1. This Writ petition is filed to issue a writ of Mandamus declaring (i) the Appellate Authority's Letter No.F/DP/CVO/F.2/52, dated13.12.2005, (ii) the order dated 28.02.2006 passed by the Appellate Authority in File No.F/OP/CVO/F.3/65, and (iii) the Disciplinary Authority's letter No. F/DP/CVO/F.2/16, dated 08.06.2005, as illegal and arbitrary, and consequently, to direct the respondents to pay all the benefits by duly fixing the pay of the petitioner.
2. Heard Sri Sankarshan, learned counsel representing Smt K.Udaya Sri, learned counsel-on-record for the petitioner, and Sri Mujib Kumar Sadasivuni, learned Standing Counsel for respondents.
3. The brief facts, as averred in this writ petition, are that the petitioner was appointed as a Scale-I Officer in Sri Satavahana Grameena Bank on 24.11.1984 and was subsequently promoted as a Scale-II Officer and posted at the Head Office, Karimnagar; that the petitioner was placed under suspension on 08.11.1998 on certain allegations; that thereafter, a charge memo dated 08.05.2000 was issued framing four charges against him, i.e., (a) failure to ensure proper maintenance, (b) conduct of the Head Office and inter-bank accounts, (c)failure to monitor the reconciliation work and timely elimination of unreconciled entries, and (d) failure to detect fraudulent transactions committed at Karimnagar Branch during April, 1997 and March, 1998, deliberately overlooking high-value entries relating to the fraud, and aiding and abetting third parties in the commission of fraud and suppressing its detection.
3.1. It is further averred that the petitioner denied the charges and submitted a detailed explanation, notwithstanding the explanation submitted by the petitioner, a departmental enquiry was conducted and the Enquiry Officer submitted his report; that thereafter, a show-cause notice dated 24.05.2005 was issued and the Disciplinary Authority, by proceedings, dated 08.06.2005, imposed the penalty of reduction by one stage for a period of three years without cumulative effect and treated the period of suspension as 'off duty'.
3.2. It is further averred that aggrieved by the order of the Disciplinary Authority, the petitioner preferred an appeal before the Appellate Authority; that the Appellate Authority, instead of considering the appeal, issued a show-cause notice, dated 13.12.2005 proposing enhancement of the punishment, including reduction of five increments permanently, denial of future promotions and treatment of the period of suspension without payment of any additional emoluments other than the subsistence allowance already paid; that the Appellate Authority also proposed recovery of an amount of Rs.1.93 lakhs towards the alleged loss suffered by the Bank due to the fraud and part of the interest thereon, adjustment of 50% of the salary revision arrears towards such recovery, and recovery of the net increase in the monthly salary arising out of the 8th Bipartite Settlement; and that aggrieved thereby this Writ Petition is filed.
3.3. Learned counsel for the petitioner submitted that the petitioner submitted a detailed explanation dated 31.12.2005 to the show-cause notice, specifically contending that he had followed the system and procedure which had been in practice since the inception of the Bank; that there was no procedure for assigning serial numbers to Head Office advices and that the allegation that such advices were handled casually was incorrect; that his duties as Manager (Accounts) were confined to the maintenance of C.R.R. and S.L.R., investments, checking of the General Ledger and General Ledger Abstract and supervision of the General Section, whereas the reconciliation work was entrusted to the Desk Officer (Accounts); that he had no direct control over the day-to-day affairs of the Karimnagar Branch; and that the allegations that he deliberately overlooked fraudulent transactions or aided and abetted the commission of fraud were false, concocted and baseless and that merely holding the post of Manager (Accounts) could not form the basis for holding him responsible for the alleged fraud.
3.4. He further submitted that the Appellate Authority, without properly considering the petitioner's explanation and without assigning any reasons, passed the impugned order, dated 28.02.2006, enhancing the punishment; that the Appellate Authority had no authority to enhance the punishment imposed by the Disciplinary Authority; and that, in any event, the enhanced punishment was grossly disproportionate to the alleged misconduct, particularly when the petitioner had denied any involvement in the fraudulent transactions; that the Appellate Authority failed to consider the petitioner's past service record before imposing the enhanced punishment; that the petitioner had been discharging his duties to the satisfaction of his superiors from the date of his appointment; and that the Appellate Authority failed to assign any reasons justifying the imposition of the enhanced punishment.
