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Judgment
P. Venkatarama Reddi, J
The petitioner who served the State Government as Commercial Tax Officer and retired on 31-3-1995 on attaining the age of superannuation has filed this writ petition seeking judicial review of the order of A.P. Administrative Tribunal passed in OA No.4262 of 1997.
Before the Tribunal, the petitioner challenged the proceedings of the Commissioner of Commercial Taxes (respondent No.2) dated 20-3-1995 whereby the Commissioner framed charges and called upon the petitioner to submit his explanation and also the revised charge memo dated 21-11-1995. The petitioner sought for a further relief to release all the pensionary benefits with effect from the date of his retirement. Incidentally, the power of the Commissioner to appoint a Second Enquiry Officer on receipt of the first enquiry report substantially absolving the petitioner was put in issue before the Tribunal. The Tribunal while upholding the validity of the second enquiry and thereby declining to interfere with the continuance of the disciplinary proceedings, directed the enquiry to be completed within a period of three months and give liberty to take further action under the provisions of the ''Pension Code'' in the light of the enquiry report.
Earlier, the Tribunal quashed the charge memo and the consequential disciplinary proceedings and directed the respondents to release the pensionary benefits within three months. The State Government questioned the said order in WP No.2426 of 1998 mainly on the ground that it had no adequate opportunity to file counter and to contest the matter. The said writ petition was allowed and the matter was remitted back to the Tribunal for fresh disposal. That is how the said OA was decided by the Tribunal afresh by the impugned order.
As already noted, the petitioner retired from service on 31-3-1995. He received the charge memo cum show-cause notice four days prior to the retirement. The disciplinary proceedings have been continued even after retirement under the provisions of Andhra Pradesh Revised Pension Rules, 1980. Rule 9 of the said Rules provides that the departmental proceedings if instituted while the Government Servant was in service can be continued and concluded by the authority by which they were commenced in the same manner as if the Government servant had continued in service. The proviso to sub-rule (2) of Rule 9 lays down that where the disciplinary proceedings were instituted by an authority subordinate to the State Government, that authority shall submit a report recording its findings to the State Government. Sub-rule (1) of Rule 9 enables the State Government to withhold or withdrew pension or part thereof, whether permanently or for a specified period, and of ordering recovery of pecuniary loss, if any, caused to the Government if in the departmental or judicial proceedings the pensioner is found guilty of grave misconduct or negligence during the period of his service. As the disciplinary action was initiated by the date of retirement with the framing of the charge against the petitioner, the disciplinary proceedings were continued notwithstanding the retirement of the petitioner in view of sub-rules (1), (2) and (6) of Rule 9 of the A.P. Revised Pension Rules.
It may be noted that the Second Enquiry Officer appointed by the Commissioner submitted his enquiry report on 10-2-1999 i.e., subsequent to the disposal of the O.A. by the Tribunal and the Commissioner in turn forwarded the report to the Government to take appropriate action under the Revised Pension Rules.
The question is whether the Government should be restrained from taking further action against the petitioner under Rule 9 of the Pension Rules. The answer to this mainly depends on the question whether the Second Enquiry Officer could have been validly appointed by the Commissioner on 14-2-1997 and the enquiry report prepared as a sequel thereto could be legitimately acted upon for the purpose of taking action under Rule 9 of the Pension Rules.
At the outset, we may point out that the Tribunal has not given relevant and valid reasons in support of its conclusion. The only reason given while upholding the validity of disciplinary enquiry are as follows :
"A reading of this Rule (sub-rule 21(a) of Rule 20) makes it crystal clear that the Commissioner of Commercial Taxes can impose a minor penalty and in case the authority feels that a major penalty has to be imposed, then the matter has to be referred to the Government. Further Rule 20(22) empowers to appoint another Enquiry Officer. Apart from that, the applicant has submitted himself to the jurisdiction of the Commissioner in the first enquiry, and, therefore, he is estopped from raising that plea when the Second Enquiry Officer is appointed."
