Bank Officer’s Removal Converted to Compulsory Retirement: Supreme Court Rules on Disciplinary Action

The case of Naresh Chandra Bhardwaj v. Bank of India & Ors. dealt with a dispute concerning disciplinary action taken against a bank officer accused of procedural irregularities in sanctioning loans, which led to substantial financial losses for the bank. The Supreme Court ruled that the punishment of ‘removal from service’ imposed on the appellant should be converted to ‘compulsory retirement,’ emphasizing the principle of parity in disciplinary actions.

This case highlights the legal considerations surrounding disproportionate punishments, the doctrine of parity in disciplinary proceedings, and the limited scope of judicial review in such matters.

Background of the Case

Naresh Chandra Bhardwaj was employed as a Scale II Officer at the Bank of India. While posted at the Lal Bangla Branch, Kanpur, he sanctioned three loans and recommended two additional loans at the Harsh Nagar Branch, also in Kanpur. These loans were later classified as Non-Performing Assets (NPAs), with the bank estimating a loss of Rs. 70.32 lakh.

Following an internal inquiry, the bank found procedural irregularities in the loan approvals, leading to the initiation of disciplinary proceedings. As a result, Bhardwaj was removed from service, but his removal was not marked as a disqualification for future employment.

Key Issues Before the Court

Whether the punishment of ‘removal from service’ was disproportionate.
Whether the principle of parity in punishment should be applied to the appellant, given that two other bank officers involved in similar misconduct were only compulsorily retired.
Whether the judiciary could interfere with the disciplinary authority’s decision on quantum of punishment.

Arguments by the Petitioner (Naresh Chandra Bhardwaj)

The appellant argued that two other bank officers, R.K. Mishra and V.K. Srivastava, who were involved in similar misconduct, were only compulsorily retired.
He contended that the principle of parity should be applied, and his punishment should be reduced to compulsory retirement.
He asserted that no mala fide intent was established against him, and the bank’s loss was primarily due to fraudulent activities by a third party (Vikram Dixit alias Vinny Sondhi).
He pointed out that the loan approvals were based on recommendations from approved advocates and valuers, which were also relied upon by other bank officials.

Arguments by the Respondents (Bank of India)

The bank opposed the appellant’s request for parity, arguing that his role was more serious than the other two officers.
The bank’s Chief Vigilance Officer had initially proposed removal from service for all three officers but later modified the penalty to compulsory retirement only for Mishra and Srivastava.
The bank contended that Bhardwaj was both a sanctioning and recommending authority, making his role more culpable.
The bank emphasized that courts have limited jurisdiction in altering the quantum of punishment unless it is found to be grossly disproportionate.

Supreme Court’s Observations and Judgment

The Supreme Court reiterated that courts have a limited role in reviewing the quantum of punishment in disciplinary cases. However, the Court recognized that judicial intervention is warranted in cases where the punishment is ‘shocking to the conscience’ or where the principle of parity is violated.

The Court made the following key observations:

While all three officers were involved in sanctioning improper loans, the bank had treated Bhardwaj differently solely because he was a ‘pension optee,’ whereas the other two officers were provident fund beneficiaries.
The disciplinary authority’s initial recommendation was ‘removal from service’ for all three officers, but it was later converted to compulsory retirement for the other two officers while Bhardwaj was removed.
The bank failed to establish a reasonable justification for treating Bhardwaj differently when the financial losses and procedural lapses were similar in all three cases.
Given that Bhardwaj had already been granted ‘compassionate allowance’ equivalent to two-thirds of his pension, converting his penalty to ‘compulsory retirement’ would not cause any financial loss to the bank.

Key Judgment Excerpt:

“In the absence of any clear distinction between the role of the appellant and the other two officers, and given that there is no financial implication for the bank, we find no reason why the appellant’s punishment should not be modified to compulsory retirement.”

Accordingly, the Supreme Court allowed the appeal and modified the punishment from ‘removal from service’ to ‘compulsory retirement.’

Conclusion

This ruling underscores the principle that disciplinary actions must be consistent and equitable. The Court’s decision ensures that similarly placed employees are not subjected to arbitrary or discriminatory penalties. The judgment reaffirms that while judicial review in disciplinary cases is limited, intervention is justified in cases of clear disparity in punishment.

Petitioner Name: Naresh Chandra Bhardwaj.
Respondent Name: Bank of India & Ors..
Judgment By: Justice Sanjay Kishan Kaul, Justice Indira Banerjee.
Place Of Incident: Kanpur, Uttar Pradesh.
Judgment Date: 22-04-2019.

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