# J. K. Chandna v. The Prathama Bank & Ors

- **Citation:** (2016) 3 ILRA 330
- **Court:** High Court of Judicature at Allahabad
- **Decided:** 2016-03-03
- **Bench:** V.K. Shukla, Mahesh Chandra Tripathi
- **Source:** https://unisonlegal.in/judgment/allahabad-high-court/j-k-chandna-v-the-prathama-bank-ors-43532
- **Pages:** 16

## Headnote

P. K. Singhal, S.C.

Petitioner was branch manager - Sanctioned disbursed a secured overdraft limit of Rs.23,00,000/-- on
basis of co-lateral security, valuer report - borrower in conspiracy with others obtained said loan on
fake documents - Departmental Enquiry held - petitioner violated the regulations 17 and 19 of the
Prathama Bank (Officers and Employees) Service Regulation, 2001 - Penalty imposed on Petitioner -
Reduction by five stages and recovery of loss modified in appeal to three stage with recovery.
Service Law - Disciplinary proceedings - Scope of judicial review - High Court cannot reappreciate
evidence - Interference permissible only when findings are perverse, unsupported by evidence or
inquiry violates statutory rules/natural justice (Paras 19-23, 26-30).

Banking Sector - Misconduct - Gross negligence - Sanction and disbursement of loan without
proper KYC verification, property inspection, or compliance with conditions - Manager held
responsible - Acts detrimental to Bank's interest amount to misconduct under Regulation 38 of 2001
Regulations (Paras 13, 16-18, 31).

Departmental Inquiry - Adequate opportunity - Inquiry held strictly as per Regulations -
Petitioner's defence considered - Findings of guilt affirmed - No procedural violation shown (Paras
8-9, 17, 31).

Punishment - Reduction in pay scale and liability for pecuniary loss - Doctrine of proportionality -
Interference only if punishment shocks conscience - Appellate authority already adopted leniency -
No ground for judicial intervention (Paras 19-25, 31).
3 All. J. K. Chandna Vs The Prathama Bank & Ors.
331

Double jeopardy - Not applicable to departmental proceedings - Recovery of pecuniary loss can
accompany imposition of major penalty - Both actions permissible under Regulation 38 (Paras 1011).

Allegation of discrimination - "Pick and choose" plea rejected - Manager, being first-level
appraiser and disbursing authority, bears primary responsibility - Negligence clearly established
(Paras 11, 16-18, 31).

Held - Departmental inquiry valid - Findings supported by evidence - Punishment lawful
Writ petition dismissed.

List of Cases cited:

## Text

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330 INDIAN LAW REPORTS ALLAHABAD SERIES
Supreme Court with dismissal of Special Leave to Appeal, forthwith. Respondents, however,
shall have liberty to act in terms of the orders passed by this Court in Special Appeal.

19. In the peculiar facts and circumstances of the case, as the action of respondent
corporation has been found to be lacking in bonafide, a cost of Rs.10,000/- is imposed upon
the respondent corporation.
----------
ORIGINAL JURISDICTION
CIVIL SIDE
DATED: ALLAHABAD 03.03.2016

BEFORE

THE HON'BLE V.K. SHUKLA, J.
THE HON'BLE MAHESH CHANDRA TRIPATHI, J.

Writ A No. - 1088 of 2011

J. K. Chandna ...Petitioner
Versus
The Prathama Bank & Ors. ...Respondents

Counsel for the Petitioner:
C. P. Gupta, Kunwar Jitendra B. Singh, K.N. Tripathi

Counsel for the Respondents:
P. K. Singhal, S.C.

Petitioner was branch manager - Sanctioned disbursed a secured overdraft limit of Rs.23,00,000/-- on
basis of co-lateral security, valuer report - borrower in conspiracy with others obtained said loan on
fake documents - Departmental Enquiry held - petitioner violated the regulations 17 and 19 of the
Prathama Bank (Officers and Employees) Service Regulation, 2001 - Penalty imposed on Petitioner -
Reduction by five stages and recovery of loss modified in appeal to three stage with recovery.
Service Law - Disciplinary proceedings - Scope of judicial review - High Court cannot reappreciate
evidence - Interference permissible only when findings are perverse, unsupported by evidence or
inquiry violates statutory rules/natural justice (Paras 19-23, 26-30).

Banking Sector - Misconduct - Gross negligence - Sanction and disbursement of loan without
proper KYC verification, property inspection, or compliance with conditions - Manager held
responsible - Acts detrimental to Bank's interest amount to misconduct under Regulation 38 of 2001
Regulations (Paras 13, 16-18, 31).

Departmental Inquiry - Adequate opportunity - Inquiry held strictly as per Regulations -
Petitioner's defence considered - Findings of guilt affirmed - No procedural violation shown (Paras
8-9, 17, 31).

