Civil Appeal No. 6161 of 2022

REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 6161 OF 2022

CAPTAIN PRAMOD KUMAR BAJAJ ..… APPELLANT

Versus

UNION OF INDIA AND ANOTHER ….. RESPONDENTS

J U D G M E N T

HIMA KOHLI, J.

1.The appellant is aggrieved by the judgment dated 31

st

May, 2022 passed by the High

Court of Judicature at Allahabad, Lucknow Bench upholding the order dated 9

th

December, 2020

passed by the Central Administrative Tribunal

1

, Principal Bench, that had turned down the

challenge laid by him to an order dated 27

th

September, 2019, passed by the Central Board of

Direct Taxes, Department of Revenue, Ministry of Finance, Government of India communicating

the decision of the President of India to compulsorily retire him, in exercise of powers conferred

under Rule 56(j) of the Fundamental Rules

2

.

1 For short ‘Tribunal’

2 For short ‘FR 56(j)’

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Civil Appeal No. 6161 of 2022

FACTS OF THE CASE

2.The present case has a chequered history with multiple rounds of litigations spewed

between the appellant and the respondents. To have an overview of the matter, we may briefly

refer to some facts relevant for deciding the present Appeal. The appellant was a Permanent

Commissioned Officer in the Indian Army, inducted in the year 1980. Due to a physical disability

suffered by him in the course of Army operations, he was demobilized and released from service.

In the year 1989, the appellant qualified the Civil Services Examination. He was appointed as an

Officer and allocated to the 1990 Batch in the Indian Revenue Service. In due course of his

service, the appellant was promoted to higher posts and on 12

th

January, 2012, he was promoted

to the rank of Commissioner, in the Department of Income Tax. On 7

th

July, 2014, the appellant

was selected and empanelled for appointment as a Member of the Income Tax Appellate Tribunal

3

by the Selection Committee headed by a sitting Judge of the Supreme Court nominated by the

then Chief Justice of India. On 15

th

July, 2015, the respondents forwarded the name of the

appellant to the Appointments Committee of the Cabinet

4

along with his vigilance clearance for

appointment as Member (Accountant), ITAT. In the year 2016, the appellant was empanelled by

the ACC for appointment as Joint Secretary to the Government of India. From the year 2017

onwards, started a saga of litigations between the appellant and the respondents, as a result

whereof, his appointment as a Member of the ITAT, did not mature.

3.The first hurdle he faced was an adverse Intelligence Bureau

5

report. This made the

appellant approach the Tribunal for relief. Vide judgment dated 10

th

February, 2017, the Tribunal

disposed of the Original Application filed by the appellant with a direction issued to the

respondents to resubmit his adverse IB Report to the Selection Committee for it to take a final

3 For short ‘ITAT’

4 For short ‘ACC’

5 For short ‘IB’

Page 2 of 27

Civil Appeal No. 6161 of 2022

view on his appointment to the subject post. The said judgment passed by the Tribunal was

assailed by the respondents in a writ petition before the High Court, which came to be dismissed

on 30

th

May, 2017, with further directions issued to make the entire process of reconsideration of

the appellant’s candidature by the Selection Committee, timebound. The Petition for Special

Leave to Appeal preferred by the respondent – Union of India against the order dated 30

th

May,

2017 passed by the High Court, was also dismissed by this Court on 15

th

November, 2017.

4.On 29

th

November, 2017, a vigilance inspection was carried out in the office of the

appellant. Based on the said vigilance inspection, the respondents issued a show cause notice to

him on 31

st

January, 2018. Ten days before that, on 21

st

January, 2018, the vigilance clearance

earlier granted in favour of the appellant, was withheld by the respondents. Both the aforesaid

orders were assailed by the appellant by filing separate Original Applications before the Tribunal.

Initially, an interim order was passed by the Tribunal observing that the show cause notice issued

by the respondents would not impede the appellant’s consideration for appointment to the post of

Member, ITAT. On 4

th

May 2018, another interim order was passed by the Tribunal, observing that

withholding of the vigilance clearance of the appellant will not come in his way for appointment to

the subject post. In the interregnum, on 11

th

April, 2018, the appellant was placed in the “Agreed

List”, which is a list of Gazetted Officers of suspect integrity prepared by the Department.

Pertinently, a second Petition for Special Leave to Appeal filed by the respondents against the

interim relief granted by the Tribunal in favour of the appellant and duly confirmed by the High

Court in WP (C) No. 22179-22187 of 2018 on 06.08.2018, was dismissed by this Court on

29.03.2019.

5.Aggrieved by the aforesaid action taken by the respondents of placing his name in the

Suspect List, the appellant approached the Tribunal for a third time and in the said proceedings,

an interim order was granted in his favour. Finally, vide common judgment dated 6

th

March, 2019,

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Civil Appeal No. 6161 of 2022

the Tribunal allowed two Original Applications filed by the appellant [O.A. No.137 of 2018 and

O.A. No.279 of 2018], quashing inclusion of his name in the “Agreed List” and the consequential

proceedings as also the decision taken by the respondents to deny him vigilance clearance. The

Tribunal also directed the respondents to forward the name of the appellant to the appropriate

Authority for selection/appointment to the post of Member, ITAT. However, the respondents did

not comply with the said order and filed a writ petition before the High Court. Admittedly, no

interim order was passed by the High Court staying the operation of the judgment dated 06

th

March, 2019, passed by the Tribunal.

6.Aggrieved by the non-compliance of the order dated 30

th

May, 2017, passed by the High

Court in his favour, the appellant filed a contempt petition before the High Court. Vide order dated

13

th

August, 2019, the High Court permitted impleadment of the then Chairman of the Central

Board of Direct Taxes

6

in the contempt petition and issued him a notice to show cause as to why

he should not be punished for wilful disobedience of the order dated 30

th

May, 2017, passed in the

writ proceedings.

