TaxTMI 
TaxTMI 
1983 (10) TMI 232
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....h, 1974 established by the Deoria Branch on Gorakhpur Branch for Rs. 2 lakhs at a time subject to maximum of Rs. 17 lakh had remained unpaid to the extent of Rs. 12 lakhs and that the openers of the Letter of Credit, M/s Jamuna Prasad Munni Lal Jaiswal, Deoria were unable to meet their obligations. In the same letter, he also informed that Deoria Branch had opened another Revolving Letter of Credit No. 20/2 dated 3rd April, 1974 for Rs. 50,000 per day subject to a maximum of Rs. 10 lakhs and that because the clauses of the credit had not been drawn properly, the bills were not negotiated thereunder by his Branch, and were instead, sent on collection basis. Certain other allegations giving the particulars of the bills and records were mentioned. In those circumstances, the head office ordered a preliminary enquiry which was conducted by Shri R.P. Srivastava, Staff Officer, Grade II and having considered his report, the head office directed Shri B.D. Sharma, Chief Manager to carry out investigation under the rules governing the services of the officers of the State Bank. Shri Sharma conducted the investigation between 9^th June to 23rd June, 1974 and in the course of the investiga....
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...., S. I. B. Division. Gorakhpur Branch at the material time which I reiterate. It was not my intention to issue clean letter of credit and to this end I used the words "accompanied by once used and unidentified plant lubricating oil in 200 liters each drum". I regret the these words were not properly placed in the Letters of Credit. Both the typists attached to the Branch were on deputation at the material time with the result that formal sanction of the controlling authority was not obtained. On my part I was also awfully busy in inspection of Agricultural loans, other important duties, mobilisation of deposits and I had absolutely little time at my disposal, towards correspondence. In these transactions I had always in mind to promote the Bank's business interest. I had never intended to jeopardise the Bank's interest at any time." He admitted that amount of Draft No. BS001560 dated 12th January, 1974 for Rs. 75,000 was not credited to "Margin on Documentary Credits Account" before issuing the Letters of Credit. He however stated that margin amount of Rs. 75,000 was lying with the Bank as security by means of a draft and the Bank's interests were not jeopardised and were ful....
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....y part and assure, Sir, that there was hardly any motive or fraudulent intention behind it." In the end he did not deny the factual basis stated to him as mentioned in the report of Shri Sharma or challenge the veracity or the correctness of any of these facts or the materials mentioned in the report of Shri Sharma. He stated in his reply to the second show cause notice on these points as follows:- "It would be clear that whatever was done by me in these transactions was done in good faith and to promote the interest of the Bank. There was a conspiracy against me that I had indulged in fraudulent transactions and attempted to misappropriate Bank's money are baseless. I never intended to jeopardise the Bank's interest. My integrity and bonafides have always been above board during my service of about 20 years in the Bank." It is material to record the conclusions reached by Shri Sharma by his investigation upon the basis of which the appellant was charge-sheeted. These were as follows:- "Considering all circumstances of the case, I am of the view that Shri Tripathi is responsible for the following irregularities:- (1) The opinion on M/s Jamuna Prasad Munnilal Jaiswal ....
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....edit were received at the Branch but were not attended to although huge sums were involved. (11) The letter of credit No. 20/2 was opened by him on 3.4.1974 irrespective of the fact that a large sum of money was already due from the drawees who were unable to pay promptly. (12) Five SCS, aggregating Rs. 2.5 lacs received from Gorakhpur Branch bearing their S. No. 774 to 778 for collection were paid on 11.4.1974 by debit to IBI Account instead of the drawyee's account. (13) The plea that since he (Shri Tripathi) was going out for inspection on 11.4.1974 and so was in hurry, he signed the S.C. payment advice of bills referred to in item No. 12, above in order to avoid inconvenience to Shri Ramji Singh, FCI representative is not supported by circumstantial evidence. I am satisfied from the evidences available that he did not go out on an inspection at 10.15 a.m. that he was in the office till late afternoon and that the inspection plea put up by him is an after thought. (14) The bills received for collection from Gorakhpur Branch were not entered in Branch Books in the normal manner on receipt but were detained and entered at later dates suiting circumstances. I, therefore....
