1 R IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 13TH DAY OF NOVEMBER, 2019 BEFORE THE HON' BLE MR. JUSTICE B. VEERAPPA WRIT PETITION No.6667/2015 (S-RES) C/W WRIT PETITION No.6668/2015 (S-DIS) C/W WRIT PETITION No.6669/2015 (S-DIS) BETWEEN:
BANGALORE, BANGALORE RURAL AND RAMANAGARA DISTRICT CENTRAL COOPERATIVE BANK LTD, "LAKSHMI SADANA" NO. 6, 5TH MAIN ROAD, CHAMARAJPET, BENGALURU 560018 REPRESENTED BY ITS CHIEF EXECUTIVE OFFICER, SRI B.R.LINGARAJU ...PETITIONER (COMMON IN ALL PETITIONS) (BY SRI SOMASHEKAR, ADVOCATE) IN WP No.6667/2015 AND:
MR. BORAJJAIAH K T S/O. SRI TIGALA BORAIAH, AGED 55 YEARS, R/A. NO. 378, 2ND CROSS, 3RD MAIN ROAD, KAMALANAGARA, BENGALURU 560079.
…RESPONDENT (BY SRI S. B. MUKKANNAPPA, ADVOCATE FOR C/R) IN WP No.6668/2015 AND:
MR. D. RANGARAJU, S/O SRI DASAPPA, AGED 60 YEARS, R/A. NO. 466, 8TH CROSS, MAHALAKSHMI LAYOUT, BENGALURU 560086.
…RESPONDENT (BY SRI S B MUKKANNAPPA, ADVOCATE FOR C/R) IN WP No.6669/2015 AND:
MR. A.C. LAKSHMIKANTH, S/O LATE SRI CHANDRAIAH ACHAR AGED 62 YEARS, RESIDING AT No.96, 3RD MAIN ROAD, SARASWATHIPURAM, NANDINI LAYOUT, BENGALURU-560086.
…RESPONDENT (BY SRI S B MUKKANNAPPA, ADVOCATE FOR C/R) **** THESE WRIT PETITIONS ARE FILED UNDER ARTICLES 226 & 227 OF THE CONSTITUTION OF INDIA PRAYING TO QUASH THE ORDER DATED 31.7.2012 VIDE ANNEXURES-L & K PASSED BY THE DRCS, NORTH DIVISION, BANGALORE CITY BANGALORE AND ETC.
THESE WRIT PETITIONS COMING ON FOR PRELIMINARY HEARING IN ‘B’ GROUP THIS DAY, THE COURT MADE THE FOLLOWING:
ORDER In all these writ petitions, the present respondents – Borajjaiah K.T., D. Rangaraju and A.C. Lakshmikanth are dismissed from service by the petitioner-Bank, which was set aside by the Deputy Registrar of Co- operative Societies-I, North Zone, Bangalore Urban District, Bangalore on 31.7.2012, Annexure-L and on the appeals filed by petitioner-Bank, the Karnataka Administrative Tribunal, Bangalore, dismissed the same by the common order dated 13th November, 2014. Hence, the present writ petitions are taken up together and disposed off by this common order.
I - FACTS OF THE CASE 2. It is the case of the petitioner-Bank that in all these writ petitions the respondents i.e., Sri Borajjaiah K.T., and D. Rangaraju were appointed as Junior Grade Branch Manager-cum-Clerk Grade-I and Sri A.C. Lakshmikanth as Junior Grade Clerk-cum-Cashier on 10.6.1992, 8.1.1983 and 4.8.1983 respectively. The petitioner-Bank had issued a Circular dated 16.5.1986 as per Annexure-A about discounting of cheques issued by the State and Central Government and other Public Corporate Bodies such as Karnataka Silk Market Board – a State Government Undertaking. According to the petitioner, it was advised in the Circular that before venturing discounting of cheques, the Discounting Officer shall refer to the Central Office and obtain clarification or confirmation as the situation demand. It is the specific case of the petitioner-Bank that when the respondents were working in their respective posts between the years 1995-96 and 1996-97, acting as in- charge Managers had discounted the four cheques in violation of the Circular dated 16.5.1986. Therefore, a Charge Sheet was issued for violation of the Head Office Circular dated 16.5.1986 bearing No.BDCCB:HO: ASO:662:85-86 against Sri D.Rangaraju and K.R. Boarajjaiah-employees for discounting the cheques unauthorisedly and causing heavy loss to the Bank for their personal gain which amounted to grave misconduct.
3. Similarly Sri A.C. Lakshmikantha was also issued with a charge sheet for discounting the cheques of M/s. Cavery Wineries and Distilleries; for preparing a false remittance challan for Rs.67 lakhs in the name of M/s Cavery Wineries and Distilleries without the signature of the remitter and raised the cash balance in the chest to Rs.87,84,240/- on 30.3.1996; preparing false adjustment slip for Rs.72 lakhs and crediting cheque discounting account and closing the balance in discounting account by adjusting from Current account of the Company. Again on 3.4.1996 he had prepared a false slip and debited the cheque discounting account and credited to Current account of the Company. On the same day, he had paid Rs.72 lakhs in cash by debiting current account to the Company. The entire transaction was only book adjustment. Without receiving actual cash, he had helped the Branch Manager to close the discounting account on 30.3.1996 which is the last day of the year to avoid audit objection. There was no space in the cash chest to keep such heavy cash of Rs.67 lakhs in smaller denomination for three days and that he had colluded with the Branch Manager to gain personal benefits from the company in this bogus transactions. Hence, he had committed an offence of falsification of accounts and breach of trust which is a grave misconduct of corruption in collusion with the Branch Manager.
4. Based on the issuance of the above said charge memo, the respondent-employee Sri Borajjaiah K.T. filed his reply dated 11.7.1996 stating that he had no knowledge about the Circular issued by Head Office; and based on the advice of the Bank Manager, he had discounted the cheques and had no experience. He has further denied that he had any malafide intention in discounting the cheques for his personal gain and therefore, requested to drop the proceedings.
