STATE BANK OF INDIAversusA.G.D. REDDY

                [2023] 11 S.C.R. 652 : 2023 INSC 766



                            CASE DETAILS

                        STATE BANK OF INDIA
                                     v.
                             A.G.D. REDDY
                    (Civil Appeal No. 11196 of 2011)
                            AUGUST 24, 2023
     [J. K. MAHESHWARI AND K. V. VISWANATHAN, JJ.]

                             HEADNOTES

      Issue for consideration: Whether the Division Bench and the Single
Judge of the High Court were justified in quashing the order passed by the
Appointing Authority imposing a punishment of “reduction in basic pay to
the lowest stage in Scale-I” as envisaged under Rule 49 (e) of the State Bank
of India (Supervising Staff) Service Rules and treating the period spent by
the delinquent officer under suspension from 18.08.1990 till the date of his
reinstatement as suspension only.
     Service Law – Misconduct – Commission of certain acts of
misconduct by the employee while working as Field Officer of the
Bank – Disciplinary proceedings – Appointing Authority imposed
punishment of reduction in basic pay to the lowest stage in Scale-I
and treated the period spent by the delinquent officer under
suspension till the date of his reinstatement as suspension only –
Single Judge and the Division Bench of the High Court quashed the
order – Correctness:
      Held: Both the Single Judge and the Division Bench of the High Court
erred in interfering with the findings of the Enquiry Officer, the decision of
the Disciplinary Authority, and the order of the Appointing Authority and
the Appellate Authority – Thus, the order of the Single Judge and that of the
Division Bench set aside – State Bank of India (Supervising Staff) Service
Rules – r. 49 (e).[Para 41]
     Service Law – Disciplinary proceeding – Onus of proof:

                                    652
               STATE BANK OF INDIA v. A.G.D. REDDY                         653


       Held: In a disciplinary proceeding, the burden of proof depends upon
the nature of the charge and the nature of the explanation put forward by
the employee – In a given case, the burden may be shifted to the employee
depending upon the explanation – On facts, the specific charge was with
regard to a series of named units, periodical inspections were not carried
out – It was after the production of the inspection register that the defence
representative of the employee stated, that they would respond after going
through the said documents – No response was forthcoming – Neither from
the records nor at the hearing it was demonstrated as to how the charge of
failure to conduct the inspection was countered by the employee – Records
sought being made available, the onus did shift to the employee to show
that the charge was untenable – As regards the failure to conduct periodical
inspection, it cannot be said that the finding of the Enquiry Officer is on a
mis-reading of the evidence or that the records of the inspection of units
were part of the records that could be possibly misplaced or that a finding
was based on some stray sentence and personal knowledge was imported
by the Enquiry Officer de hors the record. [Paras 22-25]
     Service Law – Disciplinary proceedings – Scope of judicial review:
      Held: Scope of judicial review against a departmental enquiry
proceeding is very limited – It is not in the nature of an appeal and a review
on merits of the decision is not permissible – Scope of the enquiry is to
examine whether the decision-making process is legitimate and to ensure
that the findings are not bereft of any evidence – If the records reveal that the
findings are based on some evidence, it is not the function of the court in a
judicial review to re-appreciate the same and arrive at an independent finding
on the evidence – On facts, it could not be said that the Enquiry Report,
the findings of the Disciplinary Authority and the order of the Appointing
Authority are based on no evidence or are perverse – Even if the report
insofar as the aspect of non-submission of control form, the transgression
of the area of operation and non-declaration of the immovable property and
certain other charges is avoided, the order of penalty can be sustained –
Aspects of failure to conduct periodic inspection and the negligence in not
stipulating the taking of immovable property as collateral security in spite
of the party offering it, constrains to conclude that there was material on
record for the appellant to pass the order of penalty – Orders of the Single
654          SUPREME COURT REPORTS                         [2023] 11 S.C.R.


Judge and the Division Bench not sustainable for transgressing the limits of
judicial review in setting aside the enquiry proceedings and the punishment
imposed. [Paras 32, 33, 36 and 37]
     Service Law – Penalty – Severability of charges – Interference
with the order of penalty:
      Held: If in a disciplinary proceeding, the order of penalty can be
imposed on the charges proved and the punishment imposed is lawfully
sustainable on those charges, it is not for the Court to consider whether
those grounds alone would have weighed with the authority in imposing
the punishment – Unless punishment imposed is only co-relatable to any
of those charges found not proved, the penalty cannot be set aside – On
facts, the punishment can be sustained even if the charges held not proved
are severed – Test is not of loss having being resulted or profit having
been made, the test is whether the delinquent employee, has observed the
prescribed norms of the Bank – Penalty imposed is “reduction in basic pay
to the lowest stage in Scale-I” and further, to treat the period spent by the
delinquent officer as under suspension – Since the charge of not conducting
periodical inspection and the failure to complete the formalities for creating
equitable mortgage are supported by evidence, the penalty as imposed is
not disproportionate so as to shock the conscience of the Court – Penalty
as imposed by the Appointing Authority and as confirmed by the Appellate
Authority maintained. [Para 41]

