the bank under the declared policy of the bank for taking disciplinary action for slippage of loan accounts into NPA. Therefore, the disciplinary proceeding initiated and concluded against the petitioner is not in accordance with the declared policy of the bank (xv) The domestic enquiry conducted against the petitioner was vitiated by legal mala-fides because it was initiated and conducted against the Page 10 of 32 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 14-Aug-2024 15:46:29 petitioner with the oblique purpose of shielding the actual accountable officials, including the O.P.No.2, who had sanctioned and renewed the loan, by not allowing any IAS to be conducted according to bank’s prescribed policy. (xvi) The domestic enquiry was further vitiated since the O.P.No.2, has framed the charge and initiated the enquiry in flagrant violation of the law of natural justice i.e. ‘nemo judex in causa sua’, by self-judging his own acts of omission and commission in sanctioning, reviewing and renewing the impugned loan account of M/s Raj Agency as not responsible for the slippage of the account into NPA. (xvii) No evidence whatsoever was produced in the enquiry to prove that the title deed document dated 07-01-2008 lodged with the bank is fake. No evidence was placed in the enquiry to show that the document lodged with the bank was subjected to any forensic scrutiny for confirming that it was fake and fabricated. Therefore, the enquiry itself has been entirely based on presumptions and the findings arrived are only surmises and conjectures. (xviii) The allegation under No.1(b) that the petitioner had accepted the Certified Copy of the Title deed submitted by the partner instead of obtaining the same directly from the SRO has no basis. The allegation is based on the assumption that the petitioner, as branch manager, was required to obtain the certified copy directly from the SRO. But the bank failed to bring on record any Rule that the petitioner, as Branch Manager, was required to obtain the certified copy from the SRO. Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 14-Aug-2024 15:46:29 Page 11 of 32 Hence, neither the allegation, nor the finding by the enquiry officer has any lawful basis. (xix) The bank has also failed to place on record any rule to substantiate the allegation that the petitioner, as branch manager, was required to get the certified copy of the title deed verified by the advocate. The DEX-12 is the legal opinion dated 10.02.2012 given by the bank’s advocate Shri Debabrata Jena on examination, verification and search of the title deed pledged with the bank, which clearly states that the said report was given by the advocate in response to the instruction of the branch manager, certifying the genuineness of the title deed. Therefore, the finding is utterly perverse. (xx) There is absolutely no evidence to show that MEX-5 is a document used for creating equitable mortgage in the loan account of M/s Raj Agency. The Management Witness did not whisper a word about the source from which the MEX-5 was obtained. Absolutely no evidence was brought on record of the enquiry to show that the MEX-5 was obtained by the branch. But the enquiry office has observed that MEX-5 was obtained by the branch. It is not based on any record and therefore, apparently it is an error in law and totally perverse. (xxi) There is no existing rule/ procedure of the bank was placed on record of the enquiry to show if in an SOD against Real Estate any book debt statement would be obtained. Therefore, it has been presumed that the petitioner was required to obtain it without any legal basis. (xxii) The charge did not distinctly specify, as required under the Regulation 6(3) of Andhra Bank Officer Employees’ (Discipline & Appeal) Page 12 of 32 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 14-Aug-2024 15:46:29 Regulation, 1981, the period for which the auditor’s certificate for Book Debt was not obtained. Therefore, the charge and allegation that the petitioner had not obtained the Auditor’s Certificate for book debt is patently vague. Therefore, when the allegation itself was unspecific and vague and there is no evidence whatsoever on record, the enquiry officer’s conclusion and finding on the same allegation is only perverse and bad in law. (xxiii) The enquiry officer, without giving any reason, has ignored the pleading by the petitioner that the loan was sanctioned in April, 2012 by Zonal office and before sanction of the loan by the ZO, auditor’s certificates were submitted by the branch as a part of the loan proposal and since the loan was renewed in September, 2013, it is implied that the auditor’s certificates for book debt etc. were