STATE BANK OF INDIAversusP. ZADENGA
- Citation
- 2023 INSC 868
- Decided
- 3 October 2023
- Disposal
- Appeal(s) allowed
- Bench
- HRISHIKESH ROY
Holding
Clause 4 does not create an automatic bar to departmental proceedings, and an acquittal in criminal court does not automatically discharge the employee in disciplinary proceedings.
Summary
The respondent, P. Zadenga, a bank officer, was dismissed after departmental proceedings were instituted for alleged misappropriation of deposit challan amounts, while criminal cases based on the same transactions were pending. The bank relied on Clause 4 of the 2002 Memorandum of Settlement (MoS) to argue that disciplinary action could proceed despite the criminal trial, whereas the respondent contended that the MoS barred any departmental action until the criminal case concluded. The Supreme Court examined whether Clause 4 creates an automatic stay of disciplinary proceedings and whether an acquittal in criminal court automatically discharges the employee in the departmental case. The Court held that Clause 4 does not impose a complete standstill; a stay may be advisable but is not mandatory and must be decided on facts, and that acquittal in criminal proceedings does not confer any automatic benefit in disciplinary proceedings. Consequently, the Court set aside the High Court’s order, restored the respondent’s dismissal, and allowed the appeal.
Issues considered
- Does Clause 4 of the Memorandum of Settlement dated 10 April 2002 bar the continuation of departmental proceedings when the employee is undergoing a criminal trial for the same offence?
- Does an acquittal in criminal proceedings entitle the employee to automatic discharge or any benefit in the pending disciplinary proceedings?
Subjects
Judgment
[2023] 12 S.C.R. 740 : 2023 INSC 868
CASE DETAILS
STATE BANK OF INDIA
v.
P. ZADENGA
(Civil Appeal No. 2518 of 2012)
OCTOBER 03, 2023
[HRISHIKESH ROY AND SANJAY KAROL, JJ.]
HEADNOTES
Issue for consideration: Whether clause 4 of the Memorandum
of Settlement (MoS) dated 10th April 2002 create a bar on departmental
proceedings continuing when the person subjected thereto is being tried
before a criminal court for offences of the same origin; and whether
acquittal in some of the connected proceedings entail a benefit in the
surviving proceedings, inuring a right upon the delinquent employee of
automatic discharge in disciplinary proceedings.
Service Law – Departmental proceedings pending criminal trial
arising from the same transactions, if to be stayed – Acquittal in one
of the proceedings if entails an acquittal in the other:
Held: Clause 4 of the MoS does not envisage a complete standstill
of departmental proceedings as a result of the pendency of criminal
proceedings – It may be desirable or, in certain circumstances, advisable
for disciplinary proceedings to be stayed when criminal proceedings
are ongoing however, stay is not "a matter of course" and is only to be
given after consideration of all factors, for and against – Departmental
proceedings cannot be unduly and unjustly delayed – It is only after the
completion of the entire process of disciplinary proceedings that the
respondent relying upon clause 4 of the MoS filed writ petition challenging
the action, which was a belated attempt only to forestall its implementation
– Further, completion of trial must be construed as completion “within
the reasonable time frame” and the clause cannot come to the aid of the
employee “more so”, for “prolongation on the trial” – In the instant case,
the completion of the trial concerning the crime registered in the year 1996
740
STATE BANK OF INDIA v. P. ZADENGA 741
is nowhere nearing completion – On facts, no plea of MoS was ever taken
– No specific plea of postponement of disciplinary proceedings awaiting
conclusion of a criminal trial was made – Neither was it the case that the
trial to which the respondent was subjected to begin within one year of
the commission of the offence nor does the record speak to this effect – It
is not mandatory to stay the disciplinary proceedings particularly when
they were initiated after the prescribed period of one year – The restriction
within clause 4 is not complete and is to be applied on facts – Furthermore,
the nature of proceedings being wholly separate and distinct, acquittal in
criminal proceedings does not entitle the delinquent employee for any
benefit in the latter or automatic discharge in departmental proceedings
and would also not tantamount to closure or culmination of proceedings
in favour of the delinquent employee – Impugned judgment set aside –
Respondent’s dismissal from service restored. [Paras 14.2, 15, 19, 22-24,
26 and 28-30]
Service Law – Simultaneous departmental and criminal
proceedings, principles to deal with – Discussed.
