UNION OF INDIA vs. DR P K SRIHARI

1 IN THE HIGH COURT OF KARNATAKA AT BENGALURU

DATED THIS THE 2ND DAY OF JANUARY 2017

PRESENT

THE HON’BLE MR.JUSTICE JAYANT PATEL AND THE HON’BLE MR.JUSTICE P S DINESH KUMAR WRIT PETITION NO.56608/2016 (S-CAT)

BETWEEN:

1.UNION OF INDIA BY ITS SECRETARY, DEPARTMENT OF REVENUE, MINISTRY OF FINANCE, NORTH BLOCK, NEW DELHI-110001

2.THE UNDER SECRETARY (V&L) MINISTRY OF FINANCE, DEPARTMENT OF REVENUE, CBDT, NORTH BLOCK, NEW DELHI-110001

3.THE UNDER SECRETARY (AD.VI) MINISTRY OF FINANCE, DEPARTMENT OF REVENUE, CBDT, NORTH BLOCK, NEW DELHI-110001

2 QUEEN’S ROAD, BENGALURU-560001 ... PETITIONERS (BY SRI NEERALAGI JEEVANBABU JAGADISH, ADVOCATE)

AND:

DR P K SRIHARI AGE ABOUT MAJOR ADDITIONAL COMMISSIONER OF INCOME TAX, ITAT-I, SANTOSH COMPLEX, K.G.ROAD, BENGALURU-560009 ... RESPONDENT (BY SRI SUGUMARAN S, ADVOCATE)

THIS WRIT PETITION IS FILED UNDER ARTICLES 226 & 227 OF THE CONSTITUTION OF INDIA PRAYING TO QUASH THE IMPUGNED ORDER DTD:13.4.2016 PASSED BY THE CAT, BENGALURU IN O.A.NO.632/2014 [ANNEXURE-A] AND ETC.

THIS PETITION COMING ON FOR ORDERS THIS DAY, JAYANT PATEL J., PASSED THE FOLLOWING:

ORDER

The present petition is directed against the order dated 13.04.2016 passed by the Central Administrative Tribunal (hereinafter referred to as ‘the Tribunal’ for the sake of brevity), whereby the Tribunal for the reasons recorded in the order has quashed Annexures ‘A4’ and

3 ‘A7’ and there is further direction to the respondents to consider the case of the applicant for promotion to the post of Commissioner from the date on which his immediate juniors were considered for promotion with consequential benefits. 2. We have heard Mr. Jeevan J.Neeralgi, learned Counsel appearing for the petitioners and Mr.Sugumaran S., learned Counsel appearing for the respondent.

4 departmental proceedings. He submitted that there was no breach of principles of natural justice and therefore the Tribunal ought not to have interfered with the order passed by the disciplinary authority. 4. Whereas Mr.Sugumaran, learned Counsel appearing for the respondent has supported the order of the Tribunal. 5. We may at the outset mention that the Tribunal has not interfered with the order imposing punishment upon the respondent on the ground of alleged breach of principles of natural justice and therefore the said aspect would hardly assume any importance for consideration of the case of the petitioners. However, the Tribunal has interfered with the order of the disciplinary authority on the ground that the respondent exercised quasi judicial power vested in him and after considering the material on record if the

5 decision taken is not malafide, the order imposing punishment upon the respondent Officer cannot be sustained. 6. We may record that at paragraphs 16 and 17 the Tribunal has observed thus: 16. The issue of mala fides has been examined by the Disciplinary Authority (DA) in some detail (Annexure A4). In respect of the three articles of charge the Disciplinary Authority has clearly stated the allegation that the applicant had acted with the mala fide intention of suppressing certain facts in order to cause undue benefit to the assessee is not sustainable since no material facts have been brought on record to substantiate the same. It is important to recall here that the very same DA had disagreed with the Inquiry Officer’s report exonerating the applicant. The DA has instead held that the applicant performed his duties in a negligent manner. 17. This brings us to the issue of the applicant’s alleged negligence. The very fact that two separate authorities who heard the

6 assessee’s appeal, namely, the Commissioner of Income Tax and the ITAT, found in favour of the assessee, speaks for itself. The respondents have admitted that “….CIT, who supervised the assessment, also accepted the assessment”. They further admit that the ITAT-II had also given the relief. However the respondents argue that these appellate orders are for the benefit of the assessee alone and cannot be quoted by the applicant in his defence. At best this is a weak argument. The assessment made by the applicant lies at the very core of the disciplinary action initiated against the applicant. When appellate bodies set up under the Income Tax Act have found no serious fault in the said assessments we fail to see on what grounds the disciplinary case against the applicant can stand.

