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Synopsis

High standards of integrity and honesty are expected from employees of public banks, especially when handling customer and public funds, the Madras High Court recently observed.

Court upheld disciplinary action against a bank employee, noting that his misconduct had eroded public trust and confidence in the institution and that the punishment imposed was proportionate to the charges and not excessive.

An Intra Court Appeal was preferred by the State Bank of India (SBI) against the order dated February 7, 2020, whereby the high court had set aside the punishment of removal from service imposed on the bank employee and directed the Bank to give all the monetary and consequential benefits as if he had continued in service till the age of superannuation.

The bank employee namely Palaniappan had been charged with fraudulent activities during his tenure as a clerk and assistant at the Karaikudi branch.

Palaniappan faced disciplinary action after several complaints were lodged against him, most notably for fraudulently encashing a cheque for Rs 15,000 meant for a customer, B. Ghouse Miyan, and failing to hand over the amount to the beneficiary. Additional charges against him included the encashment of a cheque for Rs 4,000 without the knowledge of the payee and the retention of a Rs 9,000 cheque for over five months without remitting the amount to the bank.

An inquiry was conducted by the bank’s disciplinary authority, which found Palaniappan guilty of four out of five charges, resulting in his dismissal from service.

On appeal, the appellate authority modified this to discharge from service, considering his 14 years of tenure at the bank. However, Palaniappan challenged both these decisions in the writ court, which ruled in his favor, citing procedural lapses in the disciplinary proceedings.

The bank, in its Intra Court Appeal argued that the writ court had overstepped its jurisdiction by interfering with the disciplinary authority's decision. The bank contended that the complainant, Ghouse Miyan, had withdrawn his complaint after receiving the money owed to him, a factor the writ court had heavily relied upon. However, the bank pointed out that documentary evidence proved Palaniappan’s misconduct, and the subsequent withdrawal of the complaint did not negate the fraudulent actions already committed.

The division bench of Justices Dr. Anita Sumanth and G. Arul Murugan agreed with the bank’s position, emphasizing that in domestic inquiries, strict rules of evidence need not apply, and the available documents clearly established Palaniappan's guilt.

It held that the disciplinary proceedings were conducted fairly, with adequate opportunities given to Palaniappan to defend himself. The evidence, including the cashier’s payment scroll and the original cheque, demonstrated that Palaniappan had misappropriated funds, and his failure to provide an explanation further validated the bank’s case, court noted. 

Moreover, the high court underscored the importance of integrity in the banking sector, where employees handle public money.

Accordingly, court set aside the writ court’s order, restoring the bank’s decision to discharge Palaniappan from service. 

Case Title: The Managing Director, State Bank of India, Central Office and Others v. Palaniappan