Supreme Court of India
UNION OF INDIA & ANR.versusASHOK KUMAR AGGARWAL
- Citation
- 2013 INSC 774
- Decided
- 22 November 2013
- Disposal
- Appeal(s) allowed
- Bench
- B S CHAUHAN
Holding
A fresh suspension order passed in contravention of the Tribunal’s final order is a nullity and cannot be sustained; the government’s actions amounted to legal malice and were dismissed., The Court held that interest under Section 1328(4)(b) of the Income‑Tax Act is payable at 15% per annum from 1 December 1990 to 4 March 1994.
Summary
The Union of India suspended an Indian Revenue Service officer in 1999 pending two CBI criminal investigations; the Central Administrative Tribunal later quashed the suspension and directed a review, but the government issued fresh suspension orders in 2012 without complying with the Tribunal’s directions, leading the Supreme Court to hold that such orders were a nullity, violated res judicata, and amounted to legal malice, resulting in the dismissal of the appeal., The appellant, Chironjilal Sharma HUF, sought interest under Section 1328(4)(b) of the Income‑Tax Act for the period from the expiry of six months after a Section 132(5) order (31 May 1990) to the date of the regular assessment (4 Mar 1994); the Court interpreted the provision to award simple interest at 15% per annum for that period and allowed the appeal.
Issues considered
- Whether a fresh suspension order can be validly issued after a Tribunal has quashed an earlier suspension and directed a review, without complying with that direction.
- Whether such a fresh suspension order violates the doctrine of res judicata and constitutes legal malice.
- Whether a representation made by an employee can be considered by the competent authority under statutory provisions.
- Whether interest under Section 1328(4)(b) of the Income‑Tax Act is payable for the pre‑assessment period after a Section 132(5) order.
- Interpretation of the scope of Section 1328(4)(b) vis‑à‑vis Sections 132 and 240 of the Income‑Tax Act.
Legislation cited
- Central Civil Services (Classification, Control and Appeal) Ruless. 10(6)
- Income Tax Act, 1961s. 132(5), s. 1328(4)(b)
- Prevention of Corruption Act
Subjects
suspensionadministrative lawres judicatalegal malicerepresentationinterestincome taxsection 1328civil service rulesarticle 14article 16article 136
Judgment
[2013] 12 S.C.R. 629
UNION OF INDIA & ANR. A
v.
ASHOK KUMAR AGGARWAL
(Civil Appeal No. 9454 of 2013)
NOVEMBER 22, 2013
B
[DR. B.S. CHAUHAN AND S.A. BOBDE, JJ.]
SERVICE LAW:
Suspension - Renewal of, after suspension order c
quashed by Tribunal - Legality of- Criminal cases pending
against delinquent officer - Officer placed under suspension
- Departmental proceedings also initiated - Suspension
reviewed from time to time - Tribunal quashing suspension
orders with certain directions - Order not challenged - 0
Further suspension orders passed irrespective the order of
Tribunal - Quashed by Tribunal - Held: It was not
permissible for appellants to pass any fresh order of
suspension till the commencement of trial before criminal
court- Tribunal and High Court were right that appellants had E
not followed the directions of Tribunal and the mandate of
Department's O.M. dated 7.1.2004 - The terms of the said
0. M. were required to be observed - Subsequent order of
suspension was a nullity - More so, the issue could not have
been re-agitated by virtue of the application of doctrine of res
judicata - It is a clear case of legal malice - Constitution of F
India, 1950 - Arts. 14 and 16 - Administrative law - Legal
malice - 0. M. dated 7.1.2004-Res judicata.
Suspension order - Held: Should be pa$sed only where
there is a strong prima facie case against the delinquent, and G
if the charges stand proved, would ordinarily warrant
imposition of major punishment i.e. removal or dismissal from
service, or reduction in rank etc.- CCS (CCA) Rules, 1965
are a self contained code and the order of suspension can
629 H
630 SUPREME COURT REPORTS (2013] 12 S.C.R.
A be examined in the light of the statutory provisions to
determine as to whether the suspension order was justified -
Central Civil Services (Classification, Control and Appeal)
Rules, 1965 - r. 10(6).
8 Suspension order - Judicial review of - Held: Long
period of suspension does not make the order of suspension
invalid - Whether the employee should or should not
continue in his office during the period of enquiry is a matter
to be assessed by disciplinary authority concerned and
C ordinarily court should not interfere with orders of suspension
unless they are passed in ma/a fide and without there being
even a prima facie evidence on record connecting the
employee with the misconduct in question.
Suspension - Connotation and effect of - Explained.
D
Representation - Held: May be considered by competent
authority if it is so provided under the statutory provisions and
the court should not pass an order directing any authority to
decide the representation for the reasons that many a times,
E unwarranted or time-barred claims are sought to be
entertained before the authority.
CONSTITUTION OF IND/A, 1950:
Art. 136 - Exercise of jurisdiction under - Explained -
F Held: Jn the instant case, appellants having acted
unreasonably and illegally, are not entitled to relief before the
Court.
The respondent, an Officer belonging to the Indian
Revenue Service and during the relevant time on
G deputation to Enforcement Directorate as Deputy Director
(Enforcement), was put under suspension since
28.12.1999 in view of the pendency of two criminal cases
against him duly investigated by the Central Bureau of
Investigation. The suspension order was reviewed from
H
UNION OF IND!A v. ASHOK KU:v1AR AGGARWAL 53•
time to time. The respondent filed an OA before the A
Tribunal seeking to quash the suspension order. The
Tribunal, by order dated 16.12.2011, directed the
appellants to convene a meeting of the Special Review
Committee (SRC) to consider revocation or continuation
of suspension of the respondent after taking into B
consideration various factors mentioned in its order.
Thereafter, as recommended by the SRC, the competent
authority, by orders dated 12.1.2102 and 3.2.2012,
decided to continue the suspension of the respondent.
The respondent challenged the said orders by filing c
another OA before the Tribunal, which, by order dated
1.6.2012, quashed the orders impugned holding that the
earlier directions given by the Tribunal on 16.12.2011 had
not been complied with. The writ petition filed by the
appellants was dismissed the High Court. D
It was contended for the appellants that though the
respondent had been under suspension for 14 years, but
in view of the gravity of the charges against him in the
disciplinary proceedings as well as in the criminal cases,
no interference was warranted by the Tribunal or the E
High Court. It was submitted that the respondent had
himself filed 27 cases in court and made 62
representations. It was further submitted that the
domestic enquiry stood completed and charges stood
proved against the respondent, but no punishment order F
could be passed by the disciplinary authority in view of
the fact that the charge sheet itself had been quashed by
the Tribunal.
Dismissing the appeal, the Court G
HELD: 1.1 Representation may be considered by the
competent authority if it is so provided under the
statutory provisions and the court should not pass an
order directing any authority to decide th~ representation.
H
632 SUPREME COURT REPORTS [2013] 12 S.C.R.
A for the reasons that many a times, unwarranted or time-
barred claims are sought to be entertained before the
authority. More so, once a representation has been
decided, the question of making second representation
on a similar issue is not allowed as it may also involve
B the issue of limitation etc. [para 6] [648-D-F]
Rabindra Nath Bose & Ors. v. Union of India & Ors., 1970
(2) SCR 697 =AIR 1970 SC 470; Employees' State Insurance
Corpn. v. All India Employees' Union & Ors., 2006 (3)
c SCR 361 = (2006) 4 sec 257; AP.S.R. T.C. & Ors. v. G.
Srinivas Reddy & Ors., 2006 (2) SCR 494 =AIR 2006 SC
1465; Karnataka Power Corporation Ltd. & Anr. v. K.
Thangappan & Anr., 2006 (3) SCR 783 =AIR 2006 SC 1581;
Eastern Coalfields Ltd. v. Dugal Kumar, 2008 (11) SCR 369
= AIR 2008 SC 3000; and Uma Shankar Awasthi v. State of
D U.P. & Anr:, 2013 (3) SCR 935 = (2013) 2 sec 435 - relied
on.
2.1 Suspension is a device to keep the delinquent out
of the mischief range. The purpose is to complete the
E proceedings unhindered. Suspension is an interim
measure in aid of disciplinary proceedings so that the
delinquent may not gain custody or control of papers or
take any advantage of his position. During suspension,
relationship of master and servant continues between
F the employer and the employee. Suspension means the
action of debarring for the time being from a function or
privilege or temporary deprivation of working in the
office. In certain cases, suspension may cause stigma
even after exoneration in the departmental proceedings
G or acquittal by the criminal court, but it cannot be treated
as a punishment in strict legal sense. [para 7 and 14] [648-
H; 649-A-C; 653-E-F]
O.P. Gupta v. Union of India & Ors., 1988 (1) SCR
27 =AIR 1987 SC 2257; and Capt. M. Paul Anthony v. Bharat
H
UNION OF INDIA v. ASHOK KUMAR AGGARWAL 633
Gold Mines Ltd. & Anr., 1999 (2) SCR 257 =AIR 1999 SC A
1416; State of Orissa v. Bimal Kumar Mohanty 1994 (2) SCR
51 =AIR 1994 SC 2296; R.P. Kapur v. Union of India & Anr.
1964 SCR 431 = AIR 1964 SC 787; and Balvantrai Ratilal
Patel v. State of Maharashtra, 1968 SCR 577 = AIR 1968
SC 800. B
2.2 Suspension order should be passed only where
there is a strong prima facie case against the delinquent,
and if the charges stand proved, would ordinarily warrant
imposition of major punishment i.e. removal or dismissal C
from service, or reduction in rank etc. [para 1O] [651-A-B]
2.3 Long period of suspension does not make the
order of suspension invalid. Whether the employee
should or should not continue in his office during the
period of enquiry is a matter to be assessed by the D
disciplinary authority concerned and ordinarily the court
should not interfere with the orders of suspension unless
they are passed in mala fide and without there being even
a prima facie evidence on record connecting the
employee with the misconduct in question. [para 12 and E
14] [651-H; 653-D-E]
State of H.P. v. B.C. Thakur, (1994) SCC-{L&;S) 83~nd
Jayrajbhai Jayantibhai Patel v. Ani/bhai Nathubhai Patel &
Ors. 2006 (5) Suppl. SCR 884 = (2006) 8 SCC 200; State
of M.P. v. Sardul Singh, (1970) 1 SCC 108; P. V. Srinivasa F
Sastry v. Comptroller & Auditor General of India, 1992 (3)
Suppl. SCR 503 = (1993) 1 SCC 419; Director General, ES/
& Anr. v. T. Abdul Razak, 1996 (3) Suppl. SCR 80 =AIR 1996
SC 2292; Kusheshwar Dubey v. Mis Bharat Cooking Coal Ltd.
