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Kul Bhusan Chopra Vs. Punjab National Bank and ors. - Court Judgment

LegalCrystal Citation
SubjectLabour and Industrial
CourtDelhi High Court
Decided On
Judge
Reported in(1979)IILLJ86Del
AppellantKul Bhusan Chopra
RespondentPunjab National Bank and ors.
Cases ReferredState of U.P. v. Jai Singh Dixit
Excerpt:
- - eventually, the investigation was entrusted to the area manager, who, in his report of april 1, 1977 found that the petitioner, as well as certain other employees of the bank, were guilty of certain lapses. if it is, the petitioner would certainly be entitled to invoke the aid of the fundamental rights subject to the other conditions being satisfied. an examination of the constitution, powers and functions of nationalised banking institutions, unmistakably point to the conclusion that, as found by the supreme court in the case of some of the other financial institutions like the reserve bank of india i. so far as the functions of these institutions are concerned it is good to bear in mind that after the nationalisation of banking, the nationalised banking institutions have ceased.....orderh.l. anand, j.1. this petition under article 226 of the constitution of india by an officer of a nationalised bank, now under suspension, is directed against the order of suspension of the petitioner ' pending disciplinary action' and raises some important questions as to whether a nationalised bank would be an authority within the meaning of article 12 of the constitution of india, as to the stage at which and the circumstances in which as officer of the bank could be suspended, pending disciplinary action, whether the right to receive salary would be property within the meaning of articles 19 and 31 of the constitution of india and as to whether non-payment of salary by virtue of an improper order of suspension from service could attract the fundamental right to property.2. on the.....
Judgment:
ORDER

H.L. Anand, J.

1. This petition under Article 226 of the Constitution of India by an officer of a Nationalised Bank, now under suspension, is directed against the order of suspension of the petitioner ' pending disciplinary action' and raises some important questions as to whether a Nationalised Bank would be an authority within the meaning of Article 12 of the Constitution of India, as to the stage at which and the circumstances in which as officer of the Bank could be suspended, pending disciplinary action, whether the right to receive salary would be property within the meaning of Articles 19 and 31 of the Constitution of India and as to whether non-payment of salary by virtue of an improper order of suspension from service could attract the fundamental right to property.

2. On the material date, the petitioner was working as a Branch Manager of the Patiala Guru Branch of the Punjab National Bank, a nationalised Banking institution, respondent No. 1. Pursuant to certain reports against the petitioner, the Bank deputed an Inspector to investigate the matter in December, 1976. The reports of the Inspector of January 1, 1977, and January 3, 1977, allegedly revealed that the petitioner had on many occasions violated the Departmental instructions/rules particularly in the matter of granting loans and had committed a number of malpractices. The reports of the Inspector are said to have been forwarded to the Development Manager for further investigation, who, in his report of January 27, 1977, upheld the reports of the Inspector. The report of the Development Manager was eventually said to have come up for consideration before the Regional Manager, who on an examination found that the matter had financial implications calling for further investigation. He directed the Development Manager to visit the Branch personally and make a detailed report. Eventually, the investigation was entrusted to the Area Manager, who, in his report of April 1, 1977 found that the petitioner, as well as certain other employees of the Bank, were guilty of certain lapses. On receipt of the report of the Area Manager, the Regional Manager observed in his note of May 9, 1977, as follows :

From the report, it is very clear that the B/Mgr Shri K.B. Chopra, has committed serious lapses and malpractices. He has also indulged in corrupt activities and in connivance with few parties has given unauthorised accommodation beyond his loaning powers. He has highly misused his position. Shri Kapur from Model Town, Pathankot, be got relieved immediately, with instructions to take charge of BO Jandiala Guru. After taking charge, instruction be sent to him from the office to suspend Shri Chopra. Immediately thereafter a regular chargesheet be served on him, on the basis of findings of Area Manager.

