IN THE HIGH COURT OF JUDICATURE AT MADRAS Dated : 10..01..2008 Coram The Honourable Mr.Justice P.K. MISRA and The Honourable Mr.Justice K.CHANDRU W.P. No. 11433 of 2001 and W.M.P. No. 16562 of 2001 1. Union of India Rep. by Secretary to Government Ministry of Finance Department of Revenue New Delhi 2. Member Personnel and Vigilance Central Board of Excise and Customs New Delhi 3. The Commissioner of Central Excise & Customs 6/7 A.T.D. Street Race Course Road Coimbatore ... Petitioners -vs- 1. P. Parameswaran 2. The Registrar Central Administrative Tribunal Chennai ... Respondents Petition under Article 226 of the Constitution of India praying to issue a writ of Certiorari calling for the records of the Tribunal relating to the order dated 21.7.2000 in O.A. No. 678 of 1999 and quash the same. For Petitioner : Mr. T.S. Rajamohan, ACGSC For Respondent 1 : Mr. S. Mani ORDER
(Order of the Court was made by K.CHANDRU, J.) Heard the arguments of Mr. T.S. Rajmohan, learned Additional Central Government Standing Counsel representing the petitioner and Mr. S. Mani, learned counsel appearing for the first respondent and have perused the records.
2. Aggrieved by the order dated 21.7.2000 passed by the Central Administrative Tribunal [for short, 'CAT'] in O.A. No.678 of 1999, the Union of India and two other subordinate authorities have filed the present writ petition. The first respondent was employed as Superintendent of Central Excise at Komarapalayam Range, Erode from 01.5.1995 to 11.7.1996. While discharging his duties as Range Officer, in respect of the monthly returns submitted by P.K.P.N. Spinning Mills Private Limited from July 1995 to February 1996, it was alleged that he failed to issue show cause notice for the short levy of duty required to be paid by the assessee on revision of prices for the sale from the depot and for the goods removed for own use for which the factory gate prices were not available. The first respondent made only an endorsement in the RT 12 Assessment Form for each month and informed the assessee that they were liable to pay differential duty of Rs.27,30,692-. Since the assessee did not pay the differential duty, they were not issued with show cause notice as per the instructions of the Customs and Central Excise Board. It was also alleged that in terms of Rule 173-C(4) of the Central Excise Rules, an obligation is caused on the Assessing Officer (first respondent) and that he did not follow the said rule. The said assessee filed 8 appeals before the Commissioner of Appeals each one for every month and four appeals were decided on merits. The Appellate commissioner held that the demands made in the RT-12 assessment suffered from the vice and violation of principle of natural justice as the demand cannot be made by a mere endorsement in the RT-12. Since no notice was issued within the limitation period, the impugned order was set aside. This, according to the petitioners resulted in considerable loss to the Department and, therefore, disciplinary proceedings were initiated under Rule 16 of the CCS (CCA) Rules imposing minor penalty in respect of the charge memoranda dated 02.4.1997 and 29.8.1997 for the two sets of assessment period.
3. After considering the reply of the first respondent and as he did not seek for any enquiry, a consolidated final order dated 05.02.1999 was passed imposing the recovery of the entire loss from the pay and other sums due to the applicant as per Rule 11(iii) of the CCS (CCA) Rules. The first respondent filed an appeal dated 12.02.1999 before the Member of the Central Board of Excise and Customs. In the appeal addressed to the President of India as there was no interim order, the 1/3rd basic pay of the first respondent was deducted towards the loss. Aggrieved by the same, the first respondent filed O.A. No. 322 of 1999 before the CAT and the CAT granted a stay of recovery and directed the disposal of the appeal. Pursuant to the same, the appeal was taken up and was rejected by an order dated 14.7.1999. But the penalty was modified to that of 1/3rd recovery from the salary for the period of three years instead of the recovery of entire 27 lakhs. Once again, the first respondent filed another application being O.A. No. 678 of 1999 challenging the said order.
