The High Court of Jammu & Kashmir and Ladakh, in a Division Bench comprising Justice Sindhu Sharma and Justice Rajesh Sekhri, allowed a Letters Patent Appeal filed by J&K Grameen Bank challenging the judgment of the Single Judge that had quashed the penalty imposed on a respondent employee. The Bank had challenged the Single Judge’s order on the grounds that no financial loss was caused and the employee derived no pecuniary gain from the alleged misconduct.
The Court observed that the scope of judicial review in matters relating to the quantum of punishment for bank employees is very limited. It held that the Court can interfere with the findings of the competent authority and the appellate authority only if the punishment is shockingly disproportionate. The Bench emphasized that it is no longer res integra that in the banking sector, the very act of acting beyond one’s delegated authority by itself constitutes a gross breach of discipline and misconduct.
The Court further stated that the absence of actual financial loss or the fact that the Bank earned a profit does not absolve the employee, as banks deal with public money and procedural discipline must be absolute. It observed that an act of a bank official acting beyond authority, even if it yields profit and causes no loss, by itself amounts to misconduct.
In departmental disciplinary proceedings, the presence of mens rea is not a prerequisite to prove misconduct of an employee. An unauthorised act, even if committed with good intentions, is still a violation of the service rules. The Court held that it is not a defence to say that there was no loss or that profit resulted when the officer acted without authority. The discipline of an organisation, particularly a bank, is dependent upon each officer acting and operating within their allotted sphere. Acting beyond one’s authority is by itself a breach of discipline and is a misconduct.
The Bench relied upon the Supreme Court’s judgment in Disciplinary Authority-Cum-Regional Manager v. Nikunja Bihari Patnaik (1996) 9 SCC 69, which held that an act of a bank official acting beyond authority, even if it yields profit and causes no loss, by itself amounts to misconduct. It also referred to State Bank of India v. Ramesh Dinkar Punde (2006) 7 SCC 212, holding that it is not permissible for the High Court to re-appreciate the evidence considered by the Inquiry Officer, Disciplinary Authority, and Appellate Authority. The Court observed that if there was an inquiry consistent with the rules and principles of natural justice, what punishment would meet the ends of justice is a matter within the exclusive domain of the competent authority.
The background of the case revealed that the respondent, upon being transferred to a branch running in losses, started aggressive lending and brought the branch to a profitable stage. Subsequently, he was served with a charge-sheet alleging that, while working as Senior Manager, he had extended undue favour and sanctioned loans to selected borrowers by misusing his official position and in violation of operational guidelines, exceeding delegated powers and exposing the bank’s funds to risk. The respondent submitted a reply contending that the branch’s business increased and NPA was reduced. An Inquiry Officer was appointed who concluded that except for one charge partially proved, the rest were proved.
The competent authority imposed a penalty of reducing the respondent to the lowest stage in the pay scale of Officer Scale-II and directed that superannuation benefits be released on reduced pay. The respondent’s appeal was partly allowed by the appellate authority, modifying the penalty to reduction to the lowest stage in the pay scale of Officer Scale-I, while directing that superannuation benefits shall be released only after recovery/adjustment of all loan accounts. The respondent challenged both orders before the writ Court, which allowed the petition holding that the punishment was disproportionate. Aggrieved, the Bank filed the present appeal.
The Division Bench, while allowing the appeal, set aside the order of the Single Judge and restored the penalty as modified by the appellate authority. The Court held that the Single Judge had failed to appreciate the controversy in the matter and had erred in quashing the penalty on the ground of absence of financial loss or pecuniary gain to the employee.