obtained from the date of disbursal of the loan till the loan was renewed by the Zonal office on 21-09-2013, otherwise the ZO would not have sanctioned and renewed the loan. Therefore, in the absence of any specific allegation about the period for which the auditor’s certificate was not obtained, and in the absence of any evidence whatsoever and in face of the fact that the loan was renewed by the zonal authority on 21.09.2013, the finding by the enquiry officer that the allegation is maintainable is completely perverse as it is not based on any evidence. (xxiv) It is settled position of law that the burden of proving the charge rests on the one who makes it. But the Enquiry Officer has based his finding admittedly on the ground that "Since the CO (the petitioner) has not brought in any exhibit in his support, I hold the allegation as Page 13 of 32 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 14-Aug-2024 15:46:29 maintainable against the CO". Therefore, the Enquiry Officer has placed the burden of proof on the petitioner in holding the allegation as proved, contrary to the settled position of law. (xxv) It is settled position of law that presumption cannot take the place of evidence. Even any rational presumption based on preponderance of probabilities, as it existed in this case in view of the renewal of the limit in 2013, would force one to the only conclusion that the auditor’s certificates for book debts were on record and were found to be satisfactory by the authority. (xxvi) The Article of Charges framed against the petitioner is for slippage of the loan account to NPA but the circumstances alleged in the statement of allegation were relating to the fraud committed by the borrowers in the account of M/s Raj Agencies. Therefore, the Charge framed against the petitioner was not in accordance to the statutory procedure prescribed under Sub-regulation 3 of Regulation 6 of the Andhra Bank Officer Employees’ (Discipline and Appeal) Regulation, 1981. Thus, the Disciplinary Authority, without any evidence about the charge of slippage of the loan account of M/s Raj Agency has made vague allegations against the petitioner which do not amount to and constitute the charged misconduct. Hence, it is clear that the Disciplinary Authority without any application of mind to the Articles of Charge. (xxvii) The Enquiry Officer in his report dated 24.09.2015 has given his finding that all the seven allegations relating to the A/c of Mr. Swopnendu Mohanty of Acharya Vihar Branch made against the petitioner are not maintainable. Thus, the petitioner has been absolved and exonerated Page 14 of 32 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 14-Aug-2024 15:46:29 from all the allegations and charge levelled against him relating to the account of Mr. Swapnendu Mohanty. (xxviii) Since the O.P.No.2 had held IAS through ineligible and lower ranking officers into other NPA accounts and there was no indication if the O.P. bank had conducted Impaired Asset Study (IAS) into the account of M/s Raj Agency of Gothapatna branch after the account slipped into NPA, as per the declared policy of the bank and it was also not revealed if the staff accountability had been decided by the General Manager, CMRD, Head Office of the O.P. Bank. III. SUBMISSIONS ON BEHALF OF THE OPPOSITE PARTIES: 5. (i). Learned counsel for the Opposite Parties earnestly made the following submissions in support of his contentions: The powers for sanctioning of loans are apportioned among branches/Zonal/Circle/Head Offices. Usually, the loans will be sanctioned by the Competent Authority at Zonal/Circle/Head Office according to their powers of sanction. It is the normal practice that the branch receives the proposal for sanction of loan from the customers. The branch, after making all enquiries, obtaining required documents such as KYC, property statements, financial statements, credit investigations, due diligence certificates etc., would forward the photo copy of the proposal to Zonal Office for sanction if the proposed loan is not coming in the powers of the branch manager. The original documents and proposal will be at the branch itself. At Zonal Office, the Credit Committee, formulated for the purpose, would process the Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 14-Aug-2024 15:46:29 Page 15 of 32 proposal and sanction the loan, basing on the recommendations of the branch, if found feasible. It is the duty of branch Manager to verify/scrutinize the documents/papers submitted with that of the originals as to the genuineness of the same in order to arrive at the eligibility of the borrower and for grounding the unit (ii). At the time of sanctioning of loan to M/s Raj