Holding

Statements recorded under Section 161 CrPC are admissible in disciplinary inquiries and, when the employee is given copies and an opportunity to cross‑examine, the inquiry is not vitiated; the presence of a CBI inspector does not invalidate the proceedings.

Summary

The State Bank of Bikaner & Jaipur dismissed its employee S.N. Gupta on charges of accepting bribes, based on a departmental inquiry that incorporated witness statements recorded under Section 161 of the Criminal Procedure Code. The CBI investigation later found no reliable evidence, but the disciplinary proceedings continued. The Rajasthan High Court set aside the Tribunal's award, holding that the Section 161 statements were inadmissible and that the presence of a CBI inspector vitiated the inquiry. On appeal, the Supreme Court held that statements under Section 161 may be used in disciplinary inquiries provided the employee receives copies and is given an opportunity to cross‑examine, and that the removal of the CBI inspector removed any defect. Consequently, the High Court judgments were set aside, the dismissal upheld, and interim payments made to the employee were not required to be refunded.

Issues considered

Whether statements recorded under Section 161 CrPC are admissible in a disciplinary inquiry.
Whether reading such statements to witnesses, providing copies to the employee, and allowing cross‑examination satisfies the principles of natural justice.
Whether the presence of a CBI inspector as a witness vitiates the disciplinary proceedings.
Whether interim payments made to the employee during the pendency of the appeal must be refunded.

Legislation cited

Code of Criminal Procedure, 1973s. 161, s. 162

Subjects

disciplinary inquirySection 161 CrPCadmissibility of statementsnatural justiceCBI inspectorservice lawemployee dismissaldepartmental enquiry

Judgment

STATE BANK OF BIKANER AND JAIPUR A
. ··)'
v.
SRINATH GUPTA AND ANR .

• OCTOBER 25, 1996

[J.S. VERMA AND B.N. KIRPAL, JJ.] B

Service Law : Disciplinary proceedings-Statement under Section 161
Cr. P. C. taking of on record in Departmental Enquiry-Read over and ad-
mitted by witness-Copy of statement given to the employee-Cross examina-
tion of the witness-Opportunity given-Whether enquiry vitiated-Held-No C
illegality committed--Enquiry Proceedings not vitiated.

An FIR was lodged with the CBI against respondent no.1 alleging
that he had demanded and accepted illegal gratification. Respondent no.1
was dismissed from service after a departmental enquiry. Appeal before
the appropriate authority was dismissed. The Tribunal upheld the dis· D
missal order. On appeal before the High Court the Single Judge allowed
the writ petition directing the appellant Bank to reinstate respondent no.1.
The appeal preferred by the appellant before the Division Bench of High
Court was dismissed. Aggrieved by the said judgment, the appellant has
preferred the the present appeal. E
Allowing the appeal, this Court

HELD : 1. The statements under Section 161 Cr.P.C. may not be
admissible in the criminal trial but can be produced in a disciplinary
inquiry. The person who made the statement has been examined before the F
Inquiry Officer. The statement recorded under Section 161 Cr.P.C. was
read over to the witness who admitted the contents thereof and the state·
ment became part of the examination-in-chief of the witnesses before the
Enquiry Officer. The copy of the statement had been given to the respon·
dent in advance and full opportunity was granted to the respondent to G
·- cross examine the witnesses. No illegality had been committed by taking
on record the statements which had been made under Section 161 Cr.P.C.
and the conclusion of the High Court that the disciplinary proceedings
stood vitiated is not correct. [784-E-G]

2. On the question regarding presence of CBI Inspector during the H
779
780 SUPREME COURT REPORTS [1996] SUPP. 7 S.C.R.

A disciplinary proceedings, when the objection of his presence was raised he
was removed from there. This being so one of the reasons given by the single ......
judge for setting aside the award was based on wrong premise. [787-E]

3. The Judgement of the single Judge and the Division Bench are
set-aside. Payments made to respondent no.1 during the pendency of
B appeal by reason of interim order are not required to be refunded. [787-G]

State of Mysore v. S.S. Makapur, [1963] 2 SCR 943, relied on.

