Customer-Banker Relationship is of Trust: Supreme Court Cancels Reinstatement of Employee

The Supreme Court has set aside the reinstatement of a Post Master who had been removed from service for embezzling money deposited by customers. The Court made it clear that simply returning the embezzled amount does not clear an employee from misconduct.

A bench of Justices Rajesh Bindal and Manmohan said that the relationship between a customer and a banker is based on trust. The judges noted that customers feel secure when their passbooks show proper entries for deposits made at the post office. However, in this case, the employee misused that trust.

The issue came to light during the annual inspection in June 2011. Officials found that the employee had taken money from several account holders for their Recurring Deposit and Postal Life Insurance accounts. He had stamped and updated the customers’ passbooks to show that the deposits were made. But he did not record these entries in the official post office ledgers. Instead, he misappropriated ₹5,266 for his personal use. He returned the money only after the fraud was discovered.

A departmental inquiry was conducted, and the inquiry confirmed the charges. He himself admitted that he had embezzled the money.

The case reached the Central Administrative Tribunal and tribunal ordered the removal of employee. Employee filed case in Rajasthan High Court. The Rajasthan High Court set aside the penalty and ordered the employee’s reinstatement. But the Union Government challenged that decision in the Supreme Court.

Now, the Supreme Court said that the High Court went beyond its powers by examining the merits of the case in detail, which is not allowed in disciplinary matters. The Court said the High Court made an error by trying to reinterpret the employee’s admission, calling the explanation an afterthought.

The Supreme Court allowed the Union Government’s appeal and restored the penalty of removal from service.

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