Canara Bank vs S.G. Nayak and Others

K.L. Manjunath, J.—These appeals are preferred by the Canara Bank being aggrieved by the order of the learned Single Judge dated 03.12.2004 passed in W.P. No. 30770/1995 connected with W.P. No. 30391/1995.

Heard Sri D.L.N. Rao, learned Senior Counsel appearing for the Bank, Mr. P.S. Rajagopal, learned Senior Counsel appearing for the respondents.

The facts leading to these appeals are as follows:

One S.G. Nayak, and P.L. Prabhu, were working as Chief Manager and Senior Manager at Mandavi Branch, the appellant Bank in Mumbai during May 1986 to July 1989 and January 1988 to January 1989 respectively. During their tenure of work, the Bank noticed irregularities in the credit facilities sanctioned to M/s. Sai Group of Concerns viz., M/s. Sai Overseas International, M/s. Sai Concerns and M/s. Ganapathi International.

It is the case of the Bank that M/s. Sai Group of Concerns were tendering cheques drawn on RBI for credit to their account with the Branch. The writ petitioners were permitting drawings against these cheques and in turn, the branch was issuing RBI cheques favouring various banks. The petitioner had permitted the Group to overdraw the amount beyond the permitted limit without reporting the same to the controlling authority and without obtaining prior sanction from the concerned higher authorities.

The writ petitioners received a sum of Rs. 3 crores from M/s. Kantilal and Co. for investment with Canfina and that investment in short term deposit with them were diverted to M/s. Sai Group of Concern and petitioners were parties to the conversion. The receipt of term deposit of Rs. 3 crores from M/s. Kantilal and Co. and diverting to M/s. Sai Group of Concern was concealed from the Circle Office. On account of over drawings, the liability in the account of M/s. Sai International went upto Rs. 216 lakhs, in respect of M/s. Sai Chemicals went upto Rs. 20 lakhs and Rs. 15 lakhs in the account of M/s. Ganapathi International. The petitioners were also violating the RBI guidelines by channelising the funds of one party to another party by misutilisation/conversion of funds and thereby they failed to perform their duties with utmost honesty and integrity.

Having noticed the serious lapses, the Bank issued chargesheet to the petitioners in August 1990. After holding an enquiry, both of them were dismissed from the service during March 1994.

Aggrieved by the order of dismissal of the disciplinary authority, the petitioners filed a departmental appeal before the appellate authority which came to be rejected. Aggrieved by the concurrent findings, the writ petitions were filed.

The learned Single Judge after hearing the parties allowed the writ petitions on the ground that the Enquiry Officer was of lower in rank than the Investigating Officer, who was cited as a witness and on account of the same, there was a bias and the enquiry conducted by the Enquiry Officer is vitiated. The learned Single Judge also held that the Enquiry Officer had put lot of questions to the witnesses and also tried to elicit answers by way of cross-examination and he acted as a Judge as well as a Prosecutor and such enquiry report vitiated on account of bias. It was also held that though documents were sought by the defence Counsel, the documents were not made available to the petitioners claiming privilege, which resulted in violation of the principles of natural justice. The learned Single Judge also came to the conclusion that the petitioners were not permitted to produce the documents and that the Disciplinary Authority without application of mind and without passing a speaking order had passed an order of dismissal. In the circumstances, he allowed the writ petition remanding the matter to conduct a fresh enquiry by the Bank in accordance with law. While allowing the writ petitions granted liberty to the Bank to conduct a fresh enquiry, the learned Single Judge did not direct the Bank to pay subsistence allowance to the writ petitioners. Therefore, they have filed separate writ appeals which will be dealt by us separately.

During the pendency of these appeals, the first respondent P.L. Prabhu, who was working as Senior Manager, died and his LRs have been brought on record.

According to Sri D.L.N. Rao, learned Senior Counsel appearing for the appellant-Bank, the learned Single Judge has committed an error in not considering the material placed by the Bank. According to him, the order passed by the learned Single Judge in setting aside the order of dismissal and the finding of the enquiry is improper, thus exceeding limits of the writ jurisdiction. According to him, merely because the Investigating Officer was a Senior Officer than the Enquiry Officer cannot be a ground to hold that the report submitted by the Enquiry Officer as a biased one, since no bias was alleged against the Investigating Officer.

