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PETITIONER: UNION OF INDIA AND ORS.

       Vs.

RESPONDENT: SHRI DULAL DUTT

DATE OF JUDGMENT05/02/1993

BENCH: YOGESHWAR DAYAL (J) BENCH: YOGESHWAR DAYAL (J) SHARMA, L.M. (CJ) MOHAN, S. (J)

CITATION:  1993 SCR  (1) 853        1993 SCC  (2) 179  JT 1993 (3)   706        1993 SCALE  (1)578

ACT: Fundamental Rules-Rules 56(3) read with Rule 1802 (a) of the Railway   Establishment  Code,  Volume  II,  1987   Edition- Compulsory retirement order-Whether to be a speaking order. Civil  Services-Indian  Railway  Stores   Service-Compulsory retirement-Whether to be a speaking order. Railway  Establishment Code : Volume II,  1987  Edition-Rule 1802  (a), read with Rule 56 (J) F.R.-Compulsory  retirement order-Whether to be a speaking order.

HEADNOTE: On  12.6.1958, the respondent joined Indian  Railway  Stores Service  as  Class I officer.  He was promoted  as  District Controller  of Stores in 1974, as Additional  Controller  of Stores in 1980 and as Controller of Stores in 1982. Respondent  was  served a major penalty  charge-sheet  dated 5.12.1989 on the charge of finalisation of a tender case  of 1983 and another major penalty charge-sheet dated  23.4.1990 on the charge of construction of a residential house  during 1981-87 at high cost. By order dated 24.4.1990, which was served on the respondent on  28.1.1991 the was compulsory retired. The delay in  the service  of  the  order was due  to  the  court  proceedings initiated against him. Respondent  challenged the order dated 24.4.1990 before  the Central Administrative Tribunal. The  Union of India submitted before the Tribunal  that  the right  to  retire a Government servant  prematurely  was  an absolute one and the only requirement was that there  should be  the formation of an opinion; that in the  present  case, the opinion was formed in public interest and the 854 requirement of the Rule was strictly complied with. The tribunal allowed the application against which the Union of India filed the present appeal by special leave. Allowing the Appeal, this Court, HELD  : 1.01. An order of a compulsory retirement is not  an order  of punishment.  It is actually a prerogative  of  the Government but it should be based on material and has to  be passed  on  the subjective satisfaction of  the  Government. Very  often,  on  enquiry by the Court  the  Government  may

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disclose the material but it is very much different from the saying that the order should be a speaking order.  No  order of compulsory retirement is required to be a speaking order. [861A-B] 1.02.     The Tribunal completely erred in assuming, in  the circumstances of the     case, that there ought to have been a speaking order for compulsory    retirement. [860H] 1.03.     From  the very order of the Tribunal it  is  clear that the Government had, before it, the report of the Review Committee  yet it thought it fit of compulsory retiring  the respondent.  The order cannot be called either mala fide  or arbitrary in law. [861C] Baikuntha  Nath  Das and another v. Chief  District  Medical Officer, Baripada and another, [1992] 2 SCC 299; R.L. Butail v.  Union of India, [1970] 2 SCC 876 and Union of  India  v. J.M. Sinha, [1970]1 2 SCC 458, referred to.

