Word 'May' in Regulation 10 of Canara Bank Discipline Rules Is Directory: SC

The Supreme Court of India has clarified that the use of the word 'may' in disciplinary regulations regarding common proceedings is directory and does not confer a right upon delinquent employees to demand a joint trial.

In a decision delivered by a bench comprising Justice S.V.N. Bhatti and Justice Vijay Bishnoi, the Court addressed the interpretative nuances of Regulation 10 of the Canara Bank Officer Employees' (Discipline and Appeal) Regulations, 1976. The appeal arose from a Karnataka High Court judgment which had set aside the punishment of a Senior Manager on grounds including the bank's failure to conduct a joint proceeding with other involved officers. While the Supreme Court upheld the High Court's decision to set aside the punishment based on lack of evidence and violation of natural justice, it explicitly overruled the High Court's mandatory interpretation of the procedural regulations.

Interpretation of 'May' vs 'Shall' in Disciplinary Regulations

The primary legal question centered on whether Regulation 10 of the Canara Bank Officer Employees' (Discipline and Appeal) Regulations, 1976 is mandatory or directory. The Court observed that 'may' is prima facie permissive. The Court, in its reasoning, observed: "'May' is not understood as 'must', so long as the English language retains its meaning. Then it may be a question of which cases an authority or body with the power to interpret the words treats 'may' as mandatory, thereby interpreting 'may' as 'shall'. The enabling words are construed as compulsory whenever the object of the said authority is to effectuate a legal right."

Management Discretion in Common Proceedings

Justice Bhatti noted that treating the regulation as mandatory would strip the management of necessary discretion in dynamic administrative situations. The Court highlighted that roles of different employees, their respective cadres, and the competent disciplinary authorities might vary significantly, making a mandatory joint proceeding impractical. The Court formally aligned itself with the view taken by the High Court of Andhra Pradesh in T. Baba Prasad v. Andhra Bank, Hyderabad and others, while departing from the Karnataka High Court's stance.

Review of Evidence and Natural Justice

Regarding the merits of the specific disciplinary action against the deceased Senior Manager, the Court found that the High Court was justified in intervening. The enquiry had relied on statements of co-accused officers who were never produced for cross-examination, thereby vitiating the findings.

Background:

The dispute originated when a Senior Manager (the first Respondent) was punished with reversion to a lower grade following allegations of negligence in sanctioning loans to two trading companies. The Bank alleged that the Credit Sanction Committee, of which she was a member, failed to verify the existence of the borrowers and the validity of collateral securities.

The first Respondent challenged the punishment in the Karnataka High Court, arguing hostile discrimination as other officers received minor penalties and asserting that she was not the final sanctioning authority. While a Single Judge dismissed her petition, a Division Bench later allowed her appeal, citing that the enquiry relied on statements of witnesses (MW2 and MW3) who were not examined, and that the Bank failed to hold a common proceeding as per Regulation 10. The Supreme Court eventually heard the Bank’s appeal, confirming the quashing of the punishment due to evidentiary gaps but clarifying the law on joint proceedings in favor of the Bank's discretion.

Case Details:
Case No.: Civil Appeal No. of 2026 (@ SLP (Civil) No. 10226 of 2023)
NeutralCitation: 2026 INSC 478
Case Title: Canara Bank v. Prem Latha Uppal (Dead) through LRs.
Appearances:
For the Petitioner(s): Mr. Naveen R. Nath, Senior Counsel
For the Respondent(s): Mr. Shailesh Madiyal, Advocate

Source: 2026 CaseBase(SC) 398