Y.P.SETHI vs UNION BANK OF INDIA & ORS.

$~83
* IN THE HIGH COURT OF DELHI AT NEW DELHI
% Date of Decision: 2nd September, 2024
+ W.P.(C) 2167/2002
Y.P.SETHI …..Petitioner
Through: Mr. Jaspreet Singh, Mr. Devinder Singh, Mr. Rohit Nagpal, Ms.Sukhdeep Kaur & Ms. Vasudha Gupta, Advocates.

versus

UNION BANK OF INDIA & ORS. …..Respondents
Through: Mr. O.P. Gaggar, Advocate.

CORAM:
HON’BLE MS. JUSTICE JYOTI SINGH
JUDGMENT
JYOTI SINGH, J. (ORAL)
1. This writ petition has been preferred on behalf of the Petitioner challenging order dated 11.02.2000 passed by the Disciplinary Authority whereby major penalty of dismissal from service has been imposed on the Petitioner as well as order dated 24.07.2000 passed by the Appellate Authority dismissing the statutory appeal of the Petitioner. Direction is sought to the Respondents to reinstate the Petitioner with all consequential benefits including increments etc.
2. Facts to the extent necessary are that Petitioner joined the Respondent Bank as Clerk on 09.07.1971 and was promoted as an Officer w.e.f. 01.10.1984. During his tenure at the Shalimar Bagh Branch of the Bank, an inquiry was initiated against the Petitioner in 1992 relating to some ‘deposit oriented accounts’. In May, 1993, Petitioner was suspended, however, suspension was revoked vide order dated 07.12.1994 and Petitioner was posted as Officer-In-Charge of premises under construction for Staff Training College, Gurgaon. In the meantime, charge sheet was issued to the Petitioner on 11.10.1993 and the disciplinary proceedings culminated into an order of dismissal, which was challenged by the Petitioner before the Appellate Authority but the appeal was dismissed.
3. Learned counsel appearing for the Petitioner fairly and candidly admits that re-appreciation of evidence led before the Inquiry Officer is beyond the domain and jurisdiction of this Court exercising power of judicial review under Article 226 of the Constitution of India, for coming to a different finding. Challenge to the penalty order of dismissal is restricted to two grounds: (a) violation of Rule 7(2) of the Union Bank of India Officer Employees’ (Discipline & Appeal) Regulations, 1976 (hereinafter referred to as the ‘1976 Regulations’); and (b) disproportionate punishment.
4. The first contention is that the charges levelled against the Petitioner were not established during the inquiry and the Inquiry Officer (IO) was himself in doubt on the guilt of the Petitioner and therefore while rendering the inquiry report dated 23.05.1997, IO concluded that no mala fide/integrity issue on the part of the Petitioner has been established and Petitioner had no intent to cheat or defraud the Bank. IO also held that no loss of any nature was caused by the conduct of the Petitioner and in this light, the IO himself recommended to the Disciplinary Authority that while passing the final order, it must be kept in mind that the Officer has recently handled a sensitive posting successfully and has already suffered the trauma during last six years by being subjected to an inquiry and suspension. Once the IO rendered these findings, if the Disciplinary Authority wanted to disagree with the findings, it should have recorded its reasons for the disagreement and following the principles of natural justice, should have called upon the Petitioner to make a representation before taking a final decision to impose the penalty of dismissal and thereafter record its own findings on the charge, if the evidence on record was sufficient for the purpose. However, this procedure mandated under Rule 7(2) of 1976 Regulations was completely violated.
5. The second contention is that without application of mind, the extreme penalty of dismissal has been imposed on the Petitioner, which is highly disproportionate to the allegations levelled and/or established during the inquiry, especially keeping in view the findings of the IO that there was no loss to the Bank and Petitioner had no intent to cheat or defraud. Petitioner had rendered an unblemished service of almost 29 years with the Bank which has also been glossed over by the Disciplinary Authority and the penalty imposed deserves to be set aside as it would shock the conscience of any Court. Reliance is placed on the judgment of this Court in Shankar Kumar (Constable) v. Union of India & Ors., 2015 SCC OnLine Del 6835.