4. Before the CAT, the first respondent took up the stand that as an Assessing Officer under the Central Excise Act, he was discharging a quasi judicial function and that he had passed orders only after considering the relevant aspects of the case and also after referring to the binding precedents in that regard. He also stated that when that order came to be reversed by the appellate authority or by any other higher authority, no disciplinary action can be taken only on the ground of wrong interpretation of law. Even the appellate authority did not find that there was any mala fide intention on the part of the first respondent and, therefore, there was no negligence on his part. Before the CAT, the first respondent also relied upon the judgment of the Supreme Court reported in 1999 (7) SCC 409 [Zunjarrao Bhikaji Nagarkar v. Union of India and others] to contend that the Government has no right to initiate disciplinary action on an information which is vague and indefinite and that suspension has no role to play in such matter. It was also contended that wrong interpretation of law cannot be a ground for misconduct. In the absence of any deliberate act or any action actuated by mala fides, no such action can be taken.
5. Even before this Court, reliance was placed on the following passage found in paragraphs 40, 42 and 43 of the Nagarkar's case (cited supra) were pressed into service.
Para 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. Ex-Constable Ram Singh interpreted misconduct not coming within the purview of mere error in judgment, carelessness or negligence in performance of duty. In the case of K.K. Dhawan the allegation was of conferring undue favour upon the assessees. It was not a case of negligence as such. In Upendra Singh case the charge was that he gave illegal and improper directions to the assessing officer in order to unduly favour the assessee. The case of K.S. Swaminathan 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 case 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 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 case 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. case 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 he 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 the Patna High Court while interpreting Section 325 IPC 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."
Para 42: "Initiation of disciplinary proceedings against an officer cannot take place on 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."
Para 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 whereunder 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."
6. However, Mr. T.S. Rajamohan, learned Additional Central Government Standing Counsel representing the petitioners contended that such a blanket immunity cannot be available even in respect of a Government officer discharging quasi-judicial functions and if his action results in any negligence thereby causing loss to the State, the same can be recovered as provided under the relevant Service Rules.
7. It must be noticed that the order of the CAT was based entirely upon the judgment of the Supreme Court in Nagarkar's case (cited supra) which was considered to be contrary to the view expressed in Union of India v. K.K.Dhawan [1993 (2) SCC 56] by a subsequent three Judges Bench in Union of India and others v. Duli Chand [2006 (5) SCC 680]. The relevant passage found in paragraph 9 of the Duli Chand's case (cited supra) is as follows:
Para 9: "In our opinion, Nagarkar case was contrary to the view expressed in K.K. Dhawan case . The decision in K.K. Dhawan being that of a larger Bench would prevail. The decision in Nagarkar case therefore does not correctly represent the law. Inasmuch as the impugned orders of the Tribunal and the High Court were passed on the law enunciated in Nagarkar case this appeal must be allowed."
8. In the light of the above, it is relevant to refer to the decision rendered by the three Judges Bench in K.K. Dhawan's case (cited supra) wherein it was noted that the view that no disciplinary action could be initiated against an officer in respect of judicial or quasi-judicial functions was wrong. It was further said that the officer who exercises judicial or quasi-judicial powers acting negligently or recklessly could be proceeded against by way of disciplinary action. The Court listed six instances when such action could be taken and the relevant passage found in paragraph 28 of the judgment is extracted below:
Para 28: "( 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;
( v ) if he had acted in order to unduly favour a party;
( vi ) if he had been actuated by corrupt motive, however small the bribe may be because Lord Coke said long ago though the bribe may be small, yet the fault is great.
9. In fact, subsequently, K.K. Dhawan's case was to be considered by the Supreme Court in Government of Tamil Nadu v. K.N. Ramamurthy [1997 (7) SCC 101] wherein the Supreme Court set aside the order of the Tribunal in quashing the punishment of an officer, who was discharging judicial function by observing that the order of the Tribunal was contrary to several decisions of the Supreme Court.
10. In normal course, we would have had no hesitation in setting aside the order of the Tribunal on the strength of the order of the three Judges Bench of the Supreme Court in Duli Chand case (cited supra). But, however, subsequent to the Duli Chand case, the Supreme Court in two occasions had considered the effect of the Nagarkar's case.