The reasoning reflected in the first sentence is not germane to the issue. Rule 21 (a) of A.P. Civil Services (Classification, Control and Appeal) Rules, adverted to by the Tribunal has obviously no application here as the question of imposing minor penalty or major penalty after retirement does not arise. The only action to be taken is under Rule 9 of the Pension Rules, as the Tribunal itself has observed in a subsequent sentence. The second part of the reasoning is based on Rule 20(22) of APCS (CCA) Rules. We have gone through Rule 20(22) of the said Rules. Absolutely, the Rule has no application. That Rule does not provide for ordering a second enquiry. It only provides as to how the unfinished enquiry should be proceeded with in case the Enquiry Officer is changed. The relevant Rule in regard to second enquiry is Rule 21 which we shall advert to later. Unfortunately, that escaped the notice of the Tribunal. The third reason given is equally untenable. If the petitioner had participated in the first enquiry, obviously, it does not mean that he is precluded from making a complaint when the Second Enquiry Officer was appointed after he was almost exonerated ofthe said charges by the first Enquiry Officer.
Before we deal with the crux of the matter in the light of the rule position, we would like to advert to the material facts in order to appreciate the legal position in the proper perspective.
The Commissioner of Commercial Taxes, on the basis of confidential reports received from the subordinates, framed the following charges against the petitioner by his proceedings dated 20-3-1995 and called upon him to submit the explanation and to show-cause as to why suitable further action should not be taken. The charges are :
Charge No.1 : He failed to verify the full details of the Registration Certificate issued to M/s. Padmavathi Commercial Corporation while issuing RC inspite of specific order of the then Deputy Commissioner (CT) on 31-8-1994 and did not watch their business as instructed.
Charge No.2 : He deliberately allowed the exemption on turnover Rs.70,06,813/-to M/s. Shiva Enterprises without verifying the details of name, address, RC No. and did not make cross-verification before furnishing the assessments for the year 1993-94 which was hurriedly finalised on 16-7-1994, 2-1/2 months after the close of the financial year 1993-94.
Charge No.3 : He deliberately allowed exemption on a turnover amounting to Rs.2,52,87,475/- to M/s. Shiva Enterprises without verifying the full details of name, address, RC No. and without making any cross checks of exemptions claimed and finalised the assessments hurriedly inspite of information given to him about the activities of M/s. Shiva Enterprises.
Charge No.4 : He deliberately allowed the exemption on. entire turnover shown in A2 returns in the range of Rs. 185-200 lakhs for the month of January, 1995 and as shown in A2 returns subsequently sent by him from M/s. Padmavathi Commercial Corporation.
On consideration of the explanation of the petitioner, the Commissioner felt it necessary to have an enquiry held into the charges. Therefore, by his proceedings dated 24-6-1995, he appointed an Enquiry Officer by name P.S.N. Murthy, Assistant Commissioner, (CT) (Intelligence), Charminar Division, to conduct a detailed enquiry into the charges. On 21-11-1995, a revised charge memo was issued. In the revised charge memo, five charges were framed. The previous charges were slightly recast and one more charge relating to Padmavathi Commercial Corporation was framed which was in elaboration of the charge already framed. It was mentioned in the revised charge memo that the supporting materials were the assessment files of the dealer. No witnesses were cited nor examined in the enquiry. The Enquiry Officer submitted his report on 28-2-1996. Charges 1, 2 relating to grant of exemption to Padmavalhi Commercial Corporation were held to be not established as the assessment was not finalised by the petitioner and no exemption was allowed. With regard to charge No.3-non-verification of registration details (corresponding to charge No. 1 extracted above), without much of discussion, the Enquiry Officer observed that it was more a case of administrative lapse. As regards charge No.4 i.e., grant of exemption for the year 1993-94 to Shiva Enterprises, the Enquiry Officer commented that the charged officer in his anxiety to complete the assessment quota, might have completed the assessment without cross-check of particulars. However, subsequently i.e., on 9-3-1995, he addressed the DC (CT), Nizamabad for cross-checking the purchase details. This very fact indicated that the assessment could have been revised as and when new facts came to light. He concluded that there was no loss of revenue to the Government and the charge was not proved. As regards the year 1994-95, the Enquiry Officer observed that the assessment for that year was not completed by the time the charged officer retired. However, he observed that the charged officer was expected to get monthly returns filed by the assessee verified from time to time. He therefore expressed the view that there was administrative lapse.
