Dr. G. Sreekumar Menon Commissioner Appeals Central Excise vs Union of India

P.K. Misra, J.—The petitioner had filed O.A. No. 968 of 2005 before the Central Administrative Tribunal, Madras Bench, (hereinafter

referred to as ""the Tribunal"") for quashing the Memorandum No. 46/2005 dated 20.10.2005, whereunder departmental proceedings had been

initiated against the present petitioner. Such Original Application having been dismissed, the present writ petition has been filed.

The facts which were indicated in the Original Application in substance indicate that the applicant had joined the Indian Revenue Service

(Customs & Excise) as Group-A Officer in 1978 and in course of time he was promoted and, subsequently between April 1995 and August

2000, he was functioning as Deputy Commissioner/Joint Commissioner. During the said period he had decided an adjudication proceeding.

Subsequently, he received a letter from the Directorate of Vigilance, New Delhi, to clarify certain points and to send a preliminary submission on

28.8.2003. On 2.11.2005, he was served with a Memorandum dated 20.10.2005 proposing to hold enquiry under Rule 14 of the CCS (CCA)

Rules 1965. Memorandum dated 20.10.2005 was challenged before the Tribunal by raising contention to the effect that Memorandum of charges

relate to infirmities in an order passed while exercising quasi judicial function and in fact such order passed by the petitioner had been ultimately

upheld in appeal. It was also indicated that charge memo was issued at the instance of the then Commissioner of Central Excise on personal

grounds and had been issued after a delay of five years.

A reply was filed by the Department, wherein it was indicated that pertaining to such order passed by the petitioner, a complaint was given by

the then Commissioner requesting the Director General of Vigilance to conduct investigation and such investigation revealed that the applicant had

committed lapses in deciding the case in haste and had accepted the assertion of the party to such assessment proceedings and he had also

misinterpreted the technical and legal issues involved in the adjudication and had acted blatantly in favour of the party and against the instructions

and circulars of the Government. Even though the petitioner had tried to explain that similar orders had been passed by the Commissioner and

some counter allegations have been made, after consultation with the CVC., the charge memo dated 20.10.2005 has been issued and there is no

justification to interfere with the charge-memo at the threshold.

The Tribunal posted the following questions for consideration:

(i) Whether the disciplinary proceedings could be initiated as against the orders passed by the quasi judicial authority in that capacity?

(ii) Whether the impugned charge memo is sustainable?

(iii) Whether there is any delay in initiation of disciplinary proceedings against the applicant?

The Tribunal by referring to the decision of the Supreme Court in 1994(27) ATC 200 (Union of India v. Upendra Singh) held that the Tribunal

could not go into the correctness or truth of the charge at the preliminary stage as the truth or otherwise of the charge is a matter for the disciplinary

authority to decide. In this connection, the Tribunal also referred to the decision of the Supreme Court in C.A. No. 2168 of 2006 dated 21.5.2006

(Union of India v. Duli Chand). The Tribunal also negatived the contention relating to delay in initiation of the proceedings as the Department has

explained the reason for the same.

In this writ petition, the petitioner has raised the following contentions:

(1) Since the petitioner was discharging his quasi-judicial function, departmental proceedings could not have been initiated in the absence of any

imputation of mala fides, extraneous consideration, corruption or negligence while discharging such quasi-judicial function.

(2) The order passed by the petitioner, which was the basis for initiation of the departmental proceedings, itself had been confirmed by CESTAT

by order dated 20.12.2006 and, in view of the subsequent development, there is no justification to continue the proceedings.

Learned Counsel appearing for the Respondents has supported the conclusion made by the Tribunal and had contended that there is no

justification to interfere with the order passed by the Tribunal.

