The Karnataka High Court recently stated that frauds committed by employees of financial institutions, no matter how minor, must be taken very seriously and dealt with harshly. While dismissing the appeal filed by one K Satishchandra Shetty, who was fired from Union Bank of India following charges of misappropriation of customer funds, a division bench of Chief Justice Ritu Raj Awasthi and Justice Sachin Shankar Magadum stated, "Frauds carried out by bank employees has now become a global problem." "Cash theft, such as skimming customer cash deposits, has become common, and employee fraud, also known as occupational fraud, is likely the most serious and widespread threat to financial institutions. As a result, there must be zero tolerance because a fraudulent employee is an attack on the organization from within, perpetrated by the very people entrusted with protecting its assets and resources."
Case Background:
After Shetty (appellant here) voluntarily admitted the charges, the bank's Disciplinary Authority imposed a penalty of dismissal from service in April 1999. The appellant challenged the order in an appeal, which was also dismissed by the Appellate Authority in November of that year. After four years, the bank sent him a communication to settle his terminal benefits. At this point, the appellant filed a dispute with the Assistant Labour Commissioner, and because the conciliation proceedings failed, the Government referred the dispute for adjudication. The Tribunal granted the reference, ordering reinstatement with back pay, continuity of service, and all other benefits. The same was challenged before the High Court's single-judge bench. After referring to the employee's admission of guilt before the disciplinary committee, the court determined that the order of reinstatement passed by the Tribunal is palpably erroneous and contrary to the evidence on record.