S G NAYAK Vs. CANARA BANK

JUDGEMENT

(1.) AS Identical charges are levelled against the petitioners, common enquiry was conducted, common evidence adduced, though separate orders are passed, common questions of law and facts arise for consideration in these two writ petitions, they are disposed of by a common order.

(2.) THE petitioner is W. P. No. 30770/95 is one Sri S. G. Nayak who was at the relevant point of time working as Divisional Manager at Mandvi Branch of Canara Bank, Bombay, during the period May 1986 to July 1989. The petitioner in W. P. No. 30391/95 is one Sri P. L. Prabhu, who was working as Senior Manager in the same Branch during the period from 31. 01. 1988 to 21. 01. 1989. Against these two officers on 31st August, 1990, separate Article of Charges were issued accompanied by statement of imputation. Broadly, the charges levelled against these two petitioners are: sai Group of Concerns had three accounts. One in the name of M/s. Sri Overseas International, second in the name of M/s. Sai Chemicals and third in the name of M/s. Ganapati International. They were enjoying various credit facilities. M/s. Sai Group of Concerns were tendering cheques drawn on RBI for credit to their account with the branch. The petitioners permitted drawings against these cheques and in turn the branch was issuing RBI cheques favouring various banks. They have permitted these customers to over draw the amount beyond the permitted limit and the same was not reported in F. 637. They did not ensure that parties submitted stock statement in time and that value furnished in the stock statement were not properly verified for their correctness resulting in inadequate securities to cover the liability. Further it was alleged that the amounts received from M/s. Kantilal and Co. , for investment through Canfina and investment in short term deposits with the Bank were diverted to Sai Group of Concerns and petitioners were parties to the conversion. The said facts were concealed from Circle Office and they permitted mis-utilization of the amounts received from M/s. Kantilal and Co. , which amounts were meant for crediting to Can Bank Financial Services Ltd. , The aforesaid amounts were received from M/s. Kantilal Co. , agreeing to pay interest ranging from 24% to 27% and the said transactions were confirmed in violation of RBI directives on interest rates on deposits. No deposit receipt was issued and instead pay orders favouring different companies were issued thereby allowing the amount deposited with the bank to be misutilised. Subsequently, the period of deposit ws extend thus allowing the amount tendered by M/s. Kantilal and Co. , being misutilized by M/s. Sai Group of Concerns which amounts to conversion. They permitted such drawings without sanction continuously. On account of over-drawings the liability in the account of M/s. Sai Overseas international want up to Rs. 216 lakhs as on 28. 02. 1989. The liability went up to Rs. 20 lakhs in the account of M/s. Sai Chemicals and Rs. 15 lakhs in the account of M/s. Ganapati international, as against sanction limit of Rs. 3 lakhs and Rs. 10 lakhs respectively. Therefore, these petitioners were accused of violating RBI guidelines and by channellising the funds of one party to another party, misutilization, conversion of funds and thus they have failed to perform their duties with utmost honestly, integrity, devotion and diligence and thus contravening regulation 3 (1) read with Regulation 24 of the Canara Bank Officer Employees' (Conduct)Regulations 1976.

(3.) BOTH the petitioners on receipt of aforesaid charge-sheets have submitted separate replies. The said reply is substantially the same. They contend that RBI cheques were not presented through the clearing process within the branch. RBI cheques were sent to Funds and Investment Section for direct credit into Bank's account with RBI. The credits to the parties account are given against the cleared RBI cheques. These transactions were well within the bonafide practice of the bank and the credits were against duly cleared RBI cheques and therefore, it is incorrect to perceive the same as accommodative. Permitting drawings against RBI cheques in respect of cleared cheques does not entail exercising of power or authority. Hence, it is neither misuse of official position nor a matter to be reported. The liability is to be cleared by the party and the petitioners could only make attempts to get it cleared. However, if the party fails to regularise, it cannot be deemed that the petitioners have failed to ensure regularisation.