According to him, when the investigation was held by the Investigating Officer, the Enquiry Officer and the Investigating Officer were of the same rank. By the time, the evidence was recorded by the Enquiry Officer, the Investigating Officer had been promoted further. He further contends that the Hon''ble Supreme Court has ruled that merely because the Investigating Officer or witnesses are superior Officer to the Enquiry Officer, cannot be a ground to hold that the Enquiry Officer was biased and such finding has to be set aside.

It is also contended by him that certain documents sought by the writ petitioners were not supplied to them because they were privileged documents and the Bank had not relied upon those documents in the enquiry. Therefore, he contends that the finding of the learned Single Judge is incorrect. He submits that finding by the learned Single Judge that reasonable opportunity was not given to the writ petitioners is also incorrect because S.G. Nayak the Chief Manager who is responsible for all these irregularities did not even step into the witness box and he had clearly admitted that the had diverted/converted the funds of a customer without enrooting through Canfina and when there is an admission on the part of S.G. Nayak that M/s. Kantilal and Co. had approached him to receive Rs. 3 crores as deposit, subject to payment of interest at 24% p.a. since there was no provision to pay interest at 24% p.a., and that the Canfina had no ready customers to pay such a heavy rate of interest inspite of rejection of the request of the petitioners to arrange for such a customer through Canfina. S.G. Nayak on his own had received the amount from M/s. Kantilal & Co. and in turn, handled the said money by issuing pay order in favour of M/s. Sai Group of Concerns. Therefore, he contends that it was a private financial transaction between the petitioner S.G. Nayak and M/s. Sai Group of Concerns and the same was also not even reported and post facto permission was also not obtained and such a transaction is much against the RBI guidelines and contrary to the usual banking practice. He further submits that Sri P.L. Prabhu, who was working as Senior Manager, had also admitted in writing that he has acted bonafide on the instruction of S.G. Nayak, and he admitted that the practice adopted by them is contrary to banking regulation.

Sri D.L.N. Rao, learned Senior Counsel further contends that on account of the illegal transactions, the Canara Bank sustained a loss of Rs. 3 crores and interest accrued thereon since on demand of M/s. Kantilal and Company, the Bank had to clear the entire Rs. 3 crores along with 24%p.a. as interest accrued thereon.

He also contends that in another case, a similar practice has been adopted by these two Officers wherein the Bank suffered a loss of Rs. 75 lakhs with interest thereon which are the subject matter of connected writ appeals which would be dealt by us separately.

According to him, he submits that before Enquiry Officer the letters of S.G. Nayak and P.L. Prabhu were marked as Exs.M27 and 39 and these documents are not challenged by the writ petitioners. When they have not challenged the contents of the letters addressed by them to the bank, there was no necessity for the Enquiry Officer to reply upon other documents and it is not the case of the writ petitioners that an opportunity was not given to them to cross-examine the Bank witnesses on Exs.M27 and 39.

In view of the clear cut admission of the writ petitioners in Exs.M27 and 39, there was no necessity for the Bank to prove the other allegations since the contention of the Bank in the instant enquiry is in regard to mishandling the funds of M/s. Kantilal and Company to an extent of Rs. 3 crores and Rs. 75 lakhs respectively by the writ petitioners. According to Sri D.L.N. Rao, learned Senior Counsel, the Enquiry Officer relying upon these two documents had rightly given a finding.

It is also his case that the finding of the learned Single Judge that the Enquiry Officer had played a role of cross-examining the petitioners is also incorrect. According to him, to elicit the relevant answers to give a correct finding had put some questions, the same cannot be considered that the Enquiry Officer has committed an error in holding that he has played a role of an Advocate to cross-examine the witnesses. According to him, those questions are more in the nature of seeking clarification.

He further submits that the learned Single Judge has also committed an error in holding that the order of the Disciplinary Authority is not a speaking order. According to him, when the Disciplinary Authority has accepted the findings of the Enquiry Officer, there was no need for him to give a detailed reasoning for accepting the findings of the Enquiry Officer. According to him, if the Disciplinary Authority had to differ with the findings of the Enquiry Officer, in such circumstances, the Disciplinary Authority was required to give a detailed reasoning disclosing the reasons for non-accepting the findings of the Enquiry Officer. In the circumstances, he requests the Court to allow these appeals and set aside the order passed by the learned Single Judge.

