editorial - aiboc

Editorial

Vol. 39 No. 4 Total 12 Pages BANGALORE Single Copy Rs. 3/- JULY - 2020

6. SHIV DIVE, CENTRAL BANK, MUMBAI7. ARUN SHIRSAT, CENTRAL BANK, THANE8. H K NAYAK CENTRAL BANK OF INDIA, MUMBAI9. SADASHIV DOL, PNB, MUMBAI10. GANSHYAM PAWAR, BANK OF INDIA, MUMBAI11. PRABHAKAR PAWAR, BANK OF INDIA, MUMBAI12. SANDU BORDE, SBI, MUMBAI13. SANKARAIAH, SBI, HYDERABAD14. ANIRBAN DATTA, SBI15. A. SWAMINATHAN, INDIAN BANK, TAMILNADU16. LATA BEHRA, UNITED BANK, WEST BENGAL17. RAJENDRA SAWANT, BANK OF MAHARASHTRA, MUMBAI18. MANIK DEY, UCO BANK, WEST BENGAL19. SACHIN KSHIRSAGAR IDBI BANK MULUND20. Y K NANDA, PNB, DELHI21. ARJUN KAKKD, PNB, AHMEDABAD.

WE PRAY THAT WE NEED NOT HAVE TO INCLUDEFURTHER NAMES IN THE LIST. HOWEVER, THEREMAY BE SOME OMMISSIONS BECAUSE OFINTERRUPTED COMMUNICATION DURING THISEXTRAORDINARY TIME.

AIBOC SALUTES THE MEMORY OF THE FRONTLINEBANKERS WHO LAID DOWN THEIR LIVES WHILEDISCHARGING THE RESPONSIBILITY OF KEEPINGTHE ECONOMY MOVING DURING THE PANDEMIC.BANKERS HAVE PROVED THAT THEY ALWAYSREMAIN IN THE FOREFRONT, BE ITDEMONETISATION, IMPLEMENTATION OFGOVERNMENT SCHEME, RESPONSIBILITY OFTURNING ROUND THE FINANCIAL SECTOR ANDECONOMY, WITHOUT WAITING FOR RECOGNITIONFROM THE POWER THAT BE.

EDITORIAL TEAM OF COMMON BOND AND AIBOCBOWS DOWN ITS HEAD IN REVERENCE ANDASSURE THAT IT WILL CARRY FORWARD THESTRUGGLE IN THEIR SACRED MEMORY.

HOMAGE THROUGH REMEMBRANCE TO SOME OFTHE BANKERS WHO HAVE DIED WITH COVID-19SYMPTOMS:

1. UDAY KAMAT, IDBI, MUMBAI2. VISHAL SONAWANE, IDBI BANK3. L K PARMAR, E-SYNDICATE BANK/ CANARA BANK, AHMEDABAD4. JASHUBHAI SOLANKI, UNION BANK OF INDIA, AHMEDABD5. RAJU SHER BAHADUR, FEDERAL BANK, MUMBAI

Editorial Board of Common Bond regrets thatwe could not reach our esteem well-wishers forthe last three months due to pandemic andresultant lockdown. Possibly this has nothappened earlier. Readers will appreciate thatwe cannot compromise with the health of oureditorial team and all others involved inpublication, printing and distribution of thisjournal. We are confident that we will be regularovercoming the threat of pandemic. Stayabsolutely safe.

COMMON BOND PAYS ITS DEEP

RESPECT TO THE SUPREME SACRIFICE

OF OUR BRAVE SOLDIERS WHO LAID

DOWN THEIR LIVES IN PROTECTING THE

SOVERIGNITY OF THE MOTHERLAND.

THEIR SACRIFICE WILL NOT GO IN VAIN

STAY ABSOLUTELY SAFE WITH YOUR FAMILY.

WASH YOUR HANDS OFTEN

2 Common Bond, July-2020ALWAYS WEAR A FACE MASK

Editorial

Little did we anticipate that our prayer ‘Let ourunity remain consolidated and our response becentred on one theme “LET’S CONNECT”’ will beanswered so deleteriously in the form ofworldwide spread of COVID-19 pandemic forcingcountries after country to declare lockdown anddisrupting our own publication for a quarter. Manyamongst us had the occasion to read “The Plague”by Albert Camus. In our own local literature,there are mentions of epidemic, loss of life andemployment. But neither possibly we nor ourearlier generation had witnessed the pandemicof this magnitude. We are yet to come out ofthe trauma. We are waiting with trepidationfor a second wave of pandemic and a possiblevaccine. But the pandemic, lockdown and theattack on life and livelihood have raised morequestions than answers known to us. The pandemichas caused a huge loss of employment both inthe organised and unorganized sector. In Indiawe have seen, a large sea of humanity movingfrom the city of their work to their nativevillage exposing in the milieu an unsympatheticsocial system.

