Upholding the principles of natural justice, the Bombay High Court has absolved a bank manager, long after his demise, of the charges of financial fraud as part of the 1992 Harshad Mehta stock scam and directed that his terminal and retirement benefits be paid to his wife and three children who fought the legal battle to exonerate his name.
A bench of Justice M S Karnik and Justice AA Sayed directed the Syndicate Bank to treat BPD Pai as in service till his death or superannuation and that his terminal benefits, including provident fund, gratuity and pension, may be paid to the petitioners along with the arrears of the retirement dues which should be paid within three months.
Pai’s wife Sushila Dayanand Pai and their three children -Jagdish, Sudhir and Raghvendra, had taken ahead the legal fight with the bank wherein the court concluded that Pai was denied a fair enquiry and hearing.
Pai had challenged filed the present petition challenging the orders of dismissal dated June 26, 1995.
His heirs prayed for quashing and setting aside the orders of dismissal and for grant of continuity of service.
Pai was working as Assistant General Manager, Nariman Point Branch of Syndicate Bank and was given permission to start portfolio management of his clients since he was already doing the same for NRI clients.
Sometime in the year 1992, news of the Harshad Mehta stock scam broke out and the petitioner said the RBI started pressuring bank managements to somehow crucify one or the other person so as to satisfy the public hue and cry and also to enable the government to meet the criticism in Parliament.
The RBI appointed two auditors to audit the portfolio management transactions for the period from September 1991 to September 1992, at Pai’s branch and 16 charges of financial fraud were levelled against him.
Pai denied all charges. During the enquiry proceedings, the defence assistant asked for an adjournment but the enquiry officer went on to hold that Pai did not make serious efforts in getting a defence assistant, without granting him sufficient time to look for another defence assistant.
In March, 1995, he even requested for a de-novo enquiry. The petitoner’s counsel told the bench that the gravity of the charges necessitated him to be represented by the defence assistant during the course of the enquiry. The representation by the defence assistant under rule is valuable right of the petitioner.
He argued that the enquiry was conducted against Pai with undue haste and incomplete breach of the principles of natural justice and refusal to adjourn the hearing under the circumstances was harsh and amounts to denial of grant of fair opportunity to the petitioner to defend his case.
The bench also noted that Pai was discharged in the criminal proceedings initiated against him.
“We are of the opinion that the petitioner has been deprived of a fair and reasonable opportunity to participate in the enquiry which has resulted in manifest miscarriage of justice…,” the bench held.
“In the departmental enquiry, the petitioner was to be proceeded against with almost 7 charges in respect of first chargesheet and 9 charges in respect of the second one… The departmental enquiry, which have been proceeded against the petitioner, ought to have been conducted in observance of the principles of natural justice and after giving full opportunity to the petitioner to participate in the enquiry,” the court observed.
“From the record, it appears that it is for the first time the Defence Assistant requested that hearing to be held on 30/11/1994 should be adjourned by a fortnight. The petitioner could not be reasonably expected to engage a Defence Assistant within such a short span of time to represent him in the enquiry proceedings when such serious charges are levelled against him. The approach of the Enquiry Officer in coming to the conclusion that the petitioner has abandoned the enquiry merely because the petitioner requested for adjournment is completely unjustifiable,” the bench said.