# STATE BANK OF INDIA AND ORS v. S.N. GOYAL

- **Citation:** [2008] 7 S.C.R. 631
- **Court:** Supreme Court of India
- **Decided:** 2008-05-02
- **Case number:** Civil Appeal Nos. 4243-4244 of 2004
- **Bench:** H.K. Sema, R.V. Raveendran
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/state-bank-of-india-and-ors-v-s-n-goyal-24568
- **Pages:** 42

## Headnote

Service law:
State Bank of India Officers Service Rules, Rule 68(3) -
Employee found guilty of misappropriation of funds - c
I.
Disciplinary authority recommended imposition of penalty of
reduction of pay by four stages of time scale - Appointing
authority agreed with recommendations - But said order not
communicated to employee - On reconsideration of matter,
disciplinary authority recommended penalty of removal which
D
was accepted by appointing authority and was communicated
to employee -
Trial court held that second order imposing
penalty of removal was passed by appointing authority on
extraneous considerations after taking advice of Chief
Vigilance Officer- The said finding affirmed by first appellate
E
Court and High Court - Held: Chief Vigilance Officer neither
issued any direction to appointing authority to impose higher
punishment nor altered finding regarding guilt - He merely
gave his opinion that gravity of proved charge did not warrant
leniency and therefore, suggested that quantum of penalty may F
..
be examined again - So Jong as decision was not on dictates
of Vigilance Department or other outside authority, but on
independent consideration, order of removal cannot be faulted
- It cannot be said that either act of intimating Vigilance
Department about enquiry or independently re-considering G
issue of penalty after receiving views of Vigilance Department
amounted to be acting on extraneous material.
_....
Employee found guilty of misappropriation of funds by
enquiry officer -Disciplinary authority recommended
~
631
H
632
SUPREME COURT REPORTS
[2008] 7 S.C.R.
A imposition of penalty of reduction of pay by four stages of time
scale - Appointing authority agreed with recommendations -
On reconsideration of matter, disciplinary authority
recommended penalty of removal which was accepted by
appointing authority and was communicated to employee -
s Plea of employee that after the first order of appointing
authority, it became functus officio - Held: First order was
intended only to be tentative and not final as it was not
communicated to respondent - Appointing Authority had only
tentatively approved proposal of disciplinary authority that
c lenient view be taken by imposing a penalty of reducing the
pay by four stages in the time scale - Therefore, the contention
that the Appointing Authority had earlier passed a final order
and had become functus officio and therefore, he could not
change the said order is liable to be rejected.
D
Bank Manager -
Removal from service for
misappropriation of funds - Request for reducing punishment
- Held: Bank survives on the trust of its clientele and
constituents - The position of Manager of Bank is matter of
great trust - The employees of the Bank in particular Manager
E are expected to act with absolute integrity and honesty in
handling the funds of customers/borrowers of Bank - Any
misappropriation, even temporary, of the funds of the Bank or
its customers/borrowers constitutes a serious misconduct,
inviting severe punishment- If the matter is to be viewed lightly
F or leniently it will encourage other Bank employees to indulge
in such activities thereby undermining the entire banking
system - The request for reducing the punishment is rejected.
Termination of bank employee- Specific Relief Act, 1963
- s. 14 - Bar of - Where relationship of master and servant is
G purely contractual, contract of personal service is not
specifically enforceable, having regard to bar contained in
s.14- Even if termination of contract of employment (by
dismissal or otherwise) is found to be illegal or in breach, the
r"emedy of employee is oniy to seek damages and not specific
H performance - When employer is statutory body, where the
STATE BANK OF INDIA AND ORS. v. S.N. GOYAL
633
~
relationship is purely governed by contract with no element of A
statutory governance, contract of personal service will not be
specifically enforceable - On facts, Held: Appellant-Bank is a
statutory body and contract

## Text

_Characters 0–39,822 of 85,433. This is a partial read: ask again with offset=39822 for what follows._

[2008] 7 S.C.R. 631
STATE BANK OF INDIA AND ORS.
A
V.
S.N. GOYAL
(Civil Appeal Nos. 4243-4244 of 2004)
MAY 2, 2008
B
,. _.Ir
[H.K. SEMA AND R.V. RAVEENDRAN, JJ.]
Service law:
State Bank of India Officers Service Rules, Rule 68(3) -
Employee found guilty of misappropriation of funds - c
I.
Disciplinary authority recommended imposition of penalty of
reduction of pay by four stages of time scale - Appointing
authority agreed with recommendations - But said order not
communicated to employee - On reconsideration of matter,
disciplinary authority recommended penalty of removal which
D
was accepted by appointing authority and was communicated
to employee -
Trial court held that second order imposing
penalty of removal was passed by appointing authority on
extraneous considerations after taking advice of Chief
Vigilance Officer- The said finding affirmed by first appellate
E
Court and High Court - Held: Chief Vigilance Officer neither
issued any direction to appointing authority to impose higher
punishment nor altered finding regarding guilt - He merely
gave his opinion that gravity of proved charge did not warrant
leniency and therefore, suggested that quantum of penalty may F
..
be examined again - So Jong as decision was not on dictates
of Vigilance Department or other outside authority, but on
independent consideration, order of removal cannot be faulted
- It cannot be said that either act of intimating Vigilance
Department about enquiry or independently re-considering G
issue of penalty after receiving views of Vigilance Department
amounted to be acting on extraneous material.
