Holding

The order of compulsory retirement was invalid as it was not based on material evidence of doubtful integrity and was punitive, not in public interest.

Summary

The respondent, S.C. Shah, an Assistant Food Controller (Class II) in Gujarat, was accused of issuing bogus cement permits and fabricating a government stamp, leading to his suspension and two FIRs under the Indian Penal Code and the Prevention of Corruption Act. A Review Committee was convened under Rule 161 of the Bombay Civil Services Rules, 1959, to decide whether he should be compulsorily retired in public interest; the Committee found no adverse entries in his character roll but, based on the FIRs, opined that his integrity was doubtful, though it recommended retaining him for disciplinary action rather than retirement. The Secretary and Chief Secretary, however, overruled the Committee and ordered his premature compulsory retirement on 21 July 1988, conditioning the withdrawal of criminal cases on his not challenging the order. The respondent challenged the order by writ; the Gujarat High Court Division Bench set aside the retirement and ordered reinstatement, a decision the State appealed to the Supreme Court. The Supreme Court held that the Review Committee exceeded its jurisdiction by branding the employee as having doubtful integrity without material evidence, that compulsory retirement must be based on a bona‑fide assessment of the whole service record, and that the order was punitive rather than in public interest, thereby dismissing the State's appeal.

Issues considered

The validity of the compulsory retirement order under Rule 161 of the Bombay Civil Services Rules, 1959.
Whether the Review Committee had authority to deem the employee's integrity doubtful in the absence of adverse character roll entries.
Whether mere involvement in criminal proceedings suffices as material for compulsory retirement.
Whether the order was passed in public interest or as a punitive measure.

Legislation cited

Subjects

Compulsory retirementPublic interestIntegrity of government servantReview Committee jurisdictionService lawBombay Civil Services RulesAdministrative law

Judgment

THE STATE OF GUJARAT AND ANR. A
v.
SURYAKANT CHUNILAL SHAH

DECEMBER 3, 1998

[S. SAGHIR AHMAD AND S.P. KURDUKAR, JJ.] B

Service Law:

Bombay Civil Services Rules, 1959-Rule 161-Compulsory
retirement-Assistant Food Controller (Class-11)-Two F.l.Rs. filed against C
the officer for issuing bogus cement permits and fabricating Government
Stamp-No adverse entries in C.R.-Few years back officer was promoted--
Character Roll entries after his promotion not available on record-No
evidence ofdoubtful integrity in service record-Review Committee concluding
that integrity of officer was doubtful-Held, whether integrity of an employee D
is doubtful or not and whether he is efficient and honest is function of
appointing authority or authority immediately superior to that employee to
consider and assess and not of Review Committee-Order of compulsory
retirement not passed in public interest-Hence set aside-Character Roll
entries-Purpose of
E
Respondent was an Assistant Food Controller (Class II) in the service
of the appellant-State. Certain complaints were received against him alleging
that he issued bogus cement permits. On 31.5.1983 he was placed under
suspension. An inquiry by the State CID was ordered into the matter. On
receipt of the CID inquiry report, which prima facie made out a case of
issuing bogus cement permits, a First Information Report under various F
sections of the Indian Penal Code read with the provisions of the Prevention
of Corruption Act was filed against the respondent on 31.12.1988. On the
same day, another FIR was lodged against him in respect of offences alleged
to have been committed by him for fabricating the rubber stamp of the
Government and fabricating bogus cement permits.

A Review Committee was constituted to examine and report whether it
would be in public interest to compulsorily retire the respondent from
service or not. The Review Committee found that the respondent was promoted
to the higher post on 16.5.1981 but the character roll entries for the years
1981-82 and 1982-83 were not available. There were two first information H
293
294 SUPREME COURT REPORTS [1998] SUPP. 3 S.C.R.

A reports lodged against the respondent under various sections of the Indian
Penal Code and the Prevention of Corruption Act. Though the Committee
found that there were no adverse entries or remarks recorded in the C.R.
file of the respondent, it opined that the integrity of the respondent was
doubtful and, therefore, he was not fit to be retained in Government service.
B The Committee, however, recommended that he should be continued in service
so that he would be available for severe departmental punishment and could
be removed from service and dealt with severely for the alleged misconduct.
The said recommendations were placed before the Chief Secretary with a
note of the Secretary raising a question whether the Government could wait
till the CID inquiry was over. Thereafter, the matter was further discussed
C and it was decided to retire the respondent prematurely. Accordingly, by an
order dated 21.7.88, the respondent was compulsorily retired from service
in public interest. The order was challenged by the respondent in a writ
petition which was dismissed by Single Judge of the High Court. But the
Division Bench allowed his writ appeal and directed his reinstatement.
Aggrieved, the State Government filed the present appeal.
D
Dismissing the appeal, this Court

