Central Administrative Tribunal - Delhi
Shri S. Rajguru vs Union Of India Through on 1 February, 2013
Central Administrative Tribunal
Principal Bench
OA No.2815/2012
Reserved on : 01.11.2012
Pronounced on : 01.02.2013
Honble Mr. Justice Syed Rafat Alam, Chairman
Honble Dr. Ramesh Chandra Panda, Member (A)
Shri S. Rajguru
C/o Shri S.K. Nayyar
115, Vigyan Lok
Near Anand Lok
New Delhi 110 092. Applicant
(By Advocate: Sh. P.P. Khurana, Sr. Advocate along with
Sh. R.S. Chauhan)
Versus
Union of India through
The Secretary,
Department of Revenue,
Ministry of Finance,
North Block,
New Delhi. Respondent
(By Advocate: Shri R.N. Singh)
O R D E R
Dr. Ramesh Chandra Panda, Member (A):
The applicant, Shri S. Rajguru, a retired Indian Revenue Service (Income Tax) Officer of 1978 batch, is aggrieved by the Memorandum dated 26.04.2012 (Annexure A-1) by which it has been proposed to hold an enquiry under Rule 14 of the CCS (CCA) Rules, 1965 and, therefore, has sought the following relief(s):-
(a) Quash the Memorandum (F.No. C-14011/24/2012-28L) dated 26th April, 2012, initiating Disciplinary proceedings against the Applicant.
Direct the Respondents to release the pensionary benefits such as commutation of pension, leave encashment, gratuity of the Applicant forthwith with interest @ 18% p.a. from the date of retirement till payment.
Any other or further orders as this Honble Tribunal may deem fit and proper.
2. In order to consider the above prayers, the relevant facts are provided here. While the applicant was working as Commissioner of Income Tax (Appeal) [CIT(A) in brief) at Cochin during November 2005 to February, 2007, he received a letter dated 02.02.2012 (Annexure A-2) calling for his explanation in respect of six orders passed by him as CIT(A). He submitted his reply dated 01.03.2012 (Annexure A-3) where he inter alia pointed out that only in two out of six cases his order had been reversed by the Income Tax Appellate Tribunal (ITAT) and ITAT did not have any adverse view in those two cases. In case of two other matters, the ITAT is yet to decide and balance two cases the respondent dropped the same from charges. Thus, he prayed to give quietus to the matter. But the Disciplinary Authority issued the Charge Memo dated 26.04.2012, a few days before his retirement (30.04.2012). It is his case that the said Charge Memo was served on him (he was CCIT at Rajkot) at Anand through a special messenger from Delhi, in a most disgraceful and humiliating manner. Four Articles of Charges read thus:-
ARTICLE-1 Shri S. Rajguru, while functioning as Commissioner of Income Tax (Appeals)-II, Kochi, committed irregularity in the appeal order passed by him on 01.09.2005 in the case of M/s. Bhageeratha Engineering Ltd. (Block Period 01.04.1996 to 09.10.2002) by deleting additions which had been made by the assessing officer without proper verification of the facts and examination of records.
By his aforesaid act, Shri S. Rajguru failed to maintain devotion to duty and thereby contravened the provisions of Rule 3(1)(ii) of the CCS (Conduct) Rules, 1964.
ARTICLE-II Shri S. Rajguru, while functioning as Commissioner of Income Tax (Appeals)-II, Kochi, committed irregularity in the appeal order passed by him on 25.08.2005 in the case of M/s. Skyline Builders (AY 2002-03) by allowing the assessees appeal in disregard of the provisions of Section 145(3) of the I.T. Act, 1961.
By his aforesaid act, Shri S. Rajguru failed to maintain devotion to duty and thereby contravened the provisions of Rule 3(1)(ii) of the CCS (Conduct) Rules, 1964.
ARTICLE-III Shri S. Rajguru, while functioning as Commissioner of Income Tax (Appeals)-II, Kochi, committed irregularity in the appeal order passed by him on 23.08.2005 in the case of Shri M.M. Rasheed (Block Period 01.04.1989 to 17.09.1998) by deleting additions which had been made by the assessing officer without proper verification of the facts and examination of records.
By his aforesaid act, Shri S. Rajguru failed to maintain devotion to duty and thereby contravened the provisions of Rule 3(1)(ii) of the CCS (Conduct) Rules, 1964.
ARTICLE-IV Shri S. Rajguru, while functioning as Commissioner of Income Tax (Appeals)-II, Kochi, committed irregularity in the appeal order passed by him on 01.09.2005 in the case of Shri Jose Cyriac (Block Period 01.04.1989 to 23.09.1998) by allowing the assessees appeal in disregard of the directions given by the Income Tax Appellate Tribunal (ITAT) in its order dtd. 30.07.2003.
By his aforesaid act, Shri S. Rajguru failed to maintain devotion to duty and thereby contravened the provisions of Rule 3(1)(ii) of the CCS (Conduct) Rules, 1964.
