Murali Purushothaman, J
1. The petitioner joined the service of Indian Bank (hereinafter referred to as the 'Bank', for short), the 1st respondent, on 26.09.1994 as Assistant Manager (Agriculture) in the scale of Junior Manager Grade-1. Later, on 26.09.2007, the petitioner took charge as the Manager of Microsate branch of the Bank which was opened at that time with the objective of providing finance exclusively for Self Help Groups (SHG). The petitioner states that, during his tenure as the Branch Manager, he had sanctioned loans amounting to Rs. 33.21 crores and that not a single account was treated as non-performing and all the loanees were regular in repayment of the loan. The petitioner was transferred from the said branch on 24.03.2009 without assigning any reason.
2. Pursuant to a vigilance investigation, on 04.01.2010, the petitioner was issued with Ext.P8 Articles of Charges and statement of imputations of misconduct. The charges levelled against the petitioner are extracted hereunder:
“1) You had sanctioned loans to Self Help Groups without proper grading, without studying the internal lending, recovery and period of existence and level of maturity.
2) You had sanctioned loans to SHG's without verifying the regular savings of the Groups and loans were sanctioned beyond actual eligibility considering bulk deposits, which is disproportionate to the groups regular savings and not matching with groups records.
3) You had continued to sanction loans by flouting all HO guidelines in respect of SHG finance despite specific directions from General Manager/Circle Head on various occasions.
4) You had sanctioned loans to SHG's outside command area and far away places against extant guidelines.
5) You had caused leakage of income to the Bank, by wrongly classifying many of the advances as Agriculture and fixed repayment schedule with Half yearly rests and with initial holiday period of six months, which otherwise would have earned more interest.
Because of your above lapses, bank is finding it difficult to recover the amount and is likely to face huge financial loss.”
3. The petitioner submitted Ext.P9 reply denying the charges and stating that all the loans were sanctioned in the best interest to meet the corporate expectations for the growth of branch without violating any norms and at the time of leaving the branch, recovery was almost 95%.
4. Pursuant to Ext.P8, an enquiry was conducted and the enquiry officer, by Ext.P10 report, found that the charges 2 to 5 levelled against the petitioner have been proved beyond doubt and charge No.1 is partially proved.
5. The disciplinary authority, the 3rd respondent, concurred with the findings of the enquiry officer and by Ext.P11 order, imposed the following punishment.
“Reduction from MMG-Scale II to JMG Scale I as per Regulation 4(g) of Indian Bank Officer Employees' (Discipline & Appeal) Regulations 1976 as (amended). Consequent to his reduction to Scale I, his basic pay shall be refixed at Rs.14500/- (as per salary revision effected).”
6. As per the Indian Bank Officer Employees' (Discipline & Appeal) Regulations 1976 as (amended) (hereinafter referred to as 'the Discipline and Appeal Regulation' for short), the said punishment is a major penalty. After the imposition of the punishment, the petitioner was transferred to Kollam branch of the Bank.
7. The petitioner preferred Ext.P12 appeal before the 2nd respondent against Ext.P11 and the 2nd respondent dismissed the appeal by Ext.P13 order. Though the petitioner challenged Ext.P13 order by filing W.P.(C) No.29857 of 2011 before this Court, the petitioner was relegated to file Review as per Clause 2.3.21 of the Discipline and Appeal Regulation. However, the Review petition preferred by the petitioner was dismissed by Ext.P14 order. Accordingly, the petitioner has filed this writ petition challenging Ext.P8 and consequential orders contending that the loans were sanctioned bona fide and such act will not come within the purview of misconduct under Regulation 24 r/w 3(1) of the Indian Bank Officer Employees' (Conduct) Regulations, 1976 (hereinafter referred to as 'the Conduct Regulations' for short) and that the punishment imposed is harsh and without taking note of his unblemished service of 17 years.