7.Similar notices were issued by the Tribunal on two contempt petitions filed by the

appellant against the respondents for non-compliance of the orders dated 30

th

May, 2017 and 6

th

March, 2019. In the meantime, the respondents initiated disciplinary proceedings against the

appellant by issuing him a chargesheet on 17

th

June, 2019. In July 2019, a Departmental

Promotion Committee

7

was convened by the Union Public Service Commission

8

to consider

promoting the appellant to the post of Principal Commissioner but the decision taken qua him,

was placed in the sealed cover due to the pending disciplinary proceedings. The appellant had

filed a writ petition before the High Court against the charge memorandum issued to him wherein

6 For short ‘CBDT’

7 For short ‘DPC’

8 For short ‘UPSC’

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Civil Appeal No. 6161 of 2022

the High Court granted stay orders in his favour. While the said proceedings were still pending,

the respondents proceeded to compulsorily retire the appellant on 27

th

September, 2019, which

was about three months short of the date of his superannuation in January 2020. The list of

promotions made to the post of Principal Commissioner was declared on 11.11.2019, by which

date the appellant was no longer in the reckoning.

8.It may be noted here that the mechanism in place within the department for arriving at a

conclusion as to who amongst the Group-A Officers in the CBDT deserve to be prematurely

retired, starts with an assessment to be conducted by the Internal Committee that identifies and

recommends the names of the officers and places it before the Review Committee. The next

stage is before the Review Committee that includes the Chairman, CBDT and the Revenue

Secretary as Members. If satisfied by the records and comments forwarded by the Internal

Committee that the pre-mature retirement of a Group-A Officer is desirable in public interest, the

Review Committee makes a recommendation to the Appointing Authority in this regard. The

Appointing Authority is then required to examine the recommendations of the Review Committee

and if satisfied, pass an order of pre-mature retirement of the concerned Officer. Once the

Competent Authority passes an order of pre-mature retirement under FR 56(j), the aggrieved

Officer is entitled to submit a representation to the Representation Committee. As per the records,

the appellant had submitted a representation to the Representation Committee, which was turned

down on 2

nd

January 2020.

9.The appellant challenged the final order of compulsory retirement issued against the

appellant on 27

th

September, 2019 and the subsequent order dated 2

nd

January, 2020, passed by

the Representation Committee declining to interfere in the order of compulsory retirement, before

the Tribunal. The said petition was dismissed, vide judgment dated 9

th

December, 2020 and

upheld by the High Court by the impugned judgment dated 31

st

May, 2022.

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Civil Appeal No. 6161 of 2022

THREEFOLD CHALLENGE

10.A threefold challenge has been laid by the appellant to the impugned judgment. Firstly, on

the ground of serious prejudice caused to him due to the active participation of the Additional

Director General (Vigilance) as a Member of the Internal Committee when he had a bias against

the appellant and the participation of the then Chairman of the CBDT in the meeting of the Review

Committee, convened to examine the recommendations of the Internal Committee for pre-

maturely retiring him, when he ought to have recused himself knowing that he was facing three

contempt notices, one issued by the High Court on 13

th

August, 2019 [Contempt Petition

No.2681/2017] and two notices issued by the Tribunal [CCP No.15/2019 and CCP No.25/2019]

for failing to forward the appellant’s vigilance clearance required for processing his case for

appointment as Member, ITAT, to the Selection Committee. Secondly, it has been argued that the

impugned order of his pre-mature retirement is punitive in nature and has been passed solely to

deprive him of an opportunity to be appointed as Member ITAT, a post for which he was selected

by the Selection Committee headed by a sitting Judge of the Supreme Court and his name was

placed at Serial No.1 in the All India Ranking, as long back as in the year 2014. This selection of

the appellant was reiterated by a subsequently constituted Selection Committee in the year 2018,

but did not reach fruition due to persistent obstructions created by the respondents, who withheld

his vigilance clearance without a valid reason and subsequently placed his name in the “Agreed

List”, followed by initiation of a disciplinary enquiry against him on baseless charges which was

not taken to its logical conclusion, as he was prematurely retired in September, 2019. Lastly, it

was urged that the High Court has completely overlooked the fact that all the Annual Performance

Assessment Reports

9

of the appellant over the past 30 years were blemishless. In fact, the

appellant was graded as ‘Outstanding’ and his integrity was assessed as ‘Beyond Doubt’ for the

9 For short ‘APAR’

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Civil Appeal No. 6161 of 2022

immediately preceding 10 years’ APARs, after he was promoted to the post of Commissioner,

Income Tax in the year 2012.

SUBMISSIONS MADE BY THE COUNSEL FOR THE UNION OF INDIA

11.Refuting the allegations levelled by the appellant and defending the impugned judgment,

Mr. Sanjay Jain, learned Additional Solicitor General

10

who appeared for the respondents – Union

of India urged that the impugned judgment is a well-reasoned one and does not deserve

interference; that the order of compulsory retirement was passed in the case of the appellant after

duly considering his entire service record; that the material relied upon by the respondents for

passing an order under FR 56(j), was carefully considered by the Tribunal before dismissing the

Original Application filed by the appellant, as meritless and that the allegations of institutional

malice and bias levelled by the appellant are ill-founded. Learned ASG contended that unlike

departmental enquiries, the scope of an enquiry under FR 56(j) is fairly limited and the standard of

adjudication is prima facie a subjective opinion as to the suitability of an officer to continue in

service, keeping in mind public interest. No stigma can be attached to an employee who is

compulsorily retired, as compulsory retirement does not amount to dismissal or removal. The

appellant is still entitled to all retiral benefits and also entitled to be considered for other

appointments. It was stated that a chargesheet was pending against the appellant for major

penalty proceedings which had been unsuccessfully challenged by him before the Tribunal. Citing

several decisions of this Court on the limited scope of interference in an order of compulsory

retirement, it was submitted on behalf of the respondents – Union of India that courts should

ordinarily refrain from returning findings on merits of the allegations against the concerned officer.

Once an order of compulsory retirement has been passed bona fide and without any extraneous

motive, there is no justification for interference.

10 For short ‘ASG’

Page 7 of 27

Civil Appeal No. 6161 of 2022

ANALYSIS AND CASE LAWS RELATING TO COMPULORY RETIREMENT

12.We have given our thoughtful consideration to the arguments advanced by learned

counsel for the parties, perused the records and the judgments cited by both sides.

