S. Sarath, Tax Recovery Officer V. Union of India and Principal Chief Commissioner of Income Tax, Kerala and Principal Chief Commissioner of Income Tax, Inquiry Authority

OP (CAT)/21/2022

AI Insights

The case involves S. Sarath, a Tax Recovery Officer, who challenged an interim order of the Central Administrative Tribunal (CAT) that allowed a disciplinary enquiry to proceed but restricted the passing of final orders until the Tribunal's decision. The petitioner argued that the disciplinary proceedings, which are based on charges similar to those in ongoing criminal proceedings against him, could prejudice his defense in the criminal case. The High Court considered precedents where simultaneous disciplinary and criminal proceedings were addressed and noted the importance of not compromising the petitioner's rights in the criminal trial.

• Counselvise Citation: [2022] 140 COUNSELVISE.COM (IT) 701739 (HC-KERALA)
• Appeal Type: Others
• Pronouncement Date: 18-03-2022
• Assessment Year: misc
• Other Referred Cases: Capt. M Paul Antony vs. Bharat Gold Mines Ltd, State Bank of India and Others vs. Neelam Nag and another, T.Takano vs. Securities and Exchange Board of India and Another
• Laws Referred To: Articles 226 and 227 of the Constitution of India
• Result in Favour of: Partly Allowed
• Court: HIGH COURT
• Department Lawyers: S MANU
• Assessee Lawyers: B G HARINDRANATH
• Keywords: Criminal Proceedings; Disciplinary Enquiry; Interim Stay; Vital documents; Pre-trial steps
• Section: 14011/46/2018-V

Judgement Text

"IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR. JUSTICE ALEXANDER THOMAS & THE HONOURABLE MR.JUSTICE VIJU ABRAHAM FRIDAY, THE 18TH DAY OF MARCH 2022 / 27TH PHALGUNA, 1943 OP (CAT) NO. 21 OF 2022 AGAINST THE ORDER IN OA 13/2022 OF CENTRAL ADMINISTRATIVE TRIBUNAL, DATED 16.03.2022, ERNAKULAM BENCH PETITIONER/APPLICANT: S.SARATH, AGED 50 YEARS, S/O.SASIDHARAN PILLAI, TAX RECOVERY OFFICER, O/O. THE PRINCIPAL COMMISSIONER OF INCOME TAX-1, C.R.BUILDING, I.S PRESS ROAD, COCHIN-18 & CHARGED OFFICER, PRESENTLY RESIDING AT HOUSE NO.307,PTP NAGAR, THIRUVANANTHAPURAM- 695 038 BY ADV B.G.HARINDRANATH RESPONDENTS/RESPONDENTS: 1 UNION OF INDIA REPRESENTED BY SECRETARY TO GOVERNMENT,MINISTRY OF FINANCE, DEPARTMENT OF REVENUE, CENTRAL BOARD OF DIRECT TAXES, NEW DELHI-110 001 2 THE PRINCIPAL CHIEF COMMISSIONER OF INCOME TAX, KERALA, 1ST FLOOR, CENTRAL REVENUE BUILDING, I.S PRESS ROAD, KOCHI-682 018 3 THE PRINCIPAL CHIEF COMMISSIONER OF INCOME TAX, INQUIRY AUTHORITY, FIRST FLOOR, CENTRAL REVENUE BUILDING, I.S PRESS ROAD, KOCHI-682 018 SRI.S.MANU, ASGI THIS OP (CAT) HAVING COME UP FOR ADMISSION ON 18.03.2022, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: OP (CAT) NO. 21 OF 2022 -2- ALEXANDER THOMAS & VIJU ABRAHAM, JJ. ========================= O.P.(C.A.T.) No. 21 of 2022 (Arising out of impugned order dated 16.03.2022 in M.A.No.207/2022 in O.A. No.13 of 2022, of the CAT, Ekm) ========================= Dated this the 1 8 th day of March , 202 2 JUDGMENT ALEXANDER THOMAS, J The interim order rendered on 16.03.2022 in M.A.No.207/2022 filed in O.A.No.13/2022, is under challenge in this O.P, filed under Articles 226 and 227 of the Constitution of India. The petitioner in the O.P is the sole applicant in the M.A./O.A before the Tribunal, and the respondents herein are the respondents in the M.A and O.A. before the Tribunal. 2. Heard Sri.B.G.Harindranath, learned counsel appering for the petitioner in the O.A/applicant in the O.P and Sri. S.Manu, learned ASGI appearing for the respondents in the O.P./respondents in M.A and O.A. 3. The prayers in the instant Ext.P2 O.A No.13/2022, filed before the CAT, Ernakulam Bench, are as follows: “i. To call for the records pursuant to Annexure A1 Memorandum No.F.No.C-14011/46/2018-V dated 30.10.2018 and set aside the same. OP (CAT) NO. 21 OF 2022 -3- ii. Such other reliefs that the Hon’ble Tribunal feed deem fit in the circumstances of the case. iii. Award cost of the Application.” 4. The interim prayer in the above said O.A. are as follows: “Stay all proceedings in furtherance of Annexure A-1 No.F.No.C-14011/46/2018-V dated 30.10.2018.” 