LIST OF CITATIONS AND OTHER REFERENCES
State Bank of India & Ors. v. Neelam Nag (2016) 9 SCC 491 : [2016]
5 SCR 278; State of Rajasthan v. B.K. Meena and Ors. (1996) 6 SCC 417 :
[1996] 7 Suppl. SCR 68; M Paul Anthony v. Bharat Gold Mines Ltd. (1999)
3 SCC 679 : [1999] 2 SCR 257; Karnataka Power Transmission Corpn. Ltd.
v. C. Nagaraju (2019) 10 SCC 367; Nelson Motis v. Union of India (1992)
4 SCC 711 : [1992] 1 Suppl. SCR 325; State of Karnataka v. Umesh (2022)
6 SCC 563 – relied on.
United Commercial Bank & Ors. v. P.C. Kakkar (2003) 4 SCC 364 :
[2003] 1 SCR 1034 – referred to.
OTHER CASE DETAILS INCLUDING IMPUGNED
ORDER AND APPEARANCES
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 2518 of 2012.
From the Judgment and Order dated 07.01.2009 of the High Court of
Gauhati in WA No. 3 of 2006.
742 SUPREME COURT REPORTS [2023] 12 S.C.R.
Appearances:
Vikas Singh, Sr. Adv., Sanjay Kapur, Surya Prakash, Arjun Bhatia,
Ms. Deepeika Kalia, Keshav Khandelwal, Advs. for the Appellants.
Jitendra Bharti, Deepak Goel, Mithilesh Kumar Jaishwal, Ms. Alka
Goyal, Advs. for the Respondent.
JUDGMENT / ORDER OF THE SUPREME COURT
JUDGMENT
SANJAY KAROL, J.
The instant lis presents two questions for consideration by this Court.
They are-
(a) Does clause 4 of the Memorandum of Settlement dated 10 th April
2002 create a bar on departmental proceedings continuing when
the person subjected thereto is being tried before a criminal court
for offences of the same origin?
(b) Does acquittal in some of the connected proceedings entail a
benefit in the surviving proceedings? Further, inuring a right upon
the delinquent employee of automatic discharge in disciplinary
proceedings?
This appeal, by way of special leave, is directed against the final
judgement and order dated 7 th January 2009 passed in Writ Appeal
No.03/2006 by which the order passed in Writ Petition (Civil) No.12 of
2005 dated 25th July 2005 allowing the appeal of the Respondent herein
against the order of dismissal from bank services dated 28th March 2003
and the rejection of the departmental appeal vide order 16th August 2004,
was allowed and the order of the Learned Single Judge confirmed.
Background
3. The facts of the instant dispute as they emanate from the record are:-
3.1 The respondent namely P. Zadenga1 was employed in the State Bank
1 Hereinafter referred to as “the delinquent employee”
STATE BANK OF INDIA v. P. ZADENGA 743
[SANJAY KAROL, J.]
of India2 as Assistant (CAT) at the Dawrpui Branch, Aizawl. Three
government retailers lodged a complaint with the Aizawl Police
Station that their challan-deposits with the said Branch had not
been entered into the cash receipt scroll. The District Civil Supply
Officer, Aizawl West, also lodged a complaint that a certain retailer
had taken the delivery of particular food stuff using a fake challan.
3.2 Pursuant thereto, disciplinary proceedings were initiated
against the respondent with the issuance of a Memorandum
dated 8 th December 1999, wherein it was alleged that he had
received Rs.61,908 for a deposit on 19 th April,1996 in respect
of which a challan was issued, but the amount never deposited
in the respective account. Two other similar occurrences dated
21 st February 1995 regarding Rs.24,640 and Rs.27,412 were
also alleged.
3.3 Three different FIRs stood registered against him, under
which he was arrested but later released on bail. In his written
show cause to this Memorandum, the Delinquent employee
contended that the disciplinary proceedings should be either
dropped or closed since criminal cases were pending him, arising
from the same set of transactions.
