The State Bank Of Patiala v. Shri Balbir Singh And Others

B.R Tuli, J.:— This is unfortunate litigation thrust by the appellant-Bank on the respondent who is one of its employees. The respondent, Balbir Singh, joined service of the appellant-Bank in 1947 as an officer in the Manager's Cadre in the pay scale of Rs. 150,15,210 and was confirmed on the said post after about a year. He was posted as a Branch Manager with effect from October 1, 1948, whereafter he served in different capacities such as Manager, Assistant Inspector of Branches etc. On August 29, 1961, he was suspended and on March 28, 1962, the Board of Directors of the Bank ordered an inquiry to be held into the charges levelled against him Shri Atam Singh Puri was appointed as the Inquiry Officer who submitted his report on November 5, 1962 to the General Mamager of the Bank the General Manager forwarded that report to the Board of Directors with his own comments extending to 10 typed pages in which he magnified some of the irregularities alleged to have been committed by the respondent. In its meeting held on December 14, 1962, the Board of Directors constituted a special committee consisting of Sarvshri Kartar Singh Malhotra, M.M Mehra and A.H Elias to go into the case of the respondent in the light of the findings of the Inquiry Officer and the observations thereon of the General Manager and to submit its report to the Board in the next meeting. These three members of the special committee were the Diectors of the Bank. They submitted their report dated January 5, 1963, to the General Manager a copy of which is Exhibit P. 85. The report of the special committee was forwarded to the Board of Directors by the General Manager on January 9, 1963 and was considered by the Board in its meeting held on January 18, 1963. In that meeting a resolution was passed approving of the conclusions arrived at and the recommendations made by the special committee of Directors. It was further resolved that—

“Shri Bablir Singh be given the maximum of the basic pay viz., Rs. 337/- per mensem provided for the clerical staff in Area II in the Desai Award Scales of Pay and the period of his suspension be treated as leave without pay (Extraordinary leave). (He should not be given a position of responsibility).”

2. In pursuance of this resolution, a notice was issued to the respondent on January 29, 1963, to show cause as to why the penalty of demotion to the clerical grade, fixed by the Desai Award Scales of Pay for Area II, should not be imposed upon him the respondent submitted a detailed reply to this notice covering 9 closely typed foolscap pages on February 27, 1963. This explanation of the respondent was forwarded by the Genera) Manager to the Board of Directors with his own comments on April 4, 1963 and the matter was then considered by the Board of Directors in its meeting held on June 24, 1963 and it was resolved to demote the respondent to the clerical grade with a further note that he should not be given a post of responsibility at any time. This order was communicated to the respondent by the General Manager on July 1, 1963, informing him that the board of Directors in its meeting dated June 24, 1963 had rejected his request for personal hearing and had demoted him to the clerical cadre fixed by the Desai Award Scales of Pay for Area II and his salary was fixed at Rs. 337/- per mensem with effect from June 26, 1963. It was further stated that his period of suspension would be treated as Extraordinary leave (leave without pay). It is significant to note that the decision of the Board not to given any post of responsibility to the respondent at any time thereafter was not communicated to him. The respondent then filed the suit, put of which the present appeal has arisen, for a declaration that the order of the Board of Directors dated June 24, 1963, was illegal, ultra vires, unconstitutional null and void, without jurisdiction and authority and mala fide and was against the principles of natural justice and not binding on the respondent for the reasons given in the plaint. The appellant-Bank contested the suit and the following issues were framed by the trial Court.—

1. Whether the order dated 24th Jane, 1963 is illegal, ultra vires, unconstitional, mala fide null and void, for the reasons stated in para 17 of the plaint?

2. Whether the suit is not maintainable in the present form?

3. Whether the matter in dispute is not justiciable?

4. Relief.

3. Issue No. 1 was later recast as under:—

Whether the order dated 26th June, 1963 is illegal, ultra vires unconstitutional, mala fide, null and void for the reasons given in paras Nos. 17 and 18-A to 18-D of the plaint?

4. The learned trial Court decided issue no in favour of the plaintiff-respondent and issues No. 2 and 3 against the defendant-appellant and thus decreed the suit as prayed. This decree was passed on November 18, 1963. Against that decree, the appellant-Bank filed an appeal which was dismissed by the learned Additional District Judge. Patiala, on September 19, 1969. Against that decree, the present appeal has been filed.

