Sandeep Dash vs Union Of India & Anr.

Hon’ble Mr. Sanjeeva Kumar, Member (A):

By way of this OA filed under Section 19 of the Administrative Tribunals Act, 1985, the applicant has sought the following relief(s):-

The facts of the case as gleaned from OA are that the applicant, who belongs to Indian Civil Accounts Service (ICAS-1990 Batch), joined his service as Assistant Controller of Accounts in the aforesaid cadre on 16.09.1991. Thereafter, he held various positions but the relevant period concerning the matter is 19.05.2005 to 04.04.2007 when he served on deputation as Executive Director (Finance) (ED-(F) in BMRCL. The origin of the controversy can be traced to a proposal recorded by the then Company Secretary/General Manager (A), [CS/GM-A, also referred to as CS/GM (F)], Shri R.K.Ravishankar regarding the deployment of surplus funds amounting to Rs.10 crores as investments based on a purported discussion. Subsequently, on 19.01.2006, an investment was made with PNB Asset Management Company Private Limited. After about 5 months, on 12.06.2006, the CS/GM (A) submitted a note to MD through ED (F) placing a statement on investments made including PNB-AMC and also stated that the investments were within the laid down policy of the Company. The said noting was for the information of the MD, BMCRL who wrote ‘Seen’. He also issued certain instructions for the future deployment of funds in the same noting. But after a lapse of about 4 ½ years from the date of the applicant’s repatriation from BMRCL on 21.10.2011, a Memorandum of Charges under Rule 14 of the CCS (CCA) Rules, 1965 was issued to the applicant, containing 3 Articles of Charge. The charges alleged (i) unauthorized investment through a broker (Article I), (ii) investment in equity-based funds in violation of the BPE guidelines (Article II) and (iii) execution of 36 switch-in/switch-out transactions through Common Transaction Forms allegedly causing loss to BMRCL (Article III). The detailed charges are as follows:

The applicant denied the aforesaid charges and submitted his reply to disagreement note on 29.11.2011. The respondents appointed Enquiry Officer and Presenting Officer on 13.08.2012 to conduct a disciplinary enquiry. Thereafter, the applicant was issued a memorandum of disagreement note by the Disciplinary Authority along with a copy of the enquiry officer report on 30.05.2014. It is stated that in his report the Inquiry Officer had already exonerated the applicant from all 3 charges. Thereafter, the applicant gave his written submission on 10.07.2014 to the disagreement note of Disciplinary Authority. The applicant was also issued an Office Memorandum on 28.09.2015 containing the advice of UPSC inviting his response. The applicant made a representation dated 06.12.2015 requested for supplying him certain documents mentioned by him in his representation to enable him to give an effective reply to the advice of UPSC. The respondents supplied a few of the documents requested by the applicant on 14.01.2016 and extended the time for filing the response to the UPSC.

The applicant sent further communication dated 25.02.2016 pointing out that other documents, which the applicant demanded, had not yet been supplied and the same may be supplied and thereafter the time may be granted to him to represent against the advice of UPSC. To this representation, the respondents did not respond. The applicant was issued the order of Disciplinary Authority dated 14.03.2016 whereby the penalty of dismissal from service was imposed on him. Aggrieved, the applicant approached this Tribunal.

The respondents in their counter reply have stated that the disciplinary proceeding under Rule 14 of CCS (CCA) Rules, 1965 was initiated against the applicant, ICAS-1990 for alleged irregularities committed by him during his tenure as ED (F), BMRCL from 20.05.2005 to 04.04.2007 vide Charged-Memorandum dated 21.10.2011.

It is submitted that on denying the chargesby the applicant vide written statement of defence dated 29.11.2011, a departmental inquiry was ordered to enquire into the charges framed against him vide Order dated 13.08.2012. On 31.10.2012 the Inquiry Officer submitted his Inquiry Report wherein Article-I, Article-II and Article-III are held as ‘Not Proved’. The Disciplinary Authority, upon consideration of record of the inquiry and the inquiry report disagreed with the findings recorded by the Inquiring Authority and held that each Article of charges against the applicant stood proved. The Disciplinary Authority forwarded a copy of Inquiry Report along with its tentative reasons for disagreement with the findings of Inquiry Authority on each Article of Charge to the applicant for seeking his representation vide Memorandum dated 30.05.2014.

It is further submitted that on receipt of detailed representation 10.07.2014, the Disciplinary Authority took a tentative view to impose a suitable major penalty on the applicant and referred the case with the tentative reasons for disagreement of the Disciplinary Authority with the findings of Inquiry Authority on each Article of Charges to UPSC for their advice. After assessment of the case and consideration of records, the UPSC vide letter dated 10.09.2015 tendered its advice wherein it was held that Article-l of the Charge is partly proved, Article-ll of the Charge is proved and Article-III of the Charge is proved against the applicant. After taking into account other aspect relevant to the case, the UPSC found that the charges established against the applicant, constitute grave misconduct on his part and considered that the end of justice would be met in the case of the applicant if the penalty of 'dismissal from service’ shall ordinarily be disqualification for future employment under Government' is imposed upon the applicant. A copy of advice of UPSC was supplied to the applicant with the direction to submit representation, if any, on the advice of UPSC within 15 days vide O.M. dated 28.09.2015. As requested by the applicant vide letter dated 12.10.2015, time extension of a period of two months from the date of his representation dated 12.10.2015 was granted by the Disciplinary Authority for submitting his representation on the advice of UPSC. Before expiry of extended period of two months, the applicant again submitted another application dated 11.12.2015 with the request to allow him extension of time for three weeks from the date of provision of the documents under RTI Act from the Department of Expenditure. The Disciplinary Authority again acceded to his request by allowing him further extension of time of three weeks from 14.01.2016 i.e. the date on which the document sought by the applicant under RTI Act, 2005 had been provided, to enable him to make representation on the advice of UPSC.

