By TIOL News Service

NEW DELHI, DEC 17, 2012: TWO appeals are decided in this case, both against the same judgement of the Delhi High Court.

The First appeal is by union of India in which the respondent is Pradip Kumar Das. The respondent was a practising Advocate in the Calcutta High Court as well as before the CESTAT for over twenty years mainly dealing with the customs, excise and service tax matters. On 22nd April, 2006 he appeared for an interview before the Selection Committee for the post of Member [Judicial] in CESTAT. On being duly selected, he assumed charge as Member [Judicial] in the CESTAT on 22nd November, 2006. 

Under the Customs, Excise and Service Tax Appellate Tribunal Members [Recruitment and Conditions of Service] Rules 1987, Member of the CESTAT is put on probation for a period of one year [Rule 8(1)]. Furthermore, under Rule 8(2), the period of probation may be extended for a further period of one year at a time. However, the total period of probation cannot exceed three years. Under Rule 8(3), a Member may be discharged from service at any time during the period of probation without assigning any reason. This rule makes a general provision regulating the period of probation of members Technical or Judicial, irrespective of their source of recruitment. Rule 9 (1) and (2), on the other hand, deals with Technical or Judicial Members, recruited from two different sources. Rule 9(1) deals with members, who have been appointed whilst already in the service of the Central Government. In the case of such Members, a provision is made in Rule 9(1) to enable the Central Government to revert him to his parent post without assigning any reason, unless such a person is confirmed. Such Member can be reverted to his parent post after giving one month's notice of such reversion. If such a Member wishes to revert to his parent post, he is required to give one month's notice to the Central Government. Under the proviso, services of such member can be terminated by giving one month's notice, without assigning any reason, if he has already superannuated under the relevant rules of his parent post. Such member has a corresponding right to resign by giving one month's notice.

The present case deals only with Rule 9(2) which provides that in the case of a person appointed as Judicial Member directly from the Bar, unless he is confirmed, his appointment may be terminated by the Central Government at any time without assigning any reason after giving him one month's notice. Similarly, in case the Judicial Member wishes to resign, he is required to give one month's notice to the Central Government. Rule 8 clearly operates within the period of the three years, during which a member can be continued on probation. Rule 9(2) would apply only in cases where the Judicial Member is still not confirmed even after the maximum period of three years, on probation. Rule 9(2) would have no application within the period of three years. Rule 8 provides for discharge of probationer. Rule 9(2) talks of termination of service. In such circumstances, it provides that notice of one month shall be given before termination. But this procedure would become applicable only if the Judicial Member has been in service for three years or more.

It appears that no order extending the period of probation of the respondent was passed at the end of the mandatory period of probation on 21st November, 2007 or soon thereafter. The respondent, therefore, continued to work as Member [Judicial]. However, he received an order dated 19th November, 2009 extending his period of probation; first upto 21st November, 2008 and then upto 21st November, 2009. Receipt of the letter dated 19th November, 2009 resulted in the respondent tendering his resignation from the post of Member [Judicial] CESTAT on 20th November, 2009. On that very date, an order was issued whereby the respondent was discharged from service on the post of Member [Judicial] CESTAT .

During the period of his service the respondent had served under three Presidents, CESTAT , namely, Justice Abichandanani , Justice S.N . Jha and Justice R.M . Khandparkar . It is the case of the respondent that he never received any adverse comments from any of the Presidents during his tenure of service as a Member [Judicial], CESTAT . In fact, he was given the annual increments in the years 2007 and 2008. Since, he had received no adverse reports, the respondent assumed that he would be confirmed on the post of Member [Judicial] CESTAT . But to his utter shock and dismay, he received the order dated 19th November, 2009 which extended his period of probation; first upto 21st November, 2008 and then further upto 21st November, 2009. It is further the case of the respondent, on the basis of the information obtained under the Right to Information Act 2005, that there is a note dated 26th November, 2007 in File No.27 /22/2005- AD.IC in which it has been mentioned that the action for initiation of the process of confirmation of the respondent, which was due on 22nd November, 2007, would be initiated in a new file. There is further noting on 23rd January, 2008 calling for the ACRs of the respondent and two other Members. On 6th June, 2008 Justice S.N . Jha , President, CESTAT , wrote to the Secretary, Department of Revenue, requesting him to take steps for the confirmation of some of the Members of the CESTAT including the respondent. The Vigilance Cell had also conveyed its clearance from its own angle, in so far as the respondent was concerned.

