Damages personally payable by erring officers- can check ground level practices of harassment and corruption,… order as to cost and damages personally payable must be order of the day.

[CA DEV KUMAR KOTHARI]

Link and references:

M/s Overseas Enterprises Versus The Union of India through the Chief Commissioner of Customs (Preventive) , and other officers 2016 (1) TMI 726 - PATNA HIGH COURT

Court directs to pay damages to be recovered from erring officers:

In case of M/s Overseas Enterprises (supra.) the honourable Patna High Court has held that the Custom Department shall pay damages to petitioner and these will be recovered from erring officers, after making enquiry. Even during pendency of such enquiry, the damages is to be paid by department with interest, and in case there is delay in such payment rate of interest shall also increase.

Major  references and observations of the Court about accountability:

1. By now, the law is well settled that the public officers have to be also held accountable for their acts of omission and commission.
2. The concept of public accountability and performance of functions takes in its ambit, proper and timely action in accordance with law. Public duty and public obligation both are essentials of good administration whether by the State or its instrumentalities.
3. In the case of Centre for Public Interest Litigation & Anr. v. Union of India & Anr. [2005 (10) TMI 530 - Supreme Court Of India], this Court declared the dictum that State actions causing loss are actionable under public law. This is a result of innovation, a new tool with the courts which are the protectors of civil liberties of the citizens and would ensure protection against devastating results of State action.
4. The principles of public accountability and transparency in State action are applicable to cases of executive or statutory exercise of power, besides requiring that such actions also not lack bona fides.
5. All these principles enunciated by the Court over a passage of time clearly mandate that public officers are answerable for both their inaction and irresponsible actions. If what ought to have  been done is not done, responsibility should be fixed on the erring officers; then alone, the real public purpose of an answerable administration would be satisfied.
6.  By-now it is well settled that a noting in the file is not a concluded order as was held by the Apex Court in the case of Bachhittar Singh v. State of Punjab & anr., reported in 1962 (3) TMI 84 - SUPREME COURT OF INDIA.
7.   In the case of State of Bihar v. Subhash Singh [1997 (2) TMI 548 - SUPREME COURT], the  Court, in exercise of the powers of judicial review, stated that the doctrine of `full faith and credit' applies to the acts  done by the officers in the hierarchy of the State. They have to faithfully discharge their duties to elongate public purpose.
8.  The doctrine of `full faith and credit' applies to the acts done by the officers. There is a presumptive evidence of regularity in official acts, done or performed, and there should be faithful discharge of duties to elongate public purpose in accordance with the procedure prescribed.
9. Avoidance and delay in decision making process in Government hierarchy is a matter of growing concern. Sometimes delayed decisions can cause prejudice to the rights of the parties besides there being violation of the statutory rule.
10.  The Apex  Court had occasion to express its concern in different cases from time to time in relation to such matters. In the case of State of Andhra Pradesh v. Food Corporation of India [(2004) 13 SCC 53], the Supreme Court  Court observed that it is a known fact that in transactions of Government business, no one would own personal responsibility and decisions would be leisurely taken at various levels.
11.  Principles of public accountability are applicable to such officers/officials with all their rigour. Greater the power to decide, higher is the responsibility to be just and fair.
12.  The dimensions of administrative law permit judicial intervention in decisions, though of administrative nature, which are ex facie discriminatory.
13.   The adverse impact of lack of probity in discharge of public duties can result in varied defects, not only in the decision making process but in the final decision as well.
14. Every officer in the hierarchy of the State, by virtue of his being `public officer' or `public servant', is accountable for his decisions to the public as well as to the State. This concept of dual responsibility should be applied with its rigours in the larger public interest and for proper governance."

Summary: we can summarise in easy language that the authority / officers empowered to function under a statute while exercising power discharges public duty. It has to act to sub serve general welfare and common good. In a modem society no authority can arrogate to itself the power to act in a manner which is arbitrary. It is unfortunate that matters which require immediate attention linger on and the man in the street is made to run from one end to other with no result. Where the duty is performed capriciously or the exercise of power results in harassment and agony then the responsibility to pay the loss determined should be whose?

The court awarded costs in favour of petitioner with direction to recover from erring officers.

Case of Overseas Enterprises (supra)

In the case of  Overseas Enterprises  (supra.) honourable Patna High Court directed to erring Customs officials to pay costs / damages of ₹ 14 lakh + interest @ 9% p.a. from personal account & to face disciplinary action for “high-handedness”, arbitrariness” and seeking to “hoodwink” Court.

Who should bear: The court considered that the issue is not only of award of compensation but who should bear the brunt.

Concept of authority and power and accountability:

The Court observed that the concept of authority and power exercised by public functionaries has many dimensions. It has undergone tremendous change with passage of time and change in socioeconomic outlook.  The authority / officers empowered to function under a statute while exercising power discharges public duty. It has to act to subserve general welfare and common good. In discharging this duty honestly and bona fide, loss may accrue to any person. And he may claim compensation which may in circumstances be payable. But where the duty is performed capriciously or the exercise of power results in harassment and agony then the responsibility to pay the loss determined should be whose?

In a modem society no authority can arrogate to itself the power to act in a manner which is arbitrary. It is unfortunate that matters which require immediate attention linger on and the man in the street is made to run from one end to other with no result.