HELD : I. The Division Bench of the High Court was justified in .
setting aside the order passed by the Single Judge and directing reinstatement
of the respondent. There being no material before the Review Committee
E inasmuch as there were no adverse remarks in the character roll entries,
the integrity was not doubted at any time and the character roll entries
subsequent to the respondent's promotion to the post of Asstt. Food Controller
(Class-II) not being available, it could not come to the conclusion that the
respondent was a man of doubtful integrity nor could anyone else come to
F the conclusion that the respondent was a fit person to be retired compulsorily
from service. The order compulsorily retiring the respondent, in the
circumstances of the case, was punitive having been passed for the collateral
purpose of his immediate removal, rather than in public interest.
[309-H; 310-A-B)

G S.R. Venkataraman v. Union of India, (1979] 2 sec 491; Baldeo Raj
Chaddha v. Union of India, [1980) 4 SCC 321 and M.S. Bindra v. Union of
India and Ors., JT (1998) 6 SC 34, relied on.

2.1. In order to find out whether any Govt. servant has outlived his
utility and is to be compulsorily retired in public interest for maintaining
H an efficient administration, an objective view of overall performance of that
ST ATE v. S.C. SHAH 295
Government servant has to be taken before deciding, after he has attained A
the age of 50 years, either to retain him further in service or to dispense
·with his services in public interest by giving him three months' notke or
pay in lieu thereof. (307-G]
Union of India v. Col. JN. Sinha and Anr., (1970] 2 SCC 458 =AIR
(1971) SC 40 = (1971] 1 SCR 791; H.C. Gargi v. State of Haryana, (1986] B
4-SCC 158 =AIR (1987) SC 64; Gian Singh Mann v. High Court of Punjab
& Haryana and Anr., (1980] 4 SCC 266 = AIR (1980) SC 1894; Kai/ash
Chandra Agarwal v. State of MP. and Anr., (1987] 3 SCC 513 =AIR (1987)
SC 1871; Union of India v. ME. Reddy and Anr., [1980] 2 SCC 16 =AIR
(1980) SC 563; Baikuntha Nath Das and Anr. v. Chief District Medical
Officer, Baripada and Anr., [1992] 2 SCC 299; Posts & Telegraphs Board C
and Ors. v. C.S.N. Murthy, [1992] 2 SCC 317 and K. Kandaswamy v. Union
of India, (1995] 6 SCC 162, referred to.
2.2. The performance of a Government servant is reflected in the
annual character roll entries and, therefore, one of the methods of discerning
the efficiency, honesty or integrity of a Government servant is to look to his D
character roll entries for the whole tenure from the inception to the date on
which the decision for his compulsory retirement is taken. It is obvious that
if the character roll is studded with adverse entries of the overall
categorisation of the employee is poor and there is material also to cast
doubts upon his integrity, such a Government servant cannot be said to be E
efficient. Efficiency is a bundle of sticks of personal assets, thickest of which
is the stick of "Integrity". If this is missing the whole bundle would disperse.
A Government servant has, therefore, to keep his belt tight.
[307-H; 308-A-C]
2.3. The purpose of adverse entries is primarily to forewarn the F
Government servant to mend his ways and to improve his performance. That
,_ is why, it is required to communicate the adverse entries so that the
Government servant, to whom the adverse entry is given, may have either
opportunity to explain his conduct so as to show that the adverse entry was
wholly uncalled for, or to silently brood over the matter and on being convinced
that his previous conduct justified such an entry, to improve his performance. C
[308-C-D]

3.1. The respondent was compulsorily retired merely because of his
involvement in two criminal cases pertaining to the grant of permits in
favour of fake and bogus institutions. The involvement of a person in a
criminal case dose not mean that he is guilty. He is still to be tried in a court H
296 SUPREME COURT REPORTS [1998) SUPP. 3 S.C.R.

