Managing Director State Bank of
ANR Vs. P. Kata Rao  INSC 711 (24 April 2008)
S.B. Sinha & D.K. Jain
REPORTABLE CIVIL APPEAL NOS. 2961-2962 OF 2008 (Arising out of SLP (C) Nos.
14356-14357 of 2007) S.B. Sinha, J.
1. Leave granted.
2. Appellant is aggrieved by and dissatisfied with a judgment and order
dated 4.6.2007 passed by a Division Bench of the Andhra Pradesh High Court in
Writ Appeal No. 627/628 of 2005 whereby and whereunder it refused to interfere
with the judgment and order passed by a learned Single Judge of the said Court
in WP No. 476 of 2001.
3. Respondent at all material times was an employee in the appellant Bank.
He was placed under suspension on or about 13.8.1998. A departmental proceeding
was initiated against him.
12 items of charges were drawn up; charge Nos. 11 and 15 whereof read as
"Charge No. 11: He authorized cash and transfer credits to the demand
loan accounts against pledge of gold ornaments of Smt. P. Lakshmi, his wife,
from out of proceeds of loan amounts released to two DIR and one cash credit
borrowers. Thus he facilitated his wife to get undue pecuniary benefit by
permitting unauthorized adjustments which were done with his prior knowledge.
Charge No. 15: He sanctioned and released loans to his close relatives in
contravention of H.O.
Cir. No. ADV/98 of 1976 dated the 2nd December, 1976."
4. He was also proceeded against in a criminal case. He was acquitted of the
5. However, the departmental proceedings continued during pendency of the
criminal proceedings as prayer for stay thereof was not acceded to. The Enquiry
Officer found that all the charges apart from charge Nos. 1(a), 2(b), 3 were
6. The Appointing Authority passed an order of dismissal. An appeal
preferred thereagainst by the respondent was dismissed.
7. By an order dated 29.12.1995, the appellant was acquitted of the charges
framed against him in the criminal proceeding under Sections 120B, 420 and 468
of the Indian Penal Code. He was also acquitted of the charges for alleged
commission of offences under Section 5(1)(d) read with Section 5(2) of the
Prevention of Corruption Act.
8. Respondent, however, was convicted under Section 477(A) of the Indian
Penal Code as also under Section 5(1)(d) and 5(2) of the Prevention of
Corruption Act. He preferred an appeal thereagainst before the High Court. A Writ Petition was also filed questioning the said order of dismissal.
9. By an order dated 12.3.1999, a learned Single Judge of the High Court
quashed the order of punishment and directed the disciplinary authority to
issue a show cause notice indicating the modified punishment and pass an
10. A show cause notice was issued, pursuant to the said direction.
11. Again an order of dismissal was passed on 2.7.1999. An appeal preferred
thereagainst was dismissed. Another writ petition was filed by the respondent
aggrieved by and dissatisfied therewith.
12. The Criminal Appeal filed by the appellant came up for consideration
before a learned Single Judge of the High Court and by a judgment and order
dated 3.10.2001, it was held:
"... In such a case, it is difficult to believe that the appellant had
any intention to benefit himself or other persons. It has to be noted that the
above reasoning of the trial court is most perverse and without any material.
In my considered view the trial court had jumped to the conclusion without any
13. As regards, alleged commission of offence under Section 477A of the
Indian Penal Code, it was stated:
"From the above discussion, I am of the considered opinion that the
appellant could not have made the alleged entries willfully and with dishonest
intention to defraud. It is certainly not the case of the prosecution that the
appellant had independently committed the offence under Section 477-A I.P.C.
and on the contrary the specific allegation of the prosecution was that there
was conspiracy initially and as such a conspiracy has culminated into various
offences attributable to all the accused and in particular of the offence under
Section 477-A against the appellant.