State of Haryana v. Rattan Singh, (1982) 1 LLJ 46; Khatri and ors. v.
State of Bihar& ors., [1981] 3SCR145 and MIS Kosoram Cotton Mills Ltd.
c v. Gangadhar and Ors, [1964] 2 SCR 809, referred t..1.

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 3847 of
1993.

D
From the Judgment and Order dated 21.10.92 of the Rajasthan High
Court in D.B.SA: No. 563 of 1992. .
G.L. Sanghi and A.V. Rangam for the Appellant.
'
V.M. Tarkuncle and Sushi! Kr. Jain for the Respondents.

E The Judgement of the Court the was delivered by

KIRPAL, J. This appeal by special leave arises from the judgment of
the Division Bench of the Rajasthan High Court which dismissed the
appeal filed by the appellant against the judgment of the Single Judge who
. had allowed the writ petition filed by respondent No.l quashing the order
F of the Central Go~ernment Industrial Tribunal (hereinafter referred to as
'the Tribunal') which had upheld the dismissal of the said respondent No.l
pursuant to the proceedings which had been held.

Respondent No.l was initially appointed as cashier-cum-godown
keeper by the appellant bank in the year 1961. He was promoted as
G Head-Cashier on 25.3.1970 and was posted at Sunel Branch of the Bank.
In June, 1973, he was transferred to Sangod Branch.

On 31.3.1975, the appellant lodged with the Central Bureau of Inves-
-·
tigation (hereinafter referred to as 'C.B.1.'), an F.l.R. in which it was, inter
alia, alleged that while working as the cashier at the Sunel Branch during
H the year 1970-1971, ~he said respondent had demanded and accepted illegal
SfA1EBANKOFBIKANERANDJAIPURv. SRINATIIGUPTA[KIRPAL,J.j 781

gratification from a number of persons in consideration of his showing A
favours to them in getting their loans sanctioned. The C.B.I. submitted its
final report on 21.2.1977 stating that no reliable evidence was available in
support of the allegations and that the evidence against the said respondent
was scanty. The final report was accepted by the Court on 2.11.1977 and
no prosecution of therespondent took place.
B
In the meantime departmental disciplinary proceedings were com-
menced by the appellant. On 22.3.1976, a charge-sheet was served on the
respondent. These charges were as follows :

"(1) You demanded and accepted bribe from the following persons
as mentioned against each for arranging sanction of bank loans in C
their favour:

NAME AMOUNT OF BRIBE

S/SHRI Rs.
D
Ashraf Ali 50/-

Dhana Lal 50/-

Raghu Nath 100/-
E
Mitthu Lal 50/-

Mohan Lal 350/-

Bapu Lal 300/-

Ram Singh 350/- F
Kanhi Ram 350/-

Mangu 375/-

(ii) You demanded and accepted Rs. 20/- in the month of May G
1973 as bribe from Smt. Phuli Bai Sweepers at Sunel Branch for
arranging payment of bonus amounting to Rs. 80/- payable to her.

(iii) You demanded and accepted bribe of Rs. 500/- (Rs. 50/- per
month) w.e.f. August, 1972 to May, 1973 from Shri Nemi Chand
for arranging for him a temporary appointment of a Peon at the H
782 SUPREMECOURTREPORTS [1996)SUPP. 7S.C.R.

A branch on 5th August, 1972.

(iv) You raised a fictitious loan of Rs. 1000/- at the branch in the ... _-<" ...
name of one Shri Panna Lal by getting the same guaranteed by
your brother Shri Jagdish Chandra."

