Karnataka High Court: The instant writ appeal was filed by Vijaya Bank, seeking to set aside the impugned order passed by the single Judge Bench of the High Court reinstating the respondent’s service, who was dismissed following a disciplinary action via-a-vis indiscriminate lending of money to fictitious persons. The division bench of Krishna S Dixit* and Ramachandra D. Huddar, JJ., agreed with the Bank Management taking opinion of the Central Vigilance Commission vis-a-vis the respondent. The Court stated that the object of consulting the Vigilance Commission is not in the interest of the employee but in the larger interest of the banking institution. The Court refused to subscribe to the views of the single Judge Bench who in the impugned order had stated that the vigilance opinion should always be shared with the delinquent employee.
The Court further emphasized on the relevance of public interest with regard to the funds entrusted to the banks. The Court further opined that when moral turpitude is involved and the bank is put to considerable financial loss, one can safely assume that the legislative intent of Section 10(1)(b)(i) of the Banking Regulation Act, 1949 is dismissal of the delinquent employee.
Background and Legal Trajectory
The respondent-employee was in the Senior Manager Cadre. In the period between 02-06-1986 and 11-05-1990, respondent had indiscriminately lent bank’s money to the fictitious persons without securing the repayment thereof and therefore bank had been put through a huge financial loss of more than Rs13 lakh and the same was substantiated by conducting an enquiry with respondent’s participation and attaining his written statement.
Subsequently, the Competent Disciplinary Authority handed a punishment of dismissal from service to the respondent vide order dated 03-04-1997. The respondent’s Departmental Appeal against the same was rejected vide order dated 05-08-1997. Along with disciplinary action, the respondent was also prosecuted under Section 120-B r/w Section .420, 468, 471 of Penal Code, 1860 (IPC) and under Section 13(1)(d) & Section 13(2) of the Prevention of Corruption Act, 1988 and was eventually convicted and sentenced to undergo simple imprisonment of 3 years and fine of Rs 70,000. The appeal against the conviction was rejected by the single Judge Bench of Karnataka High Court, however, the Supreme Court modified the sentence by reducing the period of imprisonment from 3 years to 1 year; however, the fine came to be enhanced from Rs.70,000 to Rs 2 lakh.
However, the single Judge Bench of the Karnataka High Court in 2003 allowed the respondent’s writ petition, setting aside his dismissal and issued directions for the respondent’s reinstatement.
Decision & Analysis
Perusing the matter, the Court found that Single Judge could not have passed the impugned order. The Court emphasised that in matters like the instant case, writ Courts should be slow in granting interference, subject to all just exceptions.
The Court with thorough examination of all the pertinent facts, evidence and by relying on Supreme Court decisions relevant to the instant case, noted that the appellant wealth of material on record that justified the respondent’s dismissal. It was noted that the focal point of examination of record in writ proceedings is the decision-making process and the same was not reflected in the impugned order of the Single Judge.
The Court also took note of the subsequent prosecution and conviction of the respondent and pointed out that offences that respondent was charged with, involved moral turpitude. The Court stated that Section 10(1)(b)(i) of the Banking Regulation Act, 1949 enact a Parliamentary injunction to the bank to discontinue the employment of a person who is convicted for an offence involving moral turpitude, whether he is sentenced or not.
The Court relied on State Bank of India v. P. Soupramaniane, (2019) 18 SCC 135 wherein, the Supreme Court, held that the release under probation does not entitle an employee to claim the right to continue in service. In fact, the employer is under an obligation to discontinue the services of an employee convicted of an offence involving moral turpitude.
Furthermore, the Court pointed out that Section 13(1)(d) & Section 13(2) of Prevention of Corruption Act, 1988 and Sections 420, 468 and 471 of IPC involves element of moral turpitude which merits dismissal from employment.
Pointing out the element of Public Interest in respect of funds consigned with the banks, the Court stated that funds are parked with the banks by broad segments of the public and this establishes a public trust which compels the banker to act with a greater care. Invoking Robert C. Holland, noted American Economist, who gave the slogan “Husband Your Banking Resources”, the Court pointed out that indiscriminate lending in gross violation of prescribed protocol in terms of extant Circulars & Manual of Instructions is unscrupulous & culpable. “Such a reckless act that obviously lacking in bona fide would put the banking institutions to the risk of losing public money which they have to husband, the borrowers being fictitious and securities proving futile”.
The Court also pointed out that even the Supreme Court, while considering the respondent’s criminal appeal, only modified his sentence and enhanced the fine three-fold rather than setting aside the respondent’s conviction.
The Court was of the view that afore-stated assessment adds merit to the appellant’s case, therefore, the Court set aside the impugned order of Single Judge.
[Vijaya Bank v. M Ravindra Shetty, 2024 SCC OnLine Kar 55, decided on 04-06-2024]
*Judgment by Justice Krishna S. Dixit
Advocates who appeared in this case :
For the Appellant: PRADEEP S SAWKAR., ADVOCATE
For the Respondents: MOHITH KUMR K., ADVOCATE-ABSENT
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