A fundamental question is what is really meantby pillaging? Millions of people suddenly lost theirjob. There are millions other, who are waitingfor the sword of elimination of their jobs.Irregular/reduction in the payment of salariesand wages has become a common feature. Thesituation is really encouraging for the corporatesfor they know that every increase in theunemployment rate ensures a steady supply ofcheap labour. Is not such prowling of job moredetrimental than occasional burglary in ashowroom?

This question has been raised by a veteran USeconomist Mr. Richard Wolf. No, Mr. Wolf hasnot supported burglary. He is simply correcting

REBUILD INDIA

the background of the picture that is in front ofus. We had seen arson, organised loot, sporadicrobbery and even now popular cyber hacking byfraudsters but we are failing to recognize theloss of jobs due to pandemic as pillaging. We arefailing to recognize that the so called economicpackage for revival will put further strain onthe Balance Sheet of the banks. What otherwords we can use except plundering to sum ofthe government move to privatize all the sectorsfrom space to sea including public sector banks.The government has decided to put banking inthe strategic sector which permits only fourunits to stay in PSU category. This hasimmediately put into uncertainty the fate of atleast eight other banks.

But do such unprecedented measures is reallynecessary for overcoming the economic challengesof COVID-19. It is near normal in a neo-liberalcapitalist economic structure to have a cyclicalmovement of recession, unemployment, job losswhich finally resulted in consolidation, more profitand lower living standard for the millions, whilethe billionaires made fortune out of the crisis.We had seen that how Reliance Industries Ltd.,mobilized resources during this pandemic whichin turn spiked the net worth of its owner possiblyby a few billion rupees while the migrants arewalking down the national highway bereft of food,shelter and minimum security.

Where lies the remedy? A very popular answeris the development of a socialist pattern ofsociety which ensure an exploitation free economicsystem where the workers will decide aboutproduction and distribution of surplus amongstdifferent stake holders. But let us admit, howmuch we like such model of economic management,in reality we are thousand miles away from suchan arrangement. We have to look for an answerin

Common Bond, July-2020 3

WASH YOUR HANDS BEFORE AND AFTER COOKING

the existing world setup. Let us look at Germany.They are facing recession but their unemploymentrate is under control. This is true of many otherEuropean countries like Denmark, France orHolland. They are all having a capitalisticeconomic structure. But how they differ fromUSA or the economic model they are pursuing.These European countries recognize theimportance of state in regulating the marketeconomy rather than selling the last silver coinin the chest in the open market. These Europeancountries recognize the importance of trade unionand its positive contribution in warding off economiccrisis.

It is true that there is renewed interest in leftleaning economic literature after the greatmeltdown of 2008-09. It is equally importantto find an answer beyond the accepted domain ofconflict. This answer has to be pursued by buildingup a movement for throwing new ideas for nationbuilding beyond traditional debate betweennationalization and privatization. Time has comefor building an alternative resistance movementwhich can tell the state power that the workerswill not tolerate the action of dumping them withthe slightest signal of crisis. A movement thatwill tell the state power that handing over thepublic sector to the greedy private owners throughsubvention to achieve their individual aspirationsis far less important than building up the primaryhealth care system by spending a substantial

part of GDP.

It is difficult to write an alternative narrativeto retain the earned privileges. It is very easyto lose that. COVID-19 exposes thesuperficiality of our resistance when the workingclass is losing one hard earned right afteranother. There is state sponsored pillaging onthe life and livelihood of the working people.The inadequacy in our health care system isexposed. The big capitalists are swallowing thesmall businesses. We need to rebuild it. Tradeunion is for dreamers. Since the state apparatushas pushed the movement to the wall, there isa greater need for building up our consolidation,write new pages of resistance movement beyondthe traditional thought process. This is requiredfor rebuilding the country. And who else canrebuild the country other than the workers andtheir trade unions. Obviously, the leadership inthis endeavor of nation building has to be providedby the unique organization of managerial classthe AIBOC. The power is desperate as we areslow in building the alternative narratives quickly.Let us unlock ourselves and reclaim the glory towhich we are logically entitled.

STAY SAFE. SALUTE ONCE AGAIN TOALL BANKERS FOR THEIR DEVOTEDCONTRIBUTION TOWARDS THEIR EFFORTSIN STRENGTHENING THE ECONOMY.

We are publishing an edited excerptof the Executive Summary from theGlobal Economic Report compiledby IMF. The article is shared to giveour readers a panoramic view of thelikely impact of COVID-19 on theworld economy.

