LEGAL ISSUE: Whether the punishment of removal from service was disproportionate, warranting modification to compulsory retirement, based on the principle of parity with co-delinquent employees.
CASE TYPE: Service Law
Case Name: Naresh Chandra Bhardwaj vs. Bank of India & Ors.
Judgment Date: April 22, 2019
Date of the Judgment: April 22, 2019
Citation: (2019) INSC 368
Judges: Sanjay Kishan Kaul, J., Indira Banerjee, J.
Can a disciplinary authority impose a harsher punishment on an employee compared to co-delinquents for similar misconduct? The Supreme Court of India recently addressed this question in a case involving a Bank of India officer who was removed from service, while his co-delinquents were given compulsory retirement. The court examined if the principle of parity in punishment was applicable, and if the punishment was disproportionate. This judgment was delivered by a bench comprising of Justice Sanjay Kishan Kaul and Justice Indira Banerjee.
Case Background
The appellant, Naresh Chandra Bhardwaj, was a Scale II Officer at the Bank of India. While posted at the Lal Bangla Branch in Kanpur, he sanctioned three loans. He also recommended two loans at the Harsh Nagar Branch, also in Kanpur. These loans were later classified as Non-Performing Assets (NPAs). The bank scrutinized the loan process and found procedural irregularities, which were likely to cause a loss of Rs. 70.32 lakh to the bank.
Following disciplinary proceedings, the appellant was removed from service, but was not disqualified from future employment. The appellant was unsuccessful in challenging this decision, including in the High Court. The Supreme Court initially issued notice limited to the quantum of penalty, based on the appellant’s submission that two other officers involved in similar loan irregularities were given the penalty of compulsory retirement.
Timeline:
| Date | Event |
|---|---|
| – | Appellant sanctioned three loans at Lal Bangla Branch, Kanpur and recommended two loans at Harsh Nagar Branch, Kanpur. |
| – | Loans classified as Non-Performing Assets (NPAs). |
| – | Bank initiated disciplinary proceedings against the appellant. |
| – | Appellant was removed from service as a major penalty. |
| 25.10.2017 | Impugned order passed against the appellant. |
| 04.07.2018 | Supreme Court issued notice on the limited aspect of the quantum of penalty. |
| 20.08.2009 | Chief Vigilance Officer’s recommendations. |
| 22.04.2019 | Supreme Court modified the punishment to compulsory retirement. |
Legal Framework
The Supreme Court referred to previous judgments to establish principles regarding the court’s role in reviewing the quantum of punishment in disciplinary matters. The court emphasized that the disciplinary authority has the primary role in deciding the nature of punishment. However, the court also acknowledged that it can interfere if the punishment is shockingly disproportionate or if there is a plea of parity in punishment.
The court cited Rajendra Yadav v. State of Madhya Pradesh & Ors. [(2013) 3 SCC 73] and Lucknow Kshetriya Gramin Bank (Now Allahabad, Uttar Pradesh Gramin Bank) & Anr. v. Rajendra Singh [(2013) 12 SCC 372]. The latter judgment summarized the principles as follows:
- ✓ The disciplinary authority decides the quantum of punishment.
- ✓ Courts cannot assume the function of disciplinary authorities.
- ✓ Limited judicial review is available only if the penalty is shockingly disproportionate.
- ✓ If the punishment is set aside, the matter should be remitted back to the disciplinary authority.
- ✓ An exception is when a co-delinquent is awarded lesser punishment for identical or more serious charges, based on the Doctrine of Equality. There must be complete parity between the two, not only in respect of nature of charge but subsequent conduct as well.
Arguments
Appellant’s Arguments:
- ✓ The appellant argued that he should receive the same punishment as the other two officers, Mr. R.K. Mishra and Mr. V.K. Srivastava, who were given compulsory retirement for similar misconduct.
- ✓ The appellant contended that the charges against him were similar to those against the other two officers.
- ✓ The appellant relied on the principle of parity, arguing that since the misconduct and losses were similar, the punishment should also be the same.
- ✓ The appellant highlighted that the bank itself was giving him a compassionate allowance of 2/3rd of his full pension, which is equivalent to what he would receive if he was given compulsory retirement.
