Holding

The principles of natural justice are read into Rule 50(3)(ii); therefore, the disciplinary authority must give the officer an opportunity to be heard before recording its own findings when it disagrees with the enquiry officer.

Summary

The respondent, a Manager (Grade‑I) of State Bank of India, was dismissed after disciplinary proceedings where the enquiry officer found some charges proved, some partly proved and some not proved. The disciplinary authority accepted the proved and not‑proved findings but treated the partly‑proved charges as fully proved and recommended dismissal. The respondent challenged the dismissal, arguing that he was not given an opportunity to be heard on the charges where the disciplinary authority disagreed with the enquiry officer. The High Court, relying on Punjab National Bank v. Kunj Behari Misra, set aside the dismissal, holding that natural‑justice principles require such a hearing. The Supreme Court affirmed this view, stating that Rule 50(3)(ii) of the SBI (Supervising Staff) Service Rules must be read with the principles of natural justice, and the disciplinary authority must give the officer a chance to be heard before recording its own findings when it disagrees with the enquiry officer. Consequently, the appeal was dismissed and the High Court’s order upheld.

Issues considered

Whether Rule 50(3)(ii) of the State Bank of India (Supervising Staff) Service Rules obliges the disciplinary authority to afford a hearing to the officer when it disagrees with the enquiry officer's findings.
Whether the absence of such a hearing vitiates the dismissal order even in the absence of demonstrated prejudice.

Legislation cited

State Bank of India (Supervising Staff) Service Ruless. Rule 50(3)(ii)

Subjects

natural justicedisciplinary proceedingsopportunity of hearingservice rulesdismissalenquiry officerdisciplinary authority

Judgment

STATE BANK OF INDIA AND ORS. A
v.
K.P. NARAYANAN KUTTY

JANUARY 16, 2003

[SHIVARAJ V. PATIL AND H.K. SEMA, JJ.] B

Service law:

State Bank of India (Supervising Sta.ff) Service Rules:
c
r. 50(3)(ii)-Disciplinary proceedings-Opportunity of hearing to
delinquent officer by disciplinary authority-Inquiry Officer on completion of
inquiry submitted report holding that some ofthe charges against the delinquent
officer were partly proved-Disciplinary authority held those charges to have
been folly proved and recommended dismissal of the officer-Consequently D
the officer was dismissed-His contention that no opportunity was given to
him by disciplinary authority before recording the findings with regard to
charges found by Inquiry Officer to have been partly proved, accepted by
High Court-Appeal by Bank-Held, principles of natural justice have to be
read into r. 50(3)(ii) and the delinquent officer will have to be given an
opportunity to persuade the disciplinary authority to accept the favourable E
conclusion of the Inquiry Officer-This case is identical to Punjab National
Bank's case*-Moreover, in this case High Court has given liberty to the
Bank to proceed with the case in accordance with /aw-Appeal dismissed-
Administrative Law-Principles of natural justice-Opportunity of hearing.

Punjab National Bank and Ors. v. Kunj Behari Misra, [1998) 7 SCC f
84, relied on.

Union Bank of India v. Vishwa Mohan, [1998) 4 SCC 310, held
inapplicable.

Union Bank of India and Ors. v. Mohd Ramzan Khan, [1991) I SCC G
588, refered to.

State o/Orissa v. Bidyabhushi:m Mahapatra, [1963]Supp. l SCR 648;
Institute a/Chartered Accountants ofIndia v. L.K. Raina, [1986] 4 SCC 537;
Ram Kishan v. Union of India, [1995) 6 SCC 157; State Bank ofIndia v. S.S. H
391
392 SUPREME COURT REPORTS (2003] I S.C.R.

A Koshal, 11994) Supp. 2 SCC 468 and State Bank o/Rajasthan v. MC. Saxena,
11998) 3 sec 385, cited. r
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 3781 ·of
1999.

B From the Judgment and Order dated 11.3.99 of the Karnataka High
Court in w.A. No. 2101 of 1999.
t
R. Sundaravaradan, Ramlal Roy and R.N. Keshwami for the Appellants.