It is stated that the extended period granted to the applicant lapsed on 03.02.2016, but no representation was received from him within the extended period. Accordingly, the Disciplinary Authority concluded that he has nothing to represent as if he desired so, he could have represented on the advice of UPSC within the extended time allowed to him twice. In the disciplinary case against the applicant, the Disciplinary Authority found that he failed to maintain absolute integrity, had shown lack of devotion of duty and acted in a manner unbecoming of a Government servant by exercising power which were not delegated to him, suppressing facts willfully to mislead BMRCL authorities, engaging brokers and indulging in unauthorized transaction involving public money thereby contravening Rule 3(1)(i), 3(1)(ii), 3(1)(iii) and 3(2)(i) of the CCS(Conduct) Rules, 1964 while he was functioning as ED (F) in Bangalore Metro Rail Corporation Ltd. (BMRCL) during the period 20.05.2005 to 04.04.2007. After considering Inquiry Report, tentative reasons for disagreement of the Disciplinary Authority with the findings of Inquiry Authority on each Article of Charges, UPSC's advice and all the relevant records of the proceedings, the Disciplinary Authority imposed a penalty of "dismissal from service” shall ordinarily be disqualification for future employment under the Government on the applicant vide Order dated 14.03.2016.

We have heard both the parties and also perused the pleadings on record, including the counter reply, the rejoinder and the written submissions filed by the parties.

On 30.10.2012, following the departmental enquiry, the Inquiry Officer (IO) submitted a detailed and exhaustive enquiry report wherein all the three charges (Articles I, II and III) were held as not proved, thus completely exonerating the applicant. However, on 30.05.2014, the Disciplinary Authority issued a disagreement note expressing its tentative disagreement with the IO’s exoneration report which was shared with the applicant and the applicant on 10.07.2014 submitted a detailed representation against the disagreement note. Subsequently, on 10.09.2015, the UPSC tendered its advice recommending the penalty of dismissal from service. Lastly, on 14.03.2016, the Disciplinary Authority issued the impugned order imposing penalty of dismissal from service.

The learned counsel for the applicant based on the submissions made in the pleadings has submitted that the Memorandum of Charge issued on 21.10.2011 relates to alleged events of January 2006, i.e. after over 5 ½ years of the events. It has further been submitted that the Memorandum of Charge was issued nearly 4½ years after the applicant had been repatriated and there is no explanation whatsoever for such an inordinate delay which has seriously prejudiced the applicant in effectively defending himself against the charges. Reliance is placed on the judgment of the Hon’ble Supreme Court in P.V. Mahadevan vs. MD, T.N. Housing Board (2005) 6 SCC 636.

It is also contended by the learned counsel that the Disciplinary Authority rejected the report of the IO in a mechanical manner, contrary to the law laid down by the Hon’ble Supreme Court in Maharashtra State Board of Secondary and Higher Secondary Education vs. K.S. Gandhi and Others (1991) 2 SCC 716 wherein it has been held that a quasi judicial authority while differing from the findings of the Inquiry Officer must provide independent and substantive reasons when overturning findings.

It is also argued that CS/GM(A), SW-2who initiated the matter, submitted the relevant note and released cheques, was cited as a prosecution witness but refused to appear before the I.O. despite having been served with three summons. But no departmental action was initiated against him, which accordingly to the learned counsel, clearly demonstrates a biased approach on the part of the authorities.

Learned counsel also lays emphasis that in reality the investments in question yielded a net profit to BMRCL. It is further submitted that the practice of signing blank Common Transaction Forms was an established operational practice and that keeping in view the fluctuations in the Net Asset Value (NAV,) the forms were thereafter completed internally by the CS/GM (A), without any prompting and without loss of time. It is also argued that dismissal from service for administrative/technical procedural lapse, in the absence of any malafide or pecuniary loss, shocks the judicial consciousness.

Learned counsel reiterates that alleged misconduct in the present case pertains to investment of Rs.10 Crores purportedly by the applicant in the Principal PNB Asset Management Company on 19.01.2006 and the concerned person of PNB Shri Manjit was introduced to the applicant by CS/GM (Finance) as a representative of Principal PNB AMC and not as a broker.

It is also emphasized that the Investment Committee which was responsible for taking decision about miscellaneous aspects of investment, was not made functional by the Managing Director nor was there any standing formal instructions or guidelines in this regard. Further, there was no statutory or administrative bar against any investments and the applicant was not a member of the Board and was not involved in various final decisions of the company like the CS/GM (Finance), who himself was a Board-level officer, even when being subordinate in position to the applicant and communications were directly addressed by the MD to the CS/GM (Finance).

Our attention is drawn to the note of the CS/GM (Finance) dated 16.01.2006 (Annexure A-3 pages 41-47) before the initial investment was made, references to a discussion between the applicant and CS/GM (F) which the CS/GM (F) had treated as an approval given by the applicant and accordingly investment of Rs.10 crores was made, to which the MD had given his post-facto approval on 17.06.2006 and also made certain remarks for future investments.

Moreover, no blemish in the investment was pointed out by the MD or the auditors and even the Account Statement dated 28.01.2006 (Annexure A-15 page 251) received from PNB Asset Management shows that the investment made was in a liquid fund and was made directly.

Further, there is no reason given why the CS/GM (Finance) who issued the cheque for payment as to why he did not earlier object to the investment at that relevant time but rather raised this issue after two years.

Attention is also drawn towards applicant’s unblemished service record since joining the Indian Civil Accounts Service in 1991. It is further submitted that his distinguished service in various capacities including Additional Secretary and ED of OWSSB in the Government of Orissa, Director (Finance) at the Planning Commission of India and Deputy CGA in MoF while on deputation.

