P.JYOTHIMANI,J.
The writ appeal is directed against the order of the learned Single Judge dated 6.11.2008 made in W.P.No.35902 of 2005, dismissing the writ petition.
2. The writ petitioner/appellant has joined the services of the second respondent on 7.3.1980 and ultimately, he became the Regional Chief on 13.5.1997, which post he was holding till March, 2004. During the year 1997-1998, the writ petitioner, as the Regional Chief, has recommended for sanction of Rs.7 Crores to M/s.Premier Housing and Industrial Enterprises Limited (in short, "the PHIEL"). It was based on his recommendation, the second respondent has disbursed the amount to said PHIEL. The loan was granted on the basis of bank guarantee offered by the Global Trust Bank, without any other security. On the basis that the recommendation given by the petitioner/appellant was not proper, a charge sheet was issued on 19.2.2002, for which the petitioner has submitted his explanation on 9.4.2002.
3. One Mr.K.C.Batra, one of the Executive Directors of the Housing and Urban Development Corporation Limited (in short, "the HUDCO") was appointed as an Inquiry Officer, who examined three witnesses and marked 15 documents. On the side of the delinquent officer one witness was examined and 16 documents were marked. Out of the five charges levelled against the petitioner, the Inquiry Officer found, in his report, that only Charge No.(3) stood proved. The copy of the report of the Inquiry Officer was furnished to the petitioner/appellant, for which the delinquent officer submitted his explanation in respect of charge No.(3), which was held proved by the Inquiry Officer. Thereafter, the Disciplinary Authority, taking a different view from that of the Inquiry Officer, passed an order on 9.3.2005, holding that all five charges levelled against the petitioner/ appellant stood proved and imposed the following punishment:
(i) reduction to the lower post of Deputy Chief;
(ii) reducing the basic pay by five increments in lower scale; and
(iii) not to consider for promotion for the next two years.
4. It was against the said order of the Disciplinary Authority the delinquent officer approached the first respondent/Appellate Authority, who, by an order dated 6.8.2005, has dismissed the appeal, as against which the writ petition came to be filed.
5. The learned Single Judge, having found that the charges levelled against the delinquent officer are grave in nature and relying upon the judgment of the Supreme Court in Union of India v. Vishwa Mohan, [1998] 4 SCC 310 wherein it was held that in the banking business absolute devotion, diligence, integrity and honesty need to be preserved by every bank employee, has held that the punishment imposed need not be interfered with. The learned Single Judge has also held that when the Disciplinary Authority differs from the view of the Inquiry Officer, it is not necessary to give further notice in cases where no prejudice is caused to the delinquent officer.
6.1. Mr.V.Ayyadurai, learned counsel appearing for the petitioner/appellant would submit that the law is well settled that in cases where the Disciplinary Authority differs from the view of the Inquiry Officer, a notice must be given the delinquent officer again, so as to enable him to give explanation about the proposal of the Disciplinary Authority to pass different orders other than the Inquiry Officer's finding. His contention is that the said principle is well established by hierarchy of judgments and in spite of that, the learned Single Judge, having quoted the said judgments, holding that this has been the consistent view taken by the Supreme Court, has only relied upon the judgment of the Supreme Court in Union of India v. Vishwa Mohan, referred supra, and held that inasmuch as the delinquent officer has filed an appeal to the first respondent against the order of the Disciplinary Authority, no prejudice has been caused to the delinquent officer. According to the learned counsel, when once such an issuance of further notice is a matter of right, the question of prejudice does not arise.
6.2. It is his further submission that even in the communication of the respondents, enclosing the report of the Inquiry Officer, asking the delinquent officer to give reply, there is nothing to disclose that the Disciplinary Authority has decided to differ from the report of the Inquiry Officer and therefore, there was no occasion for the delinquent officer to explain about the intended decision of the Disciplinary Authority to find the delinquent officer guilty in respect of all charges, even though in respect of four charges the petitioner/appellant was exonerated by the Inquiry Officer and therefore, there is a violation of the principles of natural justice and in such circumstances, the question of prejudice does not arise.
6.3. It is his further submission that in respect of the drafting of bank guarantee, it was the Law Officer of the second respondent, being an expert, who has prepared the same and therefore, being a Regional Chief, the delinquent officer had to just believe and forward the same to the head office. Admittedly, the head office, after scrutiny, have accepted the issuance of bank guarantee and therefore, there is no dereliction of duty.
6.4. It is his further submission that in respect of the recommendation for loan, while the delinquent officer has called for opinion from seven banks about the loanee, only two banks have responded and the said opinions, which are in the form of financial reports by the Indian Bank, have been approved by the Finance Officer of the second respondent, who is also an expert in finance and the petitioner/appellant, being a Regional Chief, believing the said report has made a recommendation and therefore, according to the learned counsel, it was, at the most, an error of judgment and not an intentional dereliction. He would also submit that the learned Single Judge has not considered that the report of the Indian Bank, which was stated to be available in the Regional Office was only relied upon during the time of inquiry as an additional document, without furnishing a copy of the same to the delinquent officer.
6.5. It is his further submission that the other responsible officers of the second respondent, like the Law Officer, Finance Officer, etc., who are experts and who have given opinion about the solvency of the loanee and also drafted the bank guarantee were only awarded minor punishment of censure, while the delinquent officer has been imposed with one major punishment and two minor punishments and therefore, according to him, it is an official bias and the said act of the Disciplinary Authority and the first respondent/Appellate Authority is discriminatory in character. To substantiate the said contention reliance was placed on the decision of the Apex Court in Akhilesh Kumar Singh v. State of Jharkand and Others, [2008] 2 SCC 74.
