CAPTAIN PRAMOD KUMAR BAJAJ versus UNION OF INDIA AND ANOTHER

[2023] 2 S.C.R.

CAPTAIN PRAMOD KUMAR BAJAJ

UNION OF INDIA AND ANOTHER

(Civil Appeal No. 6161 of 2022)

BMARCH 03, 2023

[A. S. BOPANNA AND HIMA KOHLI, JJ.]

Service Law: Compulsory retirement – Quashing of, when –Appellant selected and empanelled for appointment as Memberof ITAT by the Selection Committee – However, his appointment didCnot mature – Respondent withheld his appointment on various counts,however, tribunal and all superior courts directed the respondentsforward the name of the appellant to the appropriate Authority forselection/appointment to the post of Member, ITAT – Respondentsdid not comply with the orders and in the meantime initiatedDdisciplinary proceedings against the appellant which never reachedto its logical conclusion – Instead, the appellant was compulsorilyretired three months short of the date of his superannuation –Challenged to, however both the tribunal and the High Courtdismissed the same – On appeal, held: Service record of the appellantis impeccable – Complaints made against him are either closed orEhas been settled, and this was well within the knowledge of therespondents – Nothing placed on record to show sudden declinein the work conduct of the appellant so as to have compulsory retirehim – It is not shown what transpired the respondents to resort toFR 56(j) and invoke public interest doctrine to compulsorily retireFhim with just three months left for his service – Order of retirementis punitive in nature and was passed to short circuit the disciplinaryproceedings – It failed to satisfy the underlying test of serving theinterest of the public – Thus, the order of compulsory set aside –Fundamental Rules – r.56(j).GAllowing the appeal, the Court

HELD: 1.1 As per the material placed on record, theAPARs 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 31st July, 2019, whenHhis work performance was assessed for the period from 1st April,

2018 to 31st March, 2019 and found to be upto the mark. In hisAPARs for the past one decade, till the period just prior to theorder of his premature retirement, the respondents wereconsistently grading the appellant as “Outstanding”. No adverseentries were made by his superiors in the APARs of the appellantinsofar as his work performance was concerned. No aspersionwas cast either on his conduct or character during all this period.As per the service records, his efficiency and integrity remainedunimpeachable throughout his career. The inference drawn fromthe above is that the appellant’s service record being impeccablecould not have been factor that went against him for therespondents to have compulsorily retired him. [Para 26][48-C-E]

1.2 The respondents have referred to nine complaintsagainst the appellant, stated to be pending in the VigilanceDirectorate. Out of the said nine complaints, except one all havebeen closed or rejected. As regards, the complaint at Sr. No.9,which was made by the appellant’s ex-wife alleging bigamy, moralturpitude etc. against the appellant. In the remarks column, therespondents stated that necessary information in respect of thesaid court proceedings between the parties was sought by thedepartment. The appellant clarified that decree of divorce wasgranted to the parties by the concerned Court and copy of thesaid order was duly supplied to the department against receipton 21st March, 2018. [Paras 27, 28][49-F; 52-F; 53-B-C]1.3 In the teeth of the series of orders passed by the tribunaland the High Court in favour of the appellant, the respondentselected to withhold his vigilance clearance, thereby compellingthe appellant to file contempt petitions against the concernedofficers for non-compliance of the orders passed. Both, the HighCourt as well as the tribunal, issued notices for wilful disobedienceof the orders passed. In the proceedings before the High Court,on the one hand, the respondents kept seeking adjournments onthe ground that steps were being taken to forward the appellant’sname to the ACC for being processed for his appointment asMember, ITAT, till as late as on 31st May 2019 on which datethey were granted one last opportunity for making compliances

Aand at their request, the matter was adjourned to 9th July 2019and on the other hand, the respondents slapped the appellantwith Charge Memorandum dated 17th June 2019 and suspendedhim on 1st July, 2019. [Para 36][56-C-E]

1.4 Having regard to the fact that the respondents did notBtake the disciplinary proceedings initiated against the appellantto its logical conclusion and instead issued an order compulsorilyretiring him, it is not expedient to delve into the allegationslevelled in the said Charge Memorandum; all the same, theCharge Memorandum have gone through cursorily that mentionsthree charges – one alleging that the appellant failed to seekCpermission from the department to purchase flat in relation tothe matrimonial dispute between him and his estranged wife andthe second one is in respect of the allegation of bigamy levelledagainst him by his estranged wife. It is already noted that duringthe course of the matrimonial dispute, the parties had arrived atDa settlement and the flat that was agreed to be given to the wife,was not purchased by the appellant but by his brother, which factis amply borne out from the documents placed on record. Thematrimonial dispute between the parties stood closed on decreeof divorce being granted on the basis of mutual consent. That therespondents were also cognizant of the said fact, is apparent fromEthe contents of O.M. dated 15th July, 2015 which records interalia that the said allegations levelled by the wife had not beenestablished. The third charge was relating to the appellant havingattended Court hearings without sanctioned leave. However, thedisciplinary proceedings initiated against the appellant on 17thFJuly, 2019 were abandoned by the respondents on the order ofcompulsory retirement being passed against him in less thanthree months reckoned therefrom, on 27th September, 2019.[Para 37][56-E-H; 57-A-B]