13.The provision of Fundamental Rule 56(j) reads as under:

“FR 56(j) :- The Appropriate Authority shall, if it is of the opinion that it

is in the public interest so to do, have the absolute right to retire any

Government servant by giving him notice of not less than three months

in writing or three months' pay and allowances in lieu of such notice :-

(i)If he is, in Group 'A' or Group 'B' service or post in a substantive, quasi-

permanent or temporary capacity and had entered Government service

before attaining the age of 35 years, after he has attained the age of 50

years;

(ii)In any other case after he has attained the age of 55 years.

14.As is apparent from a perusal of the aforesaid provision, it takes in its fold two elements –

the first one is the absolute right of the Government to retire an employee and the second is the

requirement of meeting the condition of public interest for doing so. The provision also provides

for a prior notice of at least three months to the outgoing employee and mandates that the said

provision can be invoked to retire a government servant only after he has attained the age of 55

years.

15.We are conscious of the fact that the scope of judicial review in respect of an order of

compulsory retirement from the service, is fairly limited. The law relating to compulsory retirement

has been the subject matter of discussion in a number of cases where certain settled legal

principles have been laid down which are being elucidated hereinbelow.

16.The object of compulsory retirement of a government servant was highlighted by this

Court in Allahabad Bank Officers’ Association and Another vs. Allahabad Bank and Others

11

in the following words: -

11 1996(4) SCC 504

Page 8 of 27

Civil Appeal No. 6161 of 2022

“5.The power to compulsorily retire a government

servant is one of the facets of the doctrine of pleasure

incorporated in Article 310 of the Constitution. The object of

compulsory retirement is to weed out the deed wood in order to

maintain efficiency and initiative in the service and also to

dispense with the services of those whose integrity is doubtful

so as to preserve purity in the administration. Generally speaking,

Service Rules provide for compulsory retirement of a government

servant on his completing certain number of years of service or

attaining the prescribed age. His service record is reviewed at that

stage and a decision is taken whether he should be compulsorily

retired or continued further in service. There is no levelling of a

charge or imputation requiring an explanation from the government

servant. While misconduct and inefficiency are factors that enter into

the account where the order is one of dismissal or removal or of

retirement, there is this difference that while in the case of retirement

they merely furnish the background and the enquiry, if held – and

there is no duty to hold an enquiry – is only for the satisfaction of the

authorities who have to take action, in the case of dismissal or

removal they form the very basis on which the order is made, as

pointed out by this Court in Shyam Lal v. State of U.P. and State of

Bombay v. Saubhagchand M. Doshi. Thus, by its very nature the

power to compulsorily retire a government servant is dismissal etc. for

misconduct. A government servant who is compulsorily retired does

not lose any part of the benefit that he has earned during service.

Thus, compulsory retirement differs both from dismissal and removal

as it involves no penal consequences.”

“………………

17.The above discussion of case-law makes it clear that if the

order of compulsory retirement casts a stigma on the Government

servant in the sense that it contains a statement casting aspersion on

his conduct or character, then the court will treat that order as an

order of punishment, attracting provisions of Article 311(2) of the

Constitution. The reason is that as a charge or imputation is made the

condition for passing the order, the court would infer therefrom that

the real intention of the Government was to punish the government

servant on the basis of that charge or imputation and not to exercise

the power of compulsory retirement. But mere reference to the rule,

even if it mentions grounds for compulsory retirement, cannot be

regarded as sufficient for treating the order of compulsory retirement

as an order of punishment. In such a case, the order can be said to

have been passed in terms of the rule and, therefore, a different

intention cannot be inferred. So also, if the statement in the order

refers only to the assessment of his work and does not at the same

time cast an aspersion on the conduct or character of the

Government servant, then it will not be proper to hold that the order of

compulsory retirement is in reality an order of punishment. Whether

Page 9 of 27

Civil Appeal No. 6161 of 2022

the statement in the order is stigmatic or not will have to be judged by

adopting the test of how a reasonable person would read or

understand it.”

[emphasis added]

17.In Union of India v. Col. J.N. Sinha and Another

12

it has been observed that :

“Fundamental Rule 56(j) does not in terms require that any opportunity

should be given to the concerned government servant to show cause

against his compulsory retirement. It says that the appropriate

authority has the absolute right to retire a government servant if it is of

the opinion that it is in the public interest to do so. If that authority

bona fide forms that opinion the correctness of that opinion cannot be

challenged before courts though it is open to an aggrieved party to

contend that the requisite opinion has not been formed or the decision

is based on collateral grounds or that it is an arbitrary decision.”

18.On similar lines were the observations made by this Court in Swami Saran Saxena v.

State of U.P.

13

:-

“3.Several contentions have been raised in this appeal by the

appellant, who appears in person. In our judgment, one of them

suffices to dispose of the appeal. The contention which has found

favour with us is that on a perusal of the material on the record and

having regard to the entries in the personal file and character roll of the

appellant, it is not possible reasonably to come to the conclusion that

the compulsory retirement of the appellant was called for. This

conclusion follows inevitably from the particular circumstances, among

others, that the appellant was found worthy of being permitted to cross

the second efficiency bar only a few months before. Ordinarily, the

court does not interfere with the judgment of the relevant authority on

the point whether it is in the public interest to compulsorily retire a

government servant. And we would have been even more reluctant to

reach the conclusion we have, when the impugned order of

compulsory retirement was made on the recommendation of the High

Court itself. But on the material before us we are unable to reconcile

the apparent contradiction that although for the purpose of crossing

the second efficiency bar the appellant was considered to have worked

with distinct ability and with integrity beyond question yet within a few

months thereafter he was found so unfit as to deserve compulsory

retirement. The entries in between in the records pertaining to the

12 (1970) 2 SCC 458

13 (1980) 1 SCC 12

Page 10 of 27

Civil Appeal No. 6161 of 2022

appellant need to be examined and appraised in that context. There is

no evidence to show that suddenly there was such deterioration in the

quality of the appellant's work or integrity that he deserved to be

compulsorily retired. For all these reasons, we are of opinion that the

order of compulsory retirement should be quashed. The appellant will

be deemed to have continued in service on the date of the impugned

order.