6. Per contra, learned counsel for the Respondent argues that there is no violation of Rule 7(2) of 1976 Regulations as the same mandates that the Disciplinary Authority shall record its own findings on the charge only where it disagrees with the findings of the IO on any Article of Charge but in the present case, IO has held the charge to be proved and Disciplinary Authority has agreed with the findings of the IO and therefore, there is no violation of Rule 7(2), as alleged. Insofar as the second contention of the Petitioner is concerned, it is argued that the allegations against the Petitioner in the Articles of Charge were grave and serious involving participation in the conduct of the benami account of M/s. Supreme Electronics which was opened on 07.04.1989 with one Sh. Pawan Kumar as proprietor. It was found that neither any firm by this name nor any such person existed at the address given in the account opening form. From the said form, it was evident that the account was opened on 12.04.1989 in the name of the firm through the Petitioner as the person who introduced the proprietor. There were mostly cash transactions of huge amounts and the operations were done by the Petitioner and these amounts were deposited at the Delhi Cantonment Branch of the Bank, where a similar benami account was opened in the name of the same firm with the proprietor being Sh. Ruli Ram Sharma. This modus operandi was repeated for opening of accounts in various branches. Large number of accounts were opened by the Petitioner in the names of his relatives/family members and funds were transferred from these accounts to the accounts of the firm. The statement of imputation shows details of transactions and the benami accounts which was a serious misconduct on the part of the Petitioner and the charges stood established during the inquiry. Therefore, it is incorrect for the Petitioner to even urge that the penalty of dismissal is disproportionate.
7. Heard learned counsels for the parties and examined the contentions raised.
8. There is no cavil on the proposition that scope of judicial scrutiny by the Courts is extremely limited in disciplinary matters and the Courts’ interference is warranted in cases where there is no evidence or there are violations of principles of natural justice and/or rules of procedure or where the punishment is so disproportionate that it shocks the conscience of the Court, to illustrate a few. [Ref. B.C. Chaturvedi v. Union of India and Others, (1995) 6 SCC 749]. Conscious of this legal proposition, learned counsel for the Petitioner has fairly restricted his arguments to alleged violation of Rule 7(2) of 1976 Regulations and proportionality of punishment.
9. Coming to the first plank of the argument and examining Rule 7(2) of 1976 Regulations, Court does not find merit in this argument. Rule 7(2) is extracted hereunder, for ready reference:-
“7(2) The Disciplinary Authority shall, if it is disagrees with the findings of the Inquiring Authority on any article of charge, record its reasons for such disagreement and record its own findings on such charge, if the evidence on record is sufficient for the purpose.”

10. A plain reading of the Rule shows that only where the Disciplinary Authority disagrees with the findings of the IO on any Article of Charge, it is required to record its reasons for such disagreement and then record its own findings on such charge, if the evidence on record is sufficient for the purpose. In the present case, the allegations in the Articles of Charge, as noted above, related to opening of benami bank accounts in the name of the firm M/s. Supreme Electronics as well as in the name of the relatives and family members of the Petitioner, which were opened by the Petitioner and wherein the transactions were carried out by him. After the evidence was led, IO rendered his report on 23.06.1997, holding the Petitioner guilty of the misconduct, limited to his role: (a) doing acts unbecoming of a bank officer; (b) failure to discharge his duty with devotion and diligence; and (c) failure to take all possible steps to ensure and protect the interests of the Bank. In other words, IO held the charges to be proved. Disciplinary Authority agreed with the IO and after a detailed analysis of the evidence on record and IO’s report, imposed the penalty of dismissal on the Petitioner vide order dated 11.02.2000. Therefore, it is not a case where IO held the charge as ‘not proved’ and Disciplinary Authority disagreed with the IO. On the contrary, Disciplinary Authority agreed with the findings of the IO and imposed the penalty of dismissal. Rule 7(2) of 1976 Regulations is therefore wholly inapplicable to the present case and it cannot be argued by the Petitioner that the said Rule has been violated. Petitioner has largely predicated his case on the observations of the IO that Petitioner had no mala fide intent to cause any loss to the Bank and/or that since no loss has been caused to the Bank, the Disciplinary Authority while passing the final orders may keep into account the said fact coupled with the fact that Petitioner had undergone the trauma of suspension and inquiry and soon after revocation of suspension, an important assignment of handling a construction project was placed under his charge. While this Court refrains from commenting on the power of an IO to recommend a lesser punishment, suffice would it be to note that the IO after having held the charge to be proved merely gave certain suggestions to the Disciplinary Authority, to be kept in mind while taking a decision on the quantum of penalty and this cannot be construed as the IO’s findings on the charge. This contention is thus rejected.
