K. PRABHAKAR HEGDE versus BANK OF BARODA

Summary

A bank zonal head was dismissed after a departmental inquiry in which the inquiry officer never questioned him generally on the circumstances appearing against him, as Regulation 6(17) of the Vijaya Bank Officer Employees' (Discipline and Appeal) Regulations, 1981 requires, and the proposed penalty of compulsory retirement was altered to dismissal on a CVC recommendation never shown to him. The Supreme Court held that the second limb of Regulation 6(17) is mandatory and no proof of prejudice is needed, Sunil Kumar Banerjee being of diminished precedential value after Olga Tellis, Tulsiram Patel and A.R. Antulay; that a preliminary inquiry report not relied on by the inquiry officer need not be furnished; and that the CVC recommendation could not be withheld as privileged. Remand being impractical, the dismissal was quashed and a lump sum equal to gratuity directed.

Issues

1. Whether denial of the preliminary inquiry report, prepared by the officer who was also the sole management witness, vitiated the regular inquiry.
2. Whether the inquiry officer's failure to question the charged officer generally on the circumstances appearing against him in the evidence, as required by Regulation 6(17) of the 1981 Regulations, vitiated the inquiry, and whether the charged officer had to demonstrate prejudice.
3. Whether the decisions in Sunil Kumar Banerjee v. State of West Bengal and Union of India v. Alok Kumar, treating such a requirement as directory unless prejudice is shown, bound the Court.
4. Whether the disciplinary authority could alter the proposed penalty of compulsory retirement to dismissal on the basis of a CVC recommendation not furnished to the charged officer, and whether a claim of privilege over that recommendation was sustainable.
5. Whether continuation of disciplinary proceedings beyond superannuation was permissible under the 1981 Regulations (left open).
6. What relief should follow where remand is impractical because of the lapse of time and the merger of the bank.

Provisions considered

• Regulation 6(17), Vijaya Bank Officer Employees' (Discipline and Appeal) Regulations, 1981The regulation uses 'may' in its first part and 'shall' in its second: the inquiry officer may question a charged officer who examines himself as a defence witness, but shall generally question one who has not examined himself on the circumstances appearing against him. The Court held the first part directory and the second mandatory; the stage arises only after the defence evidence closes; merely inviting submissions without indicating the adverse circumstances is not substantial compliance; and breach meant the adverse circumstances should have been excluded from consideration. (¶¶ 9, 11, 31, 46, 52, 53, 54, 55, 56, 57, 58, 72)
• Section 313 (and Section 342 of the Code of Criminal Procedure, 1898), Code of Criminal Procedure, 1973Sunil Kumar Banerjee had treated Rule 8(19) of the All India Services (Discipline and Appeal) Rules as akin to Section 342 of the 1898 Code and Section 313 of the 1973 Code, applying the prejudice test from K.C. Mathew and Bibhuti Bhusan Das Gupta. The Court noted that Bibhuti Bhusan Das Gupta, Tara Singh and Rama Shankar Singh treat the second limb (questioning the accused generally after the prosecution evidence) as mandatory, that Sharad Birdhichand Sarda and Maheshwar Tigga exclude circumstances not put under Section 313, and that the stage and setting of a departmental inquiry differ from a criminal trial; it expressly declined to lay down any law for criminal courts. (¶¶ 32, 33, 34, 35, 36, 37, 38, 39, 40, 41, 42, 47, 49, 50, 52)
• Section 465 (Section 537 of the Code of Criminal Procedure, 1898), Code of Criminal Procedure, 1973The prejudice-based decisions in K.C. Mathew and Rama Shankar Singh rested on Section 537 of the 1898 Code (now Section 465), which bars reversal for an error or irregularity unless a failure of justice has in fact been occasioned and requires regard to whether the objection could have been raised earlier. The Court held that the 1969 Rules and the 1981 Regulations contain no comparable provision, a significant distinction between criminal trials and departmental inquiries. (¶¶ 38, 48)
• Sections 123 and 162, Indian Evidence Act, 1872Although the Evidence Act does not apply to disciplinary proceedings, its principles guide a claim of privilege. Section 123 bars evidence from unpublished official records relating to affairs of State except with the head of department's permission, and Section 162 requires the document to be brought to court with the court deciding the validity of any objection. Drawing on Sodhi Sukhdev Singh, Amar Chand Butail, Raj Narain and PUCL, the Court held privilege can be sustained only where an overriding public interest is shown case by case; the CVC recommendation had nothing to do with affairs of State or national security, so the claim was utterly misconceived. (¶¶ 65, 66, 67, 68, 69, 70)
• Article 14, Constitution of IndiaFollowing Tulsiram Patel, Olga Tellis and A.R. Antulay, the principles of natural justice form part of Article 14, and violation of a mandatory provision relating to fair hearing is itself prejudice, so no separate proof of prejudice is required; denial of a fair, reasonable and adequate opportunity to defend himself under Regulation 6 infringed the appellant's right under Article 14. (¶¶ 1, 2, 3, 4, 5, 44, 58)
• Order XLI Rule 33, Code of Civil Procedure, 1908Invoking the appellate court's power to pass any order that ought to have been made, the Court re-listed the appeal after reserving judgment to hear the respondent on the non-furnishing of the CVC recommendation, a point raised before the Single Judge but not argued before it by the appellant's counsel. (¶ 59)