It is also averred that even assuming that a technical lapse in approvals occurred, there was no malafide intent, pecuniary gain, or breach of trust involved as the decision was made in a bona fide manner with a view to maximize profits and not cause any loss to BMRCL. In view of such submissions, learned counsel for the applicant concludes that the penalty of dismissal from service is grossly disproportionate to the nature allegations leveled against the applicant. In support of such contention, reliance is placed upon the judgment of the Hon’ble Supreme Court in Prawin Kumar vs. Union of India (2020) 9 SCC 471 wherein it was held that where the punishment imposed is so disproportionate to the alleged misconduct as to shock the conscience of the Court, it warrants judicial intervention on the ground of proportionality.

Per contra, learned counsel for the respondents, reiterating the assertions made in the counter reply submits that the Managing Director, MBCRL vide letter dated 24.01.2009 had informed the competent authority that some financial irregularities were allegedly committed by the charged officer during his tenure as ED (F) in BMCRL from 20.05.2005 to 04.04.2007. Following, with the approval of disciplinary authority, a charge memorandum was issued to him on 21.10.2011 and an enquiry as per Rule 14 of CCS (CCA) Rules, 1965 was conducted as per due procedure. The Inquiry Officer submitted his report on 31.10.2012 wherein all the Articles of charge were held as not proved. But the disciplinary authority upon due consideration of the matter disagreed with the findings and held that each of the charges leveled against the applicant stood proved.

Learned counsel submits that subsequently the enquiry report was duly shared along with tentative disagreement note with the applicant, seeking his representation, if any. On receipt of the representation of the applicant and following the prescribed procedure, the disciplinary authority took a tentative view to impose a suitable major penalty upon the applicant and referred all the documents to the UPSC for their advice. After receiving their advice, the same was supplied to the applicant granting time to submit representation, if any on the advice of the UPSC. On request of the applicant, the disciplinary authority extended the time to file representation up to 03.02.2016 but no representation was received within the extended period. Accordingly, the disciplinary authority found that the applicant failed to maintain absolute integrity, shown lack of devotion of duty and acted in a manner unbecoming of a Govt. servant by exercising powers which were not delegated to him, suppressing facts willfully to mislead BMCRL authorities, engaging brokers and indulging in unauthorized investment transactions involving public money thereby contravening Rule3(1)(i), 3(1)(ii),3(1)(iii) and 3(2) (i) of the CCS(Conduct) Rules, 1964,while he was functioning as ED (F) in BMCRL. Thereafter considering all the relevant documents including the enquiry report, the disciplinary authority imposed a penalty of ‘dismissal from service’ which shall ordinarily be disqualification for future employment under Government upon the applicant vide order dated 14.03.2016. It is concluded that the action of the disciplinary authority in the light of aforesaid facts is as per law and the applicant has no cause of action against the order dated 14.03.2016.

It is reiterated that the charged officer had misled the authorities by submitting a handwritten note stating that funds deployed were within the parameter laid down by the BMCRL. Although investment in equity funds was not allowed, such investments were made under the CO on his own and without the approval of the MD. There was no need to sign 36 Common Transaction Forms, if the funds were kept as liquid funds as claimed for by the CO. Regarding profit or loss under BMCRL, the learned counsel for the respondents argue that moot point was not the return on investments but whether he exceeded his powers to make such decisions in violations of KSBPE and BMRCL Board of Directors’ decisions and guidelines and thus even profit made through such decision is rather questionable.

After hearing both the sides and going through the pleadings, the main issues that arise for consideration are:

So far the question of delayed charge sheet is concerned, we have gone through the penalty order dated 14.03.2016 which records the complete sequent of events i.e. initiation of disciplinary authority under Rule 14 of the CCS (CCA) Rules, 1965, submission of the enquiry report, disagreement of the disciplinary authority with the findings in respect of articles of charge, consideration of the applicant’s representation, reference of the matter to UPSC, receipt and consideration of UPSC’s advice and final decision to impose penalty of dismissal from service. It is also relevant to note that it was only in 2008 that alleged misconduct of the applicant came into the notice of MD and he vide letter dated 24.01.2009 had informed the respondent-office that some financial irregularities had been accordingly committed by the charged officer during his tenure as ED (F) in BMCRL from 20.05.2005 to 04.04.2007. Thereafter, with the approval of disciplinary authority, a charge memorandum was issued to him on 21.10.2011 under Rule 14 of CCS (CCA) Rules, 1965 and subsequent on denial of the charges by the applicant vide written defence of statement dated 29.11.2011, counter reply dated 07.11.2025, a departmental enquiry was ordered on 13.08.2012. The Inquiry Officer submitted his report on 31.10.2012 wherein all the three Article of charges were held as not proved. Thereafter, the disciplinary authority upon consideration of the enquiry report and other relevant materials tentatively disagreed with the findings of the Inquiry Officer and held that each article of the charge against the applicant stands proved. He forwarded a copy of the enquiry report with tentative reasons for disagreement note on 30.05.2014. On receipt of the applicant’s detailed representation dated 10.07.2014, took a tentative view to impose a suitable major penalty against the applicant and referred the case with the tentative reasons for disagreement of the disciplinary authority along with the findings of Inquiry Authority on each article of charges to UPSC for their advice. The UPSC tendered its advice on 10.09.2015 after which a copy of the advice was given to the applicant with the direction to submit the representation, if any, within 15 days vide OM dated 28.09.2015. As no representation was received from the applicant within the extended period, on request of the applicant, time was extended upto 03.02.2016 but no representation was received from the applicant within the extended time. Accordingly, the disciplinary authority passed the impugned order.

After going through the aforesaid sequence of events, we find that the entire process starting from issue of charge memorandum to the final order consisted of a number of stages, consideration at each steps, requiring at each stage requiring for careful examination of the matter. We are aware of the decision of the Hon’ble Supreme Court in Prem Nath Bali vs. Registrar, High Court of Delhi & Another, AIR 2016 SCC 101and the decision of the Hon’ble Delhi High Court dated 12.03.2019 in WP(C) No.5653/2018 in Union of India and Another vs. Dr. M.R. Dewan had laid down that ideally, disciplinary proceedings should be concluded within a period of 6 to 18 months but to our mind, delay alone by itself does not automatically leave the proceedings void unless it is established that such delay has caused prejudice to the delinquent employee or was attributable to malafide consideration. While such timeframes have been given to prevent undue administrative harassment, in the instant case, since the enquiry involved a detailed examination at various stages, including obtaining the advice of UPSC and sharing the same with the applicant obtaining his response, this cannot, itself, constitute the ground for setting aside the order, provided there was no impropriety with regard to the procedure and the principle of natural justice was followed.

