' ABDUR RAZZAQUE (MEMBER).--- Although heard separately, the above mentioned appeals pertain to the same scam and involve similar questions of facts and law. We, therefore, intend to dispose of them by this common judgment.
2. Appeal No,494(P)CE of 2001, filed by Mr. Ashfaq Ahmad, is against order, dated 12-11-2001 whereby the appellant's departmental appeal dated 24- 7-2001 against order, dated 13-7-2001 imposing the following penalties, was rejected:
(i) Demotion from the post of Assistant Vice-President to Officer Grade-I.
(ii) Embargo on any important managerial assignment for three years.
(iii) Warning to be more careful in performance of duties in future.
'Appeal No,201(P)CE of 2001 was filed by Mr. Ashfaq Ahmad, earlier against the impugned order, dated 13-7-2001 but upon rejection of appellant's departmental appeal his request to file an amended appeal was accepted and resultantly Appeal No,494(P)CE of 2001 was filed by him. As such Appeal No,201(P)CE of 2001 became infructuous but the same continued to be tagged with the amended Appeal No,494(P)CE of 2001 for the purpose of reference.
3. Appeal No,203(P)CE of 2001, filed by Mr. Muhammad Abdul Samad Khan, is against order, dated 13-7-2001 whereby following penalties were imposed on him:--
(i) Stoppage of one increment for three years.
(ii) Embargo on any important managerial assignment for three years.
' Departmental appeal dated 30-7-2001 remained unresponded.
4. Facts leading to these appeals briefly stated are that one Muhammad Aslam, an Officer of the Cantt. Branch of HBL, Peshawar of which the appellant Ashfaq Ahmad remained Sub-Manager and the Chief Manager from 12-5-1994 to 16-10-1997 and 17-10-1997 to 29-4-1999 respectively and appellant Muhammad Abdul Samad Khan, sub-Manager from 12-12-1998 to 30-4-1999 and 29-10-1999 to 24-4-2000, misappropriated an amount of over 16 million rupees by fraudulently debiting the accounts of Defence Savings Certificate (DSC) and WAPDA Bearer Bonds by means of fake cash debit vouchers during the period 1995-1999. The fraud remained undetected till after transfer of Mr. Muhammad Aslam to another Branch and that too when he started adjusting the misappropriated amount. As a result of investigation and audit it was found that while Mr. Muhammad Aslam alone was criminally involved, the appellants as his supervisors did not exercise proper control, exhibited negligence and did not apply rules and regulations of the Bank thereby allowing the said Muhammad Aslam to continue his activities undetected.
5. On receipt of the report of the investigation and the audit the Karachi Head Office of the bank vide letter dated 11-1-2001 authorised the Vice- President and Regional General Manager, Operations and Support Services, Peshawar to initiate disciplinary action against the appellants and 12 other officers of the Bank involved in the scam, one way or the other under the Removal from Service (Special Powers) Ordinance, 2000 (hereinafter referred to as the Ordinance). Accordingly charge-sheets dated 10-2-2001 were issued to both the appellants on the following charges:-- "(i) Negligence/inefficiency in performance of duty. (ii) Breach of law and rules and regulations."
' The appellants submitted their replies denying the charges and explaining their positions after which Notices dated 8-3-2001 were issued by the Regional General Manager, Operations and Supports Services, specifying allegations against the appellants and appointing an Inquiry Committee.
6. The Inquiry Committee, submitted its report finding the appellants guilty and giving its recommendations. This was followed by show-cause notices issued to the appellants by the Regional General Manager who upon receipt of their replies forwarded the case to the Karachi Head Office of the Bank with his recommendations on 20-6-2001, as under:-- Recommendations. From perusal of enquiry report it reveals that fraud has been committed by Muhammad Aslam solely/ individually. His confessional statement supports the same.
' The enquiry report contains no material evidence against the other delinquents regarding their involvement in fraud.
' All other delinquents except main accused contested innocence through their statements on oath and during the course of cross-examination while participating in the enquiry proceedings, that they performed their duties with utmost care and caution.
' During the period from 1995 to 1999 several auditors including SBP Auditors, HOK Auditors, External Auditors and Internal Auditors audited the branch but no one succeeded to point irregularities/fraud of the department of accused. All of them failed to discharge their responsibilities.
' From the perusal of enquiry report the under mentioned three points are sufficient to prove innocence of other delinquents staff.
(1) Confession by Muhammad Aslam main accused.
(2) Cash recovery of Rs,43,62,150 by Muhammad Aslam main accused.
(3) HOK audit/investigation reports.
' We are as such of the view that no other person has connivance with Mr. Muhammad Aslam Officer and no direct and indirect link has been established against anyone else regarding commission of said fraud.
