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Shri D.I.M Sarpal v. Canara Bank
Structured Summary of the Opinion (Mrs. Sujata Manohar, J.)
Factual and Procedural Background
The petitioner was an employee of Lakshmi Commercial Bank Ltd. A Scheme of Amalgamation sanctioned by the Reserve Bank of India under sub-section (1) of section 45 of the Banking Regulation Act resulted in Lakshmi Commercial Bank Ltd. being amalgamated with Canara Bank by notification dated 23 August 1985. Clause (2) of that notification transferred the rights, powers, claims and properties of the transferor bank to Canara Bank, and provided that from the prescribed date all liabilities, duties and obligations of the transferor bank would become those of the transferee bank.
Pursuant to amalgamation, most officers of Lakshmi Commercial Bank were absorbed by Canara Bank with continuity of service, but 76 officers were initially not absorbed. Representatives of Canara Bank management and the Canara Bank Officers' Association met on 3 October 1985 and recorded minutes governing terms and conditions of service for absorbed employees, including provisions (Clause VI and Clause VII) that disciplinary proceedings for misconduct committed before amalgamation would be in accordance with Canara Bank Officer Employees' (Discipline & Appeal) Regulations, 1976.
Several excluded officers filed writ petitions; the Supreme Court decided K.I. Shepherd v. Union of India, holding that excluded employees ought to have been given a hearing before exclusion, declared exclusion orders violative of principles of natural justice, and directed transferee banks to take over the excluded employees on the same terms and conditions as absorbed employees with continuity of service, while leaving it open to transferee banks to take action in accordance with law against such employees.
Following that decision the petitioner (an excluded employee) was absorbed by Canara Bank and executed a declaration on 15 October 1987 accepting service conditions per the 3 October 1985 minutes. Canara Bank initiated disciplinary proceedings against the petitioner for alleged misconduct during his tenure at Lakshmi Commercial Bank prior to amalgamation. The petitioner filed this writ petition under Article 226 challenging the disciplinary proceedings.
Legal Issues Presented
- Whether Canara Bank, as transferee under the Scheme of Amalgamation and the 3 October 1985 minutes, is entitled to institute disciplinary proceedings against an absorbed employee for misconduct alleged to have occurred while the employee worked for Lakshmi Commercial Bank (i.e., before amalgamation).
- Whether the petitioner can be proceeded against under the Canara Bank Officer Employees' (Discipline & Appeal) Regulations, 1976 for misconduct allegedly committed while employed by Lakshmi Commercial Bank.
- Whether the petitioner was entitled to be represented by a legal practitioner in the disciplinary proceedings notwithstanding Rule 6(7) of the Canara Bank Officer Employees' (Discipline and Appeal) Regulations, 1976.
- Whether the institution of the enquiry against the petitioner was mala fide so as to warrant interference by the High Court under Article 226 at the threshold.
Arguments of the Parties
Petitioner's Arguments
- The alleged misconduct occurred during the petitioner's employment with Lakshmi Commercial Bank Ltd.; therefore Canara Bank cannot now subject him to disciplinary proceedings.
- The petitioner cannot be proceeded against under the Canara Bank Officer Employees' (Discipline & Appeal) Regulations, 1976 because the misconduct relates to his earlier employment with Lakshmi Commercial Bank Ltd.
- The petitioner was denied the right to be represented by a lawyer in the disciplinary proceedings; he requested permission to engage a lawyer, relying in part on delay in framing charges.
- The institution of the enquiry was mala fide.
Respondent's (Canara Bank / 1st respondent) Position (as reflected in the opinion)
- The Scheme of Amalgamation and the 3 October 1985 minutes transfer to Canara Bank all rights and duties of Lakshmi Commercial Bank and expressly contemplate disciplinary proceedings against erstwhile employees for misconduct committed before amalgamation.
- The Supreme Court's decision in K.I. Shepherd v. Union of India directed the transferee bank to take over excluded employees with continuity of service but left it open for transferee banks to take action against such employees in accordance with law.
- The petitioner executed a declaration accepting the terms of the 3 October 1985 minutes on absorption, thereby being bound by those terms (including disciplinary regulations).
- Under Rule 6(7) of the Canara Bank Discipline & Appeal Regulations, an officer-employee may take assistance of another officer-employee but may not engage a legal practitioner unless the Presenting Officer is a legal practitioner or the Disciplinary Authority permits; the Presenting Officer in this case is not a legal practitioner.
