The High Court
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IN THE HIGH COURT OF ORISSA AT CUTTACK WP(C) No. 15143 of 2019 (In the matter of an application under Articles 226 and 227 of the Constitution of India, 1950). Nilamani Padhi …. Petitioner(s) -versus- Competent Authority & General Manager, UCO Bank & Anr. …. Opposite Party (s) Advocates appeared in the case through Hybrid Mode: : For Petitioner(s) Mr. Surendra Nath Panda, Adv. For Opposite Party (s) : Mr. Subrat Kumar Mishra, Adv. for O.P.1 CORAM: DR. JUSTICE S.K. PANIGRAHI DATE OF HEARING:-17.05.2024 DATE OF JUDGMENT: -25.06.2024 Dr. S.K. Panigrahi, J. 1. The Writ Petition has been filed to challenge the legality and propriety of the UCO Bank Order dated 29.01.2018 which is contrary to law and not in terms of the UCO Bank Regulations for which the Petitioner submits that it is liable to be set aside and the penalty imposed over the petitioner vide the letter be quashed. Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 25-Jun-2024 17:34:15 Page 1 of 27 I. 2. (i) FACTUAL MATRIX OF THE CASE: Succinctly put, the facts of the case are as follows:: The Petitioner had joined UCO Bank as Clerk of UCO Bank on 15.07.1977 vide Employment/PF No.20000. On reaching the period of superannuation, he retired as an AGM, MEU Parliament Street branch, New Delhi with effect from 01.06.2015 and accordingly, as per Pension Regulation, 1995, he was sanctioned monthly pension which was being credited to his SBI A/c No.21650100000132 maintained at Titilagarh Branch every month. (ii) The Petitioner received a Memorandum dated 16.06.2016 under Regulation 48 of UCO Bank (Employees) Pension Regulation, 1995, as amended. This Memorandum, along with a statement of allegations and Articles of charges, was delivered to him on 25.07.2016.The details of allegation and article of charges are given below: Allegation No. 1 The petitioner disbursed a sum of Rs.1,70,33,296.00 on 28.03.2014 and Rs.19,71,751.00 on 09.04.2014 without pre-disbursement inspection and recommendation of other officials of the Branch. Allegation No. 2 The petitioner did not ensure to obtain CIBIL report of M/s NVC Electronics Pvt. Ltd. before sanction of Credit facilities to the party and the same was pulled on 24.04.2014 after sanction of Page 2 of 27
Legal Reasoning
Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 25-Jun-2024 17:34:15 loan. Allegation No. 3 He did not make discrete injuries about the borrower company and thereby failed to know that the company had already availed credit facilities from other Bank/ financial institution. Allegation No. 4 He did not make discrete injuries about the company and failed to recognize the fact that the Director of the Company Mrs. Neelam Verma had availed credit facilities from P.N.B. in the name of R.K. Enterprisers as proprietor. That account has turned N.P.A. having outstanding of Rs.364.47 lakhs. She had also availed credit facility of Rs.300 lakhs for M/s Ara Consultant Assets Resolution Agency which is also W.P. Allegation No. 5 The petitioner did not obtain few documents during sanction of credit facility like Home Tax receipt, Electric Bill of mortgaged property allotment letter and possession letter for property situated at Greater Noida. Allegation No. 6 He failed to ensure that the insurance of assets were done as per Bank’s Guidelines. Allegation No. 7 The loan of Rs.52,56,000/- and Rs.7,98,324.00 dated 09.04.2014, 16.04.2014 and 22.10.2014 respectively Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 25-Jun-2024 17:34:15 Page 3 of 27 disbursed by way of crediting to current A/c of AVC Electric Pvt. Ltd., irregularly. Allegation No. 8 The petitioner did not take into account of pre
Legal Reasoning
disbursement inspection conducted by Mr. V. Yadav and Mrs Ankita Sanghan and disbursed loan amount. (iii) Despite such adverse remarks, he allowed to disburse an amount of Rs.48,74,250/-, Rs.25,69,200/-, and Rs.57,42,922/- on 09.04.2014, 14.08.2014 and 17.09.2014 respectively without ensuring end use. (iv) This account turned NPA on 10.09.2016 and as such the Bank had been exposed to financial risk/loss. (v) Since Shri N. Padhi had already retired from Bank’s service before the irregularities came to light, it was decided by the Competent Authority to initiate disciplinary proceedings against him under Regulation 48 of UCO Bank (Employees’) Pension Regulations, 1995, as amended as per procedure laid down in Regulation 6 of UCO Bank Officer Employees’ (Discipline & Appeal) Regulation, 1976, as amended. (vi) According to the Enquiry report dated 05.12.16, the petitioner was found guilty of Charges 2, 5, 6, and 7, while Charges 1, 3, and 4 were partly proved. (vii) Since the petitioner had already retired from Bank’s service before the irregularities came to light, it was decided by the Competent Authority to initiate disciplinary proceedings against him under Regulation 48 of Page 4 of 27 