STATE BANK OF BIKANER & JAIPURversusNEMI CHAND NALWAYA

                     [2011) 3 S.C.R. 589


           STATE BANK OF BIKANER & JAIPUR                          A
                               v.
                   NEMI CHAND NALWAYA
               (Civil Appeal No. 5861 of 2007)

                      MARCH 01, 2011
                                                                   B
      [R.V. RAVEENDRAN AND A.K. PATNAIK, JJ.]

    Service law:

     Dismissal - On ground of willful dereliction of duty -        c
Departmental enquiry against bank employee on the
a/legation that he allowed fraudulent withdrawal of certain
amount by    a   person impersonating as account holdfH.
resulting in loss to the bank - Dismissal from service -:
However, employee acquitted in a criminal case in regard to 0
the allegations which were the subject matter of the
departmental enquiry on the ground that the charges were not
proved beyond doubt - Order of dismissal challenged on the
ground of acquittal in the criminal case - High Court set aside
the order of dismissal and issued direction for re-instatement E
with full backwages and consequential benefits - On appeal,
held: Order passed by the High Court not justified - Loss of
confidence in an employee is an important and relevant factor
- Bank is justified in contending that not only employees who
are dishonest, but those who are guilty of gross negligence,
are not fit to continue in its service - High Court interfered with !=
the said finding without expressly holding that the said finding
of guilt was effoneous - It proceeded as if it was sitting in
appeal over the departmental inquiry and interfered with the
finding on a vague assumption - Order of acquittal passed
by the criminal court by giving the employee the benefit of G
doubt, would not in any way render a completed disciplinary
proceedings invalid nor affect the validity of the finding of guilt
or consequential punishment - Standard of proof required in
criminal proceedings and the departmental enquiries are
                                 589                                H
    590      SUPREME COURT REPORTS                [2011) 3 S.C.R.


A different - Thus, order of the High Court is set aside - Finding
    of guilt recorded by the disciplinary authority is upheid,
    however, the punishment is modified from 'dismissal' to
    'compulsory retirement'.

       Departmental enquiries - Interference with - Held:
8
  Courts will not interfere with findings of fact recorded in
  departmental enquiries, except where such findings are based
  on no evidence or where they are clearly perverse - Test to
  find out perversity is to see whether a tribunal acting
  reasonably could have arrived at such conclusion or finding,
C on the material on record - Courts would interfere if principles
  of natural justice or statutory regulations have been violated
  or if the order is found to be arbitrary, capricious, ma/a fide
  or based on extraneous considerations.

D        B. C. Chaturvedi vs. Union of India 1995 (6) SCC 749;
    Union of India vs. G. Gunayuthan 1997 (7) SCC 463; Bank
    of India vs. Degala Suryanarayana 1999 (5) SCC 762; High
    Court of Judicature at Bombay vs. Shahsi Kant S Patil 2001
    (1) sec 416 - relied on.
E                        Case Law Reference:
          1995 (6) sec 149        Relied on.           Para 6
          1997 (7) sec 463        Relied on.           Para 6
F         1999 (5) sec 162        Relied on.           Para 6
          2001 (1) sec 416        Relied on.           Para 6

        CIVIL APPELLATE JURISDICTION : Civil Appeal No.
    5861 of 2007.
G
        From the Judgment & Order dated 4.4.2006 of the High
    Court of Judicature for Rajasthan at Jodhpur in D.B. Civil
    Special Appeal No. 439 of 1998.

      Anil Kumar Sangal, Sneha Kalita, D.P. Mohanty for the
H Appellant.
   STATE BANK OF BIKANER & JAIPUR v. NEMI                  591
             · CHAND NALWAYA
     P.S. Patwalia, Priyanka Mathur Sardana, A. Sumathi for       A
the Respondent.

    The following Order of the Court was delivered

                         ORDER
                                                                  B
     R. V. RAVEENDRAN J. The respondent was employed
as a clerk in the Kalindri branch of the appellant Bank. He was
issued a charge-sheet dated 30.8.1988. The two charges
against him are extracted below :

