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TMI Blog2009 (9) TMI 79X X X X Extracts X X X X X X X X Extracts X X X X ..... fore it. HELD THAT:- Reference may be made to the decision of the Apex Court in the case of Chhabildas Tribhuvandas Shah v. CIT [ 1964 (9) TMI 8 - SUPREME COURT] . Where there is denial of principles of natural justice in a given case it will give rise to a legal question, as pointed out by the Madhya Pradesh High Court in the case of CIT v. Abhyeshwar. Failure to give proper and effective hearing amounts to denial of opportunity of being herd and is likely to be construed as one being perverse and all such orders are liable to be disturbed. Only on this preliminary ground if the order could be disturbed, there can be no effective disposal of appeal. Therefore, this issue requires to be properly addressed and sorted out in accordance with well laid down principles of law and also the principles of natural justice. In our considered opinion, in the light of the principle laid down in the case of M.K. Mohammed Kunhi [ 1968 (9) TMI 5 - SUPREME COURT] . The Tribunal has inherent jurisdiction to go into the question, whether the parties who are appearing before it are properly entitled under the law to make appearance. For this purpose, they are entitled to go into provisions of Advocat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9. We are not for the moment holding anything about the legislative competence of the President to make the Rules in the manner it is done, but we have only interpreted the provisions that are made as part of conditions of service and from such conditions of service the ban on right to practice can only be made applicable to the employees who are presently serving the Union of India or in connection with the affairs of the State. In our view, having regard to the principle laid down in the decisions of Apex Court in Kailashnath [ 1988 (11) TMI 346 - SUPREME COURT] ; P. Mahandran [ 1989 (12) TMI 351 - SUPREME COURT] ; T.R. Kapur [ 1986 (12) TMI 366 - SUPREME COURT] , Kaishav Madhavan Menon[ 1951 (1) TMI 32 - SUPREME COURT] ; R.S. Ajara [ 1997 (3) TMI 614 - SUPREME COURT] ; P.D. Aggarwal [ 1987 (6) TMI 393 - SUPREME COURT] , Chairman, Central Board, which have been discussed elaborately, we are of the view that these provisions are applicable to those persons who retired from the service on or after the date of publication of this notification. Accordingly, in the light of the discussion, the reference is answered as under: 1. Whether, the said Notification applies to the Members who ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tunity of being heard. X X X X Extracts X X X X X X X X Extracts X X X X ..... ether, the said Notification applies to the Members who retire, if otherwise are qualified to practice under section 288 of the Income-tax Act, should still be debarred to appear and argue before the Tribunal? 5. Whether, the said Notification applies to the Members who resigned from services before the date of Notification, without any retirement benefits?" 3. In pursuance of the directions of the Special Bench, a notice was issued to the Ministry of Law & Justice. The case was fixed for hearing on3-8-2009. In pursuance of the notice given, several ex-Members of the ITAT, who are practicing in Delhi and outside Delhi, sent their applications, referring to their cases before ITAT and pleaded to act as interveners in this case. Having regard to the issue in question, the Bench permitted all such persons who have the cases before the Tribunal to act as interveners. The Departmental Representative was also present and on behalf of the Ministry, Sr. Central Government Counsel, Shri A.K. Bhardwaj, put in the appearance. 4. At the out set, a preliminary objection was taken by the Sr. Central Government Counsel that this Tribunal has no jurisdiction to go into rule 13E, which is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... discussed earlier, the objection of the Law Ministry remains to be adjudicated, which we take up now. 8. It was argued on behalf of the Ministry of Law & Justice that the ITAT is constituted only for the purpose of hearing and disposing of the appeals arising under the Income-tax Act. It cannot go into interpretation of the validity or correctness or otherwise of Rule 13E which is the part of the ITAT Members (Recruitment & Conditions of Service) Rules, 1963. The proper forum, according to him, is the Central Administrative Tribunal ('CAT') and, therefore, it was vehemently opposed the reference by arguing that this Tribunal has no jurisdiction to adjudicate upon the issues that are being raised before it. The service in the Government is a contract between the employee and the Government of India. The Tribunal Members are part of that class and if their conditions of service are amended to their detriment, it is fair and proper that they should be directed to go before the CAT and not argue their entitlement before the ITAT. 9. On the other hand, the learned counsel for the assessee as well as the interveners, appearing, vehemently argued that this Tribunal is the only ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... illusory under any circumstance. Mere issue of a notice of hearing of the appeal will not suffice in all circumstances. In fact the power to grant adjournment also arises from the provisions of section 254(1) of the Act. A wrong exercise of a discretion to adjourn itself can give rise to questions of law before the High Court and the decision rendered by the ITAT without giving an opportunity of being heard itself can be questioned. The powers of the ITAT under section 254 of the Act in dealing with the appeal are expressed in the widest possible terms and are similar to the power of an appellate court under the Civil Procedure Code. It was so held by the Bombay High Court in New India Life Assurance Co. Ltd. v. CIT [1957] 31 ITR 844. The Supreme Court in the case of Esthuri Aswathiah v. CIT [1967] 66 ITR 468 has held that function of the Appellate Tribunal in hearing an appeal is purely judicial. It is under a duty to decide all questions of fact and law raised in the appeal before it. But the Tribunal cannot make arbitrary decisions. It cannot found its judgment on conjectures, surmises or speculation. In the exercise of its powers, the Tribunal is vested with a large area of di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... TR MP 372. Failure to give proper and effective hearing amounts to denial of opportunity of being herd and is likely to be construed as one being perverse and all such orders are liable to be disturbed. Only on this preliminary ground if the order could be disturbed, there can be no effective disposal of appeal. Therefore, this issue requires to be properly addressed and sorted out in accordance with well laid down principles of law and also the principles of natural justice. 