Holding

Disciplinary proceedings may lawfully continue after superannuation under Regulation 20(3)(iii), and the High Court cannot replace the dismissal order with a lesser punishment.

Summary

Ramesh Chandra Sharma, a manager of Punjab National Bank, was charged with negligence and misconduct in loan disbursement. The disciplinary authority proved the charges and dismissed him, but he superannuated before the order was finalized. The High Court substituted the dismissal with a order withholding his retiral benefits and refused to recover the bank's loss. The Supreme Court held that Regulation 20(3)(iii) of the Bank's Discipline & Appeal Regulations permits continuation of disciplinary proceedings even after superannuation, creating a legal fiction that the officer remains in service for the purpose of the inquiry. It further held that the High Court erred in substituting the punishment and that the original dismissal stands. Consequently, the appellant's appeal was dismissed and the bank's appeal allowed.

Issues considered

Whether disciplinary proceedings can lawfully continue against an employee who has attained superannuation under Regulation 20(3)(iii) of the Punjab National Bank Officer Employees (Discipline & Appeal) Regulations, 1977.
Whether the High Court could substitute the punishment of dismissal imposed by the disciplinary authority with a lesser order of withholding retiral benefits.

Legislation cited

Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970s. 12, s. 19(2)

Subjects

disciplinary proceedingssuperannuationdismissalbanking regulationspensionlegal fictionhigh court interferenceservice law

Judgment

RAMESH CHANDRA SHARMA A
v.
PUNJAB NATIONAL BANK AND ANR.

MAY 18, 2007

[S.B. SINHA AND MARKANDEY KA TJU, JJ.] B
.-._,__
Service law:

Punjab National Bank Officer Employees' (Discipline and Appeal)
Regulations, I 977: Regulation 20(3)(iii). C
Dismissal-Disciplinary proceedings-Continuation of-After
superannuation of the delinquent officer-Permissibility-Disciplinary
proceedings initiated against delinquent bank officer for acting negligently
and not discharging his duties with utmost integrity-Delinquent officer D
retired on superannuation during the pendency of the disciplinary
proceedings-The charges were proved-The Disciplinary Authority, while
holding the delinquent officer guilty of the proved charges, imposed upon
him a 111ajor penalty ofdismissal from the Bank's service-Appellate Authority
dismissed the appeal-The High Court substituted the order of dismissal by
the order of withholding all retiral benefits-However, the High Court held E
that no recovery of the loss to the Bank was to be made from the delinquent
officer-Correctness of-Held: It was permissible for the Bank to continue
with the disciplinary proceedings on the basis of Regulation 20(3)(iii) even
after the delinquent officer attained the age of superannuation-Ordinarily
the High Court should not interfere with the quantum ofpunishment imposed
by the Disciplinary Authority unless the punishment was impermissible in F
law or wholly disproportionate to the misconduct-Hence, High Court erred
in substituting the punishment imposed by the Disciplinary Authority-
Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970,
S. 19(2)-Punjab National Bank Employees (Pension) Regulations, 1995,
Regs. 22. 43 and 48-Punjab National Bank (Officers'.) Service Regulations. G
1979.

The appellant was working in the capacity of a Manager in one of the
branches of the respondent-Bank. Disciplinary proceedings were initiated
against the appellant, inter alia, for acting negligently and not discharging
585 II
586 SliPREME COURT REPORTS (2007) 7 S.C.R.

A his duties with utmost integrity. The charges against the 8p1Jellant were proved.
The Disciplinary Authority, while holding the appellant guilty of the
. proved charges, decided to impose upon him a major penalty of dismissal from
the Bank's service in terms of clause 4 of the Punjab National Bank Officer
Employees' (Discipline & Appeals) Regulations, 1977. The appeal filed by the
B appellant was dismissed by the appellate authority.
Being aggrieved, the appellant filed a writ petition before the High
Court. One of the contentions raised in the writ petition was that the appellant
having been allowed to superannuate on his reaching the age of
C superannuation, the continuation of the disciplinary proceedings was bad in
law.

The High Court substituted the order of dism_iss.al by th.e order of
withholding all retiral benefits. However, the High Court held tliat no recovery
of the loss to the Bank was to be madefrom the appellant Hence the appeal.
D The following questions arose before the Court:-

1. Whether, in terms of the rules governing the terms and conditions
ofservices ofthl employees of the Bank, was it permissible for
it to continue the disciplinary proceedings despite the fact that
the respondent attained .the age of superannuation?
E
2. Whether the High Court could have, in the facts and
circumstances of the case, substituted the punishment imposed
by the Appointing Authority and the Appellate Authority by its
own?

