A) ABSTRACT / HEADNOTE

The Supreme Court in A.M. Kulshrestha v. Union Bank of India & Ors. (2025) dealt with the legality of disciplinary proceedings initiated against a senior bank officer at the verge of retirement, where the bank issued a charge sheet without obtaining the mandatory first-stage advice from the Central Vigilance Commission (CVC) under Regulation 19 of the Union of India Officer Employees’ (Discipline & Appeal) Regulations, 1976. The appellant, after 34 years of unblemished service, was suspended on allegations of casual sanctioning of credit proposals. The bank itself admitted that the case involved a vigilance angle and referred the matter to the CVC, but proceeded to serve an ante-dated charge sheet before receiving the Commission’s advice. The Supreme Court quashed the charge sheet and the disciplinary proceedings, terming the bank’s actions mala fide, arbitrary, and in violation of its own sworn undertakings before the High Court. The Court further held that once the bank admitted the necessity of consulting the CVC, it could not bypass the advice. While quashing the proceedings, the Court directed release of all retiral benefits to the appellant, except back wages.

Keywords: Regulation 19, CVC consultation, disciplinary proceedings, charge sheet, mala fide action, arbitrariness, retiral benefits, suspension order, vigilance angle, pension entitlement.

B) CASE DETAILS

C) INTRODUCTION AND BACKGROUND OF JUDGEMENT

The decision in A.M. Kulshrestha v. Union Bank of India epitomises the Supreme Court’s consistent stance against arbitrary exercise of disciplinary powers by public sector undertakings. The controversy originated when the appellant, a Deputy General Manager in Union Bank of India with 34 years of service, was suspended in August 2018 on allegations of casual sanctioning of large credit facilities without due diligence. Despite issuance of two show cause notices in January and March 2019, no charge sheet was served until June 2019, only days before his superannuation. Importantly, the bank had itself admitted before the Allahabad High Court that the matter was a vigilance case, necessitating first-stage consultation with the CVC under Regulation 19 of the 1976 Regulations. The bank even assured the Court, through sworn affidavits of senior officers, that a charge sheet would be issued only after receipt of CVC’s advice. However, in contradiction, the bank proceeded to serve an ante-dated charge sheet on 18 June 2019, without awaiting CVC’s advice.

The appellant challenged the action before the High Court, contending that failure to secure mandatory advice vitiated the proceedings. Both the Single Judge and Division Bench dismissed his challenge, holding that CVC consultation was not mandatory prior to issuance of a charge sheet. The matter reached the Supreme Court, which scrutinised the interplay between Regulation 19 of the 1976 Regulations, CVC Act, 2003 and the CVC’s own circulars. The Court found that while the general issue of whether consultation is mandatory or directory may arise in other cases, in this case the bank’s own admission of necessity to consult CVC rendered its subsequent actions arbitrary and mala fide. The Court’s reasoning relied heavily on principles of administrative fairness, estoppel against inconsistent stands, and the importance of adherence to procedural safeguards in disciplinary proceedings.

D) FACTS OF THE CASE

The appellant, A.M. Kulshrestha, joined Union Bank of India in 1984 and rose through the ranks to become Deputy General Manager in 2016. He had an unblemished record until August 2018, when he was suspended pending inquiry into allegations that, as Regional Head, Meerut, he sanctioned substantial credit limits to newly incorporated firms without proper due diligence. The bank alleged that this reflected a casual approach in 16 accounts of Mid-Corporate Ghaziabad Branch.

On 18 January 2019 and again on 27 March 2019, show cause notices were issued to him, essentially repeating the allegations. Kulshrestha repeatedly requested revocation of his suspension, which was ignored. He then approached the Allahabad High Court in Civil Misc. Writ Petition No. 6976 of 2019. In response, the bank filed affidavits of its General Manager (23 May 2019) and Executive Director (13 June 2019), both unequivocally stating that the case had a vigilance angle, required consultation with CVC under Regulation 19, and that a charge sheet would be issued only after receiving CVC’s advice.

Despite this undertaking, on 18 June 2019 the bank served upon him an ante-dated charge sheet (dated 10 June 2019) without waiting for the CVC’s response. This was twelve days before his scheduled retirement on 30 June 2019. Subsequently, the High Court quashed his suspension but allowed further proceedings. Kulshrestha filed another writ petition (No. 10800 of 2019) seeking quashing of the charge sheet for want of CVC consultation. The Single Judge dismissed the petition on 26 July 2019, and the Division Bench upheld the dismissal on 20 September 2019. Aggrieved, Kulshrestha approached the Supreme Court.