A of law and the truth has to be found out by the court where the prosecution
is ultimately conducted. But before that stage is reached, it would be highly
improper to deprive a person of his livelihood merely on the basis of his
involvement. However, whether mere involvement in a criminal case would
constitute relevant material for compulsory retirement or not would depend
upon the circumstances of each case and the nature of offence allegedly
B committed by the employee. In the instant case, there was no material on the
basis of which a reasonable opinion could be formed that tht respondent had
outlived his utility as a Government servant or that he had lost his efficiency
and had become a dead-wood. Besides, the authorities themselves were
uncertain about the action which was to be taken ultimately against him.
C [309-F-G; 309-E)

3.2. Whether the integrity of an employee is doubtful or not, whether'
he is efficient and honest, is the function of the Appointing Authority or the
immediate superior of that employee to consider and assess. It is not the
function of the Review Committee to brand, and that too, off hand, an employee
D as a person of doubtful integrity. [309-A-B)

3.3. Moreover, the Review Committee did not recommend compulsory
retirement. It was of the opinion that the respondent had committed grave
irregularity and that he must be retained in service so that he may ultimately
be dealt with and punished severely. The Secretary, and the Chief Secretary,
E who considered the recommendations of the Review Committee, had other
ideas. They thought that the investigation and subsequent prosecution of the
respondent would take a long time and that it would be better to immediately
dispense with his services by giving him the temptation of withdrawing the
criminal cases and retiring him compulsorily from service, provided he does
F not approach the court against the order of compulsory retirement. In the
circumstances, the order compulsorily retiring the respondent cannot be
sustained. (309-B-D; 310-B]

CIVIL APPELLATE JURISDICTION : Civil Appeal No. 6043 of
1998.
G From the Judgment and Order dated 11.2.98 of the Gujarat High Court
in LP.A. No. 1555of1997 in S.C.A. No. 4557 of 1988.

Ms. H. Wahi for the Appellant.

Ms. J.S. Wad for the Respondent.
H The Judgment of the Court was delivered by
STATE v. S.C. SHAH [S. SAGHIR AHMAD, J.] 297
S. SAGHIR AHMAD, J. Leave granted. A .,
The State of Gujarat is in appeal before us against the judgment dated
11.2.1998, passed by a, Division Bench of the Gujarat High Court by which
the judgment and order1 dated 17, 11.1997 passed by the Single Judge, was set
aside and the Writ Petition of the respondent by which he had questioned
the validity of the orc!er dated 21. 7.1988, by which he was compulsorily retired B
from service, was allowed.
The respondent was appointed as a Clerk in the office of Food Controller,
~
Ahmedabad and after about twenty one years of service, he was promoted
as an Assistant Food Controller (Class-II) in the Office of Food Controller,
Ahmedabad. In 1983, certain complaints were received against the respondent
regarding permits for cement having been issued Illegally by him and, therefore,
c
he was placed under suspension on 31.5.1983 and an inquiry by the State C.
I. D. (Crime and Railway) was ordered into the matter of issuance of bogus
cement permits. On the receipt of the C. I. D. enquiry report, whichprimafacie
made out a case of issuing cement permits to bogus institutions which were
not "in existence in Ahmedabad, a First Information Report under various D
Sections of the Indian Penal Code read with the provisions of the Prevention
of Corruption Act, was filed against the respondent on 23.12.1983. Another
FIR was lodged against the respondent on the same day in respect of offences
committed by him for fabricating the rubber stamp of the Government and
fabricating bogus permits in favour of equally bogus parties.
E
In the meantime, the respondent made two applications to the appellants
for revocation of the suspension order but this was not done. By another
order dated 21.7.1988, passed under Rule 161 of the Bombay Civil Services
Rule, l959, the respondent was compulsorily retired from service in public
interest. It was this order which was challenged by the respondent in a Writ,
Petition before the Gujarat High Court which was initially dismissed by the F
Single Judge but was allowed, in appeal, by the Division Bench by the
impugned judgment dated 11.02.1998 which has compelled the State to approach
this Court under Article 136 of the constitution.
During the pendency of the Writ Petition before the Single Judge,
original records including the proceedings dated 9.2.1988 of the Review G
Committee as also the notings of the Secretary, which he had made after
~'
discussing the matter with the Chief Secretary, were placed before the Single
Judge. After going through the records, the learned Single Judge observed
as under:-

"The Review Committee has doubted the integrity of the petitioner H
298 SUPREME COURT REPORTS [1998] SUPP. 3 S.C.R.

A and it has been opined that it is not advisable to continue the petitioner
in service for further period. The Review Committee has further opined
that looking to the seriousness of the charges levelled against him,
there is a possibility of serious punishment of dismissal of the petitioner.
The Review Committee has next opined that in the circumstances if
the petitioner retires at the age of 50 years then such proceedings
B cannot be continued further and serious punishment cannot be inflicted.
It has further been opined that the step concerning to reduction of
pension also cannot be taken. At that point of time the petitioner was
under suspension and it has been taken by the Review Committee that
as he is under suspension and not in actual service, there is no
c question of damage to public and the Government. So, the Review
Committee was of the opinion that the petitioner should be continued
in service so that he may be dealt with severely for the alleged serious
misconduct. This note had been placed before the Secretary, who had
raised a question as to whether the Government can wait till the CID
inquiry is over. The matter was further discussed and it has been
D decided that he should be retired prematurely and thereafter the cases
against him withdrawn though with a further note "Provided he does
not go to Court in issue of premature retirement." However, rightly it
has subsequently been opined that nobody can say with certainty
that the petitioner would not go to the Court on the issue of his
E premature retirement. The matter has thereafter been discussed with
the Chief Secretary and a decision has been taken that ifthe petitioner
goes to the Court against the order of premature retirement then the
cases against him should not be withdrawn.

