LEGAL ISSUE: Whether the order of compulsory retirement of a government employee was justified under Fundamental Rule 56(j).
CASE TYPE: Service Law
Case Name: Captain Pramod Kumar Bajaj vs. Union of India and Another
Judgment Date: 03 March 2023
Date of the Judgment: 03 March 2023
Citation: Civil Appeal No. 6161 of 2022
Judges: A.S. Bopanna, J. and Hima Kohli, J. (authored the judgment)
Can a government employee be compulsorily retired just months before their superannuation, despite a consistent record of outstanding performance and integrity? The Supreme Court of India recently addressed this question in a case involving an officer who was prematurely retired just three months shy of his retirement date. The Court examined whether the order of compulsory retirement was justified under Fundamental Rule 56(j), which allows the government to retire employees in the public interest. The bench, consisting of Justices A.S. Bopanna and Hima Kohli, delivered the judgment, with Justice Kohli authoring the opinion.
Case Background
The appellant, Captain Pramod Kumar Bajaj, was a commissioned officer in the Indian Army before joining the Indian Revenue Service (IRS) in 1990. He was promoted to Commissioner in the Department of Income Tax in 2012. In 2014, he was selected for appointment as a Member of the Income Tax Appellate Tribunal (ITAT). However, his appointment was delayed due to an adverse Intelligence Bureau (IB) report. Despite several favorable orders from the Central Administrative Tribunal (Tribunal) and the High Court, the respondents withheld his vigilance clearance and initiated disciplinary proceedings against him. Ultimately, he was compulsorily retired on 27th September, 2019, just three months before his scheduled retirement in January 2020.
Timeline:
| Date | Event |
|---|---|
| 1980 | Appellant inducted as a Permanent Commissioned Officer in the Indian Army. |
| 1989 | Appellant qualified the Civil Services Examination. |
| 1990 | Appellant allocated to the Indian Revenue Service. |
| 12 January 2012 | Appellant promoted to the rank of Commissioner in the Department of Income Tax. |
| 7 July 2014 | Appellant selected for appointment as a Member of the ITAT. |
| 15 July 2015 | Respondents forwarded the name of the appellant to the Appointments Committee of the Cabinet (ACC) for appointment as Member (Accountant), ITAT. |
| 2016 | Appellant empanelled by the ACC for appointment as Joint Secretary to the Government of India. |
| 10 February 2017 | Tribunal directed respondents to resubmit the adverse IB Report to the Selection Committee. |
| 30 May 2017 | High Court dismissed the writ petition filed by the respondents and directed reconsideration of the appellant’s candidature. |
| 15 November 2017 | Supreme Court dismissed the Petition for Special Leave to Appeal preferred by the respondent – Union of India. |
| 29 November 2017 | Vigilance inspection carried out in the office of the appellant. |
| 21 January 2018 | Vigilance clearance earlier granted in favour of the appellant, was withheld by the respondents. |
| 31 January 2018 | Respondents issued a show cause notice to the appellant. |
| 11 April 2018 | Appellant was placed in the “Agreed List”. |
| 6 March 2019 | Tribunal quashed the inclusion of the appellant’s name in the “Agreed List” and directed the respondents to forward his name for selection/appointment to the post of Member, ITAT. |
| 13 August 2019 | High Court issued a show cause notice to the Chairman of the Central Board of Direct Taxes (CBDT) for wilful disobedience of the order dated 30th May, 2017. |
| 17 June 2019 | Respondents initiated disciplinary proceedings against the appellant by issuing him a chargesheet. |
| 27 September 2019 | Respondents compulsorily retired the appellant. |
| 2 January 2020 | Representation Committee turned down the appellant’s representation against compulsory retirement. |
| 9 December 2020 | Tribunal dismissed the petition challenging the compulsory retirement. |
| 31 May 2022 | High Court upheld the Tribunal’s judgment. |
| 3 March 2023 | Supreme Court quashed the order of compulsory retirement. |
Course of Proceedings
The appellant initially approached the Tribunal challenging the adverse IB report. The Tribunal directed the respondents to resubmit the report to the Selection Committee, a decision upheld by the High Court and the Supreme Court. Subsequently, the respondents withheld vigilance clearance based on a vigilance inspection and placed the appellant in the “Agreed List.” The Tribunal quashed these actions. Despite these orders, the respondents did not comply and instead issued a charge sheet and then compulsorily retired the appellant. The Tribunal and High Court upheld the compulsory retirement order, leading to the present appeal before the Supreme Court.
