Holding

A finding of doubtful integrity must be based on pre‑ponderance of probability; absent such evidence, an order of compulsory retirement is arbitrary and liable to be set aside.

Summary

M.S. Bindra, a senior Indian Revenue Service officer, was compulsorily retired on the ground that his integrity was doubtful, based on three investigations cited by a Screening Committee. The Committee’s conclusions were challenged before the Central Administrative Tribunal, which dismissed the appeal, leading to a petition before this Court. The Court examined whether the Committee’s finding was supported by material evidence and whether the order of compulsory retirement could be reviewed on grounds of arbitrariness, mala‑fide intent, or lack of evidence. It held that the Committee’s reliance on mere suspicion, uncorroborated statements, and speculative inferences did not meet the pre‑ponderance of probability required to label an officer of doubtful integrity. Consequently, the order of compulsory retirement was set aside as unsupported and arbitrary. The appeal was allowed, and the respondent department was directed to determine appropriate relief for the appellant.

Issues considered

Whether the Screening Committee's finding of "doubtful integrity" was supported by sufficient evidence.
Whether an order of compulsory retirement is amenable to judicial review on the grounds of arbitrariness, mala‑fide intent, or lack of evidence.
Whether principles of natural justice apply to orders of compulsory retirement.
Whether the reputation and past conduct of the officer must be considered in assessing the allegation of doubtful integrity.

Legislation cited

Fundamental Ruless. 56(j)

Subjects

compulsory retirementadministrative lawjudicial reviewdoubtful integrityservice lawnatural justiceFundamental RulesScreening Committeepreponderance of probabilityarbitrary order

Judgment

A M.S. BINDRA
v.
UNION OF INDIA AND ORS.

SEPTEMBER 1, 1998
•
B (S. SAGHIR AHMAD AND K.T. THOMAS, J.1.]

Se1vice Law :

Compulsmy Retirement-Grounds for---Govemment Officer held in
C high esteem suddenly dubbed as a person of doubtfttl inte1:,~ity and compul-
solily retired from se1vic~Validity of-Held, conclusions anived at by
Screening Committee not .rnppmted by available records-Doubting one's
integ1ily should not be based on swmises and hwzches-But should be based
Oil preponderallce of probability from the poillt of view of a reasonable
man-Overall estimatioll of the delinquellt officer should llot be overlooked
D while judging his i11teg1ity-In the circumstances of the case, the delinquent
officer's tenacity towards his duties does not wa1rnllt him lo be castigated as
one with "doubtful illteg1ity''-Fundamental Rules, FR 56(j).

Compul.1·01y Retirement-Judicial Review of-Grounds f 01--Held,
E judicial review is pemzissible if the order is arbitrmy or ma/a fide or based on
no evidence.

Compulsmy Retirement-Natural justic~Inapplicability of-Ex-
plained'-Venion of delinquent office1~W!zen lo be considered'-Stated.

F Administrative Law :

Administrative action-Judicial ftmction-W!itten Judg1nent-Pro11!pl
delive1y of-Revenue Officer passed an order of adjudication numing into 100
pages on the day fallowing the last day of hemin5Supelior authmity dubbed
rhe Officer as one with "doubtful inte1:,~ity" because it was suspected that the
G order must have already been wlitlen before he01ing was complete-Held, the
Officer instead of, being doubted should have been appreciated for his
prolllplitud~There was nothing wrong if the Officer had prepared the
prefatmy pmtimz and swn11101y of evidence, leaving out cmcial discussion to
be decided after conclusion of he01ing-Hence, doubting the Officer's integ1ity
H is unjustified.
232
M.S. BTNDRA v. U.0.1. 233

Judicial Review-Ovemtling of decision of lower cowt or administrative A
auth01it;-~Implicatio11 of-Held, does not amount to doubting the calibre, or
casting stigma 011 such judicial officer or authmity :

Words and Phrases :

"Jnteglity"-Meaning of B
Maxim :

"Nemo fintt repente twpissimus" (no one becomes dishonest all of a
sudden)-Meaning of-Held, the maxim is not unexceptional but still is a
salutwy t,~tideline to judge human conduct, pwticularly in the field of Ad- C
ministrative Law.

