Holding

The Supreme Court held that the employer’s failure to prove the embezzlement and forgery charges in both criminal and civil courts renders the departmental dismissal unsustainable, mandating reinstatement with back wages.

Summary

Jasbir Singh, a peon employed by Punjab & Sind Bank, was accused of embezzling Rs 25,000, forging a depositor's signature and tampering with bank records. He faced a criminal trial under IPC §§ 409 and 201 and was acquitted, and a civil recovery suit filed by the bank was also decided in his favour, the judgment attaining finality. Despite the acquittal, the bank initiated departmental proceedings and dismissed him, relying on an ex parte report that found the charges proved. The High Court upheld the dismissal, holding that departmental action could proceed after a criminal acquittal. The Supreme Court set aside the High Court’s order, observing that the employer had failed to prove any of the allegations in either criminal or civil forums, and that the final civil judgment was binding on the bank. Consequently, the Court ordered the employee’s reinstatement with back wages, continuity of service and other consequential benefits.

Issues considered

Whether departmental proceedings can be lawfully initiated or continued after the employee’s acquittal in a criminal case on the same factual allegations.
Whether a civil judgment that has attained finality binds the employer in subsequent departmental proceedings.
Whether the employee is entitled to reinstatement and back wages following wrongful dismissal where the employer failed to prove the charges.
Whether the bank can recover the alleged embezzled amount in the absence of proof.

Legislation cited

Subjects

departmental proceedingscriminal acquittalcivil judgment finalityreinstatementback wagesembezzlementforgerywrongful dismissalindustrial dispute

Judgment

..-
'}-

A JASBIR SINGH "'""'
v.
PUNJAB & SINO BANK AND ORS.

OCTOBER 31, 2006

B [S.B. SINHA AND MARKANDEY KATJU, JJ.]

Service Law-Departmental proceedings-Initiation of. 1:Yhen employee
"'' 1
acquitted in criminal case on same allegation of embezzlement of funds-
"
Held: Employer-bank failing to prove charges against employee in both civil
c as well as criminal proceedings-Judgment of civil court that employer not
entitled to recover amount not challenged by employer, and as such having
attained finality, binding o~ employer-High Court in challenge made to
dismissal order, failing to look into materials on record and also on decision
of civil court-Thus, order of High Court that departmental proceedings
D could have been initiated even after acquittal, set aside-Employee directed
to be reinstated with back wages.

E
Respondent-bank alleged that the appellant-employee had embezzled
funds, forged the signature of the account holder and tampered with the
records. Criminal case was initiated against him, however he was acquitted.
Thereafter, departmental proceeding was initiated againsf the appellant,
.,
charges were proved and he was dismissed from service. In recovery suit,
appellate court held that it was not proved that the appellant had embezzled
the amount and as such was not entitled to recover the amount. In challenge
made to the dismissal order, High Court held that the departmental
proceedings could have been initiated even after acquittal in criminal case.
F
Hence the present appeal.

Allowing the appeal, the Court

HELD: 1. Embezzlement of fund was the principal charge against the
appellant in all the proceedings. He is also said to have forged the signature
G
of the account holder and tampered with the records. Respondent-Bank has
tried to proceed against the appellant both in civil proceedings as well as in
criminal proceedings and at both the independent forums, it failed to prove
any of these charges. Therefore, impugned judgments are not sustainable and
are set aside. Appellant is directed to be reinstated with back wages, continuity
H 62

-, .
- i _,.,... JASBIR SINGH v. PUNJAB & SIND BANK (S.B. SINHA, J.] 63
of service and other consequential benefits. [65-E-F; 67-D-E-FJ A
2.1. The correctness of the judgment by the appellate court that the bank
was not entitled to recover the amount from the appellant-employee, was not
questioned by the Bank. It attained finality. The judgment in civil matter having
attained finality, the same was binding on the respondent-Bank. j65-E; 66-A)
B
2.2. High Court should have applied its mind to the fact of the matter
with reference to the materials brought on records. It failed so to do and also
l •
failed to take note of the decision of the civil court. It could not have refused
to look into the materials on record solely relying on or on the basis of clause
19.3(c) of Bipartite Settlement to hold that the departmental proceedings could
have been initiated even after the judgment of acquittal is passed in criminal
c
case. j66-F-H; 67-Al

2.3. The judgments of both the Civil Court and the Criminal Court
established that the appellant was treated very unfairly and unreasonably. For
all intent and purport, criminal case was foisted upon him. A confession was
D
extracted from him by the bank officers in a very cruel manner. 167-C-DI

~ .. Capt. M. Paul Anthony v. Bharat Gold Mines Ltd. and Anr., JI999) 3
SCC 679; Narinder Mohan Arya v. United India Insurance Co. Ltd and Ors.,
JT (2006) 4 SC 404; Pratibha Rani v. Sura) Kumar, AIR (1985) SC 628:
(198512 SCC 370; U.P. State Brassware Corpn. Ltd. and Anr. v. Uday Narain E
Pandey, (2006) I SCC 479, referred to.