3. The applicant in his letter dated 07.05.2012 (Annexure A-4) denied the above charges and sought copies of listed documents at Serial Number 1 to 9 to enable him to file a detailed reply. He also sought personal hearing. Using the instruments of Right to Information Act, 2005 in May, 2012 he received copy of the note sheet (available at Annexure A-5) and came to understand that the Charge Memo originated from the Secret Note given by Shri B. Ravi Balan, his Reporting Officer during June to October, 2005 where it was recorded that the applicant had practically allowed the appeals without properly appreciating the facts and without going through the records and the way the orders were passed by him gave strong suspicion with regard to his integrity. Shri Balan simultaneously recorded that there was no specific evidence in this regard. It is further averred that though Shri Balan retired on 31st October, 2005, the ACR was written in November, 2005 without being reviewed by the Reviewing Officer. Further, the Reporting and Reviewing Officers for the subsequent period of the same year [01.11.2005 to 31.03.2006] no adverse comment was given against him in his ACR. After a long lapse of some years the said Secret Note was forwarded on 06.05.2010 to Director of Income Tax (Vigilance) [DIT(Vig.)] who submitted the report on 3rd and 18th January, 2012 inter alia indicating therein that out of 19 appeal orders inspected he noticed irregularities in six appeal orders passed by the applicant. At this stage, his explanation was sought vide letter dated 01.02.2012 to which he submitted reply on 01.03.2012. Out of six cases, the applicants reply was found to be not convincing in respect of four cases and the result was issue of the Charge Memo dated 26.04.2012. He submitted his reply denying the charges and requested the Disciplinary Authority to review the matter and release the pensionary benefits vide his letter dated 05.06.2012 (Annexure A-6) and 19.06.2012 (Annexure A-7) respectively. As there was no response from the respondents, he instituted the present Original Application.
4. Narrating the background of the case and more specifically the Charge Memo assailed in the Original Application, Shri P.P. Khurana, learned Senior Advocate for the applicant, traced the origin of the disciplinary proceeding to the Secret Note recorded by applicants Reporting Officer in his ACR for the period from June, 2005 to October, 2005 stating that the way the applicant had passed orders in the appeals decided by him gives birth to a strong suspicion with regard to his integrity. However, there is no specific evidence in this regard. His submission is that there is no place for suspicion to be the basis for the disciplinary case. In this regard, he placed his reliance on the judgment of the Constitution Bench of the Apex Court in the matter of Union of India versus H.C. Goel [AIR-1964-SC-364] that suspicion has no role to play even in domestic inquiries. Further, his submission is that the applicant has never been conveyed such damaging adverse remarks. Moreover, this ACR was never got reviewed. Besides, for second part of the same year (November, 2005 to March, 2006) the Reporting Officer as well as the Reviewing Officer recorded that there was nothing adverse in regard to the integrity of the applicant. Learned senior counsel of the applicant would wonder that despite 35 years of service of the applicant till his retirement, when his integrity remained impeccable, how would all of a sudden the applicants integrity come under doubt. Learned counsel placed his reliance on the judgment of Honble Apex Court in the matter of M.S. Bindra versus Union of India [(1998) 7 SCC 310] where it was held that doubt about integrity should not be entertained merely on surmises. Nemo firut repente turpissimus no one becomes dishonest all of a sudden. It is stated that the applicant has not been proceeded against under Rule 3(1)(i) of CCS (Conduct) Rules, 1964 for not maintaining integrity but for violation of Rule 3(1)(ii) for lack of devotion to duty. As the applicants integrity is not under challenge in the Charge Memo, the matter should have been given a quietus instead of scanning 200 to 300 appeals decided by the applicant during the relevant period and picking out 4 cases on the consideration of tax effect to proceed against the applicant for alleged violation of Rule 3(1)(ii) of Conduct Rules, 1964 during the fag end of his career when the applicant was looking forward to a peaceful retired life. It is, further, submitted that in recording the secret note, the Reporting Officer has not followed the instructions contained in O.M. No. 51/5/72-Estt.(A) dated May, 1972 which are of a mandatory nature. There is deviation of the prescribed procedure inasmuch as the Secretary referred the matter to C.V.C. in complete contravention of instructions issued in this behalf as per OM dated 26.02.2004 which envisages that the Disciplinary Authority has to enclose a copy of the proposed charge sheet and a list of documents for CVCs advice. Learned counsel for the applicant placed his reliance on the judgment of Honble Supreme Court in the matter of Swaran Singh Chand versus P.S.E.B. [(2009) 13 SCC 758] where it was held that administrative instructions in the nature of policy guidelines were binding and uniformly applicable.
5. The other principal contention canvassed by the applicants senior counsel is that the disciplinary proceedings are coram non-judice as the four charges on which the applicant has been proceeded against are for alleged violation of the Rule 3(1)(ii) of CCS (Conduct) Rules and the orders in all those four cases have been passed by the applicant during the course of performing quasi-judicial functions and statutory duties as CIT(A) and the applicant is not amenable to disciplinary control for any bonafide action taken and orders passed during the discharge of such functions. Four articles of charges were very extensively analysed by Shri P.P. Khurana. In respect of the first article of charge, the allegation is that cash seized from a third party during search and seizure operation at the premises of the assessee company ought to have been assessed as undisclosed income of the assessee, whereas relying on Section 132 (4A), the applicant held that the money could not be treated as belonging to assessee company without recording any statement from any of the Directors, Accountants and Cashier of the assessee company. His submission is that the action of the applicant cannot attract Rules 3(1)(ii) of CCS (Conduct) Rules as by no stretch of reasoning the said action can be termed as lack of devotion to duty. With regard to the second article of charge, learned counsel would submit that the applicant relying on Section 145(3) of IT Act, held that the Assessing Officer had no power to reject books of account on the basis that correct profit could not be deduced from the books of account. He contends that assuming the respondents allegation that applicants interpretation of Section 145(3) was not correct, his action would not attract violation of Rule 3(1)(ii) of CCS (Conduct) Rules. Referring to the 3rd article of charge, the learned senior counsel would submit that the allegation that the assessment was completed under Section 158 BC of Income Tax Act, where the Assessing Officer made various additions to the income and in the appeal order, the applicant deleted some of the additions. When the matter went to I.T.A.T. some of the deletions made by the applicant were restored, while others were upheld. His submission is that such charges are nothing but part of multi-tier judicial process and does not attract violation of Rule 3(1)(ii). In so far as fourth article of charge is concerned, it is stated that the matter has been remitted to the applicant on remand by ITAT. The assessee took up a ground which went to the root of the matter, urging that block assessment could be made only if there was a search in pursuance of a search warrant. This plea was upheld by the applicant. When the matter was reconsidered by ITAT, it fairly admitted that the established legal position was that a block assessment should be considered valid only if there was a valid search under Section 132 of IT Act. However, the ITAT held that the applicant erred in permitting the assessee to urge such a new ground.
