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Jagannath Dash Vs. State Bank of India and ors. - Court Judgment

LegalCrystal Citation
SubjectLabour and Industrial
CourtOrissa High Court
Decided On
Judge
Reported in(1979)IILLJ131Ori
AppellantJagannath Dash
RespondentState Bank of India and ors.
Cases ReferredT.K. Tandavakrishna v. Chief General Manager
Excerpt:
.....[new india assurance co. ltd. v md. makubur rahman, 1993 (2) glr 430 and new india assurance co. ltd. v smt rita devi, 1997(2) glt 406, approved. new india assurance co. ltd. v birendra mohan de, 1995 (2) gau lt 218 (db) and union of india v smt gita banik, 1996 (2) glt 246, are not good law]. - on 5.6.1971, petitioner obtained a letter from the financier that the dues under the hire purchase agreement had been completely satisfied. since the petitioner has failed to establish that the service rules are statutory the petitioner is not entitled to any relief by means of the present petition. when the service rules have been brought into force by the central board, we must assume that the other pre-requisites have been satisfied, particularly when there is no challenge about it in the..........for the purpose of buying this car. in addition, you hypothecated the said car as security for the bank's loan though the security cannot be obviously enforceable in view of the defective title thereof.2. the facts indicate that you acted in gross violation of the bank's existent instructions in the matter in an utterly callous and negligent manner befiting an officer of your seniority.3. the matter has been considered by us.though the nature of the lapse committed by you calls for severe action, a lenient view has been taken in the matter and it has been decided to impose a punishment of censure upon you in terms of rule 51 of the s.b.i. (supervising staff) rules. accordingly, you are hereby censured.4. a copy of the letter is also being placed in your service file.the main objection.....
Judgment:

R.N. Misra, J.

1. Petitioner is an officer employed by the State Bank of India. During 1970 and 1971, he was posted as the Manager of the Baripada Branch of the Bank. On 5th Oct. 1970, petitioner entered into an agreement for purchase of an Ambassador car bearing registration number WBJ 2130 from one Bhagawandas Agarwalla for a consideration of Rupees 14,500 stipulating to obtain delivery of possession on payment of Rs. 4,000 and agreeing to pay the balance of Rupees 10,500 in two instalments--one of Rs. 2,000 within a month hence and the remainder of Rs. 8,500 after obtaining the transfer of ownership from the registering authority. In the agreement, the copy whereof is Annexure-4(i) to this writ application, it was mentioned that the vehicle stood in the name of Shri Banker Prasad Singh as the registered owner. On 16.9.1970, petitioner applied to the Regional Manager of the Bank for sanction of a loan and made a second application on 28.9.1970 to the same effect indicating therein that the sanction of the loan may be made expeditiously. On 28.10.1970, the loan was sanctioned. The vehicle had been purchased in the name of Bankey Prasad Singh under hire purchase basis and the Bengal Credit Corporation, Calcutta, was the financier. On 5.6.1971, petitioner obtained a letter from the financier that the dues under the hire purchase agreement had been completely satisfied. On 30.70.1971, there was transfer of ownership by appropriate endorsement in the registration book and on the following day petitioner withdrew the loan amount and hypothecated the vehicle with the Bank as security for the loan obtained by him. On 19.11.1971, petitioner was furnished with the summary of the report made by one A.K. Sarkar, Officer Gr. I, attached to the Circle Audit Cell and was called upon to offer his comments in the matter of purchase of the vehicle. Petitioner furnished his comments. From a letter dated 12.9.1973 issued by the Central Office of the Bank at Bombay to the Circle Office at Calcutta shows that the matter was given a final seal (vide paragraph 2 of Annexure-D.) Notwithstanding that decision, the question became the subject-matter of a series of correspondence between different authorities of the Bank and on 16th March, 1976, the Chief Regional Manager of the Bank at Bhubaneswar communicated to the petitioner that he has been ensured with reference to the purchase of the car. On 9th April, 1976, the writ application was filed questioning the imposition of the punishment of censure. Petitioner contended inter alia that the Chief Regional Manager was not the competent authority to impose the punishment. In the counter-affidavit filed by the opposite parties, it was maintained that Annexure 5 was not the appropriate commuincation and the matter was still under consideration by then and was finalised by the Chief General Manager on 23rd Aug. 1976, vide Annexure E. After this disclosure was made in the counter-affidavit, petitioner amended his writ application and challenged that the statement of fact in Annexure E that petitioner had obtained the loan on 1.7.1971 and had hypothecated the car for the loan was incorrect, and as a fact the transfer was obtained on 30th of July, 1971, and petitioner withdrew the loan on 31.7.1971, after hypothecating the vehicle that day. When this stand was taken by the petitioner in the amended writ application, opposite parties came forward with a further affidavit that the mention of the date as 1.7.1971 in Annexure E was a mistake and as a fact it was 31.7.1971. Petitioner challenges the imposition of punishment of censure as being contrary to Rule 51 of the State Bank of India (Supervising Staff) Service Rules (hereinafter referred to as 'the Service Rules'). It is further maintained that there is absolutely no basis for proceeding against the petitioner and while the head of the establishment had decided in 1973 that the matter should be closed, the subordinates in the establishment raked up the matter and ultimately manipulated to impose the punishment of censure. It is next contended that the entire premises upon which the decision to impose the punishment of censure has been taken is erroneous inasmuch as by the date the petitioner furnished the security by hypothecation, he was the owner of the vehicle. Lastly, Mr. Rath for the petitioner has taken the stand that there is absolutely no material upon which any adverse view against the petitioner should have been taken and since the imposition of punishment affects the petitioner adversely the order should be vacated.

