Disciplinary Penalty Must Be Proportionate: Punjab & Haryana High Court Modifies Penalty Imposed After Retirement

The Punjab and Haryana High Court has held that penalties imposed in departmental actions must bear a reasonable nexus with the gravity of misconduct proved.

Justice Harpreet Singh Brar said, "The scope of interference in disciplinary proceedings is very limited. It is settled law that this Court may only exercise its powers under Article 226 of the Constitution of India when the findings recorded in a disciplinary action are arbitrary, disproportionate, tainted with procedural illegality, or manifest prejudice. The Court must confine itself to ensuring that the findings are justified by the material on record, the proceedings were conducted in compliance with prescribed procedure and principles of natural justice, and the penalty imposed is proportionate to the misconduct."

The Court explained that the doctrine of proportionality mandates that any penalty imposed upon a delinquent employee in disciplinary proceedings must bear a just and reasonable relationship to the gravity of the misconduct established against them.

A punishment which is excessive, unwarranted, or significantly disproportionate to the proven charges not only offends the canons of fair play and reasonableness but also constitutes a violation of the fundamental right to equality under Article 14 of the Constitution of India, it added.

The judge observed that the principle further extends to ensure that the sanction must be tailored to “suit the offence and the offender,” thereby requiring an individualized assessment of the nature of the misconduct, the attendant circumstances, the employee's service record, and the absence or presence of extenuating or aggravating factors.

The petitioner joined a Gramin Bank in 1979 as a Clerk, was later promoted to Officer Scale-I, and retired on 31.05.2013 after about 35 years of service.

Days before his retirement, he was issued a charge-sheet dated 03.05.2013 alleging that while on deputation at Palla Branch in 2011, he improperly recommended 42 loan proposals. 33 of those loan accounts later became irregular/overdue. The total outstanding exposure was stated to be over ₹2.72 crores. 14 loans were allegedly recommended in violation of lending norms.

Following an inquiry, he was held guilty on four out of ten charges. The disciplinary authority imposed a major penalty reducing his pay scale by 21 stages—from ₹29,700 to ₹14,500—even after his retirement. His statutory appeal was dismissed.

Challenging the charge-sheet, punishment order, and appellate order, the petitioner sought quashing of the same and release of retiral benefits with interest.

The petitioner argued that he had an unblemished service record of 35 years and he merely recommended the loans and was not the sanctioning authority. Also several loans had since been regularised and no conclusive material showed actual financial loss to the bank.

The penalty was grossly disproportionate and severely impacted his post-retirement financial security It was further argued that some loans predated his deputation period and that relevant account details were not supplied despite objections, he submitted.

The State and bank authorities contended that the petitioner misused his official position by recommending loans outside his mandate.

The Court noted that while some lapse on the petitioner's part could not be ruled out, the respondents failed to demonstrate any conclusive or quantified financial loss resulting directly from his recommendations.

It found that the petitioner was not the sanctioning authority and the punishment imposed had lifelong financial consequences on a retired employee and a reduction of 21 stages in pay scale was a severe penalty.

Without quashing the entire disciplinary proceedings, the Court modified the penalty. Instead of reduction of pay by 21 stages, the Court substituted the punishment with, deduction of 5% from the petitioner's monthly pension for a period of five years from 02.04.2014.

Mr. Shiv Kumar, Advocate for the petitioner.

Mr. Piyush Khanna, Addl. AG Haryana-State.

Mr. Bhushan Bhatia, Advocate for respondents No.3 to 5.

Title: Purshutam Goel v. State of Haryana and others

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