5. Sri A.C. Lakshmikanth, another employee filed his detailed reply on 30.6.1996 admitting the transaction and denied the allegation contending that after verifying the amount deposited by him in the petitioner-Bank, and at the time of preparing the challan, he was not present in the Branch and hence, it was not possible to obtain his signature on the challan. He had also not made adjustment of any ledger in the Branch. To evidence the same, he submitted his written evidence of all the staff present in the Branch as witnesses and had also enclosed the evidence letter given in writing by the Managing Director of Kaveri Wineries Company. He also contended that he was not involved in any of the said transaction of discounting of cheques either directly or indirectly and he has discharged his duties in the Branch as Cash Clerk. Therefore, he requested for dropping of the charges framed against him.
6. Similarly, Sri D. Rangaraju-employee also has filed objections on 1.8.1996 stating that he had discounted the cheques dated 15.12.1995 for a sum of Rs.4 lakhs and 16.12.1995 for a sum of Rs.6 lakhs (the day to day transaction of the account of Cauvery Wineries & Distillers Company were carried out in a better manners). At the time of sending cheques to the Head Office for clearance, the owner of the company informed him not to send the cheques for clearing as he would deposit the amount. Accordingly, he had deposited the amount on 20.12.1995 and therefore, he sought to drop the proceedings as he had not caused any loss to the petitioner-Bank in any manner.
7. In view of the aforesaid reply filed by the respondents-employees, the petitioner-Bank appointed an Enquiry Officer to conduct the enquiry against the irregularities committed by the respondents-employees in the transaction of discounting of cheques in its Branch. The Enquiry Officer by the common enquiry submitted a report dated 5.9.1996 holding that the charges are proved against all the respondents- employees. Based on the enquiry report submitted by the Enquiry Officer, the Managing Director of the petitioner-Bank by the order dated 1.1.1997 proceeded to dismiss the respondents by the separate orders. Aggrieved by the said orders, the respondents- employees raised disputes, in Dispute Nos.JRB/MD/ 02/97-98, JRB/MD/03/97-98 and JRB/MD/04/97-98 against the petitioner-Bank under Section 70 of the Karnataka Co-operative Societies Act. The Deputy Registrar of Co-operative Societies, after hearing both the parties, by the separate orders dated 21.7.2003 allowed the disputes, set aside the dismissal order passed by the petitioner-Bank dated 1.1.1997 and directed the petitioner-Bank to reinstate the respondents into service within a period of one month from the date of the said order and extend all consequential financial benefits including service benefits available to them (employees-respondents).
8. Aggrieved by the said order passed by the Deputy Registrar of Co-operative Societies, Bangalore Urban District, the present petitioner preferred appeal Nos.562, 563 and 564 of 2012 before the Karnataka Appellate Tribunal, Bangalore. The Tribunal considering the entire material on record by the common order dated 13th November, 2014 dismissed all the appeals filed by the present petitioner-Bank and confirmed the award dated 31.7.2012 passed by the Deputy Registrar of Co-operative Societies, Bangalore. Hence, the present writ petitions are filed by the petitioner-Bank.
9. I have heard the learned Counsel for the parties to the lis.
II - ARGUMENTS ADVANCED BY THE LEARNED COUNSEL FOR THE PETITIONER 10. Sri Somashekar, learned Counsel for the petitioner-Bank in all these writ petitions contended that the impugned orders passed by the Deputy Registrar of Co-operative Societies and the Karnataka Appellate Tribunal setting aside the order of dismissal passed by the petitioner-Bank, are erroneous and contrary to the material on record. He further contended that the Deputy Registrar of the Co-operative Societies and the Karnataka Administrative Tribunal erred in holding that no proper enquiry was conducted by the petitioner-Bank before dismissal ignoring the fact that all the three employees-respondents in the present writ petitions, have admitted the guilt of discounting of cheques in violation of the Circular dated 16.5.1986 issued by the Head Office.
11. The learned Counsel for the petitioner further contended that the respondents-employees in response to the charge memo issued by the petitioner- bank, have filed their reply categorically admitting the guilt of charges leveled against them and therefore, the question of holding any enquiry would not arise. He would contend that though the enquiry conducted was futile, still the petitioner-Bank has appointed an Enquiry Officer, who has given an opportunity to the employees-respondents to file their objections and thereafter, considering the same, has submitted the report holding that the charges are proved.
12. The learned Counsel for the petitioner further submitted that, based on the enquiry report, the Managing Director, considering the entire material on record by the order dated 1.1.1997 dismissed the respondents from service. Therefore, the Deputy Registrar of Co-operative Societies as well as the Karnataka Administrative Tribunal ought not to have interfered with the dismissal order passed by the petitioner based on the admission of guilt by all the employees. Therefore, he sought to allow the writ petitions.
13. In support of his contentions, learned Counsel for the petitioner relied upon the following dictums of the Hon’ble Supreme Court and this Court:
a) Central Bank of India –vs- Karunamayee Banerjee reported in AIR 1968 SC 226 (para-9) to the effect that if the workman admits his guilt, to insist upon the management to let in evidence about the allegations, will, only be an empty formality;
b) Vinayak Narayan Deoshali –vs- Central Bureau of Investigation reported in (2015) 2 SCC 553 to the effect that merely because repayments have been made that itself is not an indication of lack of dishonest intention. Sometimes, it so happens that with a view to create confidence, the repayments are made so that for the future transactions, the money can be dishonestly misappropriated and it amounts to ‘market practices’;
c) Additional District Magistrate (City) Agra –vs- Prabhakar Chaturvedi and Another reported in (1996) 2 SCC 12 (para-4) to the effect that on account of the clear admission contained in writing, the charge stood proved on admission and the only question that remained to be considered was about the nature of punishment to be imposed on him;
d) HAL –vs- K. Shanmugam and Another reported in ILR 1991 KAR. 3382 (para-30) wherein the law laid down by the Hon’ble Supreme Court in the Central Bank of India’s case has been reiterated; and e) HAL –vs- B. Gulab Singh reported in Laws (Kar)- 1986-1-56 wherein the law laid down by the Hon’ble Supreme Court in the Central Bank of India’s case has been reiterated.