19.In Baldev Raj Chadha v. Union of India

14

, emphasizing the fact that exercise of powers

under Fundamental Rule 56(j) must be bona fide and promote public interest, this Court observed

that : -

“25.The whole purpose of Fundamental Rule 56(j) is to weed out

the worthless without the punitive extremes covered by Article 311 of

the Constitution. But under the guise of ‘public interest’ if unlimited

discretion is regarded acceptable for making an order of premature

retirement, it will be the surest menace to public interest and must fail

for unreasonableness, arbitrariness and disguised dismissal. The

exercise of power must be bona fide and promote public interest.”

26.“An officer in continuous service for 14 years crossing the

efficiency bar and reaching the maximum salary in the scale and with

no adverse entries at least for five years immediately before the

compulsory retirement cannot be compulsorily retired on the score

that long years ago, his performance had been poor, although his

superiors had allowed him to cross the efficiency bar without qualms.”

20.In Ram Ekbal Sharma v. State of Bihar and Another

15

it was observed that in order to

find out whether an order of compulsory retirement is based on any misconduct of the

government servant or the said order has been made bona fide, without any oblique or

extraneous purpose, the veil can be lifted. Following are the pertinent observations made in the

said decision:

“32.On a consideration of the above decisions the legal

position that now emerges is that even though the order of

compulsory retirement is couched in innocuous language

without making any imputations against the government servant

14 (1980) 4 SCC 321

15 (1990) 3 SCC 504

Page 11 of 27

Civil Appeal No. 6161 of 2022

who is directed to be compulsorily retired from service, the

court, if challenged, in appropriate cases can lift veil to find out

whether the order is based on any misconduct of the

government servant concerned or the order has been made bona

fide and not with any oblique or extraneous purposes. Mere form

of the order in such case cannot deter the court from delving into the

basis of the order if the order in question is challenged by the

concerned government servant as has been held by this Court in

‘Anoop Jaiswal case’. This being the position the respondent-State

cannot defend the order of compulsory retirement of the appellant in

the instant case on the mere plea that the order has been made in

accordance with the provisions of Rule 74(b)(ii) of the Bihar Service

Code which prima facie does not make any imputation or does not

cast any stigma on the service career of the appellant. But in view of

the clear and specific averments made by the respondent-State that

the impugned order has been made to compulsorily retire the

appellant from service under the aforesaid rule as the appellant was

found to have committed grave financial irregularities leading to

financial loss to the State, the impugned order cannot but be said to

have been made by way of punishment. As such, such an order is in

contravention of Article 311 of the Constitution of India as well as it is

arbitrary as it violates principles of natural justice and the same has

not been made bona fide.

[emphasis added]

21.In State of Orissa and Others vs. Ram Chandra Das

16

this Court observed as follows: -

“It is needless to reiterate that the settled legal position is that the

Government is empowered and would be entitled to compulsorily

retire a government servant in public interest with a view to improve

efficiency of the administration or to weed out the people of doubtful

integrity or who are corrupt but sufficient evidence was not available

to take disciplinary action in accordance with the rules so as to

inculcate a sense of discipline in the service. But the Government,

before taking the decision to retire a government employee

compulsorily from service, has to consider the entire record of the

government servant including the latest reports.”

22.In State of Gujarat and Another vs. Suryakant Chunilal Shah

17

, a case where the State

Government had challenged the judgment of the Division Bench of the High Court of Gujarat that

16 (1996) 5 SCC 331

17 (1999) 1 SCC 529

Page 12 of 27

Civil Appeal No. 6161 of 2022

had held that the order of compulsory retirement passed against the respondent therein was bad,

as there were no adverse entries in his Confidential Report and his integrity was not doubtful at

any stage, this Court held thus : -

“28.There being no material before the Review Committee,

inasmuch as there were no adverse remarks in the character roll

entries, the integrity was not doubted at any time, the character roll

subsequent to the respondent’s promotion to the post of Assistant

Food Controller (Class II) were not available, it could not come to

the conclusion that the respondent was a man of doubtful integrity

nor could have anyone else come to the conclusion that the

respondent was a fit person to be retired compulsorily from service.

The order, in the circumstances of the case, was punitive having

been passed for the collateral purpose of his immediate removal,

rather than in public interest.”

23.In State of Gujarat vs. Umedbhai M. Patel

18

, this Court has delineated the following

broad principles that ought to be followed in matters relating to compulsory retirement : -

“11.The law relating to compulsory retirement has now crystallized

into a definite principle, which could be broadly summarized thus:

(i)Whenever the services of a public servant are no longer useful

to the general administration, the officer can be compulsorily retired

for the sake of public interest.

(ii)Ordinarily, the order of compulsory retirement is not to be

treated as a punishment coming under Article 311 of the Constitu-

tion.

(iii)For better administration, it is necessary to chop off dead

wood, but the order of compulsory retirement can be passed after

having the regard to the entire service record of the officer.

(iv)Any adverse entries made in the confidential record shall be

taken note of and be given due weightage in passing such order.

(v)Even uncommunicated entries in the confidential record can

also be taken into consideration.

(vi)The order of compulsory retirement shall not be passed as a

short cut to avoid departmental enquiry when such course is more

desirable.

(vii)If the officer was given a promotion despite adverse entries

made in the confidential record, that is a fact in favour of the officer.

(viii)Compulsory retirement shall not be imposed as a punitive mea-

sure.

18 (2001) 3 SCC 314

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Civil Appeal No. 6161 of 2022

24.In Nand Kumar Verma v. State of Jharkhand and Others

19

this Court has once again

highlighted the permissibility of ascertaining the existence of valid material by a Court for the

authorities to pass an order of compulsory retirement and observed thus: -

“34.It is also well settled that the formation of opinion for

compulsory retirement is based on the subjective satisfaction

of the authority concerned but such satisfaction must be

based on a valid material. It is permissible for the Courts to

ascertain whether a valid material exists or otherwise, on

which the subjective satisfaction of the administrative

authority is based. In the present matter, what we see is that the

High Court, while holding that the track record and service record of

the appellant was unsatisfactory, has selectively taken into

consideration the service record for certain years only while making

extracts of those contents of the ACRs. There appears to be some

discrepancy………..”