- Enquiries have been completed against 24 of the initially excluded 76 officers with punishments imposed; presently enquiries are pending against 39 officers including the petitioner—this context undermines the mala fide allegation.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| K.I. Shepherd v. Union of India | The Supreme Court held that excluded employees were denied a hearing before exclusion (violation of principles of natural justice); directed transferee banks to take over excluded employees with continuity of service and left open to transferee banks to take action against such employees in accordance with law. | The court relied on this decision to justify the petitioner's absorption and to confirm that Canara Bank may initiate disciplinary proceedings against employees for conduct prior to amalgamation, since the Supreme Court left open the transferee bank's power to take action in accordance with law. |
| C.I.L. Subramaniam v. Collector of Customs, Cochin | Referenced in context of legal representation in disciplinary proceedings (cases concerning representation rights before disciplinary authorities). | The court observed that the decision does not help the petitioner in the present circumstances and therefore did not permit representation by a legal practitioner on that basis. |
| The Board of Trustees of the Port of Bombay v. Dilipkumar Raghvendranath Nadkarni | Referenced in context of legal representation in disciplinary proceedings (cases concerning representation rights before disciplinary authorities). | The court stated that this decision likewise does not assist the petitioner in the circumstances of the present case and declined to allow legal representation on that ground. |
Court's Reasoning and Analysis
The court proceeded through the following analytical steps, drawing on the text of the Scheme of Amalgamation, the 3 October 1985 minutes, the petitioner's absorption process, and prior authority:
- Scheme and Minutes: The Scheme of Amalgamation (notification dated 23 August 1985) transferred to Canara Bank all rights and liabilities of Lakshmi Commercial Bank. The 3 October 1985 minutes expressly contemplated that disciplinary proceedings for misconduct committed prior to amalgamation would be governed by the Canara Bank Officer Employees' (Discipline & Appeal) Regulations, 1976. On absorption the petitioner signed a declaration accepting those minutes and terms.
- Effect of the Supreme Court Decision: The Supreme Court in K.I. Shepherd held that excluded employees were denied natural justice and directed their absorption with continuity of service, but left it open to transferee banks to take appropriate action against such employees in accordance with law. The court read this as confirming that Canara Bank is entitled to institute disciplinary proceedings for pre-amalgamation conduct.
- Application of Canara Bank Regulations: Given the petitioner's declaration and the explicit language of the 3 October 1985 minutes, the petitioner is bound by the Canara Bank disciplinary regulations. The court inquired whether there was any material difference between Lakshmi Commercial Bank's rules and Canara Bank's rules; counsel for the petitioner conceded there was no substantial difference.
- Right to Legal Representation: Rule 6(7) of the Canara Bank Discipline & Appeal Regulations permits assistance by another officer-employee but bars engagement of a legal practitioner unless the Presenting Officer is a legal practitioner or the Disciplinary Authority permits. The Presenting Officer here was not a legal practitioner. The court observed established law that there is no absolute right to legal representation in disciplinary proceedings; it found the cited decisions (C.I.L. Subramaniam and Nadkarni) inapplicable to assist the petitioner on the facts before the court.
- Complexity and Delay: The court reviewed the charges (irregularities in loans advanced by the petitioner as manager between 6 October 1980 and 23 August 1985) and found no significant delay or complicated points of law that would necessitate legal representation.
- Mala fides Allegation: The court considered the respondent's affidavit stating that enquiries against many excluded officers had been completed with punishments imposed, and that enquiries were pending against 39 officers including the petitioner. In that context the court found no basis to conclude the enquiry was mala fide.
- Relief under Article 226: Given the above, the court found no grounds to intervene at the threshold under Article 226 to restrain the disciplinary proceedings.
Holding and Implications
Holding:
Petition dismissed with costs.
Implications:
- The direct effect is that the disciplinary proceedings instituted by Canara Bank against the petitioner may continue; the High Court refused to stay or quash them at the threshold.
- The court held that because the Scheme of Amalgamation and the 3 October 1985 minutes transferred rights and liabilities and bound the petitioner (who accepted the terms on absorption), Canara Bank is entitled to proceed under the Canara Bank Officer Employees' (Discipline & Appeal) Regulations, 1976 for alleged misconduct occurring prior to amalgamation.
- The petitioner was not entitled, on the facts before the court, to be represented by a legal practitioner in the disciplinary proceedings under Rule 6(7); the court did not find the authorities cited by the petitioner persuasive in the present circumstances.