COVID-19 has triggered a globalcrisis like no other—a global healthcrisis that, in addition to an

Article COVID-19 AND GLOBAL RECESSION

enormous human toll, is leadingto the deepest global recessionsince the Second World War.While the ultimate growthoutcome is still uncertain, andan even worse scenario ispossible if it takes longer to bringthe health crisis under control,the pandemic will result inoutput contractions across thevast majority of emerging market

4 Common Bond, July-2020

ALWAYS COVER YOUR FACE WHILE YOU COUGH OR SNEEZE

and developing economies (EMDEs). Moreover, thepandemic is likely to exert lasting damage tofundamental determinants of long-term growthprospects, further eroding living standards for yearsto come. The immediate policy priorities are toalleviate the ongoing health and human costs andattenuate the near-term economic losses, whileaddressing challenges such as informality and weaksocial safety nets that have heightened the impacton vulnerable populations. Once the crisis abates, itwill be necessary to reaffirm credible commitmentto sustainable policies—including medium-term fiscalframeworks in energy-exporting EMDEs sufferingfrom the large plunge in oil prices—and undertakethe necessary reforms to buttress long-term growthprospects. For these actions, global coordination andcooperation will be critical.

Global Outlook: Pandemic, Recession: The GlobalEconomy in Crisis. The COVID-19 pandemic has, withalarming speed, delivered a global economic shockof enormous magnitude, leading to steep recessionsin many countries. The baseline forecast envisions a5.2 percent contraction in global GDP in 2020—thedeepest global recession in eight decades, despiteunprecedented policy support. Per capita incomesin the vast majority of EMDEs are expected to shrinkthis year. The global recession would be deeper ifbringing the pandemic under control took longerthan expected, or if financial stress triggeredcascading defaults. The pandemic highlights theurgent need for health and economic policy action—including global cooperation—to cushion itsconsequences, protect vulnerable populations, andimprove countries’ capacity to prevent and cope withsimilar events in the future. Since EMDEs areparticularly vulnerable, it is critical to strengthen theirpublic health care systems, to address the challengesposed by informality and limited safety nets, and,once the health crisis abates, to undertake reformsthat enable strong and sustainable growth.

Regional Macroeconomic Implications of COVID-19.The rapid rise of COVID-19 cases, together with thewide range of measures to slow the spread of thevirus, has slowed economic activity precipitously in

many EMDEs.

Economic disruptions are likely to be more severe andprotracted in those countries with larger domesticoutbreaks, greater exposure to international spillovers(particularly through exposure to global commodityand financial markets, global value chains, andtourism), and larger pre-existing challenges such asinformality. Growth forecasts for all regions have beenseverely downgraded; Latin America and theCaribbean (LAC) and Europe and Central Asia (ECA)in particular have large downgrades partly becauseof the size of their domestic outbreaks and exposureto global spillovers, while South Asia’s substantialdowngrade is primarily the result of stringent lockdownmeasures. Many countries have avoided more adverseoutcomes through sizable fiscal and monetary policysupport measures. Despite these measures, per capitaincomes in all EMDE regions are expected to contractin 2020, likely causing many millions to fall back intopoverty.

Lasting Scars of the COVID-19 Pandemic. The COVID-19 pandemic has struck a devastating blow to analready-fragile global economy. Lockdowns and otherrestrictions needed to address the public health crisis,together with spontaneous reductions in economicactivity by many consumers and producers, constitutean unprecedented combination of adverse shocks thatis causing deep recessions in many advancedeconomies and EMDEs. Those EMDEs that have weakhealth systems; those that rely heavily on global trade,tourism, or remittances from abroad; and those thatdepend on commodity exports will be particularly hard-hit. Beyond its short-term impact, deep recessionstriggered by the pandemic are likely to leave lastingscars through multiple channels, including lowerinvestment; erosion of the human capital of theunemployed; and a retreat from global trade andsupply linkages. These effects may well lower potentialgrowth and labor productivity in the longer term.Immediate policy measures should support health caresystems and moderate the short-term impact of thepandemic on activity and employment. In addition, acomprehensive reform drive is needed to reduce theadverse impact of the pandemic on long-term


CONSULT A DOCTOR IF YOU HAVE COUGH OR FEVER

growthprospects by improving governance andbusiness environments, and expanding investmentin education and public health.

Adding Fuel to the Fire: Cheap Oil during thePandemic. The outbreak of COVID-19 and thewide-ranging measures needed to slow its advancehave precipitated an unprecedented collapse in oildemand, a surge in oil inventories, and, in March,the steepest one-month decline in oil prices onrecord. In the context of the current restrictionson a broad swath of economic activity, low oil pricesare unlikely to do much to buffer the effects of thepandemic, but they may provide some initial supportfor a recovery once these restrictions begin to belifted. Like other countries, energy-exportingEMDEs face an unprecedented public health crisis,but their fiscal positions were already strained evenbefore the recent collapse in oil revenues. To helpretain access to market-based financing for fiscalsupport programs, these EMDEs will need to makecredible commitments to a sustainable medium-term fiscal position. For some of them, current lowoil prices provide an opportunity to implementenergy-pricing policies that yield efficiency and fiscalgains over the medium term.

