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Sudhir Vishnu Panvalkar v. Bank Of India .
Factual and Procedural Background
The appellant joined the respondent Bank as a Grade III Officer on 9-2-1961 and was promoted to Grade D on 1-4-1968. He was a chief promoter and later Secretary of Manoj Cooperative Housing Society, formed in 1964 to build residential premises for Bank employees. Allegations of misappropriation of the Society’s funds prompted an inquiry under Section 83 of the Maharashtra Cooperative Societies Act, 1961. A report dated 4-10-1969 found the appellant and two others negligent, allegedly causing a Rs 3,59,000 loss.
On 17-12-1969 the Bank issued a show-cause notice. Parallel criminal complaints filed on 5-3-1970 led to charges under Sections 409 and 109 IPC and the appellant was suspended on 3-11-1970. An authorised officer’s report dated 9-10-1971 fixed liability of Rs 2,36,000 on the appellant, following which the Bank terminated his services with notice pay on 29-11-1971, effective 1-12-1971.
The appellant’s internal representations were rejected. He appealed against the Section 88 findings (Appeal 22 / 1972) and was simultaneously tried criminally. On 27-3-1972 the Magistrate convicted him, but the Bombay High Court acquitted him on 12-11-1973, observing that any plea for reinstatement should be considered “sympathetically.” After three unsuccessful representations (last dated 3-5-1975) the appellant filed a writ petition on 23-7-1975.
The Single Judge (6-12-1979/7-12-1979) allowed the petition and granted reinstatement. The Bank’s letters-patent appeal succeeded; the Division Bench (16-4-1985) dismissed the writ on grounds of laches and on merits. The present judgment addresses the appellant’s further appeal from that Division Bench decision.
Legal Issues Presented
- Whether the Division Bench erred in dismissing the writ petition on the ground of delay and laches.
- Whether the Bank’s termination of the appellant’s services on the ground of “loss of confidence,” without a formal departmental enquiry, violated principles of natural justice and Articles 14 and 16 of the Constitution.
- Whether, on the available record, the Bank was justified in treating the termination as an order simpliciter rather than punitive.
Arguments of the Parties
Appellant's Arguments
- The Division Bench wrongly interfered with the Single Judge’s discretionary decision to condone delay; the writ was filed promptly after criminal acquittal, so there was no culpable laches.
- As a permanent employee, the appellant could not be dismissed without a departmental enquiry; absence of formal service regulations does not license the Bank to ignore natural justice.
- The termination order is stigmatic and therefore punitive, attracting constitutional safeguards.
- Relied on decisions such as W.B. SEB v. Desh Bandhu Ghosh, Central Inland Water Transport Corp. v. Brojo Nath Ganguly, and Delhi Transport Corp. v. DTC Mazdoor Congress to contend that arbitrary termination clauses offend Articles 14 and 16.
Bank's Arguments
- The writ suffered from a three-and-a-half-year delay unrelated to the criminal case, because the termination was based on loss of confidence, not the prosecution.
- Termination was a bona fide simpliciter discharge; no enquiry was required where continued trust in a customer-facing Grade III Officer was lost.
- Reinstatement after such delay would impose substantial financial liability for back wages.
- The precedents cited by the appellant concern statutory or contractual disciplinary rules, which the Bank did not have at the relevant time; hence they are inapplicable.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| W.B. State Electricity Board v. Desh Bandhu Ghosh (1985) 3 SCC 116 | Arbitrary termination clauses offend Articles 14 & 16. | Court held the case inapplicable because the Bank had no comparable service rules; therefore, the principle did not govern the present facts. |
| Central Inland Water Transport Corpn. Ltd. v. Brojo Nath Ganguly (1986) 3 SCC 156 | Unconscionable service conditions and arbitrary powers are void under Articles 14 & 16. | Similarly distinguished; lack of service regulations in the Bank made the ratio irrelevant. |
| Delhi Transport Corpn. v. D.T.C. Mazdoor Congress 1991 Supp (1) SCC 600 | Scope of natural justice in public employment and invalidity of hire-and-fire provisions. | Court observed the precedent dealt with statutory regulations, which were absent here; thus it had no bearing on the outcome. |
Court's Reasoning and Analysis
The Court affirmed the Division Bench’s finding that a delay of approximately three and a half years rendered the writ petition liable to dismissal. The criminal prosecution, though contemporaneous, was not the basis of the Bank’s action, which was a simpliciter termination grounded in loss of confidence. Hence the appellant had no justification for awaiting the criminal verdict before seeking relief.
