Facts of the Case

This is a bank employee disciplinary case, not a GST matter — GST (and its predecessor VAT/CST) registrations of certain borrower firms are mentioned only as evidence bearing on whether those firms genuinely existed. The respondent, K V Subrahmanyam, was appointed an Officer in Syndicate Bank (now Canara Bank) in 1974 and rose to Senior Branch Manager. While posted at the Sitarambagh Branch, Hyderabad in 2010, he was alleged to have granted overdraft facilities of Rs. 48,00,000 each to three firms (M/s Shiva Metal Industries, M/s Vasudev Food Products, and M/s Rajya Lakshmi Foods) without verifying whether they were actually functioning, allegedly causing the Bank financial loss. A charge memo was issued in August 2010; he retired in August 2010 while the disciplinary proceedings continued. After an inquiry, he was dismissed from service by order dated 10 January 2012, and his departmental appeal was rejected.

The respondent challenged the dismissal before the High Court, and a Single Judge, by order dated 23 August 2022, set aside the dismissal and modified the punishment to stoppage of two increments without cumulative effect. The Bank appealed against this modification.

Issues Involved

  1. Whether the punishment of dismissal was disproportionate to the misconduct alleged.
  2. Whether the Single Judge, having found the punishment disproportionate, could himself substitute a specific lesser punishment, or should instead have remanded the matter to the disciplinary authority.

Petitioner's Arguments

  • (Bank/Appellant) The Enquiry Officer had specifically held the charge proved after giving the respondent every opportunity, and dismissal was rightly imposed given the gravity of the allegation; the Single Judge should not have interfered with or modified the punishment.

Respondent's Arguments

  • No witnesses were examined to prove that the respondent actually extended the overdraft facility to the three firms; the three firms held valid SSI Registration, CST Registration, and VAT Registration Certificates, and the overdraft accounts had been settled by the Bank itself under a One Time Settlement Scheme, showing the Bank suffered no ultimate loss.
  • Given 36 years of unblemished service and this being a solitary charge, dismissal was shockingly disproportionate; the Single Judge was right to interfere on that ground.

Court Order / Findings

  • The Division Bench agreed that, given the firms' valid registrations (SSI, GST/VAT and CST-era registrations, as admitted by the Bank itself) and the fact that the loan accounts were settled under a One Time Settlement Scheme, dismissal was indeed shockingly disproportionate to the charge, especially given the respondent's 36 years of service and single lapse.
  • However, it held the Single Judge erred in himself substituting a specific alternate punishment (stoppage of two increments); instead, the matter should have been remanded to the Bank to decide an appropriate punishment short of dismissal/removal.
  • The Writ Appeal was disposed of by remanding the matter to the Bank to impose any punishment other than dismissal or removal, taking into account the respondent's long service and the singular nature of the lapse.

Important Clarification

The reference to the borrower firms' GST (and predecessor VAT/CST) registrations was used only to show they were not entirely fictitious entities — it has no bearing on any GST law question. The substantive holding concerns proportionality of punishment in bank service law, and the correct procedure (remand, not judicial substitution) for revisiting a disproportionate punishment.

Sections Involved

  • Bank service and disciplinary rules governing proportionality of punishment (statute/regulation not specified in the order)

Decision – In Favour of

A mixed outcome, disposed of by remand. Neither the Bank's original dismissal nor the Single Judge's substituted punishment survived intact; the matter was sent back to the Bank to decide a fresh, proportionate punishment.

Case Details

Court: High Court for the State of Telangana at Hyderabad
Case No.: Writ Appeal No. 769 of 2022
Coram: Justice Abhinand Kumar Shavili and Justice Anil Kumar Jukanti
Date of Judgment: 19 September 2023

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