On the basis of the aforesaid observations of the Regional Manager, the petitioner was suspended from the service of the Bank vide the Bank's letter of May 24, 1977 (Annexure P 1) with effect from May 26, 1977, under the provisions of Clause 12 of the Punjab National Bank Office Employees (Discipline and Appeal) Regulations, 1977, for short, the Regulation, 'pending disciplinary action.' The officer was further informed that during the period of suspension, he will be paid subsistence allowance in terms of the Rules, It, however, appears that subsequent to the suspension of the petitioner, the examination of the matter at certain levels, in particular its examination by the Vigilance Department of the Bank revealed that a thorough investigation was justified as a sequel to which further investigation was carried on after which the matter was referred to the Chief Vigilance Commission. Government of India, as required by Clause 19 of the Regulations. The result has been that even though the petitioner remained suspended during all this period, 'pending disciplinary action', a formal charge sheet was served on the petitioner only on or about May 16, 1978, after a lapse of more than one year from the date of suspension. Thereafter, the petitioner took some time to make inspection of the records and the disciplinary proceedings are still at the initial stage. The present petition was filed by the petitioner on April 27, 1978, before the charge-sheet had been served on the petitioner.

3. On this more or less admitted hypothesis, petitioner assails the validity of the order of suspension, inter alia, on the grounds that being a suspension virtually for the purpose of investigation, it was beyond the scope of Clause 12 of the Regulations and, thereforee, punitive in nature, that, in any event, even if the order of suspension was not ab initio void in that it was made in contemplation of disciplinary proceedings, as envisaged by the Regulations, it became void when instead of initiating disciplinary proceedings, the Bank embarked upon an indefinite course of virtual investigation and took more than one year to frame a charge-sheet, and that the deprivation of the petitioner's right to receive salary during the period of suspension constituted an infraction of the petitioner's fundamental right to property in so far as the deprivation was brought about by an illegal order of suspension, but for which the petitioner would have been entitled in law to his usual salary being paid to him throughout the period of suspension.

4. Dr. Anand Prakash, learned Counsel for the Bank, did not conceal a reasonable person's obvious discomfiture over the rather unusual period of suspension before the charge-sheet, but nevertheless not only sought to justify it with reference to the need felt subsequent to the suspension for an in depth investigation into the affairs of the branch, including the conduct of the petitioner, but also urged that the petition was not maintainable inasmuch as the petitioner had an alternative remedy of an appeal under the Regulations against the order of suspension which had not been availed of by the petitioner. While learned Counsel for the petitioner invoked the aid of Clause (a) of Article 226(1) of the Constitution of India to bypass the bar created by Sub-clause (1) of Article 226, the contention was sought to be resisted on behalf of the Bank on the ground that the fundamental rights would not be available to the petitioner against the Bank as, according to him, a nationalised banking institution would not be an authority within the meaning of Article 12 of the Constitution of India.

5. The first question that must, thereforee, be considered is as to whether a nationalised banking institution is an 'authority' within Article 12 of the Constitution of India. If it is, the petitioner would certainly be entitled to invoke the aid of the fundamental rights subject to the other conditions being satisfied. If it is not, such a course would not be open to the petitioner with the consequence that the petition would be hit by the bar created by Clause (3) of the Article because the impugned order was appeal able under Clause 17 of the Regulations. Whether a nationalised bank would be an 'authority' within Article 12 is a matter of some importance not only from the point of view of the officers and employees of these institutions but also from the point of view of uniformity and a certain amount of discipline in their operations even though an element of rigidity in their functioning may perhaps to an extent impede their day-to-day operations. The examination of the question by a number of High Courts in the context of the principles and the tests laid down by the Supreme Court in the case of Rajasthan Electricity : (1968)ILLJ257SC and Sukhdev Singh : (1975)ILLJ399SC , brings out a near unanimity among the High Courts 1976 2 L.L.J. 222 : (1976) L.I.C. 843 1977 2 L.LJ. 409 : (1978) L.I.C. 612 that on the application of those principles, nationalised banking institutions must be considered to be within the scope of the Article. The solitary voice of dissent is that of the Allahabad High Court Civil Misc. Writ No. 228 of 1975, D/- 7.7.1976 reported in (1976) All W.C. 780 : 1977 L.I.C. NOC 21. Broadly three tests are possible to determine if a body is an authority within the Article or not. These are : the source of creation of the body, the source of power and the nature of its functions. An examination of the constitution, powers and functions of nationalised banking institutions, unmistakably point to the conclusion that, as found by the Supreme Court in the case of some of the other financial institutions like the Reserve Bank of India I.F.C. ; L.I.C. etc., the nationalised banking institutions are also authorities within the meaning of the Article. So far as the functions of these institutions are concerned it is good to bear in mind that after the nationalisation of banking, the nationalised banking institutions have ceased to be mere centres of commercial banking and have, to a large extent been put under certain obligations which make them almost development banking institutions. The criteria for advances which in the traditional banking was the credit and the ability of the borrower to repay has now given place to the developmental needs of an area and the viability of the project rather than the credit and the ability of the borrower to repay. If in actual practice, the high portals of these institutions are still too high for a petty trader, an artisan and a small entrepreneur, even though bank financing would be justified from the development banking point of view, it is not because of any infirmity in the policy, but on account of an unfortunate gap between policy and implementation. For these reasons, I would respectfully concur with the decision of the various High Courts and dissent, with respect, from that of the Allahabad High Court, which has unfortunately based itself on the provisions of Section 19 of the Banking Companies (Acquisition and Transfer) Undertaking Act. 1970. That Section has no relevance to the question as to the status of the banking institutions because the Section equates the banking institutions to companies but for the limited purposes of the Incometax Act. In consequence, the question whether the Bank is an authority within the meaning of Article 12 of the Constitution must be answered in the affirmative.

