THE HON'BLE SRI JUSTICE L.NARASIMHA REDDY Writ Petition No.24337 of 2008 13-07-2010 K.

Rajendra Kumar Deccan Grameena Bank represented by its Disciplinary Authority & Chairman and an other Counsel for Petitioner: Sri G.Vidyasagar Counsel for Respondents: Sri S.Udayachala Rao :ORDER: The petitioner was working as an officer in the Deccan Grameena Bank, the 1st respondent herein, in MMGS-II category, in the year 2005. A memo dated 27.08.2005 was served upon him alleging that he resorted to certain irregularities in the matter of extending the benefit of crop insurance to the borrowers from the Bank. The petitioner submitted his explanation on 30.09.2005. Not being satisfied with that, the 1st respondent issued a charge memo dated 19.11.2005 framing two charges. The petitioner submitted his explanation dated 10.12.2005. The 1st respondent appointed an inquiry officer. The enquiry officer submitted a report dated 15.12.2006 holding that the Charge No.1 is proved and that Charge No.2 is not proved. The disciplinary authority issued a memo dated 03.03.2007 to the petitioner stating that he has differed with the finding of the inquiry officer on Charge No.2 and directed the petitioner to give explanation as to why, the punishment of compulsory retirement from Bank's service, shall not be imposed. The petitioner submitted his explanation on 20.03.2007. On a consideration of the same, the disciplinary authority passed an order dated 30.06.2007 imposing the punishment of reduction to lower grade from officer, MMGS-II to officer JMGS-I and reduction of the pay scale in JMGS-I cadre to the last stage, with cumulative effect. However, it was observed that the next increment for the petitioner shall become due one month after the date of the order. The petitioner filed an appeal before the appellate authority, the 2nd respondent herein, against the order dated 30.06.2007. The 2nd respondent issued a show cause notice dated 24.12.2007 to the petitioner, directing him to explain as to why, a more severe punishment be, not imposed. The petitioner submitted his explanation on 02.01.2008. Through its order dated 20.05.2008, the appellate authority imposed the punishment reducing the grade of the petitioner from officer, MMGS-II to officer JMGS-I and reducing his pay scale in JMGS-I cadre by three stages, below the last grade. The petitioner feels aggrieved by the said proceedings of the respondent Nos.1 and 2. He contends that the disciplinary authority did not issue any show cause notice before it differed with the findings recorded by the inquiry officer and so the disciplinary proceedings are vitiated. He further submits that the 2nd respondent is not vested with the power to enhance the punishment. Respondents filed counter affidavit, opposing the Writ Petition. It is stated that every step in the proceedings was taken in accordance with law and that the Writ Petition is not maintainable. Sri G.Vidyasagar, learned counsel for the petitioner, submits that two major irregularities were committed by the respondents in imposing the punishment against the petitioner. He contends that the first is when the disciplinary authority disagreed with the findings recorded by the inquiry officer without issuing notice and the second is when the appellate authority has enhanced the