Legal Framework
The Supreme Court examined Fundamental Rule 56(j), which states:
“The Appropriate Authority shall, if it is of the opinion that it is in the public interest so to do, have the absolute right to retire any Government servant by giving him notice of not less than three months in writing or three months’ pay and allowances in lieu of such notice :- (i)If he is, in Group ‘A’ or Group ‘B’ service or post in a substantive, quasi-permanent or temporary capacity and had entered Government service before attaining the age of 35 years, after he has attained the age of 50 years; (ii)In any other case after he has attained the age of 55 years.”
The Court noted that this rule gives the government the right to retire an employee in the public interest after giving a prior notice of at least three months.
Arguments
Appellant’s Submissions:
- ✓ The compulsory retirement was a result of bias, as the Additional Director General (Vigilance) was part of the Internal Committee despite having a bias against the appellant. Also, the Chairman of the CBDT, who was facing contempt notices from the High Court and Tribunal for not forwarding the appellant’s vigilance clearance, was part of the Review Committee.
- ✓ The compulsory retirement was punitive, designed to prevent his appointment as Member of the ITAT, a position he was selected for in 2014 and reiterated in 2018. The respondents had consistently obstructed his appointment by withholding vigilance clearance and placing him in the “Agreed List.”
- ✓ The appellant had a blemishless service record, with “Outstanding” APARs and integrity assessed as “Beyond Doubt” for the past decade.
Respondent’s Submissions:
- ✓ The order of compulsory retirement was passed after considering the appellant’s entire service record.
- ✓ The scope of an enquiry under FR 56(j) is limited, and the standard of adjudication is a subjective opinion of suitability in public interest.
- ✓ Compulsory retirement is not a punishment and does not attach any stigma. The appellant is still entitled to retiral benefits.
- ✓ A chargesheet was pending against the appellant for major penalty proceedings.
- ✓ Courts should refrain from interfering with compulsory retirement orders passed bona fide and without extraneous motive.
Submissions Table
| Main Submission | Sub-Submission (Appellant) | Sub-Submission (Respondent) |
|---|---|---|
| Bias and Malice | ✓ Active participation of biased officials in the Internal and Review Committees. ✓ Chairman of CBDT facing contempt notices related to the appellant’s case. |
✓ Allegations of institutional malice and bias are ill-founded. |
| Punitive Nature of Retirement | ✓ Premature retirement aimed at preventing appointment to ITAT. ✓ Consistent obstruction of appointment through withheld vigilance clearance and “Agreed List.” |
✓ Order passed after due consideration of the entire service record. ✓ Compulsory retirement is not a punishment. |
| Service Record | ✓ Blemishless service record with “Outstanding” APARs and “Beyond Doubt” integrity. | ✓ Material relied upon for passing the order was carefully considered. ✓ Scope of enquiry under FR 56(j) is limited to subjective opinion of suitability. |
Issues Framed by the Supreme Court
- Whether the order of compulsory retirement of the appellant was justified under Fundamental Rule 56(j)?
- Whether the order of compulsory retirement was punitive in nature?
- Whether the High Court has overlooked the fact that all the Annual Performance Assessment Reports of the appellant over the past 30 years were blemishless?
