CENTRAL ADMINISTRATIVE TRIBUNAL PRINCIPAL BENCH OA 736/2010 New Delhi, this the 23rd day of April, 2010 HONBLE MR. L.K.JOSHI, VICE CHAIRMAN (A) HONBLE DR. DHARAM PAUL SHARMA, MEMBER (J) Ashish Abrol, Joint Commissioner of Income Tax, Delhi R/o D-112 Jal Vayu Towers, Sector 56 Gurgaon Applicant (By Advocate: Shri G.D. Gupta, senior counsel with Shri S.K. Sinha) Versus 1. Union of India through The Secretary, Ministry of Finance, Department of Revenue, North Block, New Delhi-110001 2. Director General of Income Tax (Vigilance), Dayal Singh Public Library Bldg., 1, Deen Dayal Upadhyaya Marg, New Delhi-110002 Respondents (By Advocate: Shri R.N. Singh) ORDER
Mr. L.K.Joshi, Vice Chairman (A) Mr. Ashish Abrol, an officer of the Indian Revenue Service (IRS), Income Tax (IT), of 1993 batch possesses abundant intellectual capabilities, as can be glimpsed from his record, should have been poised for success in his career. He, however, finds himself thwarted by a disciplinary proceeding initiated in 2004 for actions of 1995-96 and still lingering on in spite of the Applicant having submitted reply to the inquiry officers report on 18.12.2007. We are called upon to answer the following issues:
(i) What is the effect of delay in the issuance of the Memorandum of charges and delay in completion of the proceedings?
(ii) Whether action could have been initiated against the Applicant while passing an order of assessment in quasi-judicial proceedings?
Whether the Tribunal can and should intervene at a stage when the report of the inquiry officer has been given and the Applicant has participated in the proceedings so far?
2. The Applicant has been overlooked for promotion to the post of Additional Commissioner, for which he was due with effect from 1.01.12006. Junior officers of subsequent three batches of 1994, 1995 and 1996 have been promoted between the years 2006 to 2009. The Applicant was nominated for the Prime Ministers Award for Excellence in Public Administration, given on 21st April every year on Civil Services Day. His name has been dropped from consideration because of the pendency of disciplinary proceedings. The Annual Confidential Report (ACR) of the Applicant for the year 2008-09 has been placed on record, in which he has been graded as `Outstanding and his integrity has been certified as beyond doubt. He has won several commendations including Golden Icon award from the Department of Administrative Reforms and Public Grievances.
3. By Memorandum dated 12.02.2004, the following charges were communicated to the Applicant, for which it was proposed to proceed against him for major penalty proceedings:
Article 1 That the said Shri Ashish Abrol, while working as Deputy Commissioner of Income-tax, Circle-1, Margao, allowed incorrect deduction u/s.80HHC while completing assessment in the case of M/s Narcissus Investments Private Limited, Vasco, Goa, for the Asst. Year 1995-96, thus causing revenue loss to the extent of Rs.91,65,264/- and conferring consequent benefit upon the assessee.
By his above act, Sh. Abrol failed to maintain absolute integrity and devotion to duty and thereby violated the Rules 3(1) (i) and 3(1) (ii) of the CCS (Conduct) Rules, 1964.
Article II That during the aforesaid period and while functioning in the aforesaid office, the said Shri Ashish Abrol with ulterior motive abandoned the investigation which he had started, on the right lines, in the case of M/s Narcissus Investments Private Limited, Vasco, Goa for the Asst. Year 1995-96.
By the above act, Sh. Abrol failed to maintain absolute integrity and devotion to duty and thereby violated the Rules 3(1) (i) and 3(1) (ii) of the CCS (Conduct) Rules, 1964.
Article III That during the aforesaid period and while functioning in the aforesaid office, the said Shri Ashish Abrol completed the assessment in the case of M/s Narcissus Investments Private Limited, Vasco, Goa for the Asst. Year 1995-96 without charging capital gains on the sale of shares, and thus conferred undue benefit upon the assessee.
By his above act, Sh. Abrol failed to maintain absolute integrity and devotion to duty and thereby violated the Rules 3 (1) (i) and 3(1) (ii) of the CCS (Conduct) Rules, 1964.
4. The inquiry officer by his report dated 14.03.2006 took the sting out of the charges by holding that the charge of lack of integrity and acting with ulterior motives had not been proved. The disciplinary authority disagreed and note of disagreement was sent on 15.11.2006 to the Applicant after eight months of the report of the inquiry officer. The Applicant submitted his reply within one month on 18.12.2007. That is where the matter rests.
5. On 5.03.2010, while issuing notice to the Respondents, the Tribunal passed the following order:
Inter alia contends that the assessment order, subject matter of disciplinary proceedings against the applicant, was passed by him in quasi judicial capacity and the order has been upheld in appeal. The enquiry officer returned the finding in favour of the applicant with the observation that there was no malafide involved but disciplinary authority recorded a note disagreeing with the report of the enquiry officer. In the interregnum applicant has been ignored for promotion thrice and it is also coming in the way of Prime Minister Award being conferred on the applicant.
We have heard the learned counsel for the applicant and with his assistance perused the record of the case. It seems that during his service career the applicant has been decorated with number of awards. It is unfortunate that the Prime Minister Award is declined to the applicant only because of departmental proceedings pending against him, which, as mentioned above, pertained to an assessment order made by the applicant years ago and was upheld in appeal too. That being so, ad interim, we order that applicant may not be ignored for the Prime Minister Award only because of pending departmental enquiry.
Issue notice to the respondents returnable on 19.03.2010.
Process DASTI. By order dated 26.03.2010, further proceedings in the departmental inquiry were stayed.
6. On completion of training after his selection in IRS (IT), the Applicant was posted as Assistant Commissioner of Income Tax, Circle 1, Margao, Goa in June 1995. The Applicant dealt with the case of M/s Narcissus Investments Pvt. Ltd. for scrutiny in March 1996. Section 80 HHC of the Income Tax Act provides for deduction to the extent of profit in case of goods or merchandise would be allowed cent-per-cent. The assessee entered into a contract for sale of shares with International Finance Corporation (IFC), an arm of the World Bank. The assessee took clearance from the Reserve Bank of India (RBI) for export of shares under Sections 19 (1) (a) and 19 (1) (d) of the Foreign Regulations Act for transfer of shares to a non-resident and to export these shares. Copies of RBIs approval have been placed at Annex A-4 (colly). The Applicant asked for detailed explanation from the assessee. The notice, which the Applicant gave to the assessee was, however, not made a part of documents in the departmental proceedings and not supplied to the Applicant. A detailed reply of the assessee has been placed at Annex A-5. The Applicant called for the records of the assessee and also wrote to the RBI for clarification, which was received and which is placed at Annex A-6. The Applicant allowed the deduction after satisfying himself and put a detailed note also on the file. An internal audit team raised an objection in its report dated 21.01.1999 about the aforesaid assessment by holding that the assessee was not in the export of any goods or merchandise as mentioned in Section 80 HHC of the Income Tax Act and that purchase of shares in India and sale of shares outside India does not fall under the category of export business for claiming deduction under Section 80 HHC ibid. The report went on to say that deduction of Rs. 1,21,99,796.00 allowed in the assessment was not in order. The audit assessed the `total tax effect as Rs. 91,65,264.00. On 15.03.1999, the Applicant submitted a detailed reply to the observations of the audit. While replying to the objections of the audit the Applicant also recorded a note suggesting remedial action under Section 263 or Section 143 ibid. The reply to the note of the audit and the note of the Applicant are placed at Annex A-8 (colly). The Commissioner (Appeals), however, cancelled the order under Section 143 (3) read with Section 147 ibid on the ground that reopening in the case on change of opinion on the same factual and legal issues was not supported by law. This view of the Commissioner (Appeals) was upheld by the Income Tax Appellate Tribunal by its order dated 3.08.2007.
