United Commercial Bank & Ors Vs. P.C. Kakkar
 Insc 67 (11 February 2003)
Shivaraj V. Patil & Arijit Pasayat Arijit Pasayat
Appeal (civil) 1185 of 2003 P.C. Kakkar Chairman
and Managing Director, United Commercial Bank and Ors.
Leave granted in S.L.P (C) No. 883 of 2000.
Both these appeals relate to judgment of the Allahabad High Court dated
7.9.1999 and are, therefore, disposed of by this common judgment. The primary
question involved is the scope of interference in the matter of punishment by
the High Court.
Factual background in a nutshell is as follows:
Disciplinary proceedings were initiated by the
United Commercial Bank (hereinafter referred to as 'the employer') against P.C.
Kakkar (hereinafter referred to as 'the employee). It was alleged that he had
committed several acts of misconduct while functioning as Assistant Manager of Mirzapur
Branch. He was placed under suspension w.e.f. 6.7.1983. The disciplinary
proceedings were initiated in terms of United Commercial Bank Officer Employees
(Conduct, Discipline and Appeal) Regulation 1976 (hereinafter referred to as
'the regulation'). The charges were found established in respect of charge nos.
1, 2, 3, 6, 7 and 8. On the basis of findings recorded by the Inquiry Officer
and as endorsed by the Disciplinary Authority, order of dismissal was passed on
16.8.1988. Appeal preferred by the employee before the prescribed appellate
authority did not bring any relief.
Similar was the fate of the review application.
Matter was carried in writ petition before the Allahabad High Court.
As noticed by the High Court, there was no
challenge to the findings recorded, and what was urged related to the quantum
of punishment. One of the points highlighted to question the quantum of
punishment was that in a similar situation, lesser punishment was imposed on
one M.L. Keshwani though the allegations against him were of much serious
The High Court accepted the plea and, inter alia,
directed as follows:- "The Supreme Court has held in several cases that
there should be no discrimination in the matter of punishment vide Sangram
Singh Versus State of Punjab (1983 (4) SCC 225).
On the facts of the case we are of the opinion
that the punishment given to the petitioner was misappropriate and excessive.
Hence while we uphold finding of guilt. We quash
the orders dated 16.8.1988 and the order dated 11.10.1989 and 5.2.1990 and
direct that the petitioner shall be reinstated in service within six weeks of
production of certified copy of this order before the authority concerned but
he will be given a lesser punishment. Since the matter has been pending for a
long time we direct that the petitioner will be given the punishment of being
deprived of 75% of salary for the period from the date of removal to the date
of reinstatement and he will be given a severe warning not to make such
mistakes in future but he will get seniority and continuity of service as if
his service had not been terminated." According to learned counsel for the
employer, after having found that the charges were established the High Court
committed an error in interfering with the quantum of punishment. The scope of
such interference is extremely limited. After having noted that there was no
challenge to the findings, there was no scope for interfering with the quantum
of punishment. Some of the charges were of very serious nature and one of the
charges related to fabrication and manipulation of records. It is pointed out
that even if a co-delinquent has been given lesser punishment, same cannot be a
ground for interference. The employee was acting as Assistant Manager in the
Bank and committed the acts of misconduct. Taking into account the higher
standard of honesty and integrity required by such employees any interference
with the quantum of punishment would amount to misplaced sympathy. According to
Mr. Ranjit Kumar, learned counsel appearing for the employee, there were
several mitigating circumstances. It was categorically urged that there was no
embezzlement or fraud and there was no loss caused to the Bank. The allegations
of fictitious entries were found not to have been established in a criminal
case which was initiated by the Central Bureau of Investigation and the
employee was acquitted of the charge. Further case on which the High Court has
placed reliance involved more serious allegations and even if the allegations
so far as other officer M.L. Keshwani and the employee can be differentiated,
yet it has to be noted that the High Court imposed more severe punishment
compared to M.L. Keshwani.
The scope of interference with quantum of
punishment has been the subject-matter of various decisions of this Court. Such
interference cannot be a routine matter.
Lord Greene said in 1948 in the famous Wednesbury
case (1948 (1) KB 223) that when a statute gave discretion to an administrator
to take a decision, the scope of judicial review would remain limited. He said
that interference was not permissible unless one or the other of the following
conditions was satisfied, namely the order was contrary to law, or relevant
factors were not considered, or irrelevant factors were considered; or the
decision was one which no reasonable person could have taken. These principles
were consistently followed in the UK and in India to judge the validity of administrative action.
