The Supreme Court holds Regulation 10 of the Canara Bank Officer Employees’ (Discipline and Appeal) Regulations, 1976 is directory and not mandatory while partly affirming Karnataka High Court ruling in disciplinary action against a former Senior Manager.
The Supreme Court has held that Regulation 10 of the Canara Bank Officer Employees’ (Discipline and Appeal) Regulations, 1976 is directory, not mandatory.
The provision allows the competent authority to order common disciplinary proceedings when two or more officer employees face charges in the same case.
A Bench of Justice S.V.N. Bhatti and Justice Vijay Bishnoi delivered the judgment on May 12, 2026 in Canara Bank v. Prem Latha Uppal (Dead) Through LRs.
The Court said the word “may” in Regulation 10 cannot be read as “shall”.
It held that such an interpretation would wrongly take away the employer’s discretion in disciplinary matters.
The Bench added that officers may hold different posts, perform different roles, or fall under different disciplinary authorities. In such cases, management must have flexibility.
Appeal Arose From Karnataka High Court Judgment
The case arose from a Karnataka High Court Division Bench judgment dated February 15, 2023 in Writ Appeal No. 6228 of 2013.
The Division Bench had set aside the disciplinary punishment imposed on Prem Latha Uppal, a former Senior Manager (Scale-III) of Canara Bank.
The Bank had passed the punishment order on May 31, 2006.
Through that order, the Bank reduced her rank from SMG Scale-IV to MMG Scale-III.
The disciplinary action related to sanction of loans to M/s Aman Trading Company and M/s Creative Trading Company.
Bank Alleged Negligence In Loan Sanction Process
Prem Latha Uppal served at the Diplomatic Enclave Branch of Canara Bank in New Delhi.
She was one of three members of the Credit Sanction Committee. The committee approved financial assistance to the two firms.
Canara Bank alleged that negligence and collusion vitiated the sanction process.
The Bank treated the conduct as misconduct under the 1976 Regulations.
The charges alleged that Uppal failed to verify several key facts independently.
These included the existence of the businesses, ownership of collateral securities, banking documents, identity and net worth of guarantors, and discrepancies in financial records.
The Bank also alleged that she allowed large cash withdrawals without checking the proper use of funds.
It further accused her of recommending renewal and sanction of credit facilities without verifying audited balance sheets and other safeguards.
Employee Claimed She Was Singled Out
Uppal challenged the punishment before the Karnataka High Court.
She argued that she was only a committee member and not the final sanctioning authority.
She also claimed that the Bank gave minor penalties to other officers involved in the same transaction.
According to her, the Bank singled her out for harsher punishment.
She further alleged breach of natural justice.
She argued that the enquiry relied on statements which the Bank did not prove through witnesses during the disciplinary proceedings.
Single Judge Upheld Punishment
The learned Single Judge dismissed the writ petition on September 2, 2013.
The Single Judge held that Uppal acted negligently and casually while verifying the firms and securities.
The Court also held that Regulation 10 uses the word “may”.
Therefore, common disciplinary proceedings were discretionary and not compulsory.
The Single Judge found no procedural defect that required interference in judicial review.
Division Bench Set Aside Disciplinary Action
The Division Bench later allowed the writ appeal.
It set aside both the disciplinary order and the Single Judge’s judgment.
The Division Bench found that the enquiry relied on statements of officers S.S. Bhat and R. Chandramouli.
However, the Bank had not examined either officer as a witness in the departmental proceedings.
The Division Bench held that the respondent had no opportunity to rebut that material.
It therefore concluded that the enquiry findings lacked evidence.
The Division Bench also noted that the case involved no vigilance angle.
It held that consultation with the Central Vigilance Commission (CVC) was unnecessary.
However, it did not treat this issue as an independent ground to quash the proceedings.
Arguments Before The Supreme Court
Before the Supreme Court, Senior Counsel Mr. Naveen R. Nath appeared for Canara Bank.
Mr. Shailesh Madiyal represented the respondents.
The Bank argued that the Division Bench wrongly re-appreciated evidence in a disciplinary matter.
It also argued that the High Court wrongly treated Regulation 10 as mandatory.
The Bank submitted that different High Courts had taken conflicting views on the word “may” in similar disciplinary regulations.
The respondents supported the Division Bench judgment.
They argued that the High Court only corrected an error apparent on the face of the record.
They also argued that the enquiry violated natural justice and suffered from lack of evidence.
Supreme Court Upholds Findings On Enquiry
The Supreme Court upheld the Division Bench’s conclusions on the merits of the enquiry.
It found material defects in the findings recorded against the respondent.
The Court also held that the High Court did not exceed the limits of judicial review.
However, the Supreme Court disagreed with the Division Bench’s interpretation of Regulation 10.
The Bench extracted the provision and noted its wording.
Regulation 10 says that where two or more officer employees are concerned in a case, the competent authority “may” direct common disciplinary proceedings.
The Court held that courts cannot ordinarily read “may” as “shall”.
It said interpretation depends on context and legislative intent.
The Court added that enabling provisions become compulsory only when such reading protects or gives effect to a legal right.
Regulation 10 Does Not Give Employees A Right To Joint Enquiry
The Supreme Court approved the view of the Andhra Pradesh High Court in T. Baba Prasad v. Andhra Bank, Hyderabad and Others.
It disagreed with the Karnataka High Court decision in Arun Kumar Alva v. Vijaya Bank.
The Bench held that Regulation 10 is a facilitative provision.
It gives the Bank power to order joint proceedings when the situation demands it.
However, it does not give delinquent employees a right to insist on a joint enquiry.
The Court said mandatory joint proceedings would restrict management discretion.
Such a rule may create difficulty when charged employees hold different roles, belong to different cadres, or answer to different disciplinary authorities.
Final Directions
The Supreme Court partly interfered with the Karnataka High Court judgment.
It did so only on the interpretation of Regulation 10.
The Court held that Regulation 10 is directory.
It affirmed the Andhra Pradesh High Court’s interpretation in T. Baba Prasad.
At the same time, the Court upheld the Division Bench’s conclusions on the merits of the disciplinary proceedings.
The Supreme Court disposed of the appeal.
It directed Canara Bank to settle the account of the deceased first respondent within six weeks.
The Bank must note the outcome of the judgment while doing so.
The Court also disposed of all pending applications.
Case Details
Case Title: Canara Bank v. Prem Latha Uppal (Dead) Through LRs
Court: Supreme Court of India
Bench: Justice S.V.N. Bhatti and Justice Vijay Bishnoi
Date: May 12, 2026
Regulation Involved: Regulation 10, Canara Bank Officer Employees’ (Discipline and Appeal) Regulations, 1976
High Court Case: Writ Appeal No. 6228 of 2013
High Court Judgment Date: February 15, 2023
Punishment Order Date: May 31, 2006
Counsel For Appellant Bank: Senior Counsel Mr. Naveen R. Nath
Counsel For Respondents: Mr. Shailesh Madiyal
