Compulsory Retirement Order Can Be Set Aside If It's Found To Be Punitive & Was Passed To Circumvent Disciplinary Proceedings : Supreme Court

Holding the order of compulsory retirement to be unsustainable in law, a Bench comprising Justice A.S. Bopanna and Justice Hima Kohli noted that the order was punitive in nature and was passed to circumvent the pending disciplinary proceedings against the concerned Officer, to ensure his immediate removal.

“In such a case, this Court is inclined to pierce the smoke screen and on doing so, we are of the firm view that the order of compulsory retirement in the given facts and circumstances of the case cannot be sustained. The said order is punitive in nature and was passed to short-circuit the disciplinary proceedings pending against the appellant and ensure his immediate removal. The impugned order passed by the respondents does not pass muster as it fails to satisfy the underlying test of serving the interest of the public.”

Factual Background

Pursuant to a physical disability suffered by him, the appellant, a Permanent Commissioned Officer in the Indian Army, inducted in 1980, was released from service. He appeared for the Civil Services Examination in 1989 and was appointed as an Officer in the Indian Revenue Service. On 12.01.2012, he was promoted to the rank of Commissioner, Department of Income Tax. On 07.07.2014, he was empanelled for appointment as Member of the Income Tax Appellate Tribunal (ITAT).

In 2015, his name was forwarded to the Appointments Committee of the Cabinet (ACC) along with his vigilance clearance, for his ITAT Appointment. In 2016, he was empanelled by the ACC to be appointed as Joint Secretary to the Government of India. He had an adverse Intelligence Bureau report, which he challenged before the Central Administrative Tribunal (CAT). The CAT directed the Union Government to resubmit the adverse IB Report to the Selection Committee so that it can consider the same. The Union Government filed a writ petition before the Allahabad High Court assailing order of the CAT. The High Court dismissed the petition, directing the entire process of reconsideration to be completed within a stipulated time period. The Special Leave Appeal before the Apex Court was also dismissed.

On 29.11.2017, a vigilance inspection was carried out at the appellant's office. The vigilance clearance initially granted to him was withdrawn by the Union Government. Subsequently, a show cause notice was issued to him. The appellant approached the CAT. The CAT passed two interim orders, in essence, directing that the show cause notice and the withholding of the vigilance clearance should not come in the way of the appellant being considered for the appointment. In the interim, the Union Government put his name in the ‘Agreed List’, which lists out Gazetted Officers of suspect integrity. The Union Government challenged the interim orders passed by CAT before the Apex Court, which came to be dismissed. Thereafter, the appellant filed an application before the CAT challenging inclusion of his name in the Suspect List and an interim order was granted in his favour. The Tribunal directed his name to be forwarded to the appropriate authority for appointment to the ITAT. The Union Government did not comply with the order of CAT and filed a writ petition before the High Court. The appellant filed a contempt petition before the High Court and the Tribunal. The Union Government issued disciplinary proceedings against him and eventually he was compulsorily retired on 27.09.2019. The same along with the decision of the Representation Committee not to interfere with the order of compulsory retirement were challenged before the CAT, which was dismissed and so was the petition filed before the High Court.

Analysis by the Supreme Court

Referring to Rule 56(j) of the Fundamental Rules, the Court noted that the Government is vested with the absolute right to retire an employee, if it is in public interest. A prior notice of at least three months is required to be provided to the outgoing employee and the provision of compulsory retirement can be invoked only when the concerned officer has attained 50 years of age. The Court also noted that the scope of judicial review in respect of an order of compulsory retirement is limited. On perusal of the appellant's APARs the Court noted that for the past one decade till the period he was retired he was consistently graded as ‘Outstanding’. Moreover, there were no adverse entries in the APARs, there were no complaints regarding his conduct or character; even his efficiency and integrity seemed to be unimpeachable throughout his career. However, the Union Government had argued that there were as many as 9 complaints against the appellant pending with the Vigilance Directorate. The Court took into note of the fact that though the Union Government was aware of the complaints the service record of the appellant did not reflect the same; his record remained unblemished throughout. The Court did not find anything significant on record which would demonstrate why he was compulsorily retired.

Considering the allegations raised by the appellant pertaining to institutional bias and malice against the Union Government and in particular the Chairman, CBDT who is a Member of the Review Committee the Court observed -

“There is no doubt that rule of law is the very foundation of a well-governed society and the presence of bias or malafides in the system of governance would strike at the very foundation of the values of a regulated social order.”

It added -

“It has been repeatedly held that any exercise of power that exceeds the parameters prescribed by law or is motivated on account of extraneous or irrelevant factors or is driven by malicious intent or is on the face of it, so patently arbitrary that it cannot withstand judicial scrutiny, must be struck down.”

The Court noted that the Chairman was not impleaded as a party before the Tribunal or the High Court and therefore the allegation against them cannot be looked into by the Apex Court.

Case details

Captain Pramod Kumar Bajaj v. Union of India And Anr.| 2023 LiveLaw (SC) 165 | Civil Appeal No. 6161 of 2022| 3rd March, 2023| Justice A.S. Bopanna and Justice Hima Kohli

For Appellant(s) Appellant-in-person

For Respondent(s) Mr. Sanjay Jain, A.S.G. Mr. Zoheb Hussain, Adv. Mr. Padmesh Mishra, Adv. Mr. Apoorv Kurup, Adv. Mr. Sunita Sharma, Adv. Mr. Rajat Nair, Adv. Ms. Tanya Aggarwal, Adv. Mr. Shivam Shukla, Adv. Mr. Raj Bahadur Yadav, AOR

Service Law - Supreme Court sets aside order of CBDT passed to compulsorily retire a gazetted officer-any exercise of power that exceeds the parameters prescribed by law or is motivated on account of extraneous or irrelevant factors or is driven by malicious intent or is on the face of it, so patently arbitrary that it cannot withstand judicial scrutiny, must be struck down -In such a case, this Court is inclined to pierce the smoke screen and on doing so, we are of the firm view that the order of compulsory retirement in the given facts and circumstances of the case cannot be sustained. The said order is punitive in nature and was passed to short-circuit the disciplinary proceedings pending against the appellant and ensure his immediate removal. The impugned order passed by the respondents does not pass muster as it fails to satisfy the underlying test of serving the interest of the public- Para 34