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The Supreme Court has said acquittal in a criminal case would not entitle a delinquent employee any benefit in the departmental inquiry, as nature of the proceedings are separate and distinct.

A bench of Justices Hrishikesh Roy and Sanjay Karol allowed an appeal filed by the State Bank of India against the Gauhati High Court's orders and restored dismissal of employee P Zandega from service.

In the instant case, three different FIRs were lodged against the employee in Aizwal for not having entered in cash deposit rolls their challans deposits. He was arrested and subsequently granted bail.

The delinquent employee contended that in view of the clause 4 of the Memorandum of Settlement, the disciplinary proceedings should have been either dropped or closed since criminal cases were pending against him, arising from the same set of transactions.

The Gauhati HC's division bench upheld the findings of the single judge and held that the continuation of the disciplinary proceedings during the pendency of criminal cases would be an infraction of the bipartite Memorandum of Settlement of April 10, 2002.

Relying upon the SC's judgements in 'M Paul Anthony v Bharat Gold Mines Ltd' (1999) and Karnataka Power Transmission Corpn Ltd v C Nagaraju (2019), the bench said, it may be desirable or, in certain circumstances, advisable for disciplinary proceedings to be stayed when criminal proceedings are ongoing; however, stay is not "a matter of course" and is only to be given after consideration of all factors, for and against. 

Citing another SC's judgement in case of 'State Bank of India & Ors v Neelam Nag' (2016), the bench said a departmental proceeding pending criminal trial would not warrant an automatic stay unless, of course, a complicated question of law is involved. Also, acquittal in a criminal case ipso facto would not be tantamount to closure or culmination of proceedings in favour of a delinquent employee.

The court noted, most significantly, in response to the initiation of inquiry proceedings, the delinquent proceedings never took the plea of Memorandum of Settlement and neither was any specific plea of postponement of disciplinary proceedings awaiting conclusion of a criminal trial made. 

The bench thus held the Memorandum of Settlement does not envisage a complete standstill of departmental proceedings as a result of the pendency of criminal proceedings. The position of law is that the stay of the latter is desirable, but the same is to be affected only for a reasonable period of time, it said.

"The nature of proceedings being wholly separate and distinct, acquittal in criminal proceedings does not entitle the delinquent employee for any benefit in the latter or automatic discharge in departmental proceedings," the bench said.

Setting aside the HC's orders, the bench that it is not mandatory to stay the disciplinary proceedings, particularly when they have been initiated after the prescribed period of one year.

"We cannot bring ourselves to agree with the courts below," the bench said, the restriction within clause 4 of the Memorandum of Settlement is not complete and is to be applied on facts of each case.

Case Title: State Bank of India Vs P Zadenga