Disciplinary Authority-Cum Regional Manager & Ors Vs. Nikunja Bihari Patnaik
 INSC 543 (15
Reddy, B.P. (J) Jeevan Reddy, B.P. (J) Mukherjee M.K. (J) B.P. Jeevan Reddy,J.
JT 1996 (4) 457 1996 SCALE (3)711
respondent was an officer in Scale-I in the service of the Central Bank of India. While he was working as the Branch
Manager, Paradeep Branch, he was suspended pending enquiry on November 21, 1988. On January 16, 1989, ten charges were communicated to him. He denied all of
them. An Enquiry Officer was appointed who reported, after holding a due
enquiry, that Charges Nos.1, 6, 8 and 9 were established fully while Charges
Nos.2,3,5,7 and 10 were established partially. Charge No.4 was held not
established. On the basis of the said report, the appropriate authority
dismissed the respondent from service. The appeal preferred by the respondent
was dismissed whereupon he approached the Orissa High Court by way of a writ
petition. The High Court has allowed the writ petition holding that the charges
held established against the respondent represent errors of judgment but not
"misconduct". The High Court opined that though the respondent was
guilty of doing many acts beyond his authority, it was not established that it
was done with any ulterior motive or for any extraneous consideration.
the Enquiry Officer has not found that the Bank has actually incurred any loss
on account of the said acts of the respondent, the High Court held, the charge
of misconduct is not established. Accordingly, the writ petition was allowed,
the order of punishment imposed upon the respondent was set aside and the
respondent was directed to be reinstated in service with all consequential
charges framed against the respondent are the following:
The Petitioner took charge of the Branch from 29.9.86. At the time of taking
over charges there were number of overdrafts accounts.
of taking care for adjustment of such advances by constant follow up, he
continued to extend the facility unauthorisedly and without any delegated
powers even exceeding the outstanding balance as on 29.9.86 as a result bank's
interest is likely to be jeopardized.
The petitioner allowed clean overdrafts to several parties without any
delegated authority and much beyond his discretionary powers, violating Central
Office guidelines as a result he has exposed the bank to severe financial risk.
The petitioner allowed drawings in cash credit a/cs much beyond the sanctioned
limits and or enhanced the existing limits in gross violation of his
discretionary powers. As such, there is every likelihood that the bank's
interest may be at stake.
The petitioner sanctioned number of fresh cast. credit limits to different parties
much beyond his lending powers in violation of bank's norms and guidelines
without proper documents and in some cases without any documents.
The petitioner sanctioned a number of Term Loans directly without observing the
bank's rules and guidelines.
The petitioner unauthorisedly issued Bank Guarantee on behalf of different
parties without intimation to R.O. The guarantees were issued and signed by
himself as Br.Manager though on behalf of the Bank. While acting so he had not
taken counter guarantee in some cases.
While allowing unauthorisedly advances/TOD/other loans, the petitioner had not
taken proper documents. Most of the documents taken were blank, undated,
unstamped. Thus he had not safeguarded the interest of the Bank.
The petitioner though made number of unauthorized irregular advances, allowed
clean overdrafts, he had not submitted any Control Returns to the Regional
Office inspite of letters/reminders.
The petitioner allowed clean overdraft in number of accounts even after Regional
Office's specific instructions to stop such practices and stop allowing further
overdrafts. As such willfully he violated instructions of higher authorities
which was an act of insubordination.
In number of borrowal accounts, the petitioner had not done proper follow up
and had no taken due care either for renewal of documents or for obtaining
balance confirmation. As a result, in number of borrowal a/cs the documents
were allowed to go time barred, putting the interest of the bank at jeopardy.
Even in proper time he had not submitted the STF to Regional Office for taking
legal action against such defaulters." In support of Charge No.1 as many
as fifteen instances were cited. While it is not necessary to refer to all
those instances, it is sufficient to mention that in all these cases it has
been found that the respondent acted beyond his authority in allowing the
overdrafts or in passing the cheques, as the case may be. In some cases, the
Bank was benefited by the acts of the respondent while in some other cases, the
concerned amounts became sticky or irrecoverable.
No.2 relates to temporary overdrawals allowed by the respondent beyond his
authority to different parties. A number of instances were cited and held
established. The Enquiry Officer held the charge proved. He also found that in
some cases the Bank stood to gain while in some other cases the concerned
advances had become sticky. Similarly, in respect of Charge No.3, number of
instances were cited.
held that in many cases the respondent allowed drawings/enhanced limits in
excess of the sanctioned limits in violation of his discretionary powers.
Charges Nos.5,6 and 7 speak of the respondent acting beyond his authority.
No.8 says that inspite of reminders, the respondent failed to send
"Control Returns" to the Regional Office.
charge was held fully established. Charge No.9 is to the effect that the
respondent allowed number of accounts and clean overdrafts even after receiving
the instructions of the Regional Office to stop such practice. The Enquiry
Officer found that the respondent had indeed flouted the orders of the Regional
Manager and committed an act of disobedience of lawful orders. The substance of
Charge No.10 is that for want of proper follow up action, a number of borrower
accounts have become time-barred and the prospects of the recovery of bank's
dues have become bleak.
instances were cited in support of this charge.
be remembered that Charges Nos.1,6,8, and 9 were held to have been established
in full while the remaining charges [except charge No.4] were held to be
established in part. It is indeed a matter of surprise that inspite of the
aforesaid findings, the High Court came to the opinion that it is not a case of
misconduct. Regulation 24 of the Central Bank of India Officer Employees' (Displine and Appeal) Regulations, 1976
defines the acts of misconduct in the following words:
Acts of misconduct: A breach of any of the provisions of these regulations
shall be deemed to constitute a misconduct punishable under the Central Bank of
India Officer Employees'(Discipline and
Appeal) Regulations, 1976." Regulation 3 of the said Regulations may also
Every officer employee shall, at all times take all possible steps to ensure
and protect the interest of the bank and discharge his duties with utmost
integrity, honesty, devotion and diligence and do nothing which is uncoming of
a bank officer.