6.6. It is his further submission that multiple punishments, viz., both major and minor punishments, have been simultaneously imposed on the delinquent officer by way of the order of punishment, and the same is not permissible. He would rely upon the judgment of the Supreme Court in Union of India and Another v. S.C.Parashar, [2006] 3 SCC 167 to substantiate his contention.
6.7. It is his further submission that even the Appellate Authority, namely the first respondent, has not considered any point raised by the delinquent officer and therefore, he would submit that the impugned order of the Disciplinary Authority is bad in law, by relying upon the judgment of the Supreme Court in Moni Shankar v. Union of India and Another, [2008] 3 SCC 484 and D.K.Yadav v. J.M.A.Industries Limited, [1993] 3 SCC 259.
6.8. He would submit that while the view expressed by the Supreme Court in Union of India v. Vishwa Mohan, referred supra, that the employees of the bank should be very diligent and honest is indisputable, one has to see the legality of the disciplinary proceedings while applying the celebrated concept of law.
7.1. On the other hand, Mr.M.Vaidyanathan, learned counsel for the respondents, would submit that, being the Regional Chief, it is only the recommendation of the petitioner/appellant (delinquent officer), which was the basis for release of loan to the loanee and as far as the opinion of the Law Officer and the Finance Officer, who are subordinate to him, it was the duty of the delinquent officer to verify the correctness of such a report and in not verifying the same and granting of loan, the second respondent had to incur financial loss, since the amount of loan was very huge, namely Rs.7 Crores.
7.2. It is his submission that it is not as if the Inquiry Officer's report has not been furnished to the delinquent officer, who should have given explanation in respect of all charges. He would submit that the non issuance of notice for differing from the view of the Inquiry Officer is not fatal to the decision of the Disciplinary Authority, inasmuch as, admittedly, the delinquent officer had an opportunity to file an appeal before the first respondent, which was considered on merits and therefore, according to him, the petitioner/appellant had no grievance since no prejudice has been caused to him. He would rely upon the judgment of the Supreme Court in State Bank of India v. K.P.Narayanan Kutty, AIR 2003 SC 1100.
7.3. He would submit that it is because of the negligence on the part of the petitioner/appellant, the second respondent had to file a case before the Debt Recovery Tribunal against the loanee for recovery of the interest amount.
8. The fact that the petitioner/appellant was working as a Regional Chief of the second respondent and that on his recommendation loan was granted to PHIEL is not in dispute. It is also stated that the principal amount has been paid by the loanee to the second respondent and in respect of the recovery of interest, the Debt Recovery Tribunal proceedings are pending.
9. The charges which were framed against the delinquent officer are:
"Charge-I: Shri V.Arul Kumar while working as Regional Chief, HUDCO Regional Officer, Chennai, had accepted the Bank Guarantee issued by Global Trust Bank on behalf of M/s.Premier Housing & Industrial Enterprises Ltd. as security for the working capital loan of Rs.700 lacs sanctioned by HUDCO in March 1998 with the limiting liability Clause introduced by Global Trust Bank as per RBI guidelines on the recommendations of Law Officer without actually verifying the contents of the Bank Guarantee. The acceptability of the qualified Bank Guarantee resulted in non-realisation of interest at the time of revocation of Bank Guarantee.
Shri V.Arul Kumar by the above acts has thus exhibited lack of devotion of duty, negligence in the performance of duty and acted in a manner prejudicial to the interest of HUDCO thereby violated Rules 4(1)(ii), 4(2) and 5(5) of HUDCO Conduct, Discipline and Appeal Rules, 1976.
Charge-II: Shri V.Arul Kumar while working as Regional Chief, HUDCO Regional Office, Chennai had given certification regarding the financial soundness of M/s.PHIEL without actually ascertaining the factual financial position. The draft appraisal report prepared by the Indian Bank clearly indicated that there were overdue payments to CANFIN Homes and HDFC which were not taken into consideration while evaluating the financial performance of the agency.
Shri V.Arul Kumar, Regional Chief by the above acts has thus exhibited lack of devotion to duty, negligence in the performance of duty and acted in a manner prejudicial to the interest of HUDCO thereby violated Rules 4(1)(ii), 4(2) and 5(5) of HUDCO Conduct, Discipline and Appeal Rules, 1976.
Charge-III: Shri V.Arul Kumar while working as Regional Chief, HUDCO Regional Office, Chennai, had not highlighted the position regarding default of M/s.PHIEL in the sanction note. There were specific instructions by the COD to check whether M/s.PHIEL had defaulted to any of the lending agencies in the past. Shri V.Arul Kumar while working as Regional Chief had verified that there was no default to any of the financial institutions by M/s.PHIEL and recommended sanction of the scheme.
Shri V.Arul Kumar, Regional Chief by the above acts has thus exhibited lack of devotion to duty, negligence in the performance of duty and acted in a manner prejudicial to the interest of HUDCO thereby violated Rules 4(1)(ii), 4(2) and 5(5) of HUDCO Conduct, Discipline and Appeal Rules, 1976.
Charge-IV: Shri V.Arul Kumar while working as Regional Chief, HUDCO Regional Office, Chennai, had violated the guidelines approved by the Board for sanction of working capital loan of Rs.700 lakhs to M/s.PHIEL giving undue favour to the agency which has resulted in non-realisation of interest, penal interest @ 2.5% over and above the normal rate of interest causing a substantial loss to the Company.
Shri V.Arul Kumar, Regional Chief by the above acts has thus exhibited lack of devotion to duty, negligence in the performance of duty and acted in a manner prejudicial to the interest of HUDCO thereby violated Rules 4(1)(ii), 4(2) and 5(5) of HUDCO Conduct, Discipline and Appeal Rules, 1976.
