CEO, KRISHNA DISTRICT COOP. CENTRAL BANK LTD AND ANR Vs. K HANUMANTHA RAO AND ANR
Supreme Court of India (Division Bench (DB)- Two Judge)
Appeal (Civil), 11975 of 2016, Judgment Date: Dec 09, 2016
The impugned order is also faulted for the reason that it is not the
function of the High Court to impose a particular punishment even in those
cases where it was found that penalty awarded by the employer is shockingly
disproportionate. In such a case, the matter could, at the best, be
remanded to the disciplinary authority for imposition of lesser punishment
leaving it to such authority to consider as to which lesser penalty needs
to be inflicted upon the delinquent employee. No doubt, the administrative
authority has to exercise its powers reasonably. However, the doctrine
that powers must be exercised reasonably has to be reconciled with the
doctrine that the Court must not usurp the discretion of the public
authority. The Court must strive to apply an objective standard which
leaves to the deciding authority the full range of choice.
Even in cases where the punishment imposed by the disciplinary
authority is found to be shocking to the conscience of the court, normally
the disciplinary authority or the appellate authority should be directed to
reconsider the question of imposition of penalty. The High Court in this
case, has not only interfered with the punishment imposed by the
disciplinary authority in a routine manner but overstepped its jurisdiction
by directing the appellate authority to impose any other punishment short
of removal. By fettering the discretion of the appellate authority to
impose appropriate punishment for serious misconducts committed by the
respondent, the High Court totally misdirected itself while exercising
jurisdiction under Article 226. Judged in this background, the conclusion
of the Division Bench of the High Court cannot be regarded as proper at
all. The High Court has interfered with the punishment imposed by the
competent authority in a casual manner and, therefore, the appeal will have
to be accepted.”
NON-REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 11975 OF 2016
(ARISING OUT OF SLP (C) NO.30710 OF 2014)
CHIEF EXECUTIVE OFFICER,
KRISHNA DISTRICT COOPERATIVE CENTRAL BANK
LTD. AND ANOTHER .....APPELLANT(S)
VERSUS
K. HANUMANTHA RAO AND ANOTHER .....RESPONDENT(S)
J U D G M E N T
A.K. SIKRI, J.
Leave granted.
2. A departmental inquiry was conducted against respondent No.1 herein,
an employee of appellant, viz. Krishna District Cooperative Central Bank
Ltd., into certain charges of misconduct. In the said inquiry, charges
were proved and as a result the disciplinary authority inflicted the
punishment of dismissal from service upon respondent No.1. The High Court
vide impugned judgment has altered the said penalty of dismissal to that of
stoppage of two increments for a period of three years.
Whether it was permissible for the High Court to do so in
the facts of the present case, is the question that needs to be determined
in the instant appeal.
The events leading to the filing of this appeal are recapitulated in brief
as under:
Respondent No. 1 was a Supervisor of five Primary
Agricultural Cooperative Societies (PACS). He failed in discharging his
duties properly in supervising the same, which led to cheating by the
members of the Nidamanuru Primary Agricultural Cooperative Society (PACS)
resulting in misappropriation of the society funds, for which disciplinary
action was initiated against him. The precise charges against him, vide
charge memo dated 08.03.2002, were that he had derelicted his duties as
Supervisor leading to misappropriation of the funds of the society.
Details of fifteen such accounts/instances were given wherein frauds had
taken place and the amount of fraud involved in each such case totalling
upto Rs.46,87,950.10. Names of the persons who had misappropriated these
amounts were also given. It was mentioned that respondent No.1 worked as a
Supervisor of the society and it was his duty to have close supervision
over the affairs of the society and bring to the notice of the Bank the
fraud which took place and safeguard the funds of the society and the Bank.
However, he failed to discharge his legitimate duties of supervision
leading to huge misappropriation that had taken place, which he could not
detect and thwart. Thus, by derelicting his legitimate duties he paved way
for huge misappropriation and thereby committed grave misconduct. Inquiry
was held and charge of dereliction of duty was proved as per the report
given by the Inquiry Officer.