Having considered the first issue, we have clubbed ii, iii and iv together as they are largely interlinked. So far as the second issue, namely, non-participation of SW-2 is concerned, it is apparent from the enquiry officer report that despite 3 chances given to him to give statement/evidence in the case, he failed to appear before the Inquiry Officer and as such his oral evidence could not be recorded by the Inquiry Officer. As he failed to appear before the Inquiry Officer, his written statement submitted to the Audit Committee of BMCRL dated 22.09.2007 has been taken cognizance of for analyzing and preparing the report. However, the Inquiry Officer has made it clear that he has not considered his written statement in arriving at any conclusion. Moreover, even though the SW-2 did not appear, other witnesses, including Shri V.Madhu, former Managing Director of BMCRL (SW-1) appeared before the Inquiry Officer and gave oral evidence. In our considered view, absence of one witness has not made the enquiry vitiated. More so when his statement made to the Audit Committee by him has not been relied upon by the IO in drawing his findings.

Coming to the third issue related to investment with PNB AMC, the relevant records indicate that in respect of such investment Rs.8 Crores was redeemed from SBI Mutual Fund without recording any reasons for taking the decision and without seeking approval of the MD. In fact, the CO had put up a factually incorrect handwritten note, stating that the funds deployed within the laid down parameters of BMCRL. Investments in equity funds were not allowed but such investments were made under the CO’s signature without prior approval of the MD. Moreover, it is not understood as to why 36 Common Transaction Forms (CTFs), if the funds were kept as liquid funds, as claimed by the CO, were signed. Though the charged officer has denied inquiry of 31 CTFs, he has admitted to have signed the blank application forms.

We have perused the relevant note wherein an amount of Rs.10 Crores was shown in the investment portfolio accounts of PNB, AMC. It was put up to the MD for his kind information on 12.06.2006. The nature of investment of Rs.10 Crores with PNB-AMC has not been explicitly explained though there is mention of investment in liquidity fund (UTI SBI and Mutual Fund). The note also mentioned switch over to weekly dividend to save taxes. Since such investment with PNB, AMC was made for the first time we find it surprising that an explicit explanation of such investment is not made. We have also perused the Audit Committee observation (Annexure VII) which states that in its meeting held on 02.08.2005, the Board authorized the Managing Director to take decisions on investments in the best interest of the Company and not to resort to investments in mutual funds as they are risky and speculative in nature. Though it did not seem to have been supplemented by any further instructions in writing issued by the Managing Director, the existence of such board procedures laying down modalities for investment is not in doubt. Therefore, at the beginning of January 2006 when the Company’s funds were first invested in PNB-AMC, the Company’s administration was required to follow the parameters of investment laid down by the Board in its meeting held on 29.01.2005.

We have also perused the noting dated 16.01.2006 initiated by CS/GM (A) referring to a discussion with ED (F) on 12.01.2006 leading to placement of Rs.10 Crores with PNB-AMC. The applicant’s contention is that the aforesaid noting dated 16.01.2006 initiated by the CS/GM (A) there was nothing to indicate that the applicant had approved the investment and told that there was no need to take individual approval. More so, CS/GM (A) specifically knew that the approval could be granted only by the MD since he used to take MD’s approval on earlier investment before the applicant joined as ED (Finance). The applicant has also contended that he had not given any formal approval to the impugned investment and it was the responsibility of CS/GM (A) for objecting to said investment, if it not consonance with the company’s policy.

However, the matter before us pertains to the role of the applicant and not that of the CS/GM (A). If such an investment was made under the signature of the applicant, he cannot take shelter under lack of knowledge about the extent investment guidelines of the Company. If the investment was based on a discussion, which was not approved by the applicant, as claimed by him, the charged officer could have sought necessary clarification from the CS/GM (A) about the propriety of the said investment and asked if the same was within the laid down policy of the Board as well as that of the Karnataka State Bureau of Public Enterprises, more so when he was present in the Board meeting on 02.08.2005. However, there is nothing on record to indicate if any such clarification was ever sought and in fact investment was made on 15.01.2006, based on the discussion between CS/GM (F) and the applicant. Even when a note was initiated on 12.06.2006 and CS/GM (A) certified that the impugned investments were within the laid down policy of the Board, the applicant never questioned the same. The applicant being a senior supervisory officer cannot be absolved from violating the extant investment guidelines.

We have also perused the handwritten note of the applicant; the noting initiating by the CS/GM(A) on 12.06.2006 which was put up to MD. It reads as follows:

On the note put up for kind information of the MD, the MD noted the following:

