Jharkhand High Court
Case BriefsHigh Courts

   

Jharkhand High Court: Sanjay Kumar Dwivedi, J. allowed a criminal miscellaneous petition quashing the entire criminal proceeding including the order dated 08-12-2017, passed by the Special Judge, Economic Offences, Dhanbad, whereby cognizance had been taken against the petitioners for the offences under Sections 276(B) and 278(B) of the Income Tax Act, 1961 pending in the Court of Special Judge, Economic Offences, Dhanbad.

Facts of the case:

The complainant, Assistant Commissioner, Income Tax Department stated that accused 1 (petitioner1) is a joint venture company represented through its principal officer i.e., accused 2 (petitioner 2) and is carrying business of power generator in the name “Maithon Power Limited”.

It is a private limited company registered under the Companies Act and derived Income from business of generating power and is an assessee within the meaning of Income Tax Act. Being a principal officer as per Section 2(35) of the I. T. Act of accused 1, the accused 2 was liable and responsible to the company for the conduct of the business of the company.

The accused 2 for and on behalf of accused 1, being a principal officer of accused 1, deducted TDS amount, amounting to Rs. 8,22,23,551/- for F.Y.-2012-13 but failed to credit the same to the account of Central Government of India, TDS Ward Dhanbad. The complainant contended that the accused 2 deliberately, intentionally, knowingly, willingly and having mens rea in his mind failed, neglected and avoided to deposit the same in time to the credit of Central Government account without reasonable cause rather converted the aforesaid amount into their own use for their wrongful gain and for wrongful loss to the Central Government. A show cause notice was issued and served upon the accused in response to which he filed a letter which had no leg to stand.

Finally sanction to launch a prosecution U/s 276-B r/w Section 278-B of the I. T. Act against the accused persons was sent to Commissioner of Income Tax, TDS Ward, Patna. Considering all the facts and circumstances with due care and caution he applied his judicial mind and opined that a prima facie case is made out under section 276-B r/w Section 278-B of the I. T. Act.

Contentions:

Counsel appearing for the petitioners submitted that the TDS amount in question was received by the company in the month of February, 2013 and in terms of Rule-30 of the Income Tax Rules, 1962, it is required to be deposited in terms of Rule-30(2)(B), as such, the amount was required to be deposited on or before 07-03-2013, however, the same was credited in the account of Income Tax Department on 08-03-2013. He further submitted that for the delay of one day in payment of TDS amount, the interest has also been paid to the department, which is also an admitted fact. By way of referring Section 95 of the Penal Code 1860, he submitted that in view of that Section, if the harm is so slight, no person of ordinary sense and temper would complain of such harm. He further submitted that in light of Section 202 Criminal Procedure Code, 1973, the summon was not required to be issued so far as petitioner 2 is concerned, who was stationed at Mumbai. Relying on case laws he submitted that the complainant has not disclosed in the complaint as to how the petitioner 2 was overall in-charge. He finally submitted that the entire criminal proceedings including the order of taking cognizance were fit to be quashed.

Counsel appearing for the Income Tax Department submitted that whatever has been argued by the counsel appearing for the petitioners can be looked into only in the trial. She further submitted that the there is no delay of one day rather there was delay of two months in crediting the T.D.S. stating that period of delay is counted from the date of deduction of the TDS and not from the date of deposit of the TDS, as per the CBDT guidelines. She further submitted that paying the interest is civil liability, whereas the TDS amount, which has not been deposited by the petitioner is a criminal liability, for which, he has been called to face the prosecution under the relevant Sections of the Income Tax Act.

Findings:

The Court went through the materials available on record and it was noted that the charts enclosed by the General Manager, CSD, State Bank of India disclosed the time of transaction. On perusal of the said chart, it transpired that the TDS credit transaction was initiated between 10.00 P.M. to 11. 00 P.M. and the first initiation was also done in the evening and for the transaction between 10.00 P.M. to 11. 00 P.M on 07-03-2013, the status description discloses ‘completed successful.' Meaning thereby that the petitioners had taken steps within time, however, the same was credited in the account of the Central Government on 08-03-2013. It was further noted that interest of one day had also been paid.

The Court was of the opinion that looking at Rule-30(2)(B) of the Income Tax Rules and the Bank document, it transpires that the liability cannot be fastened upon the petitioners on the ground that the initiation of payment of TDS shall not be taken at the right time. The Court relied on Ravi Thapar v. Madan Lal Kapoor, (2013) 3 SCC 330 and came to a conclusion that the documents of the State Bank of India can be looked into by this Court, sitting under Section 482 Cr.P.C. The court further stated that the Magistrate was required to follow the mandatory provision of Section 202 Cr.P.C., which has been amended in the year 2005 making it mandatory to postpone the issue of process, where the accused is not residing within the territorial jurisdiction of the magistrate concerned.

The Court further relying on Girdhari Lal Gupta v. D.H. Mehta, (1971) 3 SCC 189 and Dayle De'souza v. Government of India, 2021 SCC Online SC 1012 held that the petition does not disclose as to how petitioner 2 is overall in-charge of the business reproducing Section 278(B) of the Income Tax Act.

The Court consequently quashed the entire criminal proceeding including the order Special Economic Offices against the petitioners and allowed the criminal miscellaneous petition.

[Maithon Power Limited v. State of Jharkhand, Cr.M.P. No. 2193 of 2018, decided on 14-02-2022]


Advocates who appeared in this case :

Pandey Neeraj Rai, Rohit Ranjan Sinha, Akchansh Kishore, Pradymna Poddar, Advocates, for the Petitioners;

Bhola Nath Ojha, Advocate, for the State;

Amrita Sinha, Advocate, for the Income Tax Department.


*Suchita Shukla, Editorial Assistant has reported this brief.

Rajasthan High Court
Case BriefsHigh Courts

   

Rajasthan High Court: In a case of an illegal termination of a Manager of Kotak Mahindra Bank being pending for relief and having no effective hearing owing to the post of Deputy Labour Commissioner being vacant, Arun Bhansali J. instructed the State to appoint competent authority which was thereby appointed.

The Petitioner was appointed as Senior Manager with the respondent-bank Kotak Mahindra Bank. The petitioner received several awards and accolades for his exceptional performance but on a not so fateful day, he was terminated from his services with immediate effect without any notice or enquiry whatsoever for alleged admitted indulgence in fraudulent activities prejudicial to the interest of the Bank by routing the direct business through DSA (Direct selling agents).

A complaint was filed under Section 10-A of the Industrial Dispute Act (‘ID Act') with an objective to resolve the dispute through conciliation before the Joint Labour Commissioner and Labor Conciliation Officer, Labour Department/Office, Jodhpur. However, owing to vacancies in the office of the Labour Department and thus due to no effective hearing, no action could have been undertaken.

Being aggrieved of the illegal termination order by the respondent bank, the Petitioner filed a Complaint under Section 28-A(2) of the Rajasthan Shops and Commercial Establishments Act, 1958 (‘1958 Act') read with Rule 24B of the Rajasthan Shops and Commercial Establishments Rules, 1959 (‘1959 Rules'). Hence, in the absence of an efficacious remedy to provide any relief against the prima facie illegal termination by the respondent bank, the present writ petition was preferred before the instant Court.

The petitioner contended that the illegal termination was justified as per Clause 19 of the employment agreement which is void ab initio being in contravention to the applicable law. It was further contended that though the petitioner has availed himself of his remedy under the Rajasthan shops and Commercial Establishments Act, on account of the office of the Labour Commissioner at Jodhpur being vacant present petition was filed.

Counsel for respondent submitted that steps have already been taken for appointment of Joint Labour Commissioner and needful is likely to be done by the next date of hearing.

Thus, it was brought to the notice of the Court that the competent authority, i.e. the Dy. Labour Commissioner has been appointed vide order dated 14-07-2022, and hence in light of this, the Court disposed of the petition.

However, the Court remarked that it is expected of the competent authority to deal with the matter filed by the petitioner with utmost expedition.

[Aaraj Sharma v. State of Rajasthan, S.B. Civil Writ Petition No. 7614/2022, decided on 27-06-2022 and 21-07-2022]


Advocates who appeared in this case :

Mr. Siddharth Tatiya, Advocate, for the Petitioner(s);

Mr. Himanshu Shrimali, Advocate, for the Respondent(s).


*Arunima Bose, Editorial Assistant has reported this brief.

Legislation UpdatesRules & Regulations

On 21-06-2022, the Small Industries Development Bank of India notified Small Industries Development Bank of India (Defined Contributory New Pension) [Amendment] Regulations, 2022 in order to amend  Small Industries Development Bank of India (Defined Contributory New Pension) Regulations, 2012. These Amendments will have a retrospective effect and comes into force with effect from January 01, 2020.

