Central Administrative Tribunal - Delhi
Raj Singh vs Vigilance on 20 March, 2024
1 OA No. 2357/2023
Central Administrative Tribunal
Principal Bench: New Delhi
OA No.2357/2023
MA No.2749/2023
Order reserved on: 18.03.2024
Order pronounced on: 20.03.2024
Hon'ble Mr. Justice Ranjit More, Chairman
Hon'ble Mr. Anand Mathur, Member (A)
Dr. Raj Singh, Regional Director, Group 'A'
aged about 57 years,
S/o Sh. Suraj Bhan,
R/o A-42, Niveditakunj,
Sector-10, R.K. Puram,
New Delhi.
....Applicant
(By Advocates: Mr. M.K. Bhardwaj)
Versus
Union of India through its
Secretary,
Government of India,
Ministry of Corporate Affairs,
5th Floor, A-Wing, Shastri Bhawan,
Dr. Rajender Prasad Road,
New Delhi - 110 001.
... Respondent
(By Advocates: Mr. Pradeep Kumar Sharma)
ORDER
By Hon'ble Mr. Justice Ranjit More, Chairman:
Brief facts of the case as narrated in the OA and argued by learned counsel for the applicant are as under:-
1.1 The applicant was posted as Registrar of Companies [RoC], Himachal Pradesh in the year 2017 and also continued as Inspecting Officer of Unitech Ltd. In the 2 OA No. 2357/2023 said capacity, he submitted his report pointing out gross mismanagement and diversion/siphoning of funds amounting to several thousands of crores to protect the interest of 19,000 home buyers and 51,000 fixed deposit holders. On the basis of the said report, National Company Law Tribunal [NCLT] removed the Board of Director of Unitech Ltd.
1.2 Hon'ble Supreme Court appointed 7 (seven) Government Directors on the Board of Unitech Ltd. and handed over the management of the said Company to the newly constituted Board to ensure that the interest of 19,000 home buyers and 51,000 fixed deposit holders does not get jeopardized.
1.3 On a complaint received from Prime Minister's Office and on the basis of letter dated 13.03.2019 of Serious Fraud Investigation Office [SFIO], Ministry of Corporate Affairs, vide letter dated 26.03.2019 ordered inspection of 23 companies belonging to Carnaustie Group, which were used as a conduit by promoters of Unitech Ltd. to siphon-off funds of home buyers/FD holders to make assets worth Rs.870 crores in the aforesaid 23 Companies with dummy Directors. Out of the aforesaid 23 companies, 10 companies were in the jurisdiction of Northern Region of the respondent where the applicant, 3 OA No. 2357/2023 being the Regional Director, was responsible for supervision and guiding inspection of these companies whereas rest 13 companies were in the jurisdiction of Western Region where Mr. Manmohan Juneja was the then Regional Director.
1.4 Mr. Juneja, Regional Director, Western Region submitted Inspection Reports qua 13 companies overlooking various procedural violations and without following the prescribed procedure with the sole intention to cover up financial frauds committed by the aforesaid companies and had given a 'clean chit' to the said companies. The applicant also submitted his Inspection Reports qua 10 companies of the same Group reporting that Directors of all the 23 companies have committed financial fraud worth Rs.829 crores of home buyers/FD holders. Therefore, the applicant proposed/ recommended disgorgement of all the acquired properties in the name of the aforesaid 23 companies by wrongful means u/s 224 (5) of The Companies Act, 2013. The respondent approved the Inspection Report submitted by the applicant as well as recommendation for disgorgement of the said properties/investment etc. worth Rs. 870 crorers and also sanctioned prosecution under various Sections of The Companies Act, 4 OA No. 2357/2023 authorizing the applicant to file petition on behalf of Union of India before NCLT.
1.5 NCLT, Principal Bench, New Delhi ordered attachment of the properties of these fraud companies including 07 properties, inspection whereof was conducted by Mr. Juneja, the then RD of Western Region. The respondent rejected the Inspection Reports of 13 Companies of Western Region submitted by Mr. Juneja and directed him to re-examine the financial statements, bank statements, utilization of funds and immoveable properties purchased out of the funds received from M/s. Carnoustie Management (India) Pvt. Ltd. and to submit his supplementary report within 30 days, expiring on 17.03.2020. However, the said Mr. Juneja did not allow inspection of the said companies to cover up his misdeeds and to spoil the reputation of the applicant.
