1 2025:HHC:21732 ) IN THE HIGH COURT OF HIMACHAL PRADESH SHIMLA CWP No. 3594 of 2021 Reserved on 18.06.2025 Decided on: 08.07.2025. __________________________________________________________ Nek Ram Chauhan ....Petitioner Versus UCO Bank and another …. Respondents __________________________________________________________ Coram The Hon'ble Mr. Justice Satyen Vaidya, Judge 1 Whether approved for reporting? No __________________________________________________________ For the petitioner : Mr. H.K. S. Thakur, Advocate. For the respondents : Mr. Sanjay Dalmia, Advocate. __________________________________________________________ Satyen Vaidya, Judge By way of instant petition, petitioner has prayed for the following substantive reliefs: (A) That the writ petition may kindly be allowed and the orders dated 17.04.2020 (Annexure P-8) and 4.3.2021 (Annexure P-9) may kindly be set-aside and quashed in the interest of justice. (B) That further direction may kindly be issued to the respondent to pay full salary and financial and non-financial benefits along with interest from the date of suspension i.e. 15.12.2018 till 16.04.2020. 2. The petitioner faced disciplinary proceedings held against him by the respondent-Bank on the following charges: - 1 Whether reporters of Local Papers may be allowed to see the judgment? 2 2025:HHC:21732 ) “Mr. N.R.Chauhan (Emp. No.37752), Manager (Under suspension), while functioning as Branch Head at Branch Offices Jarol (1240), Thanedhar (0188) and Dhalli (0564), has allegedly committed certain acts of omission and commission. The irregularities committed by him are mentioned in the enclosed statement of allegations, based on which, he is hereby charged as under: 1) Mr. N.R. Chauhan, Emp. No.37752, failed to take all possible steps to ensure and protect the interests of the bank, in violation of Regulation 3 (1) of UCO Bank Officer Employees’ (Conduct) Regulations, 1976, as amended. 2. Mr. N.R. Chauhan, Emp. No.37752, has failed to discharge his duties with utmost honesty and integrity, in violation of Regulation 3(1) of UCO Bank Officer Employees’ (Conduct) Regulations, 1976, as amended. 3. Mr. N.R. Chauhan, Emp. No.37752, has failed to discharge his duties with utmost devotion and diligence and acted in a manner unbecoming of a bank officer, in violation of Regulation 3(1) of UCO Bank Officer Employees’ (Conduct) Regulations, 1976, as amended. 4. Mr. N.R. Chauhan, Emp. No.37752, while discharging his official duties has acted otherwise than in his best judgement, in 3 2025:HHC:21732 ) violation of Regulation 3(3) of UCO Bank Officer Employees’ (Conduct) Regulations, 1976, as amended. The violations of the above-mentioned regulations on the part of Mr. N.R. Chauhan, Emp. No.37752, constitutes a misconduct punishable under UCO Bank Officer Employees’ (Discipline and Appeal) Regulations, 1976, as amended.” 3. The Articles of Charge served upon the petitioner were preceded by the show cause notices dated 15.06.2019 and 11.09.2019. Though, the first show cause notice dated 15.06.2019 was duly replied by the petitioner, but he was served with another show cause notice dated 11.09.2019. The petitioner replied to second show cause notice also. The Bank did not find the explanation rendered by the petitioner sufficient and thus served the petitioner with the Articles of Charge. 4. The details of allegations were presented by way of statements of allegations served upon the petitioner for the Articles of Charge. It was alleged that the petitioner while posted as Branch Head at Branch Offices Jarol w.e.f. 20.07.2009 to 29.10.2012; Thanedhar w.e.f. 30.10.2012 to 27.07.2016 and Dhalli w.e.f. 28.07.2016 to 15.12.2018 had 4 2025:HHC:21732 ) committed various acts of omission and commission in the course of his duties, which amounted to flagrant violations of systems and procedures of the Bank. Precisely the following allegations were levelled against the petitioner: - (i) Irregularities in advance accounts; (ii)suspicious cash deposits/transfer of funds from accounts of borrowers to his overdraft/savings bank accounts and savings bank accounts of his wife and vice versa. (iii)Numerous transactions were made by petitioner in his own and his wife’s accounts and considerable sums of money had been credited to these accounts without any justification for the same and which were alleged from other than his known sources of income. 5. As per the Bank, frequent transactions with borrowers’ accounts were suspicious in nature and did not appear as justified. The said action of petitioner was alleged to be malafide and a cause of concern for the bank. It was also alleged that credit facilities sanctioned during his tenure as Branch Head are indicative that petitioner did not exercise 5 2025:HHC:21732 ) his lending powers judiciously and indulged in violation of delegations and established systems, procedures and guidelines issued by the Bank from time to time. The petitioner was alleged to be gross negligent and recklessness in performance of his duties. 