1999 Supreme(SC) 814

1999(6) Supreme 523
Supreme Court of India
(From Bombay High Court)
S. Saghir Ahmad & D.P. Wadhwa, JJ.
Zunjarrao Bhikaji Nagarkar -Appellant
versus
Union of India & Ors. -Respondents
Civil Appeal No. 4294 of 1999
(Arising out of SLP (C) No. 15452 of 1998)
Decided on 6-8-1999

Important Points
1. Levy of penalty under Rule 173Q under Central Excise Rules is mandatory and not discretionary even prior to insertion of Section 11AC in the Central Excise Act.
2. A wrong interpretation of law cannot be a ground for misconduct. Of course it is a different matter altogether if it is deliberate and actuated by mala fides; in other words, to maintain any charge-sheet against a quasi judicial authority something more has to be alleged than a mere mistake of law, e.g., in the nature of some extraneous consideration influencing the quasi judicial order.

Headnote:Central Civil Service (Classifi­cation, Control and Appeal) Rules, 1965 - Rule 14 - Disciplinary/ Departmental inquiry - Charge-sheet against quasi judicial autho­rity-A wrong interpretation of law cannot be ground for misconduct unless it is deliberate and actuated by mala fides-To maintain any charge sheet against quasi judicial authority something more has to be alleged than a mere mistake of law -Appel­lant Commissioner of Central Excise confirmed order confiscating goods and leaving of duty but did not impose penalty under Rule 173 which is mandatory-Appellant wrongly interpreted rule -Disciplinary authority had no information from where it could form opinion that appellant showed favour to assessee-Charge-sheet quashed.

       Held : A wrong interpretation of law cannot be a ground for misconduct. Of course it is a different matter altogether if it is deliberate and actuated by mala fides. (Para 26)

       When we talk of negligence in a quasi judicial adjudication, it is not negligence perceived as carelessness inadvertance or omission but as culpable negligence. (Para 26)

       In the present case, it is not that the appellant did not impose penalty because of any negligence on his part but he said it was not a case of imposition of penalty. We are, however, of the view that in a case like this which was being adjudicated upon by the appellant imposition of penalty was imperative. But then, there is nothing wrong or improp­er on the part of the appellant to form an opinion that imposition of penalty was not mandatory. (Para 26)

       When penalty is not levied, the assessee certainly benefits. But it cannot be said that by not levying the penalty the officer has favoured the assessee or shown undue favour to him. There has to be some basis for the disciplinary authority to reach such a conclusion even prima facie. Record in the present case does not show if the disciplinary autho­rity had any information within its possession from where it could form an opinion that the appellant showed ‘favour’ to the assessee by not imposing the penalty. He may have wrongly exer­cised his jurisdiction. But that wrong can be corrected in appeal. That cannot always form basis for initiating disciplinary proceedings for an officer while he is acting as quasi judicial authority. It must be kept in mind that being a quasi judicial authority, he is always subject to judicial supervision in appeal. (Para 27)

       Initiation of disciplinary proceedings against an officer cannot take place on an information which is vague or indefinite. Suspicion ­has no role to play in such matter. There must exist reasonable basis for the disciplinary authority to proceed against the delinquent officer. Merely because penalty was not imposed and the Board in the exercise of its power directed filing of appeal against that order in the Appellate Tribunal could not be enough to proceed against the appellant. There is no other instance to show that in similar case the appellant invariably imposed penalty. (Para 28)

       If, every error of law were to constitute a charge of misconduct, it would impinge upon the independent functioning of quasi judicial officers like the appellant. Since in sum and substance misconduct is sought to be inferred by the appellant having committed an error of law, the charge-sheet on the face of it does not proceed on any legal premise rendering it liable to be quashed. In other words, to maintain any charge-sheet against a quasi judicial authority something more has to be alleged than a mere mistake of law, e.g., in the nature of some extraneous consideration influencing the quasi judicial order. Since nothing of the sort is alleged herein the impugned charge-sheet is rendered illegal. The charge-sheet, if sustained, will thus impinge upon the confidence and independent functioning of a quasi judicial authority. The entire system of administrative adjudication whereunder quasi judicial powers are conferred on administrative authorities, would fall into disrepute if officers performing such func­tions are inhibited in performing their functions without fear or favour be­cause of the constant threat of disciplinary proceedings. (Para 29)

       Held, consequently, considering whole aspects of the matter, we are of the view that it was not a case for initiation of any disciplinary proceedings against the appellant. Charge of misconduct against him was not prop­er. It has to be quashed. (Para 30)

       (ii) Central Excise Rules, 1944-Rule 173Q-Central Excise Act, 1944 - Sec­tion 11AC - Penalty-Levy of penalty is mandatory even prior to insertion of Section 11AC.

       The contention that it is only now after insertion of Section 11AC in the Act that levy of penalty has become mandatory and that it was not so under Rule 173Q does not appear to be correct. In both Rule 173Q and Section 11AC the language is somewhat similar. Under Rule 173Q “such goods shall be liable to confiscation” and the person concerned “shall be liable to penalty” not exceeding three times the value of excisable goods or five thousand rupees whichever is greater. Under Section 11AC the person, who is liable to pay duty on the excisable goods as determined “shall also be liable to pay penalty equal to the duty so determined”. What is the significance of the word “liable” used both in Rule 173Q and Section 11AC? Under Rule 173Q apart from confiscation of the goods the person concerned is liable to penalty. Under Section 11AC the word “also” has been used but that does not appear to be quite material in interpreting the word “liable” and if liability to pay penalty has to be fixed by the adjudicating authority. The word “liable” in the Concise Oxford Dic­tionary means, “legally bound, subject to a tax or penalty, under an obligation”. In Black’s Law Dictionary (sixth edition), the word “liable” means, “bound or obliged in law or equity; responsible; chargeable; answerable; compellable to make satisfaction, compensa­tion, or restitution..... Obligated; accountable for or chargeable with. Condition of being bound to respond because a wrong has oc­curred. Condition out of which a legal liability might arise..... Justly or legally responsible or answerable”. When we examine Rule 173Q it does appear to us that apart from the offending goods which are liable to confiscation the person concerned with that shall be liable to penalty upto the amount specified in the Rule. It is difficult to accept the argument of the appellant that levy of penalty is discretionary. It is only the amount of penalty which is discretionary. Both things are necessary : (1) goods are liable to confiscation and (2) person concerned is liable to penalty. (Paras 21 & 22)