Key points:

  • The Regulation 4.1.1 deals with Rate of contributions/subscriptions provides that the subscriber employees will have to contribute a fixed percentage of Pay and DA which will be decided by the bank from time to time, whereas previously they had to contribute 10%. The provision states that the bank will make contribution/subscription at the rates as decided by itself from time to time, whereas previously the Bank had to match the amount paid by the Subscriber Employee.
  • The newly amended Regulation 5.2 states that instead of the contributions/subscriptions including a 10% of Pay and Dearness Allowance (DA) in the case of default, the contributions/subscriptions will now include a fixed percentage of Pay and DA as decided by the Bank from time to time and the prevailing rates on the respective date(s) will apply.

Madras High Court
Case BriefsHigh Courts

Madras High Court: S M Subramaniam, J. upheld the decision taken by Indian Banks Association to unilaterally withdraw the facility for State Bank of India officers to visit overseas countries as part of Leave Travel Concession ‘LTC’/ Home Travel Concession ‘HTC’.

The instant writ was filed challenging the validity of the circular dated 07-4-2014 issued by Indian Banks Association (‘R3’) read with the e-Circular dated 15-4-2014 issued by State Bank of India (‘R1’). The circulars under challenge unilaterally took a decision to withdraw the Leave Travel Concession ‘LTC’ covering overseas travel for SBI officers, and the officers were not entitled to visit overseas countries/ centers as part of LTC or HTC (Home Travel Concession) with immediate effect.

The Indian Bank’s Association issued a Circular dated as early as on 18-09-1982 pursuant to bilateral discussions with the All India State Bank Officers Federation and All India Bank Officers Confederation (‘Petitioners’) being trade unions permitting LTC facility to cover foreign travel also within the eligibility to travel within the Country. This was continued and reiterated in a Circular dated 08-10-2008 issued by Indian Banks Association (R3). All the public Sector Banks, the State Bank of India and the Scheduled Commercial Banks have implemented and extended the facilities to their officers. There is no additional expenditure for the Banks as the amount paid is only as per the eligibility to travel within the country.

Rule 44 of the State Bank of India Officers, Service Rules, 1992, contemplates Leave Travel Concession and Leave Encashment and sub rule-1 to rule-44 provides that

“(1) During each block of four years, an officer shall be eligible for leave travel concession for travel to his home-town once in each block of two years. Alternatively, he may travel in one block of two years to his home-town and in the other block to any place in India by the shortest route.”

The Court noted that Rule 44 of the State Bank of India Officers, Service Rules, 1992 specifically contemplates that the travel is permissible to any place in India, extension of benefit to travel abroad granted by the State Bank of India itself is not in consonance with the terms of Rule 44. Therefore, it is to be construed as an additional facility or concession extended to the officers, which is otherwise not in consonance with the Statutory Rules in force and therefore, cannot have any statutory force.

Placing reliance on Director General of Foreign Trade v. Kanak Exports, (2016) 2 SCC 226 wherein it was observed

“We may state, at the outset, that the incentive scheme in question, as promulgated by the Government, is in the nature of concession or incentive which is a privilege of the Central Government. It is for the Government to take the decision to grant such a privilege or not. It is also a trite law that such exemptions, concessions or incentives can be withdrawn at any time. In such circumstances, even the Doctrine of Promissory Estoppel cannot be ignored.”

The Supreme Court in Balco Employees Union v. Union of India, (2002) 2 SCC 333, held that “Laws, including executive action relating to economic activities should be viewed with greater latitude that laws touching civil rights such as freedom of speech, religion etc., that the legislature should be allowed some play in the joints because it has to deal with complex problems which do not admit of solution through any doctrine or straitjacket formula and this is particularly true in case of legislation dealing with economic matters, where having regard to the nature of the problems greater latitude require to be allowed to the legislature. The question, however, is as to whether it can be done retrospectively, thereby taking away some right that had accrued in favour of another person?”

The Court noted that when the Government of India specifically passed a memorandum that the Leave Travel Concessions to the officers of the Public Sector Undertakings and others to be restricted on par with the Government of India scheme, then there is a context and meaning with reference to certain foreign affairs and therefore, there is no infirmity in respect of the order impugned passed by the respondents in canceling the concession extended to travel abroad under Leave Travel Concession facility. Rule 44 of the State Bank of India Officers’ Service Rules, 1992, regarding Leave Travel Concession and Leave Encashment are comprehensive and provides the procedures, definitions etc., the said Rule alone would have the statutory enforceability.

On the contention of the petitioner with respect to opportunity of hearing not being provided before the decision was taken, the Court observed that when the concession to travel abroad has been permitted without entering into bipartite agreement or through a statute, question of granting an opportunity to the officers does not arise. Such an additional facility to travel abroad is a policy decision taken by the respondent / Management and such a policy has been withdrawn, taking note of the memorandum issued by the Government of India, Ministry of Finance and based on the decision taken by the Indian Bank Association. Thus, the decision taken without providing an opportunity to the petitioners would not constitute violation of principles of natural justice nor their service rights are infringed.

The Court further noted that the concession and the facility extended to get reimbursement of the foreign travel expenses, was given by way of an additional facility through a letter and such letter was cancelled and the facility was withdrawn pursuant to the orders of the Government of India, Ministry of Finance and the Circular issued by the Indian Bank Association. The policy of the Government of India, Ministry of Finance is to be followed in the interest of public by all the Public Sector Banks, which was adopted by the Indian Bank Association.

The Court opined that the petitioners could not establish that the additional facility to travel abroad under the Leave Travel Concession is a service right or condition of service. Thus, the withdrawal would not infringe the rights of the employees nor caused any prejudice and thus, held “this Court do not find any perversity in respect of the decision taken for withdrawal of the additional concession granted to the officers of State Bank of India to travel abroad under Leave Travel Concession scheme. However, it is made clear that the officers are entitled to the Leave Travel Concession and Leave Encashment as contemplated under Rule 44 of the State Bank of India Officers Service Rules, 1992.”

[All India State Bank Officers Federation v. State Bank of India, 2022 SCC OnLine Mad 3372, decided on 24-06-2022]


Advocates who appeared in this case :

R. Vaigai, Senior Advocate, for the Petitioners;

Om Prakash, Senior Advocate, for R1 and R2;

Mr. S. Rajesh, Advocate, for R4;

No appearance, for R3.


*Arunima Bose, Editorial Assistant has reported this brief.

Calcutta High Court
Case BriefsHigh Courts

   

Calcutta High Court: Shekhar B. Saraf, J. upheld the award granted by the Arbitral Tribunal holding that the award holder should be secured for the entirety of the amount along with interest and other costs.

The petitioner had filed this petition under Section 34 of the Arbitration and Conciliation Act, 1996 (“the 1996 Act”) along with an application under Section 36(2) of the 1996 Act praying for stay of the award passed by the arbitral tribunal on 27-12-2021 where the respondent was entitled to a refund of Rs. 84.24 crores along with interest which it had deposited with the petitioner on 27-12-2006. Tribunal had also awarded a sum of Rs. 25,00,000/- towards reimbursement of litigation and arbitral costs.

The dispute between the parties had arisen out of an agreement to carry out a new township project for which the petitioner invited financial bids through a tender process. The financial bid of the respondent was accepted and the petitioner via letter dated 21-12-2006 issued a Letter of Award. Possession of 90.19 acres of land was handed to the respondent on 10-08-2007, however no lease deed was entered between the parties at the time of handing over of the possession. Even after a lapse of one year, the lease agreement for execution of work and the development agreement for the same were still not executed between the parties. Finally, in order to govern the relations between the parties a formal development agreement mentioning the terms and conditions were reduced in writing on 25-04-2008. Due to non-execution of the lease between the parties, the new township project was not commenced meanwhile, the petitioner demanded the remaining sums required to be paid by the respondent claimant. The respondent did not pay the remaining amount due to non-execution of the lease document. Finally, the petitioner terminated the development agreement due to nonpayment of the balance instalments constituting event of default by the respondent. Resultantly, arbitration clause was invoked for settlement of the dispute wherein the abovementioned order was passed by the Tribunal.

Senior Advocate appearing for the petitioner argued that the court has the discretion to decide the mode of security to be furnished by the petitioner. He stated that the land in possession of the respondent can be accepted as a valid security for granting stay of the arbitral award under Section 36 of the 1996 Act.

Advocate appearing for the respondent highlighted the default committed by the petitioner as per the development contract entered between them.

The Court perused the relevant clauses and provisions of law cited by the advocates and opined that proviso to Section 36(3) of the 1996 Act makes it clear that the Court must, while considering the stay application in proceedings under Section 34 of the Arbitration Act, have due regard to the provision for grant of stay of a money decree under the provisions of the Civil Procedure Code, 1908 (“CPC”). Order XLI, Rule 5(1) of the CPC grants the court discretion to stay the execution of a decree for ‘sufficient cause'.