6. The inquiry was conducted by the Inquiry Officer Mr. Ramesh Kumar Kakkar, AGM (Retd.). 7. The Inquiry Officer vide report dated 06.02.2020, held the 1st, 3rd and 4th Articles of Charge as proved against the petitioner, whereas, the Article of Charge at serial No.2 was held to be not proved. 8. The detailed findings report by the Inquiry Officer are reproduced as under: “Thus, the allegation to the extent that Margin money is not infused and CC limit is opened on the firm under PMEGP scheme while TL portion is opened in the name of entrepreneur stands proved. Thus, it has been observed that while sanctioning of advances, the CSO has not followed bank guidelines issued for financing under various schemes of the bank in regard to conducting of PSVR-2, PSVR-4, PDIR, fulfilling the income eligibility criteria, obtaining necessary documents for additional income, financial 6 2025:HHC:21732 ) statements/projected statements and verification of stock/ensuring end use of bank funds. As such, the CSO was found negligent for the lapses/irregularities observed in the accounts as discussed above. Further, it has been observed the Mr. N.R. Chauhan has indulged frequently in transactions by officers of the bank or their family financial transactions with the constituents of the bank and acted in utter violation of bank rules and guidelines for which he remained always negligent. However, since these transactions are emanating from known persons/ sources for purposes without any malafide and are without any complexity, these are not suspicious by nature. Moreover, there is no complaint against Mr. N.R. Chauhan and no malafide has been observed during the course of enquiry. All the management witnesses have confirmed this fact and stated that bank’s business has increased during his tenure and bank has also appreciated his efforts which have been placed on record. Looking into the objectives of the transactions and deposition of management as well as Defence witnesses there is no reason to believe that Mr. N.R. Chauhan acted with any mischief or dishonestly for any gain though he remained negligent for the said transactions.” 7 2025:HHC:21732 ) 9. The Disciplinary Authority vide order dated 17.04.2020 concurred with the findings of Inquiry Officer and imposed following penalties: - Sl. No. Charge Status Penalty 1. Mr. N.R. Chauhan’ Emp. No. 37752, failed to take all possible steps to ensure and protect the interests of the bank, in violation of Regulation 3(1) of UCO Bank Officer Employees’ (Conduct) Regulations, 1976,as amended. Proved Basic pay of Sh. N.R. Chauhan (Emp. No.37752), Manager is reduced by two stages in the time scale of pay for one year with further direction that the officer will not earn increments of pay during the period and on expiry of such period the reduction will have the effect of postponing the future increments of pay. 2. --------- ------ ---------- 3. Mr. N.R. Chauhan, Emp. No. 37752, has failed to discharge his duties with utmost devotion and diligence and acted in a manner unbecoming of a bank officer in violation of Regulation 3(1) of UCO Bank Officer Employees’ (Conduct) Regulations, 1976, as amended. Proved Basic pay of Sh. N.R. Chauhan (Emp. No.37752), Manager is reduced by two stages in the time scale of pay for one year with further direction that the officer will not earn increments of pay during the period and on expiry of such period the reduction will have the effect of postponing the future increments of pay. 8 2025:HHC:21732 ) 4. Mr. N.R. Chauhan, Emp. No. 37752, while discharging his official duties has acted otherwise than in his best judgment, in violation of Regulation 3(3) of UCO Bank Officer Employees’ (Conduct) Regulations, 1976, as amended. Proved Basic pay of Sh. N.R. Chauhan (Emp. No.37752), Manager is reduced by two stages in the time scale of pay for one year with further direction that the officer will not earn increments of pay during the period and on expiry of such period the reduction will have the effect of postponing the future increments of pay. 10. The penalties were ordered to have concurrent and immediate effect. The suspension of petitioner was revoked and his suspension period was ordered not to be treated as spent on duty. Consequently, the petitioner was not held entitled for any financial or non-financial benefits during the suspension period except subsistence allowance paid to him. 11. The petitioner assailed the inquiry report as also order dated 17.04.2020 passed by Disciplinary Authority by filing service appeal, however, his appeal has also been rejected vide order dated 04.03.2021 by the Appellate Authority i.e. the General Manager Personnel Services of the 9 2025:HHC:21732 ) Bank. Hence, the petitioner is before this Court by way of instant petition. 12. I have heard learned counsel for the parties and have also gone through the records of the case carefully. 