Agency, the petitioner was the Branch Manager of Gothapatna branch. It was the petitioner who forwarded the loan proposal to Zonal Office for sanction. As it is stated supra that it is the duty of branch manager to make all the investigations and enquiries of the loan proposal and customer, after that he has to give his recommendations for sanction of loan. In the instant case the petitioner had failed to comply with the guidelines of the Bank in forwarding loan proposal. (iii). As regards to the averment that the A/c of M/s. Raj Agency was renewed after the exit of the petitioner on transfer from the branch, it is submitted that the account slipped into NPA immediately. Later the account was regularized by upgradation on payment of over dues by the borrower. Since the immediate closure of account was not possible and there was no option other than that renewal of account. After up gradation of account, the branch forwarded the renewal proposal to Zonal Office for renewing the loan. The proposal was processed at Zonal Office which observed that the operations in the account were unsatisfactory, and the turnover reflection was inconsistent with true business transactions. Ergo, in view of the unsatisfactory conduct and Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 14-Aug-2024 15:46:29 Page 16 of 32 operation of the limit, a suggestion was made for the reduction of the party’s limit. (iv). On the decision of Credit Committee, the renewal of loan was sanctioned and accordingly a sanction letter dated 24.09.2013 was issued by stipulating enhanced restrictive conditions on the A/c. (v). The Opposite Party No.2 followed all guidelines in conduct of IAS in all accounts. It is the frivolous allegation of petitioner that the Opposite Party No.2 had held IAS through ineligible and lower ranking officer into other NPA accounts. In regards to IAS conducted in M/s Raj Agency, the IAS was conducted when the account was classified as NPA for the first time vide IAS report dated 27.05.2013 and another dated 29.09.2013. After upgradation of account on 07.06.2013 again the account slipped into NPA on 30.12.2013. At this point of the time, the fraud in the account was detected. As per Master Circular of Reserve Bank of India on Frauds - Classification and Reporting by commercial banks and select FIs, IAS study in fraudulent accounts is not mandatory. So, for that reason, an investigation was conducted in the account and the fraud was reported to RBI. Since there was a Vigilance angle and IAS was not necessary, the petitioner was served with a charge sheet on the basis on investigation report which is as good as IAS report. As an IAS was already conducted in the account on 27.05.2013 and since fraud was detected in the account, there is no necessary for IAS for the second time. As per the guidelines of RBI, staff accountability can be decided on the basis of investigation report in detecting the fraud. Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 14-Aug-2024 15:46:29 Page 17 of 32 (vi). For deciding staff accountability, conduct of IAS is not the only method. In vigilance cases, staff accountability can be decided on the basis of investigation report in detecting the frauds. As submitted supra in the instant case, IAS was not conducted for the second time as the fraud was detected. The Disciplinary Authority served charge sheet on the petitioner on the basis of investigation report on fraud. (vii). The Enquiry Officer had held two allegations as maintainable on the basis of evidences available on record and they were not presumptions. The allegations were established in the enquiry. On the basis of Enquiry Report, the Disciplinary Authority imposed the penalty on the petitioner, which was subsequently confirmed by the Appellate Authority, The enquiry was conducted duly following the principles of natural justice. (viii). After the receipt of communication from the Disciplinary Authority, proposing the penalty to be imposed on the charge sheeted officer (Petitioner), the HRD at Head Office forwarded the same to Vigilance Department at Head Office requesting to accord second stage advice in the matter. The Vigilance department vide their letter dated 09.10.2015, concurred with the views of the Disciplinary Authority in imposing the major penalty on the petitioner. After receipt of reply from the Vigilance Department, the HRD at Head Office, extended professional guidance to Disciplinary Authority by drafting the DA order. The extension of professional guidance to Disciplinary Authority does not mean that the Chief Manager at HRD dictated the DA Order by way of sending draft. Initially, the draft was forwarded by the DA to Head Office for Page 18 of 