       LIST OF CITATIONS AND OTHER REFERENCES

     State of Orissa v. Bidyabhushan Mohapatra [1963] 1 Suppl. SCR 648;
Deputy General Manager (Appellate Authority) and Others. v. Ajai Kumar
Srivastava (2021) 2 SCC 612 – relied on.
      Nand Kishore Prasad v. State of Bihar and Others (1978) 3 SCC 366
: [1978] 3 SCR 708; Anil Kumar v. Presiding Officer and Others (1985) 3
SCC 378 – distinguished.
      Orissa Mining Corporation and Another v. Ananda Chandra Prusty
(1996) 11 SCC 600 : [1996] 8 Suppl. SCR 433; State Bank of India v. Ram
Lal Bhaskar and Another (2011) 10 SCC 249 : [2011] 12 SCR 1036; State of
A.P. v. S. Sree Rama Rao AIR 1963 SC 1723 : [1964] SCR 25; Disciplinary
              STATE BANK OF INDIA v. A.G.D. REDDY                         655


Authority-cum-Regional Manager and Others vs. Nikunja Bihari Patnaik,
(1996) 9 SCC 69:[1996] 1 Suppl. SCR 314 – referred to.

       OTHER CASE DETAILS INCLUDING IMPUGNED
              ORDER AND APPEARANCES

     CIVIL APPELLATE JURISDICTION: Civil Appeal No. 11196 of
2011.
    From the Judgment and Order dated 20.10.2010 of the High Court of
Karnataka at Bangalore in WA No. 8085 of 2003.
     Appearances:
      Sanjay Kapur, Ms. Mahima Kapur, Surya Prakash, Arjun Bhatia, Advs.
for the Appellant.
     S. N. Bhat, Sr. Adv., Tarun Kumar Thakur, D P Chaturvedi,
     Ms. Parvati Bhat, Ms. Anuradha Mutatkar, Advs. for the Respondent.

       JUDGMENT / ORDER OF THE SUPREME COURT
                               JUDGMENT
     K. V. VISWANATHAN, J.
      1. The present appeal by the State Bank of India (for short “the Bank”),
calls in question the correctness of the judgment of the Division Bench of
the High Court of Karnataka at Bangalore dated 20.10.2010 in Writ Appeal
No. 8085 of 2003. By the said judgment, the Division Bench had dismissed
the Appeal of the Bank and confirmed the judgment and order of the learned
Single Judge dated 12.11.2003. The learned Single Judge had allowed
the Writ Petition No. 29547 of 1997 filed by the respondent and quashed
the order passed by the Appointing Authority and granted consequential
benefits to the respondent. The Appointing Authority had, by its order of
31.01.1995, imposed a punishment of “reduction in basic pay to the lowest
stage in Scale-I” as envisaged under Rule 49 (e) of the State Bank of India
(Supervising Staff) Service Rules and further, has treated the period spent
by the delinquent officer under suspension from 18.08.1990 till the date of
his reinstatement as suspension only.
656          SUPREME COURT REPORTS                          [2023] 11 S.C.R.


      2. Being aggrieved, the Bank has filed the present Appeal. Shri Sanjay
Kapur, learned counsel for the Bank, contends that the courts below have
transgressed the limits of Judicial Review. According to the learned counsel,
the courts below have erred in characterizing the orders of the Disciplinary
authorities as perverse.
      3. On the contrary, the respondent represented by Shri S.N. Bhat,
learned Senior Counsel, vehemently defends the orders impugned. Learned
Senior Counsel contends that the present was a case of “no evidence” and
the enquiry officer without any evidence on record and based only on his
personal purported knowledge has recorded the findings of guilt. Learned
Senior Counsel further contends that the courts below have rightly set aside
the order of the Disciplinary Authorities and that the case did not call for
any interference.
      Relevant Facts
    4. The facts, insofar as they are necessary for the adjudication of this
Appeal, are set out hereinbelow:
      a) Disciplinary proceedings were initiated against the respondent for
certain acts of misconduct allegedly committed by him when he was working
as Field Officer of the Mahadevapura Branch of the Bank. Broadly stated,
the charges in the Charge Sheet dated 13.02.1992 were:
      i) That he recommended and obtained sanction from the Branch
Manager, credit limits to various units as detailed therein and permitted
excess drawings on an on-going basis; that he did not report to the controlling
office the excess drawings permitted; that he did not conduct periodical
inspections as per the extant instructions; that loan sanctions were given and
credit limit extended to entities operating in the premises of another entity;
     ii) That credit limit was recommended and sanction obtained for M/s
Saraswathi Fabricators even though the unit was located away from the area
of operation; sanction of the advance was not reported to the Controlling
Office; and formalities for creating equitable mortgage over immovable
property offered as collateral security were not completed;
     iii) That the respondent recommended and obtained sanction of
advance to M/s ACE Photo Reprographers and M/s Sangeetha Refreshments
               STATE BANK OF INDIA v. A.G.D. REDDY                        657
                     [K. V. VISWANATHAN, J.]

