K. KANDASWAMYversusUNION OF INDIA AND ANR.

A                              K. KANDASWAMY
                                      v.
                           UNION OF INDIA AND ANR.

                               SEPTEMBER 1, 1995

B               [K. RAMASWAMY AND B.L. HANSARIA, JJ.]

          S e1vice Law :

          Fundamental Rules/All India Services (Death-cum-Retirement
C Benefits) Rules. 1958:

           F.R. 56(j) r.16(3)-Compulsmy retirement-Basis of-Indian Police
    Se1vice Officer--Confidential Rep01ts reflecting doubtful integrity-Special
    Rep01t by State Govemment of Officer acquiring large assets-Pennission
    sought by officer to purchase a large coffee estate-Held, decision taken by
D   Govemment cannot be said to be arbitra1y unjustified, or based on no
    evidence--:-When approp1iate authority fonns bona fide opinion that'compul-
    s01y retirement of employee is in public interest c01Tectness of order on merits
    cannot be challenged in Cowts.

E         Constitution of India :

          Articles 309, 311-Compulsory retirement-Does not amount to dis-
    missal or removal from service-/t is neither punishment nor does it cast
    stigma.

F         The appellant was an Indian Police Service direct recruit cadre
    officer in the Tamil Nadu Police Service. The Government of India, while
    considering his case for promotion, called for a special report. The State
    Government reported that since appellant's posting· as Deputy Inspector
    General of Police, there were persistent reports of his acquiring large
    assets and getting money from his Subordinates. Though no specific
G   evidence of receiving money was found, the appellant had sought permis-
    sion to purchase a coffee estate.worth lakhs of rupees in his wife's name.
    Confidential preliminary inquiries made by the Directorate of Vigilance
    and Anti-Corr~ption revealed that Confidential Reports of the appellant
    showed that his work as Managing Director, Tamil Nadu Police Housing
H   Corporation, Madras was not satisfactory and his integrity as such could
                                          258
                       K. KANDASWAMYv. U.O.I.                          259

not be certified. The report ultimately led to passing the order to compul-   A
sorily retire the appellant. The appellant challenged the order before the
Central Administrative Tribunal, which declined to interfere. Aggrieved,
the appellant filed the appeal.

      It was contended by the appellant that the order was arbitrary and
untenable inasmuch as there was neither any evidence nor any report of        B
the Directorate of Vigilance and Anti- Corruption that/the appellant had
assets disproportionate to his legitimate sources of income.

      Dismissing the appeal, this Court

      Held : 1.1. The object of compulsory retirement of the Government
                                                                              c
employee is public interest. While exercising the power under Rule 56(j) of
the Fundamental Rules, the appropriate authority has to weigh several
circumstances in arriving at the conclusion that the employee requires to
be compulsorily retired in public interest. The Government is given power
to energise its machinery by weeding out dead wood, inefficient, corrupt and D
people of doubtful integrity by compulsorily retiring them from service.
The opinion must be based on the material on record; otherwise it would
amount to arbitrary or colourable exercise of power. When the appropriate
authority forms bona fide opinion that compulsory retirement of the
Government employee is in the public interest, the correctness of the order
on merits cannot be challenged before Courts, though it may be open to the E
aggrieved employee to impugn it on the ground that requisite opinion is
based on no evidence or has been formed or the decision is based on
collateral grounds or that it is an arbitrary decision.
                                               [262-Fj H; 263-A-B; 262-F-G]
      S. Ramachandra Raju v. State of 01issa, [1994] 3 SCC 424, relied on.    F

      1.2. In the instant case, the decision taken by the Government of
India cannot be held to be arbitrary, unjustified or based on no evidence.
In the light of documents, the specific permission sought by the appellant
himself and on the basis of the special report submitted by the State         G
Government, the Government of India through its appropriate Committee
reached the conclusion that in view of the doubtful integrity it would not
be desirable in the public interest to retain the appellant in service and,
accordingly, the appellant was compulsorily retired. [264-B-C; 262-D-E}

     2. Compulsory retirement does not amount to dismissal or removal         H
    260                      SUPREME COURT REPORTS [1995) SUPP. 3 S.C.R.

A   from service within the meaning of Article 311 of the Constitution. It is
    neither punishment nor visits with loss of retiral benefits; nor does it cast
    stigma. The otlicer would be entitled to the pension that he has actually
    earned and there is no diminution of the accrued benefits. [262 E-F]

            CIVIL APPELLATE JURISDICTION : Civil Appeal No. 8336 of
B   1995.

