Holding

The appellate authority's enhancement of the penalty to removal from service was valid, the delay in filing the appeal was deemed condoned, and no violation of natural‑justice principles required a personal hearing.

Summary

The appellant, a former bank manager, was found guilty of sanctioning a loan to his wife in violation of SBI supervisory staff rules and was initially punished with a one‑stage salary reduction. He appealed the order, but the appeal was filed after the statutory period; the appellate authority nonetheless considered it, invoking the condonation provision in Rule 69(5) and enhanced the penalty to removal from service, later reducing it from dismissal. The appellant challenged the time‑bar, the consideration of an unproved charge, and the lack of a personal hearing. The Supreme Court held that the delay was presumed condoned, the appellate authority could rely on the proved serious charge despite a passing reference to an unproved one, and that a full personal hearing was not mandated by the service rules. Consequently, the enhancement to removal was upheld as proportionate and justified.

Issues considered

The appeal filed after the period prescribed by Rule 51(2) can be entertained if the appellate authority condones the delay under Rule 69(5).
Whether an appellate authority may enhance a penalty based on an unproved charge when a more serious charge is proved.
Whether the appellant was entitled to a personal hearing before the appellate authority enhanced the punishment.
Whether the punishment of removal from service is proportionate to the misconduct under Rule 34(3)(1).

Subjects

service lawdisciplinary proceedingsnatural justicecondonation of delaypenalty enhancementremoval from servicebanking regulationsRule 34(3)(1)Rule 51Rule 69appellate authority

Judgment

)

GANESH SANTA RAM SIRUR A
v.
STATE BANK OF INDIA AND ANR.

-; NOVEMBER 17, 2004
B
[K.G. BALAKRISHNAN AND DR. AR. LAKSHMANAN, JJ.]

Service Law :

State Bank of India (Supervisory Stafj) Rules, 1972 :
c
Rule 51 (2)-Departmental enquiry-Appeal-Delinquent employee
filed appeal against punishment of reduction of salary by one stage-The
appeal was time-bared-Rule 51 (2) expressly provided for condonation of
delay-Appellate authority considered the appeal on merits and enhanced
the punishment to removal from service-Correctness of-Held: It has to D
be presumed that delay, if any, was condoned by the appellate authority-
Hence, the delinquent employee thereafter could not contend that the appeal
should not have been considered on merits but should have been dismissed
on the ground of limitation-State Bank of India Officers Service Rules,
1992, R. 69(5).
E
Rule 34(3)(1)-Departmental enquiry-Penalty-Enhancement of-By
appellate authority-Bank manager sanctioned loan to his spouse in
contravention of R. 34(3)(1)-Punishment of reduction of salary by one
stage imposed on him-However, appellate authority enhanced the punishment
to removal from service-While so enhancing, the appellate authority
F
considered one of the unproved charges-Correctness of-Held: The charge
against the bank m<;mager was more serious and grave than the unproved
charge-However, the observation made by the appellate authority on the
unproved charge was only a passing observation-Hence, no interference
with the decision of the appellate authority is called for.
G
Rule 34(3)(1)-Departmental enquiry-Penalty-Bank manager
sanctioned loan to his spouse in her maiden name in contravention of R.
34(3)(1)-But the cheque/or the loan was not encashed-Penalty ofremoval
from service imposed-Validity of-Held: The decision to sanction loan was
not an honest decision-R. 34(3)(1) prohibiting the bank manager from . H
101
102 SUPREME COURT REPORTS [2004] SUPP. 6 S.C.R.
/

A sanctioning loan to his wife or his relative or to any partner is a rule
of integrity-Hence, punishment of removal from service awarded to the
bank manager was just and proper-State Bank of India Officers Service
Rules, 1992, R. 67(9).

B State Bank of India Officers Service Rules, 1992:

Rules 69(2) & (5)-Departmental enquiry-Penalty-Enhancement
of-Natural justice-Principles-Applicability of-Held: Cannot be put in ~ ·
a straitjacket-Their applicability depends upon the context and the facts
and circumstances of each case-The objective is to ensure a fair hearing-
C Show cause notice issued to the delinquent employee clearly showed that
the appellate authority had thoroughly comidered his detailed submissions
and thereafter enhanced the penalty-There was total application of mind
on the part of the appellate authority-Hence, enhancement of penalty not
interfered with.
D
The appellant while working as a bank manager of the respondent-
bank sanctioned a loan to his spouse in her maiden name in contravention
of Rule 34(3)(1) of the State Bank of India (Supervisory Staff) Rules.
1972. But the cheque for the loan, which was sanctioned, had not been
encashed. Seven charges were framed against the appellant. Only one
E pertaining to grant of loan was proved against the appellant. The
punishing/appointing authority imposed the punishment of reduction in
salary by one stage, on the appellant.

The appellant filed an appeal against the said punishment before
F the appellate authority who proposed to enhance the penalty imposed
upon the appellant to an order of dismissal and accordingly· a show
cause notice under Rule 69(2) of the State Bank of India (Supervisory
Staff) Rules, 1972 was issued to the appellant. The appellant submitted
his detailed reply to the proposed order of dismissal. However, the
appellate authority imposed the punishment of removal from service on
G the appellant instead of dismissal as proposed earlier. The High Court
dismissed the appellant's writ petition. Hence the appeal.

On behalf of the appellant, it was contended that the appellate . ..-
authority should not have considered the appeal on merits as it was
H time-barred: that the appellate authority had considered the charge
GANESH SANTA RAM SIRUR v. S.B.I. 103

which had not been proved while coming to the conclusion that the A
punishment was required to be enhanced to one of removal from service.