Admittedly, against the petitioner two criminal cases for the offences
F as punishable under the provisions of the Prevention of Corruption
Act have been filed. In one case the final report has been submitted
by the Police and in the other case matter is under investigation. It
is equally true that there are serious charges of corruption against the
petitioner. The criminal liability of the petitioner is one thing and his
continuation in service when his integrity is doubtful, is another
G thing. In between these two there is another aspect that for the
alleged serious charges of corruption the petitioner could have been
dealt with departmentally also and if the charges are proved the
minimum penalty could and should have been, as held by the Hon'ble
Supreme Court of India, in the case of Narayan Dattatraya Ramteen
H Thakar v. State of Maharashtra and Ors.. reported in [ 1997] I SCC
STATE v. S.C. SHAH [S. SAGHIR AHMAD, J.) 299

299, would have been dismissal or removal. The order of premature A
retirement has not been challenged by the petitioner on the ground
of ma/a jides. The petitioner has not alleged any ma/a jides against
any of the officers i.e. the Members of the Review committee as well
as the Secretary concerned, or the chief secretary.

If the integrity of the officer is doubtful, then his retention in public B
service cannot be said to be in the public interest. There cannot be
two opin_ion on this question. In such matters it is difficult to accept
that the petitioner has been prematurely retired by way of penalty.

xxx xxx xxx
c
In the present case as recorded earlier the proceedings of the
Review Committee have been produced on the record of this Special
Civil Application by the respondents. The Review Committee has
found that nothing adverse has been recorded in the C.R. file of the
petitioner regarding his integrity. It has also been noticed by the said D
Committee that the petitioner has been promoted with effect from
16.5.1981 and therefore, C.Rs. of the years 1981-82 and 1982-83 are
required to be considered. The C.Rs. of those two years were not
available. On reading the aforesaid portion of the report of the Review
Committee, what I gather is that it has proceeded on presumption that
whatever service record of the petitioner was available was of the E
period earlier to 16.5.1981 and it stood washed off on his getting
promotion on that day. After reaching that conclusion the Review
Committee has not bothered to look into the service records of the
petitioner for the period earlier to 16.5. I 981.. ........ "

The learned Single Judge further observed as under:- F

"At one point of time, I thought of to sent the matter back to the
respondent-State to reconsider the case of compulsory retirement of
the petitioner. But, from the record I find that the Review Committee
found strong grounds of doubtful integrity of the petitioner and the G
review Committee has opined that it is not advisable to continue the
petitioner in service for further period. However, the Review Committee
has further opined that when there are serious charges against the
petitioner if felt that there are probabilities that the petitioner may be
given major penalty of dismissal and in case he is retired at the age
of 50 years such disciplinary proceedings for major penalty cannot be H
300 SUPREME COURT REPORTS [1998] SUPP. 3 S.C.R.

A continued and no punishment can be imposed. The Review Committee
also observed that step for reduction of pension also cannot be taken.
So, the review Committee was of the opinion that as the petitioner's·
integrity is doubtful he should not be allowed to continue in
service ............."

B The learned Judge further proceeded to say as under:-

"So, the opinion of the Review Committee was that the petitioner,
whose integrity is doubtful, should be dismissed from service. After
forming this opinion the Review Committee has observed that he
should be continued in service under suspension so that enquiry can
c be held against him and appropriate major penalty can be imposed on
him.

The Report of the Review Committee was placed for consideration
before the Secretary concerned and the Chief Secretary and ultimately,
the chief Secretary has opined that the petitioner should be
D rompulsorily retired. However, the Chief Secretary has opined that in
case the petitioner goes to the Court challenging the order of
compulsory retirement, case pending against him should not be
withdrawn. In other words, if he does not challenge the order of
compulsory retirement case against him may be withdrawn.
E From the proceedings of the Review Committee as also the
discussion of the Secretary concerned and the Chief Secretary, it is
clear that the Review committee has formed an opinion that the
i)etitioner' s integrity is doubtful. So far as the law on the point of
compulsory retirement is concerned, it is a consensus that in case of
F employee/officers of doubtful integrity or dishonesty retention of
such employee/officer would not be in public interest. Not only this,
but to maintain efficiency and honesty in services such officer/
..
employee has to be chopped off from service. It is true, as opined by
the Review Committee, that such person should not be allowed to go
with all rewards of pension and other retiral benefits and he should
G be dismissed from service ............. "