13. Now we will see the facts in the case of M.K. Mohammed Kunhi, the assessee was imposed with penalty under section 271(1)(c) of the Income-tax Act for concealment of particulars of income. The assessee questioned those penalties before the ITAT and also made an interim prayer for stay of collection of the penalties imposed. The Tribunal declined to order any stay holding that it had no power to grant such a prayer. In fact there were no provisions as the one we have now at that point of time when the prayer for stay was made. The assessee then moved the Kerala High Court under article 226 of the Constitution. The Kerala High Court in the case of M.K. Mohammed Kunhi v. ITO [1966] 59 ITR 171, held that the T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that "where an inferior court is empowered to grant an injunction, the power of punishing disobedience to it by commitment is impliedly conveyed by the enactment, for the power would be unless if it could not be enforced." 15. It is quite interesting to note that their Lordships further proceeded and made the following observation: "It was said that the general principle was that in a taxing statute there was no room for what could be called the equitable construction, but that principle applied only to the taxing part of the statute and not to the procedural part. It has further been observed that "where the Legislature invests an Appellate Tribunal with powers to prevent an injustice, it impliedly empowers it to stay the proceedings which may result in causing further mischief." It is well-known that the Income-tax Appellate Tribunal is not a court but it exercises judicial powers. The Tribunal's powers in dealing with appeals are of the widest amplitude and have in some cases been held similar to and identical with the powers of an appellate court under the Civil Procedure Code: see Commissioner of Income-tax v. Hazarimal Nagji and Co. and New I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, when it raised or arises before it as a part of such a judicial process. 18. Although it is not of much importance, rules 16 and 17 of the Appellate Tribunal Rules, 1963, also provide for filing of proper authorization for appearing before the ITAT. It may be quite possible the Registry officials may raise objection and do not accept the power of attorney of a person filed by the parties when a rule like rule 13E is raised on a person who claims an opportunity of being heard in the matter. Therefore, it is all the more necessary that the Tribunal has to go into this question and dispose of the preliminary objection in this regard. It may be mentioned, that Jaipur and Bombay Benches of the Tribunal, in the cases cited earlier, have exactly done the same thing when disputes were raised as to the competence of a person claiming to represent before ITAT. In both these cases, the competence of person appearing as authorized representative was a Departmental Representative, protecting the interest of the revenue was in question and the Tribunal adjudicated these issues. Therefore, we entirely agree with the view taken by the Jaipur Bench and the Mumbai Bench in this regard. 19. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2007 with effect from11-5-2007. The said sub-section reads as under: "129(6)-On ceasing to hold office, the President, Vice-President or other Member shall not be entitled to appear, act or plead before the Appellate Tribunal." 23. It was pointed out that Delhi High Court was not at all concerned with the interpretation of a provision relating to conditions of service. They were concerned with the provisions of section 129(6), which was brought by the Parliament in the statute relating to Customs Act. This is the difference, according to the interveners and the appellant's advocate. The major issues that fall for our consideration, could be as under: (i) Whether, there is any difference in the legislative amendment in section 129(6) of the Customs Act, 1962 and Rule 13E of the Income-tax Appellate Tribunal Members (Recruitment and Conditions of Service) Rules, 1963. Whether, that really makes any difference? (ii) Classification of the Members, whether prohibited from appearing before the ITAT. Whether, the said prohibition applies to the ex-Members or the present Members or only the Members who join hereafter. 24. Among the ex-Members, there is an important c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orders in force from time to time. ........ 13. Your said appointment to the post of Member in the ITAT will be subject to the final orders in CWP Nos. 6797/99 (K.K. Gupta v. UOI) 6798/99 (B.R. Jain v. UOI) 7241/99 (Sh. D.K. Tyagi v. UOI) 7714/99 (B.R. Mittal v. UOI) and 135/2000 (UOI v. P.K. Bansal) pending before the High Court of Delhi." 26. Shri Rakesh Gupta, in his compilation, filed copy of the recruitment rules, which were sent to him. He accepted the offer of appointment. He joined the Tribunal on16-8-2000. He submitted his resignation during the probation itself and the said resignation was accepted from21-3-2001. The said acceptance, it may be stated was done by the Government even by waiving the notice period of one month, as mentioned in the acceptance letter. It may be mentioned that before joining the Tribunal Dr. Rakesh Gupta practiced between 1984 to 2000 and appeared before Delhi Benches of the ITAT in various cases from 1990 to 2000. After he resigned, Dr. Gupta started practicing as an advocate from May 2001 and has been appearing before the Tribunal mainly before Delhi Benches of the ITAT regularly since then. It was stated by him that he was never pos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e age of fifty-eight years on or before the first day of May, 1998 and is on extension in service, shall retire from the service on expiry of his extended period of service. or on the expiry of any further extension in service granted by the Central Government in public interest, provided that no such extension in service shall be granted beyond the age of 60 years." 