& Ors., 1988 (2) Suppl. SCR 821 =AIR 1988 SC 2118; Delhi G
Cloth General Mills vs. Kushan Bhan, 1960 SCR 227 =AIR
1960 SC 806; U.P. Rajya Krishi Utpadan Mandi Parishad &
Ors. v. Sanjeev Rajan, (1993) Supp. (3) SCC 483; State of
Rajasthan v. B.K. Meena & Ors., 1996 (7) Suppl. SCR 68 =
H
634 SUPREME COURT REPORTS [2013] 12 S.C.R.
I
A (1996) 6 SCC 417; Secretary to Govt., Prohibition and Excise
Department v. L. Srinivasan 1996 (2) SCR 737 = (1996) 3
SCC 157; and Allahabad Bank & Anr. v. Deepak Kumar
=
Bhola, 1997 (2) SCR 1055 (1997) 4 SCC 1 - referred to.
B 2.4 Central Civil Services (Classification, Control and
Appeal) Rules, 1965 are a self contained code and the
order of suspension can be examined in the light of the
statutOry provisions to determine as to whether the
suspension order was justified. Rule 10 of the Rules 1965
C provides for suspension and clause (6) thereof provides
for review thereof by the competent authority before
expiry of 90 days from the effective date of suspension.
However, the extension of suspension shall not be for a
period exceeding 180 days at a time. The eve can also
review the progress of investigation conducted by the
D CBI in a case under the Act 1988. The Vigilance Manual
issued by eve on 12-1-2005 specifically deals with
suspension of a public servant. Clause 6.1 read with
Clau~e 6.3.2 thereof provide that suspension is an
executive order only to prevent the delinquent employee
E to perform his duties during the period of suspension.
However, as the suspension order constitutes a great
hardship to the person concerned as it leads to reduction in
emoluments, adversely affects his prospects of promotion and
also carried a stigma, an order of suspension should not
F be made in a perfunctory or in a routine and casual
manner but with due care and caution after taking all factors
into account. Clause 6.3.3 further provides that before
passing the order of suspension the competent authority
may consider whether the purpose may be served if the
G officer is transferred from his post. The Department of
Personnel and Training, Government of India also issued
Circular dated 4.1.2004 regarding the suspension and
review of the suspension order. [para 13 and 15] [652-B;
653-G-H; 654-A-F, H; 655-A]
H
UNION OF INDIA v. ASHOK KUMAR AGGARWAL 635
Union of India & Ors. v. Udai Narain, (1998) 5 SCC 535 A
- referred to. '
2.5 In Dipak Mali*, this Court held that if the initial or
subsequent period of extension has expired, the
suspension order comes to an end because of the expiry 8
· of the period provided under rule 10(6) of the Rules 1965.
Subsequent review or extension thereof is not
permissible for the reason that earlier order had become
invalid after expiry of the original period of 90 days or
extended period of 180 days. [para 26] [659-E-F]
c
*Union of India & Ors. v. Dipak Mali, 2009 (16) SCR 564
=AIR 2010 SC 336 - relied on.
2.6 The Tribunal inter alia had placed reliance on
notings of the file. Notings in the files could not be relied 0
upon by the Tribunal and Court. [para 16 and 18] [655-B;
656-F]
Shanti Sports Club v. Union of India 2009 (13) SCR 710
=(2009) 15 SCC 705; Sethi Auto Service Station v. ODA,
2008 (14) SCR 598 = AIR 2009 SC 904; Jasbir Singh E
Chhabra v. State of Punjab (2010) 4 SCC 192 - relied on.
3.1 By order dated 16.12.2011 the Tribunal had
directed the appellants to reconsider the whole case
taking into account various issues enumerated in the F
order. The Tribunal neither directed the competent
authority not to renew the order of suspension nor to
decide the case in a particular way. Rather simple
directions were issued to take into consideration the
factors enumerated in its order before any order is G
passed. Though the Tribunal took note of the fact that the
charges against the respondent were grave, it held that
continuance of his suspension was not tenable and, as
such, the said orders were quashed and set aside with
the direction to the appellants to revoke the respondent's H
636 SUPREJ\/IE COURT REPORTS [2013] 12 S.C.R.
A suspension and to reinstate him in service with all
consequential benefits. However, liberty was given to the
appellants that if at any point of time the criminal trial
commenced, the appellants could consider the possibility
of keeping the officer under suspension at that point of
B time, if the facts and circumstances so warranted. [para
18 and 21] [656-G; 657-C-D, G-H; 658-A-B]
3.2 The order dated 16.12.2011 was not challenged
by the appellants and, thus, it attained fil)ality. Therefore,
it was not permissible for the appellants to pass any fresh
C order of suspension till the commencement of the trial
before the criminal court. [Para 22] [658-C]
3.3 This Court in Manohar Lat•• has held that any
order passed by any authority in spite of the knowledge
D of order of the court, is of no consequence as it remains
a nullity and any subsequent action thereof would also
be a nullity. [para 25] [659-C-D]
**Manohar Lal (D) by LRs. v. Ugrasen (D) by LRs. & Ors.,
2010 (7) SCR 346 =AIR 2010 -SC 221 O; Mu/raj v. Murti
E Raghunathji Mahaaraj 1967 SCR 84 =AIR 1967 SC 1386,
Surjit Singh & Ors. etc. etc. v. Harbans Singh & Ors. etc. etc.,
1995 (3) Suppl. SCR 354 =AIR 1996 SC 135; Delhi
Development Authority v. Skipper Construction Company (P)
Ltd. & Anr., 1996 (2) Suppl. SCR 295 =AIR 1996 SC 2005;
F and Gurunath Manohar Pavaskar & Ors. v. Nagesh Siddappa
Navalgund & Ors., 2007 (13) SCR 77 =AIR 2008 SC 901 -
relied on
3.4 The order dated 31.7.2012 is a nullity being in
G contravention of the final order of the Tribunal which had
attained finality. More so, the issue could not have been
re-agitated by virtue of the application of the doctrine of
res judicata. [para 28] [660-D-E]
H
State of U.P. v. Neeraj Chaubey, 201 O (11) SCR 542 =
UNION OF INDIA v. ASHOK KUMAR AGGARWAL 637
(2010) 10 SCC 320 and State of Orissa & Anr. v. Mamata A
Mohanty 2011 (2) SCR 704 =
(2011) 3 sec 436 - relied
on.
Satyadhyan Ghosa/ & Ors. v. Smt. Deorajin Debi & Anr.,
1960 SCR 590 =AIR 1960 SC 941; Oaryao & Ors. v. State B
of U.P. & Ors., 1962 SCR 574 =AIR 1961 SC 1457; Greater
Cochin Development Authority v. Leelamma Va/son & Ors.,
AIR 2002 SC 952; 2004 (6) Suppl. SCR 1104 =AIR 2005
SC 626 Hope Plantations Ltd. v. Ta/uk Land Board,
Peermade & Anr. 1998 (2) Suppl. SCR 514 = (1999) 5 SCC C
590 - referred to
3~5 Therefore, it was not permissible for the
appellants to consider the renewal of the suspension
order or to pass a fresh order without challenging the
order of the Tribunal dated 1.6.2012 and such an attitude D
tantamounts to contempt of court and arbitrariness as it
is not permissible for the executive to scrutinize the order
of the court. [para 31] [661-H; 662-A]
4.1 The scope of Arts. 14 and 16 of the Constitution E
of India is wide and pervasive as those Articles embodied
the principle of rationality and they are intended to strike
against arbitrary and discriminatory action taken by the
State. The facts of the instant case make it crystal clear
that it is a case of legal malice. [para 32 and 34] [662-B- F
C, H]
Kalabharati Advertising v. Hemant Vimalnath Narichania
& Ors., 2010 (10) SCR 971 =AIR 2010 SC 3745;. Dr. Amarjit
Singh Ahluwalia v. State of Punjab & Ors. 1975 (3) SCR 82 =
AIR 1975 SC 984; Union of India v. K.M. Shankarappa, 2000 G
(5) Suppl. SCR 117 = (2001) 1SCC582; Vitara/li v. Seaton,
359 US 536 - relied on
4.2 The record of the case reveals that this Court has
granted interim order dated 8.10.2012 staying the H
638 SUPREME COURT REPORTS [2013] 12 s.c.q.
A operation of the judgment and order dated 1.6.:.!012 but
that would not absolve the appellants of passing an
illegal, unwarranted and uncalled for order of renewal of
suspension on 31.7.2012 and that order being void, the
sanctity/validity of the orders passed on 21.1.2013 and
B 17.7.2013 becomes doubtful. It further creates doubt
whether the appellants, who had acted such
unreasonably or illegally, are entitled to any relief before
this Court. The Tribunal and the High Court were right that
the appellants had not followed the directions of the
c Tribunal issued on 16.12.2011 and the mandate of
Department's O.M. dated 7.1.2004. The terms of the said
O.M. were required to be observed. [para 35] [663-E-G]
4.3 Jurisdiction under Art.136 of the Constitution is
basically one of conscience. The jurisdiction is plenary
0 and residuary. Therefore, even if the matter has been
admitted, there is no requirement of law that Court must
decide it on each and every issue. The Court can revoke
the leave as such jurisdiction is required to be exercised
only in suitable cases and very sparingly. The law is to
E be tempered with equity and the Court can pass any
equitable order considering the facts of a case. In such
a situation, conduct of a party is the most relevant factor
and in a given case, the Court may even refuse to
exercise its discretion under Art. 136 for the reason that
F it is not necessary to exercise such jurisdiction just
because it is lawful to do so. para 36] [663-H; 664-A-C]
Pritam Singh v. The State, 1950 SCR 453 =AIR 1950
SC 169; Taherakhatoon (D) by Lrs. v. Salambin
G Mohammad 1999 (1) SCR 901 = AIR 1999 SC 1104; and
Karam Kapahi & Ors. v. Mis. Lal Chand Public Charitable
Trust & Anr., 2010 (4 ) SCR 422 = AIR 2010 SC 2077 -
relied on.