III ARGUMENTS ADVANCED BY THE LEARNED COUNSEL FOR RESPONDENTS 14. Per contra, Sri Mukkannappa, learned Counsel for the respondents-employees sought to justify the impugned orders passed by the Deputy Registrar of Co-operative Societies as well as the Karnataka Administrative Tribunal. He would contend that the charges framed by the petitioner-Bank on the respondents are not specific and consists of two portions.
15. The learned Counsel for the respondents further contended that though the employees, in their reply filed separately, have admitted first portion of charges i.e., discounting of cheques since it was not within their knowledge, but they have denied the second portion of the charge i.e., causing heavy loss to the petitioner-Bank for their personal gain. Hence they have denied the allegations made by the petitioner – Bank. Therefore, the regular enquiry is a must. He would contend that admittedly in the present case, except issuance of charge memo, the petitioner-Bank has not conducted any enquiry as contemplated under the provisions of Rule 71 of the Staff Service Rules of Employees of the Bangalore District Cooperative Central Bank Ltd., Bangalore-560018 Rules, 1987 (for short, hereinafter referred to as ‘the Rules’) inspite of the reply filed by the employees. Therefore, he contends that dismissal order passed by the petitioner-Bank against the respondents without holding enquiry as contemplated under the provisions of Rule 71 of the Rules especially Rule 71(iv), (v), (vi), (vii) and (viii) cannot be sustained.
16. The learned Counsel for the respondents further contended that the Deputy Registrar of the Co- operative Societies and the Karnataka Administrative Tribunal after considering the entire material on record have recorded a concurrent findings of fact that the Bank-petitioner has not followed the procedure as contemplated under the provisions of Rules 71 of the Rules and such findings of fact cannot be interfered by this Court in exercise of powers under Articles 226 and 227 of the Constitution of India and therefore, he sought to dismiss the writ petitions.
17. In support of his contentions, the learned Counsel for the respondents relied upon the following judgments:
a) Inspector Prem Chand –vs- Govt. of N.C.T. of Delhi & Others reported in 2007 LAB.1.C. 1969 (paragraphs-9 to 11) regarding misconduct;
b) The Management of the Mysore Coffee Processing Co-operative Society Ltd.-vs- Presiding Officer reported in ILR 1998 Kar. 18 (DB) (para-7) to the effect that where the Management discharges a workman by an Order which is void for want of an Enquiry, the ‘Doctrine of Relation’ - back cannot be invoked and in that event the workman would be entitled to the grant of Full back wages from the date of termination of the services till the date of award of the Labour Court;
c) B.C. Chaturvedi –vs- Union of India and Others reported in 1996 AIR 484 to the effect that 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 consider 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.
IV THE POINTS FOR DETERMINATION 18. In view of the rival contentions urged by the learned Counsel for the parties, the points that arise for consideration in the present writ petitions are:
i) Whether the petitioner-Bank has conducted the enquiry as contemplated under Rule 71 of the Staff Service Rules of Employees of the Bengaluru District Co-operative Central Bank Rules, 1987 before dismissal of the employees-respondents from service? and ii) Whether the petitioner-Bank has made out a case to interfere with the concurrent findings of fact recorded by the District Registrar of Co-operative Societies as well as the Karnataka Administrative Tribunal while setting aside the dismissal order passed by the petitioner-Bank in the facts and circumstances of the present case?
V – CONSIDERATION 19. I have given my anxious consideration to the arguments advanced by the learned Counsel for the parties and perused the entire material on record carefully.
20. It is an undisputed fact that all the respondents were appointed by the petitioner-Bank on 8.1.1983, 4.8.1983 and 10.6.1992 as Junior Grade Clerk Cashier, Junior Grade Clerk Cashier and Junior Grade Branch Manager-cum-Clerk Grade-I respectively. During the course of their employment, on the alleged violation of the Circular dated 16.5.1986 issued by the petitioner-Bank for discounting cheques issued by the State and Central Government and Karnataka Silk Marketing Board – a State Government Undertaking, separate Charge Memos were issued against the respondents. Accordingly, respondents submitted reply separately accepting the allegation of discounting of cheques as alleged in the charge memo, but denied the allegation of causing heavy loss to the petitioner-Bank for their personal gain.
21. On careful perusal of each charge memos issued to all the respondents-employees of the petitioner-Bank, it clearly depicts that there are two portions:
i) Violation of the Head Office Circular dated 16.5.1986; and ii) Unauthorisedly causing heavy loss to the petitioner-Bank for personal gain of the respondents.
22. In the replies filed by the present respondents-employees, they have not disputed discounting of cheques, but have stated that they had no knowledge about the Circular and hence, they had discounted the cheques based on the advice of the concerned Manager. They have specifically denied the allegation of issuing cheques for their personal gain and thereby causing heavy loss to the petitioner-Bank. When the respondents have denied the second portion of the charge, it is for the petitioner-Bank to hold proper enquiry as contemplated and establish that the charges are proved against the employees-respondents.
23. Though Sri Somashekar, learned Counsel for the petitioner-Bank contended that the enquiry was not at all necessary, still the Enquiry Officer was appointed, but very strangely, the Enquiry Officer, has submitted a common report on 5.9.1998 based on the charge memos and objections holding that the charges are proved against all the three employees-respondents without holding any enquiry.
