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TMI Blog2024 (5) TMI 1003X X X X Extracts X X X X X X X X Extracts X X X X ..... f deciding shifting application cannot be treated as a quasi-judicial act. What emerges from the dicta of the Apex Court in STATE OF ANDHRA PRADESH VERSUS S.M.K. PARASURAMA GURUKUL [ 1973 (5) TMI 98 - SUPREME COURT ] is that, for an act of an authority to qualify as a quasi-judicial act, it is not a sine qua non that there must be two competing parties. No doubt when there are two parties to the lis, the decision of the authority qua their inter se claims will necessarily be a quasi-judicial act. This, however, does not imply that unless there are two parties whose competing rights the authority is required to decide, and the function of the authority can never be a judicial function. The question whether an authority is required to act judicially and whether its function can be termed as quasi-judicial, would have to be gathered from the cumulative effect of all attending circumstances, including the nature of rights affected by its decisions, as also the manner in which the duty imposed on the authority is to be discharged - Cases where policy and expediency are the guiding factors for a final decision, would no doubt be an executive decision, while on the other hand, where objec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t is based on this inspection that the respondent submitted a detailed report setting out the gross mismanagement and siphoning off of funds, not only by these 5 companies but also other companies of the same Group, There is no dispute about the fact that this report was promptly accepted by the petitioner and directions were issued to the respondent to take penal and other appropriate actions against the said companies. Taking the case of the petitioner to the hilt, there certainly seems to be more than one officer barring the respondent involved in processing of the application, however, strangely and for no plausible reason absolutely no explanation has been provided by the petitioner as to why no action has been initiated against the two RoCs as also the other officers involved in forwarding the files to the respondent for approval, who failed to inform him about the order for inspections against the 5 companies of the Carnoustie Group. Strangely, the petitioner is also silent as to why no alert message was generated in the MCA 21 system. The fact cannot be lost sight that the respondent, as a Regional Director, was dealing with about 500 cases every month and therefore, had to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the Serious Fraud Investigation Office (SFIO), took a decision to get an inspection conducted in the books and papers of one M/s Carnoustie Management (India) Private Limited and 22 related companies (hereinafter Carnoustie group ), which were, allegedly, being used as a conduit by promoters of M/s Unitech Limited for siphoning of funds of home buyers. At this stage itself, it may be noted that as the Board of Directors of M/s Unitech Limited had already been suspended by the National Companies Law Tribunal (hereinafter NCLT) in 2017, in terms of an order passed by the Hon ble Supreme Court of India in January 2020, 7 nominee Directors of the Central Government were appointed to take care of the management of the said M/s Unitech Limited. 4. As out of these 23 companies, 10 companies were registered in the Northern Region and the remaining 13 companies in the Western Region, vide an order dated 26.03.2019, the Regional Directors of both the Northern Region and the Western Region were directed to get the inspection carried out in respect of all the aforesaid companies. Based on this order dated 26.03.2019 issued by the petitioner, the respondent who was working as Regional Direct ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 03.06.2019 26.03.2019 Jun-Oct 2019 7. Upon completion of the inspection in respect of the 10 companies of the Carnoustie Group, the respondent submitted a report on 29.11.2019, pointing out gross mismanagement and large-scale fraud resulting in acquisition of assets worth Rs. 870 crores by these companies on account of siphoning off funds of M/s. Unitech Limited. In his report, the respondent made specific recommendations for disgorgement of properties of the said Carnoustie Group worth Rs. 870 Crores. This report submitted by the respondent wherein recommendations for disgorgement of properties of the Carnoustie Group had been made, was accepted by the petitioner. Consequently, the respondent was directed to issue instructions for initiating penal action against the 10 companies of the said Carnoustie Group and its directors and also to approach the NCLT for seeking attachment and disgorgements of their properties as well. It is an admitted position that on the basis of this inspection report dated 29.11.2019, the Union of India/petitioner through the respondent, approached the NCLT, Principal Bench for seeking disgorgements of the properties of the Carnoustie Group. Based on this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ad with Rule 30(9) of the Companies (Incorporation) 2014 Rules (Rules). In response, on 14.09.2022, the respondent submitted a reply, explaining that he had granted the permissions of shifting of registered offices of these 5 companies thereof on the basis of the reports of the concerned RoCs, as also the Processing Officer who had put up the file to him with a clear note that no enquiry, inspection or investigation was pending against these companies. 