This Executive Summary highlights the macro-economicchallenges that COVID-19 has thrown before the worldeconomy. India is no exception. It is now feared thatmore time will be required to get free from the pandemicand possibly it has not reached its peak. In a situationof economic turbulence, banking became the first andmajor victim. The economic disruption will impair theassets quality further straining the Balance Sheet of thebanks. There are apprehensions that liberal doses offinancing may create further problems for the sector inthe years to come. The decision of the government torely more on monetary policy measures withoutemploying the weapons of fiscal policy changes maycreate additional problems for the banking sector.

We have reasons to apprehend that the problems forthe Indian banking sector may remain even after thereminiscences of the pandemic fades away from thepeoples mind. This may be used by the power that be,to malign the bankers for a crisis which they are notresponsible for. It is absolutely important to follow thecourse of economic upheaval and remain strict to thelending guidelines of the banks while discharging dailyresponsibilities that of a frontline soldier.

The decision of the central bank and bankingregulator to increase the group exposure limit thatbanks have in calculating the quantum of loansgiven to a particular corporate conglomerate as aproportion of the total loans given by the specificbank, will benefit the big corporates only.

Over the past few weeks, Newsclick hasdocumented and analysed how India’s biggestprivate corporate entity has benefitted fromchanges in government policies. In this, article,the implications of a recent policy change by theReserve Bank of India (RBI) are examined.

On May 22, the country’s central bank and apexmonetary authority hiked the group exposure limitof banks to a single corporate group from 25% to

‘Biggest Corporate bound to be Biggest Beneficiary’Economy

30% till June 30, 2021. The limit will be restored to25% after the deadline unless the RBI decidesotherwise. The group exposure limit determines themaximum amount a bank can lend to one corporategroup, ostensibly to prevent loan repayment troublesin one group entity spilling over to the entire groupleading to systemic risks for banks.

What the Parliamentary Committee Said

On January 3, 2019, the 31-member, multi-partyParliamentary Standing Committee on Finance’ssubmitted its report. Here are excerpts from the reportrelating to group exposure of banks:

“Currently, the concerns arising from concentration riskdue to banks’ exposures towards their single and group


Issues

THERMAL SCANNERS CAN DETECT IF PEOPLE HAVE A FEVER BUT CANNOT DETECT WHETHER OR NOT SOMEONE HAS THE CORONAVIRUS

borrowers are addressed by way of limits on suchexposures. However, in order to converge the currentprudential norms on “banks’ exposures” with the BCBS(Basel Committee on Banking Supervision) standardson ‘Supervisory framework for measuring andcontrolling large exposures’, RBI has issued the finalguidelines on ‘Large Exposures Framework’ videcircular dated December 1, 2016. The Frameworkwould be fully applicable by January 1, 2019.”

The parliamentary committee’s report added: “Underthe framework, the LE (large exposure) limit in respectof each counter party and group of connected counterparties, under normal circumstances, will be cappedat 20 percent and 25 percent respectively of theeligible capital base i.e. Tier 1 capital of the bank asagainst ‘Capital Funds’ at present.”

In the section titled, ‘Guidelines on Framework forEnhancing Credit Supply for Large BorrowersThrough Market Mechanism’, the report stated: “Witha view to mitigating the risk posed to the bankingsystem on account of overleveraging of a singlecorporate, RBI has issued guidelines on Frameworkfor enhancing Credit Supply for Large Borrowersthrough Market Mechanism vide circular datedAugust 25, 2016. The Framework has come into effectfrom the financial year 2017-18 and will beapplicable to all banks in India as well as branchesof Indian banks abroad.

“Under the Framework, incremental bank credit toborrowers having aggregate sanctioned fund-basedcredit limits (ASCL) in excess of a threshold, fromthe banking system, will invite additional riskweights and higher standard asset provisions. Thisshould encourage larger borrowers to access moreof their financing needs from market sources, e.g.bond issuance.”

Bankers’ React to RBI Decision

A top source in the public sector State Bank of India(SBI), the country’s largest bank, observed that theincrease in the group exposure limit will only helpthe corporates. Speaking to one of the authors ofthis article on condition of anonymity, he said:“Exposure limits of banks to corporate groups shouldbe in the public domain, just as industry-wiseexposure limits are. There should also be greaterclarity on the criteria for including an entity as a partof a group, especially in the case of entities wherethe promoters may have a minority shareholding buta controlling interest. The shareholding thresholdlimits for inclusion of an entity in a group should beclearly stated, as well as what constitutes ‘controllinginterest’ for multi-layered entities in a group thathas complex cross-holdings.

(Edited article of Shri Pranjoy Guhathakurtha inNEWSCLICK.)