13. The Inquiry Officer with respect to allegation of frequent credit and debit entries from the accounts of petitioner and his wife, has held that all the entries were identified as the persons/account holders connected with such entries were either related to the petitioner and his wife or were closely known to them. Some of such entries have been found to be related to payments of sale and purchase of commodities by the petitioner and his wife for their own purposes. Thus, the Inquiry Officer has categorically held that the entries were not proved as suspicious. 14. However, the Inquiry Officer held that since, such type of transactions by an Officer of the bank with the constituents of the bank were totally prohibited and since frequent transfer debit/credit entries were noticed with the customers/borrowers of the bank, the petitioner was held to be negligent. 10 2025:HHC:21732 ) 15. The other allegation against the petitioner that he had not observed due norms of the bank while allowing the financial facilities to the customers. Again, the Inquiry Officer has found the petitioner negligent for lapses/irregularities. As per inquiry, it was found that certain formalities with respect to documentation, assessment and diligence were lacking on the part of petitioner, though, none of these transactions were found to be result of foul play. Thus, though the transactions were found to be bonafide, but lacking only in the procedural lapses. 16. Another allegation that certain transactions in the account of petitioner and his wife were from the undisclosed destination which were other than the known sources of the income of the petitioner, has also not been found to have been established. 17. The Inquiry Officer has been very clear that except for the petitioner being negligent, no other allegation was found proved against him. All the transactions were found bonafide. None of transactions was suspicious. 11 2025:HHC:21732 ) 18. Further, the Inquiry Officer has categorically held that there was no complaint against the petitioner, all the management witnesses had confirmed that the business of the bank had increased during his tenure and the bank had also appreciated the work and efforts of the petitioner. Not only this, the Inquiry Officer also held that the petitioner had not acted with intent of mischief or dishonesty or for any undue gain. In result, the only thing found against the petitioner was that he was negligent. 19. The order of Disciplinary Authority is nothing but reproduction of the contents of inquiry report. The Disciplinary Authority has simply concurred with the findings recorded by the Inquiry Officer and proceeded to issue penalty order against the petitioner. There is no consideration on the issue as to how the negligence of petitioner, as reported by enquiry officer, was culpable under general clause 3 of UCO Bank Officers Employees’ (Conduct) Regulations, 1976 which reads as under: “3. (1) Every officer employee shall at all times take all possible steps to ensure and protect the interests of the bank and discharge his duties with utmost integrity, honesty, devotion and 12 2025:HHC:21732 ) diligence and do nothing which is unbecoming of a bank officer. (2) Every officer employee shall maintain good conduct and discipline and discipline and show courtesy and attention to all persons in all transactions and negotiations. (3) No officer employee shall, in the performance of his official duties or in the exercise of powers conferred on him, act otherwise than in his best judgement except when he is acting under the direction of his official superior. (4) Every officer employee shall take all possible steps to ensure the integrity and devotion to duty of all persons for the time being under his control and authority.” 20. In appeal also the petitioner has also remained unsuccessful for the reasons that the Appellate Authority has also concurred with the findings recorded by the Inquiry Officer as also the Disciplinary Authority without assigning any reasons on the vital question of culpability, if any, of the petitioner, in the backdrop of specific findings of the enquiry officer. 21. Apparently, neither the Disciplinary Authority nor the Appellate Authority have disagreed with the findings 13 2025:HHC:21732 ) returned by the Inquiry Officer. Thus, what only can be found to have been held against the petitioner was that he was negligent. 22. The Articles of Charges as also the statement of allegations framed against the petitioner nowhere declared that the allegations against petitioner constituted negligence and such negligence was culpable and punishable under the Service Rules of the Bank. The allegations were that the account entries were suspicious in nature and were unjustified. The malafide intent was inferred against the petitioner. Further the allegation was that the conduct of the petitioner while sanctioning credit facilities to the customer was not judicious and was against the established systems, procedures and guidelines issued by the Bank from time to time and that certain account entries were suspected to be from other than the known sources of income of the petitioner. 