On receipt of the enquiry report dated 28-2-1996, the Commissioner directed a further enquiry and report. The EO was directed to make further enquiry and report on the following aspects :
(a) Whether or not exemption details in the assessment files contained the information about RC No. and address of the buying dealers;
(b) Whether the selling or buying dealers are really existing and the result of cross-verification;
(c) How many Way Bills were issued to the dealer and what is the revenue loss ? (this information is with reference to Padmavathi Commercial Corporation regarding which the petitioner was exonerated even by the Second Enquiry Officer).
Thereafter, the Enquiry Officer after obtaining certain information from the CTO, Begumpet submitted his further report dated 27-4-1996. In that report, certain facts regarding issuance of way bills to Padmavathi Commercial Corporation and Shiva Enterprises were mentioned. The Enquiry Officer then reported the dates on which the business was closed by the two dealers. He also mentioned that the report of CTO, Ranigunj was awaited as regards the buying dealers with which M/s. Padmavathi Commercial Corporation was concerned. Another report was submitted on 26-8-1996 stating that in the absence of verification report from DC (CT), Nizamabad in regard to the exemption allowed to Shiva Enterprises in the year 1993-94, the exact figure of loss of revenue could not be assessed. He further reported that the turnovers involved in the issue of way bills to two dealers "Will be verified with the CTO, Nizamabad."
It is evident from the record that after further report was called for by the Commissioner through his proceedings dated 26-3-1996, the Enquiry Officer did not fix any date for enquiry nor the charged officer was apprised of the same. He merely got some reports behind the back ofthe petitioner and submitted further reports, which in fact did not furnish a direct answer to question No.(a) formulated by the Commissioner. As regards the question Nos.(b) and (c) in the absence ofreports from the concerned officials, he could not furnish definite answers. The Enquiry Officer - Mr. P.S.N. Murthy retired on 31-8-1996 i.e., few days after he submitted the further report dated 26-8-1996.
On 14-2-1997, the Commissioner of Commercial Taxes having observed that Mr. P.S.N. Murthy retired before completing the enquiry, appointed Mr. N. Ashok Reddy who succeeded Mr. P.S.N. Murthy as AC (Intelligence) as Enquiry Officer. He was directed to conduct a detailed enquiry under Rule 20 and submit his report expeditiously. The order appointing 2nd Enquiry Officer did not place any limitations on the scope of his enquiry. In effect and in substance, a fresh enquiry was ordered. On 6-6-1997, the Enquiry Officer was supplied with copies of the first charge memo and the explanation of the charged officer on 6-6-1997. The 2nd Enquiry Officer then called for certain particulars relating to the dealers mentioned in the charge memo from the CTOs of Begumpet and Ranigunj in June, 1997. He issued a notice to the petitioner to appear before him on 27-6-1997 for enquiry. The petitioner protested stating that the enquiry was concluded and the report was already submitted. He made it clear that he was not appearing before him on 27-6-1997. The petitioner then filed OA No.4262 of 1997 and the OA was allowed on 31-7-1997. That order was questioned by the Government and the Commissioner by filing WP No.2426 of 1998. As already noted, the same was allowed on 21-9-1998 and the matter was remitted to the Tribunal for fresh consideration. This Court did not go into the merits. After remand, the impugned order of the Tribunal was passed on 13-11-1998 disposing ofthe OA with a direction to complete the enquiry within three months and to take necessary action under the Pension Rules depending on the result of the enquiry. The nomination of second Enquiry Officer was upheld by the Tribunal.
During the pendency of the present writ petition in which notice was ordered on 5-2-1999, the 2nd Enquiry Officer Mr. Ashok Reddy submitted his enquiry report on 10-2-1999 after getting confirmation from the Commissioner that he could proceed with the enquiry notwithstanding the pendency of the writ petition. It is important to note that after the Tribunal disposed of the OA directing the enquiry to go on, the Enquiry Officer did not issue any notice to the petitioner to appear before him as he did on the earlier occasion i.e., in June, 1997, before the OA was filed by the petitioner.
Regarding charge No.(1), the second EO observed that the enquiry conducted by the petitioner pursuant to the instructions of the Dy. Commissioner was superficial as he merely reported to the DC about the names of the proprietors. Thus, the first part of the charge was held to be proved. As regards the second part of the charge, though the EO did not record specific finding, the discussion shows that this part of the charge was not proved.