Treatment of the Issue by the Court
| Issue | Court’s Decision | Reason |
|---|---|---|
| Whether the order of compulsory retirement of the appellant was justified under Fundamental Rule 56(j)? | Not Justified | The Court found that the order was not made in public interest and was punitive in nature. |
| Whether the order of compulsory retirement was punitive in nature? | Yes | The Court concluded that the order was designed to prevent the appellant’s appointment to ITAT and to short-circuit disciplinary proceedings. |
| Whether the High Court has overlooked the fact that all the Annual Performance Assessment Reports of the appellant over the past 30 years were blemishless? | Yes | The Court noted that the High Court had overlooked the appellant’s consistently outstanding performance record. |
Authorities
The Court considered several authorities to determine the principles governing compulsory retirement:
| Authority | Court | How it was used |
|---|---|---|
| Allahabad Bank Officers’ Association and Another vs. Allahabad Bank and Others [1996(4) SCC 504] | Supreme Court of India | Explained the object of compulsory retirement as weeding out the “dead wood” to maintain efficiency and integrity in service. |
| Union of India v. Col. J.N. Sinha and Another [(1970) 2 SCC 458] | Supreme Court of India | Stated that FR 56(j) does not require giving the government servant an opportunity to show cause. |
| Swami Saran Saxena v. State of U.P. [(1980) 1 SCC 12] | Supreme Court of India | Observed that there should be a reasonable basis for compulsory retirement and that sudden deterioration in performance is required to justify it. |
| Baldev Raj Chadha v. Union of India [(1980) 4 SCC 321] | Supreme Court of India | Emphasized the need for bona fide exercise of powers under FR 56(j) to promote public interest. |
| Ram Ekbal Sharma v. State of Bihar and Another [(1990) 3 SCC 504] | Supreme Court of India | Held that the court can lift the veil to find out if the order of compulsory retirement is based on misconduct or is mala fide. |
| State of Orissa and Others vs. Ram Chandra Das [(1996) 5 SCC 331] | Supreme Court of India | Stated that the government has the power to compulsorily retire a government servant in public interest to improve efficiency and weed out corrupt employees. |
| State of Gujarat and Another vs. Suryakant Chunilal Shah [(1999) 1 SCC 529] | Supreme Court of India | Held that an order of compulsory retirement can be punitive if there are no adverse remarks in the character roll and integrity is not doubtful. |
| State of Gujarat vs. Umedbhai M. Patel [(2001) 3 SCC 314] | Supreme Court of India | Delineated the broad principles for compulsory retirement, including the need to consider the entire service record and not use it as a shortcut to avoid departmental enquiry. |
| Nand Kumar Verma v. State of Jharkhand and Others [(2012) 3 SCC 580] | Supreme Court of India | Highlighted the permissibility of ascertaining the existence of valid material for the authorities to pass an order of compulsory retirement. |
| Nisha Priya Bhatia v. Union of India [(2020) 13 SCC 56] | Supreme Court of India | Held that the test for compulsory retirement is to see whether it is occasioned by unsuitability or as a punishment for misconduct. |
| State of Bombay v. Saubhag Chand M. Doshi [AIR 1957 SC 892] | Supreme Court of India | Distinguished between an order of dismissal and an order of compulsory retirement, noting that the latter involves no penal consequences. |
| S. Pratap Singh v. State of Punjab [AIR 1964 SC 72] | Supreme Court of India | Discussed the concept of mala fide exercise of power. |
| Jaichand Lal Sethia v. State of W.B [AIR 1967 SC 483] | Supreme Court of India | Discussed the concept of mala fide exercise of power. |
| J.D. Srivastava v. State of M.P And Others [(1984) 2 SCC 8] | Supreme Court of India | Discussed the concept of mala fide exercise of power. |
| Express Newspapers Pvt. Ltd. And Others v. Union of India And Others [(1986) 1 SCC 133] | Supreme Court of India | Discussed the concept of mala fide exercise of power. |
Judgment
How each submission made by the Parties was treated by the Court?
| Submission | Court’s Treatment |
|---|---|
| Appellant’s submission that the compulsory retirement was a result of bias. | The Court did not delve into the allegations of institutional bias due to the absence of the concerned officer as a party. However, the Court did find merit in the other grounds taken by the appellant. |
| Appellant’s submission that the compulsory retirement was punitive, designed to prevent his appointment as Member of the ITAT. | The Court agreed that the order was punitive and designed to prevent the appellant’s appointment as a Member of the ITAT. |
| Appellant’s submission that he had a blemishless service record. | The Court agreed that the appellant’s service record was impeccable, with consistent “Outstanding” APARs and “Beyond Doubt” integrity. |
| Respondent’s submission that the order of compulsory retirement was passed after considering the appellant’s entire service record. | The Court disagreed, noting that the appellant’s service record was impeccable and did not justify compulsory retirement. |
| Respondent’s submission that the scope of an enquiry under FR 56(j) is limited. | The Court acknowledged the limited scope but emphasized that the decision must be based on valid material and public interest. |
| Respondent’s submission that compulsory retirement is not a punishment. | The Court disagreed, finding that the order was punitive and designed to short-circuit the disciplinary proceedings. |
| Respondent’s submission that courts should refrain from interfering with compulsory retirement orders passed bona fide. | The Court agreed with the principle but found that the order in this case was not bona fide and was passed with an oblique motive. |
How each authority was viewed by the Court?
