Punjab National Bank & Ors vs CJ Arora 2026 DHC 1250 DB

Synopsis

This judgment addresses the validity of a disciplinary authority's order directing a de novo inquiry against a bank officer and examines the legal consequences of an employee's participation in such fresh inquiry without protest. The Division Bench of the Delhi High Court reversed the learned Single Judge's decision that had quashed the punishment of dismissal imposed upon the respondent-employee. The core legal controversy revolves around whether the Disciplinary Authority's order dated 28.12.1992 directing a fresh inquiry suffered from any legal infirmity and whether the respondent, having participated in the de novo proceedings without objection, could subsequently challenge the initiation of such proceedings under the doctrines of waiver and acquiescence.

Citation: 2026:DHC:1250-DB
Court: High Court of Delhi
Coram: Division Bench comprising Hon'ble Chief Justice Devendra Kumar Upadhyaya and Hon'ble Mr. Justice Tejas Karia
Date of Judgment: February 13, 2026
Court Registry: Letters Patent Appeal No. 733/2025

1. Proper Heading of the Judgment

Punjab National Bank and Ors. V. C.J. Arora

Court: High Court of Delhi at New Delhi
Coram: Division Bench: C.J. Devendra Kumar Upadhyaya and J. Tejas Karia
Judgment Date: February 13, 2026
Appeal: Letters Patent Appeal No. 733/2025 arising out of W.P.(C) No.6696/2003

2. Legal Framework

2.1. Principal Legislation and Regulations

The judgment primarily interprets and applies:

• Regulation 7 of the Punjab National Bank Officer Employees' (Discipline & Appeal) Regulations, 1977 – which governs the procedure to be followed by the Disciplinary Authority upon receipt of an inquiry report, including the power to order a fresh or further inquiry.

• Regulation 24 of the New Bank of India Officer Employees (Conduct) Regulation, 1982 – under which the original charges of misconduct were framed against the respondent.

2.2. Related Precedents Discussed

The judgment extensively examines and distinguishes:

1. K.R. Deb v. The Collector of Central Excise, Shillong [(1971) 2 SCC 102] – Relied upon by the learned Single Judge but distinguished by the Division Bench on the ground that the Central Civil Services (Classification, Control and Appeal) Rules, 1957, applicable in that case, did not contain any provision akin to Regulation 7(1) empowering the Disciplinary Authority to order a de novo inquiry post-submission of the inquiry report.

2. H.V. Nirmala v. Karnataka State Financial Corporation and Others [(2008) 7 SCC 639] – Applied for the proposition that the appointment of an incompetent inquiry officer may not vitiate proceedings, and such objections can be waived; principles of estoppel and acquiescence apply where a party participates without protest despite knowledge of the defect.

3. State Bank of India v. Ram Das [(2003) 12 SCC 474] – Cited with approval in H.V. Nirmala for the principle that a party aware of a defect in jurisdiction cannot subsequently raise the question if it participated without objection.

4. Kalpraj Dharamshi v. Kotak Investment Advisors Ltd. [(2021) 10 SCC 401] – Discussed elaborately for the doctrine of waiver, drawing from Halsbury's Laws of England, emphasizing that waiver depends on consent and conduct inconsistent with the continuance of a right.

5. Sohan Singh v. Ordnance Factory [1984 Supp SCC 661] – Referred for the proposition that superior courts may not permit questions relating to procedural aspects to be raised for the first time at a belated stage.

3. Relevant Facts of the Case

3.1. Employment Background

The respondent, Mr. C.J. Arora, was working as Manager (MMG/S-II) at New Bank of India (which subsequently merged with Punjab National Bank) until January 7, 1990. While serving at the L-Block, Connaught Place branch, he was responsible for handling loan portfolios.

3.2. Issuance of Charge-Sheet

On September 20, 1990, a charge-sheet was issued to the respondent alleging multiple instances of misconduct. The charges fundamentally related to:

• Failing to disclose that his sister, Mrs. Menka Mehta, was a partner in M/s Vishal Super Insulators, a firm that secured financial assistance from the bank.

• Manipulating documents by altering dates (changing a note from March 3, 1988, to February 19, 1988) to get financial sanctions approved for M/s U.K.G. Engineering Private Limited, a sister concern of M/s Vishal Super Insulators.

• Recommending and securing enhancement of credit limits from Rs.4,00,000 to Rs.7,50,000 within one-and-a-half months without proper justification or examination of account operations.

• Allowing excess drawings beyond sanctioned limits and facilitating diversion of funds to sister concerns.

