Charges proved, no loss to bank — yet removal was too harsh.

Thirty years of service. One loan account. A removal from the Bank.

K.M. Habeeb Muhammed walked into the Piravom Branch of the State Bank of Travancore every day for three decades. He was a Deputy Manager. His record was unblemished. Then, in the twilight of his career, the Bank charged him with making fraudulent alterations in his own vehicle loan account to reduce his interest liability. An internal inquiry found the charges partly proved. The disciplinary authority dismissed him. The appellate authority, noting no actual loss to the Bank, scaled it down to removal from service. A review failed. A writ petition filed in 2001 was dismissed for non-prosecution in 2012, and restored only in 2023. Sixteen years of litigation later, the High Court of Kerala at Ernakulam asked one question: was the punishment of removal proportionate to what he actually did?

The four charges and what the inquiry found

The Bank framed four charges against Habeeb. Charge I alleged that he made fraudulent alterations in his own vehicle loan account to reduce the interest liability. Charge II alleged that he closed his staff loan accounts without paying the due interest. Charge III alleged that he manipulated ledger entries to withdraw funds beyond the sanctioned limits. Charge IV alleged that he failed to report the irregularities to higher authorities.

The Inquiry Officer, appointed under Chapter X of the SBT (Officers) Service Regulations, 1979, submitted a report (Ext.P5). Charge I was partly proved. Charge II was fully proved. Charge III was partly proved. Charge IV was not proved. The officer found that Habeeb had indeed made alterations and omitted to debit interest. But the report did not quantify any loss to the Bank.

The disciplinary authority's hammer

The 3rd Respondent — the General Manager (Operations), SBT — accepted the inquiry report. He imposed the penalty of dismissal from service under Ext.P7. Habeeb appealed to the 2nd Respondent — the Chief General Manager, SBT. The appellate authority, in Ext.P9, made a crucial observation: “there is no loss to the Bank.” Yet, considering the nature of the charges, it scaled down the punishment from dismissal to removal from service. A review petition before the 1st Respondent — the Managing Director, SBT — was rejected under Ext.P11.

Habeeb was out of a job. After thirty years.

What each side argued

Before Justice P.V. Kunhikrishnan, Habeeb's counsel argued that the punishment was disproportionate. The core submission was simple: thirty years of unblemished service, no loss to the Bank, and similarly placed officers had received minor penalties for similar irregularities.

The Bank's counsel pushed back. They cited DGM (Appellate Authority) and others v. Ajay Kumar (2021) 2 SCC 612 to argue that strict rules of evidence do not apply to departmental enquiries. They invoked State Bank of India v. Bela Bagchi (2005) 7 SCC 435 to remind the Court that bank officers must exercise higher standards of honesty and integrity. And they leaned on U.P. State Road Transport Corporation v. Vinod Kumar (2008) 1 SCC 115 to argue that removal or dismissal is the appropriate punishment for misappropriation of funds, and courts should be reluctant to reduce punishment on misplaced sympathy.

The doctrine the Court applied — and the one it didn't

Justice Kunhikrishnan began with the settled law. Under Article 226 of the Constitution, the High Court cannot re-appreciate evidence in disciplinary proceedings. It cannot consider the sufficiency or adequacy of the evidence. The test, as laid down in Union of India v. H.C. Goel AIR 1964 SC 364, is whether there is any evidence at all in support of the impugned conclusion. If there is, the Court must accept it.

The Court applied that test. It declined to re-appreciate the evidence on the charges. The inquiry findings stood.

But then came the second question: was the punishment proportionate?

Here, the Court distinguished U.P. State Road Transport Corporation v. Vinod Kumar. That case dealt with misappropriation of funds. This case, the Court noted, involved no monetary loss to the Bank. The appellate authority itself had admitted that. And Habeeb had thirty years of unblemished service. The Court also noted an unrebutted allegation: that similarly placed officers who committed similar irregularities had received only minor penalties. The Bank did not deny this.

THE TEST: Where the disciplinary authority itself admits no loss, the employee has decades of clean service, and there is unrebutted evidence of discriminatory treatment, the punishment of removal from service is disproportionate — and the High Court will intervene under Article 226.

Why this matters for every bank officer and every employer

This judgment is not a license to commit fraud. The Court did not condone Habeeb's actions. It upheld the inquiry findings. The charges were proved. He did alter his loan account. He did close accounts without paying interest. He did manipulate entries.

But the Court drew a line. The punishment must fit the crime. And when the employer itself says there is no loss, when the employee has served faithfully for three decades, and when other officers who did the same thing got a slap on the wrist, removal from service is too harsh.

For advocates, this is a powerful tool. When challenging a disproportionate punishment, you must place on record: (a) the length and quality of service, (b) the absence of monetary loss, and (c) instances of discriminatory treatment. The Court will not re-appreciate evidence on the charges, but it will examine proportionality.

For CFOs and founders, the lesson is different. Your disciplinary process must be consistent. If you punish one employee with removal and another with a warning for the same misconduct, you create a discrimination argument that can unravel the entire proceeding. The Bank in this case could not explain why other officers got minor penalties. That silence cost them the case.

The operative order

Justice Kunhikrishnan set aside Exts.P7, P9, and P11 — but only to the extent of the punishment imposed. The inquiry findings remain. The Bank is now directed to reconsider the punishment and impose an appropriate proportionate penalty within three months. Any consequential monetary benefits must be disbursed within two months of the fresh orders.

Habeeb will not automatically get his job back. But he will get a fair reconsideration. And the Bank will have to explain why it treated him differently from others.

The bottom line: If your disciplinary authority cannot justify why one employee gets the axe while another gets a memo for the same misconduct, the High Court will step in — even if the charges are proved.