5.1 An authority cannot issue orders/office
H memorandum/ executive instructions in contravention of
UNION OF INDIA v. ASHOK KUMAR AGGARWAL 639
the statutory Rules. However, instructions can be issued A
only to supplement the statutory rules but not to supplant
it. Such instructions should be subservient to the
statutory provisions. [para 38) [664-G-H]
Sant Ram Sharma v. State of Rajasthan & Ors., AIR 1967
SC 1910; Union of India & Ors. v. Majji Jangammayya & Ors., 8
1977 (2) SCR 28 =AIR 1977 SC 757; P.O. Aggarwal & Ors.
v. State of U.P. & Ors., 1987 (3) SCR 427 =AIR 1987 SC
1676; Paluru Ramkrishnaiah & Ors. v. Union of India & Anr.,
1989 (2) SCR 92 =AIR 1990 SC 166; C. Rangaswamaiah &
Ors. v. Kamataka Lokayukta & Ors.1998 (3) SCR 837 = AIR C
1998 SC 2496; and JAC of Airlines Pilots Association of India
& Ors. v. rhe Director General of Civil Aviation & Ors., 2011
(5) SCR 1019 =AIR 2011 SC 2220; Naga People's
Movement of Human Rights v. Union of India 1997 (5) Suppl.
SCR 469 =AIR 1998 SC 431- relied on. D
Nagaraj Shivarao Karjagi v. Syndicate Bank, Head
Office, Manipal & Anr. 1991 (2) SCR 576 =AIR 1991 SC
1507; State of U.P. & Ors. v. Maharaja Dharmander Prasad
Singh & Ors., 1989 (1) SCR 176 =AIR 1989 SC 997 - E
referred to.
5.2 Considering the case in totality, this Court is of
the view that the appellants have acted in contravention
of the final order dated 1.6.2012 passed by the Tribunal
and therefore, there was no occasion for the appellants F
for passing the order dated 31.7.2012 or any subsequent
order. The orders passed by the appellants are in
contravention of not only of the order of the court but also
to the office memorandum and statutory rules. [para 42]
~~~ G
Case Law Reference:
1970 (2) SCR 697 relied on para 6
2006 (3) SCR 361 relied on para 6
2006 (2) SCR 494 relied on para 6 H
640 SUPREME COURT REPORTS [2013] 12 S.C.R.
A 2006 (3) SCR 783 relied on para 6
2008 (11) SCR 369 relied on para 6
2013 (3) SCR 935 relied on para 6
1988 (1) SCR 27 relied on para 7
B
1999 (2) SCR 257 relied on para 7
1994 (2) SCR 51 relied on para 8
1964 SCR 431 relied on para 8
c
1968 SCR 577 relied on para 8
2006 (5) Suppl. SCR 884 referred to para 11
(1994) SCC (L&S) 835 referred to para 12
D (1998) 5 sec 535 referred to para 13
(1998) 5 sec 535 referred to para 14
(1970) 1 sec 108 referred to para 14
E 1992 (3) Suppl. SCR 503 referred to para 14
1996 (3) Suppl. SCR 80 referred to para 14
1988 (2) Suppl. SCR 821 referred to para 14
1960 SCR 227 referred to para 14
F
(1993) Supp. (3) SCC 483 referred to para 14
1996 (7) Suppl. SCR 68 referred to para 14
1996 (2) SCR 737 referred to para 14
G
1997 (2) SCR 1055 referred to para 14
2009 (13) SCR 710 relied on para 16
2008 (14) SCR 598 relied on para 16
H (2010) 4 sec 192 relied on Para 17
BHARAT PETROLEUM CORP. LTD. v. CHEMBUR 641
SERVICE STATION
1967 SCR 84 relied on para 25 A
1995 (3) Suppl. SCR 354 relied on para 25
1996 (2) Suppl. SCR 295 relied on para 25
2007 (13) SCR 77 relied on para 25
8
2010 (7) SCR 346 relied on para 25
2009 (16) SCR 564 relied on para 26
2010 (11) SCR 542 referred to para 27
c
2011 (2) SCR 704 referred to para 27
1960 SCR 590 referred to para 29
1962 SCR 574 referred to para 29
AIR 2002 SC 952 referred to para 29 D
2004 (6) Suppl. SCR 1104 referred to para 29
1998 (2) Suppl. SCR 514 referred to para 30
1975 (3) SCR 82 referred to para 32 E
359 US 536 referred to para·32
2000 (5) Suppl. SCR 117 referred to para 33
2010 (10) SCR 971 relied on para 34
F
1950 SCR 453 relied on para 36
1999 (1) SCR 901 relied on para 36
2010 (4) SCR 422 relied on para 36
G
1977 (2) SCR 28 relied on para 38
1987 (3) SCR 427 relied on para 38
1989 (2) SCR 92 relied on para 38
1998 (3) SCR 837 relied on para 38 H
642 SUPREME COURT REPORTS [2013] 12 S.C.R
A 2011 (5) SCR 1019 relied on para 38
1997 (5) Suppl. SCR 469 relied on para 39
1991 (2) SCR 576 referred to para 40
1989 (1) SCR 176 referred to para 41
B
CIVIL APPELLATE JURISDICTION : Civil Appeal No
9454 of 2013.
From the Judgment and Order dated 17.09.2012 of the
c High Courtof Delhi at New Delhi in W.P. (C) No. 5247 of 2012.
Indira Jaising, ASG, R. Balasubramaniam, Anindita Pujari,
Anil Katiyar, Sonakshi Malhan, Rajiv Nanda, Madhurima Tatia,
Sadhana Sandhu for the Appellants.
D Dhruv Mehta, Aman Vachher, Ashutosh Dubey, Yash,
Abhishek Chauhan, Harsh Sharma, Balbir Singh Gupta for the
Respondent.
The Judgment of the Court was delivered by
E
DR. B.S. CHAUHAN, J. 1. This appeal has been preferred
by the Union of India against the judgment and order dated
17.9.2012, passed by the High Court of Delhi at New Delhi in
Writ Petition (Civil) No.5247 of 2012 affirming the judgment and
F order dated 1.6.2012, passed by the Central Administrative
Tribunal, New Delhi (hereinafter referred to as the 'Tribunal') in
OA No.495 of 2012 filed by the respondent by which and
whereunder the Tribunal has quashed the suspension order
passed by the appellimts.
G 2. Facts and circumstances giving rise to this _appeal are:
A. That the respondent who belongs to the Indian Revenue
Service (lncpme Tax-1985 batch) has been put under
suspension since 28.12.1999 in view of the pendency of two
H criminal cases against him duly investigated by the Central
UNION OF INDIA v. ASHOK KUMAR AGGARWAL 643
[DR. B.S. CHAUHAN, J]
Bureau of Investigation (for short 'CBI') and in which he was also A
arrested on two occasions, namely, 23.12.1999 and
19.10.2000 in relation to the said cases. During the relevant
time, the respondent was on deputation to Enforcement
Directorate and was working as Deputy Director
(Enforcement). B
B. The CBI registered RC No.S18/E0001/99 dated
29.1.1999 against the respondent in respect of certain illegal
transactions whereby the Directorate had seized a fax
message (debit advice) from the premises of one Subhash c
Chandra Bharjatya purported to have been sent from Swiss
Bank Corporation, Zurich, Switzerland, which reflected a debit
of US$ 1,50,000 from the account of Royalle Foundation,
Zurich, Switzerland in favour of one S.K. Kapoor, holder of
account number 002-9-608080, Hong Kong & Shanghai
0
Banking Corporation (HSBC), Head office at Hong Kong, as
per the advice of the customer, i.e. Royalle Foundation.
Subhash Bharjatya filed a complaint dated 4.1.1998 alleging
the said fax message to be a forgery and had been planted in
his premises during the course of search in order to frame him E
and further that he and his employee were illegally detained on
the night of 1.1.1998 and were threatened and manhandled. It
was in the investigation of this case that CBI took a prima facie
view that respondent was part of a criminal conspiracy with co-
accused Abhishek Verma to frame Subhash Chandra F
Bharjatya in a case under Foreign Exchange Regulation Act,
1973 (hereinafter referred to as FERA) by fabricating false
evidence to implicate Subhash Bharjatya.
C. Subsequently, CBI registered another case No. RC
S19/E0006/99 dated 7.12.1999 in respect of disproportionate G
assets possessed by the respondent amounting to more than
12 crores to his known sources of income during his service
period of 14 yeqrs. As the respondent was arrested on
23.12.1999, he was under deemed suspension. The
suspension order was reviewed subsequently. In view of the H
644 SUPREME COURT REPORTS [2013) 12 SC R
A provisions of Rule 10 of the Central Civil Services
(Classification, Control and Appeal) Rules. 1965, (hereinafter
referred to as 'Rules 1965'), the suspension order was passed
by the disciplinary authority to be effective ti!I further order.
B D. Sanction to prosecute the respondent had been
obtained from the competent authority under the Prevention of
Corruption Act, 1988 (hereinafter referred to as the 'Act 1988').
E. The respondent challenged the order of his suspension
before the Tribunal by filing OA No.783 of 2000 which was
C allowed by the Tribunal vide ord~r dated 17 1.2003 giving the
opportunity to the appellants herein to pass a fresh order as
appropriate based on facts of the case.
