Justice S.V.N. Bhatti, Justice Vijay Bishnoi, Supreme Court

While directing the Canara Bank to settle the account of a deceased employee and upholding the setting aside of the order of punishment of reversion to a lower grade, the Supreme Court has held that Regulation 10 of the Canara Bank Officer Employees’ Regulations, 1976, is directory in deciding whether a common cause of action against more than one employee should be through a common or independent disciplinary proceeding.

The civil appeal before the Apex Court arose from the judgment of the Karnataka High Court. Prem Latha Uppal/first Respondent, was working as a Senior Manager, Scale-III, at one of Canara Bank’s branches in New Delhi. The other Respondents are the legal heirs and representatives of the estate of the first Respondent.

The Division Bench of Justice S.V.N. Bhatti and Justice Vijay Bishnoi stated, “In our view, the word “may” in Regulation 10 of the 1976 Regulations, from any standpoint, is directory. Construing “may” as mandatory would remove the discretion available to the employer in dynamic circumstances. We need not elaborate on all the circumstances, but it would suffice to note that the roles of charge-sheeted employees may not be the same or similar in cases that fall under a common category. Similarly, the disciplinary authority may be different, such as Assistant General Manager, Regional Manager, Chief General Manager or Executive Director, to initiate disciplinary action depending upon the cadre of the charge-sheeted employee.”

It is stated in Regulation 10 that when two or more officer employees are concerned in a case, the authority competent to impose a major penalty on all such officer employees may make an order directing that disciplinary proceedings against all of them may be taken in a common proceeding.

AOR Hetu Arora Sethi represented the Appellant while Senior Advocate Shailesh Madiyal represented the Respondent.

Factual Background

The first Respondent worked as a Senior Manager in the Diplomatic Enclave, New Delhi Branch of the Appellant- Canara Bank and was one of the three members of the Credit Sanction Committee. The Credit Sanction Committee sanctioned financial assistance to M/s. Aman Trading Company and M/s. Creative Trading Company. The said sanction of the loan was found to be vitiated by negligence and collusion amounting to misconduct under the 1976 Regulations. The gist of the misconduct was that the officers sanctioned a loan without a basic examination of the proposed borrower and without verifying the availability of the assets offered as security for the financial assistance. The first Respondent was charge-sheeted.

The case dates back to the year 2006, when the Appellant, pursuant to disciplinary proceedings and report, by way of punishment, reduced the first Respondent to a lower grade, namely, from the SMG Scale-IV to MMG Scale-III. The first Respondent filed a Writ Petition challenging the order of punishment of reversion to a lower grade, but the same was dismissed. The first Respondent, aggrieved by the order of the Single Judge, filed a Writ Appeal, which was allowed, and the order of punishment was set aside by the Division Bench. Hence, the civil appeal came to be filed at the instance of Canara Bank.

Reasoning

Dealing with one of the arguments that the impugned judgment exceeded the scope of judicial review, the Bench stated, “It is axiomatic that the scope of judicial review, particularly in disciplinary matters, is well settled, and we do not intend to burden the judgment with citations. We have taken note of the findings and are of the view that the findings recorded in the impugned judgment on the merits of the matter are available, and there is no departure from the settled position of law. Having perused the record, we are of the view that the errors noted by the High Court against the findings recorded in respect of the first Respondent are not material, and the impugned judgment to that extent requires confirmation.”

The Bench next dealt with the interpretation of Regulation 10 of the 1976 Regulations, which talks about common proceedings. As per the Bench, the word “may” in Regulation 10 of the 1976 Regulations, from any standpoint, is directory. The Bench further noted that the roles of charge-sheeted employees may not be the same or similar in cases that fall under a common category. “Similarly, the disciplinary authority may be different, such as Assistant General Manager, Regional Manager, Chief General Manager or Executive Director, to initiate disciplinary action depending upon the cadre of the charge-sheeted employee”, it added.

The Bench noted that the Andhra Pradesh High Court in T. Baba Prasad v. Andhra Bank, Hyderabad and others (2011) interpreted “may” in Regulation 10 of the Andhra Bank Officer Employees (Discipline and Appeal), Regulations 1981, as directory (1981 Regulations). Regulation 10 of 1981 Regulations is pari materia to the 1976 Regulation. It was also held therein that the failure to hold a joint enquiry does not vitiate the disciplinary proceedings already initiated against an individual officer.

The Bench thus stated, “We affirm the view taken by the High Court of Andhra Pradesh in T. Baba Prasad (supra). Hence, we set aside the view taken in the impugned judgment with respect to Regulation 10 of the 1976 Regulations.”

The Bench disposed of the appeal by directing the Appellant to settle the account of the first Respondent by duly noting the outcome of the impugned Judgment within six weeks.

Cause Title: Canara Bank v. Prem Latha Uppal (Dead) Through Lrs. (Neutral Citation: 2026 INSC 478)

Appearance

Appellant: AOR Hetu Arora Sethi, Advocates Lalit Mohini Bhat, Rahul Jain, Siddarth Agarwal, Sanidhya Kumar, Anirudh Bhat

Respondent: Senior Advocate Shailesh Madiyal, AOR Mahesh Thakur, Advocates Narveer Yadav, Siddhartha Sati, Vineeth B Prasad, Ruchi Kumari, Anchit Singla, Dushyant Pratap Singh

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