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Karnataka High Court Upholds Dismissal of Bank Manager for Fraud and Corruption: Disciplinary and Criminal Convictions Validated

 Case title:   VIJAYA BANK VS M RAVINDRA SHETTY

Case no.:   WRIT APPEAL NO. 7791 OF 2003 (S-DIS)

Dated on: 04th May 2024

Quorum:  Hon’ble. MR Justice KRISHNA S DIXIT and HON’BLE MR JUSTICE RAMACHANDRA D. HUDDAR

FACTS OF THE CASE

The respondent-employee who was in the Senior Manager Cadre i.e., MMGS-III was charged for certain lapses in relation to lending money to the fictitious persons without duly securing the repayment of loans. This happened during the period between 02.06.1986 and 11.05.1990. On account of this, the bank has been put to a huge financial loss. The disciplinary proceedings having been held, penalty order by way of dismissal from service came to be passed by the Competent Authority on 03.04.1997. The Departmental Appeal laying a challenge to the same came to be negatived by the Appellate Authority namely the General Manager (Personnel) on 05.08.1997. In the meanwhile, the same set of facts had resulted into the prosecution of employee in Spl.CC No.141/2005 for the offences punishable u/ss. 120B r/w Secs.420, 468, 471 of IPC and u/ss.13(1)(d) & Sec.13(2) of the Prevention of Corruption Act, 1988. The charges having been framed, trial was held by the Criminal Court that eventually resulted into his conviction vide order dated 19.06.2010 and he was sentenced to undergo a Simple Imprisonment for a period of 3 years coupled with levy of fine of Rs.70,000/- in aggregate, with a usual default clause. His Criminal Appeal No.664/2010 c/w Crl. Appeal No.678/2010 came to be negatived by a learned Single Judge of this court vide order dated 19.09.2022. The matter having been carried in SLP No.12145/2022, the Apex Court vide order dated 02.01.2023 granted some reprieve to him. The sentence came to be modified by reducing the period of Imprisonment from three years to one year; however, the fine came to be enhanced from Rs.70,000/- to Rs.2 lakh.

 ISSUES

  • Whether the disciplinary proceedings conducted by the bank and the subsequent penalty of dismissal from service imposed on the respondent-employee were valid and justified.
  • Whether the writ court overstepped its jurisdiction by interfering with the disciplinary authority’s decision, considering that its role is limited to reviewing the decision-making process rather than the decision itself.
  • Whether the involvement of the Central Vigilance Officer in the disciplinary proceedings was justified and in compliance with Regulation 19 of the Vijaya Bank Officer Employees’ (Discipline and Appeal) Regulations, 1981.
  • Whether these developments provide additional grounds for the bank’s decision to dismiss the respondent-employee from service.

LEGAL PROVISIONS

The Indian Penal Code (IPC)

Section 120B (Criminal Conspiracy): This section deals with the punishment for criminal conspiracy.

Section 420 (Cheating and Dishonestly Inducing Delivery of Property): This section punishes cheating and inducing delivery of property.

Section 468 (Forgery for Purpose of Cheating): This section deals with forgery intended for the purpose of cheating.

Section 471 (Using as Genuine a Forged Document or Electronic Record): This section punishes using a forged document as genuine.

Sections 13(1)(d) and 13(2) of the Prevention of Corruption Act, 1988

Section 13(1)(d) (Criminal Misconduct by a Public Servant): This section deals with the criminal misconduct by a public servant involving abuse of position or obtaining pecuniary advantage.

Section 13(2) (Punishment for Criminal Misconduct): This section prescribes the punishment for criminal misconduct by a public servant.

Section 10(1)(b)(i) of the Banking Regulation Act, 1949 This section mandates the termination of an employee convicted of an offence involving moral turpitude.

Vijaya Bank Officer Employees (Discipline and Appeal) Regulations 1981

Regulation 6 (Procedure for Disciplinary Action): Outlines the procedure to be followed for disciplinary action against bank officers.

Regulation 11 (Penalties): Lists the penalties that can be imposed on bank officers for misconduct.

Regulation 19 (Role of the Central Vigilance Officer): Details the involvement of the Central Vigilance Officer in disciplinary proceedings.

Central Vigilance Commission Act, 2003

Section 3 (Establishment of Central Vigilance Commission): Establishes the Central Vigilance Commission and outlines its functions.