Dismissing the appeal, the Court

HELD: 1. The appellant was well aware while filing the appeal that B
his appeal was not filed within the period of limitation as provided under
Rule 51(2) of the State Bank of India (Supervisory Staff) Rules, 1972.
The 2ppellant having filed the appeal cannot now go around and say
that the appeal should have been dismissed on the ground of limitation.
It has to be presumed, that delay, if any, was condoned by the appellate
authority while entertaining the appeal and deciding the same on merits. C
Rule 69(5) of State Bank oflndia Officers Service Rules, 1992 expressly
provides for condonation of delay. This Rule corresponds to Rule 51(5)
of the 1972 Rules. (110-E, F, G)

2.1. Even though accepting the appellant's contention that the D
appellate authority had considered one of the unproved charges while
enhancing the punishment, the appellant cannot come out of the charge
pertaining to grant of loan, which is more serious and grave in nature.
However, the observations made by the appellate authority on the
unproved charge while considering the charge pertaining to grant of
loan, should be treated only as a passing observation and at the same E
time one cannot ignore the finding of the appellate authority on the
charge pertaining to grant of loan which is more serious and grave in
nature. The appellate authority had enhanced the punishment imposed
by following the procedure laid down in the service Rules and there is
no reason to interfere with the same. [111-B, C, D) F

2.2. However, the appellate authority was convinced with regard
to the explanation submitted by the appellant and reduced the penalty
further considering the adverse family circumstances. (112-E)

R.P. Bhatt v. Union of India, [1986) 2 SCC 651, referred to. G

3. The appellate authority has thoroughly considered the detailed
submissions made by the appellant and has reached its conclusion on
the facts and circumstances of the case and has modified the proposed
penalty of dismissal to that of removal from service. There is a total H
104 SUPREME COURT REPORTS [2004) SUPP. 6 S.C.R.

A application of mind on the part of the appellate authority in arriving
at the conclusion in regard to the punishment. [120-F, GJ

4. The principles of natural justice cannot be reduced to any hard
and fast formulae and cannot be put in a straitjacket. Their applicability
B depends upon the context and the facts and circumstances of each case.
The objective is to ensure a fair hearing, a fair deal to a person whose
rights are going to be affected. The approach and test adopted in
Karunakar's case should govern all cases where the complaint is not that
th.ere was no hearing, no notice, no opportunity and no hearing but one
of not affording a proper hearing that is adequate or a full hearing or
C violation of a procedural rule or requirement governing the enquiry.
1121-H; 122-A, BJ

Managing Director, ECJL v. B. Karunakar, (1993] 4 SCC 727, relied
on.

D Ram Chander v. Union of India, AIR (1986) SC 1173; Ram,Niwas
Bansal v. State Bank of Patiala, (1998) 4 SLR 711; Makeshwar Naih
Srivastava v. State of Bihar, 11971) 1 SCC 662; Bhagat Ram v. State of
H.P., (1983] 2 SCC 442; Ranjit Thakur v. Union of India, (1987) 4 SCC
611; Dev Singh v. Punjab Tourism Development Corporation Ltd., (l0~3)
E 8 SCC 9; State of Madras v. Gopala Iyer, AIR (1963) Mad. 14; Kai/ash
Nath Gupta v. Enquiry Officer, [2003) 9 SCC 480; Union of India v. MA.
Jaleel Khan, ( 1999] SCC (L&S) Cases 637; Disciplinary Authority-cum-
Regional Manager v. Nikunja Bihar Patnaik, [ 1996) 9 SCC 69; Union of
India v. Jesus Sales Corporation, [1996] 4 SCC 69; State Bank of Patiala
v. S.K. Sharma, (1996) 3 SCC 364; Regional Manager, UPSRTC v. Hoti
F Lal, [2003) SCC 605; Yoginath D. Bagle v. State of Maharashtra, (19991
7 SCC 739 and S.L. Kapoor v. Jagmohan, (1980) 4 SCC 379, referred to.

Russell v. Duke of Norfolk, (1949) I All ER 109, referred to.

5. The Bank Manager/Officer and employees of any Bank
G nationalised/or non-nationalised are expected to act and discharge their
functions in accordance with the rules and regulations of the Bank. Acting
beyond one's authority is by itself a breach of discipline and trust and a
misconduct. In the instant case the charge pertaining to grant of loan
framed against the appellant is very serious and grave in natur~. Rule
H 34(3)(1) of the 1972 Rules prohibits the Bank Manager to sanction a loan
GANESH SANTA RAM SIRUR v. S.B.I. [AR. LAKSHMANAN, J.] 105

to his wife or his relative or to any partner. While sanctioning the loan the A
appellant did no appear to have kept this aspect in mind and acted illegally
and sanctioned the loan. He realized the mistake later and tried to salvage
the same by not encashing the draft issued in the maiden name of his wife.
The decision to sandion a loan is not an honest decision. Rule 34(3)(1) is
a Rule of integrity and, therefore, the respondent-Bankcannot afford to B
have the appellant as a Bank Manager. The punishment of removal from
service awarded by the appellate authority is just and proper in the facts
and circumsbmces of the case. (123-C, D, E]

Chairman and Managing Director, United Commercial Bank v. P.C.
Kakkar, (2003] 4 SCC 364 and Regional Manager, U.P. SRTC v. Hoti Lal, C
(2003] 3 sec 605, relied on.

B.C. Chaturvedi v. Union of India, (1995] 6 SCC 749, cited.

CIVIL APPELLATE JURISDICTION : Civil Appeal No. 7058 of D
2002.

From the Judgment and Order dated 7.11.2001 of the Bombay High
Court in W.P. No. 540 of 1996.

M.K. Ramamoorty, S.M. Tripathi, Sri Ram, G.D. Gupta and Rameshwar E
P. Goyal for the Appellant.

Harish N. Salve, Sanjay Kapur, Raj iv Kapur, Sanjeev Kumar and Ms.
Shubhra Kapur for the Respondents.
F
The Judgment of the Court was delivered by

DR. AR. LAKSHMANAN, J. : This appeal is directed against the
final judgment and order dated 7th November, 2001 passed by the High
Court of Judicature at Bombay in Writ Petition No. 540 of 1996 filed by
the appellant herein to quash and set aside the order dated 10.5.1995 and G
for a writ of Mandamus directing the Respondent-Bank to reinstate the
respondent with back wages and with arrears of service and all other service
benefits which are consequential to reinstatement in service and for oth_er
incidental and ancillary relief. The Division Bench of the High Court
dismissed the writ petition filed by the appellant herein for the reasons H
106 SUPREME COURT REPORTS (2004] SUPP. 6 S.C.R.

A recorded therein. The appellant in this appeal questioned the orderofremo_val
from service by t~e Appellate Authority.

