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State Bank of India & Ors. v. Mohammad Badruddin

Civil Appeal · 2019 INSC 764Decided 16 Jul 2019
Civil Appeal No. 5604 of 2019
Justice L. Nageswara Rao · Justice Hemant Gupta

Background

This judgment jointly decides two connected civil appeals filed by State Bank of India against its former employee Mohammad Badruddin; the appeal relevant to this entry, Civil Appeal No. 5604 of 2019 (arising from SLP(C) No. 20488 of 2017), concerned his removal from service in 1993 over five charges, including opening a fake bank account that enabled frauds worth over Rs. 2.5 lakh. The Inquiry Officer found only one charge (improper cash-book checking) clearly proved, but the Disciplinary Authority disagreed and additionally found him guilty on two more charges without ever communicating its reasons for disagreeing with the Inquiry Officer's findings to Badruddin, then removed him from service considering his prior punishment record as well. The Jharkhand High Court's Division Bench set aside the removal for breach of natural justice, and the Bank appealed to the Supreme Court.

Decision Breakdown

The Supreme Court upheld the High Court's finding that failing to communicate the Disciplinary Authority's reasons for disagreeing with the Inquiry Officer's favourable findings (on two of the charges) was indeed a breach of natural justice, following its earlier ruling in Punjab National Bank v. Kunj Behari Misra. However, it held that the High Court went too far in granting full reinstatement with back wages, because one charge (improper cash-book checking, which was never in dispute) remained validly proved, and it was for the Disciplinary Authority, not the High Court, to decide what punishment that surviving charge alone could justify. Since Badruddin had since reached retirement age (making reinstatement impossible), the Court set aside both the removal order and the High Court's order granting full back wages, and instead sent the matter back to the Disciplinary Authority to decide, within three months, whether to record proper reasons on the disputed charges and/or impose a fresh punishment based on the undisputed charge, along with appropriate back wages and terminal benefits.

Lesson Learnt

In a disciplinary inquiry, if the authority deciding punishment wants to overturn an inquiry officer's finding that cleared the employee on a particular charge, it must tell the employee why and give a chance to respond, skipping this step can unravel the punishment, but it does not automatically mean the employee walks away with full back pay, especially where some other charge was validly and separately proved.

Official source (sci.gov.in)View Judgment (PDF)

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