_....
Employee found guilty of misappropriation of funds by
enquiry officer -Disciplinary authority recommended
~
631
H
632
SUPREME COURT REPORTS
[2008] 7 S.C.R.
A imposition of penalty of reduction of pay by four stages of time
scale - Appointing authority agreed with recommendations -
On reconsideration of matter, disciplinary authority
recommended penalty of removal which was accepted by
appointing authority and was communicated to employee -
s Plea of employee that after the first order of appointing
authority, it became functus officio - Held: First order was
intended only to be tentative and not final as it was not
communicated to respondent - Appointing Authority had only
tentatively approved proposal of disciplinary authority that
c lenient view be taken by imposing a penalty of reducing the
pay by four stages in the time scale - Therefore, the contention
that the Appointing Authority had earlier passed a final order
and had become functus officio and therefore, he could not
change the said order is liable to be rejected.
D
Bank Manager -
Removal from service for
misappropriation of funds - Request for reducing punishment
- Held: Bank survives on the trust of its clientele and
constituents - The position of Manager of Bank is matter of
great trust - The employees of the Bank in particular Manager
E are expected to act with absolute integrity and honesty in
handling the funds of customers/borrowers of Bank - Any
misappropriation, even temporary, of the funds of the Bank or
its customers/borrowers constitutes a serious misconduct,
inviting severe punishment- If the matter is to be viewed lightly
F or leniently it will encourage other Bank employees to indulge
in such activities thereby undermining the entire banking
system - The request for reducing the punishment is rejected.
Termination of bank employee- Specific Relief Act, 1963
- s. 14 - Bar of - Where relationship of master and servant is
G purely contractual, contract of personal service is not
specifically enforceable, having regard to bar contained in
s.14- Even if termination of contract of employment (by
dismissal or otherwise) is found to be illegal or in breach, the
r"emedy of employee is oniy to seek damages and not specific
H performance - When employer is statutory body, where the
STATE BANK OF INDIA AND ORS. v. S.N. GOYAL
633
~
relationship is purely governed by contract with no element of A
statutory governance, contract of personal service will not be
specifically enforceable - On facts, Held: Appellant-Bank is a
statutory body and contract of employment was governed by
Service Rules - Employee approached civil court alleging
that his removal from service was in violation of the said B
;.-Jr
statutory rules - When employee of statutory body whose
service is terminated, pleads that such termination is in
violation of statutory rules governing his employment, action
for declaration that termination is invalid and that he is deemed
to continue in service is maintainable and will not be barred c
by s. 14 - State Bank of India Officers Service Rules.
\
Code of Civil Procedure, 1908:
s. 100- 'Substantial questions of law' - Meaning of- Held:
Means not only substantial questions of law of general D
importance, but also substantial question of law arising in a
,
~
case as between the parties - In the context of s.100, any
question of law which affects final decision in case is
substantial question of law as between the parties - Question
of law which arises incidentally or co/laterally, having no E
bearing in the final outcome, will not be a substantial question
of/aw.
s. 100 - Second appeals - Scope of and procedural
aspects of - Discussed.
Civil suit vis-a-vis Writ proceedings - Distinction between
F
'
r
- Held: Adjudication of dispute by civil court is different from
the exercise of power of judicial review in writ proceedings by
the High Court - In writ proceedings, the High Court can call
for the record of the order challenged, examine the same and
pass appropriate orders after giving an opportunity to the State G
or the statutory authority to explain any particular act or
~
omission -
In civil suit parties are governed by rules of
pleadings and there can be no adjudication of an issue in the
absence of necessary pleadings - Constitution of India, 1950
- Article 226.
H
634
SUPREME COURT REPORTS
[2008] 7 S.C.R.
...,..
A
Judgment/Order:
Pronouncement of - Held: Where judgment is reserved,
mere dictation does not amount to pronouncement, but where
iudgment is dictated in open court, that itself amounts to
B
pronouncement.
Judge becoming functus officio - When - Held: When
-..;...~
he pronounces, signs and dates the judgment.
Quasi judicial authorities - While some quasi judicial
tribunals fix a day for pronouncement and pronounce their
c orders on the day fixed, many quasi judicial authorities do not
pronounce their orders - Some publish or notify their orders -
Some prepare. and sign orders and communicate same to
"
party concerned - Quasi judicial authority become functus
officio only when its order is pronounced, or published/notified
D or communicated (put in the course of transmission) to the
party concerned - When an order is made in office noting in
....
file but is not pronounced, published or communicated,
Authority can correct it or alter it for valid reasons - But once
the order is pronounced or published or notified or
E communicated, the Authority becomes functus officio.