28. According to Dr. Rakesh Gupta, the retirement can be at superannuation, voluntary retirement on completing prescribed years of service; or a compulsory retirement by employer. According to him, the retirement takes place normally a superannuation or on completion of qualified period of service. In his case and in the cases of four others, there is no retirement but they have resigned from service. The resignation is not the same thing as retirement. This difference, according to him, was noticed by the Supreme Court in the case of UCO Bank v. Sanwar Mal AIR 2004 SC 2135. In that case, according to Shri Rakesh Gupta, the Supreme Court went through different regulations and opined that the expressions 'resignation' and 'retirement' have been employed for different purposes and carry different me ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... work or to discharge special functions, which are not of a permanent nature. Our attention was drawn to the decision of the Supreme Court in the case of Kedar Nath Behl v. State of Punjab AIR 1972 SC 873 held that the phrase "likely to continue" with a temporary post does not mean an assurance that the post will be permanent. In fact in the case of Kedar Nath Behl v. State ofPunjabAIR 1979 SC 220. The Supreme Court held that there could be no question of confirmation if the post itself is temporary. It was again argued by Shri Rakesh Kumar Gupta that during probation there is no question of right to the post. The Hon'ble Supreme Court in the case of Purshottam Lal Dhingra v. Union of India AIR 1958 SC 36 at page 42 have elaborated the concept of 'probation' in these words:- "an appointment to a permanent post in Government service on probation means.... That the servant so appointed is taken on trial". 31. Dr. Rakesh Kumar Gupta argued that in his case even the appointment as not to a permanent post. Our attention was further drawn to the decision of the Supreme Court in the case of State of U.P. v. Kaushal Kishore Shukla [1991] 1 SCC 691 wherein ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ike the one that is being made, cannot take away the vested rights and any such amendment must be reasonable. Dr. Gupta referred to the decision of the Apex Court in the case of Satish Chandra Anand v. UOI AIR 1953 SC 250 on the point of "conditions of service" being governed by the contract and contended that although the Government can enter into contracts and impose special terms that some one would be ineligible to practice, the special term must exist at the time when he joined the service and such term must be accepted to become effective whereas in his case it was pleaded that there was no term at the time when he accepted or when he relinquished, hence, no question of acceptance on his part. Even the State, according to him, is bound by the term or absence of term. Reliance was also placed on the decisions of Supreme Court in the cases of State of M.P. v. Shardul Singh [1970] 3 SCR 302; and I.N. Subba Reddy v. Andhra University [1976] 3 SCR 1013, wherein it has been held that the expression "conditions of service" means all those conditions which regulate the holding of a post by a person right from the time of his appointment till his retirement and eve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sion of Hon'ble Delhi High Court in the case of P.C Jain, was not applicable to him and to the other interveners, who are identically placed, as the facts in that case are totally different. According to him, in the case of P.C. Jain, their Lordships of Delhi High Court were mainly concerned with interpretation of section 129(6) of the Customs Act and were not concerned with any interpretation as to the conditions of service. Moreover, it was emphasized by Dr. Gupta that in the case of P.C. Jain, none of the instances discussed therein pertained to the Members, who have resigned from service. The terminology used in rule 129(6) and rule 13E are different and is to be judicially recognized before views are drawn, debarring the eligible persons under section 288 of the Income-tax Act from appearing before the ITAT. It will be denial of opportunity, which, according to him, is not warranted even on the basis of decision of Delhi High Court in the case of P.C. Jain. 35. In the case of Shri Ved Jain by letter dated21-11-1997, he was offered the post of Accountant Member in ITAT. The conditions on which the post was offered, were the same as in the case of Dr. Rakesh Kumar Gupta, ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e was placed on the ratio of decision of Delhi High Court in the case of Raj Bhaskar v. Oriental Insurance Co. Ltd. MANU/DE/9223/2006 wherein their Lordships, applying the principle laid down by the Supreme Court in the case of UCO Bank, held that the resignation and the retirement cannot be taken together. Our attention was drawn to the decision of Rajasthan High Court in the case of Sohan Lal Soni. Shri Y.K. Kapoor further submitted that the Supreme Court again noticed the same difference between resignation and retirement in the case of Chandrashekar A.K. v. State of Kerala AIR 2009 SC 643. Having regard to the facts that he could not be considered to have retired within the meaning of rule 11 of the Income-tax Appellate Tribunal Members (Recruitment and Conditions of Service) Rules, 1963. Our attention was specifically drawn to para 26 of the decision of the Delhi High Court in the case of P.C. Jain, as reproduced below: "26. In our view, the two cases cited by the petitioners are clearly distinguishable. In both the cases the Court struck down the bar placed on the legal practitioners to practice before the Tribunal constituted under the concerned statutes on the ground ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere he is practicing and his case is that of resignation from service and not retirement. Reliance was placed on the ratio of decisions of Supreme Court in the cases of Union of India v. Gopal Chandra Mishra [1978] 2 SCC 301; Sanwar Mal's case; and Jaipal Singh's case, wherein the difference between resignation and retirement is judicially noticed. He argued on the same lines as in the case of Shri Rakesh Gupta. 