The learned counsel for the respondents 1 and 2 submits that none of the grounds by the appellant are tenable. According to him, the respondents had never admitted their guilt in order to dismiss them from service. When the respondents 1 and 2 have not admitted their guilt, it is for the bank to prove the charges leveled against R1 and R2 by placing the material on record to show that the charges leveled against R1 and R2 have been proved by the bank and it was for the Inquiry Officer to give its finding based on the evidence led in by both the parties by providing reasonable opportunity for both the parties. According to him, the reasonable opportunity was not given to the respondents by the Inquiry Officer and some of the important material documents summoned/requested by the respondents, were not supplied and on account of non-supply of documents to them, the entire report is required to be set aside as vitiated under the law. He further submits that the documents were not supplied to R1 and R2 on the ground that they are privileged documents. He further submits that Enquiry Officer has conducted the inquiry forgetting that he is Presiding Officer and has acted himself as Prosecutor in putting all leading questions to the respondents. Therefore, he contends that the learned Single Judge is justified in coming to the conclusion that the Presiding Officer was biased because the Investigating Officer was senior to the Presiding Officer and certain documents summoned by the respondents were not supplied to them on account of the same, the respondents 1 and 2 were communicated to show their innocence. He further submits that since the appellants have not given reasonable opportunity and the findings of the Enquiry Officer is contrary to the materials placed by the bank and the same requires to be set aside.

He further submits that the Disciplinary Authority as well as the appellate authority without application of mind and without giving any reasons have blindly accepted the findings of the enquiry officer. In the circumstances, he requested this Court to dismiss the appeals.

By way of reply, learned Sr. counsel for the Bank submits that all contentions of the respondents are to be negatived because the disciplinary proceedings were initiated by the bank on the ground that respondents 1 and 2 who were working as Chief Manager and Sr. Manager of the appellant - branch had diverted and converted the funds of M/s. Kantilal and Co., and invested the same with M/s. Sai Groups without remitting amount to M/s. Kantilal and Co., in a sum of Rs. 3,75,00,000/- treating it is a private financial transactions in the name of Sai Groups, the funds were diverted as if Sai Group had agreed to repay Rs. 3,75,00,000/- to Kantilal and Company with interest at 24% p.a. contrary to the RBI guidelines and banking practice. He further submits that when there is no provision for diverting or conversion of funds of the customers to issue pay order of DD, as per the instructions of the Sai Group, no loan was sanctioned by the bank in accordance with law resulting in causing loss to the tune of Rs. 3,75,00,000/- and interest to the bank.

He further submits when the proceedings are initiated based on two transactions. In view of the voluntary statement in writing prior to the initiation of the disciplinary enquiry under Ex. M27 and M39, there was nothing further to communicate that there is admission on the part of the appellant about diversion and conversion of funds of the customer of the bank. He further submits that when the entire proceeding is based upon Ex. M 27 and M39, CM 27 and CM 39 are not challenged by the respondents while cross examining the bank witnesses when the bank has not relied upon any other documents to prove its case. The learned Single Judge has committed an error in holding that the procedure followed by the IO as illegal and he further submits that SG Naik who is the person involved in diverting the funds of the customers has admitted such mistake with Prabhu, Sr. Manager who has admitted that he has acted at the direction of SG Naik and when SG Naik has not entered into witness box, he cannot be permitted to say that no reasonable opportunity was given to him. In the circumstances, he requests the Court to allow these appeals and set aside the order of the learned Single Judge.

Having heard the learned counsel for the parties, we have to consider the following points for consideration:--

"i) Whether the learned Single Judge is justified in setting aside the enquiry report?

ii) Whether the findings of the disciplinary and appellate authority are proper?"