1.6 It is clear from the aforesaid facts that the applicant has always been adjudged as an Outstanding Officer and considering his performance and honesty, the respondent assigned him various sensitive charges. He was posted as Regional Director, Northern Region in the year 2018 and was also assigned additional charge of Regional Director, Ahmedabad in September, 2020 for 5 OA No. 2357/2023 nearly about 1 ½ years. Being the Regional Director, he was exercising quasi-judicial powers inasmuch as he was required to decide various applications/petitions under various provisions of the Companies Act. During his tenure as Regional Director for about four years, he decided about 5000 applications relating to shifting of Registered Offices u/r 13 of the Companies (Incorporation) Rules, 2014 apart from passing 4464 orders under different Sections of the Companies Act out of total 8670 orders passed by all the six Regional Directors during the year 2019-20.
1.7 Based on this hard work and outstanding service record, the applicant got all the promotions within time. He has already been granted HAG (Non-functional Grade) on recommendation of a Selection Committee and was likely to be considered for next promotion to the post of DG (HAG Functional). Meanwhile, the respondent initiated process to hold DPC to fill up the post of DG/HAG, which was scheduled to be held on 30.05.2023. Being the senior-most SAG Officer and HAG (Non-Functional), the applicant was to be considered in the said DPC. As the applicant was clear from vigilance angle inasmuch as he was not facing any proceedings in any manner, his dossier was prepared for submission to the UPSC. 6 OA No. 2357/2023
However, some biased officers, who were not happy with the sincere working of the applicant, started making efforts to somehow stall his promotion and they succeeded in getting the Charge Memo issued. 1.8 It is shocking as to how the action of the applicant, which benefited thousands of home buyers, could be construed as misconduct whereas Mr. Juneja, who had given clean chit to 13 fraud companies of the same Group, has been appointed as DG without the approval of the ACC and was instrumental in getting the aforesaid Charge Memo issued against the applicant. The applicant submitted a reply dated 14.09.2022 to the SCN dated 23.08.2022 explaining each and every issue in detail which could be made the basis to initiate disciplinary action against Mr. Juenja on the same set of allegations, but the respondent did not take any action on the said reply.
1.9 Since Mr. Juneja was holding the charge of DG, Corporate Affairs, he misused his position and prepared a note wherein he mentioned that as the factum of shifting of offices of five companies of Carnoustie Group had been ignored, a Charge Memo be issued to the applicant. Moreover, as Mr. Juneja's promotion as DG was without the approval of ACC, he was not authorized 7 OA No. 2357/2023 to prepare such a note and even the Secretary had no jurisdiction to approve the same without consulting CVO. It is also pertinent to mention here that the Charge Memo was issued without the approval of the disciplinary authority that too just one day before the date of DPC, i.e., 14.06.2023, and served upon him only on 16.06.2023 without annexing therewith relevant documents, on the following Articles of Charge:-
"Article of charge-I That the said Dr. Raj Singh while functioning as Regional Director, Northern Region (NR), New Delhi during the period from 30.08.2018 to 28.09.2022, committed misconduct by not observing due diligence in discharge of his official duties. Regional Director (NR) has approved the shifting of registered office of M/S Carnoustie Management (India) Private Limited (R67012617) from Noida (UP) to NCT of Delhi, effective from 06.11.2020 i.e after about 9 months from the date of inspection follow up instructions issued by the Ministry (on 28.02.2020), despite knowing all the provisions of law and facts. The said shifting of office by RD (NR) is in violation of section 13 of the Companies Act, 2013 r/w Rule 30(9) of the Companies (Incorporation) Rules, 2014.
By doing the aforesaid acts, Dr. Raj Singh, the then Regional Director, Northern Region (NR)) MCA [now Regional Director, Southern Region (SR), MCA] failed to maintain devotion to duty, failed to perform and discharge his duties with the highest degree of professionalism, acted in a manner which is highly unbecoming of a Government servant and also failed to take all possible steps to ensure the integrity and devotion to duty of all Government servants under his administrative control and authority, and has, thus, violated the provisions contained in sub-rules (1) (ii),
(iii), (xix), (xxi) of Rule 3 and sub-rule (2) (i) of Rule 3 of the CCS (Conduct) Rules, 1964.