11. In his reply, the respondent also pointed out that the Charge Memorandum had been issued to him on the basis of the confidential proposal for disciplinary action submitted on 15.02.2022 under the directions of Mr. Juneja, acting as the officiating DG only because he wanted to take revenge against the respondent for obtaining an attachment order against the properties of the companies in respect whereof he had given a clean chit. The respondent also stated that Mr. Juneja was not competent to recommend any disciplinary against him, as like the respondent, he was also an SAG Officer, though wrongfully occupying the post of officiating DG without the approval of the Appointments Cabinet Committee (ACC). 12. It appears that almost 9 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of professionalism, acted in a manner which is highly unbecoming of a Government servant and also failed to take all possible steps to ensure the integrity and devotion to duty of all Government servants under his administrative control and authority, and has, thus, violated the provisions contained in sub-rules (1) (ii), (iii), (xix), (xxi) of Rule 3 and sub-rule (2) (1) of Rule 3 of the CCS (Conduct) Rules, 1964. Article of charge-II That the said Dr. Raj Singh while functioning as Regional Director, Northern Region (NR), New Delhi during the period from 30.08.2018 to 28.09.2022, committed misconduct by not observing due diligence in discharge of his official duties. In respect of 4 companies namely M/S Carnoustie Agro Private Limited (H43239818), M/s Carnoustie Security Private Limited (H50394501), M/S Carnoustie International Private Limited (H49564875) and M/S Carnoustie Leisure Private Limited (H48849434) the inspections of which were ordered on 26.03.2019, RD (NR) allowed and approved the change of registered offices of the companies from the state of Delhi to Maharashtra on 03.06.2019. Such approval of the shifting of the registered office in all the 4 companies is also u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rive him of his due promotion to the post of Deputy General, Corporate Affairs. This, he claimed, was evident from the fact that the memorandum was issued just a day before the DPC was scheduled for the said post, i.e on 14.03.2023. It was his plea that the charges against him were framed only on the basis of a note prepared by Mr. Juneja, while acting as the officiating DG, who was clearly biased against him. It was also his plea that on account of his earlier challenge to the appointment of Mr. Juneja as a Joint Director under the OBC category, he was nursing a grievance against him. The respondent had also urged that the petitioners had deliberately omitted to supply the complete set of documents as mentioned in Annexure III of the charge memorandum. He, therefore, sought quashing of the Charge Memorandum dated 13.06.2023 along with a declaration by the Tribunal that the initiating disciplinary proceeding against him was unwarranted. 17. On the other hand, the petitioner had urged that the respondent committed a grave misconduct in permitting the shifting of the registered offices of the 5 companies in violation of Section 13 of the Act read with Rule 30 of the Rules. It was the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e subject matter of disciplinary proceedings. 20. Consequently, vide its impugned order, the Tribunal quashed the charge memorandum issued against the respondent on 13.06.2023 and directed the petitioner to grant him all the consequential benefits flowing from setting aside of the charge memorandum. 21. It is in these circumstances, that the petitioner has approached this Court by way of the present writ petition. 22. Before us, the learned Additional Solicitor General, appearing for the petitioner, besides reiterating the pleas taken before the learned Tribunal, has urged that the impugned order is wholly perverse and therefore, liable to be set aside. He submits that the learned Tribunal has proceeded on an erroneous presumption that the respondent was acting as a quasi-judicial authority, whereas grant of permission for shifting of the registered office of a Company under Section 13 is purely an executive function under the Act. By relying on State of Andhra Pradesh vs. S.M.K Parasurama Gurukul, 1973 (2) SCC 232, he contends that the test to determine as to whether a decision of an authority is a quasi-judicial decision or an administrative one is threefold, i.e. (i) it must dec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tors including objections which are called for from the general public in accordance with Rule 30(5) to Rule 30(8) as per the prescribed statutory procedure and it is not a policy decision. As per the learned senior counsel this grant of permission for shifting of the registered office is evidently a quasi-judicial function. 26. Further, he submits that the petitioner s plea that for a function of an authority to qualify as a quasi-judicial function, there must necessarily be a lis between two competing parties, is wholly misconceived. By placing reliance on the decision in Orissa Administrative Tribunal Bar Association vs. Union of India and Ors. 2023 SCC OnLine SC 309 , he submits that the test laid down by the Apex Court is to see whether the authority is required to act judiciously. In case, the authority has the power to do something which will prejudicially affect the subject, the decision is necessarily a quasi-judicial act. He also places reliance on the decision in P. Surendran vs. State by Inspector of Police (2019) 9 SCC 154 to contend that in a case where the authority is required to consider the proposal as also the opposition thereto and then arrive at a decision afte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hi and an order of attachment passed by the NCLT, Delhi on 21.04.2022. He thus contends that proceedings against these companies were not hampered in any manner due to the shifting orders. He, therefore, prays that the writ petition be dismissed. 