JUDGMENT: CIVIL APPELLATE JURISDICTION : Civil Appeal No. 572 of 1993. From  the Judgment and Order dated "29.5.92 of  the  Central Administrative  Tribunal, Calcutta Bench, in O.A No. 455  of 1991. V.   R. Reddy, Additional Solicitor General, Mrs. B.  Sunita Rao and V.K. Verma for the Appellants. G.S. Chatterjee for the Respondent. The Judgment of the Court was delivered by 855 YOGESHWAR DAYAL, J. Heard.  Special leave granted.  With the consent of learned counsel for the parties the appeal itself is being disposed of. The brief facts leading to this appeal are as below The respondent joined Indian Railway Stores Service as Class I Officer on 12th June, 1953.  He was promoted to the senior scale   as  District  Controller  of  Stores  in  1974,   as Additional Controller of Stores in 1980 and as Controller of Stores in 1982. At the relevant time the respondent was posted as Controller of Stores, Metro Railway, Calcutta.  A major penalty charge- sheet dated 5th December, 1989 was served on the  respondent on  the  charge of finalisation of a tender  case  of  1983. Another  major  penalty  charge-sheet  was  served  on   the respondent on 23rd April, 1990 on the charge of construction of a residential house at Salt Lake, Calcutta during 1981-87 at high cost. The  respondent  was issued the impugned  order  dated  24th April,  1990 by the Joint Secretary (E), Railway  Board,  on behalf  of  the  President,  by  which  the  respondent  was compulsory  retired.  The said order could be served on  the respondent  only  on 28th January, 1991 in view  of  certain court  proceedings initiated by him.  Feeling  aggrieved  by the aforesaid order of compulsory retirement of the  Railway Board the respondent preferred an application under  Section 19  of  the  Administrative Tribunal Act,  1985  before  the Central  Administrative  Tribunal, Calcutta.   In  the  said application  the  respondent  inter  alia  prayed  for   the following reliefs:-               "(a)  an  order directing the  respondents  to               withdraw, revoke and cancel the impugned order               dated 24.4.90/29.1.91 issued by the respondent               No.2 and further directing the respondents  to               act in accordance with law.               (1))  an order commanding the  respondents  to               forthwith send unto this Hon’ble Tribunal  the

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             entire  records  of the case relating  to  the               passing  of the order retiring  the  applicant               from service under rule 1802 (a) including the               impugned order dated 24.4.90/29.1.91 for their               examination  and  for quashing the  same  upon               such               856               examination for doing conscienable justice  to               the applicant.               (c)   an  order directing the respondents  the               continuance  or retention of the applicant  in               service   till   he   attains   the   age   of               superannuation  on  31st July, 1993  with  all               consequential benefits." The appellants opposed the said application.  It was  stated on  behalf  of the appellants before the  Tribunal  that  in memorandum dated 20th June, 1989 addressed to the respondent it  was  mentioned that the respondent had disposed  of  the tender  expeditiously,  the lowest offer  which  was  filed, could  have  been  availed of  within  the  validity  period offered  by  the firm and the railway would  not  have  been forced to accept a higher rate and it also indicated lack of proper  management  of  the  purchase  functions  under  the respondent.   The  aforesaid  lapses  on  the  part  of  the respondent  were brought to the notice of the respondent  so that he may be careful in future.  Attention of the Tribunal was also drawn by the department towards a statement showing details  of present and past vigilance cases  involving  the respondent.   As regards the present case, there was a  list of   six,   three  of  which  were  stated   to   be   under investigation.   These were regarding alleged favours  shown to  a firm and possession of disproportionate assets to  the tune  of  over Rs. two lakhs.  In the forth  case,  the  CVS (Central Vigilance Commission) advised initiation of a major penalty  proceedings on 24th November, 1988.  In  the  fifth case,  CVS  advised  issue  of  recorded  warning  on   16th November,  1988.  In the sixth case, CVS on  reconsideration advised  closure on 28th February, 1989.  It  was  submitted before the Tribunal on behalf of the appellants herein  that F.R.  56(J) and the corresponding Railway Rule 1802  (a)  of the  Railway  Establishment Code, Volume II,  1987  Edition, under  which  the respondent was  prematurely  retired,  are identical.   The  right  to  retire  a  government   servant prematurely is an absolute one and only requirement is  that there  should  be the formation of an opinion.  And  in  the present case, the opinion has been formed in public interest and  the requirement of the rule had been strictly  complied with. The Central Administrative Tribunal by the impugned judgment dated  29th  May,  1992  allowed  the  application  of   the respondent holding that               "the  circumstances under which  the  impugned               order was               857               passed  have been brought out at paras 33,  34               and  35  of this judgment.  It  is  abundantly               clear from a perusal of these paragraphs  that               the high level review committee headed by  the               Chairman,    Railway    Board,     unanimously               recommended  the retention of  the  applicant,               firstly  because  his performance  record  had               been  quite good and secondly,  because  there               was  no  proven  vigilance  case  leading   to               punishment so far and the committee was of the               opinion  that the outcome of the more  serious