The appellant was an Indian Revenue Service Ollicer and had a steep
rise in his career and was held in great esteem. But suddenly at the age of
52 years the appellant's integrity was doubted and he was compulsorily
retired. D
The Screening Committee arrived at the conclusion that the
appellant's integrity was doubtful on the basis of the following three cases
handled by the appellant -

(a) In the first case, the appellant imposed a penalty and fine of Rs. E
10 crores on a Mill. According to the Committee the appellant committed
the following lapses while proceeding against the Mill :

(i) The order of adjudication ran into nearly 100 pages and it was
passed on the day following the last day of the hearing. It indicated that the
order must have already been got ready even before the hearing was com-
F

-- plete.

(ii) A penalty of Rs. 50 Iakhs was imposed on the proprietor of the
Mill without issuing show cause notice to him.
G
(iii) Hnge sums of duty have been demanded in respect of unac-
counted production in the factory without fully going through the claims
of the party that those accounts were wastage claimed by him.

(b} In the second case, the appellant's subordinate gave instructions
for keeping an investigation in abeyance. The Committee came to the H
234 SUPREME COURT REPORTS [1998) SUPP. l S.C.R.

A conclusion that such instruction must have been given at the appellants
behest.

(c) In the third case, it was alleged that the appellant demanded a
bribe of Rs. 10 lakhs from a party and when the amount was not paid, he
took steps for cancellation of bail granted to the party and also invigorated
B the steps against that party.

The appellant filed an application before the Central Administrative
Tribunal, which was dismissed. Hence this appeal.

C Allowing the appeal, this Court

HELD : 1.1. Want of any material is almost equivalent to the next
situation that from the available materials no reasonable man would reach
such a conclusion. While evaluating the materials the authority should not
altogether ignore the reputation in which the officer was held till recently.
D The maxim "Nemo Fintt Repente Turpissimus" (no one becomes dishonest
all of a sudden) is not unexceptional, particularly in the filed of Administra-
tive Law. The authorities should not keep the eyes totally closed towards
the overall estimation in which the delinquent officer was held in the recent
past by those who were supervising him earlier. To declare an officer to be
E of "doubtful integrity" it is not enough that the doubt fringes on a mere
hunch. That doubt should be of such a nature as would reasonably and
consciously be entertainable by a reasonable man on the given material.
Mere probability is hardly sufficient to assume that it would have hap-
pened. There must he preponderance of probability for the reasonable man
to entertain doubt regarding that possibility. Only then there is justilica-
F tion to ram an officer with the label "doubtful integrity". [241-A-D]

2.1. In the first case, it was the appellant who headed the operation
and unearthed huge sum of concealed excise duty. This work should have
won the appellant appreciation but what was noted against the appellant is
G that he willfully created lacunae in the confiscation proceedings for provid-
ing an escape route to the defaulter. One of the reasons for this allegation
is that the confiscation order contains nearly 100 pages and the period was
too short for preparing such an order. Normally it is an achievement that
an ordt:r of 100 pages was made during such a short period. There is a
possibility that the officer hearing the adjudication case for several days
H would have prepared its prefatory portion as well as statement of
M.S. BIND RA v. U.O.L 235

summary of evidence during the days when arguments were proceeding and A
before conclusion of the hearing, leaving out the crucial discussion to be
dictated after conclusion of the hearing. That is not an objectionable
course. If so, the achievement in preparing an order of confiscation within
such a short span should not have been frowned at, instead there is scope
to pay admiration for its promptitude. It is farfetched to conclude that the
appellant's omission to issue show cause notice before imposing penalty B
and fine was a deliberate attempt on the part of the appellant to help the
defaulter Mill because it was 1;pen to the appellate auU10rity to set aside
the order and direct the appellant to pass fresh order after issuing the show
cause notice. [241-E-H; 242-A-B]

2.2. In the second case, the inference made against tl~e defaulter is
c
too tenuous. The minimum thing, which should have been done, was to
ascertain from the appellant's subordinate ollicer the circumstances under
which instructions were issued by him to keep the investigation in
abeyance. Attributing a sinister motive to the appellant for what his
subordinate had done was seemingly unfair, without adopting such a D
minimum precaution. [242-D-E]