On 17.06.2006, the file was directly marked to GM (Finance) by MD. The noting gives the impression that the Company has been investing its surplus funds in Fixed Deposits, Mutual Funds and ICD. There is no explanation as to which category the fund invested with PNB-AMC fall and whether it was in conformity with the investment policy of BMCRL. It is also not clear when the Board of Directors in its 29^th Meeting held on 29.01.2005 clearly laid down that the MD is authorized to decide upon various mutual funds and bank’s depending on the yield in consultation with the Investment Committee, (which was formed by the Board on 10.04.2001) and further in its 30^th Meeting held on 02.08.2005, the Board authorized the Managing Director to take decisions on investments in the best interests of the Company where it was also decided that the Company should not resort to investments in Mutual Funds as they are risky and speculative in nature, which was also attended by the charged officer. Though the said decisions of the Board were apparently not communicated or supplemented by any further instructions in writing issued by the Managing Director, the charged officer was required to follow the parameters laid down by the Board, even if the CS/GM(A) did not advise the ED(F) about such investment in individual funds, the charged officer cannot escape responsibility as being a supervisory officer, he was aware of the aforesaid decisions of the Board. Further, the charged officer failed to bring such investment to the notice of the Managing Director immediately. The MD came to know of the investment only through the noting initiated by the CS/GM (A) on 12.06.2006, a note which was put up only for information of MD. Also, prior to this a discussion between the CS/GM(A) and ED(F) about the proposed investment of Rs.10 Crores, which the ED(F) claimed he had not approved, apparently took place on 16.01.2006, based on which an amount of Rs.10 Crores was finally invested with PNB-AMC on 19.01.2006 by redeeming Rs.8 Crores from SBI Mutual Fund. The cheques of the said investment were accordingly drawn and jointly signed by ED(F) and CS/GM(A). At that time also, no objections were raised by the charged officer about the propriety of such investments. Therefore, the contention of the applicant that it was merely a discussion between him and CS/GM (A), and such investment was never approved by him does not hold water. The ED (F) was heading the Finance Department and was responsible for ensuring that the financial reserves of BMCRL were safeguarded and its funds are deployed securely and effectively. It has been submitted that it came to notice of the MD only in May 2007 that investments were also made in equity fund. Neither internal auditor nor statutory auditor pointed about the report of investment of the body during 2005-06 and 2007. However, the charged officer has admitted that his subordinates used to bring application form or common transaction form (CTF) for his signature and thereafter they would hand over the same along with the cheques to the PNB-AMC and they might have got signed these forms from him. The charged officer also submitted that he had no idea that the CTFs signed by him with seal would be handed over to the Asset Management Company without signature of CS/GM (A) though cheques were jointly signed by ED(F) and CS/GM(A). He has admitted that the columns relating to the name of the scheme and broker’s names etc. were left blank when he signed these forms, which he did in good faith, presuming that the CS/GM(A), had signed the forms as per the extant instructions. However, such acts based on mere presumption even if done in good faith were fraught with disastrous financial consequences and it does not absolve the CO, a very high ranking officials, in-charge for prudent fund management of his responsibility.

Having considered the issues at (i) to (iv) we move on to the tentative disagreement note of DA. As evident from the pleadings, the disciplinary authority did not agree with the inquiry officer’s findings disapproving of all the three charges leveled against the applicant. The matter for consideration before us the crucial facts in this regard would be whether the disciplinary authority failed to record cogent reasons for disagreement and afforded the charged officer an opportunity of hearing and whether he gave independent and substantive reasons leading to disagreement with regard to all the three charges. Even if the reasons for disagreement were elaborate, it is necessary to examine whether they specifically indicated as to how the findings recorded by the inquiry officer in respect of each individual charge were incorrect.

The Sub-rule (2) of Rule 15 of CCS (CCA) Rules, 1965 casts a on mandatory duty on the disciplinary authority to consider the representation, if any, submitted by the Government servant and records its findings thereon before proceeding further and non-compliance with the aforesaid mandatory requirement vitiates the entire decision making process.

The Hon’ble Supreme Court, in Deputy General Manager (Appellate Authority) & Ors. v .Ajai Kumar Srivastava, (2021) 2 SCC 612, held that where the inquiry officer is not the disciplinary authority and the latter disagrees with the findings recorded by the Inquiry Officer, the disciplinary authority is required to record reasons for such disagreement and, after affording an opportunity of hearing to the delinquent employee, may record its own findings if the evidence available on record is sufficient for such exercise or else, to remit the case to the Inquiry Officer for further inquiry. This takes us to a close reading of the tentative disagreement note with regard to all three charges to see whether it contains clear, objective and cogent reasons for disagreement with the findings recorded by the inquiry officer.

The first article of charge and the disagreement note with regard to same read as follows:

The main issue herein was regarding the investment of BMRCL surplus funds of Rs.10 Crores with the PNB-AMC. The DA was of the view that the funds were invested without prior approval of Managing Director violating the Department of Public Enterprises guidelines and the decision of the Board on the previous year. Moreover, the funds were deployed through broker and the charged officer failed to maintain absolute integrity and behaved in a manner unbecoming of a Government Servant and thereby contravening Rule 3(1)(i) and 3(1)(iii) of the CCS (Conduct) Rules, 1964. The disciplinary authority was also of the view that the investment was made through a broker based on Application No.14155511.But the DA overlooked the Account Statement dated 28.01.2006 issued by the Principal Pnb Asset Management AMC which categorized investment of Rs.10 Crores as direct investment. Further, the SW-3 in his submission stated that blanks forms were readily available at the Branch and that the cheques were directly handed over to the PNB-AMC representative.

The serious charge against the charged officer was that the investment dated 19.01.2006 with PNB-AMC was without the approval of the Managing Director and from the records it is clear that even file note submitted on 12.06.2006 which was initiated by CS/GM (A), BMRCL and routed through ED (Finance) was for MD’s information. Subsequently, the MD reviewed the note and provided further instructions regarding mode of fund deployment. It is relevant here to mention that the stand taken by the IO was that the BMCRL was a fledgling organization with a Non-functional Investment and Audit Committee, a bare minimum of 3 members dealing with the financial matters and more importantly no written guidelines or instructions from the Board/MD. However, such preposition overlooks proceedings of the Board meeting dated 25.01.2005 referred to earlier.