• Failing to disclose that only photocopies of title deeds were held as security for loans amounting to Rs.19,75,000 sanctioned to M/s Everest Promoters Private Limited.

• Helping his sister's construction company secure housing loans, including a loan of Rs.1,00,000 to his sister's husband.

• Tampering with the overdraft sanction register and passing cheques despite specific instructions from the Chief Manager to the contrary.

3.3. Sequence of Disciplinary Proceedings

Date Event 20.09.1990 Charge-sheet issued to respondent 02.04.1992 First Inquiry Report submitted by Inquiry Officer28.12.1992Disciplinary Authority orders de novo inquiry "in view of the apprehensions raised about the Inquiry Report in the manner it was prepared"14.12.1995Second Inquiry Report submitted after de novo inquiry17.08.1996Disciplinary Authority imposes penalty of dismissal from service26.07.2002Appellate Authority rejects respondent's statutory appeal08.04.2003Reviewing Authority dismisses review petition2003Respondent files W.P.(C) No.6696/2003 challenging the punishment and related orders09.12.2024Learned Single Judge partially allows the writ petition, quashes punishment, and orders notional reinstatement 13.02.2026 Division Bench allows Letters Patent Appeal, sets aside Single Judge's order

3.4. The Impugned Order of Learned Single Judge

The learned Single Judge had held that:

• The order dated 28.12.1992 directing de novo inquiry was vitiated for want of cogent reasons.

• Consequently, the entire disciplinary proceedings culminating in the dismissal order were rendered illegal.

• The respondent was entitled to notional reinstatement from the date of penalty until his superannuation on April 30, 2011.

• Pay and allowances were to be calculated for the period of notional reinstatement for retiral benefits, with pension to be paid from April 30, 2011, along with arrears.

4. Issues Before the Division Bench

The Division Bench framed the following issues for consideration and adjudication:

Issue (a)

Whether, in the facts of the case and keeping in view the relevant rule regulating the disciplinary proceedings, the order dated 28.12.1992 passed by the Disciplinary Authority directing a de novo inquiry was bad in law?

Issue (b)

Whether, by participating in the de novo inquiry instituted vide order dated 28.12.1992 without any protest or demur, any challenge to the institution of such de novo inquiry on behalf of the respondent is barred in view of the doctrine of waiver and acquiescence?

5. Ratio Decidendi

5.1. On the Validity of De Novo Inquiry Order

The Court held that the Disciplinary Authority's order dated 28.12.1992 directing a de novo inquiry was valid and not vitiated for the following reasons:

Interpretation of Regulation 7(1): The language of Regulation 7(1) of the Punjab National Bank Officer Employees' (Discipline & Appeal) Regulations, 1977, requires the Disciplinary Authority to "record in writing its reasons" for remitting the case for fresh or further inquiry. The condition precedent is the recording of reasons, not the sufficiency or cogency of such reasons.

Nature of Judicial Review: The Court observed that the power of judicial review does not extend to examining whether the reasons recorded are "cogent" or whether the material on which the opinion is formed is "sufficient." The opinion must be based on some material on record, but the Court cannot sit in appeal over the Disciplinary Authority's assessment of what constitutes adequate grounds for ordering a fresh inquiry.

Sufficiency of Reason Recorded: The Disciplinary Authority had clearly recorded that a fresh inquiry was ordered "in view of the apprehensions raised about the Inquiry Report in the manner it was prepared." This reason, in the Court's opinion, sufficed for the purpose of exercising power under Regulation 7(1).

5.2. Distinguishing K.R. Deb's Case

The Division Bench found the learned Single Judge's reliance on K.R. Deb v. The Collector of Central Excise to be "highly misplaced" because:

• The rules applicable in K.R. Deb (Central Civil Services Rules, 1957) did not contain any provision akin to Regulation 7(1) vesting power in the Disciplinary Authority to order a de novo inquiry post-submission of the inquiry report.

• In K.R. Deb, the inquiry afresh was ordered under Rule 15(4) of the 1957 Rules, which operates at the pre-submission stage of the inquiry report.

• The scheme of the two sets of regulations being fundamentally different, the precedent was inapplicable to the present case.

5.3. On Waiver and Acquiescence

The Court applied the doctrine of waiver and acquiescence to hold that the respondent was disentitled from challenging the order dated 28.12.1992:

Participation Without Protest: The respondent participated in the de novo inquiry proceedings from 1992 onwards without raising any objection to the validity of the order directing such inquiry. He submitted to the jurisdiction of the Inquiry Officer and contested the matter on merits.