There is no dispute that this inquiry was conducted in accordance with the
principle of natural justice giving fair chance to respondent No.1 to
defend himself. In fact, as per the report of Inquiry Officer, respondent
No.1 had even admitted dereliction of duties on his part.
The General Manager, Krishna District Cooperative Central Bank Ltd., after
examining the report of the Inquiry Officer in detail, observed that the
charged employee committed grave misconduct and acted in a way unbecoming
of an employee of the Bank and passed an order of dismissal from service of
the Bank. Feeling aggrieved by the order dated 05.10.2002, respondent No.
1 herein filed an appeal/mercy petition before the Chairman, Person In-
charge Committee of the Krishna Cooperative Central Bank Ltd., and prayed
to consider the case sympathetically on humanitarian grounds and issue
reinstatement orders, which was also dismissed on 22.01.2003. Respondent
No. 1 thereafter filed writ petition bearing W.P. No.4238/2003 before the
High Court of Andhra Pradesh at Hyderabad.
The learned single Judge of the High Court of Andhra Pradesh at Hyderabad,
after considering the material available on record and after hearing the
arguments of the counsel for the parties, held that respondent No.1 was
negligent in performing his duties and committed an act prejudicial to the
interest of the Bank which resulted in serious loss to the Bank. The
Single Judge of the High Court further observed that because of the
negligence of respondent No.1, an amount of Rs.46,87,950.10 had been
misappropriated by the staff and members of Nidamanuru PACS. It was held
that there were no grounds to interfere with the punishment imposed by the
disciplinary authority and confirmed by the appellate authority.
Feeling aggrieved by the order dated 18.07.2005, respondent No.1 preferred
Writ Appeal No. 1640/2005, which has been partly allowed by the Division
Bench of the High Court vide its impugned order dated 17.08.2014. The
Division Bench of the High Court has, in fact, interfered with the penalty
imposed. Reason for such a course of action adopted by the High Court
given in the impugned judgment is that there was no allegation of
misappropriation against respondent No.1. The accusation was lack of
proper supervision which holds good against the top administration as well.
After hearing the counsel for the parties, we are of the view that the
impugned judgment of the Division Bench of the High Court is unsustainable.
There are more than one reason for coming to this conclusion, which are
stated hereunder:
(i) The observation of the High Court that accusation of lack of proper
supervision holds good against the top administration as well is without
any basis. The High Court did not appreciate that respondent No.1 was the
Supervisor and it was his specific duty, in that capacity, to check the
accounts etc. and supervise the work of subordinates. Respondent No.1, in
fact, admitted this fact. Also, there is an admission to the effect that
his proper supervision would have prevented the persons named from
defrauding the Bank. The High Court failed to appreciate that the duties
of the Supervisor are not identical and similar to that of the top
management of the Bank. No such duty by top management of the Bank is
spelled out to show that it was similar to the duty of respondent No.1.
(ii) Even otherwise, the aforesaid reason could not be a valid
reason for interfering with the punishment imposed. It is trite that
Courts, while exercising their power of judicial review over such matters,
do not sit as the appellate authority. Decision qua the nature and quantum
is the prerogative of the disciplinary authority. It is not the function
of the High Court to decide the same. It is only in exceptional
circumstances, where it is found that the punishment/penalty awarded by the
disciplinary authority/ employer is wholly disproportionate, that too to an
extent that it shakes the conscience of the Court, that the Court steps in
and interferes.
No doubt, the award of punishment, which is grossly in excess
to the allegations, cannot claim immunity and remains open for interference
under limited scope for judicial review. This limited power of judicial
review to interfere with the penalty is based on the doctrine of
proportionality which is a well recognised concept of judicial review in
our jurisprudence. The punishment should appear to be so disproportionate
that it shocks the judicial conscience. (See State of Jharkhand & Ors. v.
