Acquittal In Criminal Proceedings Does Not Automatically Result In Discharge In Corresponding Disciplinary Proceedings: Supreme Court

The Supreme Court recently ruled that an acquittal in connected criminal proceedings does not entail any benefit in the surviving proceedings and thus does not automatically result in a corresponding discharge in disciplinary proceedings pending against an employee.

A Division Bench of Justice Hrishikesh Roy and Justice Sanjay Karol clarified that the two proceedings operate in different domains and had distinct objectives.

"The nature of proceedings being wholly separate and distinct, acquittal in criminal proceedings does not entitle the delinquent employee for any benefit in the latter or automatic discharge in departmental proceedings."

The Court was also tasked with answering whether Clause 4 of the Memorandum of Settlement (MoS) dated April 10, 2002, creates a bar on departmental proceedings continuing when the person subjected to them is being tried before a criminal court for offences of the same origin.

It reaffirmed that clause 4 did not create a blanket prohibition on departmental proceedings during the pendency of criminal cases, and such cases should be considered individually.

"it may be desirable or, in certain circumstances, advisable for disciplinary proceedings to be stayed when criminal proceedings are ongoing; however, stay is not "a matter of course" and is only to be given after consideration of all factors, for and against." 

This appeal was filed against the final judgment and order passed in a writ petition by the Gauhati High Court. The background of the case involved a bank employee who faced disciplinary proceedings related to allegations of financial irregularities.

Disciplinary proceedings were initiated against the employee after a complaint was made by government retailers regarding financial discrepancies at the bank branch where he worked. These proceedings began in 1999, alleging that the employee had not deposited certain funds into the respective accounts.

Three different FIRs were registered against the employee, and he was arrested but later released on bail. He contended that the disciplinary proceedings should be dropped or stayed because criminal cases arising from the same transactions were pending.

Despite these objections, the bank appointed an inquiry officer, who found three out of four charges against the employee to be established. The employee was eventually dismissed from the bank's services.

The employee filed a writ petition challenging the dismissal, arguing that the disciplinary proceedings should have been stayed based on clause 4 of the MoS. The High Court had allowed the writ petition.

The Supreme Court examined the interpretation of clause 4 of the MoS, which deals with the timing of disciplinary proceedings in relation to criminal cases. It clarified that clause 4 did not create an automatic stay of disciplinary proceedings but allowed them to proceed if certain conditions were met.

The Court emphasized that the completion of the trial within a reasonable time frame was essential for the application of clause 4. The mere pendency of criminal proceedings would not warrant an automatic stay of disciplinary proceedings, especially if they had been initiated after the prescribed one-year period.

The Apex Court relying on precedents culled out the following essentialities for the operation of clause 4:

a. At least one year ought to have passed since attempts to get the delinquent employee prosecuted;

b. If, after the passage of such time, no prosecution is initiated, then the department may proceed in accordance with its procedure for disciplinary action;

c. If the prosecution commences later in point of time to the disciplinary proceedings, the latter shall be stayed, but not indefinitely. Such proceedings are to be stayed only for a reasonable period of time, which is a matter of determination per the circumstances of each case. 

Furthermore, it was also highlighted that an acquittal in criminal proceedings did not automatically result in a corresponding discharge in disciplinary proceedings. 

In this specific case, the disciplinary proceedings against the employee had been initiated well after the one-year period mentioned in clause 4. Additionally, the employee had not raised objections based on clause 4 at the outset, and there was no indication of prejudice caused by simultaneous proceedings.

Consequently, the Court set aside the High Court's judgment and restored the employee's dismissal from service based on the disciplinary proceedings.

Case Title: State Bank of India & Ors v. P Zandenga

Citation : 2023 LiveLaw (SC) 850

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