          From the Judgment and Order dated 19.11.90 of the Central Ad-
    ministrative Tribunal, Madras in O.A. No. 641/88.

            S. Sivasubramainiam and R.A. Perumal for the Appellant.
c
         Altaf Ahmed, Additional Solicitor General, Hemant Sharma and Ms.
    Sushma Suri for the Union of India.

            A. Mariarputham for the State.

D           The following Order of the Court was delivered :

            Leave granted.

            This appeal by special leave arises from the order dated November
    19, 1990 made in O.A. No. 641/88 by the Central Administrative Tribunal,
E   Madras Bench. Undisputed facts are that the appellant is an 1.P.S. direct
    recruit cadre officer (1966) in the Tamil Nadu Police Service. At the
    relevant time he was Addi. Inspector General of Police. On the basis of
    recommendation by the Review Committee on June 12, 1986 for consider-
    ing his case for promotion, the Government of India had called for a
F   special report and the State Government had submitted its report on June
    12, 1987. Therein it was stated that since his posting as Deputy Inspector
    General of Police, Coimbatore, there were persistent reports of his acquir-
    ing large assets and of his getting money from his subordinates. While no
    specific evidence of receiving money from his subordinates was forth
    coming, he himself had come up with a request for permission to acquire
G   a coffee estate in the name of his wife for Rs. 25 lakhs on the basis that
    he would pay Rs. 5 lakhs by mortgaging his house and rest of the amount
    by bank loans. Formal enquiries indicated that the estate would be worth
    about at least Rs. 60 lakhs. As the transaction al?peared to be highly
    suspicious, confidential preliminary enquiries were made by the Direc-
H   torate of Vigilance and Anti-Corruption into the source for this large
                      K. KANDASWAMYv. U.0.1.                           261

amount. It was stated that in the C.rs. of the period from April 1, 1985 to A
September 30, 1985, it has been recorded that his work as Managing
Director, Tamil Nadu Police Housing Corporation, Madras, was not satis-
factory. It has also been recorded that his integrity during this period could
not be certified, as he come out with a proposal about purchase of an estate
by his wife and son valued at a few lakhs. An officer with not much of B
patrimony to boast about, the transaction is full of suspicion. Government
have been requested to have this further verified through the Vigilance
Agency. It was also noted that pending further the reports, the entries on
verification of the integrity was awaited.

     On consideration of the above report, the Government of India in its     C
proceedings dated August 20, 1987 recorded thus :

        "The undersigned is directed to enclose copies of briefs regarding
        a proposal to retire Shri K. Kandaswamy, I.P.S. (TN: 1966) from
        Indian Police Service under rule 16(3) of AIS (DCRB) Rules,
        1958, with the request that it may kindly be placed before the D
        Central Establishment Board/Appointments Committee of the
        Cabinet Secretariat for consideration and orders."

       Pursuant thereto, decision was taken to compulsorily retire the ap-
pellant from service and order was passed to compulsorily retire to appel-    E
lant from service under the impugned order dated February 9, 1988.

       Shri S. Sivasubramaniam, the learned Senior counsel for the appel-
lant, contended that the appellant had all through unblemished record of
service. The assets with regard to the poultry business conducted by his
wife and son were enquired and found accounted for, there was no further      F
evidence to conclude that the appellant is having any disproportionate
 assets. When a crime was registered against him, after recommendation for
 his retention in the service, the order of compulsory retirement is not a
bona fide exercise of power. There is no report submitted by the Vigilance
or the Anti-Corruption Department regarding the alleged disproportionate      G
assets. His admission was only of having Rs. 5 lakhs worth house. There-
fore, the view taken by the Government to compulsorily retire the appellant
 from service is clearly arbitrary and untenable. We find no force in the
 contention.

      It is seen that the Government of India had requested the State         H
    262                   SUPREME COURT REPORTS (1995] SUPP. 3 S.C.R.

A   Government to send special report on the integrity of the appellant. As
    stated earlier, the Government had sent the report. The report thus con-
    tained specific averment, namely, that the appellant himself ha<l come
    forward seeking permission to purchase Coffee Estate worth Rs. 25 lakhs,
    which on enquiry was found to be worth Rs. 60 lakhs. The authorities also
    had information of the alleged unauthorised collections made by the ap-
B
    pellant through subordinates. That may be an assumption. But the fact
    remains that the appellant himself had come forward to purchase a coffee
    estate worth Rs. 25 lakhs, he admitted that a poultry farm is run by his wife
    and son and he claims that he had home worth Rs. 5 lakhs and he would
    obtain loans from the Bank for the purchase of the huge Estate worth Rs.
c   25 lakhs.

