Sh. A. Mosshey vs Mizoram Cooperative Apex Bank Ltd. & Ors.

Heard Mr. Victor L. Ralte, learned counsel for the petitioner. Also heard Mr. C. Lalfakzuala, learned counsel for the respondents.

In this petition, under Article 226 of the Constitution of India, the petitioner has challenged the order, dated 30.04.2025, whereby the petitioner was made liable to repay the loan issued to one Sh. VL Mawia Khenglawt; and also to issue direction to the respondent authorities to restore the petitioner's savings bank account, bearing No. 000405840020620, at Dawrpui Branch; to restrain the respondent authorities from taking the petitioner‟s monthly pension and to restore all the deduction already done; and also to direct the respondent authorities to defreeze the petitioner's savings bank account, bearing No. 000505840000041, at Siaha Branch and his fixed deposit account, bearing No. 000502620000768, amounting to Rs. 5,00,000/-, at Siaha Branch.

The background facts, leading to filing of the present petition, are briefly stated as under:

The respondents have filed an affidavit-in-opposition, wherein it is stated that the petitioner was reemployed on 07.08.2021, as Consultant PDC (Primary Agricultural Credit Societies Development Cell) on contract basis for a period of two years, which was further extended to one year, vide office order dated 10.08.2023; and that the petitioner had submitted his reply to the show cause notice on 27.03.2024, issued by the respondent and that there was no written communication between Sh. VL Mawia Khenglawt and Sh. SKM Zorama, and the petitioner had failed to obtain signature of the depositor Sh. VL Mawia Khenglawt, on any voucher or loan document and the signature appearing on the cash withdrawal voucher for payment of Rs. 4,00,000/- does not tally with the depositor‟s specimen signature. It is also stated that on 17.12.2005, an amount of Rs. 4,00,000/- was withdrawn in cash from LA/FDR Account No.445/2 (System A/C No. 214/1), instead of being disbursed through the savings bank of the depositor, and the depositor Sh. VL Mawia Khenglawt also asserted that he had not signed the voucher.

It is also stated that on 13.04.2006, an amount of Rs. 3,00,000/- was withdrawn in cash from LA/FDR Account No. 445/2 (System A/C No. 214/1), instead of being disbursed through the savings bank account of the depositor, and that the holder of FDR Account No. 019188, is Sh. VL Mawia Khenglawt, whereas in LA/FDR Account No. 445/2 (System A/c No. 214/1), the loanee‟s name was recorded as Vanlalmawia. It is also stated that on examination by the Investigating Officer on 28.01.2022, Sh. SKM Zorama clarified that he had borrowed an amount of Rs. 7,00,000/-neither from the Bank nor from Sh. VL Mawia Khenglawt, but from the petitioner; and that Sh. SKM Zorama and Sh. VL Mawia Khenglawt were not acquainted with each other.

It is further stated that the appeal preferred by the petitioner was dismissed by the Executive Committee of the Bank in its meeting held on 17.08.2025, and the respondent authorities have denied that they had overdrawn a sum of Rs. 16,76,737/-from the savings bank account of the petitioner at Dawrpui Branch, bearing account No. 000405840020620. However, it is admitted that the monthly pension of the petitioner is Rs. 35,000/- and his savings bank account, bearing No. 000505840000041, at Siaha Branch was put to debit transaction freeze, including his fixed deposit account, bearing No. 000502620000768, amounting to Rs. 5,00,000/-.

It is also stated that the petitioner had failed to maintain integrity and secrecy during his time as Branch Manager, Siaha, as required under Rule 84 (2), Rule 84 (3) & Rule 84 (4) and Rule 84 (5) of the Rules of 2020. And since the petitioner had retired, disciplinary proceeding was not initiated against him, however, show cause notice was issued to him. It is also stated that Investigating Officer was appointed to address the complaint regarding fixed deposit receipt, submitted by Sh. VL Mawia Khenglawt, customer of Mizoram Cooperative Apex Bank, Siaha Branch; and that since the petitioner was reemployed as Consultant (PDC) under the respondent bank till 10.08.2023, he is an employee as defined under Rule 5(f) of the Rules of 2020.

