Cooperative Bank Ltd. & ANR. Vs.Asim Chatterjee & Ors.
[Civil Appeal No. 657
of 2012 arising out of SLP (C) No.21192 of 2007]
J U D G M E N T
ALTAMAS KABIR, J.
short point for decision in this Appeal is whether an employer can take disciplinary
action 2against an employee in regard to acts purported to have been done by
him in his previous employment in an affiliated society.
Respondent No.1 herein was an employee of Raipur Krishi Unnayan Samity (hereinafter
referred to as "the Samity"), a cooperative society affiliated to the
Burdwan Central Cooperative Bank, the Appellant herein. Under its Recruitment Rules,
the Bank was entitled to recruit people from the affiliated societies through a
regular recruitment process. In the recruitment process held in 1997, the Bank appointed
the Respondent No.1 as a Grade III Staff of the Bank by an appointment letter
dated 8th September, 1997. On being offered the said appointment, the Respondent
No.1 left the services of the Samity where he was working and joined the Bank pursuant
to the appointment letter issued to him.
the Respondent No.1 was serving in the Bank, the Assistant Registrar, Cooperative
Societies, Burdwan-I, lodged a complaint with the Bank that during an enquiry conducted
by the Registrar of Cooperative Societies, it had transpired that the Respondent
No.1 had committed various financial irregularities in maintaining the accounts
of the Samity. In view of the above, the Assistant Registrar recommended that action
be taken against him.
the basis of the said complaint, the Bank issued a charge-sheet to the
Respondent No.1 on 2nd February, 2000. Although, according to the Bank, the
said Respondent admitted his guilt in his reply to the charge-sheet, a full-fledged
enquiry was held by the Bank by appointing an Enquiry Officer and affording the
Respondent No.1 adequate opportunity to defend himself, since according to him,
he had been forced to sign a letter of confession.
On conclusion of the disciplinary
proceedings, the Enquiry Officer found the Respondent No.1 guilty of the charges
brought against him. On the basis of the Enquiry Report, the Bank through its
Chief Executive Officer, being the Disciplinary Authority of the Respondent No.1,
passed an order of dismissal on 8th May, 2000. It appears that neither a copy of
the Enquiry Report nor the second show-cause notice was served upon the
by the order of the Disciplinary Authority, the Respondent No.1 filed a Writ
Petition challenging the order of dismissal. The learned Single Judge who heard
the matter, allowed the Writ Petition by holding that the dismissal order had been
passed by the Bank with the mala fide intention of getting rid of the Respondent
The learned Judge
held that the Bank had no authority to proceed against the Respondent No.1 on the
allegation of defalcation of the funds of the Samity at a point of time when he
was not an employee of the Bank. In addition, the learned Judge held that the order
of the Disciplinary Authority was vitiated as the Respondent No.1 was not served
with a copy of the Enquiry Report, nor was any opportunity given to him by way
of a second show-cause notice to offer his explanation thereto.
Bank preferred First Misc. Appeal No.301 of 2005 against the aforesaid order, wherein
the attention of the Division Bench was drawn to the provisions of the West Bengal
Cooperative Rules, 1987, wherein it has been stipulated that any mis-appropriation
of the employer's business or property would come within the mischief of
It was urged on behalf
of the Bank that since the Samity was affiliated to the Bank, defalcation of the
funds of the Samity would attract the definition of "misconduct" and the
6Respondent No.1 had been rightly proceeded with departmentally. It was, however,
admitted before the Division Bench that the Bank had dismissed the Respondent No.1
without affording him an adequate opportunity of explaining his version on the
findings of the enquiry by serving him a copy of the Enquiry Report as well as
the second show-cause notice.
the submissions made on behalf of the parties, the Division Bench affirmed the view
expressed by the learned Single Judge that the Bank could not have proceeded against
the Respondent No.1 in respect of an illegality and/or misconduct which had allegedly
been committed when he was not an employee of the Bank. Accordingly, without
commenting on the findings of the learned Single Judge with regard to the allegations
of mala fide and/or biased attitude on the part of the Bank, the Division Bench
held that the Bank was not entitled to proceed against the Respondent No.1 in law
and disposed of the Appeal accordingly.
indicated hereinbefore, the present Appeal is directed against the said judgment
and order of the Calcutta High Court.
Tarun Kumar Ray, learned senior advocate appearing for the Appellant-Bank, urged
that the Respondent No.1 had not been prejudiced in any way on account of non-supply
of the report of the Enquiry Officer or in the absence of a second show-cause notice,
as was earlier envisaged under Article 311(2) of the Constitution prior to its
amendment by the 42nd Constitutional Amendment Act, 1976.