7. In the above conspectus the learned senior counsel has raised the following contentions.
(i) The impugned Memorandum of charge was issued nearly eight years after the assessment. The Memorandum was undated and only later in a corrigendum dated 24.03.2007, the date of 12.02.2004 was given. Even the audit objection was given in January 1999, yet no action was initiated. No explanation for the delay has been given by the Respondents. The Applicant had given his reply to the show cause notice in March 2004. Yet, in spite of utmost cooperation from the Applicant, the inquiry took two years to complete. The inquiry officer gave his report on 14.03.2006. It took eight months for the disciplinary authority to communicate the report of the inquiry officer, with his note of disagreement to the Applicant. Although the Applicant submitted his representation to the note of disagreement and the inquiry officers report, yet the matter has remained without any resolution even after two years. The Applicant has suffered humiliation by being superseded by not only his batchmates but by officers two batches junior to him. His name was not considered for the Prime Ministers Award for Excellence, only because of pendency of the disciplinary proceedings. The Respondents have failed to give any credible explanation for this delay. The Applicant is being subjected to serious harassment in spite of performing his duties most conscientiously, as would be evidenced by the ACR of 2008-09, adverted to earlier. Important documents, which would have facilitated the Applicants defence were not made available. This was admitted by the Presenting Officer in his letter dated 3.01.2006 to the inquiry officer. The learned senior counsel has brought the following paragraph from the above said communication to our notice:
3. Inadequacy in respect of non-providing of inspection of documents as mentioned by the CO in his written statement of defense and also non-availability of documents which I have sought from the CCIT, Goa has to be taken into account while concluding the inquiry proceedings. The inquiry officer has also quoted the submissions of the Presenting Officer thus:
1. At the outset, I refer to the letter of the Charged Officer Shri Ashish Abrol dated 21.6.2005 addressed to the Inquiry Officer seeking for inspection of the additional documents which were made available during the course of preliminary inspection but did not form the part of the records shown by the undersigned during the course of inspection. His request for production and inspection of these additional documents could not be complied with due to non-availability of the same. These documents are as under:
Notice u/s 142 (1) of the I.T. Act and assesses reply dated 31.12.1996.
RBIs letter dated 4.8.94.
RBIs letter dated 22.09.1994.
Deptt. of Economic Affairs, Ministry of Finance, Govt. of Indias letter dated 3.6.1994.
RBIs letter dated 29.5.97.
RBIs letter dated 29.5.97 and 16.5.1997.
Ministry of Finance letter dated 3.7.1994.
RBIs letter dated 21.9.1994 The Inquiry Officer had also requisitioned the above documents vide his letter dated 2.8.2005 written to the Chief CIT, Goa on the basis of request made by the undersigned but the same remained unattended which has resulted in a severe grievance by the Charged Official. This severe grievance has been referred to in para 1 (A) of his written brief. It has been contended by his that he has not been provided with the copy of notice u/s 142 (1) in response to which the assessee filed letter dated 31.12.1996 but a simple notice u/s 142 (1) is produced for inspection which does not contain the specific queries raised by him. It is also contended by him that the letter dated 21.9.1994 is also not provided for inspection which was obtained by him during the course of assessment proceedings. In absence of such important documents, he has proceeded further to defend his case on the basis of available documents..
In view of the above facts of non-availability of complete and relevant records, the inquiry proceedings are requested to be completed on the basis of the available documents as the possibility of their production is not visible in the near future. This has seriously prejudiced the case of the Applicant.
(ii) The inquiry officer has absolved him of the charge of lack of integrity in the discharge of his duty and having any ulterior motive. Even the presenting officer has admitted as much as would become apparent from the observation of the inquiry officer in his report that:
To summarise, the Presenting Officer has not objected to the bona fide nature of the actions taken by the charged official in the proceedings U/S 143(3) of the IT Act. With regard to each of the Articles of charge the inquiry officers observations have been brought to our notice. The relevant observation of the inquiry officer in regard to Article I of the Charge reads thus :
.From the evidences placed before me it has not been adequately proven that the Charged Official has failed to maintain absolute integrity. Under the circumstances, it appears that Shri Ashish Abrol failed to maintain devotion to duty by his above act and has, therefore, violated the Rule 3(1)(ii) of the CCS (Conduct) Rules 1964. Thus the charge framed under Article-1 of the charge sheet regarding lack of devotion to duty can be upheld in respect of violation of Rule 3 (1)(ii) of the CCS (Conduct) Rules 1964. However in the absence of any evidence, the Charged Official can be absolved of the charge framed in respect of not maintaining absolute integrity and it is held that he has not violated Rule 3(1)(i) of the CCS (Condcut) Rules 1964.
While the inquiry officer has held that the charge of not maintaining absolute integrity has not been adequately proved, the charge of abandoning the investigation due to ulterior motives has also been punctured thus :
From the evidences placed before me it has not been adequately proved that Shri Ashish Abrol had acted with any ulterior motive while adjudicating the claim put up by the assessee. He did not abruptly abandon the investigation which he had started in midway, but had obtained the final compliance from the assessee and has passed a speaking order u/s 143(3). It is a fact that the decision taken by him in allowing the deduction u/s 80HHC is legally incorrect. However, neither any ulterior nor mala fide intention is found in his action. He has continued the investigations to the end. Though he had taken a technically and legally incorrect decision, on the culmination of the inquiries, it does not appear that he had any ulterior motive to take such a decision. The Presenting Officer also has not questioned the bona fide nature of the decision taken by the Charged Official. Hence, it appears that the Charged Official needs be absolved of the charge of lack of absolute integrity framed against him under Article-II of the charge sheet.
Therefore, as discussed in length in sub-paragraph(A) above, the Charged Official can be found to be guilty of failing to maintain devotion to duty and thus having violated Rule 3(1) (ii) of the CCS (Conduct) Rules 1964.
Regarding the charge against the Charged Official in respect of ulterior motive, the charge is not proven and he can be absolved of the charge framed in respect of not maintaining absolute integrity and, therefore, it can be held that he has not violated Rule 3 (1)(i) of the CCS (Conduct) Rules, 1964.
The Applicants stand for not charging capital gains on the sale of shares, which is the gravamen of Article III of the charge. The findings in this regard, which have pointedly been brought to our notice are reproduced below :
From the evidences placed before me it is seen that the act o fShri Ashish Abrol by not charging capital gains on the transfer of the shares had been a bona fide one. It is also relevant that his successor in office, who had taken a remedial action on this Audit Objection, had also not charged Capital gains on the transfer of the shares and, instead, assessed it as Income from business. Hence it is incorrect to hold that not charging Capital Gains on the transfer of shares and, instead, taxing the same as Income from business has prejudicially affected the interests of Revenue and had, therefore, resulted in an undue benefit to the assessee.
Moreover, it is not proven that he had acted with any ulterior motive or mala fide intention. The Presenting Officer, also, has not found anything mala-fide in the act of the Charged Official on this count.
Under the circumstances, the Charged Official can absolved of the charges contained in Article-III of the charge sheet. It is fervently argued that the disciplinary authority has failed to repel the findings of the inquiry officer, quoted above, in his note of disagreement. The disciplinary authority has only pointed to legal errors according to his interpretation, but has not even tried to rebut the conclusion regarding the charge of non maintaining integrity and ulterior motives held to be not proved by the inquiry officer. While the note of disagreement is totally inadequate of these grounds, the further argument is that it is vitiated by the fact that instead of being tentative, as required under Rule 15 (2) of the CCS (CCA) Rules, 1965, it is final expression of guilt by the disciplinary authority. By consciously recording that the disciplinary authority held all articles of charges as fully proved, the disciplinary authority has shown that his mind has already been made up.
(iii) The charge that the Applicant abandoned the right course of inquiry with ulterior motives is not maintainable at all. The aspect of ulterior motive has been dealt with in favour of the Applicant by the inquiry officer and not rebutted by the disciplinary authority, is the contention on Applicants behalf. The learned Senior Counsel would contend that the facts of the case, as already noted above, would show that the Applicant went to great lengths to make inquiries by giving notice to the assessee and writing to the RBI and obtaining their reply. He had recorded a detailed note also. It is unfortunate and a pointer to serious flaw in the inquiry that neither his letter to RBI nor his note on the file of assessment have been made available to him. The only other course of action the disciplinary authority has pointed as not having been adopted is not approaching his senior officer for guidance. The disciplinary authority failed to take note of the order of ITAT regarding upholding of Comissioner (Appeal)s order.
(iv) The Applicant was acting in quasi judicial capacity and could not have been proceeded against. It is pointed out that the Department of IT, Panaji, Goa had sought legal opinion on this issue. The advocate, who gave his opinion recorded thus :
Section 80 HHC clearly refer to an Assessee engaged in the business of export out of India of any goods. The word goods is not defined either in the IT Act or the General Clauses Act, hence one has to refer to the Sale of goods Act 1930. Section 2 (7) of the sale of Goods Act, defines goods to include shares. Hence the words goods in section 80HHC includes shares in its sweep. Similarly section 2(22) of the Customs Act, 1962, defines goods to include any other kind of movable property. Shares certainly are a kind of movable property and thus goods under the Customs Act also.
..The Assessee has also obtained RBI and FERA clearance before entering into the transaction of sale with the foreign buyer. As such no malafides could be imputed to the Assessee. Further, the Assessee could certainly rely on the report issued by the Accountant, to claim deduction under section 80HHC under the law. The Department s allegation of malafides could be successfully, repelled by relying on the report of the Accountant, who is the Authority to issue such report under section 80 HHC (4).