It was also observed as under:-

"I may revert back to the facts of this case and admittedly there
were two cases against the petitioner for offence punishable under the
H provisions of Prevention of Corruption Act. It is true that in one case
STATE v. S.C. SHAH [S. SAGHIR AHMAD, J.] 301
"A" Summary has been filed and in the other one charge-sheet has A
been filed and case is pending in the Court. Only question which now
requires consideration of this Court is, whether on the basis of this
material the review Committee and the Disciplinary Authority could
have formed bona fide opinion, to compulsorily retire the petitioner
or not. The contention of the learned counsel for the petitioner is that B
on the basis of these two criminal cases, the petitioner could not have
been ordered to be retired compulsorily. But, in view of the latest
decision of the Hon 'ble Supreme Court this contention may not be of
much substance and certainly the Review Committee and the
Disciplinary Authority could have formed and opinion on the basis
of the material available whether the integrity of the petitioner is C
doubtful or not ...."

The portions of the judgment of the Single Judge ·have been extracted
above to show that the original records were placed before him, who, after
perusing those records, has specifically and categorically referred all the
material which existed on that recor<l and which constituted the basis of the D
opinion of the Review Committee that the respondent may be retired
prematurely, although, what we feel is that on this question, namely, on the
question of premature retirement, the Review Committee itself appeared to be
in a dilemma and could not be said to have been consistent on the question
of its recommendations:
E
From what has been extracted above, it would be seen that the Review
Committee was of the opinion that :

(i) There was no adverse entry or remarks recorded in the C.R. Fi]G
of the respondent regarding his integrity, F
(ii) Respondent was promoted to the higher post on 16th of May,
1981 and, therefore, the Review Committee wanted to look to the
entries made subsequent to the date of promotion, but it noticed
that the character roll entries for the years 1981-82 and 1982-83
were not available.
G
(iii) There were two First Information Reports lodged against the
respondent under various Sections of the Indian Penal Code and
the Prevention of Corruption Act. In one FIR, final report had
been submitted, while in the other the char~e sheet was filed.
(iv) The integrity of the respondent was doubtful and, therefore, he H
302 SUPREME COURT REPORTS [1998] SUPP. 3 S.C.R.

A was not fit to be retained in Govt. service. But he should be
continued in service, so that he would be available for severe
departmental punishment and can be removed from service and
dealt with severely for the alleged serious misconduct.

These recommendations of the Review Committee were placed before
B the Chief Secretary with a note of the Secretary, who had raised the question
whether the Government could wait till the CID inquiry was over. Thereafter,
the matter was further discussed and it was decided to retire the respondent
prematurely and to withdraw the criminal cases against him, "provided he
does not go to court on the issue of premature retirement." There was a
C subsequent opinion recorded on the file that it could not be said with certainty
that the respondent would not go to court on the question of premature
retirement. The matter was, therefore, again discussed with the Chief Secretary
and a decision was taken that if the respondent approached the court, the
criminal cases pending against him would not be withdrawn. It was in these
circumstances that the decision to retire the respondent compulsorily, at the
D age of 52, was taken. This decision was taken under Rule 16 l of the Bombay
Civil Service Rules, 1959, which provides as under:

"Rule 161

E {l)[a] Except as otherwise provided in the other clauses of this rule, the
date of compulsory retirement of a Government servant other than a Class IV
servant, is the date on which he attains the age of 58 years,

Provided-

(i) (Deleted)
F
(ii) (Deleted)
(m) He may be retained in service after the date of compulsory
retirement only with the previous sanction of Government on
public grounds which must be recorded in writing.
G ({aa) Notwithstanding anything contained in clause (a) :-

(i) An appointing Authority shall, if he is of the opinion that it is
in the public interest so to do, have the absolute right to retire
any Government servant to whom clause (a) applies .by giving
him notice of not less than three months in writing or three
H months pay and allowance in lieu of such notice:
STATE 11. S.C. SHAH [S. SAGHIR AHMAD, J.] 303
(!) if he is in Class I or Class II service or post or in any unclassifie(l A
gazetted post, the age limit for the purpose of direct recruitment
to which is below 35 years, on or after the date on which he
attains the age of 50 years, and
(2) if he is in any other service or post, the age limit for the purpose
of direct recruitment to which is below 40 years, on or after the B
date on which he attains the age of 55 years.