CIRCULARS

20 dated 26th February, 2020: AIBOC issues pressstatement objecting the derogatory statement ofHon’ble Finance Minister about public sector banksand the banking fraternity

21 dated 28th February, 2020: Tax on perquisite valueof accommodation W.P.NO. 14126/2008 in the matterof AIBOC VS. UNION OF INDIA AND OTHERS

22 dated 28th February, 2020: Tax on perquisite valueunder Section 17(2) of Income Tax Act, 1961 asamended by Finance Act, 2007 Appeal against finalJudgement Order dated 20.04.2016 in W.P. NO.

10053 of 2008 of Madras High Court AIBOC appealin Supreme Court of India, Special Leave Petition No.4327/2017

23 dated 28th February, 2020: AIBOC issues pressstatement objecting the derogatory statement of Hon’ble Finance Minister about public sector banksand the banking Fraternity

24 dated 29th February, 2020: Text of UFBU CircularNo. UFBU/2020/07 dated 29.02.2020 on Bipartitetalks with IBA on 29.02.2020


ANTIBIOTICS DO NOT WORK AGAINST VIRUSES, ANTIBIOTICS ONLY WORK AGAINST BACTERIA

25 dated 05th March, 2020: Text of the PressRelease dated 05.03.2020 by AIBOC opposingcabinet decision on mega consolidation of ten publicsector banks into four

26 dated 06th March, 2020: Text of the PressRelease dated 06.03.2020 by AIBOC denouncing the proposed bail out of YES Bank

27 dated 07th March, 2020 : International Women’sDay 2020 #EachForEqual

28 dated 11th March, 2020 : Agitation Programmeagainst Amalgamation of PSBs

29 dated 18th March, 2020 : Text of the LetterNo. AIBOC/2020/13 dated 18.03.2020 addressedto Shri Ajay Bhushan Pandey, Finance Secretary,Govt. of India on Coronavirus Threat – Review ofproposed bank mergers

30 dated 18th March, 2020 : Text of Letter No.AIBOC/2020/14 dated 18.03.2020 addressed toDeputy Secretary (Fin-I), A&N Administration, PortBlair, South Andaman on the advisory issued by A&NAdministrations – Our response

31 dated 20th March, 2020 : Text of Letter No.AIBOC/2020/15 dated 20.03.2020 to the Governorof RBI On COVID-19 – Wellbeing and protection ofemployees and officers of the banking sector

32 dated 23rd March, 2020 : Text of Letter No.AIBOC/2020/16 dated 22.03.2020 addressed to theGovernor, RBI on Nationwide fight againstcoronavirus by country’s financial army

33 dated 25th March, 2020 : Text of Letter No.AIBOC/2020/17 dated 25.03.2020 addressed to theHon’ble Prime Minister of India to revisit the decisionof merger of 10 PSBS

34 dated 27th March, 2020 : Text of Letter No.AIBOC/2020/18 dated 27.03.2020 - AIBOC writes

to the Hon’ble Finance Minister of India proposing aslew of critical measures to be adopted for thebankmen and business correspondents workers

35 dated 29th March, 2020 : Text of Letter No. AIBOC/2020/19 dated 29.03.2020 - Implementation of variousSchemes and measures announced by the Hon’ble FM– a way forward

36 dated 31st March, 2020 : Text of Letter No. AIBOC/2020/20 dated 31.03.2020 to the Secretary Departmentof Financial Services, Ministry of Finance, GOI, expressingstrong resentment on how Bankers are forced to deviatefrom ‘Break the Chain’

37 dated 01st April, 2020 : AIBOC condemns theamalgamation of Public Sector Banks

38 dated 03rd April, 2020: COVID-19 Donation toPM-CARES Fund 39 dated 15th April, 2020 : Text ofLetter No. AIBOC/2020/22 dated 15.04.2020 to theSecretary Department of Financial Services, Ministryof Finance, GOI, expressing concern and seekingessential measures on extension of Lockdown till 3rdMay’20

40 dated 23rd April, 2020 : Text of joint letter dated23.04.2020 to IBA Chairman by AIBOC, AIBOA, INBOCand NOBO on Extension of lockdown period :Disciplinary Proceedings

41 dated 28th April, 2020 : Text of joint letter dated28.04.2020 to IBA Chairman by AIBOC, AIBOA,INBOC and NOBO on COVID-19 Pandemic -Classification of Leave of Absence

42 dated 30th April, 2020 : International Workers’Day : Challenges Ahead

43 dated 30th April, 2020 : Dearness Allowance

44 dated 05th May, 2020 : Text of Letter No. AIBOC/2020/23 dated 05.05.2020 to the SecretaryDepartment of Financial Services, Ministry of Finance,