           The question, therefore, is whether the Government of India was not
    justified in doubting the integrity and whether it is based on no evidence.
                                                                                    :
D         As seen in the light of documents and in the light of the specific '
    permission sought by the appellant himself on the basis of the special
    report submitted by the State Government, the Government of India
    through its appropriate Committee reached the conclusion that in view of
    the doubtful integrity it would not be desirable in the public interest to
    retain the appellant in service. Accordingly, they have compulsorily retired
E   the appellant from service. Compulsory retirement does not amount to
    dismissal or removal from service within the meaning of Article 311 of the
    Constitution. It is neither punishment nor visits with loss of retiral
    benefits; nor does it cast stigma. The officer would be entitled to the
    pension that he has actually earned and there is no diminution of the
F   accrued benefits. The object of compulsory retirement of the Government
    employee is public interest. If the appropriate authority bona fide forms ,
    that opinion, the correctness thereof on merits cannot be challenged before
    courts, though it may be open to the aggrieved employee to impugn it. But
    the same may be challenged on the ground that requisite opinion is based
    on no evidence or has not been formed or the decision is based for
G   collateral grounds or that it is an arbitrary decision.

           While exercising the power under Rule 56G) of the Fundamental
    Rules, the appropriate authority has to weigh several circumstances in
    arriving at the conclusion that the employee requires to be compulsorily
H   retired in public interest. The Government is given power to energise its
                       K. KANDASW AMY v. U .0.1.                         263

machinery by weeding out dead wood, inefficient, corrupt and people of A
doubtful integrity by compulsorily retiring them from service, when the
appropriate authority forms bona fide opinion that compulsory retirement
of the Government employee is in the public interest, court would not
interfere with the order. In S Ramachandra Raju v. State of 01is.m, [1994]
3 SCC 424, a Bench of this court to which one of us (K. Ramaswamy, J.)
                                                                              B
was a member, considered the entire case law and held that "the Govern-
ment must exercise its power only in the public interest to effectuate the
efficiency of the service. The dead wood needs to be removed to augment
efficiency. Integrity in public service needs to be maintained. The exercise
of power of compulsory retirement must not be a haunt on public servant
but must act as a check and reasonable measure to ensure efficiency of           c
service and free from corruption and incompetence. The officer would live
by reputation built around him. In an appropriate case, there may not be
sufficient evidence to take punitive disciplinary action of removal from
service. But his conduct and reputation is such that his continuance in
service would be a menace to public service and injurious to public interest. D
The entire service record or character rolls or confidential reports main-
tained would furnish the backdrop material for consideration by the
Government or the Review Committee or the appropriate authority. On
consideration of the totality of the facts and circumstances alone; the
Government should form the opinion that the Government officer needs
to be compulsorily retired from service. Therefore, the entire record more E
particularly, the latest, would form the foundation for the opinion and
furnish the base to exercise the power under the relevant rule to compul-
sorily retire a Government officer."

      Higher the ladder the officer scales in the echolons of service, greater   F
should be the transparency of integrity, honesty, character and dedication
to duty. Work culture and self- discipline augment his experience. Security
of service gives fillip to accelerate assiduity to stay in line and measure up
to the expected standards of efficiency by the Government employee.
Thereby, they ultimately aid to achieve excellence in public service. The        G
security of service provided by Article 311 of the Constitution and the
statutory rules made under proviso to Article 309 would thus ensure to
remove deficiency and incompetence and augment efficiency of public
administration. The rights-constitutional or statutory-carry with them
corollary duty to maintain efficiency, integrity and dedication to public
service. Unfortunately, the latter is being overlooked and neglected and the     H
     264                  SUPREME COURT REPORTS [1995) SUPP. 3 S.C.R.

 A   former unduly gets emphasised. The appropriate Government or the
     authority would, therefore, need to consider the totality of the facts and
     circumstances appropriate in each case and would form the opinion
     whether compulsory retirement of a Government employee would be in the
     public interest. The opinion must be based on the material on record;
     otherwise it would amount to arbitrary or colourable exercise of power.
 B
             Considered from this perspective and the material on record, we are
     of the considered view that the decision taken by the Government of India
     cannot be held to be arbitrary, unjustified or based on no evidence. It is
     made clear that our observations may not be construed as any finding on
 c   the alleged disproportionate assets of the appellant. We are informed that
     a criminal case is pendmg trial and the criminal court would decide the
     c,:ase without in any way getting influenced by any of the observations made
     by us.

             The appeal is accordingly dismissttd. But m the circumstances
· D without costs.
      R.P.                                                    Appeal dismissed.