Holding

The interim stay granted by the Central Administrative Tribunal was set aside, and the disciplinary proceedings against the respondent were ordered to continue.

Summary

The case concerned an Income Tax Officer who was charged with misconduct for irregular assessment of a trust, leading to disciplinary proceedings initiated by the department. The officer applied to the Central Administrative Tribunal (CAT) for an interim stay of those proceedings, and the CAT granted the stay without hearing a counter‑claim or providing reasons. The department appealed to the Supreme Court, contending that the stay was improperly granted at an interlocutory stage in a serious misconduct matter. The Court held that while caution is required when disciplining an officer performing quasi‑judicial functions, such action is permissible where culpable conduct is shown, and therefore set aside the CAT’s stay. It directed that the disciplinary proceedings resume, declined to interfere with the separate order on pension pending statutory authority, and ordered that the same bench of the CAT not hear the officer’s further application.

Issues considered

Whether the Central Administrative Tribunal can grant an interim stay of disciplinary proceedings at an interlocutory stage without hearing the opposite party in a case involving serious misconduct.
Whether disciplinary action can be initiated against an officer performing judicial or quasi‑judicial functions.
Whether the Tribunal has jurisdiction to stay the payment of pension pending the disciplinary enquiry.

Legislation cited

Fundamental Rules (Central Civil Services)s. 56(k)

Subjects

disciplinary proceedingsinterim stayCentral Administrative Tribunalquasi‑judicial functionsmisconductvoluntary retirementFundamental Rule 56(k)pensiontax assessmenttrust

Judgment

U.0.1. v. AN. SAXENA 365

ing stay in a disciplinary proceeding at an interlocutory stage. The imputa- A
tions made against the respllndent were extremely serious and the facts
alleged, if proved, would have establ.ished misconduct and misbehaviour.
It is surprising that without even a counter being filed, at an interim stage,
the Tribunal, without giving any reasons and without appearently con-
sidering whether the memorandum of charges deserved to be enquired into
or µot, granted a stay of disciplinary proceedings as it has done. If the
B
disciplinary proceedings in such serious matters are stayed so lightly as
the Tribunal appears to have done, it would be extremely difficult to bring
any wrong-doer to book. Therefore, the impugned order of the Tribunal is
set aside and it is directed that the dRsciplinary proceedings against the
respondent shail be proceeded llitlt according to law. [368A-D] c
1.1. In the facts and circumstances of the case it is desirable that
the same Bench of the Tribunal should not proceed with further hearing
of the application made by the respondent. [369D]

D
2. It is true that when :m officer is performingjudicial or quasi-judi-
cial functions disciplinary proceedings regarding any of his actions in the
course of such proceedings should be taken only after great caution and a
close scrutiny of his actions and only if the circumstance so warrant. The
initiation of such proceedings is likely to shake the confidence of the public
in the officer concerned and also if lightly taken likely to undermine his E
independence. Hence the need for extreme care and caution before initia-
tion of disciplinary proceedings against an officer performing judicial or
quasi-judicial functions in respect of his actions in the discharge or
purported to discharge hisfunctions. But it is not as if such action cannot
be taken at all. Where the actions of such an officer indicate culpability, F
namely, a desire to oblige himself or unduly favour one of the parties or
an improper motive there is no reason why disciplinary action should not
be taken. [368F-H, 369A]

3. It is surprising that in a disciplinary enquiry pertaining to
serious charges the respondent was allowed to retire voluntarily under G
Fundamental Rule 56(k). It is not known whether it was duly considered
whether his application for voluntary l'etirement ought to have been
rejected in view of pending enquiry against him and in view of the
seriousnes~ of the charges levelled against him. However, nothing more
can be done in that connection. [369E-F] H
366 SUPREME COURT REPORTS (1992] 2 S.C.R.

A CIVIL APPELLATE JURISDICTION : Civil Appeal Nos. 50-51 of
1992.

From the Judgment and order dated 27.6.1991 of the Central Ad-
ministrative Tribunal, Delhi in O.A. No. 1307 of 1991.

