Case Background
The case arose from disciplinary proceedings initiated by Punjab National Bank against a senior officer posted at its Udwantnagar Branch, Ara.
The petitioner joined the bank on 01.01.1979. Over the years he was promoted three times: from clerk to Junior Manager Grade-I (Officer) on 08.09.1988, then to Branch Manager on 15.01.2003 (as recorded in the judgment) and finally to Senior Manager (Management Grade-III) on 28.10.2009.
After his last promotion he was posted as Senior Manager at Udwantnagar Branch, from where he was relieved on 16.07.2013. During this posting he sanctioned loans for 46 tractors. These loans were treated as commercial loans and, according to the petitioner, were covered under the Credit Guarantee Fund Scheme (CGTMSE), under which no collateral security was to be taken.
The petitioner claimed that two routine inspections took place during his tenure at the branch and that no irregularity was recorded against him. He also relied on letters of appreciation allegedly issued by different authorities of the bank for his performance.
Later, the circle head issued a letter to him on 24.04.2014 asking for an explanation. The petitioner replied on 23.06.2014. The bank, however, decided not to accept this reply and proceeded to issue a formal charge-sheet dated 19.11.2015.
The petitioner superannuated from service on 31.07.2017. Before his retirement, the disciplinary proceedings culminated in an order of punishment dated 11.11.2016 passed by the Deputy Zonal Manager acting as Disciplinary Authority. The General Manager (Appellate Authority) passed an appellate order on 14.06.2017. The Executive Director, as Reviewing Authority, passed a further order on 14.08.2017.
Aggrieved, the petitioner filed this writ petition in the Patna High Court, registered as Civil Writ Jurisdiction Case No. 4914 of 2018, challenging the charge-sheet, the disciplinary order, the appellate order and the review order. He also sought consequential monetary and retirement benefits, including release of increments and proper fixation of pension.
What the Court Examined and Decided
Justice Dr. Anshuman heard counsel for the petitioner and for Punjab National Bank. The Court closely examined the disciplinary regulations of the bank, the contents of the charge-sheet and the nature of the discussion in the enquiry report and subsequent orders.
The petitioner’s arguments were broadly twofold.
First, he attacked the very foundation of the proceedings by saying that the charge memo dated 19.11.2015 had been issued by an authority not competent under the Punjab National Bank Officer Employees (Discipline and Appeal) Regulations, 1977. He relied on Regulation 5(1), which states that the Managing Director or any other authority empowered by him by general or special order may institute or direct the Disciplinary Authority to institute disciplinary proceedings.
He argued that this provision was a condition precedent. According to him, only after such direction from the Managing Director could the Disciplinary Authority act. As this process was not shown, the entire charge memo and all subsequent steps were claimed to be invalid. He also raised a pleading that the charge memo did not indicate any witnesses, and that this was against Regulation 6(3).
To support his stand that a defective charge-sheet vitiates the whole proceeding, he relied on the Supreme Court decision in CMD, Coal India Ltd. and Others v. Anant Shah and Others, (2011) 5 SCC 142, particularly paragraphs 31 and 32.
Second, on facts, he contended that the tractor loans were correctly sanctioned as commercial loans under MSME/CGTMSE norms where collateral security was not required. He asserted that insurance and registration of the tractors were also done for commercial use. He pointed to a mail from the Circle Office, Ara to CGTMSE, Mumbai, which supposedly confirmed that tractors financed for commercial purposes were eligible for CGTMSE cover.
The petitioner further claimed that two inspections during his tenure did not detect any irregularity, and as per the bank’s staff accountability policy, Clause 10.2A, no accountability should be fixed if a lapse is not pointed out in two successive inspection reports for four years from the date of the event. Since he had sanctioned the loans from 2009 onwards and the charge memo came only in 2015, he argued the proceedings were contrary to this policy.
He also alleged discrimination by referring to another branch of the same bank, Baruna Branch at Ara, where loans were allegedly sanctioned in a similar manner, but the then Senior Manager there was only cautioned and no disciplinary proceedings were initiated.