Article of charge - II That the said Dr. Raj Singh while functioning as Regional Director, Northern Region (NR), New Delhi during the period from 30.08.2018 to 28.09.2022, committed misconduct by not observing due diligence 8 OA No. 2357/2023 in discharge of his official duties. In respect of 4 companies namely M/S Carnoustie Agro Private Limited (H43239818), M/S Carnoustie Security Private Limited (H50394501), M/S Carnoustie International Private Limited (H49564875) and M/S Carnoustie Leisure Private Limited (H48849434) the inspections of which were ordered on 26.03.2019, RD (NR) allowed and approved the change of registered offices of the companies from the state of Delhi to Maharashtra on 03.06.2019. Such approval of the shifting of the registered office in all the 4 companies is also unlawful and in violation of section 13 of the Companies Act, 2013 r/w Rule 30 (9) of the said Rules.
By doing the aforesaid acts, Dr. Raj Singh, the then Regional Director, Northern Region (NR), New Delhi, MCA (now Regional Director, Southern Region (SR), MCA] failed to maintain devotion to duty, failed to perform and discharge his duties with the highest degree of professionalism, acted in a manner which is highly unbecoming of a Government servant and also failed to take all possible steps to ensure the integrity and devotion to duty of all Government servants under his administrative control and authority, and has, thus, violated the provisions contained in sub-rules (1) (ii) (iii), (xix), (xxi) of Rule 3 and sub-rule (2) (i) of Rule 3 of the CCS (Conduct) Rules, 1964."
1.10 After receipt of the impugned Charge Memo, the applicant sent an application dated 20.06.2023 asking the respondent to supply him the complete Charge Memo along with all the documents as mentioned in Annexure-III as well as all other relevant documents, enabling him to submit a proper reply, but the respondent have not supplied even a single document and proceeded further in the matter just to deprive him of his promotion to the post of DG. It is, therefore, clear from the above facts that the impugned Charge Memo dated 13.06.2023 is nothing but a biased decision taken on the basis of misleading proposal with distorted facts 9 OA No. 2357/2023 produced by Mr. Juneja. Moreover, the action of the applicant, which resulted in positive Order of Attachment of properties worth Rs.870 crores of fraud Companies cannot be construed to be a misconduct. 1.11 In fact, the allegations which have been made the basis of the Charge Memo cannot be even covered within the definition of 'misconduct' warranting initiation of disciplinary proceedings particularly when he was discharging quasi-judicial functions as has been held by the Hon'ble Supreme Court in Zunnajaro Bhikaji Nagarkar vs. Union of India & Ors. to the effect that the quasi-judicial authority is always subject to judicial supervision in appeal, therefore, the said authority should not be subjected to disciplinary action as the judicial/legal errors committed while passing order can always be corrected in appeal.
1.12 Aggrieved of the action of the respondent, the applicant has filed the instant OA under Section 19 of the Administrative Tribunals Act, 1985, seeking the following relief:-
"(a) To quash and set aside the impugned Memorandum No.C-14011/2/2023 Vigilance- MCA dated 13.06.2023 (A.I), issued by Respondent no.1 and direct the respondents to give all consequential benefits to the applicant as withheld on issuance of aforesaid Charge Memo;
10 OA No. 2357/2023
(b) To declare the action of the respondents in initiating disciplinary action against the applicant vide aforesaid charge memo dated 13.06.2023 as illegal and unjustified and issue consequential orders;
(c) To award the cost of the present original application; and
(d) Pass any other or further order(s) as this Hon'ble Tribunal may deem fit and proper in the facts and circumstances of the present case."