3.4 The appellant-bank proceeded to appoint an inquiry officer
who, in his report, submitted that three out of four charges
stood established. The Delinquent Employee, again denying the
charges, filed a response to that but was eventually dismissed
from the services at the bank, vide the order of dismissal dated
28 th March 2003. The departmental appeal filed by him, after
due opportunity of hearing, was dismissed on 16 th August 2004.
4. Aggrieved by the dismissal of the departmental appeal, the
delinquent employee filed Writ Petition (Civil) No.12 of 2005 before
the Gauhati High Court. The question before the said Court was:
whether, in view of the Memorandum of Settlement dated 10 th April
2 Hereinafter, the “Appellant Bank”
744 SUPREME COURT REPORTS [2023] 12 S.C.R.
2002 3, the disciplinary proceedings against the delinquent employee
(respondent) herein ought to have been stayed or not.
5. Having recorded that post signing of the said MoS, the Shastri
Award as confirmed by the Desai Award “ceased to exist for all intents
and purposes” the Court observed that clause 4 of the said document was
clear and unambiguous and, therefore, it was not correct for the bank to
have subjected him to disciplinary proceeding during the pendency of
criminal proceedings.
6. However, it would be open for the disciplinary authority to act
under the clauses of the MoS after the criminal cases against the delinquent
employee having reached a conclusion, one way or the other.
7. Dissatisfied by the order of the learned Single Judge, a Writ Appeal
was filed bearing No.03 of 2006. Having discussed the background of
the case, the Division Bench discussed the contention on behalf of the
bank regarding the applicability of the Shastri Award and observed that
the continuation of the disciplinary proceedings during the pendency of
criminal cases would be an infraction, given para 521(3) thereof.
8. In conclusion, the Division Bench upheld the order of the
learned Single Judge and confirmed the setting aside of the disciplinary
proceedings.
The Present Appeal
9. We have heard Mr. Vikas Singh, learned senior counsel for the
appellant bank and Mr. Jitendra Bharti for the delinquent employee.
10. Inviting attention to several decisions rendered by this Court, it
is argued on behalf of the appellant-bank that (i) initiation of departmental
proceedings binding criminal trial would not amount to an automatic stay
unless, of course, a complicated question of law is involved in the matter;
(ii) acquittal in a criminal trial in relation to the very same impugned action
would not preclude the employer to initiate departmental proceedings;
3 Hereinafter referred to as “MoS”: between the Management of 52 ‘A’ Class Banks as
represented by the Indian Banks’ Association and their workmen as represented by the
All India Bank Employees’ Association, National Confederation of Bank Employees,
Indian National Bank Employees’ Federation.
STATE BANK OF INDIA v. P. ZADENGA 745
[SANJAY KAROL, J.]
and (iii) mere non-compliance of the provisions of bipartite agreement, in
attending facts, would not result in the disciplinary action to be void ab initio.
11. On the other hand, it is argued on behalf of the delinquent employee
that the disciplinary proceedings, the subject matter of the instant lis, were in
gross violation of the bipartite agreement, which has been held to have the force
of law. In any case, Respondent stand acquitted in two out of three criminal
trials. Also, the action initiated by the employer was belated and an afterthought
only to harass the delinquent employee.
12. Before proceeding to the merits of the issue at hand, it would be
appropriate to reproduce clause 4 of the MoS dated 10th April 2002, which is
the bone of contention in this dispute, for the delinquent employee contends
an apparent embargo on proceedings with disciplinary enquiry when criminal
cases arising from the same transactions are pending, and the appellant-bank
submitting to the contrary of there being no such restriction. Clause 4 reads as
under: -
“If after steps have been taken to prosecute an employee or get him
prosecuted, for an offence, he is not put on trial within a year of the
commission of the office, the management may then deal with him as if he
had committed an act of “gross misconduct” or of “minor misconduct”, as
defined below; provided that if the authority which was to start prosecution
proceedings refuses to do so or comes to the conclusion that there is no
case for prosecution it shall be open to the management to proceed against
the employee under the provisions set out below in Clauses 11 and 12 infra
relating to discharge, but he shall out below in Clauses 11 and 12 infra
relating to discharge, but he shall be deemed to have been on duty during
the period of suspension, if any, and shall be entitled to the full wages and
allowances and to all other privileges for such period. In the event of the
management deciding, after enquiry, not to continue him in service, he
shall be liable only for termination with three months’ pay and allowances
in lieu of notice as provided in Clause 3 above. If within the pendency
of the proceedings thus instituted is put on trial, such proceedings shall
be stayed pending the completion of the trial, after which the provisions
mentioned in Clause 3 above shall apply.”