B After the Inquiry Officer was appointed, the inquiry proceedings
commenced. Deposition of a number of prosecution witnesses was
recorded including the statements of Ashraf Ali and Dhanna Lal, from
whom bribe was alleged to have been demanded for getting the loan
sanctioned. Some of the other witnesses. however, turned hostile. State-
c ments of the concerned witnesses including those of Ashraf Ali and Ohan-
na Lal had earlier been recorded by the appellant under Section 161
\

Cr.P.C. During 'the examination of these witnesses before the inquiry
officer, these statements were brought on record as part of the deposition.
It appears that copies of these statements were given to the respondent
workman in advance and the contents of the same were admitted by the
D witnesses and opportunity was given to the said workman to cross-examine
them.

The Inquiry Officer submitted his report on 10.2.1979 and as a
consequence thereof, a notice was issued to repondent No.1 to show cause
why he should not be dismissed from service. A reply was submitted by the
E
workman on 11.3.1979 and on 27.6.1979, the appellant passed an order
dismissing him from service. An appeal, against the order of dismissal filed
before the appropriate authority was dismissed on 2.8.1979.

The respondent then approached the Conciliation Officer, Kota and
F a failure report was sent to the Government. Thereupon the Central
Government referred the following dispute to the Tribunal:

"Whether the action of the management of State Bank of Bikaner
& Jaipur in dismissing Shri S.N. Gupta, Head Cashier, Pipalda
Branch in District Kota with effect from 6.7.1979 is justified? If
G not, to what relief is the workman concerned entitled?"
~ ..
Vide Award dt. 9.4.1984, the Tribunal upheld the dismissal of the
said respondent. The workman then filed a writ petition number 631 of
1984 before the Rajasthan High Court at Jaipur. By judgment dated
H 17.12.1984 the Award of the Tribunal was set aside and the case remanded
SfA1EBANKOFBIKANERANDJAIPURv. SRINAIBGUPTA[KIRPAL,J.) 783

with certain directions, inter alia, relating to the question as to whether the A
domestic enquiry was defective or not and whether the punishment
awarded was justified. Thereafter the Tribunal again passed an award
dated 29.5.19985 confirming its earlier decision an.d it upheld the dismissal
of the said respondent.

The respondent No.1 then filed a fresh writ petition in the Rajasthan B
High Court. Vide judgment dated 5.8.1992, a Single Judge of the High
Court allowed the writ petition. The award dated 29.5.1985 was quashed
and respondent No.1 was directed to be taken on duty forthwith. In regard
to back wages, it was held that respondent No.1 would be entitled to 50%
... of the total amount which may be found due to him subject to any C
deduction therefrom if he had worked during that period. The appellant
then filed an appeal before the Division Bench of the High Court but the
same was dismissed on 21.10.1992 with a modification that respondent be
paid 30% of the salary for the period during which the inquiry had
remained pending. Aggrieved by the said judgment, the appellant has D
preferred the present appeal.

The respondent had succeeded before the High Court on two
grounds, firstly; the High Court came to the conclusion that the statements
which had been recorded under Section 161 Cr.P.C. were not admissible
and, therefore, the decision of the Tribunal stood vitiated. Secondly, the E
Single Judge had also held that during the course of disciplinary proceed-
ings, C.B.I. Inspector had remained therein and his presence itself had
also vitiated the proceedings because the witnesses were under a fear to
state the whole truth contrary to what had been recorded earlier by the
C.B.I. Inspector.
F
As regards the statements under Section 161 Cr.P.C. are concerned,
we find that the said statements were supplied to the respondeµt on
1.11.1976. The evidence of these persons, we are informed, was recorded
on 5.4.1977. The procedure which was followed by the Inquiry Officer,
relating to the taking on record of these statements under Section 161 G
Cr.P.C. would be evident from the proceedings of the Inquiry Officer which
are as follows:

"The bank representative produced his witness Sri Dhannalal s/o
Mangilal residence of Sunel for evidence. At this moment Sri S.L.
Gupta, employees representatives raised his objection to the pro- H
784 SUPREMECOURT REPORTS (1996] SUPP. 7 S.C.R.