A chargesheet was issued on respondent by
appellant bank on the ground of misappropriation of
customer's funds. An enquiry was held and enquiry
F
officer held that the charge was proved. A copy of the
report was furnished to the respondent. In view of Rule
68(3) of State Bank of India Officers Service Rules, the
~
Disciplinary Authority after considering the inquiry
records and representation of the respondent made a
recommendation on 2.5.1995 to the Appointing Authority
G to impose penalty of 'removal from services'.
The Appointing Authority concerned with the
recommendation of Disciplinary Authority and passed
~
order dated 3.5.1995 imposing the penalty of removal from
H service which was communicated to respondent by letter
STATE BANK OF INDIA AND ORS. v. S.N. GOYAL
635
......... "
.,,.,
dated 30.6.1995.
A
The respondent unsuccessfully filed appeal and
revision. He thereafter filed suit for declaration that the
order of removal dated 30.6.1995 was arbitrary and illegal
and should be set aside with direction to take him back B
with all consequential benefits.
1->
The trial Court decreed the suit and held that there
was no violation of principles of natural justice in
conducting the enquiry and the order holding the
respondent guilty of misconduct was proper. The Trial c
Court however found that the Disciplinary Authority by
his earlier note dated 18.1.1995 had recommended
imposition of the penalty of reduction of pay of respondent
by four stages in his time scale and Appointing Authority
agreed with the said recommendation on 18.1.1995. The D
Appointing Authority had thereafter sought the advice of
Bank's Chief Vigilance Officer and acting on such advice
had changed earlier decision and imposed a higher
punishment of removal from service dated 3.5.1995. The
trial court was of the view that the second order imposing E
penalty was passed by the Appointing Authority on
extraneous reasons after taking advice of Chief Vigilance
Officer and that rendered the order of removal illegal and
therefore set aside the order of removal and directed
appellant Bank to pass fresh order imposing appropriate
I
penalty other than penalty of dismissal or removal from
F
)""
service.
Both the parties filed appeals. Before the First
Appellate Court, respondent did not challenge the finding
of trial Court that the domestic enquiry was fair and proper G
and limited his challenge only to the quantum of back
wages .
....._
The First Appellate Court upheld the decree of the
l
Trial Court, but in addition held that the respondent was
entitled to full back wages with interest thereon at 9% per H
•
636
SUPREME COURT REPORTS
[2008] 7 S.C.R.
A annum. High Court dismissed the appeal filed by Bank
holding that there was nothing to show that the findings
recorded by the Courts below suffer from any infirmity or
are contrary to law in any manner, thus no question of
law, much less any substantial question of law, has arisen.
8 Hence these appeals.
Allowing the appeals, the Court
"""·.
HELD: 1.1 The High Court misread the findings of
the courts below. The High Court observed that 'on the
c directions of the Chief Vigilance Commissioner of the
Bank, the punishment was converted to that of dismissal'.
This observation contains three errors - firstly the penalty
,
of removal was read as dismissal; secondly the
communication from the Chief Vigilance Officer, termed
D as "advice/recommendation" by the courts below, was
wrongly read as 'directions'; and thirdly, the Chief
Vigilance Officer of the Bank was wrongly referred to as
~
the Chief Vigilance Commissioner. The High Court also
erroneously assumed that respondent had pleaded that
E
the Appointing Authority had placed certain material which
was never put to him, before the Chief Vigilance
Commissioner and as such the order of punishment was
violative of principles of natural justice. There was no such
plea, nor did the courts below record a finding on any
.•
F
such plea. [Para 7] [652-A-E]
\
1.2 The High Court completely missed the real points
arising for determination. After a cursory wrong reference
~
to the findings of the court below, the High Court wrongly
held that the second appeal did not give rise to any
G substantial question of law, ignoring the several
substantial questions of law arising for consideration of
the High Court, which were clearly specified in the
memorandum of second appeal. [Para 8] [652-E, F]
1.3 Second appeals would lie in cases which involve
H substantial questions of law. The word 'substantial'
I
STATE BANK OF INDIA AND ORS. v. S.N. GOYAL
637
•:y
prefixed to 'question of law' does not refer to the stakes A
involved in the casf,t, nor intended to refer only to
questions of law of general importance, but refers to
impact or effect of the question of law on the decision in
the lis between the parties. 'Substantial questions of law'
means not only substantial questions of law of general B
,__ _ _,,,.
