Holding

The Finance Ministry’s directive was beyond its jurisdiction and the Central Vigilance Commission’s advice is not binding on the bank; therefore the directive is quashed and the compulsory retirement order set aside.

Summary

The petitioner, a manager of Syndicate Bank, was found to have discounted a Rs 50,000 cheque for a colleague and retained the instrument for two months before the amount was recovered with interest. A departmental inquiry under the Syndicate Bank Officer Employees (Discipline & Appeal) Regulations, 1976, conducted by a Central Vigilance Commission (CVC) officer, concluded that the charges were proved and the CVC recommended compulsory retirement. The bank’s disciplinary and appellate authorities imposed that penalty, citing a Finance Ministry directive dated 21 July 1984 that purported to make CVC advice binding on banks. The petitioner challenged both the compulsory retirement and the validity of the Ministry’s directive before the High Court, which dismissed the petition, and then before the Supreme Court. The Supreme Court held that the Ministry’s directive exceeded its jurisdiction under Section 8 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 and that CVC advice is merely advisory, not binding on the bank’s disciplinary authorities. Consequently, the directive was quashed, the compulsory retirement order set aside, and the case remitted for disposal in accordance with law.

Issues considered

The Finance Ministry’s directive of 21 July 1984 making CVC advice binding on banks is within its statutory jurisdiction under the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970.
Whether the advice of the Central Vigilance Commission is binding on the disciplinary and appellate authorities under the Syndicate Bank Officer Employees (Discipline & Appeal) Regulations, 1976.
Whether the disciplinary authority could impose compulsory retirement without independent discretion in view of the statutory regulations.
Whether the punishment of compulsory retirement was proportionate to the misconduct proved.

Legislation cited

Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970s. 8

Subjects

banking lawdisciplinary actioncompulsory retirementcentral vigilance commissionministerial directivejurisdictionadministrative lawjudicial reviewdepartmental inquiryemployee misconduct

Judgment

A NAGARAJ SHIV ARAO KARJAGI
v.
SYNDICATE BANK HEAD OFFICE MANIPAL AND ANR.

APRIL 30, 1991

B [K. JAGANNATHASHETTY ANDYOGESHWARDAYAL,JJ.]

Banking Companies (Acquisition and Transfer of Undertakings)
Act, 1970: Section 8----Folicy matters-Directions to Banks-Discip-
limiry matters-Awarding punishment to delinquent officers-Uniform
policy-Feasibility of-Directive issued to comply with Central Vigi-
lance Commission's advice-Whether within jurisdiction-Whether
c contrary to Regulations governing such matters.

Syndicate Bank Officer Employees (Disciplinary & Appeal)
Regulations, 1976:

D Regulations 3, 4, 5, 6, 7, JO-Punishment for misconduct-
Consultation with Central Vigilance Commission-Advice tendered by
the Commission-Whether binding on disciplinary authorities.

Cenrral Vigilance Commission Manual: Articles 22 and 23-
Guidelines for Banks-Major penalty cases-Consultation with
E Commission-Advice tendered-Acceptance of-Whether obligatory
upon disciplinary authority.

The appellant was a Manager in one of the branches of the
Respondent-Bank. In 1985, there was a departmental enquiry against
him on the charges that he discounted a cheque for Rs.50,000 drawn in
F the name of some other person to accommodate one of his colleagues and
when the cheque returned unpaid, he retained the same for about two
months without taking action for realisation of the amount. An enquiry
was conducted by the Commissioner for Vigilance Inquiry from the
Central Vigilance Commission, following the procedure prescribed by
the Syndicate Bank Officer Employees' (Disciplinary & Appeal) Regu-
G lations. The Inquiry Officer submitted hfa report holding that the
charges were proved against the appellant. The Respondent-Bank
referred the matter to the Central Vigilance Commission for advice and
the Commission reconunended the punishment of compulsory retirement.