F. The appellants re-considered the case of the
D suspension in pursuance of the order of the Tribunal dated
17.1.2003. However, vide order dated 25.4.2003 the appellants
decided that the respondent should remain under suspension.
G. Aggrieved, the respondent challenged the said order
E dated 25.4.2003 before the Tribunal by filing OA No.1105 of
2003, however the same was dismissed vide order dated
9.5.2003. The record reveals that the said order of the Tribunal
was challenged by filing a writ petition before the Delhi High
Court. However, the said petition was subsequently withdrawn
F by the respondent vide order dated 11.8.2010.
H. So far as the criminal cases are concerned, the Special
Judge granted pardon to co-accused Abhishek Verma. The
said order was challenged by the respondent before the High
Court and ultimately before this Court, but 1n vain.
G
The departmental proceedings were also initiated against
the respondent based on the CBl's investigation reports and
the charge memorandum was issued which was quashed by
the Tribunal vide judgment and order dated 24.2.2010.
H Aggrieved, appellants filed special leave petition before this
UNION OF INDIA v. ASHOK KUMAR AGGARWAL 645
[DR. B.S. CHAUHAN, J.]
Court with a delay of more than two years. without approaching A
the High Court. The judgment of this Court dated 5.9.2013
passed in C.A.Nos. 7761-7717 of 2013, Union of India & Ors.
v. B.V. Gopinath etc. etc., affirmed the view taken by the.
Tribunal that chargesheet is required to be approved by the
disciplinary authority. The petition filed by the appellants against B
the respondent has not yet been decided. Review Petition filed
by the appellants against the judgment and order dated
5.9.2013 is also reported to be pending.
I. The appellants had been reviewing the suspension order c
from time to time and thus, the respondent filed OA No.2842
of 2010 before the Tribunal for quashing of the suspension
order and the same was disposed of by the Tribunal vide order
dated 16.12.2011 directing the appellants to convene a
meeting of the Special Review Committee (SRC) within a
0
stipulated period to consider revocation or continuation of
suspension of the respondent after taking into consideration
various factors mentioned in the said order.
J. Pursuant to the said order of the Tribunal dated
16.12.2011, the SRC was constituted. The competent authority E
considered the recommendations of the SRC in this regard and
passed an order dated 12.1.2012 to the effect that the
suspension of the respondent would continue. The views of the
CBI were made available subsequent to order dated 12.1.2012
and thus, the SRC again met and recommended the F
continuance of suspension of the respondent and on the basis
of which the Competent Authority, vide order dated 3.2.2012,
decided to continue the suspension of the respondent.
K. The respondent challenged the said orders dated G
12.1.2012 and 3.2.2012 by filing OA No.495 of 2012 before
the Tribunal and the Tribunal allowed the said OA vide order
dated 1.6.2012 holding that the earlier directions given by the
Tribunal on 16.12.2011 had not been complied with while
passing the impugned orders dated 12.1.2012 and 3.2.2012 H
646 SUPREME COURT REPORTS [2013] 12 S.C.R.
A and thus, the continuation of suspension was not tenable. The
said orders were accordingly quashed by the Tribunal.
L. Aggrieved by the order dated 1.6.2012 passed by the
Tribunal, the appellants preferred Writ Petition No.5247 of 2012
8 before the High Court of Delhi which was dismissed vide
judgment and order impugned dated 17.9.2012.
Hence, this appeal.
3. Ms. Indira Jaising, learned Additional Solicitor General
C appearing for the appellants has submitted that though the
respondent had been under suspension for 14 years but in view
of the gravity of the charges against him in the disciplinary
proceedings as well as in the criminal cases, no interference
was warranted by the Tribunal or the High Court. In spite of the
D fact that the charges were framed against the respondent and
the domestic enquiry stood completed and very serious
charges stood proved against the respondent, no punishment
order could be passed by the disciplinary authority in view of
the fact that the charge sheet itself has been quashed by the
E Tribunal on the ground that it had not been approved by the
disciplinary authority and in respect of the same, the matter had
come to this Court and as explained hereinabove, has impliedly
been decided in favour of the respondent vide judgment and
order dated 5.9.2013.
F
The respondent has himself filed 27 cases in court and
made 62 representations. Almost all his representations had
been considered by the competent authority fully applying its
mind and passing detailed orders. The Tribunal has placed
G reliance on the notings in the files while deciding the case,
which is not permissible in law as the said notings cannot be
termed as decision of the government.
The scope of judicial review is limited in case of
suspension for the reason that passing of suspension order is
H
UNION OF INDIA v. ASHOK KUMAR AGGARWAL 647
[DR. B.S. CHAUHAN, J ]
of an administrative nature and suspension is not a punishment. A
Its purpose is to only forbid the delinquent to work in the office
and it is in the exclusive domain of the employer to revoke the
suspension order. The Tribunal or the court cannot function as
an appellate authority over ttie decision taken by the
disciplinary authority in these regards. B
In view of the provisions contained in CVC Regulations
which came into force in 2004, the case of suspension of the
respondent has been reviewed from time to time and the
disciplinary authority thought it proper to continue the c
suspension order. The Tribunal and the High Court failed to
appreciate that the directions given by the Tribunal in its order
dated 16.12.2011, inter-alia, to consider the reply to the letter
rogatory received from the competent authority in Switzerland
and the report of the Law Department in case of sanction D
granted by the competent authority Le. Hon'ble Finance Minister
are matters to be examined by the trial court where the case is
pending. The proceedings had been stayed by the court taking
a prima facie view that the courts below had not passed the
order in correct perspective and in that view of the matter, the E
appellants could not be blamed. Thus, the impugned judgment
and order is liable to be set aside.
4. Shri Dhruv Mehta, learned senior counsel appearing for
the respondent has opposed the appeal contending that the
respondent had served the department for a period of 14 years F
and has faced the suspension for the same duration i.e. 14
years, and after nine year, the respondent would attain the age
of superannuation. The appellants have obtained the interim
order from this court restraining the trial court to proceed in a
criminal case though it is not permissible in law to stay the trial G
as provided in Section 19(3) of the Act 1988. The said interim
order had been obtained by the appellants by suppressing the
material facts. The Tribunal vide order dated 16.12.2011 had
issued certain directions and in spite of the fact that the said
H
648 SUPREME COURT REPORTS [2013] 12 S.C.R.
A order had attained finality as the appellants had chosen not to
challenge the same before a higher forum, the appellants were
bound to ensure the compliance of the same and the Tribunal
and the High Court had rightly held that the said order had not
been complied with and the suspension orders dated
B 12.1.2012 and 3.2.2012 suffered from non-application of mind.
More so, the Tribunal having quashed the suspension orders,
renewing the suspension order would tantamount to sitting in
appeal against the order of the Tribunal. The conduct of the
appellants had been contemptuous and the same disentitled
c them for any relief from this Court. In view of the above, no
interference is called for and the appeal is liable to be
dismissed.
5. We have considered the rival submissions made by
learned counsel for the parties and perused the record.
0
6. Representation may be considered by the competent
authority if it is so provided under the statutory provisions and
the court should not pass an order directing any authority to
decide the representation for the reasons that many a times,
E unwarranted or time-barred claims are sought to be entertained
before the authority. More so, once a representation has been
decided, the question of making second representation on a
similar issue is not allowed as it may also involve the issue of
limitation etc.
F
(Vide: Rabindra Nath Bose & Ors. v. Union of India &
Ors., AIR 1970 SC 470; Employees' State Insurance Corpn.
v. All India Employees' Union & Ors., (2006) 4 SCC 257;
A.P.S.R. T.C. & Ors. v. G. Srinivas Reddy & Ors., AIR 2006
G SC 1465; Karnataka Power Corporation Ltd. & Anr. v. K.
Thangappan & Anr., Al R 2006 SC 1581 ; Eastern Coalfields
Ltd. v. Dugal Kumar, AIR 2008 SC 3000; and Uma Shankar
Awasthi v. State of U.P. & Anr., (2013) 2 SCC 435).
7. During suspension, relationship of master and servant
H
UNION OF INDIA v. ASHOK KUMAR AGGARWAL 649
[DR B.S. CHAUHAN, J]
continues between the employer and the employee. However, A
the employee is forbidden to perform his official duties. Thus,
suspension order does not put an end to the service.
Suspension means the action of debarring for the time being
from a function or privilege or temporary deprivation of working
in the office. In certain cases, suspension may cause stigma B
even after exoneration in the departmental proceedings or
acquittal by the Criminal Court, but it cannot be treated as a
punishment even by any stretch of imagination in strict legal
sense. (Vide: O.P. Gupta v. Union of India & Ors., AIR 1987
SC 2257; and Capt. M. Paul Anthony v. Bharat Gold Mines c.
Ltd. & Anr., AIR 1999 SC 1416).
8. In State of Orissa v. Bimal Kumar Mohanty, AIR 1994
SC 2296, this Court observed as under:-
"...... the order of suspension would be passed taking into D
consideration the gravity of the misconduct sought to be
inquired into or investigated and the nature of evidence
placed before the appointing authority and on
application of the mind by the disciplinary authority.
Appointing authority or disciplinary authority should E
consider ..... and decide whether it is expedient to keep
an employee under suspension pending aforesaid
action. It would not be as an administrative routine or an
automatic order to suspend an employee. It should be
on consideration of the gravity of the alleged misconduct F
or the nature of the a/legations imputed to the delinquent
employee. The Court or the Tribunal must consider each
case on its own facts and no general law should be laid
down in that behalf .... .In other words, it is to refrain him
to avail further opportunity to perpetuate the alleged G
misconduct or to remove the impression among the
members of service that dereliction of duty will pay fruits
and the offending employee may get away even pending
inquiry without any impediment or to provide an
opportunity to the delinquent officer to scuttle the inquiry H
650 SUPREME COURT REPORTS [2013] 12 S.C.R.
A or investigation to win over the other witnesses or the
delinquent having had an opportunity in office to impede
the progress of the investigation or inquiry etc. It would
be another thing if the action is actuated by ma/a fide,
arbitrarily or for ulterior purpose. The suspension must
B be a step in aid to the ultimate result of the investigation
or inquiry. The Authority also should keep in mind public
interest of the impact of the delinquent's continuation
in office while facing departmental inquiry or a trial of a
criminal charge." (Emphasis added)
c (See also: R.P. Kapur v. Union of India & Anr., AIR 1964
SC 787 ; and Balvantrai Ratilal Patel v. State of Maharashtra,
AIR 1968 SC 800).