The contention of the ITO, that in view of Explanation (aa) to section 80HHC, the present transaction does not satisfy the requirement of the Customs clearance and hence cannot be termed as export out of India, is unjustifiable in law. The explanation (aa) seek to clarify that export out of India, shall not include certain transactions in India not involving clearance at any Customs station. It only clarifies certain transactions as not export, carving out understood by the ITO. The word export used in section 80 HHC has wider import and has to be understood in its context considering the purpose of granting benefit u/s 80 HHC. It cannot be restrictive in nature as against the clarification sought in Explanation (aa) which has been introduced w.e.f. 1/4/1986, by the Parliament to plug the loopholes in the Act, since there was possibility that the goods after purchase may not be exported at all and yet the benefit may be claimed. It is an exception carved out from the Main provision of Section 80 HHC. This view has been expressed by the Allahabad High Court in decision reported in 222 ITR 606 (Ram Babu V/s UOI & Ors.) It therefore does not mean that those transactions whereby goods are exported out of India, which does not require Customs clearance under the law are taken out of purview of section 80HHC. In the present case, fact remains, that share are good, which are sold to a foreign company but no customs clearance is required because what is sent out are only share certificates after obtaining permission from the RBI and FERA clearance. What is important is that the foreign exchange has been earned in the transaction. Hence, it amounts to export as contemplated under section 80HHC.
Reliance has been placed on Zunjarrao Bhikaji Nagarkar Vs. Union of India & Ors., (1999) 7 SCC 409, Ramesh Chandra Singh Vs. High Court of Allahabad and Anr., (2007) 4 SC 247 and Inspector Prem Chand Vs. Government of NCT of Delhi, (2007) 4 SCC 566. Judicial precedents of Union of India and others Vs. Dolly Saxena, 2001 (60) DRJ 43 (DB), Arindam Lahiri Vs. Union of India and Ors., arising out of WP(C) No.13640/2006 decided on 20.03.2009 by the Honourable Delhi High Court and Union of India Vs. V.P. Parameswaran, judgment of Honourable Madras High Court in WP (C) Nos.11433/2001 and 16592/2001.
7. The learned counsel for the Respondents has vehemently opposed the case of the Applicant. We have noted the arguments of the learned counsel hereinbelow :
(i) It is contended at the outset that the challenge to the Memorandum of charge dated 12.02.2004 is barred by limitation. If the plea of the Applicant regarding delay in the service of the charge-sheet or delay in completing the inquiry is considered then the Applicants delay in challenging the Memorandum dated 12.02.2004 has equal, if not greater, force.
(ii) The Application is premature inasmuch as the proceedings have been completed to the stage of obtaining the charged officers representation against the report of the inquiry officer and the note of disagreement. The Applicant, having voluntarily participated in the inquiry, has no reason to approach the Tribunal, when the inquiry has nearly been completed. He has the right to approach the Tribunal against the order of the disciplinary authority. The Applicant should not assume that the order of the disciplinary authority would necessarily go against him.
(iii) The delay in completing the inquiry after the submission of the representation of the Applicant against the report of the inquiry officer and the note of disagreement of the disciplinary authority is due to the administrative procedure. The Respondents have to consult various authorities like the CVC and the UPSC and have to obtain the approval of the Finance Minister, which are time consuming. The delay, it is pointed out, has been explained in paragraph 6 of the counter affidavit, which reads thus :
6. That before a decision could be taken on acceptance or otherwise of the advice of the CVC, the comments of the applicant were called upon the report of the IO, the DAs disagreement thereon and CVCs advice. The comments of the applicant were filed by him on 18.12.2007. Subsequent to this, in accordance with approval of FM obtained on 22.1.2009, a reference has been made to UPSC to solicit their statutory advice on 15.2.2010. The UPSC has advised the respondent to resubmit the reference along with authenticated documents, i.e., prosecution documents mentioned in Annexure-III and copies of disagreement memo dated 15.11.2007.
(iv) The disciplinary authority has amply applied his mind to the relevant issue in the note of disagreement and passed a reasoned order. The Tribunal should not interfere at this stage.
(v) Insofar as the case of Arindam Lahiri (supra) is concerned, it would not help the Applicant as in that case final order of punishment had been passed by the Respondents, whereas in the case in hand final order has not been passed. Nagarkar (supra) case would also be of no avail to the Applicant as the Honourable Surpeme Court has held in Union of India Vs. Duli Chand, (2006) SCC (L&S) 1186 that the decision in Nagarkars case does not correctly represent the law.
(vi) Advertence has been made to State of Punjab and Others Vs. Ajit Singh, (1997) 11 SCC 368 and particularly to paragraph 3, which is reproduced below :
3. We do not find any ground to interfere with the judgment of the High Court insofar as the quashing of the order of suspension is concerned. We are, however, of the view that the High court was in error in setting aside the charge-sheet that was served on the respondent in the disciplinary proceedings. In doing so the High court has gone into the merits of the allegations on which the charge-sheet was based and even though the charges had yet to be proved by evidence to be adduced in the disciplinary proceedings. The High court, accepting the explanation offered by the respondent, has proceeded on the basis that there was no merit in the charges levelled against the respondent. We are unable to uphold this approach of the High court. The allegations are based on documents which would have been produced as evidence to prove the charges in the disciplinary proceedings. Till such evidence was produced it could not be said that the charges contained in the charge-sheet were without any basis whatsoever. Reliance has also been placed on Union of India Vs. Kunnysetty Satyanarayana, 2006 (12) SCC 28 to contend that the Tribunal/Courts should not interfere with the charge sheet. It is strenuously urged that the Tribunal cannot go into the question of guilt or otherwise of the delinquent on the basis of material supplied. This is the subject-matter of inquiry. Reliance has been placed on Union of India and Others Vs. Upendra Singh, (1994) 3 SCC 357, Union of India Vs. Ashok Kacker, 1995 Supp (1) SCC 180 and Municipal Corporation of Delhi and Anr. Vs. R. V. Bansal, 130 (2006) DLT 235 (DB).
(vii) It is urged that in case of delay in issuing the charge sheet, the delinquent should raise the question of prejudice before the inquiry officer, as held by the Honourable Supreme Court in Government of A.P. Vs. Appala Swamy, (2007) 14 SCC 49.
(viii) Citing Registrar of Cooperative Societies, Madras and Another Vs. F.X. Fernando, (1994) 2 SCC 746, it is contended that the Respondents cannot be blamed if delay is due to agencies like the CVC and the UPSC, over which the Respondents have no control.
(ix) In respect of the Nagarkar case (supra), reliance has been placed on Union of India Vs. K. K. Dhawan, 1993 SCC (L&S) 325, Union of India Vs. Duli Chand, 2006 SCC (L&S) 1186 and Subhash Chandra and Anr. Vs. Delhi Subordinate Service Selection Board, JT (2009) 10 SC 645 to contend that the judgment of a Bench with larger quorum will have precedence over the judgment of a Bench with lesser quorum. It is contended that the Applicants reliance on Nagarkar (supra) will not advance his cause.
8. We shall now consider various judicial precedents on the issues, we are called upon to answer.
9. In so far as the interference with charge sheet or disciplinary proceedings are concerned, the matter came up before the Apex Court in State of Madhya Pradesh Vs. Bani Singh and another, (1991) 16 ATC 514, in which it was held by the Apex Court that delay of 12 years in initiating disciplinary proceedings is too long and it would be unfair to permit the departmental proceeding to be initiated so late in the day. It was held thus:
4. The appeal against the order dt. 16-12-1987 has been filed on the ground that the Tribunal should not have quashed the proceedings merely on the ground of delay and laches and should have allowed the enquiry to go on to decide the matter on merits. We are unable to agree with this contention of the learned counsel. The irregularities which were the subject-matter of the enquiry is said to have taken place between the years 1975-77. It is not the case of the department that they were not aware of the said irregularities, if any, and came to know it only in 1987. According to them even in April, 1997 there was doubt about the involvement of the officer in the said irregularities and investigations were going on since then. If that is so, it is unreasonable to think that they would have taken more than 12 years to initiate the disciplinary proceedings as stated by the Tribunal. There is no satisfactory explanation for the inordinate delay in issuing the charge memo and we are also of the view that it will be unfair to permit the departmental enquiry to be proceeded with at this stage. In any case there are no grounds to interfere with the Tribunals orders and accordingly we dismiss this appeal. (emphasis added)
10. In Secretary to Government, Prohibition & Excise Department Vs. L.Srinivasan, (1996) 3 SCC 157, the State had gone up in appeal before the Honourable Supreme Court against the orders of the State Administrative Tribunal (SAT), which had, inter alia, quashed the memorandum of charge on the ground of delay. The charges pertained to embezzlement and forgery of records. The Apex Court allowed the appeal and quashed the order of the SAT. What weighed with the Apex Court was the nature of the charge and time it would take to investigate it. It was observed thus:
In the nature of the charges, it would take a long time to detect embezzlement and fabrication of false records which should be done in secrecy.