The Court reiterated what was held in the case of Pam Developments (P) Ltd. v. State of West Bengal, (2019) 8 SCC 112 that the mandate of the amended Section 36 of the 1996 Act is such that the Court while considering an application for stay filed along with filing of quashing petitioner under Section 34 of the Arbitration Act can grant the stay subject to conditions as it deems fit. Section 36 also mandates recording of reasons for such stay being granted. The Court at the initial stage of proceeding, was satisfied that there does not appear to be any illegality, perversity or violation of any law on the face of the arbitral award as Arbitrator has duly considered the pleadings on behalf of the parties, and thereafter, framed issues and dealt with specific claims and counterclaims of the parties with reasons — hence, the award is a speaking award.

The petitioner was directed to deposit 50% of the arbitral award (including interest calculated till June, 2022) by way of cash security or its equivalent and the Registrar Original Side was directed to make a fixed deposit of the said amount with any nationalised bank and keep the same renewed till the disposal of the application under Section 34 of the Act or until further orders of Court. The remaining 50% of the awarded amount was directed to be secured by way of bank guarantee(s) of a nationalised bank by the petitioner to the satisfaction of the Registrar Original Side, High Court.

[Siliguri Jalpaiguri Development Authority v. Bengal Unitech Universal Siliguri Projects Ltd., I.A. G.A. No. 1 of 2022, decided on 22-06-2022]


Advocates who appeared in this case :

Mr S.N. Mookherjee, Senior Advocate, Mr Anirban Ray, Mr Raja Saha, Mr Chayan Gupta, Mr Sandip Dasgupta, Mr Saaqib Siddiqui, Mr Aviroop Mitra, Advocates, for the Plaintiff/Respondent;

Mr Siddharth Batra, Mr Ashish Shah, Mr Chinmay Dubey, Ms Moumita Chakraborti, Advocates, for the Respondent/Claimant.


*Suchita Shukla, Editorial Assistant has reported this brief.

Customs, Excise and Services Tax Appellate Tribunal
Case BriefsTribunals/Commissions/Regulatory Bodies

Customs, Excise and Services Tax Appellate Tribunal (CESTAT): The coram of Sulekha Beevi C.S. (Judicial Member) and P. Anjani Kumar (Technical Member) allowed an appeal which was filed aggrieved by the order of the original authority confirming the demand interest and imposed penalty, including a separate penalty on the Former Chief Financial Officer of Indian Overseas Bank. 

 

Appellant-bank allegedly  had wrongly availed CENVAT Credit in respect of the Service Tax paid on deposit insurance service provided by Deposit Insurance and Credit Guarantee Corporation (hereinafter referred to as ‘DICGC’), investigation was initiated by the Kochi Regional Unit of the Directorate General of Central Excise Intelligence (DGCEI). Scrutiny of documents and statements recorded indicated that the credit availed on the Service Tax paid on deposit insurance service was ineligible. Show Cause Notice was issued proposing to disallow the wrongly availed credit and also to recover the same along with interest and also for imposing penalty.  

 

Counsel of the appellants submitted that the question involved was whether the appellant-bank can avail credit of the Service Tax on the deposit insurance service provided by DICGC. As per Section 15 of the DICGC Act, every insured bank has to pay premium at the rate notified by them. That the appellant has paid Service Tax on the basis of the premium / fees paid by them to DICGC to insure the deposits. That this is an input service for the appellant-bank and the appellant has correctly availed credit of the Service Tax paid to DICGC. 

 

The Tribunal followed the decision in South Indian Bank Ltd. v. CCE, 2020 SCC OnLine CESTAT 2395 wherein it was held that insurance service provided by DICGC to the banks is an input service and the credit of Service Tax is eligible. 

The Tribunal while allowing the appeal held that the credit of the Service Tax paid on the basis of premium paid to DICGC is eligible for Cenvat Credit. 

 

[Indian Overseas Bank v. Commr. of CE&ST, Service Tax Appeal No. 40702 of 2016, decided on June 10, 2022] 


Ms Shwetha Vasudevan, Advocate for the Appellant 

Ms K. Komathi, Authorized Representative for the Respondent 


*Suchita Shukla, Editorial Assistant has reported this brief.

Case BriefsHigh Courts

Kerala High Court: In a case wherein, due to low CIBIL Score education loan was denied, N. Nagaresh, J., directed for reconsideration of loan applications, disregarding the low Credit Score of the co-obligants.

Petitioners were aggrieved by the denial of the education loan in the present case. The 2nd respondent had rejected the application for an education loan for the reason that the CIBIL Score of the co-applicant was not up to the mark.

On being aggrieved with the above, the petitioner approached the Court.

Petitioner cited the decision of this Court in Pranav S.R. v. SBI, [2020 KHC 4695], wherein it was held that unsatisfactory credit scores of the parents of the petitioner cannot be a ground to reject an educational loan application because the repayment capacity of the petitioner after his education should be the deciding factor. Therefore, the respondents are compellable to sanction and disburse the educational loan applied for by the petitioners.

Analysis and Decision

High Court expressed that, in the exercise of the powers conferred by Sections 21 and 35A read with Section 56 of the Banking Regulation Act, 1949, the Reserve Bank of India, in public interest, has issued Reserve Bank of India (Priority Sector Lending- Targets and Classification) Directions, 2020. Direction 4 contained therein categorises Education as a priority sector. Direction 11 states that Loans to individuals for educational purposes, including vocational courses, not exceeding ₹20 lakhs will be considered as eligible for priority sector classification.

Bench stated that, this Court in the decision of Pranav S.R. v. SBI, [2020 KHC 4695], has held that for educational loans, the repayment possibilities are to be decided not on the financial position of the parents but solely on the projected future earnings of the students on employment after education.

Hence, in the present matter, Court found no reason to take any different view and allowed the petitions.

Lastly, the High Court directed the respondents to reconsider the loan applications, disregarding the low Credit Score of the co-obligants, if any, and sanction and disburse the eligible loan amount.[Kiran David v. SBI, 2022 SCC OnLine Ker 1193, decided on 2-3-2022]


Advocates before the Court:

For the Petitioner:

MANOJ RAMASWAMY

         JOLIMA GEORGE

         JISHA SASI

         C.B. SABEELA

         APARNA G.

         CHINNU ROSE MARY THOMAS

For the Respondents:

JAWAHAR JOSE

         CISSY MATHEWS

         EDWIN JOSEPH

National Consumer Disputes Redressal Commission
Case BriefsTribunals/Commissions/Regulatory Bodies

National Consumer Disputes Redressal Commission (NCDRC): The Coram of Justice R.K. Agarwal (President) and Dr S.M. Kantikar (Member) expressed that, customer avails of Locker hiring facility is so that they may rest assured that their assets are being properly taken care of, but in the present matter, OP Bank failed to take care of the assets.

Instant appeals were filed against the order passed by the State Consumer Disputes Redressal Commission, Jharkhand whereby the complaints filed were partly allowed and the State Bank of India was directed to pay a lump sum compensation of Rs 30,00,000.

In the present matter, the complainants had Saving Bank Account and several High Value Fixed Deposit Accounts for nearly last four decades with the State Bank of India (OP Bank). They were also allotted Safe Deposit Locker by the OP Bank.

During the intervening night, a theft took place in the OP Bank as a result of which various items including jewellery and postal deposit instruments which were kept in the Safe Deposit Locker by the complainants were taken away by the miscreants/thieves.

The OP Bank did not intimate about the above-stated and on reaching the bank they got to know that their Safe Deposit Locker had been broken open and burgled. Further, the complainants met the Officer of the OP Bank, who confirmed the incident and asked them to furnish a list of their valuables.

Complainants alleged deficiency in service on the part of the OP Bank, the complainants filed a consumer complaint before the State Commission seeking compensation.

On being aggrieved with the impugned order passed by the State Commission, while the OP-Bank had filed appeals for setting aside the order by the State Commission, complainants preferred the cross-appeals for enhancement of the compensation awarded by the State Commission.

Analysis and Decision


Commission expressed that the purpose for which the customer avails Locker hiring facility is so that they may rest assured that their assets are being property taken care of, but in the present matter, OP Bank failed to take care of the assets/valuable articles of the Complainants which were lying in the Lockers provided by the OP Bank.

Further, the Coram added that although the stolen goods were seized by the Police and the complainants could identify only small quantity of their jewellery because most of the jewellery was in distorted shape due to rough handling by the burglars and a substantial quantity of jewellery was melted and transformed into gold biscuits, yet the OP Bank cannot be absolved from the deficiency in service on their part.

Therefore, no interference with the well-reasoned order was required. [SBI v. Gopal Prasad Mahanty, 2022 SCC OnLine NCDRC 48, decided on 7-4-2022]


Advocates before the Commission:

For the State Bank of India: Mr. Jitendra Kumar, Advocate

For the Complainants: Mr. Gopal Prasad Mahanty, in-person

Mr. Shashi Bhushan Kr., in person

Case BriefsHigh Courts

Andhra Pradesh High Court: C Praveen Kumar, J. allowed the petition and quashed the FIR in Crime No.294 of 2013 of II Town Police Station, Eluru.