Charge-V: Shri V.Arul Kumar while working as Regional Chief, HUDCO Regional Office, Chennai, had not complied with the decision taken by the COD in its 87th Meeting held on 24.2.1998 wherein it was decided that in case of default by the agency, the Bank Guarantee should be invoked promptly in the next following month. The agency went in default in June, 1998 but the proposal for revocation of Bank Guarantee was initiated only on 27th October, 1998, in violation of the directions of the COD that in the case of default by the agency, the Bank Guarantee should be revoked promptly in the next following month. HUDCO had to suffer substantial interest loss because of this.
Shri V.Arul Kumar, Regional Chief by the above acts has thus exhibited lack of devotion to duty, negligence in the performance of duty and acted in a manner prejudicial to the interest of HUDCO thereby violated Rules 4(1)(ii), 4(2) and 5(5) of HUDCO Conduct, Discipline and Appeal Rules, 1976."
The above said charges relate to grant of loan recommended by the petitioner/appellant in March, 1998.
10.1. The imputation regarding charge No.1 makes it clear that the Law Officer has prepared the Bank Guarantee as per the Reserve Bank of India guidelines and that was recommended by the delinquent officer without verifying the contents, which resulted in the inability of realisation of interest at the time of revocation of Bank Guarantee.
10.2. In respect of Charge No.2, regarding the certification of the financial soundness of PHIEL, the imputation states that apart from the draft appraisal report of the Indian Bank, indicating that there was some overdue payment by the loanee to CANFIN Homes and HDFC, there was a report of the Karnataka Bank Limited and without verifying the same, the recommendation has been made by the delinquent officer.
10.3. In respect of Charge No.3, the imputation states about non highlighting of the position of PHIEL as per the instructions of the Committee of Directors and merely relying on the certificate of the Chartered Accountant from PHIEL stating that the company has no dues as default to any of the financial institutions.
10.4. In respect of Charge No.4 relating to non realisation of penal interest @ 2.5% over and above the normal rate, it is the imputation that the delinquent officer has violated the guidelines approved by the Board in the meeting held on 21.10.1997.
10.5. Likewise, in respect of Charge No.5, regarding the invoking of the Bank Guarantee, the decision taken by the Committee of Directors on 24.2.1998 is stated to have been violated.
11.1. In reply, the delinquent officer has stated that as far as the first charge is concerned, regarding the acceptance of the Bank Guarantee, the same was done as per the recommendation of the Law Officer and as an expert when such a report has been given by the Law Officer, it is not possible for the Regional Chief to go through each and every paper, line by line and find out any addition or omission and moreover, even during the legal inspection carried out by the SZO during October, 1999 nothing was commented on the modification of the Bank Guarantee format.
11.2. In respect of the second charge of certification regarding the financial soundness, it was the reply of the delinquent officer that when the first level officers like the Legal, Financial and Technical Officers have given their views, it is only a review of appraisal notes given by such officials which will be verified and the financial appraisal note put up by the Finance Officers has not disclosed the status report from the banks from which the reports were sought for. As per the financial performance report compiled, the loanee company was rated "P1" and "FA" by Crisil and they have been declaring dividend year after year and therefore, there was no occasion to doubt the financial prudence.
11.3. In respect of the third charge regarding the independent verification of the default by the agency, it was replied that the petitioner/appellant has followed the advice from the Head Quarters dated 15.12.1997 in respect of an identical project. He has stated that the Chartered Accountant issued a no default certificate and that the default of the agency to other financial institutions was not known to any one in the Regional Office.
11.4. Likewise, in respect of Charge No.4, regarding the violation of guidelines / provisions in the sanction-cum-loan agreement, it has been his reply that the agreement cannot be read by the Regional Chief line by line, since the same has already been scrutinized by the Law Officer and the Finance Officer.
11.5. In respect of the last charge, namely delay in invoking the Bank Guarantee, beyond one month, it is stated that there was no delay on his part in invoking Bank Guarantee.
12.1. Mr.K.C.Batra, Executive Director of the second respondent, who was appointed as an Inquiry Officer, after conducting the inquiry, while dealing with each and every one of the charge, independently assessing the evidence adduced before him, has found that in respect of Charge No.1 that the Presenting Officer has not been able to bring out any action which can be said to have been taken by the delinquent officer in acceptance of the qualified Bank Guarantee. In fact, the witnesses have spoken clearly that the Bank Guarantee has been accepted by the Officials as found to be in order. The Inquiry Officer has held "The CO (Delinquent Officer) was functioning as the Regional Chief at Chennai Regional Office at that time and he was not expected to re-examine all legal documents de-novo after the concerned Law Officer had already recorded on file that all "Legal documentation formalities have been completed" and the bank guarantee received and "found to be in order"and also clearly recommended the release of the loan amount". Thus, the Inquiry Officer exonerated the delinquent officer from the first charge.
12.2. In respect of second charge, the Inquiry Officer found that the Presenting Officer was not able to bring out as to who was required to look into the draft appraisal report of the Indian Bank or evaluate the financial performance of the agency, but found that the Presenting Officer has brought out that the Assistant Finance Officer had appraised the scheme based on the financial position of the agency and concluded that the primary responsibility for evaluating the financial performance and financial soundness of the borrowing agency rests with P.W.3, Assistant Finance Officer and not with the delinquent officer and thus, exonerated the delinquent officer from the second charge.
12.3. In respect of the third charge, viz., not highlighting of the position regarding default of PHIEL in the sanction note, while the Inquiry Officer has categorically observed that "as such furnishing the current information regarding the borrowing agency's default to the other financial institutions was the responsibility of the finance discipline officer posted at Chennai Regional Office", however found that the delinquent officer has not examined all the financial documents himself and had sent his communication solely based on the information provided to him and sending the said communication would tantamount to "wrong certification" and concluded that in respect of the said charge the delinquent officer was liable.