The appellant joined the services of the Bank as a clerk in 1963. He
was chargesheeted for such irregularities committed by him while working
B as Branch Manger ofKonkan Bhavan Branch of the Bank from 1982-1984.
There were total seven charges imputed against him. The Enquiry Officer
appointed by the Disciplinary Authority conducted an enquiry and submitted
his report to the Disciplinary Authority. In his report, the Enquiry Officer
dropped one charge out of seven charges and out of remaining six charges
C five charges had not been proved. The Enquiry Officer held that only charge
No. 5 pertaining to grant of advance by the appellant to his wife was proved.
This Enquiry Report did not contain any recommendation regarding
punishment. According to the appellant, this report was not communicated
to him for more than two years. On 24.4.1991, the Disciplinary Authority
sent the report of the Enquiry Officer to the appellant and he was asked to
D make his representation on the report. The Disciplinary Authority
recommended to the Punishing/Appointing Authority of the appellant the
punishment of reduction in substantive salary at one stage from Rs. 4020
to Rs. 3900 in the terms of Rule 49(e) of the Rules. The Punishing Authority
who was the appointing Authority of the appellant relit:d on the
E recommendations of the disciplinary authority and imposed the punishment
accordingly.

The appellant preferred an appeal against the order of punishment
dated 21.10._1991 before the Appellate Authority and pleaded that the
punishment imposed upon him was too severe and in fact of the case that
F only one charge out of seven was proved. The aopellate Authority, however,
proposed to enhance the penalty imposed upon the appellant to an order of
dismissal. He ordered the punishing authority/appointing authority to issue
a notice to the appellant under Rule 69(2) of the State Bank of India
Officer's Services Rules 1992 (hereinafter called the "Rules") to show cause
G why the penalty should not be enhanced as proposed. By this time new Rules
of 1992 had come into force to regulate the service conditions of the Bank
Officers. The appointing authority communicated the above order to the
appellant asking him to submit his contentions. The appellant submitted his
detailed reply against the proposed order of dismissal. On 10.5.1995 the
H appellate Authority decided to enhance the penalty inflicted from reduction
GANESH SANTA RAM SIRUR v. S.B.I. [AR. LAKSHMANAN, J.] 107

in basic pay by one stage to removal from service instead of dismissal as A
earlier proposed on 24.5.1995. The disciplinary authority communicated the
above order to the appellant. The appellant through his advocate made an
attempt for justice to the Chairman requesting for review in his case. It was
replied that Rule 69(3) of the Rules does not provide it mandatory for the
Reviewing Authority to make review of each and every order passed by the B
competent authority. Being aggrieved by the imposition of penalty the
appellant filed a writ petition before the High Court and the High Court vide
its order dated 7 .11.200 I dismissed the writ petition filed by the appellant
accepting that the appellate Authority had rightly exercised its power in
enhancing the punishment. Thus the Special leave petition. Leave was
granted by this Court on 28.10.2002. C

We heard Mr. K. Ramamurthy, learned senior counsel for the appellant
and Mr. Harish Salve, learned senior counsel for the respondent-bank.

Mr. K. Ramamurthy, learned senior counsel appearing for the appellant D
submitted before us three contentions:-

I .That the appeal was considered by the Appellate Authority
although it was time barred.

2. That the Appellate Authority considered the charge which E
had not been proved while coming to the conclusion that the
punishment was required to be enhanced to one of removal from
service and

3. That the order of removal from service could not be sustained
F
as no personal hearing was given to the appellant before the
enhancement of punishment even though personal interview was
specifically asked for. According to the appellant he had faced the
enquiry in unfortunate circumstances as his wife, who was also a
bank officer had committed suicide on 26. 7 .1988, during the
pendency of the enquiry against the appellant. G

Mr. K. Ramamurthy in support ofhis contention relied on the following
judgments:

1. Ram Chander v. Union of India & Ors., AIR (1986) SC l l 73 H
108 SUPREME COURT REPORTS [2004] SUPP. 6 S.C.R.
.__
A 2. Ram Niwas Bansal v. State Bank ofPatiala & Anr., (l 998) 4 SLR
711

3. Makeshwar Nath Srivastava v. The State of Bihar and Ors.,
[197ll l sec 662
B
4. Bhagat Ram v. State of Himachal Pradesh & Ors., [1983] 2 SCC
442

5. Ranjit Thakur v. Union of India & Ors., [1987] 4 SCC 611

c 6. Dev Singh v. Punjab Tourism Development Corporation Ltd. &
Anr., [2003] 8 SCC 9

7. State of Madras v. Gopala Iyer, AIR (1963) Madras 14

D 8. Kai/ash Nath Gupta v. Enquiry Officer (R.K. Rai) Allahabad
Bank and Ors., [2003] 9 SCC 480

9. Union of India and Ors. v. MA. Jaleel Khan, [1999] SCC L&S
Cases 637.

E Mr. Harish Salve, learned senior counsel for the respondent-bank
submitted that the order passed by the Appellate Authority was just and
proper and it was passed in accordance with the service Rules. He submitted
that although the cheque granting loan to appellant's wife in her maiden
name had not been encashed by her, the intention of the appellant was clear
F that there was no extenuating factor to reduce the punishment imposed on
the- appellant. Mr. Salve further contended that Rule 69(2) of the Service
Rules provided that no employee should grant on behalf of the Bank any
Joan or advance to himself or to his spouse and that the appellant had
deceitfully granted such a loan to his wife in her maiden name in order to
prevent the offence come into light. He also submitted that the lo:in was
G sanctioned by the appellant to his wife in her maiden name under a Scheme
called SEEUY, (Scheme for Educated Unemployed Youth), which clearly
reveal the evil intention of the appellant to grant the loan which is meant
only for Educated Unemployed Youth. Mr. Salve contended that dishonest
intention of the appellant is clear and therefore will not oe continued in
H service of the Bank as he was holding a responsible position of Bank
GANESH SANTA RAM SIRUR v. S.B.I. [AR. LAKSHMANAN, J.] 109

Manger. Adverting to Rule 34(3)(1) Mr. Salve submitted that this is a rule A
of integrity and when it is breached the Bank cannot have an officer like
the appellant in their bank as Manager.

