B.P.DAYANAND PAI Vs. SYNDICATE BANK AND ORS
LAWS(BOM)-2017-7-49
HIGH COURT OF BOMBAY
Decided on July 13,2017

B.P.Dayanand Pai Appellant
VERSUS
Syndicate Bank And Ors Respondents

JUDGEMENT

M.S.KARNIK,J - (1.) The original petitioner (since deceased) had filed the present Petition challenging the orders of dismissal dated 26/06/1995 and orders passed in Appeals on 26/12/1997. The petitioner has prayed for quashing and setting aside the orders of dismissal and for grant of continuity of service and full back wages. The petitioner an employee of the Syndicate Bank, was working as an Assistant General Manager, Nariman Point Branch, Mumbai at the relevant point of time. By letter dated 23/05/1991, the Deputy General Manager of Syndicate Bank advised the petitioner that permission has been granted to him to commence Portfolio Management to the clients of his branch strictly in conformity with the guidelines contained in RBI circular dated 18/01/1991. It was further mentioned in the said letter that since the petitioner was already doing Portfolio Management for NRI clients, his branch had the requisite expertise in the proposed Portfolio Management for general clients and Public Sector Undertakings. Some time in the year 1992, news of scam in the bank investments and Portfolio Management broke out. According to the petitioner, RBI started pressuring the 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 themselves appointed M/s.Batliboi and Purohit Auditors to audit the Portfolio Management transactions for the period from September 1991 to September 1992 conducted by the Bombay Nariman Point Branch of the Syndicate Bank. The respondents proposed to hold an enquiry against the petitioner in accordance with the procedure laid down in Regulation No. 6 of the Syndicate Bank Officer Employee's (Discipline & Appeal) Regulations, 1976 (hereinafter referred to as 'Regulations' for short). The petitioner was served with the Articles of Charges and the Statement of Imputations of Misconducts in respect of which the enquiry was proposed to be held. The petitioner was called upon to show cause why regular departmental proceedings should not be initiated against him. The Articles of Charges mentioned are thus : " Articles of Charges That during the period between 07/09/1987 and 16/10/1992, you were functioning as Chief Manager/Asst. General Manager of our Nariman Point Branch, Bombay and that while functioning in your position as such, in the matter of conducting Portfolio Management Services at the branch, you showed undue official favours to M/s.K.N.Amerchand, Broker, by - (a) authorising/causing to be authorised purchase of shares of 23 companies in between 30/01/1992 and 28/05/1992 at prices higher than the market prices prevailing on the relevant dates; (b) authorising/causing to be authorised sale of shares of 9 companies in between 22/01/1992 and 18/05/1992 at prices below the market rates as prevailing on the relevant dates; (c) authorising/causing to be authorised sale of shares of 5 PMS clinets to the tune of Rs.2,50,16,800/- on 24/03/1992 and allowing the sale proceeds in the possession of the Broker till 05/05/1992; and authorising/causing to be authorised sale of shares to the tune of Rs.6258301/- in respect of certain PMS clients in between January 1992 and May 1991 and allowing the sale proceeds to be left at the disposal of the Broker indiscriminately; and (d) authorising/causing to be authorised payment of Rs.4339917.82 to the Broker on 03/04/1992 and allowing the funds at the dispsoal of the Broker till 09/05/1992, in the form of a clean accommodation by manipulating records, knowing or haing reasons to believe that the transactions were not genuine; and (e) authorising/causing to be authorised purchase of shares to the tune of Rs.16448250/- on account of 3 PMS CLINENTS in between March 1991 and Apricl 1991 and selling those shares in between 29/04/1992 and 19/05/1992 in a hurried manner, causing financial loss to the Bank/PMS clients; and (f) allowing he said Broker to utilise funds to the extent of Rs.37.66 crores in respect of sale of shares on account of certain PMS clients done in between 17/02/1992 and 12/03/1992 and thus facilitating the broker to enjoy the funds in the form of clean accommodation and also authorising/causing to be authorised certain sale and purchase transactions in the books of the branch, knowing or having reasons to believe that such transactions are not genuine; and (g) making available clean accommodation to the extent of Rs.103.40 crores to the Broker in between 23/03/1992 and 09/05/1992 in the guise of purchase and sale transactions, which you were knowing or had reasons to believe were not genuine; and (h) authorising/causing to be authorised payment of Rs.5750000/- to the Broker on 19/05/1992 for the apparent purpose of purchase of shares of M/s.Essar Shipping Co., without however receiving the securities and thereafter, agreeing for substitution of securities in a casual manner. The details are more fully described in the Statement of Imputations of Misconducts mentioned herebelow. In authorising and conducting these transactions, you acted in a manner detrimental to the interest of the PMS clients/Bank. By your above acts, you failed to discharge your duties with utmost integrity and honesty and exhibited conduct unbecoming of the status of a Bank Officer and thus contravened Regulation No. 3 (1) read with Regulation No. 24 of Syndicate Bank Officer Employees (Conduct) Regulations, 1976. Articles of Charge No. II : That you also showed undue official favours to M/s.Fairgrowth Investments Ltd., by making available to them clean accommodation to the extent of Rs.22.78 crores in between 27/03/1992 and 06/04/1992 in the guise of purchase and sale of Bonds, which you were knowing or having reasons to believe were not genuine, as per details more fully to believe were not genuine, as per details more fully described in the Statement of Imputations of Misconducts mentioned herebelow. You thus acted in detriment to the interest of the Bank/PMS clients. By your above acts, you failed to discharge your duties with utmost integrity and honesty and exhibited conduct unbecoming of the status of a