About work culture and impact on common man:

The culture of window clearance appears to be totally dead. Even in ordinary matters a common man who has neither the political backing nor the financial strength to match the inaction in public oriented departments gets frustrated and it erodes the credibility in the system. Public administration, no doubt involves a vast amount of administrative discretion which shields the action of administrative authority. But where it is found that exercise of discretion was mala fide and the complainant is entitled to compensation for mental and physical harassment then the officer can no more claim to be under protective cover. When a citizen seeks to recover compensation from a public authority in respect of injuries suffered by him for capricious exercise of power and the National Commission finds it duly proved then it has a statutory obligation to award the same. It was never more necessary than today when even social obligations are regulated by grant of statutory powers. The test of permissive form of grant is over. It is now imperative and implicit in the exercise of power that it should be for the sake of society. When the court directs payment of damages or compensation against the State the ultimate sufferer is the common man. It is the tax payers’ money which is paid for inaction of those who are entrusted under the Act to discharge their duties in accordance with law. It is, therefore, necessary that the Commission when it is satisfied that a complainant is entitled to compensation for harassment or mental agony or oppression, which finding of course should be recorded carefully on material and convincing circumstances and not lightly, then it should further direct the department concerned to pay the amount to the complainant from the public fund immediately but to recover the same from those who are found responsible for such unpardonable behaviour by dividing it proportionately where there are more than one functionaries

Loss suffered due to delay in release of seized goods:

PRAYER BEFORCOURT:

   "That the petitioners by way of the present writ petition are seeking a writ of mandamus and/or any other appropriate writ or direction to the Respondents to release the seized goods (split betel nuts) of the petitioners imported vide Bill of Entry No. 01210/16/2013 dated 28.01.2013 weighing 15.470 MT which have been illegally and unauthorizedly withheld by the Respondents despite the proceedings initiated against the petitioners in respect of the said goods for the charge of its illegal import has been dropped by the Adjudicating authority and there is a specific direction for release of the seized goods vide order dated 28.03.2013."

In this regard Court observed as follows:

    “ Thus, having an overall picture this court will have no difficulty in coming to the ultimate conclusion that the petitioners on account of abnormal delay of almost 1½ years caused in release of its seized betel nuts have been put to a perennial loss. Since the authorities themselves had valued and quantified the price of the seized articles, namely, split betel nuts weighing 15.470 M.T. to the tune of ₹ 14,69,650/- on 17.2.2013, the petitioners would become at least entitled to recover this amount from the officials of the Custom Department. “

By now, the law is well settled that the public officers have to be also held accountable for their acts of omission and commission.

Thus, when this Court has found that the petitioners have been put to a loss of at least ₹ 14,69,650/- on account of complete deterioration of quality of split betel nuts solely on account of deliberate laches on the part of the officials of the Custom Department it would direct respondent no.2 to pay a sum of ₹ 14,69,650/- along with interest at the rate of 9% per annum for the period 28.3.2013, the date on which the order of provisional release of the seized article was passed by the competent authority to the order directing release of the seized articles dated 9.8.2014 within a period of three months from today.

It is, however, made clear that such amount, which has to be paid by way of compensation for the loss caused to the petitioners on account of delay of nearly 1½ years in release of the seized articles, shall be recovered from the erring officials and for the purposes of fixing individual responsibility on such erring officials this Court would direct the Chairman of Central Board of Excise and Customs Department of Revenue, New Delhi to get an enquiry conducted by an Officer not below in the rank of Chief Commissioner of Customs who must not be posted and/or associated in any manner with Patna Zone of the Custom Department.
 

In the ultimate order, honourable Court held as follows ( with highlights added by author):

          85. With the aforementioned observations and directions, this writ application is allowed with a cost of ₹ 25,000/- quantified by this Court for coercing and compelling the petitioners to file this writ petition for release of their seized betel nuts to be paid by the Respondents to the petitioners within a period of three months from today.

86. It is, however, made clear that irrespective of initiation and conclusion of the aforesaid proceedings against the erring officials of Customs department of Patna zone by the Chairman of Central Board of Excise and Customs, the payment of the amount of ₹ 14,69,650/- alongwith interest at the rate of 9% per annum from 28.3.2013 to 9.8.2014 must be made to the petitioners within a period of three months from today, failing which the amount of interest on the amount of ₹ 14,69,650/- shall stand enhanced from 9% per annum to 18% per annum from 28.3.2013 till the date of its actual payment.

Such orders must be welcome if corruption is to reduce:

Corruption at ground level is due to non-accountability of officers for wrong actions, no action and delayed actions. Passing orders contrary to settled legal position is not un-common. Just on pretext of revenue may file appeal or review petition even with petition for condonation of delay, revenue officers blatant refuse to follow binding judgments, raise demand and forcibly collect such demands.

Tax assesses are afraid of further harassment, so they file appeal and pay against disputed dues. The reason for this is that stay petitions are dismissed by revenue officers arbitrarily and unjustly. Senior authorities are also not ready to hear grievance simply for the reason that tax collection target has to be met. In course of meeting unjust and unreasonable targets of tax collection, tax payers are harassed to pay advance tax, excess tax and against disputed tax demands. These are ground realities, Unless erring officers are made accountable, such actions will continue.

An example: In an assessment the AO makes disallowances/ additions on ten counts. In first appeal  disallowances / additions on eight counts are fully deleted and on two counts partially deleted. In second appeal balance of additions and disallowances are mostly deleted but just token amount are confirmed (about 5-10%).

The AO issues show cause notice for levy of penalty in respect of token additions / disallowances remaining confirmed after second appeal.

There is no action against the Tax officer for levy of penalty or disciplinary proceedings in respect fo major additions deleted by appellate authorities but the assessee can be burdened by levy of token additions/ disallowances confirmed.

If there be a disciplinary action, and adequate punishment for arbitrary actions of the officer, then only corruption at field level shall reduce. In absence of such punishment attitude of ‘who cares for order of Court ‘shall continue, as we have long experience in past.