Facts of the Case

This is a service-law dismissal case, not a GST matter; GST is mentioned only once, as documentary evidence that a borrower company genuinely existed. The petitioner, V. Sundarrajan, joined Bank of India as a Clerk in 1991 and was promoted to Officer in 2004. On 26.07.2016 he was suspended and issued a charge memo, later followed by a formal charge memo dated 15.05.2017 under Regulation 12 of the Bank of India Officer Employees (Conduct) Regulations, 1976, containing eight charges (Articles I to VIII) of lending misconduct — including endorsing a Rs.25 crore post-dated cheque as "good for payment" without proper security or approval, sanctioning a cash credit limit to an allegedly non-existing firm (M/s CMS Agro Equipment), sanctioning 18 term loans based on that firm causing an alleged loss of Rs.274.89 lakh, and several other lending irregularities causing further alleged losses.

Following disciplinary proceedings, the petitioner was dismissed from service by order dated 30.01.2018, which was confirmed in appeal on 26.09.2018 and again on review on 31.07.2019. He challenged all three orders before the Madurai Bench of the Madras High Court.

Issues Involved

  1. Whether the borrower firm, M/s CMS Agro Equipment, was genuinely non-existing, as alleged in Article II of the charges.
  2. Whether the lending decisions underlying Articles II to VIII amounted to misconduct or were legitimate business/lending decisions.
  3. Whether the punishment of dismissal was proportionate to the proven misconduct, if any.

Petitioner's Arguments

  • The alleged non-existing firm, M/s CMS Agro Equipment, was in fact registered with the Commercial Tax Department and held a TIN number and GST number, and was filing Income Tax Returns — demonstrating it was a genuine, existing business and not a bogus entity as alleged.
  • The lending decisions reflected in Articles III to VIII were ordinary business/credit decisions taken within permissible banking risk parameters, not misconduct.
  • Regarding the Rs.25 crore cheque endorsement (Article I), the transaction was withdrawn immediately and stopped.
  • The petitioner had served the Bank for over 26 years, and dismissal was a disproportionate punishment.

Respondent's Arguments

The Bank maintained that the petitioner had committed serious lending irregularities across eight distinct charges, including endorsing a large-value cheque without proper security and sanctioning credit facilities to a firm alleged to be non-existent, causing substantial financial exposure, and that dismissal was warranted based on the disciplinary findings which had already been confirmed in appeal and review.

Court Order / Findings

  • The Court found that the firm M/s CMS Agro Equipment was shown by documentary evidence (registration with the Commercial Tax Department, TIN and GST numbers, and Income Tax filings) to be an existing entity, undermining the "non-existing firm" premise of Article II and the connected charges.
  • The other lending-related charges (Articles III to VIII) were found to reflect business risk and business decisions permissible in banking, rather than misconduct.
  • On Article I (the Rs.25 crore cheque endorsement without proper security), the Court noted this transaction was withdrawn immediately and there was no actual pecuniary loss to the Bank.
  • Considering the petitioner's over 26 years of service and the absence of proven pecuniary loss, the Court held the punishment of dismissal to be disproportionate.
  • The dismissal order was quashed, and the Bank was directed to reinstate the petitioner within two weeks with consequential benefits, while being left free to consider a lesser punishment for the first charge alone.

Important Clarification

The GST and TIN registration certificates in this case were used only to disprove one specific factual allegation — that a borrower firm did not exist. This judgment lays down no principle of GST law at all; it is a service-law ruling on proportionality of punishment in bank disciplinary proceedings. Readers should not treat it as GST-related despite the passing mention.

Sections Involved

  • Bank of India Officer Employees (Conduct) Regulations, 1976 (Regulation 12)
  • Article 226, Constitution of India (writ jurisdiction; certiorarified mandamus)

Decision – In Favour of

Decided in favour of the petitioner. The dismissal order was quashed as disproportionate, and reinstatement with consequential benefits was directed, with only the first charge left open for a lesser punishment.

Case Details

  • Court: Madurai Bench of the Madras High Court
  • Case No.: W.P.(MD) No.21492 of 2019
  • Coram: Hon'ble Mrs. Justice S. Srimathy
  • Date of Judgment: Reserved 28.06.2023, Pronounced 27.09.2023

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