2. Per contra, the respondent has filed a counter affidavit denying the claim of the applicant. Learned counsel for the respondent submitted as under:-
2.1 While processing the Inspection Report, it was observed by the Ministry that the applicant has not recommended for disgorgement of assets of the concerned companies and sought sanction for attachment of properties by filing an application before NCLT. Accordingly, the Ministry, vide letters dated 28.02.2020 and 11.03.2020 directed him to take necessary action for disgorgement of assets of the companies and file an application before NCLT. The Ministry also ordered investigation by SFIO in the matter of M/s. Unitech Ltd. on the basis of order dated 18.12.2019 passed by the Hon'ble Supreme Court in the case of Bhupinder Singh vs. Unitech Ltd.[Civil Appeal No.10856/2016] whereby the Union of India had been directed to investigate the affairs of the companies as large amount collected from homebuyers and 11 OA No. 2357/2023 financial institutes were diverted. In the said order, it was also reported that an amount of Rs.14,270 crores has been collected by Unitech from 29,800 homebuyers. 2.2 The issue of irregularities in permitting shifting of registered offices of the companies came to the attention of DGCoA, when a confidential report was received from RD (WR) dated 19.01.2022 w.r.t. letter dated 31.12.2021 issued by O/o RD (NR) to RD (WR). The said letter was issued with the approval of the applicant without obtaining the approval from the competent authority in violation of the prescribed channel of communication.
Hence, contention of the applicant that Mr. Juneja initiated the matter is factually incorrect. Actually, the process to initiate disciplinary proceedings against the applicant had already been initiated in the Ministry in February, 2022 itself, when DGCoA referred it to Vigilance Section with the approval of the Secretary, MCA for fixing responsibility for omissions and commissions, before the process for promotion in the grade of HAG commenced. After the detailed examination, a Show Cause Notice [SCN] was issued to the applicant on 23.08.2022, to which the applicant submitted his reply. After considering his reply, the impugned Charge Memo was issued to the applicant 12 OA No. 2357/2023 following the prescribed procedure of approval of the disciplinary authority and based on the advice of CVC. Hence, re-scheduling of DPC meeting from May 30, 2023 to June 14, 2023 had nothing to do with the pending disciplinary proceedings against the applicant. 2.3 Insofar as the issue of non-furnishing of documents listed in Annexure-III of the Charge Memo is concerned, it is stated that under the extant rules, there is no provision for providing such documents at the time of issuance of Charge Memo as the applicant will get sufficient opportunity to inspect such documents during the course of a regular enquiry. As the applicant has not filed any reply/statement of defense, regular inquiry has not commenced in this case, hence, the question of furnishing the required documents does not arise. Regarding submissions made by the applicant that he had passed order for shifting of registered offices of the companies after due diligence and by taking note of the report of the concerned Registrar of Companies, declaration made by the companies and alert, as made available by MCA-21 system, it is submitted that the report of ROC, Kanpur and ROC, Delhi has no relevance in this case as the Ministry ordered the inspection to be conducted by RD (NR) on 26.03.2019. RD(NR) assigned 13 OA No. 2357/2023 the said inspection to be conducted by Sh. V.G. Sathya Moorthy, a Joint Director in his own office i.e. o/o RD (NR) on 12.04.2019 and as the applicant was well aware of the inspection of these companies and RoC, Delhi and RoC, Kanpur had no role in the said inspections. Hence, it is irrelevant to put the blame on the report of RoC. 2.4 The decision in the case of Zunjarrao Bhimaji Nagarkar (supra) relied upon by the applicant is not applicable in the present case inasmuch as the Hon'ble Supreme Court has inter alia, observed that disciplinary action can be taken against an officer who exercises judicial or quasi judicial powers in the following cases:-
i) Where the officer had acted in a manner as would reflect on his reputation for integrity or good faith or devotion to duty;
ii) If there is prima facie material to show recklessness or misconduct in the discharge of his duty;
iii) If he has acted in a manner which is unbecoming of a Government servant;
iv) If he had acted negligently or that he omitted the prescribed conditions which are essential for the exercise of the statutory powers; and
v) If he had acted in order to unduly favour a party. 14 OA No. 2357/2023
2.5 Learned counsel for the respondent further argued that officers exercising quasi-judicial functions would be amenable to judicial/disciplinary proceedings, if there is some degree of culpability in a broader sense, as has been held by the Hon'ble Supreme Court in Union of India vs. R.K.Desai [1993 (2) SCC 49]. Since the charges leveled against the applicant relate to utter disregard to Section 13 of The Companies Act, 2013 read with Rule 30(9) of The Companies (Incorporation) Rules, 2014 as no discretion has been given to him under the said Act/Rules for allowing shifting of registered offices of five companies of Carnoustie Group pending inspection/ envisaged prosecution against these companies, which were involved in alleged fraud of Rs.829 crores. Hence, prima facie the act of the applicant in doing so has rightly been construed to be a misconduct warranting disciplinary proceedings against him.