Knowledge and Conduct: The Court noted that the respondent, despite having knowledge of the alleged defect in the initiation of de novo inquiry, chose to participate fully in the proceedings. Such conduct was held to be inconsistent with the continuance of his right to challenge the initiation.

Legal Principles Applied: Relying on H.V. Nirmala and Kalpraj Dharamshi, the Court held:

"Having participated in the de novo inquiry as ordered by the Disciplinary Authority vide order dated 28.12.1992, in our opinion, the respondent abandoned his right to challenge the same."

Timing of Objection: The Court emphasized that issues relating to jurisdiction must be raised at the first instance and not at any subsequent stage. The respondent's belated challenge, raised only after adverse findings and punishment, was held to be unsustainable.

6. Legal Principles Established/reaffirmed

6.1. Scope of Disciplinary Authority's Power to Order De Novo Inquiry

The judgment clarifies that under service jurisprudence, where regulations expressly empower the Disciplinary Authority to order a fresh or further inquiry (as in Regulation 7(1)), the Authority is required to record reasons in writing. The standard of judicial review over such reasons is limited to examining whether reasons exist at all, not whether they are sufficiently "cogent" or based on "adequate material."

6.2. Distinction Between Statutory Schemes

The judgment highlights the critical importance of examining the specific regulatory framework applicable to disciplinary proceedings. A precedent arising under one set of rules cannot be mechanically applied where the statutory scheme is materially different.

6.3. Waiver of Procedural Irregularities

The Court reaffirmed the principle that a charged employee who participates in disciplinary proceedings without protest, despite being aware of alleged jurisdictional defects or procedural irregularities, waives the right to subsequently challenge such proceedings on those grounds. The doctrine applies even to matters going to the root of jurisdiction, provided the defect is not one that renders the proceedings void ab initio.

6.4. Conduct as Determinative of Rights

The judgment emphasizes that for establishing waiver, the conduct of the party must be examined. Participation in proceedings, submission to the authority of the inquiry officer, and contesting the matter on merits without raising any objection constitute conduct inconsistent with the continuance of the right to challenge the initiation of such proceedings.

7. Court's Analysis and Examination

7.1. Textual Analysis of Regulation 7(1)

The Court meticulously examined the language of Regulation 7(1):

"The Disciplinary Authority, if it is not itself the Inquiring Authority, may, for reasons to be recorded by it in writing, remit the case to the Inquiring Authority for fresh or further inquiry and report..."

The Court emphasized that the phrase "for reasons to be recorded by it in writing" is the only condition precedent. There is no requirement that such reasons must be "cogent," "sufficient," or "substantial." The legislative intent is to ensure transparency by mandating recording of reasons, not to prescribe a standard of judicial review over the adequacy of such reasons.

7.2. Comparative Analysis of Statutory Schemes

The Court undertook a comparative analysis of:

• Regulation 7 of the PNB Regulations – which expressly empowers the Disciplinary Authority to remit the case for fresh or further inquiry after receipt of the inquiry report.

• Rule 15 of the Central Civil Services Rules, 1957 (as discussed in K.R. Deb) – which contained no such provision for post-inquiry report remand.

This comparative analysis led the Court to conclude that the two schemes operate on different planes and that K.R. Deb was inapplicable.

7.3. Examination of the Order Dated 28.12.1992

The Court examined the specific language of the impugned order:

"The undersigned hereby order re-enquiry in respect of Charge Sheet dated 20.9.90. Enquiry has been reconstituted afresh in view of the apprehensions raised about the enquiry report in the manner it was prepared."

The Court found this reason to be sufficient compliance with Regulation 7(1). The Disciplinary Authority had clearly identified a ground – apprehensions about the manner in which the first inquiry report was prepared – and had recorded that ground in writing.

7.4. Application of Waiver Doctrine

The Court applied the waiver doctrine through the following analytical steps:

Step 1: The respondent received the order dated 28.12.1992 and was aware that a de novo inquiry was being ordered.

Step 2: The respondent participated in the de novo inquiry proceedings from 1992 until the submission of the second inquiry report in 1995.

Step 3: Throughout this period, the respondent did not raise any objection to the validity of the order directing de novo inquiry.

Step 4: The respondent contested the matter on merits, cross-examined witnesses, and presented his defence.

Step 5: Only after receiving an adverse finding and punishment did the respondent seek to challenge the initiation of de novo inquiry.

The Court held that such conduct amounted to an unequivocal waiver of the right to challenge the order dated 28.12.1992.

7.5. Reliance on Precedents on Waiver

The Court extensively quoted from H.V. Nirmala and Kalpraj Dharamshi to establish:

• Appointment of an incompetent inquiry officer may not vitiate entire proceedings.

