UNION OF INDIA Vs. ANDREW

JUDGEMENT

(1.) The appellants are respondents in the writ petition. The appeal is filed against the judgment of the learned single Judge in O. P. No. 7316 of 1991 quashing Ext. P8 order of the Union of India, the first appellant in this appeal. The Second appellant is the Reserve Bank of India. Respondent is the writ petitioner, who challenged Ext. P8 order rejecting an appeal filed under S.36AA(3) of the Banking Regulation Act, 1947 (for short the Act).

(2.) The respondent was appointed as the Chairman, Bank of Cochin Ltd (now merged with the State Bank of India) on 18.6.1979, initially for a period of 2 years. Later the appointment was extended from time to time, which was approved by the Reserve Bank of India. However, on 18.11.1982, the Reserve Bank of India issued a notice (Ext. P1) to the petitioner under S.36AA(2) of the Act to show cause why he should not be removed from the office of the Chairman of the Bank, within a period of 3 weeks. The annexure to show cause notice contained thirteen items of charges against the respondent. The substance of charge Nos. 1 to 11 is that the respondent sanctioned credit facilities to certain persons and enhanced certain existing facilities in the case of others without obtaining adequate securities. The twelfth charge was that he intentionally delayed the placing of the branch inspection reports to the Board of Directors and the thirteenth charge was that the Bank defaulted in maintaining the statutory liquidity ratio and cash reserve ratio as required under the Act. According to the respondent, the above said charges were absolutely baseless and unreal and he had filed a detailed reply on 3.12.1982, that is to say, within the time allowed. However, the second appellant passed an order on 2.4.1983 removing the respondent from the office of the Chairman and Chief Executive Officer with effect from 2.4.1983. As against the said order, the respondent filed an appeal dated 1.5.1983 before the First appellant under S.36AA(3) of the Act. Though the respondent requested for personal hearing the First appellant without granting the same rejected the appeal as per the order dated 19.10.1984. Aggrieved by the said order, the respondent filed writ petition O. P. No. 9763 of 1984, before this court. This court by judgment in the above O. P. (Ext. P2) quashed the order dismissing the appeal on the ground that there was denial of opportunity of personal hearing. By the aforesaid judgment this court further directed the Union of India to take back the appeal on file, afford an opportunity to the petitioner to be heard in person and dispose of the matter within 6 months from the date of judgment. However, the first appellant did not comply with the direction contained in Ext. P2 judgment with in the time allowed. However, the respondent received a letter dated 28.4. 1989 (Ext. P3) asking him to appear before the First appellant on 12.5.1989 for hearing. Since Ext. P3 was received by the respondent just 2 days prior to the date fixed for his appearance in Delhi, hearing of the case was adjourned to 19.7.1989 at the request of the respondent. The respondent appeared in person before Sri. V. P. Sawhney, Additional Secretary on 19.7.1989 and presented his case. He also presented a detailed argument note (Ext. P4) to the First appellant. Even though the matter was heard in detail, no order was passed by the First appellant. After a lapse of nearly three months the First appellant again called the respondent for a personal hearing as per Ext. P5 letter dated 13.3.1990. By the said letter, the respondent was asked to appear before the 1st appellant on 4.4.1990 at the office of the First appellant. However, the hearing was again adjourned to 25.6.1990 as per communication sent to the respondent by telegram. The respondent, pursuant to the said communication, appeared before the First appellant on 25.6.1990 and argued the entire case once again before Sri. D. R. Mehta, Additional Secretary. A fresh additional argument note (Ext. P6) was submitted by the respondent to the Additional Secretary. Another argument note (Ext. P7) as clarification was also presented to the First appellant on 2.7.1990. However, Sri. D. R. Mehta, Additional Secretary, who heard the matter on 25.6.1990 did not pass final order. The final order (Ext. P8) was passed by Sri. K. J. Reddy on 13.6.1991 rejecting the appeal under S.36AA(3) of the Act. The said order was quashed by the learned single Judge as per judgment dated 3.8.1992. It is against the said judgment this writ appeal is filed.

(3.) The learned Counsel for the appellants raised a strong plea for sustaining Ext. P6 order. It was pointed out that every aspect of the case was considered by the first respondent in extension and there was due application of mind while passing Ext. P8. It is the case of the appellants that the learned single Judge was in error in making the observation that the first appellant had dealt with the case 'in such a casual manner without application of the mind'. Of course, it is difficult to say that Sri. K. J. Reddy, Additional Secretary who passed Ext. P8 order had not applied his mind while passing Ext. P8 order. But the real question is whether there was application of mind by Sri. K. J. Reddy after hearing the respondent in person. If it was an order passed after such hearing, we would have definitely sustained it without any demur. What we could perceive here, if we put it in the words of the learned single Judge, is that "Two officers who heard the case, did not pass orders and the one who passed orders did not hear the aggrieved as he was required to: That is why it was said that the first appellant had dealt with the matter in a casual manner without application of mind. This observation is required to be tested within the framework of Ext. P2 judgment of the same learned Judge, who in unequivocal terms directed the First appellant to afford an opportunity to be respondent to be heard in person. That was found necessary in view of the fact that "two courts took the view that the petitioner acted in the best interest of the Bank. This court said that 'there should be a full-blooded consideration of the case on merits' because the appellate remedy must be meaningful in quality and content.