Supreme Court Upholds Disciplinary Action Against Bank Officer in Cash Theft Case: UCO Bank vs. Krishna Kumar Bhardwaj (2022)

LEGAL ISSUE: Whether the High Court was right in interfering with the disciplinary proceedings against a bank officer for negligence leading to theft.
CASE TYPE: Service Law/Disciplinary Proceedings
Case Name: Regional Manager, UCO Bank and Another vs. Krishna Kumar Bhardwaj
Judgment Date: 18 February 2022

Date of the Judgment: 18 February 2022
Citation: (2022) INSC 171
Judges: Justices Ajay Rastogi and Abhay S. Oka
Can a High Court interfere with disciplinary proceedings against a bank officer when there is sufficient evidence of negligence? The Supreme Court recently addressed this question in a case involving a theft at a UCO Bank branch. The court examined whether the High Court was correct in overturning the disciplinary actions against an Assistant Manager who was found negligent in his duties related to cash handling. The judgment was delivered by a two-judge bench comprising Justices Ajay Rastogi and Abhay S. Oka, with Justice Rastogi authoring the opinion.

Case Background

The case revolves around a theft of ₹12.00 lakhs at the Sewla Branch of UCO Bank on 10th/11th November 1999. Krishna Kumar Bhardwaj, the respondent, was working as an Assistant Manager and was one of the joint custodians of cash. He was responsible for the safety of the keys to the cash room. The bank alleged that Bhardwaj did not follow the bank’s guidelines for handling the keys, leaving them in an almirah overnight instead of keeping them in his personal custody. This negligence allegedly led to the theft.

Following the incident, Bhardwaj was suspended on 29th November 1999, and a chargesheet was issued on 7th December 1999, with an additional charge on 13th March 2000. The charges included negligence in handling keys, failure to remit surplus cash, not checking the closure of a rear gate, and not maintaining a key register, as well as being in collusion with the thieves.

Timeline

Course of Proceedings

The departmental inquiry found Bhardwaj guilty of charges 1, 3, and 4. The disciplinary authority dismissed him from service. On appeal, the appellate authority modified the punishment to compulsory retirement and a reduction in pay, exonerating him of charge 3. Bhardwaj then challenged this order before the High Court of Judicature at Allahabad. A Single Judge of the High Court set aside the punishment, stating that the responsibility was of the Branch Manager and Assistant Manager (Cash). The Division Bench of the High Court affirmed this decision. The UCO Bank then appealed to the Supreme Court.

Legal Framework

The case primarily involves the interpretation and application of the UCO Bank Officers Employees (Discipline & Appeal) Regulations, 1976 (referred to as “Regulations 1976”). Specifically, Regulation 12 deals with suspension of employees, and Regulation 17 deals with the powers of the appellate authority. The charges against the respondent also reference Regulation 3(1) of the UCO Bank Officers Employees (Conduct) Regulations, 1976, which mandates that employees must discharge their duties with utmost devotion and diligence.

The relevant regulations mentioned in the judgment are:

• Regulation 12 of the UCO Bank Officers Employees (Discipline & Appeal) Regulations 1976: This regulation provides the bank the power to place an employee under suspension.
• Regulation 17 of the UCO Bank Officers Employees (Discipline & Appeal) Regulations 1976: This regulation defines the powers of the appellate authority in disciplinary matters.
• Regulation 3(1) of UCO Bank Officers Employees (Conduct) Regulations, 1976: This regulation mandates that employees must discharge their duties with utmost devotion and diligence.

Arguments

The appellants (UCO Bank) argued that the High Court erred in interfering with the disciplinary proceedings. They contended that the inquiry was conducted fairly, and the respondent was given ample opportunity to present his case. The bank emphasized that the respondent was indeed the custodian of the keys at the time of the theft and was negligent in his duties. The bank argued that the High Court incorrectly assumed that the Branch Manager and Assistant Manager (Cash) were solely responsible.

The respondent argued that he was merely an Assistant Manager and that the primary responsibility lay with the Branch Manager and the Assistant Manager (Cash). He also alleged that the inquiry officer was biased, that he was not provided with all necessary documents, and that the orders of the disciplinary/appellate authority were not reasoned.

The innovativeness of the argument by the UCO Bank was in highlighting the factual error committed by the High Court in assuming the responsibility of the Branch Manager and Assistant Manager (Cash) while ignoring the findings of the inquiry officer that the respondent was the custodian of the keys.

Issues Framed by the Supreme Court

The Supreme Court did not frame specific issues but addressed the following key questions:

1. Whether the High Court was justified in interfering with the disciplinary proceedings and the findings of the inquiry officer.
2. Whether the respondent was indeed negligent in his duties as a custodian of cash and keys.
3. Whether the principles of natural justice were violated during the inquiry.

Treatment of the Issue by the Court

Authorities

The Supreme Court relied on the following authorities to define the scope of judicial review in disciplinary matters:

The Court also considered the following legal provisions:

• Regulation 12 of the UCO Bank Officers Employees (Discipline & Appeal) Regulations 1976: This regulation provides the bank the power to place an employee under suspension.
• Regulation 17 of the UCO Bank Officers Employees (Discipline & Appeal) Regulations 1976: This regulation defines the powers of the appellate authority in disciplinary matters.
• Regulation 3(1) of UCO Bank Officers Employees (Conduct) Regulations, 1976: This regulation mandates that employees must discharge their duties with utmost devotion and diligence.

