Supreme Court Upholds Retrospective Dismissal in SBI Employee Case: State Bank of India vs. Kamal Kishore Prasad (2023)

Introduction

Date of the Judgment: 09 January 2023

Citation: Civil Appeal No. 175 of 2023 (Arising out of SLP (C) No. 9819 of 2018)

Judges: Krishna Murari, J., Bela M. Trivedi, J.

Can a disciplinary authority impose a retrospective dismissal order on an employee who has reached superannuation during the pendency of disciplinary proceedings? The Supreme Court of India recently addressed this question in a case involving the State Bank of India (SBI) and one of its employees. This case examines the interpretation of the State Bank of India Officer Service Rules (SBIOSR), specifically regarding the continuation of disciplinary proceedings after an employee’s retirement. The core issue revolves around whether the bank was required to take an affirmative action to continue the disciplinary proceedings after the employee reached superannuation. The judgment was delivered by a two-judge bench comprising Justice Krishna Murari and Justice Bela M. Trivedi, with the opinion authored by Justice Bela M. Trivedi.

Case Background

Kamal Kishore Prasad, the respondent, was an employee of the State Bank of India. While working as a Branch Manager at Marufganj Branch and other branches, he was found to have committed several lapses. Consequently, he was suspended on 14 June 1993, under Rule 50A(i)(a) of the SBIOSR, 1992. Following a departmental inquiry, the Inquiry Authority submitted a report on 9 March 1998, which found some allegations to be proven and others partly proven. The Disciplinary Authority agreed with some of these findings and asked the respondent for his submissions. Subsequently, the matter was referred to the Appointing Authority, which issued an order on 11 August 1999, dismissing him from service.

Aggrieved by the dismissal order, the respondent filed a Writ Petition (No. 2739 of 2000) before the High Court of Judicature at Patna. The Single Bench of the High Court allowed the petition on 26 March 2003, setting aside the dismissal order. The Appellant-Bank then filed a Letters Patent Appeal (LPA No. 378 of 2003). The Division Bench of the High Court stayed the Single Bench’s order on 9 May 2003, but ultimately dismissed the LPA on 22 April 2010. In the meantime, the respondent reached the age of superannuation on 30 November 2009. The Appellant-Bank challenged the Division Bench’s order in the Supreme Court of India, which allowed the appeal on 25 November 2013, and directed the Appointing Authority to take a fresh decision within two months.

Following the Supreme Court’s order, the Appointing Authority issued a show-cause notice to the respondent on 6 February 2014. After considering his response and granting a personal hearing on 14 February 2014, the Appointing Authority again ordered his dismissal from service on 17 February 2014, with effect from 11 August 1999, and treated his suspension period as not on duty. The respondent filed a departmental appeal, which was dismissed on 9 August 2014. He then filed another petition before the High Court (CWJC No. 10192 of 2014), which was allowed by the Single Bench on 22 August 2016. The High Court quashed the dismissal order and directed the Appellant-Bank to pay all consequential benefits. The Appellant-Bank filed LPA No. 2035 of 2016, which was dismissed by the Division Bench on 1 February 2018.

Timeline:

Course of Proceedings

The respondent initially challenged his dismissal before the High Court of Judicature at Patna, where a Single Bench set aside the dismissal order. The Appellant-Bank then appealed to the Division Bench, which initially stayed the Single Bench’s order but later dismissed the appeal. The Appellant-Bank then approached the Supreme Court of India, which set aside the Division Bench’s order and directed the Appointing Authority to reconsider the matter. After the fresh dismissal order by the Appointing Authority, the respondent again approached the High Court, where the Single Bench quashed the dismissal order, which was upheld by the Division Bench. The Appellant-Bank then approached the Supreme Court of India again, leading to the present judgment.

Legal Framework

The case primarily revolves around the interpretation of Rule 19 of the State Bank of India Officer Service Rules (SBIOSR). Rule 19(1) deals with the retirement of an officer, stating that an officer shall retire from service on attaining the age of fifty-eight years or upon completion of thirty years’ service or thirty years’ pensionable service, whichever occurs first. It also provides for the possibility of extending the service of an officer under certain conditions. Rule 19(3) addresses the continuation of disciplinary proceedings initiated against an officer before they cease to be in service.

Rule 19(1) of SBIOSR states:

“An officer shall retire from the service of the Bank on attaining the age of fifty-eight years or upon the completion of thirty years’ service or thirty years’ pensionable service if he is a member of the Pension Fund, whichever occurs first.”

Rule 19(3) of SBIOSR states:

“In case disciplinary proceedings under the relevant rules of service have been initiated against an officer before he ceases to be in the Bank’s service by I the operation of, or by virtue of, any of the said rules or the provisions of these rules, the disciplinary proceedings m’ay, at the discretion of the Managing Director, be continued and concluded by the authority by which the proceedings were initiated in the manner provided for in the said rules as if the officer continues to be in service, so however, that he shall be deemed to be in service only for the purpose of the continuance and conclusion of such proceedings.”

Arguments

The Appellant-Bank argued that the High Court had misinterpreted Rule 19(1) and 19(3) of the SBIOSR, 1992. They contended that the Supreme Court’s earlier order had set aside the Division Bench’s judgment and directed the Appointing Authority to take a fresh decision, keeping all contentions open. Therefore, the Appointing Authority was justified in issuing a show-cause notice and passing the dismissal order after giving the respondent a hearing.