[emphasis added]

25.In a recent judgment in the case of Nisha Priya Bhatia v. Union of India

20

, confronted

with the question as to whether action taken under Rule 135 of the Research and Analysis Wing

(Recruitment Cadre and Service) Rules, 1975 is in the nature of “a penalty or a dismissal clothed

as compulsory retirement” so as to attract Article 311 of the Constitution of India, this Court has

held that “the real test for this examination is to see whether the order of compulsory retirement is

occasioned by the concern of unsuitability or as a punishment for misconduct”. For drawing this

distinction, reliance has been placed on the judgment in State of Bombay v. Saubhag Chand M.

Doshi

21

, where a distinction was made between an order of dismissal and order of compulsory

retirement in the following words :

“9 … Under the rules, an order of dismissal is a punishment laid on

a government servant, when it is found that he has been guilty of

19 (2012) 3 SCC 580

20 (2020) 13 SCC 56

21 AIR 1957 SC 892

Page 14 of 27

Civil Appeal No. 6161 of 2022

misconduct or inefficiency or the like, and it is penal in character, be-

cause it involves loss of pension which under the rules would have

accrued in respect of the service already put in.

An order of removal also stands on the same footing as an order of

dismissal, and involves the same consequences, the only difference

between them being that while a servant who is dismissed is not eli-

gible for re-appointment, one who is removed is. An order of retire-

ment differs both from an order of dismissal and an order of re-

moval, in that it is not a form of punishment prescribed by the

rules, and involves no penal consequences, inasmuch as the

person retired is entitled to pension proportionate to the period

of service standing to his credit.”

[emphasis added]

EXAMINATION AND ANALYSIS OF THE CASE ON HAND

26.We may now proceed to examine the facts of the case in hand in the light of the case laws

discussed above in order to find out as to whether the order of compulsory retirement passed by

the respondents in respect of the appellant was based on valid material and was in public interest.

First, we propose to examine the personal file and character roll of the appellant. As per the

material placed on record, the APARs of the appellant reflect that over the past several years, his

integrity was being regularly assessed as “Beyond doubt” and this remained the position till as

late as 31

st

July, 2019, when his work performance was assessed for the period from 1

st

April,

2018 to 31

st

March, 2019 and found to be upto the mark. In his APARs for the past one decade,

till the period just prior to the order of his premature retirement, the respondents were consistently

grading the appellant as “Outstanding”. No adverse entries were made by his superiors in the

APARs of the appellant insofar as his work performance was concerned. No aspersion was cast

either on his conduct or character during all this period. As per the service records, his efficiency

and integrity remained unimpeachable throughout his career. The inference drawn from the above

is that the appellant’s service record being impeccable could not have been a factor that went

against him for the respondents to have compulsorily retired him.

Page 15 of 27

Civil Appeal No. 6161 of 2022

27.Coming next to the stand taken by the respondents that several complaints were received

against the appellant that had cast a cloud on his integrity, it is noteworthy that the respondents

have referred to nine complaints against the appellant, stated to be pending in the Vigilance

Directorate that have been pithily summarized by the Tribunal in a tabulated format in para 30 of

its judgment dated 6

th

March, 2019. Juxtaposed against the said tabulated statement of

complaints listed by the respondents, is a separate tabulation of the response of the appellant to

each of the said complaints. For ready reference, the two tables of contents are extracted

below :-

S.

No

.

Name of officer Status

1Sh. P.K. Bajaj Addl CIT,

Range 6 (2), Mumbai

Shri O.P. JangreCharges of harassment &

interference in work by

subordinate officer Shri

Jangre on Shri P.K. Bajaj

Under Examination.

2Sh. P.K. Bajaj, CIT E,

Lucknow

Closed dated 03.05.2018

3Sh. P.K. Bajaj, CIT E,

Lucknow

Complaint made by

Driving Training and

Scientific Research

Lucknow in January

2016

Under examination

4Sh. P.K. Bajaj, CIT E,

Lucknow

Sh. Dharam Veer

Kapil IFS Retd Dated

17.10.2017

ID issued dated 13.11.17. ID

responded dt. 18.11.17 under

examination

5Sh. P.K. Bajaj, CIT E,

Lucknow

Sh. Balesh Singh,

through

PMOPG/E2017/0597

795 dated 17.11.17

ID issued dated 27.12.17

6Sh. P.K. Bajaj, CIT

(Exemption), Lucknow

Shri Ashok Verma,

Lucknow

ID issued dated 08/04/16.

Reminder dated 11.05.16. ID

neither responded nor

received back date. Closed

dated 19.07.16

Page 16 of 27

Civil Appeal No. 6161 of 2022

7Sh. P.K. Bajaj, CIT E,

Lucknow

Sh. Jagat Pandey,

28/42, Civil Lines,

Bareilly, U.P. Dated

29.06.16

ID issued dated 03.08.16

Reminder dated 09.09.16

letter received back

undelivered till date.

Closed dated 07.10.16.

8Shri Pramod Bajaj, CIT

(Exemption), Lucknow

Sh. Ashish Rastogi, A

70, Gandhi Nagar,

Prince Road

Muradabad, U.P.

ID issued dated 25.02.16.

Reminder dated 11.05.16. ID

Neither received back nor

responded. Closed dated

29.08.16.

9CAPT. P.K. Bajaj Addl.

CIT

Smt. Renu Bajaj W/o

Capt P.K. Bajaj

Letter dated 28.01.15 to CIT,

Ajmer for providing

information on case in court

matter. A letter to Pr. CCIT,

Jaipur for status report dated

20.01.16 & reminder dated

28.09.16 sent.

Response of the Appellant

S.

No

.

Name of

officer

Status 5. Facts as per petitioner

1Sh. P.K. Bajaj

Addl. CIT,

Sh. O.P.