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             cases  now  pending  against  him  should   be               awaited.  This decision showed out application               of  mind by review Committee, which  obviously               felt that the disciplinary proceedings started               against the applicant from the vigilance angle               should  first be concluded before  any  action               was  taken.  The competent authority  did  not               agree  with the recommendation of  the  review               Committee for the retention of the  applicant.               He  was  certainly entitled to do  so  but  in               arriving  at any contrary decision, he  should               have recorded a speaking order indicating  the               reasons   of   his  own   opinion.    In   the               departmental  file  contains  only  a   single               sentence  recorded by the competent  authority               viz.   ’he  should  be  removed  from  service               forthwith’,  we have no hesitation in  holding               that  the decision of the competent  authority               was   arbitrary   and  that   it   cannot   be               sustained.’               It  is against the judgment that  the  present               appeal has been filed. We  may  mention  that one  of  the  departmental  inquiries initiated vide Order No. E(0)1-89/PU-2/17 dated  11/12.10.90 has  been  concluded by the  Commissioner  for  Departmental Inquiries vide his report dated 16th October, 1992.  In this case  the  charge  against the respondent  was  that  ’while functioning   as  Controller  of  Stores   in   Chittaranjan Locomotive  Works, Calcutta during the year  1983  committed gross  misconduct by his following actions which led to  him showing favouritism to M/s.  Bharat Traders, Calcutta in the award of contracts for the procurement of Yellow Dextrine on tender No. D2/SF/1O2/GB-10/4063:- (i)  He passed orders for acceptance of a late offer of M/s. Bharat  Traders,  treating  it as a  single  tender  without obtaining prior approval of the General Manager; 857 858 (ii) Later he passed orders for awarding of contract to M/s. Bharat    Traders   without   formal   Tender    Committee’s recommendations; (iii)     He waived off the Security Deposit payment by M/s. Bharat  Traders without obtaining finance’s concurrence  and for which the firm never requested; (iv) He misused purchase powers by exercising option clause, resulting in purchase of much higher quantity than what  had been indented. By  this  aforesaid misconduct, Shri Dulal  Dutt  failed  to maintain absolute integrity and devotion to duty and thereby contravened  Rule 3(1)(i) and (ii) of the Railways  Services (Conduct) Rules, 1966". The Commissioner for Departmental Inquiries while  assessing the  evidence  in  respect of the  allegations  against  the respondent  split  up the charge into  four  ingredients  as stated  in paragraph 6.3 of the report.  On ingredient  No.1 the Commissioner for Departmental Inquiries held               "Keeping  in view the totality of evidence  it               is  seen  that  the  factual  element  in  the               ingredient   No.1  of  the  charge  has   been               corroborated.  But in the instant case in  the               context  of extremely critical  situation  and               purchase   of  emergency  nature,   the   CO’s               arguments and course of action have  mitigated               the  alleged  gravity of the charge.   As  the               entire  course  of  action  specifically   the