7 19. But even if it is to be seen as an assessment, in our view, on all the available evidence any reasonable man can hold that Chief Income Tax Commissioner when he accepted the disclosure statement and it was confirmed by CIT (Appeals), and later ITAT, the disagreement note put up by the concerned authority will not lie in the eye of law, it is arbitrary and combined with non application of mind and all its consequences are hereby quashed.

8 reasonable person would arrive at such decision applying normal prudence. 9. At this stage, we may also refer to the decision of this Court in the case of Sri S.Narendra Kumar Vs. The Chief Secretary & Another, wherein the question which arose for consideration before this Court was whether the action taken by the revenue authority as a quasi judicial authority can be made as a basis for taking disciplinary proceedings or not and this Court in the said order after relying upon the decision of the Apex Court observed at paragraphs 7 to 14 as under: “7. The only aspect which may be required to be considered in the present matter is that if any Revenue Officer, in exercise of the quasi- judicial power has passed any order, whether the same can be termed as misconduct in the absence of any allegation of favouritism or malice or extraneous consideration while exercising the power.

9 8. We may record that it is the case of respondents that the petitioner in capacity as the Tahsildar has exercised the power under Rule 43 of the Karnataka Land Revenue Rules, 1966. 9. Rule 42 of The Karnataka Land Revenue Rules, 1966, (hereinafter referred to as the Rules) provides that the disputed cases for the mutation are to be entered in the Register of Disputed Cases. Rule 43 provides for Settlement of Disputes. After considering the material on record and after hearing both the sides and the inspection if required, the appropriate order is to be passed. Against the said order, there is a provision for preferring an appeal before the Assistant Commissioner and further appeal before the Deputy Commissioner. The learned AGA is not in a position to dispute that the power exercised under Rule 43 of The Karnataka Land Revenue Rules, 1966 is having a character of quasi-judicial authority, since the rights between the disputed parties are to

10 be adjudicated for the purpose of mutation in the Record of Rights. If the order is considered which was passed by the petitioner on 22.03.1990 it was for effecting mutation in favour of one Ramegowda S/o Venkategowda and others. Further, as observed earlier, the said order of the petitioner was carried in appeal before the Assistant Commissioner and was further carried in appeal before the Deputy Commissioner and ultimately, the matter was remanded to the Tahsildar. Under these circumstances, we are inclined to consider and hold that the power exercised by the petitioner was as a quasi-judicial authority.

11 decision, the High Court of Gujarat at paragraphs-4 to 6 observed thus: 4. It is an undisputed position that the original petitioner, at the relevant point of time, was functioning as quasi judicial authority wherein his duty was to decide the rights of the parties and to render the decision. Pertinent aspect is that the State Government was one of the parties over whose land, the claim was to be decided by the original petitioner in the capacity of quasi judicial authority. On the aspect of exercise of power by the quasi judicial authority and to carve out the contingency when can be treated as misconduct, we may refer to the decision of the apex court in the case of Zunjarrao Bhikaji Nagarkar versus Union of India and others, reported in 1999 (7) SCC page 409= AIR 1999 SC 2881, more particularly the observations made at para 40 to 43 which read as under:

“40.When we talk of negligence in a quasi judicial adjudication, it is not negligence perceived as carelessness inadvertence or