F Dismissing the appeal, the Court

HELD: 1.1. The question as to whether the continuation of a disciplinary
proceeding would be permissible or the employer will have to take· recourse
only to the Pension Rules would depend upon the terms and conditions of the
services of the employee and the.power of the disciplinary .authority conferred
G by reason ofa statue or statutory. rules. IPara 1211594-8-Cf

DisciplinaryAuthority-cum-Regional Manag~r v. Nikunja Bihari
Patf1!2ik. 1199619 SCC 69, Unio,n of India v. Suhedar ~am Narain, 1199818 ~
SCC 52, State o/U.P. v. Bhram Datt Sharma, AIR (1987) SC 943 and State of
H U.P. v. Harihar Bhole Nath, (2006) 11SCALE322, referred to.
RAMESH CHANDRA SHARMA \'.PUNJAB NATl01'AL BANK 587

1.2. Therefore, it was permissible for the Bank to continue with the A·
. .- disciplinary proceedings relying on or on the basis of Regulation 20(3)(iii)
of the Punjab National Bank Officer Employees' (Discipline and Appeal)
Regulations, 1977. !Para 141

East End Dwellings Co. Ltd v. Finsbury Borough Council, 119511 2
All ER 587, State Bank of India v. C. B. Dhall, 119981 2 SCC 544, State of B
U.P. v. Harihar Bole Nath, (2006) 11SCALE322, State of U.P. v. Bhram Datt
Sharma, AIR (1987) SC 943, State of UP. v. Shri Krishna Pandey, Al R (1996)
SC 1656, Bhgirathi Jena v. Board of Directors O.S.F.C., (199913 SCC 666
and State of U.P. v. R. C. Misra, (2007) 4 SCALE 595, referred to.

2. It is true that the Disciplinary Authority, in its order, while imposing
c
the punishment, observed that the terminal dues of the appellant were to be
settled. It was merely an observation to take a contingency into account which
might arise. No positive direction was issued in that behalf and, thus, no legal
right thereby was created in favour of the appellant to obtain the retiral
benefits. What is meant thereby was that the law would take its own course. D
., (Para 15\ (596-G\

3.1. Indisputably, as a consequence of the order imposing that
punishment of dismissal from service, the appellant would not have qualified
for the pensionary benefits. Pension Regulation is meant to be applicable E
where pension is required to be paid. It also provided for the recovery of
pecuniary loss caused to the Bank from the pensionary benefits of the
employee. (Para 1611597-B-CI

3.2. Where a proceeding is initiated for withholding or withdrawal of
pension, Regulation 43 of the Pension Regulation would be attracted. But F
provisions of the said Regulation, if read in its entirety, clearly go to show
that an officer would not qualify for pensionary benefits, if inter alia, he is
dismissed from service. (Para 171 (598-E)

3.3. Regulation 48 of the Pension Regulations empowers the Bank to
recover the pecuniary loss caused to it from the pensionary benefits. G
Regulation 20(3)(iii) of the Punjab National Bank Officer Employees'
(Discipline and Appeal) Regulations, 1977 must be read in conjunction with
the Pension Regulations. Where the employees are pension optees, Regulation
48(1) shall apply. In any event, if an officer is removed or dismissed from
service under Regulation of the (Discipline & Appeal) Regulations, the Bank H
need not take recourse to Regulation 48 of the Pension Regulations as
588 SUPREME COURT REPORTS (2007) 7 S.C.R.
/
A Regulation 22 thereof would be attracted. (Para 1711598-Fl
3.4. The High Court, therefore, committed a manifest error in passing
the impugned judgment (Para 17) 1598-GI

4. Moreover, it is now a trite law that ordinarily the High Court should
B not interfere with the quantum of punishment imposed by the Disciplinary
\
Authority. It has not been found by the High Court that the punishment imposed
. upon the appellant was impermissible in law or wholly disproportionate to the
misconduct found to have been committed by the delinquent officer.
!Para 181 (598-H; 599-A)
c U.P.S.R. T.C. v. Ram Kishan Arora, (2007) 6 SCALE 72, relied on.

