Departmental Proceedings on Same Set of Charges and Evidence Cannot Sustain After Acquittal: Punjab & Haryana High Court Quashes Departmental Punishment Following Honourable Acquittal

In a landmark decision Punjab and Haryana High Court set aside the disciplinary punishment imposed on a bank employee, P.K. Jain, after holding that the departmental proceedings were nothing but a mere duplication of criminal charges, witnesses, and evidence on which the petitioner had already been acquitted honourably. The Court declared that such proceedings were "wholly unsustainable and legally impermissible" after Jain was exonerated by the criminal court.

The petitioner, P.K. Jain, who was working as a Clerk-cum-Godown Keeper with the erstwhile New Bank of India (later merged with Punjab National Bank), was accused in 1990 of facilitating a fraudulent transaction involving four Certificates of Reinvestment Scheme (CRIS) worth ₹1,00,000/- allegedly obtained by one Rakesh Garg. Following suspicion of fraud, an FIR was registered against Jain under Sections 420, 468, 471, 380, 120-B IPC, and he was simultaneously placed under suspension.

The trial ended with Jain’s acquittal on 7th December 1998, where the criminal court held emphatically, “The prosecution has miserably failed to bring home the guilt against the accused beyond the shadow of reasonable doubt,” and further recorded, “It appears that the accused has been made a scapegoat.”

Despite the categorical findings in his favour, the bank initiated fresh departmental proceedings in 2001, almost 11 years after the incident and 4 years after the acquittal, culminating in the imposition of a major penalty of reducing his pay scale by two stages.

The central issue was whether the departmental proceedings could sustain when the criminal proceedings had resulted in a clear acquittal on identical allegations, by relying on the same set of witnesses and documents.

The Court categorically held, “When the departmental proceedings and the criminal proceedings are on same set of allegations and the same witnesses are being relied upon, the departmental proceedings cannot be continued.”

Justice Vinod S. Bhardwaj remarked that the trial court’s judgment was not one based on the mere benefit of doubt but was a clean acquittal, observing that, “Had the accused been guilty of the loss of the amount in question, the question of collection by the officials would not have arisen. It appears that the accused has been made a scapegoat.”

The Court expressed serious displeasure at the conduct of the bank. It noted, “Apparently, the respondent-Bank has tried to overcome the judgment passed by the trial Court so as to retain the service benefits to which the petitioner became entitled to on his acquittal.” The departmental charge-sheet was issued after Jain had already demanded his withheld salary and benefits post-acquittal.

Referring to the unreasonable delay, the Court pointed out that the charge-sheet was served "after nearly 11 years from the first show cause notice and after 4 years of the petitioner's honourable acquittal."

The Court relied extensively on the judgments of the Supreme Court, especially G.M. Tank vs. State of Gujarat and Capt. M. Paul Anthony vs. Bharat Gold Mines Ltd., where it has been firmly held that, “Once the criminal court records an honourable acquittal, departmental proceedings based on the same set of facts and witnesses cannot continue.”

Justice Bhardwaj firmly concluded, “The tenor of the judgment of the trial Court as also its plain reading suggests that there was miserable failure on the part of the prosecution in proving its charge against the petitioner and a specific finding of fact has been recorded by the trial Court that the petitioner has been made as a scapegoat.”

The Court also clarified that the reliance placed by the bank on Ajit Kumar Nag vs. Indian Oil Corporation Ltd. was misplaced, as that precedent was distinguished by the Supreme Court itself in G.M. Tank, given the factual situation of identical charges and witnesses.

The Court, while quashing both the disciplinary authority’s order dated 19.12.2002 and the appellate order dated 04.08.2003, restored Jain’s entitlement to all service benefits. Justice Bhardwaj directed, “The petitioner is held entitled to all consequential benefits that may accrue in his favour.”

Additionally, the Court mandated the bank to disburse all arrears and revise pay and pension benefits within five months, failing which interest at the rate of 6% per annum would be payable.

The judgment ended by re-affirming the principle that an acquitted employee cannot be “tried twice” on the same set of facts by merely shifting the forum from a criminal court to a domestic tribunal.

In a strong rebuke to the respondent bank, the Court stressed, “Such artificial distinction is immaterial as law does not take note of type of acquittal,” underlining that both departmental and criminal actions could not run parallel when the factual substratum was identical.

Date of Decision: 6th March 2025