11. Another case of undue delay in initiation of disciplinary proceeding, which the Apex Court dealt with was Food Corporation of India Vs. V.P.Bhatia, JT 1998 (8) SC 16. The Honourable Supreme Court has considered the facts and circumstances of the case to decide whether there was undue delay in serving the memorandum of charge on the Respondent. The Central Bureau of Investigation (C.B.I.) was informed that the appellant corporation had been supplied sub-standard crates. The matter was investigated and it was found that the crates were sub-standard, which had caused loss of nearly Rs.13 lakhs in two cases. In its report submitted on 30.12.1988 the C.B.I. recommended holding of disciplinary proceedings against the employees of the appellant corporation. The CVC then recommended initiation of major penalty proceedings. Memorandum of charge was served on the Respondent in September 1990 and the enquiry commenced. The Respondent before the Apex Court, V.P.Bhatia, filed a writ petition before the High Court, which was allowed. The High Court held that the appellant corporation should not have waited for the report of the CBI and should have initiated inquiry straightaway when the misconduct was detected in 1987 itself. The High Court also observed that there was delay even after the submission of report by the C.B.I. in 1988 because the enquiry was initiated only in 1990. In paragraph 4 of its judgment, the Honourable Supreme Court, inter alia, observed thus:
4. It is no doubt true that undue delay in initiation of disciplinary proceedings may cause prejudice to the employee concerned in defending himself and, therefore, the courts insist that disciplinary proceedings should be initiated with promptitude and should be completed expeditiously. (emphasis supplied).
However, in the same paragraph it was further observed that:
.. The question whether there is undue delay in initiation of disciplinary proceedings or whether they are being unnecessarily prolonged has to be considered in the light of the facts of the particular case. In this case, the appellant, Food Corporation of India, brought it to the notice of the Apex Court that Chapter III of Volume I of the Vigilance Manual of the CVC, as adopted by the appellant, mandated that once an enquiry is entrusted to the C.B.I., departmental enquiry should be held in abeyance till such time as the investigation by the CBI has been completed. It is in this context, the Honourable Supreme Court held that no fault could be found with the Corporation in waiting for the investigation report of the C.B.I. In the memorandum of the charge also the Corporation had to place reliance on 69 documents and 44 witnesses. The Supreme Court observed thus:
Having regard to the alleged misconduct and the fact that large number of documents and statements of witnesses had to be looked into it cannot be said that the period of slightly more than one year taking in serving the charge memos after recommendation of the Central Vigilance Commission is unduly long. In these circumstances and facts, the Apex Court held that there was no undue delay and allowed the appeal.
12. Yet another case of undue delay in serving the memorandum of charge is State of Andhra Pradesh Vs. N.Radhakrishnan, JT 1998 (3) SC 123. The Respondent in this case, an Assistant Director of Town and Country Planning under the appellant, had challenged his not being promoted as Director Town and Country Planning on account of three memoranda of charges pending against him, which were dated 31.07.1995, 27.10.1995 and 1.06.1996. It was urged before the State Administrative Tribunal that memoranda of charge dated 27.10.1995 and 1.06.1996 were subsequent to the date of meeting of the D.P.C. and could not, therefore, be taken into consideration. The memorandum dated 31.07.1995 related to the incidents of 1978, 1979 and 1984. In this context, while considering the delay in serving the memorandum of charge, the Apex Court observed thus in paragraph 19 of its judgment:
19. It is not possible to lay down any pre-determined principles applicable to all cases and in all situations where there is delay in concluding disciplinary proceedings. Whether on that ground the disciplinary proceedings are to be terminated each case has to be examined on the facts and circumstances in that case. The essence of the matter is that the court has to take into consideration all relevant factors and to balance and weigh them to determine if it is in the interest of clean and honest administration that the disciplinary proceedings should be allowed to terminate after delay particularly when delay is abnormal and there is explanation for delay. The delinquent employee has a right that disciplinary proceedings against him are concluded expeditiously and he is not made to undergo mental agony and monetary loss when these are unnecessarily prolonged without any fault on his part in delaying the proceedings. In considering whether delay has vitiated the disciplinary proceedings the court has to consider the nature of charge, its complexity and on what account the delay has occurred. If the delay is unexplained prejudice to the delinquent employee is writ large on the face of it. It can also be seen as to how much disciplinary authority is serious in pursuing the charges against its employees. It is the basic principle of administrative justice that an officer entrusted with a particular job has to perform his duties honestly, efficiently and in accordance with the rules. If he deviates from this path he is to suffer penalty prescribed. Normally, disciplinary proceedings should be allowed to take its course as per relevant rules but then delay defeats justice. Delay causes prejudice to the charged officer unless it can be shown that he is responsible for delay or when there is proper explanation for delay in conducting the disciplinary proceedings. Ultimately the court is to balance these two diverse considerations. (emphasis supplied).
In the judgment quoted above, the Honourable Supreme Court was considering delay, not only in issuing the memorandum of charge but also in concluding the disciplinary proceedings. The principles enunciated in the judgement would also apply to delay in issuing the memorandum of charge only.
13. In the above judgement, the Honourable Supreme Court had also considered the case of State of Punjab and others Vs. Chaman Lal Goyal, (1995) 2 SCC 570. In this case the Honourable High Court of Punjab and Haryana had quashed the memorandum of charge communicated to the respondent as also the order appointing the enquiry officer. This order has been carried in appeal before the Honourable Supreme Court by the State. The respondent before the Supreme Court was Superintendent of Nabha High Security Jail in 1986. He was transferred out and handed over the charge of the above post on 26.12.1986. On the intervening night of 1st and 2nd January 1987, some alleged terrorists lodged in the Jail tried to escape. In the melee, which ensued, two prisoners and one official of the Jail died in a shoot-out. Six alleged terrorists escaped. The Inspector General of Prisons made an enquiry and submitted a report to the Government on 9.01.1987 in which he blamed Chaman Lal Goyal and one other officer for lax administration of the Jail and recommended that action should be taken against them. Thereafter, a memorandum of charge was served on the respondent only on 9.07.1992. An enquiry officer was appointed on 20.07.1993 after the respondent had given his explanation. Chaman Lal Goyal filed a writ petition before the High Court. However, the enquiry was not stayed and it proceeded apace. The writ petition was allowed when the evidence on behalf of the government had been completed. The High Court had quashed the memorandum of charge, inter alia, on the ground of unexplained delay of five-and-a-half years in serving the memorandum of charge. On this point the Honourable Supreme Court held thus:
10. Now remains the question of delay. There is undoubtedly a delay of five and a half years in serving the charges. The question is whether the said delay warranted the quashing of charges in this case. It is trite to say that such disciplinary proceedings must be conducted soon after the irregularities are committed or soon after discovering the irregularities. They cannot be initiated after lapse of considerable time. It would not be fair to the delinquent officer. Such delay also makes the task of proving the charges difficult and is thus not also in the interest of administration. Delayed initiation of proceedings is bound to give room for allegations of bias, mala fides and misuse of power. If the delay is too long and is unexplained, the court may well interfere and quash the charges. But how long a delay is too long always depends on the facts of the given case. Moreover, if such delay is likely to cause prejudice to the delinquent officer in defending himself, the enquiry has to be interdicted. Wherever, such a plea is raised, the court has to weigh the factors appearing for and against the said plea and take a decision on the totality of circumstances. In other words the court has to indulge in a process of balancing. (emphasis supplied).
The Apex Court allowed the appeal mainly on the ground that the charges against the respondent were very grave and second, that the major part of the enquiry had nearly been completed when the High Court quashed the memorandum of charge.
14. The same issue came up for the consideration of the Apex Court in P.V. Mahadevan Vs. M.D., T.N. Housing Board, (2005) 6 SCC 636. The appellant before the Honourable Supreme Court was working as Superintending Engineer in the Tamil Nadu Housing Board. A memorandum of charge was issued on 8.06.2000 for some irregularity in issuing a sale deed in 1990 to an employee of the Housing Board who was to superannuate shortly. It was submitted by the counsel for the appellant that though the records were very much available with the respondent the Tamil Nadu Housing Board, no action was taken against the appellant for ten years. It was also urged before the Apex Court that no explanation whatsoever was offered by the Housing Board for the inordinate delay in initiating the disciplinary proceeding against the appellant. The Honourable Supreme Court placed reliance on its judgements in Bani Singh (supra) and N. Radhakrishnan (supra). The Apex Court also noted the argument on behalf of the appellant that the memorandum of charge was served to block the promotion of the appellant to the post of Chief Engineer of the Housing Board. The explanation of the respondent Board for delay was noted, as follows:
8. Our attention was also drawn to the counter-affidavit filed by the respondent Board in this appeal. Though some explanation was given, the explanation offered is not at all convincing. It is stated in the counter-affidavit for the first time that the irregularity during the year 1990, for which disciplinary action had been initiated against the appellant in the year 2000, came to light in the audit report for the second half of 1994-95.