12 omission but as culpable negligence. This is how this Court in State of Punjab v. Ram Singh Ex-Constable ((1992) 4 SCC 54) : (1992 AIR SCW 2595 : AIR 1992 SC 2188)interpreted "misconduct" not coming within the purview of mere error in judgment, carelessness or negligence in performance of the duty. In the case of K. K. Dhawan (1993 (2) SCC 56) : (1993 AIR SCW 1361 : AIR 1993 SC 1478 : 1993 Lab IC 1028), the allegation was of conferring undue favour upon the assessees. It was not a case of negligence as such. In Upendra Singh's case (1994 (3) SCC 357) : (1994 AIR SCW 2777), the charge was that he gave illegal and improper directions to the assessing officer in order to unduly favour the assessee. Case of K. S. Swaminathan (1996 (11) SCC 498), was not where the respondent was acting in any quasi judicial capacity. This Court said that at the stage of framing of the charge the statement of facts and the charge-sheet supplied are required to be looked into by the Court to see whether they support the charge of the alleged misconduct. In M. S. Bindra's case (1998 (7)

13 SCC 310) : (1998 AIR SCW 2918 : AIR 1998 SC 3058 : 1998 Lab IC 3491) where the appellant was compulsorily retired this Court said that judicial scrutiny of an order imposing premature compulsory retirement is permissible if the order is arbitrary or mala fide or based on no evidence. Again in the case of Madan Mohan Choudhary (1999) 3 SCC 396 : (1999 AIR SCW 648 : AIR 1999 SC 1018), which was also a case of compulsory retirement this Court said that there should exist material on record to reasonably form an opinion that compulsory retirement of the officer was in public interest. In K. N. Ramamurthy's case (1997) 7 SCC 101 : (1997 AIR SCW 3677 : AIR 1997 SC 3571), it was certainly a case of culpable negligence. One of the charges was that the officer had failed to safeguard Government revenue. In Hindustan Steel Ltd.'s case (AIR 1970 SC 253), it was said that where proceedings are quasi judicial penalty will not ordinarily be imposed unless the party charged had acted deliberately in defiance of law or was guilty of conduct contumacious or dishonest or

14 acted in conscious disregard of its obligation. This Court has said that the penalty will not also be imposed merely because it is lawful so to do. In the present case, it is not that the appellant did not impose penalty because of any negligence on his part but be 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. We have noticed that Patna High Court while interpreting Section 325, I.P.C. held that imposition of penalty was not mandatory which again we have said is not a correct view to take. 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. 41. When penalty is not levied, the assessee certainly benefits. But it cannot be said that by not levying the penalty the officer has favoured

15 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.

16 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.

17 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.”

18 not followed the statutory rules or particular course of action was not undertaken.

19 Hemarajbhai Unadkat (supra) and ultimately it was observed that the decision per se cannot be said as misconduct, if the power is exercised as quasi-judicial authority, unless it is a case for influence operated upon quasi-judicial authority or the power is exercised for favouritism or with extraneous consideration.

20 Assistant Commissioner as well as the ultimate order passed by the Deputy Commissioner, it does not transpire that the cancellation of the order and the remand is on the premise that it was established that the land was an Inam land. We do not propose to make any further observations, since as per the order of the Deputy Commissioner, the matter is remanded to the Tahsildar and any observations made by this Court may prejudice the rights of the original claimants or any party who are not before us. But suffice it to observe that there was no conclusive proof to show that the Tahilsdar had no power to consider the matter for mutation. Under these circumstances, we are inclined to consider that the power was exercised by the petitioner as a quasi-judicial authority may be in purported exercise of the power. When it is an undisputed position that there is no allegation of favouritism or extraneous consideration or malice in exercise of the power, merely because error is

21 committed while exercising the power as quasi-judicial authority, the same per se cannot be said to be misconduct. 13. It appears that the aforesaid aspects have not been considered by the Tribunal but since it is purely a question of law, the same can be considered at this stage. 14. In view of the aforesaid observation and discussion, the impugned order passed by the authority imposing punishment upon the petitioner dated 16.10.1998 Annexure ‘A9’ cannot be sustained. Hence the same is set aside. The order of the Tribunal is also set aside.

22 also cannot be sustained. Under the circumstances, it cannot be said that the Tribunal has committed any error in quashing the disciplinary proceedings. So far as the further direction given by the Tribunal to the petitioners to consider the case of the respondent is concerned, the same would also not call for interference since the direction is to consider the case of the respondent for the post of Commissioner from the date on which his immediate juniors were promoted. 11. In view of the above, we do not find any case made out for interference. Hence, the petition is dismissed.

Sd/- JUDGE

Sd/- JUDGE JT/-