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

Date of the Judgment: 19 January 2022. Citation: 2022 INSC 69. Judges: Sanjay Kishan Kaul, J. and M.M. Sundresh, J. Can a bank employee be dismissed for forging signatures and misappropriating funds? The Supreme Court addressed this question in a case where a bank employee was accused of defrauding his sister-in-law. The Court ultimately upheld the employee’s dismissal, emphasizing that disciplinary proceedings require a lower standard of proof than criminal proceedings. The judgment was delivered by a bench comprising Justice Sanjay Kishan Kaul and Justice M.M. Sundresh.

Case Background

The respondent, Om Prakash Lal Srivastava, was employed as a clerk-cum-cashier at the Indian Overseas Bank starting 14 September 1981. On 8 October 1994, the bank received a complaint from his sister-in-law, Mrs. Meera Srivastava. She alleged that the respondent had fraudulently opened a joint savings account in her name and his, forging her signatures. She also claimed he had encashed a demand draft of Rs. 20,000, which was meant for her, without her consent. The demand draft was issued to her as interim relief by Kalyan Nigam Limited, where her husband had worked before his death in a road accident on 15 April 1994.

Following the complaint, the bank suspended the respondent on 5 November 1994 for grave misconduct at the Gorakhpur Branch. A chargesheet was issued to him on 22 March 1995, outlining seven charges of misconduct.

Timeline

Course of Proceedings

The respondent denied the charges and an inquiry officer was appointed. The inquiry officer concluded that all charges were proven. Subsequently, the Disciplinary Authority proposed dismissal, which was upheld on 11 May 1996, after considering the respondent’s reply to the show cause notice. The appellate authority rejected the respondent’s appeal on 10 September 1996. The respondent then raised an industrial dispute, which was referred to the Central Government Tribunal-cum-Labour Court, Kanpur on 30 October 2003. The Tribunal initially found the domestic inquiry unfair due to the bank’s failure to produce original documents. However, the Tribunal allowed the bank to present evidence and ultimately upheld the dismissal on 21 February 2013. The Allahabad High Court then set aside the Tribunal’s order on 31 May 2018, remitting the matter back to the Tribunal for a handwriting expert’s opinion on charges 4 and 5. This High Court decision was stayed by the Supreme Court on 5 March 2019.

Legal Framework

The charges against the respondent were framed under the Bipartite Settlement dated 19 October 1966. Specifically, the charges referred to:

• Para 19.5(e) of the Bipartite Settlement, which pertains to acts of wilful insubordination.
• Para 19.5(j) of the Bipartite Settlement, which addresses actions prejudicial to the interests of the bank.
• Para 19.5(c) of the Bipartite Settlement, which deals with riotous, disorderly, and indecent behavior.

The Supreme Court also referred to Sections 45, 47, and 73 of the Evidence Act, 1872, which deal with the admissibility of expert opinions and the court’s power to compare handwriting.

Arguments

Appellant’s Arguments:

• The appellant argued that the High Court erred in applying criminal standards of proof to disciplinary proceedings.
• The bank contended that the misconduct should be evaluated based on the preponderance of evidence.
• The appellant submitted that there was sufficient evidence to prove that the respondent committed fraud and forgery by manipulating the signatures of his sister-in-law, opening an account, and appropriating the funds.
• The testimony of the complainant, Mrs. Meera Srivastava, was clear and unequivocal, and there was no reason to doubt her testimony.
• The other charges, including insubordination and tampering with documents, were also proven and were sufficient to justify dismissal.

Respondent’s Arguments:

• The respondent argued that charges other than 4 and 5 were not proven as no evidence was led.
• The respondent further submitted that charges 4 and 5 were also not proven because the Tribunal should have sought a handwriting expert’s opinion, as per Sections 45 and 47 of the Evidence Act, 1872, and the court cannot act as an expert under Section 73 of the Evidence Act, 1872.
• The respondent relied on the case of Lalit Popli v. Canara Bank [(2003) 3 SCC 583] to support his argument that the court should have taken the opinion of a handwriting expert.

Issues Framed by the Supreme Court

The Supreme Court did not explicitly frame issues in a separate section. However, the core issue was whether the High Court was correct in setting aside the Industrial Tribunal’s award and remitting the matter for a handwriting expert’s opinion, particularly concerning charges 4 and 5.

The sub-issues that the court dealt with were:

• Whether the standard of proof in disciplinary proceedings is the same as in criminal proceedings.
• Whether the High Court was correct in requiring a handwriting expert’s opinion.
• Whether the evidence on record was sufficient to prove the charges against the respondent.