It is not in dispute that M/s. Kantilal and Company, Bombay was one of the best customers of the Canara Bank. M/s. Kantilal and company had approached SG Naik Chief Manager of the bank stating that they have surplus funds and the same would be invested subject to repayment of interest at 24% p.a. It is also not in dispute that the respondents 1 and 2 admitted that there is procedure and practice in the bank to receive such deposits and invest the same through Canfina by lending loan to some other customers and such practice is well established by the bank. But in the instant case, when S.G. Naik was approached by Kantilal and Company, M/s. Canfin had informed S.G. Naik that such deposits cannot be accepted since there were customers to pay interest at 24% p.a.. Inspite of such information given to SG Naik, Sri S.G. Naik on his own has received deposit from Kantilal and company and on oral request of M/s. Sai Group of the above company has deposited Rs. 3,75,00,000/- by issuing pay orders to the creditors of M/s. Sai Group without authority of law. This fact was learnt by the bank only when a demand was made by Kantilal and company for refund of Rs. 3 crores with interest at 24% p.a. as disclosed in Ex. M27 and M39. Ex. M27 and 39 reads as follows:

Ex. M27

S.G. Nayak 1598

C/o Eastern Exchange, Financial Establishment Doha, Qatar 11.9.1989

Camp: Bombay

The Deputy General Manager, Canara Bank Circle Office Bombay

Dear Sir,

Sub: "Sal" Group of Firms

The partners of the above firms had approached me for arranging an amount of Rs. 3 crores temporarily for clearance of their liabilities to our bank as their proposal for term loan from Bank of India was in the final stage at that time. I had arranged for the above amount through Kantilal and company on 13.3.1989. Out of the amount of Rs. 3 crores an amount of Rs. 1,53,00,000/- was remitted to Indian Bank for credit of the account of Sai Overseas International (Rs. 1,00,00,000/-) Sai Chemicals (Rs. 31,00,000/- Ganapati International (Rs. 22,00,000/-) and Rs. 1,47,00,000/- was remitted to Kapole cooperative Bank Ltd. for credit of account of Sai Overseas International.

Similarly the following amounts were arranged subsequently.

On various dates all these amounts (Rs. 3.75 crores) have been received back and clear liabilities of the firms to the bank were cleared.

While I sincerely regret my act, I assure you that I shall never again repeat such adventures in future.

Considering my long and blemishless record I request you to condone my above lapse.

Thank you, Yours faithfully, Sd/- (S.G. Nayak)"

Ex. M39

S.G. Nayak (1598) Div. Manager (u/8)

Canara Bank Circle Office Bombay 21.10.1989

To The General Manager Canara Bank Industrial Relations Section Personal Wing HO, Bangalore-560 002.

Dear Sir

Ref:Your letter No. IRS/DP/2/2319/89 dated 25.9.1989

With reference to the above, I wish to state that M/s. Kantilal & Co are one of the WIP clients of Mandvi Branch who always had surplus funds for investments at higher rate of interest till October 1986, these funds were deployed by them through other Banks like Standard Chartered Bank, Grindlays Bank etc. In November 1986 M/s. Kantilal & Co, approached our Bank for such an arrangement with our Bank and a meeting was arranged with Canfins (The then merchant Banking division). As suggested by Canfina, it was agreed to have such an arrangement with out Bank Only. First such transaction was put through some time in November 1986 and was reported to Canfina. Thereafter, funds of M/s. Kantilal & Co were deployed from time to time as per the telephonic instructions from Canfina/Mutual fund and branch advices were sent to various branches directly by Mandvi branch.

Many a times, to find an optimum return, visit were made to Canfina/Mutual fund along with M/s. Kantilal Ualal of Ms Kantilal & Co with a view to meet of the client.

During March 1989, Mr. Kantilal visited our office and made a specific request to deploy funds to the extent of Rs. 300 lacs at a return of 24%. I contested Mr. Kannan of Canfina to find out whether avenues for deployment of above funds were available. I was informed that there were no ready takers at the rate indicated which was conveyed to Mr. Kantilal. While leaving the office, Mr. Kantilal requested me to pursue the matter and find a taker. At this point of time, Mr. Shyamlal Kishnan was present. Mr. Shyamlal expressed his desire to avail of this, so that their proposal pending sanction with other branches could be speeded up over the liabilities with us are cleared.

He informed that repayment of the same would be made out of term loan proposal for which was reported to be at an advance stage with bank of India/BCCI. Unfortunately, Bank of India did not sanction in time of credit as expected. However the proposal with BCCI is still active. Had the limits been sanctioned the repayment would have been made directly by Sri Shyamlal without involving the Bank. My sole intention was to get the outstanding liabilities to our Bank cleared.

