Supreme Court Upholds Extension of Enforcement Director’s Tenure: Common Cause vs. Union of India (2021)

Introduction

Date of the Judgment: September 8, 2021

Citation: Not Available

Judges: L. Nageswara Rao, J. and B.R. Gavai, J.

Can the government extend the service of a key official after their retirement? The Supreme Court of India recently addressed this question in a case concerning the Director of Enforcement. The core issue was whether the Union Government could extend the tenure of the Director of Enforcement beyond the initial two-year period, especially when the incumbent had reached retirement age. This judgment clarifies the powers of the government regarding extensions of service for key positions and the interpretation of relevant laws. The bench comprised Justices L. Nageswara Rao and B.R. Gavai, with the judgment authored by Justice L. Nageswara Rao.

Case Background

The case revolves around the extension of tenure of the second Respondent, who was serving as the Director of Enforcement. Initially, on November 19, 2018, the second Respondent was appointed as Director of Enforcement for a period of two years. Subsequently, by an order dated November 13, 2020, the President of India modified the initial order, extending the tenure to three years. The petitioner, Common Cause, challenged this extension, arguing that it violated Section 25 of the Central Vigilance Commission Act, 2003 (CVC Act), which prescribes a minimum tenure of two years for the Director of Enforcement. The petitioner also pointed out that the second Respondent had reached the age of superannuation in May 2020, and therefore, was ineligible for an extension.

Timeline

Course of Proceedings

The petitioner challenged the extension of the second Respondent’s tenure by filing a Writ Petition before the Supreme Court of India. The petitioner argued that the extension was contrary to Section 25 of the CVC Act, which mandates a minimum tenure of two years for the Director of Enforcement and does not allow for extensions beyond this period, especially after the age of superannuation. The Union of India defended the extension, stating that it was based on the recommendation of a committee headed by the Chief Vigilance Commissioner and was necessary due to administrative exigencies. The Union of India also argued that Section 21 of the General Clauses Act, 1897, empowered them to extend the tenure of the Director of Enforcement.

Legal Framework

The primary legal framework for this case is the Central Vigilance Commission Act, 2003, particularly Section 25, which deals with the appointment and tenure of the Director of Enforcement. Section 25 of the CVC Act states:

“25. Notwithstanding anything contained in the Foreign Exchange Management Act, 1999 or any other law for the time being in force,—
(a) the Central Government shall appoint a Director of Enforcement in the Directorate of Enforcement in the Ministry of Finance on the recommendation of the Committee consisting of—
(i) the Central Vigilance Commissioner — Chairperson;
(ii) Vigilance Commissioners — Members;
(iii) Secretary to the Government of India in-charge of the Ministry of Home Affairs in the Central Government — Member;
(iv) Secretary to the Government of India in-charge of the Ministry of Personnel in the Central Government — Member;
(v) Secretary to the Government of India in-charge of the Department of Revenue, Ministry of Finance in the Central Government — Member;
(b) while making a recommendation, the Committee shall take into consideration the integrity and experience of the officers eligible for appointment;
(c) no person below the rank of Additional Secretary to the Government of India shall be eligible for appointment as a Director of Enforcement;
(d) a Director of Enforcement shall continue to hold office for a period of not less than two years from the date on which he assumes office;
(e) a Director of Enforcement shall not be transferred except with the previous consent of the Committee referred to in clause (a);
(f) the Committee referred to in clause (a) shall, in consultation with the Director of Enforcement, recommend officers for appointment to the posts above the level of the Deputy Director of Enforcement and also recommend the extension or curtailment of the tenure of such officers in the Directorate of Enforcement;
(g) on receipt of the recommendation under clause (f), the Central Government shall pass such orders as it thinks fit to give effect to the said recommendation.”

Additionally, the General Clauses Act, 1897, Section 21, was invoked by the Union of India to justify the extension of tenure. Section 21 of the General Clauses Act states:

“21. Power to issue, to include power to add to, amend, vary or rescind notifications, orders, rules or bye-laws.— Where, by any [Central Act] or Regulations a power to [issue notifications,] orders, rules or bye-laws is conferred, then that power includes a power, exercisable in the like manner and subject to the like sanction and conditions (if any), to add to, amend, vary or rescind any [notifications,] orders, rules or bye-laws so [issued] .”

The Fundamental Rule 56, which governs the retirement age of government servants, was also considered. It states that every government servant shall retire on attaining the age of 60 years, with specific exceptions for certain posts, which do not include the Director of Enforcement.

Arguments

Petitioner’s Arguments:

• The petitioner argued that Section 25(d) of the CVC Act mandates a minimum tenure of two years for the Director of Enforcement and does not permit any extension beyond this period.
• They contended that Fundamental Rule 56 prohibits any extension of service for government servants beyond the age of superannuation, except for specific posts not including the Director of Enforcement.
• The petitioner asserted that the extension was a form of malice in law, as it was done for extraneous considerations.
• They also argued that Section 21 of the General Clauses Act does not apply to Section 25 of the CVC Act, as it would be inconsistent with the statutory scheme.
• The petitioner relied on several judgments, including Strawboard Manufacturing Co., Ltd. v. Gutta Mill Workers’ Union, State of Madhya Pradesh v. Ajay Singh & Ors., and Kazi Lhendup Dorji v. Central Bureau of Investigation & Ors., to support their argument that Section 21 of the General Clauses Act cannot be used to extend the tenure of the Director of Enforcement.