With regard to charge No.2, the EO commented that there was no discussion anywhere either in the file or in the assessment order as to the grounds on which the exemption was allowed. Further, the EO pointed out that in the absence of relevant details regarding the purchasing dealers such as Code numbers of the RCs and the Officer in whose rolls they are assessees, the claim for exemption was incapable of being verified. It was observed that it was the primary duty of the assessing officer to obtain these details and to make cross-verification before finalising the assessment for the year 1993-94. The EO also noted that on cross-verification of 14 transactions subsequently, the dealers were found to be fictitious. The EO concluded that it should be deemed that the exemption of the turnover of Rs.70 lakhs and odd was irregular. The EO did not record a finding that such irregular grant of exemption was deliberate.
With regard to charge No.3 the EO at the outset pointed out that the assessment was completed by the successor CTO long after the retirement of the petitioner and the exemption was disallowed. Thus, the charge as framed cannot be said to have been proved. However, the EO pointed out that although the exemption statements accompanying the returns were not containing the requisite particulars such as full addresses, Registration code numbers, no attempt was made by the petitioner to obtain the relevant details and to make provisional assessments disallowing the exemptions. But, it is to be noted that there was no charge to that effect.
The 4th charge regarding the irregular grant of exemption to the extent of Rs.185 lakhs to Padmavathi Commercial Corporation, was held to be not proved.
After submission of the enquiry report, the Commissioner directed the EO to report on the aspect of loss or revenue. The EO reported that in the absence of full details as regards the genuineness of purchasing dealers, it was not possible to give definite information in this regard. However, he mentioned that 14 dealers were found to be not genuine as per the report of the DC, Nizamabad.
On 25-2-1999, the Commissioner of Commercial Taxes forwarded the enquiry report to the Government without any comments. The Commissioner observed that all the charges were held to be proved except the charge No.4 (relating to Padmavathi Commercial Corporation). The Government was requested to take appropriate action under A.P. Revised Pension Rules.
In this factual background, the question is whether the Government can take further action under Rule 9 of the A.P. Revised Pension Rules. The incidental question is whether the Tribunal was right in upholding the appointment of 2nd Enquiry Officer and allowing the enquiry to be continued. As already observed, the reasons given by the Tribunal are irrelevant and untenable. Nevertheless, we shall address ourselves to the question whether the ultimate conclusion reached by the Tribunal can be sustained. We have to consider the legal position in the light of the relevant Rules and the factual matrix. The crucial rule is Rule 21. Sub-rules (1) and (2) of Rule 21 which are relevant for our purpose read as follows :
"Action on the inquiry report:--(1) The disciplinary authority, if it is not itself the inquiring authority may, for reasons to be recorded by it in writing, remit the case to the inquiring authority for further inquiry and report and the inquiring authority shall thereupon proceed to hold the further inquiry according to the provisions of Rule 20 as far as may be.
(2) The disciplinary authority shall, if it disagrees with the findings of the inquiring authority on any article of charge, record its reasons for such disagreement and record its own findings on such charge, if the evidence on record is sufficient for the purpose."
The course of action adopted by the Commissioner in directing further enquiry by his order dated 26-3-1996 is traceable to sub-rule (1) of Rule 21. The Commissioner recorded the reasons and remitted the case to the Enquiry Officer indicating the points for further enquiry. The further reports submitted by the first Enquiry Officer were not categorical on the points on which the Commissioner wanted clarifications because he could not get the required data. The EO then retired. The Commissioner instead of choosing the obvious course open to him to disagree with the findings of the Enquiry Officer and to record his own findings and to afford an opportunity to the charged officer to rebut the said findings reached by him, had chosen to direct another enquiry to be held in accordance with Rule 20. Thus, a fresh enquiry was directed thereby setting the clock back to the peril of the petitioner who retired two years earlier. The Commissioner except stating that the EO (who already held the enquiry and submitted more than one report) retired before completing enquiry, did not mention any reasons for directing a fresh enquiry as per Rule 20. The observation that the EO retired before completing the enquiry is a wrong statement of fact. The narration given by us supra make it clear that enquiry was in fact completed by him to the best of his ability, and the reports submitted. The Commissioner did not say anything about the first enquiry report and the further reports sent by the EO and the need for holding a fresh or further enquiry. Assuming that the enquiry report/reports of retired EO was/were incomplete and did not answer the points formulated by the Commissioner, the Commissioner should have directed the successor EO to hold further enquiry on those points only. There was absolutely no justification to direct de novo enquiry merely because the EO retired. There is no reason why further enquiry on the same lines should not have been directed even if the 1st report was incomplete. That is one aspect of the matter. Secondly, if the Commissioner viewed the 1st enquiry report as incomplete inasmuch as certain points were not answered by the 1st EO, equally the second enquiry report ought to be treated as incomplete. The 2nd EO could not confirm that the dealers with whom the assessees concerned had dealings were also fictitious, in the absence of verification reports from Nizamabad and other places. Then, why not it be treated as incomplete enquiry? Why should it not stand on the same footing as 1st Enquiry Officer''s reports? The truth and substance of the matter is that the statement in the proceedings dated 14-2-1997 that the enquiry was not completed, was a casual and cryptic observation made without factual basis. Thus, the only reason given for directing a fresh enquiry is irrelevant and contrary to facts.