Judgment

The Supreme Court analyzed the authorities as follows:

• B.C. Chaturvedi vs. Union of India and Others [1995(6) SCC 749]*: The court relied on this case to highlight that judicial review in disciplinary matters is not an appeal on merits but a review of the decision-making process.
• Himachal Pradesh State Electricity Board Limited vs. Mahesh Dahiya [2017(1) SCC 768]*: The court used this case to reinforce the principle that courts should not act as appellate authorities and should only interfere if there is a procedural error or violation of natural justice.
• Deputy General Manager (Appellate Authority) and Others vs. Ajay Kumar Srivastava [2021(2) SCC 612]*: The court quoted this case extensively to reiterate that judicial review is limited to cases of mala fides, perversity, or lack of evidence.

What weighed in the mind of the Court?

The Supreme Court’s decision was primarily influenced by the factual findings of the inquiry officer, which were supported by documentary evidence. The Court emphasized that the respondent was indeed the custodian of the keys and that his negligence in handling them directly contributed to the theft. The Court also noted that the High Court had committed a factual error in its assessment of the case, which led it to wrongly interfere with the disciplinary proceedings.

The court’s reasoning was based on a combination of factual analysis and legal principles. The court focused on the factual findings of the inquiry officer, which were supported by documentary evidence, to establish the negligence of the respondent. The court then applied established legal principles on the scope of judicial review in disciplinary matters to conclude that the High Court had erred in interfering with the disciplinary proceedings.

The Court considered the alternative interpretation that the Branch Manager and Assistant Manager (Cash) were primarily responsible but rejected it because the inquiry report clearly established that the respondent was the custodian of the keys. The Court also rejected the respondent’s claims of bias and non-supply of documents, finding no evidence to support these claims.

The Supreme Court held that the High Court had exceeded its jurisdiction by interfering with the disciplinary proceedings. The court emphasized that the High Court had made a factual error in assuming that the Branch Manager and Assistant Manager (Cash) were primarily responsible for the theft. The Supreme Court found that the inquiry officer’s findings, supported by documentary evidence, clearly established the respondent’s negligence.

The reasons for the decision were:

• The High Court made a factual error in assuming the responsibility of the Branch Manager and Assistant Manager (Cash).
• The inquiry officer’s findings, supported by documentary evidence, established the respondent’s negligence.
• The respondent was given sufficient opportunity to present his case, and the principles of natural justice were followed.
• The disciplinary and appellate authorities had duly considered the findings of the inquiry officer.
• The High Court exceeded its jurisdiction by interfering with the disciplinary proceedings.

The Supreme Court quoted the following from the judgment in Deputy General Manager(Appellate Authority) and Others vs. Ajay Kumar Srivastava [2021(2) SCC 612]:

• “It is thus settled that the power of judicial review, of the constitutional courts, is an evaluation of the decision-making process and not the merits of the decision itself.”
• “The court/tribunal may interfere in the proceedings held against the delinquent if it is, in any manner, inconsistent with the rules of natural justice or in violation of the statutory rules prescribing the mode of enquiry or where the conclusion or finding reached by the disciplinary authority is based on no evidence.”
• “The constitutional court while exercising its jurisdiction of judicial review under Article 226 or Article 136 of the Constitution would not interfere with the findings of fact arrived at in the departmental enquiry proceedings except in a case of mala fides or perversity i.e. where there is no evidence to support a finding or where a finding is such that no man acting reasonably and with objectivity could have arrived at those findings and so long as there is some evidence to support the conclusion arrived at by the departmental authority, the same has to be sustained.”

There was no minority opinion in this case.

The Supreme Court’s analysis of the reasoning, legal interpretation, and application to the facts was thorough. The Court carefully examined the inquiry report, the evidence, and the orders of the disciplinary and appellate authorities. The Court also considered the relevant legal principles on judicial review and applied them to the facts of the case.

The decision has implications for future cases involving disciplinary proceedings in banks and other public sector organizations. It reinforces the principle that High Courts should not interfere with disciplinary proceedings unless there is a clear violation of natural justice or a finding of perversity or lack of evidence. The judgment also highlights the importance of adhering to the factual findings of the inquiry officer, especially when supported by documentary evidence.

No new doctrines or legal principles were introduced in this case. The Court primarily relied on established principles of judicial review and applied them to the facts of the case.

Key Takeaways

• High Courts should not interfere with disciplinary proceedings unless there is a clear violation of natural justice or a finding of perversity or lack of evidence.
• Factual findings of the inquiry officer, if supported by evidence, should be given due weight.
• Employees entrusted with the responsibility of handling cash and keys must adhere to the bank’s guidelines and procedures.
• Negligence in the performance of duties can lead to disciplinary action, including dismissal or compulsory retirement.

The judgment is likely to have a significant impact on future cases involving disciplinary proceedings in public sector organizations. It will serve as a reminder to High Courts to exercise caution while interfering with disciplinary proceedings and to give due weight to the findings of the inquiry officer.

Directions

The Supreme Court quashed and set aside the judgment of the Division Bench of the High Court, thereby upholding the disciplinary action against the respondent.

Development of Law

The ratio decidendi of the case is that the High Court should not interfere with disciplinary proceedings unless there is a clear violation of natural justice or a finding of perversity or lack of evidence. This case reinforces the existing position of law regarding the limited scope of judicial review in disciplinary matters.

Conclusion

The Supreme Court allowed the appeal, setting aside the High Court’s decision. The Court held that the High Court had erred in interfering with the disciplinary proceedings against the respondent, who was found negligent in his duties as a custodian of cash and keys. This judgment reinforces the principle that High Courts should not act as appellate authorities in disciplinary matters and should only interfere when there is a clear violation of natural justice or a finding of perversity or lack of evidence.