9. The power of suspension should not be exercised in an
D arbitrary manner and without any reasonable ground or as
vindictive misuse of power. Suspension should be made only
in a case where there is a strong prima facie case against the
delinquent employee and the allegations involving moral
turpitude, grave misconduct or indiscipline or refusal to carry
E out the orders of superior authority are there, or there is a strong
prima facie case against him, if proved, would ordinarily result
in reduction in rank, removal or dismissal from service. The
authority should also take into account all the available material
as to whether in a given case, it is advisable to allow the
F delinquent to continue to perform his duties in the office or his
retention in office is likely to hamper or frustrate the inquiry.
10. In view of the above, the law on the issue can be
summarised to the effect that suspension order can be passed
G by the competent authority considering the gravity of the
alleged misconduct i.e. serious act of omission or commission
and the nature of evidence available. It cannot be actuated by
ma/a fide, arbitrariness, or for ulterior purpose. Effect on public
Interest due to the employee's continuation in office is also a
H relevant and determining factor. The facts of each case have
UNION OF INDIA v. ASHOK KUMAR AGGARWAL 651
"'
[DR. B.S. CHAUHAN, J]
to be taken into consideration as no formula of universal A
application can be laid down in this regard. However,
suspension order should be passed only where there is a strong
prima facie case against the delinquent, and if the charges
stand proved, would ordinarily warrant imposition of major
punishment i.e. removal or dismissal from service, or reduction B
in rank etc.
11. In Jayrajbhai Jayantibhai Patel v. Anilbhai Nathubhai
Patel & Ors., (2006) 8 SCC 200, this Court explained:
"18. Having regard to it all, it is manifest that the power C
of judicial review may not be exercised unless the
administrative decision is illogical or suffers from
procedural impropriety or it shocks the conscience of the
court in the sense that it is in defiance of logic or moral
standards but no standardised formula, universally D
applicable to all cases, can be evolved. Each case' has
to be considered on its own facts, depending upon the
authority that exercises the power, the source, the nature
or scope of power and the indelible effects it generates
in the operation of law or affects the individual or society. E
Though judicial restramt, albeit self-recognised, is the
order of the day, yet an administrative decision or action
which is based on who/ly irrelevant considerations or
material; or excludes from consideration the relevant
material; or it is so absurd that no reasonable person F
could have arrived at it on the given material, may be
struck down. In other words, when a court is sajisfied that
there is an abuse or misuse of power, and its jurisdiction
is invoked, it is incumbent on the court to intervene. It is
nevertheless, trite that the scope of judicial review is G
limited to the deficiency in the decision-making process
and not the decision"
12. Long period of suspension does not make the order
of suspension invalid. However, in State of H.P. v. B.C. Thakur, H
(1994) SCC (L&S) 835. this Court held that where for any
652 SUPREME COURT REPORTS [2013] 12 S.C.R.
A reason it is not possible to proceed with the domestic enquiry
the delinquent may not be kept under suspension.
13. There cannot be any doubt that the Rules 1965 are a
self contained code and the order of suspension can be
8 examined in the light of the statutory provisions to determine
as to whether the suspension order was justified. Undoubtedly,
the delinquent cannot be considered to be any better off after
the charge sheet has been filed against him in the court on
conclusion of the investigation than his position during the
C investigation of the case itself. (Vide: Union of India & Ors. v.
Udai Narain, (1998) 5 sec 535).
14. The scope of interference by the Court with the order
of suspension has been examined by the Court in a large
number of cases, particularly in State of MP. v. Sardul Singh,
D (1970) 1 SCC 108; P. V. Srinivasa Sastry v. Comptroller &
Auditor General of India, (1993) 1 SCC 419; Director General,
ES/ & Anr. v. T. Abdul Razak, Al R 1996 SC 2292; Kusheshwar
Dubey v. Mis Bharat Cooking Coal Ltd. & Ors., AIR 1988 SC
2118; Delhi Cloth General Mills vs. Kushan Bhan, AIR 1960
E SC 806; U.P. Rajya Krishi Utpadan Mandi Parishad & Ors.
v. Sanjeev Rajan, (1993) Supp. (3) SCC 483; State of
Rajasthan v. B.K. Meena & Ors., (1996) 6 SCC 417;
Secretary to Govt., Prohibition and Excise Department v. L.
Srinivasan, (1996) 3 SCC 157; and Allahabad Bank & Anr.
F v. Deepak Kumar Bhola, (1997) 4 SCC 1 , wherein it has been
observed that even if a criminal trial or enquiry takes a long time,
it is ordinarily not open to the court to interfere in case of
suspension as it is in the exclusive domain of the competent
authority who can always review its order of suspension being
G an inherent power conferred upon them by the provisions of
Article 21 of the General Clauses Act, 1897 and while
exercising such a power, the authority can consider the case
of an employee for revoking the suspension order, if satisfied
that the criminal case pending would be concluded after an
H unusual delay for no fault of the employee concerned. Where
UNION OF INDIA v. ASHOK KUMAR AGGARWAL 653
[DR. B.S. CHAUHAN, J.]
the charges are baseless, mala fide or vindictive and are A
framed only to keep the delinquent employee out of job, a case
for judicial review is made out. But in a case where no
conclusion can be arrived at without examining the entire record
in question and in order that the disciplinary proceedings may
continue unhindered the court may not interfere. In case the court B
comes to the conclusion that the authority is not proceeding
expeditiously as it ought to have been and it results in
prolongation of sufferings for the delinquent employee, the court
may issue directions. The court may, in case the authority fails
to furnish proper explanation for delay in conclusion of the C
enquiry, direct to complete the enquiry within a stipulated period.
However, mere delay in conclusion of enquiry or trial can not
be a ground for quashing the suspension order, if the charges
are grave in nature. But, whether the employee should or should
not continue in his office during the period of enquiry is a matter D
to be assessed by the disciplinary authority concerned and
ordinarily the court should not interfere with the orders of
suspension unless they are passed in mala fide and without
there being even a prima facie evidence on record connecting
the employee with the misconduct in question. E
Suspension is a device to keep the delinquent out of the
mischief range. The purpose is to complete the proceedings
unhindered. Suspension is an interim measure in aid of
disciplinary proceedings so that the delinquent may not gain
F
custody or control of papers or take any advantage of his
position. More so, at this stage, it is not desirable that the court
may find out as which version is true when there are claims and
counter claims on factual issues. The court cannot act as if it
an appellate forum de hors the powers of judicial review.
G
15. Rule 10 of the Rules 1965 provides for suspension and
clause 6 thereof provides for review thereof by the competent
authority before expiry of 90 days from the effective date of
suspension. However, the extension of suspension shall not be
for a period exceeding 180 days at a time. The CVC can also H
654 SUPREME COURT REPORTS [2013] 12 S.C.R.
A review the progress of investigation conducted by the CBI in a
case under the Act 1988.
The Vigilance Manual issued by CVC on 12th January,
2005 specifically deals with suspension of a public servant.
B Clause 5.13 thereof provides that Commission can lay down
the guidelines for suspension of a government servant.
However, if the CBI has recommended suspension of a public
servant and the competent authority does not propose to
accept the said recommendation, the matter may be referred
c to the CVC for its advice. The CBI may be consulted if the
administrative authority proposes to revoke the suspension
order. Clause 6.1 read with Clause 6.3.2 thereof provide that
suspension is an executive order only to prevent the delinquent
employee to perform his duties during the period of suspension.
However, as the suspension order constitutes a great hardship
0
to the person concerned as it leads to reduction in
emoluments, adversely affects his prospects of promotion and
also carried a stigma. an order of suspension should not be
made in a perfunctory or in a routine and casual manner but
E with due care and caution after taking all factors into account.
Clause 6.3.3 further provides that before passing the order
of suspension the competent authority may consider whether
the purpose may be served if the officer is transferred from his
post.
F
Clauses 17.42 to 17.44 of the CBI (Crime) Manual 2005
also deal with suspension. The said clauses provide that the
government servant may be put under suspension if his
continuance in office would prejudice the investigation. trial or
G enquiry e.g. apprehension of interfering with witnesses or
tampering of documents or his continuation would subvert
discipline in the office where the delinquent is working or his
continuation would be against the wider public interest.
The Department of Personnel and Training, Government
H
UNION OF !NOIA v. ASHOK KUMAR AGGARWAL 655
[DR. B.S. CHAUHAN, J.]
of India also issued Circular dated 4.1.2004 regarding the A ·
suspension and review of the suspension order.
16. The instant case is required to be considered in light
of the aforesaid settled legal propositions, statutory provisions,
circulars etc. The Tribunal inter alia had placed reliance on B
notings of the file. The issue as to whether the notings on the
file can be relied upon is no more res integra.
In Shanti Sports Club v. Union of India, (2009) 15 SCC
705, this Court considered the provisions of Articles 77(2),
77(3) and 166(2) of the Constitution and held that unless an C
order is expressed in the name of the President or the Governor
and is authenticated in the manner prescribed by the rules, the
same cannot be treated as an order on behalf of the
Government. The Court further held:
D
"43. A noting recorded in the file is merely a noting
simpliciter and nothing more. It merely represents
expression of opinion by the particular individual. By no
stretch of imagination, such noting can be treated as a
decision of the Government. Even if the competent E
authority records its opinion in the file on the merits of
the matter under consideration, the same cannot be
termed as a decision of the Government unless it is
sanctified and acted upon by issuing an order in
accordance with Articles 77(1) and (2) or Articles 166(1) F
and (2). The noting in the file or even a decision gets
culminated into an order affecting right of the parties only
when it is expressed in the name of the President or the
Governor, as the case may be, and authenticated in the
manner provided in Article 77(2) or Article 166(2). A G
noting or even a decision recorded in the file can always
be reviewed/reversed/overruled or overturned and the
court cannot take cognizance of the earlier noting or
decision for exercise of the power of judicial review."
