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PETITIONER:

UNION OF INDIA AND ORS.

Vs.

RESPONDENT:

A.N. SAXENA

DATE OF JUDGMENT27/03/1992

BENCH:

KANIA, M.H. (CJ)

BENCH:

KANIA, M.H. (CJ)

MOHAN, S. (J)

CITATION:

1992 AIR 1233 1992 SCR (2) 364

1992 SCC (3) 124 JT 1992 (2) 532

1992 SCALE (1)800

ACT:

Administrative Tribunals Act, 1985 : Section 24

Tribunal-power to make interim orders-Income Tax

Officer, performing judicial or quasi-judicial functions-

Charge of making irregular assessments-Whether disciplinary

proceeding could be initiated against him-Power of Tribunal

to stay departmental proceedings-voluntary retirement during

pendency of enquiry, Fundamental Rule 56 (k)-Permissibility

of-Payment of provisional pension-Whether could be stopped

pending enquiry.

HEADNOTE:

The respondent, an Income Tax Officer, was served a

charge-sheet on the ground that he completed certain

assessments in an irregular manner designed to confer

benefits on the assesses. Accordingly disciplinary

proceedings were initiated against him. He filed an

application before the Central Administrative Tribunal for

setting aside the charge-sheet and for restraining the

appellant from taking disciplinary proceedings against him.

By its order dated 27.6.91 the Tribunal restrained the

appellant from proceeding with disciplinary proceedings.

During the pendency of the departmental proceedings the

respondent was allowed to retire voluntarily under

Fundamental Rule 56(k). By its second order dated July 15,

1991 the Tribunal directed that in case the commuted value

of the pension payable to the respondent was refunded, he

should be paid the full value of the pension from the due

date including the arrears pending the proceedings before

the tribunal. Against both the orders of the Tribunal the

Union of India filed appeals in this Court. It was

contended on behalf of the respondent that as he was

performing judicial or quasi-judicial functions in making

the assessment order, even if his actions were wrong, they

could be corrected in an appeal or in revision and no

disciplinary proceedings could be taken regarding such

actions.

Allowing the appeals, this Court :

HELD : 1. The Tribunal should have been very careful

before grant

365

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ing stay in a disciplinary proceeding at an interlocutory

stage. The imputations made against the respondent were

extremely serious and the facts alleged, if proved, would

have established misconduct and misbehaviour. It is

surprising that without even a counter being filed, at an

interim stage, the Tribunal, without giving any reasons and

without apparently considering whether the memorandum of

charges deserved to be enquired into or not, granted a stay

of disciplinary proceedings as it has done. If the

disciplinary proceedings in such serious matters are stayed

so lightly as the Tribunal appears to have done, it would be

extremely difficult to bring any wrong-doer to book.

Therefore, the impugned order of the Tribunal is set aside

and it is directed that the disciplinary proceedings against

the respondent shall be proceeded with according to law.

[368A-D]

1.1. In the facts and circumstances of the case it is

desirable that the same Bench of the Tribunal should not

proceed with further hearing of the application made by the

respondent. [369D]

2. It is true that when an officer is performing

judicial or quasi-judicial functions disciplinary

proceedings regarding any of his actions in the course of

such proceedings should be taken only after great caution

and a close scrutiny of his action and only if the

circumstance so warrant. The initiation of such proceedings

is likely to shake the confidence of the public in the

officer concerned and also if lightly taken likely to

undermine his independence. Hence the need for extreme care

and caution before initiation of disciplinary proceedings

against an officer performing judicial or quasi-judicial

functions in respect of his actions in the discharge or

purported to discharge his functions. But it is not as if

such action cannot be taken at all. Where the actions of

such an officer indicate culpability, namely, a desire to

oblige himself or unduly favour one of the parties or an

improper motive there is no reason why disciplinary action

should not be taken. [368-H, 369-A]

3. It is surprising that in a disciplinary enquiry

pertaining to serious charges the respondent was allowed to

retire voluntarily under Fundamental Rule 56(k). It is not

known whether it was duly considered whether his application

for voluntary retirement ought to have been rejected in view

of the seriousness of the charges levelled against him.

However, nothing more can be done in that connection. [369E-

F]

366

JUDGMENT:

CIVIL APPELLATE JURISDICTION : Civil Appeal Nos. 50-51

of 1992.