The facts of the case are such that the informant was working as Manager in Central Bank of India wherein he availed a housing loan of Rs.5,00,000/- for constructing a house. The said house was mortgaged with the bank as security for the loan. In some sudden turn of events the Bank dismissed the informant from the service because of a conviction in a C.B.I. case. Later on, the Bank settled his benefits and paid Provident Fund after recovering the housing loan. The informant requested the Bank to release the title deeds and documents due to repayment and no outstanding dues but to no avail.

The informant claims to have been harassed because he belongs to Scheduled Caste. The informant thus approached the National Commission for Scheduled Castes for release of the title deeds and house documents and settlement of issues like Gratuity etc which was thereby settled. On 16-08-2013, the Bank Manager informed the informant that they have misplaced the documents and title deeds of his house and further the General Manager informed the National Commission for Scheduled Castes about the same and also informed them about the steps being taken against the local branch. Non-delivery of house documents lead to filing of the present report alleging the offences constitutes punishable under Section 3(1)(v) and 3(2)(vii) and Section 4 of POA, Act.

The present Criminal Petition was filed, under Section 482 Cr.P.C., seeking quashing of investigation in the crime of II Town Police Station, Eluru, registered for the offences under Section 3(1)(v), 3(2)(vii) and 4 of Scheduled Castes and Scheduled Tribes (Prevention of Atrocities) Act, 1989 [for short, “POA, Act”].

The Court after perusing Section 3(1) (v) and 3(2) (vii) and Section 4 of POA, Act, which deals with punishment for neglect of duties it is clear that these cannot be made applicable to the facts in issue. Section 3(2)(vii) postulates a situation where a person being a public servant commits any offence under this section i.e., Section 3(2) shall be punishable with imprisonment for a term which shall be less than one year but which may extend to the punishment provided for that offence. A reading of the above section makes it clear that it is only a punishment section and would get attracted, if an offence under Section 3(2) has been committed by a Public Servant.

The Court further observed that Section 4 of the POA, Act deals with punishment for neglect of duties, which defines that whoever, being a public servant but not being a member of a Scheduled Caste or Scheduled Tribe, willfully neglects his duties requires to be performed by him under this Act, shall be punishable with imprisonment for a term which shall not be less than six months but may extend to one year.

The Court concluded that it is no doubt true that the petitioners are Public Servants, working in a Bank where the informant has also worked and where he has taken loan. However, the averments in the First Information Report does not anywhere indicate any willful negligence of duties which were required to be performed under the POA, Act. On the other hand, the averments show misplacing of some documents, for which, the Head Office informed the National Commission for Scheduled Castes about the action which they intended to take.

The Court held “it is very clear that even accepting the allegations in the report to be true, no offence under the Scheduled Castes and Scheduled Tribes (POA) Act, is made out and as such, I am of the view that continuation of the proceedings against the petitioners, who are the Branch Manager, General Manager and Regional Manager of the Bank would be an abuse of process of law.” [N. Appa Rao v. State of AP, Criminal Petition No. 13548 of 2013, decided on 01-04-2022]


Arunima Bose, Editorial Assistant has reported this brief.

Case BriefsSupreme Court

Supreme Court: The Division Bench of L. Nageswara Rao and Vineet Saran*, JJ., quashed the confiscation order of Customs and Central Excise Commission confiscating land, building, plant and machinery of Rathi Ispat Ltd. for lacking statutory backing. The Bench observed that the existing law only permit confiscation of goods and no land, building can be confiscated under the Central Excise Rules, 2017.

Chronology of Events

  • The Commissioner, Customs and Central Excise, Ghaziabad (Commissioner) had imposed a penalty of Rs.7,98,03,000 and confiscated the land, building, plant and machinery of Rathi Ispat Ltd. (RIL) under Rule 173Q(2) of the Central Excise Rules, 1944 on 25-11-1997.
  • However, the said order was set aside by the Customs, Excise & Gold (Control) Appellate Tribunal (now CESTAT) for being contrary to principles of natural justice, and the matter was remanded back for de novo proceedings.
  • Subsequently, subrule 2 of Rule 173Q of the Central Excise Rules, 1944, came to be omitted by a notification dated 12-05-2000.
  • In 2005, RIL availed credit from the consortium of banks with the Appellant/Punjab National Bank being the lead bank, and mortgaged all its movable and immovable properties for securing the loan.
  • By the order dated 26-03-2007, the Commissioner confirmed the demand of excise duty of Rs.7,98,02,226 and a penalty of Rs.7,98,03,000 on RIL. The Commissioner also ordered, under rule 173Q(2) of the 1944 Rules, for the confiscation of all the land, building, plant, machinery and materials used in connection with manufacture and storage.
  • Similarly, the Central Excise Commissioner, vide order dated 29-03-2007, confirmed a demand of central excise duty amounting to Rs.2,67,00,348 and Rs.74,24,332 from RIL and also imposed a penalty of Rs.3,41,24,68 and further, under rule 173Q(2) of the 1944 Rules, ordered confiscation of land, building, plant, machinery, material, conveyance etc.

RIL’s Default in Clearing the Loan

Since RIL defaulted in clearing the loan amount and had failed to liquidate outstanding dues, the Appellant bank issued notice to RIL under section 13(2) of the SARFAESI Act, 2002, however, Commissioner, Customs and Central Excise had already confiscated the property by virtue of Rule 173Q(2) of Rules, 1944. Aggrieved, the appellant bank approached the Allahabad High Court with its grievances, however dismissing the petition, the High Court held that if any property has been confiscated it vests in the state and no person can claim any right, title, or interest over it, further the High Court opined that the bank had no locus standi to challenge the order as RIL had already preferred an appeal against confiscation.

Question of Law

  1. Whether the Commissioner could have invoked the powers under Rule 173(Q)(2) of Central Excise Rules, 1944 on 26-03-2007 and 29-03-2007 when on such date, the rule 173Q(2) was not on the Statue Book having been omitted w.e.f. 17-05-2000?
  2. Whether in the absence of any provisions providing for First Charge in relation to Central Excise dues in the Central Excise Act, 1944, the dues of the Excise department would have priority over the dues of the Secured Creditors or not?

Validity of Confiscation Order

The Bench noted that in the impugned order, the High Court had not considered that on the date of the confiscation orders Rule 173Q(2) stood omitted from the statute books. Rejecting the contention of the respondent that notwithstanding the omission of Section 173Q(2) from the 1944 Rules the proceedings were entitled to continue on account of Section 38A(c) and Section 38A(e) of the Central Excise Act, 1944, read along with Section 6 of the General Clauses Act, 1897 as misplaced and lacking statutory backing, the Bench opined that the proceedings initiated under the erstwhile Rule 173Q(2) would come to an end on the repeal of the said Rule 173Q(2).

The Bench followed the decision of Kolhapur Canesugar Works Ltd. v. Union of India, (2000) 2 SCC 536, wherein it had been held that Section 6 of the General Clauses Act, 1897 is applicable where any Central Act or Regulation made after commencement of the General Clauses Act repeals any enactment. It is not applicable in the case of omission of a “Rule”. Secondly, Section 38A(c) and 38A(e) of the Central Excise Act, 1944, are attracted only when “unless a different intention appears”.

Noticeably, in the instant case the legislature had clarified its intent to not restore/revive the power of confiscation of any land, building, plant machinery etc., after omission of the provisions which could be inferred from the fact that power to confiscate any land, building, plant, machinery etc. after omission had not been introduced in the subsequent Central Excise Rules, 2001, Central Excise Rules, 2002 and Central Excise Rules, 2017.

Additionally, this intent was also fortified by the fact that the newly enacted Rule 28 of the Rules of 2001, Rule 28 of the Rules of 2002 and Rule 28 of the Rules of 2017, did not provide for confiscation of any land, building, plant, machinery etc. and their consequent vesting in the Central Government, as Rule 28 only provided for vesting in the Central Government of the “Goods” confiscated by the Central Excise Authorities under the Excise Act, 1944.

Whether the dues of the Excise department create a First Charge?

In UTI Bank Ltd. v. Commissioner Central Excise, 2006 SCC Online Madras 1182, it had been held that since there is no specific provision claiming “first charge” in the Central Excise Act and the Customs Act, the claim of the Central Excise Department cannot have precedence over the claim of secured creditor, viz., the petitioner Bank. Similarly, in Union of India v. SICOM Ltd., (2009) 2 SCC 121, it was observed that prior to insertion of Section 11E in the Central Excise Act, 1944 w.e.f. 08-04-2011, there was no provision in the Act inter alia, providing for First Charge on the property of the assessee or any person under the Act of 1944.