1.5 There is no doubt that rule of law is the very foundationGof well-governed society and the presence of bias or malafidesin the system of governance would strike at the very foundationof the values of regulated social order. Any exercise of powerthat exceeds the parameters prescribed by law or is motivatedon account of extraneous or irrelevant factors or is driven by

malicious intent or is on the face of it, so patently arbitrary that itcannot withstand judicial scrutiny, must be struck down. In theinstant case, though the appellant levelled allegations ofinstitutional bias and prejudice against the respondents,particularly against the then Chairman, CBDT who was Memberof the Review Committee, the said officer was not joined by theappellant as party before the tribunal or the High Court, forhim to have had an opportunity to clarify his stand by filing acounter affidavit. Hence, these allegations cannot be looked intoby this Court. [Para 38][57-C-D, E, F]1.6 Though FR 56(j) contemplates that the respondentshave an absolute right to retire government servant in publicinterest and such an order could have been passed against theappellant any time after he had attained the age of fifty years, therespondents did not take any such decision till the very fag endof his career. The impugned order of compulsory retirement waspassed on 27.09.2019 whereas the appellant was to superannuatein ordinary course in January, 2020. There appears an apparentcontradiction in the approach of the respondents who had till aslate 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, therespondents had turned turtle to arrive at the conclusion that hedeserved to be compulsorily retired. If the appellant was worthyof being continued in service for little short of decade after hehad attained the age of 50 years and of being granted an overallgrade of 9 on the scale of 1 - 10 on 31st July, 2019 it has not beenshown as to what had transpired thereafter that made therespondents resort to FR 56(j) and invoke the public interestdoctrine to compulsorily retire him with just three months ofservice left for his retirement, in routine. In such case, theorder of compulsory retirement in the given facts andcircumstances of the case cannot be sustained. The said order ispunitive in nature and was passed to short-circuit the disciplinaryproceedings pending against the appellant and ensure hisimmediate removal. The impugned order passed by therespondents does not pass muster as it fails to satisfy theunderlying test of serving the interest of the public. The impugned

[2023] 2 S.C.R.

CAPTAIN PRAMOD KUMAR BAJAJ v. UNION OF INDIAAND ANOTHER

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 6161of 2022.

From the Judgment and Order dated 31.05.2022 of the High Courtof Judicature at Allahabad, Lucknow Bench in WA No. 24856 of 2020.D

Appellant-in-person

Sanjay Jain, A.S.G., Zoheb Hussain, Padmesh Mishra, ApoorvKurup, Sunita Sharma, Rajat Nair, Ms. Tanya Aggarwal, Shivam Shukla,Raj Bahadur Yadav, Advs. for the Respondents.

The Judgment of the Court was delivered by

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, LucknowBench upholding the order dated 9[th] December, 2020 passed by theCentral Administrative Tribunal[1], Principal Bench, that had turned downthe challenge laid by him to an order dated 27[th] September, 2019, passedby the Central Board of Direct Taxes, Department of Revenue, Ministryof Finance, Government of India communicating the decision of thePresident of India to compulsorily retire him, in exercise of powersconferred under Rule 56(j) of the Fundamental Rules[2].

1 For short ‘Tribunal’

2 For short ‘FR 56(j)’

AFACTS OF THE CASE

2. The present case has chequered history with multiple roundsof litigations spewed between the appellant and the respondents. Tohave an overview of the matter, we may briefly refer to some factsrelevant for deciding the present Appeal. The appellant was PermanentBCommissioned Officer in the Indian Army, inducted in the year 1980.Due to physical disability suffered by him in the course of Armyoperations, he was demobilized and released from service. In the year1989, the appellant qualified the Civil Services Examination. He wasappointed as an Officer and allocated to the 1990 Batch in the IndianRevenue Service. In due course of his service, the appellant was promotedCto higher posts and on 12[th] January, 2012, he was promoted to the rankof Commissioner, in the Department of Income Tax. On 7[th] July, 2014,the appellant was selected and empanelled for appointment as Memberof the Income Tax Appellate Tribunal[3] by the Selection Committeeheaded by sitting Judge of the Supreme Court nominated by the thenDChief Justice of India. On 15[th] July, 2015, the respondents forwardedthe 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 bythe ACC for appointment as Joint Secretary to the Government of India.From the year 2017 onwards, started saga of litigations between theEappellant and the respondents, as result whereof, his appointment as aMember 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. Videjudgment dated 10[th] February, 2017, the Tribunal disposed of the OriginalFApplication filed by the appellant with direction issued to the respondentsto resubmit his adverse IB Report to the Selection Committee for it totake final view on his appointment to the subject post. The said judgmentpassed by the Tribunal was assailed by the respondents in writ petitionbefore the High Court, which came to be dismissed on 30[th] May, 2017,Gwith further directions issued to make the entire process of reconsiderationof the appellant’s candidature by the Selection Committee, timebound.The Petition for Special Leave to Appeal preferred by the respondent –

3 For short ‘ITAT’

4 For short ‘ACC’

H5 For short ‘IB’

Union of India against the order dated 30[th] May, 2017 passed by theHigh Court, was also dismissed by this Court on 15[th] November, 2017.

4. On 29[th] November, 2017, vigilance inspection was carried outin the office of the appellant. Based on the said vigilance inspection, therespondents issued show cause notice to him on 31[st] January, 2018.Ten days before that, on 21[st] January, 2018, the vigilance clearance earliergranted in favour of the appellant, was withheld by the respondents.Both the aforesaid orders were assailed by the appellant by filing separateOriginal Applications before the Tribunal. Initially, an interim order waspassed by the Tribunal observing that the show cause notice issued bythe respondents would not impede the appellant’s consideration forappointment to the post of Member, ITAT. On 4[th] May 2018, anotherinterim order was passed by the Tribunal, observing that withholding ofthe vigilance clearance of the appellant will not come in his way forappointment to the subject post. In the interregnum, on 11[th] April, 2018,the appellant was placed in the “Agreed List”, which is list of GazettedOfficers of suspect integrity prepared by the Department. Pertinently, asecond Petition for Special Leave to Appeal filed by the respondentsagainst the interim relief granted by the Tribunal in favour of the appellantand duly confirmed by the High Court in WP (C) No. 22179-22187 of2018 on 06.08.2018, was dismissed by this Court on 29.03.2019.5. Aggrieved by the aforesaid action taken by the respondents ofplacing his name in the Suspect List, the appellant approached the Tribunalfor third time and in the said proceedings, an interim order was grantedin his favour. Finally, vide common judgment dated 6[th] March, 2019, theTribunal allowed two Original Applications filed by the appellant [O.A.No.137 of 2018 and O.A. No.279 of 2018], quashing inclusion of hisname in the “Agreed List” and the consequential proceedings as alsothe decision taken by the respondents to deny him vigilance clearance.The Tribunal also directed the respondents to forward the name of theappellant to the appropriate Authority for selection/appointment to thepost of Member, ITAT. However, the respondents did not comply withthe said order and filed writ petition before the High Court. Admittedly,no interim order was passed by the High Court staying the operation ofthe 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 contemptpetition before the High Court. Vide order dated 13[th] August, 2019, the

