The Allahabad High Court recently delivered a significant ruling on the consequences of gross misconduct by bank officials.
The judgment clarified that while banks possess full authority to sack errant employees, they cannot blindly strip them of their rightful pension if they are protected by prior bipartite settlements.
The Court agreed with the disciplinary findings, noting that an employee’s failure to stay within their operational limits is a severe violation.
It cited an earlier Supreme Court precedent to observe,
“In acting beyond one’s authority is by itself a breach of discipline and a breach of Regulation 3. It constitutes misconduct within the meaning of Regulation 24. No further proof of loss is really necessary….”
The order was passed by a Single Bench of Justice Saurabh Shyam Shamshery. It came while disposing of a writ petition filed by Vinod Kumar Sethi. Sethi, employed as a manager, had challenged his removal from service by UCO Bank.
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He allegedly did this without securing any margin money or seeking higher approvals. Further, he was indulged in several acts of omissions and commissions. He completely failed to record the transaction in the bank’s registers.
The private entity eventually managed to secure a massive payment of Rs. 45.89 lacs as an advance from the U.P. Jal Nigam on the strength of this very document.
As a result, an FIR was registered against him, and he was charged under Sections 420, 409, and 467 of the IPC.
The bank charged him with multiple departmental charges and initiated an enquiry. The enquiry officer ultimately found him guilty. Based on this, the disciplinary authority removed him from service.
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In this backdrop, the principal issue before the Court was whether the bank could impose the extreme penalty of removal without granting superannuation benefits.
Upon examining the record, the Court found no procedural flaw in how the bank handled the departmental inquiry. The petitioner had ample opportunity to cross-examine witnesses and submit relevant documents but simply sought endless adjournments on medical grounds.
Th counsel of the petitoner/employee, however, presented a compelling argument based on the bilateral settlement between the Indian Banks’ Association and bank employees.
Under Clause 6(b) of this settlement, an employee found guilty of gross misconduct can be removed with superannuation benefits like a pension and gratuity.
The High Court heavily relied on the Supreme Court’s recent ruling in UCO Bank and another vs. Vijay Kumar Handa 2025 INSC 442. The Apex Court verdict stated that employees removed under this specific clause are still entitled to their superannuation benefits if they otherwise qualify for it.
The Apex court had categorically observed in a referenced case,
“The Bipartite Settlement tends to provide a punishment which gives superannuation benefits otherwise due.”
It warned that ignoring this clause would essentially turn the settlement into a dead letter.
Towards the conclusion, the High Court observed that the disciplinary authority completely ignored this bipartite agreement while passing the punishment order.
The Court stated that,
“there is substance in the argument of learned counsel for petitioner so far as nature of punishment (removal from service) is concerned.”
It realized that the punishment order failed to align with the Supreme Court’s clear mandate regarding terminal benefits.
Accordingly, the Court upheld the guilty findings regarding gross misconduct but remitted the matter back to the bank.
The bank was directed to pass a fresh order within six weeks strictly regarding the nature of the punishment. The writ petition was formally disposed of.
Case: Vinod Kumar Sethi vs UCO Bank Thru Regional Manager And Others
Case No: Writ – A No. – 34539 of 2009
Date of Order: 23.04.2026
Status: Disposed of