CONTENTIONS OF THE APPELLANT

The Learned Panel Counsel appearing for the appellant-bank seeks to falter the impugned order of the learned Single Judge arguing that: Once the disciplinary proceedings are duly held and penalty order has been passed, a Writ Court should be loath to interfere and it is more so when delinquent employee’s departmental appeal has been negatived. Secondly, on the same set of facts the employee having tried is convicted & sentenced for the offences involving moral turpitude. This happened subsequent to disciplinary proceedings and therefore even otherwise he is liable to be discontinued from service in terms of Sec.10(1)(b)(i) of the Banking Regulation Act, 1949. He has placed reliance on certain rulings in support of his submission. So contending, he seeks for allowing of the appeal. As already mentioned above, there is none to controvert the above submission from the side of respondent-employee. Learned counsel for the appellant is right in contending that no error has been committed by the management in taking the opinions of Central Vigilance Officer inasmuch as, such a course is internalized vide Regulation 19 of Vijaya Bank Officer Employees’ (Discipline and Appeal) Regulations, 1981. The CVC is constituted under Section 3 of the Central Vigilance Commission Act, 2003 and it has statutory duties. One such duty is to advice the banks in matters of disciplinary proceedings of the kind. that the apprehension of the employee that the decision was taken under pressure, could not be ruled out. However, the ratio in these decisions could have been invoked from the side of delinquent employee, had there been no provision like regulation 19 of 1981 Regulations. Such a provision was conspicuously absent in the aforesaid two decisions. This aspect has not been discussed in the impugned order even though it was very essential. Mr. Sawkar is also right in contending that there is a wealth of material on record that justified dismissal of the delinquent employee. That being the position, we hardly find any reason for upsetting the findings of guilt as recorded by the Enquiry Officer and accepted by the disciplinary authority while awarding the punishment of dismissal from service. The same has been examined by the Appellate Authority who has upheld the same. Therefore, the impugned order of the learned Single Judge who has treated the matter as if he was sitting in appeal suffers from legal infirmity and therefore cannot be sustained. It hardly needs to be reiterated that the focal point of examination of record in writ proceedings is the decision-making process and not the decision itself. Such an approach is not reflected in the impugned order. Thus, the same suffers from grave infirmities warranting our interference.

 CONTENTIONS OF THE RESPONDENTS

SRI.MOHITH KUMR K., ADVOCATE-ABSENT

 COURT’S ANALYSIS AND JUDGEMENT

THIS WRIT APPEAL FILED U/S 4 OF THE KARNATAKA HIGH COURT ACT PRAYING TO SET ASIDE THE ORDER PASSED The Apex Court at para 16 has specifically stated that the offences punishable inter alia under the provisions of PC Act, 1988 do involve moral turpitude. Apparently, the respondent-employee in the subject Criminal Case has been convicted & sentenced not only for the offences punishable under the aforesaid provisions of IPC but also u/ss.13(1)(d) & 13(2) of the PC Act. The provisions of Section 10(1) of the 1949 Act enact a Parliamentary injunction to the bank to discontinue the employment of a person who is convicted for an offence involving moral turpitude, whether he is sentenced or not. In other words, mere conviction results into the obligation to disrupt employer-employee relationship. This provision leaves with the bank no discretion to disobey the direction. It is relevant to state that there is no challenge to the vires of this provision, which continues on the Statute Book with impunity & efficacy. When one is convicted for the offence involving Sec.420, 468 & 471 of IPC, it cannot be contended that his conduct does not involve moral turpitude. Once an employee of a bank is convicted for an offence involving moral turpitude as has happened in this case, he is liable to be discontinued from employment as discussed above. However, the text of Sec.10(1)(b)(i) does not indicate as to whether such disruption of vinculum juris is by way of dismissal or discharge implicatory. When moral turpitude is involved and the bank is put to considerable financial loss, one can safely assume that the legislative intent is dismissal of the delinquent employee. True it is that the respondent-employee has been dismissed from service after holding a disciplinary enquiry in terms of Regulation 6. We are adverting to the provisions of Regulation 11 only as an additional ground that has been generated subsequent to disciplinary proceedings that eventually resulted into dismissal from service and after the disposal of writ petition. As already mentioned above, there were criminal appeals that ended in vain. Matter was carried forward to the highest court of the country that did not set aside the conviction although the period of imprisonment was reduced; in fact, fine has been enhanced almost three-fold. All this subsequent development adds extra merits to the case of appellant bank and against the respondent – employee. In the above circumstances, this appeal succeeds the impugned order of learned Single Judge is set aside and respondent-employee’s writ petition is dismissed, costs having been made easy.

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Judgement Reviewed by – HARIRAGHAVA JP

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