The General Manager Personnel Syndicate Bank Vs. B.S.N. Prasad

The Supreme Court of India, in The General Manager Personnel, Syndicate Bank vs. B.S.N. Prasad [Civil Appeal No. 6327 of 2024, decided January 21, 2025; 2025 INSC 89], addressed the proportionality of disciplinary punishment imposed on a bank manager accused of serious financial irregularities.

Facts and Background
B.S.N. Prasad, employed by Syndicate Bank since 1985 and promoted to branch manager, was accused of serious misconduct during his tenure at the Mudigubba branch (2007–2008). Allegations included making fictitious debits to crop insurance accounts, unauthorized withdrawals from Syndicate Kisan Credit Card (SKCC) accounts, exceeding sanctioned limits, sanctioning a vehicle loan in violation of guidelines, misappropriating funds, and colluding with others to siphon off money. A disciplinary inquiry found him guilty, leading to his dismissal in 2012.

Despite being acquitted in related criminal proceedings, Prasad challenged his dismissal in a writ petition, arguing that he had reimbursed the financial loss, had an otherwise unblemished record, and that the penalty was excessive given the circumstances.

Legal Issues
Whether the disciplinary inquiry and punishment were fair and proportionate.

The difference in standards of proof between criminal and disciplinary proceedings.

The relevance of prior unblemished service and subsequent reimbursement of losses.

Supreme Court’s Findings
The Supreme Court reiterated that disciplinary authority’s powers must be exercised with proportionality and fairness. It noted that Prasad admitted his mistakes and worked under significant pressure, dealing with over 4,800 SKCC accounts in 60 days, and faced external pressure from farmers and political leaders due to delays in crop insurance claims. Importantly, the financial loss to the bank was reimbursed, and Prasad had served over 21 years with an unblemished record prior to the incident.

The Court held that the penalty of dismissal was disproportionate to the misconduct, especially considering Prasad’s long, clean service and the reimbursement of losses. Instead, it imposed a minor penalty: reduction to a lower stage in pay for one year, without cumulative effect and without affecting his pension. The Court clarified that acquittal in criminal cases does not automatically absolve an employee in disciplinary proceedings, as the standards of proof differ, and disciplinary action can continue even if misappropriated funds are returned.

Conclusion
This judgment affirms:

Disciplinary action should be based on evidence, fairness, and proportionality.

Long, unblemished service and restitution of loss are relevant mitigating factors.

Dismissal was excessive; a minor penalty sufficed given the circumstances.

Acquittal in criminal court does not bar disciplinary proceedings, which require a lower standard of proof.