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....9 read with Rule 50 of the State Bank of India (Officers & Assistants) Service Rules. You are, therefore, required to submit to us your written statement in defence in terms of Rule 50 (2) ibid in respect of the aforesaid charges within 15 days of the receipt hereof; also, if you so desire, you may apply for a hearing in person with the undersigned. Please note that in the event of your failure to submit the reply within this period, it will be understood that you have no defence to offer." In his reply dated 5th November, 1975, the appellant had dealt with the different allegations mentioned in the charge-sheet. So far as the first charge was concerned regarding issuance of opinion report fixing estimates arbitrarily and giving over-estimates as mentioned in the charge-sheet, the appellant admitted the facts but stated that it was done out of ignorance and he further stated 'this was, however, done by me out of enthusiasm'. Regarding Charge (ii), what he had stated has been set out hereinbefore. It may be mentioned that regarding Charge number (ii), his reply was that the words which ought to have been there 'accompanied by once used and unidentified plant lubricating oil in....
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....om the Chief General Manager intimating to him that in accordance with the independent investigation conducted under Rule 50(1) of the State Bank of India (Officers & Assistants) Service Rules governing the appellant's service in the Bank, the statement of charges served dated 19^th June, 1975 and the appellant's reply thereto dated 5^th November, 1975 were submitted to the Local Board at its meeting held on the 28th April, 1976 and it was resolved that the appellant be dismissed from the service in terms of Rule 49 (f) of the aforesaid service rules. Thereafter the appellant by the said rule was required to submit his written statement showing cause why the penalty proposed should not be imposed upon the appellant. The appellant was further informed that if no reply was received, the State Bank of India's authority will presume that the appellant had no submissions to make. Along with the said letter, a copy of the statement of charges and a copy of the report of the Investigating Officer who investigated, consisting of investigation in respect of each of the allegations and the appellant's explanations to the allegations during the time of the preliminary investigation and the fa....
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....f the statements on which reliance was placed was recorded in the presence of the appellant. The appellant prayed that the penalty proposed may not be imposed. His explanation along with other necessary papers was forwarded to the Executive Committee of the Central Board and the Central Board in its meeting duly considered the same and directed that the appellant be dismissed from the Bank's service with immediate effect. The appellant was duly communicated to the said effect on 19th October, 1976. On 4th November, 1976, Writ application under Article 226 was filed by the appellant in the Allahabad High Court alleging contravention of the State Bank of India (Officers and Assistants) Service Rules and on 2nd February, 1978, the Allahabad High Court by its judgment held that the rules had no statutory effect and as such, the writ application was dismissed. The appellant, being the petitioner therein, has now come up by special leave to this Court under Article 136 of the Constitution. It appears that the main controversy before the Allahabad High Court was whether Rule 50 of the aforesaid rules in force at the relevant time has been complied with or not. On behalf of the State Bank ....
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....e shall also be given facilities for access to the records of the Bank for the purpose of preparing his written statement. The Managing Director for the reasons to be recorded in writing, may refuse such access if in his opinion such records were not strictly relevant or it was not desirable in the interests of the Bank to allow such access. Thereafter sub-rule (3) envisages that the report of the officer who investigated the case together with the employee's statement and a further report in writing by the Managing Director or the Secretary and Treasurer, indicating the charge or charges against the employees shall be laid for consideration, in the case of an employee serving in or under Central Office, before the Executive Committee and in the case of an employee serving in a Circle, before the Local Board. The Executive Committee or the Local Board as the case may be shall make such order as they consider in the circumstance fit and proper but if they consider it fit for imposing a penalty mentioned in clause (e) or clause (f) of rule 49, the employee shall be given a further opportunity to state in writing by a specified date why such penalty shall not be imposed. "For this ....
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....greement with the basic submission of Mr. Garg in this respect, but we find that the relevant rules which we have set out hereinbefore have been complied with even if the rules are read that requirements of natural justice were implied in the said rules or even if such basic principles of natural justice were implied, there has been no violation of the principles of natural justice in respect of the order passed in this case. In respect of an order involving adverse or penal consequences against an officer or an employee of Statutory Corporations like the State Bank of India, there must be an investigation into the charges consistent with the requirements of the situation in accordance with the principles of natural justice as far as these were applicable to a particular situation. So whether a particular principle of natural justice has been violated or not has to be judged in the background of the nature of charges, the nature of the investigation conducted in the background of any statutory or relevant rules governing such enquiries. Here the infraction of the natural justice complained of was that he was not given an opportunity to rebut the materials gathered in his absence. A....