Therefore, in view of the above observation made by the Apex Court and in
view of peculiar facts and circumstances, in the instant case, it is unsafe to
draw any adverse inference against the appellant that he committed the offence
under Section 477-A I.P.C., inasmuch as the essential ingredients viz.,
'willfulness' and 'intention' to defraud could not successfully be
substantiated by the prosecution against the appellant. Admittedly the case of
the appellant as stated in his examination under Section 313 Cr.P.C., that it
was only a mistake committed inadvertently and from the above facts and
circumstances and the evidence on record, the only inference that can be drawn
is that the accused, no doubt, might have made some wrong entries, but the same
cannot be termed as acts of willfulness and with fraudulent intention to
falsify the accounts. Hence the appellant is entitled for an acquittal for the
offence under Section 477-A I.P.C."
The judgment of conviction and sentence under Sections 5(1)(d) and 5(2) of
the Prevention of Corruption Act was also set aside by the High Court opining
that the prosecution had failed to prove the guilt of the accused beyond all
reasonable doubts, holding:
"... In other words when the appellant was acquitted of all the charges
including the charge under Section 477-A, I.P.C. by this Court, it cannot be
said that he committed the offence under the provisions of Prevention of
14. The Writ Petition filed by the appellant against the order of dismissal
passed against him came up for consideration before a learned Single Judge of
the High Court. The High Court, while passing its judgment dated 7.02.2005,
considered the totality of the circumstances.
As regards the correctness of the order of dismissal, it was opined:
".The said orders can in no way be considered to be a reason as such
for a de novo consideration on the aspect of punishment and it is also to be
noticed that reconsideration is only in respect of punishment and that too
based on the earlier recommendations made in appeal. Therefore, necessarily it
follows that the order of dismissal as was imposed earlier on 23.07.1994 could
not possibly be repeated or restated much less reimposed. Necessarily it has to
be any other punishment other than the order of dismissal or removal. Further,
the specific direction is only to take a follow up action in terms of the
directions given in the appeal on the earlier occasion. Thus, on a conspectus
reading of the said directions, the only scope left for reconsideration is to
once again take into consideration the earlier directions given in appeal and
not otherwise, or to impose any other punishment much less dismissal order.
Having regard to the aforesaid circumstances and also even taking into account
totality of the circumstances vis-`-vis the allegations as made against him and
also the clear acquittal of the petitioner on criminal side though it may not
be binding, necessarily the respondents had to follow the earlier orders of this
Court, since the same are not kept in view and the impugned orders are not in
terms of the said order. Hence, the matter requires to be reconsidered afresh
by the authorities. In the circumstances, it has to be held that the impugned
orders of the respondents in dismissing the petitioner from service are not
only contrary to the directions given by this Court on 12.03.1999 in W.P. No.
16833 of 1994, but also do not in any way commensurate to the gravity of the
allegations as made or found against him."
It was directed:
"In the circumstances, both the Writ Petitions are allowed setting
aside both the orders of respondents dated 02.07.1999 and 02.02.2000 and
directing fresh consideration and disposal of the matter in accordance with law
after giving notice and opportunity to the petitioner. The respondents are also
directed to pay subsistence allowance and all such other allowances to which
the petitioner is entitled during the period of his suspension from 01.08.1994
to 02.07.1999. No costs."
15. An intra-court appeal was preferred thereagainst. The Division Bench, in
its impugned judgment dated 4.06.2007, opined:
"In the present case, we find that the enquiry officer had exonerated
the respondent of charges 1(a), 2(b), 3 and 5, which pertain to misappropriation
and deriving of pecuniary benefits by him. A perusal of the judgment dated
03.10.2001 passed by the learned Single Judge in Criminal Appeal No. 12 of 1996
makes it clear that the respondent was honourably acquitted with an unequivocal
finding that there was neither any loss to the bank nor any pecuniary benefit
was taken by the respondent. Thus, on the crucial issue whether the respondent
is guilty of financial misfeasance and malfeasance, there is no conflict
between the findings of the enquiry officer and the Court, which disposed of
the criminal appeal. Since the learned Single Judge, who decided Writ Petition
No. 16833 of 1994 and the appointing authority, which reconsidered the matter
in the light of the direction given by this Court, did not have the benefit of
considering the judgment of acquittal rendered in Criminal Appeal No. 12 of
1996, the only appropriate course would be to direct the appellants to again
consider the respondent's case and pass appropriate order in accordance with
[Emphasis supplied] It was directed:- "In the result, Writ Appeal No.