L. Nageshwar Rao and K.R. Nambiar for the Respondent.
c The following Order of the Court was delivered.

This appeal is directed against the order dated I 1th March, 1999 passed +
by the Division Bench of the High Court affirming the order passed by the
learned Single Judge. The respondent herein was working as a Manager,
D Grade-I in the appellant Bank. On the allegations of certain misconduct and
irregularities, disciplinary· proceedings were initiated against him by the
appellants. Several charges were framed against him. The Enquiry Officer,
after c_onducting enquiry, submitted a report holding that some of the charges
were proved, some of the charges were partly proved and some of the charges
were not proved. The disciplinary authot"ity, while accepting the finding of
E the Enquiry Officer to the extent that some cfiarges were proved and some
of the charges were not proved, however; did not agree with tlie report of the
Enquiry officer as regards the finding that the charges were partly proved.
The disciplinary authority held that those were fully proved. In that view, on
consideration of the material, the disciplinary authority recommended for
F dismissal of the respondent from service. Accepting the said recommendation,
the competent authority passed an order of dismissal from service. The :1.
I
respondent unsuccessfully appealed against the order of dismissal to the
authorities. Thereafter, he filed a writ petition before the High Court
challenging the order of dismissal from service. The learned single Judge ot'
the High Court, after hearing learned counsel for the parties, allowed the writ
G petition accepting the contention that no opportunity was. given to the
respondent by the disciplinary authority in regard to the charges with which
~-
the findings of the ·Enquiry officer were not agreed to by the disciplinary
authority in the light of the judgment of this Court in the case of Punjab
National Bank and Ors v. Kunj Beharl-.Misra, [ 1998] 7 SCC 84. The appellants
H took the matter in appeal before the Division Bench of the same High Court.
S.B.I. v. K.P. N. KUTTY 393
The Division Bench of the High Court did not find any good or valid reason A
1 to differ from the conclusion arrived at by the learned single Judge and
. dismissed the appeal following the judgment of the Punjab National Bank
aforesaid. Hence this appeal.

Mr. R. Sundaravaradan, learned senior counsel appearing for the
appellants strongly contended that providing further opportunity to the B
respondent by the disciplinary authority, even if it were to disagree with the
findings of the Enquiry Officer, was not necessary in terms of the regulations
governing service conditions of the respondent; not providing an opportunity
by the disciplinary authority did not prejudice the case of the respondent in
any way. As such the high Court was not justified in setting aside the order
of dismissal, particularly, when the respondent had the opportunity before the
c
Enquiry Officer to put forth his case. He also made efforts to distinguish with
"""' the case of Punjab National Bank (supra) stating that providing an opportunity
would not apply to cases prior to the case of Union of India and Ors. v.
Mohd. Ramzan Khan, [1991] l SCC 588. He added that this Court in Punjab
National Bank case did not deal with the contention raised by the learned D
counsel for the appellant-Bank in this regard. He relied on the Constitution
Bench decision of this Court in State of Orissa v. Bidyabhushan Mahapatra,
[1963] Supp. I SCR 648.

Per contra, Mr. L. Nageswara Rao, learned senior counsel representing
the respondent made submissions scpporting and justifying the impugned E
order. He said that the Constitution Bench decision in the case of Bidyabhushan
Mahapatra, above mentioned, is distinguishable; that was a case where this
Court set aside the impugned order passed by the High Court in regard to the
penalty imposed even on the proved charges. In the present case it is clear
from the order of the learned single Judge as well as that of the Division F
). Bench of the High Court that the High Court did not go into the merits of
other contentions or the factual aspects. The parties also focused their
arguments as to whether an opportunity was to be provided by the disciplinary
authority in case the disciplinary authority disagreed with certain findings
recorded by the Enquiry Officer. Applying the principle as stated in Punjab
National Bank case (supra), as already indicated above, the High Court felt G
that providing an opportunity by the disciplinary authority was necessary. As
is evident from the order of the learned single Judge, which was affirmed by
the Division Bench, that the order of dismissal was set aside, however, liberty
is given to the appellants to proceed in accordance with law, after giving
opportunity to the respondent. H
394 SUPREME COURT REPORTS [2003] l S.C.R.

A When asked, learned senior counsel for the appellants submitted that
Regulation 7(2) of the Punjab National Bank Officer Employee' (Discipline
and Appeal) Regulations, 1977 referred to in the Punjab National Bank case
is para-materia to the Rule 50(3)(ii) of State Bank of India (Supervising
Staff) Service Rules governing the facts of the present case with which we
are concerned. The contentions advanced by the learned senior counsel for
B the appellant before us are almost similar to the contentions advanced in the
case of Punjab National Bank aforementioned. In the case of Punjab National
Bank also similar contentions were urged that the Punjab National Bank t
officer Employees' (Discipline and Appeal) Regulations, 1977 did not require
that an opportunity of being heard be given to the delinquent officers when
C the disciplinary authority disagreed with the finding of the enquiring authority;
once the enquiring authority had given hearing to them and if the decision
was before Ramzan Khan's case, the disciplinary authority was not required
to give the copy of the enquiry report to the delinquent officer. In that view,
it was not necessary to give a hearing to the case where disciplinary authority
differs from the enquiry report. A Bench of learned three Judges in the said
D case has specifically noticed in paragraph 11 as to the controversy that was
required to be resolved in that case. The controversy in that case also related
to the case where the disciplinary authority disagreed with the findings of the
enquiring authority and Regulation 7(2) does not expressly state that when
the disciplinary authority disagrees with the finding of the enquiring authority
E an opportunity is to be given. After referring to various decisions including
the decisions relied on behalf of the Bank, this Court has clearly held that
where the disciplinary authority disagrees with the report of the enquiring
authority in regard to certain charges, providing of an opportunity is necessary
to satisfy the principle of natural justice. Paragraph 19 of the said judgment
reads thus:
F
"The result of the aforesaid discussion would be that the principles
of natural justjce have to be read into Regulation 7(2). As a result
thereof, whenever the disciplinary authority d:sagrees with the enquiry
authority on any article of charge, then before it records its own
findings on such charge, it must record its tentative reasons for such
G disagreement and· give to the delinquent officer an opportunity to
represent before it records its findings. The report of the enquiry
officer containing its findings will have to be conveyed and the
delinquent officer will have an opportunity to persuade the disciplinary
authority to accept the favourable conclusion of the enquiry officer.
H The principle of natural justice, as'we have already observed, require
S.B.l. v. K.P. N. KUTTY 395