both from Shivajinagar, even though the units were non-existent and the
particulars furnished were fictitious as another firm M/s All Arts Company
was operating from the same premises; that the sanction of these advances
were not reported to the controlling office and periodical inspection of the
units were not conducted.
      iv) That the respondent had recommended and obtained sanction on
20.05.1987 cash credit limit to M/s. Rajeswari Enterprises and the respondent
did not submit control return; that periodical inspections were not carried out
and formalities for creation of equitable mortgage over immovable property
stipulated as pre-condition for sanction of limit were not completed. Certain
other charges set out, which are not directly relevant for the adjudication of
the Appeal, have not been highlighted hereinabove.
      v) It was alleged in the charge memo that by the acts committed,
the respondent failed to comply with the extant instructions with regard
to sanction and follow-up of advances and failed to take all possible
steps to ensure and protect the interest of the Bank and did not discharge
his duties with utmost diligence and integrity and thereby violated the
service rules.
      b) As part of the charge, it was further alleged that he purchased
agricultural land in October 1987 ad-measuring 21.36 acres and got it
registered in his name for a nominal amount, using the influence of one Shri
Ramamurthy of M/s Bindu Enterprises who are enjoying credit facilities with
the branch and he failed to declare to the Bank the purchase of immovable
property as per the extant instructions. It was alleged that by the above acts,
he placed himself under pecuniary obligations to the party.
     c) The statement of imputations were also furnished.
     Findings of the Enquiry Officer
      5) The respondent filed his detailed reply denying the allegations.
An Enquiry Officer was appointed. Before the Enquiry Officer, the Bank
examined seven witnesses and marked twenty four documents. The
delinquent employee did not examine any witness but had produced
thirty documents. The Enquiry Officer, after completion of the enquiry
proceedings, analyzed all the oral and documentary evidence and found
the respondent guilty for some of the charges levelled and absolved the
658          SUPREME COURT REPORTS                     [2023] 11 S.C.R.


respondent with regard to a few other charges. The presenting Officer did
not pursue the following charges contained in the chargesheet.
      “(a) Recommendation of the loan by charged offi cial in respect of
      M/s. Fotografiks.
      (b) Charge vii (b) - The unit had borrowing from Central Bank of
      India, Avenue Road, Bangalore.
      (c) Charge II - The influence of Shri Ramamurthy of M/s. Bindu
      Enterprises towards purchase and registration of 21.36 acres of
      lands.”
      The following charges were held not proved:
      “I. Charge No. (ii) (a) pertaining to M/s. Farooq Tanning Control
      forms in respect of these units were submitted.
      II. Non reporting of excess drawings permitted in the case of M/s
      Fotografiks.
      III. M/s Ace Photo Reprographers
      The charge that the unit is not functioning is not proved.”
      The remaining charges were held proved.
     6) With these fi ndings, the Enquiry Officer submitted his report
dated 23.08.1993 and the records of the enquiry to the Disciplinary
Authority. The Disciplinary Authority issued a second show cause notice
along with the copy of the Enquiry report to which the respondent fi led
a detailed reply. Thereafter, the Disciplinary Authority also issued a
notice dated 04.10.1993 setting out the points of disagreement with
regard to the Enquiry Officer’s findings to which again the respondent
furnished a reply.
    Findings of the Disciplinary Authority and Imposition of
Penalty
      7) The Disciplinary Authority, by his order of 28.12.1994,
elaborately considered the matter. He agreed with all the fi ndings of the
enquiry officer and even on the aspects where the enquiry officer held
that the charges were not proved, the disciplinary proceeding differed
                STATE BANK OF INDIA v. A.G.D. REDDY                            659
                      [K. V. VISWANATHAN, J.]

with the enquiry officer on some of those aspects and held the charges
to be proved.
      For example, in the case of a unit - ACE Foto Reprographers not
functioning in the premises, while the enquiry officer held the charge not
proved, the Disciplinary Authority held the charge to be proved.
      8) These aspects need not detain the Court any further. As it will be
clear from the discussion below, ultimately the charges with regard to not
conducting periodical inspections of the units mentioned in the charge and
the non-completion of the formalities for creating equitable mortgage over
immovable property offered as collateral security, in the case of M/s Saraswathi
Fabricators are the primary aspects that has engaged the attention of this Court.
As will be clear from the discussion in the later part of this judgment, it is those
two charges which have ultimately been found to be proved that have been
elaborated herein below.
      9. Pursuant to the above, the Appointing Authority passed an order on
31.01.1995 imposing the penalty of “reduction in basic pay to the lowest
stage in Scale-I” as provided under Rule No. 49(e) of the State Bank of
India (Supervising Staff) Service Rules and further to treat the period under
suspension from 18.08.1990 till the order of his reinstatement as suspension
only.
     10. The Appellate Authority to whom the respondent approached
confirmed the orders.
     11. Challenging the order of the Disciplinary Authorities and the Appellate
Authority, the petitioner moved a writ petition, which has now resulted in the
orders of the learned Single Judge and that of the Division Bench.
      12. The learned Single Judge classified the common heads under Charge
I as was also done by the Enquiry Officer as being
      i) Conduct of periodical inspection;
      ii) Non-submission of control forms; and
      iii) Area of operation
       13. We will deal with the first limb, after we consider the second and
third limbs, for the sake of convenience.
660          SUPREME COURT REPORTS                         [2023] 11 S.C.R.


