Supreme Court Upholds Bank’s Dismissal of Employee for Fraud and Forgery in Indian Overseas Bank vs. Om Prakash Lal Srivastava (2022)

Date of the Judgment: 19 January 2022

Citation: (2022) INSC 44

Judges: Sanjay Kishan Kaul, J., M.M. Sundresh, J.

Can a bank employee be dismissed for serious misconduct, including forgery and fraud, based on the standard of proof in departmental proceedings? The Supreme Court of India addressed this question in a case where an employee was dismissed for forging signatures and misappropriating funds. The Court examined whether the High Court was correct in interfering with the Industrial Tribunal’s award, which had upheld the dismissal. The bench, comprising Justices Sanjay Kishan Kaul and M.M. Sundresh, delivered a unanimous judgment.

Case Background

The respondent, Mr. Om Prakash Lal Srivastava, was employed as a clerk-cum-cashier at Indian Overseas Bank since 14 September 1981. On 8 October 1994, the bank received a complaint from his sister-in-law, Mrs. Meera Srivastava, alleging that he had fraudulently opened a joint savings account in their names and encashed a demand draft of Rs. 20,000/- that was meant for her. This led to the respondent’s suspension on 5 November 1994 and a subsequent chargesheet on 22 March 1995.

The charges against the respondent included insubordination, causing inconvenience to customers, fraudulently opening a joint account, withdrawing money from the account by forging signatures, and misbehaving with the Branch Manager. The respondent denied all charges. An inquiry officer was appointed, who concluded that all charges were proved. The Disciplinary Authority dismissed the respondent on 11 May 1996, a decision upheld by the appellate authority on 10 September 1996.

Timeline:

Course of Proceedings

The respondent raised an industrial dispute, which was referred to the Central Government Tribunal-cum-Labour Court, Kanpur. The Tribunal initially ruled against the Bank on the fairness of the domestic inquiry due to the lack of original documents. However, it allowed the Bank to present evidence. After examining witnesses and evidence, the Tribunal upheld the dismissal, finding all charges proved and the punishment commensurate. The Allahabad High Court, in its judgment dated 31 May 2018, overturned the Tribunal’s decision on charges 1, 2, 3, 6, and 7, stating that no evidence was led on those charges. For charges 4 and 5, the High Court remitted the matter back to the Tribunal, stating that the signatures of Mrs. Meera Srivastava should have been compared with her admitted signatures by an expert. The Supreme Court stayed this decision on 5 March 2019.

Legal Framework

The charges against the respondent were framed under para 19.5 of the Bipartite Settlement dated 19.10.1966. Specifically:

• Charge No. 1 & 2: Relied on para 19.5(e) of the Bipartite Settlement dated 19.10.1966 for wilful insubordination.
• Charge No. 3, 4, 5 & 7: Relied on para 19.5(j) of the Bipartite Settlement dated 19.10.1966 for acts prejudicial to the interests of the Bank.
• Charge No. 6: Relied on para 19.5(c) of the Bipartite Settlement dated 19.10.1966 for riotous, disorderly, and indecent behavior.

The Supreme Court also considered the standard of proof in departmental proceedings, contrasting it with criminal proceedings. The Court referred to Section 73 of the Evidence Act, which allows the court to compare the admitted writing with disputed writing and come to its own independent conclusion.

The Court also considered the standard of proof in departmental proceedings, contrasting it with criminal proceedings. The Court referred to Ashoo Surendranath Tewari v. Deputy Superintendent of Police, EOW, CBI [(2020) 9 SCC 636], which observed that the standard of proof in departmental proceedings is based on preponderance of probability, lower than the standard of proof in criminal proceedings where the case has to be proved beyond reasonable doubt.

Arguments

Submissions of the Appellant (Indian Overseas Bank):

• The High Court erred in applying criminal standards of proof to disciplinary proceedings.
• Misconduct in disciplinary proceedings should be evaluated based on probabilities and preponderance of evidence.
• Sufficient evidence existed to prove that the respondent committed fraud and forgery.
• The respondent manipulated signatures, opened an account, and misappropriated funds.
• The testimony of Mrs. Meera Srivastava was clear and unequivocal.
• Other charges of insubordination and forgery of suspension letters were also proved.

Submissions of the Respondent (Om Prakash Lal Srivastava):

• Charges other than 4 & 5 were not proved as no evidence was led on those charges.
• Charges 4 & 5 were also not proved as the signatures of Mrs. Meera Srivastava were not compared by a handwriting expert.
• Relied on the judgment in Lalit Popli v. Canara Bank [(2003) 3 SCC 583], arguing that the court should take a view on the opinion of others under Sections 45 and 47 of the Evidence Act, while under Section 73, the Court can form its opinion by comparing the writings.

Issues Framed by the Supreme Court

The Supreme Court did not explicitly frame issues in a separate section, but the core issues addressed were:

1. Whether the High Court was justified in interfering with the Industrial Tribunal’s award.
2. Whether the standard of proof in departmental proceedings requires the same level of scrutiny as criminal proceedings.
3. Whether the Industrial Tribunal erred in not seeking a handwriting expert’s opinion.
4. Whether the other charges of insubordination and forgery of suspension letter could be proved on the basis of the evidence led.