the authority which has to take a final decision and can impose a A
penalty, to give an opportunity to the officer charged of misconduct
1 to file a representation before the disciplinary authority records its
findings on the charges framed against the officer."

In paragraph 20 thereof, this Court agreeing with the case of Institute
of Chartered Accountants of India v. l.K. Raina, [1986] 4 SCC 537 and Ram B
Kishan v. Union of India, [1995] 6 SCC 157, specifically stated that the view
taken in State Bank of India v. S.S. Koshal, [1994] Supp. 2 SCC 468 and
State of Rajasthan v. M.C. Saxena, [1998] 3 SCC 385, did not lay down the
correct law. In our view, the controversy that is to be resolved in the present
case arose for consideration in the said Punjab National Bank case directly. C
The said judgement in all force applies to the facts of the present case. The
distinction sought to be made on behalf of the appellants taking support from
the Constitution Bench judgment of this Court in Mahapatra 's case (supra)
does not help them for two reasons: firstly, that was not a case where the
controversy that has arisen in this case dealing with specific regulation was
directly dealt with. As already stated above, in the case of Punjab National D
Bank a three Judge Bench of this Court has directly cons.idered the effect of
said Regulation, particularly and directly in regard to providing of an
opportunity to be read into the Regulation. Secondly, on the facts of the case
before the Constitution Bench, this Court found that the direction given by
the High Court to reconsider as to the punishment imposed in that case was E
not correct. The argument that in the case arising prior to Ramzan Khan's
case not giving an opportunity by the disciplinary authority, would not vitiate
the order of dismissal, also does not support the case of the appellants in the
light of the fact that in the case of Punjab National Bank also the proceedings
related to the period prior to Ramzan Khan case.
F
It was also contended on behalf of the appellants that the High Court
committed an error in setting aside the order of dismissal when it was not
shown that any prejudice was caused to the respondent by not giving an
opportunity to him by the disciplinary authority. In this regard the learned
counsel cited a decision of this Court in Union Bank of India v. Vishwa
Mohan, [ 1998] 4 SCC 310. As already noticed above, before the High Court G
both the parties concentrated only on one point, namely, the effect of not
providing an opportunity by the disciplinary authority when the disciplinary
authority disagreed with some findings of the enquiry officer. It was also not
shown by the appellants before the High Court that no prejudice was caused
to the respondent in the absence of providing any opportunity by the H
396 SUPREME COURT REPORTS [2003] l S.C.R.

A disciplinary authority. The aforementioned case of Vishwa Mohan is of no
help to the appellants. The learned counsel invited our attention to para 9 of
the said judgment. As is evident from the said paragraph this Court having
regard to the facts of that case, taking note of the various acts of serious
misconduct, found that no prejudice was caused to the delinquent officer. In
para 19 of the judgment in Punjab National Bank case, extracted above,
B when it in clearly stated that the principles of natural justice have to be read
into Regulation 7(2) (Rule 50(3)(ii) of State Bank of India (Supervising
Staff) Service Rules, is identical in terms applicable to the present case) and
the delinquent officer will have to be given an opportunity to persuade the
disciplinary authority to accept the favourable conclusion of the Enquiry
C Officer, we find it difficult to accept the contention advanced on behalf of the
appellants that unless it is shown that some prejudice was caused to the
respondent, the order of dismissal could not be set aside by the High Court.

Therefore, we are in respectful agreement with the decision of this
Court in Punjab National Bank's case, being directly on the point. Moreover,
D in this case the High Court has given liberty to the appellants to proceed the
case in accordance with law. Under these circumstances and in view of
liberty given, as stated above, we do not find any good reason to upset the
impugned order. Consequently, the same is affirmed and the appeal is
dismissed with no order as to costs.

E R.P. Appeal dismissed.