The charge memo dated 20.10.2005 is to the following effect:

Article-I

Shri G. Sreekumar, while functioning as Joint Commissioner of Central Excise, Mangalore favoured M/s. PALS Micro Systems Ltd., Mangalore,

vide his order No. 14/2000 dated 2/9.8.2000 by adjudicating the case totally ignoring the evidence in favour of the Revenue which as adjudicating

authority he was bound to consider and relying on the belated retraction of the party and absolved them of duty liability and the interest leviable

thereon and also penalty. By doing so Shri G. Sreekumar, failed to maintain absolute integrity and devotion to duty and acted in a manner

unbecoming of a Govt. servant and thereby contravened the provisions of Rule 3(1)(i), (ii) and (iii) of the CCS (Conduct) Rules, 1964.

Article-II

Shri G. Sreekumar, vide his order No. 14/2000 dated 2/9.8.2000, favoured PALS Micro Systems Ltd., Mangalore by suppressing the presence

of the sale bills of Modvat inputs. By doing so, Shri G. Sreekumar acted in a manner unbecoming of a Government servant and failed in proper

discharge of his duties and failed to maintain absolute integrity contravening the provisions of Rule 3(1)(i), (ii) and (iii) of the CCS (Conduct) Rules,

1964.

Article-III

Shri G. Sreekumar, vide his order No. 14/2000 dated 2/9.8.2000 favoured PALS Micro Systems Ltd., Mangalore by raising irrelevant issues,

like relevant date and correlation between input invoices and sales bills. By doing so he failed in proper discharge of his duties and failed to

maintain absolute integrity and devotion to duty and thereby contravened Rule 3(1)(i), (ii) and (iii) of the CCS (Conduct) Rules, 1964.

Article-IV

Shri G. Sreekumar, in his order No. 14/2000 dated 2/9.8.2000 misinterpreted the technical and legal issues involved in the adjudication as well as

the material facts and evidence associated with the adjudication proceedings in a biased manner. He called for details/report from concerned

Division vide letter C. No. V/84/15/30/2000 Hqrs. Adjn., dated 2.8.2000. However, without waiting for the reply from the Division, Shri G.

Sreekumar hastily passed the cited order-in-original in favour of the assessee. By doing so he failed in proper discharge of his duties and failed to

maintain absolute integrity and devotion to duty and acted in a manner unbecoming of a Govt. Servant and thereby contravened Rule 3(1)(i), (ii)

and (iii) of the CCS (Conduct) Rules, 1964.

Article-V

Shri G. Sreekumar, hurriedly issued the Show Cause Notice dated 26.6.2000 without waiting for the details and evidence he himself sought from

the Deputy Commissioner, Mangalore-II Division. He also failed to issue corrigendum/addendum to the show cause notice when the details and

documents sought by him for the issue of show cause notice were received subsequently from the Division. He thus failed in proper discharge of his

duties and failed to maintain absolute integrity and devotion to duty and acted in a manner becoming of a Govt. servant and thereby contravened

Rule 3(1)(i), (ii) and (iii) of the CCS (Conduct) Rules, 1964.

There is no doubt that disciplinary proceeding has been initiated on the basis of a quasi-judicial order passed by the petitioner in his capacity as

Joint Commissioner of the Central Excise, Managalore, as per Order No. 14/2000 dated 2/9.8.2008.

The primary contention of the learned Senior Counsel for the petitioner is to the effect that since the petitioner was exercising quasi-judicial

power, no departmental proceedings should be initiated merely because such quasi-judicial order was found to be illegal or erroneous. Learned

Senior Counsel has placed reliance upon several decisions of the Supreme Court in support of the contention that disciplinary proceedings should

not be initiated merely because the order passed by a judicial or quasi-judicial authority is found to be illegal or erroneous on fact.

Learned Counsel appearing for the Respondents, on the other hand, has placed reliance upon several decisions of the Supreme Court, which

lay down that in appropriate cases disciplinary action can be initiated against the judicial or quasi-judicial authority and merely because such judicial

or quasi-judicial orders have been passed, would not give a complete immunity.