- No broader precedent was purposedly laid down beyond the application of existing principles described in the opinion; the decision affirms that transferee banks may initiate disciplinary action in accordance with law against employees absorbed by virtue of an order like that of the Supreme Court in K.I. Shepherd.
Note: The summary above is confined to and derived exclusively from the text of the provided opinion; no information has been added beyond what appears in that opinion.
Mrs. Sujata Manohar, J.:— In this writ petition the disciplinary proceedings, which were instituted against the petitioner by the Canara Bank (respondent No. 1) have been challenged. The petitioner is an erstwhile employee of Lakshmi Commercial Bank Ltd. Under a Scheme of Amalgamation sanctioned by the Reserve Bank of India in exercise of powers conferred on it under sub-section (1) of section 45 of the Banking Regulation Act, the Lakshmi Commercial Bank Ltd. has been amalgamated with the Canara Bank. The Notification in that connection is dated 23rd August 1985. Under Clause (2) of the notification all rights, powers, claims etc. as well as properties of the transferor bank, that is to say, Lakshmi Commercial Bank Ltd. have been transferred to the Canara Bank. It also provides that as from the prescribed date all the liabilities, duties and obligations of the transferor bank shall be and shall become the liabilities, duties and obligations of the transferee bank.
2. Pursuant to this Scheme of Amalgamation, the officers of the Lakshmi Commercial Bank Ltd. were absorbed by the Canara Bank with continuity of service, except for 76 officers, who were not so absorbed. A conference was held as between the representatives of the management of the Canara Bank and the Canara Bank Officers' Association on October 3, 1985 to determine the terms and conditions of service of the employees who were absorbed by the Canara Bank. The minutes of the meeting of October 3, 1985, inter alia, provide in Clause VI that from the date of amalgamation, ill the officer employees of the erstwhile Lakshmi Commercial Bank Ltd. shall be governed by the terms and conditions of service as applicable to the officer employees in the Canara Bank and as provided in (1) Canara Bank Officer Employees' (Conduct) Regulations, 1976 and (2) Canara Bank Officer Employees' (Discipline & Appeal) Regulations, 1976. Clause VII of these minutes, which deals with disciplinary matters, provides that disciplinary proceedings against any officer, employee of the erstwhile Lakshmi Commercial Bank Ltd. for misconducts committed, if any, before the date of amalgamation, shall be in accordance with the provisions contained in the Canara Bank Officer Employees' (Discipline & Appeal) Regulations, 1976. Some of the officers, who were not so absorbed, as stated earlier, filed writ petitions, which were decided by the Supreme Court. The decision is in the case of K.I Shepherd v. Union of India. It covers, inter alia, the employee officers of the Lakshmi Commercial Bank, who were not absorbed by the Canara Bank. It was contended before the Supreme Court on behalf of the excluded employees that no opportunity of ??? heard was afforded to such excluded employees before a decision was taken to ??? them under the Scheme. Hence the authorities had not meted fairly. The employees, who were excluded, also denied that they were responsible for fictitious, improper or non-business-like advances of loans to private parties; this being the ??? on which they were sought to be excluded by the Canara Bank. The Supreme Court upheld the contention that they ought to have been heard before they were so excluded. The Supreme Court, therefore, held that the order of exclusion under the scheme was in violation of the principles of natural justice. Accordingly the writ petitions were allowed. The Supreme Court directed that the transferee Bank should take over the excluded employees on the same terms and conditions of employment as the absorbed employees. They would be entitled to the benefit of continuity of service for all purposes including their salary and perquisites. The Supreme Court left it open to the transferee banks to take such action as they considered proper against these employees in accordance with law. The order was made applicable by the Supreme Court to all excluded employees although all such employees had not come to Court.
3. In view of this order the petitioner, who was an excluded employee has been absorbed by the Canara Bank. The letter of appointment states that in view of the judgment of the Supreme Court he is being absorbed. The petitioner has given a declaration dated October 15, 1987 at the time of his absorption to the effect that consequent upon his reinstatement his service conditions shall be in accordance with the minutes of the Joint Conference dated October 3, 1985 between the representatives of the management of Canara Bank and the representatives of the Canara Bank officers' Association. The petitioner is, therefore, bound by the terms and conditions as set out in the minutes of October 3, 1985.