(Emphasis Supplied)
746 SUPREME COURT REPORTS [2023] 12 S.C.R.
13. In respect of the interpretation of clause 4, we find this Court to
have observed in State Bank of India & Ors. v. Neelam Nag4 as follows:-
“21. In the plain language of Clause 4, in our opinion, it is not a
stipulation to prohibit the institution and continuation of disciplinary
proceedings, much less indefinitely, merely because of the pendency
of a criminal case against the delinquent employee. On the other hand,
it is an enabling provision permitting the institution or continuation
of disciplinary proceedings, if the employee is not put on trial by the
prosecution within one year from the commission of the offence or
the prosecution fails to proceed against him for want of any material.
22. As can be culled out from the last sentence of Clause 4, which
applies to a case where the criminal case has in fact proceeded, as in
this case, for trial. The term “completion of the trial” thereat, must be
construed as completion of the trial within a reasonable time-frame.
This clause cannot come to the aid of the delinquent employee—who
has been named as an accused in a criminal case and more so is party
to prolongation of the trial.”
14. Against this backdrop, it is also imperative that we look into the
position of law regarding two proceedings of similar origin continuing
simultaneously.
14.1 This Court in State of Rajasthan v. B.K. Meena and Ors.5
referred to some decisions on the aspect of stay on disciplinary proceedings
and observed :-
“14. It would be evident from the above decisions that each of them
starts with the indisputable proposition that there is no legal bar for
both proceedings to go on simultaneously and then say that in certain
situations, it may not be ‘desirable’, ‘advisable’ or ‘appropriate’ to
proceed with the disciplinary enquiry when a criminal case is pending
on identical charges. The staying of disciplinary proceedings, it is
emphasised, is a matter to be determined having regard to the facts
and circumstances of a given case and that no hard and fast rules can
4 (2016) 9 SCC 491
5 (1996) 6 SCC 417
STATE BANK OF INDIA v. P. ZADENGA 747
[SANJAY KAROL, J.]
be enunciated in that behalf…The interest of the delinquent officer
also lies in a prompt conclusion of the disciplinary proceedings. If
he is not guilty of the charges, his honour should be vindicated at the
earliest possible moment and if he is guilty, he should be dealt with
promptly according to law. It is not also in the interest of administration
that persons accused of serious misdemeanour should be continued
in office indefinitely, i.e., for long periods awaiting the result of
criminal proceedings. It is not in the interest of administration. It
only serves the interest of the guilty and dishonest. While it is not
possible to enumerate the various factors, for and against the stay of
disciplinary proceedings, we found it necessary to emphasise some
of the important considerations in view of the fact that very often the
disciplinary proceedings are being stayed for long periods pending
criminal proceedings. Stay of disciplinary proceedings cannot be, and
should not be, a matter of course. …”
(Emphasis supplied)
14.2 Further, this Court in M Paul Anthony v. Bharat Gold Mines
Ltd.6 elucidated the following principles in dealing with departmental and
criminal proceedings simultaneously:-
a. No bar exits on both proceedings continuing simultaneously, though
in an appropriate, separate forum.
b. If said proceedings are on identical/similar facts and if the charges
levied against the delinquent employee are of a serious nature, then it
would be desirable if the departmental proceedings are stayed till the
conclusion of the other.
c. The nature of the charge or the involvement of complex questions
of law and fact depends on the facts and circumstances of each case,
i.e., the offence, nature of the case launched, evidence and material
collected.
d. Sole consideration of the above-mentioned factors cannot be the
reason to stay the departmental proceedings.