40. On behalf of the Ministry Shri A.K. Bhardwaj, Sr. Central Government Counsel appeared and has filed detailed affidavit. It was pleaded that in the light of the decision of Delhi High Court in the case of P.C. Jain, which interpreted the identical provision of section 129(6) of Customs Act, 1962, there is a possibility to debar the appearance of such Members also. In view of dignity of office and perception of bias, such Members on their own should refrain from appearing and practicing before the Tribunal wherein they have adjudicated the dispute of others. According to him, although many of the interveners have questioned the legislative competence for enacting rule 13E into the service conditions and have also questioned its validity as discriminatory and viol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ification issued under article 309 of the Constitution has the same legislative impact as the one that was done by the Parliament. According to him, rule 13E has the same force as that of the provision of section 129(6) of the Customs Act. Any difference in interpretation will not be in line with the view expressed by the Delhi High Court in the case of P.C. Jain. He vehemently relied upon the decision of P.C. Jain. According to him, their Lordships of Delhi High Court have elaborately dealt with all the contentions that are now being taken by the parties and, therefore, the law expressed by the Jurisdictional High Court in that case should be applied in the larger interest of the Institution. 42. The learned Sr. Central Government Counsel further relied on the decision of the Supreme Court in the case of Slate of Punjab v. Kailash Nath AIR 1989 SC 558. According to him, this decision, carried the scope of article 309 even beyond the period after retirement. The ratio laid down in this case, according to him, supported the view canvassed by the Ministry of Law & Justice in this regard. The prosecution of an employee who long back retired, was upheld by theApex Courteven after the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the power 'conditions of service' can be framed only in relation to matters relating to pension and other retirement benefits. A rule framed under proviso to article 309 cannot apply to a person who is no longer in service. For this reliance was placed on the ratio of decision of Supreme Court in the case of Kailas Nath. The learned intervener further submitted that the right to practice was not a condition to service. This fact has been admitted by the ASG who appeared in the case of P.C. Jain. At any rate the decision of the Delhi High Court in the case of P.C. Jain is binding on this Tribunal to the extent it holds that right to practice before the ITAT is not a condition of service. Our attention was drawn to para 34 of the judgment. In fact in the case of P.C. Jain, their Lordships were dealing with the legislative provision in the form of section 129(6) of the Customs Act and not the condition of service. According to him, rule 13E must be ignored as it cannot be made under the proviso to article 309 of the Constitution of India. Our attention was drawn to the decision of Supreme Court in the case of D.R. Yadav v. R.K. Singh AIR 2003 SC 3935, wherein it was held tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a status superior to a State Legislature or claim itself as an 'Act of Parliament'. In other words, the right to practice conferred by the Act by the Parliament can be taken away only by another Act of Parliament which is not the case here. The qualification of the interveners, according to him, are duly supported by section 288 of the Income-tax Act, 1961 and section 14 of the Bar Councils Act and section 30 of the Advocates Act and, therefore, cannot get adversely affected by rule 13E of the ITAT (Recruitment and Conditions of Service) Rules, 1963. 47. Shri Tiwari further pointed out that the provisions of section 129 of the provisions of Customs Act are in pari materia with the provisions of section 252 of the Income-tax Act word by word. They are bodily lifted provisions. Nothing prevented the Parliament from inserting in the provisions of section 252 which is in pari materia with section 129 of the Customs Act. If that course would have been adopted by the Parliament, it could be argued that the decision of Delhi High Court in the case of P.C. Jain settles the matter in all fours. The provisions are not made that way. Nor the provisions of section 288 of the Income-ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fter the publication of Notification No. GSR 389(E). The retired Members of the Tribunal practicing before3-6-2009, before the Tribunal, cannot be debarred all of sudden after about 50 years. The Notification No. GSR 389(E) itself states that they same shall come into force on the date of their publication in the Official Gazette, meaning thereby that this cannot have a retrospective operation in the manner pleaded on behalf of the Ministry of Law & Justice. Reliance was placed on the ratio of decision of Supreme Court in the case of P. Mahendran v. State of Karnataka AIR 1990 SC 405, wherein their Lordships have observed as under:- "It is well-settled rule of construction that every statute or statutory rule is prospective unless it is expressly or by necessary implication made to have retrospective effect. Unless there are words in the statute or in the rules showing the intention to affect existing rights the rule must be held to be prospective. If a rule is expressed in language which is fairly capable of either interpretation it ought to be construed as prospective only. In the absence of any express provision or necessary intendment the rule cannot be given retrospecti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ule, denying liberty to a retired Income-tax Officer the right to practice any profession within two years after retirement was held unconstitutional and invalid, leading to quashing of Rule 11 itself. The said decision of the CAT was considered by the Supreme Court in the case of T.R. Kapoor, wherein the Supreme Court itself has struck down the rule as unconstitutional, meaning thereby such restrictions on the retired employees was not held to be valid as the same is infringement of Article 19 of the Constitution. This decision is