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If An Employee Of A Bank Is Convicted For An Offence Involving Moral Turpitude, He Is Liable To Be Discontinued From Employment: Karnataka Hc

Ifrah Murtaza ,
  11 June 2024       Share Bookmark

Court :
Hon’ble High Court of Karnataka
Brief :

Citation :
Writ Appeal No. 7791 off 2003

Case title:

Vijaya Bank v. M Ravindra Shetty 

Date of Order:

4th June 2024

Bench:

Hon’ble Mr. Justice Krishna S Dixit

Hon’ble Mr. Justice Ramachandra D Huddar

Parties:

Appellant: Vijaya Bank

Respondent: M Ravindra Shetty

SUBJECT:

The Hon’ble High Court of Karnataka adjudicated a writ petition against the respondent-employee of the appellant-bank (Vijaya Bank). The respondent was dismissed from his service as Senior Manager at the Vijaya Bank after having been found to be indiscriminately lending money to fictitious persons, causing huge financial loss to the bank. He was subsequently convicted of various offences under IPC and PCA. The respondent had appealed against his conviction, and despite his initial favourable ruling from the Ld. Single Judge, the High Court set aside the ruling, upholding the dismissal. It found the dismissal justified as it was in accordance with the regulations of the bank that mandates discontinuation of delinquent employees. 

IMPORTANT PROVISIONS:

The Central Vigilance Commission Act 2003 (CVC):

  • Section 3: Establishes Central vigilance Commission

The Banking Regulation Act, 1949 (the Banking Act): 

  • Section 10(1)(b)(i): mandates termination of employees convicted of an offence involving moral turpitude. 

The Indian Penal Code, 1860 (IPC):

  • Section 120(B): Deals with criminal conspiracy
  • Section 420: deals with cheating
  • Section 468: deals with forgery for purpose of cheating
  • Section 471: deals with using as genuine a forged document

The Prevention of Corruption Act, 1988 (PCA):

  • Section 13(1): deals with criminal misconduct by a public servant
  • Section 13(2): deals with punishment for criminal misconduct

OVERVIEW:

  • The respondent, the Senior Manager (MMGS-III) at Vijaya Bank, was allegedly involved in lending money to fictitious people without securing repayment between 02.06.1986 to 11.05.1990 that caused significant financial loss to the bank. 
  • The Bank conducted internal investigations which revealed the financial irregularities caused by the respondent-employee. 
  • On 03.04.1997 the competent authority of the bank conducted disciplinary proceedings and decided to dismiss the respondent based on its findings. 
  • The respondent appealed against his dismissal on 05.08.1997, which was rejected by the General manager (personnel), who served as the appellate authority.
  • The Central Bureau of Investigation (CBI) prosecuted the respondent under sections 120B, 420, 468, and 471 of IPC and Sections 13(1)(d) and 13(2) of the Prevention of Corruption Act, 1988. 
  • The Special Criminal Court found the respondent guilty of all the charges levied against him and sentenced him to 3 years of simple Imprisonment and imposed a fine of Rs. 70,000 on 19.06.2010.
  • The Respondent filed a criminal Appeal before the High Court, contesting his conviction. The Appeal was dismissed on 19.09.2022.
  • The respondent filed a Special Leave Petition (SLP). The Supreme Court, on 02.01.2023, granted the respondent relief by reducing his sentence from 3 years to 1 year and his fine from Rs. 70,000 to Rs. 2 lakhs.  
  • The Bank has Appealed against the impugned order before the instant Court.

ISSUES RAISED:

  • Whether the dismissal of the respondent was justified?
  • Whether the disciplinary proceedings conducted by the bank procedurally valid?

ARGUMENTS ADVANCED BY THE APPELLANT:

  •  A Writ Court should not interfere in matter where disciplinary proceedings have already been duly conducted and a penalty order has been passed. Especially when the delinquent employee’s appeal has already been rejected. 
  • The respondent was found guilty of charges involving moral turpitude after the disciplinary proceedings, further justifying his dismissal.
  • Section 10(1)(b)(i) of the Banking Act mandates the discontinuation of employees convicted of offenses involving moral turpitude, leaving no discretion for the bank once the conviction takes place.
  • Section 3 of the CVC establishes the statutory duty of the Central Vigilance Commission which includes advising banks on disciplinary proceedings, validating the bank’s decision to consult the Central Vigilance Officer as per the Bank’s Regulations. 
  • The dismissal was an internal process and not a result of any external pressure or influence. 
  • There was sufficient evidence against the respondent to justify his dismissal.
  • The Apex Court’s order was not in accordance with the principles of writ jurisdiction as it treated the matter like an appeal and failed to examine the decision-making process. 

JUDGEMENT ANALYSIS:

  • The High Court found the judgment of the Single-Judge Bench of the Supreme Court flawed and beyond its jurisdiction. The High Court held that the Apex Court had not taken into account the merits of the disciplinary actions of the bank. 
  • The disciplinary proceedings were held to be in accordance with the relevant regulations and statutory provisions.
  • Considering the Bank’s regulations, the High Court highlighted the justification of the CVC consultation, stating that the bank’s regulation mandates such consultation during disciplinary matters. 
  • The offenses under for which the respondent was convicted involved moral turpitude which necessitated his dismissal. HC observed that interference with the provisions was beyond the discretionary powers of the bank.
  • Although the respondent had been granted relief by the apex court, it does not rid him of any conviction.
  • The High Court held the disciplinary proceedings conducted by the bank to be procedurally valid and legally sound. 
  • The respondent’s writ petition was subsequently dismissed. 

CONCLUSION

The High Court set aside the impugned order of the Single Judge and upheld the decision to dismiss the respondent reaffirming bank’s disciplinary proceedings. It held that there was irregularity or illegality in the disciplinary proceedings conducted. However, it highlighted the moral turpitude involved in the offences the respondent was convicted that necessitated his dismissal u/s 10(1)(b)(i) of the Banking Regulations act. The Writ Petition was accordingly dismissed, with costs having been made easy. 
 

 
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