6. If that be the true position of the status of the Bank, Article 226 (1)(a) could be invoked by the petitioner provided there was an infraction of a fundamental right. There can be no doubt, and any such doubt has since been resolved by the Supreme Court in the case of M.M. Pathak (1978) L.I.C. 612 that the expression 'property' used in Articles 19 and 31 must receive the widest interpretation and must be held to refer to property of every kind including debts and choses in action such as unpaid accumulation of wages, pension, cash grants and constitutionally protected privy purse. The right to receive wage under a contract of employment with the State, either by virtue of the provisions of the contract or of any statutory provision regulating it must, thereforee, be held to be property, the deprivation of which would attract the fundamental right. It must, however, be remembered that the right to receive a wage being subject to the terms of the contract, as indeed the statutory rules, if any. In that behalf, would not be an absolute right in the sense that if the contract of employment provides or there is a provision in the statutory rules in that behalf, an employee may be deprived of the right to receive a wage altogether or for a temporary period of time as, for example, where he is suspended from service in accordance with the terms of the contract of the rules. In such a case, there would be no infringement of the right to property if the deprivation has been brought about by a valid order. Where, however, such a deprivation has its genesis in a void or an illegal order of suspension, the moment the order is voided the right to property would be revived. It follows, thereforee, that in case the order of suspension of the petitioner was held to be bad in law, the non-payment of wages during the period of suspension would certainly attract fundamental right to property.

7. The question that arises, thereforee, is as to the validity of the order of suspension. The order is sought to be voided on behalf of the petitioner either on the ground that it was ab initio void in that it could not have been made under Clause 12 of the Regulations at the stage at which it was made, and failing that it became void when during its operation the Bank embarked on a course of virtual investigation and thereby prolonged its life for an almost indefinite period until the chargesheet was served on the petitioner, and that on that account it got transformed into a punitive one thereby giving it the taint of illegality.

8. What then are the circumstances in which and the stage at which an order of suspension could be made under Clause 12 of the Regulations and what would be the impact of the delay in initiating disciplinary proceedings on the validity of an order of suspension are the questions that must be answered. It is well settled that ordinarily there is no power to suspend an employee in the sense that during such suspension he may be deprived of the right to receive a wage or salary even though an employer may be entitled to prevent an employee from doing the work normally assigned to him. The power to suspend in the sense in which the employee may be deprived the right to receive salary must, thereforee, be found either in the contract of employment or in the relevant rules regulating service. There can, thereforee, be neither any inherent power to suspend nor an implied one except in extraordinary circumstances in which the latter may be justified, as held by the Supreme Court in cases of industrial law involving permission of the Tribunal to terminate the services of an employee.