relied upon in support of the contention that amendments of the service conditions in relation to the retired employees are liable to be held not valid. The invalidity even for a limited period was not allowed to prevail whereas in the instant case, the learned intervener pointed out, is a life long ban on retired employee who is caught unaware. Again our attention was drawn to the Halsbury's Laws of England on "Retrospective effect of a Statute". The distinction was also drawn between retrospective and retroactive legislation. It is a cardinal rule of Principle of Construction that every statute is prima facie prospective unless it is expr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der the aforesaid Article can be exercised either for making Recruitment Rules or for providing conditions of Service in respect of the persons appointed in connection with the affairs of the Union of India or the State. Therefore, any rule made therein should be in conformity with the provisions of Article 309 of the Constitution of India. It was conceded by the Law Ministry before the Delhi High Court in the case of P.C. Jain that the amendment brought in section 129(6) of the Customs Act was not a condition of service. If the amendment brought in that Act was not a condition of service, it is strange that the Ministry has taken a stand that Rule 13E of the ITAT Members (Recruitment and Conditions of Service) Rules, 1963 falls within the scope of words "conditions of service". According to him, the recruitment rules can be made applicable to the persons who are to be recruited thereafter and cannot be applied to the persons who have already retired from service before the date of the impugned notification. For these reasons the Addl. Solicitor General who argued the case before the Delhi High Court in the case of P.C. Jain, conceded that bar to practice imposed on ex-Me ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Tribunal by virtue of section 288 of the Income-tax Act, 1961 and section 14 of the Bar Council Act, 1926 till joining the service which remained under suspension till his retirement and again got revived immediately after the date of retirement. According to him, he had a vested right to practice before the ITAT before the publication of the notification. According to him, therefore, the said notification cannot be applied in such a manner so as to take away such existing right. It was also pleaded by the intervener that after the date of retirement he ceased to be the Vice President or the Member of the ITAT and, therefore, rules or conditions of service applicable to the serving employee cannot be applied to persons no longer in service. 55. Shri Keshav Prasad, Advocate, fairly admitted that as regards the main contention is concerned, he is with all other interveners. He drew our attention to the decision of Delhi High Court in the case of P.C. Jain and submitted that in the aforesaid decision a brief history leading to the insertion of sub-section (6) to section 129 of the Customs Act has been given. In the year 1986 the Parliament enacted the Customs and Excise Revenue Ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eded the rule to be prospective, but they also stated that it would be illogical to make distinction between the Members who retired prior to this date or after the date of notification, forgetting the fact that Notification itself is declared to be prospective. Article 309, according to him, has two limbs - one relating to recruitment and the other relating to conditions of service. The rules relating to recruitment can only apply to those persons who are serving theUnionon the date of the Notification or who would serve theUnionor the State in future. It cannot apply to persons who are not serving on that date. According to him, no rule can be made under Article 309 in relation to persons who have already retired from service. The proviso of this Article, according to him, is nothing but delegation of powers of rule making to subordinates, instead of being made by the appropriate Legislature. Forcibly it is pleaded that the said rule cannot be made to those persons who have already retired. Any amendment to the rules of recruitment can be made to the persons who are joining the service after that date. As regards the conditions of service, it can be for the persons who are servin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e in all the Courts and Tribunal. Therefore the Law Ministry is not competent to make rule repugnant thereto. Our attention was also drawn to the decision of Supreme Court in the case of Legal Aid & Advice v. Bar Council of India AIR 1995 SC 691. Special emphasis was placed to the decision of Supreme Court in the case of Kailash Nath and according to him the present Rule 13E is outside the scope of Article 309 of the Constitution. 57. Shri Prakash Narain, Advocate, relied upon the written submissions, largely reiterating on the arguments of the other interveners. 58. The learned Sr. Central Government Counsel Shri A.K. Bhardwaj in relation to the Members who retired before3-6-2009, vehemently contended that in the light of the decision of the Delhi High Court in the case of P.C. Jain to which jurisdictionally this Bench of the ITAT falls is binding upon it. He submitted that the contentions of several interveners including the one who retired have all been answered by the Delhi High Court and therefore the principle laid down therein is applicable retrospectively to the Members who have already retired. Reliance was placed on the decision of Supreme Court in the case of Kailash N ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly to those persons who are recruited after3-6-2009should be rejected in the light of the ratio laid down by the Supreme Court in the aforesaid case. 59.We have carefully considered the submissions of the learned counsel for the assessee, interveners as also the Sr. Central Government Counsel and gone through the case laws which have been relied upon by the parties and deal with the submissions and issues as under: 60. As regards arguments of some of the interveners that the Ministry of Law & Justice has no locus standi in the matter and therefore they should not be permitted to argue on behalf of the Government, according to us cannot be accepted. The notice was issued by the Special Bench to