6. Another contention highlighted by Shri Khurana relates to the respondents undue haste and non-application of mind, and referred to para 4.13 of the OA to submit that the issuance of the Charge Memo preceded by undue haste without due application of mind which was evident from the fact that the note/report submitted by D.I. (Vig.) South being of 15.03.2012, thereafter all authorities right upto the Disciplinary Authority just signed without adding anything more. This resulted in giving go by to the normal procedure. In this regard support has been drawn from the case of one Ajit Kumar Singh, Joint Commissioner of Income Tax, perusal of which would reveal the normal procedure in such cases which would include first the approval of the Disciplinary Authority for the initiation of minor/major proceedings, thereafter only, a draft charge memo would have been prepared and submitted for the approval of the Disciplinary Authority. In the present case, it is contended that there has been the approval of both initiation of the disciplinary case and approval of the charge memo at the same time. This short circuiting process, it is contended, violates the prescribed procedure, which should be treated as a procedural infirmity and in support of this contention, reliance was placed on the decision of Honble Apex Court in the matter of Zenit Malaplast versus State of Maharashtra [(2009)-10-SCC-388].
7. Yet another ground was advanced to state that reasonable opportunity to file written statement of defence was not granted to the applicant. Shri Khurana submits that this ground has not been controverted by the respondents that the applicant made a request for supply of copies of documents to enable him to file written statement of defence. Till it was done, it was not possible to file a response to the events which took place years ago. He contends that the reliance by the respondents on para 21.2 of Chapter X of the Vigilance Manual to decline the aforesaid request is misplaced on account of the authoritative pronouncement of the Honble Apex Court in the matter of State of Punjab versus V.K. Khanna [(2001)-2-SCC-330].
8. The learned senior counsel submits that the question of jurisdiction goes to the root of the matter and can be raised at anytime in any proceeding. The applicant in holding this view is supported by the judgment of the Honble Apex Court in the matter of Sabitri Devi versus Sarat Chandra Rout [(1996)-3-SCC-301]. Even if the applicant was wrong in his view, it was a boanfide view and could not be subject matter of disciplinary proceedings for lack of devotion to duty.
9. In support of the above contentions, learned counsel of the applicant referred to a catena of decisions. The copies of the judgments which were provided to us during the hearing are (i) D.P. Kar versus Union of India [OA No. 447/2001 decided on 22.09.2011] by Cuttack Bench of this Tribunal; (ii) Inspector Prem Chand versus Govt. of NCT of Delhi [(2007)-4-SCC-566]; (iii) Ramesh Chander Singh versus High Court of Allahabad [(2007)-4-SCC-247]; (iv) P.C. Joshi versus State of Uttar Pradesh [AIR 2001 (SC) 2788]; (v) Zanjarro Bhikaji Nagarkar versus Union of India [(1999)-7-SCC-409]; (vi) Union of India versus K.K. Dhawan [(1993)-2-SCC-56]; and (vii) P.S. Teji versus Union of India [(2009)-12-SCC-577]. Further, while distinguishing the judgments relied on by the respondents, during the course of arguments, Shri Khurana would submit that those were misplaced for the reasons that in all those cases the Tribunal took into consideration the defence of the charged officer and determined the correctness or otherwise of the charges. This is not the case of the present applicant, who states that taking the allegations in the charge memo as true in their entirety, no misconduct is made out. Further, the contention of the respondents that charge memo cannot be quashed at the threshold is also misplaced in view of the following judgments already cited by him, where the proceedings were quashed at the stage of issuance of the charge memo: State of Punjab versus V.K. Khannas case (supra); Zunjarno Bhikaji Nagarkars case (supra) and Union of India versus Vineet Ohri [WP(C) 7914/2009 decided by Delhi High Court on 01.05.2009). In view of his above contentions, the learned senior counsel of the applicant urges to allow the OA.