Every officer employee shall maintain good conduct and discipline and show courtesy
and attention to all persons in all transactions and negotiations.
officer employee shall, in the performance of his official duties or in the
exercise of powers conferred on him, act otherwise than in his best judgment
except when he is acting under the direction of his official superior.
Every officer employee shall take all possible steps to ensure the integrity
and devotion to duty of all persons for the time being under his control and
authority." It may be mentioned that in the memorandum of charges, the
aforesaid two regulations are said to have been violated by the respondent.
Regulation 3 requires every officer/employee of the Bank to take all possible
steps to protect the interests of the Bank and to discharge his duties with utmost
integrity, honesty, devotion and diligence and to do nothing which is
unbecoming of a Bank officer. It requires the officer/employee to maintain good
conduct and discipline and to act to the best of his judgment in performance of
his official duties or in exercise of the powers conferred upon him, Breach of
Regulation 3 is "misconduct" within the meaning of Regulation 24. The
findings of the Enquiry Officer which have been accepted by the disciplinary
authority, and which have not been disturbed by the High Court, clearly show
that in number of instances the respondent allowed overdrafts or passed cheques
involving substantial amounts beyond his authority. True, it is that in some
cases, no loss has resulted from such acts. It is also true that in some other
instances such acts have yielded profit to the Bank but it is equally true that
in some other instances, the funds of the Bank have been placed in jeopardy;
the advances have become sticky and irrecoverable. It is not a single act; it
is a course of action spreading over a sufficiently long period and involving a
large number of transactions. In the case of a Bank - for that matter, in the
case of any other organization - every officer/employee is supposed to act
within the limits of his authority. If each officer/ employee is allowed to act
beyond his authority, the discipline of the organisation/bank will disappear;
the functioning of the Bank would become chaotic and unmanageable. Each officer
of the Bank cannot be allowed to carve out his own little empire wherein he
dispenses favours and largesse. No organization, more particularly, a Bank can
function properly and effectively if its officers and employees do not observe
the prescribed norms and discipline. Such indiscipline cannot be condoned on
the specious ground that it was not actuated by ulterior motives or by
extraneous considerations. The very act of acting beyond authority - that too a
course of conduct spread over a sufficiently long period and involving
innumerable instances - is by itself a misconduct. Such acts, if permitted, may
bring in profit in some cases but they may also lead to huge losses. Such
adventures are not given to the employees of Banks which deal with public
funds. If what we hear about the reasons for the collapse of Barings Bank is
true, it is attributable to the acts of one of its employees, Nick Leeson, a
minor officer stationed at Singapore, who
was allowed by his superiors to act far beyond his authority. As mentioned
hereinbefore, the very discipline of an organization and more particularly, a
Bank is dependent upon each of its employees and officers acting and operating
within their allotted sphere. Acting beyond one's authority is by itself a
breach of discipline and a breach of Regulation 3. It constitutes misconduct
within the meaning of Regulation 24. No further proof of loss is really
necessary though as a matter of fact, in this case there are findings that
several advances and over-drawals allowed by the respondent beyond his
authority have become sticky and irrecoverable. Just because, similar acts have
fetched some profit - huge profit, as the High Court characterizes it - they
are no less blameworthy. It is wrong to characterize them as errors of
judgment. It is not suggested that the respondent being a Class-I officer was
not aware of the limits of his authority or of his powers. Indeed, Charge No.9,
which has been held established in full is to the effect that inspite of
instructions by the Regional Office to stop such practice, the respondent
continued to indulge in such acts. The Enquiry Officer has recorded a clear
finding that the respondent did flout the said instructions and has thereby
committed an act of disobedience of lawful orders. Similarly, Charge No.8,
which has also been established in full is to the effect that inspite of
reminders, the respondent did not submit "Control Returns" to the
Regional Office. We fail to understand how could all this be characterized as
errors of judgment and not as misconduct as defined by the regulations. We are
of the opinion that the High Court has committed a clear error in holding that
the aforesaid conduct of the respondent does not amount to misconduct or that
it does not constitute violation of Regulations 3 and 24.
must mention that Sri V.A.Mohta, learned counsel For the respondent, stated
fairly before us that it is not possible for him to sustain the reasoning and
approach of the High Court in this case. His only submission was that having
regard to the age of the respondent [37 years] and the facts and circumstances
of the case, this Court may substitute the punishment awarded to the respondent
by a lesser punishment. The learned counsel suggested that any punishment other
than dismissal may be imposed by this Court. We considered this request with
the care it deserves, but we regret that we are unable to accede to it. Learned
counsel for the Bank, Sri V.R.Reddy, Additional Solicitor General, also stated,
on instructions of the Bank, that it is not possible for the Bank to
accommodate the respondent in its service in view of his conduct.
appeal is accordingly allowed and the judgment of the High Court is set aside.
There shall be no order as to costs.