     Charge regarding non-submission of control forms and area of
operation
      14. On the aspect of non-submission of the control forms, the learned
Single Judge records that the burden was wrongly shifted on the respondent
when the Enquiry Officer held that the delinquent had not proved the
submission of the control forms. The learned Single Judge held that when
the respondent denied the charge, the onus was on the Disciplinary Authority
to prove the charge alleged against the delinquent employee by producing
relevant material and the material must be such that it amounts to proving
the guilt of the employee in respect of the charge against him with some
degree of definiteness.
      15. We have perused the Enquiry Report on this issue and we are
satisfied that the learned Single Judge is right on this score. The following
findings in the Enquiry Report fortify that conclusion:-
      “However, in respect of other units listed in the charge sheet regarding
      non-submission of control form the charges are proved. Although, it
      is likely that the Bank’s files may be missing due to shifting of the
      branch, no attempt has been made by the defence to bring the control
      forms from the controlling authority. It only clearly indicates that the
      control forms have not been submitted. This is a failure on the part of
      the charged official.”
      16. Equally with regard to the third limb, namely, transgression of the
area of operation, the learned Single Judge rightly found that in a number
of instances loans had been sanctioned outside the area of operation and, as
such, it could not be held that there was any transgression by the delinquent
respondent. This view is independently fortified when we peruse the Enquiry
Report.
      17. In the preliminary paragraphs under the head “Area of operation”,
while dealing with the relative instructions of the Bank, the following is
set out:
      “ii) Where there are clusters of eligible units, whether SSI or Small
      business, situated outside the respective operational area, assistance
      could be rendered to them, provided the place is accessible throughout
      the year and is connected by the public transport. Even in such cases,
              STATE BANK OF INDIA v. A.G.D. REDDY                       661
                    [K. V. VISWANATHAN, J.]

     the location of units should not be far beyond the operational area and
     the number of units should reasonably large. (sic.) Recommendations in
     this regard should be first got approved from the controlling authority.
     iii) Lending to SSI and small business units could also be affected in
     adopted villages with the prior approval of the controlling authority.
     iv) Care, should however, be taken that the flexible approach does not
     lead to scattered lending. Approach should preferably be financing of
     clusters of units/growth centres.”
     Nowhere in the Enquiry Report or in the evidence had it been brought
out that any of these above conditions in the excepted categories were
breached.
     Charge regarding conduct of periodical inspections
      18. However, we find that the learned Single Judge and the Division
Bench, which confirmed the order of the learned Single Judge, erred in
recording the following finding with regard to the first limb, namely, about
the respondent not conducting the periodical inspections as required under
the extant instructions:-
     “In so far as the first component of the charge is concerned, it can
     safely be said that none of the witnesses examined by the Bank
     before the enquiry officer have spoken about the truth or otherwise
     of the allegations made in the charge memo. However, the enquiry
     officer in his lengthy report based on his personal knowledge about
     the instructions and guidelines issued by the Head Office of the bank
     for conduct of inspection by Field Officers of the bank, observes that
     it is the duty of the Field Officer, to conduct periodical inspection
     and maintain proper records of those inspections. To arrive at the
     conclusion that the delinquent officer is guilty of this charge, he
     merely states in his report that Sri Krishna Murthy Urala - PW 4 has
     deposed that the charged official has not conducted any periodical
     inspection. This conclusion of the enquiry officer is based on the mis-
     reading of the evidence of PW-4 by the enquiry officer. In fact, PW
     4 in his lengthy deposition before the enquiry officer has stated that
     the periodical inspections of units were carried out by the petitioner
     sometimes independently and some time with the Branch Manager
662           SUPREME COURT REPORTS                         [2023] 11 S.C.R.


      and the relevant records were not available at the Branch. It has also
      come in the evidence that the Branch was shifted to new building some
      time in the year 1989 and during shifting, books used for recording
      of the inspection of units might have been misplaced and they are bit
      traceable. So, in my opinion picking out one stray sentence here and
      there in the deposition of P.W. 4 and importing his personal knowledge
      about the so called instructions and guidelines issued by the Bank, in
      my view, the enquiry officer could not have come to the conclusion
      that the Petitioner failed to conduct periodical inspection and therefore
      that part of the charge in the charge memo is proved against him.”
     19. To satisfy ourselves on this aspect, we examined the enquiry report.
The rationale for the inspection is set out in the preliminary portion of the
report. It is stated as follows:-
      “Follow up and supervision for term loans:
      Term lending particularly to small scale units, is subject to various
      risks due to the long period of loan and the fact that the small
      scale units being financially vulnerably are likely to be affected
      by even minor adverse changes in their fortunes, where mortgage
      of immovable properties are obtained, we are in a relatively better
      position although the process of realization in the event of default
      may prove to be cumbrous. Where, however, the security comprises
      machinery in leased, rented premises, the risks are much greater;
      movable machinery, particularly, being liable to felonious removal.
      Further, the tenancy in rented premises may sought to be terminated
      by the owner although the law generally protects the tenancy against
      unfair ejectment.
      Having regard to the foregoing consideration, it is needles to add the
      proper selection of clients is one matter to which considerable thought
      should be given. The only means of forestalling and avoiding possible
      loss would lie in the vigilant follow up of loans after they have been
      granted.”
     Thereafter, some guidelines have been set out. Dealing with the charge,
the Enquiry Officer records the following:-
              STATE BANK OF INDIA v. A.G.D. REDDY                        663
                    [K. V. VISWANATHAN, J.]