Mr. Salve in support of his submission relied on the following
judgments:- B
I. Disciplinary Authority-cum-Regional Manager and Others v.
Nikunja Bihari Patnaik, [ 1996] 9 SCC 69

2. Union of India & Anr. v. Jesus Sales Corporation, (1996] 4 SCC
69 c
3. State Bank of Patia/a & Ors. v. S.K. Sharma, (1996] 3 SCC 364

4. Regional Manager, U.P. SRTC. Etawah & Ors. v. Hoti Lal &
Anr., (2003] 3 sec 605 D
As already noticed, the Enquiry Officer found the appellant guilty of
Charge No. 5 alone. However, appellat~ Authority while proposing to
enhance the punishment has also relied on charge No. I. Therefore, we shall
consider the arguments advanced by the learned senior counsel for the
appellant on Charge No. 1 and Charge No. 5 with reference to the pleadings E
and records and the judgments cited above at the Bar.

The findings of the disciplinary authority show that the bank had found
guilty of only one charge, which had been established against him that
namely he had granted loan under the scheme meant for Educated F
Unemployed Youth to his wife. Although the cheque for the loan which was
sanctioned, had not been en cashed, the intention of the appellant to disburse
the same in a dishonest way to his wife was amply proved. Rule 34(3)(1)
reads as follows:

"34(3)(1)- No employee shall grant on behalf of the State G
Bank any loan or advance to himself or his spouse, a joint Hindu
Family of which he or his spouse is a member or a partnership with
which he or his spouse is connected in any manner or a trust in
which he or his spouse is trustee, or a private or public limited
Company, in which he or his spouse hold substantial interest." H
110 SUPREME COURT REPORTS (2004] SUPP. 6 S.C.R.

A Charge No. 5 relate to the sanction of loan by the appellant to his wife
which reads as follows:-

"You granted loan under SEE UY scheme to your spouse
thereby violating Rule No. 34(3) of the State Bank of India
(Supervising Staff) Services Rules."
B
Since the Appellate Authority had considered charge No. 1 also while
proposing to enhance punishment, we extract herein below charge No. l : -

"You while working as Branch Manager, Konkan Bhavan
C Branch, fraudently received excess amounts on account of double
payments of T.E. Bills. You acted dishonestly and in a manner
unbecoming of the Bank's Official. You have violated Rule No.
32(4) of the State Bank oflndia (Supervising Staff) Service Rules."

D It is also pertinent to notice that the appellant in his appeal before the
Appellate Authority admitted that he had committed misconduct of disbursing
the loan to his wife in a Scheme, which is meant for Educated Unemployed
Youth. Mr. Ramamurthy submitted that the appeal filed by the appellant
should not have been considered as the same was time barred and cannot
in our opinion be accepted. The appeal was required to be filed within ~5
E days of the date of receipt of the order appealed against. The order of the
Disciplinary Authority is dated 23.10.1991 and the appeal was filed by the
appellant on l O. l. l 992. The appellant was well aware while filing the appeal
that his appeal was not filed within the period oflimitation as provided under
Rule 51(2) of the Service Rules. The appellant having filed the appeal cannot
F now go around and say that the appeal should have been dismissed on the
ground of limitation. The reason is obvious. We, therefore, do not find any
merit or substance in the submission in regard to the consideration of the
appeal on merits even though it is time barred. It has to be presumed, that
delay, if any, was condoned by the Appellate Authority while entertaining
the appeal and decide the same on merits. Rule 69(5) expressly provides that
G the authority competent thereunder may, for good and sufficient reasons or
if sufficient cause is shown, extend the time specified thereunder for anything
required to be done thereunder or condone any delay. This rule is
corresponding to Rule 51(2) of the old Rule.

·H In regard to the second contention that the consideration of the charge
GANESH SANTA RAM SIRUR v. S.B.I. [AR. LAKSHMANAN, J.] 111

which had not been proved by the appellate authority, Mr. Ramamurty A
submitted that the appellate authority had considered the charges which
were not proved while enhancing the punishment. According to Mr.
Ramamurthy, the appellate authority was mere concerned with charge No.
5 regarding disbursement of loan to the wife of the appellant in violation
of Rule 33(1) of the Service Rules and that the Order of the Appellate
B
Authority does not in any manner disclose that the same was passed by
considering the circumstances germane to the charge against the appellant
which had been proved. Even accepting the contention of Mr. Ramamurthy
on Charge No. I, the appellant cannot come out of the charge No. 5, which
is more serious and grave in nature. However, we observe that the observations
made by the Appellate Authority on Charge No. l while considering charge c
No. 5, should be treated only as a passing observation and at the same time
we cannot ignore or close our eyes in regard to the finding of the appellate
authority on Charge No. 5 which is more serious and grave in nature. The
appellate authority had enhanced the punishment imposed by following the
, procedure laid down in the service Rules and we see no reason to interfere D
with the same. As already noticed, the appellant had himself admitted his
misconduct and therefore, there is no reason why the appellate authority's
finding on charge No. 5 should not be accepted.

The third contention relate to non-grant of personal hearing to the
appellant before the enhancement of the punishment. Mr. Ramamurthy E
submi!ted that personal interview was not given to the appellant though it
has been expressly asked for in his reply to the proposal for the enhancement
of penalty. According to him, ifa personal interview/hearing was given, the
appellant would perhaps be able to express more and convince the appellate
authority on the proposal for enhancement of penalty. He further submitted F
that the penalty imposed on the appellant is not justified without affording
an opportunity of personal hearing to the appellant at the enquiry and at the
time of recommending for punishment granted to him. The imposition of
penalty of removal from service is not just considering the nature of facts
and that an order of enhancement of punishment by the appellate authority
is not just when it is not recommended by the disciplinary authority/appointing G
authority and that too in the appeal filed by the delinquent employee. It is
the contention of Mr. Ramamurthy that the High Court failed to appreciate
that the enquiry and imposition of penalty cannot stand in the eyes of law
as there is no opportunity given to the appellant to explain his stand during
the enquiry or before the penalty was imposed on the appellant by the H
112 SUPREME COURT REPORTS [2004] SUPP. 6 S.C.R.

