Bank manager disburses loans without following the due procedure. Is compulsory retirement in such case a disproportionate punishment? Read what SC says

Supreme Court: In a case where a bank manager had sanctioned and disbursed loans without following the due procedure contemplated under law, the 3-judge bench of Ashok Bhushan, R. Subhash Reddy* and MR Shah, JJ has held that

“When the procedural guidelines are issued for grant of loans, officers/employees are required to follow the same meticulously and any deviation will lead to erosion of public trust on the banks.”

Background

In the present case, there were allegations against a manager of Lakhimi Gaolia Bank of misappropriation, disbursing loans irregularly in some instances to (a) units without any shop/business; (b) more than one loan to members of same family etc.

Based on the findings recorded by Enquiry Officer, the disciplinary authority had tentatively decided to impose punishment of compulsory retirement and had issued a show cause notice to the manager to which he responded that “due to work pressure some operational lapses have occurred”.  Further, if the bank has sustained any loss due to his fault, he is ready to bear such loss from his own source.

Thereafter, the disciplinary authority imposed the punishment of compulsory retirement.

The decision of the disciplinary authority was challenged on the ground that even before tentative conclusion is arrived at by the disciplinary authority, the enquiry report has to be served upon him.

Analysis

After Enquiry Officer records his findings, it is always open for the disciplinary authority to arrive at tentative conclusion of proposed punishment and it can indicate to the delinquent employee by enclosing a copy of the enquiry report.

The argument that even before tentative conclusion is arrived at by the disciplinary authority, the enquiry report has to be served upon him, was not accepted by the Court as there is no such proposition laid down in the judgment of this Court in the case of Managing Director, ECIL,   Hyderabad (supra).  In the aforesaid judgment of this Court it is held that

“delinquent employee is entitled to a copy of the enquiry report of the enquiry officer before the disciplinary authority takes a decision on the question of guilt of the delinquent. Merely because a show cause notice is issued by indicating the proposed punishment it cannot be said that disciplinary authority has taken a decision.”

In the present case, along with the show cause notice itself enquiry report was also enclosed.  Hence, it cannot be said that the procedure prescribed under the rules was not followed by the bank.

Further, it is well settled that if the disciplinary authority accepts the findings recorded by the Enquiry Officer and passes an order, no detailed reasons are required to be recorded in the order imposing punishment.  The punishment is imposed based on the findings recorded in the enquiry report, as such, no further elaborate reasons are required to be given by the disciplinary authority.

The Court also refused to accept the argument that the punishment imposed is disproportionate to the gravity of charges. The charges framed against the appellant in the departmental enquiry are serious and grave.

“If we look at the response, in his letter dated 16.08.2005, to the show cause notice issued by the disciplinary authority, it is clear that he has virtually admitted the charges, however, tried to explain that such lapses occurred due to work pressure. Further he went to the extent of saying – he is ready to bear the loss suffered by the bank on account of his lapses.”

If the manager of a bank indulges in such misconduct, as is evident in the present case and the findings of the enquiry officer, it indicates that such charges are grave and serious.

“The manager of a bank plays a vital role in managing the affairs of the bank. A bank officer/employee deals with the public money. The nature of his work demands vigilance with the in¬built requirement to act carefully. If an officer/employee of the bank is allowed to act beyond his authority, the discipline of the bank will disappear. When the procedural guidelines are issued for grant of loans, officers/employees are required to follow the same meticulously and any deviation will lead to erosion of public trust on the banks.”

Inspite of proved misconduct on such serious charges, disciplinary authority itself was liberal in imposing the punishment of compulsory retirement and hence, the Court refused to hold that the punishment imposed in the disciplinary proceedings on the appellant, is disproportionate to the gravity of charges.

[Boloram Bordoloi v. Lakhimi Gaolia Bank, 2021 SCC OnLine SC 65, decided on 08.02.2021]


*Judgment by: Justice R. Subhash Reddy

Know Thy Judge| Justice R. Subhash Reddy

Appearances before the Court by

For appellant: Advocate Parthiv Goswami, 

For Bank: Rajesh Kumar

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