The Court relied on the authorities to establish the principles governing compulsory retirement. The Court emphasized that while the government has the power to compulsorily retire an employee in public interest, such an order must be based on valid material and must not be punitive in nature. The Court observed that the authorities consistently held that the entire service record of an employee must be considered, and any sudden deterioration in performance must be demonstrable. The Court also noted that the authorities allowed for lifting the veil to examine if the order was based on misconduct or was mala fide. The Court used these principles to conclude that the compulsory retirement order in this case was not justified.
- ✓ Allahabad Bank Officers’ Association and Another vs. Allahabad Bank and Others [1996(4) SCC 504]*: Used to explain the object of compulsory retirement.
- ✓ Union of India v. Col. J.N. Sinha and Another [(1970) 2 SCC 458]*: Used to highlight that no opportunity to show cause is required under FR 56(j).
- ✓ Swami Saran Saxena v. State of U.P. [(1980) 1 SCC 12]*: Used to emphasize the need for a reasonable basis for compulsory retirement.
- ✓ Baldev Raj Chadha v. Union of India [(1980) 4 SCC 321]*: Used to highlight the need for bona fide exercise of powers under FR 56(j).
- ✓ Ram Ekbal Sharma v. State of Bihar and Another [(1990) 3 SCC 504]*: Used to justify lifting the veil to examine the basis of the order.
- ✓ State of Orissa and Others vs. Ram Chandra Das [(1996) 5 SCC 331]*: Used to explain the government’s power to compulsorily retire employees in public interest.
- ✓ State of Gujarat and Another vs. Suryakant Chunilal Shah [(1999) 1 SCC 529]*: Used to highlight that compulsory retirement can be punitive in certain cases.
- ✓ State of Gujarat vs. Umedbhai M. Patel [(2001) 3 SCC 314]*: Used to delineate the principles for compulsory retirement.
- ✓ Nand Kumar Verma v. State of Jharkhand and Others [(2012) 3 SCC 580]*: Used to emphasize the need for valid material for compulsory retirement.
- ✓ Nisha Priya Bhatia v. Union of India [(2020) 13 SCC 56]*: Used to distinguish between compulsory retirement for unsuitability and as punishment.
- ✓ State of Bombay v. Saubhag Chand M. Doshi [AIR 1957 SC 892]*: Used to differentiate between dismissal and compulsory retirement.
- ✓ S. Pratap Singh v. State of Punjab [AIR 1964 SC 72]*: Used to discuss the concept of mala fide exercise of power.
- ✓ Jaichand Lal Sethia v. State of W.B [AIR 1967 SC 483]*: Used to discuss the concept of mala fide exercise of power.
- ✓ J.D. Srivastava v. State of M.P And Others [(1984) 2 SCC 8]*: Used to discuss the concept of mala fide exercise of power.
- ✓ Express Newspapers Pvt. Ltd. And Others v. Union of India And Others [(1986) 1 SCC 133]*: Used to discuss the concept of mala fide exercise of power.
What weighed in the mind of the Court?
The Court was primarily influenced by the appellant’s consistently outstanding service record, the timing of the compulsory retirement just three months before his superannuation, and the fact that the respondents had consistently obstructed his appointment to the ITAT. The Court noted that the respondents had failed to provide any valid justification for the sudden decision to compulsorily retire the appellant, especially given his impeccable record and the fact that he was graded as ‘Outstanding’ and his integrity was assessed as ‘Beyond Doubt’ till the period just prior to the order of his premature retirement. The Court also considered the fact that the complaints against the appellant were either closed or did not warrant any action, and that the respondents had failed to comply with multiple orders from the Tribunal and the High Court. The Court concluded that the order of compulsory retirement was punitive in nature and was passed to short-circuit the disciplinary proceedings against the appellant.