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             adoption  of  second round of  negotiation  to               neutralise  the Finance objection vide  Ex.S.6               was  within  the  knowledge of  AAO  (S)  vide               Ex.S.7,  no  mala fides have  been  considered               established against the CO. It is true that in               a normal situation acceptance of revised offer               after  the  rates are already  known  and  the               Tender   Committee  has  placed  their   final               recommendation   is   not   in   order.    The               prosecution  argument on that score  is  quite               acceptable.   The prosecution  further  argued               that  the style of noting by the CO on  Ex.S.4               indicated  that the CO initially approved  the               TC  proceedings.  However,  when  subsequently               Ex.S.5 was received the whole process of split               orders started.  Moreover, instead of ordering               second round of negotiations the CO could have               taken  up  with  the  GM  personally  for  his               approval for the single tender to               859               avoid delay and tide over the emergency within               the shortest spell of time.               6.9.The  issue is the course of action  to  be               taken  in view of the revised late  offer  and               also the criticality of the stock position  of               the Yellow Dextrine.  There may be a number of               ways to tackle the problem.  The CO has  opted               for a course of action an analysed earlier and               evident on record.  Since the entire issue was               within the knowledge of AAO (S) and the CO has               made a detailed noting vide ExD.3 and S.7,  no               mala  fide motive was established  as  already               observed earlier.’ On,  ingredient No. 2 it was found as a fact that there  was no formal Tender Committee recommendations. On ingredient No. 3 it was found that no specific mala fides were established. On  ingredient  No.  4  the  Commissioner  for  Departmental Inquiries found that the factual elements of some procedural shortcomings have been corroborated by the documents. In  the  end the finding given was that  certain  procedural shortcomings were corroborated in the relevant documents; no mala fides against the CO or loss to the Railways have  been proved. The law on the subject of compulsory retirement as  recently laid  down by this Court in the case of Baikuntha  Nath  Das and  another v. Chief District Medical Officer, Banpada  and another,  [1992] 2 SCC 299 was noticed by the  Tribunal  but erroneously distinguished it.  In the case of Baikuntha Nath aforesaid this Court has exhaustively dealt with the  entire case law on the subject and observed :-               "An  order of compulsory retirement has to  be               passed  by  the  government  on  forming   the               opinion  that it is in the public interest  to               retire a government servant compulsorily.  The               order is passed on the subjective satisfaction               of  the  government.  The government  (or  the               Review  Committee, as the case may  be)  shall               have to consider the entire record of  service               before  taking a decision in the matter   of               course               860               attaching  more  importance to record  of  and               performance  during  the  later  years.    The               record  to  be so considered  would  naturally

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             include   the  entries  in  the   confidential               records/character  rolls, both favourable  and               adverse.  There may be any number of  remarks,               observations   and  comments,  which  do   not               constitute   adverse  remarks,  but  are   yet               relevant  for the purpose of F.R. 56(j)  or  a               rule corresponding to it.’               The court also observed               "An  order of compulsory retirement is  not  a               punishment.   It  implies no  stigma  nor  any               suggestion  of  misbehaviour.  Principles   of               natural  justice have no place in the  context               of  an order of compulsory retirement.   Since               the  nature  of  the function  is  not  quasi-               judicial in nature and because the action  has               to be taken on the subjective satisfaction  of               the government, there is no room for importing               the  and  alteram partem rule of  the  natural               justice in such a case.’               It was further observed by this Court that :               "However,  this  does not mean  that  judicial               scrutiny  is excluded altogether.   While  the               High  Court  or the Supreme  Court  would  not               examine the matter as an appellate court, they               may  interfere if they are satisfied that  the               order  is passed (a) mala fide or (b) that  it               is  based  on no evidence or (c)  that  it  is               arbitrary  in the sense that  no  reasonable               person would form the requisite opinion on the               given material; in short, if it is found to be               a  perverse  order.  The  remedy  provided  by               Article 226 is no less an important safeguard.               Even  with  its well  known  constraints,  the               remedy is an effective check against  malafide               perverse or arbitrary action" It  will  be noticed that the Tribunal completely  erred  in assuming in the circumstances of the case, that there  ought to  have been a some order for compulsory retirement.   This Court has been repeatedly emphassing right from the case  of R-L Butail v. Union of India, [1970] 2 SCL 876 and Union  of India v. J.N. Sinha [1970] 2 SCC 458 that an order of 861 compulsory retirement is not an order of punishment.  It  is actually  a prerogative of the Government but it  should  be based  on  material and has to be passed on  the  subjective satisfaction  of the Government.  Very often, on enquiry  by the Court the Government may disclose the material but it is very much different from the saying that the order should be a  speaking  order.  No order of  compulsory  retirement  is required to be a speaking order.  From the very order of the Tribunal it is clear that the Government had, before it, the report  of  the Review Committee yet it thought  it  fit  of compulsory  retiring  the respondent.  The order  cannot  be called either mala fide or arbitrary in law. We are thus constrained to allow this appeal with costs  and set aside the impugned order of the Tribunal dated 29th May, 1992  and  dismiss the application of the  respondent  filed before the Tribunal against the impugned order of compulsory retirement of the respondent. V.P.R.                     Appeal allowed. 862