H
656 SUPREME COURT REPORTS [2013] 12 S.C.R.
A Similarly, while dealing with the issue, this Court in Sethi
Auto Service Station v. ODA, AIR 2009 SC 904 held:
"14. It is trite to state that notings in a departmental file
do not have the sanction of law to be an effective order.
A noting by an officer is an expression of his viewpoint
B
on the subject. It is no more than an opinion by an officer
for internal use and consideration of the other officials of
the department and for the benefit of the final decision-
making authority. Needless to add that internal notings
are not meant for outside exposure Notings in the file
c culminate into an executable order, affecting the rights
of the parties, only when it reaches the final decision-
making authority in the department, gets his approval and
the final order is communicated to the person concerned."
D 17.ln Jasbir Singh Chhabra v. State of Punjab, (2010) 4
SCC 192, this Court held:
"35 ...... However, the final decision is required to be
taken by the designated authority keeping in view the
larger public interest. The notings recorded in the files
E
cannot be made basis for recording a finding that the
ultimate decision taken by the Government is tainted by
ma/a fides or is influenced by extraneous
considerations ..... "
F 18. Thus, in view of the above, it is evident that the notings
in the files could not be relied upon by the Tribunal and Court.
However, the issue of paramount importance remains as what
could be the effect of judgment and order of the Tribunal dated
16.12.2011 wherein the Tribunal had directed the appellants to
G reconsider the whole case taking into account various issues
inter-alia as what would be the effect of quashing of the
chargesheet by the Tribunal against the respondent; the report/
recommendation of the Law Ministry to revoke the sanction; the
effect of affidavit filed by the then Finance Minister after remand
H of the sanction matter by the High Court to the effect that though
UNION OF INDIA v. ASHOK KUMAR AGGARWAL 657
[DR. B.S. CHAUHAN, J.]
the competent authority had accorded sanction, the entire A
relevant matter had not been placed before him; the directions
passed by the High Court against the officers of the CBI in the
cases of Shri Vijay Aggarwal and Shri S.R. Saini; and the
duration of pendency of criminal trial against the respondent
and, particularly, taking note of the stage/status of the criminal B
proceedings, in view of the fact that the respondent is on bail
since 2000 and since the investigation is completed, whether
there is any possibility of tampering with the evidence.
Before we proceed further, we would like to clarify that the c
Tribunal did not direct the competent authority not to renew the
order of suspension or to decide the case in a particular way.
Rather simple directions were issued to take the aforesaid
factors into consideration before the order is passed.
19. Subsequent thereto, the SRC considered the case and D
the competent authority passed the order of continuation of
suspension order on 12.1.2012. The said order made it clear
that it would not be feasible for the competent authority to pass
a reasoned and speaking order as required in terms of the
Office Memorandum dated 7.1.2004 for the reason that CBI E
reports had not been received.
20. After receiving of the report of the CBI, a fresh order
was passed on 3.2.2012 wherein substantial part is verbatim
to that of the earlier order dated 12.1.2012 and reiterating the F
report of the CBI, the authority abruptly came to the conclusion
that suspension of the respondent would continue.
21. Both these orders were challenged by the respondent
before the Tribunal by filing OA No. 495 of 2012 and in view of G
the fact that the directions given earlier on 16.12.201 thad not
been complied with, in letter and spirit, the Tribunal allowed the
OA by a detailed judgment running into 72 pages. Though the
Tribunal took note of the fact that the charges against the
respon.®nt were grave, it held that continuance of the H
658 · SUPREME COURT REPORTS [2013] 12 S.C.R
A respondent's suspension was not tenable. Hence, the said
orders were quashed and set aside with the direction to the
appellants to revoke his suspension and to reinstate him in
service with all consequential benefits. However, liberty was
given to the appellants that if at any point of time and in future,
B the criminal trial proceedings commenced, the appellants could
consider the possibility of keeping the officer under suspension
at that point of time if the facts and circumstances so warranted.
22. The order dated 16.12.2011 was not challenged by the
C appellants and thus, attained finality. Therefore, the question
does arise as to whether it was permissible for the appellants
to pass any fresh order of suspension till the commencement
of the trial before the criminal court?
23. Instead of ensuring the compliance of the aforesaid
D judgment and o.rder of the .Tribunal dated 16.12.2011, the
matter was reconsidered bY. SRC, which took note of the fact
that the orders dated 12.·1.2012 and 3.2.2012 had been
quashed and set aside, and further that cr'minal trial had been
stayed by this Court, which recommended that suspension of
E the respondent be revoked and he may be posted to a non-
sensitive post. However, this recommendation was subject to
the approval of the Hon'ble Finance Minister. The record
reveals that the said recommendation of the SRC was
considered by several higher authorities and ultimately, the
F competent authority passed an order that the suspension order
would continue till further review after six months or the outcome
of the appeal to be preferred by the department, whichever was
earlier.
G 24. It is astonishing that in spite of quashing of the
suspension order and direction issued by the Tribunal to re-
instate the respondent, his suspension was directed to be
continued, though for a period of six months, subject to review
and further subject to the outcome of the challenge of the
H Tribunal's order before the High Court. The High Court affirmed
UNION OF INDIA v. ASHOK KUMAR AGGARWAL 659
[DR. B.S. CHAUHAN, J.]
the judgment and order of the Tribunal dismissing the case of A
the appellants vide impugned judgment and order dated
17.9.2012. Even then the authorities did not consider it proper
to revoke the suspension order.
25. Placing reliance upon the earlier judgments in Mu/raj 8
v. Murti Raghunathji Mahaaraj, AIR 1967 SC 1386, Surjit
Singh & Ors. etc. etc. v. Harbans Singh & Ors. etc. etc., AIR
1996 SC 135; Delhi Development Authority v. Skipper
Construction Company (P) Ltd. & Anr., AIR 1996 SC 2005;
and Gurunath Manohar Pavaskar & Ors. v. Nagesh Siddappa c
Navalgund & Ors., AIR 2008 SC 901, this Court in Manohar
Lal (D) by LRs. v. Ugrasen (D) by LRs. & Ors., AIR 2010 SC
2210 held that any order passed by any authority in spite of the
knowledge of order of the court, is of no consequence as it
remains a nullity and any subsequent action thereof would also 0
be a nullity.
26. In Union of India & Ors. v. Dipak Mali, AIR 2010 SC
336, this court dealt with the provisions of Rules 1965 and the
power of renewal and extension of the suspension order. The
court held that if the initial or subsequent period of extension E
has expired, the suspension order comes to an end because
of the expiry of the period provided under rule 10(6) of the Rules
1965. Subsequent review or extension thereof is not
permissible for the reason that earlier order had become invalid
after expiry of the original period of 90 days or extended period F
of 180 days.
27. In State of UP. v. Neeraj Chaubey, (2010) 10 SCC
320 and State of Orissa &Anr. v. Mamata Mohanty, (2011) 3
SCC 436, this Court held that in case an order is bad in its G
inception, it cannot be sanctified at a subsequent stage. In
Mamta Mohtanty, it was held:
"37. It is a settled legal proposition that if an order is bad
in its inception, it does not get sanctified at a later stage. H
660 SUPREME COURT REPORTS [2013] 12 S.C.R.
A A subsequent action/development cannot validate an
action which was not lawful at its inception, for the reason
that the illegality strikes at the root of the order. It would
be beyond the competence of any authority to validate
such an order. It would be ironic to permit a person to rely
B upon a law, in violation of which he has obtained the
benefits. If an order at the initial stage is bad in law,
then all further proceedings consequent thereto will
be non est and have to be necessarily set aside. A
right in law exists only and only when it has a lawful
c origin. (Vide Upen Chandra Gogoi v. State of Assam,AIR
1998 SC 1289, Mangal Prasad Tamoli v. Narvadeshwar
Mishra, AIR 2005 SC 1964; and Ritesh Tewari v. State
of U.P.,AIR 2010 SC 3823)
(Emphasis added)
D
28. In view of the above, the aforesaid order dated
31.7.2012 in our humble opinion is nothing but a nullity being
in contravention of the final order of the Tribunal which had
attained finality. More so, the issue could not have been re-
E agitated by virtue of the application of the doctrine of res
judicata.
29. This Court in Satyadhyan Ghosal & Ors. v. Smt.
Oeorajin Debi & Anr., AIR 1960 SC 941 explained the scope
F of principle of res-judicata observing as under:
"7. The principle of res judicata is based on the need of
giving a finality to judicial decisions. What it says is that
once a res is judicata, it shall not be adjudged again.
Primarily it applies as between past litigation and future
G litigation, When a matter - whether on a question of fact
or a question of law - has been decided between two
parties in one suit or proceeding and the decision is final,
either because no appeal was taken to a higher court or
because the appeal was dismissed. or no appeal lies,
H neither party will be allowed in a future suit or proceeding
UNION OF INDIA v. ASHOK KUMAR AGGARWAL 661
[DR. B.S. CHAUHAN, J.]
between the same parties to canvass the matter again. A
This principle of res judicata is embodied in relation to
suits in S. 11 of the Code of Civil Procedure; but even
where S. 11 does not apply, the principle of res judicata
has been applied by courts for the purpose of achieving
finality in litigation. The result of this is that the original B
court as well as any higher court must in any future
litigation proceed on the basis that the previous decision
was correct."
Similar view has been re-iterated in Daryao & Ors. v. State C
of U.P. & Ors., AIR 1961 SC 1457; Greater Cochin
Development Authority v. Leelamma Va/son & Ors., AIR 2002
SC 952; and Bhanu Kumar Jain v. Archana Kumar &" Anr.,
AIR 2005 SC 626.