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....cular lis, if there be any, between the parties. If the credibility of a person who has testified or given some information is in doubt, or if the version or the statement of the person who has testified, is, in dispute, right of cross-examination must inevitably form part of fair play in action but where there is no lis regarding the facts but certain explanation of the circumstances there is no requirement of cross-examination to be fulfilled to justify fair play in action. When on the question of facts there was no dispute, no real prejudice has been caused to a party aggrieved by an order, by absence of any formal opportunity of cross-examination per se does not invalidate or vitiate the decision arrived at fairly. This is more so when the party against whom an order has been passed does not dispute the facts and does not demand to test the veracity of the version or the credibility of the statement. The party who does not want to controvert the veracity of the evidence from or testimony gathered behind his back cannot expect to succeed in any subsequent demand that there was no opportunity of cross-examination specially when it was not asked for and there was no dispute ....
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....or credibility of the entries on records. Indeed he has given explanation namely, he was over-worked, he had consulted his superiors and sought their guidance, his conduct has not actually, according to him caused any financial risk or damage to the Bank concerned. Therefore, in our opinion, in the manner in which the investigation was carried out as a result of which action has been taken against him cannot be condemned as bad being in violation of the principles of natural justice. Had he, however, denied any of the facts or had questioned the credibility of the persons who had given information against him, then different considerations would have applied and in those circumstances, refusal to give an opportunity to cross-examine the persons giving information against him or to lead evidence on his own part to rebut the facts would have been necessary and denial of such opportunity would have been fatal. But such is not the case here as we have mentioned hereinbefore. Our attention was drawn to the new rules called 'State Bank of India (Supervising Staff) Service Rules' which were first introduced on 25th July, 1975 and thereafter from time to time amended which laid down det....
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....on 'reasonable opportunity of showing cause under Article 311(2) of the Constitution'. The facts of that case were entirely different from the facts of the instant case. However, Das C.J., dealing with opportunity to show cause explained at pages 1096-97 of the report the position under the said Article as follows:- "If the opportunity to show cause is to be a reasonable one it is clear that he should be informed about the charge or charges levelled against him and the evidence by which it is sought to be established, for it is only then that he will be able to put forward his defence. If the purpose of this provision is to give the government servant an opportunity to exonerate himself from the charge and if this opportunity is to be a reasonable one he should be allowed to show that the evidence against him is not worthy of credence or consideration and that he can only do if he is given a chance to cross-examine the witnesses called against him and to examine himself or any other witness in support of his defence. All this appears to us to be implicit in the language used in the clause, but this does not exhaust ....
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....was duly given to him. We are, therefore, of the opinion that the aforesaid passage relied on behalf of the appellant would not be of any assistance to the appellant in this case. It is true that all actions against a party which involve penal or adverse consequences must be in accordance with the principles of natural justice but whether any particular principle of natural justice would be applicable to a particular situation or the question whether there has been any infraction of the application of that principle, has to be judged, in the light of facts and circumstances of each particular case. The basic requirement is that there must be fair play in action and the decision must be arrived at in a just and objective manner with regard to the relevance of the materials and reasons. We must reiterate again that the rules of natural justice are flexible and cannot be put on any rigid formula. In order to sustain a complaint of violation of principles of natural justice on the ground of absence of opportunity of cross-examination, it has to be established that prejudice has been caused to the appellant by the procedure followed. See in this connection the observations of this Co....
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....and tribunals should afford fair and proper hearing to the persons sought to be affected by the orders and give sufficiently clear and explicit reasons in support of the orders made by them. The Court, further, observed, that the rule requiring reasons to be given in support of an order is like the principle of audi alteram partem, a basic principle of natural justice which must inform every quasi-judicial process and this rule must be observed in its proper spirit and mere pretence of compliance with it would not satisfy the requirement of law. It may be mentioned that the facts in that case were different. In the instant case though reasons have not been expressly stated, these reasons were implicit namely, the nature of the charges, the explanation offered and the reply of the appellant to the show cause notice. These appear from a fair reading of the order impugned in this case. It, further, appears that there was consideration of those facts and the decision was arrived at after consideration of those reasons. It is manifest, therefore, that absence of any denial by the appellant, indeed admissions of the factual basis and nature of the explanation offered by the appellant ....