importance, but also substantial question of law arising
in a case as between the parties. In the context of s.100
CPC, any question of law which affects the final decision
in a case is a substantial question of law as between the
parties. A question of law which arises incidentally or c
collaterally, having no bearing in the final outcome, will
not be a substantial question of law. Where there is a clear
and settled enunciation on a question of law, by this Court
or by the High Court conc9rned, it cannot be said that the
case involves a substantial question of law. It is said that D
a substantial question of law arises when a question of
~-
law, which is not finally nettled by this court (or by the
concerned High Court so far as the State is concerned),
arises for consideration in the case. But this statement
has to be understood in the correct perspective. Where E
there is a clear enunciation of law and the lower court has
followed or rightly applied such clear enunciation of law,
obviously the case will not be considered as giving rise
to a substantial question of law, even if the question of
law may be one of general importance. On the other hand,
if there is a clear enunciation of law by this Court (or by
F
·'"
the concerned High Court), but the lower court had
ignored or misinterpreted or misapplied the same, and
correct application of the law as declared or enunciated
by this Court (or the concerned High Court) would have
led to a different decision, the appeal would involve a G
substantial question of law as between the parties. Even
where there is an enunciation of law by this court (or the
......
concerned High Court) and the same has been followed
by the lower court, if the appellant is able to persuade the
High Court that the enunciated legal position needs
H
638
SUPREME COURT REPORTS
[2008] 7 S.C.R.
A reconsideration, alteration, modification or clarification or
that there is a need to resolve an apparent conflict between
two view points, it can be said that a substantial question
of law arises for consideration. There cannot, therefore,
be a strait-jacket definition as to when a substantial
B question of law arises in a case. [Para 9.1] [654-A-H;
655-A]
1.4. It is a matter of concern that the scope of second
appeals and as also the procedural aspects of second
appeals are often ignored by the High Courts. Some of
C the oft-repeated errors are : (a) Admitting a second appeal
when it does not give rise to a substantial question of law;
(b) Admitting second appeals without formulating
substantial question of law; (c) Admitting second appeals
by formulating a standard or mechanical question such
o as "whether on the facts and circumstances the judgment
of the first appellate co1,1rt calls for interference" as the
substantial question of law; (d) Failing to consider and
formulate relevant and appropriate substantial questionn/
s of law involved in the second appeal; (e) Rejecting
E second appeals on the ground that the case does not
involve any substantial question of law, when the case in
fact involves substantial questions of law; (f)
Reformulating the substantial question of law after the
conclusion of the hearing, while preparing the judgment,
thereby denying an opportunity to the parties to make
F submissions on the reformulated substantial question of
law; (g) Deciding second appeals by re-appreciating
evidence and interfering with findings of fact, ignoring the
questions of law; These lapses or technical errors lead
to injustice and also give rise to avoidable further appeals
G to this court and remands by this court, thereby
prolonging the period of litigation. Care should be taken
to ensure that the cases not involving substantial
questions of law are not entertained, and at the same time
ensure that cases involving substantial questions of law
H are not rejected, as not involving substantial questions
STATE BANK OF INDIA AND ORS. v. S.N. GOYAL
639
"",,-
of law. [Para 9.3] [655-G; 656-A-G]
A
1.5 The failure on the part of the High Court to take
note of the substantial questions of law involved, has led
to unwarranted dismissal of the second appeal and calls
for interference. [Para 1 O] [656-G, H]
B
... ~
2.1. Where the relationship of master and servant is
purely contractual, it is well settled that a contract of
personal service is not specifically enforceable, having
regard to the bar contained in s.14 of the Specific Relief
Act, 1963. Even if the termination of the contract of c
employment (by dismissal or otherwise) is found to be
illegal or in breach, the remedy of the employee is only to
seek damages and not specific performance. Courts will
neither declare such termination to be a nullity nor declare
that the contract of employment subsists nor grant the D
consequential relief of reinstatement. The three well
recognized exceptions to this rule are: where a civil
servant is removed from service in contravention of the
provisions of Article 311 of the Constitution of India (or
any law made under Article 309); where a workman having
the protection of Industrial Disputes Act, 1947 is wrongly E
,.
terminated from service; and where an employee of a
statutory body is terminated from service in breach or
violation of any mandatory provision of a statute or
statutory rules. [Para 11] [657-C-H]
2.2. There is a clear distinction between public
F
employment governed by statutory rules and private
employment governed purely by contract. The test for
deciding the nature of relief - damages or reinstatement
with consequential reliefs - is whether the employment
is governed purely by contract or by a statute or statutory G
rules. Even where the employer is a statutory body, where
the relationship is purely governed by contract with no
element of statutory governance, the contract of personal
service will not be specifically enforceable. Conversely,
where the employer is a non-statutory body, but the H
640
SUPREME COURT REPORTS
[2008] 7 S.C.R.
employment is governed by a statute or statutory rules, a
f•
A
declaration that the termination is null and void and that
the employee should be reinstated can be granted by
courts. [Para 11] [658-A, B, C]
B
Dr. S. Dutt v. University of Delhi - AIR 1958 SC 1050;
Executive Committee of UP State Warehousing Corporation
Ltd. v. Chandra Kiran Tyagi - 1970 (2) SCR 250; Sirsi
~ ...
Municipality vs. Cecelia Kam Francies Tellis - 1973 (3) SCR
348; Executive Committee of Vaish Degree College v.