From the Judgment and order dated 27.6.1991 of the

Central Administrative Tribunal, Delhi in O.A. No. 1307 of

1991.

K.T.S. Tulsi, Addl. Solicitor General Ashok K.

Srivastava, Hemant Sharma and P. Parmeswarn for the

Appellants.

A.K. Sanghi for the Respondent.

The Judgment of the Court was delivered by

KANIA, CJ. These appeals are directed against two

orders passed by the Central Administrative Tribunal

(Principal Bench). New Delhi (hereinafter referred to as

"The tribunal"). By the first impugned order the appellant

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was restrained from proceeding further with the disciplinary

proceedings against the respondent in terms of the charge-

sheet dated March 13, 1989, filed by the appellant. This

order was passed by the Vacation Bench of the tribunal on

June 27, 1991.

The second order sought to be challenged is an order

dated July 15, 1991, whereby the tribunal directed that in

case the commuted value of the pension payable to the

respondent was refunded, the respondent should be paid the

full value of the pension from the due date including the

arrears pending the proceedings before the tribunal.

We propose to set out only a few facts: At the relevant

time, the respondent was an Income Tax Officer posted at New

Delhi. On March 13, 1989, a memorandum of charges or

charge-sheet was served on the respondent. The first

article of charge was to the effect that the respondent

while functioning as an Income Tax Officer completed certain

assessments in an irregular manner, designed to confer undue

benefit on the assessees concerned. The statement of

imputations for misconduct and misbehaviour was forwarded

along with the charge-sheet.

The first case dealt with is that of Master Raju Sehgal

Trust. The assessment year in question was 1979-80. The

statement of imputations is to the effect that the private

discretionary trust of the aforesaid name created on July 1,

1977, by one Shri Vinay Sehgal, the settlor, was for the

benefit of the sole beneficiary, Master Raju Sehgal, younger

brother of the

367

settlor. The trustees were the parents of the settlor and

the beneficiary, while the trust was created with corpus of

only Rs. 1,000. The trustees were given power to receive

donations and gifts from relations, friends and so on. The

assessee-trust filed the first return of income for the

assessment year 1979-80 declaring their income nil. In the

accounting year relevant to the assessment year 1979-80, the

trust claimed having received donations amounting to Rs.

16,52,053. The respondent completed the assessment on March

29, 1982 accepting the receipt of the aforesaid donations as

genuine. A scrutiny of the record showed that 179

certificates were produced by the assessee from the alleged

donors showing donations amounting to Rs.9,49,200. The

alleged donors were mostly from Calcutta whereas the

beneficiary, the trustees and the settlor were all from

Delhi. Thus, the bulk of the donations were made by the

parties in a different city far away. A good part of the

funds of the trust was utilised by the trustees and other

members of the Sehgal family, including the beneficiary.

Details of such amounts have been given in the statement of

imputations. Loans were also taken for substantial amounts

from the trust by members of the Sehgal family for which no

interest was charged. Curiously enough, none of the donors

was ever assessed at an income exceeding Rs. 15,000 till the

assessment year 1982-83 and most of the donors have been

assessed to incomes less than Rs. 10,000 each. All the

donors deposited in their bank account cash equal to the

amount of the gift a day or two before the issue of the

cheques towards making of the gift. None of the donors was

related to the family of the beneficiary. The statement of

imputations alleged that the trust was used apparently only

as a device for converting the unaccounted income of the

Sehgal family into an accounted income. The allegation is

that the respondent without making any enquiry, in the

assessment order held that the donations made to the trust

were found to be genuine, rendering it difficult even to re-

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open the assessment of the trust for the said assessment

year, without considering and determining the issues in

volved. As per imputations, the order enabled the Sehgal

family to legalist their unaccounted income of over Rs. 16

lacs on which tax of Rs.10 lacs would have been payable.

The respondent filed an application before the tribunal

for setting aside this charge-sheet and prayed for an

interim relief restraining the appellant from taking

disciplinary proceedings against him, pending decision of

the tribunal. It is on this application that the tribunal

granted interim relief by the order which is sought to be

impugned before us.

368

In the first place, cannot, but confess out

astonishment at the impugned order passed by the tribunal.