5. 'rhe High Court, however, posed unto itself a wrong question of law
that despite applicability of Regulation 20(3)(iii) of the (Discipline and Appeal)
Regulations, the Bank exceeded its jurisdiction in continuing the disciplinary
D proceedings after the date the appellant reached the age of superannuation.
(Para 2111600-EJ

State Bank of India v. Bela Bagchi, AIR (2005) SC 3272, referred to. ~
"'.
S.P. Badrinath v. Govt. ofA.P., (2003) 8 SCC 1, held inapplicable•..
E
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 971 of2007.

From the Final Judgment and Order dated 3.1.2006 of the High Court of
Judicature at Allahabad in Civil Misc. Writ Petition No. 44373of1998.
WITH
F
Civil Appeal No. 975 of2007.
·'
Pramit Saxena, Yash Pal Dhingra, K.L. Mehta & Co., Dhruv~Mehta,
Harsh Vardhan Jha and Yash Pal Dhingl'a for the appearing parties.

G The Judgment of the Court was delivered by

S.B .. SINHA, J. I. These two appeals arising out of the common
judgment and order were taken up together for hearing and are being disposed
of by this common judgment.

H 2. Before embarking upon the question involved in these matters, we
may notice the fact of the matter.
RAMESH CHANDRA SHARMA v.PUNJAB NATIONAL BANK [S.B. SINHA, J.] 589

3. Punjab National Bank (hereinafter referred to as the 'Bank') is a A
nationalized bank constituted under the Banking Companies (Acquisition and
Transfer of Undertakings) Act, 1970 (1970 Act). While Ramesh Chandra Sharma
(hereinafter referred to as the 'appellant') was working in the capacity of a
Manager in the Bank's Latouche Road, Kanpur Branch, a disciplinary
proceeding was drawn against him.
B
The following charges were levelled against him:

"ARTICLE-I

He acted negligently as also deliberately with improper motive
while granting credit facility to various borrowers to the detriment of C
the interest of the Bank and thereby exposed huge funds of the Bank
to jeopardy.

ARTICLE-II

He did not discharge his duties with utmost integrity by D
· unauthorizedly associating outsiders through which he affected
disbursement of the loan to various borrowers overlooking the fact
that entire proceeds of the loan has not been received by the borrowers.

ARTICLE-Ill
E
He did not ensure to keep limitation alive in borrowal accounts,
thereby exposing Bank's funds to jeopardy, as also incurred expenses
beyond his vested financial powers."

Charge No. I was sub-divided into 24 sub-charges and Charge No. III was
sub-divided into two sub-charges. All these charges were proved. A F
disciplinary proceeding was initiated in relation thereto.

4. The Enquiry Officer submitted a report to the Disciplinary Authority.
By an order dated 13.11.1997 the_ Disciplinary Authority while holding the
appellant guilty of the proved charges decided tO impose upon him a major
penalty of dismissal from Bank's service which shall ordinarily be a G
disqualification for future employment in terms of clause 4(j) of Punjab National
Bank Officer Employees (Discipline & Appeals) Regulations, 1977. It was,
however, stated that the terminal dues of the respondent would be settled.

An appeal preferred thereagainst by the appellant was dismissed by H
590 SUPREME COURT REPORTS [20011 1 s.c.~.

·.~A the Appellate Authority by an order dated 2 l.l 0.1998.

5. Aggrieved by and dissatisfied therewith the appellant filed a writ
petition before the High Court of Judicature of Allahabad.

One of the contentions in the writ petition was that the appellant having
B allowed to superannuate on his reaching the age of superannuation on
31.1.1997, continuation of the disciplinary proceedings was bad in law. The
High Court negatived the said contention. In its judgment, reliance, inter alia,
was placed on a decision of this Court in Disciplinary Authoritj!-cum-Regional
Manager and Ors. v. Nikunja Bihari Patnaik, [1996) 9 SCC 69. It was held
thus:
c
"We must mention that Shri V.A. Mohta, the learned counsel for
the respondent, stated fairly before us that it is not possible for him
to sustain the reasoning and approach of the High Court in this case.
His only submission was that having regard to the age of the
respondent (37 years) and the facts and circumstances of the case,
D this Court may substitute the punishment awarded to the respondent
by a lesser punishment. The learned counsel suggested that any
punishment other than dismissal may be imposed by this Court. We
considered this request with the case it deserves, but we regret that
we are unable to accede to it. The learned counsel for the Bank, Shri
E V.R. Reddy, Additional Solicitor General, also stated, on instructions
of the Bank, that it is not possible for the Bank to accommodate the
respondent in its service in view of his conduct."