     “From the above instructions it may be observed that it is the duty
     of Field Officer to conduct periodical inspection and maintain proper
     records of those inspections.
     The defence merely contested the charge on the plea that inspection
     register has not been produced for evidence. The I is not only supposed
     to maintain the inspection register but also report the observations
     made by his (sic.) during the inspection by means of separate report.
     None of such reports have been produced by the defence to prove that
     inspections have been conducted by him.
     In this connection it is pertinent to bring the following instructions
     of the Bank in regard to report to be submitted by the field Officer.
     Accounts with borrowings of Rs.2 lacs and over should be followed
     up by I on the basis of a proforma marked follow up form for I
     (STF6). The objective underlying the form is to relate outstanding to
     the activity level on a continuing basis i.e. every month, and to relate
     the activity level to earlier projections (as indicated in the scheme or
     estimates based on past performance). A systematic follow-up through
     this form will reveal any tendency towards irregularity in an account
     and the probable reasons if any irregularity does occur. In either case,
     the situation is brought to the attention of the Manager SIB or BM,
     who even otherwise will be expected to check these statements every
     month. The abnormalities indication (sic.) in item 6 of the Notes on
     Form SIF 6 are illustrative. There could be other abnormalities which
     could be inferred on the basis of this form. Sri Krishnamurthy Urala
     - PW4 deposed on page 10,11 of the proceedings that the charged
     official has not conducted any periodical inspection. This deposition
     clearly proves the above charge.
     Accordingly, I conclude that the charges levelled against him regarding
     conduct of periodical inspection has been amply proved.”
                (In the summary of findings ‘I’ is recorded as indicating
                the Field Officer)
     No doubt, the report records that no such report has been produced by
the defence to prove that the “inspections have been conducted by him”.
To satisfy ourselves, whether the onus has been wrongly shifted on the
employee, we perused the evidence of PW-4 Krishnamurthy Urala to whose
664          SUPREME COURT REPORTS                          [2023] 11 S.C.R.


deposition, copious references were made both by Mr. Sanjay Kapur, learned
Counsel and Mr. S.N. Bhat, learned Senior Counsel.
      20. In the charge memo, the respondent was specifically charged that
the respondent had recommended and obtained sanction from the Branch
Manager, credit limits to various units as detailed therein and permitted
excess drawings on an on-going basis and the respondent did not report to
the controlling office the excess drawings and did not conduct periodical
inspections as per the extant instructions. A number of units were mentioned
in the charge memo to substantiate the allegation that periodical inspections,
as per the extant instructions, were not conducted on them. The following
have emerged in the deposition of PW-4 - Shri Krishnamurthy Urala recorded
on 17.02.1993:
      “PO:       Mr. Urala do you by chance know who was the field officer
                 handling this unit between June 86 to 1988.
      PW4:       Yes. It is Mr. AGD Reddy.
                 …. …..
      PW4:       What is the procedure for conducting inspections to units as
                 per laid down instructions.
      PO:        The laid down instruction is the unit has to be inspected
                 normally once in a month by FO along with the stock
                 statements to verify whether the disbursal of the funds from
                 the a/cs has been properly utilized.
                 The field officer should carry branch inspection book to the
                 units and write the observations thereon, and also he has to
                 make the observations in the inspection book kept at the unit.”
                 ….. …….
      PO:        Were the inspections conducted for these units.
      PW4:       No.”
      Deposition of PW-4 recorded in the enquiry on 03.03.1993:
      “DR:       You said certain units have not been inspected by your
                 predecessors. Can you tell us the basis for this allegation.
              STATE BANK OF INDIA v. A.G.D. REDDY                      665
                    [K. V. VISWANATHAN, J.]

     PW 4:      No proper records were maintained.
     DR:        Did you trace/see the inspection cards relating to the
                period of 1988, 87 & back.
     PW4:       Yes.
     DR:        A submission to EO: We have been told by the branch
                that the inspection records related to 88,87 & back are
                not available. Kindly direct the prosecution to make
                available copies of the records for the defence purpose.
     EO:        DR to specifically mention the inspection registers in
     r/o which units you require to enable EO to examine your request.
     DR:        Inspection cards in r/o units mentioned in the charge
                sheet.
     EO:        PO may examine the request of DR and if possible
                records, if available may be given.
                Otherwise a report may be given to EO.”
     21. It transpires that there was a direction to produce the inspection
records relating to units mentioned in the chargesheet. The following is
found in the transcript in the enquiry proceeding (dated 04.05.1993):-
     “PO: I was requested by DR in the previous sitting to produce two
     documents viz. Inspection register for the relevant period and list
     of machinery in r/o M/s. Bindu Enterprises. I am submitting the
     inspection register & also a list of machineries as requested for
     perusal of EO & DR.
     DR: We will respond after going through the said documents.”
                                                     (emphasis supplied)
     Onus of proof
      22. Having considered the above, we are constrained to conclude
that the charge of the Bank, that the inspection was not carried, stood
established. Then it was for the respondent to show, as undertaken by
him, what his response to the allegation was.
666           SUPREME COURT REPORTS                          [2023] 11 S.C.R.


