The Supreme Court has held that courts exercising judicial review in disciplinary matters cannot ordinarily re-appreciate evidence unless there is a clear violation of principles of natural justice or absence of evidence. The Court also clarified that Regulation 10 of the Canara Bank Officer Employees’ (Discipline and Appeal) Regulations, 1976, which uses the expression “may” regarding common disciplinary proceedings, is directory and not mandatory.
The bench Justice Raja Basu Chowdhury has observed that had set aside disciplinary punishment imposed on a former Senior Manager of the bank.
The dispute arose from disciplinary proceedings initiated against the officer in connection with sanction of loans to two firms, M/s Aman Trading Company and M/s Creative Trading Company. The bank alleged serious lapses in verification of borrowers, collateral security, guarantors, and supporting financial documents while sanctioning the loans. The charges also alleged failure to independently verify businesses, discrepancies in legal scrutiny reports, and permitting large cash withdrawals without monitoring end use of funds.
Following disciplinary proceedings, the officer was punished by reduction in rank from SMG Scale-IV to MMG Scale-III through an order dated May 31, 2006. The officer challenged the punishment before the Karnataka High Court. While the Single Judge dismissed the writ petition, the Division Bench later interfered with the disciplinary action and set aside the punishment.
Before the Supreme Court, the bank argued that the Division Bench exceeded the permissible limits of judicial review by re-appreciating evidence recorded during the disciplinary proceedings. It also contended that Regulation 10 of the 1976 Regulations merely grants discretion to hold joint disciplinary proceedings and does not mandate common proceedings against all employees involved in the same transaction.
The legal heirs of the deceased employee argued that the disciplinary proceedings were vitiated because statements relied upon during the enquiry were not proved through witnesses examined in the proceedings. They further contended that the Division Bench had only corrected an error apparent on the face of the record and had not exceeded the scope of judicial review.
The Supreme Court examined the findings of the Division Bench and reiterated the settled principle that the scope of judicial review in disciplinary matters is limited. The Bench observed that the High Court’s findings on the merits of the disciplinary proceedings were available on record and did not amount to impermissible re-appreciation of evidence. The Court therefore declined to interfere with those findings.
However, the Court disagreed with the Karnataka High Court’s interpretation of Regulation 10. The provision states that where two or more officer employees are concerned in a case, the competent authority “may” direct that disciplinary proceedings against all of them be taken in a common proceeding.
Interpreting the provision, the Supreme Court held that the word “may” cannot ordinarily be read as “shall” unless the statutory context compels such interpretation. The Court observed that construing the provision as mandatory would improperly eliminate managerial discretion in disciplinary administration.
The Bench referred to the Andhra Pradesh High Court decision in T. Baba Prasad v. Andhra Bank, which had held that a similar provision was directory and facilitative in nature. The Court approved that interpretation and noted that employees do not possess a vested right to demand joint disciplinary proceedings merely because multiple officers are involved in a transaction.
The Supreme Court further observed that disciplinary proceedings may involve employees of different cadres, varying responsibilities, and different disciplinary authorities. Therefore, making joint proceedings compulsory could create administrative complications and unnecessarily restrict employer discretion.
The Court affirmed the Andhra Pradesh High Court’s interpretation and set aside the Karnataka High Court’s contrary view regarding Regulation 10. At the same time, the Court maintained the relief already granted to the employee on the merits of the disciplinary proceedings. The bank has been directed to settle the employee’s dues within six weeks.
Case Details
Case Title: Canara Bank Versus Prem Latha Uppal (Dead)
Citation: JURISHOUR-1235-SC-2026
Case No.: Special Leave Petition (Civil) No(S). 10226 Of 2023
Date: 12/05/2026