9. Sections 118 and 119 of the Tamil Nadu State Housing Board Act, 1961 reads thus:
118. At the end of every year, the Board shall submit to the Government an abstract of the accounts of its receipts and expenditure for such year.
119. The accounts of the Board shall be examined and audited once in every year by such auditor as the Government may appoint in this behalf. 10. Section 118 specifically provides for submission of the abstracts of accounts at the end of every year and section 119 relates to annual audit of accounts. These two statutory provisions have not been complied with at all. In the instant case the transaction took place in the year 1990. The expenditure ought to have been considered in the accounts of the succeeding year. In the instant case the audit report was ultimately released in 1994-95. The explanation offered for the delay in finalising the audit account cannot stand scrutiny in view of the above two provisions of the Tamil Nadu Act 17 of 1961. It is now stated that the appellant has now retired from service. There is also no acceptable explanation on the side of the respondent explaining the inordinate delay in initiating departmental disciplinary proceedings. Mr. R. Venkataramani, learned Senior Counsel is appearing for the respondent. His submission that the period from the date of commission of the irregularities by appellant to the date on which it came to the knowledge of the Housing Board cannot be reckoned for the purpose of ascertaining whether there was any delay on the part of the Board in initiating disciplinary proceedings against the appellant has no merit and force. The stand now taken by the respondent in this Court in the counter-affidavit is not convincing and is only an afterthought to give some explanation for the delay.
11. Under the circumstances, we are of the opinion that allowing the respondent to proceed further with the departmental proceedings at this distance of time will be very prejudicial to the appellant. Keeping a higher government official under charges of corruption and disputed integrity would cause unbearable mental agony and distress to the officer concerned. The protracted disciplinary enquiry against a government employee should, therefore, be avoided not only in the interests of the government employee but in public interest and also in the interests of inspiring confidence in the minds of government employee... As a matter of fact, the mental agony and sufferings of the appellant due to the protracted disciplinary proceedings would be much more than the punishment. For the mistakes committed by the department in the procedure for initiating the disciplinary proceedings, the appellant should not be made to suffer. (emphasis added)
15. The process of inquiry itself has been too slow. The Government and its agencies have issued instructions from time to time regarding the need to adhere to time-limits in processing of disciplinary cases. Instructions contained in CVCs Circular No. 000/VGL/18 (Office Order No. 51/08/2004), dated 10th August 2004 state:
2. Delay in decision making by authorities in processing of vigilance cases would also be construed as misconduct under the relevant Conduct Rules and would be made to attract penal action. All administrative authorities are requested to take note and strictly adhere to the prescribed time-limits in dealing with disciplinary cases. The CVC has given time-limits for processing of cases of disciplinary proceedings in its letter No. 000/VGL/18 dated 23rd May 2000, which is reproduced below:-
Sir, Delays in disposal of disciplinary cases are a matter of serious concern to the Commission. Such delays also affect the morale of the suspected/charged employees and others in the organization. The Commission has issued instructions, vide its communication No.8(1)(g)/99(3) dated 03.03.1999, that departmental inquiries should be completed within a period of six months from the date of appointment of Inquiry Officers. Regarding other stages of investigation/inquiry, the time-schedule, as under, has been laid down in the Special Chapters on Vigilance Management in Public Sector Banks/Enterprises, which are applicable to the employees of public sector banks / enterprises. The Commission desires that these time-limits should also be adhered to by the Ministry/Departments of Government of India, autonomous organizations and other Cooperative Societies, in respect of their employees, so as to ensure that the disciplinary cases are disposed of quickly.
S.No. State of Investigation or inquiry Time Limit
1. Decision as to whether the complaint involves a vigilance angle. One month from receipt of the complaint.
2. Decision on complaint, whether to be filed or to be entrusted to CBI or to be taken up for investigation by departmental agency or to be sent to the concerned administrative authority for necessary action.
- do -
3. Conducting investigation and submission of report. Three months.
4. Departments comments on the CBI reports in cases requiring Commissions advice. One month from the date of receipt of CBIs report by the CVO/Disciplinary Authority.
5. Referring departmental investigation reports to the Commission for advice. One month from the date of receipt of investigation report.
6. Reconsideration of the Commissions advice, if required. One month from the date of receipt of Commissions advice.
7. Issue of charge-sheet, if required (i) One month from the date of receipt of Commissions advice.
(ii) Two months from the date of receipt of investigation report
8. Time for submission of defence statement. Ordinarily ten days or as specified in CDA Rules.
9. Consideration of defence statement. 15 (Fifteen) days.
10. Issue of final orders in minor penalty cases. Two months from the receipt of defence statement.
11. Appointment of IO/PO in major penalty cases. Immediately after receipt and consideration of defence statement.
12. Conducting departmental inquiry and submission of report. Six months from the date of appointment of IO/PO.
13. Sending a copy of the IOs report to the Charged Officer for his representation. i) Within 15 days of receipt of IOs report if any of the Articles of charge has been held as proved;
ii) 15 days if all charges held as not proved. Reasons for disagreement with IOs findings to be communicated.
14. Consideration of COs representation and forwarding of IOs report to the Commission for second stage advice. One month from the date of receipt of representation.
15. Issuance of orders on the Inquiry report. i) One month from the date of Commissions advice.
ii) Two months from the date of receipt of IOs report if Commissions advice was not required.
The Department of Personnel & Training issued an office memorandum dated 16.02.2004 on the subject of accountability in decision making and stressed that any officer adopting dilatory attitude, leading to delay in decision making could be subjected to disciplinary proceeding.
16. The sum and substance of the judgments is that :
the competent authority should be able to give an explanation for the inordinate delay in issuing the Memorandum of Charge;
the charges should be of such serious nature, the investigation of which would take a long time and would have to be pursued secretly;
the nature of charges would be such as to take a long time to detect such as embezzlement and fabrication of false records;
if the alleged misconduct is grave and a large number of documents and statement of witnesses had to be looked into, delay can be considered to be valid;
the Court has to consider the nature of charge, its complexity and on what account the delay has occurred;
how long a delay is too long always depends on the facts of the given case;
if the delay is likely to cause prejudice to the Charged Officer in defending himself, the enquiry has to be interdicted; and the Court should weigh the factors appearing for and against the disciplinary proceedings and take a decision on the totality of circumstances. In other words, the Court has to indulge in the process of balancing.
We have gone through the record of the disciplinary proceedings in the file of the Directorate General of Income Tax, made available by the Respondents on our direction. After the submission of the reply of the Applicant on 18.12.2007, the first note for submission to CVC was initiated after ten months on 18.09.2007. The matter was referred to the CVC on 22.10.2007. The advice of the CVC was communicated on 1.11.2007. It took eleven months, thereafter, for further processing and note for Finance Ministers approval on 29.09.2008. It took another three and half months for the Director General (Vigilance) to mark the file to the Prime Minister qua Finance Minister on 13.01.2009. Interestingly, there was no delay in the Prime Ministers office and the file was received back on 22.01.2009. It was sent to the UPSC on 13.02.2010. It is clear that the explanation given for delay in paragraph 6 of the counter affidavit, adverted to above, is mere eye wash and facetious and so is the reliance on F.X. Fernando (supra). The delay is squarely on the part of the Respondents and at this speed final order would be passed only in Greek Calendars.
