HC allows J&K Bank to continue departmental inquiry against officer facing criminal trial over Rs.1.26 crore alleged fraud

12/08/2026

JAMMU, Aug 11: The High Court of Jammu & Kashmir and Ladakh has held that the pendency of a criminal trial does not, by itself, require an employer to keep departmental proceedings in abeyance, observing that criminal prosecution and disciplinary inquiry operate in distinct spheres and are governed by different standards.
Justice Sanjay Parihar, while dismissing a petition filed by Ishvinder Singh Ranyal, an Assistant Manager of Jammu and Kashmir Bank, held that the petitioner had failed to establish any real or demonstrable prejudice to his defence in the criminal case if the departmental inquiry was allowed to continue.
The judgment was pronounced on August 6, 2026, in WP(C) No. 588/2025, along with connected applications.
Ranyal was serving as an Assistant Manager at the J&K Bank's Pouni Branch in Reasi when he was accused of forging customers' signatures and carrying out fraudulent transactions allegedly to secure wrongful gain for himself and cause corresponding loss to customers and the Bank.
According to the material placed before the Court, the alleged fraudulent transactions took place between September 2022 and October 2023 and involved an amount of Rs.1,26,34,318, which was subsequently classified as fraud and reported by the Bank to the Reserve Bank of India. The Bank also stated that Rs.30,32,678 was recovered from the accounts of the petitioner and his relatives.
The Bank lodged an FIR against the petitioner for offences under Sections 409, 420, 467, 468, 471, 477-A and 201 of the Indian Penal Code. Following investigation, a charge-sheet was filed before the competent criminal court. The petitioner was arrested on March 28, 2024 and subsequently released on bail.
Simultaneously, the Bank initiated departmental proceedings against him, issuing a show-cause notice followed by formal articles of charge.
The departmental allegations included acts prejudicial to the interests of the Bank, misuse of official position for personal gain, embezzlement, manipulation of Bank records to conceal irregularities and dishonest conduct allegedly unbecoming of an officer of the Bank.
The petitioner approached the High Court seeking a direction to the Bank not to proceed with the departmental inquiry until conclusion of the criminal proceedings arising out of the charge-sheet titled "UT of J&K v. Ishvinder Singh Ranyal", stated to be pending before the Court of the Chief Judicial Magistrate, Reasi.
His principal contention was that both proceedings arose from the same set of facts and substantially identical allegations. It was argued that the criminal charges were grave and involved complicated questions of fact and law and that requiring him to participate in the departmental inquiry would compel him to disclose his defence prematurely, potentially prejudicing his defence before the criminal court.
The petitioner relied, among other authorities, upon the Supreme Court judgment in M. Paul Anthony v. Bharat Gold Mines Ltd. and a judgment of the Madhya Pradesh High Court. The High Court had earlier, on March 12, 2025, stayed the departmental inquiry, but the Bank repeatedly sought vacation of the interim order and early disposal of the petition.
The Bank opposed the petition, maintaining that criminal prosecution and departmental proceedings operate in separate fields and that the charges framed in the departmental inquiry were not identical to those in the criminal prosecution.
It submitted that an independent examination had found that the petitioner had misused his official position and committed acts amounting to misconduct under the applicable service regulations. The Bank argued that pendency of the criminal trial did not create any legal bar to continuation of the disciplinary proceedings.
Justice Parihar noted that the principal question was whether a departmental inquiry must necessarily remain suspended whenever a criminal prosecution arising from the same transaction is pending.
After examining a series of Supreme Court precedents, the Court held that there is no absolute rule requiring departmental proceedings to await the outcome of a criminal trial merely because both arise from the same transaction.
The Court observed that both proceedings may ordinarily continue simultaneously unless the particular facts demonstrate circumstances warranting deferment of the disciplinary proceedings.
The judgment referred to Supreme Court decisions including Depot Manager, Andhra Pradesh State Road Transport Corporation v. Mohd. Yousuf Miya, Ajit Kumar Nag v. General Manager, Indian Oil Corporation, M. Paul Anthony v. Bharat Gold Mines Ltd., G.M. Tank v. State of Gujarat, and State of Karnataka v. Umesh.
Examining the facts of the present case, the Court noted that the criminal charge-sheet accused the petitioner of dishonestly misappropriating amounts lying in dormant, inactive or rarely operated accounts and appropriating the allegedly withdrawn amounts for his own use.
The investigation had resulted in prosecution for offences including criminal breach of trust, cheating, forgery, use of forged documents and falsification of accounts.
The Court further noted that the alleged fraud came to the Bank's notice in November 2023 during an internal audit.
According to the material before the Court, the petitioner had allegedly started depositing amounts towards the money said to have been misappropriated, including through his loan accounts and funds arranged from friends. By the time the alleged fraud was fully detected, Rs.29.75 lakh had reportedly been recovered, the judgment records.
The criminal charge-sheet attributed 185 allegedly unauthorised transactions to the petitioner, of which 123 transactions were stated to involve misappropriation of funds.