AHigh Court permitted impleadment of the then Chairman of the CentralBoard of Direct Taxes[6] in the contempt petition and issued him noticeto show cause as to why he should not be punished for wilful disobedienceof the order dated 30[th] May, 2017, passed in the writ proceedings.

7. Similar notices were issued by the Tribunal on two contemptBpetitions filed by the appellant against the respondents for non-complianceof the orders dated 30[th] May, 2017 and 6[th] March, 2019. In the meantime,the respondents initiated disciplinary proceedings against the appellantby issuing him chargesheet on 17[th] June, 2019. In July 2019, aDepartmental Promotion Committee[7] was convened by the Union PublicService Commission[8] to consider promoting the appellant to the post ofCPrincipal Commissioner but the decision taken qua him, was placed inthe sealed cover due to the pending disciplinary proceedings. The appellanthad filed writ petition before the High Court against the chargememorandum issued to him wherein the High Court granted stay ordersin his favour. While the said proceedings were still pending, theDrespondents proceeded to compulsorily retire the appellant on 27[th]September, 2019, which was about three months short of the date of hissuperannuation in January 2020. The list of promotions made to the postof Principal Commissioner was declared on 11.11.2019, by which datethe appellant was no longer in the reckoning.

E8. It may be noted here that the mechanism in place within thedepartment for arriving at conclusion as to who amongst the Group-AOfficers in the CBDT deserve to be prematurely retired, starts with anassessment to be conducted by the Internal Committee that identifiesand recommends the names of the officers and places it before theReview Committee. The next stage is before the Review CommitteeFthat includes the Chairman, CBDT and the Revenue Secretary asMembers. If satisfied by the records and comments forwarded by theInternal Committee that the pre-mature retirement of Group-A Officeris desirable in public interest, the Review Committee makes arecommendation to the Appointing Authority in this regard. TheGAppointing Authority is then required to examine the recommendationsof the Review Committee and if satisfied, pass an order of pre-matureretirement of the concerned Officer. Once the Competent Authority

6 For short ‘CBDT’7 For short ‘DPC’H8 For short ‘UPSC’

passes an order of pre-mature retirement under FR 56(j), the aggrievedOfficer is entitled to submit representation to the RepresentationCommittee. As per the records, the appellant had submitted arepresentation to the Representation Committee, which was turned downon 2[nd] January 2020.

9. The appellant challenged the final order of compulsoryretirement issued against the appellant on 27[th] September, 2019 and thesubsequent order dated 2[nd] January, 2020, passed by the RepresentationCommittee declining to interfere in the order of compulsory retirement,before the Tribunal. The said petition was dismissed, vide judgment dated9[th] December, 2020 and upheld by the High Court by the impugnedjudgment dated 31[st] May, 2022.

THREEFOLD CHALLENGE

10. threefold challenge has been laid by the appellant to theimpugned judgment. Firstly, on the ground of serious prejudice caused tohim due to the active participation of the Additional Director General(Vigilance) as Member of the Internal Committee when he had biasagainst the appellant and the participation of the then Chairman of theCBDT in the meeting of the Review Committee, convened to examinethe recommendations of the Internal Committee for pre- maturely retiringhim, when he ought to have recused himself knowing that he was facingthree contempt notices, one issued by the High Court on 13[th] August,2019 [Contempt Petition No.2681/2017] and two notices issued by theTribunal [CCP No.15/2019 and CCP No.25/2019] for failing to forwardthe appellant’s vigilance clearance required for processing his case forappointment as Member, ITAT, to the Selection Committee. Secondly, ithas been argued that the impugned order of his pre-mature retirement ispunitive in nature and has been passed solely to deprive him of anopportunity to be appointed as Member ITAT, post for which he wasselected by the Selection Committee headed by sitting Judge of theSupreme Court and his name was placed at Serial No.1 in the All IndiaRanking, as long back as in the year 2014. This selection of the appellantwas reiterated by subsequently constituted Selection Committee in theyear 2018, but did not reach fruition due to persistent obstructions createdby the respondents, who withheld his vigilance clearance without validreason and subsequently placed his name in the “Agreed List”, followedby initiation of disciplinary enquiry against him on baseless chargeswhich was not taken to its logical conclusion, as he was prematurely

Aretired in September, 2019. Lastly, it was urged that the High Court hascompletely overlooked the fact that all the Annual PerformanceAssessment Reports[9] of the appellant over the past 30 years wereblemishless. In fact, the appellant was graded as ‘Outstanding’ and hisintegrity was assessed as ‘Beyond Doubt’ for the immediately preceding10 years’ APARs, after he was promoted to the post of Commissioner,BIncome Tax in the year 2012.