I have an excellent service record of over 29 years having served in various capacities in prominent branches contributing my best for the development of the branch business which has been recognized by the bank by promoting me as and when I was eligible to compete as a candidate for promotion.

In view of the above, I request you to view my above bonafide action leniently.

Thanking you, Yours faithfully, Sd/- (S.G. Nayak)"

It is stated that 3.75 crores was remitted by the Kantilal and company and the payments were made to the creditors of M/s. Sai Group between March, 1989 and 30th June, 1989 itself as evidenced from Ex. M27. But the internal transactions carried out by S.G. Naik and Prabhu with M/s. Sai Group was brought to the notice of the bank only on 21.10.99 and 11.9.99 i.e, 6 months after the transaction.

In reply to the charge sheet, P.L Prabhu has admitted that he has only acted upon the direction of his Sr. Officer S.G. Nayak. The Sr. Officer has also brought to the notice of the bank about personal dealings of S.G. Nayak and diverting the funds of Kantilal and company to M/s. Sai Group On going through Ex. M27 and Ex. M39 and reply of PL Prabhu to the charge sheet, it is clear to the Court that there is admission of diversion of fund without authority of law. In this back ground, it would be useful to refer the charges leveled against respondents 1 and 2

Charges framed against R1

"ARTICLES OF CHARGE

You were working as Divisional Manager at our Mandvi, Bombay branch from May 1986 to July 1989.

Mandvi branch is having the following accounts of Sai Group of Concerns:

1) M/s. Sai Overseas International

2) M/s. Sai Chemicals

3) M/s. Ganapati International

The group is enjoying various credit facilities. M/s. Sai Group of Concerns were tendering cheques drawn on RBI for credit to their account with the branch. You had permitted drawings against these cheques and the branch in turn was issuing RBI cheques favouring various banks. You permitted passing of cheques against RBI cheques to the extent of Rs. 75 lacs in April 1988 in all the three accounts put together. You had transgressed the powers/authority vested in you and thereby misused your official position. You had not reported the transactions in F.637.

An ad hoc limit of Rs. 55 lacs was permitted to M/s. Sai Overseas International which ought to have been cleared in March 1988. You failed to ensure that the ad hoc limit was regularized. You permitted overdrawings and the liability in all the three accounts started mounting. You permitted overdrawings without sanction continuously. On account of overdrawings, the liability in the account of M/s. Sai Oversea International went upto Rs. 216/- lacs as on 28.02.89, as against the sanctioned limit of Rs. 20/- lacs regular OCC plus Rs. 55/- lacs adhoc. The liability went upto Rs. 20/- lacs in the account of M/s. Sai Chemicals and upto Rs. 15/- lacs in the account of M/s. Ganapati International as against the sanctioned limit of Rs. 3 lacs and Rs. 10 lacs respectively.

You failed to ensure that the party submitted stock statements in time. You failed to ensure that the values furnished in the stock statements were properly verified for their correctness, resulting in inadequate securities to cover the liability.

You reported to Circle Office that the accounts were regularized by market borrowings, import business, borrowings from friends, etc. In fact amounts received from M/s. Kantilal & Co. for investment through Canfina and investment in short term deposits with the Bank were diverted to Sai Group of Concerns and you are a party to the conversion. You have deliberately concealed facts from Circle Office. You have permitted misutilisation of amounts received from M/s. Kantilal & Co. which amounts were meant for crediting to Can Bank Financial Services Ltd.

You have accepted various amounts from M/s. Kantilal & Co. for investments as deposits with the Bank for periods ranging from one month to three months with interest ranging from 24% p.a. to 27% p.a. You have confirmed the above transactions although the same are in violation of RBI directives on "Interest rates on deposits". No deposit receipt was issued and instead pay orders favouring different companies were issued, thereby allowing the amount deposited with the Bank to be misutilised. The party agreed to extend the period of deposit for a specific period at specified rates of interest. You have confirmed the above even though the original deposit itself was not made and there is no provision to offer interest at such high rates for such short term deposits.