Kamal Prasad & Ors.[1]). It would also be apt to extract the following
observations in this behalf from the judgment of this Court in Deputy
Commissioner, Kendriya Vidyalaya Sangthan & Ors. v. J. Hussain[2]:
“8. The order of the appellate authority while having a relook at the case
would, obviously, examine as to whether the punishment imposed by the
disciplinary authority is reasonable or not. If the appellate authority is
of the opinion that the case warrants lesser penalty, it can reduce the
penalty so imposed by the disciplinary authority. Such a power which vests
with the appellate authority departmentally is ordinarily not available to
the court or a tribunal. The court while undertaking judicial review of the
matter is not supposed to substitute its own opinion on reappraisal of
facts. (See UT of Dadra & Nagar Haveli v. Gulabhia M. Lad [(2010) 5 SCC 775
: (2010) 2 SCC (L&S) 101] . In exercise of power of judicial review,
however, the court can interfere with the punishment imposed when it is
found to be totally irrational or is outrageous in defiance of logic. This
limited scope of judicial review is permissible and interference is
available only when the punishment is shockingly disproportionate,
suggesting lack of good faith. Otherwise, merely because in the opinion of
the court lesser punishment would have been more appropriate, cannot be a
ground to interfere with the discretion of the departmental authorities.
When the punishment is found to be outrageously disproportionate to the
nature of charge, principle of proportionality comes into play. It is,
however, to be borne in mind that this principle would be attracted, which
is in tune with the doctrine of Wednesbury [Associated Provincial Picture
Houses Ltd. v. Wednesbury Corpn., (1948) 1 KB 223 : (1947) 2 All ER 680
(CA)] rule of reasonableness, only when in the facts and circumstances of
the case, penalty imposed is so disproportionate to the nature of charge
that it shocks the conscience of the court and the court is forced to
believe that it is totally unreasonable and arbitrary. This principle of
proportionality was propounded by Lord Diplock in Council of Civil Service
Unions v. Minister for the Civil Service [1985 AC 374 : (1984) 3 WLR 1174 :
(1984) 3 All ER 935 (HL)] in the following words: (AC p. 410 D-E)
“...Judicial review has I think developed to a stage today when without
reiterating any analysis of the steps by which the development has come
about, one can conveniently classify under three heads of the grounds upon
which administrative action is subject to control by judicial review. The
first ground I would call ‘illegality’, the second ‘irrationality’ and the
third ‘procedural impropriety’. This is not to say that further development
on a case by case basis may not in course of time add further grounds. I
have in mind particularly the possible adoption in the future of the
principle of ‘proportionality’.”
An imprimatur to the aforesaid principle was accorded by this Court as well
in Ranjit Thakur v. Union of India [(1987) 4 SCC 611 : 1988 SCC (L&S) 1 :
(1987) 5 ATC 113] . Speaking for the Court, Venkatachaliah, J. (as he then
was) emphasising that “all powers have legal limits” invoked the aforesaid
doctrine in the following words: (SCC p. 620, para 25)
“25...The question of the choice and quantum of punishment is within the
jurisdiction and discretion of the court martial. But the sentence has to
suit the offence and the offender. It should not be vindictive or unduly
harsh. It should not be so disproportionate to the offence as to shock the
conscience and amount in itself to conclusive evidence of bias. The
doctrine of proportionality, as part of the concept of judicial review,
would ensure that even on an aspect which is, otherwise, within the
exclusive province of the court martial, if the decision of the court even
as to sentence is an outrageous defiance of logic, then the sentence would
not be immune from correction. Irrationality and perversity are recognised
grounds of judicial review.”
No such finding is arrived at by the High Court to the
effect that the punishment awarded to respondent No.1 was shockingly
disproportionate.
Even otherwise, we do not find it to be so having regard
to the fact that respondent No.1 did not perform his duties with due
diligence and his negligence in performing the duties as a Supervisor has
led to serious frauds in number of accounts by the subordinate staff. It
was, therefore, for the disciplinary authority to consider as to whether
respondent No.1 was fit to continue in the post of Supervisor.