Punishment - Reduction in pay scale and liability for pecuniary loss - Doctrine of proportionality -
Interference only if punishment shocks conscience - Appellate authority already adopted leniency -
No ground for judicial intervention (Paras 19-25, 31).
3 All. J. K. Chandna Vs The Prathama Bank & Ors.
331

Double jeopardy - Not applicable to departmental proceedings - Recovery of pecuniary loss can
accompany imposition of major penalty - Both actions permissible under Regulation 38 (Paras 1011).

Allegation of discrimination - "Pick and choose" plea rejected - Manager, being first-level
appraiser and disbursing authority, bears primary responsibility - Negligence clearly established
(Paras 11, 16-18, 31).

Held - Departmental inquiry valid - Findings supported by evidence - Punishment lawful
Writ petition dismissed.

List of Cases cited:
1. Lt. Governor, Delhi & others v. HC Narinder Singh, (2004) 13 SCC 342.
2. State of Uttar Pradesh & others v. Madhav Prasad Sharma, (2011) 2 SCC 212
3. Trilok Nath v. Union of India, 1967 SLR 759
4. Union of India & others v. J. Ahmed, AIR 1979 SC 1022
5. T.V. Chaudhary with E.S. Reddi v. Chief Secretary, Government of A.P. & another, (1987) 3 SCC 258
6. State of U.P. v. Shatrughan Lal & another, (1998) 6 SCC 651
7. Engineering & Locomotive Co. Ltd. v. Jitendra Pd. Singh & another, (2001) 10 SCC 530
8. TATA and Moni Shankar v. Union of India & another, 2009 (3) Scale 455
9. State of U.P. & others v. Raj Pal Singh, (2010) 5 SCC 783
10. Rajendra Yadav v. State of M.P. & others, (2013) 3 SCC 73
11. State of Orissa v. Bidyabhushan Mohapatra, AIR 1963 SC 779
12. State of A.P. v. Sree Rama Rao, AIR 1963 SC 1723
13. Railway Board v. Niranjan Singh, AIR 1969 SC 966
14. State of Madras v. G. Sundaram, AIR 1965 SC 1103
15. Syed Yakoob v. Radhakrishnan, AIR 1964 SC 477
16. State of A.P. v. C. Venkata Rao, (1975) 2 SCC 557
17. B.C. Chaturvedi v. Union of India, (1995) 6 SCC 749
18. Tara Chand Byas v. Chairman, JT 1997 (3) SC 500
332 INDIAN LAW REPORTS ALLAHABAD SERIES
19. Apparel Export Promotion Council v. A.K. Chopra, AIR 1999 SC 625
20. Regional Manager & Disciplinary Authority, SBI, Hyderabad v. S. Mohd. Gaffar
21. Union of India & others v. K.G. Singh, 2006 (3) ESC 373 (SC)
22. State Bank of India v. T.J. Pal, (1999) 4 SCC 759
23. Union of India v. Vishwa Mohan, (1998) 4 SCC 310
24. Disciplinary Authority v. N.B. Patnaik, (1996) 4 SCC 457
25. State Bank of India v. T.J. Pant, (1999) 4 SCC 759
26. D.S. Bisnoi v. State Bank of India, 2004 (1) ESC 381 (All) (DB)
27. Sudhir Singh v. District Cooperative Bank, 2003 (1) ESC 465 (All) (DB)
28. Ram Pratap Sonekar v. Allahabad Bank, 2000 (2) ESC 814 (All) (DB)
29. K.K. Singh v. Gomti Gramin Bank, 2002 (1) ESC 257 (All) (DB)
30. Dr. Ram Pal Singh v. State of U.P. & others, 2006 (2) ESC 1182 (All) (DB)
31. Sarvesh Kumar Sharma v. Nuclear Power Corporation of India Ltd. & another, 2006 (2) ESC 1153
(All) (DB)
(Delivered by Hon'ble Mahesh Chandra Tripathi, J.)

1. We have heard Shri Ashok Bhalla and Shri J.B. Singh, learned counsel for the
petitioner and Sri P.K. Singhal, learned counsel for respondents-bank.

2. J. K. Chandna is before this Court with the request to issue suitable writ or direction
in the nature of certiorari calling for the record and quashing the entire enquiry and
disciplinary proceedings and the impugned order of punishment dated 4.12.2009 passed by
respondent no.3 as modified by the order of respondent no.2 dated 22.9.2010. He has further
prayed for direction restraining the respondents from withholding or denying the petitioner
his due promotion and all other service benefits to him in pursuance of the impugned orders
of punishment passed by the respondents concerned.