punishment though it does not have such a power. He further submits that the service regulations do not provide for reduction of pay of an employee, to a stage, below the minimum stipulated, for the post, held by him. Sri S.Udayachala Rao, learned counsel for the respondents, on the other hand, submits that though no independent show cause notice was issued to the petitioner as to why the finding on Charge No.2 shall not be disagreed to, the purport of the show cause notice dated 03.03.2007 was very much understood by the petitioner and a detailed explanation was submitted therefor. As regards the punishment imposed either by the disciplinary authority or by the appellate authority, the learned counsel submits that it is not opposed to the regulations. This Court is rather surprised to know the manner in which a statutory entity like a Grameena Bank handled a simple disciplinary matter against one of its employees. There cannot be any second opinion that if an employee is found guilty of any misconduct he must be inflicted with punishment commensurate with the gravity and in accordance with the relevant provisions of law. However, before such punishment is imposed the prescribed procedure of law must be followed. The two charges framed against the petitioner read as under: "1) You have engaged middlemen to collect percentage from the borrowers of crop loans sanctioned during Khariff - 2004, out of the amount received from Insurance Company on account of loss suffered due to drought. 2) You have directly received percentage of Insurance amount received from the Company from the borrowers of Crop Loans." The petitioner submitted his explanation and, not satisfied with the same, the disciplinary authority appointed an inquiry officer. In clear and categorical terms the inquiry officer held that the Charge No.1 is proved and that the Charge No.2 is not proved. It is settled principle of law that wherever a disciplinary authority intends to disagree with the findings recorded by the inquiry officer, the delinquent employee must be issued a show cause notice as to why such a view be not taken. It is only on a consideration of such explanation, that the disciplinary authority can take a decision whether or not to disagree with the findings recorded by the inquiry officer. The stage of issuing show cause notice indicating proposed punishment arises thereafter. In the instant case, the disciplinary authority straightaway issued a show cause notice dated 03.03.2007 directing the petitioner to give explanation as to why the punishment of compulsory retirement from Bank's service be not imposed. It was stated that he has disagreed with the finding of the inquiry officer on Charge No.2. He did not issue notice to the petitioner, before he decided to disagree. In RANJIT SINGH vs. UNION OF INDIA AND OTHERS1 the Honourable Supreme Court held that Authorities can is committed by inquiry officer petitioner. such a course of action is totally impermissible in law. be multiplied on this aspect. Therefore, a clear irregularity the disciplinary officer in disagreeing with the finding of the on Charge No.2 without giving a show cause notice to the

The learned counsel for the respondents argued that the punishment imposed against the petitioner can be sustained on the basis of the finding on Charge No.1 even if the petitioner is exonerated of Charge No.2. This argument cannot be accepted. The reason is that the punishment was imposed on the basis that Charge Nos.1 and 2 are proved. As a matter of fact, Charge No.2 is very grave and Charge No.1 does not impute any serious objectionable conduct to the petitioner. Therefore, it is difficult to sustain the punishment imposed against the petitioner on the strength of the finding on Charge No.1.

The 2nd respondent herein, before which the petitioner filed appeal, has resorted to two serious irregularities. One is that it has chosen to issue show cause notice to the petitioner to explain as to why the punishment imposed against him cannot be enhanced. Such a power can be exercised only when it is conferred specifically by the relevant service regulations. The service regulations of the first respondent Bank have not conferred such a power upon the appellate authority. Therefore, the exercise undertaken by the 2nd respondent in this regard cannot be countenanced. The second irregularity is in the matter of framing the enhanced punishment against the petitioner. The disciplinary authority imposed the punishment of reversion of the petitioner from MMGS-II cadre to JMGS-I cadre. The further punishment was in the form of reduction of his pay scale in the JMGS-I to the last stage, with cumulative effect. The expression 'cumulative effect' was utilized without mentioning any time. Curiously it was stated that the next increment would accrue to the petitioner in the subsequent month itself. Be that as it may, 2nd respondent has reduced the pay scale of the petitioner in JMGS-I cadre by three stages below the last stage of the basic pay. The relevant portion of the order reads as under: "Reduction to a lower grade from Officer, MMGS-II to Officer, JMGS - I cadre with effect from the date of order and reducing his basic pay with cumulative effect to three stages below the last stage of basic pay of Officer, JMGS-I cadre (i.e. Rs.16,560\-) as per the pay structure of the Bank. His next increment falls due after one year from the date of issuance of the order." The pay scale for the petitioner reduced to a stage, below the last stage of basic pay in JMGS-I. No authority, not even Court can reduce the pay of an employee below the basic pay. It is rather unfortunate that an officer of the rank of Chairman of such a Bank has become a party to such a glaring irregularity. Viewed from any angle, the impugned order cannot be sustained. The Writ Petition is, accordingly, allowed and the impugned order is set aside. The petitioner shall be extended all the consequential benefits. There shall be no order as to costs. ?1 AIR 2003 SC 3685 = (2006) 4 SCC 153