Jangre

No explanation ever called for

from petitioner in last 13 years

in this regard. Shri S.K.

Jangre was arrested by

ACB/CBI on 12.12.15, and is

under suspension. (Annexure

No.A1).

2Sh. P.K. Bajaj

CIT (E),

Lucknow

Blank/ Closed dated

03.05.18

No details mentioned

3Sh. P.K. Bajaj

CIT (E),

Lucknow

Complaint

made by

Driving

Training and

Scientific

Research

Lucknow in

January 2016

Under

Examination

File taken for inspection on

03.02.2016 returned after 17

months on 09.08.2017 with

the remarks that this record is

no longer required and matter

closed by ADG(VIG)(NZ on

10.02.16. (Annexure no.A2)

(ii) NBW issued by Ld. CJM

Lucknow against complainant

Page 17 of 27

Civil Appeal No. 6161 of 2022

(Annexure no.A3)

4Sh. P.K. Bajaj

CIT (E),

Lucknow

Sh. Dharam

Veer Kapil

IFS Retd

Dated

17.10.2017

ID issued dt.

13.112017 ID

responded dt.

18.11.17.

under

examination

Father in Law of Mrs. Naina

Kapil So in, IRS posted earlier

in DG(V) office Delhi.

(ii) Application rejected

because even PAN was not

provided in spite of two

opportunities given (copy of

order as Annexure No.A4)

5Sh. P.K. Bajaj

CIT (E),

Lucknow

Sh. Balesh

Singh,

through

PMOPG/E20

17/0597795

dated

17.11.17

ID issued dt.

27/12/17

No details provided by

Respondents. No query ever

raised till date.

6Sh. P.K. Bajaj

CIT

(Exemption),

Lucknow

Shri Ashok

Verma,

Lucknow

ID issued dt.

08/04/16

Reminder dt.

11.05.16 ID

neither

responded nor

received back

undelivered till

dated Closed

dt./19.7.16.

Fictitious/Pseudo anonymous

complaint. Still connected

files taken during inspection

on 29.11.2017.

7Sh. P.K. Bajaj

CIT

(Exemption),

Lucknow

Sh. Jagat

Pandey,

28/42, Civil

Lines,

Bareilly, U.P.

Dated

29.06.16

ID issued

dated

03.08.16

Reminder dt.

09.09.16. ID

letter received

back

undelivered.

Closed/dt.07.

10.16.

Fictitious/Pseudo anonymous

complaint still connected files

taken during inspection on

29.11.2017

8Sh. P.K. Bajaj

CIT

(Exemption),

Lucknow

Sh. Ashish

Rastogi, A

70, Gandhi

Nagar, Prince

Road

Muradabad,

U.P.

ID issued

dated

25.02.16

reminder

dated

11.05.16. ID

neither

received back

nor

Fictitious/Pseudo anonymous

complaint still connected files

taken during inspection on

29.11.2017.

Page 18 of 27

Civil Appeal No. 6161 of 2022

responded.

Closed

Dt/29.08.16

9Sh. P.K. Bajaj

Addl. CIT

Smt. Renu

Bajaj W/o

Capt P.K.

Bajaj

Letter dt.

28.01.15 to

CIT, Ajmer for

providing

information on

case in court

matter. A

letter to Pr.

CCIT Jaipur

for status

report dt.

20.1.16 &

reminder dt.

28.09.16 sent

Divorced on 31.05.2008. No

query ever raised by DGIT

(V) till date but copies of

Hon’ble SC/HC orders

handed over to DGIT (V) on

21.03.2018 (old settled

matrimonial dispute), but still

kept pending by DGIT (V)

(copy as Annexure No. A5)

28.As can be seen from the above, out of the aforesaid nine complaints, four complaints

mentioned at Sr. Nos. 2, 6, 7 and 8 had already been closed by the department in the year 2016-

2017. With regard to the complaint listed at Sr. No.1, is stated to have been levelled by another

officer of the department against the appellant, relating to harassment and interference in work.

The Tribunal has noted the submission of the appellant, which has gone unrefuted that the Anti-

Corruption Bureau of the Central Bureau of Investigation

22

had at a later date, arrested the said

officer on charges of corruption. The appellant has also stated in the remarks column that no

explanation had ever been called for from him on the said complaint, status whereof is shown as

“Under examination”. In respect of the complaints at Sr. Nos. 3 and 4, the respondents have

stated that they are “Under examination”. In reply, the appellant has stated that the complaint at

Sr. No.3, of the year 2016 was closed by the ADG (Vigilance)(NZ) on 10

th

February, 2016 and the

complaint at Sr. No.4, made by a relative of an officer within the Department, was rejected

because the complainant did not provide his PAN number despite being afforded two

22 For short ‘ CBI’

Page 19 of 27

Civil Appeal No. 6161 of 2022

opportunities. There is no rebuttal to the said assertions. Coming to the complaint at Sr. No. 5,

the Review Committee constituted by the respondents has recorded the status of the said

complaint as having been closed on 22

nd

January, 2019. This is apparent from a perusal of para

26 of the judgment dated 09

th

December, 2020, passed by the Tribunal. Now remains the

complaint at Sr. No.9, which was made by the appellant’s ex-wife alleging bigamy, moral turpitude

etc. against the appellant. In the remarks column, the respondents have stated that necessary

information in respect of the said court proceedings between the parties was sought by the

department. The appellant has clarified that a decree of divorce was granted to the parties by the

concerned Court and a copy of the said order was duly supplied to the department against receipt

on 21

st

March, 2018.

