Mens Rea Not Required In Departmental Proceedings; Unauthorised Act With Good Intentions Violates Service Rules: J&K&L High Court

The Court was hearing a Letters Patent Appeal filed by the J&K Grameen Bank challenging the judgment passed by the Single Judge, whereby the penalty imposed by the competent authority and reduced by the appellate authority upon the respondent was quashed on the ground that the Bank did not suffer financial loss and the respondent did not derive any pecuniary gain.

A Division Bench of Justice Sindhu Sharma and Justice Rajesh Sekhri, while allowing the appeal, observed,

"....scope of judicial review in matters relating to quantum of punishment to Bank employees is very limited. Court can interfere with the findings of the competent authority and the appellate authority only if punishment is shockingly disproportionate and it is no longer res integra now that in the banking sector, the very act of acting beyond one's delegated authority by itself constitutes a gross breach of discipline and misconduct. The absence of actual financial loss or the fact that Bank earned a profit does not absolve the employee because Banks deal with public money and procedural discipline must be absolute."

The Court further observed,

"In departmental disciplinary proceedings, the presence of mens rea is not a prerequisite to prove misconduct of an employee. An unauthorised act, even if committed with good intentions, is still a violation of the service rules."

Background:

The respondent on being transferred to a Branch which was running in losses started aggressive lending and brought the Branch to a profitable stage. Subsequently, he was served with a charge-sheet alleging that while working as Senior Manager, he had extended undue favour and sanctioned loans to selected borrowers by misusing his official position and in violation of operational guidelines, exceeding delegated powers and exposing the Bank's funds to risk.

The respondent submitted a reply contending that the Branch's business increased and NPA was reduced. An Inquiry Officer was appointed who concluded that except for one charge partially proved, the rest were proved. The competent authority imposed penalty of reducing the respondent to the lowest stage in the pay scale of Officer Scale-II and directed that superannuation benefits be released on reduced pay.

The respondent's appeal was partly allowed by the appellate authority, modifying the penalty to reduction to the lowest stage in the pay scale of Officer Scale-I, while directing that superannuation benefits shall be released only after recovery/adjustment of all loan accounts.

The respondent challenged both orders before the writ Court, which allowed the petition holding that the punishment was disproportionate. Aggrieved, the Bank filed the present appeal.

Court's Observation

The Court examined the scope of judicial review in matters relating to quantum of punishment to Bank employees. The Court relied upon Disciplinary Authority-Cum-Regional Manager v. Nikunja Bihari Patnaik (1996) 9 SCC 69, wherein the Supreme Court held that an act of a Bank official acting beyond his authority, even if it yields profit and causes no loss, by itself amounts to misconduct.

The Court observed,

"It is no defence available to say that there was no loss or profit resulted in case, when the officer/employee acted without authority. The very discipline of an organisation more particularly a Bank is dependent upon each of its officers and officers acting and operating within their allotted sphere. Acting beyond one's authority is by itself a breach of discipline and is a misconduct."

The Court also relied upon State Bank of India v. Ramesh Dinkar Punde (2006) 7 SCC 212, holding that it is not permissible for the High Court to re-appreciate the evidence considered by the Inquiry Officer, Disciplinary Authority, and Appellate Authority. The Court observed,

"If there was an inquiry consistent with the rules and principles of natural justice, what punishment would meet the ends of justice is a matter within the exclusive domain of the competent authority."

The Court observed that the Single Judge had failed to appreciate the controversy in its correct perspective and embarked upon judicial review as a Court of appeal, which is not countenanced in law. The Court noted that during the disciplinary inquiry, the respondent admitted his misconduct, and it surfaced that he had already been charge-sheeted and punished twice during his service career.

On the aspect of mens rea, the Court observed that in departmental disciplinary proceedings, the presence of mens rea is not a prerequisite to prove misconduct of an employee. An unauthorised act, even if committed with good intentions, is still a violation of the service rules, it underscored

The Court further observed,

"The act of a bank employee exceeding his authority by itself would constitute serious misconduct, even if Bank suffered no financial loss or made a profit and the employee acted without malice or ulterior motives. In other words, the absence of actual financial loss or the fact that Bank earned a profit would not absolve the employee of the Bank, because the absence of malice or mens rea in departmental proceedings is irrelevant."

In view of these findings the court allowed the appeal, setting aside the impugned judgment of the Single Judge. While upholding the appellate authority's order reducing the respondent to the lowest stage in the pay scale of Officer Scale-I, the Court set aside the direction withholding superannuation benefits and directed the Bank to immediately release the same, while reserving liberty to recover loan amounts by availing appropriate remedy.

Case Title: J&K Grameen Bank & Ors. v. Rachhpal Singh

Citation: 2026 LiveLaw (JKL) 326

Appearances

Appellants: Mr. R.K. Jain, Sr. Advocate; Mr. Paramever Singh, Advocate

Respondent: Mr. Abhimanyu Sharma, Advocate

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