Inquiry; Chamoli District Co-Operative Bank Vs. Raghunath Singh Rana [17-05-2016] SC

Natural Justice – Principles of  – Disciplinary Proceedings – Inquiry – The compliance of principles of natural justice is not a mere formality, more so when the statutory provisions specifically provides that disciplinary proceedings shall be conducted with due observations of the principles of natural justice.

Disciplinary Inquiry


IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

(ABHAY MANOHAR SAPRE) AND (ASHOK BHUSHAN) JJ.

MAY 17, 2016

CIVIL APPEAL NO.2265 OF 2011

CHAMOLI DISTRICT CO-OPERATIVE BANK LTD. THROUGH ITS SECRETARY/MAHAPRANDHAK & ANR. APPELLANT(S)

VERSUS

RAGHUNATH SINGH RANA & ORS. RESPONDENT(S)

J U D G M E N T

ASHOK BHUSHAN, J.

1. This appeal has been filed against the order dated 01.12.2010 of the Division Bench of the High Court of Uttrakhand by which judgment, the writ petition filed by the respondent – Raghunath Singh Rana has been disposed of after quashing the dismissal order dated 01.02.2002. Aggrieved by the judgment, the Chamoli District Co-operative Ltd., is in appeal before this Court. The short facts necessary for deciding this appeal are: the Chamoli District Co-operative Bank Ltd. (hereinafter referred to as ‘the appellant/Bank’) is a District Co-operative Bank registered under the

U.P. Co-operative Societies Act, 1965

(hereinafter referred to as ‘the Act’). The Raghunath Singh Rana, respondent No.1 (hereinafter referred to as ‘the employee/Respondent No.1’) at the relevant time, was working as a Branch Manager at Ghat Branch of the Chamoli District. A charge sheet dated 03.07.1992 was issued to the employee leveling 19 charges against him. The employee/respondent No.1 was asked to reply upto 3rd August, 1992. There was allegation against the employee/respondent No.1 that he made payments to the bearers of cheques without its prior collection and made payment to the bearer of the cheque, causing loss to the appellant/Bank. Further charges were that he had not taken any action against the persons concerned and had thus committed serious irregularities. Another set of charges were imputation that the respondent–employee has issued overdrafts/loans against the provision of the Act.

2. The employee/respondent No.1 submitted a reply on 31.07.1992 denying the allegations. On 05.8.1992, an Inquiry Officer was appointed to conduct the inquiry. The Inquiry Officer also submitted a report on 21.09.1992. The employee/respondent No.1 was placed under suspension by order dated 21.10.1992. No further steps were taken on the inquiry report dated 21.09.1992. However, a fresh charge sheet containing the charges which were levelled in the charge sheet dated 03.07.1992 as well as six additional charges was issued on 16.01.1993. The employee/respondent No.1 submitted a reply dated 04.02.1993 to the charge sheet denying the allegations. After submission of the reply by the employee/respondent No.1, a show-cause notice was issued to the petitioner by the District Co-operative Bank Ltd. dated 04.05.1993 asking the employee/respondent No.1 to submit a reply, failing which action under Regulation 84 of the U.P. Co-operative Societies Employees Service Regulations Act, 1975 was to be taken. The Disciplinary Authority passed a Resolution dated 11.07.2000 that charges against the employee/respondent No.1 have been proved and further action to be taken. The Disciplinary Authority passed an order on 01.02.2002, dismissing the employee/respondent No.1 with immediate effect. Aggrieved by dismissal order, writ petition was filed by the employee-respondent No.1 praying for quashing the order dated 01.02.2002 with further prayer that employee/respondent No.1 be reinstated in service with full back wages and salary.

3. The employee/respondent No.1’s case in the writ petition was that after receipt of the charge sheet dated 18.01.1993, reply was submitted by the employee but without holding an inquiry, the Disciplinary Authority took a decision to dismiss the petition. No Inquiry have been held as provided by statutory regulations, hence, the entire proceedings are liable to be set aside.

4. The appellant-Bank filed a counter affidavit in the writ petition. In the counter affidavit no inquiry report subsequent to charge sheet dated 18.01.1993 was referred to.

5. The Division Bench of the High Court heard the matter and vide judgment dated 01.12.2010 quashed the dismissal order. The Division Bench took the view that dismissal orders have been passed without holding an inquiry which deserves to be set aside.

6. Learned senior counsel appearing for the appellant-Bank contends that Inquiry Officer had issued a letter dated 11.09.1992 to the employee/respondent No.1 asking the employee/respondent No.1 to appear on 18.09.1992 at 10.00 AM, but employee/respondent No.1 failed to appear in the inquiry, hence, the view of the High court that no inquiry was held is not correct. He further submits that inquiry report dated 21.09.1992 was submitted by the Inquiry Officer which has been brought on record as Annexure P3. Learned counsel for the appellant-Bank further submits that there were serious allegations against the employee/respondent No.1 on the basis of which the employee/respondent No.1 was dismissed from service.

7. It is further contended that First Information Reports have been lodged against the employee/respondent No.1 and criminal cases are pending.

