The Supreme Court of India, in a significant ruling on the scope of judicial review in disciplinary matters, has set aside the orders of the Karnataka High Court and the Central Government Industrial Tribunal (CGIT) that had invalidated the compulsory retirement of a Canara Bank sub-staff member. The apex court, comprising Justice J.K. Maheshwari and Justice Vijay Bishnoi, affirmed the original punishment imposed by the bank’s Disciplinary Authority, holding that the Tribunal and High Court had acted as appellate bodies by re-appreciating evidence, which is beyond their jurisdiction.
The judgment clarifies that in departmental enquiries, charges need only be proven on a “preponderance of probabilities,” not beyond a reasonable doubt, and that loss of confidence is a critical factor in the banking sector.
Background of the Case
The case originated with Mr. Ganganarasimhaiah, who joined Canara Bank as a daily wage sub-staff in 1990 and was later confirmed. Disciplinary proceedings were initiated against him following an investigation in 2004 that uncovered “serious irregularities” at the V.G. Doddi branch where he was previously posted.
A chargesheet issued on April 28, 2005, detailed several grave accusations. It was alleged that Mr. Ganganarasimhaiah:
- Made unauthorized debits in the savings account of a customer, Shri Ramakrishnaiah, to benefit his father’s loan account.
- Tampered with and falsified bank records, including the SB balancing book and control register, to conceal these transactions.
- Deliberately omitted these unauthorized entries while updating the customer’s passbook.
- Coerced the then-branch manager, Shri R.R. Hoover, to sanction multiple loans and Temporary Overdrafts (TODs) for his wife and father without obtaining the required concurrence from the controlling office.
During a preliminary enquiry on July 24, 2004, Mr. Ganganarasimhaiah admitted to certain irregularities, including coercing the manager for loans and making unauthorized entries.
Following a domestic enquiry, where the Enquiry Officer found all charges proven, the Disciplinary Authority, on March 15, 2006, imposed the punishment of “Compulsory Retirement.” This decision was subsequently upheld by the Appellate Authority on November 22, 2006.
Proceedings at the Tribunal and High Court
The Central Government referred the dispute to the CGIT in Bengaluru. The Tribunal first held in a preliminary order on May 17, 2013, that the domestic enquiry was “fair and proper.” However, in its final award on September 25, 2019, the Tribunal set aside the punishment. It reasoned that the bank had failed to produce direct evidence, such as an expert opinion, to prove Mr. Ganganarasimhaiah was the “author of the entries.” Despite noting that it was “highly possible that at the instance of the 1st Party the Manager committed the irregularities” and that he was the “beneficiary of the misconduct,” the Tribunal deemed the punishment “too harsh and disproportionate.”
Canara Bank challenged this award in the Karnataka High Court, which dismissed the writ petition on August 12, 2022. The High Court affirmed the Tribunal’s decision, adding that the charges were “absurd” and that no financial loss had occurred to the bank.
Arguments Before the Supreme Court
Before the apex court, Canara Bank argued that the Tribunal had exceeded its jurisdiction under Section 11A of the Industrial Disputes Act, 1947, by acting as a court of appeal and re-appreciating evidence, especially after finding the initial enquiry to be fair. The bank asserted that strict rules of evidence do not apply to disciplinary proceedings and that the employee’s actions had led to a loss of confidence, a crucial element in the banking industry.
Conversely, counsel for Mr. Ganganarasimhaiah contended that the bank failed to prove the charges, as key witnesses were not examined and his admissions were obtained under coercion. It was argued that as a sub-staff with limited education, he was being made a scapegoat for the manager’s actions.
Supreme Court’s Analysis and Decision
The Supreme Court heavily criticized the approach taken by the Tribunal and the High Court, stating they “had failed to take into consideration the settled principal of law in respect of judicial review in disciplinary matters.”
The Court reiterated that judicial review is limited to determining if the enquiry was competent, if natural justice was followed, and if the findings were based on “no evidence” or were perverse. Justice Bishnoi, writing for the bench, observed, “It is also equally settled that strict rules of evidence are not applicable in the departmental proceedings and the charge against the delinquent can be proved on preponderance of probabilities.”
The judgment highlighted that the Disciplinary Authority had found that the alterations in bank records were “admittedly in the handwriting of CSE” (Chargesheeted Employee) and that he had admitted to these acts in writing. The Court noted that bank officers, through a “banker’s eye,” could gain sufficient experience in identifying signatures and handwriting.
Citing its own precedent in Deputy General Manager (Appellate Authority) and Others vs. Ajai Kumar Srivastava (2021), the Court emphasized the high standard of conduct expected of bank employees: “in banking business absolute devotion, integrity and honesty is a sine qua non for every bank employee… if it is not observed, the confidence of the public/depositors would be impaired.”
The Court concluded that the Tribunal’s finding that the punishment was disproportionate was erroneous, as was its observation that compulsory retirement would deny the employee his retirement benefits. The judgment clarified, “It is well settled that compulsory retirement of an employee from the services does not mean that the employee is not entitled to retirement benefits, which can only be denied in a case of dismissal from service.”
Ultimately, the Supreme Court allowed Canara Bank’s appeal, setting aside the orders of the High Court and the Tribunal and affirming the Disciplinary Authority’s order of compulsory retirement. The Court directed that Mr. Ganganarasimhaiah is entitled to gratuity and other pensionary benefits in accordance with the law.