The need for recording reasons for directing a further enquiry in terms of sub-rule (1) of Rule 2i is a pre-rcquisite for setting in motion a further enquiry. This requirement has obvious purpose behind it. The disciplinary authority if he is not satisfied with the enquiry conducted or the report submitted, has to come out with his views as to why he cannot act upon the enquiry report already submitted and thereby chart out the path of further enquiry. If that is the pre-requisite for directing further enquiry under Rule 21(1), a fortiori, the recording of reasons is essential if he wants to order a cie novo enquiry in supersession of the previous enquiry. If reasons are to be given for directing further enquiry, logically and by necessary implication reasons should be spelt out for ordering a fresh enquiry. Otherwise, the charged employee and the EO will be groping in darkness as to the purpose and right direction of such enquiry. In the present case, such reasons are wanting. The only reason given, as already observed, is factually incorrect or at any rate, does not make out a case for fresh enquiry.
Apart from lack of valid reasons, we are also of the view that the well-recognised requisites for ordering a de novo enquiry are not fulfilled in the instant case, in this context, certain questions arise: Whether the disciplinary authority has power to direct fresh enquiry in certain situations in contradislinction to ''further enquiry'' irrespective of the existence of the specific rule in that behalf? Whether such power to order fresh enquiry be regarded as incidental or necessary adjunct to the powers and functions of the disciplinary authority? There are two decisions of the Supreme Court which throw light on this aspect. The first one is the Constitution Bench decision in K.R. Deb Vs. The Collector of Central Excise, Shillong, . The second one is the recent decision in Union of India and Others Vs. P. Thayagarajan, . In the latter case, Rajendra Babu, J., speaking tor the Supreme Court summarised the principle laid down in Deb ''$ case (supra) in the following words:
"A careful reading of this passage will make it clear that if in a particular case where there has been no proper enquiry because of some serious defect having crept into the enquiry or some important witnesses were not available at the time of the enquiry or were not examined, the disciplinary authority may ask the enquiry officer to record further evidence but that provision would not enable the disciplinary authority to set aside the previous enquiries 011 the ground that the report of the enquiry officer does not appeal to the disciplinary authority."
Adverting to the facts of that particular case which arose out of disciplinary action initiated under Central Reserve Police Force Rules, it was observed :
"In the present case, the basis upon which the disciplinary authority set aside the enquiry is that the procedure adopted by the enquiry officer was contrary to the relevant Rules and affects the rights of the parties and not that the report does not appeal to him. When important evidence, either to be relied upon by the Department or by the delinquent official, is shut out, this would not result in any advancement of any justice but on the other hand, result in a miscarriage thereof. Therefore, we are of the view that Rule 27(c) enables the disciplinary authority to record his findings on the report and to pass an appropriate order including ordering a de novo enquiry in a case of the present nature."