12.4. In respect of Charge No.4, it was specifically found that in the absence of specific mention in the sanction condition or communication received from the HUDCO, it cannot be concluded that the delinquent officer must necessarily obtain post dated cheques and exonerated the delinquent officer from the said charge.
12.5. Likewise, in respect of Charge No.5 regarding the delay in initiating the proposal for invoking the Bank Guarantee, the Inquiry Officer has found that it was only the Head Office which has conveyed the decision to the delinquent officer in the letter dated 28.4.1999 and therefore, the delinquent officer was exonerated from the said charge.
13. The said report of the Inquiry Officer was communicated to the petitioner/appellant by communication dated 16.8.2004, by the Deputy Chief (Vigilance). It is interesting to note that in the letter, by which the said Deputy Chief (Vigilance) has communicated the report of the Inquiry Officer, he has asked the petitioner/appellant to make his representation or submission, if any, to the Disciplinary Authority, viz., the Chairman-cum-Managing Director, HUDCO. A reading of the letter also makes it very clear that the Disciplinary Authority, on perusal of the report of the Inquiry Officer is in "tentative agreement" with the finding of the Inquiry Officer. The letter dated 16.8.2004 is as follows:
"The Inquiry Officer appointed vide order dated 13.9.2002 has concluded the inquiry and sent the inquiry report to the Disciplinary Authority. The Disciplinary Authority has perused the IO's report and is in tentative agreement with the findings of the IO. A copy of the report of the IO is enclosed herewith. If you wish to make any representation or submission, you may do so in writing to the Disciplinary Authority i.e., CMD, HUDCO, within 15 days of the receipt of the letter. The Disciplinary Authority will take a final decision in the matter after considering your submission on the report of the IO."
14. Admittedly, this is the only letter which was enclosed along with the report of the Inquiry Officer. Apart from the fact that under this letter there is absolutely no reference that the Disciplinary Authority intends to differ from the report of the Inquiry Officer in respect of Charge Nos.1, 2, 4 and 5, it, in unequivocal terms, says that the Disciplinary Authority is in tentative agreement with the finding of the Inquiry Officer, which means that the Disciplinary Authority has informed the petitioner/appellant that only in respect of Charge No.3, the Disciplinary Authority desires to proceed. It was in such view of the matter, normal prudence would show that the petitioner/appellant was called upon to given explanation only in respect of Charge No.3. In fact, the explanation submitted by the petitioner/appellant also makes it clear that he has submitted explanation only in respect of Charge No.3.
15. On fact, it is clear that the Disciplinary Authority, in the impugned order dated 9.3.2005, has differed from the report of the Inquiry Officer and held that the petitioner/appellant is liable for punishment in respect of all the five charges. A reading of the order of the Disciplinary Authority, while arriving at such conclusion, makes it abundantly clear that the Disciplinary Authority has not even applied its mind in respect of all the charges independently and he has only stated crisply about all charges as follows:
"I have gone through the findings of the IO, representation of Shri V.Arul Kumar on IOs' report, other evidence on record and keeping in view the overall circumstances, find that the IO's findings are not altogether rational and Shri V.Arul Kumar cannot be absolved as such from the charges leveled against him. After examining the submission of the Charged Officer and the matter in entirety, I am of the view that the findings of IO relating to holding the CO as not guilty in accepting the faulty Bank Guarantee, non-verification of financial soundness of the Agency, violation of approved Guidelines and delay in taking action for invoking the Bank Guarantee which resulted in pecuniary loss to HUDCO, are not agreeable. Further, the contention of Shri V.Arul Kumar that he was a non-finance professional is not tenable. Shri V.Arul Kumar, the then Regional Chief, being the overall in-charge of the Regional Office cannot be absolved from the above charges just by laying blame on his subordinates whereas it was his core responsibility of overall supervision and cross verification. Even Shri V.Arul Kumar had himself admitted the lapse on his part for not highlighting the default position of the Agency in the sanction note. As a matter of fact, the lapse whatsoever on part of Shri V.Arul Kumar has put HUDCO in pecuniary loss and the issue was specifically highlighted by the CAG in its Report No.3 of 2001."
16. In the appeal filed by the petitioner/appellant to the first respondent dated 30.3.2005, he had raised all the issues in detail. However, the Appellate Authority, while confirming the order of the Disciplinary Authority, has given its ultimate finding, which is as follows:
(i)
(a) The nature of each punishment is aimed to prevent him from getting further promotion especially in the light of the fact that he attended the interview for the further promotional post of Executive Direction on 6.8.2004; and
(b) Imposing such punishment rendering the decision of the Board in calling him for interview to the post of Executive Director on 6.8.2004 There is no relation between the penalty imposed by the Disciplinary Authority in the instant case and the future promotional avenues of Shri V.Arul Kumar. The instant inquiry is being carried out since 19.2.2002 and it has come to this position now. As part of natural justice , Shri V.Arul Kumar was called for the interview for the post of Executive Director despite the pendency of this inquiry, since he was eligible for the post of the Executive Director at that time. As per procedure in vogue, the sealed cover proceedings were adopted and the outcome of the instant inquiry was to decide about the promotion of Shri V.Arul Kumar. Had no penalty been imposed on Shri V.Arul Kumar, his case for promotion would have been taken up as per procedure to be adopted under the sealed cover proceeding cases. As such, the contention of Shri V.Arul Kumar is not correct.