It is equally well known that in 1983, Lord Diplock in Council for Civil
Services Union v. Minister of Civil Service [(1983) 1 AC 768] (called the CCSU
case) summarized the principles of judicial review of administrative action as
based upon one or other of the following viz., illegality, procedural
irregularity and irrationality. He, however, opined that
"proportionality" was a "future possibility".
In Om Kumar and Ors. v. Union of India (2001 (2) SCC 386, this
Court observed, inter alia, as follows:
"The principle originated in Prussia in the nineteenth
century and has since been adopted in Germany, France and other European countries. The European
Court of Justice at Luxembourg and the European Court of Human Rights at Strasbourg have applied the
principle while judging the validity of administrative action. But even long
before that, the Indian Supreme Court has applied the principle of
"proportionality" to legislative action since 1950, as stated in
By "proportionality", we mean the
question whether, while regulating exercise of fundamental rights, the
appropriate or least-restrictive choice of measures has been made by the
legislature or the administrator so as to achieve the object of the legislation
or the purpose of the administrative order, as the case may be.
Under the principle, the court will see that the
legislature and the administrative authority "maintain a proper balance
between the adverse effects which the legislation or the administrative order
may have on the rights, liberties or interests of persons keeping in mind the
purpose which they were intended to serve". The legislature and the
administrative authority are, however, given an area of discretion or a range
of choices but as to whether the choice made infringes the rights excessively
or not is for the court. That is what is meant by proportionality.
xxx xxx xxx xxx xxx The development of the
principle of "strict scrutiny" or "proportionality" in
administrative law in England is, however, recent. Administrative action was traditionally
being tested on Wednesbury grounds. But in the last few years, administrative
action affecting the freedom of expression or liberty has been declared invalid
in several cases applying the principle of "strict scrutiny". In the
case of these freedoms, Wednesbury principles are no longer applied. The courts
in England could not expressly
apply proportionality in the absence of the convention but tried to safeguard
the rights zealously by treating the said rights as basic to the common law and
the courts then applied the strict scrutiny test. In the Spycatcher case
Attorney General v. Guardian Newspapers Ltd. (No.2) (1990) 1 AC 109 (at pp.
283-284), Lord Goff stated that there was no inconsistency between the
convention and the common law.
In Derbyshire County Council v. Times Newspapers
Ltd. (1993) AC 534, Lord Keith treated freedom of expression as part of common
law. Recently, in R. v. Secy. Of State for Home Deptt., ex p. Simms (1999) 3
All ER 400 (HL), the right of a prisoner to grant an interview to a journalist
was upheld treating the right as part of the common law.
Lord Hobhouse held that the policy of the
administrator was disproportionate. The need for a more intense and anxious
judicial scrutiny in administrative decisions which engage fundamental human
rights was re- emphasised in in R. v. Lord Saville ex p (1999) 4 All ER 860
(CA), at pp.870,872) . In all these cases, the English Courts applied the
"strict scrutiny" test rather than describe the test as one of
"proportionality". But, in any event, in respect of these rights
"Wednesbury" rule has ceased to apply.
However, the principle of "strict
scrutiny" or "proportionality" and primary review came to be
explained in R. v. Secy. of State for the Home Deptt. ex p Brind (1991) 1 AC
696. That case related to directions given by the Home Secretary under the
Broadcasting Act, 1981 requiring BBC and IBA to refrain from broadcasting
certain matters through persons who represented organizations which were
proscribed under legislation concerning the prevention of terrorism. The extent
of prohibition was linked with the direct statement made by the members of the
organizations. It did not however, for example, preclude the broadcasting by
such persons through the medium of a film, provided there was a
"voice-over" account, paraphrasing what they said. The applicant's
claim was based directly on the European Convention of Human Rights. Lord Bridge noticed that the
Convention rights were not still expressly engrafted into English law but
stated that freedom of expression was basic to the Common law and that, even in
the absence of the Convention, English Courts could go into the question (see
".....whether the Secretary of State, in
the exercise of his discretion, could reasonably impose the restriction he has
imposed on the broadcasting organisations" and that the courts were
"not perfectly entitled to start from the premise that any restriction of
the right to freedom of expression requires to be justified and nothing less
than an important public interest will be sufficient to justify it".