CIVIL APPELLATE JURISDICTION : Civil Appeal No. 8046 of2004.

From the Judgment and Final Order dated 11.7.2003 of the High Court
of Punjab and Haryana at Chandigarh in C. W.P. No. 1682/2002. F
R.V. Naik and Raja Raghavendra Naik [for Rameshwar Prasad Goyal] for
the Appellant.
<.
J. Buther [for Ambhoj Kumar Sinha] for the Respondents.
G
The Judgment of the Court was delivered by

S.B. SINHA, J.: Appellant herein was appointed as peon and has been
working in the said capacity in Respondent Bank with effect from 4.4.1984.
He was confmned in his services. On an allegation made that he had forged
the signature of a depositor Rattan Singh and fraudulently withdrawn a sum H
,,.
64 SUPREME COURT REPORTS (2006] SUPP. 8 S.C.R. ..__ t....

A of Rs. 25,000/- on 11.4.1989, a departmental proceeding was initiated against
him. A criminal case was also initiated under Section 409/201 of the Indian
Penal Code. He was acquitted in the criminal case. A purported confession
which he had allegedly made was found to have been done under undue
coercion. The learned Chief Judicial Magistrate noticed that even Rattan
...
Singh did not make any complaint. The other officers who were said to be
B involved were not proceeded against.

It was held: #' 1

(i) A sum of Rs. 25,000/- was not standing to the credit of so called
Rattan Singh on 11th April, 1989.
c
(ii) The appellant was found to have been threatened by the officers.
(iii) His complaints soon after his release from the hands of the bank
officials had not been taken note of.
(iv) An adverse inference should be drawn against the prosecution
D witness Mukhtiar Singh in regard to encashment of the withdrawal
form without observing due formalities.
(v) Above all, Rattan Singh was not examined.

It was also held:
...
E "Sixthly, the amount in c;.uestion is alleged to have been
misappropriated on 1Jth April, 1989, whereas this defalcation was
detected on 29th May, 1989 obviously after a long spell. Extra judicial J

confession can be taken of not only a case of its having been made
shortly after the preparation of crime. Seventhly, the evidence adduced
F by the prosecution is so incompatible inconsistent and weak that no
conviction c:m be pa~sed thereon. Eightly, there is no direct evidence
worth the namf' of the record connecting the accused in any manner
with his offence."

However, despite acquittal, the departmental proceedings continued.
G The said departmental proceedings ended in an exparte report submitted on
24.5.1996 holding that the charges against the appellant had been proved
stating:

"In the circumstances and facts stated above, I am of the considered
opinion that the C.S.E. has absented himself intentionally inspite of
H sufficient opportunity provided to him. In the absence of any defence

"
.IASBIR SINGH v. PUNJAB & SIND BANK [S.B. SINHA, J.] 65
documents/ witnesses, I have no second choice except to reply on the A
documents & witnesses produced by the P.O. The Management
witnesses and the documents are a sufficient proof to agree with the
arguments pleaded by P.O. that Sh. Jasbir Singh, C.S.E. has fraudulently
withdrawn Rs. 25000/- on 11.4.89 through & withdrawal form by forging
the signature of a depositor Sh. Rattan Singh of S.B. Ale 7069 he B
received the payment himself from the cashier and to hide this
fraudulent transaction, he tempered the record, torn off the relevant
portion of SB log book, removed the ledger sheet of SB Ale 7069 and
I ..
destroyed the withdrawal form dated 11.4.89 of Rs. 25000/- bearing
S.B. Ale No. 7069."
c
Interestingly, Respondent Bank also filed a suit against the appellant for
recovery of a sum of Rs. 25,000/-. The suit was decreed. On an appeal
preferred thereagainst, the Addi. District Judge, Faridkot by a judgment and
decree dated 3.3.2001, on analysis of the evidences brought on records, held
that Respondent - Bank miserably failed to prove that the appellant has
withdrawn the said sum of Rs. 25,000/- and the allegation against him that he D
had embezzled an amount of Rs. 25,000/- was not proved and, thus, it was
not entitled to recover the said amount.