9. Clause 12 of the Regulations empowers the competent authority to place an officer under suspension either-

(a) Where a disciplinary proceeding against him is contemplated or is pending, or

(b) Where a case against him in respect of any criminal offence is under investigation, inquiry or trial.

Clause 14 of the Regulations provides for payment of subsistence allowance during suspension which varies and increases with the increase in the duration of suspension. The employee is entitled to 1/3rd of the basic pay as subsistence allowance for the first three months of suspension. For the subsequent period, he is entitled to half of the basic pay where the inquiry is held departmentally and where the inquiry is held by an outside agency, 1/3rd of the basic pay for the next three months and half of the basic pay for the remaining period. Clause 15 of the Regulations provides for pay, allowances and treatment of services on termination of suspension. Clause 17 of the Regulations, inter alia, provides for an appeal against the order of suspension. Clause 19 of the Regulations provides that the Bank shall consult the Central Vigilance Commission, wherever necessary in respect of disciplinary cases having a vigilance angle.

10. Clause 12 of the Regulations appears to lay down not only the circumstances in which an officer may be suspended but also the stage at which such an order could be made and the earliest that an officer could be suspended is where disciplinary proceedings against him are 'contemplated.' The contemplation has to be of the disciplinary proceedings and not of the disciplinary action. The distinction between the two appears to be obvious. Disciplinary proceedings commence with the charge sheet and culminate in the order which may either exonerate the officer or result in disciplinary action. Disciplinary action; thereforee, in that sense is the end result in one eventuality of such proceedings. What must be in contemplation to attract Clause 12(a), thereforee, is disciplinary proceedings and not disciplinary action. There was some controversy between the parties on this aspect of the matter because the order of suspension. Annexure P 1, is rather unhappily worded in that it says that 'pending disciplinary action', the petitioner was being suspended from the Bank's service. The order, however, adds that it was in terms of the provisions laid down in the regulations. The phraseology of the order to my mind, would not make any difference because the source of the power to suspend has relation to the Regulations and not the order. According to the Regulations, the genesis of the power to suspend is in the contemplation with regard to the disciplinary proceedings and not the action in pursuance thereof. The validity of the order, thereforee, has to be tested at the touchstone of the Regulations and not because of an inappropriate expression used in the order.

11. What can the disciplinary proceedings be said to be 'contemplated' must then be determined. Can an officer be suspended merely during the investigation by the Bank or during the pendency of some sort of a preliminary or confidential enquiry by it and must the suspension be resorted to, if at all, only after a formal charge or accusation has been made against an officer? What does the expression 'contemplated' connote? Does it merely mean that proceedings are likely in the foreseeable future or are imminent in the near future or are about to be initiated. These are some of the questions that were posed in the course of arguments. The expression 'contemplated' is not denned in the Regulations. According to the dictionary meaning, the word 'contemplate' would mean to have in view, to expect, to take into account as a contingency, to propose. In the case of P.R. Nayak : (1972)ILLJ535SC , the difference between 'contemplation' and 'initiation' was brought out. The relevant rule in that case empowered the authority to suspend where the proceedings had been initiated. The order of suspension was, however, made before the initiation of proceedings on the ground that the same were 'contemplated '. It was held that the rules did not authorise suspension ' merely because disciplinary proceedings against him are contemplated. In the case of State of U.P. v. Jai Singh Dixit (1975) 2 S L.R. 754 : (1977) L.I.C. 73 a Full Bench of the Allahabad High Court was concerned with Rule 49A of the U.P. Civil Services (Classification, Control and Appeal) Rules which empowered the authority to suspend a Government servant 'against whose conduct an enquiry is contemplated or is proceeding' which is in pari materia with the Regulation in the present case. According to the Allahabad High Court, the proper meaning which could be assigned to the word 'contemplated' in the context of the aforesaid rule was when it was in the mind of the appointing authority that in due course a formal departmental enquiry shall be held or there existed a contingency for such an enquiry. It was observed that a departmental enquiry could be said to be contemplated when an objective consideration of the material, the appointing authority considered the case as one which would lead to a departmental enquiry irrespective of whether any preliminary enquiry, summary or detailed, had or had not been made or if made is not completed, and that there could be suspension pending enquiry even before a final decision was taken to initiate the disciplinary proceeding, i.e., even before the framing of the charge and the communication thereof to the Government servants. Support for this view was sought from the decision of the Supreme Court in the case of Nayak (supra). In England, the expression 'contemplated' in the context of Section 3 of the Trade Disputes Act, 1906, was judicially denned to mean imminent and an 'act done in contemplation or furtherance of a trade dispute' was held to mean that either the dispute was imminent or that the act was done in expectation of it and with a view to it and the dispute must be a real thing, imminent or existing.