It is further stated that Rule 101 of the Rules of 2020, was not scrupulously followed due to the fact that the punishment proposed to be imposed is a minor penalty under Rule 100(c) of the aforementioned Rules, and as such, the petitioner was given an opportunity to submit his explanation by the said show case notice, and that there is no merit in this petition, and therefore, it is contended to dismiss the same.

Mr. Ralte, learned counsel for the petitioner, submits that the impugned order dated 30.04.2025, is being challenged on different grounds. Firstly, he submits that the petitioner is not an employee of the respondent Bank as he was on engaged on contract after his retirement, and that he does not fall in any of the category of employees, defined under Rule 5 of the Rules of 2020. Secondly, he has pointed it out that the petitioner was reemployed as Consultant (PDC) and the said category finds no mention in the categorization/grading of officers and staffs, as stated in Rule 6 of the Rules of 2020. Thirdly, he has pointed it out that the respondent authorities have relied upon the statement of two witnesses, namely, Sh. SKM Zorama and Sh. VL Mawia Khenglawt on 28.01.2022 and 19.01.2022, recorded by the enquiry/investigating officer, but, the same were not produced during the departmental proceeding and in fact, no departmental inquiry was initiated against him, and on such count, the respondent authorities played the role of judge and also of prosecutor, and that Rule 100, sub-rule (xxi)(4) of the Rules of 2020, which requires informing the petitioner in writing by giving an opportunity to submit written statement, was not followed. He also pointed it out that enquiry report was also not furnished to the petitioner.

It is the further submission of Mr. Ralte that the recovery was made from the monthly pension account of the petitioner, not from the savings bank account, and his monthly pension account has been transferred from Dawrpui Branch to Siaha Branch, without his consent, and that the respondent authorities have admitted having not followed the procedure prescribed in Chapter-XIII of the Rules of 2020. Mr. Ralte further submits that the petitioner is not governed by the Service Rules, as he is not an employee in real term.

Mr. Ralte has also produced the bank of statement of the petitioner, which indicates that the respondent authorities have already recovered a sum of Rs. 17,97,937/-, from the petitioner.

In support of his submissions, Mr. Ralte has referred to the following decisions:

Per contra, Mr. Lalfakzuala, learned counsel for the respondents, has supported the impugned order, dated 30.04.2025, passed by the respondent authorities. He submits that on account of the irregularity, being committed by the petitioner, and also on account of being retired from service, no formal departmental proceeding was initiated against him. However, as per Rules, show cause notice was issued to him and a minor punishment for recovery from pay, as provided under Rule 100(c), was imposed, and the same is consistent with the Rules of 2020. He also submits that there is no illegality or impropriety in the impugned order and as such, this petition is liable to be dismissed.

Mr. Lalfakzuala has also produced one letter, dated 19.06.2026, before this Court, to contend that the respondent Bank has debited an amount of Rs. 17,11,737/-, towards repayment of loan against FDR No. 019188, and that the petitioner has received pension in his account, bearing No. 000505840000041, amounting Rs. 2,10,000/- during the last six months i.e. from December, 2025 to May, 2026, and that no amount has been debited by the Bank from his account during the said period.

In support of his submissions, Mr. Lalfakzuala has referred to a decision of Hon‟ble Supreme Court in the case of Director of Agriculture & Ors. vs. M.V. Ramachandran, in Civil Appeal No. .. of 2023 [@Special Leave Petition (C) No. 18371/2021].

Having heard the submissions of learned counsel for both the parties, this Court has carefully gone through the petition and documents placed on record, and also gone through the decisions referred by learned counsel for both the parties and the Rules of 2020.