The correctness of the said judgment was not questioned by the Bank.
It, thus, attained finality. E
Respondent-Bank, therefore, invited findings of a competent civil court
on the issue as to whether the appellant has committed any embezzlement or
not. It is not in dispute that embezzlement of fund was the principal charge
against the appellant in all the proceedings. He is also said to have been
forged the signature of the account holder and tampered with the records. F
Respondent-Bank failed to prove any of these charges before any court of
law.

In Capt. M Paul Anthony v. Bharat Gold Mines ltd. and Anr., [1999]
3 sec 679. this Court held that if departmental proceedings and criminal case G
are based on identical set of facts, evidence in both the proceedings are
common and employee is acquitted in the criminal case, an order of dismissal
already passed may also be set aside.

The learned counsel for the respondent contended that the decision of
this Court has no application. He may be right. But, it is not necessary for H
66 SUPREME COURT REPORTS [2006) SUPP. 8 S.C.R.

A us to delve deep into the matter as we are of the opinion that the judgment
in civil matter having attained finality, the same was binding on Respondent-
Bank.

In Narinder Mohan Arya v. United India Insurance Co. Ltd. & Ors., ~
JT (2006) 4 SC 404, it was opined:
B
a
"It is, however, beyond any controversy that when crucial finding
like forgery is arrived at on an evidence wh.ich is non est in the eye
of the law, the civil court would have jurisdiction to interfere in the .. ~
matter."
c It was further observed:

"It is also of some interest to note that the first respondent itself, in
the civil suit filed by the firm relied upori a copy of the report of the
enquiry officer. The first respondent, therefore, itself invited comments
as regards the existence of sufficiency of eviden~e/acceptability thereof
D
and, thus, it may not now be open to them to contend that the report
of the enquiry officer was sacrosanct.

We have referred to the fact of the matter in some detail as also the
scope of judicial review only for the purpose .of pointing out that . "'
E neither the learned Single Judge nor the Division Bench of the High
Court considered the question on merit at all. They referred to certain
principles of law but failed to explain as to how they apply in the
instant case in the light of the contentions raised before them. Other
contentions raised in the writ petition also were not considered by the
High Court."
F
In a case of this nature, therefore, the High Court should have applied
its mind to the fact of the matter wit!, reference to the materials brought on
records. It failed so to do.

G The High Court relied upon a decision of this Court in Pratibha Rani
v. Suraj Kumar, AIR (1985) SC 628: [1985] 2 SCC 370 where a statement of
law was made that criminal law and civil law can be allowed to operate side
by side. There is no quarrel with the said proposition.

The High Court, however, failed to take note of the decision of the civil
H court. It could not have refused to look into the materials on record solely
JASBIR SINGH v. PUNJAB & SIND BANK [S.B. SINHA, J.] 67
relying on or on the basis. of clause I 9.3(c) of Bipartite Settlement to hold that A
the departmental proceedings could have been initiated even after the judgment
of acquittal is passed in criminal case. We, therefore, are of the opinion that
,' impugned judgments cannot be sustained.

It was, however, urged that no back wages should be directed to be
paid. Reliance in this behalf has been placed on U.P. State Brassware Corpn. B
Ltd and Anr. v. Uday Narain Pandey, [2006] I SCC 479. In that case, this
I • Court was dealing with a power of the Industrial Courts under Section 11-A
of the Industrial Disputes Act Therein, as the establishment was closed, the
question of reinstatement of the workman did not arise. Still then, 25% back
wages were directed to be paid as also the compensation payable in terms C
of Section 6-1'i of the U.P. Industrial Disputes Act.

The judgments of both the Civil Court and the Criminal Court established
that the appellant was treated very unfairly and unreasonably. For all intent
and purport, a criminal case was foisted upon him. A confession. according
to learned Chief Judicial Magistrate, was extracted from him by the bank D
officers in a very cruel manner. It is, therefore, not a case where back wages
should be denied. Respondent Bank has tried to proceed against the appellant
f . both in a civil proceedings as well as in a criminal proceedings and at both
the independent forums, it failed.

We, therefore, are of the view that the impugned orders and judgments E
cannot be sustained. They are set aside accordingly. The appeal is allowed.
The appellant is directed to be reinstated with back wages, continuity of
service and other consequential benefits. The respondent shall also pay and
bear the costs of the appellant which is quantified Rs. I 0,000/-.

NJ. Appeal allowed. F