23. In the third case, the steps taken by the appellant to cancel the
bail granted to the defaulters were not objectionable. This is a p1ima f acie
point in favour of the appellant's tenacity. The role played by the appellant
was that of a dutiful and ellicient ollicer of the department. The Screening E
Committee came to the conclusion that the appellant's integrity was doubt-
ful on the basis of the statements made by the defaulters that some person
told them.that the appellant was to-be paid Rs. 10 lakhs to save them from
the proceedings. Nobody bad cbe~ked up the truth from that person. If
integrity of senior ollicers, who established unblemished reputation and F
earned encomiums from all concerned till then, is proclaimed as doubtful
merely on the strength of statements of persons prosecuted by such officers,
what is the safety of such officers more so when they have to embark on
hazardous operations risking their lives against big business houses?
[242-F-G; 243-B]
G
Union of India v. Col. J.N. Sinha, [1970] 2 SCC 458; Bailamtha Nath
Das v. Chief Dist1ict Medical Officer, (19!!2) 2 SC 299 and Posts and
Telegraphs Board v. C.S.N. Mwthy, [1992] 2 SCC 317, relied on.

3. Therefore, there is utter dearth of evidence for the Screening
Committee tci conclude that the appellant had doubtful integrity. Such a H
236 SUPREME COURT REPORTS [1998] SUPP. 1 S.C.R.

A conclusion does not stand judicial scrutiny even within the limited permis-
sible scope. [243-D]

4. Judicial scrutiny of any order imposing premature compulsory
retirement is permissible if the order is either arbitrary or ma/a fide or if
it is based on no evidence. The observation that principles of natural
B justice have no place in the context of compulsory retirement does not
mean that if the version of the delinquent officer is necessary to reach the
correct conclusion the same can be obviated on the assumption that other
materials alone need be looked into. [240-F]

C 5. Members of the Screening Committee may be reputed persons.
Declining to agree with their conclusion does not mean that their calibre
is doubted or a stigma is cast on them. If the decision of a lower court is
overruled it does not mean that a stigma is cast upon the judicial ollicer
concerned. [243-C]

D CIVIL APPELLATE JURISDICTION : Civil Appeal No. 5583 of
1993.

From the .Judgment and Order dated 3.12.92 of the Central Ad-
ministrative Tribunal, New Delhi in 0.A. No. 588 of 1986.

E Raju Ramachandran, Manmohan, B.L. Wali and Maninder Singh for,
the Appellant.

N.N. Goswami, Hemant Sharma, V.K. Verma and (Ms. Sushma Suri)
(NP) for the Respondents.
F
The Judgment of the Court was delivered by

THOMAS, J. Appellant had a steep rise in the hierarchy of Indian
Revenue Service and was held in great esteem by his superiors until the
dawn of 1985 which marked the beginning of his downfall. He suddenly fell
G from grace as his integrity was eclipsed by the dark clouds of doubts
entertained by his superiors. Consequently at the age of 52 he was asked
to quit the department by terming the action as "compulsory retirement".
If appellant's stand is correct he would have felt the same way as Cardinal
Thomas Wolsey had lamented four centuries ago when his master Henry
H VIII King of England suddenly stripped him of his high office and indicted
M.S. BIND RA v. U.O.I. [THOMAS, J J 237

him to face a trial. "If I had served God as diligently as I have done the A
King, He would not have given me over in my grey hairs".

On 9-10~ 1985, Government of India (Ministry of Finance) axed the
appellant down by serving an order of compulsory retirement. Though he
challenged the order ~efore Central Administrative Tribunal (New Delhi
B
Bench) he was unsuccessful. Hence he has filed this appeal by special
leave.

A resume of facts which led to the said necking off is the following:

Appellant joined Indian Revenue Service in the year 1958 and was C
absorbed in the Excise Department. He had a quick rise in the ladder
which in 1980 reached him to the level of Director Enforcement and in
1983 as Appellate Collector of Customs and Excise since he earned a high
standard of reputation by then as "a very good officer all round". As he
proved to be efficient and trustworthy he was entrusted with the high D
sensitive post of Director of Anti Evasion Wing in 1984 which post he held
till June 1985. During the said period a series of raids was conducted by
Anti Evasion Squad headed by the appel!ant and a whopping sum of
escaped excise duty was unearthed through such raids. This became the
subject matter of extensive media coverage and praises were showered on E
the department for carrying out such daring operation in big business
houses and hoarding places. But the above raids became the commence-
ment of a volte face in the official career of the appellant.