SUBMISSIONS MADE BY THE COUNSEL FOR THEUNION OF INDIA

11. Refuting the allegations levelled by the appellant and defendingCthe impugned judgment, Mr. Sanjay Jain, learned Additional SolicitorGeneral[10] who appeared for the respondents – Union of India urged thatthe impugned judgment is well-reasoned one and does not deserveinterference; that the order of compulsory retirement was passed in thecase of the appellant after duly considering his entire service record;that the material relied upon by the respondents for passing an orderDunder FR 56(j), was carefully considered by the Tribunal before dismissingthe Original Application filed by the appellant, as meritless and that theallegations of institutional malice and bias levelled by the appellant areill-founded. Learned ASG contended that unlike departmental enquiries,the scope of an enquiry under FR 56(j) is fairly limited and the standardEof adjudication is prima facie subjective opinion as to the suitability ofan officer to continue in service, keeping in mind public interest. Nostigma can be attached to an employee who is compulsorily retired, ascompulsory retirement does not amount to dismissal or removal. Theappellant is still entitled to all retiral benefits and also entitled to beconsidered for other appointments. It was stated that chargesheetFwas pending against the appellant for major penalty proceedings whichhad been unsuccessfully challenged by him before the Tribunal. Citingseveral decisions of this Court on the limited scope of interference in anorder of compulsory retirement, it was submitted on behalf of therespondents – Union of India that courts should ordinarily refrain fromGreturning findings on merits of the allegations against the concernedofficer. Once an order of compulsory retirement has been passed bonafide and without any extraneous motive, there is no justification forinterference.

9 For short ‘APAR’H10 For short ‘ASG’

ANALYSIS AND CASE LAWS RELATING TOCOMPULORY RETIREMENT

12. We have given our thoughtful consideration to the argumentsadvanced by learned counsel for the parties, perused the records andthe 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 theopinion that it is in the public interest so to do, have theabsolute right to retire any Government servant by givinghim notice of not less than three months in writing or threemonths’ pay and allowances in lieu of such notice :-

(i) If he is, in Group ‘A’ or Group ‘B’ service or post in asubstantive, quasi- permanent or temporary capacity andhad entered Government service before attaining the ageof 35 years, after he has attained the age of 50 years;

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

14. As is apparent from perusal of the aforesaid provision, ittakes in its fold two elements – the first one is the absolute right of theGovernment to retire an employee and the second is the requirement ofmeeting the condition of public interest for doing so. The provision alsoprovides for prior notice of at least three months to the outgoingemployee and mandates that the said provision can be invoked to retirea government servant only after he has attained the age of 55 years.

15. We are conscious of the fact that the scope of judicial reviewin respect of an order of compulsory retirement from the service, isfairly limited. The law relating to compulsory retirement has been thesubject matter of discussion in number of cases where certain settledlegal principles have been laid down which are being elucidatedhereinbelow.

16. The object of compulsory retirement of government servantwas highlighted by this Court in Allahabad Bank Officers’ Associationand Another vs. Allahabad Bank and Others[11]in the followingwords:-

11 1996(4) SCC 504

“5. The power to compulsorily retire government servantis one of the facets of the doctrine of pleasure incorporatedin Article 310 of the Constitution. The object of compulsoryretirement is to weed out the deed wood in order to maintainefficiency and initiative in the service and also to dispensewith the services of those whose integrity is doubtful so asto preserve purity in the administration. Generally speaking,Service Rules provide for compulsory retirement of governmentservant on his completing certain number of years of service orattaining the prescribed age. His service record is reviewed atthat stage and decision is taken whether he should becompulsorily retired or continued further in service. There is nolevelling of charge or imputation requiring an explanation fromthe government servant. While misconduct and inefficiency arefactors that enter into the account where the order is one ofdismissal or removal or of retirement, there is this difference thatwhile in the case of retirement they merely furnish the backgroundand the enquiry, if held – and there is no duty to hold an enquiry –is only for the satisfaction of the authorities who have to takeaction, in the case of dismissal or removal they form the verybasis on which the order is made, as pointed out by this Court inShyam Lal v. State of U.P. and State of Bombay v.Saubhagchand M. Doshi. Thus, by its very nature the power tocompulsorily retire government servant is dismissal etc. formisconduct. government servant who is compulsorily retireddoes not lose any part of the benefit that he has earned duringservice. Thus, compulsory retirement differs both from dismissaland removal as it involves no penal consequences.”

“………………

17. The above discussion of case-law makes it clear that if theorder of compulsory retirement casts stigma on the Governmentservant in the sense that it contains statement casting aspersionon his conduct or character, then the court will treat that order asan order of punishment, attracting provisions of Article 311(2)ofthe Constitution. The reason is that as charge or imputation ismade the condition for passing the order, the court would infertherefrom that the real intention of the Government was to punishthe government servant on the basis of that charge or imputationand not to exercise the power of compulsory retirement. But merereference to the rule, even if it mentions grounds for compulsoryretirement, cannot be regarded as sufficient for treating the orderof compulsory retirement as an order of punishment. In such acase, the order can be said to have been passed in terms of therule and, therefore, different intention cannot be inferred. Soalso, if the statement in the order refers only to the assessment ofhis work and does not at the same time cast an aspersion on theconduct or character of the Government servant, then it will notbe proper to hold that the order of compulsory retirement is inreality an order of punishment. Whether the statement in the orderis stigmatic or not will have to be judged by adopting the test ofhow reasonable person would read or understand it.”

[emphasis added]

17. In Union of India v. Col. J.N. Sinha and Another[12]it hasbeen observed that :

“Fundamental Rule 56(j) does not in terms require that anyopportunity should be given to the concerned government servantto show cause against his compulsory retirement. It says that theappropriate authority has the absolute right to retire governmentservant 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 ofthat opinion cannot be challenged before courts though it is opento an aggrieved party to contend that the requisite opinion has notbeen formed or the decision is based on collateral grounds or thatit is an arbitrary decision.”

