Holding

The second enquiry was not a fresh enquiry as required, rendering the dismissal order invalid.

Summary

Heera Prasad, a State Bank of India employee, was charged with granting loans without proper documentation and receiving illegal gratification. An initial enquiry found him guilty and he was dismissed, but the Patna High Court set aside the dismissal, directing a fresh enquiry. The same enquiry officer conducted an "additional enquiry report" but merely relied on the earlier report, did not allow the appellant to examine three crucial witnesses, and did not apply a fresh mind as mandated. The disciplinary authority again dismissed the appellant based on this flawed enquiry, and the High Court dismissed his subsequent writ petition. The Supreme Court held that the second enquiry was not a genuine fresh enquiry, violated principles of natural justice, and therefore quashed the dismissal order, directing the bank to appoint a new enquiry officer to conduct a proper fresh enquiry.

Issues considered

Whether the second enquiry complied with the High Court's order requiring a fresh enquiry.
Whether reliance on the previous enquiry report and denial of examination of certain witnesses violated natural justice.
Whether the dismissal order based on the flawed enquiry is valid.

Subjects

disciplinary enquiryfresh enquirynatural justiceservice dismissalbank employeeSupreme Courtappealprocedural fairness

Judgment

A HEERA PRASAD
v.
STATE BANK OF INDIA AND OTHERS

. MARCH 2, 1993

B (J.S. VERMA AND S.P. BHARUCHA, JJ.)

Constinition ofIndia, 1950: Anicle 136-Appeal-Senice-Disciplinary --1.
proceeding-Bank employee-Dismissal from sen•ice on the basis of enquiry
repon Challenged before High Corm--f(igh Co11rt's order dated 8.7.1988 con-
C templating fres/1 enquiry-"Additional enquiry report" made by Enquiry Of-
fice,.....ivhether there was application of mind-Supreme Co11rt's direction to
appoini another Enquiry Officer prescribing his d11ties.

The respondent-bank charge-sheeted the appellant-employee for.
granting bank loans to a large number of persons without proper -~
D documentation and without verifying their credit-worthi~ess and obtaining
illegal gratification in that connection.

An enquiry was held. The Enquiry Officer found the appellant .guilty
and on the basis of the enquiry ~port, he was dismissed from service.
E
The appellant challenged the order or dismissal in a writ petition
before the High Court.

Ou 8.7.1988 the High Court allowed the petition holding that the
enquiry held was not proper and in accordance with law and ordered the
F appellant to face another enquiry in respect of which it gave certain
directions. '

The ·same enquiry Office~ then permitted the appellant to cross-ex-
amine the witnesses of the bank and to examine his own "itnesses; _/""
G
The Enquiry Officer htld in his report dated 27.3.1989 that nine
charges against the appellant were found to be proved, one not proved and
one partly proved.

The disciplinary authority, considering the enquiry report, dis- •..,J..
H missed the appellant from service on 23.10.1989.
160
__,
..
HEEl}A PRASAD v. STATE BANK 161

The appellant challenged the dismissal order in the High Court A
contending that the enquiry was not conducted as required by the order of
the High Court dated 8.7 .1988 and that he was not furnished with a copy
of the Enquiry Report.

The High Court dismissed the writ petition, against which the
present appeal by special leave was filed. B

The appellant contended that the Enquiry Officer in the second
enquiry report had relied upon the findings of the earlier enquiry, since
quashed, and that he did not permit the appellant to examine three
necessary witnesses In support of his case; that there was no real enquiry C
as contemplated by the High Court's order dated 8.7.1988; and that,
therefore, the dismissal order passed on the bassis of the second enquiry
'r - report be quashed.

The respondent-bank submitted that the Enquiry Officer conducted
the enquiry as directed by the High Court in its order dated 8.7.1988. D

Allowing the appeal, this Court,

HELD : 1.01. The order dated 8th July, 1988 contemplated a fresh
enquiry. At best, the examination-in-chief of the witnesses of the respon-
dent could be said to have been allowed to be incorporated in the second E
enquiry proceedings. The order certainly contemplated that the Enquiry
Officer would apply his mind afresh to the evi_dence on record, comprising
the examination-in-chief and cross-examination of the respondent's wit-
nesses and that of the appellant's witnesses. [165C]
F
1.02:, It was patent from the "Additional enquiry report' made by the
Enquiry Officer that there had been no fresh application of mind. It was
impermissible for the Enquiry Officer, in these circumstances, to have
borne bis previous Enquiry Report in mind and to have confined the
"Additional enquiry report" only to the cross-examination of prosecution
witnesses and the examination and cross~xamination of defence witnesses G
"as the charges have been dealt with one by one in detail in my previous
enquiry report". It was also impermissible for him to have stated that "the
findings of the previous enquiry report remain as they are". Having regard
to the High Court's order dated 8th July, 1988, the Enquiry Officer was
bound to consider the material on record afresh and not to take .his earlier H
162 SUPREME COURT REPORTS [1993) 2 S.C.R.