' We believe that auditors of HOK who had audited the Branch during the said period have been issued warning letters therefore, we strongly recommend that warning letters may be issued to all other delinquents as mentioned at S.No,1 to S.No,12 above.
' However, as far as the role of Muhammad Aslam is concerned, keeping in view his voluntary confession regarding commission of said fraud, we recommend that he may be dismissed from Bank's service with immediate effect"
7. The competent authority in the Head Office of the Bank disregarded the recommendations of the Regional General Manager and imposed penalties recommended by the Inquiry Committee vide the impugned order dated 13-7-2001.
8. Learned counsel for the appellants has assailed the proceedings and the impugned order on the following grounds:--
(i) Disciplinary action was initiated by an incompetent authority. The Head Office could not delegate the powers of competent authority to an officer who was not the appointing authority of the appellants and thus, the charge-sheets, notices and appointment of Inquiry Committee were all mala fide of law.
(ii) As required by section 5 of the Removal from Service (Special Powers) Ordinance, 2000 the Inquiry Committee did not serve any charge-sheet along with statement of allegations.
(iii) The contentions of the appellants in defence and recommendations of the General Manager were not given objective and due consideration when awarding the punishments for which there was no material evidence of appellants' involvement.
(iv) The penalty of demotion awarded to the appellant Ashfaq Ahmed for a single act' of alleged negligence was harsh. Similarly there was no justification to punish Abdul Samad Khan as he was not a superior of the accused Muhammad Aslam. Unblemished service record of the appellants was disregarded.
(v) The appellants were discriminated against as virtually no action had been taken against the audit personnel, who carried out periodic audit of the Bank Branch but failed to detect the fraud. It was failure of the entire system of check and balance. The Field Management of the Bank and audit parties of the State Bank as well as those of the Head Office of the Bank had failed to detect but were spared.
(vi) Principal accused Muhammad Aslam, who committed the fraud, confessed his guilt and adjusted the amount misappropriated, was examined in the absence of the appellants without providing them the opportunity to cross-examine him.
9. Learned counsel for the respondent-Bank averred that the main accused Muhammad Aslam continued his fraudulent activities for almost 5 years and that whereas there was a failure on the part of the audit and others, the fact remained that the appellants, in their capacity as Sub-Managers or Chief Manager of the Branch, were supposed to keep an eye on the activities of their subordinates and ensure that they performed their functions in accordance with rules, regulations and instructions of the Bank. The counsel contended that the appellant did not exercise due care and caution at the time of checking cash books and balancing books or surprise balancing books which encouraged the main culprit Muhammad Aslam to prepare fake cash debit vouchers and receive cash by obtaining second signature of a subordinate or colleague of his whereas as per bank's instructions the cash debit vouchers were required to be signed by two officers of which one had to be the Manager himself. As to issuance of charge-sheets, notices and appointment of the Inquiry Committee, the learned counsel contended that powers were validly delegated to the Vice- President and Regional General Manager, Peshawar by the competent authority in the Head Office and therefore, the proceedings were quite in order. Besides, the learned counsel argued that the procedural deficiencies like the charge-sheet not having been served by the Inquiry Committee, had not prejudiced the defence of the appellants who were given full opportunity to defend themselves.
10. We have heard and considered the arguments and also perused the available record.
11. The thrust of the arguments of the appellant's counsel was that the disciplinary proceedings were mala fide of law as these were initiated F by an incompetent authority. Section 2(aa) of the Ordinance defines the competent authority as under:- "2. Definitions ....................................................................................................
(a) ..............................................................................................
(aa) "competent authority" means, the Chief Executive and where in relation to any person or class of persons, the Chief Executive authorizes any officer or authority, not being inferior in rank to the appointing authority prescribed for the post held by the person against whom action is proposed to be taken, to exercise the powers of competent authority under this Ordinance (underlining is for emphasis).
' In the light of the above provision of law S.R.O.281(I)/2000, dated 27-5-2000 was issued delegating powers of competent authority in relation to the employees of Corporations as under:-- "TABLE No,III ' For persons in Corporation Service.
S.No.Class of persons Officer authorized to exercise the powers of competent authority 1 2 3 (1)Holders of posts in BS-20 and above and equivalent.Chief Executive of Pakistan (2)Holders of posts in BS 16-19 and equivalent Managing Director/Chief Executive Officer of the Organization by whatever name called.
(3)Holders of posts in BS 1-15 and equivalentAn officer not below the appointing authority to be authorized by the Chief executive Officer of th Organization."