17. In Kunisetty Satyanarayana (supra), the respondent had secured employment on the basis of forged caste certificate. The Government of Andhra Pradesh declared in February 2001 that the respondent did not belong to ST category. A Memorandum of charge was communicated on 23.12.2003. Instead of replying to the aforesaid Memorandum, the Applicant filed an OA before the Tribunal, which was dismissed. The facts of the case are, therefore, distinct and distinguishable from the instant case. In Upendra Singh (supra), the case before the Honourable Supreme Court was in appeal against the judgment of this Tribunal. The Tribunal had gone into the merits of the charge, when the Memorandum of charge was challenged, on the basis of the material produced by the respondent (Upendra Singh) and quashed the charge. The Honourable Supreme Court quashed the order of the Tribunal on the ground that it cannot take over the functions of the disciplinary authority. We are keenly aware of the limitation of judicial review and appreciate that the Tribunal can neither act as an appellate authority nor can it appropriate the role of the disciplinary authority to decide the case on its merits. We shall refrain from considering the case on its merits. The same ratio was laid down in Ajit Singh (supra) in which the High Court decided the case on merit. In Ashok Kacker (supra), the respondent before the Honourable Supreme Court, the charge was quashed on the ground, which was not even supported by his counsel before the Honourable Court. The only prayer made in the appeal was to remit the case to the Tribunal so that several other grounds submitted by the respondent are considered. As such, no law has been laid down in this case. In R.V. Bansal (supra), the Honourable Delhi High Court accepted the grounds of delay in serving the charge sheet on the basis of explanation furnished by the appellant. Both in Kunnisetty Satyanarayana (supra) and R.V. Bansal (supra), it was held that ordinarily the Courts/Tribunal should not interfere with the charge, but it is not the imperative direction. In so far as Appala Swamy (supra) is concerned, the Applicant has raised the question of prejudice before the inquiry officer. Moreover, the facts of Appala Swamy (supra) are different from the facts of the instant case. A departmental proceeding was started against Appala Swamy on 8.07.1990 for several charges of misconduct. The inquiry officer submitted his report on 8.01.1992. Appala Swamy retired on 30.06.1992. A show cause notice was given to said Appala Swamy as to why 50 per cent of his pension should not be withheld. This order was passed following an interim order dated 18.03.1993 of the Andhra Pradesh Administrative Tribunal in OA No.992 of 1993, which the said Appala Swamy had filed. He replied to the show cause notice on 20.11.1997. During the pendency of the departmental proceedings, he filed an Original Application No.4866 of 2001 before the State Administrative Tribunal. On 17.04.2003, the State Administrative Tribunal directed the State to conclude the inquiry in three months. The State questioned this order before the High Court. The High Court quashed the disciplinary proceedings and directed full payment of pension to Appala Swamy from the date of his retirement. The observation of the Honourable Apex Court is reproduced below :
8. The principal issue which falls for our determination, in view of the rival contentions advanced by the learned counsel appearing on behalf of the parties, is: Whether the High Court was justified in passing the impugned judgment quashing the disciplinary proceedings and issue a direction to the appellant to pay all pension-ary benefits to the respondent herein, only on the ground of delay in concluding the departmental proceedings.
9. The charges made against the respondent are as under:
"Charge-1. That Sri V. Appala Swamy, while working as principal, Govt. Junior College, Kurupam had falsified and tampered with certain records of the college and irregularly drawn the salaries for certain period without being regulated."
Charge-2. That Sri V. Appeala Swamy while working as Principal, Govt. Junior College, Kurupam had misappropriated the funds and committed serious financial irregularities in flagrant violation of rules and regulation thereby, causing pecuniary loss to the Government.
Charge-3. That Sri V. Appeala Swamy while working as Principal, Govt. Junior College, Kurupam was found to be very negligent and highly irresponsible in dis-charging of his duties."
. . .
11. It may be true that there was some delay on the part of the appellants to con-clude the departmental proceedings. The Tribunal did not accept the contention raised on behalf of the respondent that only by reason thereof the entire departmental pro-ceedings became vitiated. The High Court thus, in our opinion, was required to consider the question as to whether, in the facts and circumstances of this case, particularly in view of the nature of the charges levelled against the respondent as also the explanation offered by the appellants in this behalf, it was a case where the entire proceedings should have been quashed. The High Court in its impugned judg-ment did not address itself the said question. It, as noticed hereinbefore, from the very beginning proceeded on the premise that the pension was payable to the re-spondent on his retirement. The High Court furthermore did not determine the ques-tion as to whether a proceeding could have been initiated against the respondent in terms of Rule 9 of the Andhra Pradesh Civil Service (CCA) Rules, 1963. If it is held that the second proceeding was maintainable in terms of the extant rules, ordinarily, the Tribunal or the High Court should not have interfered therewith. This aspect of the matter is concluded by the decisions of this Court in State of Uttar Pradesh vs. Brahtun Dutta Sharma & Ann (1987(2) SCC179) and State Of U.P. & Ors. vs. Hari/iarBhole Nath. (2006 (11) SCALE322).
12. So far as the question of delay in concluding the departmental proceedings as against a delinquent officer is concerned, in our opinion, no hard and fast rule can be laid down therefor. Each case must be determined on its own facts.The principles upon which a proceeding can be directed to be quashed on the ground of delay are:
(1) Where by reason of the delay, the employer condoned the lapses on the part of the employee.
(2) Where the delay caused prejudice to the employee.
Such a case of prejudice, however, is to be made out by the employee before the Inquiry Officer.
.. . ..
14. Learned counsel appearing on behalf of the respondent, however, placed strong reliance on a decision of this Court in M. V. Billani vs. Union of India & Ors., (2006(5) SCC 88). That case was decided on its peculiar facts. In that case, even the basic material on which a departmental pro-ceedings could be initiated was absent. The departmental proceedings was initiated after 6 years and continued for a period of 7 years. In that fact situation, it was held that the appellant therein was prejudiced.
15. Bijlani (supra), therefore, is not an authority and, in fact, as would appear from the decision in P.D. Agrawal (supra), for the proposition that only on the ground of delay the entire proceedings can be quashed without considering the other relevant factors therefor.
16. The High Court did not consider any of the aforementioned aspects. In this case also no ratio has been enunciated by the Honourable Court. It is in peculiar facts of the case that the impugned judgment of the High Court was set aside. It has no application in the instant case, when considered in its entirety and not on the reading of paragraph 12 of the judgment, reproduced above, in isolation, as the learned counsel for the Respondent is doing.
18. In the instant case the assessment order, the subject matter of the departmental proceedings, was passed in 1997. The audit raised its objection in 1999. The Memorandum was issued on 12.02.2004 and inquiry continued for two years. Crucial documents were not given, as admitted by the presenting officer. The Applicant could not have remembered the facts and the reasons recorded in his notings and letters after a lapse of so many years. His defence is surely prejudiced. The proceedings have continued even after the Applicant has given his reply to the inquiry officers report and the note of disagreement, which itself has been considerably delayed. It is clear from the records, as discussed in the preceding paragraphs, that the delay is entirely at the level of the first and the second Respondent. As we have seen, the CVC and the PMO have been prompt and there has been no delay on account of consultation with the CVC or in obtaining the order of Prime Minister qua Finance Minister. No explanation for such leisurely disposal has been given in the counter affidavit and nothing can be derived from the records. The time limit fixed by the DOP&T has been flagrantly violated and then such unconscionable delay is sought to be explained as normal. In the meantime, the Applicant has been superseded by several junior officers. He has missed consideration for the Prime Ministers Award for excellence. It has been stated that meeting of DPC for promotion is likely to be held in the current year in March or April. The Applicant could miss that also and be again superseded. In Food Corporation of India Vs. V.P. Bhatia (supra), already quoted above, the Honourable Supreme Court held that the question whether the disciplinary proceedings are unnecessarily prolonged has to be considered in the light of the facts of the particular case. In State of Andhra Pradesh Vs. N. Radhakrishnan (supra) also the Honourable Supreme Court held that delay defeats justice unless it can be shown that the charged officer is responsible for delay or there is proper explanation for delay. The Tribunal has to balance these diverse considerations. In the OA in hand, it is not the Respondents case that there has been any delay caused by the Applicant. We have already considered the explanation for delay, which we find thoroughly unsatisfactory. The only case of the Respondents is that the Applicant should wait for the final order in the departmental proceedings and that the Applicant cannot assume that the order of the disciplinary authority would be adverse to him. The later argument would be difficult to accept in view of the disciplinary authority stating in the note of disagreement that the charges are fully proved, an advertence to which has been made above.