E) LEGAL ISSUES RAISED

i. Whether consultation with the Central Vigilance Commission under Regulation 19 of the 1976 Regulations is mandatory before issuance of a charge sheet in disciplinary proceedings involving vigilance angle?
ii. Whether the Union Bank of India acted mala fide and arbitrarily in serving the charge sheet without awaiting CVC’s advice, despite earlier admissions and undertakings?
iii. Whether the disciplinary proceedings and charge sheet served on the appellant are liable to be quashed for violation of procedural safeguards?
iv. Whether the appellant is entitled to retiral benefits, including pension, under Union Bank of India Employees’ Pension Regulations, 1995 despite pending proceedings?

F) PETITIONER / APPELLANT’S ARGUMENTS

The counsel for the appellant contended that Regulation 19 of the 1976 Regulations imposes a mandatory obligation to consult the CVC in all vigilance-related disciplinary cases. The use of the word shall indicates compulsion. They relied on multiple CVC circulars (2000, 2004, 2015), which clarify that first-stage advice must be sought before issuance of a charge sheet and second-stage advice after reply to the charge sheet or inquiry report. Reference was made to Section 8(1)(h) of the CVC Act, 2003, which grants the Commission superintendence over vigilance matters in public sector banks. Clause 7.9.1 of the CVC Vigilance Manual, 2017 also mandates seeking advice prior to taking disciplinary action.

The appellant further highlighted that the bank, through affidavits of senior officers, admitted before the High Court that consultation was necessary, and promised to serve a charge sheet only after receiving advice. Hence, the bank is estopped from taking a contrary stand. Issuance of an ante-dated charge sheet, barely days before retirement, without advice, was argued to be mala fide, arbitrary, and violative of Article 14 of the Constitution. Reliance was placed on precedents such as Union of India v. Mohd. Ramzan Khan (1991 Supp (1) SCC 588) (importance of procedural fairness), and State of Punjab v. V.K. Khanna ((2001) 2 SCC 330) (mala fide disciplinary action quashed). They also urged that continuation of proceedings after retirement violates Union Bank of India Employees’ Pension Regulations, 1995, entitling him to pension.

G) RESPONDENT’S ARGUMENTS

The respondent-Bank argued that Regulation 19 does not make CVC consultation a condition precedent to issuance of a charge sheet. According to Clause 7.9.1 of the Vigilance Manual, advice is required before a “final decision”, not at the preliminary stage of issuing a charge sheet. Thus, absence of advice cannot vitiate the proceedings. The bank admitted that CVC advice was sought on 17 May 2019, but contended that receipt was delayed until 21 June 2019. Issuance of the charge sheet on 10 June 2019 was a matter of abundant caution to avoid stalling disciplinary action. They maintained that internal proceedings can proceed independently of vigilance advice.

The respondents denied mala fides, asserting that the charge sheet was neither ante-dated for extraneous reasons nor served in haste. They argued that no prejudice was caused to the appellant, who was free to defend himself in inquiry. Reliance was placed on State Bank of India v. Hemant Kumar ((2011) 11 SCC 355) (procedural irregularity not fatal unless prejudice shown) and Union of India v. B.V. Gopinath ((2014) 1 SCC 351) to argue that procedural consultation norms are not absolute conditions.

H) RELATED LEGAL PROVISIONS

i. Regulation 19, Union of India Officer Employees’ (Discipline & Appeal) Regulations, 1976 – Mandatory consultation with CVC wherever necessary in vigilance cases.
ii. Section 8(1)(h), Central Vigilance Commission Act, 2003 – Superintendence of vigilance administration.
iii. Union Bank of India Employees’ Pension Regulations, 1995 – Governs entitlement to retiral benefits post superannuation.
iv. CVC Circulars 2000, 2004, 2015 – First-stage and second-stage advice scheme.
v. Clause 7.9.1, Vigilance Manual, 2017 – Necessity of CVC advice before final decision in corruption cases.
vi. Article 14, Constitution of India – Prohibition against arbitrary state action.