(iii) The impugned order is also faulted for the reason that it is not the
function of the High Court to impose a particular punishment even in those
cases where it was found that penalty awarded by the employer is shockingly
disproportionate. In such a case, the matter could, at the best, be
remanded to the disciplinary authority for imposition of lesser punishment
leaving it to such authority to consider as to which lesser penalty needs
to be inflicted upon the delinquent employee. No doubt, the administrative
authority has to exercise its powers reasonably. However, the doctrine
that powers must be exercised reasonably has to be reconciled with the
doctrine that the Court must not usurp the discretion of the public
authority. The Court must strive to apply an objective standard which
leaves to the deciding authority the full range of choice. In Lucknow
Kshetriya Gramin Bank & Anr. v. Rajendra Singh[3], this principle is
formulated in the following manner:
“13. Indubitably, the well-ingrained principle of law is that it is the
disciplinary authority, or the appellate authority in appeal, which is to
decide the nature of punishment to be given to a delinquent employee
keeping in view the seriousness of the misconduct committed by such an
employee. Courts cannot assume and usurp the function of the disciplinary
authority. In Apparel Export Promotion Council v. A.K. Chopra [(1999) 1 SCC
759 : 1999 SCC (L&S) 405] this principle was explained in the following
manner: (SCC p. 773, para 22)
“22...The High Court in our opinion fell in error in interfering with the
punishment, which could be lawfully imposed by the departmental authorities
on the respondent for his proven misconduct. … The High Court should not
have substituted its own discretion for that of the authority. What
punishment was required to be imposed, in the facts and circumstances of
the case, was a matter which fell exclusively within the jurisdiction of
the competent authority and did not warrant any interference by the High
Court. The entire approach of the High Court has been faulty. The impugned
order of the High Court cannot be sustained on this ground alone.”
14. Yet again, in State of Meghalaya v. Mecken Singh N. Marak [(2008) 7
SCC 580 : (2008) 2 SCC (L&S) 431], this Court reiterated the law by
stating: (SCC pp. 584-85, paras 14 and 17)
“14. In the matter of imposition of sentence, the scope of interference is
very limited and restricted to exceptional cases. The jurisdiction of the
High Court, to interfere with the quantum of punishment is limited and
cannot be exercised without sufficient reasons. The High Court, although
has jurisdiction in appropriate case, to consider the question in regard to
the quantum of punishment, but it has a limited role to play. It is now
well settled that the High Courts, in exercise of powers under Article 226,
do not interfere with the quantum of punishment unless there exist
sufficient reasons therefor. The punishment imposed by the disciplinary
authority or the appellate authority unless shocking to the conscience of
the court, cannot be subjected to judicial review. In the impugned order of
the High Court no reasons whatsoever have been indicated as to why the
punishment was considered disproportionate. Failure to give reasons amounts
to denial of justice. The mere statement that it is disproportionate would
not suffice.
xx xx xx
17. Even in cases where the punishment imposed by the disciplinary
authority is found to be shocking to the conscience of the court, normally
the disciplinary authority or the appellate authority should be directed to
reconsider the question of imposition of penalty. The High Court in this
case, has not only interfered with the punishment imposed by the
disciplinary authority in a routine manner but overstepped its jurisdiction
by directing the appellate authority to impose any other punishment short
of removal. By fettering the discretion of the appellate authority to
impose appropriate punishment for serious misconducts committed by the
respondent, the High Court totally misdirected itself while exercising
jurisdiction under Article 226. Judged in this background, the conclusion
of the Division Bench of the High Court cannot be regarded as proper at
all. The High Court has interfered with the punishment imposed by the
competent authority in a casual manner and, therefore, the appeal will have
to be accepted.”
In any case, insofar as the instant matter is concerned, since we find that
the punishment imposed was not shockingly disproportionate, no question of
remitting the case to the disciplinary authority arises. We, thus, allow
this appeal and set
aside the impugned judgment of the Division Bench of the High Court.
.............................................J.
(A.K. SIKRI)
.............................................J.
(ABHAY MANOHAR SAPRE)
NEW DELHI;
DECEMBER 09, 2016.
-----------------------
[1] (2014) 7 SCC 223
[2] (2013) 10 SCC 106
[3] (2013) 12 SCC 372