8. We have considered the submissions and perused the record.

9. The statutory regulations have been framed under the Act, namely, U.P. Co-operative Societies Employees Service Regulations, 1975, which regulations are applicable with regard to the conduct of Disciplinary enquiry against the employee/respondent No.1 and where governing the field at the relevant time. Regulation 84, Chapter-VII of the Regulation deals with Penalties, Regulation 85 deals with Disciplinary proceedings, and Regulation 86 deals with Appeal. Regulation 85 which deals with Disciplinary proceedings, is as follows:-

85. Disciplinary Proceedings

(i) The disciplinary proceedings against an employee shall be conducted by the Inquiring Officer (referred to in clause (iv) below) with due observance of the principles of natural justice for which it shall be necessary –

(a) The employee shall be served with a charge-sheet containing specific charges and mention of evidence in support of each charge and he shall be required to submit explanation in respect of the charges within reasonable time which shall not be less than fifteen days;

(b) Such an employee shall also be given an opportunity to produce at his own cost or to cross-examine witnesses in his defence and shall also be given an opportunity of being heard in-person, if he so desires;

(c) If no explanation in respect of charge sheet is received or the explanation submitted is unsatisfactory, the competent authority may award him appropriate punishment considered necessary.

(ii)(a) Where an employee is dismissed or removed from service on the ground of conduct which has led to his conviction on a criminal charge; or

(b) Where the employee has absconded and his whereabouts are not known to the society for more than three months; or

(c) Where the employee refuses or fails without sufficient cause to appear before the Inquiring Officer when specifically called upon in writing to appear; or

(d) Where it is otherwise (for reasons to be recorded) not possible to communicate with him, the competent authority may award appropriate punishment without taking or continuing disciplinary proceedings.

(iii) Disciplinary proceedings shall be taken by the society against the employee on a report made to this effect by the inspecting authority or an officer of the society under whose control the employee is working.

(iv) The inquiring officer shall be appointed by the appointing authority or by an officer of the society authorised for the purpose by the appointing authority:-

Provided that the officer at whose instance disciplinary action was started shall not be appointed as an inquiring officer nor shall the inquiring officer be the appellate authority. ……….”

10. From the facts, as noted above, it is clear that charge sheet dated 03.07.1992 was issued to the employee/respondent No.1 to which he submitted a reply on 31.07.1992. Inquiry report dated 21.09.1992 was issued and submitted. However, without proceeding any further on the basis of the inquiry report dated 21.09.1992, a fresh charge sheet dated 18.01.1993 was issued to the employee/respondent No.1 containing 24 charges. The employee/respondent No.1 was asked to submit a reply within 15 days. Reply to the subsequent charge sheet was again filed by the employee/respondent No.1 on 04.02.1993. The second charge sheet having been issued on 18.01.1993 which included all the charges which were contained in the earlier charge sheet, the earlier proceedings consequent to charge sheet dated 03.07.1992 stood abandoned. The appellant-Bank decided to proceed with the Disciplinary Inquiry on the basis of charge sheet dated 18.01.1993. After 18.01.1993 charge sheet reply was submitted by the employee/respondent No.1 on 04.02.1993 but there is no material on the record brought by the appellant-Bank indicating that any inquiry proceedings were conducted.

11. It is relevant to note that in the writ petition filed by the employee/respondent No.1, specific averments were made that disciplinary proceedings against him were conducted in violation of principles of natural justice and against the procedure prescribed in Regulation 85, which averments were made in paragraphs 19 and 25 of the writ petition, to the following effect:-

“19. That since the whole of the procedure adopted in conducting of the disciplinary proceeding is against the principle of natural justice and procedure mention in regulation 85, In fact, no inquiry worth to name has been conducted by the respondents. The so called inquiry was a mere eye-wash. It is a farce and fraud played on the statutory rights of the petitioner.”

25. That the disciplinary proceeding held against the petitioner was not conducted in accordance with the provisions of natural justice and procedure prescribed under the Regulations of 1975. Serious objections were raised by the petitioner through his replies dated 31.07.1993, 04.02.1993 and 21.03.1993 but no heed was given to the objections raised by the petitioner. Once the charge sheet has been issued to the petitioner, second charge sheet cannot be sent by the Inquiry Officer in the same disciplinary proceeding. But this objections was also not considered by the Inquiry Officer or disciplinary authority. After the reply dated 04.02.1993 to the charge-sheet dated 18.01.1993, no inquiry was held by the Inquiry Officer. Instead of holding the inquiry in accordance with the provisions, the disciplinary authority sent the letter dated 04.05.1993 saying that the charges were proved against the petitioner. Between 18.01.1993 to 04.05.1993 no inquiry was held and the petitioner was never called upon to cross examine the witnesses. No records or documents which the petitioner has requested to inspect were summon or made available to the petitioner. Even these documents were not available to the petitioner. Even those documents were not inspected or considered by the disciplinary authority and inquiry officer. The way the Disciplinary Proceeding were conducted it cost serious doubt and aspersion against the respondents. It appears that before the conduct of the inquiry the respondents made up their mind to get rid of the petitioner and for that reason they have conducted the inquiry in such a perfunctory manner, which is not known to services jurisprudence.”