6. Before the High Court, it appears, a copy of a Circular dated 5.3.1999
was placed for the purpose of raising a contention that the order of the
F Appellate Authority would be relevant to determine the controversy even if
the same was issued subsequent to the order imposing punishment. The High
Court observed thus :

"In view of the above, it may be desirable that the matter be
remanded to the respondent authorities to pass an appropriate order
G setting aside the impugned orders. However, considering the fact that
the matter is pending since long and in order to bring the litigation
to an end and considering the gravity of the charges and financial
loss suffered by the Bank, we substitute the order of dismissal by the
order of withholding all retiral benefits as has been explained in the
counter affidavit. However, no recovery of the loss to the Bank to the
H
RAMESH CHANDRA SHARMA v. PUNJAB NATIONAL BANK [S.B. SINHA, J.] 591

tune of Rs. l, 14, 87,164.76 shall be made from him." A
Both the parties, being aggrieved by the impugned judgment of the
High Court, are before us.

7. The questions which, in the facts and circ..umstances, arise for our
consideration are (i) whether, in tenns of the rules governing the terms and B
conditions of services of the employees of the Bank, it was permissible for
it to continue the disciplinary proceedings despite the fact that the respondent
attained the age of superannuation; and (ii) whether the High Court could
have, in the facts and circumstances of the case, substituted the punishment
imposed by the Appointing Authority and the Appellate Authority by its C
own.

8. Indisputably, Parliament enacted the Banking Companies (Acquisition
and Transfer of Undertaking) Act 1970. Sub-section (2) of Section 19 thereof
empowers the Board of Directors of the Bank to make regulations. Jn exercise
. of the said power read with Section 12 of the Act, the Board of Directors of D
the Appellant - Bank in consultation with the Reserve Bank of India and with
the previous sanction of the Central Government made regulations known as
the 'Punjab National Bank Employees (Pension) Regulations, 1995'.

9. Submissions of Mr. Pramit Saxena, learned counsel appearing on
behalf of the appellant, are that: E
(i) the appellant having been permitted to retire from service,
continuation of disciplinary proceedings and subsequent
imposition of major punishment i.e. dismissal from service, is bad
in law; and

(ii) in any event, as the Disciplinary Authority clearly directed F
payment of the terminal dues and the said order having been
upheld by the Appellate Authority, the High Court committed a
manifest error in passing the impugned judgment.

10. Submissions of Mr. Dhruv Mehta, learned counsel appearing on
behalf of the Bank, on the other hand, are: G
(i) that Regulation 20 (3)(iii) of the 1977 Regulations permits
continuation of a disciplinary proceeding in terms whereof a legal
fiction has been created, and hence the disciplinary authority had
the requisite jurisdiction to impose an order of dismissal from H
592 SUPREME COURT REPORTS [2007) 7 S.C.R.

A service; and

(it) that the appellant is not entitled to the retirement benefits in .
tenns of Regulation 22 of the Pension Regulation which provides
for forfeiture of the entire past service of an. employee and
subsequent disqualification for obtaining pensionary benefits,
B inter a/ia, dismissal or removal from service.

(iii). When a punishment of dismissal from service is imposed under
a provision or statute, the delinquent officer loses his or her
pensionary benefits as the same stands forfeited, and does not
suffer from the doctrine of double jeopardy, as has been held in
c U~ion ofIndia and Ors. v. Subedar Ram Narain and Ors., [ 1998]
s sec s2.
11. The question as to whether a departmental proceeding can continue
despite the delinquent .officer's reaching the age of superannuation would .'_
depend upon the applicability of the extant rules. It may be true that the
D question of imposition of dismissal of the delinquent officer from service
when he has already reached the age of superannuation would not ordinarily
arise. However, as the consequences of such an order is provided for in the
service rule, in our opinion, it would not be correct to contend that imposition
of such a punishment would be wholly impermissible in law.