6 (1999) 3 SCC 679
748 SUPREME COURT REPORTS [2023] 12 S.C.R.
e. It must be remembered that departmental proceedings cannot be
unduly and unjustly delayed.
f. If the criminal proceedings are delayed, the other, having been
stayed on account thereof, may be resumed to conclude the same at
the earliest. This may result in two possibilities: either the vindication
of the position of the delinquent employee or he being found guilty,
enabling the department concern to show him out the door.
14.3 The view taken in M. Paul Anthony (supra) was referred to by this
Court in Karnataka Power Transmission Corpn. Ltd. v. C. Nagaraju 7.
15. As is evident from the judicial pronouncements referred to above,
it may be desirable or, in certain circumstances, advisable for disciplinary
proceedings to be stayed when criminal proceedings are ongoing; however,
stay is not “a matter of course” and is only to be given after consideration
of all factors, for and against.
16. Keeping in view Neelam Nag (supra), the following essentialities
may be culled out for the operation of clause 4 –
a. At least one year ought to have passed since attempts to get the
delinquent employee prosecuted;
b. If, after the passage of such time, no prosecution is initiated, then
the department may proceed in accordance with its procedure for
disciplinary action;
c. If the prosecution commences later in point of time to the disciplinary
proceedings, the latter shall be stayed, but not indefinitely. Such
proceedings are to be stayed only for a reasonable period of time,
which is a matter of determination per the circumstances of each case.
17. The next aspect we must consider is whether an acquittal in one
of the proceedings entails an acquittal in the other.
17.1 In Nelson Motis v. Union of India8 it was observed that the
question whether departmental proceedings could have continued
7 (2019) 10 SCC 367
8 (1992) 4 SCC 711
STATE BANK OF INDIA v. P. ZADENGA 749
[SANJAY KAROL, J.]
in the face of acquittal in criminal proceedings had no force as “the
nature and scope of a criminal case are very different from those of
a departmental disciplinary proceeding and an order of acquittal,
therefore, cannot conclude the departmental proceeding.”
17.2 In C. Nagaraju (supra) it was observed:
“9. Acquittal by a criminal court would not debar an employer
from exercising the power to conduct departmental proceedings in
accordance with the rules and regulations. The two proceedings,
criminal and departmental, are entirely different. They operate in
different fields and have different objectives. [Ajit Kumar Nag v. Indian
Oil Corpn. Ltd., (2005) 7 SCC 764 ]In the disciplinary proceedings, the
question is whether the respondent is guilty of such conduct as would
merit his removal from service or a lesser punishment, as the case
may be, whereas in the criminal proceedings, the question is whether
the offences registered against him under the PC Act are established,
and if established, what sentence should be imposed upon him. The
standard of proof, the mode of inquiry and the rules governing inquiry
and trial in both the cases are significantly distinct and different. [State
of Rajasthan v. B.K. Meena, (1996) 6 SCC 417]
(Emphasis supplied)
17.3 This observation was quoted with profit in the State of Karnataka
v. Umesh.9
18. It is a matter of record that concerning the incident(s) in question,
the FIR was registered sometime in 1996, and disciplinary proceedings
were initiated on 8th December 1999. With the completion thereof in the
year 2002 and pursuant to further completion of formalities mandatorily
required to be complied with, including the principles of natural justice, the
delinquent employee was dismissed from service with the passing of the
order dated 28th March 2003.
19. An appeal preferred by the delinquent employee was also dismissed
in 2004. It is only after the completion of the entire process of disciplinary
9 (2022) 6 SCC 563
750 SUPREME COURT REPORTS [2023] 12 S.C.R.
proceedings that the delinquent employee, in February 2005, seeking reliance
upon clause 4 of the MoS, filed a writ petition challenging the action, which,
to our mind, was a belated attempt, only to forestall its implementation.
20. Repetitive as it may sound, we reiterate the principle of law
enunciated in Neelam Nag (supra) that the completion of trial must be
construed as completion “within the reasonable time frame” and that the
clause cannot come to the aid of the employee “more so”, for “prolongation
on the trial”. In the instant case, the completion of the trial concerning the
crime registered in the year 1996 is nowhere nearing completion.
21. As a principle of law, we have already observed that a departmental
proceeding pending criminal trial would not warrant an automatic stay
unless, of course, a complicated question of law is involved. Also, acquittal in
a criminal case ipso facto would not be tantamount to closure or culmination
of proceedings in favour of a delinquent employee.