5. The Tribunal after hearing both sides, rendered the impugned Ext.P1 interim order dated 16.03.2022, in M.A.No.207/2022 in O.A.No.13/2022, which reads as follows: “Both sides present. We have heard on the question of interim relief. Counsel for the respondents submits that the stay cannot be granted since it is premature at this stage to come to a finding regarding the prejudice caused to the applicant. Counsel for the applicant submits that the witnesses and documents are same and it may cause prejudice to the applicant. In view of the above facts and considering the balance of convenience, we hereby direct the Disciplinary Authority not to pass any order on the Disciplinary Proceedings till an order is passed by this Tribunal. However, the Disciplinary Authority can continue with the enquiry. Reply statement has not been filed. Hence M.A.No.208/2022 for early hearing is closed. M.A.No.207/2022 to accept additional documents is allowed. Post the matter for completion of pleadings to 07.06.2022.” OP (CAT) NO. 21 OF 2022 -4- 6. The petitioner herein, for convenience, is referred to as original applicant/applicant. The applicant is essentially aggrieved by the impugned Ext.P1 interim order to the extent the Tribunal had refused to grant interim stay of the disciplinary enquiry proceedings initiated against him in pursuance with memo of charges dated 30.10.2018, issued by the 1st respondent. Though the Tribunal has refused to grant interim stay of the disciplinary enquiry proceedings, but has also ordered that the disciplinary authorities shall not pass any orders in the disciplinary proceedings till the final order is passed by the Tribunal in the present O.A, and that the disciplinary authorities can continue the enquiry in the meanwhile. 7. The main contention raised by the learned counsel for the petitioner herein is that, certain vital documents have not been made available to the petitioner till day and further that, on the same set of charges as in the impugned Annexure A1 memo of charges dated 30.10.2018 issued by the departmental authorities, criminal proceedings is also pending at the instance of the investigation by the Central Bureau of Investigation, whereby, after taking cognizance based on the final report/charge sheet filed by the CBI investigating agency, the Special OP (CAT) NO. 21 OF 2022 -5- Court has framed the charges and the case is pending for completion of pre-trial steps. Further that, the criminal trial has not started yet and the undue hurry shown by the respondents to complete the disciplinary enquiry well ahead of the commencement of the criminal trial proceedings and that the petitioner herein is also an accused in the said criminal proceedings, will be constrained to disclose the defense in the matter, which will be known to the prosecution agency and which will thus detrimentally affect his right of defense in the criminal proceedings now pending before the criminal court. Hence it is argued that, going by the well settled legal principles in regard, the disciplinary enquiry could be deferred for the time being and can be recommenced, after evidence in the criminal trial is over so that the petitioner who is also an accused will not be prejudiced in the criminal proceedings and at the same time, the rights and interest of both sides will be adequately protected. In that regard, petitioner would place reliance on various decisions of the Apex Court, which has laid down legal principles when dealt with cases of simultaneous conduct of criminal proceedings as well as disciplinary proceedings on the similar set of charges. In Capt. M Paul Antony vs. Bharat Gold Mines Ltd [1993 (3) SCC 679], the Apex Court after OP (CAT) NO. 21 OF 2022 -6- analyzing various pleas on the subject, has laid down the following broad principles, which reads as follows: “(i) Departmental proceedings and proceedings in a criminal case can proceed simultaneously as there is no bar in their being conducted simultaneously, though separately. (ii) If the departmental proceedings and the criminal case are based on identical and similar set of facts and the charge in the criminal case against the delinquent employee is of a grave nature which involves complicated