24. A careful perusal of the enquiry report, clearly depicts that the petitioner-Bank has not examined any witnesses or has produced any documents to the charges framed against the employees-respondents and not allowed them neither to cross-examine nor to lead evidence on their behalf or any documents to be marked. The enquiry report submitted based on the charge memos and objections cannot be called as enquiry report at all. Once enquiry is initiated and when the respondents-employees have denied a portion of the charges leveled against them, it is the duty and obligation on the part of the employer-Bank to prove the charges in accordance with law.
25. It is also not in dispute that the petitioner- Bank has framed the Rules called Staff Service Rules of Employees of the Bangalore District Co-operative, Central Bank Ltd., Bangalore 1987 (for short, hereinafter referred to as ‘the Rules), where Rules 58 to 67 contemplate disciplinary action, Rules 68 and 69 contemplate procedure for taking disciplinary action, Rule 70 contemplates issue of notice to the employee before taking disciplinary action and Rule 71 contemplates procedure for imposing major penalties.
26. Admittedly, in the present case, except appointing the Enquiry Officer, the petitioner-Bank has not followed any procedure as contemplated under the Rules for initiating disciplinary action though notice was issued to the employees and no enquiry was conducted before taking disciplinary action and procedure for imposing major penalty.
27. The provisions of Sub-rule (i) of Rule 71 of the Rules clearly depicts that without prejudice to the provisions of Public Servants (Inquiries) Act, 1850 on order imposing on an employee any of the major penalties specified in these shall be passed except after an inquiry held as far as may be in the manner hereafter provided. Explanation (b) of Rule 71 of the Rules defines that ‘Enquiry Officer’ means a Board of Enquiry or an Enquiry Officer constituted or appointed as the case may be by the Disciplinary Authority to hold a domestic enquiry into the charges approved by the Disciplinary Authority.
28. The provisions of Sub-rule (iv) of Rule 71 of the Rules contemplates that on receipt of written statement within the time specified, the Disciplinary Authority or the specially empowered authority may inquire into such of the charges as are not admitted or if the Disciplinary Authority considers it necessary to do so appoint a Board of Enquiry or Inquiring Officer for the purpose.
29. Admittedly, in the present case, as already stated supra, the charge contemplates two portions:
one Discounting of cheques in violation of the Head Office Circular dated 16.5.1986 and another the respondents-employees have unauthorisedly caused heavy loss to the bank for their personal gain. Though all the employees have admitted guilt of violating the Circular mainly on the ground that they were not aware of the said Circular, but denied the charge of causing heavy loss to the Bank for their personal gain. If that is so, in view of the Rules stated supra, wherein it contemplates for holding enquiry, though enquiry was initiated by the petitioner by appointing an Enquiry Officer, he has not followed the procedure as contemplated under the Rules of the petitioner-Bank.
30. The provisions of Sub-clause (v) of Rule 71 of the Rules contemplates that Board may nominate any persons to press the case in support of the charges before the Enquiry Officer.
31. Admittedly in the present case, Articles of Charges came to be issued on 22.6.1996 giving seven days time to file reply on or before 29.6.1996, but the Enquiry Officer was appointed even before issuance of Articles of Charges i.e., on 10.6.1996 itself. On that ground alone the dismissal order passed by the petitioner-Bank is liable to be set aside.
32. Though clause (vi) of Rule 71 of the Rules envisages that the employee concerned shall, ordinarily not be permitted to engage a legal practitioner for the purpose of defence, unless the Enquiry Officer for special reasons to be recorded in writing and in consideration of the circumstances of the case, orders otherwise. But in the present case, the respondents have not engaged any legal practitioner.
33. The provisions of clause (vii) of Rule 71 of the Rules envisages that the Enquiry Officer shall in the course of enquiry summon such documentary evidence including the records of the Bank and take such oral evidence in the presence of the employee as may be relevant or material to the charges. The provisions of sub-clause (viii) of Rule 71 stipulates that the employee shall be entitled to cross-examine witness examined in support of the charges and to give evidence in person and the person presenting the case in support of the charges shall be entitled to cross-examine the employee and the witness examined in his defence. Admittedly, in the present case, the Enquiry Officer has neither summoned any documentary evidence including records of the decree nor recorded any oral evidence in presence of the employees or relevant material to the charges and also neither allowed the employees to cross-examine the witness in support of the charges nor given evidence in person or the person presenting the case in support of the charges nor was allowed to cross-examine which clearly indicates that the Enquiry Officer while holding enquiry has not followed the procedure as contemplated under Clauses (vii) and (viii) of Rule 71 of the Rules.
34. The provisions of clause (x) of Rule 71 of the Rules contemplates that the documents shall be admitted in evidence in original and secondary evidence in respect thereof shall be admissible only if it is proved or attested in the presence of the employee concerned. Clause (xi) of Rule 71 of the Rules contemplates that the Enquiry Officer shall record the statement of the employee concerned.
35. The provisions of Clause (xii) of Rule 71 of the Rules contemplate that in conducting the enquiry, the Enquiry Officer shall act in a quasi judicial manner. Admittedly in the present case, none of the documents on behalf of the employer and employees were admitted in evidence nor the Enquiry Officer has recorded the statement of the employees nor acted in a quasi judicial manner.
36. The provisions of Clause (xv) of Rule 71 of the Rules envisages that the Enquiry Officer may recommend the nature of quantum of penalties or punishments that may be imposed. But in the present case, in the enquiry report, Annexure-D, the Enquiry Officer has not recommended anything to the Disciplinary Authority.
37. The provisions of clause (xvi) of Rule 71 contemplates that the records of the enquiry shall include -
(a) The charges framed by the Disciplinary Authority against the employee and the statement of allegations communicated to him/her under sub-rule (ii);
(b) His/her written statement of defence, if any;
(c) The oral evidence taken in the course of enquiry;
(d) The documentary evidence considered in the course of the enquiry;
(e) The orders, if any, made by the Enquiry Officer in regard to the enquiry; and (f) A report setting out the findings on each charge and the reasons therefor.
