Penalty Originating From Flawed Inquiry Found Bad In Law | J&K HC Quashes Retrospective Dismissal Of Retired Bank Officer | Orders Full Pensionary Benefits
Safiya Malik
The High Court of Jammu & Kashmir and Ladakh Single Bench of Justice Javed Iqbal Wani quashed the dismissal of a retired bank official, holding that the disciplinary enquiry was legally unsustainable and vitiated by procedural irregularities. The Court directed the respondent bank to release all pensionary and post-retiral benefits to the petitioner within eight weeks of receiving the certified copy of the judgment. Failure to do so would render the bank liable to pay interest at the rate of 8% on the withheld benefits.
The petitioner, a retired officer of the Jammu and Kashmir Bank, approached the High Court challenging an order of dismissal dated 01.04.2022, made effective retrospectively from 30.06.2021—the date of his superannuation. The appellate order dated 09.11.2022, rejecting his appeal, was also contested. The petitioner had rendered over 34 years of service before retirement and was subjected to disciplinary proceedings for alleged misconduct during his tenure as Branch Head at two separate branch units.
According to the petitioner, the disciplinary proceedings originated with a letter dated 08.01.2021 seeking an explanation for irregular sanctioning of Temporary Overdrafts (TODs), some of which became Non-Performing Assets (NPAs). The petitioner submitted a reply denying any rule violations and asserting that the TODs were issued in accordance with norms without causing any financial loss to the bank. A charge-sheet dated 21.05.2021 followed, alleging the grant of overdrafts without proper sanction, resulting in seven accounts turning into NPAs and twenty-three TODs being issued without verifying the creditworthiness of the borrowers.
A second charge-sheet dated 28.06.2021 was issued, relating to a housing loan of Rs. 20 lakhs granted to one Mr. Javaid Ahmad Kralyari, with alleged irregularities such as including a defaulter co-borrower and partially funding the loan through a TOD. The petitioner responded to both charge-sheets, maintaining that actions were taken under instructions from superiors and within procedural bounds.
The disciplinary enquiry culminated in two separate reports dated 07.09.2021 and 10.09.2021, and a consolidated show cause notice dated 20.11.2021 proposing dismissal and recovery of financial loss. The petitioner submitted a response alleging procedural violations, including denial of opportunity to cross-examine witnesses and inspect documents. Nevertheless, the Disciplinary Authority issued an order of dismissal on 01.04.2022, effective retrospectively from 30.06.2021, which was affirmed in appeal by order dated 09.11.2022.
The petitioner argued that the disciplinary proceedings violated the Office Service Manual, 2000 (OSM 2000), particularly Rules 376 and 380, and invoked Rule 337(c) and Para-21 of the Central Vigilance Commission (CVC) Guidelines to assert that the TODs were sanctioned on verbal directions or deemed approved. He claimed no allegation of corruption or personal gain was ever made, and that recoveries were made in a significant number of accounts.
The bank, in its counter affidavit dated 28.06.2023, contended that the petitioner was dismissed after proper enquiry for unauthorised sanctioning of TODs, resulting in NPAs and financial loss to the tune of Rs. 2.26 Crores and Rs. 1.76 Crores. It denied the allegations of procedural irregularity and bias, arguing that full opportunity was given during the enquiry and that the disciplinary action was taken as per OSM 2000 and J&K Bank Employees' Pension Regulations, 1995.
Further, the bank submitted that gratuity and provident fund amounts were adjusted against outstanding staff loans, and Rs. 6.37 lakhs was credited to the petitioner. Pension and leave encashment were denied due to the dismissal penalty, and it was stated that Rule 337(c) and the CVC Guidelines were not formally adopted to the extent claimed.
In rejoinder, the petitioner challenged the selective application of OSM 2000, asserting that post-facto proposals were indeed submitted, supported by emails and the branch dispatch register. He also claimed denial of documents and opportunity to cross-examine key officials. The petitioner cited communications from his successor and internal emails acknowledging his compliance with instructions from higher authorities. He also stated that recoveries of Rs. 42.59 lakhs and Rs. 29.61 lakhs were made due to his efforts.
A supplementary affidavit by the bank dated 18.03.2025 reiterated its stance, denying any direction from superiors or deemed sanction and stating further irregularities found post-dismissal, such as unauthorized extensions of overdrafts and documentation lapses.
The Court stated: "This Court cannot sit in appeal over the enquiries conducted by the Enquiry Officers insofar the merits of the allegations are concerned, however, can delve into the manner, in which the enquiries are conducted in order to ascertain as to whether, as alleged by the petitioner, enquiries have been conducted in an arbitrary manner or not."
Upon examining Rule 337(c) of the OSM 2000, the Court observed: "An employee is expected to discharge his duties and exercise the powers vested in him by applying his own independent judgment, except in cases where he acts under the directions of his official superior."
Regarding the sanction of TODs, the Court noted: "Once the petitioner had made a clear and specific allegation that the facilities were extended on verbal instructions of the superior officer, the burden was on the Enquiry Officer to summon such officer and offer the petitioner an opportunity to cross-examine him, which, however, was not done."
On denial of cross-examination, the Court found: "The right to cross-examine a person, who provides adverse material against the charged official, is a foundational element of principles of natural justice."
Evaluating documentary submissions, the Court stated: "It has not been denied by the respondents... that the petitioner, on the same date, responded to this e-mail with details of 20 TODs, out of which 14 were later sanctioned, while 6 remained pending. This contradicts the respondents’ stand that no proposal was received."
The Court criticised the Enquiry Officer for omitting relevant context: "The enquiry report does not record any discussion on these sanctioned 14 TODs, thus, suggesting material irregularity in the holding of the enquiry."
With respect to recovery efforts, the Court noted: "Recoveries amounting to Rs. 42.59 lakhs in 13 potential NPA TOD Accounts and Rs. 29.61 lakhs in 8 NPA Accounts were made. The said recoveries were not only ignored by the Enquiry Officer, but were also not considered as mitigating circumstances by the disciplinary authority."
Concerning proportionality of punishment, the Court stated: "Discipline must be tempered with fairness and an isolated departure from procedure, especially in an environment, where certain practices were informally accepted ought not to result in the severest punishment available."
"The denial of such benefits flowed from the penalty of dismissal owing its origin to an unfair and flawed enquiry, which has been found to be bad in law."
"Such denial, in the context of a retired officer, seeking to challenge his dismissal was neither fair nor justified and only compounded the procedural unfairness already evident in the enquiry proceedings."
The Court directed as follows: "The instant petition succeeds, as a consequence whereof, the impugned order dated 01.04.2022 passed by the respondent-Bank is quashed."
"The respondents are commanded to release all the pensionary benefits in favour of the petitioner, preferably within a period of eight weeks from the date a certified copy of this order is produced by him before the respondents."
"In the event of failure, the respondents shall be liable to pay interest @ 8% to the petitioner on the said pensionary/retiral benefits from the date the same became due to the petitioner till the date of actual payment."
"Disposed of alongwith connected application(s). No order to as costs."
Advocates Representing the Parties:
For the Petitioner: Mr. Shuja Ul Haq, Advocate
For the Respondents: Mr. Aadil Asmi, Advocate
Case Title: Naseer Ahmad Sheikh v. J&K Bank Ltd. & Ors.
Neutral Citation: 2025: JKLHC-SGR:193
Case Number: WP(C) No. 2887/2022
Bench: Justice Javed Iqbal Wani