23. The negligence only manifests lack of care. In light of specific findings of the enquiry officer that the reported action(s) of petitioner were neither motivated with malice, malafide, foul intent nor were intended to cause harm to the 14 2025:HHC:21732 ) bank in reputation or otherwise, the question whether the negligence as has been found to be committed by the petitioner was per se culpable under the Service Rules of the Bank required to be determined? 24. The disciplinary authority acts as quasi-judicial authority and is required to adhere to the principles of natural justice. Failure to give reasons amount to denial of justice. Reasons are the link between the mind of the decision maker and the conclusion arrived at. Reasons manifest objectivity. Right to reason is an integral part of sound judicial system. 25. The Hon’ble supreme Court in Kranti Associates (P) Ltd. v. Masood Ahmed Khan, (2010) 9 SCC 496 it has been observed as under : “15. This Court always opined that the face of an order passed by a quasi-judicial authority or even an administrative authority affecting the rights of parties, must speak. It must not be like the “inscrutable face of a sphinx”. 26. Similarly in Ravi Yashwant Bhoir v. Collector (2012) 4 SCC 407 the Hon’ble Supreme Court has held as under: “38. It is a settled proposition of law that even in administrative matters, the reasons should be recorded as it 15 2025:HHC:21732 ) is incumbent upon the authorities to pass a speaking and reasoned order.” 27. The orders of Disciplinary as well as Appellate Authorities do not explicitly spell out as to how the alleged negligence of petitioner, when it had not caused any loss to the bank either in terms of money or reputation, would be culpable. In Rule 3 (supra), the negligence per se has not been made culpable. There is no specific finding that the petitioner had acted and conducted himself in such a manner which did not protect the interest of the bank or he had not discharged his duties with integrity, honesty and devotion. It has also not been stated that how the petitioner was not diligent. No Code of Conduct or SOP has been shown to be applicable to the employees of the bank from which inference of conduct unbecoming of a bank officer could be drawn against the petitioner. 28. It is also not a case where the petitioner is alleged to have exercised power conferred upon him without his best judgment. His integrity and devotion have also not been found to be lacking. Rather, the Inquiry Officer has found that the petitioner was awarded for his services to the bank. 16 2025:HHC:21732 ) 29. Regarding misconduct, in Ravi Yashwant Bhoir (supra) it has been held as under: 11. “Misconduct” has been defined in Black's Law Dictionary, 6th Edn. as: “A transgression of some established and definite rule of action, a forbidden act, a dereliction of duty, unlawful behavior, wilful in character, improper or wrong behavior, its synonyms are misdemeanor, misdeed, misbehavior, delinquency, impropriety, mismanagement offence, but not negligence or carelessness.” “Misconduct in office” has been defined as: “Any unlawful behavior by a public officer in relation to the duties of his office, wilful in character. Term embraces acts which the office-holder had no right to perform, acts performed improperly, and failure to act in the face of an affirmative duty to act.” 12. P. Ramanatha Aiyar's Law Lexicon, Reprint Edn. 1987 at p. 821 defines “misconduct” thus: “The term ‘misconduct’ implies a wrongful intention, and not a mere error of judgment. Misconduct is not necessarily the same thing as conduct involving moral turpitude. The word ‘misconduct’ is a relative term, and has to be construed with reference to the subject-matter and the context wherein the term occurs, having regard to the scope of the Act or statute which is being construed. Misconduct literally means wrong conduct or improper conduct. In usual parlance, misconduct means a transgression of some established and definite rule of action, where no discretion is left, except what necessity may demand and carelessness, negligence and unskilfulness are transgressions of some established, but indefinite, rule of action, where some discretion is necessarily left to the actor. Misconduct is a violation of definite law; carelessness or abuse of discretion under an indefinite law. Misconduct is a forbidden act; carelessness, a forbidden quality of an act, and is necessarily indefinite. Misconduct in office may be defined as unlawful 17 2025:HHC:21732 ) behaviour or neglect by a public officer, by which the rights of a party have been affected. Thus it could be seen that the word ‘misconduct’ though not capable of precise definition, on reflection receives its connotation from the context, the delinquency in its performance and its effect on the discipline and the nature of the duty. It may involve moral turpitude, it must be improper or wrong behaviour; unlawful behaviour, wilful in character; forbidden act, a transgression of established and