2023 (6) TMI 1398 - HC - Income Tax

Withdrawal of LTCG given to any employee of the Bank visiting foreign destinations -Violation of principles of natural justice as no notice or opportunity has been provided to a person before denying such facility - appellants stated that the LTC to the Bank Officers is governed by Rule 44(1) of the State Bank of India Officers Service Rules, 1992 contained in Chapter 17, Rules 17.4 and 17.18, permit visit to a foreign country by the officer as part of the LTC facility - Challenge to decisions of the third and the first respondent in its e-circular dated 15.04.2014 with respect to withdrawal of the LTC facility covering overseas travel, which was previously granted to the officers of the respondent Bank and members of the appellants. HELD THAT - As seen from the records that on 07.04.2014, Indian Bank's Association took a decision to withdraw the LTC facility covering overseas travel and the same was not preceded by any notice or discussion with the parties. It is also seen that the respondent Bank followed the decision of the Indian Bank's Association by its Circular dated 15.04.2014 and thereafter, instructions came into force with immediate effect. Thus, it is an admitted fact that before issuing such letter and circular, no notice was served on the appellants and no opportunity was provided on them. The learned Judge has observed that the principles of natural justice alone would not be a ground to quash the decisions of the authorities in all cases in a routine manner, wherever there is no notice or opportunity has been provided to a person. This Court is of the considered view that an opportunity would have been given to the appellants 1 and 2 Union representing the Officers, while withdrawing such facility, as the said facility was granted to the officers right from the year 1982 and further, its terms were revised in the year 2007 by way of negotiation, and it was enjoyed by the officers, till 2014. Therefore, the letter and circular impugned in the writ petition are naturally in violation of the principles of natural justice. The Hon'ble Supreme Court in Prakash Ratan Sinha v. State of Bihar 2009 (7) TMI 1234 - SUPREME COURT has held that when there were disputed facts, the respondents without affording an opportunity of hearing, could not have taken any administrative decision unilaterally and therefore, the Division Bench of High court was not justified in concluding that under the useless formality theory the rules of natural justice need not have been followed by the respondents . Having regard to the admitted fact that no opportunity was provided to the appellants before withdrawing the overseas facility granted to them, which is in violation of the principles of natural justice, this court is inclined to set aside the letter dated 07.04.2014 and the circular dated 15.04.2014 and remand the matter to the authorities to take a decision afresh, after issuing due notice and providing an opportunity of hearing to the appellants, in accordance with law.

Summary

Issues:
Challenge to withdrawal of LTC facility covering overseas travel; Violation of principles of natural justice; Statutory force of LTC facility on foreign travel.

Analysis:

1. Challenge to Withdrawal of LTC Facility Covering Overseas Travel:
The appellants, representing Bank Officers, challenged the withdrawal of LTC facility covering overseas travel by the respondent authorities. The appellants argued that the benefit of LTC on foreign travel was introduced based on bilateral negotiations and industry-level settlements, which had been implemented for nearly 30 years. They contended that the withdrawal of this benefit without notice or discussion adversely affected the officers. The court found that the withdrawal decision was not preceded by any notice or discussion with the parties, violating the principles of natural justice. Citing a Supreme Court case, the court emphasized the importance of affording an opportunity of hearing before taking administrative decisions unilaterally. Consequently, the court set aside the withdrawal decision and remanded the matter to the authorities for fresh consideration after providing an opportunity of hearing to the appellants.

2. Violation of Principles of Natural Justice:
The court observed that the withdrawal of the overseas facility without providing notice or opportunity to the appellants, who had been enjoying the benefit since 1982, was a violation of natural justice. It noted that the terms of the facility had been revised through negotiations in 2007 and had been in effect until 2014. Citing a legal precedent, the court held that in cases of disputed facts, administrative decisions cannot be taken unilaterally without affording an opportunity of hearing. Consequently, the court set aside the withdrawal decision and directed the authorities to reconsider the matter after due notice and hearing to the appellants.

3. Statutory Force of LTC Facility on Foreign Travel:
The court did not express an opinion on the statutory force of the LTC facility on foreign travel, as it primarily focused on the violation of natural justice in the withdrawal decision. The court's decision to set aside the withdrawal decision and remand the matter for fresh consideration was based on the lack of opportunity provided to the appellants before withdrawing the overseas facility. The court emphasized the importance of following principles of natural justice in administrative decisions, especially when long-standing benefits are being revoked unilaterally.

In conclusion, the court's judgment primarily revolved around the violation of natural justice in withdrawing the LTC facility covering overseas travel, leading to the decision to set aside the withdrawal decision and remand the matter for reconsideration with due notice and hearing to the appellants.