In a case like this the tribunal, we feel, should have been

very careful before granting stay in a disciplinary

proceeding at an interlocutory stage. The imputations made

against the respondent were extremely serious and the facts

alleged, if proved, would have established misconduct and

misbehaviour. It is surprising that without even a counter

being filed, at an interim stage, the tribunal without

giving any reasons and without apparently considering

whether the memorandum of charges deserved to be enquired

into or not, granted a stay of disciplinary proceedings as

it has done. If the disciplinary proceedings in such

serious matters are stayed so lightly as the tribunal

appears to have done, it would be extremely difficult to

bring any wrong-doer to book. We have, therefore, no

hesitation in setting aside the impugned order of the

tribunal and we direct that the disciplinary proceedings

against the respondent in terms of the charge-sheet dated

March 13, 1989 shall be proceeded with according to law. In

fact, we would suggest that disciplinary proceedings should

be proceeded with as early as possible and with utmost zeal.

It was urged before us by learned Counsel for the

respondent that as the respondent was performing judicial or

quasi-judicial functions in making the assessment orders in

question even if his actions were wrong they could be

corrected in an appeal or in revision and no disciplinary

proceedings could be taken regarding such actions.

In our view, an argument that no disciplinary action

can be taken in regard to action taken or purported to be

done in the course of judicial or quasi-judicial proceedings

is not correct. It is true that when an officer is

performing judicial or quasi-judicial functions disciplinary

proceedings regarding any of his actions in the course of

such proceedings should be taken only after great caution

and a close scrutiny of his actions and only if the

circumstances so warrant. The initiation of such

proceedings, it is true, is likely to shake the confidence

of the public in the officer concerned and also if lightly

taken likely to undermine his independence. Hence the need

for extreme care and caution before initiation of

disciplinary proceedings against an officer performing

judicial or quasi-judicial functions in respect of his

actions in the discharge or purported to discharge his

functions. But it is not as if such action cannot be taken

at all. Where the actions of such an officer indicate

culpability, namely, a desire to oblige himself or unduly

favour one of the parties or an improper motive there is

369

no reason why disciplinary action should not be taken.

Appellants have also sought to impugne the order

relating to the payment of pension, which we have referred

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to earlier. However, learned counsel for the appellants is

unable to point out any provision under which the payment of

provisional pension could be stopped pending enquiry. In

the circumstances, we decline to interfere with that part of

the order leaving it open to the appellants, if so advised,

to make an application to the tribunal for varying or

vacating the relief granted in connection with the pension.

Considering all the facts and circumstances of the

case, we direct that a copy of this order should be

forwarded to the Chairman of the Central Administrative

Tribunal so that he may consider whether further hearing of

the application made by the respondent should be proceeded

with by a bench presided over by him or a Bench other than

the one which has passed the impugned order. We do not

intend to cast any aspersions on the members of the tribunal

who have passed the order, in the absence of more concrete

material. But we certainly feel that in the facts and

circumstances it is desirable that the same Bench of the

tribunal should not proceed with further hearing of the

application.

We are somewhat surprised that in a disciplinary

enquiry pertaining to serious charges which we have referred

to earlier, the respondent was allowed to retire voluntarily

under Fundamental Rule 56(k) by an order dated March 28,

1989. We do not know whether it was duly considered whether

his application for voluntary retirement ought to have been

rejected in view of pending enquiry against him and in view

of the seriousness of the charges levelled against him.

However, nothing more can be done in that connection.

Finally, we direct that a copy of this order be sent to

the Chairman, Central Board of Direct Taxes, Secretary of

the Ministry of Finance and the Finance Minister

respectively for such action as they deem fit. The appeals

are allowed with no order as to costs.

We may make it clear, in fairness to the respondent,

that although we have made strong observations it must be

remembered that they are in an appeal from an interim order

and cannot be regarded as conclusive. When the case is to

be finally heard by the tribunal it shall be decided on

370

the material before it on merits according to law and

without being unduly guided by our observations.

Mr. Sanghi, learned counsel for the respondent, urged

that the pending application of the respondent before the

Tribunal it may be directed to be heard expeditiously. That

application may be made to the tribunal and we have no doubt

that the tribunal will give it due consideration according

to law. It has further been pointed out by Mr. Sanghi that

as the allegations levelled against his client are very

serious, the relevant documents must be supplied and all the

rules of fair play must be adhered to. We have no doubt

that this will be done by the tribunal.

T.N.A. Appeals allowed.

371