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?

• The Court distinguished Lalit Popli v. Canara Bank [(2003) 3 SCC 583], clarifying that while the court can compare handwriting under Section 73 of the Evidence Act, 1872, it does not mandate a handwriting expert’s opinion in all cases.
• The Court referred to Murari Lal vs. State of Madhya Pradesh [(1980) 1 SCC 704], reiterating that even without an expert’s opinion, the court can compare writings and decide the matter.
• The Court referred to GE Power India Ltd. v. A. Aziz [2020 SCC Online SC 782], emphasizing the inherent limitations on the High Court’s power to scrutinize a Tribunal’s award under Article 226 of the Constitution of India.
• The Court referred to Ashoo Surendranath Tewari v. Deputy Superintendent of Police, EOW, CBI [(2020) 9 SCC 636], reiterating that the standard of proof in departmental proceedings is lower than in criminal proceedings.

What weighed in the mind of the Court?

The Supreme Court was primarily influenced by the following factors:

• Testimony of Mrs. Meera Srivastava: The Court found her testimony to be clear, unambiguous, and trustworthy. She had stated that she did not visit the bank to open the account or withdraw the money, and her testimony was not effectively challenged in cross-examination.
• Inquiry Officer’s Opinion: The Court noted that the Inquiry Officer, observing the signatures from a “banker’s eye,” found a discrepancy. This, coupled with Mrs. Srivastava’s testimony, was considered sufficient evidence.
• Nature of Disciplinary Proceedings: The Court emphasized that disciplinary proceedings require a lower standard of proof than criminal proceedings, relying on the principle of preponderance of probability.
• Breach of Trust: The Court highlighted that the respondent, being a bank employee, had breached the trust placed in him and had also betrayed the trust of his widowed sister-in-law.

Fact:Law

The Court’s decision was influenced more by the factual aspects of the case, such as the testimony of Mrs. Meera Srivastava and the Inquiry Officer’s observations, than by legal considerations.

The Court reasoned that the High Court had erred in applying the standards of criminal proceedings to disciplinary proceedings. The Court emphasized that in disciplinary matters, the standard of proof is based on the preponderance of probabilities. The Court also found that the testimony of Mrs. Meera Srivastava, coupled with the Inquiry Officer’s observation, was sufficient to prove the charges of fraud and forgery. The Court also noted that the respondent had breached the trust placed in him, both by the bank and by his sister-in-law. The Court stated: “The respondent took advantage of the complainant being his sister-in-law.”

The Court considered the argument that the Tribunal should have sought a handwriting expert’s opinion but rejected it, stating: “This would go contrary to the settled legal position enunciated by this Court.” The Court also noted: “The deposition of Mrs. Meera Srivastava was clear and unambiguous.” The Court concluded that the High Court had overstepped its jurisdiction by acting as an appellate court and interfering with the Tribunal’s award. The Court held that the punishment imposed on the respondent was not disproportionate to the misconduct established.

Key Takeaways

• Disciplinary proceedings require a lower standard of proof than criminal proceedings; the standard is based on the preponderance of probabilities.
• A handwriting expert’s opinion is not always necessary in disciplinary proceedings if other evidence sufficiently proves the charges.
• The testimony of a witness can be considered credible even without extensive cross-examination if the testimony is clear and unambiguous.
• Bank employees are held to a high standard of trust and integrity, and any breach of this trust can lead to dismissal.

Directions

The Supreme Court allowed the appeal and set aside the judgment of the High Court. The Court 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 disciplinary proceedings, the standard of proof is based on the preponderance of probabilities, which is lower than the standard of proof required in criminal proceedings. The Court also clarified that a handwriting expert’s opinion is not mandatory in all cases, and the court can rely on other evidence, including the testimony of witnesses and the opinion of the Inquiry Officer. This judgment reinforces the principle that disciplinary authorities have the power to take action against employees who engage in misconduct, and the courts should not interfere with such decisions unless there is a clear error of law or violation of natural justice.

Conclusion

The Supreme Court’s judgment in Indian Overseas Bank & Ors. vs. Om Prakash Lal Srivastava upholds the dismissal of a bank employee for fraud and misconduct. The Court emphasized that disciplinary proceedings require a lower standard of proof than criminal proceedings and that a handwriting expert’s opinion is not always necessary. The judgment reinforces the importance of trust and integrity in the banking sector and sets a precedent for how disciplinary matters should be handled.