questions of law and fact, it would be desirable to stay the departmental proceedings till the conclusion of the criminal case. (iii) Whether the nature of a charge in a criminal case is grave and whether complicated questions of fact and law are involved in that case, will depend upon the nature of offence, the nature of the case launched against the employee on the basis of evidence and material collected against him during investigation or as reflected in the charge sheet. (iv) The factors mentioned at (ii) and (iii) above cannot be considered in isolation to stay the Departmental proceedings but due regard has to be given to the fact that the departmental proceedings cannot be unduly delayed. (v) If the criminal case does not proceed or its disposal is being unduly delayed, the departmental proceedings, even if they were stayed on account of the pendency of the criminal case, can be resumed and proceeded with so as to conclude them at an early date, so that if the employee is found not guilty his honour may be vindicated and in case he is found guilty, administration may get rid of him at the earliest.” 8. The learned counsel for the petitioner has also placed reliance on OP (CAT) NO. 21 OF 2022 -7- various other decisions of the Apex Court including that rendered in the case in State Bank of India and Others vs. Neelam Nag and and another 2016 (9) SCC 491, in which paragraph No.27 reads as follows: “Accordingly, we exercise discretion in favour of Respondent 1 of staying the ongoing disciplinary proceedings until the closure of recording of evidence of prosecution witnesses cited in the criminal trial, as directed by the Division Bench of the High Court and do not consider it fit to vacate that arrangement straightaway. Instead, in our opinion, interests of justice would be sufficiently served by directing the criminal case pending against Respondent 1 to be decided expeditiously but not later than one year from the date of this order. The trial court shall take effective steps to ensure that the witnesses are served, appear and are examined on day-to-day basis. In case any adjournment becomes inevitable, it should not be for more than a fortnight, when necessary.” 9. As pointed out above, it is also urged by the learned counsel for the petitioner that various vital and relevant documents which are relied on by the disciplinary authority in the enquiry proceedings has been withheld and not given to the petitioner. In that regard, the petitioner would place reliance on the judgment of the Apex Court in T.Takano vs. Securities and Exchange Board of India and Another 2022 SCC OnLine SC 210, in which paragraph No.62 reads a follows: “62. The conclusions are summarised below: OP (CAT) NO. 21 OF 2022 -8- (i) The appellant has a right to disclosure of the material relevant to the proceedings initiated against him. A deviation from the general rule of disclosure of relevant information was made in Natwar Singh (supra) based on the stage of the proceedings. It is sufficient to disclose the materials relied on if it is for the purpose of issuing a show cause notice for deciding whether to initiate an inquiry. However, all information that is relevant to the proceedings must be disclosed in adjudication proceedings; (ii) The Board under Regulation 10 considers the investigation report submitted by the Investigating Authority under Regulation 9, and if it is satisfied with the allegations, it could issue punitive measures under Regulations 11 and 12. Therefore, the investigation report is not merely an internal document. In any event, the language of Regulation 10 makes it clear that the Board forms an opinion regarding the violation of Regulations after considering the investigation report prepared under Regulation 9; (iii) The disclosure of material serves a three-fold purpose of decreasing the error in the verdict, protecting the fairness of the proceedings, and enhancing the transparency of the investigatory bodies and judicial institutions; (iv) A focus on the institutional impact of suppression of material prioritises the process as opposed to the outcome. The direction of the Constitution Bench of this Court in Karunakar (supra) that the non-disclosure of relevant information would render the order of punishment void only if the aggrieved person is able to prove that prejudice has been caused to him due to non- disclosure is founded both on the outcome and the process; (v) The right to disclosure is not absolute. The disclosure of information may affect other third-party interests and the stability and orderly functioning of the securities market. The respondent should prima facie establish that the disclosure of the report would affect OP (CAT) NO. 21 OF 2022 -9- third-party rights and the stability and orderly functioning of the securities market. The onus then shifts to the appellant to prove that the information is necessary to defend his case appropriately; and (vi) Where some portions of the enquiry report involve information on third-parties or confidential information on the securities market, the respondent cannot for that reason assert a privilege against disclosing any part of the report. The respondents can withhold disclosure of those sections of the report which deal with third-party personal information and strategic information bearing upon the stable and orderly functioning of the securities market.” 10. The prayers in the O.A. is strongly opposed by the learned Asst. SGI appearing for the respondents. After hearing both sides, we note that though a copy of the final report/charge sheet filed by the investigating agency in the criminal proceedings in question have been produced in the O.A. as Annexure A5, the charges framed by the Special CBI Court pursuant to the said final report, has not been produced as annexure or document either in the O.A or in the O.P. We say so because it is brought to our notice by the petitioner that, on the basis of Annexure A6, which is the copy of the proceedings before the criminal court as on 22.02.2022, the criminal case concerned (C.C. No.4/2018) on the file of the court of the Special Judge (CBI), Thiruvananthapuram constituted under the provisions of the Prevention of Corruption Act, would show that the case is OP (CAT) NO. 21 OF 2022 -10- posted for pre-trial steps and thereby it implies that, pursuant to the final report/charge sheet filed by the CBI investigating agency, the criminal court has not only taken cognizance of the offences concerned, but has also framed the charges, and so the case is pending trial. Without going through the charges framed by the criminal court and comparing with the allegations in Annexure A1 memo of charges, we will not be in a position to assess as to whether the allegations in both the criminal proceedings and the departmental proceedings are on the same set of charges or substantially similar charges. Hence, the Tribunal cannot be blamed for not being in a position to apprise those aspects and without such appraisal and appreciation, it would not be proper for this Court to venture into the area of enquiry by applying the well settled legal principles in the matter, to the factual aspects of the case. However, the Tribunal has guarded the rights and interest of the petitioner by making it clear that the disciplinary authorities shall not pass final orders in the disciplinary proceedings, but the disciplinary enquiry may go on in the meanwhile. Petitioner may produce copy of the charges framed by the criminal court without any further delay, before the Tribunal. The Tribunal will apprise the factual scenario and may examine as to whether the allegations in the criminal OP (CAT) NO. 21 OF 2022 -11- proceedings as well as in the departmental proceedings are on the same set of allegations or substantially similar set of allegations and as to how much prejudice would be caused to the applicant by permitting the disciplinary proceedings to be finalized, before the commencement or even finalization of criminal trial. However, we make it clear that, merely because the disciplinary enquiry may go on in the meanwhile, that by itself will not in any manner disentitle the Tribunal to independently adjudicate on the merits of the contentions of the petitioner, as to whether the commencement of the disciplinary proceedings at this stage, would seriously