Supreme Court Upholds UCO Bank’s Disciplinary Action Against Employee for Misconduct: Krishna Kumar Bhardwaj Case (2022)

Introduction

Date of the Judgment: 18 February 2022

Citation: 2022 INSC 148

Judges: Justice Ajay Rastogi and Justice Abhay S. Oka.

Can a High Court interfere with disciplinary proceedings initiated by a bank against its employee? The Supreme Court of India recently addressed this question in a case involving UCO Bank, where the High Court of Allahabad had set aside the disciplinary actions against an employee. This case revolves around allegations of misconduct and procedural lapses during the employee’s tenure as a branch manager. The Supreme Court overturned the High Court’s decision, emphasizing the limited scope of judicial review in disciplinary matters.

Case Background

The respondent, Krishna Kumar Bhardwaj, while working as an officiating Manager at UCO Bank’s Taharpur branch, was accused of several irregularities. On 15th May 1993, he was served with a charge sheet under Regulation 6 of the UCO Bank Officers Employees’ (Conduct) Regulations, 1976. The charges included opening accounts without proper verification, mishandling cash deposits, and issuing false certificates.

Specifically, the charges were that:
✓ He opened two savings accounts on 24 December 1991 without proper introductions and completion of necessary formalities.
✓ He did not follow the proper procedure while depositing large sums of cash in the currency chest at Meerut on 24 December 1991 and 1 January 1992.
✓ By opening accounts without proper introduction and allowing huge transactions, he facilitated unscrupulous persons to derive benefits under government amnesty schemes.
✓ He remained absent from duty for several months without proper sanction of leave.

Timeline:

Course of Proceedings

Following the charge sheet, an inquiry was conducted. The inquiry officer found the respondent guilty of charges 1, 2, and 3, but not guilty of charge 4. The disciplinary authority, after providing a hearing, confirmed the findings and imposed penalties on 12 August 1996. The penalties included reduction to the lowest stage in the time scale for charges 1 and 2, and recovery of any claims by the Income Tax Department from his retirement benefits for charge 3.

On appeal, the appellate authority upheld the guilt on charges 1, 2, and 3 but modified the punishment on 14 November 1998. The punishment was modified to a reduction of 13 stages in pay for two years, with future increments postponed.

The respondent then challenged this order in a writ petition before the High Court of Allahabad. The High Court set aside the disciplinary proceedings, which led to the present appeal before the Supreme Court.

Legal Framework

The disciplinary proceedings against the respondent were initiated under Regulation 6 of the UCO Bank Officers Employees’ (Conduct) Regulations, 1976. The charges against the respondent were framed based on alleged violations of Regulation 3 of the same regulations, which mandates that employees must discharge their duties with utmost honesty, integrity, diligence, and devotion.

The specific regulations cited are:
✓ Regulation 3 of the UCO Bank Officers Employees’ (Conduct) Regulations, 1976: This regulation requires employees to maintain honesty, integrity, diligence, and devotion in their duties.
✓ Regulation 6 of the UCO Bank Officers Employees’ (Conduct) Regulations, 1976: This regulation pertains to the procedure for initiating disciplinary proceedings against employees.

Arguments

Appellant’s Arguments (UCO Bank):

• The High Court incorrectly assumed that the appellate authority had exonerated the respondent on charges 2 and 3. The appellate authority had, in fact, upheld the guilt on all three charges but modified the punishment.
• Charge no. 1 was not vague or lacking in material particulars. The respondent had participated in the inquiry without ever claiming that the charge was unclear.
• The High Court exceeded its jurisdiction by acting as an appellate authority and re-evaluating the evidence, which is not within the scope of judicial review under Articles 226 and 227 of the Constitution.

Respondent’s Arguments (Krishna Kumar Bhardwaj):

• The respondent did not dispute the factual matrix of the case.
• The punishment inflicted upon him was not supported by the material on record.
• The High Court was correct in setting aside the punishment.

Issues Framed by the Supreme Court

The Supreme Court did not explicitly frame issues but addressed the following points:

1. Whether the High Court was correct in its assessment that the appellate authority had exonerated the respondent on charges 2 and 3.
2. Whether charge no. 1 was vague and lacked material particulars, thus causing prejudice to the respondent.
3. Whether the High Court exceeded its jurisdiction in interfering with the disciplinary proceedings.

Treatment of the Issue by the Court

Authorities

The Supreme Court considered the following legal provisions:
✓ Articles 226 and 227 of the Constitution of India: These articles define the powers of the High Courts to issue writs and exercise superintendence over subordinate courts and tribunals.

The Supreme Court did not explicitly cite any prior case law in the judgment.

Judgment

How each authority was viewed by the Court?
✓ Articles 226 and 227 of the Constitution of India: The Court clarified that the High Courts’ power of judicial review under these articles is not analogous to that of an appellate authority. The High Court’s role is limited to correcting errors of law or procedure leading to injustice or violation of natural justice, not to re-evaluate the evidence.

What weighed in the mind of the Court?

The Supreme Court’s decision was primarily influenced by the following factors:
✓ The factual error made by the High Court in assuming that the appellate authority had exonerated the respondent on charges 2 and 3.
✓ The clarity and specificity of charge no. 1, which did not prejudice the respondent’s ability to defend himself.
✓ The limited scope of judicial review in disciplinary matters, which does not allow the High Court to act as an appellate authority.

The Court’s reasoning was primarily based on the legal principles of judicial review and the factual accuracy of the case.

The Supreme Court rejected the High Court’s interpretation, emphasizing that the High Court had overstepped its bounds by re-evaluating the evidence. The Court held that the High Court’s role was limited to correcting errors of law or procedure, not to act as an appellate authority.

The Supreme Court stated, “the constitutional courts while exercising their power of judicial review under Articles 226 or 227 of the Constitution would not assume the role of the appellate authority where jurisdiction is circumscribed by limits of correcting errors of law or procedural errors leading to manifest injustice or violation of principles of natural justice.”

The Court also noted, “the finding which has been recorded by the inquiry officer in reference to charge nos. 1,2 and 3 is duly supported with the material on record and after revisiting the record of inquiry, has been confirmed by the disciplinary/appellate authority.”

The Supreme Court further observed, “The article of charge no. 1 is clear and specific and leaves no ambiguity in understanding the delinquent in submitting his response.”

Key Takeaways

• High Courts should not act as appellate authorities in disciplinary matters.
• The scope of judicial review under Articles 226 and 227 of the Constitution is limited to correcting errors of law or procedure, not re-evaluating evidence.
• Disciplinary proceedings should be conducted in accordance with the prescribed procedure, and charges should be clear and specific.
• Factual accuracy is paramount in judicial review.

Directions

The Supreme Court set aside the judgment of the Division Bench of the High Court dated 19th February 2021. No further directions were given.

Specific Amendments Analysis

There were no specific amendments discussed in this judgment.

Development of Law

The ratio decidendi of this case is that High Courts should not act as appellate authorities in disciplinary matters and their power of judicial review is limited to correcting errors of law or procedure. This case reinforces the principle that the factual findings of disciplinary authorities should not be lightly interfered with unless there is a clear violation of procedure or natural justice. There is no change in the previous position of law.

Conclusion

In conclusion, the Supreme Court allowed the appeal, setting aside the High Court’s judgment. The Supreme Court emphasized that the High Court had erred in its assessment of the facts and had exceeded its jurisdiction by acting as an appellate authority. The disciplinary proceedings against the respondent were upheld, underscoring the limited scope of judicial review in such matters.