Admittedly in the present case, the records of the enquiry does not disclose all these features to conclude a proper enquiry. On that ground also, the dismissal order passed by the petitioner-Bank is liable to be set aside.
38. The provisions of clause (xviii) of Rule 71 contemplates that if the Disciplinary Authority after going through the report of the Enquiry Officer, is of the opinion that any of the major penalties specified in Rule 69 should be imposed, it should after recording its reasons in this behalf, pass a provisional order indicating its decision to impose such penalties and Clause (xix) contemplates that the ‘Disciplinary Authority’ shall communicate to the employee the findings of Inquiry Officer and penalty proposed to be inflicted by a final Show Cause Notice, but in the present case, though the final Show Cause Notice is issued while passing the impugned order of dismissal of employees from service on 1.1.1997 by the Board of Directors, the Disciplinary Authority has not recorded any independent reasons except accepting the report and absolutely, there is no application of mind and the impugned order of dismissal of the employees from service is in violation of Clause (xviii) of Rule 71 of the Rules. On that ground alone, the impugned order of dismissal of the employees from service passed by the petitioner-Bank cannot be sustained.
39. The aforesaid provisions of Rule 71 of the Rules prescribes how the Enquiry Officer has to conduct the proceedings, record statements, cross-examination and how the Disciplinary Authority has to proceed while imposing punishment. But the said procedures have not at all been followed by the Enquiry Officer/petitioner-Bank before dismissal of the respondents and the same is in utter violation of Article 311(2) of the Constitution of India. On that ground alone, the dismissal order passed by the petitioner- Bank cannot be sustained.
40. It is relevant to state at this stage that the employees raised their dispute bearing No.JRB/MD/2/1997-98, JRB/MD/3/1997-98 and JRB/MD/4/1997-98 before the Deputy Registrar of Co- operative Societies, Bangalore, who by the orders dated 31.7.2012, 21.7.2003 and 31.7.2012 respectively dismissed all the disputes raised under the provisions of Section 70 of the Karnataka Co-operative Societies Act, 1959 which was the subject matter of appeal before the Karnataka Appellate Tribunal in Appeal Nos.966, 967 and 968 of 2003. The Karnataka Appellate Tribunal considering the entire material on record, by a separate order dated 30th September, 2010 allowed the appeals and set aside the orders passed by the District Registrar of Co-operative Societies by remitting the matters to the Joint Registrar of Co-operative Societies for fresh disposal after affording an opportunity to all the employees as well as the Bank to lead additional evidence on other issues and decide the dispute including the preliminary issue in the light of the observations made therein. The said impugned orders passed separately by the Karnataka Administrative Tribunal have reached finality.
41. After remand, the District Registrar of Co- operative Societies recorded the evidence of the present petitioner-Bank and the employees-respondents, marked certain documents and confirmed that neither the petitioner-Bank nor the Enquiry Officer right from the initial stage itself i.e., from the stage of issuance of charges itself have followed the prescribed procedure in accordance with law, even though it was the duty of the Bank-petitioner to provide reasonable opportunity to the respondents-employees at each and every stage and as such, with an only intention of imposing grievous punishment to the respondents-employees, the bank- petitioner without extending proper opportunity, has completed the enquiry by throwing the rules into the air. Further the preliminary issue was held in favour of the respondents-employees holding that the disciplinary enquiry conducted by the petitioner-Bank against the respondents was not conducted impartially, properly and in accordance with the law. It was further held that the petitioner-bank imposing punishment of dismissal of the employees from service was on the basis of defective enquiry report which was against the provisions of the Rules and principles of natural justice which is unilaterally not justified. Ultimately, the petitioner-bank was directed to reinstate the respondents within one month from the date of that order with all consequential financial benefits including the service benefits available to them.
42. It is also not in dispute that on second round of litigation on the appeal filed by the petitioner-Bank in Appeal Nos. 562, 563 and 564 of 2012 before the Karnataka Appellate Tribunal, Bangalore, the Tribunal considering the entire material on record has recorded a finding that it was confirmed that the articles of charges were not accompanied by the statement of imputations, list of documents and witnesses. It has also observed that very strangely the bank-petitioner, which has leveled such serious charges against the delinquent employees-the respondents, has failed to support its own charges with proper documents and witnesses. It has also observed that every employee of an institution, who is charged with misconduct, is entitled to know not only the nature of the charges, but also details of the statement of imputations, the documents and witnesses that are produced by the employer in support of the charges. The articles of charges, statement of imputations, list of documents and witnesses are mandatory to be made available to the employee by the Management of any Organisation which levels such charges. Hence, the Bank-petitioner had failed by merely issuing the articles of charges without other three vital documents to the respondents-employees. Thus the employees, in the very first stage of the enquiry, were denied with an opportunity of defending themselves properly.
43. The Tribunal has also held that the Joint Registrar of Co-operative Societies has rightly observed that a domestic enquiry has to be conducted in a meticulous and proper manner and all procedures need to be followed to ensure that the person, against whom the charges have been framed, properly defends himself or atleast an opportunity is given to defend himself. If the Bank has gone ahead with the domestic enquiry without these basic requirements, such as statement of imputations, necessary documents and witness to prove its own charges, undoubtedly, it has vitiated its own case. The Tribunal has further held that reasonable opportunity encompasses sufficient opportunity, but while the delinquent employees had been served with the article of charges on 22.6.1997 as per Ex.P.5, Sri J. Ningegowda, was already appointed as the Enquiry Officer on 10.6.1996 itself, before the issuance of article of charges which is against the principles of natural justice and it was shocking that before the employees were served with the article of charges, the Enquiry Officer had already been appointed. Therefore, it is blatant violation of procedure of the Rules, and all laid down norms of justice only show the arbitrariness with which the Bank has handled this issue and has attempted to sweep all its blunders under the carpet by going ahead with the enquiry and imposing punishment despite there being grievous lacunae in the procedures adopted by the Bank.