the Ministry of Law & Justice and the Ministry has in fact assisted the Bench by filing the affidavit and has also directed the appearance of the Sr. Central Government Counsel to plead its case, we appreciate their concern and assistance in the matter. In our view, the Tribunal is entitled to hear the Ministry of Law & Justice, who has in fact issued the notification. Ultimately the decision has to be of the Bench and we are not guided by the contentions of the Ministry of Law & Justice as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ended that the Government was contemplating such like amendment in other pari materia statutes, in consonance with the provisions of section 129(6) of the Customs Act, which barred the Members and the Chairman of such Tribunals from appearing, acting or pleading before the Tribunal of which a person served as a Chairman or a Member. We have kept this background in our mind. 62. Some of interveners questioned the charge/fear of bias upon the ITAT. According to them in the case of P.C. Jain, President of CESTAT himself placed on record the charge against its former Members and raised such issues before the Ministry. Although we are not aware of any such material with regard to ITAT but that hardly is material/significant. Still the executive/Parliament can take cognizance of public perception of the matter and legislate so as to take the institution out of it. They have questioned how the bias be raised upon persons who have retired long long back, for according to them the new generation of Members may not even know them by person/face. They felt the imagination of the Ministry is too much theoretical and based on hearsay is not on any substance or material. We do not agree with th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed as a separate unit is, in the Fundaments Rules, section II, Chapter II, rule 9(4), called the cadre. Each cadre consists of a certain number of posts. According to rule 9(22) of the Fundamental Rules, a permanent post means a post carrying a definite rate of pay sanctioned without limit of time. In each cadre there may be and often is a hierarchy of ranks. Due to rush of business or other exigencies some temporary posts are often created. A temporary post is defined in rule 9(3) to mean a post carrying a definite rate of pay sanctioned for a limited time. These temporary posts are very often outside the cadre and are usually for one year and are renewed from ear to year, although some of them may be created for a certain specified period. The conditions of service of a Government servant appointed to a post, permanent or temporary, are regulated by the terms of the contract of employment, express or implied, any subject thereto, by the rules applicable to the Members of the particular service. 18. The appointment of a Government servant to a permanent post may be substantive or on probation or on an officiating basis. A substantive appointment to a permanent post in public ser ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... act or specific rule regulating the conditions of the service, the implied term of such appointment, under the ordinary law of master and servant, is that it is terminable at any time. In short, in the case of an appointment to a permanent post in a Government service on probation or on an officiating basis, the servant so appointed does not acquire any substantive right to the post and consequently cannot complain, any more than a private servant employed on probation or on an officiating basis can do, if his service is terminated at any time. Likewise an appointment to a temporary post in a Government service may be substantive or on probation or on an officiating basis. Here also, in the absence of any special stipulation or any specific service rule, the servant so appointed acquires no right to the post and his service can be terminated at any time except in one case, namely, when the appointment to a temporary post is for a definite period. In such a case the servant so appointed acquire a right to his tenure for that period which cannot be put an end to unless there is a special contract entitling the employer to do so on giving the requisite notice or the person so appointe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d during the probation period except in the case of Shri Y.K. Kapoor. Now the question is as to whether these people, whose services were terminated by the Government by accepting their resignation can be treated as having been retired, which is the necessary condition for roping them within the ambit of rule 13E. Again the Hon'ble Supreme Court in the case of Kaushal Kishore Singh, has observed as under:- "7. A temporary Government servant has no right to hold the post, his services are liable to be terminated by giving him one month's notice without assigning any reason either under the terms of the contract providing for such termination or under the relevant statutory rules regulating the terms and conditions of temporary Government servants. A temporary Government servant can, however, be dismissed from service by way of punishment. Whenever, the competent authority is satisfied that the work and conduct of a temporary servant is not satisfactory or that his continuance in service is not in public interest on account of his unsuitability, misconduct or inefficiency, it may either terminate his services in accordance with the terms and conditions of the service o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 66, decided on 13-12-1966 and Shams her Singh v. State of Punjab MANU/SC/0073/1974, these decisions have been discussed and followed by a three-Judge Bench in State of Punjab v. Shri Sukh Raj Bahadur MANU/SC/0182/1968." 66. Having seen the interpretation of the terms 'temporary posts and probation', now we will proceed to see whether such persons, who are on probation, holding such temporary posts could be said to have retired in terms of Rule 13E. The term 'retirement' itself is a subject-matter, which was judicially noticed and has to be understood differently from the term 'resignation'. The sum and substance of the first set of 5 interveners who have resigned is that they are the one who have not retired from the service of the Tribunal because they resigned before they were confirmed in the post. 67. The Hon'ble Supreme Court in the case of Union of India v. Gopal Chandra Misra [1978] 2 SCC 301, in para 23 of the judgment, has referred the dictionary meaning of the term 'resignation' as under:- "23. 