3.5. He further submitted that ordering for recovery of Rs.1.93 lakhs towards the alleged loss caused to the Bank was illegal and arbitrary; that the respondents had been recovering an amount of Rs.2,410/- from the petitioner's salary every month; that the arrears payable to the petitioner pursuant to the salary revision with effect from 01.04.2006 were also being withheld or adjusted towards the proposed recovery; and that the petitioner was, therefore, suffering serious financial prejudice on account of the impugned proceedings. He finally submitted that the impugned proceedings of the Disciplinary Authority and the Appellate Authority are illegal, arbitrary and disproportionate to the alleged misconduct and, therefore, are liable to be set aside.
6. Per Contra, learned Standing Counsel for the respondents-Bank submitted that the writ petition is liable to be dismissed on the ground of non-joinder of proper and necessary parties; that the Board of Directors of the erstwhile Sri Satavahana Grameena Bank, which was the Appellate Authority that passed the impugned order dated 28.02.2006 were not made parties to the Writ Petition; that, although the petitioner subsequently sought amendment of the prayer to challenge the said order, he failed to implead the authority which had actually passed it; that without making the appellate authority as party, the order passed by the said authority cannot be challenged.
6.1. He further submitted that the petitioner cannot dispute the findings recorded in the disciplinary enquiry, as the charges against him stood proved; that the disciplinary authority had consequently imposed the punishment of reduction of increment for three years without cumulative effect; that as the petitioner did not challenge the findings of the enquiry officer, he cannot, seek to reopen the disciplinary proceedings while challenging the subsequent recovery.
6.2. He further submitted that through the impugned order dated 28.02.2006, the appellate authority has not imposed fresh punishment, but, has enhanced the punishment imposed by the disciplinary authority; that the appellate authority is empowered to reconsider the punishment imposed by the disciplinary authority and to confirm, reduce or enhance the same; that the subsequent direction for recovery of the fraud amount was part of the enhanced punishment and could not be characterised as a second punishment so as to attract the principle of double jeopardy.
6.3. He further submitted that the petitioner was afforded a full opportunity to contest the proposed enhancement of punishment; that the show-cause notice dated 13.12.2005 was served upon him, his explanation was received and considered, and only thereafter, the final order dated 28.02.2006 was passed; that the contention of the petitioner that recovery of amount from his salary was commenced without any final order was factually incorrect; that the appellate authority had independently considered the enquiry record, the findings of the Enquiry Officer and the petitioner's explanation before passing the impugned order;
6.4. He further submitted that the petitioner's assertion that there was no basis for recovery, in the absence of a specific charge of misappropriation, is misconceived; that the charges against the petitioner are related to the fraudulent transactions, including the relevant vouchers and cheques, and the petitioner's misconduct had been established in the enquiry; that therefore, the recovery was consequential to the loss attributable to the misconduct proved against him.
6.5. He further submitted that the gravity of the misconduct was required to be viewed in the context of the petitioner being a bank officer dealing with public money and occupying a position of trust; that the punishment imposed by the Appellate Authority commensurates with the misconduct proved against the petitioner and therefore, the impugned orders do not warrant interference merely on the ground of proportionality. He finally submitted that the impugned order was passed by the competent Appellate/Reviewing Authority after consideration of the material and as such, the Writ Petition is devoid of any merit and is liable to be dismissed.
7. This Court has carefully considered the rival submissions advanced by the learned counsel appearing for the parties and perused the material available on record.
8. The material available on record discloses that by order dated 28.02.2006, the Appellate Authority proceeded to enhance the punishment, observing, inter alia, that no new facts had been brought out in the replies of the petitioner and that the submissions/explanation made by him had already been dealt with by the disciplinary authority. Insofar as the order of the Disciplinary Authority dated 08.06.2005 is concerned, this Court finds no sufficient ground to interfere with the same. The petitioner was subjected to a departmental enquiry for the charges framed against them and the Disciplinary Authority, upon consideration of the material and the findings recorded in the enquiry, came to the conclusion that the misconduct was proved. The petitioner has not demonstrated before this Court any perversity in the findings of the enquiry or violation of the principles of natural justice warranting interference in exercise of the jurisdiction under Article 226 of the Constitution.