32 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 14-Aug-2024 15:46:29 verification and vetting. On finalization, the CM (IR) forwarded the correct version to ZO. (ix). The loan of M/s Raj Agency was renewed since the immediate closure of account was not possible. If the loan couldn’t have been renewed, again the account would have slipped to NPA. But, ultimately the account became NPA on 30.12.2013 for non-payment of overdue amount. The loan was sanctioned by credit committee at Zonal Office and the Opposite Party No.2 was accepting authority only. (x). As per Andhra Bank Officer Employees’ (D&A) Regulations, for MMGS-II Officers, Deputy General Manager is disciplinary authority. By virtue of this regulation Opposite Party No. 2 became disciplinary authority to petitioner’s case. As regards to the rule against bias i.e. nemo judex in causa sua, it is submitted that Opposite Party No. 2 was not the person who sanctioned the loan initially, his, involvement was restricted upto renewal of loan and the reasons for renewal are mentioned supra. (xi). The petitioner was not served charge sheet for slippage of A/c of M/s Raj Agency to NPA. The petitioner was issued charge sheet for not following guidelines of the bank while complying with conditions mentioned in loan sanction letter dated 04.04.2012. (xii). It is worth to mention here that Opposite No. 2 was not enquiry officer in disciplinary proceedings. The Opposite No. 2 passed his order on the findings of Enquiry Officer. It is also submitted that the petitioner never protested during enquiry for change of Disciplinary Authority. It is also mentioned here that Mr. Sujit Kumar Das was the person who Page 19 of 32 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 14-Aug-2024 15:46:29 happened to be the Deputy General Manager at the time of renewing the loan and the time of passing D.A orders and changing the EO, Mr. K.C. Pradhan was the Deputy General Manager. It was Mr. K.C. Pradhan who issued DA orders against the petitioner. The DGM who renewed the loan and the DGM who passed the DA orders on the petitioner were not the same persons. At this juncture it can be stated that rule against bias i.e. nemo judex in causa sua is not applicable to the instant case. (xiii). Penalty is imposed for not following the Bank’s policy guidelines. The compliance of loan policy guidelines is a must for any loan sanctioned. In the instant case, since the petitioner had obtained certified copies of title deeds directly from borrowers instead of obtaining personally or through panel advocate from SRO, Bhubaneswar he was charge sheeted. The findings of EO on this allegation are mentioned below: "...however in MEX-S i.e.., Certified copy of Sale Deed obtained by the branch on 07.02.2012. It was observed on the reverse of first page that Mr. Raj Kishore Mishra has applied for certified copy of the document. So it is clear that that CO has accepted the certified copy of the title deed submitted by the partner instead of obtaining the same directly from SRO through Panel Advocate. Had the CO followed the prescribed procedure i.e., obtaining Certified Copies directly from SRO through panel advocate, the intending fraud by Partners could have been averted in the beginning itself. So, the plea of the defense that branch has assigned job to panel advocate for obtaining the certified copy from SRO Bhubaneswar as per circular No. 477/11/42 dated 20.01.2004, page No.2 clause (7) is not correct and I hold the charge as maintainable against the CO." Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 14-Aug-2024 15:46:29 Page 20 of 32 (xiv). As per the loan policy guidelines of the Bank, branches have to obtain Auditor’s Certificate for Book Debts on Quarterly basis. Further in the sanction letter dated 04.04.2012 it was clearly mentioned that/ “the borrower should submit statement of sundry debtors at monthly intervals along with the stock statement. The auditor of the firm should certify the Sundry Debtors statement along with amount of Creditors at least once in a quarter....”