No leniency for bank officers acting beyond delegated powers: DB

19/08/2026

JAMMU, Aug 18: The High Court of Jammu & Kashmir and Ladakh has held that a bank officer cannot escape disciplinary action merely because his conduct caused no financial loss to the bank or even resulted in profit, observing that acting beyond delegated authority constitutes serious miscond-uct in the banking sector.
A Division Bench comprising Justice Sindhu Sharma and Justice Rajesh Sekhri made the observation while allowing an appeal filed by J&K Grameen Bank and others against a Single Judge order that had quashed disciplinary punishment imposed on former bank officer Rachhpal Singh.
In its judgment in LPA No. 136/2025 pronounced on August 18, the Division Bench restored the punishment reducing Singh to the lowest stage of Officer Scale-I with a basic pay of Rs 48,170.
The Bench, however, set aside the direction withholding his superan-nuation benefits and ordered the bank to release the retirement benefits immediately.
The disciplinary proceedings arose from Singh's tenure as Branch Head at J&K Grameen Bank's Simble Morh Branch. The bank had alleged that he extended undue favour to selected borrowers and sanctioned loans and advances in violation of operational guidelines and beyond the powers delegated to him.
An Inquiry Officer, in a report submitted on February 3, 2022, held that all but one charge, which was partly proved, stood proved against Singh. The disciplinary authority subsequently imposed punishment by reducing him to the lowest stage in Officer Scale-II and directed that his superannuation benefits be released on the reduced pay.
The appellate authority later modified the punishment by reducing his basic pay to the first stage of Officer Scale-I at Rs 48,170. It also directed that his retirement benefits would be released after recovery or adjustment of the loan accounts involved in the disciplinary proceedings.
The Single Judge had quashed the punishment, taking into account that the bank had suffered no financial loss, Singh had not derived any pecuniary benefit and most of the irregularities had been rectified.
Setting aside the view, the Division Bench held that judicial review of disciplinary proceedings is limited and a writ court cannot reassess evidence as an appellate authority.
The Bench observed that in banking institutions dealing with public money, exceeding delegated authority itself constitutes a serious breach of discipline and misconduct.
It further held that the absence of financial loss cannot come to the rescue of a bank employee who consciously acts beyond the limits of his authority.
The court noted that Singh, being a Senior Manager and Class-I Officer, could not claim ignorance of the extent of his delegated powers. It also took note of his admission during the disciplinary proceedings and the fact that he had earlier been charge-sheeted and penalised twice during his service.
"The absence of actual financial loss or the fact that Bank earned a profit would not absolve the employee of the Bank," the Bench observed, adding that absence of malice or mens rea in departmental proceedings was irrelevant and describing the misconduct as "unpardonable".
The Bench further noted that of the loans sanctioned during Singh's tenure, 24 accounts were settled under the One-Time Settlement scheme, 10 were declared NPAs, while recovery in another 14 accounts remained pending and was likely to turn into NPA.
On the issue of retirement benefits, however, the Division Bench held that the bank could not indefinitely withhold them.
It held that superannuation benefits can be forfeited or withheld only to the extent of quantified loss or damage caused to the bank and after providing the employee an opportunity of hearing. In the present case, no loss had been quantified by either the disciplinary or appellate authority.
The Bench accordingly held that Singh's retirement benefits could not be withheld merely until recovery of outstanding loan accounts, particularly when the bank had other legal remedies available for recovering the dues from borrowers.
The appeal was accordingly allowed, the Single Judge's judgment was set aside and the punishment reducing Singh to the lowest stage of Officer Scale-I was restored. At the same time, the withholding of his retirement benefits was quashed and the bank was directed to release them immediately.
Senior Advocate R.K. Jain, assisted by Advocate Paramveer Singh, appeared for J&K Grameen Bank, while Advocate Abhimanyu Sharma represented Rachhpal Singh.

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