On the merits, the Court held that when the appellant’s services were terminated the nationalised Bank had not yet promulgated disciplinary or conduct regulations. In the absence of such rules, the Bank could validly resort to termination on loss-of-confidence grounds without conducting a formal enquiry, provided the action was not mala fide. The record—including findings of the Registrar’s authorised officer under Section 88 and the Maharashtra State Cooperative Tribunal—demonstrated involvement in misappropriation, supporting the Bank’s loss of confidence.
The Court considered the documents annexed to the Bank’s counter-affidavit, noting the appellant had long had copies and did not substantively refute them. Consequently, reliance on those materials was permissible. Precedents invoked by the appellant were distinguished as inapplicable because they dealt with service regimes containing express termination clauses, unlike the present context.
Finding no violation of natural justice, no arbitrariness, and no mala fides, the Court upheld the Division Bench’s dismissal of the writ petition.
Holding and Implications
Appeal Dismissed.
The Division Bench’s judgment stands; the appellant’s termination remains effective and each party bears its own costs. The ruling underscores that:
- Unexplained delay in filing a writ petition can bar relief, particularly where reinstatement would create significant back-pay liability.
- In the absence of formal disciplinary rules, a public sector bank may validly terminate an employee on bona fide grounds of loss of confidence without a departmental enquiry, provided the action is not arbitrary or mala fide.
The decision turns on its specific facts and does not establish new precedent regarding statutory service regulations.
S.P Kurdukar, J.— The appellant on 9-2-1961 was appointed as an Officer in Grade III in the respondent Bank (for short “the Bank”). He was promoted on 1-4-1968 as a Grade D Officer in the Foreign Exchange Department in the Head Office of the Bank. Sometime in 1964, Manoj Cooperative Housing Society (for short “the Society”) was formed of which the appellant was one of the Chief Promoters and thereafter its Secretary. The object of the Society was to construct residential premises for the employees of the Bank and its other members. It appears that a complaint was received in respect of the affairs of the Society relating to misappropriation of the funds of the Society and consequently, in exercise of the powers under Section 83 of the Maharashtra Cooperative Societies Act, 1961 (for short “the Act”), the Registrar on 23-4-1969 instituted an inquiry thereof. Mr A.S Rangnekar was appointed the Registrar's nominee who on 4-10-1969, submitted the report holding the appellant and two other officer-bearers of the Society negligent in dealing with the funds of the Society causing a loss to the tune of Rs 3,59,000. The Registrar on 21-10-1969, passed an order appointing an officer under Section 88 of the Act to assess the loss caused to the Society. However, the Government by its order dated 29-11-1969 annulled the Registrar's order dated 23-4-1969 and 21-10-1969 and directed a fresh inquiry into the affairs of the Society.