After considering the Inquiry Report and after affording oppor-
H tunity to the appellant, the Disciplinary Authority imposed on him the

576

'
SHIVARAO v. SYNDICATE BANK 577

penalty of compulsory retirement. Ou appeal, the appellate authority
A
concurred with the findings recorded and the punishment imposed. The
appellant filed a Writ Petition before the High Court challenging the
order of his compulsory retirement. The High Court declined to
interfere with the order. Hence the present appeal, by special leave.

The appellant also filed a Writ Petition before this Court challeng- B
ing the validity of the direction dated 21. 7.1984 issued by the Finance
Ministry, following which the Respondent-Rank had imposed on him
the penalty of compulsory retirement .
• -.;
On behalf of the appellant/petitioner it was contended that the
advice given by the Central Vigilance Commission was blindly followed
by the Respondent-Bank as it was made binding on it by virtue of the c
directions dated 21. 7. 84 issued by the Ministry of Finance and in that
process the merits of the case and the statutory regulations governing
departmental inquiries were ignored. It was also contended that the
subject matter of the inquiry was only regarding irregularities in bank-
ing practice and since the interest of the Bank was not affected as he had D
the money recovered and credited to the Bank with interest thereon, the
---- alleged misdemeanour did not warrant any major penalty like com-
pulsory retirement, which even according to the Respondent-Bank, was
too harsh.

On behalf of the Respondent-Bank it was contended that it had E
independently considered the material on record notwithstanding the
advice given by the Central Vigilance Commission and since the orders
did not refer to the circulars or to the advice of Central Vigilance
Commission, the punishment imposed on the appellant/petitioner was
not vitiated by extraneous influences.
F
Allowing the matters, this Court

HELD: 1. The Respondent-Bank itself felt that the compulsory
retirement recommended by the Central Vigilance Commission was too
harsh and excessive on tlie appellant/petitioner in view of his excellent
" performance and unblemished antecedent service. The Bank made two
representations, one in 1986 and another in 1987 to the Central Vigi-
G
lance Commission for taking a lenient view of the matter and to advise
lesser punishment. Apparently, those representations were not accep-
ted by the Commission. The disciplinary authority and the appellate
authority therefore had no choice in the matter. They had to impose the
punishment of compulsory retirement as 'ldvised by the Central Vigi- H
578 SUPREME COURT REPORTS I 1991] 2 S.C.R.
A lance Commission. The advice was binding on the authorities in view of
the directive of the Ministry of Finance issued on 21. 7.1984, followed by
two circulars issued by the successive Chief Executives of the Bank. The ~

disciplinary and appellate authorities might not have referred to the +- '
directive of the Ministry of Finance or the Bank circulars. They might
not have stated in their orders that they were bound by the punishment
B
proposed by the Central Vigilance Commission. But it is reasonably
forseeable and needs no elaboration that they could not have ignored
the advice of the Commission. They could not have imposed a lesser

c
punishment without the concurrence of the Commission. Indeed, they
could have ignored the advice of the Commission and imposed a lesser
punishment only at their peril. [586F·H; 587 A-CJ
,.. -
2.1 But for the Finance Ministry's directive dated 21.7.1984, the
advice tendered by the Central Vigilance Commission is not binding on
the Bank or the punishing authority; it is not obligatory upon the
punishing authority to accept the advice of the Central Vigilance
D
Commission. [588C] I
2.2. The Ministry of Finance has no jurisdiction to issue such a ....
directive to Banking institutions. The Government may regulate the
Banking institutions within the power located under the Banking Com-
panies (Acquisition and Transfer of Undertakings) Act, 1970. Even though
Section 8 thereof empowers the Government to issue directions in
E regard to matters of policy, there cannot be any uniform policy with
regard to different disciplinary matters and much less there could be
any policy in awarding punishment to the delinquent officers in diffe-
rent cases. The punishment to be imposed depends upon the nature of ,_,
every case and the gravity of the misconduct proved. The authorities
have to exercise their judicial discretion having regard to the facts and
F circumstances of each case. They cannot act under the dictation of the
Central Vigilance Commission or of the Central Government in the
exercise of their power and the imposition of punishment on the delin-
quent officer. Therefore the directive of the Ministry of Finance is
wholly without jurisdiction and contrary to the statutory Regulations
G
governing disciplinary matters and is quashed. [S88D-H; 589A]
. ~

A.N.D'silva v. Union of India, [1962] Suppl. S.C.R. 968, relied
on.