(ii) any Government servant to whom clause (a) applies may by
giving notice of not less than three months, in writing to the appointing
authority, retire from service after he has attained the age of 50 years,
if he is in Class I or Class II service or post or in any unclassified C
gazetted post the age limit for the purpose of recruitment to which is
below 3 5 years and in an other case, after he has attained the age of
~5 years.

Provided that it shall be open to the Appointing Authority to
withhold permission to retire to a Government servant who is under D
suspension, or against whom Departmental proceedings are pending
or contemplated and who seeks to retire under this sub-clause.]

(b) A Government servant .................. "

Sub-clause (aa) of Clause (I) of this Rule gives power to the Appointing E
Authority to retire a Government servant in public interest by giving him three
months' notice in writing or three months's pay in lieu thereof at any time
after the date on which he has attained the age of 50 years.

What is 'public interest' was explained in the classic decision of this F
Court in Union of India v. Col. J.N. Sinha & Anr., [1970] 2 SCC 458 =AIR
(1971) SC 40 = [1971] I SCR 791. It was pointed out that the object of
premature retirement of a Govt. servant was to weed out the inefficient,
corrupt, dishonest employees from the Govt. service. The public interest in
relation to public administration means that only honest and efficient persons
are to be retained in service while the services of the dishonest or the corrupt G
or who are almost dead-wood, are to be dispensed with. The court observed:

"Compulsory retirement involves no civil consequences. The afore-
mentioned Rule 560) is not intended for taking any penal action
against the Government servants. That rule merely embodies one of
the facts of the pleasure doctrine embodied in Article 310 of the H
304 SUPREME COURT REPORTS [1998] SuPP. 3 S.C.R.

A constitution. Various considerations may weigh with the appropriate
authority while exercising the power conferred under the rnle. In some
cases, the Government may feel that a particular post may be more
usefully held in public interest by an officer more competent than the
one who is holding. It may be that the officer who is holding the post
is not inefficient but the appropriate authority may prefer to have
B more efficient officer. It may further be that in certain Key posts public
interest may require that a person of undoubted ability and integrity
should be there. There is no denying the fact that in all organisations
and more so in Government organisations, there is good deal of dead
wood. It is in public interest to chop off the same. Fundamental Rule
c 56 (j) holds the interests of the public. While a minimum service is
guaranteed to the Government, the Government is given power to
energies its machinery and make it more efficient by compulsorily
retiring those who in its opinion should not be there in public

D
interest... ......" It is true that a compulsory retirement is bound to have
some adverse effect on the Government servant who is compulsorily
retired but then as the rule provides that such retirements can be
made only after the officer attains the prescribed age. Further a
-
compulsorily retired Government servant does not lose any of the
benefits earned by him till the date of his retirement. Three months'
notice is provided so as to enable him to find out other suitable
E employment. In our opinion, the High Court erred in thinking that the
compulsory retirement involves civil consequences."

This was also the view of this Court in HC. Gargi v. State of Haryana,
[1986] 4 sec 158 =AIR 1987 SC 64.

F In Gian Singh Mann v. High Court ofPunjab & Haryana & Anr., [1980]
4 SCC 266 =AIR 1980 SC 1894, it was pointed out that 'the expression 'public
interest' in the context of premature retirement has a well settled meaning. It
refers to cases where the interests of public administration require the retirement
of a Government servant who with the passage of years has prematurely
G ceased to possess the standard of efficiency, competency and utility called
for by the Government service to which he belongs."

In Kai/ash Chandra Agarwal v. State of MP. & Anr., [1987] 3 SCC 513
= AIR 1987 SC 1871, it was pointed out that the order of compulsory retirement,
if taken in public interest, could not be treated as a major punishment and that
H Article 311 (2) of the Constitution could not be invoked, as the employee
STATE v. S.C. SHAH [S. SAGHIR AHMAD,J.) 305
concerned was no longer fit in public interest to continue in service and, A
therefore, he was compulsorily retired.

In Union of India v. M.E. Reddy & Anr., (1980] 2 SCC 15 =AIR 1980
SC 563, it was pointed out that the object of compulsory retirement was to
weed out the dead-wood in order to maintain a high standard of efficiency
and initiative in service. Rule 16(3) of the All India (Death-cum-Retirement) B
Rules, 1958, empowered the Govt. to compulsorily retire officers of doubtful
integrity. The safety valve of public interest was the most powerful and the
strongest safeguard against any abuse or colourable exercise of power under
that rule.