Rule 15 (2) of the CCS (CCA) Rules, 1965 reads thus :
(2) The Disciplinary Authority shall forward or cause to be forwarded a copy of the report of the Inquiry, if any, held by the Disciplinary Authority or where the Disciplinary Authority is not the Inquiring Authority, a copy o the report of the Inquiring Authority together with its own tentative reasons for disagreement, if any, w ith the findings of Inquiring Authority on any article of charge to the Government servant who shall be required to submit, if he so desires, his written representation or submission to the Disciplinary Authority within fifteen days, irrespective of whether the report is favourable or not to the Government servant. The Honourable Supreme Court in Lav Nigam Vs. Chairman and MD, ITI Ltd. and Another, (2006) 9 SCC 440 has held thus:
10.The conclusion of the High Court was contrary to the consistent view taken by this Court that in case the disciplinary authority differs with the view taken by the inquiry officer, he is bound to give notice setting out his tentative conclusions to the appellant. It is only after hearing the appellant that the disciplinary authority would at all arrive at a final finding of guilt. Once the disciplinary authority has made up his mind, the consideration of the representation of the Applicant is merely post-decisional hearing. We have already discussed how the Applicant has already suffered prejudice in his defence before the inquiry officer due to delay in serving the charge sheet on him and by not making crucial documents available to him in spite of his request. The serious set back caused to the career of the Applicant by wanton delay in deciding the case on the part of the Respondents. We have also seen that the Applicant has been held to be not guilty of having ulterior motives in passing the assessment order, of abandoning the inquiry and lacking in integrity. The disciplinary authority has not repelled the findings of the inquiry officer in his note of disagreement and has only advanced the argument of legal infirmities, yet hold the charges to be fully proved. We find it difficult to agree with the arguments of the learned Counsel for Respondents that the OA is barred by limitation and that the Memorandum of Charge of 12.02.2004 cannot be challenged at this late stage. The law as it has developed and as we have discussed in preceding paragraphs on the basis of the judgments of the Honourable Supreme Court, that challenge to disciplinary proceedings can be mounted on grounds of delay at any stage, as long as final order has not been passed and the challenge to the final order is barred by limitation. There is no final order in this case. The proceedings flowing from the Memorandum of Charge are still continuing because of delay on the part of the Respondents. The Applicant has a continuing cause of action to challenge the delay in the proceedings as well as the Memorandum of charge. We hold that the Application is not barred by limitation and that we can interfere in the proceedings at this stage in judicial review.
19. Reiterating at the cost of repetition that the inquiry officer has held the Applicant to be not lacking in integrity and not abandoning the inquiry and not having ulterior motives while adjudicating the case and that the disciplinary authority has failed to rebut these findings, we proceed to examine, whether in the light of law laid down by the Apex Court disciplinary proceedings could have been initiated against the Applicant, acting in quasi-judicial capacity. The matter has been splendidly considered by the detailed judgment of Honourable Delhi High Court in the case of Arindam Lahiri (supra). The legal position has been so thoroughly and profusely examined that we may reproduce the paragraphs for proper analysis of the case in light of the aforesaid analysis :
23. LEGAL POSITION The petitioner acted in a quasi-judicial authority in passing orders of stay in one case or deciding appeals of certain asses sees, which acts of the petitioner became the basis of serving charge sheet against him, thereby bringing the acts on the part of the petitioner within the ambit of misconduct. It is now well settled principle of law that an officer taking decision in exercise of quasi-judicial function is not immune from disciplinary proceedings. However, it is only the conduct of the officer in dischare of his duties and not correctness or legality of his decision which could be subject to disciplinary action. Various nuances explaining this legal principle can be found in the judgment of the Supreme Court in the case of Union of India & Ors v. K.K. Dhawan, 1993 (2) SCC 56, which has become a classic on this subject. The Supreme Court in that case held that when an officer in exercise of judicial or quasi-judicial powers acts negligently or recklessly or in order to confer undue favour on a person, he is not acting as a Judge. There is a great reason and justice for holding in such cases that the disciplinary action could be taken. It is one of the cardinal principles of administration of justice that it must be free from bias of any kind. The observation of the Supreme Court in V.D. Trivedi v. Union of India, (1993) 2 SCC 55 that that the action taken by the appellant was quasi-judicial and should not have formed the basis of disciplinary action was made to buttress the ultimate conclusion that the charge framed against the delinquent officer had not been established and, therefore, it could not be construed as laying down the law that in no case disciplinary action could be taken if it pertains to exercise of quasi-judicial powers.
24. While stating this principle, the Supreme Court also outlined the circumstances in which disciplinary action can be taken against the erring official, which are as under:-
Where the officer had acted in a manner as would reflect on his reputation for integrity or good faith or devotion of duty;
If there is prima facie material to show recklessness or misconduct in the discharge of his duty;
If he has acted in a manner which is unbecoming of a Government servant;
If he had acted negligently or that he omitted the prescribed conditions which are essential for the exercise of the statutory powers;
If he had acted in order to unduly favour a party;
If he had been actuated by corrupt motive, however small the bribe may be.
25. The Apex Court also added immediately thereafter that the aforesaid instances were not exhaustive and made following pertinent observations in this behalf;-
29. The instances above catalogued are not exhaustive. However, we may add that for a mere technical violation or merely because the order is wrong and the action not falling under the above enumerated instances, disciplinary action is not warranted. Here, we may utter a word of caution. Each case will depend upon the facts and no absolute rule can be postulated.
26. While the aforesaid principles are not difficult to fathom, it is the application of these principles in given case which may become a thorny issue. In the present case itself the department has tried to allege that the manner in which the orders were passed by the petitioner, it manifests that he acted in order to unduly favour those assesses. At the same time, it is also accepted by the department that there is no evidence or even allegation that the petitioner was actuated by corrupt motive or he had acceded his statutory powers while passing those orders.
27. Before dealing with the issue as to whether inference of the disciplinary authority that the petitioner acted in order to unduly favour the assesses, it would be of immense help to us to take note of the approach which is to be adopted by the Court while making such an assessment of the findings recorded by the Inquiry Officer or, for that matter, the disciplinary authority.
In K.K. Ditawan (supra), article of charge against the respondent ITO mentioned that nine assessments against various assesses were completed: (i) in an irregular manner, (ii) in undue haste, and (iii) apparently with a view to confer undue favour upon the assesses concerned. In case of the nine cases of the assesses the details relating to misconduct or misbehaviour were furnished. Therefore, it was charged that the respondent had violated the provisions of Rule 3(1) (i), 3(1)(ii) and 3(1) (iii) of the Central Civil Services (Conduct) Rules, 1964. What is of relevance is not the correctness or legality of the decision of the respondent but the conduct of the respondent in discharge of his duties as an officer. The legality of the orders with reference to the nine assessment may be questioned in appeal or reversion under the Act. But the Government is not precluded from taking the disciplinary action for violation of the Conduct Rules.
28. Some other judgments which may be useful for us while discussing the respective arguments in the present case may also be noted at this stage.
29. Ramesh Chander Singh v. High Court of Allahabad & Anr. JT 2007 (4) SC 135 This was a case where inquiry was initiated by the High Court against its judicial officer on receiving complaint against the aid Officer, namely, the appellant in that case. The appellant had granted bail to an accused who was charged with the offence of murder. There was no allegation of receiving any illegal gratification for granting bail to the accused. The charge was that he had passed the orders of bail for extraneous consideration with oblique motive and insufficient grounds, without cogent and tangible reasons, and that he attempted to justify his order by superfluous reasoning by making adverse comments on the conduct of the Executive Magistrate who recorded the dying declaration. The learned Judge of the High Court, who conducted the inquiry, held that in the facts of the case where a heinous and daring offence has been committed in broad day light and two persons had been shot dead in a crowded area next to the Collectorate at Jhansi and the accused were named in the FIR as well as in the dying declaration and the bail applications having been considered and rejected twice on merits by the respective courts, the third bail application granted by the charged officer in utter disregard of the judicial norms and on insufficient grounds appeared to be based on extraneous considerations. The Supreme Court, in the aforesaid conspectus, formulated the following issue which needed determination:
8. The question for consideration is whether the appellant had granted bail on insufficient grounds or was justified in passing such an order The Apex Court thereafter observed that granting of bail to the accused, pending trial, is one of the significant judicial functions to be performed by aj judicial officer. Neither the State nor the complainant had filed appeal against the bail order passed by the appellant. The State had also not alleged that the accused, who had been granted bail, was likely to abuse his bail or likely to abscond. Commenting upon the reasons given by the Inquiry Officer, the Apex Court noted the following material aspects which were ignored:
9. The learned enquiry Judge did not care to take notice of the fact that the co-accused who were similarly situate had been granted bail by the High Court and that accused Ram Pal, who was a student and had been in jail for more than one year was granted bail for cogent reasons, set out in the order passed by the appellant. In the bail order, the appellant stated that there was an allegation that the Magistrate who recorded the dying declaration was once upon a time a tenant in one of the houses owned by the complainant. Taking cognizance of this fact by the appellant in the order could not be said to be a totally unwarranted an a superfluous reasoning.