44. The Tribunal has further held that in the instant case, the bank has done everything to destroy its own case by violating the laid down norms and procedures that were required to be followed in conducting the disciplinary enquiry. The bank has relied upon the admission of the employees in having discounted the cheques and sadly, such admission of employees could have been considered only if it had come about in a properly conducted disciplinary enquiry and should be disregarded, if such enquiry conducted suffers infirmities as is evident in the present case. The Tribunal has also observed that, had the disciplinary enquiry followed its prescribed route and had the management of the Bank and the Enquiry Officer conducted the enquiry in a free and fair manner, the admission of the employees that they had discounted the cheques would have been paramount significance. But it is not so, as the disciplinary enquiry proceedings are brought with illegality and are vitiated by violation of principles of natural justice. Accordingly, the appeals came to be dismissed.
45. A careful perusal of the entire enquiry proceedings clearly depicts that the rules adopted by the petitioner-Bank stated supra particularly, Rule 71 of the Rules has been violated by the Bank in the enquiry proceedings initiated. The District Registrar of Co- operative Societies after recording the evidence of both parties has allowed both sides to mark the documents and has come to the conclusion that the Bank- petitioner while proceeding to pass the dismissal order against the respondents-employees has not followed the procedure as contemplated under Rule 71 of the Rules of the Bank. Accordingly, petitions filed by the employees-respondents were allowed and a direction was issued to the bank to reinstate all the three employees within one month with all consequential benefits. Admittedly, the order passed by the District Registrar of Co-operative Societies dated 31.7.2012 has been confirmed by the KAT in the appeals filed by the Bank-petitioner on 13th November, 2014 as stated supra.
46. When the petitioner-Bank has filed these writ petitions before this Court in the year 2015, this Court while issuing Rule on 28.10.2015 directed the registry to post the matters for hearing in the first week of January, 2016, but till today, the matters were not posted. Unfortunately, the employees have not persuaded this Court for implementation of the order passed by the District Registrar of Co-operative Societies directing the petitioner-Bank to reinstate them within one month with all consequential benefits. But the fact remains that, in view of the pendency of the proceedings since 1997 – proceedings for dismissal and earlier two rounds before the Deputy Registrar of Co- operative Societies and the Karnataka Administrative Tribunal, the two employees retired after attaining superannuation i.e., Sri A.C. Lakshmikanth, on 16.5.2013 and Sri D. Rangaraju on 31.12.2015 and Sri K.T. Borajjaiah, is going to attain superannuation on 31.8.2020 (nearly after nine months). In view of the patent error committed by the petitioner-Bank, dismissing the respondents from service without following the mandatory procedure as contemplated under Rule 71 of the Rules stated supra, the respondents-employees should not be allowed to suffer in violation of Article 21 of the Constitution of India.
47. In view of the aforesaid reasons, it is clear as already stated supra that the Articles of charges were leveled against the employees-respondents by the Bank- petitioner for discounting of cheques which contained two charges. So far as the first charge for discounting of cheques is concerned, it is admitted by all the employees as stated supra that they were not aware of the Circular issued by the Head Office –Bank and hence, issued cheques as per the advise of the Bank Manager. In so far as the second charge is concerned, the employees have categorically denied that they have caused any loss to the petitioner-bank which is for their personal gain. If that is so, the very Rules framed by the petitioner-Bank especially Rule 71 of the Rules contemplates the procedure as to how the enquiry has to be proceeded with. Admittedly, the petitioner-Bank has not followed its own Rules and Procedure as contemplated.
48. Sri Somashekar, learned Counsel for the petitioner submits that the enquiry was not at all required to be conducted, when the guilty is admitted by the employees and only for the formality sake, enquiry has been conducted. The said contention cannot be accepted in view of the fact that the specific provisions of the Rules of the petitioner-Bank were not followed by the petitioner-Bank especially Rule 71 of the Rules before dismissal of the respondents from service unilaterally.
49. As stated supra, the proceedings initiated by the petitioner-Bank against the employees-respondents, charges leveled, the evidence adduced by both parties and the conclusion arrived at by both the Registrar of Co-operative Societies and the Karnataka Administrative Tribunal clearly depicts that the punishment imposed by the petitioner-Bank dismissing the respondents-employees from service is disproportionate to the gravity of charges and shocks the conscience of this Court. My view is fortified by the judgment of the Hon’ble Supreme Court in the case of B.C. Chaturvedi –vs- Union of India and Others reported in 1995(6) SCC 749 wherein at para-18 it has been held as under:
“18. 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 the magnitude or gravity of the misconduct. The High Court/ Tribunal, while exercising the power of judicial of 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.”
50. It is well settled that when the punishment is found to be outrageously disproportionate to the nature of charge, principle of proportionality comes into play. It is, however, to be borne in mind that this principle would be attracted, which is in tune with the doctrine of Wednesbury [Associated Provincial Picture Houses Ltd.
v. Wednesbury Corpn., (1948) 1 KB 223 : (1947) 2 All ER 680 (CA)] Rule of reasonableness, only when in the facts and circumstances of the case, penalty imposed is so disproportionate to the nature of charge that it shocks the conscience of the Court and the Court is forced to believe that it is totally unreasonable and arbitrary. This principle of proportionality was propounded by Lord Diplock in Council of Civil Service Unions v. Minister for the Civil Service [1985 AC 374 : (1984) 3 WLR 1174 : (1984) 3 All ER 935 (HL)] in the following words: (AC p. 410 D-E) “...Judicial review has I think developed to a stage today when without reiterating any analysis of the steps by which the development has come about, one can conveniently classify under three heads of the grounds upon which administrative action is subject to control by judicial review. The first ground I would call ‘illegality’, the second ‘irrationality’ and the third ‘procedural impropriety’. This is not to say that further development on a case by case basis may not in course of time add further grounds. I have in mind particularly the possible adoption in the future of the principle of ‘proportionality’.”
