Regulation 10 “May” Is Directory: No Employee Right to Insist on Common Disciplinary Proceedings

1. Introduction

In CANARA BANK v. PREM LATHA UPPAL (DEAD) (2026 INSC 478, decided on 12-05-2026), the Supreme Court considered a challenge by Canara Bank to a Karnataka High Court Division Bench decision that had set aside a major penalty imposed on Prem Latha Uppal (Senior Manager; later deceased, represented by LRs).

The respondent was one of three members of a Credit Sanction Committee that sanctioned facilities to M/s. Aman Trading Company and M/s. Creative Trading Company. The Bank alleged misconduct under the Canara Bank Officer Employees' (Discipline and Appeal) Regulations, 1976 (“1976 Regulations”), primarily for failures of verification and due diligence (borrower existence, collateral ownership, genuineness of banking documents, identity verification, and monitoring end-use).

Two principal issues reached the Supreme Court:

  1. Whether the High Court exceeded the permissible scope of judicial review in interfering with disciplinary findings and punishment.
  2. Whether Regulation 10 (“Common Proceedings”) is mandatory or directory, i.e., whether “may” should be read as “shall”.

2. Summary of the Judgment

The Supreme Court:

  • Declined to interfere with the High Court’s decision on the merits of judicial review (i.e., the High Court’s interference with the disciplinary outcome), holding that the High Court’s approach did not depart from settled limits of judicial review and that the impugned judgment on that aspect required confirmation.
  • Authoritatively clarified Regulation 10: the word “may” in Regulation 10 of the 1976 Regulations is directory, not mandatory. Reading it as mandatory would wrongly remove managerial discretion in “dynamic circumstances”.
  • Directed the Bank to settle the account of the deceased respondent by noting the outcome of the impugned judgment within six weeks.

3. Analysis

3.1 Precedents Cited

(a) T. Baba Prasad v. Andhra Bank, Hyderabad and others

This decision was central to the Supreme Court’s interpretive conclusion on Regulation 10-type provisions. The Supreme Court noted that Regulation 10 of the Andhra Bank Officer Employees (Discipline and Appeal), Regulations 1981 was pari materia with the 1976 Regulations.

The Supreme Court endorsed T. Baba Prasad for the proposition that:

  • Regulation 10 is a facilitative provision enabling a common proceeding; it is not framed as an obligation.
  • The provision does not confer a right on a delinquent employee to demand a joint/common enquiry.
  • Non-holding of a joint enquiry does not, by itself, vitiate proceedings against an individual officer.

(b) Arun Kumar Alva v. The Vijaya Bank, M.G. Road, Bangalore and others

The judgment records that the High Court of Andhra Pradesh had disagreed with the Karnataka High Court’s view in this case, which treated “may” in Regulation 10 as effectively mandatory.

The Supreme Court, by affirming T. Baba Prasad and setting aside the contrary view in the impugned judgment on Regulation 10, implicitly disapproved the mandatory reading associated with Arun Kumar Alva on this point.

(c) Interpretive authorities surveyed within T. Baba Prasad

The Supreme Court reproduced and relied upon the interpretive approach canvassed in T. Baba Prasad, including the following authorities (as cited in the judgment text):

  • Natvarlal Nagindas v. Emperor: “may” is prima facie permissive, not obligatory, though it can be construed as “shall” in appropriate contexts.
  • State of U.P. v. Babu Ram Upadhya: whether a provision is mandatory/directory depends on legislative intent; consequences of either construction matter; even “shall” may be directory and “may” may be mandatory.
  • Montreal Street Railway v. Normandin: directory construction is preferred where invalidation would cause serious inconvenience/injustice without advancing the statute’s essential aims (as approved in the interpretive discussion).

These authorities influenced the Court’s conclusion that Regulation 10 is meant to empower the competent authority to combine proceedings, not to compel it to do so.