30. Apex Court was also of the view that solely on the basis of the complaint, decision to initiate disciplinary proceedings should not have been taken by the High Court. It counseled that there should be strong grounds to suspect the officers bona fides and that the order passed by a judicial officer is actuated by malice, bias or illegality. This action can be found in the following passage from the said judgement :-
11. We fail to understand as to how the High Court arrived at a decision to initiate disciplinary proceedings solely based on the complaint, the contents of which were not believed to be true by the High Court. If the High Court were to initiate disciplinary proceedings based on a judicial order, there should have been strong grounds to suspect officers bona fides and the order itself should have been actuated by malice, bias or illegality. The appellant-officer was well within his right to grant bail to the accused in discharge of his judicial functions. Unlike provisions for granting bail in TADA Act or NDPS Act, there was no statutory bar in granting bail to the accused in this case. A Sessions Judge was competent to grant bail and if any disciplinary proceedings are initiated against the officer for passing such an order, it would adversely affect the morale of subordinate judiciary and no officer would be able to exercise this power freely and independently.
31. At this juncture, we deem it proper to discuss the case of Zunjarrao Bhikaji Nagarkar v. Unio of India & Ors. (1997) 7 SCC 409 and other judgments which tend to show a discordant note to the Nagarkars case (supra).
In this case, disciplinary proceedings for major penalty were initiated under Rule 14 of the CCS (CCA) Rules, 1965 against the appellant. The charge against him was that he, while working as Collector/Commissioner, Central Excise, passed an Order-in-Original in which he had favoured (an assessee party) by not imposing any penalty on the said party even though he had held that (the party) had clandestinely manufactured and cleared the excisable goods and evaded the excise duty willfully. (The appellant) thus failed to maintain absolute integrity and devotion to duty and acted in a manner unbecoming of a government servant and contravened Rules 3 (1)(i) and (ii) and (iii) of the CCS (Conduct) Rules, 1964. The appellant ordered imposition of excise duty and confiscation of the goods but his Order-in-Original was silent about imposition of penalty. The Supreme Court on reviewing the legal position regarding imposition of penalty, concluded that the appellant had no discretion not to impose penalty though he had discretion to decide quantum of penalty. His approach in not imposing penalty was therefore not in conformity with the law. The Court however considered the question whether mistaken view of law itself was sufficient to proceed against the appellant. The Supreme Court while deciding this question also took into consideration the explanation given by the appellant that he had acted in the overall interest of revenue in not imposing penalty on assessee party. In this process, it is held as under:-
(a) A wrong interpretation of law cannot be a ground of misconduct. It is a different matter altogether it is deliberate and actuated by mala fides. Negligence in quasi-judicial adjudication is not carelessness, inadvertence or omission but a culpable negligence.
(b) When penalty is not levied, the assessee certainly benefits but it cannot be said that by not levying penalty, the officer has favoured 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. Records in the present case do not show that the disciplinary authority had any information within its possession from where it could form an opinion that the appellant showed favour to the assesee by not imposing penalty. He may have exercised his jurisdiction wrongly but that wrong can be corrected in appeal. That cannot always forma basis for initiating disciplinary proceedings against an officer while he is acting as a quasi-judicial authority. It must be kept in mind that being a quasi-judicial authority, he is always subject to judicial supervision in appeal.
(c) 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 exercise of its power directed filing of appeal against the order-in-original passed by the appellant could not be enough to proceed against him. There is no other instance to show that in similar case, the appellant invariably imposed penalty.
(d) It every error of law were to constitute a charge of misconduct, it would impinge upon independent functioning of quasi-judicial officers like the appellant. Misconduct, in sum and substance, is sought to be inferred in the present case from the fact that the appellant committed an error of law. The charge-sheet on the face of it, does not proceed on any legal premise and is thus liable to be quashed. To maintain a 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 quasi-judicial order. Since nothing of the sort is alleged herein, the impugned charge-sheet is rendered illegal. The charge-sheet, if sustained, will 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 constant threat of disciplinary proceedings. On the aforesaid analysis, the Supreme Court was of the opinion that no case for initiation of any disciplinary proceedings against the appellant had been made out and the penalty imposed upon him.
32. This case came up for discussion before the Supreme Court in Union of India & Ors. v. Duli Chand (2006) 5 SCC 680. Following passage therefrom was relied upon by the learned counsel for the respondent to argue that the ratio of Nagarkar (supra) was not approved by the Supreme Court :-
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. The impugned decisions are accordingly set aside and the order of punishment upheld. There will be o order as to costs.
33. However, interestingly in two subsequent judgments, there is a note of approval put by the Apex court to the Nagarkars case. These are :-
(i) Ramesh Chander Singh v. High Court of Allahabad & Anr. (2007) 4 SCC 247
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, High Court must take extra care and caution.
17. In Zunjarrao Bhikaji Nagarkar v. Union of India, (1999) 7 SCC 409, 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.
(ii) Inspector Prem Chand v. Govt. of NCT of Delhi & Ors.(2007) 4 SCC 566
11. 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 vs. Union of India & Ors., [1999 (7) SCC 409], 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."
34. All these cases, and precisely the issue whether Nagarkar (supra) stands disapproved by the Supreme Court in subsequent judgments, has been discussed by the Madras High Court in its illuminous judgment in WP (C) No.11433/2001 and 16592/2001 entitled Union of India & Ors. v. P. Parameswaran. In its decision rendered on 10.1.2008, the Division Bench of the High Court affirmed the view of the Tribunal which had quashed the penalty imposed upon the respondent therein who was charge sheeted in the course of discharge of his quasi-judicial duties. In that case the concerned officer 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 considerinjg 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. He had also relied upon the judgment of the Supreme Court in the case of Nagarkar (supra) 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.
35. Submission of the department, on the other hand, was 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. The High Court found that judgment of the CAT was solely based on Nagarkars case (supra). In this context, question arose as to whether Nagarkars case (supra) was contrary to the view expressed by the Supreme Court in K. K. Dhawan (supra), as noted in Duli Chand (supra). After taking note of the observations in Duli Chand that Nagarkars case was contrary to the view expressed in K. K. Dhawan, the High Court referred to subsequent judgments in Ramesh Chander Singh (supra) and Inspector Prem Chand (supra), wherein Nagarkars case was approved and resolved the sic. Dichotomy in the following manner :-
14. Once again, in this matter also, there is no reference to the earlier three Judge Bench judgment in Duli Chands case. However, since Nagarkars 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 Nagarkars case and quoted it with approval. Ultimately, the decision 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 Ramesh Chander Singhs case even took an exception to the practice of initiating disciplinary action against officers merely because the orders passed by them were wrong. Applying the aforesaid test in the case at hand, the Madras high Court affirmed the view of the Tribunal in the following manner:-
16. If all these test 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. We have already quoted the Articles of charge in paragraph 3 of this order. The inquiry officer has held and the disciplinary authority in his note of disagreement has failed to repel that the charge regarding failure to maintain absolute integrity has not been proved. In regard to the second charge, it has been held that the Applicant acting with ulterior motive has not been proved and that the Applicant did not abandon the investigation. In regard to the third charge the view of the inquiry officer is that the Revenue has not been prejudicially affected by the Applicant not charging capital gains on the transfer of shares and instead assessing it as income from business. These have not been refuted in the note of disagreement. There is not even a whisper in the note of disagreement as to how lack of integrity, ulterior motive, abandoning the inquiry midway and giving undue benefit have been inferred. There is no material before the disciplinary authority to substantiate these charges. Now there is no poison in the fangs of the charges. The Revenue and the Applicant have difference of opinion on a legal point and its interpretation. There is no prima facie material to show recklessness. The action of officer has not been shown to be such as to reflect on his integrity, Showing undue favour to party has not been established. He has not been shown to have acted negligently. No corrupt motive has been proved on the Applicants part in the inquiry. It cannot merely be inferred from the fact that according to the Respondents, the order of assessment is wrong. As was held in Ramesh Chander Singh (supra), in the instant case also the order has been passed on cogent reasons. Furthermore, the note recorded by the Applicant in the file of assessment, as mentioned above, has not been made available. Merely because the internal audit has different views from the Applicant on the interpretation of law would not give rise to the charge of ulterior motives, giving undue benefits and lacking in integrity. The wrong interpretation of law, according to the Respondents would not be a ground for alleging misconduct, as held in Nagarkar (supra). The objections of the Respondents that Nagarkar (supra) may not be considered as it has been overruled in Duli chand (supra) has been more than adequately answered in the judgment of the Honourable Delhi High Court and we need not labour the point any further.
20. On the basis of consideration of all the facts and circumstances of this case, as analysed above, we are of the considered view that this inquiry should not proceed any further and curtain should finally be drawn in this drama. We quash and set aside the Memorandum of charge dated 12.02.2004 and all the subsequent steps in the disciplinary proceedings. The Applicant would be eligible for consideration for promotion from the date his immediate junior was promoted on notional basis. There will be no orders as to costs.
( Dr. Dharam Paul Sharma ) ( L.K. Joshi ) Member (J) Vice Chairman (A) /dkm/