De Smith's Judicial Review of Administrative Action, 4th Edn. p.
309, referred to.
H
SHIVARAO v. SYNDICATE BANK [SHETIY, J.] 579
.-
3. The Chairman of.the Respondent-Bank is directed to withdraw
the circular letters dated 27.7.1984 and 8.9.1986 issued in furtherance
A
of the Finance Ministry's directive dated 21. 7.1984. [589C]

[Setting aside the orders of the disciplinary authority and the
appellate authority, this Court directed the disciplinary authority to
dispose of the case in accordance with law and the observations made in B
the judgment.]

-- CIVIL APPELLATE JURISDICTION: Civil Appeal No. 2123
of 1991.

From the Judgment and Order dated 20.12.1988 of the Bombay
High Court in Appeal No. 1649 of 1988.
c
WITH
WRIT PETITION NO. 1287 of 1989.
(Under Article 32 of the Constittion of India).
D
Rajinder Sachhar, R.K. Agnihotri and S.C. Paul for the
Appellant/Petitioner.
K.N. Bhat, Vineet Kumar, Lalit Bhasin and Ms. Nina Gupta for
the Respondents.
The Judgment of the Court was delivered by E

K. JAGANNATHA SHETTY, J. Nagaraj Shivarao Karjagi, the
petitioner in SLP No. 4415 of 1989 has challenged his compulsory
retirement and in Writ Petition No. 1287 of 1989 he has questioned the
validity of the direction dated 21 July 1984 issued by. the Finance
Ministry, Government of India. Since the questions raised in both the F
cases are inter locked, we grant special leave in the SLP and proceed to
dispose of the same along with the writ petition.

The events leading to these cases may briefly be stated. In 1982,
the petitioner was a Manager of the Syndicate Bank ('the Bank') at
East Patel Nagar Branch at New Delhi. He discounted a cheque of the G
sum of Rs. 50,000 drawn on Punjab National Bank, Madras, after
obtaining, by phone prior approval of the Regional Divisional
Manager of the Bank. The cheque was sent for realisation to the
Punjab National Bank at Madras, but it was returned unpaid .. The
petitioner did not take prompt action to recover the amount from the
person in whose favour he discounted the cheque. He kept the'l!heque H
580 SUPREME COURT REPORTS [ 1991] 2 S.C.R.

A with him even without reporting to the higher authorities. In 1983, the
Assistant General Manager of the Bank called upon him to explain
why the amount due under the discounted cheque has not been
recovered. The petitioner in his reply explained the circumstances
under which the cheque was discounted. He has stated that the credit
was given to the account of one Dr. N. Ramakrishnan who was a
B Senior Scientist in Indian Agricultural Research Institute, New Delhi
but the amount was withdrawn by another person called A. Chandra-
shekhar who is an officer of the Bank. He has further stated that
A. Chandrashekhar has promised to pay the amount and therefore, he
has retained the instrument with him hoping that A. Chandrashekhar
would keep up his promise. On 6 July 1984 a sum of Rs.52,167.15 was
deposited with the Bank. A sum of Rs.36,000 towards principal sum
c and Rs.16,167.15 towards interest. A suit was filed to recover a sum of
Rs. 14,000 out of the principal amount. And later on, this principal
amount was also recovered and credited to the Bank.

