Case Name: CANARA BANK V. PREM LATHA UPPAL (DEAD) THROUGH LRS.
Petition Number: SLP (CIVIL.) No. 10226 of 2023
Neutral Citation: 2026 INSC 478
Date of Judgment: 12.05.2026
Coram: HON’BLE MR. JUSTICE SVN BHATTI & HON’BLE JUSTICE MR. VIJAY BISHNOI.
INTRODUCTION
The dispute centered around whether courts could interfere with disciplinary findings against a bank officer on grounds of breach of natural justice and lack of evidence, and whether Regulation 10 of the Canara Bank Officer Employees’ (Discipline and Appeal) Regulations, 1976 (1976 Regulations) mandated joint disciplinary proceedings. The Supreme Court upheld judicial interference where fair procedure was violated, while clarifying that common disciplinary proceedings against multiple employees are discretionary, not mandatory.
FACTS
The Civil Appeal before the Supreme Court arose from disciplinary proceedings initiated by appellant bank against the respondent, a Senior Manager and member of the Credit Sanction Committee, for alleged negligence and collusion in sanctioning loans to fraudulent firms. She was reduced in rank from SMG Scale-IV to MMG Scale-III after charges relating to failure in verification of borrowers, guarantors, collateral securities, and financial documents were found proved. Her writ petition challenging the punishment was dismissed by the Single Judge, who held that the disciplinary authorities had acted fairly and that Regulation 10 of the 1976 Regulations made joint disciplinary proceedings discretionary, not mandatory.
However, the Division Bench set aside the punishment on the ground that the Enquiry Officer relied upon statements of co-accused officers who were not examined during the enquiry, thereby denying the respondent an opportunity to rebut such evidence and violating principles of natural justice. The Bench also noted the absence of a vigilance angle and questioned consultation with the Central Vigilance Commission. Aggrieved, the Bank approached the Supreme Court raising issues regarding the permissible scope of judicial review in disciplinary matters and the interpretation of Regulation 10 concerning common disciplinary proceedings.
ISSUES
1. Whether the impugned Judgment in setting aside the order of punishment exceeded the scope of judicial review of a decision taken in the disciplinary proceedings initiated against an employee?
- Whether Regulation 10 of the 1976 Regulations is mandatory or directory in deciding whether a common cause of action against more than one employee should be through a common or independent disciplinary proceeding?
ARGUMENTS OF THE PARTIES
The appellant bank contended that the Division Bench illegally re-appreciated evidence and exceeded the limited scope of judicial review in disciplinary matters. It further argued that Regulation 10 of the 1976 Regulations is directory, not mandatory, and the word “may” cannot be judicially interpreted as “shall” to restrict management discretion.
Per contra, the first Respondent argued that the Division Bench merely corrected errors apparent on the face of the record, since findings in the enquiry lacked evidentiary support and violated natural justice. It was submitted that there was no impermissible re-appreciation of evidence and remanding the matter would serve no purpose after her death.
JUDGMENT AND ANALYSIS
The Supreme Court held that the Division Bench had not exceeded the permissible scope of judicial review in interfering with the disciplinary proceedings against the respondent. After examining the record of the case, the Court found that the errors identified by the High Court regarding the enquiry findings were material and justified interference, particularly on grounds of lack of evidence and violation of natural justice. Accordingly, the Court affirmed the Division Bench’s conclusions on the merits of the disciplinary proceedings.
With respect to the second issue, the Court then examined Regulation 10 of the Canara Bank Officer Employees’ (Discipline and Appeal) Regulations, 1976, concerning common disciplinary proceedings. It rejected the interpretation that the word “may” should be read as “shall”. The Court held that Regulation 10 was directory in nature and merely enabled the management to conduct joint proceedings where appropriate. The court remarked that treating it as mandatory would improperly curtail managerial discretion, especially where employees hold different positions, responsibilities, or are subject to different disciplinary authorities. Consequently, the Court set aside the contrary view of the Division Bench on Regulation 10, while otherwise affirming the impugned judgment. The Bank was directed to settle the respondent’s dues within six weeks.
CONCLUSION
The Supreme Court partly allowed the appeal by holding that Regulation 10 of the 1976 Regulations is directory and does not mandate common disciplinary proceedings against multiple employees. At the same time, the Court upheld the High Court’s interference with the punishment imposed on the respondent, finding that the inquiry suffered from evidentiary deficiencies and violations of natural justice warranting judicial review.