8. The writ petition was admitted by this Court on 04.04.2012 and a counter affidavit was filed on behalf of the respondents wherein it is contended that the scope of judicial review of this Court under Article 226 of the Constitution against the orders impugned is limited and the charges levelled against the petitioner are grave inasmuch as the loans were sanctioned in violations of the guidelines, and the disciplinary authority, based on the evidence adduced and the report of the enquiry officer, imposed the aforesaid punishment which cannot be said to be disproportionate to the charges.
9. This Court, taking note of the contention of the petitioner that the Bank has not sustained loss consequent to the sanctioning of loans and also the submission regarding the propriety of imposing major penalty, by order dated 07.11.2017, observed that, it is not clear from the records that on what basis the Bank has distinguished between minor and major penalty and directed the Bank to file a statement as to whether it sustained any loss and also the factors taken into account for distinguishing between minor and major penalty. The Bank was also directed to state the status of recovery of loan advanced in the SHG. Order dated 07.11.2017 reads thus:-
“...............................................................................
2. It is not clear from the records on what basis the Bank has distinguished between minor and major penalty.
3. Learned counsel for the petitioner submitted that the Bank has not sustained any loss and it recovered the loan amount.
In the above context, it is appropriate to direct the Bank to file a statement as to whether it sustained any loss and also the factors taken into account for distinguishing between minor and major penalty. The Bank shall also state the status of recovery of loan advanced in the Self Help Groups”.
10. Pursuant to the directions of this Court, a Statement dated 01.02.2018 has been filed by the Counsel for the Bank and the relevant portions thereof read as follows:-
“2. On verification of the records and as per the instructions issued by the Respondent bank the book balance of the accounts mentioned in the charge sheet is Rs.344.97 lakhs excluding memorandum of interest.
3. Majority of the accounts have been assigned to the Asset Reconstruction company/Reliance on various years as the Bank found it difficult to recover the amounts. The cumulative defect of Rs.344.954 lakhs excluding memorandum of interest with regard to the entire amounts outstanding in the various accounts for which proceedings were initiated against the Petitioner.
It is respectfully submitted that since the above mentioned amounts were unable to recover by the Bank, the same had to be treated as loss caused to the Bank excluding interest portion.”
11. The petitioner has filed a reply affidavit dated 07.03.2021 rebutting the contentions in the statement dated 01.02.2018 and specifically contending that the Bank has recovered the entire loan amount from the borrowers in due course of time and nothing is left back.
12. Heard Sri. Alias M.Cherian, the learned Counsel for the petitioner, and Sri. S. Easwaran, the learned Standing Counsel for the respondents.
13. Taking me through the norms for granting loans to SHG and the instructions issued by the Bank to the petitioner to procure business of Rs. 25 crores and the appreciation letters for reaching the target, Sri. Alias, submits that the petitioner acted bona fide and sanctioned loans strictly in accordance with the guidelines issued by the Head Office and Circle Office of the Bank and that none of the provisions of the Conduct Regulations have been breached by the petitioner so as to constitute misconduct under the Discipline and Appeal Regulation. Sri. Alias submits that the findings of the enquiry officer are not based on records and that the disciplinary authority went wrong in concurring with the findings of the enquiry officer. It is also contended that the punishment of reduction to a lower grade (from MMG-Scale II to JMG-Scale I) imposed under Regulation 4(g) of the Discipline and Appeal Regulations, is a major penalty and consequent to the imposition of the said punishment, the petitioner's basic pay was refixed at Rs.14,500/- in the Junior Manager Scale. Sri. Alias contends that the said punishment carries within it the penalty of demotion and stoppage of increment and that the punishment is totally disproportionate to the charges levelled against the petitioner. It is also contended that the Bank has not sustained any loss due to the loans sanctioned by the petitioner under the SHG scheme and that the Bank initiated proceedings against the petitioner on the basis of probable loss and the fact remains that there is absolutely no loss. To substantiate the said contention, Sri. Alias relied on Ext.P16, the copy of the statement from the Bank's server. Accordingly, Sri. Alias submits that Exts.P8 and consequential orders shall be set aside.