11. In Ramesh Chander Singh v. High Court of Allahabad and another [2007 (4) SCC 247, the Nagarkar's case came to be considered. Speaking for the three Judges Bench, K.G. Balakrishnan, CJ observed in paragraph 12 of the judgment as follows:
Para 12: "This Court on several occasions has disapproved the practice of initiation of disciplinary proceedings against officers of the subordinate judiciary merely because the judgments/orders passed by them are wrong. The appellate and revisional courts have been established and given powers to set aside such orders. The higher courts after hearing the appeal may modify or set aside erroneous judgments of the lower courts. While taking disciplinary action based on judicial orders, the High Court must take extra care and caution."
12. In the same judgment, while referring to Nagarkar's case, in paragraph 17, it was observed as follows:
Para 17: "In Zunjarrao Bhikaji Nagarkar v. Union of India this Court held that wrong exercise of jurisdiction by a quasi-judicial authority or mistake of law or wrong interpretation of law cannot be the basis for initiating disciplinary proceeding. Of course, if the judicial officer conducted in a manner as would reflect on his reputation or integrity or good faith or there is a prima facie material to show recklessness or misconduct in discharge of his duties or he had acted in a manner to unduly favour a party or had passed an order actuated by corrupt motive, the High Court by virtue of its power under Article 235 of the Constitution may exercise its supervisory jurisdiction. Nevertheless, under such circumstances it should be kept in mind that the Judges at all levels have to administer justice without fear or favour. Fearlessness and maintenance of judicial independence are very essential for an efficacious judicial system. Making adverse comments against subordinate judicial officers and subjecting them to severe disciplinary proceedings would ultimately harm the judicial system at the grassroot level."
But, however, there was no reference to Duli Chand's case in this decision.
13. Once again, another two Judges Bench in Inspector Prem Chand v. Government of NCT of Delhi and others [2007 (4) SCC 566] considered the decision in Nagarkar's case. While referring to Nagarkar's case, the Supreme Court in paragraph 15 observed as follows:
Para 15: "A finding of fact was arrived at that the accused did not make demand of any amount from the complainant and thus no case has been made out against him. This Court in Zunjarrao Bhikaji Nagarkar v. Union of India has categorically held:
42. Initiation of disciplinary proceedings against an officer cannot take place on 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.
14. Once again, in this matter also, there is no reference to the earlier three Judge Bench judgment in Duli Chand's case. However, since Nagarkar's case was found to be contrary to the earlier judgment of the Supreme Court in K.K.Dhawan case wherein the Supreme Court had laid down six instances under which a Government servant discharging quasi-judicial function can be proceeded in a disciplinary action (which have been already extracted). We will have to apply those facts also in the present case. But the subsequent judgment in Ramesh Chander Singh case (cited supra), K.G.Balakrishnan, CJ had referred to Nagarkar's case and quoted it with approval. Ultimately, the decisions will have to be applied depending on the fact situation of each case.
15. Therefore, if the decisions in K.K.Dhawan case, Nagarkar case, Duli Chand case, Ramesh Chander Singh case and Inspector Prem Chand case are read together, it is necessary that before initiating disciplinary action, the Department must have a prima facie material to show recklessness and that the officer had acted negligently or by his order unduly favoured a party and his action was actuated by corrupt motive. In fact, K.G. Balakrishnan, CJ in Rameh Chander Singh's case even took an exception to the practice of initiating disciplinary action against Officers merely because the orders passed by them were wrong.
16. If all these tests are cumulatively applied, the Tribunal in the present case had correctly found that there was no mala fide motive on the part of the first respondent in passing the order and that a Government servant cannot be punished for a wrong interpretation of law. In the light of the above discussion, we feel that the CAT has correctly understood the scope of judicial review and has set aside the order of recovery passed against the petitioner.
17. Under these circumstances, the writ petition will stand dismissed. We find from the records that this Court did not grant any stay of the order of the Tribunal pending the writ petition. Therefore, we presume that no recovery has been made from the salary of the first respondent. Even otherwise, if any such recoveries were made, the petitioners are directed to refund the same to the first respondent within a period of eight weeks from the date of receipt of a copy of this order. However, there will be no order as to costs. Connected Miscellaneous Petitions are closed.
gri To The Registrar Central Administrative Tribunal Chennai.