So far as the Charge-II and disagreement are concerned, they are summed up as below:

The charge relates to investment in equity-based funds allegedly made in contravention of the Board Resolution and the Department of Public Enterprises (DPE) guidelines dated 25.04.1997, without obtaining the approval of the Managing Director. In his defence, the CO attributed the alleged irregularities to systemic deficiencies and collective lapses within the organisation, rather than to any individual misconduct on his part. However, the Disciplinary Authority (DA) asserted that the documentary evidence available on record, particularly the application dated 19.01.2006 and the Common Transaction Form dated 06.02.2006, established the CO's personal involvement in the alleged misconduct. As per the issue of approval is concerned, it has been addressed while dealing with the disagreement note against Charge-I. We are of the considered view that though the noting made by the Managing Director on 17.06.2006 indicates ratification of the action taken by the Charged Officer but the note dated 12.06.2006 itself was misleading in as much as it stated that the investment was in line with Company’s policy. Further, the Inquiry Officer and the Audit Committee noted that the Managing Director had not laid down any written operating procedure prescribing the obligations or protocol to be followed by the subordinates but the 29^th and 30^th Board meeting made the investment modalities clear of which CO was aware. The Disciplinary Authority also placed reliance upon the Application Form, the Common Transaction Form, and the Asset Management Company Account Statement dated 02.04.2008, and concluded that the funds were deliberately routed into an equity-based scheme.

The Disciplinary Authority rejected the Inquiry Officer's finding of a collective lapse and asserted that the CO's signing of the relevant forms connected him with the alleged misconduct. However, the deposition of SW-I (MD) indicates that, owing to the skeletal strength of only three officers in the Finance Department, the day-to-day affairs were being conducted on the basis of mutual trust and without any clearly defined Standard Operating Procedures (SOPs).

Signing blank forms to facilitate liquidity/investment transactions was undoubtedly an irregular practice.

The IO in his report on page 5 has recorded the details of DPE circular dated 25/4/1997 which prohibit any investment in equity based funds. The IO has also recorded in his report on page 6 about the decisions of the Board of Directors in its meeting on 29/1/2005 and on 2/8/2005 which authorized only the Managing Director to take investment decisions. The documentary evidence i.e. all 36 Common Transaction Forms (CTF) (Sl. No. 10 of Annexure III of the Charge Sheet), by which switch in and switch out were made, indicate that all 36 CTFs were under the CO's signature and such acts were in contravention of the laid down procedures i.e. such investment were not made with the approval of MD and was not as perDPE guidelines. The CO has admitted signing the Common Transaction Forms as recorded on page 13 of Audit Committee Report(Sl. No. 13 of Annexure III of the Charge Sheet). Further, the 10 in his report on page 61 has noted that it is possible that the CO signed the blank Common Transaction Forms without any mala fide intention and in the interest of the organisation. The IO has, however, not reflected to any documents/proof in support of this possibility. Therefore, the IO's conclusion that the charges are not proved cannot be established merely on the basis of such possibilities when the available documentary evidence indicates that the CO had acted in violation of laid down procedures. The 10 while making his conclusion against Articles of Charge-III, has recorded that "If, any action results in loss that should not be a cause for taking penal action against the concerned or the responsible member of the Management". This indicates that IO has not made any distinction between legitimate and illegitimate action in this case as the documentary evidence i.e. the CO's signature on all 36 Common Transaction Forms indicate that the CO had acted on his own and such acts were in violation of laid down procedures.

The CO has recorded that the Common Transaction Forms were always handed over by CS&GM(A) to the Principal Pnb AMC and it was, therefore, duty of CS&GM(A) to ensure its correctness. However, as per the duties and responsibilities issued vide Office Order No. BMRCL/Job allocation/2006 dated 25/8/2006 the CO was responsible for Fund Management (receipts, payment, cash and bank transactions, cash and fund flow etc.) and therefore, cannot evade his responsibility for any mismanagement of any MBRCL funds. Further, IO's recording that "in this case no officer or staff has been charged for any other offence. Therefore, it is inappropriate to charge the CO under Rule 3(2) (i) of CCS (Conduct) Rules" is devoid of any merit as the CO has failed to produce any documents to indicate that any possible steps were taken by him to ensure the integrity and devotion to duty of such officer under his control and authority, as required under Rule 3(2)(i) of the CCS (Conduct) Rules, 1964.

The available documentary evidence placed on record indicates that the CO has failed to maintain absolute integrity and shown lack of devotion to duty and acted in a manner unbecoming of a Government Servant by exercising powers which were not delegated to him, engaging brokers and indulging in unauthorised investment transactions involving public money and thereby contravening Rule 3(1)(i), 3(1) (ii), 3(1)(iii) and 3 (2) (i) of the CCS (Conduct) Rules, 1964.

The Disciplinary Authority was of the view that the CO, by signing the 36 Common Transaction Forms, exercised authority in relation to transactions which facilitated the switch-in and switch-out of investments, allegedly in violation of the extant guidelines of the Department of Public Enterprises. The Disciplinary Authority further observed that, under the decision of the BMRCL Board, the authority to take decisions relating to such investments was vested exclusively in the Managing Director. The Disciplinary Authority observed that the presence of the CO's signatures on the relevant documents established his deliberate involvement in the alleged misconduct and, according to the Disciplinary Authority, constituted a violation of the standards of absolute integrity and devotion to duty prescribed under Rules 3(1)(i), 3(1)(ii), 3(1)(iii) and 3(2)(i) of the CCS (Conduct) Rules, 1964. The Inquiry Officer exonerated the CO, observing that BMRCL suffered from an utter lack of proper systems and procedures, weak internal control mechanisms, and a non-functional Audit and Investment Committee. The Inquiry Officer accordingly concluded that there was insufficient evidence on record to establish any mala fide intention on the part of the CO. The CO contended that the disciplinary authority’s disagreement note was based on conjectures executive inferences. The CO highlighted the systemic deficiencies prevalent in the organization, the established practice adopted for ensuring liquidity, and the role played by subordinate officers, particularly the CS/GM (Finance) and the Accounts Section. While the Disciplinary Authority correctly pointed out that the Inquiry Officer's finding that the CO had signed the blank forms without any mala fide intent was unsupported by adequate proof, the Disciplinary Authority, in arriving at its conclusion, relied upon the documentary evidence, including the DPE Circular dated 25.04.1997 prescribing restrictions on equity investments, the BMRCL Board Resolutions dated 29.01.2005 and 02.08.2005 vesting exclusive authority in the Managing Director, and the Office Order relating to allocation of duties issued in 2006, which designated the CO as responsible for funds management. At the cost of repetition, we find that, although considerable emphasis has been placed by the Disciplinary Authority on the CO's having signed 36 Common Transaction Forms (CTFs), only photocopies of the said forms were produced during the inquiry.