'Resignation', in the Dictionary sense, means the spontaneous relinquishment of ones own right. This is conveyed by the ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of service but that is not at the event of retirement but an act of resignation on the part of the employee concerned, which is, of course, subject to acceptance by the employer in accordance with rules prescribed therein. 70. The difference between the "retirement" and the "resignation" has been noticed by the Supreme Court in the cases of Jaipal Singh; and UCO Bank. The Supreme Court in the aforesaid cases noticed that there was a difference between "retirement" and "resignation". It also noticed that such difference was already accepted by the Apex Court in the case of Reserve Bank of India v. Cecil Dennis Solomon AIR 2004 SC 3196, wherein the Apex Court has held that in service jurisprudence, the expressions superannuation, 'voluntary retirement', 'compulsory retirement' and 'resignation' convey different connotations. TheApex Courtheld that in the case of resignation, it can be tendered at any time but in the case of voluntary retirement, it can only be sought for after rendering prescribed period of qualifying service. 71. Now we will advert to the decision of the Supreme Court in the case of Sanwar Mal, where ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. The view we have taken is supported by the judgment of this Court in the case of Reserve Bank ofIndiav. Cecil Dennis Solomon [2003 (10) Scale 49]. Before concluding we may state that Clause 22 is not in the nature of penalty as alleged. It only disentitles an employee who has resigned from service from becoming a Member of the Fund. Such employees have received their retiral benefits earlier. The pension scheme, as stated above, only provides for a second retiral benefit. Hence, there is no question of penalty being imposed on such employees as alleged. The pension scheme only provides for an avenue for investment to retirees. They are provided avenue to put in their savings and as a term or condition which is more in the nature of an eligibility criteria the scheme disentitles such category of employees out of it." 72. In the light of the aforesaid decisions it is difficult to say that Dr. Rakesh Gupta and other such like interveners have retired from service. They have resigned and terminated their contract of employment with the Government. In other words, they do not hold any post and no question of any conditions of services that can be made applicable to them after o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the facts of that case. It cannot be used to sweep all other cases irrespective of the facts concerned therein. 76. Moreover, it must be appreciated that in the case of P.C. Jain, the Hon'ble Delhi High Court proceeded with interpretation for the provision of statute and not a condition of service as has already been discussed earlier. Therefore, what we are basically, required to interpret here is Rule 13E which is part of ITAT Members (Recruitment and Conditions of Service) Rules, 1963, as a part of conditions of service. Therefore, the ratio laid down therein may not strictly apply to a case where amendments are to the conditions of service. Admittedly, conditions of service can only be in relation to the employees who are in service and not to those persons who lost the right to the post long back much before the same was brought by way of amendment made subsequently. We, therefore, unhesitatingly answer question Nos. 5 & 6 in favour of the interveners. There is nothing in the Rule 13E to debar such persons. 77. Now as regards Shri Y.K. Kapur is concerned, he was relinquished of his post in the ITAT with effect from1-7-2004having joined the service on3-12-2001, after tw ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Rules for continuation of such probation beyond the maximum period, the Courts have made an exception and said that there will be no deemed confirmation in such cases and the probation period will be deemed to be extended. In this category of cases we can place Samsher Singh v. State of Punjab MANU/SC/0073/1974 which was the decision of a Bench of seven Judges where the principle of probation not going beyond the maximum period fixed was reiterated but on the basis of the Rules which were before the Court, this Court said that the probation was deemed to have been extended. A similar view was taken in the case of Municipal Corporation,Raipurv. Ashok Kumar Misra MANU/SC/0332/1991. In Satya Narayan Athya v. High Court of Madhya Pradesh MANU/SC/0202/1996, although the Rules prescribed that the probationary period should not exceed two years, and an order of confirmation was also necessary, the termination order was issued within the extended period of probation. Hence, the termination was upheld. 17. The other line of cases deals with Rules where there is no maximum period prescribed for probation and either there is a Rule providing for extension of probation or there is a Rul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... all such persons who are not permanent Judges of the High Court and have resigned before becoming permanent, may not be subjected to debar under Article 221 of the Constitution but at the same time they pleaded that the spirit of P.C. Jain's case be applicable even to them. However, the Ministry suggested that a magnanimous view be taken in relation thereto. In our opinion, in the light of the decision of the Apex Court in the case of Sanwar Mal, their case does not fall within the meaning of the expression 'retirement' used in Rule 13E of the ITAT Members (Recruitment & Conditions of Service) Amendment Rules, 2009 and, therefore, do not fall within this category. We are not taking any magnanimous view but we are only clarifying the position of law as we understand. Here it must be appreciated, the persons have resigned from service when they were only at temporary post and that too during their probation period. So they do not have any right to hold the post as construed by the authorities discussed in earlier paragraphs and on their resignation they have forfeited their service and, therefore, debarring them