(ii)
(a) Awarding multiple punishments by taking a different conclusion than that of the enquiry report without issuing show cause notice;
(b) Having issued the letter dated 16.8.2004 stating that the Authority is in tentative agreement with the findings of Inquiry Officer surprisingly passed the final order without even providing an opportunity to him;
(c) Non-furnishing of CVC advice both in first stage and the second stage, no second show cause notice on the proposed punishment has been issued; and
(d) No show cause notice before taking a different conclusion than that of the enquiry report.
The stand of Shri V.Arul Kumar that the Disciplinary Authority had passed the order without giving him an opportunity has been evaluated in the context of the fact that vide letter dated 16.8.2004, he was provided with a copy of the findings of the Inquiry Officer to make representation/submission as he deemed fit, expressly indicating that the decision of the Disciplinary Authority is "tentative". The procedure of departmental inquiry enjoins upon the Disciplinary Authority to take the final decision only after receipt of submission/ representation of the Charged Officer on the findings of the IO. Shri V.Arul Kumar vide his letter dated 23.11.2004 made the submissions/ representations on the findings of the Inquiry Officer. The Disciplinary Authority has to take a holistic view on the matter keeping in view the overall circumstances of the case, the findings of the IO and the submissions of the Charged Officer. The penalty imposed by the Disciplinary Authority is a decision taken only after receipt and due consideration of the same. The available fact do indicate that these requirements have been duly complied by the Disciplinary Authority. As such, the contentions of Shri V.Arul Kumar are not tenable.
Further, the operational part of the penalty imposed on Shri V.Arul Kumar is consisting of different parts, which gives an impression of multiple punishments, but in fact it is only one penalty. The CVC's 1st stage advice is not required to be provided to the Charged Officer, since during oral hearing he was given a chance to putforth his view point on the charge(s) levelled against him. As such, the contentions of Shri V.Arul Kumar are not correct and accordingly rejected.
(iii)
(a) Treating him with hostile treatment in awarding severe punishment when compared to the punishment awarded to the co-delinquents who had admitted their lapses during their cross examination;
(b) Non-consideration of the role of delinquent and his official responsibility as set out in Ex.D16 viz. "Project Appraisal and Monitoring Manual for Housing Scheme"; and
(c) Total non-consideration of the evidences elucidated in the cross examination of PW1, PW2 & PW3 who had admitted their lapses respectively.
The contentions of Shri V.Arul Kumar are not justified. The Disciplinary Authority has to evaluate the delinquency of each officer involved in the case as per the individual officer's status and responsibility in the overall circumstances of the case/issue under consideration. The Disciplinary Authority had duly considered the overall circumstances of the case, the findings of the IO in other cases, the respective role of other officers and the overall responsibility of Shri V.Arul Kumar in the affairs of the Regional Office, which was under his charge. It is also to be seen that Shri V.Arul Kumar cannot be absolved from the charges merely by blaming his subordinate officers. Being the Regional Chief, he had the overall responsibility for the operations of the Regional Office, keeping the HUDCO's interest as paramount.
(iv)
(a) There is no reason being assigned to sustain the conclusion of the Disciplinary Authority to hold that the findings of the Inquiry Officer are not altogether rational and are not agreeable etc.;
(b) Failure to consider the overall facts and circumstances of the case especially the subject matter of loan is based on bank guarantee for working capital; and
(c) Findings as of pecuniary loss of interest and penal interest and the duty to cross, cross verification etc. without any iota of evidences available on records The order passed by the Disciplinary Authority is explicitly speaking order, detailing out the reasons for holding Shri V.Arul Kumar as guilty and as well as the reasons to differ from the findings of the Inquiry Officer. The above issues raised by Shri V.Arul Kumar were also elucidated by him, in his submissions. Even if, it is accepted that HUDCO recovered the principal loan amount, the fact remains that the due interest has not been received. Based on the earlier submissions of Shri V.Arul Kumar and considering the overall facts and circumstances of the case, the Disciplinary Authority had imposed the penalty on Shri V.Arul Kumar and the penalty imposed is appropriate considering the gravity of charges.
In view of the above, the Board decided to reject the appeal preferred by Shri V.Arul Kumar.
17. Before going into the crux of the issue involved in this case, it is relevant to point out that the Disciplinary Authority has awarded three punishments to the delinquent officer, which are as follows:
(i)Reduction to the post of Deputy Chief under Rule 23(2)(g);
(ii)Reducing the scale of pay by five increments under Rule 23(1)(d); and
(iii)Not to be considered for promotion for next two years under Rule 23(1)(e).
18. Out of the above said three punishments, the first punishment under Rule 23(2)(g) of the HUDCO Conduct, Discipline and Appeal Rules (in short, "the Rules"), is a major penalty, while the other two punishments under Rule 23(1)(d) and 23(1)(e) respectively are minor penalties. Therefore, on fact, it is clear that the Disciplinary Authority has awarded three different punishments, including the major and minor penalties, jointly.
19. In the above said factual background, we would proceed to examine the entire issue involved, including the order of the learned Single Judge.
20. At the outset, the major legal issue, which arises for our consideration in this case, is as to whether the delinquent officer is entitled to a specific notice for explanation when the Disciplinary Authority proposes to differ from the findings of the Inquiry Officer.