9. The subsequent action of the Appellate Authority stands on a different footing. It is pertinent to note that merely because an appellate authority is considering an appeal preferred by a delinquent employee, it does not follow that the authority can enhance the punishment in an arbitrary manner. The power to impose or enhance a penalty must necessarily flow from the applicable statutory or regulatory framework and must be exercised in accordance with such provisions. In this regard it is pertinent to refer to D Subhash Chandra Bose Babu v. Andhra Pradesh State Electricity Board and Another (1995 SCC Online AP 738) and Makeshwar Nath Srivastava v. State of Bihar and Others (1971 (1) SCC 662), which emphasises the principle that an authority hearing an appeal, preferred by an aggrieved employee, cannot, in the absence of an enabling provision, place the employee in a position worse than the one in which he stood before preferring the appeal.
10. In D Subhash Chandra Bose Babu's case (cited supra), the erstwhile High Court of Andhra Pradesh has held as under:
"As far as the appellate authority passing an order of dismissal in an appeal filed by the petitioner against the order of the disciplinary authority, the law is very clear in this regard as laid down by the Supreme Court in the decision cited (vide supra), which says that the appellate authority cannot exercise its review powers in an appeal filed by the aggrieved party and impose a higher punishment than that of the punishment imposed by the disciplinary authority."
11. In Makeshwar Nath Srivastava's case (cited supra), the High Court of Patna has held as follows:
"In the absence of any other provision of law or any rule, conferring on the State Government the power to pass an order of dismissal in exercise of its revisional power or power of general superintendence, the general principle must prevail, namely, that an appellate authority in an appeal by an aggrieved party may either dismiss his appeal or allow it either wholly or partly and uphold or set aside or modify the order challenged in such appeal. It cannot surely impose on such an appellant a higher penalty and condemn him to a position worse than the one he would be in if he had not hazarded to file an appeal."
12. In the present case, the respondents have failed to place any material or any specific provision empowering the appellate authority to enhance the punishment imposed on delinquent employee. Even assuming that the Appellate Authority possessed the power to enhance the punishment, such power was required to be exercised by application of mind and the reasons therefor, are required to be recorded. Once the Disciplinary Authority had imposed a particular penalty after conclusion of the disciplinary proceedings, the Appellate Authority, while proposing a substantially enhanced punishment and directing recovery of the alleged loss, was required to indicate why the punishment imposed by the Disciplinary Authority was inadequate and what are the circumstances of the case which warranted for enhancement of punishment. The impugned order dated 28.02.2006 passed by the appellate authority does not satisfy the above requirements.
13. On the contrary, the Appellate Authority proceeded essentially on the basis that no new facts had been brought out in the explanation submitted by the petitioner and that his submissions had already been dealt with by the disciplinary authority. Such observation, by itself, does not demonstrate independent consideration of the explanation or be considered as the reasons for enhancing the punishment, more particularly, when the proposed action involved not merely enhancement of the existing penalty but also recovery of substantial amounts allegedly representing the loss caused to the Bank, the authority was required to record cogent reasons for such action. The requirement of recording reasons assumes greater significance where an authority proposes to enhance a punishment already imposed by the Disciplinary Authority. The decision-making process must disclose that the authority has independently considered the defence of the delinquent employee and has arrived at the conclusion that the original punishment was inadequate. A mere rejection of the explanation, without disclosing the reasons which justify enhancement, cannot be treated as sufficient application of mind.
14. The contention of the respondents that the petitioners were afforded an opportunity by way of the show-cause notice dated 13.12.2005 cannot, by itself, negate the defect in the order, dated 28.02.2006. The opportunity of submitting an explanation is meaningful only when the authority considers the explanation and record reasons for accepting or rejecting the material submissions raised therein. The impugned order dated 28.02.2006 passed by the Appellate Authority does not disclose such independent consideration to sustain the enhanced punishment.
15. In the facts and circumstances of the present case, this Court is of the opinion that the order of the Disciplinary Authority dated 08.06.2005 does not warrant interference of this court. However, the subsequent order of the Appellate Authority dated 28.02.2006 enhancing the punishment and directing recovery cannot be sustained.
16. Accordingly, the writ petition is partly allowed, the order dated 08.06.2005 passed by the Disciplinary Authority vide impugned proceedings letter No. F/DP/CVO/F.2/16 is upheld and the order dated 28.02.2006 passed by the Appellate Authority in enhancing the punishment and directing recovery from the salary of the petitioner is set aside. Consequently, any recovery effected pursuant to the impugned order dated 28.02.2006 passed by Appellate Authority shall be refunded to the petitioner.
17. Miscellaneous petitions pending, if any, shall stand closed. No costs.
