Yamuna Gramin Bank & Ors Vs. Devi Sahai  INSC 288 (12 February 2009)
IN THE SUPREME COURT
OF INDIA CIVIL APPELLATE JURISDICTION CIVIL APPEAL NO. 940 OF 2009 (Arising out
of SLP (C) No. 7529 of 2006) CHAIRMAN, GANGA YAMUNA GRAMIN BANK & ORS. ...
S.B. SINHA, J.
is a bank constituted and incorporated under the Regional Rural Banks Act, 1976
(for short, "the Act"). Section 30 thereof provides for a regulation
On or about
13.5.1980, the Government of India circulated the model (staff service)
regulations for the officers/employees of the Regional Rural Bank for
adoption/approval by their respective Board of Directors. The Board of
Directors of the Appellant- Bank in exercise of its powers conferred upon it
under Section 30 of the Act after consultation with the State Bank of India
(sponsor bank) and Reserve Bank of India and with the previous sanction of the
Central Government framed regulations known as "Ganga Yamuna Gramin Bank
Staff Service Regulations, 1985" laying down the terms and conditions of
service of its employees. Some of the relevant provisions of the said
Regulations are as under:
Bank may terminate the services of an (i) Officer after giving him three
month's notice of emolument in lieu thereof.
(ii) Employee after
giving him one month's notice or emoluments in lieu thereof.
Without prejudice to the provisions of other regulations, an officer or
employee who commits a breach of these regulations or who displays negligence,
inefficiency or indolence, or who knowingly does anything detrimental to the
interests of the Bank or in conflict with its instructions or who commits a
breach of discipline or is guilty of any other act of misconduct shall be
liable to the following penalties--- (a) reprimand;
(b) delay or stoppage
of increments or promotion;
(c) degradation to a
lower post or grade to a lower stage in his incremental scale;
(d) recovery from pay
of the whole or part of any pecuniary loss caused to the Bank by the officer or
(e) Removal from service
which shall not be a disqualification for future employment;
(2) No officer or
employee shall be subjected to the penalties referred to in clause (b), (c),
(d), (e) or (f) of sub-regulation (1) except by an order in writing signed by
the Chairman and no such order shall be passed without the charge being
formulated in writing and given to the said officer or employee so that he
shall have reasonable opportunity to answer them in writing or in person, as he
prefers and in the latter case his defence shall be taken down in writing as
read to him.
requirements of this sub- regulation may be waived. If the facts on the basis
of which action is to be taken have been established in the court of law or
court martial where the officer or employee has absconded or where it is for
any reason impracticable to communicate with him or where there is difficulty
in observing them and the requirements can be waived and the reasons for so
doing shall be recorded in writing."
Act was amended by Act No. 1 of 1988 which came into force with effect from
28.9.1988 in terms whereof `National Bank' was defined in Section 2(ca), to
"National Bank" means the National Bank for Agriculture and Rural
Development established under Section 3 of the National Bank for Agriculture
and Rural Development Act, 1981."
even prior thereto `National Bank for Agricultural and Rural Development
(NABARD)' being the National Bank, which although had nothing to do with
statutory functioning of the Regional Rural Banks, allegedly, on requests made
by Board of Directors of several regional banks issued guidelines, stating:
"We have been
receiving a number of references from Chairmen of RRBs requesting us for
guidance on disciplinary procedure to be adopted by RRBs for disciplinary
action against their staff. In order to meet the demands of the Chairman of
RRBs, we have prepared a set of guidelines on the above subject with the help
of our Legal Department and representative of some sponsor banks/RRBs. A copy
of the manual is enclosed for your guidance."
Relevant portion of
the said guidelines are as follows:
penalty prescribed in sub-regulation (1) can be imposed only after following
the procedure as laid down in the regulation strictly in accordance with the
principles of natural justice. Broadly stated in a case of disciplinary action,
those principles require that:
i) there is good and
sufficient reason for formulating the charges;
charge-sheeted official knows precisely what the charges are against him and
the grounds on which these have been based;
iii) the employee is
given reasonable opportunity to show cause against the penalty prescribed to be
imposed on him."
on or about 6.8.1996, an explanation was sought for from the respondent for
alleged acts of misconduct committed by him.
He submitted his
reply to the show cause notice but the same was not found satisfactory by the
competent authority. On or about 25.2.1997, a charge-sheet was issued to him.
An Inquiry Officer was appointed to conduct a departmental inquiry. In spite of
several notices/advertisements published in the newspaper, respondent did not
attend the departmental inquiry. The Inquiry Officer conducted the inquiry ex
parte and submitted his report holding the charges as proved.
Authority by its letter dated 18.6.1998 forwarded the report of the Inquiry
officer to the respondent and called upon him to submit his comments, if any,
within one week from the date of receipt of that letter. As the respondent did
not do so within that time, he was granted another opportunity by letters dated
11.07.1998 and 29.07.2008.
Authority thereafter imposed a penalty of dismissal upon him by order dated
Some of the charges
held proved against the respondent are as under:- i) Respondent sanctioned a
demand loan for himself, from time to time - without obtaining sanction,
contrary to the rules of the Bank. Thus misusing his powers as Branch Manager
for his personal interest;
ii) To achieve the
target of the Branch, he started making window dressing by first crediting and
later debiting the amount, of the account holders, without their request;
iii) Bank amount was
misutilized. He received the cash amount, but did not deposit the same, instead
he purchased NSC in his name, and thereafter took demand loan against the said
iv) He left the cash,
under the custody of a clerk/cashier; he entrusted the master key to the said
clerk, thereby failing to discharge his duties.
v) He left the place
of his duty without permission of the competent authority.
vi) He sanctioned
crop loan to 16 debtors, however did not allow them to withdraw the amount till
closure of financial year, to achieve the target.
vii) Complaint was
received that he was demanding bribe.
viii) Complaint was
also made that he fraudulently withdrew an amount from the saving account of a
appeal was preferred there against. In the said Memo of Appeal, no plea was
raised by him that a second show cause notice was required to be issued. He
also did not make any reference to the NABARD guidelines; he also did not say
that any prejudice has been caused to him.