Lakshmi Narain - 1976 (2) SCR 1006; Smt. J. Tiwari v. Smt.
c Jawala Devi Vidya Mandir - AIR 1981 SC 122; Dipak Kumar
Biswas v. Director of Public Instruction -AIR 1987 SC 1422 -
relied on.
2.3. The appellant is a statutory body established
D
under the State Bank of India Act, 1955 and the contract
of employment was governed by the State Bank of India
Officers Service Rules, which are statutory rules framed
under s.43(1) of the said Act. The respondent approached
the civil court alleging that his removal from service was
in violation of the said statutory rules. When an employee
E of a statutory body whose service is terminated, pleads
that such termination is in violation of statutory rules
. '
governing his employment, an action for declaration that
the termination is invalid and that he is deemed to continue
in service is maintainable and will not be barred by s.14
F of the Specific Relief Act. [Para 12] [658-E, F, G]
3.1. The plaint did not contain any plea that the order
of removal by the Appointing Authority (Chief General
Manager) was vitiated on account of his consulting and
acting on the advice of the Chief Vigilance Officer of the
G Bank. Nor did it contain any allegation that the Appointing
Authority acted on extraneous material in passing the
order of removal. In the plaint, the challenge to the order
of removal was on the ground that the enquiry by the
....._
Enquiry Officer was opposed to principles of natural
H justice. The respondent had also averred that the
STATE BANK OF INDIA AND ORS. v. S.N. GOYAL
641
''T
Appointing Authority had approved the recommendation A
made by the Disciplinary Authority for imposition of
penalty of removal, without application of mind and
without giving him a hearing. But there was absolutely
no plea with reference to the advice/recommendation of
t-Athe Chief Vigilance Officer of the Bank. The respondentB
plaintiff did not amend the plaint to include the averments
and grounds to challenge the order of removal on the said
additional ground. No issue was framed in that behalf. No
amount of evidence on a plea that was not put forward in
the pleadings can be looked into. In the absenre of c
necessary pleading and issue, neither the trial court nor
the appellate court could have considered the contention
and recorded a finding thereon. [Para 13] [658-H; 659A-D, G, H; 660-A]
3.2. The minimum pleading that was necessary was D
that the Appointing Authority acted on extraneous material
in arriving the decision or acted on the advice or
recommendation of an Authority who was not concerned
with the Enquiry. In the absence of appropriate pleading
on a particular issue, there can be no adjudication of such
E
issue. [Para 14] [660-C, DJ
3.3 Adjudication of a dispute by a civil court is
significantly different from the exercise of power of judicial
review in a writ proceedings by the High Court. In a writ
proceedings, the High Court can call for the record of the
F
)"
order challenged, examine the same and pass appropriate
orders after giving an opportunity to the State or the
statutory authority to explain any particular act or
omission. In a civil suit parties are governed by rules of
pleadings and there can be no adjudication of an issue G
in the absence of necessary pleadings. [Para 14]
[660-D, E, F]
3.4 Code of Civil Procedure contains appropriate
provisions relating to interrogatories, discovery and H
642
SUPREME COURT REPORTS
[2008] 7 S.C.R.
A inspection (Order XI Rules 1, 12 and 15) to gain access to
relevant material available with the other party. A party to
a suit should avail those provisions and if any new ground
becomes available on the basis of information secured
by discovery, a party can amend his pleadings and
B introduce new facts and grounds which were not known
earlier. The difficulty in securing relevant material or
ignorance of existence of relevant material will not justify
introduction of such material at the stage of evidence in
the absence of pleadings relating to a particular aspect
C to which the material relates. If a party should be permitted
to rely on evidence led on an issue/aspect not covered
by pleadings, the other side will be put to a disadvantage.
Therefore, the courts below committed a serious error in
holding that the order of removal was based on an
extraneous material (the advice/recommendation of Chief
D Vigilance Officer) and therefore, invalid. Where the enquiry
was found to be fair and proper and the finding of guilt in
the enquiry in respect of a serious charge was found to
be valid, in the absence of any other valid ground of
challenge, the courts below ought to have held that the
E penalty of removal from service did not warrant any
interference. [Paras 14, 15] [660-G; 661-A-E]
4.1 The Disciplinary Authority though was of the view
that the respondent deserved a severe punishment, felt
that having regard to the length of his service, he should
F be shown leniency, and therefore, recommended
imposition of a lesser punishment of reduction of pay by
four stages in the time scale. The Appointing Authority
made a note on the same day (18.1.1995) agreeing with
the said recommendation. But the said order was not
G communicated to the respondent. On the other hand, the
Disciplinary Authority on reconsideration of the matter put
up a fresh note dated 2.5.1995 recommending the penalty
of removal and that was accepted by the Appointing
Authority on 3.5.1995 and communicated to the
H respondent on 30.6.1995. [Para 16] [661-G; 662-A-C]
1
• .
