Supreme Court clarifies procedure in disciplinary actions: State Bank of India vs. Mohammad Badruddin (2019)

Introduction

Date of the Judgment: 16 July 2019

Citation: 2019 INSC 712

Judges: L. Nageswara Rao, J., Hemant Gupta, J.

Can a disciplinary authority impose a punishment based on disagreement with an Inquiry Officer’s report without informing the employee? The Supreme Court of India recently addressed this crucial question in a case involving the State Bank of India and one of its employees, Mohammad Badruddin. This judgment clarifies the procedural requirements in disciplinary proceedings, particularly concerning the communication of reasons for disagreement and the consideration of past penalties.

The Supreme Court bench, comprising Justices L. Nageswara Rao and Hemant Gupta, delivered the judgment. Justice Hemant Gupta authored the opinion of the court.

Case Background

Mohammad Badruddin, an employee of the State Bank of India (SBI), faced departmental inquiries on five charges. The Inquiry Officer found him not guilty of charges 1, 2, 3, and 5, but guilty of charge 4. However, the Disciplinary Authority disagreed with the findings on charges 1 and 5, and imposed a penalty of removal from service. Badruddin challenged this order, arguing that the reasons for disagreement were not communicated to him, and that past punishments were considered without notice.

The High Court of Jharkhand at Ranchi, in an intra-court appeal, ruled in favor of Badruddin, setting aside the order of punishment and granting him consequential benefits. The High Court held that the failure to communicate the reasons for disagreement with the Inquiry Officer’s report violated the principles of natural justice. Aggrieved by this decision, the State Bank of India appealed to the Supreme Court.

Timeline

Course of Proceedings

The disciplinary proceedings against Mohammad Badruddin began with a memo of charge served on June 13, 1989, outlining five charges. The Inquiry Officer submitted a report on February 5, 1992, finding Badruddin guilty of charge 4 but not guilty of charges 1, 2, 3, and 5. The Disciplinary Authority disagreed with the findings on charges 1 and 5, and imposed a penalty of removal from service on November 4, 1993.

Badruddin’s appeal against the order of punishment was dismissed on March 8, 1995. Subsequently, a writ petition filed by Badruddin was dismissed by a single judge on June 15, 2007. However, in an intra-court appeal, the Division Bench of the High Court set aside the order of punishment, citing a violation of natural justice because the reasons for disagreement with the Inquiry Report were not communicated to Badruddin.

Legal Framework

The case primarily revolves around the interpretation of Article 311 of the Constitution of India and the principles of natural justice in disciplinary proceedings.

Article 311 of the Constitution deals with the dismissal, removal, or reduction in rank of persons employed in civil capacities under the Union or a State. The 42nd Constitutional Amendment removed the requirement of giving a second show cause notice on the proposed penalty.

The State Bank of India (Supervising Staff) Service Rules, particularly Rule 32(4) and Rule 67(g), were also relevant. Rule 32(4) mandates that employees discharge their duties with devotion and diligence, and Rule 67(g) pertains to the penalty of removal from service.

The Supreme Court also considered the implications of the judgments in Union of India & Ors. v. Mohd. Ramzan Khan [(1991) 1 SCC 588] and Managing Director, ECIL, Hyderabad & Ors. v. B. Karunakar & Ors. [(1993) 4 SCC 727], which discuss the necessity of providing a copy of the inquiry report to the delinquent employee.

Arguments

Arguments of the Appellants (State Bank of India):

• The appellants argued that the High Court erred in setting aside the order of punishment. They contended that charge No. 4, which was found to be proved, was a grave and independent charge sufficient to warrant the penalty of removal from service.

• The appellants relied on the principle of severability of charges, citing State of Orissa & Ors. v. Bidyabhushan Mohapatra [AIR 1963 SC 779] and P.D. Agrawal v. State Bank of India & Ors. [(2006) 8 SCC 776], arguing that the order of punishment should not be interfered with even if some charges are not proven.

• They argued that the previous punishment of reversion to the Junior Manager grade, considered by the Disciplinary Authority, was not a ground for interference. They cited Govt. of A.P. & Ors. v. Mohd. Taher Ali [(2007) 8 SCC 656] and Union of India & Ors. v. Bishamber Das Dogra [(2009) 13 SCC 102], asserting that the consideration of past punishments is permissible.

• The appellants contended that the 42nd Constitutional Amendment removed the requirement of serving notice of the proposed punishment, and therefore, the ratio of judgments relating to pre-42nd amendment would not be applicable.

Arguments of the Respondent (Mohammad Badruddin):

• The respondent contended that the Disciplinary Authority’s order was vitiated because the reasons for disagreement with the Inquiry Officer’s report on charges 1 and 5 were not communicated to him.

• He relied on State of Mysore v. K. Manche Gowda [AIR 1964 SC 506], arguing that before past punishments are considered, the delinquent must be made aware of them and given an opportunity to respond.

• The respondent also cited Nicholas Piramal India Limited v. Harisingh [(2015) 8 SCC 272] to support the argument that past records could not be taken into consideration without notice to the delinquent.