under any conditions of service, that comes to play much aft ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as one falling within the meaning of conditions of service but going beyond it. 82. We agree with contention of the intervener that the Legislature cannot ignore the march of events over a period of time and the rights accruing as a result thereof. After all, notification or the law must satisfy the requirements of constitution today taking into account the accrued or acquired rights of the parties as on the date of such notification or legislation. That would be most arbitrary, unreasonable and negation of history if such recognition is not made, as observed by Apex Court in Raman Lal's case as also in P.D. Agarwal's case. 83. Any how, we can do nothing about this, except interpret the provision as it is spelt out by the Notification. We accept the plea made by the Sr. Central Government Counsel that Rule 13E brings about amendments to the conditions of service. The next question that immediately strikes to us is whether it can apply to the Members who are in service now or who are going to join the service from now or who were in service earlier. Before answering that issue, the common intention and purpose in bringing the amendment to section 129(6) of the Customs Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd invalid. The matter went to the Supreme Court and the Supreme Court affirmed the view of the CAT, meaning thereby the limited ban imposed under Rule 11 of the CCS (Pension) Rules, denying liberty to a retired Income-tax Officer the right to practice in profession within two years of retirement was held to be unconstitutional and invalid [R. Kapoor's case]. As a result of this legislative exercise, now it is difficult to say that identical provision under conditions of service can still pass the test of validity in the eyes of law. This interpretation rendered by the Supreme Court in connection with CCS (Pension) Rules, cannot merit ignorance or be slighted merely because the executive's attempt in bringing Rule 13E is in the direction of bringing some reformative provisions to free the judiciary from the charges of bias in their judicial functions. The executive if permitted in this manner will only set naught the judicial interpretation rendered by the highest Court of the land and also bypass the higher wisdom of the Parliament. We must be conscious of the fact that limited ban of two years on retired income-tax employees was not approved by the Supreme Court. Now the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of theApex Courtin the case of Bishun Narain Misra. The appellant in that case was in the service of State ofU.P.as Sub-Registrar. He was born on11-12-1905and was recruited in service in July 1933. At the time of his recruitment the age of retirement (superannuation) for Government servants of his class was 55 years. Normally he should have retired on11-12-1960. But by a Notification dated27-11-1957, the Government raised the age of retirement to 58 years. Thus, he would have retired on11-12-1963. On25-5-1961, Government again reduced the age of retirement to 55 years by a Notification of that date issued under Article 309 of the Constitution. By second notification of the same date, the Government issued order the effect of which was that all Government servants who would have retired because of the change in the age of retirement after 25-5-1961 and before 20-12-1961 were retained in service up to 31-12-1961 except those who reached the age of 58 years before 31-12-1961 in which case they were to retire at the age of 58 years. Accordingly, Bishun Narain Mishra retired on31-12-1961. It was argued by Shri Bishun Narain Mishra that the rule is retrospective and no retrospective ru ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al clearance. The palace so built, although of strong structural components, is likely to crumble. The same is true here. We were very anxious to apply the ratio laid in P.C. Jain's case but refrained or shown caution because the base on which our palace is built is different from the one appreciated by the Delhi High Court. We can only accept the reality and envy our neighbours in the CESTAT. 89. The words used in Rule 13E read that the President, Sr. Vice President, Vice President and the Members of the Tribunal shall not practice before the Tribunal after the retirement from the service of the Tribunal. That means it can apply to those persons who are the President, Sr. Vice President, Vice Presidents and the Members on the date when the Notification was issued. In fact Rule 13F which was brought by the same amendment under the same proviso to Article 309 provides that the same persons would not undertake any arbitration work while functioning in those capacities in the Tribunal. That means, those persons cannot undertake any arbitration work while working in those capacities or undertake to practice before the Tribunal after their retirement from service from the Tribunal. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hich they feel is right unless the Legislature wants it that way in the expressed legislation. 91. We are not for the moment holding anything about the legislative competence of the President to make the Rules in the manner it is done, but we have only interpreted the provisions that are made as part of conditions of service and from such conditions of service the ban on right to practice can only be made applicable to the employees who are presently serving the Union of India or in connection with the affairs of the State. In our view, having regard to the principle laid down in the decisions of Apex Court in Kailashnath; P. Mahandran; T.R. Kapur, Kaishav Madhavan Menon; R.S. Ajara; P.D. Aggarwal, Chairman, Central Board, which have been discussed elaborately, we are of the view that these provisions are applicable to those persons who retired from the service on or after the date of publication of this notification. 92. Accordingly, in the light of the above discussion, the reference is answered as under: (1) In our view it does not apply to Members who have retired prior to the date of publication of Notification. (2) In our view the question No. 2 is answered to the effec ..... X X X X Extracts X X X X X X X X Extracts X X X X
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