Quantum of Penalty Is the Domain of the Disciplinary Authority, But Courts Can Interfere If It Shocks the Conscience: Orissa High Court Sets Aside Reversion of Bank Officer

Doctrine of Proportionality Must Prevail Where Penalty Is Excessive to Misconduct - Orissa High Court holding that the penalty imposed on the petitioner — reversion to the base rank of Junior Assistant — was “excessive and disproportionate” to the misconduct established in a departmental proceeding. While affirming that judicial review in service matters is limited, the Court invoked the Doctrine of Proportionality, observing that “the only option left to the Court when a penalty is found to be violative on the pedestal of the ‘Doctrine of Proportionality’ is to remit the matter back to the authority for reconsideration.”

The High Court, therefore, quashed the reversion order and directed the disciplinary authority to reconsider an appropriate punishment in accordance with rules.

“Courts Should Not Act as a Second Court of First Appeal”: Judicial Review Is Limited in Disciplinary Proceedings

The petitioner, Sunil Kumar Rout, who began his career as Junior Assistant in 1991, had risen to the position of Assistant Manager. In 2007, departmental proceedings were initiated against him on eleven charges. Two charges — negligence in discharging duties and disobedience of official orders — were found proved. Based on this, he was reverted to Junior Assistant and ordered to repay losses caused to the bank, failing which his services would be terminated.

While the Co-operative Tribunal set aside the financial recovery portion of the penalty, it upheld the reversion. Challenging this, the petitioner approached the High Court.

Justice G. Satapathy clarified at the outset the restricted scope of judicial review in disciplinary proceedings. Citing Union of India v. P. Gunasekaran, the Court emphasized:

“The High Court, in exercise of its powers under Articles 226/227 of the Constitution of India, shall not venture into reappreciation of the evidence.”

The Court further noted: “The High Court is not and cannot act as a second court of first appeal… it shall not disturb the findings of the Disciplinary Authority, unless there is serious miscarriage of justice or the punishment imposed is shockingly disproportionate.”

“Negligence Without Mala Fide Cannot Justify Extreme Penalty of Two-Grade Reversion”

Examining the findings of the disciplinary authority, the Court noted that although negligence and disobedience were proved, there was no evidence of mala fide intent. The alleged misconduct involved allowing overdrafts in violation of internal circulars. The Court remarked:

“Nothing was brought on record to suggest that the petitioner had committed the act of negligence or disobedience of orders with mala fide intention.”

In light of this, the Court held that reversion to the base cadre — two ranks below his position at the time of the proceedings — was excessive. The Court elaborated: “True it is that the petitioner has been reverted to the original grade, which is two grade below than the grade in which he was posted… however, such penalty appears excessive, especially when the misconduct lacked mala fide intention.”

The Court observed that while no rule or circular prohibited the authority from imposing a two-grade reversion, disciplinary authorities are expected to apply proportionality in their decisions:

“Decision qua the nature and quantum of the penalty is the prerogative of the Disciplinary Authority… but award of penalty which is grossly in excess to the misconduct cannot claim immunity and remains open for interference under the limited scope for judicial review.”

“Doctrine of Proportionality Protects Against Arbitrary Punishment”: Court Remits Matter for Reconsideration

The High Court concluded that although it could not substitute the punishment, it was competent to intervene where punishment violated the Doctrine of Proportionality. Justice Satapathy ruled:

“Looking at the gravity of misconduct vis-a-vis the imputation of charges, this Court is of the considered view that the penalty of reversion of the petitioner to the post of Junior Assistant is excessive and disproportionate.”

Accordingly, the Court quashed the order of reversion and remitted the matter to the disciplinary authority for imposition of a suitable penalty in accordance with law.

In reaffirming the sanctity of judicial restraint in service matters, the Orissa High Court also sent a clear message on the balance that must be maintained in exercising disciplinary power. When misconduct is proven, punishment must follow — but only to the extent justified by law and fairness. As the Court noted: “Quantum of penalty lies with the Disciplinary Authority, but it must pass the test of reasonableness and proportionality.”

Date of Decision: 8 April 2025