D
However, in 1985 there was a departmental inquiry against the
petitioner. The Commissioner for Vigilance Inquiry from the Central
•
Vigilance Commission conducted the inquiry. The first charge against
the petitioner was that when he was functioning as Manager, he dis-
counted under his discretionary jurisdiction a cheque. for Rs.50,000
drawn in the name of Dr. N. Ramakrishnan in order to accommodate
A. Chandrashekhar an officer of the Bank or others known to him.
E The second charge framed against him, related to the retention of the
discounted instrument with him from December, 1982 till January
1984 without taking/causing to be taken any action to realise the
amount due under the unpaid cheque. It was also alleged that the
petitioner made available undue financial accommodation to A.
Chandrashekhar or others to the detriment of the interests of the
F Bank. He was charged with lack of the integrity, honesty devotion to
duty, diligence and conduct unbecoming of the status of Bank Officer
in contravention of Regulation No. 3(1) of the Syndicate Bank Officer
Employees' (Conduct) Regulations, 1976.

The inquiry was held as per the procedure prescribed by Syndi- .,,,
G cate Bank Officer Employees' (Discipline & Appeal) Regulations,
1976, ('the Regulations'). On 16 October 1986, the Inquiry Officer
submitted his report holding that the charges were proved against the
petitioner. He has held that the petitioner has failed to take any effec-
tive steps for recovery of the amount paid under the discounted instru-
ment. He has kept the instrument with himself for unduly long period
H without even surrendering the same to the custody of the Bank. It was
SHIVARAO v. SYNDICATE BANK [SHETTY, J.l 581

only after the Additional General Manager reminded him by letter A
dated 15 December 1983, the petitioner assured him that he would
return the cheque which he finally did on 18 January 1984. The Inquiry
-~
_, Officer has finally concluded that the transaction connected with the
unpaid instrurr1ent was of an accommodative nature with a view to
assist A. Chandrashekhar by using another person as benami and it
was in clear violation of the rules of the Bank. B

It is said and indeed not disputed that the Bank referred the
matter to the Central Vigilance Commission for advice and the Com-
·~
mission has recommended that the petitioner may be compulsorily
retired from service by way of punishment.

The disciplinary authority after considering the inquiry report
c
and affording an opportunity to the petitioner passed an order dated 7
October 1987 imposing on the petitioner the penalty of compulsory
, retirement. The petitioner appealed to the General Manager challeng-
ing the punishment. On 27 August 1988 the General Manager dismis-
sect the appeal concurring with the findings recorded and the punish- D
,.._. ment imposed by the disciplinary authority. The petitioner thereupon
moved the Bombay High Court for relief under Article 226 of the
Constitution. The High Court has also dismissed the writ petition. He
has now appealed to this Court.

THE CONTENTIONS OF THE PETITIONER E

The petitioner has been complaining throughout and also before
us that the punishing authorities did not apply their mind and did not
......
exercise their power in considering the merits of his case. They have
imposed on him the penalty of compulsory retirement in obedience to
the advice of the Central Vigilance Commission which has been made F
binding on them by the direction dated 21 July 1984 issued by the
Ministry of Finance, Department of Economic Affairs (Banking Divi-
sion). They have blindly followed the advice given by the Central
Vigilance Commission without regard to the merits of the matter and
contrary to the statutory Regulations governing the departmental
y inquiries. The subject matter of inquiry was only regarding irregu- G
larities in the 1'anking practice and the action complained of has not
affected the interests of the Bank. The petitioner by his owri efforts
has recovered the money due under the discounted cheque and ere-
dited the same with interest to the Bank. The findings recorded by the
Inquiry Officer on the alleged misdemeanour does not warrant any
major penalty like the compulsory retirement. Reference was also H
582 SUPREME COURT REPORTS [ 1991] 2 S.C.R.

made to certain representations said to have been made by the Bank to
A
the Central Vigilance Commission for approval to impose a lesser
punishment. It is said that the Bank pleaded in the representations
that the punishment of compulsory retirement advised by the Commis- <- . .
sion was too harsh.

