Safiya Malik

A division bench of the Patna High Court has set aside the disciplinary action against a bank employee, ruling that the imposed penalties were unsustainable due to procedural irregularities and lack of evidentiary support. The court ordered the reinstatement of the appellant with all consequential benefits, stating the necessity of adhering to established procedural safeguards in disciplinary proceedings.

The appellant, Rakesh Roshan Gupta, was serving as an Assistant Branch Manager at a nationalized bank when he was subjected to disciplinary action. The allegations included unauthorized debit of funds from a customer’s account, opening a personal account without obtaining the necessary permissions, and being absent from duty without authorization. These allegations led to a departmental inquiry under the State Bank of India Officers’ Service Rules, 1992.

A First Information Report (FIR) had been filed against the appellant in connection with the allegations, but following an investigation, a final report was submitted in which the case was closed. Despite the closure of the criminal case, disciplinary proceedings continued under the bank’s internal rules.

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The inquiry report found that the first charge—unauthorized debit of Rs. 50,000 from the savings bank account of a customer—was not proved. The second charge, concerning the opening of an unauthorized bank account under a new customer identification number without permission and omitting key details, was found to be substantiated. The third charge, regarding unauthorized absence from duty for nearly a month, was also held to be proven.

Following the inquiry, the disciplinary authority imposed the penalty of dismissal from service. The appellant’s statutory appeal was rejected. However, in an earlier legal challenge, the High Court had directed reinstatement with all benefits and allowed the authorities to proceed from the second show-cause notice stage. A fresh show-cause notice was issued, and after further proceedings, the penalty was modified to a demotion in rank and salary reduction to Rs. 21,240 per month. The appellant’s appeal against this decision was dismissed.

The appellant challenged the disciplinary action before the High Court, contending that the orders were arbitrary, non-speaking, and failed to consider his defense adequately. He argued that the inquiry officer had found the primary allegation (misuse of customer funds) unsubstantiated, yet the disciplinary authority disagreed with this finding without valid reasoning.

The division bench examined the procedural aspects of the inquiry and found significant lapses. It noted that the disciplinary authority had not provided adequate reasons for disagreeing with the inquiry officer’s findings. It observed that in disciplinary proceedings, findings must be based on substantive evidence. Citing the Supreme Court’s precedent in Roop Singh Negi v. Punjab National Bank, the court stated:

“No witness was examined to prove the documents. The management witnesses merely tendered the documents and did not prove the contents thereof.”

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The bench further noted that Rule 68.3(iii) of the Officers’ Service Rules had been improperly applied. According to this rule, if the disciplinary authority disagrees with the findings of the inquiry officer, it must record detailed reasons and proceed accordingly. The court observed:

“The Rules clearly stipulate that in case the disciplinary authority disagrees with the findings of the inquiring authority on any article of charge, it is to record its reason for such disagreement and proceed to impose penalty.”

Since the disciplinary authority did not comply with this requirement, the entire process was deemed procedurally flawed. The bench also took note of the fact that the evidence used to support the second and third charges was not independently verified. No witnesses were produced to substantiate the claims, and key documents were neither authenticated nor introduced through direct testimony.

The court also examined the proportionality of the punishment imposed. It referred to several precedents where courts have held that an absence of direct evidence necessitates a more lenient approach in disciplinary matters. Additionally, the court recorded that the appellant had already suffered significant career setbacks due to the prolonged litigation and punitive measures imposed by the bank.

After considering the procedural lapses and absence of substantive proof, the High Court set aside the disciplinary action and issued the following directives:

• The disciplinary action, including the orders of punishment and appellate confirmation, was quashed.

• The appellant was directed to be reinstated with full-service benefits, including arrears, effective from the date of his initial dismissal (February 6, 2015).

• The bank was ordered to comply with these directives within three months from the date of judgment.

Case Title: Rakesh Roshan Gupta v. Chairman-cum-Managing Director, State Bank of India & Ors.

Case Number: Letters Patent Appeal No. 283 of 2024 in Civil Writ Jurisdiction Case No. 1323 of 2020

Bench: Acting Chief Justice Ashutosh Kumar, Justice Partha Sarthy

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