2012 (12) TMI 578 - SC - Indian Laws

Appointment of Mr. Pradip Kumar as Judicial Member of Customs Excise and Service Tax Appellate Tribunal CESTAT - he was a practising Advocate in the Calcutta High Court as well as before the CESTAT for over twenty years mainly dealing with the customs, excise and service tax matters. On 22nd April, 2006 he appeared for an interview before the Selection Committee for the post of Member Judicial in CESTAT. On being duly selected, he assumed charge as Member Judicial in the CESTAT on 22nd November, 2006. Service conditions of the Member of the CESTAT are governed by Customs, Excise and Service Tax Appellate Tribunal Members Recruitment and Conditions of Service Rules 1987 hereinafter referred to as the Rules . The controversy in the present proceedings is limited to the interpretation of Rule 8 and Rule 9 2 of the aforesaid Rules. Under the Rules, Member of the CESTAT is put on probation for a period of one year Rule 8(1) . The order of discharge, being based upon the report of the President, is clearly stigmatic and could not have been passed without giving an opportunity to the respondent to meet the allegations contained in the report of the President, CESTAT. Although, the High Court had allowed the writ petition of the respondent only on the ground that there had been a violation of Rule 9(2), we have come to a conclusion that the order of discharge was vitiated being colourable exercise of power, stigmatic and punitive in nature and such order cannot be sustained in law. In our opinion, the order of discharge is arbitrary and therefore violates Article 14 of the Constitution. The appellant - Pradip Kumar is entitled to be reinstated in service. He shall be entitled to full back wages during the period he has been compelled to remain out of service. Union of India is directed to release all consequential benefits to the said Pradip Kumar within a period of two months of the receipt of a certified copy of this order.

Summary

Issues Involved:
1. Interpretation of Rule 8 and Rule 9(2) of the Customs, Excise and Service Tax Appellate Tribunal Members [Recruitment and Conditions of Service] Rules, 1987.
2. Validity of the discharge order of the respondent from service.
3. Whether the discharge order was punitive and stigmatic in nature.
4. Compliance with the procedural requirements for termination under Rule 9(2).
5. Entitlement to reinstatement and consequential benefits.

Detailed Analysis:

1. Interpretation of Rule 8 and Rule 9(2):
The controversy centers on the interpretation of Rule 8 and Rule 9(2) of the Customs, Excise and Service Tax Appellate Tribunal Members [Recruitment and Conditions of Service] Rules, 1987. Rule 8 outlines the probation period for members, stating a one-year probation period extendable up to three years. Rule 9(2) stipulates that a Judicial Member appointed directly from the Bar can be terminated without assigning any reason after giving one month's notice if not confirmed after three years. The court clarified that Rule 9(2) applies only after the completion of the maximum probation period of three years, while Rule 8 governs the probation period within those three years.

2. Validity of the Discharge Order:
The respondent, a practicing advocate appointed as a Judicial Member in CESTAT, was discharged from service without an extension order for his probation period being issued timely. The respondent continued to serve beyond the initial probation period without any adverse reports. However, an incident involving a complaint from the Bar led to his discharge. The court found that the discharge order, issued without prior notice, was not in compliance with Rule 9(2) and was influenced by the complaint, making it punitive and stigmatic.

3. Punitive and Stigmatic Nature of the Discharge Order:
The court held that the discharge order was punitive and stigmatic, as it was based on a report by the President of CESTAT concerning the respondent's conduct during a court incident. The order was issued without giving the respondent an opportunity to respond to the allegations, violating principles of natural justice. The court emphasized that non-communication of performance deficiencies to a probationer renders any adverse action arbitrary, referencing the case of Sumati P. Shere vs. Union of India.

4. Procedural Requirements for Termination:
The court noted that the respondent was not given the required one month's notice under Rule 9(2). The discharge order was issued on 20th November 2009, immediately following an extension of the probation period, indicating a deliberate attempt to circumvent the notice requirement. This action was deemed a colorable exercise of power and a violation of Article 14 of the Constitution.

5. Entitlement to Reinstatement and Consequential Benefits:
Given the punitive and arbitrary nature of the discharge, the court concluded that the respondent is entitled to reinstatement with full back wages and consequential benefits. The Union of India was directed to release these benefits within two months of receiving the certified copy of the order.

Conclusion:
The appeal by the Union of India (Civil Appeal No. 9089 of 2012) was dismissed, and the appeal by the respondent (Civil Appeal No. 9082 of 2012) was allowed. The respondent was ordered to be reinstated with full back wages and consequential benefits, underscoring the importance of adherence to procedural fairness and natural justice in employment termination cases.