B SYNDICATE BANK OFFICER EMPLOYEES' (DISCIPLINE
AND APPEAL) REGULATIONS 1976

These .Regulations have been framed under Section 19 of the
Banking Companies (Acquisition and Transfer of Undertakings) Act, +- 'W
1970. They were framed by the Board of Directors of the Syndicate
Bank in consultation with the Reserve Bank of India and with the
c previous sanction of the Central Government. Regulation 4 prescribes
penalties for acts of misconduct. Regulation 5 specifies the authority to
institute disciplinary proceedings and impose penalties. Regulation 6
lays down procedure for imposing major penalties and Regulation 7

D
provides for action on the inquiry report. Regulation 7 confers power
to the disciplinary authority either to agree or disagree with the find- •
ings of the inquiry authority on any article of charge. The disciplinary ,_.,
authority may reach its own conclusion on the material on record and
impose any penalty prescribed under Regulation 4. Or if it is of the
opinion that no penalty should be imposed on the delinquent officer, it
may pass an order exonerating the delinquent officer. Regulation 17
E provides for appeals against the order imposing any of the penalties
specified in Regulation 4. The appellate authority has been given the
power to pass any order of penalty or remitting the case to the discipli-
nary authority or to any other authority for fresh disposal. Regulation
19 provides for consultation with the Central Vigilance Commission. It
states that "the Bank shall consult the Central Vigilance Commission
F wherever necessary, in respect of all disciplinary cases having a vigi-
lance angle." There is no other Regulation requiring consultation with
Central Vigilance Commission, or providing that the advice given by
the Commission is binding on the punishing authorities.

The Central Vigilance Commission, however, appears to have
G framed guidelines for Banks to consult the Commission in respect of '<
cases where major penalty is prescribed under the Regulation. Article
22 of the Central Vigilance Commission Manual reads:

"The Scheme of consultation with the Commission in
respect of major penalty cases pertaining to such officers
H envisages consultation with the Commission at two stages.
SHIVARAO v. SYNDICATE BANK [SHETTY, J.l 583

The first stage of consultation arises when initiating disci-
A
plinary proceedings while the second consultation is taken
at the conclusion of the proceedings."

-· Article 23.2 of the C.V.C. Manual Chapter 10 reads:

"In all the cases where C.V.C. advises initiation of major B
penalty proceedings, it also nominates simultaneously a
Commissioner for Departmental Inquiries to whom the

- ~
inquiry should be entrusted."

THE DIRECTION OF THE MINISTRY OF FINANCE, DEPART-
MENT OF ECONOMIC AFFAIRS (BANKING DIVISION)
c
On 21 July 1984 Joint Secretary, Ministry of Finance, Depart-
ment of Economic Affairs (Banking Division) has written a letter to all
Banking Institutions thus:

"Recently a case has been reported where a bank has D
revised the punishment awarded to an officer in a discipli-
nary case contrary to the advice of the Central Vigilance
Commission. The case has figured in the Annual Report of
the CVC as a case of non-consultation with the Conimis-
sion and thus created an embarassing ·situation. You will,
perhaps, be aware of the Annual Reports of the CVC, E
which contain cases where the disciplinary authorities had
not accepted its recommendations or had not consulted it,
are laid on the Tables of both the Houses of Parliament.
This may, thereafter be discussed in the Parliament also.
You Will agree that under no circumstances the advice of
the eve should be modified except with the prior concur- F
rence of the commission and this Ministry. I may mention
here that revision of the penalty imposed on a delinquent
officer as a result of an appeal filed by him before the
appellate authority against the decision of the original dis-
ciplinary authority also amounts to non-consultation/non-
y acceptance of the advice of the eve and is included in G
CVC's Annual Report.

Kindly circulate these instructions to the concerned
officers in your bank for strict compliance. The receipt of
this D.O. letter may please be acknowledged. A copy of
this D.O. letter is being marked to CVO in your bank H
separately."
584 SUPREME COURT REPORTS [ 1991] 2 S.C.R.