A cedure of reading the statement of the witnesses by bank repre-
sentative previously recorded.

With a view to offer equal opportunity to both the sides and to
I,

enable the bank to present the case in the proper manner, as a
norm of the domestic enquiry, I allow this procedure to continue
B and proceed further in the case.

The statement of Dhannalal s/o Mangilal previously recorded by
the CBI Inspector was read over to him by the bank representative.
Sri D hannalal admitted the contents of the statement.
c Cross examination by defence ....................... "

Accordii}g to the appellant in respect of Ashraf Ali also a similar
procedure was followed. It is now well-settled that strict rules of evidence
are not applicable and are not required to be followed in domestic inquiry
D e.g. see State of Haryana v. Rattan Singh, (1982) 1 LLJ. 46. What has to be
ensured is that the principles of natural justuce are complied with and the
delinquent workman has the opportunity of defending himself.

The statements under Section 161 Cr.P.C. may not be admissible in
E the criminal trial, but the said statements can be produced in a disciplinary
inquiry like the present. The person who made the statement has been
examined before the inquiry officer. It was open to the witness to have
stated orally t~e entire contents of what was recorded in his statement
under Section 161 Cr.P.C. Instead of following this time consuming proce-
dure, the said statement recorded under Section 161 Cr.P.C. was read over
F to the witaess who admitted the contents thereof. In this way the earlier
statement under Section 161 Cr.P.C. became a part of the examination-in-
chief of the witness before the Inquiry Officer. It is not in dispute that the
said statements had been given to the respondent in advance and full
opportunity was granted to the respondent to cross-examine the said
G witnesses. This· being the case, it is difficult to appreciate as to how the
high court could have come to the conclusion that the inquiry proceedings
stood vitiated.

In comirig to the aforesaid conclusion, we are fortified by the
decision of a Constitution Bench of this Court in the case of State of Mysore
H v. S.S. Makapur [1963] 2 SCR 943. In that case also, statements of witnesses
SfATEBANKOFBIKANERANDJAIPURv. SRINATIIGUITA[KIRPAL,J.] 785
which had been recorded behind the back of the delinquent officer were A
taken on record and an opportunity of cross-examination was given. The
·v High Court had come to the conclusion that the principles of natural justice
had not been followed because of the admission in evidence of such
statements. While allowing the appeal and rejecting the contention of the
respondent therein, this Court in S.S. Makapur's case (supra) at page 951
B
observed as follows :
I
"When the evidence is oral, normally the examination of the witness
will in its entirety, take place before the party charged, who will
have full opportunity of cross-examining him. The position is the
same when a witness is called, the statement given previously by
him behind the back of the party is put to him, and admitted in
c
evidence, a copy thereof is given to the party, and he is given an
opportunity to cross-examine him. To require in that case that the
contents, of the previous statement should be repeated by the
witness word by word, and sentence by sentence, is to insist on
bare technicalities, and rules of ·natural justice are matters not of D
from but of substance. In our opinion they are sufficiently complied
with when previous statements given by witnesses are read over to
them, marked .on their admission, copies thereof given to the'
person charged, and he is given an opportunity to cross-examine
them."
E
The aforesaid obervations apply in the present case as well. In Khatri
& Ors. etc. v. State of Bihar& Ors., (1981) 3 SCR 145, dealing with petition
under Article 32 of the Constitution, the question arose whether the
statements made before the police officer in the course of investigation
could be directed to be produced and whether the bar of Section 162 F
Cr.P.C. applied or not. In this connection, it was observed, at page 152, as
follows:

"It bars the use of any statement made before a police officer in
the course of an investigation under Chapter XII, whether
recorded in a police diary or otherwise, but by the express terms G
,;>- of the Section t.his bar is applicable only where such statement is
sought, to be used at any inquiry or trial in respect of any offence
-.4 under investigation at the time when such statement was made.· If
•
the statement made before a police officer in the course of an
investigation under chapter XII is sought to be used in any H
786 SUPREME COURT REPORTS (1996) SUPP. 7 S.C.R.