Lord Templeman also said in the above case that
the courts could go into the question whether a reasonable minister could
reasonably have concluded that the interference with this freedom was
justifiable. He said that "in terms of the Convention" any such
interference must be both necessary and proportionate (ibid pp. 750-51).
In the famous passage, the seeds of the
principle of primary and secondary review by courts were planted in the
administrative law by Lord Bridge in the Brind case (1991) 1 AC 696. Where Convention rights were
in question the courts could exercise a right of primary review. However, the
courts would exercise a right of secondary review based only on Wednesbury
principles in cases not affecting the rights under the Convention.
Adverting to cases where fundamental freedoms
were not invoked and where administrative action was questioned, it was said
that the courts were then confined only to a secondary review while the primary
decision would be with the administrator. Lord Bridge explained the primary and secondary review as
"The primary judgment as to whether the
particular competing public interest justifying the particular restriction
imposed falls to be made by the Secretary of State to whom Parliament has
entrusted the discretion.
But, we are entitled to exercise a secondary
judgment by asking whether a reasonable Secretary of State, on the material
before him, could reasonably make the primary judgment." But where an
administrative action is challenged as "arbitrary" under Article 14
on the basis of Royappa (1974) 4 SCC 3 (as in cases where punishments in
disciplinary cases are challenged), the question will be whether the
administrative order is "rational" or "reasonable" and the
test then is the Wednesbury test. The courts would then be confined only to a
secondary role and will only have to see whether the administrator has done
well in his primary role, whether he has acted illegally or has omitted
relevant factors from consideration or has taken irrelevant factors into
consideration or whether his view is one which no reasonable person could have
taken. If his action does not satisfy these rules, it is to be treated as
arbitrary. In G.B. Mahajan v. Jalgaon Municipal Council (1991) 3 SCC 91 at p.
111 Venkatachaliah, J. (as he then was) pointed out that
"reasonableness" of the administrator under Article 14 in the context
of administrative law has to be judged from the stand point of Wednesbury
In Tata Cellular v. Union of India (1994) 6 SCC
651 at pp. 679-80), Indian Express Newspapers Bombay (P) Ltd. v. Union of India
(1985) 1 SCC 641 at p.691), Supreme Court Employees' Welfare Assn. V. Union of India (1989) 4 SCC 187 at p.
241) and U.P. Financial Corpn. V. Gem Cap(India) (P) Ltd. (1993) 2 SCC 299 at
p. 307) while judging whether the administrative action is
"arbitrary" under Article 14 (i.e. otherwise then being
discriminatory), this Court has confined itself to a Wednesbury review always.
The principles explained in the last preceding
paragraph in respect of Article 14 are now to be applied here where the
question of "arbitrariness" of the order of punishment is questioned
under Article 14.
xxx xxx xxx xxx xxx Thus, from the above
principles and decided cases, it must be held that where an administrative
decision relating to punishment in disciplinary cases is questioned as
"arbitrary" under Article 14, the court is confined to Wednesbury
principles as a secondary reviewing authority. The court will not apply
proportionality as a primary reviewing court because no issue of fundamental
freedoms nor of discrimination under Article 14 applies in such a context. The
court while reviewing punishment and if it is satisfied that Wednesbury
principles are violated, it has normally to remit the matter to the
administrator for a fresh decision as to the quantum of punishment. Only in
rare cases where there has been long delay in the time taken by the
disciplinary proceedings and in the time taken in the courts, and such extreme
or rare cases can the court substitute its own view as to the quantum of
punishment." In B.C. Chaturvedi vs. Union of India and Ors. (1995  SCC 749) it was observed:
"A review of the above legal position would
establish that the disciplinary authority, and on appeal the appellate
authority, being fact-finding authorities have exclusive power to consider the
evidence with a view to maintain discipline. They are invested with the
discretion to impose appropriate punishment keeping in view the magnitude or
gravity of the misconduct. 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/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." In Union of India and Anr. vs. G. Ganayutham
(1997  SCC 463), this Court summed up the position relating to
proportionality in paragraphs 31 and 32, which read as follows:
"The current position of proportionality in
administrative law in England and India can be summarized 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) 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) principles.