Mr. Ray submitted that
as had been held by this Court in Managing Director, E.C.I.L. vs. B. Karunakar [(1993)
4 SCC 727], the order of reinstatement for non-furnishing of Enquiry Report to the
concerned employee would depend on the extent of prejudice caused to him and
could not be ordered as a matter of course.
It was, however,
mentioned that a copy of the Enquiry Report, if not served earlier, should be provided
to the employee before arguments were allowed to be advanced and thereafter the
court should apply its judicial mind before setting aside the punishment on a finding
that prejudice has been caused to the concerned employee. The Court held
further that this was the minimum compliance of the rules of natural justice
while awarding major penalties.
support of his contention that even though the Respondent No.1 was not under the
administrative control of the Appellant when the alleged irregularity was perpetrated,
the Appellant-Bank was still entitled to commence disciplinary proceedings against
him, Mr. Ray referred to the decision of this Court in S. Govinda Menon vs. Union
of India [(1967) 2 SCR 566]. In the said decision this Court had held that 9even
if an employee was not subject to the administrative control of the Government when
he was functioning as Commissioner, his acts or omissions as Commissioner could
form the subject matter of disciplinary proceedings, provided the act or omission
reflected on his reputation for integrity or devotion to duty as a member of the
Ray urged that in the instant case there was no prejudice caused to the Respondent
No.1 either by the non-service of the report of the Enquiry Officer or by the
non-issuance of a second show-cause notice, which merited interference by the High
Court with the decision to terminate the services of Respondent No.1.
Mr. Ray submitted
that in B. Karunakar's case (supra) it had been held that the failure to
provide the Enquiry Report was not fatal to the disciplinary proceedings which
could be re-commenced from the stage prior to arguments, after supply of a copy
of the Enquiry Officer's report which resulted in the termination of the services
of the Respondent No.1.
Mr. Ray further submitted
that since no prejudice had been caused to the Respondent, in the above-mentioned
circumstances the decision of the High Court to set aside the said Respondent's
order of termination was not warranted in law and the judgments of both the learned
Single Judge and the Division Bench were, therefore, liable to be set aside.
the other hand, Mr. Gupta appearing for the Respondent No. 1 submitted that the
learned Single Judge had rightly arrived at the conclusion that the dismissal of
the Respondent No.1 was tainted with malafides on the part of the Bank to get rid
of him. Mr. Gupta also contended that the High Court had rightly held that the dismissal
of the Respondent on the basis of an allegation of defalcation of the funds of
the Samity, when he was not even an employee of the Bank, was wholly without jurisdiction,
as he was not answerable to the Bank for whatever allegations that may have
been made against him in his previous employment under the Raipur Krishi
Unnayan Samity, which was a co-operative society affiliated to the Appellant-Bank.
Mr. Gupta further submitted
that in the absence of employer-employee relationship at the time when the alleged
defalcation is said to have been committed, the Appellant co-operative Bank
ought not to have proceeded against the Respondent No.1 in disciplinary proceedings,
and, thereafter, dismissed him from service. Mr.Gupta submitted that the order of
the learned Single Judge, as well as that of the Division Bench, was based on a
correct appreciation of the law and did not merit interference in the appeal.
carefully considered the submissions made on behalf of the respective parties
and having 12regard to the fact that the Respondent No.1 was an employee of the
Samity, which was a cooperative society affiliated to the Appellant Cooperative
Bank herein, there was a link between the previous employment of the Respondent
No.1 and his subsequent appointment under the Appellant-Bank.
It has to be kept in mind
that under its Recruitment Rules, the Appellant-Bank was entitled to recruit people
from the affiliated societies through a regular recruitment process.
Accordingly, even though the Respondent No.1 was employed by a different Cooperative
Society, the same had a link with the Appellant-Cooperative Bank on the basis whereof
the Respondent No.1 was appointed by the Appellant-Bank on 8th September, 1997.
is no denial of the fact that the Respondent No.1 came to be appointed by the
Appellant-Bank on a temporary basis as a Grade-III employee in the quota
reserved for the employees of Primary Cooperative Societies affiliated to the
District Central Cooperative Bank in terms of Rule 69(2)(b) of the West Bengal Co-operative
Societies Rules, 1987.
The provisions of Rule
69(2)(b) of the 1987 Rules, which are relevant in this case, provides as
follows : "69. Minimum paid staff to be employed by a co-operative society,
their respective essential qualifications and procedure of their employment and
the conditions of their service –
1. xxx xxx xxx xxx
2. The posts shall be filled
up in the following manner :-
b. not more than twenty-five
percent of the sanctioned posts in the establishment of an apex or central society
shall be filled up by promotion of fit and suitable employees of the societies affiliated
keeping with the above, the Appellant-Bank appointed the Respondent No.1 against
the quota reserved for the employees of Primary Cooperative Societies affiliated
to the Respondent-Bank in terms of Rule 69(2)(b) of the 1987 Rules. Mr. Ray
appears to be correct in his contention that in view of the above link between the
Primary Cooperative Society and the Appellant-Bank, even though the Respondent No.1
was not under the administrative control of the Appellant-Bank when he allegedly
committed various financial irregularities, the Appellant-Bank was still
entitled to commence disciplinary proceedings against him in view of his past conduct.
