Important Point
Judicial scrutiny of any order imposing premature compulsory retirement is permissible if the order is either arbitrary, or is malafide or if it is based on no evidence.

Headnote:(i) Premature Compulsory Retirement-Scope of judicial scrutiny-Interference if mala fide-No evidence-Arbitrary.
       Held : Therefore, judicial scrutiny of any order imposing premature compulsory retirement is permissible if the order is either arbitrary or mala fide or if it is based on no evidence. The observation that principles of natural justice have no place in the context of compulsory retirement does not mean that if the version of the delinquent officer is necessary to reach the correct conclusion the same can be obviated on the assumption that other materials alone need be looked into. (Para 11)
       (ii) Premature Compulsory Retirement-Challenged on ground of mala fide-Whether correct? (No).
       Held : In this case, appellant made an endeavour to show that the order is tainted by mala fides as one of the members of the Screening Committee (M.L. Wadhawan) had some axe to grind against him. But we are not persuaded to believe that merely because appellant has such a version against either that member or other members of the Screening Committee, the Committee would have gone against the appellant on account of that reason. So we repell the contention based on the allegation of mala fides. (Para 12)
       (iii) Premature Compulsory Retirement-On recommendation of Screening Committee based on three incidents-Incidents showing promptitude and strict action by alleged delinquent officer against big business houses-Earlier record very good-Sudden conclusion of “doubtful integrity” - Whether based on no evidence and is arbitrary? (Yes)-Appeal allowed.
       Held : We feel that the two lacunae ferretted out from the proceedings relating to M/s. Orkay Silk Mills are grossly insufficient to reach a conclusion that the delinquent officer was trying to help the defaulting manufacturer. (Para 16)
       In the second instance concerning the file of M/s. Indian Tobacco company the inference made against the defaulter is too tenuous. The minimum thing which should have been done was to ascertain from Shri Bhattacharjee, the Deputy Director, the circumstances under which instructions were issued by him to keep the investigation in abeyance. Attributing a sinister motive to the appellant for what Shri Bhattacharjee had done was seemingly unfair, without adopting such a minimum precaution. (Para 17)
       The third is the case relating to import of spare parts which the Jain Brothers assembled for making Honda cars. In that case the ostensible role of the appellant was to detect the offence through investigation and then to follow it up seriously. When the defaulters were granted bail the appellant moved for cancellation of the bail it is prima facie a point in favour of the appellant’s tenacity to pursue the steps adopted. Thus far the role played by the appellant was that of a dutiful and efficient officer of the department. But the reason for the Screening Committee to doubt the integrity of the appellant in the aforesaid case is that the Jain Brothers have alleged that one Mr. Kapoor told them that appellant was to be paid Rs. 10 lakhs to save them from the proceedings. (Para 18)
       We perused the statement of Jains. They never said that appellant made the above demand to them at any time. The only material before the Screening Committee was that the two accused had stated that Kapoor gave them such an impression. It must be noted that nobody had checked up the truth of it with the person to whom it was attributed. The most unfortunate feature is that nobody has checked it up even with Mr. Kapoor who is alleged to have told like that to the Jain Brothers. If integrity of senior officers, who established unblemished reputation and earned encomiums from all concerned till then, is proclaimed as doubtful merely on the strength of statements of persons prosecuted by such officers, what is the safety of such officers more so when they have to embark on hazardous operations risking their lives against big business houses. (Para 19)
       Held finally : We have no doubt that there is utter dearth of evidence for the Screening Committee to conclude that appellant had doubtful integrity. Such a conclusion does not stand judicial scrutiny even within the limited permissible scope. We, therefore, allow this appeal and set aside the order under attack including the order by which premature compulsory retirement was imposed on the appellant. The department concerned shall now work out the reliefs to be granted to the appellant as sequel to this judgment. (Para 21)

Judgment

Thomas, J.-Appellant had a steep rise in the hierarchy of Indian Revenue Service and was held in great esteem by his superiors until the dawn of 1985 which marked the beginning of his downfall. He suddenly fell from grace as his integrity was eclipsed by the dark clouds of doubts entertained by his superiors. Consequently at the age of 52 he was asked to quit the department by terming the action as “compulsory retirement”. If appellant’s stand is correct he would have felt the same way as Cardinal Thomas Wolsey had lamented four centuries ago when his master Henry VIII King of England suddenly stripped him of his high office and indicted him to face a trial. “If I had served God as diligently as I have done the King. He would not have given me over in my grey hairs”.

2. On 9.10.1985, Government of India (Ministry of Finance) axed the appellant down by serving an order of compulsory retirement. Though he challenged the order before Central Administrative Tribunal (New Delhi Bench) he was unsuccessful. Hence he has filed this appeal by special leave.

3. A resume of facts which led to the said necking off is the following:

Appellant joined Indian Revenue Service in the year 1958 and was absorbed in the Excise Department. He had a quick rise in the ladder which in 1980 reached him to the level of Director Enforcement and in 1983 as Appellate Collector of Customs and Excise since he earned a high standard of reputation by then as “a very good officer all round”. As he proved to be efficient and trustworthy he was entrusted with the high sensitive post of Director of Anti Evasion Wing in 1984 which post he held till June 1985. During the said period a series of raids was conducted by Anti Evasion Squad headed by the appellant and a whopping sum of escaped excise duty was unearthed through such raids. This became the subject matter of extensive media coverage and praises were showered on the department for carrying out such daring operation in big business houses and hoarding places. But the above raids became the commencement of a volte face in the official career of the appellant.

4. A Screening Committee which considered the cases of several officials of the Revenue Department found that in the interest of the department some officials should be weeded out. On 9.4.1985, the Committee delved into the files relating to such persons including the appellant and in the case of appellant they forcussed on three specific instances which are the following:

(1) Pursuant to search made in the premises of M/s. Orkay Silk Mills Ltd. adjudication proceedings were initiated and in the end a penalty and fine of Rs. 10 crores have been imposed on the said Mills. But certain derelictions were noted as against the appellant in the above operations. They are:

(a) The order of adjudication ran into nearly 100 pages and it was passed on the day following the last day of the hearing. It indicated that the order must have already been got ready even before the hearing was complete.

(b) A penalty of Rs. 50 lakhs was imposed on the proprietor of the Mills without issuing a show cause notice on him.

(c) Huge sums of duty have been demanded in respect of unaccounted production in the factory without fully going through the claims of the party that those accounts were wastage claimed by him.

(2) Important cases relating to M/s. Golden Tobacco Co. were lying unattended for a very long time and instructions were issued by the Deputy Director Shri Bhattacharjee to the units under him to keep further investigation in abeyance. The Screening Committee held that Shri Bhattacharjee would have given such instructions at the behest of the Director.

(3) One Ashok Jain and his brother imported components of Honda cars from abroad and assembled them in India in violation of Central Excise Laws. On 1.12.1984, officers of the Anti Evasion Wing raided the premises where those cars were garaged and the Jain Brothers were

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1998 Supreme(SC) 905

Important PointJudicial scrutiny of any order imposing premature compulsory retire­ment is permissible if the order is either arbitrary, or is malafide or if it is based on no evidence.

Cases Referred (3)

Important Point
Judicial scrutiny of any order imposing premature compulsory retirement is permissible if the order is either arbitrary, or is malafide or if it is based on no evidence.