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

Date of the Judgment: January 19, 2022
Citation: (2022) INSC 49
Judges: Sanjay Kishan Kaul, J. and M.M. Sundresh, J.
Can a bank employee be dismissed for forging signatures and misappropriating funds, even if a handwriting expert’s opinion wasn’t obtained? The Supreme Court of India addressed this question in a case involving Indian Overseas Bank and one of its employees, Om Prakash Lal Srivastava. The court ultimately upheld the employee’s dismissal, emphasizing that disciplinary proceedings require a lower standard of proof than criminal trials. The judgment was delivered by a two-judge bench comprising Justice Sanjay Kishan Kaul and Justice M.M. Sundresh, with Justice Kaul authoring the opinion.

Case Background

The respondent, Om Prakash Lal Srivastava, was employed as a clerk-cum-cashier at the Indian Overseas Bank starting September 14, 1981. On October 8, 1994, the bank received a complaint from the respondent’s sister-in-law, Smt. Meera Srivastava, alleging that the respondent had fraudulently opened a joint savings account in their names. She further alleged that the respondent forged her signatures to encash a demand draft of Rs. 20,000 issued to her as compensation after her husband’s death on April 15, 1994. Following this complaint, the bank suspended the respondent on November 5, 1994, and issued a chargesheet on March 22, 1995.

Timeline

Course of Proceedings

The respondent challenged his dismissal, leading to a series of proceedings. Initially, the Central Government referred the matter to the Industrial Tribunal, which initially ruled against the bank due to procedural issues in the domestic inquiry. However, the Tribunal allowed the bank to present additional evidence and eventually upheld the dismissal. The Allahabad High Court then intervened, setting aside the Tribunal’s award and remanding the case back for further consideration, specifically regarding the need for a handwriting expert’s opinion on the alleged forgery. The Supreme Court eventually stayed the High Court’s decision and heard the appeal.

Legal Framework

The charges against the respondent were framed under para 19.5 of the Bipartite Settlement dated 19.10.1966, which defines various acts of misconduct. Specifically, the charges included:

• Para 19.5(c): Behaving in a riotous, disorderly, or indecent manner.
• Para 19.5(e): Wilful insubordination or disobedience of orders.
• Para 19.5(j): Acting in a manner prejudicial to the interests of the bank.

The Supreme Court also referred to Sections 45, 47 and 73 of the Indian Evidence Act, 1872, which deal with the admissibility of expert and other opinions on handwriting.

Arguments

Appellant (Indian Overseas Bank):

• The bank argued that the High Court erred in applying the standard of proof required in criminal proceedings to a disciplinary matter.
• They contended that the misconduct should be evaluated based on the preponderance of evidence, not proof beyond a reasonable doubt.
• The bank presented evidence, including the testimony of Smt. Meera Srivastava, which they argued clearly demonstrated the respondent’s fraud and forgery.
• The bank argued that the testimony of the sister-in-law was clear and unequivocal and there was no reason to doubt her testimony.
• The bank submitted that the other charges relating to insubordination and forging suspension letters were also proved and sufficient for dismissal.

Respondent (Om Prakash Lal Srivastava):

• The respondent argued that the charges other than 4 & 5 were not proved as no evidence was led in that behalf.
• The respondent contended that charges 4 & 5 were also not proved and the High Court was right in remitting the matter back to the Industrial Tribunal for obtaining the opinion of a handwriting expert.
• The respondent relied on the case of Lalit Popli v. Canara Bank to argue that the court should take a view on the opinion of others and by its own comparison of writings can form its opinion.

Issues Framed by the Supreme Court

The Supreme Court did not explicitly frame issues in a separate section. However, the core issues addressed by the court were:

1. Whether the High Court was correct in applying the standard of proof of criminal proceedings to disciplinary proceedings.
2. Whether the High Court was correct in remitting the matter back to the Industrial Tribunal for obtaining the opinion of a handwriting expert.
3. Whether the Industrial Tribunal was right in upholding the dismissal of the respondent.