    (i) On 14.10.1987, you disclosed the balance of SB
                                                                  c
    Account No.1025 of Shri Dharamchand Nathaji lying in in-
    operative account to an unidentified person posing himself
    as the said account holder though the person was not
    having even Pass Book of that account. This disclosure
    of secrecy led a fraudulent withdrawal of Rs.6,000/- from     D
    the said account thereby putting the bank into loss.
    (ii) On 14.10.1987, you have advised Shri l.M. Rawal, the
    counter clerk handling Savings Banks ledgers to transfer
    the balance lying in account number 1025 in the name of E
    Shri Dharam Chand Nathaji from in-operative Savings
    Bank ledger to that of operative ledgers without first
    obtaining the permission of the Branch Manager which is ,
    a pre-requirement in all such cases. It is further alleged that
    you have collected the withdrawal form purported to have F
    been signed by the depositor, handed over the same to
    Shri l.M. Rawal, the counter clerk, obtained token and after
    it was passed for payment by the Branch Manager,
    obtained payment from paying cashier Shri S.R. Meghwal
    The real depositor has subsequently complained that the G
    signature on withdrawal form was forged and the matter
    is now under police investigation."
    The charge-sheet followed a preliminary enquiry by one H.
S. Sharma, an officer of the appellant bank, in which the
                                                                  H
    592     SUPREME COURT REPORTS                 [2011] 3 S.C.R.

A · respondent broadly admitted the facts constituting the subject
    matter of the two charges.

       2. A joint inquiry was held in respect of the charges against
  the respondent and two others namely l.M. Rawal and S.R.
  Meghwal. Several witnesses were examined. The Inquiry Officer
8
  submitted a report dated 12.6.1989 holding that both the
  charges against the respondent were proved. He also held that
  the charges against l.M. Rawal and S.R. Meghwal were also
  proved. The disciplinary authority considered the inquiry report.
  He was of the view that on the material placed in the inquiry, -
C the respondent was not guilty of the first charge. He, however,
  concurred with Inquiry Officer in regard to the finding of guilt
  recorded in respect of the second charge. He, therefore, issued
  a show cause notice dated 23.6.1990 proposing to impose the
  punishment of dismissal in regard to the second charge. After
D considering the respondents' reply, the disciplinary authority, by
  order dated 1.8.1990, imposed the punishment of dismissal.
  The matter rested there for several years.
       3. In the meanwhile, on the basis of a complaint by the
E Branch Manager, a charge-sheet was filed before the Chief
  Judicial Magistrate, Sirohi, in regard to the allegations which
  were the subject matter of the departmental enquiry. The criminal
  court acquitted the respondent by judgment dated 7.7.1994,
  holding that charges were not proved beyond doubt. Thereafter,
F he filed a writ petition (WP No.5761/1994) challenging his
  dismissal, on the ground that he was acquitted in the criminal
  case. The said writ petition was disposed of by a brief order
  dated 26.5.1997 observing that he may avail the remedy of
  appeal and the appellate authority may consider the explanation
G for delay in submitting the appeal.
      4. The respondent filed an appeal before the Appellate
  Authority, with an application for condonation of delay. The
  appellate authority, by order dated 7.10.1997, dismissed the
  application for condonation of delay and consequently
H dismissed the appeal.
    STATE BANK OF BIKANER & JAIPUR v. NEMI                  593
     CHAND NALWAYA [R.V. RAVEENDRAN, J.]
      5. The respondent challenged the order of the appellate       A
authority in WP No.450/1998. A leaned Single Judge of the
Rajasthan High Court dismissed the writ petition on the ground
that the appellate authority had not committed any error in
dismissing the appeal on the ground of delay. The respondent
filed a special appeal and the division bench of the High Court     B
allowed the appeal by the impugned judgment dated 4.4.2006.
The pendency of the criminal case was accepted as sufficient
explanation regarding delay. The division bench held that the
non-filing of the appeal by the respondent in time was due to a
bona fide impression that he could do so after the disposal of      c
the criminal proceedings. With reference to merits, the division
bench held that no wilful or fraudulent conduct with intention to
cause loss to the appellant Bank, nor misappropriation by the
respondent, was made out. The division bench was of the view.
that the case was not one where respondent had acted in wilful      D
dereliction of duty; and that in an increasing customer-friendly
atmosphere in the Bank, the respondent had acted bona fide
and allowed the person considered by him to be a valued
customer tb operate on the account not realising that such
person was impersonating the account holder. The High Court
was of the view that in such circumstances, the question of loss    E
of confidence would not arise and the punishment of dismissal
was grossly disproportionate to the misconduct. Therefore, it
set aside the order of dismissal and directed reinstatement with
full backwages and consequential benefits. The said order is
challenged in this appeal by special leave.                         F
     6. It is now well settled that the courts will not act as an
appellate court and reassess the evidence led in the domestic
enquiry, nor interfere on the ground that another view is possible
on the material on record. If the enquiry has been fairly and G
properly held and the findings are based on evidence, the
question of adequacy of the evidence or the reliable nature of
the evidence will not be grounds for interfering with the findings
in departmental enquiries. Therefore, courts will not interfere
with findings of fact recorded in departmental enquiries, except H
    594      SUPREME COURT REPORTS                 [2011] 3 S.C.R.