Held

• A preliminary inquiry is held only to decide whether regular disciplinary proceedings are called for and its report is an internal document. It need not be furnished unless the inquiry officer relies on it; if it or its findings are relied upon, the witnesses on whose evidence it was prepared must be produced for cross-examination and the report supplied. Once a chargesheet detailing the charges is served, the preliminary report is of no consequence, subject to any rule requiring its supply. (¶¶ 19, 20, 21, 22, 23, 24, 25, 30)
• Since the inquiry officer placed no reliance on the preliminary inquiry report and relied only on the deposition of the sole management witness, whom the appellant cross-examined on the basis of his recorded statements, non-furnishing of that report caused neither a violation of natural justice nor prejudice, even though its author was the sole witness. (¶¶ 27, 28, 29)
• The precedential value of Sunil Kumar Banerjee stands significantly diminished and it is an authority only for what it decided: it did not independently consider the words 'may' and 'shall' in Rule 8(19); it rested wholly on Section 342 of the 1898 Code and K.C. Mathew and Bibhuti Bhusan Das Gupta without noticing Tara Singh or the mandatory character of the second limb of Section 342 as explained in Bibhuti Bhusan Das Gupta; the prejudice decisions were predicated on Section 537 of the 1898 Code (Section 465 of the 1973 Code), which has no counterpart in the 1969 Rules or 1981 Regulations; inquiry officers, unlike judges, are members of the employer's organisation; and the stage at which Regulation 6(17) operates (after the defence evidence closes) differs from the stages of examination in a criminal trial. The later Constitution Bench decisions in Olga Tellis, Tulsiram Patel and A.R. Antulay, which hold that violation of a mandatory fair-hearing provision is itself prejudice, were not noticed in Alok Kumar, so neither decision binds the Court on this point. (¶¶ 43, 44, 45, 46, 47, 48, 49, 50, 51, 52, 55)
• Regulation 6(17) uses 'may' and 'shall' deliberately and with distinct consequences: it is discretionary for the inquiry officer to question a charged officer who has examined himself as a defence witness, but where the charged officer has not examined himself the inquiry officer shall generally question him on the circumstances appearing in the evidence against him. The first part is directory; the second is mandatory. A charged officer who elects to lead his own evidence cannot thereafter claim that the inquiry officer was bound to question him generally. (¶¶ 52, 53, 54)
• By not generally questioning the appellant on the adverse circumstances, the inquiry officer failed to perform a mandatory duty; such circumstances should have been excluded from his consideration, and the action cannot be upheld on the specious ground that the appellant failed to demonstrate prejudice. Offering the charged officer an opportunity to make submissions before the evidence closed, without indicating the circumstances that could weigh against him, is not equivalent to the duty cast by Regulation 6(17) and does not amount to substantial compliance; the inquiry being quasi-judicial, the regulation obliges the inquiry officer to apply his mind to the evidence and indicate those circumstances as part of his decision-making. (¶¶ 55, 56)
• A charged officer ought to raise the inquiry officer's failure to comply with Regulation 6(17) before the disciplinary authority or at least the appellate authority; if the objection is raised at neither tier and the omission is unexplained in the writ petition, the court may infer that he was not seriously affected and pass an appropriate order on that inference. Here the appellant raised non-adherence to Regulation 6 generally before the appellate authority, which failed to address it, so he was justified in complaining that he was denied a fair, reasonable and adequate opportunity to defend himself, infringing Article 14. (¶¶ 57, 58)
• Following SBI v. D.C. Aggarwal, where the disciplinary authority accepts a CVC recommendation at variance with its own proposed penalty, it must furnish the recommendation to the charged officer before acting on it. The CVC recommendation here weighed heavily enough to convert the proposed compulsory retirement into dismissal; receiving it behind the appellant's back without an opportunity to plead for a lesser punishment vitiated the inquiry. A charged officer is entitled to any material used to determine his misconduct or considered in imposing punishment, though no standing requirement of a pre-punishment hearing is imposed where the rules do not provide for one. (¶¶ 59, 60, 61, 62, 63, 64, 71)
• A claim of privilege cannot be invoked as reflexive recourse; it must rest on an actual, overriding public interest evaluated case by case, with the State wholly convinced that disclosure would cause grave injury to public interest. The appellate authority's claim that the CVC recommendation was a privileged internal document, without any reason showing how it could be withheld, was utterly misconceived, the recommendation having nothing to do with affairs of State or national security; the appellate order was to that extent legally flawed. (¶¶ 65, 66, 67, 68, 69, 70, 71)
• Although the normal course would be a remand to restart the inquiry from the stage of Regulation 6(17), remand was impeded by the inaccessibility of records after the bank's merger, the lapse of time, the appellant's advanced age and the continuation of proceedings beyond superannuation; the question whether disciplinary proceedings could continue beyond superannuation under the 1981 Regulations was left open. Interest of justice was served by quashing the dismissal and directing a lump sum equal to the gratuity that would have been payable, without other terminal benefits. (¶¶ 72, 73)

Result

Appeal disposed of; High Court's Division Bench order dated 14.12.2021 set aside; order of dismissal quashed. The appellant is not entitled to terminal benefits except a lump sum equal to the gratuity that would have been payable but for the dismissal, to be released within eight weeks without interest, failing which interest at 9% per annum is payable; the question of continuation of proceedings beyond superannuation is kept open; criminal proceedings, if any, may proceed in accordance with law; no order as to costs.