5. The learned lower appellate Court held the appeal before it to be incompetent on the ground that the Board of Directors of the appellant-Bank had not passed any resolution authorising the General Manager to file the appeal against the decree passed by the learned trial Court. A copy of the resolution passed on August 22, 1966, by the Board of Directors reading as under was produced before the lower appellate Court without any objection on the part of the respondent:—

“Submitted a memorandum dated the 25th July, 1966 by the General Manager informing the position of Civil suit filed against the Bank and others by Shri Balbir Singh. Clerk at Mill Road Branch Patiala, seeking approval of the Board to defend the suit and also confirmation of his action in engaging Sarvshri D.K Puri and Vijay Tewari, Advocate, Patiala, on inclusive fees of Rs. 440/- and Rs. 220/- respectively.

Resolved that the General Manager be authorised to defend the suit and that his action in engaging the Advocates on the all inclusive fees stipulated be confirmed”

6. The appeal in the Court of the District Judge, Patiala, was filed on January 9, 1969 and in the meeting held on March 28, 1969, the Board of Directors considered item No. 9 reading as under:—

“Review of the case of Shri Balbir Singh, Clerk, Mall Road Branch, Patiala. Submitted a memorandum dated the 11th March, 1969, by the General Manager, advising that the declaratory suit filed by Shri Balbir Singh, Clerk, challenging the orders of the Board for his demotion from the position of Manager ‘B’ grade to the position of a Clerk, has been decreed with costs in his favour and that the appeal against the said decision of the Court has since been admitted in the preliminary hearing by the Additional District Judge, Patiala and seeking confirmation for having engaged in the case Sarvshri H.L Sibal, Advocate, Chandigarh and Vijay Tewari, Abvocate, Patiala, in anticipation of the sanction of the Board.”

7. The decision of the Board against this item is “Noted and confirmed.” On the basis of these two resolutions it was pleaded on behalf of the appellant Bank that the appeal was competent and had been filed with the authority of the Board of Directors. This plea, however, did not prevail with the learned Additional District Judge, who held that the resolution authorising the defence of the suit did not entitle the General Manager to file the appeal and the confirmation of his Act in filing the appeal, after the appeal had been filed and the period of limitation for filing the appeal had expired, had no effect. The learned counsel for the appellant has brought to my notice a judgment of Bhandari, C.J, in The Municipal Committee, Pathankot v. Roshan Lal . I.L.R 1957 Punj. 1443., wherein the learned Chief Justice expressed the opnion that if a Corporation authorised any person on its behalf to defend the suit, that authorisation enured for all the stages of the litigation, that is, from the lowest Court to the highest Court. The learned counsel for the appellant-Bank enforces the dictum of the learned Chief Justice by referring to the judgment of their Lordships of the Supreme Court in Garikapati Veeraya v. N. Subbiah Choudhry & Others . A.I.R 1957 S.C 540., at page 553 (Para 23) wherein the following principals have been laid down:—

“(i) That the legal pursuit of a remedy, suit, appeal and second appeal are really but steps in a series of proceedings all connected by an intrinsic unity and are to be regarded as one legal proceeding.

(ii) The right of appeal is not a mere matter of procedure but is a substantive right.

(iii) The institution of the suit carries with it the implication that all rights of appeal then in force are preserved to the parties thereto till the rest of the career of the suit.

(iv) The right of appeal is a vested right and such a right to enter the superior Court accrues to the litigant and exists as on and from the date the lis commences and although it may be actually exercised when the adverse judgment is pronounced, such right is to be governed by the law prevailing at the date of the institution of the suit or proceeding and not by the law that prevails at the date of its decision or at the date of the filing of the appeal.

(v) This vested right of appeal can be taken away only by a subsequent enactment, if it so provides expressly or by necessary intendment and not otherwise.”

8. The learned counsel for the appellant also relied on a Division Bench judgment of the Calcutta High Court in Union of India v. Mannull Jain . A.I.R 1954 Cal. 615., wherein it has been observed:

“Where litigation is being carried on by any person in the name of an agent, the agent can certainly continue to carry it on till the last stage of litigation.”

9. A Division Bench of the Lahore High Court in Mt. Balqis Begam v. Shazada Muhammad. Hamdam . A.I.R 1934 Lah 9731., held that—

“an appeal is a proceeding in a suit and the prosecution of a suit includes the prosecution of all the proceedings till a final decree is passed.”

10. The learned counsel has also relied on Rasul Shah v. Dewan Chand, A.I.R 1936 Lahore 583 and Boora Mal v. Tulsi Ram, A.I.R 1930 Lahore 68, which are, however, of no help as they relate to pleaders and Advocates.