Further, section 35 of the SARFAESI Act, 2002 inter alia, provides that the provisions of the SARFAESI Act shall have overriding effect on all other laws. Therefore, the provisions of Section 11E of the Central Excise Act, 1944 are subject to the provisions contained in the SARFAESI Act, 2002. Therefore, the Bench held that the Secured Creditor-Bank would have a First Charge on the Secured Assets.

Verdict

In the light of above, the Bench concluded that the Commissioner of Customs and Central Excise could not have invoked the powers under Rule 173Q(2) of the Central Excise Rules, 1944 on 26-03-2007 and 29-03-2007 for confiscation of land, buildings etc., when on such date, the said Rule 173Q(2) was not in the Statute books, having been omitted by a notification dated 12-05-2000. Secondly, the dues of the secured creditor, i.e. the bank, would have priority over the dues of the Central Excise Department. Accordingly, the appeal was allowed and the confiscation orders were quashed.

[Punjab National Bank v. Union of India, 2022 SCC OnLine SC 227, decided on 24-02-2022]


*Judgment by: Justice Vineet Saran 


Appearance by:

For the Appellant: Dhruv Mehta, Senior Counsel

For Union of India: K.M. Nataraj, Additional Solicitor General


Kamini Sharma, Editorial Assistant has put this report together

Case BriefsSupreme Court

Supreme Court: The Division Bench of M. R. Shah* and Sanjiv Khanna, JJ., held that  the entire liability outstanding against the borrower could not be discharged on making the payment i.e. Rs.65.65 lakhs against the total dues Rs.1,85,37,218.80 and that the Division Bench of the High Court had erred in directing to release the mortgaged property/secured property and to handover the possession along with the original title deeds to the borrower on payment of a total sum of Rs.65.65 lakhs only.

Factual Matrix

The appellant bank had granted term loan of Rs.100 lakhs and cash credit limit of Rs.95 lakhs to the respondent–borrower against the security of two mortgaged properties namely; an industrial plot measuring 500 Sq.Mtrs. and a residential/housing property measuring 198 Sq.Mtrs. That the borrower failed to repay the term loan and his account became NPA. A notice under Section 13(2) of the SARFAESI Act, 2002 was served upon the borrower demanding a sum of Rs.1,85,37,218.80. Later on, the bank took possession of the residential house and issued a sale notice by public auction for the same for the reserve price was fixed at Rs.48.65 lakhs.

Findings of DRT and DRAT

The borrower challenged the auction by filing Securitization Application under Section 17 of the SARFAESI Act, 2002 before the DRT. The DRT by an interim order held that if the borrower deposits Rs.48.65 lakhs with the bank on or before 27-01-2014, the bank shall deliver the possession of the secured asset along with the original title deeds of the property in question. The order of the DRT was challenged by the bank before the DRAT (Debt Recovery Appellate Tribunal). Observing that the reserve price was Rs.48.65 lakhs which the borrower deposited and the bank had received the bids ranging from Rs. 61.50 lakhs to Rs.71 lakhs and the alleged bidders failed to deposit the earnest money, the DRAT held that when the borrower was ready to purchase the said property for Rs.71 lakhs no fault can be found with the order passed by DRT.

Impugned Order of the High Court

In appeal the Single Judge of the Rajasthan High Court set aside both the orders of DRT and DRAT primarily for the reason that the said orders were in contravention of Section 13(8) of the SARFAESI Act, 2002. However, by the impugned judgment and order the Division Bench of the High Court had reversed the judgment and order of the Single Judge and had directed the bank to release the secured property (residential house) on the borrower depositing a further sum of Rs.17 lakhs to the bank and handover the possession along with the title deeds to the borrower.

Analysis and Observation

The Court observed that when the auction proceedings were initiated under Section 13 of the SARFAESI Act and after the bank took over the possession under Section 14 of the SARFAESI Act as per Subsection (8) of Section 13 of the SARFAESI Act the secured asset should not be sold and/or transferred by the secured creditor, where the amount dues of the secured creditor together with all costs, charges and expenses incurred by him is tendered by the borrower or debtor to the secured creditor at any time before the date of publication of notice for public auction or inviting quotations or tender from public or private treaty for transfer by way of lease assignment or sale of the secured assets.

Though as on 07-01-2013 the dues were Rs. 15 Rs.1,85,37,218.80 and without the secured property was sold in a public auction the Division Bench of the High Court had directed to release the mortgaged property and handover the possession along with original title deeds to the borrower on the borrower depositing/paying a total sum of Rs.65.65 lakhs only.

Noting that Rs.65.65 lakhs was not the amount realized by selling the mortgaged property in a public auction; it was only a highest bid received and the DRT passed an interim order directing to handover the possession and handover the original title deeds on payment of Rs.48.65 lakhs which was the base price, the Bench observed,

“…the borrower did not deposit and was not ready to deposit the entire amount of dues with secured creditor with all costs, charges and expenses incurred by the secured creditor.”

Even as per the Division Bench of the High Court the borrower made an offer to deposit/pay Rs.71 lakhs as a purchaser and not by way of redeeming the mortgaged property. Therefore, the Bench held that the impugned judgment and order passed by the Division Bench of the High Court directing to release the mortgaged property/secured property and to handover the possession as well as the original title deeds to the borrower on payment of a total sum of Rs.65.65 lakhs only was contrary to Subsection (8) of Section 13 of the SARFAESI Act.

Even otherwise, the Bench opined that on making the payment i.e. Rs.65.65 lakhs against the total dues the entire liability outstanding against the borrower could not be said to have been discharged and the liability of the borrower to pay the balance amount would still continue.

Findings and Conclusion

In the light of above, the Bench reached to following findings:

  1. The DRT in its interim order was not justified in directing to release the mortgaged property and handover the possession along with the original title deeds to the borrower on payment of Rs.48.65 lakhs only which was the base price/ reserve price, which the Division Bench of the High Court had increased to Rs.65.65 lakhs on the ground that the highest bid received was Rs.71 lakhs.
  2. Unless and until the borrower was ready to deposit/pay the entire amount payable together with all costs and expenses with the secured creditor, the borrower could not be discharged from the entire liability outstanding.
  3. The Single Judge had rightly set aside the orders passed by the DRT as well as by the DRAT considering Section 13(8) of the SARFAESI Act. The Division Bench of the High Court had erred in interfering with the order passed by the Single Judge.

Consequently, the Bench concluded, since the DRT’s order was an interim order, even if it is set aside the appeal/application will have to be decided and disposed of on merits and on whatever grounds which may be available to the borrower. However, at the same time the bank cannot be restrained from selling the mortgaged property by holding the public auction and realize the amount and recover the outstanding dues, unless the borrower deposits/pays the entire amount due and payable along with the costs incurred by the secured creditor as per Section 13(f) of the SARFAESI Act.

The impugned judgment and order was quashed and set aside and the order passed by the Single Judge quashing and setting aside the order passed by the DRT and confirmed by the DRAT was hereby restored.

[Bank of Baroda v. Karwa Trading Co., 2022 SCC OnLine SC 169, decided on 10-02-2022]


*Judgment by: Justice M. R. Shah

Appearance by:

For the Appellant: Praveena Gautam, Advocate

For the Respondent: Christi Jain, Advocate


Kamini Sharma, Editorial Assistant has put this report together 


 

Case BriefsSupreme Court

Supreme Court: The 3-judge bench of L. Nageswara Rao, Sanjiv Khanna* and BR Gavai, JJ has held that the post office/bank can be held liable for the fraud or wrongs committed by its employees.

In the case at hand, the appellants had sought transfer of their Kisan Vikas Patras from branch of the Post Office to another and they were made to believe that this transfer was not possible without the help of one Rukhsana, who convinced them that she had been working and associated with the post office for fifteen years. A sum of Rs. 25,54,000/- was paid in cash to Rukhsana, who had pocketed the entire amount. Later, the involvement of one of the Post Office Employees, one MK Singh, was alleged, who, contrary to the rules, had paid the maturity proceeds in cash and not by cheque in the names of the appellants.

Noticing that M.K. Singh is not a third person but an officer and an employee of the Post Office, the Court observed that post Office, as an abstract entity, functions through its employees. Employees, as individuals, are capable of being dishonest and committing acts of fraud or wrongs themselves or in collusion with others. Such acts of bank/post office employees, when done during their course of employment, are binding on the bank/post office at the instance of the person who is damnified by the fraud and wrongful acts of the officers of the bank/post office. Such acts of bank/post office employees being within their course of employment will give a right to the appellants to legally proceed for injury, as this is their only remedy against the post office. Thus, the post office, like a bank, can and is entitled to proceed against the officers for the loss caused due to the fraud etc., but this would not absolve them from their liability if the employee involved was acting in the course of his employment and duties.

In State Bank of India v. Smt. Shyama Devi, (1978) 3 SCC 399 held that for the employer to be liable, it is not enough that the employment afforded the servant or agent an opportunity of committing the crime, but what is relevant is whether the crime, in the form of fraud etc., was perpetrated by the servant/employee during the course of his employment. Once this is established, the employer would be liable for the employee’s wrongful act, even if they amount to a crime. Whether the fraud is committed during the course of employment would be a question of fact that needs to be determined in the facts and circumstances of the case.