11. Coming to the next and the only other argument of the Petitioner that penalty of dismissal is disproportionate to the allegations, while learned counsel for the Petitioner urges that the penalty be reduced, counsel for the Respondent justifies the penalty by arguing that the proved allegations are grave and serious. Counsel for the Petitioner places reliance on the judgment of a Division Bench of this Court in Shankar Kumar (Constable) (supra), in this context. In the said judgment, the Division Bench took note of the settled principles on proportionality of punishment and observed that in exercise of power of judicial review, Courts would not normally substitute their conclusions on the quantum of punishment unless the punishment shocks the conscience of the Court in the sense that it defies logic or rationality on the face of it. There is no cavil to this proposition and in this context, I may also allude to the judgments in Ranjit Thakur v. Union of India and Others, (1987) 4 SCC 611 and V. Ramana v. A.P. SRTC and Others, (2005) 7 SCC 338. The principles that emerge from these judgments of the Supreme Court are that while examining the issue of proportionality of punishment, Court can consider the circumstances under which the misconduct was committed and interference in the quantum would be warranted only if it is found that the punishment is not commensurate with the gravity of the charges. In Union of India and Another v. G. Ganayutham, (1997) 7 SCC 463, the Supreme Court elaborately considered the doctrine of proportionality, both under the Administrative Law in England and in India and summed up the position of law as under:-
“31.  The current position of proportionality in administrative law in England and India can be summarised as follows:
(1) To judge the validity of any administrative order or statutory discretion, normally the Wednesbury test is to be applied to find out if the decision was illegal or suffered from procedural improprieties or was one which no sensible decision-maker could, on the material before him and within the framework of the law, have arrived at. The court would consider whether relevant matters had not been taken into account or whether irrelevant matters had been taken into account or whether the action was not bona fide. The court would also consider whether the decision was absurd or perverse. The court would not however go into the correctness of the choice made by the administrator amongst the various alternatives open to him. Nor could the court substitute its decision to that of the administrator. This is the Wednesbury [(1948) 1 KB 223 : (1947) 2 All ER 680] test.
(2) The court would not interfere with the administrator’s decision unless it was illegal or suffered from procedural impropriety or was irrational — in the sense that it was in outrageous defiance of logic or moral standards. The possibility of other tests, including proportionality being brought into English administrative law in future is not ruled out. These are the CCSU [1985 AC 374 : (1984) 3 All ER 935] principles.
(3)(a) As per Bugdaycay [R. v. Ministry of Defence, ex p Smith, (1996) 1 All ER 257] , Brind [(1991) 1 AC 696 : (1991) 1 All ER 720] and Smith [Cunliffe v. Commonwealth, [(1994) 68 Aust LJ 791] (at 827, 839) (also 799, 810, 821), Australian Capital Tel. Co. v. Commonwealth, 1992 CL p. 106 (at 157) (Aus), R. v. Oake, 1987 Law Reports of Commonwealth 477 (at 500) (Can), R. v. Big M Drug Mart Ltd., (1985) 1 SCR 295 (Can)] as long as the Convention is not incorporated into English law, the English courts merely exercise a secondary judgment to find out if the decision-maker could have, on the material before him, arrived at the primary judgment in the manner he has done.
(3)(b) If the Convention is incorporated in England making available the principle of proportionality, then the English courts will render primary judgment on the validity of the administrative action and find out if the restriction is disproportionate or excessive or is not based upon a fair balancing of the fundamental freedom and the need for the restriction thereupon.
