Domestic Enquiry Findings Based On Preponderance Of Probabilities Cannot Be Interfered With Merely Due To Non-Examination Of Complainant Borrowers: Telangana High Court

"The acceptance of illegal gratification by a Bank officer in the course of his employment, particularly when connected with the exercise of official authority, bears the characteristics of such conduct and, therefore, amounts to an offence involving moral turpitude within the meaning of Section 4(6)(b)(ii) of the Payment of Gratuity Act, 1972." Telangana High Court, by a bench comprising Justice Laxmi Narayana Alishetty, ruled that disciplinary findings in banking services, when based on the preponderance of probabilities, are not vitiated solely by the failure to examine borrower-complainants.

The Court held that when sufficient circumstantial evidence is on record to support allegations of corruption, the non-production of such complainants does not render the enquiry perverse.

The petitioner, a former Branch Manager with Canara Bank, challenged his dismissal from service following a departmental enquiry that found him guilty of sanctioning loans in violation of lending norms and accepting illegal gratification. Following his dismissal, the petitioner sought the payment of gratuity, which was initially allowed by the Controlling Authority under the Payment of Gratuity Act, 1972. The bank challenged this directive, while the petitioner challenged his dismissal, leading to the current writ petitions before the High Court.

The Court was tasked with determining whether the non-examination of borrower-complainants in a departmental enquiry renders the disciplinary proceedings unsustainable. Additionally, the Court addressed whether the acceptance of illegal gratification by a bank officer constitutes "moral turpitude" under Section 4(6)(b)(ii) of the Payment of Gratuity Act, thereby justifying the forfeiture of gratuity.

Standard of Proof in Departmental Enquiries

The Court reaffirmed that the standard of proof required in a departmental enquiry is the preponderance of probabilities, not proof beyond reasonable doubt as required in criminal cases. While the initial burden to establish the charge lies on the Management, this burden is discharged when the bank places sufficient supporting circumstances and evidence before the Enquiry Officer.

Evidence of Circumstances Over Complaints

The Court observed that the petitioner’s guilt was not established solely on the preliminary enquiry reports or the disputed borrower complaints. Instead, the Enquiry Officer relied upon corroborative evidence, including the testimony of bank officials who witnessed the context of the complaints and the subsequent conduct of the borrowers who sought refunds of commissions paid.

No Absolute Requirement to Examine Borrowers

Drawing upon the ratio in State Bank of India v. Tarun Kumar Banerjee, the Court held that a customer of a bank need not be involved in a domestic enquiry as it could adversely impact the banker-customer relationship. Consequently, the failure to examine the borrowers as witnesses does not invalidate the findings if other sufficient evidence exists on record to justify the conclusion of misconduct.

Dismissal of Procedural Objections

The petitioner contended that the simultaneous submission of written briefs deprived him of an opportunity to respond to the Management's submissions. The Court dismissed this, noting that the petitioner failed to demonstrate any specific prejudice or violation of the Syndicate Bank Officer Employees (Discipline and Appeal) Regulations, 1976. The Court emphasized that judicial review is restricted to examining the decision-making process, not re-appreciating evidence.

Defining Moral Turpitude for Gratuity Forfeiture

Regarding the forfeiture of gratuity, the Court distinguished between simple procedural misconduct and conduct involving moral turpitude. It ruled that the acceptance of illegal gratification by a Bank officer in connection with the exercise of official authority is inherently base and depraved, thus squarely falling within the ambit of Section 4(6)(b)(ii) of the Payment of Gratuity Act.

Court Rejects Gratuity Claims

The Court concluded that the petitioner's actions, which included sanctioning loans without requisite approvals and demanding bribes, clearly amounted to moral turpitude. The orders of the Controlling and Appellate Authorities directing the payment of gratuity were consequently set aside, as the bank was entitled to forfeit the same in light of the proved misconduct.

The High Court dismissed the petition challenging the dismissal, upholding the integrity of the departmental enquiry. Conversely, it allowed the bank’s petition, ruling that the proved misconduct involving illegal gratification constitutes moral turpitude, thereby disqualifying the petitioner from receiving gratuity benefits.

Date of Decision: 30 September 2026