Supreme Court Upholds UCO Bank’s Disciplinary Action Against Assistant Manager in Cash Theft Case (2022)

Date of the Judgment: February 18, 2022

Citation: 2022 INSC 138

Judges: Justice Ajay Rastogi and Justice Abhay S. Oka

Can a bank employee be held responsible for a theft at the branch if they were negligent in their duties? The Supreme Court of India recently addressed this question, overturning a High Court decision that had quashed disciplinary proceedings against an Assistant Manager of UCO Bank. The core issue revolved around the responsibility of a bank employee in ensuring the safety of cash and keys, and whether lapses in this duty could lead to disciplinary action. The judgment was delivered by a two-judge bench comprising Justice Ajay Rastogi and Justice Abhay S. Oka, with Justice Rastogi authoring the opinion.

Case Background

The case involves a theft of ₹12 lakhs from the Sewla Branch of UCO Bank on November 10/11, 1999. Krishna Kumar Bhardwaj, the respondent, was an Assistant Manager and one of the joint custodians of cash at the branch. He was responsible for the safety of the keys to the cash room. The bank alleged that Mr. Bhardwaj did not follow the bank’s guidelines for handling the keys, which led to the theft.

Specifically, it was alleged that Mr. Bhardwaj left the keys in an almirah within the branch premises overnight, instead of keeping them in his personal custody. Additionally, he did not remit the surplus cash to the currency chest, and failed to check the closure of a rear gate. Furthermore, he did not maintain the key register properly. The bank initiated departmental inquiry proceedings against him.

Timeline

Course of Proceedings

The departmental inquiry found Mr. Bhardwaj guilty of charges 1, 3, and 4. The disciplinary authority initially dismissed him from service. On appeal, the appellate authority modified the punishment to compulsory retirement for charge 1 and a reduction in pay for charge 4, while exonerating him from charge 3.

Mr. 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 for the theft lay with the Branch Manager and the Assistant Manager (Cash), not Mr. Bhardwaj. This decision was upheld by a Division Bench of the High Court. The UCO Bank then appealed to the Supreme Court.

Legal Framework

The case is governed by the UCO Bank Officers Employees (Discipline & Appeal) Regulations, 1976. Regulation 12 allows for the suspension of an employee, while Regulation 17 deals with the powers of the appellate authority. The charges against Mr. Bhardwaj also referred to Regulation 3(1) of the UCO Bank Officer Employees (Conduct) Regulations, 1976, which mandates that employees discharge their duties with utmost devotion and diligence.

The specific charges against Mr. Bhardwaj were:

• Charge 1: Not keeping the keys in his person as per bank guidelines and leaving them in an almirah, resulting in theft.
• Charge 2: Not remitting surplus cash to the currency chest.
• Charge 3: Not checking the closure of a rear gate.
• Charge 4: Not maintaining the key register.
• Charge 5: Being in collusion with some person in the theft.

Arguments

Appellant (UCO Bank) Arguments:

• The bank argued that the inquiry was conducted as per the Regulations of 1976, and Mr. Bhardwaj never claimed that the inquiry was not conducted properly or that relevant documents were not provided.
• The bank contended that the High Court erred in assuming that the Branch Manager and Assistant Manager (Cash) were solely responsible for the theft.
• The bank emphasized that Mr. Bhardwaj was the custodian of the keys at the time of the incident, and the inquiry officer’s findings were supported by documentary evidence.
• The bank stated that the High Court failed to examine the inquiry officer’s findings regarding Mr. Bhardwaj’s responsibility as a custodian of cash.

Respondent (Krishna Kumar Bhardwaj) Arguments:

• Mr. Bhardwaj argued that as an Assistant Manager, he was not solely responsible, and the responsibility lay with the Branch Manager and Assistant Manager (Cash).
• He claimed that the inquiry officer was biased, and that the documents he requested were not provided.
• He argued that the orders passed by the disciplinary and appellate authorities were not speaking and cryptic in nature.
• He contended that the findings of the inquiry officer were perverse and unsustainable.

The innovativeness of the argument by the respondent was that he tried to shift the blame on the Branch Manager and Assistant Manager (Cash), which was factually incorrect as per the inquiry report.

Issues Framed by the Supreme Court

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

1. Whether the High Court was justified in interfering with the findings of the departmental inquiry.
2. Whether the respondent was responsible for the charges proved against him.
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:

Judgment

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

How each authority was viewed by the Court?

The Supreme Court relied on the precedents of B.C. Chaturvedi Vs. Union of India and Others [1995(6) SCC 749]*, Himachal Pradesh State Electricity Board Limited Vs. Mahesh Dahiya [2017(1) SCC 768]*, and Deputy General Manager(Appellate Authority) and Others Vs. Ajay Kumar Srivastava [2021(2) SCC 612]* to emphasize the limited scope of judicial review in departmental inquiries. These cases established that courts should not re-appreciate facts or interfere with findings of fact unless there is a clear error of law, procedure, or violation of natural justice. The Court also relied on the UCO Bank Officers Employees (Discipline & Appeal) Regulations, 1976 to determine the validity of the disciplinary proceedings.

What weighed in the mind of the Court?

The Supreme Court’s decision was heavily influenced by the factual findings of the inquiry officer and the disciplinary/appellate authority. The Court emphasized that the High Court had overlooked these findings and had incorrectly assumed that the responsibility for the theft rested solely with the Branch Manager and Assistant Manager (Cash). The Court noted that Mr. Bhardwaj was the custodian of the keys and had failed to follow bank guidelines, which led to the theft. The Court also considered the fact that Mr. Bhardwaj did not raise any significant objections to the inquiry proceedings before the departmental authorities.

Fact:Law Ratio

The Supreme Court’s reasoning was primarily based on the factual aspects of the case, particularly the findings of the inquiry officer and the actions of the respondent. While legal principles were considered, the factual aspects weighed more heavily in the Court’s decision.

Key Takeaways

• Bank employees, especially those in positions of trust, must adhere strictly to bank guidelines and procedures.
• Negligence in the handling of cash and keys can lead to serious disciplinary action, including dismissal or compulsory retirement.
• Courts will generally not interfere with departmental inquiries unless there is a clear error of law, procedure, or violation of natural justice.
• The responsibility of an employee is determined based on their role and duties at the time of the incident, not based on general hierarchy.

Directions

The Supreme Court did not give any specific directions other than quashing and setting aside the judgment of the Division Bench of the High Court.

Development of Law

The ratio decidendi of the case is that High Courts should not interfere with departmental inquiries unless there is a clear error of law, procedure, or violation of natural justice. The Supreme Court reiterated the limited scope of judicial review in such matters. The judgment did not introduce a new position of law but reinforced existing principles regarding disciplinary proceedings and the responsibility of employees.

Conclusion

The Supreme Court allowed the appeal by UCO Bank, 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 guilty of negligence in his duties as a custodian of cash and keys. The Supreme Court emphasized the limited scope of judicial review in departmental inquiries and upheld the disciplinary action taken by the bank.