12. In the counter affidavit, the averments made in paragraph 19 and 25 were replied by the appellant-Bank in paragraph 18 and 24, which are to the following effect:-

“18. That in reply to the contents of para nos.18 & 19 of the writ petition it is submitted that the grounds on which the charges issued were found proved was supplied to the petitioner vide letter no.251-52 annexure no.7 to the writ petition, instead of a copy of the enquiry report. The letter of charges serves the purpose of an enquiry report. That it is incorrect to say that no reasonable opportunity was given to the petitioner by the Inquiry Officer a letter dated 6-1-93 Annexure No.5 to the writ petition was sent to the petitioner to know whether he wanted to be cross-examined by his witnesses, but the petitioner did not want any such opportunity. Further, the petitioner was directed to appear before the committee of management in person, but he did not appear at all. Another opportunity was given as per resolution no.14 dated 25.11.1993 which was also not available by him. Petitioner was again given an opportunity to appear before the committee on 3-8-2000 Annexure No.10 to the writ petition to explain his case personally, but he did not appear. It is therefore, totally false to say that no opportunity of being heard was given to the petitioner. Copy of the resolution no.14 dated 25.11.1993 is annexed herewith and is marked as Annexure No. CA.5 to this counter affidavit.”

24. That the contents of para nos.25, 26, 27 & 28 of the writ petition are denied. It is incorrect to say that the second charge sheet dated 18-1-93 was sent in the same disciplinary proceedings as a matter of fact this was the first and the only chargesheet issued. Disciplinary proceedings were initiated on 21.10.92 and, therefore, charge sheet was issued to the petitioner on 18.1.93 to which reply was submitted by the petitioner on 4.2.93. It is wrong to allege that records were not made available to the petitioner as the petitioner did not want to refer to any record and he did not make any request even during the course of the cross examination of the witness. It is further incorrect to state that opportunity was not given to the petitioner. That the answering respondent is justified a dismissing the services of the petitioner as heavy loss of Rs.35,00,000/- approximately was caused to the bank, exceeding all his powers and overlooking all the norms laid down by the bank in making unsecured advances to various customers/parties. Therefore, the order of the respondents dismissing the services of the petitioner is lawful and in the interest of justice and the writ petition of the petitioner is liable to be dismissed on this ground alone.”

13. As noted above, learned counsel for the appellant/Bank has referred to the letter issued by the Inquiry Officer dated 11.09.1992, calling the employee/respondent No.1 to appear before the Inquiry Officer on 18.09.1992. The inquiry report dated 21.09.1992 mentioned that the employee/respondent No.1 did not appear, hence the inquiry report was submitted. The letter dated 11.09.1992 and the inquiry report dated 21.09.1992 looses all its importance when the bank decided to issue a fresh charge sheet on 18.11.1993 which includes all earlier charges. The petitioner submitted a reply on 04.02.1993 but thereafter no inquiry proceeding seems to have taken place. The employee/respondent No.1 made a specific complaint that inquiry proceeding has not been held and there is violation of Regulation 85. No specific reply have been made, by the appellant/bank referring to any inquiry proceeding before the Inquiry Officer or the date of any inquiry.

14. As noted above, Regulation 85 is a statutory Regulation according to which an opportunity to the employee to produce at his own cost or to cross-examine witnesses in his defence and shall also be given an opportunity of being heard in person, if he so desires. Regulation 85 (i)(b) is specifically mandates the said requirements.

15. From the pleadings and the materials on record, it is clear that no inquiry was conducted by the appellant/Bank in conformity with Regulation 85 (i)(b) after issuance of charge sheet dated 16.01.1993. The High Court has set aside the dismissal order after coming to the conclusion that without holding an inquiry the employee/respondent No.1 has been dismissed. No materials have been brought in the appeal to indicate that any inquiry was conducted or inquiry report was submitted subsequent to the charge sheet dated 16.01.1993.

16. Learned counsel for the appellant/Bank has submitted that in the Resolution passed by the Disciplinary Authority that inquiry report has been mentioned.

17. Imposing of any penalty on an employee of the bank that too major penalty of dismissal from service can only be done after following the statutory provisions governing the disciplinary proceedings.

18. It is also relevant to note that after submission of reply dated 04.02.1993, Disciplinary Authority issued a show-cause notice on 04.05.1993 asking the employee/respondent No.1 to submit his reply. When the Inquiry Officer was appointed, conducting of the inquiry was mandatory and without conducting of an inquiry and without any inquiry report having been served on the employee/respondent No.1, Disciplinary Authority could not have proceeded to impose any punishment. The compliance of principles of natural justice by the appellant-Bank is not a mere formality, more so when the statutory provisions specifically provides that disciplinary proceedings shall be conducted with due observations of the principles of natural justice.

19. The compliance of natural justice in domestic/disciplinary inquiry is necessary has long been established. This Court has held that even there are no specific statutory rule requiring observance of natural justice, the compliance of natural justice is necessary. Certain ingredients have been held to be constituting integral part of holding of an inquiry. The Apex Court in