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State Bank of India & Ors. vs Kamal Kishore Prasad

Civil Appeal · 2023 INSC 21Decided 9 Jan 2023
Civil Appeal No. 175 of 2023
Krishna Murari · Bela M. Trivedi · Ajay Rastogi

Background

A State Bank of India branch manager was suspended in 1993 for various lapses and, after a departmental inquiry, dismissed from service in August 1999. A single judge of the Patna High Court set the dismissal aside in 2003 because the officer who passed the order was not the one who had heard him; the Bank appealed and obtained a stay, during which the officer reached retirement age in November 2009. In 2013 the Supreme Court set aside the Division Bench's order, noted the rule that "the person who hears must decide", and directed the Appointing Authority to take a fresh decision within two months, keeping all contentions open. The Appointing Authority gave the officer a hearing and in February 2014 again dismissed him with effect from 11 August 1999. The High Court quashed this second dismissal, reasoning that the Bank had never taken an "affirmative" decision to continue proceedings past retirement under Rule 19(3).

Decision Breakdown

The Supreme Court allowed the Bank's appeal and restored the dismissal. It held that Rule 19(3), which lets the Managing Director continue pending disciplinary proceedings after an officer leaves service, had no application here, because the proceedings had already concluded in a dismissal in 1999; the single judge's order setting that aside was stayed throughout, and the Division Bench's order was itself set aside by the Supreme Court, so the officer could never be treated as having continued in service until superannuation. The 2014 order was passed strictly in compliance with the Supreme Court's own direction, after a show-cause notice and a personal hearing, and could not be called arbitrary or contrary to the Rules. The High Court's contrary view rested on a misreading of both the facts and the law.

Lesson Learnt

When a court stays an order reinstating a dismissed employee, the dismissal continues to operate, so reaching retirement age during the litigation does not wipe out the disciplinary case. A fresh penalty order passed on a court's direction, after a proper hearing, is valid even if issued after the employee's notional retirement date.

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

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