CIRCULARS OF THE BANK
A
On 27 July 1984, A. Krishna Rao, Chairman and Managing
Director of the Bank, issued a circular to all branches of the Bank as •-
follows:

B "I am enclosing herewith a photostat copy of the DO letter
No. 41/3/84-Vig. dated 21.7.1984 received by me from Shri
Ashok Kumar, Joint Secretary, Ministry of Finance,
Department of Economic Affairs, (Banking Division),
Vigilance Cell, New Delhi, in the above connection for
strict compliance of the instructions contained therein.
c As the advice in vigilance cases received from Central Vigi-
lance Commission is communicated to the authorities con-
cerned by the Chief Vigilance Officer, I advise, that the
Chief Vigilance Officer's advice, as explained in my above
referred to DO letter, should be complied with.
D
Even when a revision of the penalty imposed on a delin-
quent officer at the advice of the Chief Vigilance Officer by
the Original Disciplinary Authority were to be considered
as a result of an appeal filed by him before the appellate/
higher authorities, such revision shall be effected only after
E consulting the Chief Vigilance Officer.

Please acknowledge receipt of this and ensure compliance
of the instructions contained herein."

On 8 September 1986 P.S.V. Mallya, the succeeding Chairman
F and Managing Director of the Bank issued another circular letter to all
branches of the bank in the following terms:

"All vigilance cases in the Bank are being investigated/
processed at Vigilance Cell at the HO, under the adminis-
trative control of the Chief Vigilance Officer, who is
G reporting directly to me. After processing of the reports is
concluded, the cases are referred to Central Vigilance
Commission as per the existing procedure and the advice
received from the commission is being communicated to
the Disciplinary/ Appellate Authorities by the Chief Vigi-
lance Officer.
H
- SHIVARAO v. SYNDICATE BANK [SHEITY, J.J

If the advice tendered by the Commission is not
585

A
accepted/acted upon, it will amount to non-acceptance of
the advice of the Commission and such instance will figure
in the Annual Report of the Central Vigilance Commission
placed before the Parliament.
B
This apart the non-acceptance of the advice in vigi-
lance cases is likely to lead to a situation, in which, diffe-
rent types of decisions are possible to be taken in similar
cases, which is sure to result in a voidable complications
and injustice to certain sections of the Officers/employees
community. Again in such a situation, ensuring uniform
stantards in finalising action on vigilance cases will also c
become a very difficult phenomenon, which is not a desir-
able trend and does not augur well for the healthy function-
ing of the vigilance machinery in the Bank.

I therefore, advice all Disciplinary/Appellate Autho- D
rities to see that they refer as hitherto all vigilance cases to
Chief Vigilance Officer and consult him on such cases and
act upon his advice.

xxxxx xxxxx xxxxx xxxxx
E
If for any reasons, the authorities concerned feel that the
advice needs to be reconsidered or a departure is called for,
they may refer back the matter to Chief Vigilance Officer
for reconsideration of the advice, with the reasons for such
disagreement and the Chief Vigilance Officer will see
whether and to what extent such reconsideration is desir- F
able or feasible and will tender advice again on recon-
sideration.

If the authority concerned is still not disposed to act
on the advice, the disinclination on the part of the authority
concerned will have to be brought to my notice and the
G
advice given by me in respect of such cases shall be treated
as final. It is also necessary that the authorities concerned
should for obvious reasons keep the advice in strict confi-
dence and see that no reference thereof is made in any of
the correspondence communication, whether emanating
from their end." H
586 SUPREME COURT REPORTS I 1991] 2 S.C.R.