B K.T.S. Tulsi, Addl. Solicitor General, Ashok K. Srivastava, Hemant
Sharma and P. Parmeswarn for the Appellants. -
~
A.K. Sanghi for the Respondent.

c
The Judgment of the Court was delivered by

KA..1'1IA, CJ. These appeals are directed against two orders passed
by the Central Administrative Tribunal (Principal Bench), New Delhi
~ -
(hereinafter referred to as "The tribunal"). By the first impugned order the
appellant was restrained from proceeding further with the disciplinary
~
proceedings against the respondent in terms of the charge-she~t dated
D March 13, 1989, filed by the appellant. This order was passed by the
Vacation Bench of the tribunal on June 27, 1991.

The second order sought to be challenged is an order dat.ed July 15,
1991, whereby the tribunal directed that in case the commuted value of the
E pension payable to the respondent was refunded, the respondent should
be paid the full value of the pension from the due date including the arrears
pending the proceedings before the tribunal. -..(
We propose to set out only a few facts. At the relevant time, the
respondent was an Income Tax Officer posted at New Delhi. On March
F 13, 1989, a memorandum of charges or charge-sheet was served on the
respondent. The first article of charge was to the effect that the respondent
while functioning as an Income Tax Officer completed certain assessments
in an irregular manner, designed to confer undue benefit on the assessees
concerned. The statement of imputations for misconduct and misbehaviour J--
was forwarded along with the charge-sheet.
G
The first case dealt with is that of Master Raju Sehgal Trust. The
assessment year in question was 1979-80. The statement of imputations is
to the effect that the private discretionary trust of the aforesaid name

H
created on July 1, 19n, by one Shri Vinay Sehgal, the settlor, was for the
benefit of the sole beneficiary, Master Raju Sehgal, younger brother of the
.-.( ---
U.O.I. v. A.N. SAXENA [KANIA, CJ.] 367

..., settlor. The trustees were the parents of the settlor and the beneficiary, A
~ while the trust was created with corpus of only Rs.1,000. The trustees were
given power to receive donations and gifts from relations, friends and so
on. The assessee-trust filed the first return of income for the assessment
year 1979-80 declaring their income nil. In the a9counting year relevant to
the assessment year 1979-80, the trust claimed having received donations
B
amounting to Rs.16,52,053. The respondent completed the assessment on
_..__ March 29, 1982 accepting the receipt of the aforesaid donations as genuine.
A scrutiny of the record showed that 179 certificates were produced by the
assessee from the alleged donors showing donations amounting to
Rs.9,49,200. The alleged donors were mostly from Calcutta whereas the

- ~
beneficiary, the trustees and the settlor were all from Delhi. Thus, the bulk
of the donations were made by the parties in a different city far away. A
good part of the funds of the trust was utilised by the trustees and other
c

.__., members of the Sehgal family, including the beneficiary. Details of such
amounts have been given in the statement of imputations. Loans were also
taken for substantial amounts from the trust by members of the Sehgal
D
family for which no interest was charged. Curiously enough, none of the
donors was ever assessed at an income exceeding Rs.15,000 till the assess-
ment year 1982-83 and most of the donors have been assessed to incomes
less than Rs.10,000 each. Ali the donors deposited in their bank account
cash equal to the amount of the gift a day or two before the issue of the
cheques towards making of the gift. None of the donors was related to the E
family of the beneficiary. The statement of imputations alleged that the
>-- trust was used apparently only as a device for converting the unaccounted
income of the Sehgal family into an accounted income: The allegation is
that the respondent without making any enquiry, in the a-;sessment order
held that the donations made to the trust were found to be genuine,
F
rendering it difficult even to re-open the assessment of the trust for the
said assessment year, without considering and determining the issues in-
volved. As per imputations1 the orde'r enabled the Sehgal family to legalise
•~ their unaccounted income of over Rs. 16 lacs on which tax of Rs.10 lacs
would have been payable.
G
The respondent filed an application before the tribunal for setting
.tside this charge-sheet and prayed for an interim relief restraining the
appellant from taking disciplinary proceedings against him, pending
decision of the tribunal. It is on this application that the tribunal granted
~ interim relief by the order which is sought to be impugned before us. H
368 SUPREME COURT REPORTS [1992] 2 S.C.R.

