Bank's Disciplinary Action Quashed: Court Upholds Importance of Vigilance Commission Consultation.


20 May 2025 Civil Appeals >> Civil & Consumer Law   |   Disciplinary Proceedings >> Workplace/ Professional Related  

In a significant ruling of A.M. Kulshrestha v/s Union Bank of India & Others, the Supreme Court has quashed disciplinary proceedings initiated by the Union Bank of India against one of its former Deputy General Managers, emphasizing the critical role of consultation with the Central Vigilance Commission (CVC) in vigilance-related matters. The decision highlights that once a bank acknowledges the necessity of CVC advice in a disciplinary case, it cannot proceed with a charge sheet without first receiving and considering that advice.

The case involved an employee who served the Union Bank of India for 34 years, from 1984 to 2018, rising to the post of Deputy General Manager in 2016. He was due to retire on June 30, 2019. However, in August 2018, less than a year before his superannuation, the bank suspended him. The allegations stemmed from his prior role as Regional Head, Meerut, where he was accused of adopting a "casual approach" in sanctioning credit proposals for newly incorporated firms without ensuring proper due diligence.

 
 

Following his suspension, the employee received show cause notices in January and March 2019. Facing continued suspension without a formal charge sheet, he approached the Allahabad High Court. During these proceedings, the bank's General Manager and Executive Director submitted affidavits acknowledging that the case had a "vigilance angle" and that the matter had been referred to the CVC for its "first stage advice" as per Regulation 19 of the Union of India Officer Employees’ (Discipline & Appeal) Regulations, 1976. Crucially, the Executive Director explicitly stated that the charge sheet would only be issued upon receipt of the CVC's advice.

Despite these sworn statements, the bank served an ante-dated charge sheet on June 18, 2019 (dated June 10, 2019), without waiting for the CVC's input. The High Court initially quashed the suspension order in June 2019, deeming its continuation without a charge sheet for almost a year as arbitrary, especially given the employee's impending retirement. However, it granted the bank liberty to initiate further proceedings.

The employee then challenged the charge sheet itself, arguing it was invalid due to the absence of the mandatory CVC advice. While the learned Single Judge and subsequently the Division Bench of the High Court dismissed his petition, holding that CVC advice was not necessary before issuing a charge sheet, the Supreme Court took a different view.

The Supreme Court, in its detailed consideration, noted that Regulation 19 of the 1976 Regulations mandates consultation with the CVC "wherever necessary, in respect of all disciplinary cases having a vigilance angle." While acknowledging the potential for debate on whether this provision is strictly mandatory or discretionary, the Court found it unnecessary to delve into that question in this specific instance.

The key factor, the Court highlighted, was that the Union Bank of India itself had admitted that the case involved a vigilance angle and that consultation with the CVC was necessary. This was evident from their own affidavits and the act of seeking the CVC's first-stage advice in May 2019.

The Court referenced CVC circulars from 2000, 2004, and 2015, which clearly stipulate that the CVC is consulted at two stages in disciplinary proceedings: first, on the investigation report before the issue of the charge sheet, and second, after the reply to the charge sheet or the inquiry report.

The Supreme Court found the bank's actions to be mala fide and arbitrary. It pointed out that the bank had specifically stated under oath that the charge sheet would be issued after receiving CVC advice, yet it proceeded to serve the charge sheet without it, just 12 days before the employee's superannuation and after 34 years of unblemished service.

"Once the first stage advice of the CVC was called, it was the duty of the respondent-Bank to consider the advice and then take a decision to serve the chargesheet," the Court observed. It concluded that the employee was "sought to be victimised at the fag end of his unblemished career."

Consequently, the Supreme Court quashed and set aside the disciplinary proceedings, including the charge sheet dated June 10, 2019. While the employee will not be entitled to back wages and allowances for the period, the bank has been directed to release all his retirement benefits, admissible as of his superannuation on June 30, 2019, within three months.

This judgment serves as a strong reminder to public sector organizations that once the necessity of CVC consultation is acknowledged in vigilance-related disciplinary matters, adhering to the prescribed procedure, particularly obtaining and considering the first-stage advice, becomes a binding obligation.