21. It is not in dispute that the Disciplinary Authority is entitled to differ from the view of the Inquiry Officer. The principles of natural justice start at the time when the original charges are framed against the delinquent officer, for which the delinquent officer has submitted his explanation, and the said concept continues at the time of conducting inquiry by the Inquiry Officer, in which witnesses are examined. After appreciation of evidence, when the Inquiry Officer finds the delinquent officer not liable in respect of charges 1, 2, 4 and 5 and finds that he is liable only in respect of charge No.3, it is clear that in respect of those charges, in which the delinquent officer was exonerated, there was no sufficient proof or evidence to implicate him. Now, if the Disciplinary Authority wants to differ in respect of the charges, which were exonerated by the Inquiry Officer, giving of further notice to the delinquent officer asking him to submit further explanation in respect of those charges in which he was exonerated is certainly the continuation of the principles of natural justice and it is not merely a second opportunity. There is no doubt in our mind that, in such circumstances, conferring of an opportunity to the delinquent officer is not only in compliance of the principles of natural justice, but the same is a mandatory requirement, failing which it would mean that without giving opportunity, the Disciplinary Authority would impose punishment in respect of charges, regarding which, after full-fledged inquiry and appreciation of evidence, the Inquiry Officer found on fact that charges 1, 2, 4 and 5 stood not proved.
22. In such circumstances, in our considered opinion, it can never be said that conferring of an opportunity is only a matter of convenience and not of legal necessity, under the guise that non giving of such opportunity has not caused any prejudice to the delinquent officer. Non conferring of such opportunity certainly causes great prejudice to the delinquent officer, since he loses a very vital opportunity to explain to the Disciplinary Authority not only about the correctness of the finding arrived at by the Inquiry Officer exonerating him, but also explain to the Disciplinary Authority various grounds against the charges levelled against him. In such view of the matter, it is not possible to accept the view of the learned Single Judge that no prejudice has been caused to the delinquent officer and therefore, non giving of an opportunity by the Disciplinary Authority, while differing from the finding of the Inquiry Officer, does not vitiate the disciplinary proceedings.
23. It is true that there are cases where non furnishing of Inquiry Officer's report may not vitiate the disciplinary proceedings. There may be cases where the regulation governing the service conditions of an employee may not stipulate providing of such inquiry report. There may also be cases where all particulars contained in the inquiry report were very much available with the delinquent officer and therefore, the furnishing of copies would only become an empty formality. It has been the consistent view of the Hon'ble Apex Court that the principles of natural justice cannot be applied in the straight-jacket formula and the same is flexible based on the circumstances, especially in the circumstances that in recent time, the principle has undergone a sea change.
24. The view that non giving of an opportunity of hearing, while differing with the finding of the Inquiry Officer, is a flagrant violation of the principles of natural justice has been laid down by the Supreme Court in P.D.Agrawal v. State Bank of India and Others, [2006] 8 SCC 776. In almost similar facts to that of the present facts in issue, wherein out of the charges levelled, the Disciplinary Authority wanted to differ in respect of a charge, which was exonerated by the Inquiry Officer and in spite of it, the Disciplinary Authority has given punishment in respect of that charge also and when the Bank raised a similar contention that no prejudice has been caused by omission on the part of the Disciplinary Authority of giving the delinquent an opportunity of hearing, it was held as follows:
"34. Firstly, the effect of the Disciplinary Authority having not given him an opportunity of hearing while differing with the findings of the Inquiry Officer as has been laid down in Punjab National Bank & Ors. vs. Kunj Behari Mishra [(1998) 7 SCC 84] may be noticed.
35. In Ranjit Singh vs. Union of India & Ors. [2006 (4) SCALE 154], following Punjab National Bank (supra), it was held:
"In view of the aforementioned decisions of this Court, it is now well settled that the principles of natural justice were required to be complied with by the Disciplinary Authority. He was also required to apply his mind to the materials on record. The Enquiry Officer arrived at findings which were in favour of the Appellant. Such findings were required to be over turned by the Disciplinary Authority. It is in that view of the matter, the power sought to be exercised by the Disciplinary Authority, although not as that of an appellate authority, but akin thereto. The inquiry report was in favour of the Appellant but the Disciplinary Authority proposed to differ with such conclusions and, thus, apart from complying with the principles of natural justice it was obligatory on his part, in absence of any show cause filed by the Appellant, to analyse the materials on records afresh. It was all the more necessary because even the CBI, after a thorough investigation in the matter, did not find any case against the Appellant and thus, filed a closure report. It is, therefore, not a case where the Appellant was exonerated by a criminal court after a full fledged trial by giving benefit of doubt. It was also not a case where the Appellant could be held guilty in the disciplinary proceedings applying the standard of proof as preponderance of the probability as contrasted with the standard of proof in a criminal trial, i.e., proof beyond all reasonable doubt. When a final form was filed in favour of the Appellant, the CBI even did not find a prima facie case against him. The Disciplinary Authority in the aforementioned peculiar situation was obligated to apply his mind on the materials brought on record by the parties in the light of the findings arrived at by the Inquiry Officer. He should not have relied only on the reasons disclosed by him in his show cause notice which, it will bear repetition to state, was only tentative in nature. As the Appellate Authority in arriving at his finding, laid emphasis on the fact that the Appellant has not filed any objection to the show cause notice; ordinarily, this Court would not have exercised its power of judicial review in such a matter, but the case in hands appears to be an exceptional one as the Appellant was exonerated by the Inquiry Officer. He filed a show cause but, albeit after some time the said cause was available with the Disciplinary Authority before he issued the order of dismissal. Even if he had prepared the order of dismissal, he could have considered the show cause as it did not leave his office by then. The expression "communication" in respect of an order of dismissal or removal from service would mean that the same is served upon the delinquent officer. [See State of Punjab vs. Amar Singh Harika, AIR 1966 SC 1313]"
36. Contention of Mr. Bobde in this behalf that he was not prejudiced thereby cannot be accepted. There has been a flagrant violation of principles of natural justice in so far as no show cause notice was issued to the Appellant by the Disciplinary Authority while differing with the findings of the Inquiry Officer as regard charge No.2. We would deal with this aspect of the matter a little later."