627 of 2005 is dismissed and Writ Appeal No. 628 of 2005 is disposed of with
the direction that the appointing authority shall reconsider the case of the
respondent on the issue of quantum of punishment to be imposed on him and pass
appropriate order within six weeks from the date of receipt of copy of this
16. Mr. Soli J. Sorabjee, the learned senior counsel appearing on behalf of
the appellant would submit that the High Court committed a serious error in
passing the impugned judgment insofar as it failed to take into consideration:-
(i) That the criminal court merely granted the benefit of doubt in favour of
the respondent; and (ii) Even an order of acquittal may not be a bar for passing
an order of dismissal from service particularly keeping in view the fact that a
bank employee is required to maintain strict integrity.
17. Mr. P. Kata Rao, the respondent appearing in person, however, would urge
that both the departmental proceedings and the criminal case were based on the
same set of facts. The charge of misconduct against him, it was urged, was
based on violation of some procedural guidelines only and, thus, not grave in
nature. It was pointed out that the learned Single Judge examined the entire
records and it had been found that the respondent is not guilty of any
malpractice and furthermore has not derived any pecuniary benefit. Even the
charges of misappropriation, it was urged, have not been proved against him.
18. There cannot be any doubt whatsoever that the jurisdiction of superior
courts in interfering with a finding of fact arrived at by the Enquiry Officer
is limited. The High Court, it is trite, would also ordinarily not interfere
with the quantum of punishment. There cannot, furthermore, be any doubt or
dispute that only because the delinquent employee who was also facing a
criminal charge stands acquitted, the same, by itself, would not debar the
disciplinary authority in initiating a fresh departmental proceeding and/ or where
the departmental proceedings had already been initiated or to continue
19. We are not unmindful of different principles laid down by this court
from time to time. The approach that the court's jurisdiction is unlimited
although had not found favour with some Benches, the applicability of the
doctrine of proportionality, however, had not been deviated from.
20. The legal principle enunciated to the effect that on the same set of
facts the delinquent shall not be proceeded in a departmental proceedings and
in a criminal case simultaneously, has, however, been deviated from.
The dicta of this Court in Capt. M. Paul Anthony v. Bharat Gold Mines Ltd.
and Another [(1999) 3 SCC 679], however, remains unshaken although the
applicability thereof had been found to be dependant on the fact situation
obtaining in each case.
21. The case at hand is an exceptional one. Respondent was a responsible
officer. He was holding a position of trust and confidence. He was proceeded
with both on the charges of criminal misconduct as also civil misconduct on the
same set of facts, subject, of course, to the exception that charges Nos. 11
and 15 stricto sensu were not the subject matter of criminal proceedings, as
integrity and diligence, however, were not in question.
Before us also it has not been contended that he had made any personal gain.
22. The High Court in its judgment categorically opined that he merely had
committed some inadvertent mistakes. He did not have any intention to commit
any misconduct. The purported misconduct on his part was neither willful nor
there existed any fraudulent intention on his part to falsify the account. The
High Court opined that the prosecution had failed to bring home the guilt of
the accused beyond all reasonable doubts for the offences punishable under the
provisions under the Indian Penal Code.
The judgment of the High Court states a definite view. It opined that the
finding of the learned Trial Judge holding him guilty under Section 477A of the
Indian Penal Code and the provisions of the Prevention of Corruption Act was
perverse. The circumstances in favour of the accused, the High Court inferred,
had wrongly been attributed against him by the Trial Judge.