2.6 In view of the above submissions, learned counsel for the respondents pleaded for dismissal of the instant OA.
3. The applicant has filed a rejoinder controverting the contentions of the respondents made in the counter 15 OA No. 2357/2023 affidavit and has more or less reiterated the averments made in the OA.
4. The respondent has also filed a sur-rejoinder reiterating the stand taken in the counter affidavit. Learned counsel for the respondent stated as under:-
4.1 While granting interim relief in favour of the applicant, this Tribunal has not correctly appreciated the facts and circumstances of the matter. With regard to the first Charge, which relates to shifting of registered office of the company on 06.11.2020 in spite of follow up instructions (to file prosecution/initiate penal action) issued by the Ministry on 28.02.2020, the applicant allowed shifting on 06.11.2020, i.e. after nine months of follow up instructions. Thus, the applicant instead of filing prosecution against the company, kept the matter pending with him for nine months and allowed shifting of registered office of the company ignoring the directions of the Ministry on follow up action to be taken against the company, including filing of prosecution and taking penal action under Section 447/448 of The Companies Act, 2013, as the company was involved in an alleged fraud of Rs.829 crores. Further, on completion of such enquiry, inspection or investigation as a consequence of which no prosecution is envisaged 16 OA No. 2357/2023 or no prosecution is pending, shifting of registered office shall be allowed. Hence, the said action of the applicant is against the above provisions of the Companies Act, 2013.
4.2 Learned counsel further argued that this Tribunal observed that the charge has been framed without application of mind. In this regard, it is stated that the applicant has deliberately and willfully concealed the fact that after submission of Inspection Report, the Ministry vide letter dated 28.02.2020 directed the applicant to file prosecution against the company for various violations including fraud. However, being fully aware of the alleged fraud committed by the company, he supported/recommended these findings. 4.3 With regard to second Article of Charge, this Tribunal has relied upon the report submitted by RoC, Delhi whereas the said report has nothing to do with the present case.
5. We have heard Sh. M.K. Bhardwaj, learned counsel for the applicant, Mr. Pradeep Kumar Sharma, learned counsel for the respondent and have also perused the material on record as also the citations relied upon by learned counsel for both the parties.17 OA No. 2357/2023
6. As has already been noticed while granting interim stay on 28.08.2023, the first charge levelled against the applicant is that 'he shifted registered office of M/s Carnoustie Management (India) Private Limited from Noida (UP) to Delhi' and the second charge is that 'he shifted other four companies from Delhi to Maharashtra'. 6.1 We have gone through the submissions made by learned counsel for the respondent in counter affidavit and sur-
rejoinder filed on behalf of the respondents and find that no new material has been mentioned, except that the action of the applicant is in violation of Section 13 (4) of The Companies Act, 2013 read with Rule 30(9) of the Companies (Incorporation) Rules, 2014. The said submission of the respondent has already been considered by this Tribunal in its order dated 28.08.2023. Learned counsel for the respondent was not even able to point out any financial angle involved in discharge of official functions by the applicant as a quasi-judicial officer.
6.2 It is not in dispute that when the shifting was ordered by the applicant, inspection had already been completed and in fact, the report was submitted on 29.11.2019. Hence, the first charge apparently has been framed without application of mind. Though the respondent 18 OA No. 2357/2023 has vehemently argued that the report of RoC, Delhi and RoC, Kanpur has nothing to do with the present case, but the Charge Memo issued to the applicant does not reveal such facts. Hence, the stand taken by the respondent cannot be sustained in the eyes of law. 6.3 As far as the second charge is concerned, learned counsel for the applicant asserted that the applicant, while allowing shifting of registered offices of the companies, adopted due diligence and relied upon certain details to buttress his arguments, which have already been extracted by this Tribunal while passing the interim order dated 28.8.2023. However, we feel it appropriate to reproduce the same as under:-
"1. Perusal of declaration given by the company in the application form for shifting of the registered office. In column No 09 of Form No INC-23, which is an application to the Regional Director for shifting of the registered office from one state to another state, there is a specific question as to whether any enquiry/ investigation /inspection is initiated against the Company and if yes, brief details is to be submitted in the same column. In all the four applications mentioned in Article of Charge II, None of the companies declared that any enquiry/ investigation /inspection has been initiated.