3. Brief background of the case, as is reflected from the record, is that Pradhama Bank
(in short, the Bank), which is a Regional Rural Bank, established under the provisions of
Regional Rural Banks Act, 1976 (hereinafter referred to Act 1976). The Bank has its 212
branches spread in three districts namely Moradabad, Rampur and Jyotiba Phule Nagar in
the State of Uttar Pradesh. The Syndicate Bank is its sponsor bank. The main function of the
Bank is to carry out the banking business. The Bank is State within the meaning of Article
12 of Constitution of India and its banking activities including supervisory, finance and
administration are managed and controlled by the Government of India. The share capital of
3 All. J. K. Chandna Vs The Prathama Bank & Ors.
333
the Bank is held by the Central Government, State Government and Sponsor Bank in the
ratio of 50%, 15% and 35% respectively and the Bank is primarily an agency and
instrumentality of the Central Government. Under Section 29 of the Act 1976 the Central
Government has power to make Rules after consultation with the National Bank for
Agriculture and Rural Development (in short, NABARD) and Sponsor Bank. The Board of
Director of the Bank has the power to make Regulations after consultation with Sponsor
Bank and NABARD and with previous sanction of the Central Government. The
appointment and other conditions of service of officers and employees of the Bank are
governed by statutory regulations known as "Prathama Bank (Officers and Employees)
Service Regulations, 2001" (in short, Regulations 2001) framed by the bank in exercise of
its powers under Section 30 of the Act 1976. Chapter-IV of Regulations, 2001 deals with the
conduct, discipline and appeals of the officers and employees of the bank. Regulation 38 (1)
of Regulations 2001 provides penalties in respect of officers as under:-

"38. Penalties
Without prejudice to foregoing Regulations of this Chapter an officer or employee
who commits a breach of these Regulations or who displays negligence, inefficiency or
indolence or who commits acts detrimental to the interests of the Bank or in conflict
with its instructions, or who commits a breach of discipline or is guilty of any other acts
of misconduct, shall be liable for any one or more penalties as prescribed hereinafter.

1. Officers
(a) Minor Penalties
(i) Censure
(ii) Withholding or stoppage of increments of pay with or without cumulative
effect.
(iii) Withholding of promotion.
(b) Major Penalties
(i) Recovery from emoluments or such other amounts as may be due to him, of the
whole or part or any pecuniary loss caused to the Bank by negligence or breach of
orders.
(ii) Reduction to a lower grade or post, or to a lower scale in a time scale.
Compulsory retirement
(iv) Removal from service which shall not be a disqualification for future
employment.
(v) Dismissal."

4. It appears from the record in question that the petitioner was working as Manager in
Thakurdwara Branch of the Bank, Moradabad Head Office. While he was posted as
Manager of Town Hall Branch of the Bank at Moradabad, which was a new and TBM
(Total Branch Mechanization) branch, one Rafat Ali Khan had approached to the petitioner
for sanction of loan credit limit known as Secured Over Draft (SOD) of Rs.25 lacs for his
proprietorship firm M/s P.S. Handicrafts, Budh Bazar, Moradabad, which was claimed to be
engaged in the business of manufacturing of Brass, Iron, Aluminum and wooden items. It
has also been contended that Rafat Ali Khan was introduced by a renowned Medical
334 INDIAN LAW REPORTS ALLAHABAD SERIES
Practitioner and Eye Surgeon of the area Dr. Virendra Singh Chauhan, who had also a loan
account in the said branch. It has been claimed that the branch in question was a new and
TBM branch of which the petitioner did not have much experience of working. On
receiving the said loan application on 13.9.2007 the petitioner had processed the said
application on the basis of collateral security by the loanee and the reports of the valuer and
panel lawyer and accordingly recommended for sanction of Rs.25 lacs as loan credit limit
to the said firm. The same was forwarded to the Area Manager of the area office of
petitioner's bank on 23.9.2005.

5. Record in question also reflects that in the normal practice of sanctioning of loan
credit limit to the tune of Rs.25 lacs, the loan proposal is to be processed at the first
instance by the Branch office concerned and the same is to be forwarded to the Area Office
alongwith its recommendation/appraisal note with all necessary documents and
information. Thereafter, the said proposal is to be examined and scrutinized by the Area
Office concerned and if it is found in order in all respect, the same is submitted with its
recommendations to the credit department of the head office. Thereafter, the entire
proposal/recommendation and documentations are then closely scrutinized and verified by
the credit department and then the same is liable to be placed before the sanctioning
authority i.e. the General Manager for sanction. In the present matter, on the basis of the
said recommendation the said loan credit limit of Rs.23 lacs was sanctioned on 28.9.2007
and after the said approval, the loan limit was disbursed by the petitioner to the loanee on
30.9.2007.