10. On receipt of the notice from the Tribunal, the respondents have entered appearance and have filed the reply affidavit through the learned Senior Central Government counsel Sh. R.N. Singh. Mr. Singh would submit that the applicant has challenged the chargesheet dated 26.04.2012 and at this interlocutory stage the powers of the Tribunal being limited, the Original Application deserves to be dismissed. However, referring to the contentions raised by the learned senior counsel for the applicant, he would submit that at this interlocutory stage there is no grievance of the applicant as he would be provided adequate opportunity as prescribed under the law to defend himself before the Inquiry Officer and, therefore, he does not suffer from any penalty and the charge memo is only a tentative view of the Disciplinary Authority and there is no cause of action on which the Tribunal should interfere in the matter. He further submits that the disciplinary procedure involves full and fair opportunity to the applicant at various stages which also includes consultation with independent advisory bodies like Central Vigilance Commission (CVC) and Union Public Service Commission (UPSC). Therefore, the applicant is not justified at this nascent stage of the disciplinary proceeding in seeking the intervention of the Tribunal. He further submits that the Original Application is not maintainable as there is no cause of action. It is trite law that issuance of Notice/Memorandum being not a final order the challenge to the Chargesheet and subsequent enquiry would be regulated by the complete set of rules and instructions and the applicant would have abundant opportunity to defend himself. He, therefore, submits that since no cause of action has arisen to the applicant, Tribunal cannot invoke its powers of judicial review. In support of the above contention, he places his reliance on the judgments of Honble Apex Court in the matters of Union of India and Another versus Ashok Kacker [1995 (Supp.) (1) SCC 180]; Union of India versus Upender Singh [JT 1994 (1) SC 658]; Union of India versus Kuni Setty Satyanarayana [2007(1)SCT 452]; State of Punjab and Others versus Ajit Singh [ 1997(11) SCC 368] and DIG of Police versus K. Swaminathan [1996 (11) SCC 498].
11. Refuting the allegation of framing charges after inordinate delay, Mr. Singh would submit that after receipt of the Secret Note the concerned officers have processed the same and within the shortest possible time, the Competent Authority has come to a view to take disciplinary action by framing charges against the applicant. No prejudice has been caused in the process and as such the time consumed in framing the charges against the applicant and allegation that the charge memo has been issued just before his retirement would not support the case of the applicant. He places his reliance on the judgment of Honble Apex Court in the matter of State of Andhra Pradesh and Others versus V. Appala Swamy [2007 (1) SCALE 1] and of Honble High Court of Delhi in the matter of MCD versus R.V. Bansal [2006(130) DLT 235]. Mr. Singh has further relied on the judgment of Honble Apex Court in the matter of Union of India and Others versus Swathi S. Patil [Civil Appeal No. 3881 of 2007 arising out of SLP(C) No. 17417 of 2006] where Honble Supreme Court has held as under:-
We are unable to countenance with the above extracted reasoning recorded by the High Court whether there exists sufficient and cogent material to sustain the articles of charge or not, should not be decided by the court at the stage of framing of the charges. The articles of charge can be established by the evidence only during the course of inquiry without being inquired into by an inquiry officer and without recording any finding whether the article of charge has been sustained or not either by oral inquiry or documentary evidence, it was not open for the High Court to come to the conclusion at the stage of framing of charges that no material is forthcoming to establish the charges. Mr. Singh would submit that the Honble High Court of Mumbai in its judgment in the matter of Union of India versus Benoy Gupta has held that the Honble Tribunal was not justified in quashing the Memorandum of Charge issued to the applicant without waiting for the outcome of the findings of the disciplinary authority in the disciplinary proceedings initiated against the officer.
12. In view of the above, Shri R. N. Singh would submit that all the contentions and grounds taken by the applicant and the judgments relied on by the learned Senior Advocate do not come to the rescue of the applicants claim. Therefore, he urges that the Original Application has been filed at a very premature stage with no cause arising against the applicant and without availing the appropriate opportunity to defend himself before the Disciplinary Authority the applicant has rushed to the Tribunal. He, therefore, submits that the Original Application is fit to be dismissed.
13. Having heard the above submissions of the parties, with the assistance of their counsel we have carefully perused the pleadings as well as the relied on judgments. We would refer to the ratio laid in those judgments which would be relevant in adjudicating the issues arising in the present OA. In order to avoid burdening of the judgment, we would not be in a position to refer to a catena of judgments relied on by both the parties.
14. The controversies for our consideration and determination are:
Whether the applicant has been charged on the decision taken by him as a quasi-judicial authority while discharging quasi-judicial functions and whether the issue of Charge Memo is legally sustainable?
Whether there are procedural infirmities in issuing the impugned charge memo against the applicant?
Can the ground of delay be justified to quash and set aside the charge memo?
15. We may advert to the first issue i.e. whether the CIT (A) is quasi-judicial authority and discharges the quasi-judicial functions? Associated issue is: Whether decisions taken by CIT (A) can be treated as misconduct and the concerned officer is liable to disciplinary action? The CIT (A) hears the appeal preferred to it on the issues related to the Income Tax against the orders passed by the other subordinate authorities. Against the orders of the CIT (A), appeal lies to ITAT. As per the Income Tax Act, there are definite hierarchical authorities to hear appeal on the issues raised by respective aggrieved parties. The Income Tax Act also provides that the affected individuals/companies/assesses as well as the Government can appeal against such orders. All such appeals are heard and judicially decided by granting opportunities to the relevant parties. The procedure adopted in Income Tax appeals may not be 100% judicial proceedings but the basic principle of judicial proceeding is followed as the authorities concerned discharge the quasi-judicial functions under the statutory provisions of the Income Tax Act. After a careful perusal of the relevant provisions of the Income Tax Act and various judgments of Honble Supreme Court, we are of the considered views that CIT (A) is a quasi-judicial authority and the concerned CIT (A) discharges the quasi-judicial functions.