23. A learned Single Judge of the High Court in his judgment dated 7.02.2005
only upon taking into consideration the observations made by the High Court in
the said criminal appeal but also the other circumstances, brought on record,
directed fresh consideration and disposal of the matter in accordance with the
law upon giving an opportunity of hearing to the respondent. The Division Bench
of the High Court, in the first round of litigation, noticed that the entire
record had been perused by the learned Single Judge. It was found that the
original authority had imposed a punishment of only stoppage of one increment
with cumulative effect which was modified by the appellate authority into one
of withholding of increment without cumulative effect and held that failure of
the disciplinary and appellate authorities to take into consideration modified
punishment has caused serious prejudice to the respondent.
24. It was furthermore noticed that in purported compliance of the
directions issued by the learned Single Judge, the penalty of dismissal from
service was re-imposed on the respondent.
25. The Division Bench, however, disagreed with the conclusion of imposition
of stoppage of one increment. Even then it observed that in the facts and
circumstances of this case the issue relating to dismissal of respondent needs
reconsideration. It was directed:
"While doing so, the concerned authority shall keep in view the
Both the disciplinary authority and
this Court in Criminal Appeal No. 12 of 1996 found the respondent not guilty of
charges of misappropriation, deriving the personal benefit for himself and
causing loss to the bank.
The effect of the Judgment of this Court in Criminal Appeal No. 12 of
1996 in the light of the decision of the Supreme Court in M. Paul Anthony's
case (supra) and G.M. Tank's case (supra).
Modified punishment of withholding of increment without cumulative
effect imposed on the respondent is a minor penalty unlike the punishment of
withholding of increment with cumulative effect, which was held to be a major
penalty by the Supreme Court in Kulwant Singh Gill's case (supra).
While considering the proportionality
of the punishment, distinction lies between the procedural irregularities
constituting misconduct from the acts of misappropriation of finances, causing
loss to the institution, etc."
26. We do not see any reason keeping in view the peculiar facts and
circumstances of the case to disagree with the said findings, although we would
like to reiterate the principles of law to which we have referred to
27. We may, however, notice that Mr. Sorabjee has strongly relied upon a
decision of this Court in Commissioner of Police, New Delhi v. Narender Singh
[(2006) 4 SCC 265] to contend that therein initiation of a departmental
proceeding was upheld inter alia on the ground that although a confession made
by an accused in a criminal proceeding would not be admissible having regard to
Sections 25 and 27 of the Evidence Act, the same would not be a bar to proceed
against him departmentally.
In that case it was held:
"13. It is now well settled by reason of a catena of decisions of this
Court that if an employee has been acquitted of a criminal charge, the same by
itself would not be a ground not to initiate a departmental proceeding against
him or to drop the same in the event an order of acquittal is passed."
This court therein considered the nature of the confessions made by the
delinquent officer and the implication thereof having regard to Sections 25 and
26 of the Evidence Act to hold that the Tribunal was not correct in holding
that the confessional statement was not admissible in the departmental
In G.M. Tank v. State of Gujarat and Others [(2006) 5 SCC 446], noticing a
large number of decisions operating in the field, it was observed:
"30. The judgments relied on by the learned counsel appearing for the
respondents are distinguishable on facts and on law. In this case, the
departmental proceedings and the criminal case are based on identical and
similar set of facts and the charge in a departmental case against the
appellant and the charge before the criminal court are one and the same. It is
true that the nature of charge in the departmental proceedings and in the
criminal case is grave. The nature of the case launched against the appellant
on the basis of evidence and material collected against him during enquiry and
investigation and as reflected in the charge-sheet, factors mentioned are one
and the same. In other words, charges, evidence, witnesses and circumstances
are one and the same. In the present case, criminal and departmental
proceedings have already noticed or granted on the same set of facts, namely,
raid conducted at the appellant's residence, recovery of articles therefrom.
The Investigating Officer Mr V.B.
Raval and other departmental witnesses were the only witnesses examined by
the enquiry officer who by relying upon their statement came to the conclusion
that the charges were established against the appellant. The same witnesses
were examined in the criminal case and the criminal court on the examination
came to the conclusion that the prosecution has not proved the guilt alleged
against the appellant beyond any reasonable doubt and acquitted the appellant
by its judicial pronouncement with the finding that the charge has not been
proved. It is also to be noticed that the judicial pronouncement was made after
a regular trial and on hot contest. Under these circumstances, it would be
unjust and unfair and rather oppressive to allow the findings recorded in the
departmental proceedings to stand.