6. This much has also been averred in the writ petition that a news item was published
in daily newspaper 'Amar Ujala' on 20.10.2007 by which the petitioner got an information
that Rafat Ali Khan had committed some sort of fraud in obtaining the loan from Punjab
National Bank, Civil Lines, Moradabad. Immediately on receiving the said information the
petitioner had apprised to higher officers and after receiving instructions from the higher
authority, a first information report was lodged by the petitioner against Rafat Ali Khan and
its firm. A charge sheet had also been submitted against the loanee by the local police.
Thereafter, a preliminary enquiry was made by the inspection department at the Head
Office of the Bank and consequently on the basis of preliminary enquiry report, a show
cause notice was served upon the petitioner on 26.11.2007 to show cause within seven
days, as to why the disciplinary proceedings be not initiated against him for alleged
irregularities committed by him in recommending the said proposal for the loan credit limit
of Rafat Ali Khan. The petitioner had submitted a detailed reply on 7.12.2007 narrating the
entire facts and circumstances of the case.

7. Thereafter, the petitioner was placed under suspension vide an order dated
17.12.2007 but later on he was reinstated by the Competent Authority on 23.2.2008. A
charge sheet dated 18.3.2008 had been served upon the petitioner containing two charges
namely procedural irregularities in recommending the said loan credit limit of the firm of
Rafat Ali Khan and thereby violating Regulation 17 and 19 of the Regulations. In the said
charge sheet the petitioner was charged of being guilty and liable for punishment under
Regulation 38 for putting a sum of Rs.23 lacs of the bank at stake which was likely to cause
3 All. J. K. Chandna Vs The Prathama Bank & Ors.
335
a financial loss to the bank. Thereafter the petitioner proceeded to file his reply on
15.5.2008 to the charge sheet denying both the charges levelled against him and further
explaining the entire facts and circumstances and thereby pleaded himself as not guilty of
the said charges and requested for his exoneration. Shri V.K. Rastogi, Senior Manager of
Loan Department at the Head Office of the bank was appointed as enquiry officer. In the
course of enquiy proceeding on 26.8.2008, the Bank's representative Sri A.K. Sharma, who
was the Manager, Inspection Department at the Head Office, filed a list of only ten
documents and two witnesses.

8. This much is also reflected from the record in question that the enquiry was
conducted strictly as per Regulations and finally the enquiry officer submitted the report on
1.8.2009 to the Disciplinary Authority holding both the charges levelled against the
petitioner as fully proved. Consequently, the Disciplinary Authority had proceeded vide
letter dated 4.8.2009 to ask the petitioner to submit his representation/comments, if any,
within seven days. On 12.8.2009 the petitioner had submitted detailed reply. Thereafter the
Chairman/Disciplinary Authority passed an order dated 4.12.2009 imposing a major
penalty/punishment of reduction of basic pay of the petitioner to five stages lower in the
time scale of pay and also holding the petitioner liable to the financial loss to the bank.
Apart from it, the Disciplinary Authority also passed an administrative order on 4.12.2009
for not treating the period of petitioner's suspension as the duty period. Aggrieved with the
said punishment order, the petitioner had filed an appeal on 31.12.2009 and the same was
rejected by the Appellate Authority vide an order dated 22.9.2010.

9. Shri Ashok Bhalla, learned counsel for the petitioner submitted that the entire
enquiry and the disciplinary proceedings have been held by the enquiry officer and the
disciplinary authority in most arbitrary, impartial, unfair and biased manner and the same
cannot be sustained. Various documents, which had been asked by the petitioner, were not
supplied and only on the basis of the preliminary enquiry report the enquiry officer had
proceeded and drawn conclusion against the petitioner and the said preliminary enquiry
report was not supplied to the petitioner. He further made submission that the petitioner
was only a recommending authority at the first instance of the loan proposal and the said
loan was not even within his domain for sanctioning limit. The same could only be
sanctioned at the head office on the basis of recommendations made by the Area Office as
well as the credit department of the Head Office. The petitioner has not at all been made
liable for the said dereliction of duty and even the petitioner himself was a victim of fraud
of the loanee on account of negligence and carelessness of the Area Office and Credit
Department of the Head Office. In the present matter, the petitioner had taken every care at
the initial stage and forwarded the said application only on the basis of recommendations
made by the approved valuer and the lawyer concerned but while inflicting punishment no
suitable punishment had been made against the officer concerned and they are also
responsible for the said loss to the bank but none of them has been charge sheeted and the
petitioner, who alone has been singled out, has been made a scapegoat in the matter.

