Subraya Hegde Vs Canara Bank (Karnataka High Court)
₹300 Crore Manual LoC Blunder- Karnataka HC Backs Canara Bank’s Full Pension Cut for Ex-Chief Manager’s Grave Misconduct; Grave Misconduct Justifies Complete Pension Cut Even Without Conviction, Rules Karnataka High Court; Karnataka HC: Post-Retirement Disciplinary Action Valid Under Canara Bank Regulations; Bank Can Withhold Entire Pension for Grave Misconduct, Board Consultation Not Needed: Karnataka HC
The Appellant, a retired Chief Manager of Canara Bank’s Deccan Gymkhana Branch (Pune), challenged the Single Judge’s decision upholding the Bank’s withdrawal of his entire pension. He had issued a manual Letter of Credit (LoC) for ₹300 crores-beyond his authority, without entry in the books, security, or sanction-& the LoC was used by another bank to discount bills. A CBI case followed, resulting in his conviction for criminal conspiracy & offences under the Prevention of Corruption Act, though the sentence was stayed pending appeal before Bombay HC
Bank’s Action & Proceedings
- Show-cause notice: Issued after his retirement (12 Sept 2016) alleging misconduct in issuing a manual LoC for ₹300 crores.
- Departmental enquiry: Conducted under the Canara Bank Officer Employees (Discipline & Appeal) Regulations, 1976; charges were found proved.
- Punishment: The Disciplinary Authority (30 Jun 2017) permanently withdrew his entire pension under Regulations. 43 & 45 of the Canara Bank (Employees’) Pension Regulations 1995.
- Appeal: Dismissed by the Executive Director (6 Jun 2018).
- Writ Petition: Dismissed by Single Judge (4 Jul 2024), holding that proceedings & punishment were valid
Appellant’s Arguments
- The Bank had no jurisdiction to start or continue proceedings after retirement.
- Regulation 43 & 45 require conviction, which occurred much later (2021).
- Only Regulation 48 (for recovery of pecuniary loss) could apply-& that too with prior Board consultation.
- As the Bank’s own finding said no financial loss, the withdrawal of pension was unlawful
Bank’s Defence
- The Appellant manually issued a fraudulent LoC, risking huge loss; thus, a disciplinary inquiry was independently justified.
- Loss of ₹225 crores was later determined payable to Bank of India by a Dispute Resolution Committee.
- Since the punishment was for grave misconduct, Regulation 43 & 45 were rightly invoked- 48 (which concerns recovery) was irrelevant
Court’s Reasoning
- Post-retirement proceedings valid: Unlike SBI v. Navin Kumar Sinha (2024 SCC OnLine SC 3369), the Canara Bank Regulations (especially Regulation 48) create a legal fiction allowing continuation after retirement; hence jurisdiction existed.
- Regulation. 43 & 45 distinct from Regulation: Following P. Mathivanan Inbaraj v. Canara Bank (Madras HC, 2023), the Bench held that Reg. 43/45 apply to grave misconduct without any Board consultation, while Reg. 48 applies only when recovering pecuniary loss.
- The Bank complied with proper procedure; the enquiry was valid; & the finding of grave misconduct justified permanent pension withdrawal
Decision
- Appeal dismissed.
- Withdrawal of entire pension upheld.
- Pending applications closed
Key Takeaways
- Canara Bank can continue disciplinary proceedings post-retirement under Regulation 48 if instituted while in service.
- Grave misconduct-even without conviction-can justify complete withdrawal of pension under Regulations 43 & 45.
- Board consultation is required only when recovery of pecuniary loss is sought (u/s 48), not for misconduct-based penalties.
FULL TEXT OF THE JUDGMENT/ORDER OF KARNATAKA HIGH COURT