The basic facts, herein this case, are not in dispute. The petitioner was appointed on 31.07.1986, and he served in different capacities in the respondent Bank, and ultimately, he retired on 30.04.2021 as AGM. It is not in dispute that while he was serving at Saiha Branch, he had sanctioned a loan of Rs. 7,00,000/- against the fixed deposit made by the one Sh. VL Mawia Khenglawt to one Sh. SKM Zorama, and it is alleged that while granting the said loan, he had not followed the procedure. In this regard a complaint was received by the respondent Bank on 09.11.2021, from Sh. VL Mawia Khenglawt, which is extracted herein below:-

Thereafter, the respondent Bank had received another reminder from Mr. V.L Mawia Khenglawt. The respondent Bank has appointed an investigating officer/enquiry officer was appointed to address the complaint of V.L MAWIA KHENGLAWT. The investigating officer then examined V.L MAWIA KHENGLAWT and the owner of FDR Account No. 445/2, and Sh. SKR Zorama on 28.01.2022. Thereafter, the investigating/enquiry officer had submitted his report on 01.02.2022. The report, Annexure-9A, of the petition, read as under:-

The petitioner herein, indisputably, retired on 30.04.2021, and therefore, the respondent Bank had not drawn up any disciplinary proceeding against the petitioner. It was also not drawn up during his tenure as Branch Manager of Saiha Branch. But, the respondent authority had treated the petitioner as employee as defined under Rule 5(f) of the Staff Service (Amendment) Rules, 2020.

Thereafter, the respondent No.2 had issued show cause notice to the petitioner on 28.02.2024, which is extracted herein below for ready reference:-

A perusal of the show cause Notice issued to the petition indicates that it was not accompanied by the investigation/enquiry report, which Mr. Ralte has already pointed it out and there appears to be substance in the same.

The petitioner, on receipt of show cause notice, had filed his reply as under:-

As stated herein above, no regular departmental proceeding was initiated against the petitioner, since he had retired from service. Thereafter, the respondent authorities, considering the reply of the show cause notice, submitted by the petitioner, and having not been satisfied with the same, decided to impose minor penalty i.e. recovery from pay under Rule 100(c), and accordingly, the impugned order was passed and subsequent action has been taken, and ultimately, a sum of Rs. 17,11,737/-, has been recovered from the bank account and also from his pension account of the petitioner.

It is to be noted here that decision to initiate and procedure for disciplinary action is provided in Staff (Amendment) Rules 2020, which read as under:

From a perusal of the Rules 101, it appears that the penalties prescribed in Rule 100 can be imposed when disciplinary proceeding is initiated and a finding to misconduct is recorded. In the instant case, the finding of misconduct, on the part of the petitioner is not recorded in any disciplinary proceeding, which is, admittedly, not drawn up against the petitioner. The relevant stand of the respondent authority in the affidavit in opposition is quoted herein below for clarity:-

It is to be noted here that the impugned order of recovery dated 30.04.2025, is read asunder:-

And before passing the aforesaid order, the petitioner was informed by the respondent authorities by following letter to repay LA/FDR No. 214/1 of Siaha Branch :-

Thus, it becomes apparent that the inquiry/investigating officer, so appointed by the respondent bank, had examined two witnesses, namely, Sh.V.L.Mawia Khenglawt the complainant and owner of LA/FDR and Sh.SKM Zorama. These two witnesses, however, were examined behind the back of the petitioner. And as such, the petitioner had lost the opportunity to cross-examine them. And without the participation in the investigation and without there being any cross-examination of the two witnesses, Mr. Vanlalhriata, Asst. General Manager Inspection Department, who was the investigating/enquiry officer, and investigated the complaint of Sh.V.L.Mawia Khenglawt, recorded the finding as under, in his report, Annexure-9A, of the petition.

And this finding of the investigating/enquiry officer, namely, Mr. Vanlalhriata, Asst. General Manager, Inspection Department, is the bedrock of the impugned order, dated 30^th April, 2025. Since the investigation/enquiry was conducted behind the back of the petitioner and since in its own admission of the respondent authorities, minor penalty under Rule 100(c) of the Staff (Amendment) Rule 2020, was imposed upon the petitioner, vide impugned order, based upon such one sided order, the principle of natural justice appears to be violated herein this case. It is well settled that even in case of imposing minor penalties, though the procedure may be simpler under certain rules, but principles of natural justice still apply. A purely one-sided report prepared behind the employee‟s back without any opportunity to respond to the said employee is not sustainable.