10. In this background, learned counsel for the petitioner submitted that on account of
pendency of the disciplinary proceedings against him, the petitioner has already been
336 INDIAN LAW REPORTS ALLAHABAD SERIES
deprived of his promotion to the next higher Grade-III in the year 2010. The charges
against the petitioner in the charge sheet were to the effect that the petitioner had put the
money of bank at stake due to which the monetary loss was likely to cause to the bank but
there was no finding returned on this score whether any actual loss to the bank had
occurred or not. While inflicting punishment, the charge of pecuniary loss has also been
levelled against the petitioner and as such, the same is the second punishment for the same
cause of action and the same is double jeopardy. The loss is liable to be recovered from the
defaulter and the same cannot be directed to be recovered against the delinquent employee.
He has placed his reliance on Lt. Governor, Delhi & ors vs. HC Narinder Singh (2004)
13 SCC 342 and in State of Uttar Pradesh & ors vs. Madhav Prasad Sharma (2011) 2
SCC 212.

11. Learned counsel for the petitioner further submitted that in the present matter, the
pick and choose policy has been adopted and the petitioner has been made as a scapegoat.
He has proceeded to recommend for sanction of loan credit limit of Rs.25 lacs in favour of
Rafat Ali Khan only on the basis of valuer's report. He himself had taken extra precaution
while making the proposal to the extent that he had proceeded to inspect the property in
question, which had been put as collateral security in the matter and the valuer and panel
lawyer submitted their valuation and verification reports dated 18.9.2007 and 19.9.2007
respectively, wherein they had mentioned that the said properties were of a sound value and
were free from all encumbrances and as such, the punishment is discriminatory. He has
placed his reliance on the judgements passed by Hon'ble Apex Court in Trilok Nath vs.
UOI 1967 SLR 759; Union of India & ors vs. J. Ahmed AIR 1979 SC 1022; T.V.
Chaudhary with ES Reddi vs. Chief Secretary, Government of AP & another (1987) 3
SCC 258; State of UP vs. Shatrughan Lal & another (1998) 6 SCC 651; Engineering &
Locomotive Co. Ltd vs. Jitendra Pd. Singh & another (2001) 10 SCC 530; Tata and
Moni Shankar vs. UOI & anr 2009 (3) Scale 455; State of UP & ors vs. Raj Pal Singh
(2010) 5 SCC 783 and Rajendra Yadav vs. State of MP & ors (2013) 3 SCC 73 in
support of his submission.

12. Per contra, Shri P.K. Singhal, learned counsel appearing for the respondents-bank
has vehemently opposed the writ petition on the ground that in the present matter, the bank
was cheated by the borrower by hatching a well-organized conspiracy in collusion with
some person. The borrower procured a sum of Rs.23 lacs by getting loan sanctioned on the
basis of fake/manipulated documents in a planned manner. The matter was thoroughly
investigated and it was found that the fraud was committed by the borrower in collusion
with some person and caused heavy loss to the extent of Rs.23 lacs to the bank and the said
loan was sanctioned due to negligence of the petitioner and as such, the petitioner failed to
perform his duty as per rules and procedures of the bank. He further made submission that
the petitioner in very hurriedly manner recommended for sanction to headquarter for such a
huge loan amount, even though the borrower had little dealing with the bank. There was
almost no banking behaviour of the said customer till the petitioner recommended the said
Secured Over Draft limit. This also clearly indicates that the petitioner showed extra
interest in finalisation of the proposal and acted with gross negligence in recommending the
said proposal for sanction. The petitioner obtained two co-obligants in the said loan
3 All. J. K. Chandna Vs The Prathama Bank & Ors.
337
proposal. As per procedure and rules of the bank, KYC (Know Your Customer) Rules laid
down by the Reserve Bank of India are necessary to be complied with. Even the petitioner
had not taken a care to open the account of one of the co-obligants namely Mohd. Ahsan
son of Mohd. Jaan.

13. In this background, learned counsel for the respondents bank further submitted that
the so-called co-obligant had been found to be a fictitious person during the investigation.
The petitioner had obtained the details regarding bonafide of the co-obligant in a very
casual manner without ascertaining the facts such as his occupation, identity and address.
He further submitted that the petitioner furnished information in regard to the co-obligants
in the specified format of the bank but no documents were obtained in support of the said
information. He has also placed his reliance on the averments contained in para-9-I, 9-J, &
9-K of the counter affidavit wherein details have been averred regarding the properties,
which were used in the present matter as collateral securities. The claim of the petitioner,
that he himself had inspected the property in question, cannot be substantiated in the light
of the averments made in paras 9-I, 9-J and 9K of the counter affidavit. While sanctioning
the said loan limit by the Head Office of the bank, some conditions were liable to be
fulfilled by the petitioner himself for disbursement of the loan limit but the petitioner for
the reason best known to him had not taken care to comply with the very important
conditions and hurriedly disbursed the loan amount.