A Screening Committee which considered the cases of several offi-
cials of the Revenue Department found that in the interest of the depart- F
ment some officials should be weeded out. On 9-4-1985, the committee
delved into the files relating to such persons including the appellant and
in the case of appellant they focussed on three specific instances which are
the following:
G
(1) Pursuant to search made in the premises of M/s. Orkay Silk Mills
Ltd. adjudication proceedings Were initiated and in the end a penalty and
fine of Rs.10 crores hav~ been imposed on the said Mills. But certain
derelictions were not\:d as against the appellant in the above operations.
They are: H
238 SUPREME COURT REPORTS [1998] SUPP. 1 S.C.R.

A (a) The order of adjudication ran into nearly 100 pages and it was
passed on the day following the last day of the hearing. It indicated
that the order must have already been got ready even before the
hearing was complete.

(b) A penalty of Rs.50 lakhs was imposed on the proprietor of the
B Mills without issuing a show cause notice on him.

(c) Huge sums of duty have been demanded in respect of unac-
counted production in the factory without fully going through the
claims of the party that those account~ were wastage claimed by
c him.

(2) Important cases relating to M/s. Golden Tobacco Co. were lying
unatten?ed for a very long time and instructions were issued by the Deputy
Director Shri Bhattacharjee to the units under him to keep further inves-
tigation in abeyance. The Screening Committee held that Shri Bhattachar-
D jee would have given such instructions at the behest of the Director.

(3) One Ashok Jain and his brother imported components of Honda
cars from abroad and assembled them in India in violation of Central
Excise Laws. On 1-12-1984, officers of the Anti Evasion Wing raided the
E premises where those cars were garaged and the Jain Brothers were
subjected to interrogation. They were arrested and produced before the
court. When they were released on bail the appellant persisted with the
steps and moved for cancellation of their bail order. In this operation what
was viewed against the appellant was that he had demanded Rs.10 lakhs
from Jain Brothers and when it was not paid he invigorated the steps
F against those two brothers.

The Screening Committee after considering the files relating to the
aforesaid three instances (which were recorded in a document marked by
the department as Annexure IV) reached the following conclusion:
G "On the basis of the specific cases and other material at Annexure
IV hereto, he is found to be of unreliable integrity and unfit to be
entrusted with any position of responsibility in the Government service
as he ha~ widely and systematically indulged in extortion of money
from the parties and adopted methods. which have the effect of
H bringing down the esteem of the Government in the public eye."
M.S. BrNDRt\ v. U.0.1. [THOMAS, J.) 239

The Revenue Committee upheld the said conclusion and thereafter A
Government of India passed the order prematurely retiring the
appellant.

Appellant made a scathing attack against the aforesaid order
mainly on three premises.
B
(1) The big business houses whose premises were subjected to series
of raids were so influenced as lo spread canards about the appellant as
part of a retaliatory measure against him.

- (2) The Screening Committee was actuated by ma/a fides as one of
its members (Shri M.L Wadhawan) who was a member of Central Board
of Excise and Customs had been inimical to him on account of serious
C

differences which can be discerned from a file (number of which appellant
has cited in the Special Leave Petition).

(3) The conclusion made against the appellant by the Screening
Committee is perverse in the sense that the material on which that con- D
clusion was reached could never have afforded scope to reach such con-
clusion to any reasonable person. In other words, there was utter dearth
of evidence for the Screening Committee to conclude that appellant was a
case of doubtful or unreliable integrity.