E Nikunja Bihari Patnaik (supra) is an authority for the proposition that
an officer of the bank cannot be allowed to flout the existing rules. In Nikunja
Bihari Patnaik (supra) this Court held:

"In the case of a Bank - for that matter, in the case of any
otherorganization -every officer/employee is supposed to act within
F the limits of his authority. If each officer/ employee is allowed to act
beyond his authority, the discipline of the organisation/bank will
disappear; the functioning of the Bank would become chaotic and
unmanageable. Each officer of the Bank cannot be allowed to carve
out his own little empire wherein he dispenses. favours and largesse.
G No organization, more particularly, a Bank can function properly and
eftectively if its officers and employees do not observe the prescribed
norms· and discipline. Such indiscipline cannot be condoned on the ·
specious ground that it was not actuated by ulterior motives or by
. extraneous considerations. The very act of acting beyond authority
- that too a course of conduct spread over a sufficiently long period
H and involving innumerable instances - is by itself a misconduct. Such
RAMESH CHANDRA SHARMA v.PUNJAB NATIONAL BANK [S.B. SINHA, J.] 593

acts, if permitted, may bring in profit in some cases but they may also A
lead to huge losses. Such adventures are not given to the employees
of Banks which deal with public funds. If what we hear about the
reasons for the collapse of Barings Bank is true, it is attributable to
the acts of one of its employees, Nick Leeson, a minor officer stationed
at Singapore, who was allowed by his superiors to act far beyond his B
authority. As mentioned hereinbefore, the very discipline of an
organization and more particularly, a Bank is dependent upon each of
its employees and officers acting and operating within their allotted
sphere. Acting beyond one's authority is by itself a breach of discipline
and a breach of Regulation 3. It constitutes misconduct within the
meaning of Regulation 24. No further proof of loss is really necessary C
though as a matter of fact, in this case there are findings that several
advances and over-drawals allowed by the respondent beyond his
authority have become sticky and irrecoverable. Just because, similar
acts have fetched some profit - ·huge profit, as the High Court
characterizes it - they are no less blameworthy. It is wrong to D
characterize them as errors of judgment."

12. In this case also, the punishment of dismissal from service was
upheld.

The question, we may notice, came up for consideration before this
Court in State of U.P. v. Bhram Datt Sharma, AIR (1987) SC 943, wherein this E
Court while interpreting Regulatio~ 470 of the Civil Services Regulations in
State of U.P. v. Harihar Bhole Nath, [2006] 11 SCALE 322, held as under:

"A plain reading of the regulation indicates that full pension is
not awarded as a matter of course to a Govt. servant on his retirement F
instead, it is awarded to him if his satisfactory service is approved.
If the service of a Govt. servant has not been thoroughly satisfactory
the authority competent to sanction the pension is empowered to
make suc!t reduction in the amount of pension as it may think proper.
Proviso to the regulation lays down that no order regarding reduction
in the amount of pension shall be made without the approval of the G
appointing authority. Though the Regulations do not expressly provide
for affording opportunity to the Govt. servant before order for the
reduction in the pension is issued, but the principles of natural justice
ordain that opportunity of hearing must be afforded to the Govt..
servant before any order is passed. Article 311 (2) is not attracted, H

-·
594 SUPREME COURT REPORTS [2007] 7 S.C.R.

A nonetheless the Govt. servant is entitled to opportunity of hearing as
the order of reduction in pension affects his right to receive full
pension. It is no more in dispute that pension is not bounty; instead
it is a right to property earned by the Govt. servant on his rendering
satisfactory service to the State."

B The question, thus, as to whether continuation of a disciplinary proceeding
would be pennissible or the employer will have to take recourse only to the
pension rules, in our opinion, would depend upon the tenns and conditions
of the services of the employee and the power of the disciplinary authority
conferred by reason of a statute or statutory rules.

c We have noticed hereinbefore that the Bank have made Regulations
which are stat.utory in nature. Regulation 20(3)(iii) of the said Regulations
reads thus:

"20 (3)(iii). The officer against whom disciplinary proceedings
have been initiated will cease to be in service on the date of
D superannuation but the disciplinary proceedings will continue as if he
was in service until the proceedings are concluded and final order is
passed in respect thereof. The concerned officer will not receive any
pay and /or allowance after the date of superannuation. He will also
not be entitled for the payment of retirement benefits till the
E proceedings are completed and final order is passed thereon except
his own contribution to CPF ."

The said Regulation clearly envisages continuation of a disciplinary proceeding
despite the officer ceasing to be in service on the date of superannuation. For
the said purpose a legal fiction has been created providing that the delinquent
F officer would be deemed to be in service until the proceedings are concluded
and. final order is passed thereon. The said Regulation being statutory in
nature should be given full effect.