• Such rights can be waived.

• Principles of estoppel and acquiescence apply.

• Superior courts may not permit such questions to be raised for the first time at a belated stage.

• Waiver depends on consent and conduct inconsistent with the continuance of rights.

• Mere acts of indulgence do not amount to waiver; there must be alteration of position in reliance.

8. Critical Analysis of the Judgment

8.1. Strengths of the Judgment

8.1.1. Doctrinal Clarity on Waiver: The judgment provides a comprehensive exposition of the doctrine of waiver in the context of disciplinary proceedings. By drawing from English law (Halsbury's Laws of England) and Indian precedents, the Court has laid down clear parameters for when participation in proceedings amounts to waiver.

8.1.2. Contextual Interpretation of Regulations: The Court rightly emphasized that statutory provisions must be interpreted in their own context. The distinction drawn between Regulation 7(1) and Rule 15 of the Central Civil Services Rules demonstrates sensitivity to the specific language of the applicable regulations.

8.1.3. Practical Wisdom on Disciplinary Proceedings: The judgment recognizes the practical realities of disciplinary proceedings – that employers must have the flexibility to order fresh inquiries when apprehensions exist about the integrity of the inquiry process. Requiring "cogent reasons" beyond recording the basis of apprehension would unduly hamper the disciplinary authority's functioning.

8.1.4. Finality in Litigation: By applying the waiver doctrine, the judgment promotes finality in litigation. An employee cannot be permitted to participate in proceedings, take the chance of a favorable outcome, and only upon receiving an adverse order challenge the very foundation of those proceedings.

8.2. Potential Concerns

8.2.1. Limited Scrutiny of Reasons: While the Court correctly held that judicial review does not extend to examining the sufficiency of reasons, the observation that "an opinion has to be based on some material on record" leaves open the question: what if there is absolutely no material to support the "apprehensions" recorded? The judgment does not provide guidance on the threshold of "some material" required.

8.2.2. Vague Reason Upheld: The reason recorded – "apprehensions raised about the Inquiry Report in the manner it was prepared" – is somewhat vague. It does not specify what the apprehensions were, who raised them, or what exactly was wrong with the manner of preparation. The judgment's acceptance of such a generalized reason may set a precedent that allows disciplinary authorities to order de novo inquiries on the basis of unspecified apprehensions.

8.2.3. Waiver in Cases of Inherent Lack of Jurisdiction: The judgment does not squarely address whether the doctrine of waiver would apply if the Disciplinary Authority lacked inherent jurisdiction to order a de novo inquiry (as opposed to a procedural irregularity in the exercise of jurisdiction). While the Court found that jurisdiction existed under Regulation 7(1), the question of whether jurisdictional defects can be waived remains underexplored.

8.2.4. Employee's Dilemma: The judgment places employees in a dilemma – if they participate in proceedings they believe to be invalid, they waive their right to challenge; if they refuse to participate, they risk ex parte proceedings and potential dismissal for non-cooperation. The judgment does not provide guidance on how employees can protect their rights without risking waiver.

8.3. Broader Implications

8.3.1. For Banking Sector Disciplinary Proceedings: The judgment provides clarity to public sector banks on their power to order de novo inquiries. Disciplinary authorities can now act with greater confidence when they have apprehensions about the integrity of inquiry reports.

8.3.2. For Service Jurisprudence: The judgment reinforces the principle that participation in proceedings without protest amounts to waiver. This principle will apply across various service contexts, not merely in banking disciplinary proceedings.

8.3.3. For Judicial Review: The judgment restrains the tendency of courts to micro-manage disciplinary proceedings by examining the "cogency" of reasons when the governing regulations only require reasons to be recorded.

9. Final Outcome

The Division Bench:

1. Allowed the Letters Patent Appeal filed by Punjab National Bank and others.

2. Set aside the judgment and order dated 09.12.2024 passed by the learned Single Judge in W.P.(C) No.6696/2003.

3. Held that the order dated 28.12.1992 directing de novo inquiry was valid and not vitiated.

4. Held that the respondent, by participating in the de novo inquiry without protest, waived his right to challenge the initiation of such inquiry.

5. Restored the punishment of dismissal imposed upon the respondent vide order dated 17.08.1996, along with the appellate order dated 26.07.2002 and review order dated 08.04.2003.

6. Disposed of pending applications, if any.

7. Ordered no costs.

The effect of this judgment is that the respondent's challenge to the disciplinary proceedings fails, and the punishment of dismissal from service stands restored.