Delhi High Court Affirms Dismissal of Bank Officer for Fraudulent Credit Note: “Procedural Lapses Must Cause Demonstrable Prejudice to Vitiate Disciplinary Proceedings”; Judicial Review Limited to Procedural Fairness

Court’s Decision

The Delhi High Court dismissed the appeal filed by the appellant (a former Deputy Manager at the Bank of India) and upheld his dismissal from service. The court held that judicial review in disciplinary matters is limited to assessing the fairness and legality of the decision-making process, rather than reappraising the evidence or findings of the disciplinary authority. The court found no evidence of procedural impropriety or violation of natural justice.

Facts

1. Charges Against the Appellant: The appellant was charged with creating a fraudulent credit note purportedly issued by the Nariman Point Branch of the Bank of India. Using this, fraudulent credits amounting to Rs. 22,571.83 were deposited into joint accounts held by the appellant, his wife, son, and another individual (Mr. Manish).
2. Sequence of Events:
   • On May 25, 1993, an internal investigation was initiated.
   • On May 27, 1993, the appellant was suspended, and a charge sheet was issued.
   • An inquiry concluded on April 27, 1994, where the Inquiry Officer found the appellant guilty of all charges.
   • The Disciplinary Authority dismissed the appellant from service on August 30, 1994, a decision later upheld by the Appellate Authority on October 4, 1995.
3. Writ Petition: Dissatisfied with the outcome, the appellant filed a writ petition in 1996, which was dismissed by a Single Judge on April 22, 2013. This dismissal led to the present appeal.

Issues

1. Was the inquiry conducted in accordance with the principles of natural justice?
2. Did the absence of the original fraudulent credit note invalidate the findings of the inquiry?
3. Did non-compliance with Regulation 6(17) of the Bank of India Officer Employees (Discipline & Appeal) Regulations, 1976, cause prejudice to the appellant?

Petitioner’s Arguments

1. Violation of Principles of Natural Justice:
   • The appellant argued that the Inquiry Officer violated Regulation 6(17), which mandates that the officer under inquiry must be questioned about the evidence against them. The appellant was not specifically examined under this provision, depriving him of an opportunity to clarify the allegations.
2. Lack of Evidence:
   • The appellant asserted that no direct evidence linked him to the creation or destruction of the fraudulent credit note. The Inquiry Officer’s findings were based on assumptions, as the original credit note was not available.
3. Jurisdictional Issues:
   • The appellant contended that the suspension order and the charge sheet were issued by a Deputy General Manager (DGM) who was not the competent authority under the regulations. The Zonal Manager should have acted as the Disciplinary Authority.
4. Procedural Lapses:
   • The appellant argued that the inquiry was vitiated as critical documents and witness statements were not provided to him. He also objected to being denied legal representation during the inquiry.

Respondent’s Arguments

1. Adherence to Procedure:
   • The respondents contended that the inquiry followed due process. The appellant was given sufficient opportunities to present his defense and cross-examine witnesses.
2. Evidence on Record:
   • The Inquiry Officer’s findings were based on documentary evidence, including bank account statements and other records. The absence of the original credit note did not undermine the findings, as sufficient secondary evidence was available.
3. Preponderance of Probabilities:
   • In disciplinary matters, findings are based on the preponderance of probabilities, not the strict rules of evidence applicable in criminal trials.
4. No Prejudice to the Appellant:
   • The respondents argued that the appellant had not demonstrated any actual prejudice caused by alleged procedural lapses. He had full knowledge of the charges and filed detailed submissions during the inquiry.

Analysis of the Law

1. Scope of Judicial Review: The court reiterated that judicial review in disciplinary matters is confined to examining the decision-making process. Courts cannot act as appellate bodies to re-evaluate evidence or substitute their judgment for that of the Inquiry Officer. This principle was affirmed in State of Rajasthan v. Bhupinder Singh (2024 SCC OnLine SC 1908).
2. Compliance with Regulation 6(17): The court observed that Regulation 6(17) of the Bank’s regulations is akin to Section 313 of the Code of Criminal Procedure (CrPC). Non-compliance does not vitiate an inquiry unless the appellant demonstrates that such non-compliance caused prejudice. The court relied on Sunil Kumar Banerjee v. State of West Bengal (1980 3 SCC 304), which held that procedural lapses must result in demonstrable prejudice to warrant interference.
3. Evidentiary Standards in Disciplinary Proceedings: The court emphasized that disciplinary proceedings rely on the preponderance of probabilities, not conclusive proof. The Inquiry Officer’s findings were based on logical inference from available evidence, which did not appear perverse or unreasonable.

Precedent Analysis

1. Ministry of Finance v. S.V. Ramesh (1998 3 SCC 227): The Supreme Court held that non-compliance with procedural regulations vitiates disciplinary proceedings only if it results in prejudice.
2. Sunil Kumar Banerjee v. State of West Bengal (1980 3 SCC 304): The court held that procedural requirements, while important, are not rigid. The inquiry remains valid if the charged officer is given sufficient opportunity to defend themselves and no prejudice is caused.

Court’s Reasoning

1. The appellant was aware of the allegations, had full access to the evidence, and filed detailed submissions during the inquiry.
2. The absence of the original credit note was immaterial, as the findings were supported by secondary evidence and logical inferences.
3. Regulation 6(17) was substantially complied with, as the appellant addressed all allegations in his written submissions.
4. There was no jurisdictional irregularity. Even if the charge sheet was issued by the DGM instead of the Zonal Manager, it did not prejudice the appellant’s defense.

Conclusion

The court dismissed the appeal, holding that the appellant failed to establish any procedural impropriety, violation of natural justice, or prejudice caused during the inquiry. The disciplinary action taken by the bank was deemed fair and reasonable.

Implications

1. This judgment reinforces the limited scope of judicial review in disciplinary matters, emphasizing the need for courts to focus on procedural fairness rather than reevaluating evidence.
2. It underscores that procedural lapses do not automatically invalidate disciplinary proceedings unless actual prejudice is demonstrated.
3. Employers must adhere to internal regulations while conducting inquiries, but minor deviations will not vitiate proceedings if fairness is ensured.

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