Punishment Must Be Proportionate to the Gravity of Charges: Rajasthan High Court Applies Doctrine of Proportionality

Rajasthan High Court quashed the penalty of compulsory retirement without service benefits imposed on the petitioner, Robin Shah, a former Branch Manager of the Rajasthan Marudhara Gramin Bank. The Court held that the punishment was disproportionate to the charges proved in the disciplinary inquiry and remanded the case for reconsideration of the quantum of punishment. Justice Farjand Ali observed that while judicial review of disciplinary proceedings is limited, courts can interfere where the punishment is arbitrary, excessive, and shocks the conscience.

The petitioner had challenged the disciplinary proceedings on the grounds of procedural irregularities and the harshness of the penalty imposed. The Court, however, upheld the findings of the inquiry but found that the punishment was excessive in light of the nature of the charges and directed the disciplinary authority to reconsider the penalty in accordance with the principles of proportionality.

The petitioner, Robin Shah, had been serving as a Branch Manager at the Rajasthan Marudhara Gramin Bank when he was charged under Regulation 39(1)(b) of the Rajasthan Marudhara Gramin Bank (Officers & Employees Service Regulations, 2010). The disciplinary inquiry was initiated based on five charges, which included sanctioning loans exceeding his discretionary limit, failing to notify loan approvals to the Regional Office, and improperly processing travel allowance claims for himself and a subordinate. The disciplinary authority, accepting the inquiry officer's report, imposed the penalty of "compulsory retirement without service benefits," which was upheld by the appellate authority.

Challenging these orders, the petitioner argued that the disciplinary inquiry violated principles of natural justice as relevant documents and evidence were not provided to him. He also contended that the penalty imposed was disproportionate to the charges, particularly as there were no allegations of fraud, misappropriation, or personal gain.

Judicial Review Is Not an Appeal Against the Decision But the Decision-Making Process

Justice Farjand Ali, addressing the scope of judicial review in disciplinary proceedings, emphasized that courts do not sit as appellate authorities to reappreciate evidence or substitute their decision for that of the disciplinary authority. Relying on the Supreme Court's observations in B.C. Chaturvedi v. Union of India [(1996) AIR 484], the Court noted:

“Judicial review is not an appeal from a decision but a review of the manner in which the decision is made. The power of judicial review is meant to ensure that the individual receives fair treatment and not to ensure that the conclusion which the authority reaches is necessarily correct in the eye of the court.”

The Court further referred to the decision in Union of India v. P. Gunasekaran [(2015) 2 SCC 610], where it was held that the High Court must confine itself to examining whether the inquiry was held by a competent authority, conducted in accordance with law, and adhered to principles of natural justice. The Court cannot interfere with findings of fact unless they are perverse or unsupported by evidence.

Applying these principles, the Court held that the disciplinary inquiry against the petitioner was conducted in accordance with the applicable regulations and the principles of natural justice. The petitioner was provided with multiple opportunities to defend himself, and the findings of the inquiry were supported by evidence on record. The Court, therefore, declined to interfere with the findings of the inquiry.

“Doctrine of Proportionality: Punishment Must Suit the Gravity of the Misconduct”

Turning to the issue of the penalty, the Court observed that the doctrine of proportionality requires that the punishment imposed on a delinquent employee must correspond to the gravity of the misconduct. Justice Farjand Ali stated:

“The absence of allegations like misappropriation of funds or personal financial gain differentiates this case from more severe misconduct. The punishment imposed is not commensurate with the gravity of the charges and thus shocks the conscience of the court.”

The Court highlighted that the petitioner’s primary misconduct involved exceeding his discretionary limit in sanctioning loans, which was a violation of bank regulations but did not involve any fraudulent intent, embezzlement, or financial loss to the bank. The Court observed:

“The principle of proportionality necessitates that the punishment corresponds with the gravity of the misconduct. Here, the petitioner’s actions, though in breach of procedural limits, lack any criminal intent or severe repercussions on the bank’s financial health. Therefore, imposing the punishment of compulsory retirement appears disproportionate.”

The Court also referred to the Supreme Court's decision in Ranjit Thakur v. Union of India [(1987) 4 SCC 611], which held that:

“Judicial review generally speaking, is not directed against a decision, but is directed against the decision-making process. The question of the choice and quantum of punishment is within the jurisdiction and discretion of the disciplinary authority. But the sentence has to suit the offence and the offender. It should not be vindictive or unduly harsh.”

Inconsistent Punishments Highlight Arbitrary Exercise of Discretion
The petitioner cited several instances where employees of the same bank were found guilty of more serious misconduct, such as forgery, embezzlement, and unauthorized use of funds, but were awarded lesser penalties. While recognizing that parity in punishment is not an absolute right, the Court held:

“Parity and equal treatment in the exercise of discretion must be shown. For less grave charges, awarding a harsh penalty while awarding minor penalties for graver allegations reflects arbitrary and discriminatory exercise of discretion.”

The Court noted that this inconsistency in the bank’s disciplinary measures highlighted a failure to exercise discretion judiciously and reinforced the argument for reassessment of the petitioner’s penalty.

Directions Issued: Reconsideration of Penalty
The Court set aside the orders of the disciplinary and appellate authorities to the extent of awarding the penalty of compulsory retirement and remanded the matter to the disciplinary authority for reconsideration of the quantum of punishment. Justice Farjand Ali directed:

“The matter is remanded to the disciplinary authority for reconsidering the case in regard to quantum of punishment awarded in pursuance of the departmental inquiry and to pass a fresh order awarding suitable punishment to the petitioner commensurate to the gravity of the charges, other than compulsory retirement, removal from service, or dismissal from service.”

The Court further directed that compliance with the order be completed within three months.

The Rajasthan High Court’s decision in Robin Shah v. Rajasthan Marudhara Gramin Bank & Ors. reaffirms the judiciary’s commitment to ensuring fairness and proportionality in disciplinary proceedings. While recognizing the limited scope of judicial review in such matters, the Court emphasized that disciplinary authorities must exercise their discretion judiciously, particularly when imposing penalties that have severe consequences for an employee’s career and livelihood.

Date of Decision: January 21, 2025