A appointing authority. It is his further submission that the High Court has
failed to appreciate that penalty as enhanced by the appellate authority for
reduction in scale to removal from service is not just according to the nature
of offence. It is submitted that though there were seven charges framed
against the appellant, out of which, only one was proved ty the enquiry
B officer that is an offence committed under Rule 34(3)(1) of the Service Rule,
1972. The imposition of penalty of removal was unwarranted, therefore, he
submitted that the bank cheque issued by the appellant was not encashed,
it was only an attempt, whieh has been found to be proved by the Enquiry
Officer against the appellant and there has been no loss caused to the Bank.
C This apart, the appellate authority for imposing the enhanced punishment
relied on the reasons, which were not part of the charge of the enquiry.
Winding up his arguments Mr. Ramamurthy contended that the impugned
actions of the Bank are arbitrary, unreasonable, unfair and violative of the
statutory rights as also the principles of natural justice and moreover, no loss
whatsoever accrued to the Respondent Bank as no disbursal of the relevant
D loan took place. He pleaded that the punishment of removal be set aside and
the punishment imposed by the disciplinary authority be restored and justice
rendered to the appellant.

It is true that the appellate authority has proposed to enhance the
E punishment a.nd imposed the penalty of dismissal on the appellant. However,
the appellate authority was convinced with regard to the explanation submitted
by the appellant and reduced the penalty further cons~dering the adverse
family circumstances, which could be seen from the following observation
in the appellate order:-

F "I, therefore, direct that the earlier penalty of reduction in basic pay
by one stage imposed on him by the Appointing Authority be
enhanced to removal from service in terms of Rule 67(g) of the
State Bank of India Officers Service Rules. The tentative decision
taken while serving the show cause notice was to dismiss Shri Sirur
G from service. Although, considering the acts of misdemeanour of
the appellant, this was the appropriate penalty, I have taken a
lenient view of the matter because of his adverse family
circumstances. Removal from service would enable him to draw
higher terminal benefits as compared to dismissal. The removal will
H take effect from the date of communication of this order and the
GANESH SANTA RAM SIRUR v. S.B.I. [AR. LAKSHMANAN, J.] 113

intervening period will be treated as under suspension. I order A ,,
accordingly."

We shall now advert to the decision cited by the learned senior counsel
for the appellant. R.P. Bhatt v. Union of India & Ors., [1986] 2 SCC 651.
This decision was cited by the learned senior counsel to the effect the rules B
casting the duty on the appellate authority to consider the relevant factors
set-forth in Rule 27(2) of the Rules which are relevant in the above case:-

(a) whether the procedure laid down in these rules has b~en
complied with and ifnot, whether such non-compliance has resulted
in the violation of any provisions of the Constitution of India or C
I
'
in the failure of justice;

(b) whether the findings of the disciplinary authority are warranted
by the evidence on the record; and
D
(c) whether the penalty or the enhanced penalty imposed is
adequate, inadequate or severe;"

Ram Chander v. Union of India and Ors., AIR ( 1986) SC l 173. This
case was cited for the proposition that an opportlmity should be given to
the delinquent officer to exonerate himself from the charge by showing that E
the evidence adduced at the enquiry is not worthy of cred_ence or consideration
or that the charges proved against him are not of such a character as to merit
the extreme penalty of dismissal or removal or reduction in rank and that
any of the lesser punishments ought to have been sufficient in his case. This
Court observed as follows: F

" ........ such being the legal position, it is of utmost importance
after the Forty-Second Amendment as interpreted by the majority
in Tulsiram Patel's case that the Appellate Authority must not only
give a hearing to the Government servant concerned but also pass
a reasoned order dealing with the contentions raised by him in the G
appeal. We wish to emphasize that reasoned decisions by tribunals
such as the Railway Board in the present case, will promote public
confidence in the administrative process. An objective consideration
is possible only if the delinquent servant is heard and given a
chance to satisfy the Authority regarding the final orders that may H
114 SUPREME COURT REPORTS [2004] SUPP. 6 S.C.R.

A be passed on his appeal. Considerations of fair-play and justice also
require that such a personal hearing should be given."

In Ram Niwas Bansal v. State Bank ofPatiala and Anr., [1998] 4 SLR
711, this Court held:-
B
"14. Under Regulation 70 of the Regulations wide power and discretion
has been vested in the appellate authority. The appellate authority is under
obligation to consider -

(a) whether the findings are justified or not;
c
(b) whether the penalty is excessive or inadequate; and

(c) it may pass any order confirming, enhancing, reducing or
setting aside the penalty or remitting the case to the authority,
which imposed the punishment, or any other authority, as it may
D
deem fit in the circumstances of the case.

20. Although there are no positive words in the statute requiring
that the party shall be heard, yet the justice of the common law will
supply the omission of the legislature. The principle of audi alterm
E partem, which mandates that no one shall be condemned unheard
is part of the rules of natural justice.

Natural justice is a great humanising principle intended to
invest Jaw with fairness and to secure justice and over the years it
F has grown into a widely pervasive rule affecting large areas of
administrative action. The inquiry must always be does fairness in
action demand that an opportunity to be heard should be given to
the person affected?

The law must now be taken to be well settled that even in an
G administrative proceeding, which involves civil consequences, the
doctrine of justice must be held to be applicable."

In this case the Court has further observed the personal hearing would
be a necessary facet of the principle of natural justice before the appellate
H authority. (Emphasis provided).
GANESH SANTA RAM SIRUR v. S.B.I. [AR. LAKSHMANAN, J.] 115

Makeshwar Nath Srivastava v. The State of Bihar and Ors., [1971] 1 A
SCC 662. This judgment was cited that the appellate authority in an appeal
by the aggrieved party may either dismiss his appeal or allow it either wholly
or partly and uphold or set aside or modify the order challenged in such
appeal. It cannot surely impose on such an appellant a higher penalty or
condemn him to a position worse than the one he would be in if he had not B
hazarded to file an appeal.

