Parallel disciplinary action may continue despite criminal trial, unless it prejudices defence or settlement terms clearly bar it.

Disciplinary proceedings need not be stayed merely because a criminal trial arises from the same facts; stay is justified only where parallel departmental action would prejudice the employee's defence, especially in a case involving complicated issues. Here, prolonged delay in the criminal case meant the pendency of prosecution could not support an indefinite suspension of inquiry, so only a limited stay tied to completion of prosecution evidence was justified. Clause 4 of the settlement was read as enabling, not prohibitory, and it did not bar disciplinary action beyond a reasonable period. The employer was therefore entitled to revive and complete the disciplinary proceedings if the criminal trial was not concluded within the stipulated time.

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Issues: (i) Whether disciplinary proceedings against an employee should be kept in abeyance pending closure of prosecution evidence in a parallel criminal trial arising from the same facts; (ii) Whether Clause 4 of the memorandum of settlement barred continuation of disciplinary proceedings in the facts of the case.

Issue (i): Whether disciplinary proceedings against an employee should be kept in abeyance pending closure of prosecution evidence in a parallel criminal trial arising from the same facts.

Analysis: There is no legal bar to the simultaneous continuance of disciplinary proceedings and criminal prosecution. Stay of departmental action is justified only where continuation is likely to prejudice the employee's defence in the criminal case, especially in matters involving complicated questions of fact or law. The Court balanced the need for a fair trial against the employer's right to an expeditious departmental inquiry and noted that the criminal case had already suffered prolonged delay, with only a small part of the prosecution evidence recorded despite the passage of many years. In such circumstances, the pendency of the criminal case could not by itself justify an indefinite suspension of disciplinary proceedings.

Conclusion: The disciplinary proceedings were not liable to remain stayed indefinitely; the Court permitted a limited continuation of the stay only up to the closure of prosecution evidence, with a further outer limit tied to timely completion of the criminal trial.

Issue (ii): Whether Clause 4 of the memorandum of settlement barred continuation of disciplinary proceedings in the facts of the case.

Analysis: Clause 4 was construed as an enabling provision and not as an absolute prohibition against disciplinary action merely because a criminal case was pending. The clause was read to require completion of trial within a reasonable time and could not be used by an employee who was herself involved in prolonging the criminal proceedings. On the facts, the long pendency of the trial defeated any plea that the clause mandated an open-ended restraint on the employer's disciplinary powers. The Court also balanced the settlement against larger public interest, especially in a case involving alleged breach of trust and embezzlement in a public sector bank.

Conclusion: Clause 4 did not bar the employer from proceeding with disciplinary action beyond a reasonable period, and the respondent could not claim an indefinite stay on its basis.

Final Conclusion: The appeal was disposed of by maintaining only a limited protection in favour of the employee for a defined period, while preserving the employer's right to revive and conclude the disciplinary proceedings if the criminal trial was not completed within the stipulated time.

Ratio Decidendi: Disciplinary proceedings may be stayed only in exceptional cases where continuation would prejudice the defence in a criminal trial, and any contractual or settlement-based protection against such proceedings must be read as subject to a reasonable time limit and cannot be used to secure an indefinite suspension of disciplinary action.

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