. It was the implied duty on the part of the petitioner to obtain book debts on quarterly basis which he failed to do. In this regard EO’s findings are as below, "....the CO has not submitted any exhibit in his defence having obtained Auditor’s Certificate for Book Debts. The contention of CO that if the certified statement for book debts were not available then the loans would never have been sanction by ZO is not convincing. As per extant guidelines Branch has to obtain Auditor’s Certificate for Book Debts on quarterly basis. Since CO has not brought in any exhibit in his support, I hold the allegation as maintainable against the CO.” (xv). The charges framed against the petitioner were as per Regulation 6 of the Andhra Bank Officer Employees’ (D&A) Regulations. Charges were not framed on basis of fraud committed by borrowers. The charges were against the petitioner for not following the guidelines of the bank. In HMT Ltd. Vs. Chaya Srivastava,1 the Karnataka High Court held that: "we do not find any merit in the contention that the disciplinary authority has not applied its mind independently to the evidence on record and the order passed by it is not a speaking order. When the punishing authority agrees with the 1 2003 LLR 878 (KAR) Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 14-Aug-2024 15:46:29 Page 21 of 32 findings of the enquiry officer and accepts the reason given by him in support of such findings, it is not necessary for the punishing authority to again discuss the evidence and come to the same findings as that of the enquiry officer and give the same reasons for the findings Therefore it cannot be said that the order passed by the disciplinary authority is a non speaking order.” (xvi). The petitioner was charge sheeted and called for explanation on several occasions for not complying with the guidelines of the Bank in monitoring and follow up of the loan accounts. While he was working as Branch Manager at Gothapatna branch, he had committed irregularities in sanction of three vehicle loans for which he was imposed with a minor penalty of "Censure". Further, while he was working at Mahaboobabad as officer, he was called for explanation for not reviewing the outstanding FCCPs which would have helped in recovery of Rs.19000/-. For this, the petitioner was warned. Again, while he was working at Khandagiri branch as Branch Manager, he had committed certain irregularities in conduct/ disbursement and monitoring the OCC account of M/s. Chandan Car Care where he had failed to generate CIBIL reports, sanction terms were not followed and adequate care was not taken while accepting collateral securities. For the said misconduct, he was imposed with a major penalty of "Reduction of Pay by 3 stages for 3 years with Cumulative Effect". With regard to this, the petitioner had also filed a writ petition No.14272 of 2016 before this Court of which is pending disposal. And while working at Gothapatna branch, as Branch Manager, the petitioner had failed to Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 14-Aug-2024 15:46:29 Page 22 of 32 follow the extant guidelines while sanctioning two vehicle loans of Rs.2.00 lakhs each where the funds were diverted and the vehicles were not purchased at all. For this irregularity, the DA imposed on the petitioner a minor penalty of "Reduction of pay by 1 stage by one year without cumulative effect." IV. EXAMINATION OF THE LEGAL MATRIX 6. 7. It is trite in law that Power of judicial review exercised by a Court or a Tribunal against the orders of a departmental enquiry committee is only limited to ensuring that the individual receives fair treatment and not to ensure that the conclusion which the authority reaches is necessarily correct in the eye of the Court. In case of State of Orissa v. Bidyabhushan Mohapatra,2 the Constitutional Bench of the Supreme Court noted that, considering the seriousness of the proven misconduct, the disciplinary authority possessed the authority and jurisdiction to impose the corresponding penalty. This penalty was not subject to review by the High Court under Article 226. The relevant excerpts are produced hereinbelow: “If the conditions of the constitutional protection have been complied with, is not justiciable. Therefore if the order may be supported on any finding as to substantial misdemeanour for which the punishment can lawfully be imposed, it is not for the Court to consider whether that ground alone would have weighed with the authority in dismissing the public servant. The Court has no jurisdiction if the findings of the enquiry officer or the Tribunal Prima facie make out a case of misdemeanour, to direct the authority to reconsider that order 2 AIR 1963 SC 779 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 14-Aug-2024 15:46:29 Page 23 of 32 because in respect of some of the findings but not all it appears that there had been violation of the rules of natural justice.” 