Learned Senior Counsel for the petitioner has inter alia relied upon the decisions of the Supreme Court reported in Zunjarrao Bhikaji Nagarkar

Vs. U.O.I. and Others, , Ramesh Chander Singh Vs. High Court of Allahabad and Another, and Inspector Prem Chand Vs. Govt. of N.C.T. of

Delhi and Others, , whereas the learned Counsel for the Department has placed reliance upon the decision reported in Union of India and Others

Vs. K.K. Dhawan, . The relevant facts in the words of the Supreme Court are extracted hereunder:

The respondent, while working as Income Tax Officer, Muktsar during the year 1982-83 completed certain assessments. A charge-

memorandum dated May 2, 1989 was served on him to the effect it was proposed to hold an inquiry against him under Rule 14 of the Central Civil

Services (Classification, Control and Appeal) Rules, 1965. A statement of article of charge framed against him was to the following effect:

Statement of article of charge framed against Shri K.K. Dhawan, A Group �A� now posted as Assistant Commissioner of Income Tax,

Bombay.

Article I

Shri K.K. Dhawan, while functioning as I.T.O. ""A"" Ward, Muktsar during 1982-1983 completed nine assessments in the case of:

... (names omitted as not necessary)

in an irregular manner, in undue haste and apparently with a view to conferring undue favour upon the assessees concerned.

By his above acts Shri Dhawan failed to maintain absolute integrity and devotion to duty and exhibited a conduct unbecoming of a Government

servant, thereby violating provisions of Rules 3(1)(i), 3(1)(ii) and 3(1)(iii) of the CCS (Conduct) Rules, 1964.

This was accompanied by a statement of imputation of his misconduct or misbehaviour in support of the article of charge framed against him.

In each of the nine cases of the assessees above-referred to, 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.

The necessary documents in support of these allegations were also enclosed.

(Emphasis added)

The Central Administrative Tribunal quashed the aforesaid charge memo on the ground that ""the action taken by the officer was quasi-judicial and

should not have formed the basis of disciplinary action.

While allowing the appeal, the Supreme Court observed as follows:

Certainly, therefore, the officer who exercises judicial or quasi-judicial powers acts negligently or recklessly or in order to confer undue favour

on a person is not acting as a Judge. Accordingly, the contention of the respondent has to be rejected. It is important to bear in mind that in the

present case, we are not concerned with 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 assessments may be questioned in appeal or revision under

the Act. But we have no doubt in our mind that the Government is not precluded from taking the disciplinary action for violation of the Conduct

Rules. Thus, we conclude that the disciplinary action can be taken in the following cases:

(i) Where the officer had acted in a manner as would reflect on his reputation for integrity or good faith or devotion to duty;

(ii) if there is prima facie material to show recklessness or misconduct in the discharge of his duty;

(iii) if he has acted in a manner which is unbecoming of a Government servant;

(iv) if he had acted negligently or that he omitted the prescribed conditions which are essential for the exercise of the statutory powers;

(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.

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.

In (1997) 7 SCC 409 (cited supra), the appellant before the Supreme Court had challenged initiation of the disciplinary proceedings

unsuccessfully, initially before the Tribunal and subsequently before the High Court. Two Judge Bench of the Supreme Court, while allowing the

appeal and quashing the charge memo, the Supreme Court observed:

When penalty is not levied, the assessee certainly benefits. But it cannot be said that by not levying the penalty the officer has favoured the

assessee or shown undue favour to him. There has to be some basis for the disciplinary authority to reach such a conclusion even prima facie. The

record in the present case does not show if the disciplinary authority had any information within its possession from where it could form an opinion

that the appellant showed ""favour"" to the assessee by not imposing the penalty. He may have wrongly exercised his jurisdiction. But that wrong can

be corrected in appeal. That cannot always form a 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.

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.

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.

(Emphasis added)

It is to be noted that the Supreme Court in the above case had referred to earlier decision in K.K. Dhawan''s case.

In a subsequent decision of the Supreme Court in P.C. Joshi Vs. State of U.P. and Others, . the Supreme Court, while referring to the law laid

down in Union of India and others Vs. A.N. Saxena, and Union of India and Others Vs. K.K. Dhawan, to the effect that disciplinary action can be

initiated in respect of judicial or quasi-judicial order under certain contingencies, quashed the ultimate punishment on the basis of factual finding that

there was no allegation nor any proof of any recklessness or misconduct in duty.

