2008 (5) TMI 649 - SC - Indian Laws

Court sets aside judgments, dismisses suit, upholds integrity in banking, denies punishment reduction.

State Bank of India & Ors Versus S.N. Goyal

The court allowed the appeals, set aside the judgments and decrees of the lower courts, and dismissed the respondent's suit. The court emphasized the ... Whether a direction by the Civil Court to reinstate the respondent, amounted to granting specific performance of a contract of personal service which is barred by section 14 of Specific Relief Act, 1963? In the absence of a pleading that the order imposing penalty was invalid because the Appointing Authority acted on the advice or recommendation of the Chief Vigilance Officer, and in the absence of any issue in that behalf, could the Courts below hold that the order imposing punishment was illegal on that ground? Whether an order recorded by the Appointing Authority on an office note, to impose the penalty of reduction in pay, which was neither pronounced, published or communicated, is a final decision which could not be reconsidered or altered, by the Appointing Authority? Whether the decision of the Appointing Authority imposing penalty can be said to have been influenced by extraneous material, merely because the Chief Vigilance Officer of the Bank requested him to re-examine the proposed penalty ? Whether the Appointing Authority ought to have communicated the advice/recommendation of the Chief Vigilance Officer to the respondent and given him an opportunity to show cause before imposing punishment? Issues Involved:1. Specific performance of a contract of personal service.2. Absence of pleading regarding the advice/recommendation of the Chief Vigilance Officer.3. Finality of the Appointing Authority's decision and functus officio status.4. Influence of extraneous material on the Appointing Authority's decision.5. Requirement to communicate the advice/recommendation of the Chief Vigilance Officer to the respondent.Detailed Analysis:1. Specific Performance of a Contract of Personal Service:The court examined whether the Civil Court's direction to reinstate the respondent amounted to granting specific performance of a contract of personal service, barred by Section 14 of the Specific Relief Act, 1963. The judgment clarified that specific performance of a personal service contract is generally not enforceable unless it falls within certain exceptions, such as contravention of Article 311 of the Constitution, protection under the Industrial Disputes Act, or breach of mandatory statutory provisions. In this case, the appellant (State Bank of India) is a statutory body, and the respondent's employment was governed by statutory rules, making the action for declaration maintainable.2. Effect of Absence of Pleading:The court noted that the plaint did not contain any plea that the order of removal was vitiated due to the Appointing Authority consulting and acting on the advice of the Chief Vigilance Officer. The challenge to the removal order was based on principles of natural justice and severity of punishment. The court emphasized that adjudication in civil suits requires necessary pleadings and issues, and in the absence of such pleadings, the courts below should not have considered the contention regarding extraneous material.3. Finality of the Appointing Authority's Decision and Functus Officio Status:The court analyzed whether the Appointing Authority became functus officio after making a note on 18.1.1995 agreeing with a lesser penalty. It concluded that the order dated 18.1.1995 was neither pronounced, published, nor communicated, and thus was not final. The final decision was taken on 3.5.1995, and the Appointing Authority did not become functus officio after the 18.1.1995 note.4. Influence of Extraneous Material:The court examined whether the Appointing Authority's decision was influenced by extraneous material, specifically the advice of the Chief Vigilance Officer. It found that the correspondence between the Appointing Authority and the Chief Vigilance Officer was merely an intimation and not a request for advice or directions. The subsequent decision to impose removal was made independently without reference to the Chief Vigilance Officer's opinion. The court held that there was no mechanical acceptance of any advice or consideration of extraneous material.5. Requirement to Communicate the Advice/Recommendation of the Chief Vigilance Officer:The court addressed whether the Appointing Authority should have communicated the advice/recommendation of the Chief Vigilance Officer to the respondent and given him an opportunity to show cause. It concluded that the correspondence was not material on which the finding of guilt was based, and there was no requirement to consult or act upon the Chief Vigilance Officer's recommendations. Therefore, non-furnishing of the correspondence did not violate principles of natural justice.Conclusion:The court allowed the appeals, set aside the judgments and decrees of the lower courts, and dismissed the respondent's suit. The court emphasized the importance of integrity and honesty in banking, particularly for a Branch Manager, and rejected the request for reducing the punishment.