A where such findings are based on no evidence or where they
  are clearly perverse. The test to find out perversity is to see
  whether a tribunal acting reasonably could h~ve arrived at such
  conclusion or finding, on the material on record. Courts will
  however interfere with the findings in disciplinary matters, if
B principles of natural justice or statutory regulations have been
  violated or if the order is found to be arbitrary, capricious, mala
  fide or based on extraneous considerations. (vide B. C.
  Chaturvedi vs. Union of India - 1995 (6) SCC 749, Union of
  India vs. G. Gunayuthan - 1997 (7) SCC 463, and Bank of
C India vs. Degala Suryanarayana - 1999 (5) SCC 762, High
  Court of Judicature at Bombay vs. Shahsi Kant S Patil - 2001
  (1) sec 416).

          7. When a court is considering whether punishment of
    'termination from service' imposed upon a bank employee is
D   shockingly excessive or disproportionate to the gravity of the
    proved misconduct, the loss of confidence in the employee will
    be an important and relevant factor. When an unknown person
    comes to the bank and claims to be the account-holder of a
    long inoperative account, and a bank employee, who does not
E   know such person, instructs his colleague to transfer the
    account from "dormant" to "operative" category (contrary to
    instructions regulating dormant accounts) without any kind of
    verification, and accepts the money withdrawal form from such
    person, gets a token and collects the amount on behalf of such·-
F   person for the purpose of handing it over to such person, he in
    effect enables such unknown person to withdraw the amount
    contrary to the banking procedures; and ultimately, if it
    transpires that the person who claimed to be account holder
    was an imposter, the bank can not be found fault with if it says
G   that it has lost confidence in the employee concerned. A Bank
    is justified in contending that not only employees who are
    dishonest, but those who are guilty of gross negligence, are not
    fit to continue in its service.
          8. Several witnesses were examined to prove the charge.
H
    STATE BANK OF BIKANER & JAIPUR v. NEMI                  595
     CHAND NALWAYA [R.V. RAVEENDRAN, J.].
  One of them was H.S. Sharma who conducted the preliminary A
  inquiry and to whom the respondent had made a statement
  broadly admitting the facts which constituted the subject matter
  of the second charge. l.M. Rawal, who was the cashier and l.C.
  Ojha, the officiating Branch Manager were also examined .
. Based upon their evidence, the Inquiry Officer found the B
  respondent to be guilty of the second charge and that has been
  accepted by the disciplinary authority. The High Court has
  interfered with the said finding without expressly holding that the
  said finding of guilt was erroneous. The High Court has
  proceeded as if it was sitting in appeal over the departmental c
  inquiry and interfered with the finding on a vague assumption
  that the respondent must have acted bonafide in an "increasing
  customer friendly atmosphere". There was no justification for
  the division bench to interfere with the finding of guilt.

      9. The fact that the criminal court subsequently acquitted D
 the respondent by giving him the benefit of doubt, will not in any
 way render a completed disciplinary proceedings invalid nor
 affect the validity of the finding of guilt or consequential
 punishment. The standard of proof required in criminal
 proceedings being different from the standard of proof required E
 in departmental enquiries, the same charges and evidence may
 lead to different results in the two proceedings, that is, finding
 of guilt in departmental proceedings and an acquittal by giving
 benefit of doubt in the criminal proceedings. This is more so
 when the departmental proceedings are more proximate to the F
 incident, in point of time, when compared to the criminal
 proceedings. The findings by the criminal court will have no
 effect on previously concluded domestic enquiry. An employee
 who allows the findings in the enquiry and the punishment by
 the disciplinary authority to attain finality by non-challenge, G
 cannot after several years, challenge the decision on the
 ground that subsequently, the criminal court has acquitted him.
     10. We are, therefore, of the view that the High Court was
 not justified in quashing the panishment and directing            H
    596     SUPREME COURT REPORTS                  (2011) 3 S.C.R.

A reinstatement with backwages and consequential benefits. In
  fact, the order of the High Court directing back wages amounts
  to rewarding a person who has been found guilty of a
  misconduct.

        11. However having regard to the fact that the proven
8
    charge did not involve either misappropriation or fraudulent
    conduct and the other circumstances of the case, we are of the
    view that the punishment of dismissal should be substituted by
    compulsory retirement, which does not involve reinstatement.

C        12. We, accordingly, allow the appeal and set asiae the
    judgment of the High Court. We uphold the finding of guilt
    recorded by the disciplinary authority, but modify the punishment
    from 'dismissal' to 'compulsory retirement'. There is therefore
    no question of grant of any back-wages.
D
    N.J.                                           Appeal allowed.