2. Report of the ROC. Before passing any order of shifting of a registered a office of any company, the RD seeks a report from the ROC of the concerned state and there has to be a special mention about the initiation of any enquiry/investigation/inspection against such company and also to report about any pending prosecution against the applicant company. In all the reports of the companies mentioned in Article of charge II, the ROC Delhi, submitted in his report that no enquiry/ investigation/inspection has been initiated against these companies and no prosecution was pending.19 OA No. 2357/2023
3. Notings of the Dy. Director and the Asst who examined the compliance of all the provisions of law dealing before placing the matter before the regional Director have not mentioned about any enquiry/ investigation /inspection initiated against these companies.
4. Alerts in the electronic processing system- MCA21. The processing and approval of applications for shifting of registered office is done in hybrid mode where applications are received in electronic mode but orders are passed in physical mode. In the instant case, the inspection of these companies were ordered by the office of DG Corp Affairs on 26.03.2019 but no entry was made by the Office of DG in the MCA-21 system and therefore, no alert message was generated by the system while processing the said applications by the by the office of RD and the office of ROC. Interestingly, in the instant case the Min has not initiated any action for filing prosecution against the company for declaring false information, no action against the ROC for giving wrong information in his reports against the Asst. Director for not mentioning about the inspections in his note and no action against the office of Director General of Corporate Affairs for not making the entry in the electronic processing system MCA-21 about the order of inspection, if, we assume that there is a technical error while passing the order of shifting of the registered office. Had an entry of the inspection order been made in the MCA -21 system, by the office of Director General of Corporate Affairs at the time of order of inspection, the MCA-21 system would have prevented even the filing of application, leave aside the question of approval of the application by RD."
6.4 We have perused the application for shifting of address of the concerned companies, which are annexed with this O.A. After perusal of the same, we find that these companies in their applications have not given any details about the pendency of inspection. 6.5 Learned counsel for the applicant also referred to the report of the ROC. We have perused the same and find that even the ROC in his report has not stated anything 20 OA No. 2357/2023 about the pendency of inspection against the said companies. Even the noting of the Deputy Director and dealing assistant do not show that the applicant, in his capacity as a Regional Director, was apprised of the pendency of any inspection report. The applicant asserted that there was no alert in electronic processing system MCA 21 about pending investigation etc. That apart, admittedly, the applicant was exercising a quasi judicial function while allowing shifting of the registered companies.
6.6 In view of the above discussion, we are of the considered opinion that the action of the applicant exercising his powers as quasi-judicial authority is subject to judicial supervision in appeal, therefore, the said authority cannot be subjected to disciplinary action as the judicial/legal errors committed while passing order can always be corrected in appeal as has been held by the Hon'ble Supreme Court in Zunnajaro Bhikaji Nagarkar (supra).
6.7 In the conspectus of the facts and circumstances brought out above, we are of the considered opinion that the respondent has erred in issuing the impugned Charge Memo to the applicant for the act exercised by him as a quasi-judicial officer, without subjecting him to 21 OA No. 2357/2023 judicial supervision in appeal. We are also of the view that the applicant has exercised due diligence. Coupled with these facts, when there is no financial implication, we allow the present OA with the following directions:-
i) Charge Memo No.C-14011/2/2023-Vigilance-MCA dated 13.06.2023 (Annexure A-1) is quashed and set aside;
ii) The respondent is directed to grant the applicant all consequential benefits flowing from setting aside of the Charge Memo; and
iii) The exercise, as ordained above, shall be completed by the respondents within a period of six weeks from the date of receipt of a certified copy of this Order.
7. MA No.2749/2023 also stands disposed of.
8. No order as to costs.
(Anand Mathur) (Justice Ranjit More) Member (A) Chairman 'na'