22. Having perused the delinquent employee’s response to the initiation
of inquiry proceedings, most significantly, we notice that no plea of MoS was
ever taken. No specific plea of postponement of disciplinary proceedings
awaiting conclusion of a criminal trial was made.
23. It is seen that the officer neither pleaded nor indicated the prejudice
caused to him as a consequence of the initiation of criminal proceedings or
simultaneous continuation of both proceedings.
24. Applying all of the above-noted principles to the facts of the case,
we find that neither was it the case of the delinquent employee that the trial
to which he was subjected to begin within one year of the commission of the
offence nor does the record speak to this effect. It is in the inquiry report 10,
dated 3rd December 2001, that an objection to the disciplinary proceedings
being conducted while a criminal case was being tried is registered, but
even there, no date stands specified.
25. Further, it is not the case of the delinquent employee that the
principles of natural justice were not complied with in the disciplinary
proceedings of the bank.
10 Annexure P-4 Pg.109 of the Paperbook
STATE BANK OF INDIA v. P. ZADENGA 751
[SANJAY KAROL, J.]
26. Both these aspects, taken along with the fact that it is not mandatory
to stay the disciplinary proceedings, particularly when they have been
initiated after the prescribed period of one year, we cannot bring ourselves to
agree with the courts below. The restriction within clause 4 is not complete
and is to be applied on facts. In such a situation, the Division Bench’s
reliance on United Commercial Bank & Ors. v. P.C. Kakkar,11 is entirely
misconceived. Contrary to the conclusion arrived at by the High Court in
Writ Appeal, Kakkar (supra) furthers the position of the appellant-bank as it
states, “acquittal in the criminal case is not determinative of the commission
of misconduct or otherwise, and it is open to authorities to proceed with the
disciplinary proceedings, notwithstanding acquittal in the criminal case.”
27. Surprisingly, having referred to Kakkar (supra), which takes the
above-mentioned position, the High Court, in the very next paragraph, takes
a diametrically opposite view without any reasoning to that. We may, in fact,
refer to Kakkar (supra) to reiterate what is expected of persons employed
in a bank while also observing that the conduct of the delinquent employee
herein flies in the face of these principles. This Court noted : -
“14. A bank officer is required to exercise higher standards of honesty
and integrity. He deals with the money of the depositors and the
customers. Every officer/employee of the bank is required to take
all possible steps to protect the interests of the bank and to discharge
his duties with utmost integrity, honesty, devotion and diligence and
to do nothing which is unbecoming of a bank officer. Good conduct
and discipline are inseparable from the functioning of every officer/
employee of the bank… The very discipline of an organization more
particularly a bank is dependent upon each of its officers and officers
acting and operating within their allotted sphere. Acting beyond one’s
authority is by itself a breach of discipline and is a misconduct.”
(Emphasis Supplied)
28. Given the foregoing discussion and in the light of judicial
pronouncements discussed supra, the appeal succeeds. We set aside
the judgment and order dated 7th January 2009 passed in Writ Appeal
11 (2003) 4 SCC 364
752 SUPREME COURT REPORTS [2023] 12 S.C.R.
No.03/2006, and consequentially, the order passed in Writ Petition (Civil)
No.12 of 2005 dated 25 th July 2005.
29. The questions presented in this appeal are answered as under :
29.1 Clause 4 of the MoS dated 10th April 2002 does not envisage
a complete standstill of departmental proceedings as a result of the
pendency of criminal proceedings. The position of law is that the
stay of the latter is desirable, but the same is to be affected only for a
reasonable period of time.
29.2 The nature of proceedings being wholly separate and distinct,
acquittal in criminal proceedings does not entitle the delinquent
employee for any benefit in the latter or automatic discharge in
departmental proceedings.
30. Consequently, Mr. P. Zadenga’s dismissal from service as per the
Memorandum dated 28th March 2003 (D.P.S.No.2003/02) is restored.
31. Interlocutory Applications, if any, stand disposed of.
32. Parties to bear their own costs.
Headnotes prepared by: Appeal allowed.
Divya Pandey
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