30. In Hope Plantations Ltd. v. Taluk Land Board, D
Peermade & Anr., (1999) 5 SCC 590, this Court has explained
the scope of finality of the judgment of this Court observing as
under:
·one important consideration of public policy is that the E
decision pronounced by courts of competent jurisdiction
should be final, unless they are modified or reversed by
the appellate authority and other principle that no one
should be made to face the same kind of litigation twice
ever because such a procedure should be contrary to F
consideration of fair play and justice. Rule of res judicata
prevents the parties to a judicial determination from
litigating the same question over again even though the
determination may even be demonstratedly wrong. When
the proceedings have attained finality, parties are bound G
by the judgment and are estopped from questioning it."
31. In view of above, we are of the considered opinion that
it was not permissible for the appellants to consider the renewal
of the suspension order or to pass a fresh order without
challenging the order of the Tribunal dated 1.6.2012 and such H
662 SUPREME COURT REPORTS [2013) 12 S.C.R.
A an attitude tantamounts to contempt of court and arbitrariness
as it is not permissible for the executive to scrutinize the order
of the court.
32. In Dr. Amarjit Singh Ahluwalia v. The State of Punjab
8
& Ors., AIR 1975 SC 984, this Court placing reliance upon the
judgment in Vitaral/i v. Seaton, 359 US 536, considered the
scope of Articles 14 and 16 observing that the scope of those
Articles is wide and pervasive as those Articles embodied the
principle of rationality and they are intended to strike against
C arbitrary and discriminatory action taken by the State.
33. In Union of India v. K.M. Shankarappa, (2001) 1 SCC
582, this Court deprecated the practice of interfering by the
executives without challenging the court order before the
superior forum, observed as under:
D
"The executive has to obey judicial orders. Thus, Section
6(1) is a travesty of the rule of law which is one of the basic
structures of the Constitution. The legislature may, in
certain cases, overrule or nullify a judicial or executive
E decision by enacting an appropriate legislation. However,
without enacting an appropriate legislation, the executive
or the legislature cannot set at naught a judicial order.
The executive cannot sit in an appeal or review or
revise a judicial order. The Appellate Tribunal
F consisting of experts decides matters quasi-judicially.
A Secretary and/or Minister cannot sit in appeal or
revision over those decisions. At the highest, the
Government may apply to the Tribunal itself for a review,
if circumstances so warrant. But the Government would
be bound by the ultimate decision of the Tribunal."
G
(Emphasis added)
34. The aforesaid facts make it crystal clear that it is a clear
cut case of legal malice. The aspect of the legal malice was
H considered by this Court in Kalabharati Advertisinq v. Hemant
UNION OF INDIA v. ASHOK KUMAR AGGARWAL 663
[DR. B.S. CHAUHAN, J.]
Vimalnath Narichania & Ors., AIR 2010 SC 3745, observing: A
"25. The State is under obligation to act fairly without ill
will or malice- in fact or in law. "Legal malice" or "malice
in law" means something done without lawful excuse. It
is an act done wrongfully and wilfully without reasonable B
or probable cause, and not necessarily an act done from
ill feeling and spite. It is a deliberate act in disregard to
the rights of others. Where malice is attributed to the
State, it can never be a case of personal ill will or spite
on the part of the State. It is an act which is taken with an
oblique or indirect object. It means exercise of statutory C
power for "purposes foreign to those for which it is in law
intended". It means conscious violation of the law to the
prejudice of another, a depraved inclination on the part
of the authority to disregard the rights of others, which
intent is manifested by its injurious acts. D
26. Passing an order for an unauthorised purpose
constitutes malice in law."
35. The record of the case reveals that this Court has E
granted interim order dated 8.10.2012 staying the operation
of the judgment and order dated 1.6.2012 but that would not
absolve the appellants from passing an illegal, unwarranted
and uncalled for order of renewal of suspension on 31.7.2012
and if that order was void, we are very much doubtful about the F
sanctity/validity of the orders passed on 21.1.2013 and
17.7.2013. It further creates doubt whether the appellants, who
had acted such unreasonably or illegally, are entitled for any
relief before this Court. The Tribunal and the High Court were
right that the appellants had not followed the directions of the G
Tribunal issued on 16.12.2011 and the mandate of
Department's O.M. dated 7.1.2004. There is no gainsaid in
saying that the terms of the said O.M. were required to be
observed.
36. It is a settled legal proposition that jurisdiction under H
664 SUPREME COURT REPORTS [2013] 12 S.C.R.
A Article 136 of the Constitution is basically one of conscience.
The jurisdiction is plenary and residuary. Therefore, even if the
matter has been admitted, there is no requirement of law that
court must decide it on each and every issue. The court can
revoke the leave as such jurisdiction is required to be exercised
B only in suitable cases and very sparingly. The law is to be
tempered with equity and the court can pass any equitable order
considering the facts of a case. In such a situation, conduct of
a party is the most relevant factor and in a given case, the court
may even refuse to exercise its discretion under Article 136 of
C the Constitution for the reason that it is not necessary to
exercise such jurisdiction just because it is lawful to do so.
(Vide: Pritam Singh v. The State, AIR 1950 SC 169;
Taherakhatoon (0) by Lrs. v. Salambin Mohammad, AIR 1999
SC 1104; and Karam Kapahi & Ors. v Mis. Lal Chand Public
D Charitable Trust & Anr., AIR 2010 SC 2077).
37. A Constitution Bench of this Court while dealing with
a similar issue in respect of executive instructions in Sant Ram
Sharma v. State of Rajasthan & Ors., AIR 1967 SC 1910, held:
E "It is true that the Government cannot amend or
supersede statutory Rules by administrative instruction,
but if the Rules are silent on any particular point, the
Government can fill-up the gap and supplement the rule
and issue instructions not inconsistent with the Rules
F already framed."
38. The law laid down above has consistently been
followed and it is a settled proposition of law that an authority
cannot issue orders/office memorandum/ executive instructions
G in contravention of the statutory Rules. However, instructions can
be issued only to supplement the statutory rules but not to
supplant it. Such instructions should be subservient to the
statutory provisions. (Vide: Union of India & Ors. v. Majji
Jangammayya & Ors., AIR 1977 SC 757; P.O. Aggarwal &
H Ors. v. State of U.P. & Ors., AIR 1987 SC 1676; Paluru
UNION OF INDIA v. ASHOK KUMAR AGGAO..WAL 665
[DR. S.S. CHAUHAN, J.]
Ramkrishnaiah & Ors. v. Union of/ndia &Anr., AIR 1990 SC A
166; C. Rangaswamaiah & Ors. v. Kamataka Lokayukta &
Ors., AIR 1998 SC 2"-96; and JAG of Airlines Pilots
Association of India & Ors. v. The Director General of Civil
Aviation & Ors., AIR 2011 SC 2220).
B
39. Similarly, a Constitution Bench of this Court, in Naga
People's Movement of Human Rights v. Union of India., AIR
1998 SC 431, held that the executive instructions have binding
force provided the same have been issued to fill up the gap
between the statutory provisions and are not inconsistent with c
the said provisions.
40. In Nagaraj Shivarao Karjagi v. Syndicate Bank, Head
Office, Manipal & Anr., AIR 1991 SC 1507, this Court has
explained the scope of circulars issued by the Ministry
observing that it is binding on the officers of the department D
particularly the recommendations made by CVC.
41 . In State of U. P. & Ors. v. Maharaja Dharmander
Prasad Singh & Ors., Al R 1989 SC 997, this Court held that
the order must be passed by the authority after due application E
of mind uninfluenced by and without surrendering to the dictates
of an extraneous body or an authority.
42. Considering the case in totality, we are of the view that
the appellants have acted in contravention of the final order F
passed by the Tribunal dated 1.6.2012 and therefore, there was
no occasion for the appellants for passing the order dated
31.7.2012 or any subsequent order. The orders passed by the
appellants had been in contravention of not only of the order of
the court but also to the office memorandum and statutory rules. G
In view thereof, we do not find any force in this appeal. The
appeal lacks merit and is accordingly dismissed. There will he
no order as to costs.
R.P. Appeal dismissc ·
[2013] 12 S.C.R. 666
A CHIRONJILAL SHARMA HUF
v.
UNION OF !NOIA AND ORS.
(Civil Appeal No. 10601 of 2013)
NOVEMBER 26, 2013
B
[R.M. LODHA, MADAN B. LOKUR AND
KURIAN JOSEPH, JJ.]
Income Tax Act, 1961 - s.1328(4)(b) - Payment of
C interest on delayed assessment- Search conducted in house
of appellant - Cash amount of Rs. 2,35,0001- recovered -
Order passed u/s.132(5) on 31.5.1990 - Assessing Officer
(A.O.) calculated tax liability and cash seized in search from
appellant's house appropriated - Order of A. 0. set-aside by
D Tribunal - Revenue accepted the order of Tribunal -
Appellant got refund of Rs.2,35,0001- alongwith interest from
4.3.1994 (date of last of the regular assessments by A.O.)
until the date of refund - Claim of appellant-assessee for
interest u/s.1328(4)(b) for the period from expiry of period of
E six months from the date of order under s. 132(5) to the date
of regular assessment order - Held: Order u/s. 132(5) having
been passed on 31.5.1990, six months expired on 30.11.1990
and the last of the regular assessments was done on
4.3.1994, hence, appellant entitled to claim simple interest u/
F s.1328(4)(b) from 1.12.1990 to 4.3.1994 at the rate of 15%
per annum.
In the search conducted in the house of the appellant
on 31.1.1990, a cash amount of Rs. 2,35,0001- was
recovered. On 31.5.1990, an order under Section 132(5)
G of the Income Tax Act, 1961 came to be passed. The
Assessing Officer calculated the tax liability and the cash
seized in the search from the appellant's house was
appropriated. However, the order of the Assessing Officer
was finally set-aside by the Income Tax Appellate Tribunal.
H 666
CHIRONJILAL SHARMA HUF v. UNION OF INDIA 667
The revenue accepted the order of the Tribunal. A
Consequently, the appellant was refunded the amount of
Rs. 2,35,000/- along with interest from 4.3.1994 (date of
last of the regular assessments by the Assessing Officer)
until the date of refund.