However, the circumstances did a complete about turn when, like a bolt out of the blue, on 14th September, 2009, the respondent received a note from the President of the CESTAT annexing therewith a copy of the complaint from the members of the Bar about an incident which was alleged to have occurred in the respondent's Court on 9th September, 2009 and requesting for a report about the incident. The President of the CESTAT prepared a report on 18th November, 2009 regarding the incident, which inter alia, contained the following observations regarding the conduct of the respondent:

"15. It must be noted that whenever any act of misbehavior on the part of the parties or their representatives takes place in the court, it is essentially for the Presiding Officer to administer proper control and to try to defuse the tension if any caused on that count and not to retire immediately to the chamber. Abstaining from and abandoning the court in such a situation and leaving it open and free for all court result is encouraging indiscipline in the court. Merely because some of the representatives of the parties start raising voice or make allegations against the Bench, it would not be proper to abandon the court functioning and to retire to chamber. Rather the Presiding Officer has to try to control such situation by use of administrative acumen. In the case in hand, there does not appear any efforts made by the Presiding Officer in that regard."

The respondent claims that his services were terminated as a direct consequence of the complaint made by the representatives of the Bar and the report of the President, CESTAT .

Aggrieved by the aforesaid order, the respondent challenged the same before the CAT on 7th December, 2009. On 9th December, 2009, the OA was dismissed by the CAT. It was held by CAT that even though report had been received from the President, CESTAT regarding the complaint made by the Members of the Bar, ultimately the discharge of the respondent was on the basis of his unsuitability of the job and unsatisfactory performance of duty.

The respondent being aggrieved challenged the order before the High Court of Delhi which allowed the writ petition only on the interpretation of Rule 8(3) and Rule 9(2) of the Rules, although the respondent had raised four specific points for the consideration of the High Court.

The High Court on interpretation of Rules 8 and 9 of the Rules has held that since the respondent had completed more than three years service and he was a Judicial Member, under Rule 9(2) his services could not be terminated without serving upon him one month's notice.

Both the Government and the Member CESTAT are in appeal before the Supreme Court.

Supreme Court was of the view, the interpretation given by the High Court on Rule 9(2) is not correct. In the case of Judicial Member directly recruited from the Bar, the procedure prescribed under Rule 9(2) is required to be followed only if such member without being confirmed continues for three years or more.

The Supreme Court observed,

"Nonetheless the order of discharge cannot be upheld, as it is stigmatic and punitive in nature. It is a matter of record that during three years of service no order was issued extending the period of probation of the respondent. He completed the mandatory period of probation on 21st November, 2007, therefore, it was expected of the department to take a decision about the performance of the respondent within a reasonable period from the expiry of one year. It is also a matter of record that the respondent continued in service without receiving any formal or informal notice about the defects in his work or any deficiency in his performance.

It is also a matter of record that the procedure for confirmation of the respondent had been initiated on 26th November, 2007. It is also not disputed that vigilance report for his confirmation had also been received. Therefore, it is difficult to accept the submission of learned counsel for the Union of India, that the discharge of the respondent is not founded on the complaint made by some of the advocates.

The report prepared by the President, CESTAT on 18th November, 2009, clearly indicated that the only reason for issuing the order of discharge was contained in the aforesaid report. In our opinion the order of discharge passed by the Union of India was clearly vitiated by the legal malice. It was clearly founded upon the report submitted by the President, CESTAT . In our opinion, the controversy herein is squarely covered by a number of earlier judgments of this Court.

In our opinion, there is clearly a live nexus between the decision to discharge the respondent vide order dated 19th November, 2009; the disturbance caused by the members of the Bar in the Court of the respondent and his leaving the Bench and retiring to his Chamber. The report of the President leaves no manner of doubt that the respondent had been condemned unheard on the basis of the aforesaid incident and the report of the Chairman, CESTAT dated 18th November, 2009. The order of discharge, being based upon the report of the President, is clearly stigmatic and could not have been passed without giving an opportunity to the respondent to meet the allegations contained in the report of the President, CESTAT."

The Supreme Court had no hesitation in holding that the special leave petition filed by the Union of India is wholly devoid of merit and so was dismissed.

The second appeal is by Pradip Kumar claiming the relief of reinstatement and for the grant of consequential benefits including full back wages. Although, the High Court had allowed the writ petition of the respondent only on the ground that there had been a violation of Rule 9(2), the Supreme Court has come to a conclusion that the order of discharge was vitiated being colourable exercise of power, stigmatic and punitive in nature and such order cannot be sustained in law. The Court held, the order of discharge is arbitrary and therefore violates Article 14 of the Constitution.

Consequently, the Supreme Court held that the appellant - Pradip Kumar is entitled to be reinstated in service. He shall be entitled to full back wages during the period he has been compelled to remain out of service. Union of India is directed to release all consequential benefits to the said Pradip Kumar within a period of two months of the receipt of a certified copy of this order.

Please also see:

DDT 1243 24.11.2009 - CESTAT Member PK Das Discharged

DDT 1249 02.12.2009 - Can a CESTAT Member who has not completed probation be sent home just like that?

DDT 1911 30.07.2012 - Discharged CESTAT Member Gets Back His Job

(See 2012-TIOL-118-SC-MISC-LB)