25. Again that was the view of the Supreme Court in Lav Nigam v. Chairman & MD, ITI Ltd. and Another, [2006] 9 SCC 440. In fact, the Supreme Court in that case, while referring to the judgment in Punjab National Bank v. Kunj Behari Misra, [1998] 7 SCC 84 and Yoginath D.Bagde v. State of Maharashtra, [1999] 7 SCC 739, wherein the relevant Bank Officer Employees Regulations and Civil Services Rules did not specifically provide for the Disciplinary Authority giving an opportunity to the delinquent officer before differing with the view of the Inquiry Officer, it was held that the principles of natural justice required the authority to give opportunity to the officer charged of misconduct when he disagrees with the inquiry authority. The operative portion of the said judgment reads as follows:
"10. The conclusion of the High Court was contrary to the consistent view taken by this Court that in case the disciplinary authority differs with the view taken by the inquiry officer, he is bound to give a notice setting out his tentative conclusions to the appellant. It is only after hearing the appellant that the disciplinary authority would at all arrive at a final finding of guilt. Thereafter, the employee would again have to be served with a notice relating to the punishment proposed.
11. In Punjab National Bank v. Kunj Behari Misra, [1998] 7 SCC 84 a Bench of this Court considered Regulation 7(2) of the Punjab National Bank Officer Employees (Discipline and Appeal) Regulations, 1977. The Regulation itself did not provide for the giving of any notice before the disciplinary authority differed with the view of the enquiry officer. This Court held:
The result of the aforesaid discussion would be that the principles of natural justice have to be read into Regulation 7(2). As a result thereof, whenever the disciplinary authority disagrees with the enquiry authority on any article of charge, then before it records its own findings on such charge, it must record its tentative reasons for such disagreement and give to the delinquent officer an opportunity to represent before it records its findings. The report of the enquiry officer containing its findings will have to be conveyed and the delinquent officer will have an opportunity to persuade the disciplinary authority to accept the favourable conclusion of the enquiry officer. The principles of natural justice, as we have already observed, require the authority which has to take a final decision and can impose a penalty, to give an opportunity to the officer charged of misconduct to file a representation before the disciplinary authority records its findings on the charges framed against the officer.
12. This view has been reiterated in Yoginath D. Bagde v. State of Maharashtra, [1999] 7 SCC 739. In this case also Rule 9(2) of the Maharashtra Civil Services (Discipline and Appeal) Rules, 1979 did not specifically provide for a disciplinary authority to give an opportunity of hearing to the delinquent officer before differing with the view of the enquiry officer. The Court said:
But the requirement of hearing in consonance with the principles of natural justice even at that stage has to be read into Rule 9(2) and it has to be held that before the disciplinary authority finally disagrees with the findings of the enquiring authority, it would give an opportunity of hearing to the delinquent officer so that he may have the opportunity to indicate that the findings recorded by the enquiring authority do not suffer from any error and that there was no occasion to take a different view. The disciplinary authority, at the same time, has to communicate to the delinquent officer the TENTATIVE reasons for disagreeing with the findings of the enquiring authority so that the delinquent officer may further indicate that the reasons on the basis of which the disciplinary authority proposes to disagree with the findings recorded by the enquiring authority are not germane and the finding of not guilty already recorded by the enquiring authority was not liable to be interfered with. (See also State Bank of India v. K.P. Narayanan Kutty, [2003] 2 SCC 440.)"
26. As correctly submitted by the learned counsel for the petitioner/appellant, a little difference in fact or additional fact may make a lot of difference in the precedential value of a decision as held in the decision of the Supreme Court in Bhavnagar University v. Palitana Suga Mill (P) Ltd. and Others, [2003] 2 SCC 111.
27. In the light of the consistent view of the Supreme Court in this regard, as it is elicited by the learned Single Judge in the impugned judgment, the different view taken by the learned Single Judge to make the petitioner/appellant liable, based on the observation of the Supreme Court in Union of India v. Vishwa Mohan, referred supra, wherein it was held that the banking business requires devotion, diligence, integrity and honesty, and every bank employee has to act as per the said norms and if and the same is not followed the confidence of the public would be impaired, and the consequential finding that the petitioner/appellant has been served with the copy of the order passed by the Disciplinary Authority and he has also filed a statutory appeal under Rule 33 of the Rules and therefore, the non giving of an opportunity to the delinquent officer by the Disciplinary Authority, while differing from the view of the Inquiry Officer has not caused any prejudice, is not a correct position of law. The mere availability of a statutory appeal right, which is independent, does not mean that in the first stage of disciplinary proceedings the principles of natural justice can be dispensed with. It is true that the principles of natural justice, which cannot be put under a straight-jacket formula, is not an empty formality, but nevertheless it remains to be a necessary ingredient, since the concept of audi alteram partem continues to be the celebrated concept of law.
28. In the facts of the present case, it can never be said that merely because the petitioner/appellant has availed a statutory right of filing an appeal before the first respondent, the legal right, which has been conferred on him based on the principles of natural justice, as stated above, can be dispensed with at the time when the Disciplinary Authority desires to differ from the view of the Inquiry Officer. The giving of an opportunity to the delinquent officer at the time when the Disciplinary Authority proposes to differ from the view of the Inquiry Officer is neither an empty formality nor a principle which can be dispensed with only on the basis that the delinquent officer will have a right of appeal and in the said appeal he can raise this point.
29. Even though the applicability of the concept of natural justice has undergone a sea change in the legal parlour by the advent of principles of no prejudice formula, the said later invention has absolutely no application on the facts of the present case, in the light of the law enunciated by the Hon'ble Supreme Court consistently, as narrated above. In such view of the matter, we do not subscribe to the view of the learned Single Judge in the impugned judgment, in this regard since the same is not the reflection of the correct legal position.