I) JUDGEMENT

The Supreme Court quashed the charge sheet and disciplinary proceedings. It noted that while the mandatory vs. directory debate regarding Regulation 19 may exist in abstract, the bank’s own admission that consultation was necessary foreclosed the issue. Once the bank sought first-stage advice, it could not bypass it. Serving an ante-dated charge sheet twelve days before retirement, despite sworn statements to await advice, was held mala fide and arbitrary.

The Court observed that the appellant’s suspension was itself quashed by the High Court for being prolonged and unjustified. Issuing the charge sheet without CVC advice at the fag end of a 34-year blemishless career amounted to victimisation. Accordingly, the Court directed quashing of the disciplinary proceedings and ordered release of all retiral benefits within three months, while denying back wages.

a) RATIO DECIDENDI

The ratio lies in the interpretation of Regulation 19 of the 1976 Regulations. The Court held that once the bank admits a case has vigilance angle and seeks CVC advice, it cannot serve a charge sheet without receiving such advice. The use of the word shall in Regulation 19 creates an obligation, and the bank’s own conduct estopped it from denying this. Procedural fairness in disciplinary matters, particularly when reputation and retiral benefits are at stake, is fundamental. Actions contrary to sworn affidavits before courts are mala fide, arbitrary, and violative of Article 14. Thus, issuance of a charge sheet without CVC advice is invalid where the bank has admitted its necessity.

b) OBITER DICTA

The Court observed that in other factual contexts, whether consultation is mandatory or directory may arise. However, in the present case, since the bank itself acknowledged the necessity, that question was irrelevant. The Court also hinted that undue delay in obtaining advice (nine months post suspension) reflected administrative lethargy, undermining procedural safeguards. Further, disciplinary proceedings initiated close to superannuation, particularly after long blemishless service, must be scrutinised with heightened suspicion, as they may be intended to deny retiral benefits. The Court suggested that vigilance and disciplinary systems must not be used as tools of harassment.

c) GUIDELINES

The Court implicitly laid down the following guiding principles:

i. Where a disciplinary case is acknowledged to have vigilance angle, first-stage advice of CVC must be obtained before issuing a charge sheet.
ii. Public sector banks and PSUs are bound by their own affidavits and representations before courts; deviation amounts to mala fides.
iii. Suspension and disciplinary action close to retirement should be exercised with caution and must not be arbitrary.
iv. Delay in seeking CVC advice undermines fairness; authorities must act expeditiously.
v. Retiral benefits cannot be withheld indefinitely on the pretext of pending proceedings if initiation itself is procedurally invalid.
vi. Consultation with CVC is a safeguard against arbitrariness and must not be treated as an empty formality.

I) CONCLUSION & COMMENTS

This judgment reaffirms judicial intolerance for arbitrary and mala fide disciplinary actions in the banking sector. The Supreme Court drew a clear line: once an organisation accepts that consultation with CVC is necessary, it cannot proceed otherwise. This ensures integrity and fairness in vigilance cases, preventing misuse of disciplinary powers against employees nearing retirement. By quashing the charge sheet and directing release of retiral benefits, the Court balanced accountability with protection of employee rights.

Importantly, the judgment reflects broader administrative law principles. It emphasises estoppel against inconsistent stands, the centrality of procedural fairness, and constitutional prohibition against arbitrariness. The case strengthens employees’ protections against abuse of disciplinary mechanisms, particularly in PSUs where vigilance and disciplinary controls often overlap. It also underscores the supervisory role of the CVC, ensuring that disciplinary actions in vigilance matters are not weaponised.

K) REFERENCES

a. Important Cases Referred

i. Union of India v. Mohd. Ramzan Khan, 1991 Supp (1) SCC 588.
ii. State of Punjab v. V.K. Khanna, (2001) 2 SCC 330.
iii. Union of India v. B.V. Gopinath, (2014) 1 SCC 351.
iv. State Bank of India v. Hemant Kumar, (2011) 11 SCC 355.

b. Important Statutes Referred

i. Union of India Officer Employees’ (Discipline & Appeal) Regulations, 1976 – Regulation 19.
ii. Union Bank of India Employees’ Pension Regulations, 1995.
iii. Central Vigilance Commission Act, 2003, Section 8(1)(h).
iv. CVC Vigilance Manual, 2017 – Clause 7.9.1.
v. Constitution of India, Article 14.