A two Judge Bench of this Court has held in Union of India v. Col. E
I.N. Sinha and Ors., (1970] 2 SCC 458, that "If the appropriate authority
forms the requisite opinion bona fide its opinion cannot be challenged
before the courts though it is open to an aggrieved party to contend that
the requisite opinion has not been formed or that it is based on collateral
grounds or that it is an arbitrary decision."
F
Approving the above principle, a three Judge Bench of this Court
has laid down in Baikw1tha Nath Das and A11r. v. Chief District Medical
Officer a11d A1zr., (1992] 2 SCC 299 that five principles should be borne in
mind while considering a case of compulsory premature retirement. It is
not necessary to extract all the five principles here except No. (iii) which G
reads thus:

"Principles of natural justice have no place in the context of an
order of compulsory retirement. This does not mean that judicial
scrutiny is excluded altogether. While the High Court or this Court
would not examine the matter as an appellate court, they may H
240 SUPREME COURT REPORTS (1998) SUPP. l S.C.R.

A interfere if they are satisfied that the order is passed (a) ma/a fide
or (b) that it is based on no evidence or ( c) that it is arbitrary - in
the sense that no reasonable person would form the requisite
opinion on the given material; in short, if it is found lo be a perverse
order."

B This was reiterated very soon by another three Judge Bench in Posts
and Telegraphs Board and 01:~. v. C.S.N. Mw1hy, [1992] 2 SCC 317 in which
their Lordships further added thus:

c
"An order of compulsory retirement is not an order of punishment.
F.R. 56 G) authorises the Government to review the working of its
employees at the end of their period of service referred to therein
-
and to require the servant to retire from service if, in its opinion,
public interest calls for such an order. Whether the conduct of the
employee is such as to justify such a conclusion is primarily for the
departmental authorities to decide. The nature of the delinquency
D and whether it is of such a degree as to require the compulsory
•
reti1 ement of the employee are primarily for the Government to '
decide upon. The courts will not interfere with the exercise of this
power, if anived at bona fide and 011 the basis of matelial available
on the record."

E (emphasis supplied)

Therefore, judicial scrutiny of any order imposing premature com-
pulsory retirement is permissible if the order is either arbitrary or mala
fide or if it is based on no evidence. The observation that principles of
F natural justice have no place in the context of compulsory retirement does
not mean that if the version of the delinquent officer is necessary to reach
the correct conclusion the same can be obviated on the assumption that
other materials alone need be looked into.

In this case, appellant made an endeavour to show that the order is
G tainted by ma/a /ides as one of the members of the Screening Committee
(M.L. Wadhawan) had some axe to grind against him. But we are not
persuaded to believe that merely because appellant has such a version
against either that member or other members of the Screening Committee,
the Committee would have gone against the appellant on account of that
H reason. So we repell the contention based on the allegation of ma/a fides.
M.S. BINDRA v. U.O.I. [THOMAS, J.] 241

While viewing this case from the next angle for judicial scrutiny i.e. A
want of evidence or material to reach such a conclusion, we may add that
want of any material is almost equivalent to the next situation that from
the available materials no reasonable man would reach such a conclusion.
While evaluating the materials the authority should not altogether ignore
the reputation in which the officer was held till recently. The maxim "Nemo
Fintt Repente Twpissi11ms" (no one becomes dishonest all of a sudden) is
B
not unexceptional but still it is a salutary guideline to judge human conduct,
particularly in the field of Administrative Law. The authorities should not
keep the eyes totally closed towards the overall estimation in which the
delinquent officer was held in the recent past by those who were supervis-
ing him earlier. To dunk an officer into the puddle of "doubtful integrity" c
it is not enough that the doubt fringes on a mere hunch. That doubt should
be of such a nature as would reasonably and consciously be entertainable
by a reasonable man on the given material. Mere possibility is hardly
sufficient to assume that it would have happened. There must be
preponderance of p·robability for the reasonable man to entertaiji doubt D
regarding that possibility. Only then there is justification to ram an officer
with the label "doubtful integrity".