In that case, the Enquiry Officer acted on the letters of certain persons who were appearing as witnesses. The disciplinary authority was of the view that the witnesses should have been examined in person and the procedure adopted by the EO in taking the letters as their statements, was improper. Therefore, the findings of the EO were set aside and de novo enquiry was ordered. Rule 27(c)(6) enables the Commandant after receiving the enquiry report to record his findings and pass orders where he has power to do so. From the above two decisions, two propositions can be taken to be well-settled. One is, a fresh enquiry is not altogether barred even if there is no specific rule to that effect. Another proposition is that the enquiry report cannot be discarded merely because it does not appeal to the disciplinary authority on merits or in other words, that it does not accord with his views. A material defect in the procedure adopted which may amount to denial of reasonable opportunity and some important evidence not being available at the time of holding the enquiry, can be the grounds for ordering a fresh enquiry subject ofcourse to all just exceptions.
The case on hand does not fall within the permissible limits of ordering a fresh enquiry. None of the situations adverted to above is present in the instant case. Fresh enquiry was ordered obviously because the disciplinary authority (Commissioner) was not satisfied with the first enquiry report and even the further reports. It is not a case where the enquiry already concluded was faulted at any time on the ground of defect in procedure or for not taking on record the evidence of any material witness or documentary evidence or for shutting out any evidence which goes to the root of the matter. In fact, no witnesses were cited and no documents other than the assessment files were relied on in the charge-sheet. Even in the second enquiry, no witnesses were examined and no fresh evidence was taken on record. On the basis of the material discernible from the assessment files which constituted the only evidence before the EO, the disciplinary authority could have reached his own findings and expressed his disagreement with the EO with reference to any or all of the charges. What was commented upon by the 2nd EO with reference to charge No.2 which is the main charge that was held proved could have as well been commented upon by the disciplinary authority and he could have drawn his own inferences on the conduct of the petitioner and then submitted his report to the Government for the purpose of taking further action. In other words, the power under sub-rule (2) of Rule 21 could have been exercised. But, the Commissioner, without proceeding on those lines, went on a wrong track by ordering fresh enquiry. Thus, ordering enquiry by appointing a 2nd EO is not only unwarranted, but has become a purposeless exercise. We are therefore of the view that what the Supreme Court laid down in Thyagarajan ''s case (supra) does not come to the rescue of the respondents. The Commissioner functioning as disciplinary authority out-stepped his limits and acted contrary to the mandatory requirements of law. The enquiry report submitted pursuant to the illegal direction given by the disciplinary authority shall be treated as non est in the eye of law and cannot be acted upon by the respondents.
There is yet another reason why the second enquiry report cannot legally form the basis for taking disciplinary action under the Pension Rules. The EO did not issue any notice to the petitioner fixing the date for enquiry or to present his statement of defence orally or in writing and to file his written brief as required by sub-rules (16) and (19) of Rule 20, after the enquiry was resumed subsequent to the disposal of OA by the Tribunal. As already stated, the only notice issued to the petitioner was the notice requiring him to appear on 27-6-1997 for enquiry. The petitioner protested stating that the enquiry was already concluded. Thereafter, the enquiry did not proceed obviously because the petitioner and the Department took recourse to the legal remedies and the matters were pending before the Tribunal and the High Court. After the Tribunal disposed of the present OA on 30-11-1998 and gave clearance for proceeding with the enquiry, the EO did not give any opportunity to the petitioner to appear before him to adduce evidence and to state his case. Even if the oral enquiry was found unnecessary, atleast an opportunity for making his submissions orally or in writing should have been given. The petitioner could have been, questioned with reference to incriminating material appearing from the assessment record or the reports obtained by him in the course of enquiry. Thus, there was no enquiry in accordance with the procedure laid down in Rule 20. The second enquiry report was in flagrant violation of principles of natural justice. The petitioner was denied reasonable opportunity to defend himself. No doubt, this point has not been specifically raised by the petitioner. However, on perusal of the records, we noticed this aspect and gave an opportunity to the learned Government Pleader to meet this point.
For the aforesaid reasons, we set aside the order of the Tribunal in OA No.4262 of 1997 and restrain the State Government from taking further action against the petitioner under Rule 9 of A.P. Revised Pension Rules on the basis ofthe enquiry report forwarded by the 2nd respondent to the Government. We direct that the pensionary/terminal benefits to which the petitioner is eligible shall be sanctioned and released within a period ofthree months from the date of receipt of this order. The writ petition is accordingly allowed. In the circumstances of the case, we make no order as to costs.