The respondent argued that the Supreme Court’s order of 25 November 2013, required the Appellant-Bank to take an affirmative action. He submitted that since he had reached superannuation, the bank should have either extended his service under Rule 19(1) or continued the disciplinary proceedings under Rule 19(3) by taking a conscious decision. The respondent contended that the Appointing Authority failed to exercise its discretion properly and instead passed a retrospective dismissal order, which was not legally permissible.

Issues Framed by the Supreme Court

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

• Whether the Appointing Authority was justified in passing the order of dismissal with retrospective effect, after the respondent had attained the age of superannuation, and whether the bank was required to take affirmative action to continue the disciplinary proceedings after the employee reached superannuation.

Treatment of the Issue by the Court

Authorities

The Court considered the following authorities:

Judgment

The Supreme Court analyzed the submissions made by both parties and the relevant rules of the SBIOSR. The court held that the disciplinary proceedings against the respondent had already been initiated and had culminated in his dismissal on 11 August 1999. Although this order was set aside by the Single Bench, the operation of that order was stayed by the Division Bench, and the Supreme Court had set aside the Division Bench’s order, directing the Appointing Authority to take a fresh decision.

The court rejected the respondent’s argument that the bank was required to take affirmative action under Rule 19(3) of the SBIOSR. The court clarified that Rule 19(3) applies when disciplinary proceedings are pending when an officer ceases to be in service. In this case, the disciplinary proceedings had already concluded with the dismissal order of 1999. The Supreme Court had kept all contentions open and directed the Appointing Authority to take a fresh decision, which the authority did by issuing a show-cause notice and granting a hearing to the respondent before passing the dismissal order.

The court stated,
“It was only pursuant to the direction given by this Court vide the order dated 25.11.2013, the Appointing Authority was expected to hear the respondent and pass appropriate order. This Court had kept all the contentions of all the parties open.”

The Supreme Court set aside the impugned order of the High Court and upheld the dismissal order passed by the Appointing Authority. The court stated that the order of the Appointing Authority was in consonance with the direction given by the Supreme Court and could not be considered arbitrary, illegal, or in violation of Rule 19(3) of the SBIOSR.

“Since all the contentions were kept open by this Court while allowing the appeal filed by the Appellant-Bank, as such no affirmative action was expected from the Appellant-Bank, as sought to be submitted by the learned counsel for the respondent.”

“The said order of Appointing Authority dismissing the respondent from service after granting opportunity of hearing to the respondent was in consonance with the direction given by this Court and could not be said to be arbitrary illegal or in violation of Rule 19(3) of the said Rules.”

What weighed in the mind of the Court?

The Supreme Court’s decision was primarily influenced by the procedural history of the case and the correct interpretation of Rule 19 of the SBIOSR. The court emphasized that the disciplinary proceedings had already been initiated and concluded with the dismissal order of 1999. The subsequent legal challenges and the Supreme Court’s earlier order did not change the fact that the proceedings had been completed. The court also stressed that it had kept all contentions open in its earlier order, and therefore, the Appointing Authority was within its rights to pass the dismissal order after granting a hearing to the respondent.

The sentiment analysis of the court’s reasoning indicates a strong emphasis on upholding the procedural correctness and the finality of the disciplinary proceedings. The court’s reasoning was more inclined towards the legal aspects and procedural correctness rather than the factual aspects of the case.

Key Takeaways

• Retrospective dismissal orders are valid if the disciplinary proceedings were initiated before the employee’s superannuation and the final order is passed after providing an opportunity of hearing.
• Banks are not required to take affirmative action to extend the service of an employee or continue disciplinary proceedings under Rule 19(3) of the SBIOSR if the disciplinary proceedings had already culminated in a dismissal order before the employee’s superannuation.
• The Supreme Court’s directions must be followed in letter and spirit and the authority is bound to pass the order as per the directions given by the Supreme Court.

Directions

The Supreme Court set aside the order of the Division Bench of the High Court and upheld the order of the Appointing Authority dismissing the respondent from service with retrospective effect from 11 August 1999.

Development of Law

The judgment clarifies that if disciplinary proceedings have already culminated in a dismissal order before an employee’s superannuation, there is no requirement for the disciplinary authority to take further affirmative action to continue those proceedings under Rule 19(3) of the SBIOSR. The ratio decidendi of the case is that a retrospective dismissal order is valid if the disciplinary proceedings were initiated before the employee’s superannuation and the final order is passed after providing an opportunity of hearing. This judgment reinforces the principle that once a disciplinary process has been completed, it is not necessary to re-initiate or extend it merely because the employee has reached superannuation during the pendency of legal challenges to the initial order.

Conclusion

The Supreme Court allowed the appeal filed by the State Bank of India, setting aside the High Court’s order. The court held that the Appointing Authority was justified in passing the dismissal order with retrospective effect, as the disciplinary proceedings had already been initiated and concluded before the respondent’s superannuation. The court clarified that the bank was not required to take any affirmative action under Rule 19(3) of the SBIOSR, as the said rule was not applicable to the facts of the case.