31. In our opinion, such facts and evidence in the departmental as well as
criminal proceedings were the same without there being any iota of difference,
the appellant should succeed. The distinction which is usually proved between
the departmental and criminal proceedings on the basis of the approach and
burden of proof would not be applicable in the instant case. Though the finding
recorded in the domestic enquiry was found to be valid by the courts below,
when there was an honourable acquittal of the employee during the pendency of
the proceedings challenging the dismissal, the same requires to be taken note
of and the decision in Paul Anthony case1 will apply.
We, therefore, hold that the appeal filed by the appellant deserves to be
Each case, therefore, must be determined on its own facts.
28. However, we may notice that this Court, in State Bank of India and
Others v. T.J. Paul [(1999) 4 SCC 759], noticed:
"7. The above orders were questioned in a writ petition. The learned
Single Judge while allowing the writ petition held that the finding of the
enquiry officer on Item 23 was that no financial loss was proved and if it was
a case of not taking adequate "security" from the loaners and in not
obtaining ratification as per Head Office instructions, these charges were not
sufficient in view of Rules 22(vi)(c) and (d) read with sub-rule (vii) for
imposing a penalty of dismissal or removal. Only a minor penalty could be
As per the enquiry officer's report there was no actual loss caused by
reason of any act of the employee wilfully done. There was no evidence of
financial loss adduced before the enquiry officer.
The finding that the respondent jeopardised the Bank's interest was based on
no evidence. Penalty must have been only for minor misconduct. The SBI Rules
were not applicable since the misconduct alleged related to the period of
service in Bank of Cochin. The learned Judge observed that "punishment of
removal" could not have been imposed as it was not one of the enumerated
punishments under Bank of Cochin Rules. The writ petition was allowed, the
impugned order was quashed. It was, however, observed that the Bank could
impose punishment for minor misconduct as per rules of Bank of Cochin."
T.J. Paul (supra) was a case involving violation of the instructions of the
Head Office as also gross negligence on the part of the delinquent officer.
While holding that the same would constitute major misconduct referring to the
case of Union of India v. G. Ganayutham [(1997) 7 SCC 463], it was opined:
"19In our view, this decision is not applicable to the facts of the
case. Here the Court is not interfering with the punishment awarded by the
employer on the ground that in the opinion of the Court the punishment awarded
is disproportionate to the gravity of the misconduct. Here, the gradation of
the punishments has been fixed by the rules themselves, namely, the rules of
Bank of Cochin and the Court is merely insisting that the authority is confined
to the limits of its discretion as restricted by the rules. Inasmuch as the
rules of Bank of Cochin have enumerated and listed out the punishments for
"major misconduct", we are of the view that the punishment of
"removal" could not have been imposed by the appellate authority and
all that was permissible for the Bank was to confine itself to one or the other
punishment for major misconduct enumerated in para 22(v) of the rules, other
than dismissal without notice. This conclusion of ours also requires the
setting aside of the punishment of "removal" that was awarded by the
appellate authority. Now the other punishments enumerated under para 22(v) are
"warning or censure or adverse remark being entered, or fine, or stoppage
of increments/reduction of basic pay or to condone the misconduct and merely
discharge from service". The setting aside of the removal by the High
Court and the relief of consequential benefits is thus sustained. The matter
has, therefore, to go back to the appellate authority for considering
imposition of one or the other punishment in para 22(v) other than dismissal
29. As the respondent has merely been found to be guilty of commission of
procedural irregularity, we are of the opinion that it is not a fit case where
we should exercise our discretionary jurisdiction under Article 136 of the
Constitution of India, particularly in view of the fact that the respondent has
now reached his age of superannuation, and the appropriate authority of the
appellant would be entitled to impose any suitable penalty upon him.
35. The appeals are dismissed. No costs.