11. On the basis of the authorities above referred to, the learned counsel for the appellant-Bank submits that the resolution passed on August 22, 1966, authorising the General Manager to defend the suit included in it the right to file an appeal in case the decision of the suit went against the Bank, as the defence of the suit meant the defence of the plaintiff's claim through all stages of the litigation, that is, from the lowest Court to the highest Court.

12. The learned counsel for the respondent has relied on a Single Bench Judgment of this court in Punjab Agricultural University v. Walia Brothers, 1969 P.L.R 257, which related to the Punjab Agricultural University. Ludhiana the learned Judge observed—

“It is for the Board of Management to decide by resolutions the nature or type of the suits which could be instituted with the sanction of the Vice-Chancellor. No such material has been brought on the record to show that the present suit or appeal was of that type. In the instant case, a suit has been filed against the University and certain of its officers and the Board of Management had to decide as to whether that suit had to be defended or not. If former was the case, then it had to authorise somebody to defend the said suit. Similarly, when the application under section 34 filed by the University in the said suit had been rejected, it was again the Board of Management which had to decide by a resolution as to whether that matter had to be taken up in appeal or not. It was held by the Supreme Court in Vice Chancellor, Utkal University v. S.K Ghosh, A.I.R 1954 S.C 217, that though an incorporated body, like a University, was a legal entity, it had neither a living mind nor voice. It could only express its will in a formal way by a formal resolution and so could only act in its corporate capacity by resolution properly considered and duly recorded in the manner laid down by its Constitution. Similarly, it was held by a Division Bench of the Lahore High Court in Bawa Bhagwan Dans v. Municipal Committee, Rupar, A.I.R 1943 Lahore 318, that the act of filing an appeal by the Municipal Committee required a special resolution of the Committee Under these circumstances. I would hold that the Board of Management should have by a resolution authorised the Vice-Chancellor or somebody else to file an appeal in the instant case. The Vice-Chancellor on his own could not do so, because no such power was given to him under the Punjab Agricultural University Act.”

13. That case is clearly distinguishable as no resolution by the Board of Management was passed at any stage to authorise the filing of the application under section 34 of the Arbitration Act or the appeal arising out of the decision of that application. If there had been a resolution of the Board of Management authorising the Vice-Chancellor or some other officer to file the application under section 34 the matter, would have been considered by the learned Judge whether that authorisation was enough to entitle the Vice-Chancellor to file an appeal or not. This judgment, therefore, is of no help.

14. Another judgment of another learned Single Judge of this Court in Murti Singh Raghunath ji v. Joginder Singh . 1989 71 P.L.R 302., is also distinguishable as that judgment related to section 6 of the Societies Registration Act wherein the words “for the occasion” occur. It was on the basis of those words that the learned Judge held that for every stage of the litigation the authorisation of the Society must be obtained.

15. The last judgment of this Court on the point brought to my notice is by Tewatia, J., in The Municipal Committee, Ludhiana v. Surinder Kumar, wherein the learned Judge approved of the observations of Bhandari, C.J, in The Municipal Committee, Pathankot v. Roshan Lal (supra), but stated that no resolution of the Municipal Committee in the case before him had been brought on the record in order to find out its ambit. The result is that none of the judgments cited by the learned counsel for the respondent helps him. I respectfully agree with the dictum of Bhandari, C.J, in The Municipal Committee, Pathankot v. Roshan Lel (supra) and hold that the resolution of the Board of Directors of the appellant-Bank pissed on August 22, 1966, authorising the General Manager to defend the suit also entitled him to file the appeal arising out of the decree passed in that suit in case the decree was against the Bank. The appeal filed by the General Manager before the District Judge was, therefore, competent and could not be dismissed on that ground.