Respondent’s Arguments:

• The Union of India argued that Section 25(d) of the CVC Act provides for a minimum tenure of two years to ensure the independence of the Director of Enforcement and does not restrict the tenure to only two years.
• They contended that the words ‘not less than two years’ should not be interpreted as ‘not more than two years’.
• The Union of India submitted that Section 21 of the General Clauses Act empowers them to extend the tenure of the Director of Enforcement, as there is no specific provision in the CVC Act prohibiting such extensions.
• They relied on the judgment in Kamla Prasad Khetan & Anr. v Union of India to support their argument that modification of an earlier order extending the tenure is permissible.
• The respondents argued that the extension was based on the recommendation of a committee constituted under Section 25 of the CVC Act and was necessary due to administrative exigencies and the crucial stage of ongoing investigations.
• They also stated that there were no allegations against the second Respondent’s conduct or performance.

Submissions Table

Issues Framed by the Supreme Court

The Supreme Court framed the following issues for consideration:

1. Whether the Union Government can extend the tenure of the Director of Enforcement beyond the initial two-year period as prescribed in Section 25(d) of the CVC Act.
2. Whether Section 21 of the General Clauses Act can be invoked to extend the tenure of the Director of Enforcement in the absence of a specific provision for extension in the CVC Act.
3. Whether the extension of tenure of the second Respondent was vitiated by malice in law.

Treatment of the Issue by the Court

The following table demonstrates as to how the Court decided the issues

Authorities

The court considered the following authorities:

Judgment

What weighed in the mind of the Court?

The Supreme Court’s decision was primarily influenced by the need to ensure the independence and effectiveness of the Director of Enforcement. The Court emphasized that the minimum tenure of two years was to protect the office from external pressures, and the extension was justified by the crucial stage of ongoing investigations. The Court also considered the administrative exigencies and the recommendation of the high-powered committee. The Court also relied on the principle that the General Clauses Act applies to all Central Acts unless specifically excluded, and the CVC Act did not exclude its application. The Court also emphasized that the extension of tenure was based on the recommendation of a committee constituted under Section 25(a) of the CVC Act. The Court also highlighted that the initial appointment of the second Respondent for a period of two years from 19.11.2018 which extends beyond the date of his superannuation in May, 2020 is in accordance with Section 25 of the CVC Act and cannot be said to be illegal.

Logical Reasoning

Judgment

The Supreme Court held that the Union Government could extend the tenure of the Director of Enforcement beyond the initial two-year period. The Court interpreted Section 25(d) of the CVC Act as prescribing a minimum tenure of two years, not a maximum. The Court also held that Section 21 of the General Clauses Act could be invoked to extend the tenure in the absence of a specific provision in the CVC Act prohibiting such extensions. The Court also found no evidence of malice in law in the extension of the second Respondent’s tenure. The Court, however, clarified that extensions should be granted in rare and exceptional cases and for a short period.

The Court quoted the following from the judgment:“We are of the considered view that the Central Government is empowered to extend the tenure of the Director of Enforcement beyond the period of two years. Section 25(d) of the CVC Act prescribes a minimum tenure of two years to ensure that the Director of Enforcement is not transferred or shifted from the said post during the course of investigation of serious offences. The words “not less than two years” cannot be interpreted as “not more than two years”. The Central Government is empowered to extend the tenure of the Director of Enforcement by invoking Section 21 of the General Clauses Act. The power to issue an order includes the power to amend it. The power under Section 21 of the General Clauses Act can be exercised subject to the condition that it is exercised in the like manner and subject to the like sanction and conditions. We are of the view that the extension of tenure of the second Respondent was not vitiated by malice in law. However, we make it clear that extensions should be granted in rare and exceptional cases and for a short period.”

Dissenting Opinion

There was no dissenting opinion in this case. The judgment was delivered by a bench of two judges, both of whom agreed with the final decision.

Ratio Decidendi

The ratio decidendi of the case is as follows:

• Section 25(d) of the Central Vigilance Commission Act, 2003, prescribes a minimum tenure of two years for the Director of Enforcement but does not restrict the tenure to only two years. The words “not less than two years” do not mean “not more than two years.”
• Section 21 of the General Clauses Act, 1897, can be invoked to extend the tenure of the Director of Enforcement in the absence of a specific provision in the Central Vigilance Commission Act prohibiting such extensions.
• The power to extend the tenure of the Director of Enforcement should be exercised in rare and exceptional cases and for a short period.

Obiter Dicta

The obiter dicta in this case include the following:

• The Court emphasized the importance of a minimum tenure of two years for the Director of Enforcement to ensure independence and prevent external pressures.
• The Court clarified that extensions should be granted in rare and exceptional cases and for a short period, to maintain the integrity of the office.
• The Court reiterated that the initial appointment of the second Respondent for a period of two years from 19.11.2018 which extends beyond the date of his superannuation in May, 2020 is in accordance with Section 25 of the CVC Act and cannot be said to be illegal.

Conclusion

In conclusion, the Supreme Court upheld the extension of the Director of Enforcement’s tenure, interpreting Section 25(d) of the CVC Act as providing for a minimum, not a maximum, tenure. The Court also clarified that Section 21 of the General Clauses Act could be invoked to extend the tenure in the absence of any specific prohibition in the CVC Act. The judgment underscores the importance of the independence of key officials while also recognizing the government’s power to make necessary extensions in exceptional circumstances. The Court emphasized that such extensions should be rare and for a limited duration. This case is a significant interpretation of service law and the applicability of the General Clauses Act in the context of specific statutes.