      23. It is well settled that, in a disciplinary proceeding, the question of
burden of proof would depend upon the nature of the charge and the nature
of the explanation put forward by the respondent. In a given case, the burden
may be shifted to the respondent depending upon the explanation. [See Orissa
Mining Corporation and Another vs. Ananda Chandra Prusty, (1996) 11
SCC 600, Para 6].
      24. Here the specific charge was with regard to a series of named units,
periodical inspections were not carried out. To support the charge, witnesses
were examined and on the request through his defence representative, the
Enquiry Officer has directed the presenting officer to produce the inspection
records. The Enquiry Officer specifically asked the defence representative to
mention the inspection registers in respect of the units which are required.
The defence representative specifically makes a request for the inspection
records in respect of the units mentioned in the charge sheet. The Enquiry
Officer directs the presenting officer to examine the request and records, if
available, be given. Thereafter, it has come on record that the Presenting
Officer produced the inspection register for the relevant period for perusal
of the Enquiry Officer and the defence representative. On this, the defence
representative stated that they would respond, after going through the
documents. In the written submissions filed, a grievance is raised that the
records pertaining to inspection were produced at the fag end of the enquiry.
We are not impressed with the submission since, it was after the production
of the inspection register that the defence representative of the respondent
had stated, that they will respond after going through the said documents. No
response was forthcoming. Neither from the records nor at the hearing has it
been demonstrated as to how the charge of failure to conduct the inspection
was countered by the respondent. The records sought being made available,
the onus did shift to the respondent to show that the charge was untenable.
      25. In view of the above, clearly with regard to the first limb of the
first charge, namely, the failure to conduct periodical inspection, it cannot
be said that the finding of the Enquiry Officer is on a mis-reading of the
evidence or that the records of the inspection of units were part of the records
that could be possibly misplaced or that a finding was based on some stray
sentence and personal knowledge was imported by the Enquiry Officer de
hors the record.
              STATE BANK OF INDIA v. A.G.D. REDDY                        667
                    [K. V. VISWANATHAN, J.]

     Charge regarding formalities for creation of equitable mortgage
      26. There is one other aspect which has completely escaped the
attention of the learned Single Judge and consequently the Division Bench.
One of the charges dealt with by the Enquiry Officer was about not securing
the advance to M/s Saraswathi Fabricators by creation of an equitable
mortgage even though the equitable mortgage of immovable property was
offered by the party. The following findings were recorded by the Enquiry
Officer:-
     “On page 12 para 7.2 of PEX 9, the borrower has offered equitable
     mortgage of building at No. 458, Viveknagar, Bangalore, a site
     measuring 1500 sq. ft. and built in area of 700 sq. ft. belonging to Sri
     K. V. Srinivasan valued at Rs. 4.5 lacs. The CO by his negligence has
     not stipulated this in his recommendations to the BM. In the process
     the advance could not be collaterally secured by non-creation of
     equitable mortgage. Hence the charge that equitable mortgage has not
     been created is proved.”
     27. To satisfy ourselves, we examined the record of the enquiry
proceedings on this issue. In the deposition of PW-4, recorded in the enquiry
proceeding on 17.02.1993, the following is found:-
     “PO:      Looking to PEX page 12 item 7.2 of PEX 9 please tell us
               the collateral security offered by the unit.
     PW4:      …. security is a site measuring 1,500 sq. ft. & bldg. area of
               700 sq. ft. belonging to Sri KV Srinivasan at Vivek Nagar,
               Bangalore valued at Rs.4.5 lacs.
     PO:       Was the formality completed at the time of sanctioning of
               this loan.
     PW4:      No.”
     Deposition of PW-4 recorded on 03.03.1993:-
     “DR:      Who puts the stipulations in sanctioning of a loan?
     At the branch level?
     PW4:      Field Officer in consultation with the Br. Manager.
668          SUPREME COURT REPORTS                       [2023] 11 S.C.R.


      DR:     Can the Br. manager as sanctioning authority waive any
              stipulation?
      PW4:    Depends on the circumstances.
              …. …..
      DR:     Showing PEX9 from pg. l to 12 constitute the application.
              Do you agree?
      PW4:    It is application cum interview form.
      DR:     From pg. 13 to 19 forms appraisal memorandum.
      PW4:    Yes.
      DR:     The application contains the offers of the applicant and
              the appraisal contains the conditions of sanction by the
              sanctioning authority. Do you agree?
      PW4:    The application cum interview form is containing information
              regarding the prospective borrower.
              Based on the information the FO in consultation with BM
              has to fix the credit limits and stipulations in the appraisal
              memorandum.
      DR:     On page 12 para 7. 2 though there is an offer, on pg. 18 para
              9.2 there is no stipulation to the effect that the offer of the
              applicant should be taken as collateral security. Do you see?
      PW4:    I do not know.
      DR:     On pg.12 para 7.2 there is a mention of equitable mortgage
              of certain properties. Do you see?
      PW4:    Yes.
      DR:     On pg.18 para 9.2 under the stipulation the stipulation column
              is vacant. Do you see?
      PW4:    Yes.
      DR:     The taking of equitable mortgage of certain securities is not
              a condition stipulated by the sanctioning authorities i.e. BM
              at branch level in r/o PEX9, pg. 18, para 9.2 ‘stipulations’.
               STATE BANK OF INDIA v. A.G.D. REDDY                         669
                     [K. V. VISWANATHAN, J.]