' A reading of section 2(aa) of the Ordinance SRO 281(1)/2000 tends to show that the President of the Habib Bank Limited as Chief Executive Officer should have acted as competent authority in respect of both the appellants as appellant in Appeal No,494(P)(CE) of 2001 was Assistant Nice- President (equivalent to B-19) and the appellant in appeal No,203(P)CE of 2001 was 0G-I (equivalent to B-18) respectively. However, on our query learned counsel for the respondents stated that Senior Executive Vice-President of the Bank is the appointing authority of the appellants and that he delegated his powers to the Regional General Manager to initiate .The proceedings, issue charge-sheet, notice and appoint the Inquiry Committee.
The question is whether the powers delegated to an authority specifically under the Ordinance could be further delegated to another person who is not the Appointing Authority. Our view is that it could not be done and for this we derive strength from the judgment of the Honourable Supreme Court of Pakistan in House Building Finance Corporation v. Inayatullah Shaikh 1999 SCMR 311, relevant part of which at page 318, reads:- "No doubt the Managing Director has been delegated full powers in respect of appointments, promotions and awarding the punishment including termination/dismissal of all officers except Officers in management cadre, but the Managing Director cannot further delegate such powers to the General Manager In this way the impugned order is ultra vires of the powers of the General Manager, as it could be passed only by the respondent No,1 Corporation, as per Regulation No,11 read with Regulation No,26 (as amended) or at the most by delegatee of the Corporation."
12. The second point raised by the learned counsel for the appellant relates to appointment of the Inquiry Committee and its mandatory functions. In this connection section 5(1)(a)(b) and (c) reads:-- "section 5. Power to appoint an Inquiry Officer or Inquiry Committee.--- (1) Subject to the provisions of subsection (2), the competent authority shall before passing an order under section 3, appoint an Inquiry Officer or Inquiry Committee to scrutinize the conduct of a person in Government service or a person in corporation service who is alleged to have committed any of the acts or omissions specified in section 3. The Inquiry officer or, as the case may be, the Inquiry Committee shall---
(a) Communicate to the accused the charges and statement of allegations specified in the order of inquiry passed by the competent authority.
(b) Require the accused within seven days from the day the charge is communicated to him to put in a written defence.
(c) enquire into the charge and may examine such oral or documentary evidence in support of the charge or in defence of the accused as may be considered necessary and the accused shall be entitled to cross-examine the witnesses against him and.
' The above provisions of the Ordinance clearly lay down that the Inquiry Committee shall be appointed by the competent authority and that the Inquiry Committee shall communicate to the accused the charges and statement of allegations as specified in the order of inquiry passed by the competent authority.
13. From the above we find that:
(i) powers of the competent authority could not have been delegated to the Regional General Manager.
(ii) The appointment of Inquiry Committee was not made by the competent authority.
(iii) The charges/memo. Of allegations were not communicated to the appellants (the accused then) by the Inquiry Committee.
(iv) Show-cause notice dated 3-5-2001 under section 3 of the Ordinance was issued by the Regional General Manager (an incompetent authority).
' The learned counsel for the appellant has referred to PLD 1999 Pesh. 33 wherein the Honourable Supreme Court of Pakistan held that it was a settled principle of law that; "when anything is prescribed to be done under law it must be done in that manner or not at all". He has also argued that the entire proceedings were mala fide of law in terms of the judgment of the Honourable Supreme Court of Pakistan in 1990 SCMR 999, relevant portion of which reads:-- "Mala fide of law is involved where authority not competent has taken an action or the mandatory procedural requirements for taking the action of the jurisdictional requirements for it remain unsatisfied."
' Learned counsel for the appellants has also contended that: "if the first step in a series of steps is illegal, the whole superstructure raised on it shall fall to the ground including the order of imposition of penalty". He has quoted judgments in PLD 1958 SC 104, 2001 CLC 1741 and 2000 PLC (C.S.) 270 in this regard.
14. We fully agree with the contention that the proceedings were mala fide of law. There is, therefore, no need to go into other points raised by the learned counsel for the appellants including merits of the case. The fact that the proceedings were mala fide of law is sufficient to accept the appeals and set aside the impugned orders in both appeals i,e, No,SAS/TM/IS/192522, dated 13-7-2001 and No,SAS/TM/IS/148582, dated 13-7-2001.
The respondent-Bank is however, at liberty to conduct de novo proceedings in accordance with the provisions of law, if so advised. Such proceedings, if initiated, should be completed within a period of five months from the receipt of this judgment. The question of back-benefits will depend on the outcome of such proceedings but if not held and completed within stipulated period of time, the appellants would be entitled to all back-benefits.
15. The appeals are disposed of in the above terms with no orders as to costs. Parties be informed.