16. This appeal, however, deserves to be dismissed on another ground, that is, the respondent was not supplied with the copy of the report of the General Manager which he submitted to the Board of Directors along with the report of the Inquiry Officer. The General Manager had definitely differed from some of the fit dings of the Inquiry Officer and in some others he had magnified the irregularities imputed to the respondent. It was, therefore, necessary for the Board of Directors to supply a copy of that report to the respondent along with the copy of the Inquiry Report when the notice was issued to him so as to give him an adequate opportunity to show cause against the penalty proposed and the conclusions arrived at by the General Manager. After the receipt of the report of the General Manager, the Board of Directors constituted a sub-committee of Directors to consider the whole matter in the light of that report and it was with the help of that report that the special committee came to its conclusion. It has been held in Leary v. National Union of Vahicle Builders . 1970 2 All. E.R 713., that—

“although a decision at a committee meeting is not invalidated by the mere presence of a person who is not a member of the committee, the decision is void if such a person participates in the deliberations and decisions of the committee;”

17. On that principle it can be said that although the General Manager did not participate in the meeting of the Board of Directors, his report was considered by the special committee, the members of which were influenced by it. By way of illustration. I may point out that the Board of Directors considered irregularity No. 1 of charge No. 1 to be of so serious a nature as to warrant his dismissal from the service of the Bank some other irregularities and charge were also mentioned. Irregularity No. 1 of charge No. 1 was to the following effect:—

“A credit for Rs. 49,933/- was wrongly afforded in the current account of Shrimati Balbir Kaur on 10th December, 1959. The amount belonged to Salig Ram Kanhia Lal, Kotkapura and a cheque for Rs. 50,000/- drawn by Salig Ram Kanhia Lal, was also passed on the same date through the account of Smt. Balbir Kaur. A sum of Rs. 67/- thus remained short in the account of Smt. Balbir Kaur. The mistake was detected on the 15th July, 1960, by the account-holder.”

18. From the charge it is clear that a cheque favouring Salig Ram Kanhia Lal was credited in the account of Smt. Balbir Kaur on 19th December, 1959. The firm Salig Ram Kanhia Lal had also drawn a cheque for Rs. 50,000/- out of their account which was cashed on that day through the account of Smt. Balbir Kaur. The reasonable inference is that the Clerk who was responsible for posting these entries wrongly entered these two items in the account of Smt. Balbir Kaur and that the respondent did not detect this irregularity. The Inquiry Officer was of the opinion that at best it was an act of negligence on the part of the Clerk not to have inked the correction in the ledger. He did not hold the respondent liable for it. The General Manager expressed the opnion:

“I am convinced that the entries in question were deliberately put through the account of Shrimati Balbir Kaur in active connivance with Salig Ram Kanhia Lal and this was presumably done to held them in income-tax matters the account of a lady and that too a villager, with no operations therein for a long time, came as a handy tool and the possibility of a fraud also having been committed in the process, though rectified subseqently, cannot be overruled. For the reasons stated above, the summations, in whatever manner tallied, would also have to be taken as fictitious.”

19. From this comment of the General Manager, it is absolutely clear that he attributed some imaginary intentions to the respondent which were never put to him and he was never afforded an opportunity to explain the same. There was also no material on the record for the insinuation that there was collusion between the respondent and the firm Salig Ram Kanhia Lal to defraud the income-tax department this allegation had not been stated as a basis of the charge against him. It is significant to note that along with the show cause notice a copy of the report of the special committee was supplied to the respondent which was too laconic that not the report of the General Manager which was a detailed one and which really influenced the decision of the special committee and the Board of Directors. I am convinced that the non-supply of this report to the respondent prejudiced him in presenting his case before the Board of Directors in reply to the show-cause notice and this omission on the part of the Board of Directors to supply a copy of the resort of the General Manager to the respondent is sufficient to vitiate the order of punishment passed against him on June 24, 1963.

20. The second infirmity in the order of punishment is that in the show-cause notice the punishment proposed was “Demotion to the clerical grade fixed by the Desai Award Scales of Pay for Area II” whereas in the resolution passed on June 24, 1963, in addition to that punishment it was decided that “he should not be given a post of responsibility at any time.” Thus the punishment imposed on the respondent was severer than the one proposed which was illegal. In Chanan Singh v. The State of Punjab . C.W 3079 of 1958., (C.W 3079 of 1968 decided on October 23, 1970) I held—

“……..in the show cause notice issued by the Collector, Kapurthala, after the submission of the inquiry report to him, it was stated that the petitioner should show cause why he should not be removed from service Removal from service is a lesser punishment than dismissal from service but, while passing the order, the learned Collector dismissed him from service. Since the effects of the two orders art different, the petitioner has certainly been prejudiced by the order of the Collector which his been upheld by the Commissioner in appeal and by the learned Financial Commissioner in revision. Those orders are, therefore, ??? to be quashed.”