2. On 17-12-1969, the Bank issued a show-cause notice to the appellant to explain within fifteen days his alleged negligent conduct in dealing with the affairs of the Society as revealed in the report dated 4-10-1969. In the meantime, Mr Godbole came to be appointed by the Registrar vide his order dated 26-7-1969, to make inquiries under Section 88 of the Act. The petitioner by his reply dated 18-1-1970/22-1-1970 submitted his explanation and also challenged the legality of the inquiry and the findings recorded therein. On 5-3-1970, Mr M.S Mavalkar, Treasurer of the Society and an employee of the Bank filed two criminal complaints in the Court of Additional Chief Presidency Magistrate, Bombay alleging that the appellant and two other officer-bearers of the Society had dishonestly misappropriated a sum of Rs 51,000 and Rs 80,000 respectively which was entrusted to the appellant in his capacity as Promoter and Secretary of the Society and thereby committed criminal breach of trust. The Magistrate framed the charges against the appellant under Sections 409 and 109 of the Indian Penal Code. The Bank having regard to the serious misconduct of the appellant involving moral turpitude vide its order dated 3-11-1970 suspended the appellant pending trial. The appellant protested against this action of the Bank complaining that he was not given an opportunity of hearing before passing the order of suspension. In the meantime, Mr Godbole, the authorized officer appointed by the Registrar vide his order dated 9-10-1971 held the appellant liable to pay Rs 2,36,000 to the Society in addition to the amount of Rs 2,03,000 for which he (the appellant) and two other office-bearers of the Society were held jointly liable. The Bank in view of this finding, vide its order dated 29-11-1971 terminated the services of the appellant with effect from 1-12-1971 along with notice pay. The appellant protested against the action of the Bank and on 3-12-1971 filed detailed representation against the order of termination. The Bank replied to the appellant's representation and justified its action. The appellant on 28-12-1971 submitted his reply to the Bank stating, inter alia, that the termination of his services was not simpliciter and was in violation of the principles of natural justice; that no opportunity of hearing was given to him; that the termination order attached a stigma. The appellant aggrieved by the findings and order made by Mr Godbole preferred Appeal No. 22 of 1972 before the Maharashtra State Cooperative Tribunal, Bombay. In the meantime, the criminal proceedings ended in conviction vide order dated 27-3-1972 passed by the Additional Chief Metropolitan Magistrate, Bombay. The appellant challenged the order of conviction and sentence in the Bombay High Court being Criminal Appeal No. 4020 of 1972 and during the pendency of the said appeal, the Maharashtra State Cooperative Tribunal vide its order dated 12-4-1973 dismissed the appellant's appeal but reduced the liability by Rs 72,000. On 12-11-1973, the High Court allowed the criminal appeal and acquitted the appellant. The High Court, however in its order observed that since the services of the appellant were terminated in view of the criminal proceedings and since the appellant has been acquitted, representation, if any, by the appellant to the Bank for reinstatement may be considered sympathetically. Taking clue from the observations made by the High Court, the appellant filed three representations, the last being dated 3-5-1975 requesting the Bank to revoke the order of termination and he be reinstated. The Bank vide its communication dated 21-5-1975 refused to reinstate the appellant. The appellant, therefore, on 23-7-1975 filed the writ petition in the High Court for quashing the orders dated 29-11-1971, 27-12-1971 and 21-5-1975 passed by the Bank.
3. The learned Single Judge of the High Court by his judgment and order dated 6-12-1979/7-12-1979 granted the desired relief to the appellant. The Bank aggrieved by the judgment and order passed by the learned Single Judge preferred an appeal under clause 15 of the letters patent. The appeal was heard by the Division Bench. The Division Bench of the High Court did not agree with the judgment passed by the learned Single Judge and consequently by its judgment and order dated 16-4-1985 allowed the appeal and dismissed the writ petition on the ground of laches and also on merits. It is this judgment and order of the High Court which is impugned in this appeal.
4. Mr K.K Singhvi, the learned Senior Advocate appearing in support of this appeal, contended that the Division Bench of the High Court was wholly unjustified in rejecting the claim of the appellant on the grounds of delay and laches. The learned Single Judge while granting the relief to the appellant had condoned the delay and this being the discretionary exercise of the power, the Division Bench committed a serious error in interfering with such a discretionary order. It is a common premise that the termination order was made by the Bank on 29-11-1971 whereas the writ petition was filed on 23-7-1975. Obviously, there was delay of about three and half years. The only justification sought to be pleaded by the appellant was the pendency of the criminal proceedings which ultimately ended in his acquittal vide order dated 24-7-1974/25-7-1974. Mr Singhvi, therefore, contended that there was no delay whatsoever on the part of the appellant in approaching the High Court by way of writ petition.