8. In B.C. Chaturvedi vs. Union of India,3 the Supreme Court also held that judicial review is not an appeal from a decision but a review of the manner in which the decision is made. Power of judicial review is meant to ensure that the individual receives fair treatment and not to ensure that the conclusion which the authority reaches is necessarily correct in the eye of the Court. The relevant excerpt is produced hereinbelow: “Judicial review is not an appeal from a decision but a review of the manner in which the decision is made. Power of judicial review is meant to ensure that the individual receives fair treatment and not to ensure that the conclusion which the authority reaches is necessarily correct in the eye of the court. When an inquiry is conducted on charges of misconduct by a public servant, the Court/Tribunal is concerned to determine whether the inquiry was held by a competent officer or whether the inquiry was held by a competent officer or whether rules of natural justice are complied with. Whether the findings or conclusions are based on some evidence, the authority entrusted with the power to hold inquiry has jurisdiction, power and authority to reach a finding of fact or conclusion. But that finding must be based on some evidence. Neither the technical rules of Evidence Act nor of proof of fact or evidence as defined therein, apply to disciplinary proceeding. When the authority accepts that evidence and conclusion receives support therefrom, the disciplinary authority is entitled to hold that the delinquent officer is guilty of the charge. The Court/Tribunal in its power of judicial review does not act as appellate authority to re- appreciate the evidence and to arrive at its own independent findings on the evidence. The 3 (1995) 6 SCC 749 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 14-Aug-2024 15:46:29 Page 24 of 32 Court/Tribunal may interfere where the authority held the proceedings against the delinquent officer in a manner inconsistent with the rules of natural justice or in violation of statutory rules prescribing the mode of inquiry or where the conclusion or finding reached by the disciplinary authority is based on no evidence. If the conclusion or finding be such as no reasonable the Court/Tribunal may interfere with the conclusion or the finding, and mould the relief so as to make it appropriate to the facts of each case.” person would reached, have ever 9. When an inquiry is conducted on the charges of misconduct by an employee of the state, the Court or Tribunal would be concerned only to the extent of determining whether the inquiry was held by a competent officer or whether the rules of natural justice and statutory rules were complied with. 10. In Om Kumar & Others vs. Union of India,4 the Supreme Court had also after considering the Wednesbury Principles and the doctrine of proportionality held that the question of quantum of punishment in disciplinary matters is primarily for the disciplinary authority, and the jurisdiction of the High Courts under Article 226 of the Constitution or of the Administrative Tribunals is limited and is confined to the applicability of one or the other of the well-known principles known as “Wednesbury Principles” namely whether the order was contrary to law, or whether relevant factors were not considered, or whether irrelevant factors were considered or whether the decision was one 4 (2001) 2 SCC 386 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 14-Aug-2024 15:46:29 Page 25 of 32 which no reasonable person could have taken. The Apex held as following: “In this context, we shall only refer to these cases. In Ranjit Thakur v. Union of India, [1987] 4 SCC 611, this Court referred to ‘proportionality’ in the quantum of punishment but the Court observed that the punishment was ‘shockingly’ disproportionate to the misconduct proved. In B.C. Chaturvedi v. Union of India, [1995] 6 SCC 749, this Court stated that the court will not interfere unless the punishment awards was one which shocked the conscience of the Court. Even then, the Court would remit the matter back to the authority and would not normally substitute one punishment for the other. However, in rare situations, the Court could award an alternative penalty. It was also so stated in Ganayutham. issue of fundamental Thus, from the above principles and decided cases, it must be held that where an administrative decision relating to punishment in disciplinary cases is questioned as ‘arbitrary’ under Article 14, the Court is confined to Wednesbury principles as a secondary reviewing authority. The court will not apply proportionality as a primary reviewing Court freedoms nor of because no discrimination under Article 14 applies in such a context. The Court while reviewing punishment and if it is satisfied that Wednesbury principles are violated, it has normally to remit the matter to the administrator for a fresh decision as to the quantum of punishment. Only in rare cases where there has been long delay in the time taken by the disciplinary proceedings and in the time taken in the Courts, and such extreme or rare