K.V. Brahmaji Rao vs. Union of India & Anr.
Background
The petitioner was an Executive Director of Punjab National Bank when the massive PNB "Brady House" SWIFT-based fraud came to light in 2018. He was issued a show-cause notice blaming top management (including him) for failing to exercise proper control that allowed the fraud to remain undetected for years. Three days before his five-year tenure was due to expire, the government removed him from office under the special "removal in the bank's interest" provision (paragraph 8(4) of the 1970 Scheme), citing that failure.
Decision Breakdown
The Court found that the PNB Board's own consultative comments, which the law required the government to properly weigh, were far more qualified than the notice suggested: the Board said the fraud-detection system (SWIFT-CBS integration) was not actually the petitioner's job, found no evidence of criminality, and only said he "could have exercised greater caution." The government's harsher final conclusion relied partly on later CBI/CVC material that was never specifically put to the petitioner for a response, breaching his right to a fair opportunity to defend himself. The Court also questioned why removal (with its harsher pension/benefit consequences) was necessary just three days before his tenure was ending anyway. It set aside the removal notice and treated him as having retired normally on tenure expiry, entitled to full pension, gratuity, and other retiral benefits with 6% interest on withheld amounts.
Lesson Learnt
Even senior officials removed from a government/public-sector post for alleged misconduct are entitled to be told the actual specific case against them and given a genuine chance to answer it before removal: procedural fairness cannot be skipped even where the substantive concerns raised may be serious.