Suspicion, However Grave, Cannot Replace Proof: Calcutta High Court Sets Aside Bank Clerk’s Dismissal in Rs. 38.67 Lakh Pension Account Case

“A Finding Unsupported by Evidence Cannot Survive Judicial Review Under Article 226”, Calcutta High Court examining the legality of disciplinary proceedings against a bank employee accused of misappropriating funds from dormant pension accounts. Justice Partha Sarathi Chatterjee held that a disciplinary authority cannot sustain findings on mere suspicion or assumptions when the record itself fails to contain supporting evidence.

The Court emphasized the central principle governing departmental proceedings:

“The principles of natural justice require that the findings recorded in a disciplinary proceeding must be founded on some evidence on record. Suspicion, however grave, cannot take the place of proof.”

Finding that the dismissal of the petitioner was based on no evidence and founded largely on conjectures, the Court set aside the order of the Disciplinary Authority and the Appellate Authority, remanding the matter for fresh consideration.

Background of the Case

The petitioner Bhaskar Adhikari joined the Bank of India on 11 March 1998 as a Cash-cum-Accounts Clerk on compassionate grounds and was posted at the Kharagpur Branch. After successfully completing probation, he was confirmed in service in September 1998 and continued to serve the branch for nearly nineteen years without any adverse record. His responsibilities were not confined to the cash department alone and he was also selected as a Marketing Assistant in 2005, reflecting the bank’s satisfaction with his performance.

The controversy arose in April 2017, when the petitioner was placed under suspension following a preliminary investigation into irregularities in several pension accounts of illiterate customers who used Left Thumb Impressions (LTI) for transactions. The bank alleged that a pattern of suspicious high-value withdrawals had been detected between July 2016 and April 2017, involving dormant pension accounts.

According to the bank, the petitioner had activated nineteen dormant pension accounts in the Finacle banking system without obtaining KYC documents or any request from the account holders. It was further alleged that he processed cash withdrawals from eleven of those accounts on the basis of withdrawal slips that lacked proper authentication or cancellation of the pensioners’ signatures or LTIs, and that the denominations of currency notes were not recorded on the reverse side of most withdrawal slips.

The bank alleged that these acts resulted in the misappropriation of Rs. 38.67 lakhs, purportedly in connivance with other officials.

Departmental Enquiry and Divergent Findings

A domestic enquiry was conducted between December 2017 and March 2018, during which the management examined several witnesses and relied upon transaction logs, withdrawal slips, procedural circulars, and the opinion of a handwriting expert.

After evaluating the evidence, the Enquiry Officer recorded a mixed finding. One charge relating to activation of dormant accounts was held partially proved, another charge relating to payment irregularities was held proved, while the crucial allegation of misappropriation of funds was held not proved.

The Enquiry Officer clearly observed:

“During enquiry, any ill motive, nexus or unholy alliance of the CSE with Sudip Das or Kamal Bhattacharya was not established.”

The report further noted:

“There is no evidence to establish that the CSE has misappropriated Rs. 38,67,000/-.”

Despite these findings, the Disciplinary Authority issued a disagreement note and concluded that all the charges stood fully proved, ultimately imposing the penalty of dismissal without notice on 15 October 2018. The petitioner’s statutory appeal was dismissed on 21 January 2019, prompting him to invoke the writ jurisdiction of the High Court under Article 226 of the Constitution.

Judicial Review in Disciplinary Proceedings

The High Court first addressed the scope of judicial review in disciplinary matters. It reiterated that courts ordinarily do not act as appellate authorities over departmental findings, nor do they reappreciate evidence. However, an exception arises where the finding is perverse or unsupported by evidence.

Justice Chatterjee observed:

“While judicial review is generally confined to the decision-making process, where the impugned finding is alleged to be based on no evidence, the writ court is not precluded from examining whether any material existed to sustain such finding.”

The Court emphasized that the doctrine of fairness under Article 14 requires that administrative decisions affecting service rights must not be arbitrary or irrational.

“Disciplinary Authority Cannot Replace Evidence With Assumptions”

The Court undertook a detailed comparison of the Enquiry Officer’s findings and the conclusions drawn by the Disciplinary Authority. It found that the Disciplinary Authority had largely paraphrased portions of the enquiry report and relied on speculative reasoning rather than evidence.

The Enquiry Officer had specifically recorded that applications and KYC documents allegedly used for activation of dormant accounts were not available in the branch records, and that the management failed to produce any designated officer who could testify that the petitioner had acted without instructions.

However, the Disciplinary Authority treated the absence of such documents as corroboration of the charge, without independently analyzing the evidence. The Court criticized this reasoning and observed that such conclusions cannot form the basis of disciplinary punishment.

“Activation of Dormant Account Is Not a Unilateral Process”

A crucial factual aspect considered by the Court was the operational procedure governing transactions of illiterate pensioners.

Evidence revealed that the process involved multiple stages and several officials. The withdrawal slip was first presented before a bank officer who authenticated the LTI, after which the document was placed before the cash-paying employee for data entry. The document would then be forwarded to another officer for cancellation of the LTI, and only thereafter would the cashier disburse the payment.

The Court observed that although system logs showed that data entries were made using the petitioner’s User ID, the bank failed to produce evidence showing who authenticated the LTIs or cancelled them. It was also undisputed that no disciplinary proceedings were initiated against any other staff member involved in the process.

In these circumstances, the Court held that the theory that the entire fraud was committed by a single employee was highly improbable.

Misappropriation Not Established on Record

The High Court further noted that essential elements of the charge of misappropriation were missing. The enquiry record did not establish that the pensioners had died or changed their addresses, nor was there evidence showing that the amounts were actually diverted to the petitioner.

The Court emphasized that even in departmental proceedings governed by the “preponderance of probabilities” standard, the conclusion must reasonably flow from evidence.

Justice Chatterjee observed:

“The findings must be supported by some evidence on record and cannot rest merely on conjectures or assumptions.”

The Court therefore concluded that the decision of the Disciplinary Authority was based on no evidence.

“Dismissal Shocks the Conscience of the Court”

The Court also examined the proportionality of the punishment. It observed that the only aspects that could arguably be attributed to the petitioner were entering certain data in the system, failing to record denominations on some withdrawal slips, and overlooking irregular authentication of LTIs.

Since misappropriation was not satisfactorily proved, the Court held that the penalty of dismissal without notice was grossly disproportionate.

Justice Chatterjee observed that such punishment “shocks the conscience of the Court” and is inconsistent with the principle of proportionality in service jurisprudence.

Court’s Final Decision

In view of these findings, the High Court set aside the disciplinary order dated 15 October 2018 and the appellate order dated 21 January 2019. Instead of terminating the proceedings entirely, the Court followed the settled rule in service law and remitted the matter back to the Disciplinary Authority.

The Disciplinary Authority was directed to reconsider the enquiry report and the petitioner’s written submissions afresh, without being influenced by the earlier decision, and to pass a fresh order within four weeks.

A request by the bank’s counsel seeking stay of the judgment was rejected by the Court.

The decision underscores the fundamental principle that disciplinary authority cannot impose severe service penalties in the absence of evidence linking the employee to the alleged misconduct. Even though bank employees handle public money and are expected to maintain high standards of integrity, the charges of financial misconduct must still be established through reliable material and rational inference.

By setting aside the dismissal and directing reconsideration of the matter, the Calcutta High Court reaffirmed that administrative fairness and evidentiary foundation remain indispensable requirements in disciplinary proceedings.

Date of Decision: 10 March 2026