14. Sri. S.Easwaran, the learned Counsel for the respondents submits that, the sanction of the loans under the SHG was not as per the guidelines issued by the Bank and that even an irregularity in sanctioning loan would constitute misconduct. Sri. Easwaran objected to the petitioner placing reliance on Ext.P16 statement from the Bank's server stating that the petitioner cannot add materials to the findings in the enquiry. It is also contended that this Court cannot re-appreciate evidence in the enquiry and can interfere with the punishment only if the same is shockingly disproportionate to the charges proved. It is contended that the petitioner has not raised any contention regarding procedural irregularities in the enquiry.
15. Sri. Alias is justified in his submission that the proceedings have been initiated against the petitioner on the basis of probable loss that the Bank would sustain. This is evident from the recital in the Articles of Charges. After narrating the charges levelled, in Ext.P8 Articles of Charges it is stated that, because of the lapses of the petitioner, the Bank is finding it difficult to recover the amount and is likely to face huge financial loss. At the time of initiation of the enquiry, the Bank was only apprehending loss by the alleged conduct of the petitioner in sanctioning the loan. The petitioner relies on Ext.P16 statement to contend that the Bank has not sustained any loss upon sanctioning the loans.
16. Sri. Easwaran submits that Ext.P16 statement cannot be relied on as it will be adding to the findings of the enquiry. If the enquiry has been initiated on the basis of probable loss the Bank is likely to sustain, then the question whether the Bank has actually sustained loss consequent upon the action of the petitioner is very much relevant while considering the legality and propriety of the orders impugned. Accordingly, this Court directed the Bank to file a statement as to whether it sustained any loss and the status of recovery of loan advanced in the SHG. No affidavit or statement verified by the officers of the Bank has been filed. However, the learned Standing Counsel for the Bank has filed a Statement. The Statement does not specifically deal with the facts required to be answered by the Bank. It does not specifically state whether the Bank has sustained any loss or the status of recovery. The Statement is made with reference to the accounts mentioned in the charge sheet for which proceedings were initiated against the petitioner. The affidavit filed by the petitioner states that the Bank has recovered the loan amounts from the borrowers in due course of time and nothing is left back. The Statement filed by the learned counsel for the Bank is also silent regarding the direction of this Court as to the factors considered for distinguishing between minor and major penalty.
It is trite law that the power of judicial review in the matter of disciplinary proceedings is very limited. It is circumscribed by the limits of correcting errors of law or procedural errors leading to manifest injustice or violation of principles of natural justice. The punishment imposed by the disciplinary authority can be interfered with only if the same is found to be grossly disproportionate to the charges proved. It is in the said context, this Court, by order dated 07.11.2017, directed the Bank to file a Statement placing on record whether it sustained any loss, the status of recovery of loan advanced in the SHG and the factors taken into account for distinguishing between minor and major penalty. These materials are relevant for deciding whether this Court should exercise its limited power of judicial review. The materials sought are not placed on record. In the circumstances, this Court is of the view that the punishment imposed on the petitioner requires a re-visit by the disciplinary authority in the light of the order passed by this Court on 07.11.2017. Accordingly, the matter is remitted to the disciplinary authority, the 3rd respondent, to consider the question of punishment. While considering the question of punishment, the disciplinary authority shall consider whether the Bank has sustained any loss on account of the petitioner's action and whether the punishment is in terms of the Discipline and Appeal Regulation. Fresh orders regarding the punishment shall be passed within two months from the date of receipt of a copy of this judgment after hearing the petitioner. The disciplinary authority shall call for records as to the status of the recovery of the loan advanced and the petitioner will be free to adduce evidence in this regard.
The writ petition is disposed of with the above direction. There will be no order as to costs.
