New Delhi, March 19 The Supreme Court on Thursday said that a banker holds a position of trust as he deals with public funds and loans, and that sanctions beyond his authority, or failing to ensure their proper use, can lead to financial irregularities, which exposes the bank to financial risk.
The apex court said that ensuring the proper use of loan disbursements serves multiple purposes, including securing recovery and ensuring that the loan was not diverted for purposes other than those for which it was sanctioned or disbursed.
A bench of Justices P S Narasimha and Manoj Misra said that when a bank employee handles the money of depositors or customers, it is essential for him to be cautious and not reckless in the discharge of his duties, as he is dealing with money on behalf of his employer.
It said that although good conduct and discipline are expected from every employee of an institution, it is even more important when the institution deals with the money of customers or depositors.
"Any dereliction in the discharge of duties by such an employee or officer, whether by way of negligence/casualness, or with deliberate intention, constitutes misconduct," the bench noted.
The top court delivered its verdict on an appeal challenging a February 2023 order of the Punjab and Haryana High Court in a matter related to a bank employee who was served a chargesheet on September 30, 2011, on the allegation of irregularities in the disbursement of loans.
The bench noted that the employee had retired from service on September 30, 2011, but the disciplinary proceedings continued, and one of the charges, that he failed to ensure the proper use of the loan, was found partly proven.
It noted that consequently, a punishment of reduction by three stages in the pay scale was imposed upon him.
The employee moved the high court, contending that the penalty imposed upon him was not permissible as he had retired.
A single-judge bench of the high court set aside the punishment order, while reserving the right of the bank to issue a fresh show-cause notice for action under the pension regulations.
Later, the bank preferred an intra-court appeal before a division bench of the high court.
The high court's division bench held that service regulations extant permitted the continuation of disciplinary proceedings post attainment of the age of superannuation, and therefore, the disciplinary proceedings could continue and be brought to their logical conclusion.
Aggrieved by the order, the man approached the apex court.
"Besides, a bank officer holds a position of trust as he deals with public funds. Sanctioning a loan beyond one's authority, or failing to ensure the proper use of the loan, amounts to financial irregularity, which exposes the bank to financial risk," the top court said.
"Therefore, penal action on proof of such a charge cannot be questioned merely because no loss is suffered by the bank," it added.
Referring to the inquiry report and the comments of the appellant, the bench said that it did not find any ground to hold that the charge was not partly proven, or that the punishment awarded was "shockingly disproportionate" to the gravity of proven misconduct.
It also dealt with the issue of whether, post-retirement, the punishment as imposed upon the appellant was permissible in law.
Referring to previous verdicts of the apex court, the bench noted that if the service rules/regulations extant permit the continuation of disciplinary proceedings against an employee before the person had attained the age of superannuation, those can be continued and brought to their logical conclusion even after the person had retired.
"In this case, the punishment awarded is of reducing the pay scale by three stages on a permanent basis. Such a reduction in the pay scale would relate back to the date the incumbent retired from service," the bench said.
It said, ordinarily, a pension is computed based on the last drawn/payable salary.
"Therefore, in our view, it would not be difficult to implement such a punishment, as the pension can be computed accordingly," the court said as it dismissed the appeal.