THERE IS NO EVIDENCE THAT COMPANION ANIMALS/PETS SUCH AS DOGS OR CATS CAN TRANSMIT THE CORONAVIRUS

GOI, on Mega amalgamation of 10 banks into 4 -HR related issues

45 dated 11th May, 2020 : Text of joint letter dated23.04.2020 to the Central Chief VigilanceCommissioner by AIBOC, AIBOA, INBOC and NOBOon CVC Guidelines – transfer of bank officers

46 dated 20th May, 2020 : Text of Letter No. AIBOC/2020/24 dated 20.05.2020 to the SecretaryDepartment of Financial Services, Ministry of Finance,GOI, on discrimination to the retirees of erstwhileAllahabad Bank

47 dated 26th May, 2020 : Join hands to rebuildWest Bengal

48 dated 11th June, 2020: Text of Letter No. AIBOC/

2020/25 dated 11.06.2020 to IBA Chairmanregarding COVID-19 ailment - Hospitalisation:Reimbursement under medical insurance Scheme

49 dated 13th June, 2020 : Com Shashidhar Shetty,Joint General Secretary, AIBOC and PresidentSyndicate Bank Officers’ Association passes away

50 dated 17th June, 2020 : Text of Letter No. AIBOC/2020/26 dated 17.06.2020 to the Hon’ble Minsiterof Railways, GOI, on resumption of suburban trainservices in Mumbai: Bankers to be permitted to availthe facility as essential service providers

51 dated 24th June, 2020 : Text of Letter No. AIBOC/2020/27 dated 24.06.2020 to the Hon’ble FinanceMinister, GOI, on Assault on Bankers - Incident at SaroliBranch of Canara Bank (e-Syndicate bank) at Surat

JUDICIAL VERDICT

[2017 (155) FLR 75](SUPREME COURT)

SUDHIR AGARWAL and MUKHTAR AHMAD,JJ.W.A.No. 33687 of 2006

April 24, 2017Between

PRAMOD KUMAR SINGH SISHODIAAnd

STATE OF U.P and others

Disciplinary Proceedings-Dismissal-Charge sheet given to petitioner and departmental enquiry-proceeded-show cause notice issued and punishment of dismissal imposed-In case of imposing majorpenalty, charges must be proved passing the impunged order of punishment-Impugned punishmenttherefore, cannot be sustained. [Para 20]

JUDGMENT

SUDHIR AGARWAL and MUKHTAR AHMAD,JJ.-Punishment order of dismissal and recovery dated29.3.2006 passed by Managing Director U.P.Cooperative Federation Limited is under challenge.

It is contended that petitioner received a charge-sheet dated 13.6.2005, pursuant whereof a

departmental inquiry proceeded. However relied ondocuments were not supplied to petitioner. Petitionersubmitted reply to charge-sheet on 11.12.2005denying all the charges. Inquiry Officer thereaftersubmitted inquiry report on 20.12.2005 which showsthat no oral inquiry at all was conducted and onlyon the ground since petitioner has not submitted replyto charge-sheet charges were treated proved.


KEEP YOUR WORKPLACE HYGENIC. USE SANITIZERS FREQUENTLY

2. Disciplinary Authority thereafter issued a showcause notice on 21.12.2005 alongwith inquiry reportdated 20.12.2005 and thereafter punishment ordersdated 20.2.2006 was passed imposing punishmentof dismissal as also recovery.

3. Learned Counsel for petitioner has assailed entireproceedings mainly on the ground that thoughmajor penalty of dismissal has been imposed butno oral inquiry was conducted before holding thecharges proved and hence entire proceedings arevitiated.

4. We find force in the substance.

5. In Meenglas Tea Estate v. The Workmen theSupreme Court observed “It is an elementaryprinciple that a person who is required to answer acharge must know not only the accusation but alsothe testimony by which the accusation is supported.He must be given a fair chance to hear the evidencein support of the charge and to put such relevantquestions by way to cross-examination as hedesires. Then he must be given a chance to rebutthe evidence led against him. This is the barestrequirement of an enquiry of this character and thisrequirement must be substantially fulfilled beforethe result of the enquiry can be accepted.

6. In State of U.P. v.C.S.Sharma Court held thatomission to give opportunity to the officer to producehis witnesses and lead evidence in his defencevitiates the proceedings. The Court also held thatin the enquiry witnesses have to be examined insupport of the allegations and opportunity has tobe given to the delinquent to cross-examine thesewitnesses and to lead evidence in his defence.

7. In Punjab National Bank v. A.I.P.N.B.E.Federation (vide para 66) Court held that in suchenquiries evidence must be recorded in the presenceof the charge-sheeted employee and he must begiven an opportunity to rebut the said evidence. Thesame view was taken in A.C.C. Ltd. v. TheirWorkmen and in Tata Oil Mills Co. Ltd., v. TheirWorkmen.