12. In determining the true import of the expression 'contemplated' in Clause 12(1)(a) of the Regulation, it is necessary to bear in mind that suspension may be of two kinds. In the first instance, it may be punitive in nature and, thereforee, by itself constituting a punishment, secondly, it is of a non-punitive nature and purely for the purpose of departmental proceedings or disciplinary proceedings as a measure of security until the guilt of the delinquent officer has either been determined or he has been vindicated. Such suspension is not intended to punish the officer for any misconduct of which he may have been guilty or may eventually be found guilty. By its very nature, thereforee, such suspension is ordinarily resorted to either when the disciplinary proceedings commence with the service of the formal charge-sheet or accusation on the officer or when such proceedings are about to commence. Such suspension being for the limited purpose of the proceedings, must be confined to the absolute minimum limits. In construing the expression 'contemplated', it is also necessary to examine the setting in which the expression is used in the Regulation even though in the context of the ordinary or the judicially determined meaning of the expression. The Regulation empowers the competent authority to suspend where a disciplinary proceeding against an officer is contemplated or is pending. The regulation does not empower suspension where disciplinary proceedings are merely under contemplation. Disciplinary proceedings commence with the framing of the charge sheet and culminate in the final order punishing or vindicating the officer. Disciplinary proceedings could not be contemplated unless a decision to initiate the proceedings had already been taken. The expression 'is pending' also lends colour to the true meaning of the expression 'contemplated', so that an officer may be suspended either where the proceedings are pending or if not pending, the decision to initiate proceedings having been taken, such proceedings are imminent and would follow as a matter of course, There would, thereforee, be no power to suspend if the decision to initiate proceedings is yet to be taken where, for example, the matter is at the preliminary enquiry or confidential enquiry or some sort of departmental investigation stages. The reason for this is obvious, Until the investigation or preliminary enquiry or confidential enquiry concludes, there can be no application of mind by the competent authority if the case was fit one for initiation of disciplinary proceedings and until such application of mind, it could not be said that the proceedings are contemplated. The mere possibility of disciplinary proceedings is outside the expression 'contemplated'. An extended meaning was sought to be given to the expression with reference to the language used in Sub-clause (b) of Clause 12(1) of the Regulations which provides for the eventuality where in respect of any criminal offence, a case was under investigation, enquiry or trial. True, pendency of investigation into an offence would justify suspension under Sub-clause (b), but not so under Sub-clause (a). Investigation by the police stands on a different footing. The moment the conduct of an officer is subject-matter of an investigation by the police, it could justify suspension because such investigation is a matter of public record. That is not so in the case of a preliminary enquiry by an employer or a confidential enquiry by him to determine if there was a prima facie case for proceedings. Moreover the course of investigation by the police is regulated by law but not so where investigation is carried out by an employer on his own. I am, thereforee, of the view that while suspension under the Regulation would be justified even though a formal charge sheet or an accusation has not been made against the delinquent officer, mere pendency of the preliminary enquiry or a confidential enquiry or a departmental investigation would not justify an order of suspension and such an order could be made only if on an application of the mind to the material, the competent authority has taken a decision to initiate disciplinary proceedings even though the decision may not yet have been carried out.