In (2006) 5 SCC 680 (Union of India v. Duli Chand), a three Judge Bench, while reiterating the views expressed in K.K. Dhawan''s case,

observed:

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.

Subsequently, however, the Supreme Court in the decision reported in Ramesh Chander Singh Vs. High Court of Allahabad and Another, has

observed as follows:

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.

(Emphasis added)

It is to be noted that in the above decision of the Supreme Court, there is no specific reference to the earlier decision of the Supreme Court in

K.K. Dhawan''s case or Duli Chand''s case. However, the observations made in para 17, which have been emphasised by us, clearly indicate that

the Division Bench of the Supreme Court was clearly conscious of the specific instances as recognised in K.K. Dhawan''s case and reiterated in

Duli Chand''s case justifying initiation of a disciplinary proceedings against the officer in respect of judicial or quasi-judicial order.

In other words, in our humble opinion, even though there is no specific reference to those decisions, it is obvious that the Bench was conscious of

the principles already elucidated in the aforesaid two decisions.

In our considered opinion, on an in-depth perusal of the decisions of the Supreme Court in K.K. Dhawan''s case, which was followed in Duli

Chand''s case and Nagarkar''s case, which was followed in Ramesh Chander Singh''s case, is no real conflict in the principles elucidated in these

decisions. As a matter of fact, in K.K. Dhawan''s case, it has been clearly indicated that each case will depend upon the facts and no absolute rule

can be postulated.

In Nagarkar''s case, there is specific reference to K.K. Dhawan''s case. It is obvious that two Judge Bench decision in Nagarkar''s case was

conscious of the law laid in K.K. Dhawan''s case and that is why even while quashing the proceedings it was observed that ""The record in the

present case does not show if the disciplinary authority had any information within its possession from where it could form an opinion that the

appellant showed ""favour"" to the assessee by not imposing the penalty.

It was further observed ""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.

Similarly in Ramesh Chander Singh''s case, it is apparent that the Bench was conscious of the exposition of law made in K.K. Dhawan''s case

as apparent from the observation made in para 17, which we have extracted earlier.

As a matter of fact, in a very recent Division Bench decision of this Court reported in Union of India (UOI) Vs. P. Parameswaran and The

Registrar, Central Administrative Tribunal, , to which one of us (P.K. Misra, J) was a party, after referring to all the above decisions of the

Supreme Court, it was observed:

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.

We may venture to add that, even though the Supreme Court in Duli chand''s case said that Nagarkar''s case cannot be followed, in our

humble opinion, the factual scenario in Nagarkar''s case was completely different from the facts in K.K. Dhawan''s case and Nagarkar''s case can

be said to have been resurrected in Ramesh Chander Singh''s case.

It has to be seen whether in the present case initiation of the disciplinary proceeding was justified.

We have already extracted the articles of charges. It is apparent that charges were based upon the order passed by the petitioner which was

perceived to be erroneous by the appellate authority. Entire articles of charges read as a whole would indicate that there is no specific allegation of

recklessness or utter negligence of the quasi-judicial function and similarly there is no specific allegation of any overt misconduct.

In our considered opinion, the ratio of the latest decision of the Supreme Court in Ramesh Chander Singh''s case would be applicable in the

absence of specific imputation of dishonesty, lack of bona fide or utter negligence in discharge of duties and initiation of departmental proceedings

is required to be quashed. Incidentally it may be pointed out that even though the appellate authority had set aside the order passed by the present

petitioner, subsequently, in further appeal, CESTAT had set aside the order of the appellate authority and had restored the order which had been

passed by the present petitioner. In view of this subsequent event, even the main basis for the initiation of the disciplinary proceedings, namely, the

alleged illegal and erroneous order,is no longer available. In the changed circumstances it would not be appropriate to continue the disciplinary

proceedings.

For the aforesaid reasons, the order of the Tribunal is set aside and accordingly the writ petition is allowed. No costs. Consequently, the

connected miscellaneous petition is closed.