13. The effect of a legal fiction is well-known. When a legal fiction is
created under a statute, it must be given its full effect, as has been observed
G in East End Dwellings Co. Ltd v. Finsbury Borough Council. (1951) 2 All
E.R. 587 as under:

"Iryou are bidden to treat an imaginary state of affairs as real, you
must surely, unless prohibited from doing so, also imagine as real the . · -r

H
RAMESHCHANDRASHARMAv.PUNJABNATIONALBANK[S.B.SINHA,J.) 595
consequences and incidents which, if the putative state of affairs had A
in fact existed, must inevitably have from or accompanied it. One of
these in this case is emancipation from the 1939 level of rents. The
statute says that you must imagine a certain state of affairs; it does
notsay that having done so, you must cause or pennit your imagination
to boggle when it comes to the inevitable corollaries of that state of B
affairs."

14. The issue is, thus, no longer res integra, which as would be evident
from the ratio laid down by this Court from time to time.

In State Bank of India v. C.B. Dhall, [1998] 2 SCC 544, it is held as
under: c
"Under Rule 20-B disciplinary proceedings if initiated against an
employee before he retires from service could be continued and
concluded even after his retirement and for the purpose of conclusion
of the disciplinary proceedings, the employee is deemed to have D
continued in service but for no other purpose."

In Harihar Bhole Nath (supra) upon considering Regulations 351-A
" .and 470 of the Civil Services Regulations, this Court following Bhram Datt
Sharma (supra) opined as under:

"The right to withhold or withdraw the pension may arise in E
different situations. Two different contingencies are clearly envisaged
under the Regulations, viz., if the pensioner is found. guilty of
misconduct either in departmental proceedings or in judicial
proceedings. Although, prima facie, the proviso appended to
Regulation 351-A does not envisage continuation of the proceedings, F
the same must be held to be existing on a plain reading thereof.
Regulations 351-A and 470 provide for a composite scheme; by
emphasizing that payment of pension is not automatic and it can be
withheld if the conditions laid down therein are satisfied. Undoubtedly,
before an order of withholding the amount of pension or a part thereof
--i
it is passed, the procedures laid down undec the statute are required G
to be complied with. The procedural safeguards must be kept in mi~d.
Limitations of application of the Rules again have to be borne in mind.

- But the said Rules read with the Proviso and the Explanation
appended thereto construed in their entirety clearly postulate that the
H
596 SUPREME COURT REPORTS [2007) 7 S.C.R.

A proceeding initiated before the delinquent officer reached his age of
superannuation would be valid."

This Court therein distinguished this decision in State of U.P.& Anr. v.
Shri Krishna Pahdey, AIR (1996) SC 1656, Bhagirathi Jena v. Board of
Directors O.S.F.C & Ors., [1999] 3 SCC 666 in the following tenns:
B
"The High Court has placed strong reliance on State of U.P. & J:
Anr. v. Shri Krishna Pandey, AIR (1996) SC 1656, wherein the
departmental enquiry was initiated after the delinquent officer reached
his age of superannuation. Noticing Rule 351-A of the Civil Services
Rules and that the departmental proceeding was initiated after the
~-
-
c retirement of the employee, the same was held to be impennissible in
law. Although it was not necessary to pronounce upon the construction
of Rule 351-A involving a case where a departmental proceeding was
initiated prior to reaching of the age of superannuation by the
delinquent officer, it was observed that as the officer had retired on
D 31st March, 1987 and proceedings were initiated against him on 12th
April, 1991, proviso appended to the Rule would be applicable.

Reliance has also been placed on Bhagirathi Jena v. Board of .,._ •
Directors, O.S.F.C. & Ors., [1999] 3 SCC 666, wherein this Court was
concerned with interpretation of Regulation 17 of the Orissa State
E Financial Corporation Employees' Provident Fund Regulations, 1959".

To the same vein is the decision of this Court in State of U.P. & Ors. v. R.C.
Misra [2007] 4 SCALE 595.

We are, therefore, of the opinion that it was permissible for the Bank
F to continue with the disciplinary proceedings relying on or on the basis of
Regulation 20(3)(iii) of the Punjab National Bank (Officers') Service Regulations,
1979.