cases can the Court substitute its own view as to the quantum of punishment.” (Emphasis supplied) Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 14-Aug-2024 15:46:29 Page 26 of 32 11. Finally, in Deputy General Manager (Appellate Authority) and Others v. Ajai Kumar Srivastava,5 the observation of the Supreme Court must be remembered: “25. When the disciplinary enquiry is conducted for the alleged misconduct against the public servant, the court is to examine and determine: (i) whether the enquiry was held by the competent authority; (ii) whether rules of natural justice are complied with; (iii) whether the findings or conclusions are based on some evidence and authority has power and jurisdiction to reach finding of fact or conclusion.” 12. Now, with the above principles in mind, I shall consider the arguments of the counsel for the petitioners, one by one, against the arguments of the counsel for the Opp. Parties. V. COURT’S REASONING AND ANALYSIS: 13. A perusal of the charges, two of which are held to be proved by the Enquiry Officer, reveal that he has sanctioned and disbursed loans without following the due procedure contemplated under the guidelines of the bank, disbursing loans irregularly. Based on the findings recorded by Enquiry Officer, the disciplinary authority has tentatively decided to impose imposed the major penalty of “Reduction of Pay by 4 stages for 2 years with further direction that he will not earn increments during the rigor period and on the expiry of such rigor period, the reduction will have the effect of postponing his future increments of pay” vide orders dated 06.11.2015. 5 (2021) 2 SCC 612 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 14-Aug-2024 15:46:29 Page 27 of 32 14. Now, the counsel for the Opp. Party has submitted repeatedly that penalty is solely imposed for not following the Bank’s lending guidelines and not for the loss sustained by the bank. The compliance of loan policy guidelines is a must for any loan sanctioned. In the instant case, the petitioner had accepted the certified copy of the title deed submitted by the partner instead of obtaining the same directly from SRO through Panel Advocate. Additionally, the petitioner had not obtained the Auditor’s Certificate for book debt. It is argued by the counsel of the Opp. Party that had the petitioner followed the prescribed procedure i.e., obtaining Certified Copies directly from SRO through panel advocate and obtaining the audit certificate, the intending fraud by Partners could have been averted in the beginning itself. 15. From the foregoing, it is evident that the punishment was imposed due to the petitioner’s non-compliance with the bank’s guidelines, rather than directly resulting from any loss incurred by the bank from the accounts mentioned in this case. Consequently, this court need not address questions of natural justice pertaining to the departmental proceeding, which appears to be procedurally sound otherwise. 16. Almost all scheduled commercial banks have established lending guidelines which meticulously outline the necessary steps for compliance prior to granting a loan. These guidelines ensure that all regulatory and financial criteria are met, safeguarding both the bank and the borrower. Adhering to these guidelines not only promotes transparency and accountability but also fosters trust within the Page 28 of 32 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 14-Aug-2024 15:46:29 financial system. These lending guidelines often include thorough credit assessments, collateral evaluations, and risk analyses. By adhering to these procedures, banks mitigate potential risks and ensure that loans are granted to creditworthy individuals and businesses. Additionally, these guidelines help in maintaining financial stability and integrity, preventing defaults and fostering a robust economic environment. The structured approach also facilitates a seamless and efficient lending process, enhancing customer satisfaction and confidence in the banking system. The petitioner admittedly erred in not following the compliance guidelines and hence, the impugned chargesheet and subsequent disciplinary action cannot be termed to be illegitimate or arbitrary. 