(4)(a) The position in our country, in administrative law, where no fundamental freedoms as aforesaid are involved, is that the courts/tribunals will only play a secondary role while the primary judgment as to reasonableness will remain with the executive or administrative authority. The secondary judgment of the court is to be based on Wednesbury and CCSU principles as stated by Lord Greene and Lord Diplock respectively to find if the executive or administrative authority has reasonably arrived at his decision as the primary authority.
(4)(b) Whether in the case of administrative or executive action affecting fundamental freedoms, the courts in our country will apply the principle of “proportionality” and assume a primary role, is left open, to be decided in an appropriate case where such action is alleged to offend fundamental freedoms. It will be then necessary to decide whether the courts will have a primary role only if the freedoms under Articles 19, 21 etc. are involved and not for Article 14.
Punishment in disciplinary matters: Wednesbury and CCSU tests
32.  Finally, we come to the present case. It is not contended before us that any fundamental freedom is affected. We need not therefore go into the question of “proportionality”. There is no contention that the punishment imposed is illegal or vitiated by procedural impropriety. As to “irrationality”, there is no finding by the Tribunal that the decision is one which no sensible person who weighed the pros and cons could have arrived at nor is there a finding, based on material, that the punishment is in “outrageous” defiance of logic. Neither Wednesbury nor CCSU tests are satisfied. We have still to explain “Ranjit Thakur [(1987) 4 SCC 611 : 1987 SCC (L&S) 1 : (1987) 5 ATC 113] ”.
33.  In Ranjit Thakur [(1987) 4 SCC 611 : 1987 SCC (L&S) 1 : (1987) 5 ATC 113] this Court interfered with the punishment only after coming to the conclusion that the punishment was in outrageous defiance of logic and was shocking. It was also described as perverse and irrational. In other words, this Court felt that, on facts, Wednesbury and CCSU tests were satisfied. In another case, in B.C. Chaturvedi v. Union of India [(1995) 6 SCC 749 : 1996 SCC (L&S) 80 : (1996) 32 ATC 44] a three-Judge Bench said the same thing as follows: (SCC p. 762, para 18)
“18. … The High Court/Tribunal, while exercising the power of judicial 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 authority/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.”
Similar view was taken in Indian Oil Corpn. Ltd. v. Ashok Kumar Arora [(1997) 3 SCC 72 : 1997 SCC (L&S) 636] that the Court will not intervene unless the punishment is wholly disproportionate.
34.  In such a situation, unless the court/tribunal opines in its secondary role, that the administrator was, on the material before him, irrational according to Wednesbury [(1948) 1 KB 223 : (1947) 2 All ER 680] or CCSU [1985 AC 374 : (1984) 3 All ER 935] norms, the punishment cannot be quashed. Even then, the matter has to be remitted back to the appropriate authority for reconsideration. It is only in very rare cases as pointed out in B.C. Chaturvedi case [AIR 1961 SC 418 : (1961) 2 SCR 343] that the Court might — to shorten litigation — think of substituting its own view as to the quantum of punishment in the place of the punishment awarded by the competent authority. (In B.C. Chaturvedi [AIR 1961 SC 418 : (1961) 2 SCR 343] and other cases referred to therein it has however been made clear that the power of this Court under Article 136 is different.) For the reasons given above, the case cited for the respondent, namely, State of Maharashtra v. M.H. Mazumdar [(1988) 2 SCC 52 : 1988 SCC (L&S) 436 : (1988) 6 ATC 876] cannot be of any help.”

12. In Coimbatore District Central Cooperative Bank v. Coimbatore District Central Cooperative Bank Employees Assn. and Another, (2007) 4 SCC 669, the Supreme Court held as under:-
“Doctrine of proportionality
17.  So far as the doctrine of proportionality is concerned, there is no gainsaying that the said doctrine has not only arrived in our legal system but has come to stay. With the rapid growth of administrative law and the need and necessity to control possible abuse of discretionary powers by various administrative authorities, certain principles have been evolved by courts. If an action taken by any authority is contrary to law, improper, irrational or otherwise unreasonable, a court of law can interfere with such action by exercising power of judicial review. One of such modes of exercising power, known to law is the “doctrine of proportionality”.