The decision of this
Court in S. Govinda Menon's case (supra), cited by Mr. Ray, also has a direct
bearing on the facts of this case, where, although the Respondent No.1 was not under
the administrative control of the Appellant-Bank, prior to his service with the
Bank, his previous conduct 15was a blot on his integrity and devotion to duty
as a member of the service. Since no prejudice had been caused to the Respondent
No.1 by the non-supply of the Enquiry Officer's report or the second show-cause
notice under Article 311(2) of the Constitution, the Respondent No.1 had little
scope to contend that the principles of natural justice had been violated which
had vitiated the proceedings.
there is one aspect of the matter which cannot be ignored. In B. Karunakar's case
(supra), despite holding that non-supply of a copy of the report of the Inquiry
Officer to the employee facing a disciplinary proceeding, amounts to denial of
natural justice, in the later part of the judgment it was observed that whether
in fact, prejudice has been caused to the employee on account of non-furnishing
of a copy of the inquiry report has to be considered in the facts of each case.
It was observed that
where the furnishing of the inquiry report would not make any difference to the
ultimate outcome of the matter, it would be a perversion of justice to allow the
concerned employee to resume his duties and to get all consequential benefits. It
was also observed that in the event the Inquiry Officer's report had not been furnished
to the employee in the disciplinary proceedings, a copy of the same should be made
available to him to enable him to explain as to what prejudice had been caused
to him on account of non-supply of the report.
It was held that the
order of punishment should not be set aside mechanically on the ground that the
copy of the inquiry report had not been supplied to the employee. This is, in
fact, a case where the order of punishment had been passed against the
Respondent No.1 on allegations of financial irregularity. Such an allegation would
require serious consideration as to whether the services of an employee against
whom such allegations have been raised should be retained in the service of the
Bank. Since a Bank acts in a fiduciary capacity in regard to people's
investments, the very legitimacy of the banking system depends on the complete
integrity of its employees.
hereinbefore, there is a live-link between the Respondent No.1's performance as
an employee of the Samity, which was affiliated to the Bank, and if the Bank was
of the view that his services could not be retained on account of his previous
misdemeanor, it is then that the second part of B. Karunakar's case (supra) becomes
attracted and it becomes necessary for the court to examine whether any prejudice
has been caused to the employee or not before punishment is awarded to him.
It is not as if the
Bank with an ulterior motive or a hidden agenda dismissed the Respondent No.1 from
service, in fact, he was selected and appointed in the Appellant-Bank on account
of his merit and 18performance at the time of interview. It cannot be said that
the Bank harboured any ill-feeling towards the Respondent No.1 which ultimately
resulted in the order of dismissal passed on 8th May, 2010. We, therefore, repeat
that since no prejudice has been caused to the Respondent No.1 by the
non-supply of the Inquiry Officer's report, the said Respondent had little scope
to contend that the disciplinary proceedings had been vitiated on account of
the above circumstances, we cannot agree with the view taken by the learned
Single Judge, as affirmed by the Division Bench of the High Court, that the Appellant-Bank
had no jurisdiction to proceed against the Respondent No.1 by way of
disciplinary proceedings in regard to the allegations of defalcation made against
him while he was employed under the Co-operative Samity which was an affiliate of
The other 1\decision cited
by Mr. Ray in S. Govinda Menon's case (supra) also makes it abundantly clear that
even though the Respondent No.1 may not have been under the direct
administrative control of the Bank at the relevant point of time when the defalcation
is alleged to have taken place, on account of the affiliation of the Samity with
the Bank under the provisions of the West Bengal Co-operative Societies Rules, 1987,
the Appellant-Bank had jurisdiction over the Respondent No.1 after he joined the
employment of the Appellant-Bank.
In the instant case, since
the question of integrity in managing the accounts of the Samity is in
question, it was but natural for the Bank to proceed departmentally against the
Respondent No.1 after coming to learn of the allegations which have been made
our view, both the learned Single Judge and the Division Bench of the High Court
were not justified in interfering with the action taken by the disciplinary authorities
of the Bank and their findings are liable to be set aside. The appeal,
therefore, succeeds and is allowed. The orders of the learned Single Judge and the
Division Bench of the High Court, are set aside. The decision taken by the Bank
in dismissing the Respondent No.1 from service is restored.
will be no order as to costs.