It is not denied that the Charter of Duties of the applicant was issued only on 25.08.2006, but irrespective of the post of Executive Director inherently was responsible, including those relating to the investment of BMCRL. CS/GM (A) was only the assistant to the Executive Director in financial matters and was not the decision making authority.

On 17.06.2006, the noting was initiated by CS/GM (A) for MD’s information through ED(F). The noting gives the impression that the Company has been investing its surplus funds in Fixed Deposits and Mutual Funds and ICD. There is no explanation as to which category the fund investments with PNB-AMC fall and whether it was inconformity with the investment policy of BMCRL.

The noting placed on record also indicates that the CS/GM had initiated the matter which reproduced as follows:

There is also no denying that though the existing Investment Committee was formed way back in 2001, no regular meetings were held. Similarly, the Audit Committee was also not functioning. However, the investments were made circulating the files among the members of the Committee. The enquiry officer has also noted that the action of the charged officer should not be seen in violation but in the overall context of weak internal control system, non-functional Audit and Investment Committee and collective unprofessional roles at the level of Company Secretary/Managing Director, Executive Director (Finance) and the Board of Directors.

The moot question is that even if the Company suffered from inadequate internal control, can anyone justify the conduct of ED (Finance) in signing a large number of blank financial documents which were open to misuse. It is also evident that he was present in the meeting held on 02.08.2005 when the decision by the Board not to invest in Mutual Fund was taken and the Board also authorized MD to take decision on investment in the best interest of the Company. By no stretch of imagination, signing of such blank forms can be justified by the officer. Whether he signed many such forms or few, is just an exercise in statistics. Even a single such blank form signed by an officer responsible for fund management, exposed the Company to huge financial risk and it cannot be blamed on absence of internal financial control, diluting the role of the CO.

In the tentative disagreement by the DA, he has taken into account all the above factors, including misleading the MD by stating that the funds deployed were within the parameters laid down by BMCRL Board in its meeting held on 21.01.2005. The disciplinary authority in his tentative disagreement note has also taken into account signing of such application forms which ultimately lead to switch-in and switch-out such funds including switching over to equities. The CO incidentally had admitted signing of blank form though he has claimed that it was done in good faith and in the interest of the organization which the IO also tends to agree. However, in the face of subsequent switch-in and switch-out which went uninterrupted, one is compelled to question the credentials of the charged officer rather than accepting the IO views that it was done in good faith.

It is also not in doubt that disagreement note of the DA was tentative and not conclusive and DA has exercised his mind indicating as to why he did not agree with the findings which were not proved, concluding that the charges are fully established. An opportunity was also given to concerned officer to submit his response to the disagreement note. It is pertinent that, while discussing each and every article seriatim, the disciplinary authority concluded that the IO’s findings have not been acceptable and the charges have been viewed as proved. However, the disciplinary authority had not formed a conclusion on the guilt of the charged officer with regard to the charges framed against him. The disciplinary authority had not formed a final opinion with regard to the petitioner’s guilt while issuing the disagreement note and the final opinion was formed after considering the representation of the petitioner and after dealing with his submission. Therefore, we see no reason to question the duly considered tentative disagreement note of the disciplinary authority.

Judicial review of disciplinary proceedings lies against the decision making process and not against the decision itself. The court cannot act as an appellate forum and, thus, cannot re-appreciate the evidence. The scope of judicial review is limited to correct errors of law or procedure. Therefore, the court can interfere, if the action/decision is found to be perverse where no reasonable body or person properly involved could have come to such conclusion where the order is based on irrelevant or extraneous matters or considerations, or where relevant material has not been considered. Therefore, a statutory functionary is obliged to apply its mind to proximate matters only, while eschewing irrelevant and remote considerations.

The purpose of judicial review is to ensure that the delinquent employee receives fair treatment, and not to ensure that the conclusion reached by the authority is necessarily correct.

A three-Judge Bench in State of Haryana & Anr. v. Rattan Singh was dealing with the issue of non-examination of passengers when the allegation against the conductor was non- issuance of the tickets. This Court held that in a domestic enquiry, strict and sophisticated rules of evidence under the Indian Evidence Act may not apply and that all materials which are logically probative for a prudent mind are permissible. The Court held as under:

In the instant case, there is nothing to suggest non-application of mind by the disciplinary authority or non-recording reason in support of the conclusion arrived at by him. Also, it is not the case that the enquiry was conducted without giving a fair and reasonable opportunity to the charged officer and it is a case of no evidence. Similarly, production of photocopies of transaction forms, to our mind, has not caused any prejudice to the applicant as he has himself admitted to have signed such few blank forms in good faith.

It is settled law that interference with the orders passed pursuant to a departmental inquiry can be only in case of no evidence. Sufficiency of evidence is not within the realm of judicial review. The standard of proof as required in a criminal trial is not the same in a departmental inquiry. Strict rules of evidence are to be followed by the criminal Court where the guilt of the accused has to be proved beyond reasonable doubt. On the other hand, preponderance of probability is the test adopted in finding the delinquent guilty of the charge. Interference with the order of dismissal of the respondents by re-examining the evidence and taking a view different from that of disciplinary authority, therefore it does not call for interference with the order of the dismissal.

The plea of the charged officer is that signing of blank forms was due to practical and operational considerations, as the applicant was required to travel frequently, and given that the Net Asset Value of mutual funds fluctuates on daily basis, timely execution of transactions was essential to optimize returns their organization. It is also stated that this was an established and accepted practice within the organization, prevailing even prior to the applicant’s tenure with BMRCL and thus a bona fide administrative practice adopted in the interest of maximizing returns of the organization. However, we cannot go beyond the extant policy/instructions to deal with such informal arrangements and there is nothing to suggest that such informal arrangements had the sanction of MD.