30. In fact the judgment of the Supreme Court in State Bank of India v. K.P.Narayanan Kutty, AIR 2003 SC 1100 is actually in favour of the delinquent officer. In that case the Supreme Court has held that in circumstances wherein the Disciplinary Authority disagrees with some of the findings of the Inquiry Officer, an opportunity of hearing to the delinquent officer is necessary. In fact, the Supreme Court has held that the fact that in the absence of such opportunity no prejudice was caused to the delinquent officer is immaterial.
"4. When asked, learned Senior Counsel for the appellants submitted that Regulation 7(2) of the Punjab National Bank Officer Employees (Discipline and Appeal) Regulations, 1977 referred to in Punjab National Bank case is in pari materia to Rule 50(3)(ii) of the State Bank of India (Supervising Staff) Service Rules governing the facts of the present case with which we are concerned. The contentions advanced by the learned Senior Counsel for the appellant before us are almost similar to the contentions advanced in the case of Punjab National Bank aforementioned. In the case of Punjab National Bank also similar contentions were urged that the Punjab National Bank Officer Employees (Discipline and Appeal) Regulations, 1977 did not require that an opportunity of being heard be given to the delinquent officers when the disciplinary authority disagreed with the finding of the enquiring authority; once the enquiring authority had given hearing to them and if the decision was before Ramzan Khan's case, the disciplinary authority was not required to give the copy of the enquiry report to the delinquent officer. In that view, it was not necessary to give a hearing to the case where the disciplinary authority differs from the enquiry report. A Bench of learned three Judges in the said case has specifically noticed in para 11 as to the controversy that was required to be resolved in that case. The controversy in that case also related to the case where the disciplinary authority disagreed with the findings of the enquiring authority and Regulation 7(2) does not expressly state that when the disciplinary authority disagrees with the finding of the enquiring authority, an opportunity is to be given. After referring to various decisions including the decisions relied on behalf of the Bank, this Court has clearly held that where the disciplinary authority disagrees with the report of the enquiring authority in regard to certain charges, providing of an opportunity is necessary to satisfy the principles of natural justice. Paragraph 19 of the said judgment reads thus:
... The result of the aforesaid discussion would be that the principles of natural justice have to be read into Regulation 7(2). As a result thereof, whenever the disciplinary authority disagrees with the enquiry authority on any article of charge, then before it records its own findings on such charge, it must record its tentative reasons for such disagreement and give to the delinquent officer an opportunity to represent before it records its findings. The report of the enquiry officer containing its findings will have to be conveyed and the delinquent officer will have an opportunity to persuade the disciplinary authority to accept the favourable conclusion of the enquiry officer. The principles of natural justice, as we have already observed, require the authority which has to take a final decision and can impose a penalty, to give an opportunity to the officer charged of misconduct to file a representation before the disciplinary authority records its findings on the charges framed against the officer."
31. It is no doubt true that the other points raised by the learned counsel for the petitioner/appellant also deserve to be considered in this case, even though the same is not necessary due to our finding on the vital legal issue, as stated above.
32. It is not in dispute that in respect of the other officials, who were instrumental in giving opinions, like the legal opinion of the Law Officer in respect of the format of Bank Guarantee, apart from the financial appraisal report given by the Assistant Finance Officer, meagre punishment of censure was awarded. In Akhilesh Kumar Singh v. State of Jharkand and Others, [2008] 2 SCC 74, under similar circumstances, the Supreme Court has held as follows:
"15. It is true that delinquent officers similarly situated should be dealt with similarly and, thus if the charges against the employees are identical, it is desirable that they be dealt with similarly.
....
....
19. Director General of Police v. G. Dayasan, [1998] 2 SCC 407 is a case where respondent therein as also the Head Constable were tried together, but as different punishments having been imposed upon them although they faced identical charges, this Court interfered with the quantum of punishment."
33. While dealing with mixing of major and minor penalties, the Supreme Court in Union of India and Another v. S.C.Parashar, [2006] 3 SCC 167 has held that the action of the Disciplinary Authority in that regard is illegal and without jurisdiction. The operative portion of the said judgment is as follows:
"10. It is not in dispute that sub-Rules (iii) and (iii)(a) of Rule 11 provide for minor penalties whereas clause (v) thereof provides for major penalty. Indisputably the procedure adopted in the departmental proceeding was for imposition of a major penalty. It is trite that even in a case where the procedure followed in the departmental proceedings for imposition of a major penalty, having regard to the facts and circumstances of a case, minor penalty can also be imposed. The question is as to whether the penalty imposed by the President upon taking into consideration the report filed by the Enquiry Officer, was under clauses (iii) and (iii)(a) or clause (v) of Rule 11 of the CCS Rules.
....
....
12. The penalty imposed upon the respondent is an amalgam of minor penalty and major penalty. The respondent has been inflicted with three penalties : (1) reduction to the minimum of the time-scale of pay for a period of three years with cumulative effect; (2) loss of seniority; and (3) recovery of 25% of the loss incurred by the Government to the tune of Rs.74,341.89p., i.e., Rs.18,585.47p. on account of damage to the Gypsy in 18 (eighteen) equal monthly instalments. Whereas reduction of time-scale of pay with cumulative effect is a major penalty within the meaning of clause (v) of Rule 11 of the CCS Rules, loss of seniority and recovery of amount would come within the purview of minor penalty, as envisaged by clause (iii) and (iii)(a) thereof. The Disciplinary Authority, therefore, in our opinion acted illegally and without jurisdiction in imposing both minor and major penalties by the same order. Such a course of action could not have been taken in law."
34. For all the reasons aforesaid, the writ appeal is allowed and the impugned judgment of the learned Single Judge is set aside. No costs. Consequently, M.P.No.1 of 2008 is closed.
sasi