The prosecution alleged that the amounts were illegally transferred, resulting in wrongful gain to the petitioner and corresponding wrongful loss to account holders and/or their nominees.
The departmental charges, meanwhile, alleged that the petitioner forged signatures of deceased customers and prepared fraudulent vouchers for securing wrongful gain, thereby committing breach of trust and misappropriation.
The departmental charges specifically included doing acts prejudicial to the interests of the Bank, embezzlement or misuse of official position for personal gain, manipulation of Bank records to conceal the true position or cover up irregularities with dishonest motive, and conduct unbecoming of a Bank officer.
The Court acknowledged that the transactions forming the basis of the criminal prosecution also constituted the factual foundation of the departmental proceedings.
However, it drew a distinction between the nature and legal character of the charges in the two proceedings.
In the criminal case, the petitioner was facing prosecution for specific penal offences relating to criminal breach of trust, cheating, forgery, use of forged documents and falsification of accounts.
The departmental proceedings, on the other hand, were concerned with whether his acts and omissions amounted to misconduct under the Bank's service regulations, including misuse of official position, conduct prejudicial to the Bank and conduct unbecoming of an officer.
The Court therefore held that mere commonality of the underlying facts could not, by itself, be a sufficient ground for staying the departmental inquiry.
The Court rejected the petitioner's argument that participation in the departmental proceedings would necessarily prejudice his criminal defence.
It observed that an employee seeking deferment of disciplinary proceedings must establish, with reference to the nature of the criminal charges, the evidence likely to be led and the defence required to be disclosed, how continuation of the departmental proceedings would materially prejudice the criminal trial.
The Bench emphasised that the expression "complicated questions of fact and law" cannot be invoked as a mere incantation and that a specific factual foundation demonstrating prejudice must be laid.
In the present case, the petitioner had not demonstrated any real or tangible prejudice that would be caused to his defence in the criminal trial by continuation of the disciplinary inquiry.
The Court also considered the petitioner's reliance on M. Paul Anthony v. Bharat Gold Mines Ltd.
Justice Parihar noted that the Supreme Court decision arose in a particular factual setting where both the departmental and criminal proceedings rested on a raid and recovery of incriminating articles. The criminal court had subsequently disbelieved the very raid and recovery on which both proceedings were founded.
The High Court held that the principle laid down in that case could not be interpreted as an inflexible rule requiring stay of departmental proceedings whenever a criminal prosecution based on the same factual background was pending.
The judgment also referred to a coordinate Bench decision in which the plea of prejudice from simultaneous proceedings had been rejected, noting that the continuation of departmental proceedings does not automatically cause prejudice merely because the employee is also facing criminal prosecution.
A significant observation in the judgment concerns the different standards governing criminal and departmental proceedings.
The Court held that in departmental proceedings, misconduct is required to be established on the touchstone of preponderance of probabilities, whereas in a criminal trial the prosecution carries the substantially higher burden of proving guilt beyond reasonable doubt.
It further observed that the rules of evidence applicable to a criminal trial do not apply with the same rigour to disciplinary proceedings.
Consequently, an outcome in one proceeding does not necessarily dictate the outcome in the other.
The Court relied upon the Supreme Court's decision in State of Karnataka and others v. Umesh, which reiterated that a criminal trial determines criminal culpability, whereas disciplinary proceedings determine whether an employee's conduct amounts to misconduct warranting action under the applicable service rules.
The Court summed up the distinction by observing that the criminal court would determine whether the acts attributed to the petitioner satisfy the ingredients of the alleged penal offences and whether the prosecution establishes those offences beyond reasonable doubt.
The disciplinary authority, by contrast, would determine whether the petitioner's conduct, viewed in the context of his duties and obligations as a Bank officer, constitutes misconduct under the applicable service regulations.
Thus, the two proceedings operate in distinct spheres, even though some evidence and underlying transactions may overlap.
The Court ultimately found no exceptional circumstance warranting interference with the departmental proceedings or requiring the Bank to keep them in abeyance until conclusion of the criminal trial.
It held that the petitioner had failed to establish any real or demonstrable prejudice to his defence in the criminal proceedings.
Accordingly, the writ petition was dismissed, and the interim directions, if any, operating in the matter were ordered to stand vacated.
Justice Sanjay Parihar pronounced the judgment on August 6, 2026, which has been marked as a speaking and reportable judgment.
The petitioner was represented by Senior Advocate Sunil Sethi, assisted by Advocates Rudra Sharma and Vanya Gupta, while the J&K Bank was represented by Senior Advocate M.K. Bhardwaj, assisted by Advocate Manik Bhardwaj.

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