On the other hand, counsel for the respondent-bank submitted that the petitioner, while working as Senior Manager at Udwantnagar Branch, sanctioned 46 tractor loans under the Small and Medium Enterprises (SME) scheme without obtaining collateral securities. According to the bank, this jeopardised the bank’s interest and amounted to misconduct under Regulation 3(1) and 3(3), read with Regulation 24 of the Punjab National Bank Officer Employees (Conduct) Regulations, 1977.
The bank pointed out that the charge-sheet dated 19.11.2015 was followed by detailed imputations of charges. An enquiry was conducted, the charges were found proved, and a show cause notice was given before punishment. The Disciplinary Authority imposed a major penalty of reduction of salary by two stages in the time scale of pay till the date of his retirement with no increments during that period, under Regulation 4(F) of the 1977 D&A Regulations.
On appeal, the Appellate Authority found the punishment inconsistent and modified it by allowing one increment but maintaining a major penalty of reduction of salary by one stage till 31.07.2017, again denying increments during the period. The Reviewing Authority, on 14.08.2017, upheld the appellate decision.
The bank argued that the Disciplinary Authority, being the Deputy General Manager (DGM), was fully competent under Regulation 5(2) to institute and conduct disciplinary proceedings. It stressed that Regulation 5(1) was not a condition precedent for the Disciplinary Authority to act. The bank also stated that the manager of Baruna Branch had already superannuated, and in any case, the charges against him were not shown to be identical.
Counsel for the bank relied on several Supreme Court decisions on limited judicial review in service disciplinary matters, including State Bank of India v. Ram Lal Bhaskar and Another, (2011) 10 SCC 249; Union Bank of India v. Vishwa Mohan, (1998) 4 SCC 310; and Punjab National Bank v. M.L. Kalra (D) through LRs & Another, 2023 LiveLaw (SC) 733.
After hearing the parties, the Patna High Court first addressed the question of competence of the authority issuing the charge memo. The Court examined the definition of “Disciplinary Authority” in Clause 3(g) of the D&A Regulations, which refers to the authority specified in the Schedule, competent to impose penalties under Regulation 4.
Regulation 5, dealing with authority to institute disciplinary proceedings, was quoted in full. It provides:
(1) The Managing Director or any other authority empowered by him by general or special order may institute or direct the Disciplinary Authority to institute disciplinary proceedings against an officer employee of the bank.
(2) The Disciplinary Authority may himself institute disciplinary proceedings.
(3) The Disciplinary Authority or any authority higher than it, may impose any of the penalties specified in Regulation 4 on any officer employee.
The Court held that clause 5(1) was not a condition precedent for clauses 5(2) and 5(3). Instead, all three clauses were independent. Referring to the Schedule to the Regulations, the Court noted that for officers in Management Grade Scale-II and III, the DGM is the Disciplinary Authority.
Since the petitioner himself had stated that he was in Management Grade-III, the Court concluded that the DGM was the competent Disciplinary Authority. Accordingly, the plea that the charge memo was issued by an incompetent authority was rejected. The Court found the petitioner’s reliance on the precedent cited by him to be misplaced.
The Court then turned to examine the nature of the charge and the discussion in the enquiry and appellate orders. It found that the charge memo expressly alleged that the petitioner sanctioned 46 tractor loans “in SME scheme” without obtaining collateral securities, thereby jeopardising the bank’s interest.
However, on perusal of the enquiry report, the disciplinary order and the appellate order, the Court noted a mismatch: there was no discussion anywhere about the SME scheme. Instead, all along the reasoning was based on alleged violation of the MSME scheme and its guidelines.
The Court recorded that, as explained at the Bar, SME stands for Small and Medium Enterprises, while MSME stands for Micro, Small and Medium Enterprises. In the Court’s view, this difference was not a mere technicality, because the very article of charge mentioned only SME, while the authorities proceeded as if the allegation concerned MSME norms.
The Court described this as “very surprising” and concluded that such mismatch amounted to an error of law. Since judicial review under Article 226 permits correction of errors of law, the Court held that this error required correction, notwithstanding the bank’s argument based on limited judicial review and the judgment in Punjab National Bank v. M.L. Kalra.