Yoginath D. Bagde v. State of Maharashtra and Anr., [1999] 7 SCC
739. Referring to Para 29 and 30 of the above judgment it was argued that
the Service Rules enables the disciplinary authority to disagree with the
findings of the enquiring officer or any article of charge. The only requirement
c
is that it shall record its reasoning for such disagreement. It is again observed:

"It will be most unfair and iniquitous that where the charged
officers succeed before the enquiry officer, they are deprived of
representing to the disciplinary authority before that authority differs :b
with the enquiry officer's report and, while recording a finding of
guilt, imposes punishment on the officer. In our opinion, in any
such situation, the charged officer must have an opportunity to
represent before the disciplinary authority before final findings on
the charges are recorded and punishment imposed."
E
Bhagat Ram v. State ofHimachal Pradesh and Ors., [1983] 2 SCC 442.
This judgment was cited in regard to the contention that the punishment was
excessive:

"12. In the facts and circumstances of this case herein threadbare F
discussed, we are of the opinion that the appellant was not afforded
a reasonable opportunity to defend himself and accordingly the
enquiry and consequential order of removal from service are vitiated.

13. That conclusion poses another question as to what relief we G
should give in this appeal. Ordinarily where the disciplinary enquiry
is shown to have been held in violation of principle of natural
justice the enquiry would be vitiated and the order based on such
enquiry would be quashed by issuance of a writ of certiorari. It is
sell settled that in such a situation, it would be open to the Disciplinary H
116 SUPREME COURT REPORTS [2004] SUPP. 6 S.C.R.

A Authority to hold the enquiry afresh. That would be the normal
consequence.

15. We may adopt the same approach. Keeping in view the nature
of misconduct, gravity of charge and no consequential Joss, a
B penalty of withholding his increments with future effect will meet
the ends of justice. Accordingly, two increments with future effect
of the appellant be withheld and he must be paid 50 per cent of the
arrears from the date of termination till the date of reinstatement."

In Ranjit Thakur v. Union of India and Ors., [1987] 4 SCC 611, it
c is again observed as under :-
"In Bhagat Ram v. State of Himachal Pradesh, this Court held :

It is equally true that the penalty imposed must be commensurate
D with the gravity of the misconduct, and that any penalty
disproportionate to the gravity of the misconduct would be violative
of Article 14 of the Constitution. ·

The point to note, and emphasise is that all powers have legal
limits."
E
In Dev Singh v. Punjab Tourism Development Corporation Ltd. and
Anr., [2003] 8 SCC 9, this Court held:

"Applying the said principles laid down by this Court in the cases
F noted hereinabove, we see that in this case the appellant has been
serving the respondent Corporation for nearly 20 years with
unblemished service, before the present charge of misconduct was
levelled against him. The charge itself shows that what was alleged
against the appellant was misplacement of a file and there is no
allegation whatsoever that this file was either misplaced by the
G appellant deliberately or for any collateral consideration. A reading
of the charge-sheet shows that the misplacement alleged was not
motivated by any ulterior consideration and at the most could be
an act of negligence, consequent to which the appellant was unable
to trace the file again. The disciplinary authority while considering
H the quantum of punishment came to the ·conclusion that the
GANESH SANTA RAM SIRUR v. S.B.I. [AR. LAKSHMANAN, J.] 117
';..)
misconduct of the nature alleged against the appellant should be A
viewed very seriously to prevent such actions in future, whereby
important and sensitive records could be lost or removed or destroyed
by the employee under whose custody the records are kept. Therefore,
he was of the opinion that a deterrent punishment was called for,
forgetting for a moment that no such allegation of misplacing of B
important or sensitive record was made in the instant case against
the appellant and what he was charged of was misplacement of a
file, important or sensitiveness of which was not mentioned in the
charge-sheet. Therefore, in our opinion, the disciplinary authority
was guided by certain facts which were not on record, even otherwise,
we are of the opinion that when the Service Bye-Laws applicable c
to the Corporation under Service Bye-law 17 provide various minor
punishments, we fail to appreciate why only maximum punishment
available under the said Bye-laws should be awarded on the facts
of the present case. We think the punishment of dismissal for mere
misplacement of a file without any ulterior motive is too harsh a D
punishment which is totally· disproportionate to tht: misconduct
alleged and the same certainly shocks our judicial conscience.
Hence, having considered the basis on which the punishment of
dismissal was imposed on the appellant and the facts and
circumstances of this case, we think to avoid further prolonged
litigation it would be appropriate if we modify the punishment E.
ourselves. On the said basis, while upholding the finding of
misconduct against the appellant; we think it appropriate that the
appellant be imposed a punishment of withholding of one increment
including stoppage at the efficiency bar in substitution of the
punishment of dismissal awarded by the disciplinary authority. We F
further direct that the appellant will not be entitled to any back
wages for the period of suspension. However, he will be entitled
to the subsistence allowance payable up to the date of the dismissal
order."

In Kai/ash Nath Gupta v. Enquiry Officer (R.K. Rai), Allahabad Bank G
and Ors., (2003] 9 SCC 480, this Court held:

"In the ba.ckground of what has been stated above, one thing is clear
that the power of interference with the quantum of punishment is
extremely limited. But when relevant factors are not taken note of, H
118 SUPREME COURT REPORTS [2004] SUPP. 6 S.C.R.

A which have some bearing on the quantum of punishment, certainly
the Court can direct reconsideration or in an appropriate case to
shorten litigation, indicate the punishment to be awarded. It is
stated that there was no occasion in the long past service indicating
either irregularity or misconduct of the appellant except the charges
which were the subject-matter of his removal from service. The
B
stand of the appellant as indicated above is that though small
advances may have become irrecoverable, there is nothing to indicate
that the appellant had misappropriated any money or had committed
any act of fraud. If any loss has been caused to the Bank (which
he quantifies at about Rs. 46,000) that can be recovered from the
c appellant. As the reading of the various articles of charges go to
show, at the most there is some procedural irregularity which
cannot be termed to be negligence to w~rrant the extreme punishment
of dismissal from service."

D In Union of India and Ors. v. M.A. Jaleel Khan, [1999] SCC L&S
Cases 637, this Court held:

"5. The learned counsel appearing for the respondent submitted
that the act of the appellate authority in enhancing the punishment
without giving a reasonable opportunity to the respondent cannot
E be sustained He also submitted that for refusing to vacate the
accommodation allotted to the railway servant, the authorities cannot
invoke the Service Rules.