B
In the instant appeal, the appellant (assessee)
claimed entitlement to interest under Section 1328(4)(b)
of the Act which was holding the field at the relevant time
for the period from expiry of period of six months from
the date of order under Section 132(5) to the date of C
regular assessment order. The order under Section
132(5) of the Act having been passed on 31.5.1990, six
months expired on 30.11.1990 and the last of the regular
assessments was done on 4.3.1994, the assessee
claimed interest under Section 1328(4)(b) of the Act from
1.12.1990 to 4.3.1994. D
Allowing the appeal, the Court
HELD: 1. A close look at the provisions of Section
1328(4)(a) and (b) of the Income Tax Act, 1961 clearly E
shows that where the aggregate of the amounts retained
under Section 132 of the Act exceeds the amounts
requited to meet the liability under Section 1328(1 )(i), the
department is liable to pay simple interest at the rate of
fifteen percent on expiry of six months from the date of F
the order under Section 132(5) of the Act to the date of
the regular assessment or re-assessment or the last of
such assessments or reassessments, as the case may
be. In the instant case, it is true that in the regular
assessment done by the Assessing Officer, the tax
liability for the relevant period was found to be higher G
and, accordingly, the seized cash under Section 132 of
the Act was appropriated against the assessee's tax
liability but the fact of the matter is that the order of the
Assessing Officer was over-turned by the Tribunal. finally,
on 20.2.2004. As a matter of fact, the inte~~$t for the post· H
668 SUPREME COURT REPORTS [2013] 12 S.C.R.
A assessment period i.e. from 4.3.1994 until refund on the
excess amount has already been paid by the department
to the assessee. The department denied the payment of
interest to the assessee under Section 132B(4)(b) on the
ground that the refund of excess amount is governed by
B Section 240 of the Act and Section 132B(4)(b) of the Act
has no application. But, Section 132B(4)(b) deals with pre-
assessment period and there is no conflict between this
provision and Section 240 or for that matter 244(A). The
former deals with pre-assessment period in the matters
C of search and seizure and the later deals with post
assessment period as per the order in appeal. The view
of the department is not right on the plain reading of
Section 132B(4)(b) of the Act. The appellant is entitled to
the simple interest at the rate of fifteen percent per annum
under Section 132B(4)(b) of the Act from 1.12.1990 to
D 4.3.1994. The revenue shall calculate the interest payable
to the assessee as above and pay the same to the
appellant (assessee) within two months. [Paras 5, 7, 8 &
9] [672-B-H; 673-A-B]
E CIVIL APPELLATE JURISDICTION : Civil Appeal No.
10601 of2013.
From the Judgment and Order dated 16.08.2011 of the
High Court of Madhya Pradesh at Jabalpur, Bench at Gwalior
F in W.P. No. 5531 of 2005.
Gaurav Agrawal for the Appellant.
RP. Bhatt, Arijit Prsad, Shalini Kumar, Anil Katiyar for the
Respondents.
G
The Judgment of the Court was delivered by
R.M. LODHA,J. 1. Leave granted.
2. The brief facts necessary for consideration of the issue
H
CHIRONJILAL SHARMA HUF v. UNION OF INDIA 669
raised in the appeal are these: In the search conducted in the A
house of the appellant on 31.1.1990, a cash amount of Rs.
2,35,000/- was recovered. On 31.5.1990, an order under
Section 132(5) of the Income Tax Act, 1961 (for short "the Act")
came to be passed. The Assessing Officer calculated the tax
liability and the cash seized in the search from the appellant's B
house was appropriated. However, the order of the Assessing
Officer was finally set-aside by the Income Tax Appellate
Tribunal (for short "the Tribunal") on 20.2.2004. The revenue
accepted the order of the Tribunal. Consequently, the appellant
has been refunded the amount of Rs. 2,35,000/- along with c
interest from 4.3.1994 (date of last of the regular assessments
by the Assessing Officer) until the date of refund.
3. The appellant (assessee) claims that he is entitled to
interest under Section 1328(4)(b) of the Act which was holding
0
the field at the relevant time for the period from expiry of period
of six month's from the date of order under Section 132(5) to
the date of regular assessment order. In other words, the order
under Section 132(5) of the Act having been passed on
31.5.1990, six months expired on 30.11.1990 and the last of E
the regular assessments was done on 4.3.1994, the assessee
claims interest under Section 132B(4)(b) of the Act from
1.12.1990 to 4.3.1994.
4. Section 132 of the Act deals with search and seizure.
Sub-section (5) thereof, which is relevant for the purposes of F
the present appeal, reads as under:
(5): Where any money, bullion, jewellery or other valuable
article or thing (hereafter in this section and in sections
132A and 1328 referred to as the assets) is seized under G
sub-section (1) or sub-section (1A), as a result of a search
initiated or requisition made before the 1st day of July,
1995, the Income-tax Officer, after affording a reasonable
opportunity to the person concerned of being heard and
H
670 SUPREME COURT REPORTS [2013] 12 S.C.R.
A making such enquiry as may be prescribed, shall, within
one hundred and twenty days of the seizure, make an
order, with the previous approval of the Joint
Commissioner)-
(i) estimating the undisclosed income (including the
B
income from the undisclosed property) in a
summary manner to the best of his judgment on the
basis of such materials as are available with him;
(ii) calculating the amount of tax on the income so
c estimated in accordance with the provisions of the
Income Income-Tax Act, 1922 (11 of 1922), or this
Act;
(iia) determining the amount of interest payable and
D the amount of penalty imposable in accordance with
the provisions of the Indian Income-Tax Act, 1922
(11 of 1922), or this Act, as if the order had been
the order of regular assessment;
E (iii) specifying the amount that will be required to
satisfy any existing liability under this Act and any
one or more of the Acts specified in clause (a) of
sub-section (1) of section 230A in respect of which
such person is in default or is deemed to be in
F default,
and retain in his custody such assets/or part thereof as are
in his opinion sufficient to satisfy the aggregate of the
amounts referred to in clauses (ii), (iia) and (iii) and
forthwith release the remaining portion, if any, of the assets
G
to the person from whose custody they were seized:
Provided that if, after taking into account the materials
available with him, the Income Tax Officer is of the view
that it is not possible to ascertain to which particular
H
CHIRONJILAL SHARMA HUF v. UNION OF INDIA 671
[R.M. LODHA, J.]
previous year or years such income or any part thereof A
relates, he may calculate the tax on such income or part,
as the case may be, as if such income or part were the
total amount chargeable to tax at the rates in force in the
financial year in which the assets were seized and may
also determine the interest or penalty, if any, payable or B
imposable accordingly:
Provided further that where a person has paid or made
satisfactory arrangements for payment of all the amounts
referred to in clauses (ii), (iia) and (iii) or any part thereof, C
the Income-Tax Officer may, with the previous approval of
the Chief Commissioner or Commissioner, release the
assets or such part thereof as he may deem fit in the
circumstances of the case."
5. Section 1328 deals with the payment of interest on D
delayed assessment. Omitting the unnecessary part, the
relevant provisions of Section 1328(4)(a) and(b) of the Act read
as under:
1328: Application of retained assets ....... . E
(4)(a) The Central Government shall pay simple interest at
the rate of fifteen per cent per annum on the amount by
which the aggregate of money retained under Section 132
and of the proceeds, if any, of the assets sold towards the
discharge of the existing liability referred to in clause 3 of F
sub-section (5) of that section exceeds the aggregate of
the amounts required to meet the liability referred to in
clause (i) of sub-section (1) of this section.
(b) Such interest shall run from the date immediately G
following the expiry of the period of six months from the
date of the order under sub-section 5 of section 132 to the
date of the regular assessment or reassessment referred
to in clause (i) of sub-section (1) or, as the case may be,
H
672 SUPREME COURT REPORTS [2013] 12 S.C.R.
A to the date of last of such assessments or re-
assessments. 3
5. A close look at the above provisions and, particularly,
clause (b) of Section 1328(4) of the Act clearly shows that
B where the aggregate of the amounts retained under Section
132 of the Act exceeds the amounts required to meet the
liability under Section 132B(1)(i), the department is liable to pay
simple interest at the rate of fifteen percent on expiry of six
months from the date of the order under Section 132(5) of the
c Act to the date of the regular assessment or re-assessment or
the last of such assessments or reassessments, as the case
may be. It is true that in the regular assessment done by the
Assessing Officer, the tax liability for the relevant period was
found to be higher and, accordingly, the seized cash under
o Section 132 of the Act was appropriated against the
assessee's tax liability but the fact of the matter is that the order
of the Assessing Officer was over-turned by the Tribunal finally
on 20.2.2004. As a matter of fact, the interest for the post
assessment period i.e. from 4.3.1994 until refund on the
E excess amount has already been paid by the department to the
assessee. The department denied the payment of interest to
the assessee under Section 132B(4)(b), according to Mr. Arijit
Prasad, learned counsel for the revenue on the ground that the
refund of excess amount is governed by Section 240 of the Act
F and Section 132B(4)(b) of the Act has no application. But, in
our view, Section 132B(4)(b) deals with pre-assessment period
and there is no conflict between this provision and Section 240
or for that matter 244(A). The former deals with pre-assessment
period in the matters of search and seizure and the later deals
G with post assessment period as per the order in appeal.
7. The view of the department is not right on the plain
reading of Section 132B(4)(b) of the Act as indicated above.
8. We, accordingly, allow the appeal and set-aside the
H impugned order and hold that the appellant is entitled to the
CHIRONJILAL SHARMA HUF v. UNION OF INDIA 673
[R.M. LODHA, J.]
simple interest at the rate of fifteen percent per annum under A
Section 132B(4)(b) of the Act from 1.12.1990 to 4.3.1994.
9. The revenue shall calculate the interest payable to the
assessee as above and pay the same to the appellant
(assessee) within two months from today. No costs. B
B.B.B. Appeal allowed.
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