14. Learned counsel for the respondents further placed his reliance regarding the
explanation of the petitioner dated 7.12.2007 submitted in response to the charge sheet in
which it has been stated that he disbursed the said loan amount in good faith and he was
assured by the borrower that the said documents will be got completed by him within 2-4
days, which could not be completed because the borrower was arrested. He further made
submission that the scope of judicial review in disciplinary action taken by the employer is
extremely limited and in most of the cases, the Courts did not interfere with the punishment
imposed on the employee. If it is shown that the action of the employer is vitiated due to
violation of the statutory rules or regulations or the principles of natural justice, and such
violation has prejudiced his cause but in the present matter, the enquiry was got conducted
by the enquiry officer strictly in consonance with the regulations and as such, no
interference is required in the matter.

15. Heard rival submissions and perused the record.

16. We have proceeded to examine the record in question and find that a Secured
Overdraft limit No.13/07 for Rs.23 lacs was disbursed at Town Hall branch on 30.9.2007 in
the name of M/s P.S. Handicrafts, Budh Bazar, Moradabad (Prop. Rafat Ali Khan) by the
petitioner as Branch Manager of the said branch of respondent bank. The bank was cheated
by the borrower by hatching a well organized conspiracy in collusion with some persons
and succeeded in procuring an amount of Rs. 23 lacs by getting the above loan sanctioned
on the basis of fake and manipulated documents.
338 INDIAN LAW REPORTS ALLAHABAD SERIES
17. This much is reflected that in the present matter, the bank had proceeded to make
the preliminary enquiry and thereafter the departmental enquiry was conducted wherein at
every stage the petitioner was afforded an ample opportunity to defend himself. The
petitioner had obtained two co-obligants against the said loan proposal and as per the
procedure and rules of the bank, the KYC Rules laid down by the Reserve Bank of India
are necessary to be complied with and at every stage the petitioner being as Manager of the
bank had deviated with the norms and terms and conditions laid down by the bank. At the
time of investigation, it was also revealed that the residents of the locality were not aware
of any Rafat Ali Khan and as such, there was no property in his name in the said locality.
The property in question, which was mortgaged, was actually belonging to three brothers
namely Arshad Khursheed, Mohd. Habib and Mohd. Asharaf, all sons of Mohd. Khursheed
and the property was mortgaged in the loan of M/s M.H. Pool Point (Prop. Mohd. Habib
son of Mohd. Khursheed) for Rs.1,80,000/- which was sanctioned by Indian Overseas
Bank, Budh Bazar, Moradabad. The borrower Rafat Ali Khan submitted manipulated title
deed to defraud the bank and the petitioner in most casual manner had acted negligently in
the matter and as such, the claim of the petitioner, that he himself visited the property in
question, cannot sustain and as such he failed to inspect/enquire about the properties
offered as collateral security of the loan.

18. This is also reflected from the record in question that after receiving the said loan
application alongwith documents and appraisal note the petitioner had forwarded the papers
to the Area Manager, who was supposed to have made his own independent enquiry, and as
such the Area Officer was equally responsible and had the vital role for sanctioning of the
loan credit limit. The petitioner is alone victimized in the matter. Being as Manager of the
bank it was incumbent upon the petitioner to protect the interest of the bank and in this
background, he cannot submit that in the good faith and in bonafide manner, he had
proceeded to process and recommend the proposal of the loan to the Area Officer.
Admittedly the petitioner had initially forwarded the said proposal and finally he had
disbursed the cash credit limit. It was initially incumbent on his part to verify the
credentials of an applicant and at least he could ascertain the property in question, which
had been put as collateral security. The claim set out by the petitioner cannot be sustained
on the ground that he himself admitted in response to the charge sheet that he had disbursed
the said loan limit in good faith and was assured by the borrower that the documents will be
got completed within 2-4 days' time, and the said formalities could not be completed on
account of arrest of Rafat Ali Khan. Moreover, Regulation 38 of Regulations 2001 clearly
proceeds to make a mention that an officer or employee who commits a breach of
Regulations or who displays negligence, inefficiency or indolence or who commits acts
detrimental to the interests of the Bank or in conflict with its instructions, or who commits
a breach of discipline or is guilty of any other acts of misconduct, shall be liable for any
one or more penalties as prescribed in the Regulations 2001 and as such, the argument
advanced by learned counsel for the respondent-petitioner regarding double jeopardy
would not be attracted. Even otherwise, if the argument advanced by learned counsel for
the petitioner is accepted, then in such an eventuality, if any pecuniary loss has occurred to
the respondent-bank, then only remedy available to the respondent Bank is to dispense with
the services of the incumbent and not to proceed for recovery of the said loss. We do not
3 All. J. K. Chandna Vs The Prathama Bank & Ors.
339
subscribe to such interpretation of law, and are of the opinion that under the compelling
facts and circumstances of the case, the Bank can proceed to award major penalty and
simultaneously can also ask to the delinquent employee to make good the loss occurred to
the Bank.