6. We have considered the submission of the counsel on both
F sides and also appreciated the facts of this case. We have seen
earlier that the respondent had given a solemn undertaking to
vacate the premises when the main allottee vacated the same.
Notwithstanding such solemn undertaking, the refu.sal to vacate the
premises when the main allottee vacated the accommodation cannot
be appreciated or encouraged. The authorities are, therefore, right
G in initiating disciplinary proceedings on the facts of this case.
However, the punishr.ient imposed by the appellate authority by
issuing notice to enhance the punishment given by the disciplinary
authority requires some consideration. The disciplinary authority,
after taking into consideration the facts and circumstances concerning
H the charge, has imposed the punishment as noticed above. The
GANESH SANTA RAM SIRUR v. S.B.I. [AR. LAKSHMANAN, J.] 119

appellate authorit~ in the appeal filed by the respondent has issued A
notice for enhancing the punishment. No doubt the appellate
authority has jurisdiction to issue such a notice but the question is
whether the facts and circumstances of the case warrant such
enhancement of the punishment. On the facts, we are of the view
that the enhanced punishment given by the appellate authority B
dismissing the respondent is too harsh and, therefore, we set aside
the order of the appellate authority to that extent and restore the
punishment imposed by the disciplinary authority."

Thus Mr. Ramamurthy, submitted in view of the plethora of decisions
cited as above, the punishment ought not to have been enhanced without C
offering an opportunity of personal hearing/interview and that such an
enhancement of punishment imposed without considering the adequacy or
inadequacy is wholly illegal and is therefore be set aside. He further submitted
that the appellant joined Bank as a clerk in the year 1963 and had to his
credit 26 years of meritorious service and therefore, the bank should consider D
the above service and ~he family background and must take a lenient view
in the peculiar facts and circumstances of the case and order reinstatement
and also by restoring the penalty imposed by the disciplinary authority.
Concluding his submissions he said that the appellate authority has gravely
erred in enhancing the punishment, when it is not warranted in the facts of
this case. ~

Mr. Salve invite our attention to the pleadings and also the statement
made by the appellant in Annexure P-4 at page 36 wherein he has stated
that the total amount which was to be reimbursed to the appellant aggregated
to 6,000 and there was no response to personal or official requests and that F
since he had no money to pay income-tax as per the instructions he debited
the suspense account of the Branch and took part amount while working in
Madras Circle. The above statement was stated in his own appeal. Inviting
our attention to the show cause notice by the appellate authority, he submitted
that the charge that had been held as established by the enquiry authority
is that the appellant granted loan to his wife in her Maiden name and also G
disbursed term loan of Rs. 25,000 to her and also obtained the subsidiary
for the said loan and therefore it was submitted that the gravity of the charge
is enormous and the intention to sanction the loan to his wife is clear and
proved. He had also further submitted that as regards Charge No. I that the
appellant had freely debited suspense account and credited his personal H
120 SUPREME COURT REPORTS (2004] SUPP. 6 S.C.R.

A account on the plea of non-payment of certain official claims. The claims
were admissible to him under the Service Rules and therefore it is evident
that the appellant exercised his official position and took excess amount on
account of payment ofT.A. Bills. According to Mr. Salve, the charge proved
against the appellant is that the appellant has a propensity to misuse the
B official position to the detriment of the bank. The appellant sanctioned the
Joan by using wife's maiden name, and such a tendency on the part of the
Manager of the Bank must be treated firmly. Therefore, he submitted that
the decision to enhance the punishment imposed on the appellant and
decided to dismiss the appellant from service in place of reduction in basic
pay by one stage as already decided is not improper. Mr. Salve also submitted
C that in terms of Rule 69(2) .second proviso, the appellate authority has
ordered that the show-cause notice be issued to the appellant as to why the
enhanced penalty should not be imposed upon him. Mr. Salve also invited
our attention to the detailed explanation submitted by the appellant to the
proposal of the appellate authority to enhance the penalty and also the order
D passed by the appellate authority imposing the punishment of removal from
service. Mr. Salve cited some decisions in order to show the current trend
of cases on natural justice in disciplinary proceedings. He said the appellate
authority has considered the detailed representation and for the reasons
recorded has reduced the penalty of dismissal to the removal. It is a1so his
contention that the appellant has not challenged the rule 69(2) and Rule
E 69(5). A reading of the above rule show that the appellate authority shall
give a show cause notice to the officer as to why the enhanced penalty
should not be imposed upon him and shall pass final order after taking into
account the representation, if any, submitted by the officer and that this rule
does not provide for a personal hearing or a personal interview. Mr. Salve
F is right in his above submissions. A reading of the show-cause notice and
the final order passed by the appellate authority clearly go to show that the
appellate authority has thoroughly considered the detailed submissions made
by the appellant and has reached its conclusion on the facts and circumstances
of the case and has modified the proposed penalty of dismissal to that of
G the penalty of removal. There is total application of mind on the part of the
appellate authority in arriving at the conclusion in regard to punishment.

Union of India and Anr. v. Jesus Sales Corporation, [1996] 4 SCC
69.

H The above judgment was cited for the proposition as to taking into
GANESH SANTA RAM SIRUR v. S.B.I. [AR. LAKSHMANAN, J.] 121

consideration the facts and circumstances of each case to exercise discretion. A
and that it does not flow from the rule that before exercising such discretion
the appellate authority should hear the appellant and that this discretion can
be exercised by the appellate authority as the said authority may deem think
proper. He further contended that whenever a statute vest discretion in an
authority to exercise the statutory power, such authority can exercise the B
same in an unfettered manner and that whenever an unfettered discretion
has been exercised, courts have refused to countenance the same. He also
invited our attention to para 5 of the above judgment which is to the
following effect:-

" ...... The courts cannot insist that under all circumstances and C
under different statutory provisions personal hearings have to be
afforded to the persons concerned. If this principle of affording
personal hearing is extended whenever statutory authorities are
... vested with the power to exercise discretion in connection with
statutory appeals, it shall lead to chaotic conditions. Many statutory D
appeals and applications are disposed of by the competent authorities
who have been vested with powers to dispose of the same. Such
authorities which shall be deemed to be quasi-judicial authorities..
are expected to apply their judicial mind over the grievances made
by the appellants or applicants concerned, but it cannot be held that
before dismissing such appeals or applications in all events the E
quasi-judicial authorities must hear the appellants or the applicants,
as the case may be. When principles of natural justice require an
opportunity to be heard before an adverse order is passed on any
appeal or application, it does not in all circumstances mean a
personal hearing. The requirement is complied with by affording F
an opportunity to the person concerned to present his case before
such quasi-judicial authority who is expected to apply his judicial
mind to the issues involved."