Submissions Table

Issues Framed by the Supreme Court

The Supreme Court addressed the following key issues:

1. Whether the order of punishment was vitiated due to non-communication of the reasons for disagreement with the Inquiry Officer’s report on charges 1 and 5.
2. Whether the Disciplinary Authority could consider past punishments without notifying the delinquent employee.
3. Whether the order of punishment of removal from service on the basis of charge No. 4 alone can be sustained.

Treatment of the Issue by the Court

The following table demonstrates as to how the Court decided the issues

Authorities

The Supreme Court considered the following authorities:

Judgment

What weighed in the mind of the Court?

The Supreme Court’s decision was primarily influenced by the principles of natural justice and the procedural requirements in disciplinary proceedings. The Court emphasized that while the 42nd Constitutional Amendment removed the need for a second show cause notice on the proposed penalty, it did not eliminate the requirement to communicate the reasons for disagreement with the Inquiry Officer’s report.

The Court also clarified that past punishments could be considered, but this did not negate the need for procedural fairness, especially in communicating the reasons for disagreement with the inquiry report.

The Court noted that the Disciplinary Authority must provide an opportunity to the employee to respond to the disagreement with the Inquiry Officer’s report before imposing punishment.

The Court rejected the argument that the 42nd Constitutional Amendment eliminated the need to communicate the reasons for disagreement. It emphasized that while the second show cause notice on proposed penalty was removed, the principles of natural justice still required that the delinquent be informed of the reasons for disagreement.

The Court also clarified that while past punishments could be considered, they could not be the sole basis for the decision, and the delinquent must be given a fair opportunity to respond to the findings.

The Court held that the order of removal from service would be in realm of conjectures as to whether punishment of removal would be sustainable on charge No. 4 alone.

The Supreme Court held that the High Court was correct in setting aside the order of punishment due to non-communication of the reasons for disagreement. However, the Court also clarified that the matter should be remitted to the Disciplinary Authority to reconsider the punishment, taking into account the findings on charge No. 4 and the reasons for disagreement on charges 1 and 5.

The Court stated, “When, like in the present case, the enquiry report is in favour of the delinquent officer but the disciplinary authority proposes to differ with such conclusions, then that authority which is deciding against the delinquent officer must give him an opportunity of being heard for otherwise he would be condemned unheard. In departmental proceedings, what is of ultimate importance is the finding of the disciplinary authority.”

The Court also observed, “The requirement of second show cause notice of proposed punishment has been dispensed with. The mandate now is only to apprise the delinquent of the Inquiry Officer’s report. There is no necessity of communicating proposed punishment which was specifically contemplated by clause (2) of Article 311 prior to 42nd Amendment.”

The Court further stated, “Therefore, there cannot be any bar to take into consideration previous punishments in the constitutional scheme as interpreted by this Court. Thus, the non-communication of the previous punishments in the show cause notice will not vitiate the punishment imposed.”

The Court also noted that the delinquent had attained the age of superannuation, thus, there cannot be any order of reinstatement or of suspension.

The Court concluded that the order of punishment dated November 4, 1993, as well as the order of the Appellate Authority, were set aside, and the matter was remanded to the Disciplinary Authority. The Disciplinary Authority was directed to consider whether it would like to record reasons of disagreement on charge Nos. 1 and 5, and/or impose punishment on the basis of charge No. 4, as it may consider appropriate.

Key Takeaways

• The Disciplinary Authority must communicate reasons for disagreement with the Inquiry Officer’s report to the delinquent employee.
• The 42nd Constitutional Amendment removed the requirement of a second show cause notice on the proposed penalty, but it did not eliminate the need to adhere to the principles of natural justice.
• Past punishments can be considered but cannot be the sole basis for the decision.
• The matter was remitted back to the Disciplinary Authority to reconsider the punishment.
• The Disciplinary Authority was directed to pass an appropriate order within three months of the receipt of copy of this judgment in respect of payment of back wages as well as terminal benefits, if any, payable to the delinquent.

Directions

The Supreme Court directed the Disciplinary Authority to pass an appropriate order within three months of the receipt of a copy of this judgment regarding the payment of back wages and terminal benefits, if any, to the delinquent.

Development of Law

The ratio decidendi of the case is that while the 42nd Constitutional Amendment removed the requirement of a second show cause notice on the proposed penalty, it did not eliminate the need to adhere to the principles of natural justice, particularly the communication of reasons for disagreement with the Inquiry Officer’s report. The Court also clarified that past punishments can be considered but cannot be the sole basis for the decision.

The judgment clarifies that there is no change in the position of law regarding the requirement to communicate reasons for disagreement with the inquiry report.

Conclusion

The Supreme Court’s judgment in State Bank of India vs. Mohammad Badruddin clarifies the procedural requirements in disciplinary proceedings, emphasizing the importance of communicating reasons for disagreement with the Inquiry Officer’s report. While the 42nd Constitutional Amendment removed the need for a second show cause notice on the proposed penalty, the principles of natural justice still require that the delinquent be informed of the reasons for disagreement. The Court also clarified that past punishments can be considered but cannot be the sole basis for the decision. This ruling ensures that disciplinary actions are conducted fairly and transparently, upholding the rights of employees.