15. It is true that the Disciplinary Authority in its order while imposing
punishment observed that the terminal dues of the appellant were to be
G settled. It was merely an observation to take case of a contingency which
might arise. No positive direction was issued in that behalf and, thus, no legal
right thereby_ '_¥as created in favour of the appellant to obtain the retiral
benefits. What it meant thereby was that the law would take its own course.

16. We may also at this juncture notice the relevant provisions of the
H Punjab National Bank Employees'(Pensions) Regulations, 1995. Regulation 22

j
RAMESl-I CHANDRA SHARMA v.PUNJAB NATIONAL BANK [S.B. SINHA, J.) 597
. ..., of the said Regulation reads as under: A
"22 (i)- Resignation or dismissal or removal or termination of an
employee from the services of the Bank shall entail forfeiture of his
entire past service and consequently shall not qualify for pensionary
benefits."
B
Indisputably as a consequence of the order imposing the punishment

-·
of dismissal from service the appellant would not have qualified for the
pensionary benefits. Our attention, however, has been drawn by Mr. Saxena
to Regulations 43 and 48 to contend that even for the purpose of withholding
pension, a specific order in that behalf by a competent authority was required
to be passed. Pension Regulation is meant to be applicable where pension is
c
required to be paid. It also provides for recovery of pecuniary loss caused
to :he Bank from the pensionary benefits of the employee.

Regulations 43 and 48 of the Pension Regulation are as under:
D
"43. Withholding or withdrawal ofpension. The Competent Authority
may, by order in writing, withhold or withdraw a pension or a part
-'(
thereof, whether permanently or for a specified period, ifthe pensioner
is convicted of a serious crime or criminal breach of trust or forgery
of acting fraudulently or is found guilty of grave misconduct.
E
Provided that where a part of pension is withheld or withdrawn,
the amount of such pension shall not be reduced below the minimum
pension per mensem payable under these regulations."

"48. Recovery of Pecuniary loss caused to the Bank (I) The Competent
Authority ma; withhold or withdraw a pension or a part thereof, F
r whether permanently or for a specified period and order recovery from
pension of the whole or part of any pecuniary loss caµsed to the Bank
if in any departmental or judicial proceedings the pensioner is found
guilty of grave misconduct or negligence or criminal breach of trust
or forgery or acts done fraudulently during the period of his service:
G
Provided that the Board shall be consulted before any final orders are
passed;
---,._
Provided further that departmental proceedings, if instituted while the
employee was in service, shall, after the retirement of the employee,
'H
598 SUPREME COURT REPORTS [2007] 7 S.C.R.

A be deemed to be proceedings under these regulations and shall be
continued and concluded by the authority by which they were
commenced in the same manner as if the employee had continued in
service;

(2) No departmental proceedings, if not instituted while the employee
B was in service, shall be instituted in respect of an event which took
place more than four years before such institution:

Provided that the disciplinary proceedings so instituted shall be in
accordance with the procedure applicable to disciplinary proceedings
..... ,,......
1
in relation to the employee during the period of his service. "'.,I

c (3) Where the Competent Authority orders recovery of pecuniary loss
from the pension, the recovery shall not ordinarily be made at a rate
exceeding one-third of the pension admissible on the date of retirement
of the employee:

D Provided that where a part of pension is withheld or withdrawn, the
amount of pension drawn by a pensioner shall not be less than the
minimum pension payable under these regulations."

17. Where a proceeding is initiated for withholding or withdrawal of
pension, Regulation ~.J of the Pension Regulations would be attracted. But
E provisions of the said Regulation ifread in its entirety clearly go to show that
an officer would not qualify for pensinary benefits, if inter alia, he is dismissed
from services.

Regulation 48 empowers the Bank to recover pecuniary loss caused to
it from the pensionary benefits. Regulation 20(3)(iii) of the Discipline and
F Appeal Regulations must be read in conjunction with the Pension Regulations. ·
Where the employees are pension optees, Regulation 48(1) shall apply. In any
event, if an officer is removed or dismissed from service under Regulation 4
- :.1
of the (Discipline & Appeal) Regulations, the Bank need not take recourse
to Regulation 48 of the Pension Regulations as Regulation 22 thereof would •
G be attracted.