19. In State of Orissa vs. Bidyabhushan Mohapatra AIR 1963 SC 779, the Supreme
Court considered whether the High Court can interfere with the order of punishment simply
because finding recorded by the Enquiry Officer in respect of some charges is found to be
vitiated by an error of law and whether it can go into the sufficiency and adequacy of
punishment. While reversing the order of Orissa High Court, which had allowed the writ
petition filed by the respondent, the Supreme Court observed:-

"But the Court in a case in which an order of dismissal of a public servant is
impugned is not concerned to decide whether the sentence imposed, provided it is
justified by the rules, is appropriate having regard to the gravity of the
misdemeanour established. The reasons which induce the punishing authority, if
there has been an inquiry consistent with the prescribed rules, are not justiciable:
nor is the penalty open to review by the Court. If the High Court is satisfied that if
some but not all of the findings of the Tribunal were 'unassailable', the order of
the Governor on whose powers by the rules no restrictions in determining the
appropriate punishment are placed, was final, and the High Court had no
jurisdiction to direct the Governor to review the penalty for as we have already
observed the order of dismissal passed by a Competent Authority on a public
servant, if the conditions of the constitutional protection have been complied with,
is not justiciable. Therefore if the order may be supported on any finding as to
substantial misdemeanour for which the punishment can lawfully be imposed, it is
not for the Court to consider whether that ground alone would have weighed with
the authority in dismissing the public servant. The Court has no jurisdiction if the
findings of the Inquiry Officer or the Tribunal prima facie make out a case of
misdemeanour, to direct the authority to reconsider that order because in respect
of some of the findings but not all it appears that there had been violation of the
rules of natural justice."

20. In State of A.P. v. Sree Rama Rao AIR 1963 SC 1723, the Supreme Court
indirectly reiterated the proposition laid down in Bidyabhushan Mohapatra's case (supra)
and held:-

"The High Court is not constituted in a proceeding under Article 226 of the
Constitution a Court of appeal over the decision of the authorities holding a
departmental inquiry against a public servant; it is concerned to determine
whether the inquiry is held by an authority competent in that behalf, and
according to the procedure prescribed in that behalf, and whether the rules of
natural justice are not violated. Where there is some evidence, which the authority
entrusted with the duty to hold the inquiry has accepted and which evidence may
reasonably support the conclusion that the delinquent officer is guilty of the
340 INDIAN LAW REPORTS ALLAHABAD SERIES
charge, it is not the function of the High Court in a petition for a writ under
Article to review the evidence and to arrive at an independent finding on the
evidence. The High Court may undoubtedly interfere where the departmental
authorities have held the proceedings against the delinquent in a manner
inconsistent with the rules of natural justice or in violation of the statutory rules
prescribing the mode of inquiry or where the authorities have disabled themselves
from reaching a fair decision by some considerations extraneous to the evidence
and the merits of the case or by allowing themselves to be influenced by irrelevant
considerations or where the conclusion on the very face of it is so wholly arbitrary
and capricious that no reasonable person could ever have arrived at that
conclusion, or on similar grounds. But the departmental authorities are, if the
inquiry is otherwise properly held, the sole judges of facts and if there be some
legal evidence on which the findings can be based, the adequacy or reliability of
that evidence is not a matter which can be permitted to be canvassed before the
High Court in a proceeding ... under Article of the Constitution.

21. In Railway Board v. Niranjan Singh AIR 1969 SC 966, the principle laid down in
Bidyabhushan Mohapatra's case (supra), was reiterated. In State of Madras vs. G.
Sundaram AIR 1965 SC 1103, the Constitution Bench of the Supreme Court laid down
the following proposition:-

"High Court, in the exercise of its jurisdiction under Article 226 of the
Constitution, cannot sit in appeal over the findings of fact recorded by a
competent Tribunal in a properly conducted departmental enquiry except when it
be shown that the impugned findings were not supported by any evidence. It
cannot consider adequacy of that evidence to sustain the charge.

22. In State of A.P. Vs. C. Venkata Rao (1975) 2 SCC 557, a three Judges Bench of
the Supreme Court referred to the judgments of Syed Yakoob Vs. Radhakrishnan, AIR
1964 SC 477, Bidyabhushan Mohapatra's case (supra), Niranjan Singh's case (supra)
and observed:-