29.Insofar as the matrimonial dispute of the appellant is concerned, the material placed on

record reveals that the same had attained quietus by virtue of a settlement arrived at between him

and his estranged wife, vide Settlement Agreement dated 18

th

June, 2016 recorded by the learned

Mediator appointed by the Delhi High Court Mediation and Conciliation Centre. The said

Settlement Agreement was duly taken on record by the Division Bench of the High Court of Delhi

vide order dated 14

th

July, 2016 passed in MAT. APP. (F.C.) Nos.148 of 2014, 34 of 2016 and 36

of 2016. Both the parties had agreed that they would take joint steps to get their marriage

dissolved by filing a petition before the concerned Family Court. One of the terms and conditions

of the Settlement was that the appellant would arrange a residential flat for his wife, which his

brother had agreed to purchase in her name, as a one-time settlement towards all her claims of

maintenance, alimony, stridhan, etc. This condition was subsequently complied with and is borne

out from the Sale Document of the flat dated 3

rd

October, 2016 that records the fact that a sum of

₹ 6,00,000/- (Rupees six lakhs) was paid by the appellant’s brother to the seller towards the sale

price of the flat.

Page 20 of 27

Civil Appeal No. 6161 of 2022

30.Once the parties had arrived at a settlement and a decree of divorce by mutual consent

was passed by the concerned Court, the allegations of bigamy etc. levelled by the appellant’s wife

loses significance since the case was never taken to trial for any findings to be returned by the

Court on this aspect. In the above backdrop, there appears no justification for the respondents to

have raised the spectre of a series of complaints received against the appellant during the course

of his service that had weighed against him for compulsorily retiring him, more so, when these

complaints were to the knowledge of the respondents and yet, his service record remained

unblemished throughout. Nothing has been placed on record to show a sudden decline in the

work conduct of the appellant so as to have compulsorily retired him.

31.We may now proceed to examine the background in which vigilance clearances were

initially given to the appellant and subsequently withheld by the respondents. It is not in dispute

that in the year 2013, the appellant had applied for the post of Member, ITAT and in the year

2014, the Selection Committee had placed him on the top of the list of 48 selected candidates.

Based on the vigilance clearance issued by the department in August, 2013 and once again on

15

th

July 2015, the appellant was recommended by the respondents to the ACC for his

appointment to the subject post.

32.However, sometime later, the respondents withheld the vigilance clearance given earlier

on the ground that there was an adverse IB Report against the appellant. It is not out of place to

mention here that the aforesaid adverse IB report had also arisen from the complaint received

from the appellant’s wife during the very same matrimonial dispute which had already been

amicably settled in Court. The factum of the said settlement was well within the knowledge of the

respondents, who had stated in O.M. dated 15

th

July, 2015 that “the alleged acts of bigamy

against Shri Bajaj emanating from matrimonial dispute is not established”. Aggrieved by the

withholding of his vigilance report, the appellant had approached the Tribunal for relief in OA

Page 21 of 27

Civil Appeal No. 6161 of 2022

No.95 of 2016. Vide interim order dated 10

th

February, 2017, the Tribunal directed the

respondents to resubmit the adverse IB report in respect of the appellant before the Selection

Committee within one month for the said Committee to take a view in the matter. As noted earlier,

the aforesaid order dated 10

th

February, 2017, passed by the Tribunal was upheld by the High

Court, on 30

th

May, 2017 and affirmed by this Court, vide order dated 15

th

November, 2017.

33.Undeterred by the aforesaid judicial orders, the respondents continued to withhold the

vigilance clearance of the appellant, this time claiming that there were some adverse findings

against him in an Inspection Report dated 20

th

April, 2018 stated to have been prepared on the

basis of an inspection of the office of the appellant conducted on 29

th

and 30

th

November, 2017

which was done within a few days of this Court upholding the order dated 10

th

February, 2017

passed by the Tribunal, calling upon the respondents to place his adverse IB report before the

Selection Committee, for it to take a view in the matter. It is rather ironical that the irregularities

noticed by the respondents in the Inspection Report dated 20

th

April, 2018, that made them

withhold the vigilance clearance of the appellant were to their knowledge ten days before and yet

they had issued a letter dated 11

th

April, 2018, giving him vigilance clearance.

34.It is noteworthy that the appellant had challenged the proceedings initiated against him by

the respondents on the basis of the inspections conducted on 29

th

and 30

th

November, 2017 in OA

No.77 of 2018. In the said proceedings, the Tribunal had passed an interim order on 2

nd

February,

2018 directing that the said proceedings will not come in the way of promotion, appointment and

deputation prospects of the appellant. Regardless of the above directions, the respondents not

only denied vigilance clearance to the appellant on 20

th

April, 2018 they went a step ahead and

proceeded to place his name in the “Agreed List” i.e., the list of suspected officers. This act of the

respondents was also assailed by the appellant before the Tribunal in O.A. No. 279 of 2018.

Ultimately, both the captioned Original Applications were collectively decided by the Tribunal in

Page 22 of 27

Civil Appeal No. 6161 of 2022

favour of the appellant by a detailed judgement dated 6

th

March, 201, which has not been stayed

by any superior Court.

35.Aggrieved by a separate Memo dated 30

th

January 2018 issued by the respondents on the

basis of the aforesaid inspection of his office conducted on 29

th

and 30

th

November, 2017 calling

for his explanation in respect of some orders passed by him in his judicial/quasi-judicial capacity

as Commissioner of Income Tax (Exemption), the appellant had to file O.A. No.332 of 2018 that

was decided by the Tribunal in his favour vide judgment dated 28

th

May, 2019. In its judgment,

the Tribunal relied on the order dated 15

th

May 2018, passed by the High Court in W.P. No.13390

of 2018 (SB), declaring that the inspection conducted by the Department was without jurisdiction

and that there was no justification for withholding the vigilance clearance of the appellant on the

basis of the said inspection. Noting that the Memo dated 30

th

January 2018 issued by the

respondents calling for an explanation from the appellant was premised on the very same

inspection conducted by the Department, the Tribunal reiterated the string of findings returned by

it in favour of the appellant in its earlier common judgment dated 6

th

March 2019 [passed in O.A.

No. 137 of 2018 and O.A. No. 279 of 2018] and proceeded to quash the Memo dated 30

th

January

2018 issued by the respondents. It was further held that the said order will not adversely impact

forwarding of the name of the appellant as Member, ITAT, in terms of the recommendations made

by the Selection Committee in its meeting held on 26

th

August 2018.