A ttport into account and to say that be round "no reason to change that
report"•. [165C-E] +-
1.03. In the fitness of things it was directed that another Enquiry
Officer should be appointed by the ttspondent who should allow the
appellant the opportunity of examining as his witnesses the three persons
·B n:Cerred to by the earlier Enquiry <ilfficer in the paragraph of the "Addi-
tional enquiry report' sub-titled "Conclnsion". He should give to the
respondent and the appellant the opportunity of a hearing. He should then
apply his mind to the material OD record witbont in any way being in-
lluenced by the earlier enquiry ttports, and make his own enquiry report
C accordingly. [16SG-H, 166A]

Union of India and Others v. Mohd. Ranizan Khan, AIR 1991 SC 471,
referred to. [1"3G]

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 901of1993.
D
From the Judgment and Order dated 15.11.91 of the Patna High
Court in C.WJ.C. No. 3430 of 1991:

A. Sharan for the Appellant.'

E G. Ramaswamy and A.V. Rangam for the Respondents.

The Judgment of the· Court was delivered by

BHARUCHA, J.Leave to appeal is granted.

The appeal is directed against thejudgment and order of the High
F Court at Patna dismissing the writ petition filed by the appellant.
- The appellant was employed by. the respondent. He was charge-
sheeted for having granted bank loans to a large number of persons witliout
proper documentation and without verifying their creditworthiness and
G also with having obtained illegal gratification in that connection. An e!l-
quiry was held. The Enquiry Officer made a report holding the appellant
guilty. Upon •the basis of the enquiry report .the appellant was dismissed
from service.

The appellant filed a writ petition before the High Court at Patna
H (being Writ Petition No. C.WJ.C. No. 1979 of 1988) impugning the dis-
HEERA PRASAD v. STATE BANK [BHARUCHA. J.] 163

-f missal. The High Court allowed the writ petition by judgment and order A
dated 8th July, 1988. The enquiry, the court concluded, could not be held
to be proper and in accordance with law. Consequently, the order of
dismissal was set aside. The High Court observed :

"This does not mean that the petitioner should be got scot
free. He must face enquiry. Sufficient time has already B
lapsed. The enquiry must be concluded as early as pos-
sible. The petitioner will appear before the Enquirying
Officer (to be nominated in the meantime) at Patna on
2nd August, 1988 and the prosecution will produce the
witnesses examined on his behalf for cross-examination. c
After the cross-examination is over the petitioner will also
produce the witnesses when he may like to enquire. This
should be done without any adjournment and the proceed-
ing should be conducted day to day so that it may be
concluded as early as possible. With this observation this
writ application is disposed of."
D

The same Enquiry Officer then permitted the appellant to cross
examine the witnesses produced in support of the charge and to examine
his own witnesses. He made a reprot dated 27th March, 1989 in which he
held nine charges against the· appellant to be proved, one to be partly E
proved and one not proved. The disciplinary authority, upon consideration
of the enquiry report, passed an order dated 23rd October, 1989, dismiss-
ing the appellant from service.
-
1 The appellant challenged the order of dismissal dated 23rd October, F
1989 on the ground that the enquiry upon the basis of which it had been
,...." passed had not been conducted as required by the order of the High Court
dated 8th July, 1988. He also challenged it upon the ground that he had
not been furnished with a copy of the Enquiry Report. The High Court
rejected the writ petition. It held that the judgment of this Court in the
case of U11io11 of India a11d others v. Molzd. Ramzan Kha11, A.LR. 1991 S.C. G
471, did not cover an order of dismissal that had been passed before the
.~ said judgment was delivered. Insofar as the enquiry report was concerned,
the High Court took the view that the Enquiry Officer had allowed the
appellant to participate in the proceedings as also to cross-examine wit-
nesses and he had considered all relevant aspects on the record. H
](,4 SUPREME COURT REPORTS IJ993I 2 S.C.R.