Bank Officer and thus contravened Regulation No.3 (1) read with Regulation No.24 of Syndicate Bank Officer Employees (Conduct) Regulations 1976. Articles of Charge No. III : That on 01/01/1992, you authorised purchase of shares of two companies on account of PMS account no. 21 through Sri Jamnadas T Shah, Broker, at a price higher than the market rates prevailing and thus caused an approximate loss of Rs.117500/- to the Bank/the PMS client, at average market price, as per details more fully described in the Statement of Imputations of Misconducts mentioned herebelow. You thus showed undue official favours to the said SriJamnadas T Shah, Broke, in detriment to the interest of the Bank/PMS clients. By our above acts, you failed to discharge your duties with utmost integrity and honesty and exhibited conduct unbecoming of the status of a Bank Officer and thus contravened Regulation No. 3(1) read with Regulation No. 24 of Syndicate Bank Officer Employee's (Conduct) Regulations, 1976. Articles of Charge No. IV : That during the period between February 1991 and March, 1992, you authorised sale of/caused to be sold shares of certain companies on account of PMS clients to the tune of Rs.1007725/- through M/s.Kishore Kumar Hariram, Broker, and allowed th sale proceeds at the disposal of the Broker for a considerably long period, and thus caused a loss of Rs.17580/- to the Bank/PMS clients, as per details more fully described in the Statement of Imputations of Misconducts mentioned herebelow. You thus showed undue official favours to the said M/s.Kishore Kumar Hariram, Broker in detriment to the interest of the Bank/PMS clients. By your above acts, you failed to discharge your duties with utmost integrity and honesty and exhibited conduct unbecoming of the status f Bank Officer and thus contravened Regulation No. 3 (1) read with Regulation No. 24 of Syndicate Bank Officer Employee's (Conduct) Regulations, 1976. Articles of Charge No. V : That on 31/03/1992, on authorised payment of Rs.22.50 lakhs in favour of IDBI by raising debiton IM Account No.22 of M/s. Oil India Ltd., with false./fictitious details by resorting to manipulation of accounts and records knowing or having reasons to believe the fictitious nature of the transaction, as per details more fully described in the Statement of Imputations of Misconduct mentioned herebelow. By your above acts, you failed to discharge your duties with utmost integrity and honesty and exhibited conduct unbecoming of the status of a Bank Officer and thus contravened Regulation No.3 (1) read with Regulation No.24 of Syndicate Bank Officer Employee's (Conduct) Regulations, 1976. Articles of Charge No. VI : that in between 23/12/1991 and 05/03/1992, you authorised conducting of/caused to be conducted certain purchase and sale transactions of buy-back nature, in violation of RBI guidelines. In the matter of conducting these transactions, you issued/caused to be issued BR s against BRs, violating RBI guidelines. In the process, you acted indetriment to the interest of the Bank/PMS clients. By you above acts, you failed to discharge your duties with utmost integrity and honesty, and exhibited conduct unbecoming of the status of a Bank Officer and thus contravened Regulation no.3 (1) read with Regulation No.24 of Syndicate Bank Officer Employee's (Conduct) Regulations, 1976. Articles of Charge No. VII : That in the matter of conducting the PMS operations at the branch - (a) you failed to obtain/caused obtention of the prescribed Written Agreement from 12 PMS clients for reasons best known to you; and (b) you offered/caused to be offered indicative yiled on the funds invested by 20 PMS clients contrary to the guidelines issued by RIB and SEBI and you approved unauthorisedly, the acts of the Chief Manager of our K.G. Marg branch, Delhi, in his having indicated yield on funds accepted for PMS; and (c) you failed to ensure that investment of Rs.15.00 crores made by M/s. Oil India Ltd., were deployed immediately' and (d) you failed to ensure that the Bank's position with regard to its PMS operations is correctly reflected in the Balance Sheet as at 31/03/1992. and (e) you failed to ensure that the deals were put through in a proper and systematic manner, with adequate supervision and control; and (f) you failed to ensure that a system of periodical surprise verification of the securities was introduced and meticulously followed; and (g) you failed to ensure that proper books of accounts are maintained evidencing receipt/delivery/movement of securities; and (h) you failed to get the panel of Brokers introduced by you, approved by the Head Office, fixing individual exposure limits, Broker-wise; and i) you failed to ensure that the BRs were issued in the form prescribed by IBA; and (j) you failed to report individual transactions carried out under PMS to the Head Office, furnishing full details; and (k) you failed to ensure that periodical reports are sent to the PMS clients as prescribed in the guidelines issued by SEBI. That when certain discrepancies in the holding of securities were observed, you allowed/caused to be allowed to effect adjustment entries in an unusual manner, as per details more fully described under sl. no. 6 in the Statement of Imputations of Misconduct mentioned herebelow. You thus exposed the Bank to unnecessary/avoidable financial risks and litigation, damaging the overall image of the Bank and its reputation. By your above acts, you failed to discharge your duties with utmost integrity and honesty and exhibited conduct unbecoming of the status of a Bank Officer and thus contravened Regulation No. 3(1) read with Regulation NO. 24 of Syndicate Bank Officer Employee's (Conduct) Regulations, 1976."
(2.) The petitioner by reply dated 12/04/1993 denied the charges as the presumptive and baseless. A detailed explanation was offered by the petitioner in response to the said Articles of Charges.
(3.) The petitioner was served with the second charge-sheet on 13/05/1993. The said charge-sheet was similar to the first charge-sheet but for different transactions. The petitioner filed a detailed reply to the second charge-sheet on 10/07/1993.;


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