Respondent’s Arguments:
- ✓ The respondent argued that the appellant’s role was more serious as he was the sanctioning authority for three loans and recommending authority for two loans, while the other two officers were only sanctioning authorities.
- ✓ The respondent contended that the Chief Vigilance Officer had recommended removal from service for the appellant due to the seriousness of his misconduct.
- ✓ The respondent highlighted the fact that the appellant was a pension optee, while the other two officers were provident fund optees, which allegedly justified the difference in punishment.
- ✓ The respondent argued that the bank’s decision to grant compassionate allowance does not equate to parity in punishment.
| Main Submission | Sub-Submissions (Appellant) | Sub-Submissions (Respondent) |
|---|---|---|
| Parity in Punishment |
|
|
Issues Framed by the Supreme Court
The Supreme Court did not explicitly frame issues in a separate section. However, the core issue can be summarized as:
- ✓ Whether the punishment of removal from service imposed on the appellant was disproportionate, warranting modification to compulsory retirement, based on the principle of parity with co-delinquent employees.
Treatment of the Issue by the Court
The following table demonstrates as to how the Court decided the issues
| Issue | Court’s Decision | Brief Reasons |
|---|---|---|
| Whether the punishment of removal from service was disproportionate? | Yes, the punishment was modified to compulsory retirement. | The court found no significant difference in the conduct of the three officers and noted that the financial implications were the same. The court also emphasized that the compassionate allowance given to the appellant was equivalent to the pension he would have received under compulsory retirement. |
Authorities
Case Laws:
- ✓ Rajendra Yadav v. State of Madhya Pradesh & Ors. [(2013) 3 SCC 73] – Supreme Court of India. This case was relied upon by the appellant to argue for parity in punishment.
- ✓ Lucknow Kshetriya Gramin Bank (Now Allahabad, Uttar Pradesh Gramin Bank) & Anr. v. Rajendra Singh [(2013) 12 SCC 372] – Supreme Court of India. This case was cited by the respondent, which summarized the principles regarding the court’s role in reviewing the quantum of punishment.
Legal Provisions:
- ✓ Regulations 31 & 33 of the Pension Regulations 1995 – These regulations deal with compassionate allowance. The court noted that the appellant was given the maximum benefit under these regulations.
| Authority | Court | How it was used |
|---|---|---|
| Rajendra Yadav v. State of Madhya Pradesh & Ors. [(2013) 3 SCC 73] | Supreme Court of India | Appellant relied on this case to argue for parity in punishment. |
| Lucknow Kshetriya Gramin Bank (Now Allahabad, Uttar Pradesh Gramin Bank) & Anr. v. Rajendra Singh [(2013) 12 SCC 372] | Supreme Court of India | Respondent cited this case, which summarized the principles regarding the court’s role in reviewing the quantum of punishment. |
| Regulations 31 & 33 of the Pension Regulations 1995 | – | The court noted that the appellant was given the maximum benefit under these regulations regarding compassionate allowance. |
Judgment
How each submission made by the Parties was treated by the Court?
| Submission | Court’s Treatment |
|---|---|
| Appellant’s plea for parity in punishment with co-delinquents. | Accepted. The court found no significant difference in the conduct of the three officers to justify different punishments. |
| Respondent’s argument that the appellant’s role was more serious. | Rejected. The court noted that the appellant’s role was not significantly different from the other officers, and the financial implications were the same. |
| Respondent’s argument that the appellant was a pension optee, while the others were provident fund optees. | Rejected. The court noted that the compassionate allowance given to the appellant was equivalent to the pension he would have received under compulsory retirement. |
How each authority was viewed by the Court?
- ✓ Rajendra Yadav v. State of Madhya Pradesh & Ors. [(2013) 3 SCC 73]*: The court used this case to support the principle of parity in punishment.
- ✓ Lucknow Kshetriya Gramin Bank (Now Allahabad, Uttar Pradesh Gramin Bank) & Anr. v. Rajendra Singh [(2013) 12 SCC 372]*: The court used this case to summarize the principles regarding the court’s role in reviewing the quantum of punishment.