A proceeding other than an inquiry or trial or even at an inquiry or
trial but in respect of an offence other than thati which was under
investigation at the came when such statement was made, the bar
of Section 162 would not be attracted."

· Mr. Tarkunde, learned counsel for the respondent, however, placed
B strong reliance on the following observations of this Court in M/S. Kosoram
Cotton Mills Ltd. v. Gangadhar and others, [1964] 2 SCR 809, at page &27:

"Further we can take judicial notice of the fact that many of our
industrial workers are illiterate and sometimes even the repre-
sentatives of labour union may not be present to defend them. In
c such a case to read over a prepared statement in a few minutes
and then ask the workmen to cross-examine would make a mockery
of the opportunity that the rules ofnatural justice require that the
workmen should have to defend themselves. It seems to us there-
fore that when one is dealing with domestic inquiries in industrial
D matters, the proper course for the management is to examine the
witnesses from the beginning to the end in the presence of the
workman at the enquiry itself. Oral examination always takes inuch
longer than a mere reading of a prepared statement of the same
length and brings home the evidence more clearly to the person
against whom the inquiry is being held. Generally speaking there"
E
fore we should expect a domestic inquiry by the management to
be of this kind."

The aforesaid observations do imply that oral examination should
take place and reading of a prepared statement may cause prejudice but
F the Court did not hold that the procedure which has referred to in
Shibavasappa's case (supra) was illegal. In fact in the very next sentence,
it was observed in the said case as follows :

"Even so, we. recognise the force of the argument on behalf of the
appellant that the main principles of natural justice cannot change
G from tribunal to tribunal and therefore, it may be possible to have
another method of conducting a domestic inquiry (though we again
repeat that this should not be the rule but the exception) and that
is in the manner laid down in Shibavasappa's case. The minimum
that we shall expect where witnesses are not examined from the
H very beginning at the enquiry the presence of the person charged
SfATEBANKOFBIKANERANDJAIPURv. SRINA1HGUPTA[KIRPAL,J.] 787
is that the person charged should be given a copy of the statements A
made by the witnesses which are to be used at the inquiry well in
advance before the inquiry begins and when we say that the copy
of the statements should be given well in advance we mean that it
should be given at least two days before the inquiry is to begin."

In the present case, statements under Section 161 Cr.P.C. had been B
given to respondent No.l a number of months before the witnesses were
examined. Therefore, even the minimum requirement which is referred to
in Kesoram Cotton Mills Ltd. case (supra) was complied with.

From the aforesaid discussion the only conclusion which could be C
arrived at is that in the present case no illegality had been committed by
taking on record the statements which had been made under Section 161
Cr.P.C. and the conclusion of the High Court which has held that the
disciplinary proceedings stood vitiated, is not correct.

Coming to the question with regard to the presence of a C.B.l. D
Inspector during the disciplinary proceedings, Mr. G.L. Sanghi, learned
counsel for the appellant, has drawn our attention to the observation in the
award of the Tribunal in which it is stated that the C.B.l. Inspector. was
one ·of the witnessts in the enquiry. When the objection regarding his
presence was raised then he was removed from there. This being so, one E
of the reasons given by the Single Judge for setting aside the award, was
based on a wrong premise. In fact, the Division Bench did not base its
decision on this ground.

For the aforesaid reasons, this appeal is allowed. The Judgments of
the Single Judge and the Division Bench of the Rajasthan High Court are F
set aside. During the pencency of this appeal, by reason of the interim
order passed by this Court, certain payments have been made to the
respondent. In the circumstances of the case we direct that the amount so
paid is no required to be refunded. There will be, however, no order as to
costs.
G
S.V.K.l. Appeal allowed.