definite rule of action or code of conduct but not mere error of judgment, carelessness or negligence in performance of the duty; the act complained of bears forbidden quality or character. Its ambit has to be construed with reference to the subject-matter and the context wherein the term occurs, regard being had to the scope of the statute and the public purpose it seeks to serve….” (emphasis supplied) 13. Mere error of judgment resulting in doing of negligent act does not amount to misconduct. However, in exceptional circumstances, not working diligently may be a misconduct. An action which is detrimental to the prestige of the institution may also amount to misconduct. Acting beyond authority may be a misconduct. When the office-bearer is expected to act with absolute integrity and honesty in handling the work, any misappropriation, even temporary, of the funds, etc. constitutes a serious misconduct, inviting severe punishment. 14. In Govt. of A.P. v. P. Posetty [(2000) 2 SCC 220 : 2000 SCC (L&S) 254] , this Court held that since acting in derogation to the prestige of the institution/body and placing his present position in any kind of embarrassment may amount to misconduct, for the reason, that such conduct may ultimately lead that the delinquent had behaved in a manner which is unbecoming of an incumbent of the post. 15. In M.M. Malhotra v. Union of India [(2005) 8 SCC 351 : 2005 SCC (L&S) 1139 : AIR 2006 SC 80] , this Court explained as under : (SCC p. 362, para 17) “17. … It has, therefore, to be noted that the word ‘misconduct’ is not capable of precise definition. But at the 18 2025:HHC:21732 ) same time though incapable of precise definition, the word ‘misconduct’ on reflection receives its connotation from the context, the delinquency in performance and its effect on the discipline and the nature of the duty. The act complained of must bear a forbidden quality or character and its ambit has to be construed with reference to the subject-matter and the context wherein the term occurs, having regard to the scope of the statute and the public purpose it seeks to serve.” 16. Conclusions about the absence or lack of personal qualities in the incumbent do not amount to misconduct holding the person concerned liable for punishment. (See Union of India v. J. Ahmed [(1979) 2 SCC 286 : 1979 SCC (L&S) 157 : AIR 1979 SC 1022] .) 17. It is also a settled legal proposition that misconduct must necessarily be measured in terms of the nature of the misconduct and the court must examine as to whether misconduct has been detrimental to the public interest. (Vide Bank of India v. Mohd. Nizamuddin [(2006) 7 SCC 410 : 2006 SCC (L&S) 1663 : AIR 2006 SC 3290] .) 18. The expression “misconduct” has to be understood as a transgression of some established and definite rule of action, a forbidden act, unlawful behaviour, wilful in character. It may be synonymous as misdemeanour in propriety and mismanagement. In a particular case, negligence or carelessness may also be a misconduct for example, when a watchman leaves his duty and goes to watch cinema, though there may be no theft or loss to the institution but leaving the place of duty itself amounts to misconduct. It may be more serious in case of disciplinary forces. 19. Further, the expression “misconduct” has to be construed and understood in reference to the subject-matter and context wherein the term occurs taking into consideration the scope and object of the statute which is being construed. Misconduct is to be measured in the terms of the nature of misconduct and it should be viewed with the consequences of misconduct as to whether it has been detrimental to the public interest. 19 2025:HHC:21732 ) 30. The impugned orders passed by the Disciplinary as well as the Appellate Authority are found bereft of the caveats of law, some of which have been reproduced above. 31. Another aspect that requires to be noticed is that the conduct of the petitioner has been assessed for a long span of period of about eight years. It cannot be said that there was no hierarchical authority above the petitioner in the bank. The fact that for such a long time the conduct of the petitioner had remained unnoticed itself was indicator that his conduct was not per se culpable. 32. In light of above discussion, the petition is allowed. The orders dated 17.04.2020 (Annexure P-8) passed by the Disciplinary Authority and order dated 04.03.2021 (Annexure P-9) passed by the Appellate Authority are quashed and set-aside. The matter is remitted back to the Disciplinary Authority to pass the orders afresh after re- assessing and re-evaluating the findings of the inquiry officer in light of the Service Rules of the Bank and the observations made hereinabove. Needless to say, that the Disciplinary Authority shall afford reasonable opportunity of being heard to the petitioner before passing the order. 20 2025:HHC:21732 ) 33. The petition stands disposed of in above terms, so also the pending application(s), if any. 8th July, 2025 (Satyen Vaidya) (GR) Judge