The Court concluded that, in the present case, the payment was made in violation of the statutory mandate of Section 10 of the NI Act and, therefore, there is no valid discharge under clause (c) to Section 82 of the NI Act. Further, Rukhsana not being a ‘holder’, payment to her is not a valid discharge under Section 78 read with Section 8 of the NI Act. The respondents would have avoided the liability and claimed valid discharge if they had accepted the KVPs with the identity slip or if they had made payment by cross cheque, in which case, they would have satisfied the condition that they had made payment in good faith and there was no negligence, a requirement of clause (c) to Section 82 read with Section 10 of the NI Act.

[Pradeep Kumar v. Post Master General, 2022 SCC OnLine SC 154, decided on 07.02.2022]


*Judgment by: Justice Sanjiv Khanna,

Case BriefsSupreme Court

Supreme Court: In a case where a bank employee was dismissed from services despite lack of evidence, the bench of KM Joseph and S. Ravindra Bhat*, JJ has directed his reinstatement and has held that  even in departmental proceedings, there had to be some overt evidence, and not mere suspicion, to support a valid finding of complicity of the employee.

In the case at hand, it was alleged that the respondent had disbursed loan in favour of twelve fictitious persons in connection with the Integrated Rural Development Project and had misappropriated the amount of ₹ 60,000/- forming the subsidy component, (of the total ₹ 1,20,000/- disbursed to the beneficiaries).

Interestingly, his colleague who confessed to the misconduct, was charged and proceeded with departmentally. The confession of guilt, which he owned up to, nevertheless resulted in a mild penalty of withholding of increments. However, the respondent, who did not admit his guilt, or confess to it, and in respect of whom there was no credible evidence, even going by the lower standards of acceptable proof in departmental inquires, was held to be guilty and visited with the penalty of dismissal.

The supreme Court noticed that

“A reading of the disciplinary authority’s order reveals that his past record of minor misconduct played a major role in determining his guilt, despite lack of evidence, and the extreme penalty of dismissal.”

The Court observed that in the present case, the confessional statement was not by the respondent. Hence, best then, that document bound the authors, not third parties, like the respondent.

“The enquiry officer clearly erred by relying on such extraneous matters, as the respondent could not be made a scapegoat for the confession of others, especially with regard to his role. The bank’s charge about his complicity had to be proved by evidence. This document, containing others’ confession, could not have been used against him.”

The Court hence directed the Bank to reinstate the respondent, and calculate all his benefits, including arrears of salary, pay increase (as applicable), increments, and all consequential benefits, and calculate his terminal benefits, and fix his pension, if admissible to him under the bank’s regulations. The determination of these benefits shall be undertaken, and the payment of all amounts be made, within three months.

[United Bank of India v. Biswanath Bhattacharjee, 2022 SCC OnLine SC 108, decided on 31.01.2022]


*Judgment by: Justice S. Ravindra Bhat


Counsels

For respondent: Advocate Kunal Chatterji

Case BriefsSupreme Court

Supreme Court: Addressing a case of dismissal of a Bank clerk for breaching the trust of a widowed sister-in-law as well as of the bank, the Division Bench of Sanjay Kishan Kaul* and M.M. Sundresh, JJ., held that it was hardly a case for interference either on law or on moral grounds. The Court opined,

“The High Court had applied the test of criminal proceedings to departmental proceedings while traversing the path of requirement of a hand writing expert to be called for the said purpose.”

Backdrop

The dispute in the instant case was with regard to departmental proceedings made by the Indian Overseas Bank against the respondent employee and declaring him guilty on various counts inter alia including breach of duty as a custodian of public money and dishonesty, fraud or manipulation of documents.

The respondent was employed with the appellant-Bank as a clerk cum-cashier. It was on a complaint from the sister-in-law of the respondent, Smt. Meera Srivastava, complainant herein, that the respondent had opened and operated a savings account in the joint name of the respondent and his sister-in-law by forging her signatures, and encashed a demand draft of Rs. 20,000 which was issued to her by Kalyan Nigam Ltd., employer of her deceased husband, who passed away in a road accident, that the departmental proceedings were initiated against the respondent and he was placed under suspension and later on, on charges being proved against him he was dismissed from service.

Award by the Industrial Tribunal

The Industrial Tribunal decided the preliminary issue against the Bank as the Management/Bank had failed to produce original documents and most photocopies of the relevant pages were not readable. It was, thus, concluded that there was violation of the principles of natural justice. However, the Tribunal allowed the Bank to prove the charges against the respondent by adducing evidence. Consequently, the Tribunal opined that the Bank/Management had been successful in establishing all the charges against the respondent. On the issue of quantum of punishment also it was held that the same was commensurate to the charges levelled and proved against the respondent.

Findings of the High Court

However, by the impugned judgment the High Court had held that when the earlier departmental proceedings were found to be violative of the principles of natural justice then no findings vis-a-vis charges 1, 2, 3, 6 & 7 should have been arrived at, based on the plea that the Bank led evidence only in respect of charges 4 & 5. In respect of charges 4 & 5 it was opined that on the request of the respondent the signatures of the complainant should have been got compared with her admitted signatures by an expert and then only a correct conclusion could have been arrived at whether the signatures on the account opening form or the withdrawal form had been forged by the respondent or not and the Tribunal should have refrained from acting like an expert. The High Court held that degree of investigation should have been a standard which is resorted to by a criminal court.

Factual Analysis

Noticeably, while observing the admitted signatures in comparison with the signatures in question from a banker’s eye, the inquiry officer had opined that it could be said that there was absence of similarity. The stand of the complainant was that even the account was opened fraudulently without her ever visiting the bank. Considering that in her cross-examination it was never put to the complainant that she had gone to the Bank to open the account and the account opening form bears her signatures nor was it put to her that she had gone to the Bank to withdraw the amounts of Rs.7,000 and Rs.13,000, the Bench opined,

“We are of the view that the High Court has fallen into an error in coming to the conclusion in the impugned judgment and directing, once again, the matter to be remitted to the Industrial Tribunal to now seek opinion of a hand writing expert.”

The Bench emphasised that at the threshold that there are certain inherent legal limitations to the scrutiny of an award of a Tribunal by the High Court while exercising jurisdiction under Article 226 of the Constitution. Referring to GE Power India Ltd. v. A. Aziz, 2020 SCC Online SC 782, the Bench stated, “if there is no jurisdictional error or violation of natural justice or error of law apparent on the face of the record, there is no occasion for the High Court to get into the merits of the controversy as an appellate court.” That too, on the aspect of an opinion formed in respect of two sets of signatures where the inquiry was held by an officer of the bank who came to an opinion on a bare comparison of the signatures that there was a difference in the same.

Further, the Inquiry Officer had opined while observing the admitted signatures in comparison with the signatures in question, it was not just the ipse dixit of the Inquiry Officer but was based on the deposition of the complainant. She unfortunately lost her husband in an accident. Observing the sorry state of situation, the Bench remarked,

“She unfortunately lost her husband in an accident. The two drafts were received from his employer and those drafts were kept in custody with the respondent, possibly because he was a banker and the elder brother of her deceased husband. Instead of extending the benefits of the same to her, the respondent went on a path of opening an account jointly in his and his sister-in-law’s name, presenting the drafts, and drawing the amounts with appropriation of the same to himself.”

Findings and Conclusion

Referring to a recent judgment in Ashoo Surendranath Tewari v. CBI, (2020) 9 SCC 636, where it had been observed that the standard of proof in departmental proceedings, being based on preponderance of probability, is somewhat lower than the standard of proof in criminal proceedings where the case has to be proved beyond reasonable doubt, the Bench opined that the evidence was enough to implicate the respondent and  the High Court had applied the test of criminal proceedings to departmental proceedings while traversing the path of requirement of a hand writing expert to be called for the said purpose.

With regard to opinion of the High Court that only charges 4 & 5 could really have been gone into by the Industrial Tribunal, which required further evidence of a hand writing expert and that no evidence was led for other charges, the Bench held that view was neither the correct approach nor borne out of the record as, the Bench said,

“Evidence was led. Even earlier, the material in respect of other charges emanates from the record of the bank which shows the conduct of the respondent which are apparent from the manner of framing of the charges themselves and the material led in support thereof. Thus, even the aspect of the other charges could not have been brushed aside in the manner it purports to. “

In the light of above the Bench held that the respondent, a clerk-cum-cashier which was a post of confidence had breached that confidence along with the trust of a widowed sister-in-law, making it hardly a case for interference either on law or on moral grounds. Accordingly, the punishment imposed on the respondent was held to be appropriate as the conduct established of him did not entitle him to continue in service. The impugned judgment was set aside and the challenge to the award of the Industrial Tribunal was repelled.