     PW4:       Yes,
     DR:        Hence the question of completion of the formalities of non-
                existent stipulation does not arise. Do you see?
     PW4:       I do not know.”
       28. What is significant to note is PEX 9 pertains to the application for
working capital in respect of M/s Saraswathi Fabricators together with the
appraisal memorandum. It is clear from the deposition that the applicant for
the loan had offered collateral security in the form of land and building and
that the formality of collateral security was not taken. It is further borne out
that it is the Field Officer in consultation with the Branch Manager who has
to fix the credit limit and the stipulations. It appears from the records that
no stipulation was put with regard to equitable mortgage so mentioned with
regard to M/s Saraswathi Fabricators, even though the party had offered
equitable collateral security in the form of immovable property.
      29. The explanation of the respondent is only that there was no
stipulation in the sanction order with regard to the taking of collateral
security. The charge is that, with regard to M/s Saraswathi Fabricators,
the formalities for creating equitable mortgage over immovable property
offered as collateral security were not completed. The evidence of PW-4 is
that the stipulation for collateral security is so made by the Field Officer in
consultation with the Branch Manager.
      30. In the light of the above, the finding of the Enquiry Officer that the
respondent, by his negligence, did not stipulate this in his recommendation
to the Branch Manager and, as such, the advance could not be collaterally
secured by creation of equitable mortgage cannot be said to be perverse or
based on no evidence.
       31. The answer given by the respondent in the writ petition that
personal guarantee was available; that the sanction did not contain any
condition regarding equitable mortgage of the property; that documents
of title were traced only in September, 1988 after he left the Branch in
June, 1988; that as required by the successor of the respondent and the
then Branch Manager, the respondent had identified the documents and
suggested that they complete the work connected with the creation of
equitable mortgage, are not matters on which the view of the Disciplinary
670          SUPREME COURT REPORTS                          [2023] 11 S.C.R.


Authority can be substituted. In the written submissions filed, the
respondent claims that, after the papers were traced, the mortgage was,
in fact, effected. Even this would not make any difference to the charges
and the findings recorded, which themselves were based on the evidence
on record.
      Scope of judicial review in disciplinary proceedings
      32. From the above discussion, it is clear that it could not be said that
the Enquiry Report, the findings of the Disciplinary Authority and the order
of the Appointing Authority are based on no evidence or are perverse. Even
if we eschew the report insofar as the aspect of non-submission of control
form, the transgression of the area of operation and non-declaration of the
immovable property and certain other charges are concerned, the order of
penalty can be sustained.
      33. As has been demonstrated above, the aspects of failure to conduct
periodic inspection and the negligence in not stipulating the taking of
immovable property as collateral security in the case of M/s Saraswathi
Fabricators in spite of the party offering it, constrain us to conclude that
there was material on record for the appellant to pass the order of penalty.
      34. Mr. S.N. Bhat, learned Senior Counsel, relying upon the judgments
of this Court in Nand Kishore Prasad vs. State of Bihar and Others, (1978)
3 SCC 366 and Anil Kumar vs. Presiding Officer and Others, (1985) 3 SCC
378 contends that the Disciplinary Authority should arrive at its conclusion
on the basis of some evidence with some degree of definiteness pointing to
the guilt of the delinquent in respect of the charge against him. He would
contend that a suspicion cannot be allowed to take the place of proof and
scrupulous care must be taken to see that the innocent are not punished by
recording findings merely based on ipse dixit of the Enquiry Officer. We are
unable to accept the contention that the principles laid down in the above
judgments are attracted to the present case. The judgments cited are clearly
distinguishable, for the reasons that we have set out hereinabove, while
analyzing the facts of the present case.
      35. Shri Sanjay Kapur, learned counsel for the Bank relies on State
Bank of India vs. Ram Lal Bhaskar and Another, (2011) 10 SCC 249. In
that judgment the scope of judicial review of departmental proceedings was
              STATE BANK OF INDIA v. A.G.D. REDDY                         671
                    [K. V. VISWANATHAN, J.]