Mr. Salve invited our attention to Para 17 of the Judgment in State
Bank of Patiala & Ors. v. S.K. Sharma, [1996] 3 SCC 364, which deals with G
the opinion of the House of Lords in United Kingdom. He also drew our
attention to S.L. Kapoor v. Jagmohan, [1980] 4 SCC 379 and Managing
Director ECIL v B. Karunakar's, [1993] 4 SCC 727 in para 25, 26 and 28.
The decisions relied on and cited above make one thing clear namely
principles ofnaturaljustice cannot be reduced to any hard and fast formulae H
122 SUPREME COURT REPORTS [2004) SUPP. 6 S.C.R.

A and as said in Russel v. Duke of Nor/old, [1949) I All ER 109, these
principles cannot be put in a strait jacket. Their applicability depends upon
the context and the facts and circumstances of each case. The objective is
to ensure a fair hearing, a fair deal to a person whose rights are going to
be affected. In our opinion, the approach and test adopted ir;i Karunakar 's
B case (supra) should govern all cases where the complaint is not that there
was no hearing, no notice, no opportunity and no hearing but one of not
affording a proper hearing that is adequate or a full hearing or violation of
a procedural rule or requirement governing the enquiry. ·

On proportionately of punishment imposed, Mr. Salve .cited Chairman
c and Managing Director, United Commercial Bank & Ors. v. P.C. Kakkar,
[2003) 4 SCC 364. In the above case it was observed:-

"In B.C. Chaturvedi v. Union of India, [1995) 6 SCC 749, it
was observed :
D
18. A review of the above legal position would establish that
the disciplinary authority, and on appeal the Appellate Authority,
being fact-finding authorities have exclusive power to consider the
evidence with a view to maintain discipline. They are invested with
the discretion to impose appropriate punishment keeping in view
E the magnitude or gravity of the misconduct. The High Court/
Tribunal, while exercising the power of judicial review, cannot
normally substitute its own conclusion on penalty and impose some
other penalty. lfthe punishment imposed by the disciplinary authority
or the Appellate Authority shocks the conscience of the High Court/
F Tribunal, it would appropriately mould the relief, either directing
the disciplinary/appellate authority to reconsider the penalty
imposed, or to shorten the litigation, it may itself, in exceptional
and rare cases, impose appropriate punishment with cogent reasons
in support thereof."

G The learned senior counsel also relied on para 14 of the above judgment.
Replying on the above passage, Mr. Salve submitted that the appellant, the
Branch Manger of a Bank is required to exercise higher standards of honesty
and integrity when he deals with the money of the depositors and the
customers and, therefore, he is required to take all possible steps to protect
H the interest of the bank and to discharge his duties with utmost integrity,
GANESH SANTA RAM SIRUR v. S.B.I. [AR. LAKSHMANAN, J.] 123

honesty, devotion and diligence and to do nothing which is unbecoming of A
the bank Officer. According to Mr. Salve, good conduct and discipline are
inseparable for the functioning of every officer, Manager or employee of
the Bank, who deals with public money and there is no defence available
to say that there was no Joss or profit resulted in the case, when the manager
acted without authority and contrary to the rules and the scheme which is B
formulated to help the Educated Unemployed Youth. Mr. Salve's above
submissions is well merited acceptance and we see much force in the said
submission.

The Bank Manager/Officer and employees and any Bank nationalised/
or non-nationalised are expected to act and discharge their functions in c
accordance with the rules and regulations of the Bank. Acting beyond one's
authority is by itself a breach of discipline and Trust and a misconduct. In
the instant case Charge No. 5 framed against the appellant is very serious
and grave in nature. We have already extracted the relevant rule which
prohibits the Bank Manager to sanction a loan to his wife or his relative or D
to any partner. While sanctioning the loan the appellant do not appear to
have kept this aspect in mind and acted illegally and sanctioned the loan.
He realized the mistake later and tried to salvage the same by not encashing
the draft issued in the maiden name of his wife though the draft was issued
but not encashed. The decision to sanction a loan is not an honest decisions.
The Rule 34(3)(1) is a rule of integrity and therefore as rightly pointed out E
by Mr. Salve, the respondent Bank cannot afford to have the appellant as
Bank Manager. The punishment of removal awarded by the Appellate
Authority is just and proper in the facts and circumstances of the case.
Before concluding, we may usefully rely on the judgment Regional Manager,
UP. SRTC. Etawah & Ors. v. Hoti Lal & Anr. reported in [2003] 3 SCC F
605. Wherein this Court has held as under:-

"If the charged employee holds a position of trust where honesty
and integrity are inbuilt requirements of functioning, it would not
be proper to deal with the matter leniently. Misconduct in such
cases has to be dealt with iron hands. Where the person deals with G
public money or is engaged in financial transactions or acts in a
fiduciary capacity, the highest degree of integrity and trustworthiness
is a must and unexceptionable. Judged in that background,
conclusions of the Division Bench of the High Court do not appear
to be proper. We set aside the same and restore order of the learned H
124 SUPREME COURT REPORTS [2004] SUPP. 6 S.C.R.

A Single Judge upholding the order of dismissal."

We entirely agree with the above observations made in the above_
judgment.

We have, therefore, no hesitation in dismissing the appeal filed by
B the appellant and confirming the order passed by the Division Bench of the
High Court. However, we make it clear that in the· peculiar facts and
circumstances of the case the appellant will be entitled to full pension and
gratuity irrespective of his total period of service. No costs.
•
c v.s.s. Appeal dismissed.