Disciplinary Proceedings Initiated During Service Can Continue Post-Superannuation; Bank Officers Handle Public Funds In Trust: J&K & Ladakh High Court

"A bank officer holds a position of trust as he deals with public funds. Sanction of loan beyond one’s power, or not ensuring end-use of the loan, amounts to financial irregularity which exposes the Bank to financial risk," High Court of Jammu & Kashmir and Ladakh, in a significant ruling, held that disciplinary proceedings initiated against a bank employee while in service can legally continue to their logical conclusion even after the employee’s superannuation.

A Division Bench comprising Justice Sanjeev Kumar and Justice Sanjay Parihar observed that bank officers hold a position of public trust, and any reckless lending or unauthorized sanctioning of credit facilities constitutes grave misconduct. The Court set aside a Single Judge's order that had previously quashed the dismissal of a retired Branch Head.

The respondent, Naseer Ahmad Sheikh, served as a Branch Head at Jammu & Kashmir Bank and was placed under suspension in March 2021 following allegations of unauthorized sanctioning of Temporary Overdrafts (TODs). Although two formal charge sheets were issued while he was in service, he attained the age of superannuation on June 30, 2021, while the enquiries were still pending. Upon the conclusion of the departmental enquiries, which proved the charges of financial irregularity, the Bank issued an order of dismissal effective from the date of his retirement.

The primary question before the court was whether a disciplinary enquiry initiated during service could culminate in a dismissal order after the employee had superannuated. The court was also called upon to determine the scope of judicial review over departmental findings and whether sanctioning TODs without written approval from superiors constitutes a punishable breach of duty under the Bank's service rules.

Deemed Continuation of Service for Disciplinary Action

The Court emphasized that the legal position regarding the continuation of enquiries post-retirement is well-settled. It noted that if service rules permit, an enquiry does not lapse merely because an employee reaches the age of superannuation. Referring to Rule 259 of the J&K Bank Officers’ Service Manual-2000, the Bench noted that an officer "will cease to be in services on the date of superannuation but the disciplinary proceedings will continue as if he was in service until the proceedings are concluded."

"Disciplinary proceedings initiated during service can be brought to their logical conclusion even after superannuation if the extant rules permit such continuation."

The Bench relied on the Supreme Court’s recent precedent in Virinder Pal Singh vs. Punjab and Sind Bank (2026), which affirmed that such deemed continuation allows for the imposition of major penalties, including dismissal. The Court clarified that this fiction of service is specifically created to ensure that employees do not escape accountability for misconduct committed during their tenure simply by retiring.

Limited Scope of Judicial Review in Departmental Enquiries

The High Court reiterated that Constitutional Courts do not sit as courts of appeal over the merits of a departmental enquiry. The Bench observed that judicial review is confined to the "decision-making process" rather than the decision itself. Citing State of Rajasthan vs. Bhupendra Singh (2024), the Court held that findings of fact recorded by an enquiry officer cannot be interfered with unless they are based on "no evidence" or are "wholly arbitrary and capricious."

"The High Court is not a Court of appeal over the decision of the authorities holding a departmental enquiry; it is concerned only with whether the rules of natural justice were followed."

Fiduciary Duty of Bank Officers Regarding Public Funds

Central to the Court’s reasoning was the unique nature of the banking profession. The Bench observed that a bank officer deals with money belonging to depositors and customers, necessitating a higher standard of integrity and diligence. The Court rejected the argument that the Bank must prove an actual financial loss to punish an officer for unauthorized lending. The mere act of exposing the Bank to financial risk by bypassing sanctioned limits is sufficient to constitute misconduct.

"Any dereliction in discharge of duties by a bank employee, whether by way of negligence or deliberate intention, constitutes misconduct as they handle public money."

Misinterpretation of Rule 337(C) by the Single Judge

The Division Bench found that the Writ Court had erroneously interpreted Rule 337(C) of the Service Manual. While the respondent claimed he acted under the "verbal instructions" of his superiors, the Court pointed out that the rule mandates obtaining "written confirmation of the direction as soon thereafter as possible" if written instructions were not immediately practicable. The respondent had failed to prove that he ever sought such post-facto written approvals for the TODs he granted.

"Rule 337(C) does not permit an employee to act beyond his authority; it requires immediate written confirmation of any verbal directions followed by the officer."

The Bench further noted that the respondent was a habitual offender who practiced reckless lending across multiple branches, leading to several accounts turning into Non-Performing Assets (NPAs). Since the enquiry followed all procedural requirements and provided the respondent with an adequate opportunity to defend himself, the Court found no reason to interfere with the Bank’s decision to dismiss him.

The High Court concluded that the disciplinary proceedings were conducted in full compliance with the principles of natural justice and the Bank's regulations. It held that the Single Judge had overstepped by re-appreciating evidence as an appellate authority. Consequently, the appeal filed by J&K Bank was allowed, the dismissal order was upheld, and the respondent's writ petition was dismissed.

Date of Decision: 14 May 2026