•
STATE BANK OF INDIA AND ORS. v. S.N. GOYAL
643
VGM Holdings Ltd 1941 (3)All. ER page 417- referred A
to.
4.2. It is true that once an Authority exercising quasi
judicial power, takes a final decision, it cannot review its
decision unless the relevant statute or rules permit such
review. [Para 18] [662-F]
B
P Ramanatha Aiyar's Advance Law Lexicon 3rd Edition,
Vol.2 Pages 1946-47; Black's Law Dictionary Sixth Edition
Page 673 - referred to.
5.1 Order XX of Code of Civil Procedure deals \Vith C
judgment and decree. Where a judgment is reserved, mere
dictation does not amount to pronouncement, but where
the judgment is dictated in open court, that itself amounts
to pronouncement. But even after such pronouncement
by open court dictation, the Judge can make corrections D
before signing and dating the judgment. Therefore, a
Judge becomes functus officio when he pronounces, signs
and dates the judgment (subject to section 152 and power
of review). The position is different with reference to quasi
judicial authorities. While some quasi judicial tribunals fix E
a day for pronouncement and pronounce their orders on
the day fixed, many quasi judicial authorities do not
pronounce their orders. Some publish or notify their
orders. Some prepare and sign the orders and
communicate the same to the party concerned. A quasi
F
judicial authority becomes functus officio only when its
)--
order is pronounced, or published/notified or
communicated (put in the course of transmission) to the
party concerned. When an order is made in an office noting
in a file but is not pronounced, published or G
communicated, nothing prevents the Authority from
correcting it or altering it for valid reasons. But once the
_.... order is pronounced or published or notified or
communicated, the Authority will become functus officio.
The order dated 18.1.1995 made on an office note, was H
644
SUPREME COURT REPORTS
(2008] 7 S.C.R.
A neither pronounced, nor published/notified nor
communicated. Therefore, it cannot be said that the
Appointing Authority became functus officio when he
signed the note on dated 18.1.1995. [Para 19] (663-C, F-H;
664-A-D]
B
5.2 A careful examination shows that the order dated
18.1.1995 was intended only to be tentative and not final.
Firstly, the said decision was not communicated to the
respondent, nor was any letter or order issued to the
respondent imposing the penalty mentioned in the order
C dated 18.1.1995. Secondly, the Appointing Authority by
letter dated 2.2.1995 informed the Chief Vigilance Officer
of the Bank about the enquiry against respondent, his
decision accepting the findings of the Enquiry Officer, and
the proposal to show leniency by imposing only a
D punishment of reduction of pay by four stages. The Chief
Vigilance Officer sent a reply dated 7.2.1995 wherein he
observed that "by pocketing the money of the customers
Sri Goyal has exposed the Bank's faith reposed in him"
and there was no ground for showing leniency. He also
E expressed the view that the respondent deserved a more
severe punishment and requested the appointing
authority to re-examine whether respondent should be
continued in the post. Thereafter the Disciplinary
Authority reconsidered the entire issue again and put up
F another note dated 23.3.1995/2.5.1995 to the Appointing
Authority proposing the punishment of removal from
service. [Para 20] (664-E-H; 665-A]
5.3 It is thus clear that on 18.1.1995, the Appointing
Authority had only tentatively approved the proposal of
G the disciplinary authority that a lenient view be taken by
imposing a penalty of reducing the pay by four stages in
the time scale; and that on 3.5.1995, a final decision was
taken in regard to the penalty and that final order was
communicated to the respondent as per letter dated
H 30.6.1995. Therefore, the contention that the Appointing
,
..
STATE BANK OF INDIA AND ORS. v. S.N. GOYAL
645
,...,,_
Authority had earlier passed a final order on 18.1.1995 and A
had become functus officio and therefore, he could not
change the said order dated 18.1.1995 is liable to be
rejected. [Para 21] [665-D, E]
6.1. A perusal of the letter dated 2.2.1995 sent by the
B
.... --t-'
Appointing Authority to the Chief Vigilance Officer clearly
demonstrates that the Appointing Authority did not seek
any guidance or advice or directions from the Vigilance
Department and that the letter was only by way of
'intimation' of factual position. [Para 22] [665-F, G]
c
6.2 The reply dated 7.2.1995 from the Chief Vigilance
Officer also makes it clear that he neither issued any
_,
direction to the Appointing Authority to impose a higher
punishment nor altered the finding regarding guilt. He
merely gave his opinion that the gravity of the proved D
~.
charge did not warrant leniency and therefore, suggested
that the quantum of penalty may be examined again. The
subsequent note put up by the disciplinary authoriu; on
2.5.1995 and the order passed thereon by the appoinhhg
authority on 3.5.1995 imposing the penalty of removal,
E
show that they were on independent consideration of the
question. Neither the note dated 2.5.1995 nor the order
dated 3.5.1995 refer to the opinion or the view expressed
by the Chief Vigilance Officer of the Bank. Nor is there
•
any material to show that the order imposing punishment
was on the dictates of the Chief Vigilance Officer. There
F
..
was no mechanical acceptance of any suggestion or
advice by the Chief Vigilance Officer nor consideration of
any extraneous material as assumed by the courts below.