On or about 8.7.1999,
the Appellate Authority dismissed the said appeal. He filed a writ petition
there against. However, in the meanwhile, he filed a review petition against
the order of the Appellate Authority. By an order dated 17.7.2001, the writ
petition was dismissed in view of the pendency of the review petition. By an
order dated 21.8.2001, the review petition was dismissed. He filed another writ
petition on 14.11.2002 for quashing the order of dismissal dated 28.9.1998
passed by the Disciplinary Authority as also the order dated 8.7.1999 passed by
the Appellate Authority, which by reason of the impugned judgment and order
dated 30.12.2003 was allowed. A review petition filed by the appellant - Bank
there against has been dismissed by an order dated 1.3.2006.
Appellant is, thus,
Sanjay Kapur, learned counsel appearing on behalf of the appellant would
contend that the High Court committed a serious error in passing the impugned
judgment in holding that the guidelines issued by 8 NABARD were mandatory in character
and non-compliance thereof had resulted in rendering the order of dismissal
Anand Prakash Srivastava, learned counsel appearing on behalf of the
respondent, on the other hand, would not only support the impugned judgment but
also contend that the procedure laid down in the said guidelines have been
followed in the cases of the other employees and, thus, there was absolutely no
reason as to why the same could not be implemented in the case of the
Appellant has been constituted under the Act. It has a regulation making power.
Regulations framed by it subject to the compliance of the statutory mandate
contained in Section 30 of the Act have statutory force. The provisions of the
Act and the Service Regulations made by the appellant, therefore, form
Indisputably, at a
point of time when NABARD issued guidelines, it had nothing to do with the functioning’s
of the Regional Rural Banks. Act No.1 of 1988, in terms whereof the `National
Bank' was defined and in terms whereof instead of consulting the Reserve Bank
of India for the purpose of making regulation in terms of Section 30 of the
Act, NABARD was required to be consulted, came into force only with effect from
again, the guidelines issued by NABARD laying down the procedure to be adopted
for disciplinary action in Regional Rural Banks were made part of the
Regulations. Even after coming into force of Act No.1 of 1988, regulations were
not amended. Issuance of second show cause notice for the purpose of obtaining
the views of delinquent officer in regard to quantum of punishment is not a
part of the common law principles of natural justice. Such a provision could be
laid down by reason of a statute. The respondent does not enjoy any status. The
service conditions of employees of Regional Rural Banks are not protected in
terms of Article 311(2) of the Constitution of India.
validity or otherwise of the regulations framed by appellant is not in
question. In any event, respondent did not participate in the inquiry.
The learned counsel,
however, submitted that a situation was created by transferring the respondent
to Uttar Kashi as a result whereof he could not participate in the inquiry. It
is stated before us that such a contention has been raised in the writ
petition. A copy of the writ petition has not been placed before us. We are not
aware as to whether such a contention has been raised in the writ petition as
from the perusal of the order passed by the High court it does not appear that
such a contention had been raised. In any event, respondent does not show how
he was prejudiced. He was supplied with a copy of the report of the Inquiry
Officer. He even did not submit any reply thereto. As indicated hereinbefore,
notices had not only been published asking the respondent to take part in the
disciplinary proceedings but also chance after chance had been given to him to
respond to the report of the Inquiry Officer. We, therefore, are of the opinion
that the NABARD guidelines having been issued only for the guidance of the
Regional Rural Banks, the same was not mandatory in character and in any event
respondent was not prejudiced by reason of non-compliance thereof.
In Bank of India vs.
Apurba Kumar Saha [(1994) 2 SCC 615], this Court opined as under:
regard to the arguments addressed by learned Counsel on both sides we have gone
through the papers and seen that the High Court's view that there was violation
of principles of natural justice, in conducting the disciplinary proceedings
against the respondent, was wholly unjustified. The records of the disciplinary
proceedings show that the respondent had avoided filing of the written
explanation for the charges of misconduct levelled against him and also had for
no valid reason refused to participate in the disciplinary proceedings. A Bank
employee who had refused to avail of the opportunities provided to him in a
disciplinary proceeding of defending himself against the charges of misconduct
involving his 11 integrity and dishonesty, cannot be permitted to complain
later that he had been denied a reasonable opportunity of defending himself of
the charges levelled against him and the disciplinary proceeding conducted
against him by the Bank-employer had resulted in violation of principles of
natural justice of fair hearing."
therefore, are of the opinion that the High Court committed a serious error in
passing the impugned judgment. It is set aside accordingly. However, as it is
stated before us that the respondent had raised several other contentions
before the High Court, we remand the matter to the High court for consideration
of all other contentions raised by the respondent. In the facts and
circumstances of the case, as the disciplinary proceeding against the
respondent had been initiated long time back, we would request the High Court
to consider the desirability of disposing of the matter at the earliest
possible opportunity and preferably within six months from the date of
communication of this Court's order.
appeal is allowed with the aforementioned directions.
However, in the facts
and circumstances of the case, there shall be no order as to costs.
[Dr. Mukundakam Sharma]