16. In this regard, we find that a similar case has been decided by the Honble Supreme Court. Though, the said case relates to the Central Excise, but the issue of quasi-judicial authority and quasi judicial functions under Central Excise Act and under Income Tax Act being the same or similar, we would like to refer to the law laid by the Honble Supreme Court in Civil Appeal No. 4294 of 1999 (arising out of S.L.P. (C) No. 15452 of 1998) in the matters of Zunjarrao Bhikaji Nagarkar Vs. Union of India and Others [1999 -7-SCC-409] under Central Excise Rules, 1944 Rule173q; Section 11ac of the Central Excise Act, 1944 and Rule14 of Central Civil Services (Classification Control And Appeal) Rules, 1965 where two principal issues arose for the consideration of Honble Supreme Court: (1) if levy of penalty under Rule 173-Q was obligatory and (2) was there enough background material for the Central Government to form a prima facie opinion to proceed against the officer on the charge of misconduct on his failure to levy penalty under Rule 173-Q. Relevant issue for the instant OA is about the negligence amounting to misconduct and the same was addressed by the Apex Court in the aforesaid judgment. Before we dwell on this specific issue it is appropriate to provide brief factual background of the case. The Appellant Zunjarrao Bhikaji Nagarkar was posted as Collector of Central Excise, Nagpur in the year 1995. [Collector is now called Commissioner]. He was served with a memorandum dated September 2, 1997 under Rule 14 of the Central Civil Services (Classification, Control and Appeal) Rules, 1965 informing him that the President proposes to hold an inquiry against him on the allegation that he favoured M/s. Hari Vishnu Packaging Ltd., Nagpur (assessee) by not imposing penalty on it under Rule 173-Q of the Central Excise Rules, 1944 when he passed an order in Original No. 20/95 dated March 2, 1995 holding that the assessee had clandestinely manufactured and cleared the excisable goods willfully and evaded the excise duty and had ordered confiscation of the goods. The appellant approached Mumbai Bench of this Tribunal challenging the proposed inquiry in OA No. 250 of 1998 on March 18, 1998. While admitting the application the Tribunal granted interim relief and stayed the disciplinary proceedings against the appellant and however, the OA was dismissed by order dated August 12, 1998 with the result the interim order stood vacated. Immediately thereafter the appellant filed a writ petition in the Bombay High Court,WP No. 4717 of 1998 which was dismissed in limine by a Bench of the High Court by order dated September 7, 1998 and the appellant assailed the same in Hon'ble Supreme Court in appeal by filing Special Leave Petition and while issuing notice on the petition interim stay was granted. Section 33 of the Act gives powers to Central Excise authorities to adjudicate. Under this Section 'where by the rules made under the Act anything is liable to confiscation or any person is liable to a penalty, such confiscation or penalty may be adjudged without limit, by a Commissioner of Central Excise'. In exercise of powers conferred by Section 33 of the Act the appellant held adjudication proceedings against the assessee and two others. A show-cause notice was issued to the assessee on four grounds asking him to show-cause as to why central excise duty of Rs.4,81,950/- be not recovered from him under Rule 9(2) read with proviso to Section 11-A of the Act and why not 95,000 numbers and 25,500 numbers of HDPE bags seized in transit and from its factory premises be confiscated and why penalty be not imposed on it under Rule 173-Q of the Rules. After examining the evidence on record and hearing the assessee the appellant by his order in Original No. 20 of 1995 passed the order (i)confirming the excise duty of Rs.3,57,000/- on 25,500 Nos. of HDPE Woven sacks removed by Noticee-1 clandestinely under Rule 9(2) of the Central Excise Rules, 1994 read with proviso to Section 11-A of the CESA, 1944 (ii) confiscating 95,000 bags cleared clandestinely by Noticee-1 and seized on 16-1-1994 and as the goods had been released provisionally on execution of bond for the full value of the goods and cash security of Rs. 1 Lakh and as the goods were not available for confiscation, Rs. 10,000/-were appropriated in lieu of confiscation; and (iii) ordered confiscation of 'L' shaped 25,500 Nos. of HDPE woven sacks valued at Rs. 1, 27,500/- under Rule 173Q of C. Ex. Rules, 1944. by however, allowing the goods to be redeemed on payment of Rs. 10,000/- Under Section 35-B of the Act an appeal lies to the Customs, Excise and Gold (Control) Appellate Tribunal (Appellate Tribunal) against a decision or order passed by the Commissioner of Central Excise as an adjudicating authority. Powers have been conferred on the Central Board of Excise and Customs (Board) under Section 35-E of the Act to pass certain orders. By order dated February 26, 1996 made under Section 35-E of the Act Board directed the appellant to file appeal to the Appellate Tribunal to determine whether his order in Original No. 20/95 dated March 20, 1995 against the assessee was correct, legal and proper and whether the appellant ought to have imposed penalty. Accordingly appeal was filed before the Appellate Tribunal which, it was stated to be pending. In answer to these pleas raised by the appellant Mr. Harish Chandra, learned senior advocate for the Union of India submitted that there was sufficient material to proceed against the appellant and that the CAT and the High Court were right in not interfering in the disciplinary proceedings at the very threshold. He said the appellant would have the opportunity to defend himself in the proceedings which have been initiated against him. The appellant having failed in the CAT and High Court approached the Apex Court in the said civil appeal. The law laid by the Honble Apex Court in the said case is worth reproduction below:
40. When we talk of negligence in a quasi judicial adjudication, it is not negligence perceived as carelessness inadvertence or omission but as culpable negligence. This is how this Court in State of Punjab v. Ram Singh Ex-Constable ((1992) 4 SCC 54) : (1992 AIR SCW 2595 : AIR 1992 SC 2188) interpreted "misconduct" not coming within the purview of mere error in judgment, carelessness or negligence in performance of the duty. In the case of K. K. Dhawan (1993 (2) SCC 56) : (1993 AIR SCW 1361 : AIR 1993 SC 1478 : 1993 Lab IC 1028), the allegation was of conferring undue favour upon the assessees. It was not a case of negligence as such. In Upendra Singh's case (1994 (3) SCC 357) : (1994 AIR SCW 2777), the charge was that he gave illegal and improper directions to the assessing officer in order to unduly favour the assessee. Case of K. S. Swaminathan (1996 (11) SCC 498), was not where the respondent was acting in any quasi judicial capacity. This Court said that at the stage of framing of the charge the statement of facts and the charge-sheet supplied are required to be looked into by the Court to see whether they support the charge of the alleged misconduct. In M. S. Bindra's case (1998 (7) SCC 310) : (1998 AIR SCW 2918 : AIR 1998 SC 3058 : 1998 Lab IC 3491) where the appellant was compulsorily retired this Court said that judicial scrutiny of an order imposing premature compulsory retirement is permissible if the order is arbitrary or mala fide or based on no evidence. Again in the case of Madan Mohan Choudhary (1999) 3 SCC 396 : (1999 AIR SCW 648 : AIR 1999 SC 1018), which was also a case of compulsory retirement this Court said that there should exist material on record to reasonably form an opinion that compulsory retirement of the officer was in public interest. In K. N. Ramamurthy's case (1997) 7 SCC 101 : (1997 AIR SCW 3677 : AIR 1997 SC 3571), it was certainly a case of culpable negligence. One of the charges was that the officer had failed to safeguard Government revenue. In Hindustan Steel Ltd.'s case (AIR 1970 SC 253), it was said that where proceedings are quasi judicial penalty will not ordinarily be imposed unless the party charged had acted deliberately in defiance of law or was guilty of conduct contumacious or dishonest or acted in conscious disregard of its obligation. This Court has said that the penalty will not also be imposed merely because it is lawful so to do. In the present case, it is not that the appellant did not impose penalty because of any negligence on his part but be said it was not a case of imposition of penalty. We are, however, of the view that in a case like this which was being adjudicated upon by the appellant imposition of penalty was imperative. But then, there is nothing wrong or improper on the part of the appellant to form an opinion that imposition of penalty was not mandatory. We have noticed that Patna High Court while interpreting Section 325, I.P.C. held that imposition of penalty was not mandatory which again we have said is not a correct view to take. A wrong interpretation of law cannot be a ground for misconduct. Of course it is a different matter altogether if it is deliberate and actuated by mala fides.
41. When penalty is not levied, the assessee certainly benefits. But it cannot be said that by not levying the penalty the officer has favoured the assessee or shown undue favour to him. There has to be some basis for the disciplinary authority to reach such a conclusion even prima facie. Record in the present case does not show if the disciplinary authority had any information within its possession from where it could form an opinion that the appellant showed 'favour' to the assessee by not imposing the penalty. He may have wrongly exercised his jurisdiction. But that wrong can be corrected in appeal. That cannot always form basis for initiating disciplinary proceedings for an officer while he is acting as quasi judicial authority. It must be kept in mind that being a quasi judicial authority, he is always subject to judicial supervision in appeal.
42. Initiation of disciplinary proceedings against an officer cannot take place on an information which is vague or indefinite. Suspicion has no role to play in such matter. There must exist reasonable basis for the disciplinary authority to proceed against the delinquent officer. Merely because penalty was not imposed and the Board in the exercise of its power directed filing of appeal against that order in the Appellate Tribunal could not be enough to proceed against the appellant. There is no other instance to show that in similar case the appellant invariably imposed penalty.
43. If, every error of law were to constitute a charge of misconduct, it would impinge upon the independent functioning of quasi judicial officers like the appellant. Since in sum and substance misconduct is sought to be inferred by the appellant having committed an error of law, the charge-sheet on the face of it does not proceed on any legal premise rendering it liable to be quashed. In other words, to maintain any charge-sheet against a quasi judicial authority something more has to be alleged than a mere mistake of law, e.g., in the nature of some extraneous consideration influencing the quasi judicial order. Since nothing of the sort is alleged herein the impugned charge-sheet is rendered illegal. The charge-sheet, if sustained, will thus impinge upon the confidence and independent functioning of a quasi judicial authority. The entire system of administrative adjudication where under quasi judicial powers are conferred on administrative authorities, would fall into disrepute if officers performing such functions are inhibited in performing their functions without fear or favour because of the constant threat of disciplinary proceedings.
44. Considering whole aspects of the matter, we are of the view that it was not a case for initiation of any disciplinary proceedings against the appellant. Charge of misconduct against him was not proper. It has to be quashed.
17. The above judgment of Honble Apex Court is fully applicable in the facts and circumstances of the present OA. Let us examine as to what has happened in case of the applicant. He has been CIT (Appeal) and decided more than 300 cases over a specified period of time and like his counterpart in the Central Excise he has passed the orders following the proper procedure. The decision arrived at by him may be a mistake in law or error in law but the same cannot be the basis for taking disciplinary action against him as the respondents/disciplinary authority have not pointed out any malafide, question of integrity/dishonesty and no nexus has been established between him and the decision the applicant has taken in those four cases. In the absence of any malafide intention and with no linkage of dishonest action of the applicant, the decision taken by him cannot be considered to be lack of devotion to duty, nor it can be called to be lack of integrity and unbecoming of a government servant. The quasi-judicial authority has to function independently, transparently and should not be biased either by the views of the Government or by the views of the affected parties. In order to ensure that the CIT (A) functions as an independent quasi-judicial authority he has to be free from the fear or favour impact/effect. If there is fear of suffering a disciplinary action in case his decision goes against the Government, no quasi-judicial authority can function independently, fairly and in a transparent manner. As the Honble Supreme Court has held in the judgment referred to above, the CIT (A)-a quasi judicial authority has to be protected against the fear of proceeding against the disciplinary cases on decision taken by him, unless the same can be attributed to be the result of malafide/arbitrary action and with certain dishonest motive. In the instant case, there is no iota of dishonest motive and question on the applicants integrity. The charge memo does not reveal that the decision taken by the applicant was based on certain malafide or arbitrary action. At best the Disciplinary Authority can attribute negligence against the applicant but even that negligence in discharging the quasi judicial functions cannot be treated as illegality and misconduct for which the applicant should face disciplinary action.