A II will be recalled that the High Court by the judgment and order
dated 8th July, 1988 had held that the earlier enquiry was not proper and
in accordance with law and had quashed the order of dismissal dated 14th
February, 1987 based thereon. It had directed that the appellant should
face an enquiry whereat the prosecution would produce the witnesses it
had examined on its behalf for cross-examination by the appellant. There-
B
after, the appellant could produce such witnesses as he desired. It is the
submission of learned counsel on behalf of the appellant that the Enquiry
Officer had in the second enquiry report relied upon the findings of the
earlier enquiry, since quashed, and that he had not permitted the appellant
to examine three necessary witnesses in support of his case. There bad,
c therefore, been ho real enquiry as contemplated by the High Court's order
dated 8th July, 1988 and that, therefore, the dismissal order passed upon
the basis of the second enquiry report should be quashed. ··~·

Shri G. Ramaswamy, learner senior counsel for the respondent,
D submitted that the Enquiry Officer had conducted the enquiry as directed
by the High Court in its order dated 8th July, 1988, from the point of
cross-examination of the respondent's witnesses onward.

The enquiry report made by the Enquiry Officer subsequent to the
order of the High Court dated 8th July, 1988 is entitled "Additional enquiry
E report in respect of charges laid against Sbri Heera Prasad". It opens with ---Y
the sentence, "This enquiry report is further to the enquily report already
submitted by me in September 1986". It says that "the enquiry was
reopened". It says, further, "As the charges have bee11 dealt with 011e by 011e
i11 detail i11 my previous enquiry report I am co11fini11g this repon only to the
F cross etami11atio11 of prosecutio11 witnesses as also examination/cross et·
ami11atio11 of defence wit11esses." The report concludes thus:

"After going through the proceedings, hearing the deposi-
tions made by the defence witnesses, and hearing the
answers given by the prosecution witnesses, I find 110
G reason to cltange 111y report as no exonerating fact came
out during the enquiry instead it becomes a little darker
particularly noting the fact .that at least three (03) of the
witnesses cited by ~he charged officer himself refused to
come for deposing before the enquiry for reasons best
H known to the charged officer/witnesses. As tire various
HEERA PRASAD v. STATE BANK [BHARUCHA, J.] 165

exhibits etc. were discussed and analysed by nie in nzy A
prvious repott, I ani not repeating the analysis once again
in this report."

As aforesaid, the Enquiry Officer held nine of the eleven charges to be
proved, one to be partly proved and one to be not proved. {The Emphasis
)- is supplied). B

It is patent that the order dated 8th July, 1988 contemplated a fresh
enquiry. At best, the examination-in-chief of the witnesses of the respon-
dent could be said to have been allowed to be incorporated in the second
enquiry proceedings. The order certainly contemplated that the Enquiry
Officer would apply his mind afresh to the evidence on record comprising
c
the examination-in-chief and cross-examination of the respondent's wit-
'r - nesses and that of the appellant's witnesses. It is patent from the "Addi-
tional enquiry report" made by the Enquiry Officer that there has been no
fresh arplication of mind. It was impermissible for the Enquiry Officer, in
these circumstances, to have borne his previous Enquiry Report in mind D
and to have confined the "Additional enquiry report" only to the cross-
examination of prosecution witnesses and the examin3tion and cross-ex-
amination of defence witnesses "as the charges have been dealt with one
by one in detail in my previous enquiry report". It was also impermissible
y- for him to have stated that "the findings of the previous enquiry report E
remain as they are". Having regard to the High Court's order dated 8th
July, 1988, the Enquiry Officer was bound to consider the material on
record afresh and not to take his earlier report into account and to say that
he found "no reason to change that report".

We are, in the circumstances, not satisfied that the appellant has had F
a fair opportunity of presenting his case to an Enquiry Officer unbiased by
:r--. pre-conceptions.

Having regard to all that has transpired, we think that it is in the
fitness of things that the order of dismissal dated 23rd October, 1989
should be quashed and another Enquiry Officer should be appointed by G
the respondent who should allow the appellant the opportunity of examin-
.)c. ing as his witnesses the three persons referred to by the earlier Enquiry
Officer in the paragraph of the "Additional enquiry report" sub-titled
"Conclusion". He should give to the respondent and the appellant the
opportunity of a hearing. He should then apply his mind to the material H
166 SUPREME COURT REPORTS [1993] 2 S.C.R.

A on record without in any way being influenced by the earlier enquiry ~
reports, and make his own enquiry report accordingly.

In the result, the appeal is allowed. The judgment and order under
appeal are set aside. The writ petition is· allowed to the extent mentioned
in the preceding paragraph.
B
There shall be no order as to costs.

V.P.R. Appeal allowed.