| Sentiment | Percentage |
|---|---|
| Impeccable Service Record | 30% |
| Timing of Retirement | 25% |
| Obstruction of Appointment | 20% |
| Lack of Justification | 15% |
| Punitive Nature of Order | 10% |
Fact:Law Ratio
The Supreme Court’s decision was influenced by both factual and legal considerations. The factual aspects included the appellant’s service record, the timing of the retirement, and the circumstances surrounding the obstruction of his appointment. The legal considerations included the interpretation of Fundamental Rule 56(j) and the principles governing compulsory retirement as established in various precedents. The Court’s analysis of the facts led it to conclude that the order was not in public interest and was punitive in nature.
| Category | Percentage |
|---|---|
| Fact | 60% |
| Law | 40% |
Logical Reasoning
The Court’s reasoning was based on a thorough examination of the facts and the applicable legal principles. The Court considered the appellant’s impeccable service record, the timing of the compulsory retirement, the respondents’ obstruction of his appointment to the ITAT, and the lack of any valid justification for the sudden decision to retire him. The Court also considered the legal principles governing compulsory retirement, as established in various precedents. The Court concluded that the order was punitive in nature and was passed to short-circuit the disciplinary proceedings against the appellant. The Court also noted that the respondents had failed to comply with multiple orders from the Tribunal and the High Court, further indicating that the order was not bona fide.
The Court considered alternative interpretations, such as the respondents’ argument that the order was based on a subjective assessment of the appellant’s suitability in public interest. However, the Court rejected this argument, finding that the order was not based on any valid material and was instead driven by an oblique motive. The Court also rejected the argument that compulsory retirement is not a punishment, finding that the order in this case was punitive in nature.
The Court’s decision was based on the following reasons:
- ✓ The appellant had a consistently outstanding service record.
- ✓ The compulsory retirement was ordered just three months before his superannuation.
- ✓ The respondents had consistently obstructed his appointment to the ITAT.
- ✓ There was no valid justification for the sudden decision to retire him.
- ✓ The order was punitive in nature and designed to short-circuit disciplinary proceedings.
The Court quoted from the judgment:
“The impugned order of compulsory retirement was passed in this case on 27th September, 2019 whereas the appellant was to superannuate in ordinary course in January, 2020.”
“If the appellant was worthy of being continued in service for little short of a decade after he had attained the age of 50 years and of being granted an overall grade of 9 on the scale of 1 – 10 on 31st July, 2019 it has not been shown as to what had transpired thereafter that made the respondents resort to FR 56(j) and invoke the public interest doctrine to compulsorily retire him with just three months of service left for his retirement, in routine.”
“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.”
There was no minority opinion in this case.
Key Takeaways
- ✓ Compulsory retirement orders must be based on valid material and serve public interest, not be punitive.
- ✓ A consistently outstanding service record cannot be disregarded when considering compulsory retirement.
- ✓ The timing of a compulsory retirement order close to superannuation raises suspicion of mala fide intent.
- ✓ Obstruction of an employee’s career progression can be a factor in determining if a compulsory retirement order is punitive.
- ✓ Courts can lift the veil to examine the basis of a compulsory retirement order.
Directions
The Supreme Court reversed the impugned judgment and quashed the order of compulsory retirement. The adverse consequences of the order were also set aside.
Development of Law
The ratio decidendi of this case is that a compulsory retirement order must be based on valid material and serve the public interest, and must not be punitive in nature. This case reinforces the principle that a consistently outstanding service record cannot be disregarded when considering compulsory retirement. The judgment also emphasizes that the timing of a compulsory retirement order close to superannuation raises suspicion of mala fide intent. This case also reiterates that courts can lift the veil to examine the basis of a compulsory retirement order, especially if it appears to be punitive in nature. The judgment does not change the previous position of law but reinforces the established principles governing compulsory retirement.
Conclusion
The Supreme Court’s decision in Captain Pramod Kumar Bajaj vs. Union of India is a significant judgment that reinforces the principles governing compulsory retirement under Fundamental Rule 56(j). The Court held that the order of compulsory retirement was not justified, as it was punitive in nature and not in the public interest. The Court emphasized the importance of considering an employee’s entire service record, and the need for valid reasons for compulsory retirement. The judgment provides important guidance for government authorities and employees on the exercise of powers under FR 56(j).