Consequently, the Court did not accept the petitioner’s request to quash the charge-sheet itself, nor did it finally exonerate him. Instead, it set aside the appellate and review orders dated 14.06.2017 and 14.08.2017 respectively.
The Court directed the respondent-General Manager (Appellate Authority) to hear the petitioner’s appeal afresh and to pass a reasoned and speaking order, this time specifically dealing with the alleged violation of the SME scheme as mentioned in the charge memo. The Court further directed that, after the petitioner produces a copy of the High Court’s order before the Appellate Authority, the appeal be decided within 90 days based on the entire records but focusing on the allegation in the charge.
With these directions, the writ petition was allowed.
Why This Judgment Matters
This judgment is significant for bank employees and other workers facing departmental proceedings.
First, the Patna High Court has clarified that while disciplinary authorities have wide powers, they must strictly stick to the exact charges framed. If the charge refers to violation of one scheme, the final decision cannot be based on a different scheme or a different legal yardstick.
Second, for employees, this decision shows that even if courts do not sit in appeal over the merits of findings, they will step in where there is a clear error of law or mismatch between the charge and the reasoning used to punish them.
Third, the Court has confirmed that under the Punjab National Bank Officer Employees (Discipline and Appeal) Regulations, 1977, the Disciplinary Authority itself can institute proceedings under Regulation 5(2). Employees cannot succeed merely by arguing that there was no special direction from the Managing Director when the Schedule itself makes the DGM the Disciplinary Authority for their grade.
Finally, the judgment offers practical guidance: appellate and reviewing authorities in service matters must pass detailed “reasoned and speaking” orders, dealing directly with the specific charge framed. Failure to do so can result in their orders being set aside, even if the original charge-sheet remains.
Legal Issues and Answers
- Issue: Was the charge memo dated 19.11.2015 invalid because it was not issued by a competent authority under the Punjab National Bank Officer Employees (Discipline and Appeal) Regulations, 1977?
Answer: No. The Court held that Regulation 5(1), 5(2) and 5(3) are independent, and that for officers in Management Grade-II and III, the DGM is the Disciplinary Authority as per the Schedule. Therefore, the DGM was competent to issue the charge memo. - Issue: Could the appellate and reviewing authorities base their decisions on alleged violation of MSME guidelines when the article of charge mentioned only violation of SME scheme?
Answer: No. The Court found this mismatch to be an error of law. Since the charge spoke of SME scheme, the authorities were required to examine that allegation specifically. Because they did not, the appellate and review orders were set aside and the appeal was remitted for fresh decision on the SME-based charge. - Issue: Should the entire disciplinary proceeding, including the charge-sheet, punishment, appellate and review orders, be quashed and the petitioner fully exonerated?
Answer: No. The Court did not quash the charge-sheet or the original disciplinary order. It only set aside the appellate and review orders and directed a fresh appellate decision within 90 days, confined to the allegation mentioned in the charge memo.
Cases Cited by the Court
- The petitioner relied on CMD, Coal India Ltd. and Others v. Anant Shah and Others, (2011) 5 SCC 142.
- The bank relied on:
- State Bank of India v. Ram Lal Bhaskar and Another, (2011) 10 SCC 249;
- Union Bank of India v. Vishwa Mohan, (1998) 4 SCC 310;
- Punjab National Bank v. M.L. Kalra (D) through LRs & Another, 2023 LiveLaw (SC) 733.
Case Details
Case Number: Civil Writ Jurisdiction Case No. 4914 of 2018
Case Title: Pranab Kumar Saha v. The Punjab National Bank & Others
Citation: 2024 (2) PLJR 664
Coram: Hon’ble Mr. Justice Dr. Anshuman
Advocates:
- For the petitioner: Mr. Gautam Saha, Advocate
- For the respondents (Punjab National Bank and others): Dr. Pankaj, Advocate
Nature of the Case: Writ petition under Article 226 of the Constitution of India challenging departmental proceedings and penalties imposed by a public sector bank, with a request for quashing of charge-sheet, punishment, appellate and review orders, and for consequential service and pensionary benefits.
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