[Indian Overseas Bank v. Om Prakash Lal Srivastava, 2022 SCC OnLine SC 62, decided on 19-01-2022]


*Judgment by: Justice Sanjay Kishan Kaul


Kamini Sharma, Editorial Assistant has put this report together 


Case BriefsSupreme Court

Supreme Court: In an interesting case where one SBI account holder was left with a balance of Rs. 59/- only in his account due to the existence of another bank account with strikingly similar name in the same branch, the bench of Sanjiv Khanna and Bela M. Trivedi*, JJ has set aside the “highly erroneous” impugned order passed by the National Consumer Disputes Redressal Commission solely relying upon the suo-moto report called for from SBI during the pendency of the revision application.

Factual Background

Sunil Kr. Maity had a saving account number 01190010167 with SBI since January, 2000. On 24.02.2010, the said account number was changed to number 10140478732. On 15.09.2012, the appellant went to deposit a sum of Rs. 500/- in the said account, when a staff of respondent-bank informed him that the account number had again been changed and wrote account number being 32432609504 on his passbook. The said amount was deposited in the said account number. Thereafter, on 16.01.2013, appellant deposited a cheque being no. 670013 for Rs. 3,00,000/- drawn on SBI of the said Branch.

When the appellant went to update his passbook on 11.12.2013, he noticed that his passbook showed the balance of Rs. 59/- only, though he had not made any transaction between 16.01.2013 to 11.12.2013. On the enquiry having been made, the respondent-bank informed the appellant that there was another customer by the name Sunil Maity whose account number was 32432609504 and the said account number was wrongly given to the appellant whose name was Sunil Kr Maity on 15.09.2012. The said Sunil Maity on 25.01.2013 and 28.01.2013 had withdrawn the sum of Rs. 1,00,000/- and Rs. 2,00,000/- respectively from the said account number.

When the matter reached the National Commission, it not only sought for a report from SBI at the revisional stage but set aside the findings and conclusion recorded by the District and State Forum, simply based on this report. The report indicated that the bank had every reason to believe that wrong account number was intentionally inserted by the appellant himself for reasons best known to the appellant or on account of negligence by the appellant by not keeping the passbook in his safe and proper custody.

Analysis

Explaining the scope of the revisional jurisdiction of the NCDRC under Section 21(b) of the said Act, the Court held that the same is extremely limited. It should be exercised only in case as contemplated within the parameters specified in the said provision, namely when it appears to the National Commission that the State Commission had exercised a jurisdiction not vested in it by law, or had failed to exercise jurisdiction so vested, or had acted in the exercise of its jurisdiction illegally or with material irregularity.

In the instant case, the Court noticed that the NCDRC itself had exceeded its revisional jurisdiction by calling for the report from the bank and solely relying upon such report, had come to the conclusion that the two fora below had erred in not undertaking the requisite in-depth appraisal of the case that was required.

The Supreme Court was at a loss to understand as to how the NCDRC could have sought for a report at the revisional stage, that too from an officer of the party which already had an opportunity to submit all the documents necessary for the purpose of defending itself before the Consumer Forum, and as to how such a report in the form of an additional evidence produced at the revisional stage could be relied upon, in respect of which the two fora below had no opportunity to deal with.

Contrary to the NCDRC’s opinion, the Court observed that both the State Commission as well as the Consumer Forum had elaborately appreciated the documents on record and passed the reasoned orders.

On the reliability of the report submitted by the Bank, the Court said that the report that tries to absolve the respondent-bank of its liability is based on surmises and conjectures as it abstrusely and without evidence holds that the bank has every reason to believe that wrong account number was intentionally inserted by the appellant himself for reasons best known to the appellant or on account of negligence by the appellant by not keeping the passbook in his safe and proper custody.

“The suppositions are contradictory as well as incredulous and fanciful. The appellant did not know the second respondent and would not have known his account number unless given to him by a bank officer. There was no way that the appellant would have known that the second respondent, namely Sunil Maity had an account in the same branch. No sane person would deposit cash or cheque meant to be deposited in his account in an account number belonging to another person with similar name.”

On the other hand, the bank should have been extra cautious given the fact that accounts of the appellant, Sunil Kumar Maity, and the second respondent, Sunil Maity, were with the same bank branch. The Court found it rather surprising that the NCDRC set aside the findings and conclusion recorded by the District and State Forum, by simply relying on this report.

The Court hence, restored the State Commission’s order wherein it was held that,

“Given that it is virtually impossible for one to know the account number of another person, and more so, as passbook is stated to be updated by Group ‘D’ staff of the bank, it would be myopic not to believe that the goof up created at the end of the Appellant itself. Besides this, since the Appellant made a great blunder while crediting the amount of the cheque to the account of Respondent No. 2, we feel, the Appellant must own up due responsibility in this regard.”

[Sunil Kumar Maity v. State Bank of India, 2022 SCC OnLine SC 77, decided on 21.01.2022]


*Judgment by: Justice Bela M. Trivedi

Case BriefsSupreme Court

Supreme Court: The bench of Ajay Rastogi and Abhay S. Oka, JJ has held that an amendment having retrospective operation which has the effect of taking away the benefit already available to the employee under the existing rule indeed would divest the employee from his vested or accrued rights and that being so, it would be held to be violative of the rights guaranteed under Articles 14 and 16 of the Constitution.

Factual Background

A Bank pension scheme was introduced by Punjab State Cooperative Agricultural Development Bank Limited, Chandigarh from 1st April 1989 and options were called from the employees and those who had given their option became member of the pension scheme and accordingly pension was continuously paid to them without fail and only in the year 2010, when the Bank failed in discharging its obligations, respondent employees approached the Punjab and Haryana High Court by filing the writ petitions. The Bank later on withdrawn the scheme of pension by deleting clause 15(ii) by an amendment dated 11th  March, 2014 which was introduced with effect from 1st April, 1989.

Analysis

Considering the facts of the case, the Court noticed that the employees who availed the benefit of pension under the scheme, indeed their rights stood vested and accrued to them and any amendment to the contrary, which has been made with retrospective operation to take away the right accrued to the retired employee under the existing rule certainly is not only violative of Article 14 but also of Article 21 of the Constitution.

Explaining the distinction between the legitimate expectation and a vested/accrued right in favour of the employees, the Court observed that the rule which classifies such employee for promotional, seniority, age of retirement purposes undoubtedly operates on those who entered service before framing of the rules but it operates in futuro. In a sense, it governs the future right of seniority, promotion or age of retirement of those who are already in service.

The Court also explained by way of the following example,

“If a person while entering into service, has a legitimate expectation that as per the then existing scheme of rules, he may be considered for promotion after certain years of qualifying service or with the age of retirement which is being prescribed under the scheme of rules but at a later stage, if there is any amendment made either in the scheme of promotion or the age of superannuation, it may alter other conditions of service such scheme of rules operates in futuro.  But at the same time, if the employee who had already been promoted or fixed in a particular pay scale, if that is being taken away by the impugned scheme of rules retrospectively, that certainly will take away the vested/accrued right of the incumbent which may not be permissible and may be violative of Article 14 and 16 of the Constitution.”

The Court also rejected the submission about the financial distress of the appellant Bank to justify the impugned amendment to say that it may not be possible to continue the grant of pension any more and observed that the rule making authority was presumed to know repercussions of the particular piece of subordinate legislation.

“Once the Bank took a conscious decision after taking permission from the Government of Punjab and Registrar, Co-operative, introduced the pension scheme with effect from 1st  April 1989, it can be presumed that the competent authority was aware of the resources from where the funds are to be created for making payments to its retirees and merely because at a later point of time, it was unable to hold financial resources at its command to its retirees, would not be justified to withdraw the scheme retrospectively detrimental to the interests of the employees who not only  became member of the  scheme but received their pension regularly at least upto the year 2010 until the dispute arose between the parties and entered into litigation.”

The Court held that the non-availability of financial resources would not be a defence available to the appellant Bank in taking away the vested rights accrued to the employees that too when it is for their socio-economic security. It is an assurance that in their old age, their periodical payment towards pension shall remain assured.

“The pension which is being paid to them is not a bounty and it is for the appellant to divert the resources from where the funds can be made available to fulfil the rights of the employees in protecting the vested rights accrued in their favour.”

[Punjab State Cooperative Agricultural Development Bank Ltd v. Registrar, Cooperative Societies, 2022 SCC OnLine SC 28, decided on 11.01.2022]


*Judgment by: Justice Ajay Rastogi


Counsels

For petitioners: Senior Advocates Gurminder Singh and K.V.Viswanathan, AORs Niharika Ahluwalia and Shalini Kaul

For respondent: Senior Advocate P.S. Patwalia and AOR Siddharth

Case BriefsSupreme Court

Supreme Court: In a case where the Rajasthan High Court had permitted the respondent employee who is facing disciplinary proceedings to represent through ex-employee of the Bank, the bench of MR Shah* and Sanjiv Khanna, JJ has interpreted Regulation 44 of the Rajasthan Marudhara Gramin Bank (Officers and Employees) Service Regulation, 2010 read with clause 8.2 of the Handbook Procedure to hold that the delinquent employee has no absolute right to avail the services by ex-employee of the Bank as his DR in the departmental proceedings.