51. Considering the entire material on record, the way in which the petitioner-Bank has conducted the disciplinary enquiry is in blatant violation of its own Rules and Procedures against the employees- respondents and disproportionately against the gravity of the charges leveled against the employees- respondents. The contention of the petitioner that there was no need to hold any enquiry even though the Enquiry Officer was appointed only for formality purpose, and in view of the guilt admitted by the employees, the punishment imposed by the Bank on the employees cannot be accepted.
52. The learned Counsel for the petitioner relied upon the dictum of the Hon’ble Supreme Court in the case of Central Bank Of India Ltd vs Karunamoy Banerjee reported in AIR 1968 SC 266 (para-9). It was a case where a regular enquiry was conducted under the provisions of Section 33(2)(b) of the Industrial Disputes Act, 1947 and in the enquiry, the employee admitted the charges. Under those circumstances, it was held that if the workman admits his guilt, to insist upon the management to let in evidence above the allegations, will, only be an empty formality. In such a case, it will be open to the management to examine the workman himself, even in the first instance, so as to enable him to offer any explanation for his conduct, or to place before the management any circumstances which will go to mitigate the gravity of the offence. But, even then, the examination of the workman, under such circumstances, should not savour of an inquisition. If, after the examination of the workman, the management chooses to examine any witnesses, the workman must be given a reasonable opportunity to cross- examine those witnesses and also to adduce any other evidence' that he may choose. The said case has no application to the facts and circumstances of the present case since the petitioner-Bank has violated the provisions of Rule 71 of the Rules stated supra.
53. The learned Counsel for the petitioner also relied upon a judgement of this Court in the case of Hindustan Aeronautics Ltd.–-vs- Gulab Singh reported in Laws(Kar.) – 1986-1-56 (para-5) wherein it was held that if the workman, against whom disciplinary proceedings are initiated, admits his guilty, there is no necessity for the Management to hold any enquiry as held by the Hon’ble Supreme Court in the case of Central Bank of India stated supra. In the present case, all the employees in their explanation though admitted that they have discounted the cheques without knowledge of the Circular issued by the Head Office, have specifically denied causing heavy financial loss to the petitioner- Bank for their personal gain. Therefore, there is no clear admission of entire charge as already stated supra. However, the Articles of Charge consists of two portions. Even though the first portion of the charge is admitted by the employees that they have discounted the cheques without their knowledge of the Circular issued by the Head Office, they have denied the other charge regarding causing heavy loss to the Bank for their personal gain. Therefore the procedure followed by the petitioner-Bank while imposing punishment of dismissal from service is in violation of the Rule 71 of the Rules of the Bank. Therefore, the said judgment has no application to the facts and circumstances of the present case.
54. The learned Counsel for the petitioners also relied upon the judgment of this Court in the case of Hindusthan Aeronautics Limited –vs- Shanmugam reported in ILR 1991 KAR. 3382 where workman against whom charges of misconduct were made, has categorically admitted that he had committed a mistake and even when the enquiry proceedings began, he had stated that he had nothing more to add in respect of the charges against him. Under those circumstances, this Court held that there is no necessity to hold enquiry as further. Admittedly, in the present case though the second portion of the charge is denied by the employees, there is no enquiry as contemplated except initiating enquiry for the formality purpose. Therefore, the said case has no application to the facts and circumstances of the present case.
55. The next judgment relied upon by the learned Counsel for the petitioner is Sri. Vinayak Narayan Deosthali –vs- Central Bureau of Investigation reported in (2015)2 SCC 553 (para-9) wherein it was that that in an offence of conspiracy even repayment has been made, that itself is not an indication of lack of dishonest intention. Sometimes, it so happens that with a view to create confidence the repayments are made so that for the future transactions, the money can be dishonestly misappropriated and make ‘market practices’. Admittedly, in the present case, even though discounting of cheques is admitted by the employees since the Circular issued by the Head Office of the petitioner-Bank was not within their knowledge, no financial loss was caused to the petitioner-Bank and it is not the case of the petitioner-Bank that the respondents-employees are habitually doing their duties with dishonest intention. Therefore, the said judgment has no application to the facts and circumstances of the present case.
56. Lastly, the learned Counsel relied upon the judgment of the Hon’ble Supreme Court in the case of Additional District Magistrate –vs- Prabhakar Chaturvedi and Another reported in (1996)2 SCC 12 where infact, on account of clear admission contained in writing given by the employee, the charge against him stood proved on admission and the only question that remained to be considered was about the nature of punishment to be imposed on him. In the present case, the charge was not proved against the employees as held by both the District Registrar of Co-operative Societies as well as the Karnataka Administrative Tribunal that too after holding detailed enquiry, recording of evidence and marking of documents. Therefore, consideration of nature of punishment would not arise in the present case as held by the District Registrar of Co-operative Societies and confirmed by the Karnataka Administrative Tribunal. Therefore, the said judgment has no application to the facts and circumstances of the present case.
57. The Division Bench of this Court while considering the provisions of Section 33 of the Industrial Disputes Act read with Articles 226 and 227 of the Constitution of India has held that where the Management discharges a workman by an Order, is void for want of an Enquiry in the case of the Management of the Mysore Coffee Processing Co-operative Society Ltd. – vs- Presiding Officer reported in ILR 1998 Kar.18, and at paragraph-7, it has been held as under:
“7. Such a position of law is in consonance with the principles of natural justice and the objects sought to be achieved by the Industrial Laws enacted for protecting the interests of the workmen. In the absence of an enquiry as mandated under the Act, Rules, Bye-laws and Standing Orders governing the service conditions of the workman the order of dismissal should be deemed to be non-existent and not operating against the interests of the workman till it is justified in a legal manner by adducing evidence before the Labour Court, inasmuch as the workman, dismissed in complete disregard to the principles of law and awaiting verdict of the Court, would be deprived of the wages even for the period he awaits a judgment. The position in the case of defective enquiry would be totally different because the workman in that case would take a chance to prove that the enquiry though held was defective but in a case where no enquiry was held he would be justified to presume that the action of the respondent was liable to be quashed being contrary to law. For the fault and inaction of the management and in the hope of seeking justice the workman could not be deprived of the wages for the period he remains out of job and employment presumably on account of the pendency of the case in a Court of law.”