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 25-Jun-2024 17:34:15 UCO Bank (Employees’) Pension Regulations, 1995, as amended as per procedure laid down in Regulation 6 of UCO Bank Officer Employees’ (Discipline & Appeal) Regulation, 1976, as amended. Consequentially, the basic pension of the petitioner is reduced by 1/3rd for a period of 24 months. The above noted penalties were imposed with concurrent and immediate effect. II. SUBMISSIONS ON BEHALF OF THE PETITIONER: 3. Learned counsel for the Petitioner earnestly made the following submissions in support of his contentions: (i) The above stated proceeding under the regulation is also not applicable in case of the petitioner as he had retired and no departmental proceeding has been instituted / pending prior to his retirement. Therefore the entire proceeding carried out against the petitioner is not only bad in law but also contrary to the provisions as stated above. The very penalty under the above stated facts needs to be quashed. (ii) The Regulation 48 of the UCO Bank (Employees’) Pension Regulation/ 1995 provides for recovery of pecuniary loss caused to the bank. The first proviso mandates that the Board shall be consulted before any final orders are passed. The second proviso maintains that departmental proceeding of instituted while the employee was in service, shall after retirement of the employees be deemed to be proceedings under these regulations and shall be continued and concluded by the authority by which they are commended in the same manner as if the employee had continued in service. The first proviso has not been complied with by Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 25-Jun-2024 17:34:15 Page 5 of 27 the competent authority as there is no evidence submitted by the opp. party to that effect nor there are any pleadings in counter affidavit. The second proviso is also not met out in the case of petitioner as no departmental proceeding has been instituted against him prior to his retirement. (iii) The lists of 17 vital and relevant documents were submitted by the petitioner before the Enquiry Authority for landing over to him for his defence. But only copies of 9 documents were handed over as a result the petitioner is highly prejudiced. This is in violation of the principles of natural justice. (iv) It was not the petitioner’s fault; instead, the Bank authority initiated and approved the proposal for settling the loan dues, despite there being sufficient funds available to fully repay the loan. The Bank obtained Rs. 4,41,17,727.00 through the auction of the company’s mortgaged property. (v) However, the Bank did not proceed with the auction of another valuable property listed under serial no. 1 (Annexure-1), despite receiving valuation reports from two approved valuers that assessed the property’s worth at Rs. 2.34 crores. Instead, the Bank compromised for a sum of Rs. 30 lakhs, the rationale for which remains known only to the Bank authority. (vi) The above facts and figure and related documentary evidences produced by the petitioner clearly shows that he is not at all responsible or liable for loss of the Bank and therefore, the recovery of the 1/3rd basic pension of the petitioner is not justified. Page 6 of 27 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 25-Jun-2024 17:34:15 III. SUBMISSIONS ON BEHALF OF THE OPPOSITE PARTY : 4. Learned counsel for the Opposite Party No.1 earnestly made the following submissions in support of his contentions. (i) The petitioner was duly supplied fourteen documents i.e. ME-1 to ME- 14 as would be apparent from the copy of the entire enquiry proceedings conducted against the petitioner. (ii) The petitioner could not be provided with copies of the CIBIL reports dated 15.10.16 and 24.10.16, as these were unavailable at the branch. Consequently, the petitioner received the majority of the requested documents, totaling 14, but did not receive three documents, including the aforementioned CIBIL reports. Therefore, the petitioner has not demonstrated how the absence of these three documents, including the CIBIL reports dated 15.10.16 and 24.10.16, has caused any prejudice to him or violated principles of natural justice. The Enquiry Officer did not rely on these CIBIL reports but concluded that the petitioner had failed to obtain prior CIBIL reports before the loan sanction, as per Allegation No. 2. The CIBIL reports dated 24.04.14 were marked as exhibits ME2/1 to ME2/3 in the petitioner’s presence and with his knowledge. It is respectfully submitted that the petitioner’s assertions regarding the non- consideration of documents submitted by him in relation to other allegations are incorrect and contrary to the records. (iii) The disciplinary proceedings were initiated and continued even after his retirement against the petitioner by taking recourse to Regulation 48 (2) of UCO Bank (Employees) Pension Regulation Rules, 1995 and the Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 25-Jun-2024 17:34:15 Page 7 of 27 petitioner’s charges were drawn up for violation of Regulation 3(1) and 3(3) of UCO Bank Officer Employees’(Conduct) Regulation,1976 by taking recourse to Regulation 48(2) proviso of UCO Bank (Employees) Pension Regulation Rules, 1995, and the procedure to conduct the enquiry was under Regulation 6 of the UCO Bank Officer Employees’(Discipline and Appeal ) Regulations 1975 as the Pension Regulations do not have any procedure for conducting enquiries. The UCO Bank Officer Employees’ (Conduct) Regulation, 1976 and UCO Bank Officer Employees’(Discipline and Appeal) Regulations, 1975 are applicable in petitioner’s case as per Regulation 48 (2) proviso of UCO Bank (Employees)Pension Regulation. (iv) The Enquiry report has been held that the petitioner’s charges were drawn up for violation of Regulation 3(1) and 3(3) of UCO Bank Officer Employees’ (Conduct) Regulation, 1976 and which has led to pecuniary loss to the bank as the petitioner did not properly follow the procedure for sanction of the loan accounts and caused the bank grave financial problems for the loan accounts. (v) The closure of the loan account by settling the accounts of AVC Electric Pvt. Ltd. was due to the petitioner’s conduct in taking incorrect steps for sanctioning loans and not adhering to the Bank’s procedures for these loans. This resulted in a substantial pecuniary loss to the Bank, arising from the petitioner’s actions while serving as Assistant General Manager at the MEU Parliament Street branch, New Delhi. Consequently, a disciplinary proceeding was initiated, and charges were framed for violation of Regulation 3(1) and 3(3) of the UCO Bank Page 8 of 27 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 25-Jun-2024 17:34:15 Officer Employees’ (Conduct) Regulation, 1976, read with Regulation 48(2) of the UCO Bank (Employees) Pension Regulation Rules, 1995. The petitioner did not properly follow the procedure for sanctioning the loan accounts, causing significant financial problems for the Bank. (vi) The Bank had to accept the settlement proposal vide letter dated 30.10.17 with its internal papers/annexures vide letter dated 31.10.2017 and letter of approval of compromise dated 31.11.2017 was issued for the settlement of the loan account of M/S AVC Electric Pvt. Ltd. absorbing the pecuniary losses as the sale of one mortgaged property was not legally enforceable as per Civil Court, Tis Hazari vide its order No. CIV/DJ/611205/2016 dated 30.08.2016. IV. EXAMINATION OF THE LEGAL MATRIX: 5. 6. I have heard the representations of the counsels appearing for the respective parties at length. The first question posed for the consideration of this Court is whether is it permissible in law for the respondent›employer to initiate the disciplinary proceeding and withhold the payment of amount of gratuity payable to the respondent-employee, even after his superannuation from service? 7. Within the realm of employment relationships, it is generally accepted that once an employee retires or the employer-employee relationship is terminated, the employer loses the authority to impose disciplinary measures against the former employee. Consequently, disciplinary actions typically cannot be initiated against a retiree, nor can ongoing Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 25-Jun-2024 17:34:15 Page 9 of 27 disciplinary proceedings be maintained after their departure from service. However, this general principle may be overridden in instances where statutory regulations or employment rules explicitly allow for the initiation or continuation of disciplinary proceedings post-retirement, thereby legitimizing such actions under specific circumstances. 8. Let’s start with Jaswant Singh Gill v. Bharat Coking Coal Ltd.,1 where the Supreme Court observed and held that once the employee is permitted to retire on attaining the age of superannuation, thereafter no order of dismissal or punishment can be passed. However, in the case of Chairman-cum-Managing Director, Mahanadi Coalfields v. Sri Rabindranath Choubey,2 the Supreme Court digressed from the view taken by the Court in the case of Jaswant Singh Gill (supra) eventually overturning it. The Supreme Court adjudicated that significant disciplinary measures can be imposed on a former employee in accordance with the prevailing rules of the organization, provided that the proceedings were commenced prior to the retirement or superannuation of the said employee. The relevant excerpts are produced hereinbelow: ‚10.30 In view of the various decisions/ it is apparent that under Rule 34.2 of the CDA Rules inquiry can be held in the same manner as if the employee had continued in service and the appropriate major and minor punishment commensurate to guilt can be imposed including dismissal as provided in Rule 27 of the CDA Rules and apart from that in case pecuniary loss had been