set out and the principle laid down in State of A.P. vs. S. Sree Rama Rao,
AIR 1963 SC 1723, was reiterated, which reads as follows:-
     “This Court has held in State of A.P. and Others v. S. Sree Rama
     Rao (AIR 1963 SC 1723, para 7):
     “7. … The High Court is not constituted in a proceeding under Article
     226 of the Constitution a Court of appeal over the decision of the
     authorities holding a departmental enquiry against a public servant: it
     is concerned to determine whether the enquiry is held by an authority
     competent in that behalf, and according to the procedure prescribed
     in that behalf, and whether the rules of natural justice are not violated.
     Where there is some evidence, which the authority entrusted with
     the duty to hold the enquiry has accepted and which evidence may
     reasonably support the conclusion that the delinquent officer is guilty
     of the charge, it is not the function of the High Court in a petition for
     a writ under Article 226 to review the evidence and to arrive at an
     independent finding on the evidence.”
     13. Thus, in a proceeding under Article 226 of the Constitution, the
     High Court does not sit as an appellate authority over the findings of
     the disciplinary authority and so long as the findings of the disciplinary
     authority are supported by some evidence the High Court does not
     re-appreciate the evidence and come to a different and independent
     finding on the evidence. This position of law has been reiterated in
     several decisions by this Court which we need not refer to, and yet
     by the impugned judgment the High Court has re-appreciated the
     evidence and arrived at the conclusion that the findings recorded by
     the enquiry officer are not substantiated by any material on record and
     the allegations leveled against the respondent no.1 do not constitute
     any misconduct and that the respondent no.1 was not guilty of any
     misconduct.”
     36. It is now well settled that the scope of judicial review against
a departmental enquiry proceeding is very limited. It is not in the nature
of an appeal and a review on merits of the decision is not permissible.
The scope of the enquiry is to examine whether the decision-making
process is legitimate and to ensure that the findings are not bereft of
any evidence. If the records reveal that the findings are based on some
672          SUPREME COURT REPORTS                          [2023] 11 S.C.R.


evidence, it is not the function of the court in a judicial review to re-
appreciate the same and arrive at an independent finding on the evidence.
This lakshman rekha has been recognized and reiterated in a long line
of judgments of this Court.
       37. In the present case, it could certainly not be said that the report
is based on no evidence or that it is perverse. The learned Single Judge
transgressed the limits of judicial review in setting aside the enquiry
proceedings and the punishment imposed. The Division Bench, in a short
order has, after extracting a part of the learned Single Judge’s judgment, gone
on to hold that having perused the records of the enquiry they do not find
that the charges have been dealt with in any manner of specificity. Thereafter
they conclude that the learned Single Judge was justified in arriving at its
conclusion. We are not able to sustain the orders of the learned Single Judge
and the Division Bench.
      Severability of charges
     38. The question that remains is, in the light of the findings above,
does the order of penalty imposed call for any interference?
     39. The law is well-settled that if in a disciplinary proceeding, the
order of penalty can be imposed on the charges proved and the punishment
imposed is lawfully sustainable on those charges, it is not for the Court to
consider whether those grounds alone would have weighed with the authority
in imposing the punishment. No doubt, on the facts of the present case,
on some aspects of the charge, the proof may have been found wanting.
However, since the law laid down by this Court is that unless punishment
imposed is only co-relatable to any of those charges found not proved, the
penalty cannot be set aside. In this case, the punishment can be sustained
even if the charges held not proved are severed. [See State of Orissa vs.
Bidyabhushan Mohapatra [1963] Supp. 1 SCR 648 and Deputy General
Manager (Appellate Authority) and Others. vs. Ajai Kumar Srivastava,
(2021) 2 SCC 612].
     40. Then the only question is does the penalty imposed shock the
conscience of the Court? In the oral arguments as well as in the written
submissions, the respondent contended that there was no charge of
financial misappropriation or of causing any financial loss to the Bank.
                 STATE BANK OF INDIA v. A.G.D. REDDY                      673
                       [K. V. VISWANATHAN, J.]

This submission was countered by the appellant by placing reliance on the
judgment of this Court in Disciplinary Authority-cum-Regional Manager
and Others vs. Nikunja Bihari Patnaik, (1996) 9 SCC 69, particularly,
the holding of the Court in para seven thereof to contend that the test is
really not of loss having been resulted or profit having been made. The test
is whether the delinquent employee, has observed the prescribed norms of
the Bank. The penalty imposed in this case is “reduction in basic pay to the
lowest stage in Scale-I” as envisaged under Rule 49 (e) of the State Bank of
India (Supervising Staff) Service Rules and further, to treat the period spent
by the delinquent officer under suspension from 18.08.1990 till the date of
his reinstatement as suspension only. Since the charge of not conducting
periodical inspection and the failure to complete the formalities for creating
equitable mortgage with regard to M/s Saraswathi Fabricators are supported
by evidence, we do not think that the penalty as imposed is disproportionate
so as to shock the conscience of the Court. We maintain the penalty as
imposed in the order of the Appointing Authority dated 31.01.1995 and as
confirmed by the Appellate Authority.
      41. For the reasons stated above, we have no hesitation in holding
that both the learned Single Judge and the Division Bench were in error in
allowing the writ petition and interfering with the findings of the Enquiry
Officer, the decision of the Disciplinary Authority, the order of the Appointing
Authority and the decision of the Appellate Authority. We, therefore, set
aside the order of the learned Single Judge and that of the Division Bench
and dismiss the Writ Petition No. 29547 of 1997 filed by the respondent.
Accordingly, the Appeal is allowed, with no order as to costs.


Headnotes prepared by :                                         Appeal allowed.
Nidhi Jain