2. In the several counter affidavits of opposite parties, the action taken has been sought to be supported.

3. At the hearing of the application Mr. Roy Mukherjee for the opposite parties has disputed the maintainability of the application by contending that the Service Rules upon which reliance has been placed are not statutory and infraction thereof, even conceding that there is breach, cannot be made the subject-matter of an application under Article 226 of the Constitution, inasmuch as the matter would not come under any of the three clauses indicated in Sub-article (1). Reliance is placed in support of this stand on two decisions, the first one being the case of Ramesh Krishna Rao v. State Bank of India 1974 II L.L.J. 441 : (1975) L.I.C. 175 and the second one being the case of K.L. Tripathiv, State Bank of India (1978) L.I.C. 441 (All). In the Bombay case 1974 II L.L.J. 441 : (1975) L.I.C. 175, the question that arose for consideration was whether the State Bank of India came within the term 'other authorities' occurring in Article 12 of the Constitution. The Court relying upon the dictum of the Supreme Court in the case of Executive Committee of U.P. State W. Corporation, Lucknow v. C.K. Tyagi : (1970)ILLJ32SC , and in Re': Indian Airlines Corporation : (1971)ILLJ496SC came to hold that the State Bank of India did not come within the ambit of Article 12 and the State Bank of India (Officers and Assistants) Rules were not statutory. The fundamental basis of the judgment has been shaken in view of the fact that the ratio in both the decisions of the Supreme Court referred to above has been found not to be correct by a larger Bench in the case of Sukhdev Singh v. Bhagatram : (1975)ILLJ399SC . In fact, both the desisions relied upon by the Bombay High Court have been specifically overruled. The second case relied upon by Mr. Roy Mukherjee is the Bench decision of the Allahabad High Court (1978) L.I.C. 441, which apparently supports his contention. The Service Rules which are for consideration before us were being considered by the Allahabad High Court and the Court found that (at p. 445):

In view of the principles laid down above we are of the opinion that the Central Board cannot frame 'statutory regulations' in the exercise of its general power of superintendence under Section 17 of the Act without following the procedure laid down in Section 50 of the Act.

In this view of the matter the impugned service rules cannot be held to be statutory unless they were framed after following the procedure prescribed by Section 50 of the State Bank of India Act, 1966. As stated above, the service rules in question have not been framed by the Central Board after consultation with the Reserve Bank and with the previous sanction of the Central Government and hence in our opinion they have no statutory character. Since the petitioner has failed to establish that the service rules are statutory the petitioner is not entitled to any relief by means of the present petition. In view of our findings that the service rules in question are not statutory we do not consider it necessary to go into the merit of the other submissions made by the learned Counsel for the petitioner challenging the validity of the dismissal order.

Learned Counsel for the petitioner has relied upon the observations of Supreme Court in Sukhdev Singh v. Bhagatram, (supra) as contained in paras 22, 23, 32, 100, 116, 121 and 122. We have carefully considered the observations of the judgment of the Supreme Court but we find nothing therein which may in any way advance the argument made on behalf of the petitioner. In fact the Supreme Court had examined the provisions of the Oil and Natural Gas Commission Act, 1969, Industrial Finance Corporation Act, 1956 and thereafter held that various regulations framed under the respective Acts were statutory as the procedure which was required to be followed in framing the said regulations had been followed in these cases. In the instant case the legislative mandate as laid down in Section 50 has not been followed in framing the Service Rules.

