In the recent case of State Bank of India & Ors v Neelam Nag the Supreme Court held that the pendency of a criminal case “cannot be the sole basis” to indefinitely suspend disciplinary proceedings initiated against an individual.
The court was ruling on a recurring question as to whether disciplinary proceedings can be initiated before the completion of the recording of prosecution evidence in a criminal case that is based on the same facts.
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Nag, a former employee of the State Bank of India (SBI), had admitted to causing it losses in 2006. The bank issued a disciplinary charge-sheet after the police had filed charges against her. A single judge and a division bench of Chhattisgarh High Court at Bilaspur allowed a challenge filed by Nag against initiation of the bank’s disciplinary proceedings.
The high court held that the facts involved were similar in both the criminal case and the disciplinary proceedings. It also referred to a clause in a 2002 memorandum of settlement that granted SBI employees protection from facing departmental proceedings until the completion of the trial.
On appeal before the Supreme Court, the SBI contended that the misconduct was in relation to an embezzlement that caused financial loss both to the bank and to the public exchequer. Reliance on the clause in the memorandum would be against public policy and also encourage unscrupulous employees to stall disciplinary proceedings.
Partly allowing the appeal, the Supreme Court said it is well settled that there is no legal bar to the simultaneous conduct of disciplinary proceedings and a criminal trial. Referring to the memorandum of settlement, the court held that the term “completion of the trial” must be construed as completion within a reasonable time frame.
Holding that departmental proceedings cannot be suspended indefinitely or delayed unduly, the Supreme Court directed the criminal court to decide the case within one year, failing which disciplinary proceedings shall be resumed.
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The dispute digest is compiled by Bhasin & Co, Advocates, a corporate law firm based in New Delhi. The authors can be contacted at lbhasin@bhasinco.in or lbhasin@gmail.com. Readers should not act on the basis of this information without seeking professional legal advice.