(3)(a) As per Bugdaycay (1987 AC 514), Brind
(1991 (1) AC 696) and Smith (1996 (1) All ER 257) 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
(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
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.
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  SCC
The common thread running through in all these
decisions is that the Court should not interfere with the administrator's
decision unless it was illogical or suffers from procedural impropriety or was
shocking to the conscience of the Court, in the sense that it was in defiance
of logic or moral standards. In view of what has been stated in the Wednesbury's
case (supra) the Court would not go into the correctness of the choice made by
the administrator open to him and the Court should not substitute its decision
to that of the administrator. The scope of judicial review is limited to the
deficiency in decision-making process and not the decision.
To put difference unless the punishment imposed
by the Disciplinary Authority or the Appellate Authority shocks the conscience
of the Court/Tribunal, there is no scope for interference. Further to certain
litigations it may, in exceptional and rare cases, impose appropriate
punishment by recording cogent reasons in support thereof. In a normal course
if the punishment imposed is shockingly disproportionate it would be
appropriate to direct the Disciplinary Authority or the Appellate Authority to
reconsider the penalty imposed.
In the case at hand the High Court did not
record any reason as to how and why it found the punishment shockingly disproportionate.
Even there is no discussion on this aspect. The only discernible reason was the
punishment awarded in M.L. Keshwani's case. As was observed by this Court in Balbir
Chand vs. Food Corporation of India Ltd. and Ors.(1997  SCC 371), even if a
co-delinquent is given lesser punishment it cannot be a ground for
Even such a plea was not available to be given
credence as the allegations were contextually different.
A Bank officer is required to exercise higher
standards of honesty and integrity. He deals with money of the depositors and
the customers. Every officer/employee of the Bank is required 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. Good conduct and discipline are inseparable
from the functioning of every officer/employee of the Bank. As was observed by
this Court in Disciplinary Authority-cum-Regional Manager v. Nikunja Bihari Patnaik
(1996 (9) SCC 69), it is no defence available to say that there was no loss or
profit resulted in case, when the officer/employee acted without authority. The
very discipline of an organization more particularly a Bank is dependent upon
each of its officers and officers acting and operating within their allotted
sphere. Acting beyond one's authority is by itself a breach of discipline and
is a misconduct. The charges against the employee were not casual in nature and
were serious. These aspects do not appear to have been kept in view by the High
It needs no emphasis that when a Court feels
that the punishment is shockingly disproportionate, it must record reasons for
coming to such a conclusion. Mere expression that the punishment is shockingly
disproportionate would not meet the requirement of law. Even in respect of
administrative orders Lord Denning M.R. in Breen v. Amalgamated Engineering
Union (1971 (1) All E.R. 1148) observed "The giving of reasons is one of
the fundamentals of good administration". In Alexander Machinery (Dudley) Ltd. v. Crabtree (1974
LCR 120) it was observed: "Failure to give reasons amounts to denial of
justice". Reasons are live links between the mind of the decision taker to
the controversy in question and the decision or conclusion arrived at".
Reasons substitute subjectivity by objectivity. The emphasis on recording
reasons is that if the decision reveals the "inscrutable face of the
sphinx", it can, by its silence, render it virtually impossible for the
Courts to perform their appellate function or exercise the power of judicial
review in adjudging the validity of the decision. Right to reason is an
indispensable part of a sound judicial system. Another rationale is that the
affected party can know why the decision has gone against him. One of the
salutary requirements of natural justice is spelling out reasons for the order
made, in other words, a speaking out. The "inscrutable face of a
sphinx" is ordinarily incongruous with a judicial or quasi-judicial performance.
But as noted above, the proceedings commenced in 1981. The employee was placed
under suspension from 1983 to 1988 and has superannuated in 2002. Acquittal in
the criminal case is not determinative of the commission of misconduct or
otherwise, and it is open to the authorities to proceed with the disciplinary
proceedings, notwithstanding acquittal in criminal case. It per se would not
entitle the employee to claim immunity from the proceedings. At the most the factum
of acquittal may be a circumstance to be considered while awarding punishment.
It would depend upon facts of each case and even that cannot have universal
In the peculiar circumstances of the case, it
would be appropriate to send the matter back to the High Court for fresh consideration.
The High Court shall only consider the punishment aspect, treating all other
matters to be closed and to have become final. The appeal filed by the employer
is accordingly disposed of while that filed by the employee is dismissed.