The petitioner being aware of the directions of the Ministry of
A
Finance and the circulars issued by the Bank has in his memo of appeal
before the appellate authority inter a/ia complained that the system 1--
A

and procedure adopted by the Bank in dealing with vigilance cases, is
totally against the principles of natural justice. The Bank has no con-
trol over such cases. The Disciplinary Authority and Appellate
B Authority are required to carry into effect the punishment advised by
the Central Vigilance Commission without change. He has also
pointed out that his appeal could be nothing but an empty formality as
the appellate authority would be also bound by the decision of the
Central Vigilance Commission. The petitioner has also added post ....
script to his appeal Memo stating thus '"This appeal has been filed
without prejudice to my contention that this appeal is an exercise in
c futility as the appellate authority also is not the deciding authority and
this appeal also will be decided by the CVO/CVC, who has already
decided and whose decision is binding on you. There is in fact no
effective right of appeal."

D Counsel for the Bank however, submits that notwithstanding the
advice of the Central Vigilance Commission and the directive dated 21 ~

July 1984 of the Ministry of Finance, Department of Economic Affairs
(Banking Division), the case of the petitioner has received the.fullest
consideration from the disciplinary and appellate authorities. They
have independently considered the material on record both on the
E articles of charges and also on the appropriate punishment of com-
pulsory retirement imposed on the petitioner. The orders of the
authorities do not refer to the circulars of the Bank, nor to the punish-
ment proposed by the Central Vigilance Commission. It is therefore,
illegitimate, to contend that the punishment imposed on the petitioner
has been vitiated by extraneous influences.
F
We are not even remotely impressed by the arguments of counsel
for the Bank. Firstly, the Bank itself seems to have felt as alleged by
the petitioner and riot denied by the Bank in its counter that the
compulsory retirement recommended by the Central Vigilance Com-
mission was too harsh and excessive on the petitioner in view of his
G excellent performance and unblemished antecedent service. The Bank "
appears to have made two representations; one in 1986 and another in
1987 to the Central Vigilance Commission for taking a lenient view of
the matter and to advise lesser punishment to the petitioner. Appa-
rently, those representations were not accepted by the Commission.
The disciplinary authority and the appellate authority therefore have
H no choice in the matter. They had to impose the punishment of com-
SHIVARAO v. SYNDICATE BANK [SHETIY, J.l 587
,•
pulsory retirement as advised by the Central Vigilance Commission. A
The advice was binding on the authorities in view of the said directive
.:.
-· of the Ministry of Finance, followed by two circulars issued by the
successive Chief Executives of the Bank. The disciplinary and appel-
late authorities might not have referred to the directive of the Ministry
of Finance or the Bank circulars. They might not have stated in their
orders that they were bound by the punishment proposed by the Cent- B
ral Vililance Commission. But it is reasonably furseeable and needs no
elaboration that they could not have ignored the advice of the Com-
mission. They could not have imposed a lesser punishment without the
~ concurrence of the Commission. Indeed, they could have ignored the
advice of the Commission and imposed a lesser punishment only at
their peril.
c
The power of the punishing authorities in departmental proceed-
ings is regulated by the statutory Regulations. Regulation 4 merely
prescribes diverse punishment which may be imposed upon delinquent
officers. Regulation 4 does not provide specific punishments for diffe-
rent misdemeanours except classifying the punishments as minor or D
... major. Regulations leave it to the dis~Tetion of the punishing authority
to select the appropriate punishment having regard to the gravity of
the misconduct proved in the case. Under Regulation 17, the appellate
authority may pass an order confirming, enhancing, reducing or comp-
letely setting aside the penalty imposed by the disciplinary authority.
He has also power to express his own views on the merits of the matter E
and impose any appropriate punishment on the delinquent officer. It is
quasi-judicial power and is unrestricted. But it has been completely
fette;·ed by the direction issued by the Ministry of Finance. The Bank
""' has been told that the punishment advised by the Central Vigilance
Commission in every case of disciplinary proceedings should be strictly
adhered to and not to be altered without prior concurrence of the F
Central Vigilance Commission and the Ministry of Finance.