8. In S.C.Girotra v. United commercial BankCourt set aside a dismissal order which was passed

without giving employee an opportunity of cross-examination.

9. This Court in Subhas Chandra Sharma v.Managing Director and another said:-

In our opinion after the petitioner replied to thecharge-sheet a date should have been fixed forthe enquiry and the petitioner should have beenintimated the date, time and place of the enquiryand on that date the oral and documentaryevidence against the petitioner should have beenled in his presence and he should have beengiven an opportunity to cross-examine thewitnesses against him and also he should havebeen given an opportunity to produce his ownwitnesses and evidence. If the petitioner inresponse to this intimation had failed to appearfor the enquiry then an ex parte enquiry shouldhave been held but the petitioner’s serviceshould have not been terminated withoutholding an enquiry. In the present case itappears that no regular enquiry was held at all.All that was done that after receipt of thepetitioner’s reply to the charge-sheet he wasgiven a show-cause notice and thereafterthe dismissal order was passed. In ouropinion this was not the correct legalprocedure and there was violation of therules of natural justice. Since no date forenquiry was fixed nor any enquiry held inwhich evidence was led in our opinion theimpugned order is clearly violative ofnatural justice.”

10. The above judgment was followed by a DivisionBench in Subhash Chandra Sharma v. U.P.Co-operative Spinning Mills and others the Court heldthus:

“In case where a major punishmentproposed to be imposed an oral enquiry isa must whether the employee request for itor not. For this it is necessary to issue a noticeto the employee concerned intimating him datetime and place of the enquiry as held by theDivision Bench of this Court in SubhashChandra Sharma v. Managing Directoragainst which SLP has been dismissed by theSupreme Court on 16.8.2000.”


AVOID CROWDING AT BRANCHES. MAINTAIN PHYSICAL DISTANCING

11. In theState of Uttar Pradesh v. Saroj Kumar SinhaCourt held that:-

“An inquiry officer acting in a quasi-judicialauthority is in the position of an independentadjudicator. He is not supposed to be arepresentative of the department/disciplinaryauthority/Government. His function is toexamine the evidence presented by theDepartment even in the absence of thedelinquent official to see as to whether theunrebutted evidence is sufficient to hold thatthe charges are proved. In the present case theaforesaid procedure has not been observed.Since no oral evidence has been examinedthe documents have not been proved, andcould not have been taken intoconsideration to conclude that the chargeshave been proved against the respondents.

When a departmental enquiry is conducted againstthe Government servant it cannot be treated as acasual exercise. The enquiry proceedings also cannotbe conducted with a closed mind. The inquiry officerhas to be wholly unbiased. The rules of natural justiceare required to be observed to ensure not only thatjustice is done but is manifestly seen to be done.The object of rules of natural justice is to ensure thata Government servant is treated fairly in proceedingswhich may culminate in imposition of punishmentincluding dismissal. Removal from service.”

12. Similar view was taken in Roop Singh Negi v.Punjab National Bank, as under:-

“Indisputably a departmental proceeding is aquasi-judicial proceeding. The enquiry officerperforms a quasi-judicial function. The chargelevelled against the delinquent officer must befound to have been proved. The enquiry officerhas a duty to arrive at a finding upon takinginto consideration the materials brought onrecord by the parties. The purported evidencecollected during investigation by theinvestigating officer against all the accused byitself could not be treated to be evidence in thedisciplinary proceeding. No witness wasexamined to prove the said documents. Themanagement witnesses merely tendered the

documents and did not prove the contentsthereof. Reliance inter alia was placed bythe enquiry officer on the FIR which couldnot have been treated as evidence.”

13. One of us (Justice Sudhir Agarwal) in RajeshPrasad Mishra v. Commissioner Jhansi DivisionJhansi and others observed as under after detailanalysis:

“Now coming to the question what is the effectof non-holding of oral inquiry I find that in acase where the inquiry officer is appointed oralinquiry is mandatory. The charges are notdeemed to be proved suo motu merely onaccount of levelling them by means of thecharge sheet unless the same are proved bythe department before the inquiry officer andonly thereafter it is the turn of delinquentemployee to place his defence. Holding oralenquiry is mandatory before imposing a majorpenalty as held by Apex Court in State of U.P.and another v. T.P.Lal Srivastava as well asby a Division Bench of this Court in SubhashChandra Sharma v. Managing Director andanother.

14. In another case in Subhash Chandra Gupta v.State of U.P. the Division Bench of this Court aftersurvey of law on this issue observed as under:

‘It is well settled that when the statute providesto do a thing in a particular manner that thinghas to be done in that very manner. We are ofthe considered opinion that any punishmentawarded on the basis of an enquiry notconducted in accordance with the enquiry rulesmeant for that very purposes is unsustainablein the eye of law. We are further of the viewthat the procedure prescribed under the inquiryrules for imposing major penalty is mandatoryin nature and unless those procedures arefollowed any outcome inferred thereon will beof no avail unless the charges are so glaringand unrefutable which does not require anyproof. The view taken by us find support fromthe judgement of the Apex Court in state ofU.P. and another v. T.P.Lal Srivastava as wellas by a Division Bench of this Court in Subash

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Chandra Sharma v. managing Director andanother.