18. Now the question arises - whether a quasi judicial order if found to be wrong, can be the basis to treat the quasi judicial authoritys decision as misconduct? Let us examine what constitutes misconduct under CCS (Conduct) Rules.
19. The Hon'ble Supreme Court observed in the case of M. M. Malhotra Vs. Union of India [2005 -8-SCC-351] that the range of activities which may amount to acts which are inconsistent with the interest of public service and not befitting the status, position and dignity of a public servant are so varied that it would be impossible for the employer to exhaustively enumerate such acts and treat the categories of misconduct. "It has, therefore, to be noted that the word "misconduct" is not capable of precise definition. But at the same time though incapable of precise definition, the word "misconduct" on reflection receives its connotation from the context, the delinquency in performance and its effect on the discipline and the nature of the duty. The act complained of must bear a forbidden quality or character and its ambit has to be construed with reference to the subject-matter and the context wherein the term occurs, having regard to the scope of the statute and the public purpose it seeks to serve."
20. In view of the well settled legal position, we are of the considered view that the applicant as CIT (A) functioned as quasi-judicial authority and discharged quasi-judicial functions. Further, in the absence of any alleged link of the applicant with malafide motive, arbitrary action and question of his integrity, we opine that he is not liable to disciplinary action.
21. Hon'ble Supreme Court made clear distinction between quasi judicial and administrative decisions in Dev Singh Vs. Registrar, Punjab and Haryana High Court[1987 -3-SCC-169] and held that only where the authorities are required to act judicially either by express provisions of the statute or by necessary implication that the decisions of such an authority would amount to a quasi judicial proceeding.. In the instant OA the applicant acted as per the expressed provisions of the statute as the CIT (Appeal). Hence his decision is quasi judicial decision.
22. The issue arises whether the decision taken by the applicant in his quasi judicial capacity has been binding one or merely advisory, deliberative, investigatory or conciliatory in character. We note that decision taken by him was final and binding and the affected party was entitled to appeal before the ITAT against his orders and in fact in those four cases there were appeals to the ITAT. Hence in our opinion he discharged the duties mandated to him as quasi judicial authority. In this context we draw support from the judgment of the Honourable Apex Court in Automotive Tyre Manufacturers Association Vs. Designated Authority [2011-1-SCALE-149] where the Supreme Court outlined one of the ingredients and the attributes of a quasi-judicial authority holding that it must render a binding decision, and if its decision is merely advisory, deliberative, investigatory or conciliatory in character, which has to be confirmed by another authority before it becomes binding, then such a body is administrative in character. Thus, following the above dicta we are of the considered views that applicant's decision in all those cases being binding in nature he as CIT (Appeal) has exercised the powers of a quasi judicial authority.
23. The Hon'ble Apex Court in Siemens Engineering and Manufacturing Co. of India Ltd. Vs. Union of India [AIR1976 SC 1785] has held that where an authority makes an order in exercise of a quasi-judicial function it must record its reasons in support of the order it makes. Every quasi-judicial order must be supported by reasons. It must be noted that if courts of law were to be replaced by administrative authorities and tribunals it is essential that administrative authorities and tribunals should accord fair and proper hearing to the persons sought to be affected by their orders and give sufficiently clear and explicit reasons in support of the orders made by them. The rule requiring reasons to be given in support of an order is like the principle of audi alteram partem, a basic principle of natural justice which must adhere to the quasi-judicial process. It is seen from the pleadings in which charges find place that the applicant has followed the quasi judicial process. His ultimate views may not be upheld by the higher judicial fora but he cannot be faulted to have circumvented the prescribed quasi judicial decision making process. In this regard he passed the test that his decision followed the quasi judicial process.
24. The second issue relates to the grounds taken by the applicant on procedural infirmities. It is admitted fact that the initiation of disciplinary proceeding and issue of charge memo have been decided together by the competent authority in one process. The prescribed procedure envisages that the Disciplinary Authority has to decide as to whether any disciplinary action is called for on the alleged misconduct and once such a decision is taken by the Disciplinary Authority, the independent agency like CVC is consulted to seek its independent advice. Once the CVC agrees with the Disciplinary Authority, the charges are framed against the delinquent official and the same is again submitted to the competent authority for approval. The said procedure has been prescribed for proper application of mind by the Disciplinary Authority. The inputs that come between the first and second stage of decision making might guide the Disciplinary Authority to take an informed decision before the charge memo is issued. In the instant case, the decision of the disciplinary authority on both (i) the initiation of disciplinary proceeding and (ii) issue of charge memo against the applicant have been done in one go. There is no dispute about this fact. To the extent such a combined process has been adopted, there is a procedural infraction.