We are indeed surprised to see the impugned directive issued by
the Ministry of Finance, Department of Economic Affairs (Banking
- ,¥
Division). Firstly, under the Regulation, the Bank's consultation with
Central Vigilance Commission in every case is not mandatory. Regula-
tion 20 provides that the Bank shall consult the Central Vigilance
G

Commission wherever necessary, in respect of all disciplinary cases
having a vigilance angle. Even if the Bank has made a self imposed
rule to consult the Central Vigilance Commission in every disciplinary
matter, it does not make the Commission's advice binding on the
punishing authority. In this context, reference may be made to Article H
588 SUPREME COURT REPORTS I 1991) 2 S.C.R.
320(3) of the Constitution. The Article 320 (3) like Regulation 20 with
A
which we are concerned provides that the Union Public Service Com-
mission or the State Public Service Commission, as the case may be,
shall be consulted-on all disciplinary matters affecting a civil servant
including memorials or petitions relating to such matters. This Court
in A.N. D' Silva v. Union .ilf India, I1962) Suppl; I SCR 968 has expres-
B sed the view that the Commission's function is purely advisory. It is
not an appellate authority over the inquiry officer or the disciplinary
authority. The advice tendered by the Commission is not binding on
the Government. Similarly, in the present case, the advice tendered by
the Central Vigilance Commission is not binding on the Bank or the
punishing authority. It is not obligatory upon the punishing authority
to accept the advice of the Central Vigilance Commission.
c
Secondly, the Ministry of Finance, Government of India has no
jurisdiction to issue the impugned directive to Banking institutions.
The Government may regulate the Banking institutions within the
power located under the Banking Companies (Acquisition and Trans-
D fer of Undertakings) Act, 1970. So far as we could see, Section 8 is the
only provision which empowers to the Government to issue directions.
Section 8 reads:

"Every corresponding new bank shall, in the discharge of
its functions, be guided by such directions in regard to mat-
E ters of policy involving public interest as the Central
Government may, after consultation with the Governor of
the Reserve Bank, give."

The corresponding new bank referred to in Section 8 has been
defined under Section 2(f) of the Act to mean a banking company
F specified in column I of the First Schedule of the Act and includes the
Syndicate Bank. Section 8 empowers the Government to issue direc-
tions in regard to matters of policy but there cannot be any uniform
policy with regard to different disciplinary matters and much less there
could- be any policy in awarding punishment to the delinquent officers
in different cases. The punishment to be imposed whether minor or
G major depends upon the nature of every case and the gravity of the •
misconduct proved. The authorities have to exercise their judicial dis-
cretion having regard to the facts and circumstances of each case. They
cannot act under the dictation of the Central Vigilance Commission or
of the Central Government. No third party like the Central Vigilance
Commission or the Central Government could dictate the disciplinary
H authority or the appellate authority as to how they should exercise
SH!VARAO v. SYNDICATE BANK [SHETTY, J.l 589

their power and what punishment they should impose on the delin- A
quent officer. (See: D"' Smith's Judicial Review of Administrative
Action, Fourth Edition, p. 309). The impugned directive of the
Ministry of Finance, is therefore, wholly without jurisdiction, and
plainly contrary to the statutory Regulations governing disciplinary
matters.
B
For the foregoing reasons, we allow the appeal and the writ
petition quashing the directive issued by the Finance Ministry, Depart-
ment of Economic Affairs, (Banking Division) dated 21July1984. We
also issue a direction to the Chairman of the Syndicate Bank' to with-
draw the circular letters dated 27 July 1984 and 8 September 1986. We
further set aside the impugned orders of the disciplinary authority and c
appellate authority with a direction to the former to dispose of the
petitioner's case in accordance with law and in the light of the observa-
tions made.

The petitioner is entitled to costs which we quantify in both the
cases at Rs.15,000 which shall be paid by the Central Government. D

G.N. Appeal and petition allowed.