A In the first place, cannot, but confess out astonishment at the im-
''
pugned order passed by the tribunal. In a case like this the tribunal, we A
feel, should have been very careful before granting stay in a disciplinary
proceeding at an interlocutory stage. The imputations made against the ...
respondent were extreme_Iy serious and the facts alleged, if proved, would
have established misconduct and misbehaviour. It is surprising that without
B even a counter being filed, at an interim stage, the tribunal without giving
any reasons and without apparently considering whether the memorandum ~
of charges deserved to be enquired into or not, granted a stay of discipli-
nary proceedings as it has done. If the disciplinary proceedings in such
serious matters are stayed so lightly as the tribunal appears to have done,
c it would be extremely difficult to bring any wrong-doer to book. We have,
therefore, no hesitation in setting aside the impugned order of the tribunal ~
and we direct that the disciplinary proceedings against the respondent in
term~ of the charge-sheet dated March 13, 1989 shall be proceeded with
according to law. In fact, we would suggest that disciplinary proceedings r
should be proceeded with as early as possible and with utmost zeal.
D
It was urged before us by learned Counsel for the respondent that
as the respondent was performing judicial or quasi-judicial functions in
making the assessment orders in question even if his actions were wrong
they could be corrected in an appeal or in revision and no disciplinary
E proceedings could be taken regarding such actions.

In our view, an argument that no disciplinary action can be taken in
regard to actions taken or purported to be done in the course of judicial
or quasi-judicial proceedings is not correct. It is true that when an officer
F is performing judicial or quasi-judicial functions disciplinary proceedings
regarding any of his actions in the course of such proceedings should be
taken only after great caution and a close scrutiny of his actions and only
if the circumstances so warrant. The initiation of such proceedings, it is
true, is likely to shake the confidence of the public in the officer concerned ~
and also if lightly taken likely to undermine his independence. Hence the
G need for extreme care and caution before initiation of disciplinary proceed-
ings against an officer performing judicial or quasi-judicial functions in
respect of his actions in the discharge or purported to discharge his
functions. But it is not as if such action cannot be taken at all. Where the
actions of such an officer indicate culpability, namely, a desire to oblige ~
H himself or unduly favour one of the parties or an improper motive there is
U.O.I. v. AN. SAXENA [KANIA, CJ.] 369

no reason why disciplinary action should not be taken. A
Appellants have also sought to impugn the order relating to the
payment of pension, which we have referred to earlier. However, learned
counsel for the appellants is unable to point out any provision under which
the payment of provisional pension could be stopped pending enquiry. In
the circumst~ces, we decline to interfere with that part of the order B
leaving it open to the appellants, if so advised, to make an application to
the tribunal for varying or vacating the relief granted in connection with
the pension.
...
Considering all the facts and circumstances of the case, we direct C
that a copy of this order should be forwarded to the Chairman of the
Central Administrative Tribunal so that he may consider whether further
hearing of the application made by the respondent should be proceeded
\\ith by a bench presided over by him or a Bench other than the one which
has passed the impugned order. We do not intend to cast any aspersions
on the members of the tribunal who have passed the order, in the absence D
of. more concrete material. But we certainly feel that in the facts and
circumstances it is desirable that the same Bench of the tribunal should
not proceed with further hearing of the application.

We are somewhat surprised that in a disciplinary enquiry pertaining E
to serious charges which we have referred to earlier, the respondent was
allowed to retire voluntarily under Fundamental Rule 56(k) by an order
dated March 28, 1989. We do not know whether it was duly considered
whether his application for voluntary retirement ought to have been
rejected in view of pending enquiry against him and in view of the serious-
ness of the charges levelled against him. However, nothing more can be F
done in that connection;

Finally, we direct that a copy of this order be sent to the Chairman,
Central Board of Di_rect Taxes, ~ecretary to the Ministry of Finance and
the Finance Minister respectively for such action as they deem fit. The G
appeals are allowed with no order as to costs.

We may make it clear, m fairness to the respondent, that although
we have made strong observations it must be remembered that they are in
an appeal from an interim order and cannot pe regarded as conclusive.
-~
When the case is to be finally heard by the tribunal it shall be dedded on H
•
370 SUPREME COURT REPORTS [1992] 2 S.C.R.

A the material before it on merits according to law and without being unduly
guided by our observations.

Mr. Sanghi, learned counsel for the respondent, urged that the
pending application of the respondent before the. Tribunal it may be
directed to be heard expeditiously. That application may be made to the
B tribunal and we have no doubt that the tribunal will give it due considera-
tion according to law. It has further been pointed out by Mr. Sanghi that
as the allegations levelled against his client are very serious, the relevant
documents must be supplied and all the rules of fair play must be adhered
to. We have no doubt that this will be done by the tribunal.

T.N.A. Appeals allowed.