58. The Constitution Bench of the Hon’ble Supreme Court while considering the provisions of Article 311(2) of the Constitution of India with regard to reasonable opportunity in the case of Jagdish Prasad Saxena –vs- State of Madhya Bharat (Now Madhya Pradesh) reported in AIR 1961 SC 1070 at paragraphs- 11 and 13 has held as under:
“11. It is true that the appellant specifically admitted during the course of the previous enquiry that illegal liquor had been delivered to the contractor, and that he had given the key of the receiver to Narona. It is on the strength of those admissions that the High Court took the view that the appellant had substantially admitted his guilt and so there was really no need for holding a formal enquiry against him after the charge-sheet was supplied to him. In this connection it is necessary to remember that the previous enquiry was not directed against the appellant as such, and he was certainly not in the position of an accused in the said enquiry. In fact, as we have already indicated, the result of the said enquiry was that the appellant was absolved from any complicity in the commission of the offence, and the only criticism made against him was that he was slack in his supervision, that is why he was transferred. In such a case, even if the appellant had made some statements which amounted to admission it is open to doubt whether he could be removed from service on the strength of the said alleged admissions without holding a formal enquiry as required by the Rules. But apart from this consideration, if the statements made by the appellant do not amount to a clear or unambiguous admission of his guilt, failure to hold a formal enquiry would certainly constitute a serious infirmity in the order of dismissal passed against him. Under Article 311(2) he was entitled to have a reasonable opportunity of meeting the charge framed against him, and in the present case, before the show-cause notice was served on him he has had no opportunity at all to meet the charge.
After the charge-sheet was supplied to him he did not get an opportunity to cross-examine Kethulekar and others. He was not given a copy of the report made by the enquiry officers in the said enquiries. He could not offer his explanation as to any of the points made against him; and it appears that from the evidence recorded in the previous enquiries as a result of which Kethulekar was suspended an inference was drawn against the appellant and show-cause notice was served on him. In our opinion, the appellant is justified in contending that in the circumstances of this case he has had no opportunity of showing cause at all, and so the requirement of Article 311(2) is not satisfied.”
“The order passed by the Minister shows that he took into account the alleged interpolations in the books kept by the appellant as well as the facts that Kethulekar and the contractor saw the appellant the next morning. Now it is clear that so far as these two facts are concerned the appellant was given no opportunity to cross-examine Kethulekar and the contractor and to show that their story was untrue; nor was he given an opportunity to substantiate his explanation about the alleged interpolations in the books. The Minister may have thought that the facts to which his attention was invited indicated that the appellant must have been present at the warehouse when the offence took place; but it is of the utmost importance that in taking disciplinary action against a public servant a proper departmental enquiry must be held against him after supplying him with a chargesheet, and he must be allowed a reasonable opportunity to meet the allegations contained in the chargesheet. In the present case preliminary enquiries of a general type were held and they ended in a findings Kethulekar. The reports did not show that the appellant was guilty of the offence for which he was ultimately dismissed from service. The delay made in giving the appellant the chargesheet as well as in communicating to him the final order of dismissal shows that the authorities did not think that time was the essence of the matter, and so there was hardly any justification for not holding a formal and proper enquiry after the appellant was given a chargesheet on 17 October, 1951. In our opinion; therefore, the High Court was in error in coming to the conclusion that no prejudice had been caused to the appellant as a result of the respondent's failure to hold an enquiry against him after supplying him with a chargesheet. The departmental enquiry is not an empty formality; it is a serious proceeding intended to give the officer concerned a chance to meet the charge and to prove his innocence. In the absence of any such enquiry it would not be fair to strain facts against the appellant and to hold that in view of the admissions made by his the enquiry would have served no useful purpose. That is a matter of speculation which is wholly out of place in dealing with cases of orders passed against public servants terminating their services.”
VI – CONCLUSION 59. The District Registrar of Co-operative Societies on considering the entire material both oral and documentary evidence on record has recorded a finding of fact that the petitioner-Bank has not conducted the enquiry as contemplated under the provisions of the required Rules and therefore, the punishment imposed dismissing the employees from the service is without any basis and accordingly, allowed the disputes raised by the employees directing the petitioner-Bank to reinstate all the employees within one month from the date of order and to extend all consequential financial benefits including the service benefits available to them under the Rules which has been confirmed by the Karnataka Administrative Tribunal by the impugned orders as per Annexures-L and N. Both the District Registrar of Co-operative Societies as well the Karnataka Administrative Tribunal have concurrently held that the enquiry conducted by the petitioner-Bank against the employees is in utter violation of the principles of natural justice and the Rules of the Bank-petitioner as contemplated. Such findings of fact cannot be interfered with by this Court in exercise of power under Articles 226 and 227 of the Constitution of India.
60. In the aforesaid facts and circumstances, both the points are answered in the negative holding that the petitioner-Bank has not conducted the enquiry as contemplated under the provisions of Rule 71 of the Rules before dismissal of the respondents-employees from service and also has not made out any ground to interfere with the concurrent findings of fact recorded by both the Deputy Registrar of Co-operative Societies as well the Karnataka Administrative Tribunal.
Accordingly, writ petitions are dismissed.
Sd/- Judge Nsu/-