May" In Service Regulations Is Directory; Delinquent Employee Has No Right To Insist On Common Disciplinary Proceedings: Supreme Court

"Regulation 10 does not vest any power or right in the hands of a delinquent officer/employee to either insist or ask for joint or common proceedings to be held. There is no such corresponding right vested in an employee, and failure to hold a joint enquiry does not vitiate the disciplinary proceedings," Supreme Court, in a significant ruling dated May 12, 2026, held that Regulation 10 of the Canara Bank Officer Employees’ (Discipline and Appeal) Regulations, 1976, is directory and not mandatory.

A bench comprising Justice S.V.N. Bhatti and Justice Vijay Bishnoi observed that the word "may" in the regulation signifies management discretion, clarifying that an employee cannot legally demand a common disciplinary proceeding even if multiple officers are involved in the same cause of action.

The case involved a Senior Manager of Canara Bank who was punished with a reduction in grade following disciplinary proceedings related to negligence in loan sanctions. While a Single Judge of the Karnataka High Court dismissed her challenge, a Division Bench later set aside the punishment, holding that the enquiry was vitiated by natural justice violations and that the bank should have conducted a common proceeding under Regulation 10 for all involved officers.

The primary question before the court was whether Regulation 10 of the 1976 Regulations is mandatory or directory regarding common disciplinary proceedings. The court also examined whether the High Court exceeded the scope of judicial review by setting aside the punishment based on the merits of the evidence.

Scope Of Judicial Review In Disciplinary Matters

The Supreme Court first addressed the High Court Division Bench's findings on the merits of the departmental enquiry. The Court noted that the enquiry officer had relied on statements from individuals who were not examined as witnesses during the proceedings, thereby depriving the respondent of an opportunity for rebuttal.

The bench affirmed that while the scope of judicial review in disciplinary matters is settled and limited, the errors identified by the High Court in this specific enquiry were significant. The Court found that the findings of the enquiry officer were vitiated for "want of a semblance of evidence," as the primary witnesses relied upon were co-accused officers whose statements were recorded only during a preliminary investigation.

"The findings of the Enquiry Officer were vitiated for want of a semblance of evidence."

Interpretation Of "May" In Regulation 10

Turning to the statutory interpretation of Regulation 10, the Court rejected the view that the provision is mandatory. The regulation states that the competent authority "may" make an order directing common proceedings where two or more employees are concerned in a case. The Court emphasized that "may" should not be understood as "must" in this context.

The bench observed that interpreting "may" as "shall" would strip the management of necessary discretion required to handle dynamic situations. It noted that different authorities might be competent to initiate action depending on the specific cadre of the various employees involved in a single incident.

"May is not understood as must, so long as the English language retains its meaning. Enabling words are construed as compulsory only whenever the object is to effectuate a legal right."

Facilitative Versus Obligatory Provisions

The Court highlighted that Regulation 10 is a facilitative provision intended to empower the Bank to order joint proceedings, which might otherwise be impermissible. It does not confer a corresponding right upon a delinquent officer to insist on such a procedure.

The bench cited with approval the High Court of Andhra Pradesh’s decision in T. Baba Prasad v. Andhra Bank, which interpreted a similar provision as directory. The Supreme Court clarified that the nature, design, and consequences of a provision determine if it is mandatory, and in this case, a mandatory reading would cause "serious general inconvenience" to the administration.

"Regulation 10 is a facilitative, not an obligatory, provision. The context of its setting does not lend any support to the view that holding of such common proceedings is a mandatory affair."

While the Supreme Court corrected the legal interpretation regarding Regulation 10, it ultimately upheld the High Court's decision to set aside the punishment based on the procedural flaws in the enquiry. Since the original respondent had passed away, the Court directed the Bank to settle her accounts with her legal heirs.

The Court concluded that although the High Court erred in its interpretation of the service regulations, its conclusion on the merits of the flawed disciplinary enquiry required confirmation. The Bank was directed to settle the deceased respondent's dues within six weeks.

The Supreme Court set aside the High Court's finding that common proceedings are mandatory under Regulation 10 but maintained the quashing of the punishment due to lack of evidence and natural justice violations. The ruling reaffirms that service regulations using "may" for procedural choices generally grant discretion to the employer rather than rights to the employee.

Date of Decision: May 12, 2026