18. On similar lines were the observations made by this Court inSwami Saran Saxena v. State of U.P.[13]:-

“3. Several contentions have been raised in this appeal by theappellant, who appears in person. In our judgment, one of themsuffices to dispose of the appeal. The contention which has foundfavour with us is that on perusal of the material on the recordand having regard to the entries in the personal file and characterroll of the appellant, it is not possible reasonably to come to theconclusion that the compulsory retirement of the appellant was

12 (1970) 2 SCC 458

13 (1980) 1 SCC 12

Acalled for. This conclusion follows inevitably from the particularcircumstances, among others, that the appellant was found worthyof being permitted to cross the second efficiency bar only fewmonths before. Ordinarily, the court does not interfere with thejudgment of the relevant authority on the point whether it is in thepublic interest to compulsorily retire government servant. AndBwe would have been even more reluctant to reach the conclusionwe have, when the impugned order of compulsory retirement wasmade on the recommendation of the High Court itself. But on thematerial before us we are unable to reconcile the apparentcontradiction that although for the purpose of crossing the secondCefficiency bar the appellant was considered to have worked withdistinct ability and with integrity beyond question yet within fewmonths thereafter he was found so unfit as to deserve compulsoryretirement. The entries in between in the records pertaining to theappellant need to be examined and appraised in that context. Thereis no evidence to show that suddenly there was such deteriorationDin the quality of the appellant’s work or integrity that he deservedto be compulsorily retired. For all these reasons, we are of opinionthat the order of compulsory retirement should be quashed. Theappellant will be deemed to have continued in service on the dateof the impugned order.

E19. In Baldev Raj Chadha v. Union of India[14], emphasizingthe fact that exercise of powers under Fundamental Rule 56(j) must bebona fide and promote public interest, this Court observed that : -

“25. The whole purpose of Fundamental Rule 56(j) is to weed outthe worthless without the punitive extremes covered by ArticleF311 of the Constitution. But under the guise of ‘public interest’ ifunlimited discretion is regarded acceptable for making an orderof premature retirement, it will be the surest menace to publicinterest and must fail for unreasonableness, arbitrariness anddisguised dismissal. The exercise of power must be bona fideGand promote public interest.”26. “An officer in continuous service for 14 years crossing theefficiency bar and reaching the maximum salary in the scale andwith no adverse entries at least for five years immediately before

the compulsory retirement cannot be compulsorily retired on thescore that long years ago, his performance had been poor, althoughhis superiors had allowed him to cross the efficiency bar withoutqualms.”

20. In Ram Ekbal Sharma v. State of Bihar and Another[15]itwas observed that in order to find out whether an order of compulsoryretirement is based on any misconduct of the government servant or thesaid order has been made bona fide, without any oblique or extraneouspurpose, the veil can be lifted. Following are the pertinent observationsmade in the said decision:

“32. On consideration of the above decisions the legalposition that now emerges is that even though the order ofcompulsory retirement is couched in innocuous languagewithout making any imputations against the governmentservant who is directed to be compulsorily retired fromservice, the court, if challenged, in appropriate cases canlift veil to find out whether the order is based on anymisconduct of the government servant concerned or theorder has been made bona fide and not with any oblique orextraneous purposes. Mere form of the order in such casecannot deter the court from delving into the basis of the order ifthe order in question is challenged by the concerned governmentservant as has been held by this Court in ‘Anoop Jaiswal case’.This being the position the respondent-State cannot defend theorder of compulsory retirement of the appellant in the instant caseon the mere plea that the order has been made in accordancewith the provisions of Rule 74(b)(ii) of the Bihar Service Codewhich prima facie does not make any imputation or does not castany stigma on the service career of the appellant. But in view ofthe clear and specific averments made by the respondent-Statethat the impugned order has been made to compulsorily retire theappellant from service under the aforesaid rule as the appellantwas found to have committed grave financial irregularities leadingto financial loss to the State, the impugned order cannot but besaid to have been made by way of punishment. As such, such anorder is in contravention of Article 311 of the Constitution of India

Aas well as it is arbitrary as it violates principles of natural justiceand 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: -B

“It is needless to reiterate that the settled legal position is that theGovernment is empowered and would be entitled to compulsorilyretire government servant in public interest with view to improveefficiency of the administration or to weed out the people ofdoubtful integrity or who are corrupt but sufficient evidence wasCnot available to take disciplinary action in accordance with therules so as to inculcate sense of discipline in the service. But theGovernment, before taking the decision to retire governmentemployee compulsorily from service, has to consider the entirerecord of the government servant including the latest reports.”

22. In State of Gujarat and Another vs. Suryakant ChunilalShah[17], case where the State Government had challenged the judgmentof the Division Bench of the High Court of Gujarat that had held that theorder of compulsory retirement passed against the respondent thereinwas bad, as there were no adverse entries in his Confidential ReportEand 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 rollentries, the integrity was not doubted at any time, the characterroll subsequent to the respondent’s promotion to the post ofFAssistant Food Controller (Class II) were not available, it couldnot come to the conclusion that the respondent was man ofdoubtful integrity nor could have anyone else come to the conclusionthat the respondent was fit person to be retired compulsorilyfrom service. The order, in the circumstances of the case, waspunitive having been passed for the collateral purpose of hisGimmediate removal, rather than in public interest.”

23. In State of Gujarat vs. Umedbhai M. Patel[18], this Courthas delineated the following broad principles that ought to be followed inmatters relating to compulsory retirement : -

“11. The law relating to compulsory retirement has now crystallizedinto definite principle, which could be broadly summarized thus:

(i) Whenever the services of public servant are no longer usefulto the general administration, the officer can be compulsorilyretired for the sake of public interest.

(ii) Ordinarily, the order of compulsory retirement is not to betreated as punishment coming under Article 311 of the Constitu-tion.

(iii) For better administration, it is necessary to chop off deadwood, but the order of compulsory retirement can be passed afterhaving the regard to the entire service record of the officer.