It is well settled that a penalty, whether minor or major, cannot validly be imposed under service rules, solely on the basis of a one-sided enquiry report prepared by the Enquiry Officer behind the back of the employee. Such action violates the principles of natural justice i.e. “audi alteram partem”- hear the other side, and the requirement of reasonable opportunity to defend. Needless to say that departmental/disciplinary proceedings are quasi-judicial proceedings. The enquiry officer must act as an independent adjudicator. Findings must be based on evidence properly brought on record in the presence of or with due notice to the charged employee, who must have a fair opportunity to rebut, cross-examine witnesses, and present a defence.

A report prepared ex parte without associating the employee, or relying on material collected behind his/her back, is generally non-est and cannot form the basis of punishment. In the case of Roop Singh Negi v. Punjab National Bank, reported in (2009) 2 SCC 570, Hon‟ble Supreme Court has held that a departmental enquiry is quasi-judicial and that evidence collected during investigation or behind the employee‟s back cannot, by itself, be treated as evidence in the disciplinary proceedings.

Again in the case of Nirmala J. Jhala v. State of Gujarat, reported in (2013) 4 SCC 301, Hon‟ble Supreme Court has held that evidence recorded in a preliminary enquiry cannot be used in the regular enquiry because the delinquent employee is not associated with it and has no opportunity to cross-examine the persons examined. Using such evidence violates the principle of natural justice. The proposition laid down in the case of Roop Singh Negi (supra) and Nirmal J. Jhala (supra) was reaffirmed in the case of Satyendra Singh v. State of Uttar Pradesh, reported in 2024 INSC 873.

It also appears from the show cause Notice, Annexure-1 of the petition, dated 28.02.2024, that the enquiry/investigation report was not furnished to the petitioner along with the said notice. As stated herein above, Mr. Ralte, learned counsel for the petitioner has pointed this out during hearing and the said submission of Mr. Ralte was not controverted by the learned counsel for the respondent authorities. Reference in this context can be made to a Constitutional bench decision of Hon‟ble Supreme Court in Managing Director, ECIL, Hyderabad v. B. Karunakar, reported in (1993) 4 SCC 727, wherein it has been held that when the enquiry officer is different from the disciplinary authority, the delinquent employee has a right to receive a copy of the enquiry report before the disciplinary authority arrives at its conclusions on guilt/innocence. Denial of the report is a denial of reasonable opportunity and a breach of natural justice. In this case the Court introduced a “prejudice” test for the nature of relief. However, the right itself is firmly established.

It is also well settled that departmental proceeding can be initiated only upon issuance of charge-sheet and in this context, reference can be made to decision of Hon‟ble Supreme Court in the case Union of India vs. K.V. Jankiraman, reported in (1991) 4 SCC 109. Indisputably, in the instant case, there was no charge-sheet against the petitioner.

Further, it is well settled proposition of law that once an employee retires on superannuation, the employer-employee relation ends. Fresh disciplinary proceedings cannot ordinarily be initiated and only continuation of proceedings validly started before retirement is permissible, and only if service rules create a legal fiction treating the employee as still in service for the limited purpose of concluding the enquiry. This proposition of law is well settled in the case of State Bank of India and Others vs. Navin Kumar Sinha, reported in 2024 SCC OnLine SC 3369.

From the aforesaid discussion, it becomes apparent that in order to pass an order for recovery from pension, proper departmental or judicial proceedings are required, in which, the pensioner is found guilty of grave misconduct or negligence causing pecuniary loss. In the proceeding, the principles of natural justice must be followed, charges must be framed and also to be communicated and opportunity to reply, oral enquiry, where major penalty is contemplated or charges are denied, examination of witnesses in the presence of the employee has to be done and right of cross-examination has to be afforded and the enquiry report must be supplied to the employee. And thereafter, a reasoned order is to be passed. An enquiry conducted ex-parte or solely „behind the back‟ of the employee, without participation or fair opportunity, is vitiated and any findings based purely on documents without proof, unless admitted or without hearing cannot sustain any penalty, be it major or minor penalty.

In the instant case, as already stated, the respondent authorities in paragraph No. 9 of the affidavit-in-opposition, in no uncertain term stated that minor penalty is imposed under Rule 100(c) of the aforementioned rule. But, as discussed herein above, the proposition, does not make any distinction in respect of minor or major penalties. Even in case of lesser penalties, affecting pension/gratuity etc. requires compliance of the procedure discussed herein above. Recovery from pension/gratuity without finding of guilt in a proper proceeding or at least reasonable opportunity to explain, depending on the specific rule, is illegal. Mr. Ralte, learned counsel for the petitioner, has rightly pointed it out during his argument and this Court finds sufficient force in his submission.