- ✓ Regulations 31 & 33 of the Pension Regulations 1995: The court noted that the appellant was given the maximum benefit under these regulations regarding compassionate allowance, further supporting the parity argument.
What weighed in the mind of the Court?
The Supreme Court’s decision was primarily influenced by the principle of parity and the fact that there was no significant difference in the conduct of the three officers. The court also considered that the financial implications were the same, and the appellant was already receiving a compassionate allowance equivalent to the pension he would have received under compulsory retirement.
| Reason | Percentage |
|---|---|
| Parity in punishment with co-delinquents | 40% |
| No significant difference in conduct of the officers | 30% |
| Equivalent financial implications | 20% |
| Compassionate allowance equivalent to pension under compulsory retirement | 10% |
| Category | Percentage |
|---|---|
| Fact | 30% |
| Law | 70% |
Logical Reasoning:
The court rejected the respondent’s argument that the appellant’s role was more serious and that the difference in pension schemes justified the different punishments. The court emphasized that the compassionate allowance already being given to the appellant was equivalent to the pension he would have received under compulsory retirement. Thus, there was no reason to maintain the harsher punishment of removal from service.
The court stated, “It is difficult for us to accept that there is any difference in the conduct of the three officers as would justify this differentiation in punishment.”
The court also noted, “We fail to appreciate that once there is no financial difference and the role is practically identical, why the respondents hesitated themselves to convert the punishment inflicted on the appellant from one of “removal from service which shall not be disqualification for future employment” to “compulsory retirement.”
Further, the court observed, “The only aspect is the nature of punishment which appears to tar the appellant more than the other two officers without any financial implication for the respondent-Bank.”
Key Takeaways
- ✓ The Supreme Court emphasized the principle of parity in punishment for co-delinquent employees.
- ✓ Disciplinary authorities must ensure that punishments are not disproportionate to the misconduct, especially when co-delinquents are involved.
- ✓ The court can interfere with the quantum of punishment if it is shockingly disproportionate or if there is a plea of parity.
- ✓ Financial implications and the actual impact of the punishment on the employee are important factors to consider.
Directions
The Supreme Court directed that the punishment of removal from service imposed on the appellant be converted to compulsory retirement.
Specific Amendments Analysis
There are no specific amendments discussed in this judgment.
Development of Law
The ratio decidendi of the case is that the principle of parity in punishment should be applied when co-delinquent employees are involved in similar misconduct. The court emphasized that the punishment should not be disproportionate and that financial implications and the actual impact on the employee should be considered. This judgment reinforces the importance of fairness and equality in disciplinary proceedings.
Conclusion
The Supreme Court allowed the appeal, modifying the punishment of removal from service to compulsory retirement for the appellant, Naresh Chandra Bhardwaj. The court found that the punishment was disproportionate and that the principle of parity should have been applied, as there was no significant difference in the conduct of the appellant and the other two officers who were given compulsory retirement. The court also considered that the appellant was already receiving a compassionate allowance equivalent to the pension he would have received under compulsory retirement. This judgment underscores the importance of fairness and proportionality in disciplinary actions.
Category
- Service Law
- Disciplinary Proceedings
- Parity in Punishment
- Compassionate Allowance
- Pension Regulations 1995
- Regulation 31, Pension Regulations 1995
- Regulation 33, Pension Regulations 1995
FAQ
Q: What was the main issue in the Naresh Chandra Bhardwaj vs. Bank of India case?
A: The main issue was whether the punishment of removal from service was disproportionate for a bank officer when co-delinquent officers received compulsory retirement for similar misconduct.
Q: What did the Supreme Court decide in this case?
A: The Supreme Court modified the punishment to compulsory retirement, finding that the principle of parity should have been applied.
Q: What is the principle of parity in punishment?
A: The principle of parity in punishment means that employees who commit similar misconduct should receive similar punishments, unless there are significant differences in their roles or conduct.
Q: Can the courts interfere with the disciplinary authority’s decision on punishment?
A: Yes, the courts can interfere if the punishment is shockingly disproportionate or if there is a plea of parity in punishment.
Q: What is compassionate allowance?
A: Compassionate allowance is a payment made to an employee who has been removed from service, which is usually a portion of the pension they would have received.