3.2 Legal Reasoning

(A) Scope of judicial review in disciplinary matters

The Court treated the governing principles as well-settled and expressly avoided “burdening” the judgment with further citations. It nonetheless accepted that the High Court’s intervention on the merits of the disciplinary case was within the permissible bounds of judicial review, and it did not reinstate the punishment.

On the record as reflected in the High Court’s reasoning (summarised in the judgment), the departmental findings were criticised for reliance on statements of co-accused officers recorded in preliminary investigation but not proved by examining them as witnesses, thereby depriving the charged officer of a proper opportunity to rebut such material—an issue framed as a natural justice/evidence sufficiency problem. The Supreme Court left that interference undisturbed.

(B) Interpretation of “may” in Regulation 10 (Common Proceedings)

Regulation 10 provides that where two or more officer employees are concerned, the competent authority “may make an order” directing a common proceeding.

The Court’s interpretive reasoning proceeded on classic principles:

  • Plain meaning: “May” is not to be treated as “must” merely by preference; “may” ordinarily remains permissive.
  • Context and purpose: Regulation 10 is an enabling mechanism to consolidate proceedings when administratively appropriate. It is not designed to create an enforceable entitlement in the delinquent employee.
  • Preservation of discretion: making common proceedings mandatory would improperly constrain the employer’s discretion in “dynamic circumstances”. The Court highlighted practical considerations: different roles of involved officers, different cadres, and potentially different disciplinary authorities.

Consequently, the Supreme Court held that “may” in Regulation 10 of the 1976 Regulations is directory.

3.3 Impact

  • Banking/PSU disciplinary practice: The decision strengthens managerial discretion to proceed by separate charge-sheets/enquiries even when multiple officers are involved, without fear that non-joinder alone will invalidate proceedings.
  • Employee litigation strategy: Employees cannot successfully claim, as a matter of right, that the employer was bound to hold a joint/common proceeding under Regulation 10. Challenges must instead focus on concrete procedural unfairness, evidentiary deficiency, or perversity.
  • Uniformity across similar regulations: Because the Court relied on a pari materia regulation (Andhra Bank’s), the directory reading is likely to influence interpretation of similar “common proceedings” clauses across bank/PSU discipline rules.
  • Judicial review signal: While reaffirming that courts do not sit as appellate bodies over departmental findings, the outcome indicates that where the record shows reliance on unproved adverse material (without an opportunity to rebut), High Courts may intervene without being accused of impermissible re-appreciation.

4. Complex Concepts Simplified

  • Judicial review (in disciplinary matters): Courts generally check legality and fairness (procedure, natural justice, jurisdiction, perversity), not whether the court would have reached the same factual conclusion as the enquiry officer.
  • Domestic enquiry: An internal disciplinary enquiry by the employer. Strict rules of the Indian Evidence Act do not apply, but fairness and opportunity to defend do.
  • Natural justice: Core procedural fairness—especially the right to know the case against you and to meaningfully respond to adverse material.
  • Directory vs mandatory: A mandatory rule must be followed; non-compliance invalidates the action. A directory rule guides conduct but allows flexibility; non-compliance does not automatically invalidate action unless prejudice/illegality is shown.
  • Pari materia: Provisions in different statutes/regulations that are similarly worded and address the same subject, so interpretations can be borrowed.
  • CVC consultation: Consulting the Central Vigilance Commission is typically associated with vigilance/anti-corruption angles; here, the High Court noted no vigilance angle on the framed charges.

5. Conclusion

The key doctrinal contribution of CANARA BANK v. PREM LATHA UPPAL (DEAD) lies in its clear holding that Regulation 10 “Common Proceedings” is directory: the competent authority may, but is not compelled to, consolidate disciplinary proceedings against multiple officers, and employees have no right to insist upon a joint enquiry. At the same time, the Court left undisturbed the High Court’s interference with the punishment on the judicial review side of the case, thereby underscoring that disciplinary autonomy coexists with enforceable procedural fairness.