The Appointing Authority is required to inform the
vigilance department in regard to cases involving vigilance G
angle. The Appointing Authority did so. But he did notseek
any instruction, direction, suggestion or advice from the
Vigilance Department. There was also no direction or
circular or instruction requiring the Appointing Authority
to accept or act upon the. suggestions or views of the H
"
fi4G
SUPREME COURT REPORTS
(2008) 7 S.C.R.
iJl1ief Vigilance Officer. The Vigilance Department merely
gave its comment or view that it was not a fit case for
showing leniency and left it to the concerned authority to
take a decision on the punishment to be imposed. So long
as the decision was not on the dictates of the Vigilance
B Department or other outside authority, but on independent
consideration, the order of removal cannot be faulted. It
cannot be said that either the act of intimating the
Vigilance Department about the enquiry or independently
re-considering the issue of penalty after receiving the
c views of the Vigilance Department amounted to be acting
on extraneous material, or acting on the advice or
recommendation or direction of the Chief Vigilance
Officer. [Para 23] [667-B-H; 668-A]
7. The assumption made by the High Court that the
D Appointing Authority had placed some undisclosed
additional material before the Chief Vigilance Officer is
without any basis. The issue relating to the respondent's
guilt was neither referred to the Vigilance Department nor
did the Vigilance Department give any finding on the
E question of guilt. When the Disciplinary Authority and the
Appointing Authority accepted the find1ing of guilt
recorded by the Enquiry Officer on examining the facts,
even before the matter was informed to Vigilance
Department, it cannot be said that the said d1:!cision was
F influenced by any extraneous advice from Vigilance
Department. The issue on which the Vigilance Department
made its comment was on the limited ground whether any
leniency should be shown in imposing punishment. No
additional facts or material were placed by the Appointing
G Authority before the Vigilance Department for this
purpose. Further the Vigilance Department merely
expressed the view that the gravity of the charue did not
warrant leniency and the authority should examine the
matter. [Para 24] [668-B-F]
H
8. The Disciplinary Authority made available the
STATE BANK OF INDIA AND ORS. v. S.N. GOYAL
647
.
,,
Enquiry Report to the respondent to enable him to make A
his submissions on the findings of the Enquiry Officer.
The respondent made his submissions in regard to the
Enquiry Report. The correspondence between the
Appointing Authority and Chief Vigilance Officer of the
Bank was not 'material' on which the finding regarding
B
.
~
guilt/misconduct was based. Such correspondence was
subsequent to the Enquiry Report. There was no
compulsion or requirement that the Appointing Authority
should consult the Chief Vigilance Officer or act as per
his recommendations or directions. Nor was there any c
direction by the Chief Vigilance Officer to impose any
specific direction. Therefore non furnishing of copies of
the correspondence between the Appointing Authority
and the Chief Vigilance Officer to the respondent, did not
violate principles of natural justice nor vitiate the order of D
penalty. [Para 25] [668-G, H; 669-A, B, C]
....
UP State Agro Industrial Corporation Ltd. v. Padam
Chand Jain - 1995 SCC L&S 1011 - distinguished.
Nagaraj Shivarao Karjagi v. Syndicate Bank 1991 (3)
E
SCC 219; State Bank of/ndia v D. C. Aggarwal [1993 (1) SCC
13; Mohd. Quaramuddin (dead) By LRs. v. State of AP [1994
(5) sec 118 - referred to.
9. In the suit, the respondent had challenged the
enquiry as being opposed to principles of natural justice,
F
)
and the finding of guilt recorded by the Enquiry Officer as
being erroneous. He gave up those contentions before
the first appellate court, and restricted the challenge to
the quantum of punishment and non-grant of back wages.
He cannot therefore be permitted to revive the contention G
that the Enquiry Officer violated the principles of natural
justice in conducting the enquiry. [Para 27] [671-G, H;
...._
672-A]
10. At the relevant point of time the respondent was
functioning as a Branch Manager. A Bank survives on the
H
648
SUPREME COURT REPORTS
[2008] 7 S.C.R.
A trust of its clientele and constituents. The position of the
Manager of a Bank is a matter of great trust. The
employees of the Bank in particular the Manager are
expected to act with absolute integrity and honesty in
handling the funds of the customers/borrowers of the
B Bank. Any misappropriation, even temporary, of the
{ ...
funds of the Bank or its customers/borrowers
i- ..
constitutes a serious misconduct, inviting severe
punishment. When a borrower makes any payment
towards a loan, the Manager of the Bank receiving such
C amount is req1.1ired to credit it immediately to the
borrower's account. If the matter is to be viewed lightly
or leniently it will encourage other Bank employees to
indulge in such activities thereby undermining the entire
banking system. The request for reducing the punishment
0 is rejected. [Para 28] [648-A-D]
CIVIL APPELLATE JURISDICTION : Civil Appeal Nos.