prejudice him and as to the applicability of the dictum laid down by the Apex Court and various High Courts on matters of this nature. In other words, if the enquiry authorities proceed with the disciplinary enquiry now, then they may do so, but that by itself will not entitle them to content later before the Tribunal that the disciplinary enquiry has already been conducted and therefore, the matter has become “fait accompli”. Therefore, it is for the disciplinary authority to apply their mind to the facts of this case and take a conscious and fair decision as to what would eminently lie within their own interests. All what we would say now is that the disciplinary authority may contemplate seriously as to what is on their OP (CAT) NO. 21 OF 2022 -12- own best interest and as to whether it is appropriate to defer the enquiry proceedings now till the final verdict in the matter is rendered by the Tribunal. We say so because we are sure that the respondents herein who are top functionaries of Union Government as well as the Income Tax Department, will contemplate and apply their mind and take an appropriate call on the said aspects and if so required by them, after obtaining any legal advise in the matter. These are all matters now at the interlocutory stage which would also fall eminently within the province of the respondents to contemplate and decide as to what lies best in their own interest, taking note of the fact that the Tribunal will be rendering the final verdict in the matter within a very short time. 11. The petitioner may submit any additional pleadings in the matter including copy of the charges framed by the criminal court and any other documents and may also make necessary submissions in any addition pleadings as to the nature of the allegations raised in the criminal proceedings as well as in the disciplinary proceedings and as to how exactly he is prejudiced in the matter and also as to the applicability of the well settled legal principles of the Apex Court in the facts and circumstances of the case. The respondents may also file their response OP (CAT) NO. 21 OF 2022 -13- pleadings thereto without any further delay. From the pleadings in the impugned Ext.P2 order it is seen that the Tribunal has already fixed the final hearing of the matter on 07.06.2022. The respondents shall not be permitted to make any request for adjournment. If the respondents make any attempt to unduly prolong the matter, then the Tribunal may seriously consider the grant of appropriate interim relief at that stage. The Tribunal will make all endeavors to ensure early consideration and final disposal of the main matter in the O.A No.207/2022, without any further delay, and if there are no impediments, the Tribunal to the extent possible, may ensure that the final hearing is conducted on 07.06.2022 itself and the final verdict in the matter be rendered immediately thereafter. 12. As regards the supply of vital documents, the learned counsel for the petitioner had alerted us on the previous occasion by taking our attention to the contents of Annexure A7(1), more particularly, paragraph No.3 thereon, given on page No.157 of the paper book, which reads as follows: “The CO (Charged Officer) submitted that, with reference to the list of documents by which the articles of charges are framed, certain documents provided are only photocopies of certified documents. The PO (Presenting Officer) is directed to provide the copies of OP (CAT) NO. 21 OF 2022 -14- entire set of documents originally certified, to the CO on or before 14.03.2022.” 