You have allowed the amount tendered by M/s. Kantilal & Co. for deposits with us, to be misutilised by M/s. Sai Group of Concerns which amounts to conversion. As the transactions have been confirmed by you, the Bank had to reimburse the amount to M/s. Kantilal & Co. by debiting the cheques of M/s. Sai Group of Concerns. There is no adequate security to cover up the liability in the Sai Group of Concerns and the Bank is exposed to serious monetary loss.

The details are more fully enumerated in the Statement of Imputation.

By your above actions, you have violated the RBI guidelines and also by channelling the funds of the party to M/s. Sai Group of Concerns, you are a party for misutilisation/conversion of funds entrusted to/deposited with the Bank.

You have thus acted in a way quite unbecoming of a responsible officer of the bank.

You have therefore failed to perform your duties with utmost honesty, integrity, devotion and diligence and thereby failed to ensure and protect the interests of the Bank.

You have thereby contravened Regulation 3(1) read with Regulation 24 of Canara Bank Officer Employees'' (Conduct) Regulations 1976 and committed a misconduct punishable as per the provisions of Canara Bank Officer Employees'' (Discipline and Appeal) Regulations 1976."

Charges framed against P.L Prabhu

ARTICLES OF CHARGE

You were working as SENIOR MANAGER at our Mandvi branch, Bombay from 31/1/1988 to 21/9/1989 - the date on which you were suspended.

Mandvi branch is having the following accounts of Messrs Sai Group of Concerns:--

(1) Messrs Sai Overseas International;

(2) Messrs Sai Chemicals;

(3) Messrs Ganapati International.

The group is enjoying various credit facilities. M/s. Sai Group of Companies were tendering cheques drawn on Reserve Bank of India for credit to their account with the branch. You were permitting drawings against these cheques and in turn you were issuing RBI cheques favouring various banks. For instance on 8/4/1988, you had permitted drawings against RBI cheques to the extent of Rs. 70 lacs in all the 3 accounts put together. You had transgressed the powers/authority vested in you and thereby misused your official position. You had not reported the transactions in F.637.

An ad hoc limit of Rs. 55 lacs was permitted to M/s. Sai Overseas International ought to have been cleared in March 1988, but it was not regularized. Inspite, overdrawings were permitted and the liability in all the three accounts started mounting. These overdrawings were allowed with your concurrence and knowledge, but you have failed to take effective steps to regularize the overdrawings. On account of overdrawings, the liability in the account of M/s. Sai Overseas International went up to Rs. 216 lacs as on 28/2/1989. The liability went up to Rs. 20 lacs in the account of M/s. Sai Chemicals and upto Rs. 15 lacs in the account of M/s. Ganapathy International.

You failed to ensure that the party submitted stock statements in time. You also failed to ensure that the values furnished in the stock statements were properly verified for their correctness, resulting in inadequate securities to cover the liability.

You reported to Circle Office that the accounts were regularized by market borrowings, import business, borrowings from friends, etc. In fact, amounts received from M/s. Kantilal & Co. were diverted to M/s. Sai Group of Concerns and you are a party to the conversion. Even though you were aware about the manner in which the overdrawings were cleared, you had concealed the facts from Circle Office. You have permitted misutilisation of amounts received from Kantilal & Co. which amounts were meant for crediting to M/s. Can Bank Financial Services Ltd. You have accepted various amounts from M/s. Kantilal & Co. for investments as deposits with the Bank for periods ranging from 1 month to 3 months with interest ranging from 24% p.a. to 27% p.a.

You have confirmed the above transactions although the same are in violation of RBI directives on "Interest Rates on Deposits". No deposit receipt was issued and instead Pay Orders favouring M/s. Sai Group were issued, thereby allowing the amount deposited with the Bank to be misutilised. (The party agreed to extend the period of deposit for a specific period at specified rates of interest. You have confirmed the above even though the original deposit itself was not made and there is no provision to offer interest of such high rates for such short term deposits).

You have allowed the amount tendered by M/s. Kantilal & Co. for deposits with us to be misutilised by M/s. Sai Group of Concerns which amounts to conversion. As the transactions were confirmed by you, the Bank had to reimburse the amount to M/s. Kantilal & Co. by debiting the cheques of M/s. Sai Group of Concerns. There is no adequate security to cover the liability in the Sai Group of Concerns and the Bank is exposed to serious monetary loss.