(iv) Any adverse entries made in the confidential record shall betaken note of and be given due weightage in passing such order.

(v) Even uncommunicated entries in the confidential record canalso be taken into consideration.

(vi) The order of compulsory retirement shall not be passed as ashort cut to avoid departmental enquiry when such course is moredesirable.

(vii) If the officer was given promotion despite adverse entriesmade in the confidential record, that is fact in favour of theofficer.

(viii) Compulsory retirement shall not be imposed as punitivemea- sure.

24. In Nand Kumar Verma v. State of Jharkhand and Others[19]this Court has once again highlighted the permissibility of ascertainingthe existence of valid material by Court for the authorities to pass anorder of compulsory retirement and observed thus: -

“34. It is also well settled that the formation of opinion forcompulsory retirement is based on the subjective

18 (2001) 3 SCC 314

19 (2012) 3 SCC 580

Asatisfaction of the authority concerned but such satisfactionmust be based on valid material. It is permissible for theCourts to ascertain whether valid material exists orotherwise, on which the subjective satisfaction of theadministrative authority is based. In the present matter, whatwe see is that the High Court, while holding that the track recordBand service record of the appellant was unsatisfactory, hasselectively taken into consideration the service record for certainyears only while making extracts of those contents of the ACRs.There appears to be some discrepancy. “

[emphasis added]C

25. In recent judgment in the case of Nisha Priya Bhatia v.Union of India[20], confronted with the question as to whether actiontaken under Rule 135 of the Research and Analysis Wing (RecruitmentCadre and Service) Rules, 1975 is in the nature of “a penalty or dismissalclothed as compulsory retirement” so as to attract Article 311 of theDConstitution of India, this Court has held that “the real test for thisexamination is to see whether the order of compulsory retirement isoccasioned by the concern of unsuitability or as punishment formisconduct”. For drawing this distinction, reliance has been placed onthe judgment in State of Bombay v. Saubhag Chand M. Doshi[21],Ewhere distinction was made between an order of dismissal and orderof compulsory retirement in the following words :

“9 … Under the rules, an order of dismissal is punishment laidon government servant, when it is found that he has been guiltyof misconduct or inefficiency or the like, and it is penal in character,Fbe- cause it involves loss of pension which under the rules wouldhave accrued in respect of the service already put in.

An order of removal also stands on the same footing as an orderof dismissal, and involves the same consequences, the onlydifference between them being that while servant who isGdismissed is not eli- gible for re-appointment, one who is removedis. An order of retire- ment differs both from an order ofdismissal and an order of re- moval, in that it is not formof punishment prescribed by the rules, and involves no

20 (2020) 13 SCC 56H21 AIR 1957 SC 892

penal consequences, inasmuch as the person retired isentitled to pension proportionate to the period of servicestanding to his credit.” [emphasis added]

EXAMINATION AND ANALYSIS OF THE CASE ONHAND

26. We may now proceed to examine the facts of the case inhand in the light of the case laws discussed above in order to find out asto whether the order of compulsory retirement passed by the respondentsin respect of the appellant was based on valid material and was in publicinterest. First, we propose to examine the personal file and characterroll of the appellant. As per the material placed on record, the APARs ofthe appellant reflect that over the past several years, his integrity wasbeing regularly assessed as “Beyond doubt” and this remained theposition till as late as 31[st] July, 2019, when his work performance wasassessed for the period from 1[st] April, 2018 to 31[st] March, 2019 andfound to be upto the mark. In his APARs for the past one decade, till theperiod just prior to the order of his premature retirement, the respondentswere consistently grading the appellant as “Outstanding”. No adverseentries were made by his superiors in the APARs of the appellant insofaras his work performance was concerned. No aspersion was cast eitheron his conduct or character during all this period. As per the servicerecords, his efficiency and integrity remained unimpeachable throughouthis career. The inference drawn from the above is that the appellant’sservice record being impeccable could not have been factor that wentagainst him for the respondents to have compulsorily retired him.

27. Coming next to the stand taken by the respondents that severalcomplaints were received against the appellant that had cast cloud onhis integrity, it is noteworthy that the respondents have referred to ninecomplaints against the appellant, stated to be pending in the VigilanceDirectorate that have been pithily summarized by the Tribunal in atabulated format in para 30 of its judgment dated 6[th] March, 2019.Juxtaposed against the said tabulated statement of complaints listed bythe respondents, is separate tabulation of the response of the appellantto each of the said complaints. For ready reference, the two tables ofcontents are extracted below :-

AResponse of the AppellantBCDEFG

Response of the AppellantA

EFGH

ABCDE

28. As can be seen from the above, out of the aforesaid ninecomplaints, four complaints mentioned at Sr. Nos. 2, 6, 7 and 8 hadalready been closed by the department in the year 2016- 2017. Withregard to the complaint listed at Sr. No.1, is stated to have been levelledFby another officer of the department against the appellant, relating toharassment and interference in work. The Tribunal has noted thesubmission of the appellant, which has gone unrefuted that the Anti-Corruption Bureau of the Central Bureau of Investigation[22] had at alater date, arrested the said officer on charges of corruption. The appellantGhas also stated in the remarks column that no explanation had ever beencalled 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