"In considering whether a public officer is guilty of misconduct charged
against him, the rule followed in criminal trials that an offence is not established
unless proved by evidence beyond reasonable doubt to the satisfaction of the
Court need not be applied. Even if that rule is not applied by a domestic tribunal
in any inquiry the High Court in a petition under Article 226 of the Constitution is
not competent to declare the order of the authorities holding a departmental
enquiry invalid. The High Court is not a Court of appeal under Article 226 over
the decision of the authorities holding a departmental enquiry against a public
servant. The Court is concerned to determine whether the enquiry is held by an
authority competent in that behalf and according to the procedure prescribed in
that behalf, and whether the rules of natural justice are not violated. Where there
is some evidence which the authority entrusted with the duty to hold the enquiry
has accepted and which evidence may reasonably support the conclusion that the
3 All. J. K. Chandna Vs The Prathama Bank & Ors.
341
delinquent officer is guilty of the charge, it is not the function of the High Court to
review the evidence and to arrive at an independent finding on the evidence. An
error of law which is apparent on the face of the record can be corrected by a writ,
but not an error of fact, however grave it may appear to be. A finding of fact
recorded by the Tribunal cannot be challenged on the ground that the relevant
and material evidence adduced before the Tribunal is insufficient or inadequate to
sustain a finding. The adequacy or sufficiency of evidence led on a point and the
inference of fact to be drawn from the said finding are within the exclusive
jurisdiction of the Tribunal."

23. In B.C. Chaturvedi vs. Union of India (1995 ) 6 SCC 749, the Supreme Court,
while considering the appellant's challenge to the order of punishment passed as a sequel to
the departmental enquiry held against him, highlighted the limited scope of judicial review
by making the following observations:-

"Judicial review is not an appeal from a decision but a review of the manner
in which the decision is made. Power of judicial review is meant to ensure that the
individual receives fair treatment and not to ensure that the conclusion which the
authority reaches is necessarily correct in the eye of the Court. When an inquiry is
conducted on charges of misconduct by a public servant, the Court/Tribunal is
concerned to determine whether the inquiry was held by a competent officer or
whether rules of natural justice are complied with. Whether the findings or
conclusions are based on some evidence, the authority entrusted with the power to
hold inquiry has jurisdiction, power and authority to reach a finding of fact or
conclusion. But that finding must be based on some evidence. Neither the technical
rules of Evidence Act nor of proof of fact or evidence as defined therein, apply to
disciplinary proceeding. Adequacy of evidence or reliability of evidence cannot be
permitted to be canvassed before the Court/Tribunal. When the authority accepts
that evidence and conclusion receives support therefrom, the disciplinary
authority is entitled to hold that the delinquent officer is guilty of the charge. The
disciplinary authority is the sole judge of facts. Where appeal is presented, the
appellate authority has coextensive power to reappreciate the evidence or the
nature of punishment. The Court/Tribunal in its power of judicial review does not
act as appellate authority to reappreciate the evidence and to arrive at its own
independent findings on the evidence. The Court/Tribunal may interfere where
the authority held the proceedings against the delinquent officer in a manner
inconsistent with the rules of natural justice or in violation of statutory rules
prescribing the mode of inquiry or where the conclusion or finding reached by the
disciplinary authority is based on no evidence. If the conclusion or finding be such
as no reasonable person would have ever reached, the Court/Tribunal may
interfere with the conclusion or the finding, and mould the relief so as to make it
appropriate to the facts of that case."
342 INDIAN LAW REPORTS ALLAHABAD SERIES
24. In Tara Chand Byas vs. Chairman JT 1997 (3) SC 500 a bank employee was
punished for giving loans without adequate security. The Supreme Court upheld the
punishment.

25. In Apparel Export Promotion Council vs. A.K. Chopra AIR 1999 SC 625, the
Supreme Court again considered the High Court's power to interfere with the disciplinary
proceedings and held:-

"It is a settled position that in departmental proceedings, the disciplinary
authority is the sole judge of facts and in case an appeal is presented to the
appellate authority, the appellate authority has also the power/and jurisdiction to
reappreciate the evidence and come to its own conclusion, on facts, being the sole
fact-finding authorities. Once findings of fact, based on appreciation of evidence
are recorded, the High Court in writ jurisdiction may not normally interfere with
those factual findings unless it finds that the recorded findings were based either
on no evidence or that the findings were wholly perverse and/or legally untenable.
The adequacy or inadequacy of the evidence is not permitted to be canvassed
before the High Court. Since the High Court does not sit as an appellate authority
over the factual findings recorded during departmental proceedings, while
exercising the power of judicial review, the High Court cannot, normally speaking,
substitute its own conclusion, with regard to the guilt of the delinquent, for that of
the departmental authorities. Even insofar as imposition of penalty or punishment
is concerned, unless the punishment or penalty imposed by the disciplinary or the
departmental appellate authority, is either impermissible or such that it shocks the
conscience of the High Court, it should not normally substitute its own opinion
and impose some other punishment or penalty.

Further, it is a well-settled principle that even though judicial review of
administrative action must remain flexible and its dimension not closed, yet the
Court, in exercise of the power of judicial review, is not concerned with the
correctness of the findings of fact on the basis of which the orders are made so
long as those findings are reasonably supported by evidence and have been
arrived at through proceedings which cannot be faulted with for procedural
illegalities or irregularities which vitiate the process by which the decision was
arrived at.