4. In this context we have to examine the contention raised on behalf of the petitioner that his alleged misconduct during his tenure with Lakshmi Commercial Bank Ltd. cannot now be the subject-matter of a disciplinary proceeding instituted by the Canara Bank. This contention of the petitioner does not have any substance. The minutes of October 3, 1985 clearly contemplate disciplinary proceedings against any erstwhile officer employee of the Lakshmi Commercial Bank Ltd. who has been absorbed by the Canara Bank. The Scheme of Amalgamation also invests the Canara Bank with all rights and duties of Lakshmi Commercial Bank Ltd. The Canara Bank is, therefore, entitled to take disciplinary proceedings against the petitioner although his conduct relates to a period prior to amalgamation. In fact, the order of the Supreme Court pursuant to which the petitioner has been absorbed also quite clearly indicates that it is open to the Canara Bank to take proceedings against the petitioner in accordance with law. These observations have to be seen in the context of the case which was before the Supreme Court. The transferee banks had refused to absorb certain employees who they claimed, were guilty of misconduct. The Supreme Court, however, directed their absorption on the ground that before deciding the question of misconduct or otherwise, a hearing had not been given to the employees. The Supreme Court, however, permitted the transferee banks to the action against these employees in accordance with law. Thus the Canara Bank had a right to take disciplinary proceedings in respect of such employees for their conduct prior to their absorption. The absorption is also with continuity of service. The transferee bank is, therefore, entitled to take disciplinary proceedings against these employees for their conduct prior to absorption.
5. It is also contended on behalf of the petitioner that the petitioner cannot be proceeded against under the Canara Bank Officer Employees' (Discipline & Appeal) Regulations, 1976. The misconduct relates to his employment with Lakshmi Commercial Bank Ltd. The petitioner, however, is bound by the minutes of October 3, 1985, which requires such an enquiry to be conducted in accordance with the Canara Bank Officer Employees' (Discipline & Appeal) Regulations, 1976. We have asked Mr. Desai, learned advocate for the petitioner, as to whether there is any material difference between the similar rules of Lakshmi Commercial Bank Ltd. and these rules. He has fairly stated that there is no substantial difference.
6. It is also contended by the petitioner that he has been denied representation by a lawyer in the disciplinary proceedings. Under Rule 6(7) of the Canara Bank Officer Employees' (Discipline and Appeal) Regulations, 1976, “the Officer-employee may take the assistance of any other officer employee but may not engage a legal practitioner for the purpose unless the Presenting Officer appointed by the Disciplinary Authority is a legal practitioner or the Disciplinary Authority having regard to the circumstances of Age case, so permits”. In the present case, the Presenting Officer is not a legal practitioner nor does he have any legal training. The only ground on which the petitioner asked for permission to be represented by a lawyer in his application before the Disciplinary Authority, was that me charges against him were delayed. The request of the petitioner has been turned down by the Disciplinary Authority.
7. It is now well settled that in a disciplinary proceeding the employee does not have a right as such to be represented by a lawyer unless the Presenting Officer is also a lawyer or a person possessing legal or special training in that connection. The presenting officer in the present case does not have such a qualification or training. The decisions in C.I.L Subramaniam v. Collector of Customs Cochin and The Board of Trustees of the Port of Bombay v. Dilipkumar Raghvendranath Nadkarni do not help the petitioner in the circumstances of present case.
8. There are also no complicated questions of law which may necessitate such assistance. We have seen the charges against the petitioner. They deal with his conduct while he was working as the manager of Lakshmi Commercial Bank Ltd. at the Defence Colony, Lajpatnagar, New Delhi Branch between October 6, 1980 and August 23, 1985. The charges relate to various irregularities in connection with loans advanced by him as such manager to private parties. The period is immediately proceeding the date of amalgamation. There is no delay. We also do not find that there are any complicated questions of law involved in these charges.
9. The petitioner has also contended that the institution of enquiry against him is mala fide. We do not find any substance in this allegation also. In their affidavit the 1st respondents have pointed out that out of 76 officers who were initially excluded and have been subsequently reinstated, enquiries have been completed against 24 officers and punishment is imposed on them. Presently enquires are pending against a further 39 officers including the petitioner. Looking to the context in which these officers were initially excluded and have been subsequently reinstated, and looking to the fact that the Canara Bank has taken action against a number of such officers, we cannot accept the petitioner's contention that the action of the 1st respondent in instituting a disciplinary proceeding against him is mala fide.
10. In the premises, in our view, no grounds have been made out before us for intervention under art. 226 of the Constitution to stop the disciplinary proceeding against the petitioner at the threshhold. Petition is dismissed with costs.
11. Petition dismissed.
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