Author: PURNASRI BS, a student of symbiosis law school,nagpur
Coram: 2 bench
Citation: MANU/TN/6807/2024
ABSTRACT:
The Indian Overseas Bank v(W.A. No. 2260/2023) case concerned the termination of a bank manager for procedural defaults in loan approvals.Even though the Writ Court initially granted relief based on his spotless and dedicated service record, the Division Bench of the Madras HighCourt(2024) overturned the order,thereby, emphasizing the strict compliance with banking practices.The Supreme Court refused interference, upholding limited judicial review in disciplinary cases. Major legal concepts involved were varying standards of proof between criminal and disciplinary trials and imposing high accountability on bank officers who deal with public funds.The ruling emphasizes that procedural breaches deserve harsh punishments regardless of criminal trial outcomes.
BACKGROUND AND SUMMARY:
The case number W.A.No.2260 of 2023,C.M.P.Nos.4370 of 2024 and 19440 of 2023,The Disciplinary Authority &The Deputy General Manager of Indian Overseas Bank and Ors. V. J.Thomas Karunanithi dispute was heard under the High Court of Madras on October 21,2024 by 2 bench judges ,Hon’ble Dr.Anita Sumanth and G.Arul Murugan.The appeal was prosecuted by the Indian Overseas Bank,reprented by K.Srinivasamurthy, and P.Vasuky,representing J.Thomas Karunanithi.The case challenged an order of Writ issued on 28th April,2023 in which the court had impugned all the orders dated (23 March ,2013) issued by the reviewingauthority,(8th September 2012) upheld by appellete authority and (6th July,2012) upheld by disciplinary authority which led to dismissal of J.Thomas Karunanithi from his service at the bank.
The dispute arose from a loan sanctioned by the defendant (mr.karunanidhi) to the customer Mr.Murali ,while in his service as a branch manager in hosur town branch after confining with the authentication of the pledge submitted.However,allegations of procedural lapses were raised when G.Muniappa (complainant),who was purported to be the guarantor,claimed impersonation and denied offering his property as collateral.An enquiry was followed upon this matter and the enquiry officers report concluded that the allegations against the defendant was subsequently fully proved, indicating his alleged failure to protect the bankś interests and lack of diligence in his duties.Consequentely,the disciplinary authority issued an order on 6th july,2012,dismissing Karunanithi from service,a decision upheld by the appellete jurisdiction on 8th September,2012,which was later upheld again by reviewed authority on 23rd march,2013.
The High Court of madras, however favoured the defendant under the influence of the order in C.C No. 134 of 2016. The magistrate 2 ,mr.Krishnagiri even justified the verdict given by stating that the investigation authorities failed to prove the charges regarding the alleged forgedy.considering his long unblemished service of 32 years,the court also noted that Karunanithi has repayed the loan, resulting in no pecuniary loss to the bank.and led to dismissal of the case.
However, the High Court during the appeal, overturned the writ Court’s decision,by standing with petitionerś (bank) side arguments that Karunanithi has violated norms and procedures, particularly in verifying the guarantorś identity and ensuring due diligence in the loan process.the court also emphasized the responsibility of bank officers in managing public funds and adhering to procedural guidelines.The court also concluded in dismissal from the post as a punishment for the act. In further appeal in Supreme Court, the court dismissed the case stating that the judgement given cannot be changed or interfered regarding this matter.
DISCIPLINARY PROCEEDINGS AND JUDICIAL REVIEW:
Various cases were referred to highlight the restricted role of judicial review in disciplinary cases.
- State of U.P. & Ors v. Nand Kishore Shukla and anr
- Disciplinary Authority cum Regional Manager and ors v. Nikunja Bihari Patnaik
- Tara Chand Vyas V. Chairman & Disciplinary Authority & Ors.
- State Bank of India V. Tarun Kumar Banerjee & Ors.
JUDICIAL REVIEW:
- Bank Officers’ Responsibility: One of the major themes in the precedents is the high level of conduct expected of bank officers, considering that they handle public funds. The cases emphasize that violations of trust and procedural improprieties constitute serious misconduct.
- Evidence in Disciplinary Proceedings vs. Criminal Court: The case of Noida Entrepreneurs Association was specifically cited to bring out the fact that the quantum of proof varies in criminal proceedings and disciplinary inquiries. A criminal acquittal does not rule out disciplinary action.
- Proportionality of Punishment: Whereas proportionality had been used as a basis of arguing for leniency by the respondent, the court, drawing on Boloram Bordoloi, upheld the gravity of bank managers’ misconduct and reaffirmed the termination.
Overall, the case draws considerably upon well-settled principles of law on the reach of judicial review of disciplinary actions and on what is the standard conduct of bank officers.
FREQUENTLY ASKED QUESTIONS(FAQ):
1. What was the issue in the case of Indian Overseas Bank vs. J. Thomas Karunanithi?
The issue in the case was regarding one of a loan granted by J.Thomas Karunanithi, Branch Manager, Indian Overseas Bank, Hosur Town Branch. The guarantor, G. Muniappa, had claimed impersonation and disowned giving his property as collateral. The bank charged Karunanithi with procedural defaults for which disciplinary proceedings were initiated, and he was removed from service.
2. What were the main judicial proceedings in this case?
Initial Orders (2012-2013):Disciplinary Authority rejected Karunanithi (06.07.2012), confirmed by Appellate Authority (08.09.2012) and Reviewing Authority (23.03.2013).
Writ Court (2023): The Madras High Court initially ruled in favor of Karunanithi, stating his 32-year clean service record and no loss of money for the bank.
Division Bench (2024): Reversed the Writ Court ruling, confirming the dismissal order of the bank.
Supreme Court: Dismissed the further appeal, declining to interfere with the High Court judgment.
3. Why did the High Court overrule the Writ Court order?
The Division Bench held Karunanithi acted against bank norms, specifically in identifying the guarantor and conducting due diligence. The court laid stress on bank officers’ accountability in managing public money and maintained dismissal as a reasonable punishment.
4. Did the acquittal by the criminal court affect the disciplinary action?
No. The court referred to precedents (e.g., Noida Entrepreneurs Association v. Noida) and stated that the disciplinary proceedings are subjected to a lesser burden of proof than criminal cases. An acquittal in a criminal case (C.C. No. 134/2016) did not exonerate Karunanithi of procedural impropriety in the bank’s inquiry.
5. What legal principles were emphasized in this case?
Judicial Review Limits: The courts are not allowed to re-examine evidence in disciplinary proceedings (State of U.P. v. Nand Kishore Shukla).
Bank Officers’ Duty: Strict standards are required as they deal with public money (Nikunja Bihari Patnaik case).
Proportionality of Punishment: Dismissal was considered proper for misconduct (Boloram Bordoloi v. Lakshmi Gaolia Bank).
REFERENCES:
Cases Cited:
1. Indian Overseas Bank & Ors. v. J. Thomas Karunanithi, W.A. No. 2260 of 2023, Madras High Court (2024).
2. State of U.P. & Others v. Nand Kishore Shukla and Another, (1996) 3 SCC 750.
3. Disciplinary Authority cum Regional Manager & Ors. v. Nikunja Bihari Patnaik, (1996) 9 SCC 69.
4. Tara Chand Vyas v. Chairman & Disciplinary Authority & Ors., (1997) 4 SCC 565.
5. State Bank of India v. Tarun Kumar Banerjee & Ors., (2000) 8 SCC 12.
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