We are, therefore, of the opinion that the High Court committed a
manifest error in passing the impugned judgment. I
f
-.
--r·
18. Moreover, it now a trite law that ordinarily the High Court should
H not interfere with the quantum of punishment imposed by the Disciplinary l"

-
RAMESH CHANDRA SHARMA 1·.PUNJAB NATIONAL BANK [S.B. SINHA, J.) 599

Authority. [See U.P.S.R. TC. v. Ram Kishan Arora, (2007] 6 SCALE 721] It has A
not been found by the High Court that the punishment imposed upon the
appellant was impermissible in law or wholly disproportionate to the misconduct
found to have been committed by the delinquent officer.

19. Our attention has been drawn to a decision of this Court in S.P.
Badrinath V. Govt. of A.P. and Ors., [2003] 8 sec 1. This decision has no B
application in this case, as we have noticed in the present case that the acts
of misconduct proved against the appellant were of grave nature.

20. The High Court itself has noticed a large number of decisions and
formed the opinion that the charges levelled against the delinquent officer C
were of grave nature. A major punishment may be inflicted even where no
pecuniary loss was caused to the Bank by reason of the act of the delinquent
officer. In support of the aforementioned proposition of law, the High Court
opined:

"The charges leveled against the petitioner, which were found proved D
upon enquiry, are quite serious in nature. The petitioner had engaged
himself in reckless lending causing huge financial loss to the Bank to
the extent of Rs. 1,14,87,164.76. It also shows that the petitioner had
disbursed loan through middlemen and demanded and received illegal
gratification from a borrower. We are of the considered opinion that
in such cases, the officers of the Bank should not be permitted to E
continue in service at all.

Once _the employer has lost the confidence in the employee and
the bona fide loss of confidence is affirmed, the order of punishment
must be considered to be immune from challenge, for the reason that
discharging the office of trust and confidence requires absolute F
integrity. A necessary implication which must be engrafted on the
contract of service is that the servant must undertake to serve his
master with good faith and fidelity. In a case of loss of confidence,
reinstatement cannot be directed. Granting such an employee the relief
of reinstatement would be "an act of misplaced sympathy which can G
find no foundation in law or in eyuity." (Vide Air India Corporation
Bombay v. V.A. Ravel/ow, AIR (1972) SC 1343; The Binny ltd. v. Their
Workmen, AIR (1973) SC 1403; Kamal Kishore Lakshman v.
Management of Mis. Pan American World Airways Inc & Ors., AIR
(1987) SC 229; Francis Kalein & Co. Pvt. ltd. v. Their Workmen, AIR
(1971) SC 2414; Regional Manager, Rajasthan SRTC v. Sohan Lal, H
. 600 SUPREME COURT REPORTS (2007) 7 S.C.R.

A (2004] 8 SCC 218; and Bharat Heavy Electricals Ltd. v. M.
Chandrashekhar Reddy & Ors., (2005) AIR SCW 1232).

In Kanhaiyalal Agrawal & Ors. v. Factory Manager, Gwaliar
Sugar Co. Ltd., [2001] 9 SCC 609, the Hon.'ble ~upreme Court laid
down the test for loss of confidence to find out as to whether there
B was bona fide loss of confidence in the employee, observing that, (i)
the workman is holding the position of trust and confidence; (ii) by
abusing such position, he commits act which results in forfeiting the
same; and (iii) to continue him in service/establishment would be
embarrassing and inconvenient to the employer, or would be

c detrimental to the discipline or security of the establishment. Loss of
confidence cannot be subjective, based upon the mind of the
management. Objective facts which would lead to a definite inference
of apprehension in the mind of the management, regarding
trustworthiness or reliability of the employee, must be alleged and
proved."
D
Reliance in this regard has also been placed by the High Court on the
decision of State Bank of India v. Bela Bagchi, AIR (2005) SC 3272.

21. The High Court, however, in our opinion, posed unto itself a wrong
question of law that despite applicability of Regulation 20(3)(iii) of the Punjab
E National Bank Officer Employees' (Discipline and Appeal) Regulations, 1977,
the Bank exceeded its jurisdiction in continuing the disciplinary proceedings
after 31.1.1997 on which date the appellant reached the age of superannuation.

22. For the reasons aforementioned, the appeal preferred by the appellant
must be dismissed and the one preferred by the Bank must be allowed.
F Resultantly, Civil Appeal No. 971 of2007 is.dismissed and Civil Appeal No.
975 of 2007 is allowed. However, in the facfs and circumstances of the case,
there shall be no order as to costs.

V.S.S. C.A. No. 971/07 dismissed
C.A. No. 975/07 allowed.