18.  “Proportionality” is a principle where the court is concerned with the process, method or manner in which the decision-maker has ordered his priorities, reached a conclusion or arrived at a decision. The very essence of decision-making consists in the attribution of relative importance to the factors and considerations in the case. The doctrine of proportionality thus steps in focus true nature of exercise—the elaboration of a rule of permissible priorities.
19.  de Smith states that “proportionality” involves “balancing test” and “necessity test”. Whereas the former (balancing test) permits scrutiny of excessive onerous penalties or infringement of rights or interests and a manifest imbalance of relevant considerations, the latter (necessity test) requires infringement of human rights to the least restrictive alternative. [Judicial Review of Administrative Action (1995), pp. 601-05, para 13.085; see also Wade & Forsyth: Administrative Law (2005), p. 366.]
20.  In Halsbury’s Laws of England (4th Edn.), Reissue, Vol. 1(1), pp. 144-45, para 78, it is stated:
“The court will quash exercise of discretionary powers in which there is no reasonable relationship between the objective which is sought to be achieved and the means used to that end, or where punishments imposed by administrative bodies or inferior courts are wholly out of proportion to the relevant misconduct. The principle of proportionality is well established in European law, and will be applied by English courts where European law is enforceable in the domestic courts. The principle of proportionality is still at a stage of development in English law; lack of proportionality is not usually treated as a separate ground for review in English law, but is regarded as one indication of manifest unreasonableness.”
21.  The doctrine has its genesis in the field of administrative law. The Government and its departments, in administering the affairs of the country, are expected to honour their statements of policy or intention and treat the citizens with full personal consideration without abuse of discretion. There can be no “pick and choose”, selective applicability of the government norms or unfairness, arbitrariness or unreasonableness. It is not permissible to use a “sledgehammer to crack a nut”. As has been said many a time; “where paring knife suffices, battle axe is precluded”.
22.  In the celebrated decision of Council of Civil Service Union v. Minister for Civil Service [1985 AC 374 : (1984) 3 WLR 1174 : (1984) 3 All ER 935 (HL)] Lord Diplock proclaimed: (All ER p. 950h-j)
“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 the grounds on 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’. That 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’….”
(emphasis supplied)
23. CCSU [1985 AC 374 : (1984) 3 WLR 1174 : (1984) 3 All ER 935 (HL)] has been reiterated by English courts in several subsequent cases. We do not think it necessary to refer to all those cases.
24.  So far as our legal system is concerned, the doctrine is well settled. Even prior to CCSU [1985 AC 374 : (1984) 3 WLR 1174 : (1984) 3 All ER 935 (HL)] , this Court has held that if punishment imposed on an employee by an employer is grossly excessive, disproportionately high or unduly harsh, it cannot claim immunity from judicial scrutiny, and it is always open to a court to interfere with such penalty in appropriate cases.
25.  In Hind Construction & Engg. Co. Ltd. v. Workmen [AIR 1965 SC 917 : (1965) 2 SCR 85] , some workers remained absent from duty treating a particular day as holiday. They were dismissed from service. The Industrial Tribunal set aside the action. This Court held that the absence could have been treated as leave without pay. The workmen might have been warned and fined. (But)
“It is impossible to think that any other reasonable employer would have imposed the extreme punishment of dismissal on its entire permanent staff in this manner.” (AIR p. 919, para 7)
(emphasis supplied)
The Court concluded that the punishment imposed on the workmen was
“not only severe and out of proportion to the fault, but one which, in our judgment, no reasonable employer would have imposed”. (AIR pp. 919-20, para 7)
(emphasis supplied)
26.  In Federation of Indian Chambers of Commerce and Industry  v. Workmen [(1972) 1 SCC 40 : AIR 1972 SC 763] , the allegation against the employee of the Federation was that he issued legal notices to the Federation and to the International Chamber of Commerce which brought discredit to the Federation—the employer. Domestic inquiry was held against the employee and his services were terminated. The punishment was held to be disproportionate to the misconduct alleged and established. This Court observed that: (SCC p. 62, para 34)
“[T]he Federation had made a mountain out of a mole hill and made a trivial matter into one involving loss of its prestige and reputation.”