17. Bank managers are entrusted with the critical responsibility of ensuring that all loan disbursements adhere strictly to established compliance guidelines and procedural safeguards. This diligence is essential to maintain the integrity and stability of the financial system. It is imperative that they conduct thorough assessments and follow all mandated protocols meticulously. Any deviation or neglect in this regard can lead to significant repercussions, including disciplinary actions and substantial penalties. These measures are not merely institutional formalities but are designed to mitigate risks, prevent fraud, and safeguard the interests of all stakeholders. Therefore, a stringent adherence to these guidelines is non-negotiable and must be observed with the utmost seriousness. However, this court must address the last submission of the learned counsel for the petitioner that the punishment imposed is disproportionate to the gravity of charges. Page 29 of 32 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 14-Aug-2024 15:46:29 18. At first glance, it may appear that the penalty imposed by the bank is disproportionate, considering it as a major sanction for a mere non- compliance issue. However, it has been brought to the court’s attention that the petitioner had been rebuked and called for explanations on several occasions for failing to comply with the bank’s guidelines in monitoring and following up on loan accounts. The petitioner had committed irregularities in the sanctioning of loans and compliance issues, for which he had received multiple warnings and minor penalties. Consequently, this penalty cannot be viewed as a response to a single isolated incident. It is, in fact, a culmination of repeated non- compliance and misconduct, reflecting a pattern of behavior that warranted a more severe penalty. 19. It is relevant to refer to the decision of the Supreme Court in Boloram Bordoloi v. Lakhimi Gaolia Bank,6 wherein the court rejected the appellant’s argument that the punishment was disproportionate to the charges, emphasizing the serious nature of the charges proven in the departmental enquiry: “Even, the last submission of the learned counsel for the appellant that the punishment imposed is disproportionate to the gravity of charges, also cannot be accepted. The charges framed against the appellant in the departmental enquiry are serious and grave. If we look at the response, in his letter dated 16.08.2005, to the show cause notice issued by the disciplinary authority, it is clear that he has virtually admitted the charges, however, tried to explain that such lapses occurred due to work pressure. Further he went to the extent of saying – he is ready to bear the loss suffered by the bank on account of his lapses. 6 AIR 2021 SC 872 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 14-Aug-2024 15:46:29 Page 30 of 32 of for are grant issued The manager of a bank plays a vital role in managing the affairs of the bank. A bank officer/employee deals with the public money. The nature of his work demands vigilance with the in›built requirement to act carefully. If an officer/employee of the bank is allowed to act beyond his authority, the discipline of the bank will disappear. When the procedural guidelines loans, officers/employees are required to follow the same meticulously and any deviation will lead to erosion of public trust on the banks. If the manager of a bank indulges in such misconduct, which is evident from the charge memo dated 18.06.2004 and the findings of the enquiry officer, it indicates that such charges are grave and serious. Inspite of proved misconduct on such serious charges, disciplinary authority itself was liberal in imposing the punishment of compulsory retirement. In that view of the matter, it cannot be said that the punishment imposed in the disciplinary proceedings on the appellant, is disproportionate to the gravity of charges. As such, this submission of the learned counsel for the appellant also cannot be accepted.” 20. Hence, in my opinion, the penalty imposed on the petitioner is not disproportionate at all. The bank’s actions underscore the importance of adhering to established guidelines to maintain the integrity and reliability of its operations. VI. CONCLUSION: 21. Based on the aforementioned analysis of both factual and legal aspects, this Court concludes that there has been no procedural irregularity or breach of the Principles of Natural Justice in the conduct of the inquiry against the petitioner. Furthermore, it has been determined in the preceding paragraphs that there is adequate reason to substantiate the penalty imposed on the Petitioner. Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 14-Aug-2024 15:46:29 Page 31 of 32 22. In light of the facts and circumstances of the present case, this Court finds no merit in the current petition. The Petitioner has not succeeded in establishing grounds for interference with the impugned order. 23. The Writ Petition is, accordingly, dismissed. Judge (Dr. S.K. Panigrahi) Orissa High Court, Cuttack, Dated the 24th July., 2024/ Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 14-Aug-2024 15:46:29 Page 32 of 32