H22 For short ‘ CBI’

was closed by the ADG (Vigilance)(NZ) on 10[th] February, 2016 and thecomplaint at Sr. No.4, made by relative of an officer within theDepartment, was rejected because the complainant did not provide hisPAN number despite being afforded two opportunities. There is no rebuttalto the said assertions. Coming to the complaint at Sr. No. 5, the ReviewCommittee constituted by the respondents has recorded the status ofthe said complaint as having been closed on 22[nd] January, 2019. This isapparent from 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, moralturpitude etc. against the appellant. In the remarks column, therespondents have stated that necessary information in respect of thesaid court proceedings between the parties was sought by the department.The appellant has clarified that decree of divorce was granted to theparties by the concerned Court and copy of the said order was dulysupplied 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 quietusby virtue of settlement arrived at between him and his estranged wife,vide Settlement Agreement dated 18[th] June, 2016 recorded by the learnedMediator appointed by the Delhi High Court Mediation and ConciliationCentre. The said Settlement Agreement was duly taken on record bythe 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 of2016. Both the parties had agreed that they would take joint steps to gettheir marriage dissolved by filing petition before the concerned FamilyCourt. One of the terms and conditions of the Settlement was that theappellant would arrange residential flat for his wife, which his brotherhad agreed to purchase in her name, as one-time settlement towardsall her claims of maintenance, alimony, stridhan, etc. This conditionwas subsequently complied with and is borne out from the Sale Documentof the flat dated 3[rd] October, 2016 that records the fact that sum of` 6,00,000/- (Rupees six lakhs) was paid by the appellant’s brother tothe seller towards the sale price of the flat.

30. Once the parties had arrived at settlement and decree ofdivorce by mutual consent was passed by the concerned Court, theallegations of bigamy etc. levelled by the appellant’s wife losessignificance since the case was never taken to trial for any findings to

Abe returned by the Court on this aspect. In the above backdrop, thereappears no justification for the respondents to have raised the spectre ofa series of complaints received against the appellant during the courseof his service that had weighed against him for compulsorily retiring him,more so, when these complaints were to the knowledge of the respondentsand yet, his service record remained unblemished throughout. NothingBhas been placed on record to show sudden decline in the work conductof the appellant so as to have compulsorily retired him.

31. We may now proceed to examine the background in whichvigilance clearances were initially given to the appellant and subsequentlywithheld by the respondents. It is not in dispute that in the year 2013, theCappellant had applied for the post of Member, ITAT and in the year2014, the Selection Committee had placed him on the top of the list of 48selected candidates. Based on the vigilance clearance issued by thedepartment in August, 2013 and once again on 15[th] July 2015, the appellantwas recommended by the respondents to the ACC for his appointmentDto the subject post.

32. However, sometime later, the respondents withheld thevigilance clearance given earlier on the ground that there was an adverseIB Report against the appellant. It is not out of place to mention herethat the aforesaid adverse IB report had also arisen from the complaintEreceived from the appellant’s wife during the very same matrimonialdispute which had already been amicably settled in Court. The factumof 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 ofbigamy against Shri Bajaj emanating from matrimonial dispute isnot established”. Aggrieved by the withholding of his vigilance report,Fthe appellant had approached the Tribunal for relief in OA No.95 of2016. Vide interim order dated 10[th] February, 2017, the Tribunal directedthe respondents to resubmit the adverse IB report in respect of theappellant before the Selection Committee within one month for the saidCommittee to take view in the matter. As noted earlier, the aforesaidGorder dated 10[th] February, 2017, passed by the Tribunal was upheld bythe High Court, on 30[th] May, 2017 and affirmed by this Court, vide orderdated 15[th] November, 2017.

33. Undeterred by the aforesaid judicial orders, the respondentscontinued to withhold the vigilance clearance of the appellant, this timeHclaiming that there were some adverse findings against him in an

Inspection Report dated 20[th] April, 2018 stated to have been preparedon the basis of an inspection of the office of the appellant conducted on29[th] and 30[th] November, 2017 which was done within few days of thisCourt upholding the order dated 10[th] February, 2017 passed by theTribunal, calling upon the respondents to place his adverse IB reportbefore the Selection Committee, for it to take view in the matter. It israther ironical that the irregularities noticed by the respondents in theInspection Report dated 20[th] April, 2018, that made them withhold thevigilance clearance of the appellant were to their knowledge ten daysbefore and yet they had issued letter dated 11[th] April, 2018, giving himvigilance clearance.34. It is noteworthy that the appellant had challenged theproceedings initiated against him by the respondents on the basis of theinspections conducted on 29[th] and 30[th] November, 2017 in OA No.77 of2018. In the said proceedings, the Tribunal had passed an interim orderon 2[nd] February, 2018 directing that the said proceedings will not comein the way of promotion, appointment and deputation prospects of theappellant. Regardless of the above directions, the respondents not onlydenied vigilance clearance to the appellant on 20[th] April, 2018 they wenta 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 assailedby the appellant before the Tribunal in O.A. No. 279 of 2018. Ultimately,both the captioned Original Applications were collectively decided bythe Tribunal in favour of the appellant by detailed judgement dated 6[th]March, 201, which has not been stayed by any superior Court.

35. Aggrieved by separate Memo dated 30[th] January 2018 issuedby the respondents on the basis of the aforesaid inspection of his officeconducted on 29[th] and 30[th] November, 2017 calling for his explanation inrespect of some orders passed by him in his judicial/quasi-judicial capacityas Commissioner of Income Tax (Exemption), the appellant had to fileO.A. No.332 of 2018 that was decided by the Tribunal in his favour videjudgment dated 28[th] May, 2019. In its judgment, the Tribunal relied onthe order dated 15[th] May 2018, passed by the High Court in W.P. No.13390of 2018 (SB), declaring that the inspection conducted by the Departmentwas without jurisdiction and that there was no justification for withholdingthe vigilance clearance of the appellant on the basis of the said inspection.Noting that the Memo dated 30[th] January 2018 issued by the respondentscalling for an explanation from the appellant was premised on the very