4243-4244 of 2004.
From the Judgment and Order dated 11.12.2003 of the
E High Court of Punjab and Haryana at Chandigarh in RSA Nos.
4183-4184 of 2002.
R.F. Nariman, Sanjay Kapur Shubra Kapur and Arti Singh
for the Appellants.
Dr. K.S. Chauhan, Dr. Indra Pratap Singh, Chand Kiran,
F Gyan Mitra and P.K. Jayakrishnan for the Respondent.
The Judgment of the Court was delivered by
R.V. RAVEENDRAN, J. Theses appeals by special leave
are filed by a defendant-employer (State Bank of India) against
G the judgment dated 11.12.2003 of the Punjab & Haryana High
Court in R.S.A. No.4184 of 2002.
2. A charge-sheet dated 28.4.1994 was issued by the
Appellant Bank to the respondent alleging that when he was
H posted as the Branch Manager of appellant's Kalanwali Branch,
)""
I
I
STATE BANK OF INDIA AND ORS. v. S.N. GOYAL
649
[R.V. RAVEENDRAN, J.]
~ .. .,,
Sirsa, Haryana, he had received cash payments tendered by
A
two customers of the Bank, for being credited to their loan
accounts, and temporarily misappropriated such amounts and
had belatedly deposited them to the borrowers' accounts (after
about five months in one case and two and half months in
another). The said acts amounted to a misconduct, violative of B
.,
~-
Rule 50(4) of the State Bank of India Officers Service Rules
('Service Rules' for short). An enquiry was held in regard to the
said charge. The Enquiry Officer submitted his report dated
11.11.1994 holding that the charge was proved. The Disciplinary
"=#
Authority furnished a copy of the said report to the respondent c
and gave him an opportunity to show cause in the matter.
-
3. Rule 68(3) of the Service Rules required, where the
Disciplinary Authority was of the opinion that a major penalty is
to be imposed, and where he was lower in rank to the Appointing
Authority (in respect of the category of officers to which the D
delinquent officer belonged), that he should submit to the
Appointing Authority, the records of the enquiry together with
his recommendations regarding the penalty that may be
imposed, and the Appointing Authority should make the order
imposing the penalty, which in his opinion was appropriate. In
E
view of the above rule, the Disciplinary Authority after
considering the inquiry records and the representation of the
respondent, made a recommendation on 2.5.1995 to the
Appointing Authority to impose the penalty of 'removal from
-
service' on the respondent. The Appointing Authority considered
F
the entire material and concurred with the recommendation of
)-
the Disciplinary Authority and made an order dated 3.5.1995
imposing the penalty of removal from service, which was
communicated to the Respondent by letter dated 30.6.1995 of
the Disciplinary Authority.
G,
4. The appeal and Revision (Review) filed by the
Respondent were dismissed on 29.11. 1995 and 27.11.1996 .
.....
The respondent thereafter filed Civil Suit No.158 of 1998 on the
file of the Civil Judge, Senior Division, Jind, for a declaration
that the order of removal dated 30.6.1995 as also the orders of H
650
SUPREME COURT REPORTS
[2008] 7 S.C.R.
the Appellate Authority and Reviewing Authority were arbitrary
-( ..
A
and illegal. He also prayed that the said orders be set aside
,_
with a direction to take him back into service with all
i
consequential benefits. The suit was resisted by the appellantbank. After trial, the suit was decreed on 19.4.2003. The Trial
B Court found that there was no violation of principles of natural
justice in conducting the enquiry and the order holding the
i. ..
respondent guilty of misconduct was proper. The trial court
however found that the Disciplinary Authority, by his earlier note
dated 18.1.1995, had recommended imposition of the penalty
c of reduction of pay of respondent by four stages in his time scale
and the Appointing Authority had agreed with the said
._
recommendation on 18.1.1995. According to the trial court, the
,.
said order was a final order of punishment by the Appointing
Authority; and the Appointing Authority had thereafter sought the
D advice of the Bank's Chief Vigilance Officer, and acting on such
advice, had changed his earlier decision and imposed a higher
punishment by way of removal from service, by order dated
3.5.1995 (communicated on 30.6.1995). The trial court was of
the view that the second order imposing penalty was passed
E
by the Appointing Authority "on extraneous reasons after taking
advice of the Chief Vigilance Officer", and that rendered the
order of removal illegal, null and void. The trial court therefore
set aside the order of removal dated 30.6.1995 as also the
orders dated 29.11.95 and 27.11.1996 of the Appellate Authority
and reviewing authority affirming the order of removal. It directed
F the appellant Bank to reinstate the respondent with continuity of
....
service and all consequential benefits except back-wages. The
~
Trial Court reserved liberty to the appellant to pass a fresh order
imposing appropriate penalty on the respondent, other than the
penalty of dismissal or removal from service.
G
5. Feeling aggrieved, both parties filed appeals.