No plea as to the character of the Service Rules was raised in the counter-affidavits filed in this case. Section 43 of the State Bank of India Act, 1955 provides:

(1) The State Bank may appoint such number of officers advisers and employees as it considers necessary or desirable for the efficient performance of its functions, and determine the terms and conditions of their appointment and service.

(2)....

Section 50 of the said Act provides:

(1) The Central Board may, after consultation with the previous sanction of the Central Government make regulations, not inconsistent with this Act and the rules made thereunder, to provide for all matters for which provision is expedient for the purpose of giving effect to the provisions of this Act. * * * **

Sub-section (2) makes provision without prejudice to the generality of the power conferred under Sub-section (1), to make Regulations in respect of named matters. Clause (n) deals with the topic of the duty and conduct of officers. We have been supplied with printed copies of Service Rules by Mr. Roy Mukherjee and we find that at page 43 of the printed Rules dated 25th July, 1975, it has been indicated that the Service Rules are under the authority of the Central Board. It is not the case of the counsel for the opposite parties that the Reserve Bank has not been consulted or that the previous sanction of the Central Government has not been taken. When the Service Rules have been brought into force by the Central Board, we must assume that the other pre-requisites have been satisfied, particularly when there is no challenge about it in the pleading. The Service Rules appear to be applicable to all officers of the categories covered by them, whether serving in India or outside and in fact, at the time of entry into service, a declaration is intended to be taken from every officer that he has been served with a copy of the Service Rules and he subscribes and agrees to be bound by them. In these circumstances we are not prepared to agree with the view indicated by the Allahabad High Court.

Reference has been made to an unreported Bench decision of the Andhra Pradesh High Court in Writ Petition No. 1467 of 1976 T.K. Tandavakrishna v. Chief General Manager, disposed of on 13.8.1977, where the High Court has come to hold that the Service Rules are statutory. Keeping in view the ration in Sukhdev Singh's case (supra) and the provisions of the State Bank of India Act and the Rules in question, we are inclined to hold that the State Bank of India comes within the ambit of Article 12 and the relevant Rules are statutory. There is no force in the preliminary objection and it is accordingly overruled.

4. According to the petitioner, 'censure' is the punishment contemplated under Rule 49(a) and Rule 51 provides:

When it is proposed to cancel, withhold, reduce or delay the increment due to an employee or to penalise and employee in any way other than by imposing on him any of the penalities mentioned in Clause (c) to (f) of Rule 49, the precedure described in Rule 50 shall not be followed. The employee concerned shall be informed by the Managing Director, if he is serving in or under Central Office, or by the Chief General Manager, if he is serving in a Circle, of the reasons for proposing to inflict such penalty and he shall be given an opportunity to make a written statement in his defence. Such statement, if any, shall be placed before the Executive Committee or the Local Board, as the case may be, when the employee's case comes up for consideration:

Provided that in a case where an employee has not been proceeded against under Rule 50, the Managing Director in the case of an employee serving in or under Central Office of the Chief General Manager in the case of an employee serving in a Circle may inflict the penalty of censure, if he considers it to be adequate and inform the employee of the reasons for inflicting such penalty.

Admittedly petitioner serves in a Circle and, therefore, the Chief General Manager would be the appropriate authority to impose the punishment indicated in Clause (a) or (b) of Rule 49 in relation to the petitioner. Counsel for the petitioner contends that petitioner was never given notice of the reasons proposing to impose upon him the punishment of censure nor had he been given an opportunity to make a written statement in his defence against the proposed punishment. This fact has not been seriously controverted in the counter-affidavits and during hearing of the application when we called upon Mr. Roy Mukherjee to meet the contention, he readily conceded that there was no answer to it. We are not inclined to take the view that the proviso to Rule 51 of the Service Rules intended to authorise the named authorities to impose the punishment of censure without following the procedure indicated in the main rule. Even conceding that the proviso intended to carve out an exception in respect of the punishment of censure, we are inclined to agree with the counsel for the petitioner that there is absolutely no material in the case to justify imposition of any punishment. Law is well-settled that no public officer is entitled to affect the rights of a subordinate of his by acting arbitrarily.

5. The admitted facts appear to be the following: WBJ 2130 was an Ambassador car purchased through a hire purchase financier, namely, M/s. Bengali Credit Corporation of Calcutta. From the original book of registration it appears that the vehicle stood registered in the name of one Bankey Prasad Singh. Petitioner entered into an arrangement for purchaing this vehicle and the agreement was entered into between him and one Bhagwandas Agarwalla on 5.10.1970. In para 1 of the agreement it was stated:

The seller (No. 1) is the real owner of the vehicle No. WBJ 2130, although the ownership stands in the name of Sri Bankey Prasad Singh and has not yet been transferred.