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

How each submission made by the Parties was treated by the Court?

How each authority was viewed by the Court?

• Lalit Popli v. Canara Bank [(2003) 3 SCC 583]: The Court distinguished this case, stating that while it discussed handwriting comparison under the Evidence Act, it did not mandate a handwriting expert in every case.
• Ashoo Surendranath Tewari v. Deputy Superintendent of Police, EOW, CBI [(2020) 9 SCC 636]: The Court relied on this case to emphasize that departmental proceedings require a lower standard of proof than criminal proceedings.
• Section 73, Evidence Act: The Court acknowledged the provision but did not find it necessary to apply it in this case, as the evidence was clear and sufficient.

The Supreme Court held that the High Court had erred in applying the standards of criminal proceedings to departmental proceedings. The Court emphasized that in departmental inquiries, the standard of proof is based on the preponderance of probability, not proof beyond a reasonable doubt. The Court noted that the inquiry officer, from a “banker’s eye,” found a difference in the signatures, and this was corroborated by the testimony of Mrs. Meera Srivastava. The Court found no reason to doubt her testimony.

The Court also stated that the High Court was wrong in concluding that no evidence was led on charges other than 4 & 5. The Court noted that evidence was indeed led through bank records and witnesses. The conduct of the respondent was a breach of trust, both towards his sister-in-law and the bank, and the punishment imposed was not disproportionate.

“The High Court appears to have applied the test of criminal proceedings to departmental proceedings while traversing the path of requirement of a hand writing expert to be called for the said purpose. This would go contrary to the settled legal position enunciated by this Court.”

“The deposition of Mrs. Meera Srivastava was clear and unambiguous. She was staying in a joint family of which the respondent was a part… Instead of extending the benefits of the same to her, the respondent went on a path of opening an account jointly in his and his sister-in-law’s name, presenting the drafts, and drawing the amounts with appropriation of the same to himself.”

“The conduct established of the respondent did not entitle him to continue in service.”

What weighed in the mind of the Court?

The Supreme Court’s decision was primarily influenced by the following factors:

• Standard of Proof: The Court emphasized that departmental proceedings require a lower standard of proof than criminal proceedings. The standard of “preponderance of probability” was deemed sufficient, and the High Court erred in applying the higher standard of “beyond reasonable doubt.”
• Evidence: The Court found the evidence presented by the bank, including the testimony of Mrs. Meera Srivastava and the bank records, to be sufficient to prove the charges against the respondent. The Court noted that Mrs. Meera Srivastava’s testimony was clear, unambiguous, and not effectively challenged during cross-examination.
• Inquiry Officer’s Opinion: The Court upheld the inquiry officer’s opinion, formed from a “banker’s eye,” that there was a difference in the signatures. The Court did not find it necessary to seek a handwriting expert’s opinion, as the evidence was already compelling.
• Breach of Trust: The Court noted that the respondent had breached the trust of his widowed sister-in-law and the bank. The Court emphasized that the respondent’s conduct was not only a breach of his professional duties but also a moral lapse.
• Nature of the Employee’s Role: The Court highlighted that the respondent was a clerk-cum-cashier, a position of confidence, and his actions were a clear violation of that trust.

Fact:Law Ratio

The Court’s decision was heavily influenced by the factual evidence presented, particularly the testimony of Mrs. Meera Srivastava and the bank records. While the legal principles regarding the standard of proof in departmental proceedings were important, the Court’s reasoning was primarily based on the specific circumstances of the case.

Key Takeaways

• Departmental proceedings require a lower standard of proof than criminal proceedings. The standard of “preponderance of probability” is sufficient.
• High Courts should not interfere with the awards of Industrial Tribunals unless there is a jurisdictional error, violation of natural justice, or an error of law apparent on the face of the record.
• A handwriting expert’s opinion is not always necessary in cases of forgery, especially when there is other compelling evidence.
• Bank employees in positions of trust are expected to act with integrity, and any breach of that trust can lead to dismissal.
• The testimony of a witness, if clear and unambiguous, can be sufficient to prove charges in departmental proceedings.

Directions

The Supreme Court set aside the judgment of the High Court and upheld the award of the Industrial Tribunal, which had upheld the dismissal of the respondent. The parties were left to bear their own costs.

Development of Law

The ratio decidendi of this case is that in departmental proceedings, the standard of proof is based on the preponderance of probability, which is lower than the standard of proof in criminal proceedings, which requires proof beyond a reasonable doubt. The Court also reiterated that High Courts should not interfere with the awards of Industrial Tribunals unless there is a jurisdictional error, violation of natural justice, or an error of law apparent on the face of the record. This judgment reinforces the settled legal position on the standard of proof in disciplinary proceedings and the limited scope of judicial review of such proceedings.

Conclusion

The Supreme Court’s judgment in Indian Overseas Bank vs. Om Prakash Lal Srivastava reinforces the principle that disciplinary proceedings in service matters require a lower standard of proof than criminal trials. The Court upheld the dismissal of the employee, emphasizing that the evidence of fraud and forgery was sufficient, and the High Court had erred in re-evaluating the evidence. This case serves as a reminder of the importance of integrity in public service and the consequences of breaching the trust placed in employees.