A three Judge Bench of this Court in Baikuntha Nath Das & Anr., v. C
Chief District Medical Officer Baripada & Anr., (1992] 2 SCC 299, laid down
the following five principles :

(i) An order of compulsory retirement is not a punishment. It implies
no stigma nor any suggestion of misbehaviour.
D.
(ii) The order has to be passed by the government of forming the
opinion that it is in the public interest to retire a government
servant compdsorily. The order is passed on the subjective
satisfaction of the government.

(iii) Principles of natural justice have no place in the context of an E
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 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 F
arbitrary-in the sense that no reasonable person would form
the requisite opinion on the given material; in short, if it is found
to be a perverse order.

(iv) The government (or the Review Committee, as the case may be)
shall have to consider the entire record of service before taking G
a decision in the matter--of course attaching more importance
to record of and performance during the later years. The record
to be so considered would naturally include the entries in the
confidential records/character rolls, both favourable and adverse.
If a government servant is promoted to a higher post
notwithstanding the adverse remarks such remarks lose their H
306 SUPREME COURT REPORTS [1998] SUPP. 3 S.C.R.

A sting, more so, if the promotion is based upon merit (selection)
and not upon seniority:

(v) An order of compulsory retirement is not liable to be quashed
by a Court merely on the showing that while passing it
uncommunicated adverse remarks were also taken into
B consideration. That circumstance by itself cannot be a basis .of
interference."

This decision was reiterated by another three Judge Bench of this Court
in Posts & Telegraphs Board & Ors. v. C.S.N. Murthy, [ 1992] 2 SCC 317, in
which it was laid down as under :
c "An order of compulsory retirement is not an order of punishment.
F.R. 560) 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
.n is such as to justify such a conclusion is primarily for the departmental
authorities to decide. The nature of the delinquency and whether it
is of such a degree as to require the compulsory retirement of the
employee are primarily for the Government to decide upon. The courts
will not interfere with the exercise of this power, if arrived at bona
fide and on the basis of material available on the record."
E
(emphasis supplied).

In K. Kandaswamy v. Union of India, (1995] 6 SCC I 62, this court
observed that:-"

While exercising the power under Rule 560) of th!: Fundamental
F 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 energies its machinery by weeding out dead wood, inefficient,
corrupt and people of doubtful integrity by compulsorily retiring them
G 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."

The Court, however, added that the opinion must be based on the
material on record otherwise it would amount to arbitrary or colourable exercise
H of power. It was also held that the decision to compulsorily retire an employee
STATE v. S.C. SHAH[S. SAGHIR AHMAD,J.] 307
can, therefore, be challenged on the ground that requisite opinion was based A
on no evidence or had not been formed or the decision was based on
collateral grounds or that it was an arbitrary decision.

..
_
In. S.R. Venkataraman v. Union of India, [1979] 2 SCC 491, this Court
held the order of compulsory retirement as a gross abuse of power as there
was nothing on the record to justify and support the order. B
In Baldeo Raj Chaddha v. Union ofIndia, [ 1980] 4 SCC 321, it was held
that although the purpose of FR 56 was to weed out worthless employees
without punitive extremes, if, under the guise of ''public interest", an order
of premature retirement is made for any other purpose, it would be the surest
menace to public interest and the order must fail for unreasonableness, C
arbitrariness and "disguised dismissal".
Baikuntha Nath's case (supra) was considered by this Court in MS.
Bindra v. Union of India & Ors., JT (1998) 6 SC 34 and it was laid down as
under:

"Judicial scrutiny of any order imposing premature compulsory D
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 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 E
assumption that other materials alone need be looked into."

It was further observed as under :

"While viewing this case from the next angle for judicial scrutiny, i.e.
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 F
form the available materials no reasonable man would reach such a
conclusion.

In order, therefore, to find out whether any Govt. servant has outlived
his utility and is to be compulsorily retired in public interest for maintaining
an efficient administration, an objective view of overall performance of that G
Govt. servant has to be taken before deciding, after he has attained the age
of 50 years, either to retain him further in service or to dispense with his
services in public interest, by giving him three months' notice or pay in lieu
thereof.
The performance of a Govt. servant is reflected in the annual character H
308 SUPREME COURT REPORTS [1998] SUPP. 3 S.C.R.

A roll entries and, therefore, one of the methods of discerning the efficiency,
honesty of integrity of a Govt. servant is to look to his character roll entries
for the whole tenure from the inception to the date on which decision for his
compulsory retirement is taken. It is obvious that if the character roll is
studded with adverse entries or the overall categorization of the employee is
B poor and there is material also to cast doubts upon his integrity, such a Govt.
servant cannot be said to be efficient. Efficiency is a bundle of sticks of
personal assets, thickest of which is the stick of"Integrity". If this is missing
the whole bundle would disperse. A Govt. servant has, therefore, to keep his
belt tight.