13. The above said directions appears to have been given by the enquiry officer to the Presenting Officer on 09.03.2022. Hence, when this matter came up for consideration before us on the previous day on 17.03.2022, we had issued an order that the competent authority to the respondents will furnish instructions as to whether the directions issued in the above said paragraph No.3 of Annexure A7(1), whereby, the PO has been directed to give the requisite certified copies of the documents to the delinquent on or before 14.03.2022, has been complied with, and if not, to ensure that the said directions are complied with immediately. Learned Asst. SGI appearing for the respondents would point out that, now the authorized Central Government Counsel at Thiruvananthapuram, where the CBI Special Court is situated, has been instructed to apply for and secure certified copies of the requisite documents from the said criminal court, and after obtaining the certified copies, the same would be immediately made available to the petitioner herein. The said undertaking made on behalf of the enquiry officer and the PO is hereby recorded. Consequentially, it is also directed that both the Presenting Officer and the OP (CAT) NO. 21 OF 2022 -15- Enquiry Officer shall meticulously comply with the said undertaking to ensure that the requisite certified copies are secured without any further delay and the same is made available to the petitioner and its receipt may also be obtained in that regard. 14. The learned counsel for the petitioner has also invited our attention to the contents of Annexure A7(5) letter dated 21.02.2022, issued by the 3rd respondent enquiry officer addressed to the petitioner, wherein, he was given time to submit his statement or defense on or before 15.02.2022. It is pointed out that, since the petitioner was not provided with certified documents which are withheld by the other side, he was not in a position to furnish the statement of defense within the time limit. The petitioner has reiterated that the withholding of the documents by the respondents to him, has disabled him to furnish the statement of defense as can be seen from Annexure A7 (6) letter dated 11.02.2022, sent by him to the 3rd respondent enquiry officer in reply to Annexue A7(7) letter dated 22.01.2022, issued to the petitioner by the 3rd respondent enquiry officer. We need not get into those areas except to say that the enquiry officer may consider granting reasonable time to the petitioner to furnish his statement of defense after securing necessary documents. These are all OP (CAT) NO. 21 OF 2022 -16- matters essentially within the domain of the disciplinary authority and the enquiry officer and they may also bear in mind that it may be better in their own long term interest that such documents if relevant and relied on by them against the delinquent should be given to the delinquent and otherwise the delinquent can later raise contentions of denial of reasonable opportunity guaranteed to him in terms of Article 311(2) of the Constitution of India. We hope and trust that such issues would be resolved by the disciplinary authority and the enquiry authority so that the rights and interests of both sides are resolved satisfactorily. No other orders and directions are called for. With these observations and directions, the above O.P (CAT) would stand disposed of. Sd/- ALEXANDER THOMAS JUDGE Sd/- VIJU ABRAHAM JUDGE uu/21.03.2022 OP (CAT) NO. 21 OF 2022 -17- APPENDIX OF OP (CAT) 21/2022 PETITIONER EXHIBITS Exhibit P1 TRUE COPY OF THE ORDER IN MA NO.180/207/2022 IN OA NO.180/0013/2022 DATED 16.03.2022 Exhibit P2 TRUE COPY OF THE ORIGINAL APPLICATION NO.180/0013/2022 ALONG WITH ANNEXURES ANNEXURE-A1 A COPY OF THE MEMORANDUM NO.F.NO.14011/46/2018-V DATED 30.10.2018 ISSUED TO THE APPLICANT BY THE 1ST RESPONDENT, WITH COPY OF THE ARTICLES OF CHARGE FRAMED AGAINST THE APPLICANT AND COPY OF THE STATEMENT OF HT IMPUTATION OF MISCONDUCT OR MISBEHAVIOR IN SUPPORT OF THE ARTICLES OF CHARGE ANNEXURE-A2 A COPY OF THE REPRESENTATION SUBMITTED BY THE APPLICANT ON 02.03.2021 ANNEXURE-3 DAILY ORDER-SHEET OF THE INQUIRY OFFICER DATED 02.03.2021 ANNEXURE-4 A COPY OF THE CIRCULAR F NO.C-14010/3/2011- ADV DATED 24TH FEBRUARY 2011 Exhibit P3 TRUE COPY OF THE REPLY STATEMENT FILED BY THE RESPONDENTS Exhibit P4 TRUE COPY OF THE MISCELLANEOUS APPLICATION ALONG WITH ANNEXURES ANNEXURE-A5 THE TRUE COPY OF THE FINAL REPORT FILED BY THE POLICE IN FIR NO.RC 17(A0/2015/CBI/ACB/KOCHI DATED 14.10.2015 ANNEXURE-A6 A TRUE COPY OF THE PROCEEDINGS SHEET IN CC NO.4/2018 ON THE FILE OF COURT OF SPECIAL JUDGE FOR CBI CASES, THIRUVANANTHAPURAM ,DATED 22.02.2022 ANNEXURE-A7 A TRUE COPY OF THE ORDER DATED 9.3.2022 ANNEXURE-A8 A TRUE COPY OF THE LIST OF WITNESSES FURNISHED BY THE DISCIPLINARY AUTHORITY "