27.  In Ranjit Thakur [(1987) 4 SCC 611 : 1988 SCC (L&S) 1] referred to earlier, an army officer did not obey the lawful command of his superior officer by not eating food offered to him. Court-martial proceedings were initiated and a sentence of rigorous imprisonment of one year was imposed. He was also dismissed from service, with added disqualification that he would be unfit for future employment.
28.  Applying the doctrine of proportionality and following CCSU [1985 AC 374 : (1984) 3 WLR 1174 : (1984) 3 All ER 935 (HL)] , Venkatachaliah, J. (as His Lordship then was) observed: (SCC p. 620, para 25)
“The question of the choice and quantum of punishment is within the jurisdiction and discretion of the court martial. But the sentence has to suit the offence and the offender. It should not be vindictive or unduly harsh. It should not be so disproportionate to the offence as to shock the conscience and amount in itself to conclusive evidence of bias. The doctrine of proportionality, as part of the concept of judicial review, would ensure that even on an aspect which is, otherwise, within the exclusive province of the court martial, if the decision of the court even as to sentence is an outrageous defiance of logic, then the sentence would not be immune from correction. Irrationality and perversity are recognised grounds of judicial review.”
(emphasis supplied)
13. Keeping these principles as a guiding light, I may now examine if the Petitioner has made out a case for interference with the penalty of dismissal imposed on him on the ground of proportionality. Certain facts need to be noted at this stage. Petitioner served the Bank for almost three decades before the dismissal order was passed on 11.02.2000 and it is not the Bank’s case that his service prior to the said charge sheet was blemished. Petitioner was suspended but the suspension was revoked by the Bank and he was soon thereafter given the charge of a construction project, which was a sensitive job. Significantly, the IO has in his report observed that Petitioner had no mala fide intent to cheat or cause loss to the Bank albeit he should have exercised restraint in carrying out the transactions, being a senior officer. There is another pertinent fact that needs to be taken note of at this stage. When the writ petition came up for hearing on 21.12.2016, Court passed an order noting certain factors, which in the prima facie opinion of the Court merited lesser punishment than dismissal and encapsulating those factors, Court directed the Competent Authority to re-consider the quantum of punishment. Pursuant to the order, Disciplinary Authority re-considered the matter and passed a fresh order on 15.04.2017, which is handed over in Court by counsel for the Respondent and is taken on record. Perusal of this order shows that none of the factors noted by the Court in the order dated 21.12.2016, were considered and the Disciplinary Authority merely reiterated its stand predicated on the gravity of the charges. Even the aspect that no loss was caused to the Bank or that Petitioner had not cheated the Bank and had rendered an unblemished service of 29 years was not taken into consideration. In my view, Petitioner has made out a case for reconsideration of the quantum of penalty on ground of the same being disproportionate.
14. Accordingly, this writ petition is disposed of upholding the charge sheet and the Inquiry Report but with a limited direction to the Disciplinary Authority to revisit the penalty of dismissal, taking into account the factors as mentioned in the order dated 21.12.2016 and reiterated above by this Court. The decision will be taken by the Disciplinary Authority within a period of 8 weeks from the date of receipt of this order and needless to state that will be in accordance with law and uninfluenced by the dismissal order dated 11.02.2000 and the second order dated 15.04.2017. The order so passed will be a reasoned and speaking order and shall be communicated to the Petitioner within one week from the decision and Petitioner will be at liberty to take recourse to legal remedies, in case of any surviving grievance. At this stage, this Court is apprised that the Petitioner has retired and his current residential address is not available with the Bank. In order to resolve this issue, Petitioner shall furnish his current address by an e-mail to Personnel Department, Field General Manager’s Office, Konnectus Tower, Opposite New Delhi Railway Station, Bhavbhuti Marg, New Delhi and the Bank shall communicate the order on the address so furnished.

JYOTI SINGH, J
SEPTEMBER 2, 2024
B.S. Rohella/shivam/DU

W.P.(C) 2167/2002 Page 15 of 15