Thus, what can be crystallised from the aforesaid discussion is that punishment of any kind, on a retired employee, solely on the basis of an unilateral enquiry conducted without the employee‟s participation, without there being a charge-sheet and without there being a disciplinary proceeding, is not permissible. Any punishment dehors the aforementioned procedure violates the principles of natural justice and liable to be interfered with.

As discussed herein above, a show cause notice was issued to the petitioner based on the report furnished by the investigating/enquiry officer. But, it does not constitute initiation of disciplinary proceeding. Only, service of formal charge-sheet, constituting initiation of the departmental proceeding. Reference in this context can be made to a decision of Hon‟ble Supreme Court in the cases of UCO Bank vs. Rajinder Lal Capoor, reported in (2007) 6 SCC 694, which has been affirmed in the case of Canara Bank vs. DRP Sundharam, reported in (2016) 12 SCC 724.

It is a fact that the petitioner was re-employed on contract. But, it is not automatically revive the power to initiate proceeding for old irregularities committed during the period of regular service.

Another aspect of the matter, which should not lose sight of, is that as per Regulation 48(2) of the Employees‟ Pension Regulation, 1995, though the same is not applicable in the present case, provides four years limitation for initiating departmental proceeding after retirement in respect of irregularities committed during the period of regular service. In the case of State of UP vs. Shri Krishna Pandey, reported in (1996) 9 SCC 395, Hon‟ble Supreme Court has held that departmental proceedings against the pensioner cannot be initiated in respect of an event that took place more than four years before the institution of such proceedings under Rule 351-A of the Civil Service Regulations and proceedings started after the four years period are barred.

Further, Rule 9(2)(b) of the CCS (Pension) Rules also provides that departmental proceeding initiated well beyond four years from the alleged incident is barred and the aforementioned provision was upheld by Hon‟ble Supreme Court in the case of Brajendra Singh Yambem vs. Union of India, reported in (2016) AIR SC 4107. In the instant case, the alleged incident took place in the year 2005-2006 and the show cause notice was issued on 28.02.2024, almost 19 years after the incident.

This Court has considered the submission of Mr. Lalfakjuwalla, learned counsel for the respondent Bank and also gone though the decision referred by him in M.V. Ramachandran(supra). And for the reason discussed above this court is unable record concurrence to his submission. Further, in the case referred by him Hon‟ble Supreme Court has held that writ petition under Article 226 of the Constitution of India, ought not to be entertained for recovery of money alleged to have been due and payable under the bills/invoices. Therefore, this Court afraid the decision referred by him would not come into his assistance.

On the other hand this Court finds sufficient merit in the submission of Mr. Ralte, learned counsel for the petitioner and the decision referred by him in Virinder Pal Singh (supra) and also in the case of Navin Kumar Sinha (supra) supported his contention.

Under such circumstances, this Court finds sufficient merit in this petition and accordingly, the same stands allowed. The impugned order dated 30.04.2025, by which the recovery of arrear was ordered and the bank accounts were frozen, stands set aside and quashed as the same failed to withstand legal scrutiny for the reasons discussed in the foregoing para.

It is to be noted here that during the pendency of this petition, a Coordinate Bench of this Court, vide interim order, dated 09.12.2025, stayed the operation of the impugned order, dated 30.04.2025, and thereafter directed the respondent authorities to defreeze bank account No. 000405840020620, at Dawrpui Branch, and account No. 000505840000041, at Siaha Branch and the fixed deposit bearing account No. 000502620000768, at Siaha Branch belonging to the petitioner and also not to deduct the monthly pension of the petitioner till the next date of listing.

Accordingly, the interim order dated 09.12.2025, is hereby made absolute. Consequently, upon setting aside of the impugned order dated 30.04.2025, the respondent authorities shall forthwith refund the entire recovered amount to the petitioner forthwith.

In terms of above this writ petition stands disposed of leaving the parties to bear their own costs.