25. At this stage, it would be appropriate to note that initiation of disciplinary proceedings and issue of the charge memo has originated from a Secret Note given by the Reporting Officer raising certain doubts on the applicants integrity. There is a prescribed procedure to be adopted on such Secret Note to be taken on record in the Annual Confidential Report of the Government employee. Such a Note needs to be properly enquired into after which the Government servant is given an opportunity to defend himself and thereafter a proper decision is to be taken by the competent authority on such a Secret Note to be kept on ACR or not. A careful perusal of the pleadings does not disclose that any enquiry was conducted to find out the veracity and truthfulness of such Secret Note. Though the procedural lapse in this regard is of an innocuous nature, yet when the applicant gets prejudiced and affected by the issue of a charge memo on the basis of the said Secret note, non-adoption of proper procedure is definitely an infirmity. Therefore, we are of the firm view that not following the proper procedure by the competent authority in processing the Secret Note is an incurable procedural infirmity.
26. An associated issue that comes up for our consideration is that the applicant is a superannuated/retired official. The disciplinary action and issue of charge memo has been under the CCS (CCA) Rules and deemed to have been proceeded against him under the CCS (Pension) Rules. In case of Rule 9 of CCS (Pension) Rules a retired government officer can be proceeded against only on the grounds of grave misconduct or grave negligence or both. In the instant case, the respondents have not been in a position to demonstrate that the charges framed against the applicant involved grave misconduct or grave negligence. On this ground also, the charge memo is liable to be quashed.
27. In respect of the third issue that whether the delay has occurred in framing the charges and that can be the ground to quash the charge memo, we note that within the shortest possible period the charge memo has been issued. Thus, there is no delay in initiating disciplinary action and issue of charge memo. This ground so strongly advanced by the Senior Advocate for the applicant does not convince us at all. Hence, the said contention is rejected.
28. Considering the totality of facts and circumstances of the case and guided by the law laid by the Honble Supreme Court, we are of the considered opinion that the applicant discharged the quasi-judicial function in the position of a quasi-judicial authority i.e. CIT (A). His action or error in law or mistake in law cannot be attracted to proceed against him treating the same as misconduct. As stated within, the law laid by the Honble Supreme Court is extremely clear and binding. The quasi-judicial authorities are to function independently without fear or favour. The fear of facing disciplinary action in case the decision goes against the Government cannot be brought in the mind of such quasi-judicial authorities. We are, therefore, of the considered opinion that the applicants action being of quasi-judicial nature and having acted as a quasi-judicial authority, his decisions in those four cases, wherein no malafide, arbitrariness or question of integrity has been raised, cannot be treated as misconduct.
29. We are aware that the Tribunals power is limited to interfere at the stage of charge memo but when the charge memo has been issued against a quasi judicial authority discharging quasi judicial function, the Tribunal has power to interfere with such charge memo. The Tribunal cannot interfere only if there is ulterior motive, malafide intention and arbitrary action or allegation of dishonestly/corrupt motive in taking such decisions. In the absence of such ingredients, the Tribunal has the authority to quash the charge memo.
30. In this context, we place our reliance on the judgment of the Honble Apex Court in Union of India Vs. Kunisetty Satyanarayana [2006-12-SCC-28]. In the said case while allowing appeal the Honble Supreme Court considered the issue whether in writ petition quashing of charge sheet or show cause notice is a discretionary remedy and if so whether such discretion should not ordinarily be exercised by quashing a show cause notice or charge-sheet as the same does not infringe the right of anyone but held that in some very rare and exceptional cases the High Court can quash a charge sheet or show-cause notice if it is found to be wholly without jurisdiction or for some other reason if it is wholly illegal. We reproduce below the pertinent paragraphs which would guide us in the instant OA:.
"13. It is well settled by a series of decisions of this Court that ordinarily no writ lies against a charge sheet or show-cause notice vide Executive Engineer, Bihar State Housing Board vs. Ramdesh Kumar Singh and others JT 1995 (8) SC 331, Special Director and another vs. Mohd. Ghulam Ghouse and another AIR 2004 SC 1467, Ulagappa and others vs. Divisional Commissioner, Mysore and others 2001(10) SCC 639, State of U.P. vs. Brahm Datt Sharma and another AIR 1987 SC 943 etc.
14. The reason why ordinarily a writ petition should not be entertained against a mere show-cause notice or charge-sheet is that at that stage the writ petition may be held to be premature. A mere charge-sheet or show-cause notice does not give rise to any cause of action, because it does not amount to an adverse order which affects the rights of any party unless the same has been issued by a person having no jurisdiction to do so. It is quite possible that after considering the reply to the show-cause notice or after holding an enquiry the authority concerned may drop the proceedings and/or hold that the charges are not established. It is well settled that a writ lies when some right of any party is infringed. A mere show-cause notice or charge-sheet does not infringe the right of any one. It is only when a final order imposing some punishment or otherwise adversely affecting a party is passed, that the said party can be said to have any grievance.
15. Writ jurisdiction is discretionary jurisdiction and hence such discretion under Article 226 should not ordinarily be exercised by quashing a show-cause notice or charge sheet.
16. No doubt, in some very rare and exceptional cases the High Court can quash a charge-sheet or show-cause notice if it is found to be wholly without jurisdiction or for some other reason if it is wholly illegal. However, ordinarily the High Court should not interfere in such a matter."
31. In view of the above authoritative and binding pronouncement of Honble Apex court and considering the facts of the present case and reasons given within, we are of the opinion that the impugned charge memo dated 26.04.2012 (Annexure A-1) is liable to be quashed. We order accordingly. Resultantly, the applicant would be entitled to all his retiral dues as admissible under the law.
32. In terms of our above orders and directions, the Original Application having merits is allowed. There is no order as to costs.
(Dr. Ramesh Chandra Panda) (Syed Rafat Alam) Member (A) Chairman /pj/