5. Mr Raj Birbal, learned Senior Advocate appearing for the Bank, contested this contention and urged that the termination order was the simpliciter termination without being influenced by the criminal proceedings and there was no reason for the appellant to wait until the disposal of the criminal proceedings. Delay of three and half years in the event of reinstatement involves financial implications relating to back wages. On perusal of judgments of the learned Single Judge as well as the Division Bench on this issue, we are of the considered view that having regard to the facts and circumstances of the present case, the Division Bench was right in holding that the writ petition suffered from the vice of delay and laches. At this stage, it needs to be stated that the termination order was a simpliciter termination. However, the appellant insisted for the reasons for his termination and, therefore, the Bank was constrained to inform the appellant that the termination was resorted to because of loss of confidence. It also needs to be emphasised that the appellant was a Grade III Officer in the Bank who was required to deal with the customers and, therefore, if the Bank thought it fit to terminate the services of the appellant on the ground of loss of confidence, such an action could not be said to be unwise or mala fide action. We, therefore, find no illegality in upholding the finding of the Division Bench that the writ petition filed by the appellant suffered from the vice of delay and laches.
6. It is an admitted position that when the appellant's services were terminated, the Bank though nationalised had not prescribed the Conduct and Disciplinary Rules or Regulations. It is in these circumstances, the general principles of natural justice held the field. Mr Singhvi contended that the appellant being a permanent employee, his services could not have been terminated without holding a departmental enquiry. Merely because the services of the employees of the Bank were not governed by any Conduct and Disciplinary Rules or Regulations, an employee could not be put to a greater disadvantage and the disciplinary authority could be permitted to violate the principles of natural justice. The main thrust of the contention of Mr Singhvi was that the termination order of the appellant was totally in violation of principles of natural justice and also an arbitrary action on the part of the Bank. The order of termination was thus violative of Articles 14 and 16 of the Constitution. In support of this submission, Mr Singhvi relied upon various decisions of this Court and in particular, the decisions in W.B SEB v. Desh Bandhu Ghosh (1985) 3 SCC 116, Central Inland Water Transport Corpn. Ltd. v. Brojo Nath Ganguly (1986) 3 SCC 156, (1986) 1 ATC 103 and Delhi Transport Corpn. v. D.T.C Mazdoor Congress 1991 Supp (1) SCC 600. We have very carefully gone through these decisions. In all these reported decisions, the rules and/or regulations relating to conduct and disciplinary matters, fell for consideration in the context of Articles 14 and 16 of the Constitution of India. As indicated earlier, the Bank had framed no rules and regulations in regard to the service conditions etc. of its employees. It is in these circumstances, we do not think it necessary to refer to these decisions in detail since they are not applicable to the facts of the present case. The Division Bench of the High Court in its judgment has exhaustively dealt with the various decisions of this Court and the High Courts and very succinctly drawn the distinction and pointed out how those decisions were not applicable to the facts of the present case. We are in complete agreement with the reasons given by the High Court.
7. The only ground that survives for our consideration is as to whether the Bank was justified in terminating the services of the appellant on the ground of loss of confidence and in the facts and circumstances of the case, whether any such inquiry was necessitated. From the material placed on record before us, it is quite clear that the appellant was involved in misappropriation of the Society's funds. The proceedings initiated under Section 88 of the Act went up to the Maharashtra Cooperative Tribunal and after contest by the parties, the Tribunal held the appellant guilty of certain charges involving moral turpitude relating to misappropriation of the Society's funds. Mr Singhvi, however, urged that some of these documents were not the subject-matter of proceedings before the High Court and, therefore, they cannot be relied upon by the Bank in this appeal. He also urged that these documents/papers are from the proceedings before the Registrar and that they have no bearing upon the issue involved in this case. He also urged that the Bank had not produced the entire correspondence before this Court for its appreciation and proper decision. Ordinarily, this plea could have been sustained but no stateable reasons could be given on behalf of the appellant nor could the correctness thereof be challenged. All these documents were filed by the Bank along with its counter-affidavit of which the copy and the documents were furnished to the appellant long time back. Although, the rejoinder was filed by the appellant but he could not dispute the correctness of all these documents. It is in these circumstances, we are of the view that these documents could be relied upon by the Bank to justify the order of termination on the ground of loss of confidence. On perusal of the material produced before us, we are of the opinion that the order of termination passed by the Bank does not suffer from any vice and the Division Bench of the High Court was right in upholding the termination order.
8. In the result, we find no merit in this appeal and the same is dismissed. Parties are directed to bear their own costs.
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