Treatment of the Issue by the Court

Authorities

The Supreme Court considered the following authorities:

Cases:

• Lalit Popli v. Canara Bank, (2003) 3 SCC 583, Supreme Court of India: This case was cited by the respondent to argue that the court should take a view on the opinion of others and by its own comparison of writings can form its opinion. The Supreme Court distinguished this case and held that the High Court erred in relying on this judgment.
• GE Power India Ltd. v. A. Aziz, 2020 SCC Online SC 782, Supreme Court of India: This case was cited to emphasize the limitations of the High Court’s jurisdiction under Article 226 of the Constitution of India in reviewing awards of the Tribunal. The court held that the High Court should not act as an appellate court and delve into the merits of the case.
• Ashoo Surendranath Tewari v. Deputy Superintendent of Police, EOW, CBI, (2020) 9 SCC 636, Supreme Court of India: This case was cited to reiterate that the standard of proof in departmental proceedings is lower than that in criminal proceedings.
• Murari Lal vs. State of Madhya Pradesh (1980) 1 SCC 704, Supreme Court of India: This case was cited in Lalit Popli v. Canara Bank to state that even when experts’ evidence is not there, Court has power to compare the writings and decide the matter.

Legal Provisions:

• Sections 45, 47, and 73 of the Indian Evidence Act, 1872: These sections deal with the admissibility of expert and other opinions on handwriting. The Court discussed these sections in the context of whether a handwriting expert’s opinion was necessary in this case.
• Para 19.5 of the Bipartite Settlement dated 19.10.1966: This provision defines various acts of misconduct, under which the charges were framed against the respondent.

Judgment

How each authority was viewed by the Court?

• Lalit Popli v. Canara Bank [CITATION]: The Court distinguished this case, stating that it did not support the High Court’s decision to require a handwriting expert in this disciplinary proceeding.
• GE Power India Ltd. v. A. Aziz [CITATION]: The Court used this case to highlight the limitations on the High Court’s power to review decisions of the Industrial Tribunal.
• Ashoo Surendranath Tewari v. Deputy Superintendent of Police, EOW, CBI [CITATION]: The Court relied on this case to emphasize that disciplinary proceedings require a lower standard of proof than criminal proceedings.

What weighed in the mind of the Court?

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

• The clear and unambiguous testimony of Smt. Meera Srivastava, which was deemed trustworthy by both the inquiry officer and the Industrial Tribunal.
• The fact that the respondent breached the trust of his widowed sister-in-law and the bank.
• The principle that disciplinary proceedings require a lower standard of proof than criminal proceedings.
• The view that a “banker’s eye” could discern the difference in signatures, making a handwriting expert unnecessary.
• The fact that the respondent was a clerk-cum-cashier, a post of confidence, and he had breached that confidence.

Logical Reasoning:

The court rejected the High Court’s view that a handwriting expert was necessary, stating that “It has been looked at from the perspective of a ‘banker’s eye’.” The court also emphasized that “The deposition of Mrs. Meera Srivastava was clear and unambiguous.” Further, the court stated that “The standard of proof in departmental proceedings, being based on preponderance of probability, is somewhat lower than the standard of proof in criminal proceedings where the case has to be proved beyond reasonable doubt.”

The Supreme Court found that the High Court had erred in applying the standards of criminal proceedings to disciplinary proceedings. The court also noted that the High Court should not have acted as an appellate court. The court found that the evidence was sufficient to implicate the respondent and that the punishment was commensurate with the misconduct.

There was no minority opinion in this case.

Key Takeaways

• Disciplinary proceedings against employees require a lower standard of proof than criminal trials.
• A handwriting expert’s opinion is not always necessary in disciplinary proceedings, especially when other evidence is available.
• Courts should not interfere with the findings of fact made by the inquiry officer and the Industrial Tribunal unless there is a jurisdictional error or violation of natural justice.
• Bank employees holding positions of trust must maintain the highest standards of integrity and honesty.
• Breach of trust, especially when involving family members, can lead to severe consequences.

Directions

The Supreme Court did not give any specific directions in this case, other than setting aside the judgment of the High Court and upholding the award of the Industrial Tribunal.

Development of Law

The ratio decidendi of this case is that in disciplinary proceedings, the standard of proof is based on the preponderance of probabilities and not beyond reasonable doubt, as required in criminal proceedings. This judgment also reiterates that the High Court should not act as an appellate court while exercising jurisdiction under Article 226 of the Constitution of India. There is no change in the previous position of law.

Conclusion

The Supreme Court allowed the appeal filed by Indian Overseas Bank, setting aside the Allahabad High Court’s judgment. The court upheld the Industrial Tribunal’s decision to dismiss Om Prakash Lal Srivastava, emphasizing that the bank had sufficient evidence of fraud and forgery. The judgment reinforces the principle that disciplinary proceedings require a lower standard of proof than criminal trials and that courts should be cautious in interfering with the findings of fact made by the inquiry officer and the Industrial Tribunal. The case also highlights the importance of trust and integrity for bank employees.