Supreme Court: Acquittal in Criminal Proceedings Doesn’t Guarantee Discharge in Disciplinary Cases

Supreme Court Law Insider

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Published on: October 6, 2023 at 10:25 IST

The Supreme Court, in a recent decision, has clarified that an acquittal in criminal proceedings does not automatically lead to a discharge in corresponding disciplinary proceedings against an employee.

A Division Bench consisting of Justice Hrishikesh Roy and Justice Sanjay Karol emphasized that criminal and disciplinary proceedings operate in separate domains, and an acquittal in the criminal case does not entitle the accused employee to automatic benefits or discharge in the departmental proceedings.

The Court also addressed the question of whether Clause 4 of the Memorandum of Settlement (MOS) dated April 10, 2002, bars the continuation of departmental proceedings when an individual is simultaneously facing criminal charges related to the same matter.

The Court clarified that Clause 4 does not impose a blanket prohibition but rather suggests that each case should be assessed individually.

The Court acknowledged that in certain circumstances, it might be advisable to stay disciplinary proceedings while criminal cases are ongoing. However, such stays should not be granted as a matter of course and should only be decided after careful consideration of all relevant factors.

The case before the Supreme Court involved a bank employee who was the subject of disciplinary proceedings related to allegations of financial irregularities. These proceedings were initiated in 1999 after complaints from government retailers regarding financial discrepancies at the bank branch where the employee worked.

The employee faced three different FIRs and was arrested but later released on bail. He argued that the disciplinary proceedings should be dropped or stayed due to the pendency of criminal cases arising from the same transactions.

Despite these objections, the bank appointed an inquiry officer who found the employee guilty of three out of four charges, leading to his dismissal from the bank’s services.

The employee challenged his dismissal through a writ petition, contending that Clause 4 of the MoS should have led to the stay of disciplinary proceedings. The High Court had ruled in favor of the employee.

The Supreme Court examined the interpretation of Clause 4 and clarified that it did not automatically stay disciplinary proceedings. Instead, it allowed them to continue if specific conditions were met.

The Court emphasized that completing the criminal trial within a reasonable timeframe was crucial for applying Clause 4. Mere pendency of criminal proceedings would not automatically warrant a stay of disciplinary proceedings, particularly if they were initiated after the prescribed one-year period.

The Court outlined the essential conditions for the operation of Clause 4, including the passage of at least one year since attempts to prosecute the delinquent employee, the absence of prosecution within that time, and a reasonable period of stay if criminal proceedings commence later than disciplinary proceedings.

Additionally, the Court stressed that an acquittal in criminal proceedings did not automatically result in a corresponding discharge in disciplinary proceedings.

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

Therefore, the Supreme Court set aside the High Court’s judgment and upheld the employee’s dismissal based on the disciplinary proceedings.

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

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