A Division Bench decision of this Court in thecase of Salahuddin Ansari v. State of U.P. andothers held that non holding of oral inquiryis a serious flaw which can vitiate the orderof disciplinary proceeding including theorder of punishment has observed asunder:-

10. ………Non holding of oral inquiry in such acase is a serious matter and goes to the root ofthe case.

11. A Division Bench of this Court in SubashChandra Sharma v. Managing Director andanother considering the question as to whetherholding of an oral inquiry is necessary or not, heldthat if no oral inquiry is held it amounts to denialof principles of natural justice to the delinquentemployee. The aforesaid view was reiterated inSubash Chandra Sharma v. U.P.CooperativeMills and others and Laturi Singh v. U.P. PublicService Tribunal and others Writ Petition No.12939 of 2001 decided on 6.5.2005.

15. Even if the employees refuses to participate inthe enquiry the employer cannot straightaway dismisshim, but he must hold and ex parte enquiry whereevidence must be led vide Imperial Tobacco Co.Ltd. v. Its Workmen Uma Shankar v. Registrar.

16. The Division Bench of this Court in the case ofMahesh Narain Gupta v. State of U.P. and othershad also occasion to deal with the same issue. It held.

“At this stage we are to observe that in thedisciplinary proceedings against adelinquent the department is just like aplaintiff and initial burden lies on thedepartment to prove the charges which cancertainly be proved only by collecting someoral evidence or documentary evidence inpresence and notice charged employee.Even if the department is to rely its ownrecord/document which are alreadyavailable then also the enquiry officer by

looking into them and by assigning his ownreason after analysis will have to record afinding that those documents are sufficientenough to prove the charges.

In no case approach of the Enquiry Officer thatas no reply has been submitted, the charge willhave to be automatically proved can beapproved. This will be erroneous. It has beenrepeatedly said that disciplinary authority hasa right to proceed against delinquent employeein ex parte manner but some evidence willhave to be collected and justification to sustainthe charges will have to be stated in detail.The approach of the enquiry officer of automaticprove of charges on account of non filing ofreply is clearly misconceived and erroneous.This is against the principle of natural justicefair play fair hearing and thus enquiry officerhas to be cautioned in this respect.”

17. Recently the entire law on the subject has beenreviewed and reiterated in Chamoli district Co-operative Bank Ltd., v. Raghunath Singh Ranaand others, and court has culled out certainprinciples as under:

(i) The enquiries must be conducted bona fideand care must be taken to see that theenquiries do not become empty formalities.

(ii) If an officer is a witness to any of the incidentswhich is the subject matter of the enquiry orif the enquiry was initiated on a report ofan officer then in all fairness he should notbe the Enquiry Officer. If the said positionbecomes know after the appointment of theEnquiry Officer during the enquiry stepsshould be taken to see that the task ofholding an enquiry is assigned to someother officer.

(iii) In an enquiry the employer/departmentshould take steps first to lead evidenceagainst the workman/delinquent chargedand give an opportunity to him to cross-examine the witnesses of the employer. Onlythereafter, the workman/delinquent be

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asked whether he wants to lead any evidenceand asked to give any explanation about theevidence led against him.

(iv) On receipt of the enquiry report beforeproceeding further it is incumbent on the partof the disciplinary/punishing authority tosupply a copy of the enquiry report and allconnected materials relied on by the enquiryofficer to enable him to offer his views if any.”

18. The principal of law emanates from the abovejudgments are that initial burden is on the departmentto prove the charges. In case of procedure adoptedfor inflicting major penalty the department must provethe charges by oral evidence also.

19. So far as case in hand is concerned learnedStanding Counsel despite repeated query could notproduce anything before us to show that before passingimpugned order of punishment any oral inquiry was

conducted.

20. In view thereof and applying the above expositionsof law to the facts in the case in hand impugnedpunishment order cannot be sustained.

21. Writ Petition is allowed. Impugned order dated29.3.2006 is hereby set aside.

22. It is made clear that normally we would havepermitted respondents to initiate fresh proceedings,but subsequent events do not permit us to do so forthe reason that petitioner-employee Pramod KumarSingh Sishodia during pendency of this writ petitionhas died and substituted by his legal heirs and thiswrit petition is being pursued by his legal heirs forconsequential monetary benefits. Therefore there isno occasion for giving liberty to respondents to holdfresh inquiry from the stage of charge-sheet.

Petition Allowed.

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