21. For similar reasons, the order of punishment passed in the present case is also liable to be set aside.

22. The next point requiring determination is whether under rule 51(c) of the Bank of Patiala (Staff) Rules, 1951, the penalty of demotion to the clerical grade from the officer's grade could be imposed on the respondent. It may be noted that at the time, the impugned order was passed the respondent was an officer of the IInd grade and prior to his promotion to that rank he was an officer of III Grade form which rank he had been promoted. The clerical grade was below all the grades of officers the question arises whether the respondent could be demoted only to the next lower post that is, III grade officer from II grade officer or he could be demoted to a still lower post. The words of clause (c) of rule 51 are “degradation to the lower post or grade or to a lower stage in his incremental scale.” In my opinion, article ‘the’ before the word ‘lower’ means the grade or post from which the respondent was promoted. In the instant case, thus, he could be denoted to the post of III grade officer and not to that of a clerk. If the words of clause (c) had been ‘degradation to a lower post or grade’, the matter might have been different. The use of article the signifies that the penalty of degradation refers to demotion to the immediate lower rank from which the delinquent was earlier promoted. The punishment imposed on the respondent was thus outside the punishments provided in the said rules.

23. Another point that has been debated before me is whether the order of the Board of Directors is a speaking order. It is not disputed by the learned counsel for the appellant that the order imposing punishment on a delinquent officer is a quasi judicial order and must state reasons. The only question for consideration is the extent of the reasons to be stated. The learned counsel for the appellant has referred to State of Madras v. A.R Srinivasan . A.I.R 1966 S.C 1827., wherein the following observations appear in para 15 on page 1831:—

“We are not prepared to accept this argument. In dealing with the question as to whether it is obligatory on the State Government to give reasons in support of the order imposing a penalty on the delinquent officer, we cannot overlook the fact that the disciplinary proceeding against such a delinquent officer began with an enquiry conducted by an officer appointed in that behalf. That enquiry is followed by a report and the Public Service Commission is consulted where necessary. Having regard to the material which is thus made available to the State Government and which is made available to the delinquent officer also, it seems to us somewhat unreasonable to suggest that the State Government must record its reasons why it accepts the findings of the Tribunal. It is conceivable that if the State Government does not accept the findings of the Tribunal which may be in favour of the delinquent officer and purposes to impose a penalty on the delinquent officer it should give reasons why it differs from the conclusions of the Tribunal, though even in such a case, it is not necessary that the reasons should be detailed or elaborate. But where the State Government agrees with the findings of the Tribunal which are against the delinquent officer, we do not think as a matter of law, it could be said that the State Government cannot impose the penalty against the delinquent officer in accordance with the findings of the Tribunal unless it gives reasons to show why the said findings were accepted by it. The proceedings are no doubt, quasi-judicial but having regard to the manner in which these enquiries are conducted, we do not think an obligation can be imposed on the State Government to record reasons in every case.”

24. These observations help the respondent in the present case because the Board of Directors did not accept the findings of the Inquiry Officer on some of the charges and therefore, it was incumbent on the Board of Directors to give reasons why it differed from the conclusions of the Inquriy Officer particularly when a copy of the report of the General Manager, on the basis of which the Board of Directors and its special committee differed from the findings of the Inquiry Officer, was not supplied to the respondent.

25. The second judgment of their Lordships of the Supreme Court id Som Datt Datta v. Union of India . A.I.R 1969 S.C 414., was also a case in which the finding of the Court Martial under section 164 of the Army Act was confirmed by the Chief of the Army Staff. It was not a case in which the Chief of the Army Staff differed with the finding of the Court Martial. Their Lordships of the Supreme Court, in The State of Assam v. Bimal Kumar Pandit . A.I.R 1963 S.C 1612., held that—

“If the dismissing authority differs from the findings either wholly or partially, recorded in the enquiry report, it is essential that the provisional conclusions reached by the dismissing authority mist be stated in the notice in order to give the delinquent officer a reasonable opportunity to show cause under Article 311.”

26. These observation squarely apply to the fists of the present case. In the show cause notice issued to the respondent on January 29, 1963, not a word has been mentioned that the Board of Directors or its special committee differed with any of the findings of the Inquiry Officer. This notice gave the impression as if the Inquiry Officer's report had been accepted, which was not the case. The order imposing the punishment also did not give the reasons as to why the Board of Directors; differed with the findings of Inquiry Officer. The order is, therefore, bad in law.

27. For the reasons given above, I am of the opinion that the suit of the plaintiff-respondent has been rightly decreed. There is thus no merit in this appeal which is dismissed with costs.

28. Appeal dismissed.