'Fraud By Bank Employees A Global Problem, There Has To Be Zero Tolerance': Karnataka High Court

The Karnataka High Court recently said that frauds, even if negligible, committed by employees associated with financial institutions have to be viewed very seriously and dealt with an iron hand. A division bench of Chief Justice Ritu Raj Awasthi and Justice Sachin Shankar Magadum while dismissing the appeal filed by one K Satishchandra Shetty who was dismissed from Union Bank of India, following charges of misappropriation of customers money, said, "Frauds carried out by bank employees has now become a global problem." It added that,"Cash theft such as skimming customer's cash deposits has become rampant and employees fraud or occupational fraud is likely the largest and most prevalent threat faced by financial institutions. Therefore, there has to be zero tolerance as a fraudulent employee constitutes an attack against the organization from within, by the very people who are entrusted to protect its assets and resources." Further the court also opined, "It is no exaggeration to say that the greatest fraud risk that banks faces, walk through their doors every morning and sit down to work. Therefore, any fraud, however negligible, associated with financial institutions has to be viewed very seriously and dealt with an iron hand." Case Background: The Disciplinary Authority of the bank had imposed a penalty of dismissal from service in April 1999, after Shetty (appellant herein) voluntarily admitted the charges. The said order was challenged by the appellant in an appeal which was also dismissed by the Appellate Authority in November that year. After four years, the bank sent a communication to him to settle his terminal benefits and at this juncture, the appellant raised a dispute before the Assistant Labour Commissioner and since the conciliation proceedings ended in failure, the Government referred the dispute for adjudication. The Tribunal allowed the reference directing reinstatement with back wages, continuity of service and all consequential benefits. The same came to be challenged before the single judge bench of the High Court. Having referred to the admission made by the employee of his guilt before the disciplinary committee, the court was of the view that the order of reinstatement passed by the Tribunal is palpably erroneous and contrary to the evidence on record. Accordingly, the court set aside the impugned order passed by the Central Government Industrial Tribunal-cum-Labour Court and restored the penalty of dismissal from service imposed by the respondent/Bank. Findings: In appeal the court considered the material on record and said, "The appellant herein has virtually exploited the trust that was reposed by the customer who appeared to be acquainted with the appellant herein." It added, "If these aspects are taken into consideration, we are not inclined to interfere with the order under challenge passed by the learned Single Judge." Accordingly, the court dismissed the appeal as being devoid of merits. Case Title: K Satishchandra Shetty v. Union Bank Of IndiaCase No: Writ Appeal No.952 Of 2021 Date Of Order: 15th Day Of November, 2021 Appearance: Advocate Chikkangoudar L S, for AppellantClick Here To Read/Download Order

'Fraud By Bank Employees A Global Problem, There Has To Be Zero Tolerance': Karnataka High Court

Mustafa Plumber

The Court thus upheld dismissal of service of an employee for misappropriating a customer's money.

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