Having dealt with the five issues, we come to the last question whether the magnitude of the impugned action is so disproportionate to shock the conscience. The submission of the learned counsel for the applicant is that the proceedings was initiated solely against the applicant while no action has been taken against the officials who were equally involved, thereby indicating selective targeting and lending credence to the allegations of mala fides and institutional bias. In the context of occurrence of such malpractice, the persons concerned are not before us and are not a party in the application.

Moreover, the officers subordinate to him were not the decision making authority as per the organizational hierarchy and admitted position of the applicant himself, the ultimate responsibility for financial decisions, with the charged officer. The initiation of note by CS/GM does not absolve the applicant, as the final decision was taken by him. He was also signing application forms, cheques etc. The contention of the applicant that approval of the Managing Director was not taken in earlier instances is not tenable because the Board’s decisions clearly mandated that investment decisions were subject to approval of the Managing Director. Past deviations, if any, do not grant legal immunity for the specific violation in this case.

Thus, there is no denying that the applicant signed application forms which were blank, irrespective whether he signed 36 Common Transaction Forms for switch-in and witch-out actions or less. Signing blank financial instruments or application forms is highly irregular and unacceptable. Also, the application forms and transaction documents bear the signature and subsequent investment, including those through broker’s code involving switch-in/switch-out actions were executed on the basis of such documents. Even assuming the forms were incomplete at the time of signing, the responsibility for correctness and preventing misuse of such forms squarely rests with the applicant. There is nothing on record to suggest whether in the aftermath of signing of blank forms, the applicant took any follow-up action or exercised any supervisory control to ensure that the forms are not misused or not converted to equality by way of CTFs.

Learned counsel for the applicant has placed reliance on the judgments of the Hon’ble Supreme Court in Maharashtra State Board of Secondary and Higher Secondary Education vs. K.S.Gandhi and Others (supra) and S.N.Mukherjee vs. Union of India (1990) 4 SCC 594. However, we find that the ratio of these two judgments do not apply in the instant case as the disciplinary authority has applied its mind and given cogent reason while recording the tentative disagreement note. He has duly considered the particular facts and circumstances of the case and the reasons therein are clear and explicit to indicate that the disciplinary authority has given due consideration to the point in controversy.

It has also been made out by the learned counsel for the respondents that with regard to financial loss caused because of such transactions, the UPSC has specifically considered the financial aspect of the transactions and noted that the broker had paid Rs.3.00 Crores towards losses. The charged officer, however, cannot derive any relief merely from the fact that the financial consequences was ultimately limited, recovered or otherwise mitigated. The disciplinary misconduct arose from the manner in which public funds were dealt with and from the applicant acting beyond the authority available to him and contrary to the governing investment framework. The existence or absence of a substantial net loss is therefore not the sole determinant of the misconduct. Moreover, the allegation was not confined to a single isolated transaction rather it concerns repeated multiple instances of switch-in and switch out transactions through common transaction forms. Therefore, the expression “financial loss” cannot be treated as the sole foundation of the penalty.

We draw strength from Regional Manager U.P.S.R.T.C. Etawah, vs. Hoti Lal and Another, AIR 2003 SCC 1462, wherein the Hon’ble Supreme Court has held as follows:

We have also considered the issue of proportionality of the penalty imposed on the applicant. Part of it has already been answered in the context of afore cited judgment of the Hon’ble Supreme Court. The instant case highlights the severe breach of fiduciary duty and company’s policy committed by the charged officer, the senior-most officer entrusted with funds management in his capacity as ED (F). The applicant had pre-signed blank investment application forms, which were subsequently utilized to deploy the company’s funds into high risk equity schemes, an investment area strictly prohibited under the company’s investment mandate. By signing such blank instruments surpassing all approvals and checks, exposing company’s financial resources to market volatility was a serious misconduct, as it created a direct vulnerability for systematic financial fraud. The officer without specifying amounts or other relevant details signed forms. In fact as the senior-most officer, dealing with the finance of the company, the charged officer should have demonstrated a superior standard of stewardship, but on the contrary there is nothing on record to indicate that once such blank forms were signed whether the charged officer took any step to review the subsequent development with regard to investment based on such forms, including the mode of deployment of funds. This amounts to gross negligence, operational recklessness and a failure to exercise basic supervisory control.

Further, to our mind, the officer cannot be absolved of liability, even if no direct mandatory loss materialized or the same was done in good faith or for administrative convenience. The absence of gain or actual mandatory loss does not insulate the senior finance officer of from severe disciplinary action. The fact that the financial risk did not result into a specified monetary loss does not lessen the degree of operational recklessness, irrespective of whether it was done in good faith or out of administrative exigency. Further, the past clean record of long service of the applicant is not relevant as the disciplinary authority has recorded a clear finding of guilt for policy breach, negligence and procedural violations. We have also considered the plea taken in the pleadings by the learned counsel for the applicant that other officers more particularly CS/GM (A) who was also responsible for such irregularity and MD who had supposedly approved the investment in question were not acted against. However, even if the action against him may appear discriminatory, it does not absolve the delinquent officer nor reduces his individual liability. An individual who has committed misconduct cannot claim immunity merely because another employee escaped action. The doctrine in parity in disciplinary proceedings have a very narrow window and it could have be applied, if other officers were also charged in the disciplinary proceedings under consideration, for the same act and one was given a light penalty and the other is given a severe punishment without any rational distinction. But in the instant matter, only the applicant has been charged and other officers are not before us. Therefore, the plea of discrimination or parity raised by the applicant is legally not tenable.

In view of the above discussions, we see no reason to interfere with the impugned penalty order dated 14.03.2016. The OA is dismissed accordingly. No order as to costs.