Issue

In the case at hand, the Cashier – cum­ Clerk (office Assistant), while working as a Branch Manager, was alleged to have committed certain irregularities amounting to misconduct. By the impugned judgment and order, the Rajasthan High Court had permitted the respondent employee who is facing disciplinary proceedings to represent through ex-employee of the Bank. While permitting the respondent employee, the High Court while construing Regulation 44 of the Rajasthan Marudhara Gramin Bank (Officers and Employees) Service Regulation, 2010 has observed that the Regulation 44 only restricts representation by a legal practitioner, and even that too is permissible of course with the leave to the competent authority, and there is no complete or absolute bar even on engaging a lawyer, the employee cannot be restrained from availing services of retired employee of a Bank. However, it was the specific case on behalf of the Bank that in view of circular dated 31.01.2014 and clause 8.2 of the Handbook Procedure, the DR should be a serving official / employee from the Bank.

Hence, the following question arose before the Supreme Court:

Whether the respondent employee, as a matter of right is entitled to avail the services of an Ex-employee of the Bank as his DR in the departmental proceedings?

Analysis

Regulation 44 of Regulations, 2010

It is true that Regulation 44 puts specific restriction on engagement of a legal practitioner and it provides that for the purpose of an enquiry under Regulation, 2010, the Officer or Employee shall not engage a legal practitioner without prior permission of the competent authority. Therefore, even   availing the services of legal practitioner is permissible with the leave of the competent authority. However, Regulation does not specifically provides that an employee can avail the services of any outsider and/or exemployee of the Bank as DR. Therefore, Regulation, neither restricts nor permits availing the services of any outsider and /or ex¬employee of the Bank as DR and to that extent Regulation is silent.

Clause 8 of the Handbook Procedure

The High Court was of the opinion that as there is no complete or absolute bar even on engaging a lawyer, it is difficult to accept that a retired employee of the Bank cannot be engaged to represent a delinquent officer in the departmental inquiry. However, the Supreme Court noticed that the High Court has not appreciated the effect of the Handbook.

As per Clause 8 of the Handbook Procedure which has been approved by the Board of Directors and it is applicable to all the employees of the Bank and Clause 8 is with respect to the defence representative, it   specifically provides that DR should be serving official/employee from the Bank. The said Handbook Procedure which has been approved by the Board of Directors of the Bank is binding to all the employees of the Bank.

Further, the High Court has considered Regulation 44 of the Regulation, 2010, however has not considered clause 8 of the Handbook Procedure on the ground that the same cannot be said to be supplementary. However, we are of the opinion that Handbook Procedure can be said to be supplementary. The same cannot be said to be in conflict with the Regulation 44  of Regulation, 2010.

Neither Regulation 44 permits nor restricts engagement of an ex-employee of the Bank to be DR. Therefore, Clause 8.2 cannot be said to be in conflict with the provisions of Regulation, 2010.   Provisions of Regulation, 2010 and the provisions of Handbook Procedure are required to be read   harmoniously, the result can be achieved without any violation of any of the provisions of Regulation, 2010 and the Handbook Procedure.

“The objects of Regulation 44 of Regulation, 2010 and Clause 8 of the Handbook Procedure seem to be to avoid any outsider including legal representative and/or even ex-employee of the Bank.”

Important Rulings

N. Kalindi v. Tata Locomotive & Engg. Co. Ltd, (1960) 3 SCR 407

Ordinarily in inquiries before domestic tribunals the person accused of any misconduct conducts his own case and therefore, it is not possible to accept the argument that natural justice ex-facie demands that in the case the enquiries into a chargesheet of misconduct against a workman he should be represented   by a member of his Union; though of-course an employer in his discretion can and may allow his employee to avail himself of such assistance.

Dunlop Rubber Co. (India) Ltd v. Workmen, (1965) 2 SCR 139

There is no per se right to representation in the departmental proceedings through a representative through own union unless the company by its Standing Order recognized such a right. Refusal to allow representation by any Union unless the Standing Orders confer that right does not vitiate the proceedings. Further, in holding domestic enquiries, reasonable opportunity should be given to the delinquent employees to meet the charge framed against them and it is desirable that at such an enquiry the employee should be given liberty to represent their case by persons of their choice, if there is no standing order against such a course being adopted and if there is nothing otherwise objectionable in the said request. Denial of such an opportunity cannot be said to be in violation of principles of natural justice.

Crescent Dyes and Chemicals Ltd. v. Ram Naresh Tripathi, (1993) 2 SCC 115

In the departmental proceedings right to be represented through counsel or agent can be restricted, controlled or regulated by statute, rules, regulations or Standing Orders. A delinquent has no right to be represented through counsel or agent unless the law specifically confers such a right. The requirement of the rule of natural justice insofar as the delinquent’s right of hearing is concerned, cannot and does not extend to a right to be represented through counsel or agent.

Bharat Petroleum Corporation Ltd. v. Maharashtra Genl. Kamgar Union, (1999) 1 SCC 626

A delinquent employee has no right to be represented by an advocate in the departmental  proceedings and that if a right to be represented by a co-workman is given to him, the departmental proceedings would not be bad only for the reason that the assistance of an advocate was not provided to him.

Ruling

As per settled proposition of law in the abovementioned rulings and the analysis and interpretation by the Supreme Court in the case at hand, the only requirement is that delinquent officer must be given fair opportunity to represent his case and that there is no absolute right in his favour to be represented through the agent of his choice. However, at the same time, if the charge is severe and complex nature, then request to be represented through a counsel can be considered keeping in mind Regulation 44 of Regulation, 2010 and if in a particular case, the same is denied, that can be ground to challenge the ultimate outcome of the departmental enquiry. However, in each and every case, irrespective of whether charges is severe and complex nature or not, the employee as a matter of right cannot pray that he may be permitted to represent through the agent of his choice.

It was, hence, held that the High Court had committed an error in permitting respondent delinquent officer to be represented in the departmental enquiry through ex-employee of the Bank.

[Rajasthan Marudhara Gramin Bank v. Ramesh Chandra Meena, 2022 SCC OnLine SC 9, decided on 04.01.2022]


*Judgment by: Justice MR Shah

For Appellant: Advocate Rishabh Sancheti

Case BriefsSupreme Court

Supreme Court: The Division Bench comprising of M.R. Shah and B.V. Nagarathna, JJ., directed the Indian Bank to refund the 25% auction consideration forfeited by the bank after cancelling the proposed auction. The Bench stated that since no loss had been accrued by the bank in the subsequent auction, it cannot wrongly deny the release of disputed amount.

The Property in question had been auctioned by the respondent Bank under Section 13 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 and the Rules made thereunder. The petitioner being successful highest bidder had deposited 25% of auction sale consideration and was required to deposit the remaining 75% of the bid within the time stipulated in the auction notice. The petitioner despite the repeated reminders and relaxation of Covid-19 Pandemic failed to comply the terms and conditions accepted by her, which led the Bank to cancel the sale and forfeit the amount deposited.

Alleging high handedness of the respondent Bank in cancelling the sale and forfeiture of the amount deposited, the petitioner had approached the High Court of the judicature at M.P. seeking refund of the forfeited amount. However, noticing that the petitioner was given proper reminders and Covid 19 extension for the payment of remaining 75% amount of the bid, the High Court had dismissed the petition.

Considering the fact that though initially the appellant deposited 25% of the auction sale consideration, however, subsequently she could not deposit balance 75% due to COVID-19 pandemic, the Bench opined that the High Court ought to have allowed the refund of the amount deposited being 25% of the auction sale consideration.

Further, noticing that subsequently the fresh auction had taken place, the property had been sold and it was not the case of the respondent-bank that in the subsequent sale, lesser amount was received; the Bench opined that no loss was caused to the respondent-bank.

Accordingly, the appeal was allowed and the order of forfeiture of 25% of the amount of auction sale consideration was set aside. The Bench directed the respondent-bank to refund/return the amount earlier deposited by the appellant as the part auction sale consideration (minus 50,000/- towards the expenditure which were required to be incurred by the respondent Bank for conducting the fresh auction) within a period of four weeks.

[Alisha Khan v. Indian Bank (Allahabad Bank), C.A. No. 007680 – 007681 of 2021, decided on 13-12-2021]


Kamini Sharma, Editorial Assistant has put this report together


Appearance by:

For the Appellant: Mithan Lal Gupta, Advocate, Vipin Gupta, Advocate and Mohan Lal Sharma, AOR

For Respondent(s): Ashish Rana, AOR