C Purpose of adverse entries is primarily to forewarn the Govt. servant to
mend his ways and to improve his performance. That is why, it is required
to communicate the adverse entries so that the Govt. servant, to whom the
adverse entry is given, may have either opportunity to explain his conduct
so as to show that the adverse entry was wholly uncalled for, or to silently
brood over the matter and on being convinced that his previous conduct
D justified such an entry, to improve his performance.

Applying the principles laid down above to the instant case, what
comes out is that in compulsorily retiring the respondent from service, the
authorities themselves were uncertain about the action which was to be taken
E ultimately against him. In fact, there was hardly any material on the basis of
which a bona fide opinion could have been formed that it would be in public
interest to retire the respondent from service compulsorily. The material which
was placed before the Review Committee has already been mentioned above.
To repeat, respondent was promoted in 1981; the character roll entries for the
next two years were not available on record; there were no adverse entries
F in the respondent's character roll about his integrity; he was involved in two
criminal cases, in one of which a final report was submitted while in the other
a charge sheet was filed. Although there was no entry in his character roll
that the respondent's integrity was doubtful, the Review Committee, on its
own, probably on the basis of the FIRs lodged against the respondent,
G formed the opinion that the respondent was a person of doubtful integrity.
The review Committee was constituted to assess the merits of the respondent
on the basis of the character roll entries and other relevant material and to
recommend whether it would be in public interest to compulsorily retire him
from service or not. The Review Committee, after taking into consideration the
character roll entries and noticing that there were no adverse entries and his
H integrity was, at no stage, doubted, proceeded, in excess of its jurisdiction,
STATE v. S.C. SHAH [S. SAGHIR AHMAD, J.] 309
to form its own opinion with regard to respondent's integrity merely on the A
basis of the F!Rs lodged against him. Whether the integrity of an employee
is doubtful or not, whether he is efficient and honest, is the function of the
Appointing Authority or the immediate superior of that employee to consider
and assess. It is not the function of the Review Committee to brand, and that
too, off hand, an employee as a person of doubtful integrity. Moreover, the B
Review Committee did not recommend compulsory retirement. It was of the
opinion that the respondent had committed grave irregularity and that he
must be retained in service so that he may ultimately be dealt with and
punished severely. The Secretary and the Chief Secretary, who considered the
recommendations of the Review committee, had other ideas. They thought
that the investigation and subsequent prosecution of the respondent would C
take a long time and that it would be better to immediately dispense with his
services by giving him the temptation of withdrawing the criminal cases and
retiring him compulsorily from service, provided he does not approach the
court against the order of compulsory retirement. This proposal too was not
immediately acted upon and it was thought that nobody could say whether D
the order of compulsory retirement ·¥ould be challenged by the respondent
before the court or he would merely subrnit to it on the temptation that
criminal cases against him would be withdrawn. It was at this stage, that the
order of compulsory retirement was passed.

The whole exercise described above would, therefore, indicate that E
although there was no material on the basis of which a reasonable opinion
could be formed that the respondent had outlived his utility as a Govt.
Servant or that he had lost his efficiency and had become a dead wood, he
was compulsorily retired merely because of his involvement in two criminal
cases pertaining to the grant of permits in favour of fake and bogus
institutions. The involvement of a person in a criminal case does not mean F
that he is guilty. He is still to be tried in a court of law and the truth has to
be found out ultimately by the court where the prosecution is ultimately
conducted. But before that stage is reached, it would be highly improper to
deprive a person of his livelihood merely on the basis of his involvement. We
may, however, hasten to add that mere involvement in a criminal case would G
constitute relevant material for compulsory retirement or not would depend
upon the circumstances of each case and the nature of offence allegedly
committed by the employee.

There being no material before the Review Committee, in as much as
there were no adverse remarkS in the character roll entries, the integrity was H
310 SUPREME COURT REPORTS [1998] SUPP. 3 S.C.R.

A not doubted at any time, the character roll entries subsequent to the
respondent's promotion to the post of Asstt. Food Controller (Class II) were
not available, it could not come to the conclusion that the respondent was
a man of doubtful integrity nor could have anyone else come to the conclusion
that the respondent was a fit person to be retired compulsorily from service.
B The order, in the circumstances of the case, was punitive having been passed
for the collateral purpose of his immediate removal, rather than in public
interest. The Division Bench, in our opinion, was justified in setting aside the
order passed by the Single Judge and directing reinstatement of the
respondent.

C We find no merit in this appeal which is dismissed without any order
as to costs.

RP. Appeal dismissed.