On 30.7.1971, appropriate endorsement was made in the certificate of registration cancelling the name of Bankey Prasad Singh and describing the petitioner as the owner of the vehicle by transfer. It is the settled position in law that the person shown in the book of registration as owner has prima facie title to the vehicle. Petitioner withdrew the loan from the Bank on 31.7.1971 and hypothecated the vehicle of which he had already become the owner as security for the loan taken from the Bank. Now that the opposite parties have conceded that the punishment was in terms of Annexure E, we may extract the same.

It has been found that the Ammbassador car bearing the registration number WBJ-2130 (Cal.) which you reported to have purchased from Shri B.D. Agarwala was not registered in his name but you paid him the price by obtaining from the Bank a demand loan on 1.7.1971 for Rs. 8,280/- for the purpose of buying this car. In addition, you hypothecated the said car as security for the Bank's loan though the security cannot be obviously enforceable in view of the defective title thereof.

2. The facts indicate that you acted in gross violation of the Bank's existent instructions in the matter in an utterly callous and negligent manner befiting an officer of your seniority.

3. The matter has been considered by us.

Though the nature of the lapse committed by you calls for severe action, a lenient view has been taken in the matter and it has been decided to impose a punishment of censure upon you in terms of Rule 51 of the S.B.I. (Supervising Staff) Rules. Accordingly, you are hereby censured.

4. A copy of the letter is also being placed in your service file.

The main objection against the petitioner, as would appear from Annexure E and the argument advanced by counsel for the opposite parties during hearing of the application, is that petitioner offered the vehicle as security for the loan though he had defective title thereto. Bankey Prasad Singh had made the offer to sell the vehicle to the petitioner. Admittedly the financier has been paid all its dues as would appear from the certificate furnished by it. The fact that the vehicle stood registered in the name of Bankey Prasad Singh was indicated in the agreement of sale by Bhagawandas Agarwalla where he maintained that he was the real owner. Admittedly ownership has been changed from Bankey Prasad Singh to the petitioner and appropriate endorsements have been made in the certificate of registration.

6. In these premises, we are inclined to agree with Mr. Rath for the petitioner that there is no basis for coming to the conclusion that petitioner was not the owner and there was defect in his title, yet he had offered the vehicle as security for the loan taken from the Bank. It was for the opposite parties to establish that the title of the petitioner was defective and since nothing has been shown by them and no other person has come to claim title over the vehicle, we are of the opinion that there was no material to justify the conclusion reached by the authorities of the Bank that title of the petitioner was defective in relation to the car.

7. In Annexure D, dated 10th Feb. 1976, it has been stated.

We have had the case enquired into by Shri A.R. Sarkar, Staff Officer (Grade III) and his report sent to us by the Chief Regional Manager, Bhubaneswar, was forwarded to you with our letter No. VIG-Co 1991 of 34th Aug. 1973 giving our views that there was not sufficient evidence to justify departmental action against Shri Dash with which you concurred in terms of your letter No. 27934 of 12th Sept. 1973.

Inasmuch as Annexure D has been produced by the opposite parties, they are bound by the facts stated therein. The Central Office of the Bank at Bombay had come to the conclusion as early as 12th Sept. 1973, that there was no material to justify departmental action against the petitioner. Opposite parties have not indicated in the circumstances under which the matter was allowed to protract notwithstanding the conclusion of the Central Office.

8. There is some force in the contention of the petitioner that the opposite parties laboured under the impression that petitioner had withdrawn the demand loan on 1.7.1971 and had offered the security of the vehicle before having good title to the same. The date '1.7.1971' does not only appear in Annesure E but in several correspondences between the different authorities preceding the finalisation of the matter. Now that it has been conceded that the ownership was transferred on 30th July. 1971, and the hypothecation was made on the following day, there can be no scope for the contention that the hypothecation was made when petitioner's title to the vehicle was defective.

9. On a consideration of all the aspects indicated above, we have come to the definite conclusion that the imposition of punishment was without foundation and done in a manner contrary to the provision contained in the Service Rules. The writ application is accordingly allowed and the imposition of the punishment of censure is quashed. Opposite parties are directed not to place the copy of the letter Annexure E in the service file of the petitioner. Ordinarily, we would have awarded costs in favour of the petitioner, but keeping in view that the petitioner is still in service under the opposite parties, we think it appropriate not to make any direction in the matter of costs.

B.K. Ray., J.

10. I agree.


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