Asame inspection conducted by the Department, the Tribunal reiteratedthe string of findings returned by it in favour of the appellant in its earliercommon judgment dated 6[th] March 2019 [passed in O.A. No. 137 of2018 and O.A. No. 279 of 2018] and proceeded to quash the Memodated 30[th] January 2018 issued by the respondents. It was further heldthat the said order will not adversely impact forwarding of the name ofBthe appellant as Member, ITAT, in terms of the recommendations madeby 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 andthe High Court in favour of the appellant, the respondents elected towithhold his vigilance clearance, thereby compelling the appellant to fileCcontempt petitions against the concerned officers for non-compliance ofthe orders passed. Both, the High Court as well as the Tribunal, issuednotices for wilful disobedience of the orders passed. In the proceedingsbefore the High Court, on the one hand, the respondents kept seekingadjournments on the ground that steps were being taken to forward theDappellant’s name to the ACC for being processed for his appointment asMember, ITAT, till as late as on 31 [st] May 2019 on which date they weregranted one last opportunity for making compliances and at their request,the matter was adjourned to 9[th] July 2019 and on the other hand, therespondents slapped the appellant with Charge Memorandum dated17[th] June 2019 and suspended him on 1[st] July, 2019.E37. Having regard to the fact that the respondents did not take thedisciplinary proceedings initiated against the appellant to its logicalconclusion and instead issued an order compulsorily retiring him, thisCourt does not deem it expedient to delve into the allegations levelled inthe said Charge Memorandum; all the same, we have cursorily goneFthrough the Charge Memorandum that mentions three charges – onealleging that the appellant failed to seek permission from the departmentto purchase flat in relation to the matrimonial dispute between him andhis estranged wife and the second one is in respect of the allegation ofbigamy levelled against him by his estranged wife. We have alreadyGnoted earlier that during the course of the matrimonial dispute, the partieshad arrived at settlement and the flat that was agreed to be given tothe wife, was not purchased by the appellant but by his brother, whichfact is amply borne out from the documents placed on record. Thematrimonial dispute between the parties stood closed on decree ofdivorce being granted on the basis of mutual consent. That the respondentsH

were also cognizant of the said fact, is apparent from the contents ofO.M. dated 15th July, 2015 which records inter alia that the saidallegations levelled by the wife had not been established. The third chargewas relating to the appellant having attended Court hearings withoutsanctioned leave. However, the disciplinary proceedings initiated againstthe appellant on 17[th] July, 2019 were abandoned by the respondents onthe order of compulsory retirement being passed against him in less thanthree months reckoned therefrom, on 27[th] September, 2019.

38. The appellant has made allegations of institutional bias andmalice against the respondents on the plea that the Chairman, CBDTwho was Member of the Review Committee, was facing three contemptproceedings relating to the appellant’s service dispute, wherein noticeshad been issued by the High Court as well as the Tribunal. There is nodoubt that rule of law is the very foundation of well-governed societyand the presence of bias or malafides in the system of governancewould strike at the very foundation of the values of regulated socialorder. The law relating to mala fide exercise of power has been thesubject matter of catena of decisions [Refer: S. Pratap Singh v. Stateof Punjab[23]; Jaichand Lal Sethia v. State of W.B[24]; J.D. Srivastavav. State of M.P And Others[25]; and Express Newspapers Pvt. Ltd.And Others v. Union of India And Others[26]]. It has been repeatedlyheld that any exercise of power that exceeds the parameters prescribedby law or is motivated on account of extraneous or irrelevant factors oris driven by malicious intent or is on the face of it, so patently arbitrarythat it cannot withstand judicial scrutiny, must be struck down. In theinstant case, though the appellant has levelled allegations of institutionalbias and prejudice against the respondents, particularly against the thenChairman, CBDT who was Member of the Review Committee, thesaid officer was not joined by the appellant as party before the Tribunalor the High Court, for him to have had an opportunity to clarify his standby filing counter affidavit. Hence, these allegations cannot be lookedinto 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 othergrounds taken by the appellant. It is noticed that though FR 56(j)23 AIR 1964 SC 7224 AIR 1967 SC 48325 (1984) 2 SCC 826 (1986) 1 SCC 133

Acontemplates that the respondents have an absolute right to retire agovernment servant in public interest and such an order could have beenpassed against the appellant any time after he had attained the age offifty years, the respondents did not take any such decision till the veryfag end of his career. The impugned order of compulsory retirementwas passed in this case on 27[th] September, 2019 whereas the appellantBwas to superannuate in ordinary course in January, 2020. There appearsan apparent contradiction in the approach of the respondents who hadtill as late as in July, 2019 continued to grade the appellant as‘Outstanding’ and had assessed his integrity as ‘Beyond doubt’. Butin less than three months reckoned therefrom, the respondents had turnedCturtle to arrive at the conclusion that he deserved to be compulsorilyretired. If the appellant was worthy of being continued in service forlittle short of decade after he had attained the age of 50 years and ofbeing 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 thatmade the respondents resort to FR 56(j) and invoke the public interestDdoctrine to compulsorily retire him with just three months of service leftfor his retirement, in routine. In such case, this Court is inclined topierce the smoke screen and on doing so, we are of the firm view thatthe order of compulsory retirement in the given facts and circumstancesof the case cannot be sustained. The said order is punitive in nature andEwas passed to short-circuit the disciplinary proceedings pending againstthe appellant and ensure his immediate removal. The impugned orderpassed by the respondents does not pass muster as it fails to satisfy theunderlying test of serving the interest of the public.

40. In view of the above discussion, it is deemed appropriate toFreverse the impugned judgment dated 31[st] May, 2022 and quash and setaside the order dated 27[th] September, 2019 passed by the respondents,compulsorily retiring the appellant. Resultantly, the adverse consequencesif any, flowing from the said order of compulsory retirement imposed onthe appellant, are also set aside. The appeal is allowed and disposed ofon the aforesaid terms while leaving the parties to bear their own costs.G

Nidhi Jain(Assisted by : Shashwat Jain, LCRA)

Appeal allowed.