36.In the teeth of the series of orders passed by the Tribunal and the High Court in favour of

the appellant, the respondents elected to withhold his vigilance clearance, thereby compelling the

appellant to file contempt petitions against the concerned officers for non-compliance of the

orders passed. Both, the High Court as well as the Tribunal, issued notices for wilful disobedience

of the orders passed. In the proceedings before the High Court, on the one hand, the respondents

kept seeking adjournments on the ground that steps were being taken to forward the appellant’s

Page 23 of 27

Civil Appeal No. 6161 of 2022

name to the ACC for being processed for his appointment as Member, ITAT, till as late as on 31

st

May 2019 on which date they were granted one last opportunity for making compliances and at

their request, the matter was adjourned to 9

th

July 2019 and on the other hand, the respondents

slapped the appellant with a Charge Memorandum dated 17

th

June 2019 and suspended him on

1

st

July, 2019.

37.Having regard to the fact that the respondents did not take the disciplinary proceedings

initiated against the appellant to its logical conclusion and instead issued an order compulsorily

retiring him, this Court does not deem it expedient to delve into the allegations levelled in the said

Charge Memorandum; all the same, we have cursorily gone through the Charge Memorandum

that mentions three charges – one alleging that the appellant failed to seek permission from the

department to purchase a flat in relation to the matrimonial dispute between him and his

estranged wife and the second one is in respect of the allegation of bigamy levelled against him

by his estranged wife. We have already noted earlier that during the course of the matrimonial

dispute, the parties had arrived at a settlement and the flat that was agreed to be given to the

wife, was not purchased by the appellant but by his brother, which fact is amply borne out from

the documents placed on record. The matrimonial dispute between the parties stood closed on a

decree of divorce being granted on the basis of mutual consent. That the respondents were also

cognizant of the said fact, is apparent from the contents of O.M. dated 15th July, 2015 which

records inter alia that the said allegations levelled by the wife had not been established. The third

charge was relating to the appellant having attended Court hearings without sanctioned leave.

However, the disciplinary proceedings initiated against the appellant on 17

th

July, 2019 were

abandoned by the respondents on the order of compulsory retirement being passed against him

in less than three months reckoned therefrom, on 27

th

September, 2019.

Page 24 of 27

Civil Appeal No. 6161 of 2022

38.The appellant has made allegations of institutional bias and malice against the

respondents on the plea that the Chairman, CBDT who was a Member of the Review Committee,

was facing three contempt proceedings relating to the appellant’s service dispute, wherein notices

had been issued by the High Court as well as the Tribunal. There is no doubt that rule of law is the

very foundation of a well-governed society and the presence of bias or malafides in the system of

governance would strike at the very foundation of the values of a regulated social order. The law

relating to mala fide exercise of power has been the subject matter of a catena of decisions

[Refer: S. Pratap Singh v. State of Punjab

23

; Jaichand Lal Sethia v. State of W.B

24

; J.D.

Srivastava v. State of M.P And Others

25

; and Express Newspapers Pvt. Ltd. And Others v.

Union of India And Others

26

]. It has been repeatedly held that any exercise of power that

exceeds the parameters prescribed by law or is motivated on account of extraneous or irrelevant

factors or is driven by malicious intent or is on the face of it, so patently arbitrary that it cannot

withstand judicial scrutiny, must be struck down. In the instant case, though the appellant has

levelled allegations of institutional bias and prejudice against the respondents, particularly against

the then Chairman, CBDT who was a Member of the Review Committee, the said officer was not

joined by the appellant as a party before the Tribunal or the High Court, for him to have had an

opportunity to clarify his stand by filing a counter affidavit. Hence, these allegations cannot be

looked into by this Court.

39. Dehors the aforesaid allegations of institutional bias and malice, having perused the

material placed on record, we find merit in the other grounds taken by the appellant. It is noticed

that though FR 56(j) contemplates that the respondents have an absolute right to retire a

23 AIR 1964 SC 72

24 AIR 1967 SC 483

25 (1984) 2 SCC 8

26 (1986) 1 SCC 133

Page 25 of 27

Civil Appeal No. 6161 of 2022

government servant in public interest and such an order could have been passed against the

appellant any time after he had attained the age of fifty years, the respondents did not take any

such decision till the very fag end of his career. The impugned order of compulsory retirement was

passed in this case on 27

th

September, 2019 whereas the appellant was to superannuate in

ordinary course in January, 2020. There appears an apparent contradiction in the approach of the

respondents who had till as late as in July, 2019 continued to grade the appellant as ‘Outstanding’

and had assessed his integrity as ‘Beyond doubt’. But in less than three months reckoned

therefrom, the respondents had turned turtle to arrive at the conclusion that he deserved to be

compulsorily retired. If the appellant was worthy of being continued in service for little short of a

decade after he had attained the age of 50 years and of being granted an overall grade of 9 on

the scale of 1 - 10 on 31

st

July, 2019 it has not been shown as to what had transpired thereafter

that made the respondents resort to FR 56(j) and invoke the public interest doctrine to

compulsorily retire him with just three months of service left for his retirement, in routine. In such

a case, this Court is inclined to pierce the smoke screen and on doing so, we are of the firm view

that the order of compulsory retirement in the given facts and circumstances of the case cannot

be sustained. The said order is punitive in nature and was passed to short-circuit the disciplinary

proceedings pending against the appellant and ensure his immediate removal. The impugned

order passed by the respondents does not pass muster as it fails to satisfy the underlying test of

serving the interest of the public.

Page 26 of 27

Civil Appeal No. 6161 of 2022

40.In view of the above discussion, it is deemed appropriate to reverse the impugned

judgment dated 31

st

May, 2022 and quash and set aside the order dated 27

th

September, 2019

passed by the respondents, compulsorily retiring the appellant. Resultantly, the adverse

consequences if any, flowing from the said order of compulsory retirement imposed on the

appellant, are also set aside. The appeal is allowed and disposed of on the aforesaid terms while

leaving the parties to bear their own costs. .

…………….................................. J

[A.S. Bopanna]

………..........................................J

[Hima Kohli]

NEW DELHI,

MARCH 03, 2023

Page 27 of 27