13. Whether the requirement of the Regulation was satisfied in the present case, is the next question that falls for consideration. According to the Bank, the petitioner was suspended following the decision of the Regional Manager as reflected in his note of May 9, 1977 which has been extracted above. According to this note, it appeared to Regional Manager from the report of the Area Manager that the petitioner had committed serious lapses and malpractices, indulged in corrupt activities in giving unauthorised accommodation, misused his position and, thereforee, the officer should be suspended. The note adds that 'immediately thereafter a regular charge-sheet be served on him on the finding of the Area Manager.' It is very difficult to accept the contention that the application of mind of the Regional Manager to the report of the Area Manager with regard to the complicity of the petitioner and the imminence not only of the proceedings, but of the framing of a regular charge did not amount to contemplation of disciplinary proceedings, even though for reasons which would be discussed presently, the charge-sheet was not served on the petitioner for quite sometime after the order of suspension and the Bank virtually embarked on a course of investigation. I have, thereforee, no hesitation in rejecting the contention that the suspension order was beyond the power of the authority under Regulation 12.

14. The question that, however, arises is whether the suspension order, having been validly made in accordance with the Regulations by the competent authority when the disciplinary proceedings were in contemplation got transformed by the subsequent events into a punitive one and thus tainted with illegality. It is true that the suspension may either be punitive or non-punitive pending enquiry as a security measure. It is equally true that where an officer or an employee is suspended pending disciplinary proceedings, it is reasonable and proper that the duration of the suspension is not unreasonable prolonged and the disciplinary proceedings are initiated and concluded within a reasonable time and the officer or the employee is either exonerated or punished, as the case may be. There can also be no doubt that an innocuous order of suspension may be farcical and a mere facade for a veiled mode of penalty and such an order would be liable to be struck down as punitive it the requirements of imposition of a penalty are not satisfied, even though it may for all external appearance be innocent. There can also be no doubt that the non-punitive action if its duration is unreasonably prolonged or there is inordinate and unexplained delay in initiating or concluding disciplinary proceedings. When an order of suspension pending disciplinary proceedings would be treated as punitive or would, on account of delay, become punitive in character would depend on the facts and circumstances of each case and no general or hard or fast rule could be laid down with regard to it.

15. In the present case, the time lag between the date of suspension, i.e., May 26, 1977 and the communication of a formal charge-sheet, i.e., May 19,1978 is certainly unusual but such delay, however, inordinate would not vitiate the order of suspension or make it punitive unless there is something in the conduct of the employer or the circumstances of the case which either impinge on the bona fide of the employer or render the delay unreasonable and unexplained. According to the Bank, on an examination of the matter at different levels after the order of the Regional Manager suspending the petitioner, it was realised that the various allegations brought out in the report of the Area Manager involved in depth investigation and the course of investigation, as also the reference of the matter to the Central Vigilance Commission in terms of Clause 19 of the Regulations consumed considerable time with the result that, even though the disciplinary proceedings were in contemplation in May, 1977, the charge-sheet could not be served until after a lapse of one year. While, thereforee, the delay is highly regrettable because suspension for an almost indefinite period pending disciplinary proceedings causes grave hardship and is to be deprecated, it could not be said that there was any deliberate delay or any want of bona fides on the part of the Bank so as to vitiate the order of suspension or transform it into punitive in character. The petitioner himself made no such suggestion and the fact that he never challenged the order of suspension in appeal is itself indicative of the fact that he was aware of the course that the events were taking on account of the need for further investigation before a formal accusation could be made against him or any one else.

16. While the petitioner certainly suffered because of the unusually long duration of the suspension, it was not intended to penalise him but had been ordered clearly for the purpose and in contemplation of departmental proceedings and it is not possible for this Court to give any relief to the petitioner on the facts and circumstances of this case in the present proceedings. If this Court had the necessary jurisdiction to moderate the hardship thus caused to the petitioner, this Court would certainly have considered the desirability of treating a part of the period of suspension as on duty and I would have been unhappy because this Court was not in a position to give such a relief to the petitioner but for the fact that Dr. Anand Prakash, counsel for the Bank, gave an assurance that if the petitioner even now filed an appeal against the order of suspension the Bank would not be averse to considering the desirability of entertaining the appeal, even though it would be barred by time, and consider it sympathetically and I would, thereforee, dismiss the petition in the hope that, if approached, the Bank would consider it, having regard to the duration of the period of suspension, the petitioner to (sic) would be entitled to relief, in the peculiar circumstances there would, however, be no costs.


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