Here, out of the three instances on which the Screening tommittee
relied to dub the officer as a case of "doubtful integrity" the first is his
action against M/s. Orkay Silk Mills. The fact is that it was the appellant E
who headed the operation. A task which unearthed such a huge sum of
concealed excise duty \:ould normally evoke appreciation for his work. But
what was noted against him in that affair is that he willfully created lacunae
in the confiscation proceedings for providing an escape route to the
defaulter. One is that the confiscation order contains nearly 100 pages and F
the period was too short for preparing such an order. What is the inference
to be drawn? Normally it is an achievement that an order of 100 pages was
made during such a short period. So what is then to be thought of against
it? Is it that he would have taken too much pain to finish his work or is it
that he would have caused it to be written by scimel;>ody else? Is there not
a clear possibility that the officer hearing the adjudication case for several G
days would have prepared its prefatory portion as well as statement of
summary of evidence during the days when arguments were proceeding
and before conclusion of the hearing, leaving out the crucial discussion to
be dictated after conclusion of the hearing? That is not an objectionable
course. If so, the achievement in preparing an order of confiscation within H
242 SUPREME COURT REPORTS (1998) SUPP. 1 S.C.R.

A such a, short span should not have been frowned at, instead there is scope
to pay admiration for its promptitude.

Another lacuna is that he imposed a huge penalty and fine without
issuing a show cause notice. To say that he did it for helping the defaulter
is too far-fetched. The appellate authority which may be persuaded to set
B aside such an order on that ground could as well direct the authority to .
<

pass a fresh order after jssuing the show cause notice. So it is unreasonable
to conclude that the imposition of penalty was made calculatedly to have
it upset by the superior authority.

C We feel that the two lacunae ferretted out from the proceedings
relating to M/s. Orkay Silk Mills are grossly insufficient to reach a con-
clusion that the delinquent officer was trying to help the defaulting
manufacturer.

'In the second instance concerning the file of M/s. Indian Tobacco
D Company the inference made against the defaulter is too tenuous. The
minimum thing which should have been done was to ascertain from Shri
Bhattacharjee, the Deputy Director, the circumstances under which in-
structions were issued by him to keep the investigation in abeyance. At-
tributing a sinister motive to the appellant for what Shri Bhattachar}ee had
E done was seemingly unfair, without adopting such a minimum precaution.

• The third is the case relating to import of spare parts which the· Jain
Brothers assembled for making Honda cars. In th<# case the ostensible role
of the appellant was to detect the offence through investigation and then
to follow it up seriously. When the defaulters were granted bail the appel-
F !ant moved for cancellation of the bail it is prim a f acie a point in favour of
the appellant's tenacity to pursue the steps adopted. Thus far the role
played by the appellant was that of a dutiful and efficient officer of the
department. But the reason for the Screening Committee to doubt the
integrity of the appellant in the aforesaid case is that the Jain Brothers have
G alleged that one Mr. Kapoor told them that appellant was to be paid Rs.10
lakhs to save them from the proceedings.

We perused the statement of Jains. They never said that appellant
made the above demand to them at any time. The only material before the
Screening Committee was that the two accused had stated that Kapoor
H ga"'.e them such an impression. It must be noted that nobody had checked
M.S. BIND RA v. U.0.1. [THOMAS, J.) 243

up the truth of it with the person to whom it was attributed. The most A
unfortunate feature is that nobody has checked it up even with Mr. Kapoor
who is alleged to have told like that to the Jain Brothers. If integrity of
senior officers, who established unblemished reputation and earned en-
comiums from all concerned till then, is proclaimed as doubtful merely on
the strength of statements of persons prosecuted by such officers, what is
the safety of such officers more so when they have to embark on hazardous
B
operations risking their lives against big business houses.

Shri N.N. Goswami, Senior Advocate arguing for Union of India
submitted to us that members of the Screening Committee are very reputed
persons am! hence their conclusion must be given full weight. It is not a
question of doubting the calibre of the members of the Screening Commit-
c
tee. While declining to agree with their conclusion no particle of mud is
slung on any member of the Screening Committee. Even if such a con-
clusion was made by a judicial personage the higher court which overrules
it does not cast any stigma on the judicial officer concerned.
D
We have no doubt that there is utter dearth of evidence for the
Screening Committee to C(Jilclude that appellant had doubtful integrity.
Such a conclusion does not stand judicial scrutiny even within the limited
permissible scope. We, therefore, allow this appeal and set aside the order
under attack including the order by which premature compulsory retire-
ment was imposed on the appellant. The department concerned shall now
E
work out the reliefs to be granted to the appellant as sequel to this
judgment.

V.S.S. Appeal allowed.