The details are more fully enumerated in the State of Imputation.

By your above actions, you have violated the RBI guidelines and also by channelling the funds of the party, you have become party for misutilisation/conversion of funds entrusted to/deposited with the Bank.

You have thus acted in a way quite unbecoming of a responsible officer of the bank.

You have therefore failed to perform your duties with utmost honesty, integrity, devotion and diligence and thereby failed to ensure and protect the interests of the Bank.

You have thereby contravened Regulation 3(1) read with Regulation 24 of Canara Bank Officer Employees'' (Conduct) Regulations 1976 which is punishable under the provisions of Canara Bank Officer Employees'' (Discipline and Appeal) Regulations 1976."

From the above reply, it is clear that P.L Prabhu acting in good faith based on the instructions of his Senior, he is a party to the transaction. When the charge sheet discloses that diverting of funds to M/s. Kantilal and company as per Exs M27 and 39 and reply of Prabhu to the charge sheet, it is clear that they have admitted their diversion of funds which made the bank to suffer to the tune of Rs. 3,75,00,000/- with interest. We have also seen evidence placed before the Enquiry Officer on Exs P27 and P29. Sri S.G. Nayak has not cross examined bank officials when he has not challenged the contents of Ex. P27 and 39, it goes without saying that he has admitted the mistake committed by him contrary to the banking regulations, the bank was made to suffer loss of Rs. 3,75,00,000/-. When there is clear cut evidence and admission of respondents 1 to 4 in support of other documents concerning article of charges, as rightly pointed out by Sri D.L.N Rao, learned Sr. counsel for appellant that bank has not relied upon those documents. Mr. Rajagopal, learned counsel appearing for R1 and 2 has unable to show to us that how those documents are relevant to consider the case of the bank in order to prove the charges leveled against R2. If there are series of correspondence between the bank and its employees and customers, they are all formal in nature and copies of those documents are not supplied by the respondents. According to us, the learned Single Judge has committed an error in setting aside the enquiry on the ground that reasonable opportunity has not been given to the respondents and more so when Sri S.G Nayak has not stepped into witness box. Sri P.S. Rajagopal has no answer as to why Mr. S.G. Naik did lead his evidence.

This Court in similar circumstances has taken view that merely because the Investigating officer was senior officer to the Enquiry Officer, the same cannot be ground to set aside the enquiry, since no bias is alleged against the officer who has conducted the enquiry. So far as this case is concerned, when the enquiry was appointed the Inquiry Officer as well as the Investigating Officer were of the same ranking. Subsequently, since the Investigating Officer was senior to the enquiry officer in the same cadre, was further permitted. Therefore, it cannot be held that enquiry is conducted on the ground of bias. The same is also held by the Hon''ble Supreme Court in the case of SYNDICATE BANK v. FRANCIS D SOUZA in SLP No. 36164/2012 dated 1.4.2014. We have also seen that the respondents 1 and 2 did not raise contention before the IO that the IO was biased and the Investigating officer was senior to him.

When such a contention was not raised by the respondents 1 and 2 either before the Disciplinary Authority or the Appellate Authority, we are of the view of that the learned Single Judge has committed an error in remanding the matter and set asiding the order of the disciplinary authority on the ground that the disciplinary authority has not given cogent reasons for acceptance of findings of the I.O and so also of the appellate authority. So far as these two grounds are concerned, as rightly pointed out by the appellant when the enquiry report is accepted by the disciplinary authority, in view of Ex. M27 and M 39 and reply to the charge sheet filed by P.L. Prabhu that the respondents 1 and 2 have admitted in diverting the fund there was nothing for the disciplinary authority or the appellate authority to give the reasons in detail to accept the findings of the Investigating Officer, we are of the view that we cannot find fault with the disciplinary and appellate authority in accepting the findings of the enquiry officer.

In the result, these writ petitions are allowed. The order passed in W.P. Nos. 30770/95 (S-DE) c/w W.P. No. 30391/1995 (S-DE) is set aside. The order passed by the disciplinary authority and appellate authority in dismissing respondents 1 and 2 are hereby confirmed.