29. Having considered the rival submissions of the parties, we may begin by noting that the parties are ad idem as under that: (i) In compliance of the petitioner s order dated 26.03.2019, the respondent had on 12.04.2019, directed Mr. Moorthy to inspect the affairs of 10 companies of the Carnoustie Group. (ii) Inspection report submitted by the respondent on 29.11.2019 pointing out gross mismanagement and large-scale fraud, resulting in acquisition of assets worth Rs. 870 Crores by these companies on account of siphoning off of funds of M/s. Unitech Limited. The report had therefore, recommended disgorgement of the assets of the companies of the Carnoustie Group, which recommendations were accepted by the petitioner. (iii) On the basis of this report, proceedings were initiated before the NCLT against the companies by the petitioner through the respondent, resulting in attachment of assets of the group worth Rs.870 crores vide order dated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ffice of M/s Carnoustie Management (India) Private Limited from Noida (UP) to Delhi and the second charge is that the shifted other four companies from Delhi to Maharashtra'. 6.1 We have gone through the submissions made by learned counsel for the respondent in counter affidavit and sur-rejoinder filed on behalf of the respondents and find that no new material has been mentioned, except that the action of the applicant is in violation of Section 13 (4) of The Companies Act, 2013 read with Rule 30(9) of the Companies (Incorporation) Rules, 2014. The said submission of the respondent has already been considered by this Tribunal in its order dated 28.08.2023. Learned counsel for the respondent was not even able to point out any financial angle involved in discharge of official functions by the applicant as a quasi-judicial officer. 6.2 It is not in dispute that when the shifting was ordered by the applicant, inspection had already been completed and in fact, the report was submitted on 29.11.2019. Hence, the first charge apparently has been framed without application of mind. Though the respondent has vehemently argued that the report of RoC, Delhi and RoC, Kanpur has nothing to d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .2019 but no entry was made by the Office of DG in the MCA-21 system and therefore, no alert message was generated by the system while processing the said applications by the by the office of RD and the office of ROC. Interestingly, in the instant case the Min has not initiated any action for filing prosecution against the company for declaring false information, no action against the ROC for giving wrong information in his reports against the Asst. Director for not mentioning about the inspections in his note and no action against the office of Director General of Corporate Affairs for not making the entry in the electronic processing system MCA-21 about the order of inspection, if, we assume that there is a technical error while passing the order of shifting of the registered office. Had an entry of the inspection order been made in the MCA-21 system, by the office of Director General of Corporate Affairs at the time of order of inspection, the MCA-21 system would have prevented even the fling of application, leave aside the question of approval of the application by RD. 6.4 We have perused the application for shifting of address of the concerned companies, which are annexed with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the respondent s action of approving the request of shifting of the registered offices of the 5 companies of the Carnoustie Group was not a quasi-judicial function but an executive act. It has therefore, been urged by the learned ASG that the very premise of the Tribunal s decision that since the respondent was discharging quasi-judicial function while allowing the shifting applications, no disciplinary proceedings could be initiated against the respondent in respect of these orders, is erroneous. By placing reliance on the Apex Court s decision in State of Andhra Pradesh (supra), the learned ASG has vehemently urged that the action of the respondent in passing these shifting orders under Section 13 of the Act is purely an executive action and not a quasi-judicial act, as presumed by the learned Tribunal. He has, therefore, urged that since the very premise of the Tribunal s decision is erroneous, the impugned order is liable to be set aside on this ground alone. 32. On the other hand, the respondent has urged that taking into account that before passing an order under Section 13 of the Act, the respondent was required to follow a detailed procedure as laid down under Rule 30, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... certain objective facts as a preliminary step in the discharge of an executive function, it does not follow that it must determine those facts judicially. When the executive authority has to form an opinion about an objective matter as a preliminary step to the exercise of a certain power conferred on it, the determination of the objective fact and the exercise of the power based thereon are alike matters of an administrative character and are not amenable to the writ of certiorari. To the like effect is the observation of Fazl Ali, J. in the same case: The mere fact that an executive authority has to decide something does not make the decision judicial. It is the manner in which the decision has to be arrived at which makes the difference, and the real test is: Is there any duty to decide judicially? As I have already said, there is nothing in the Ordinance to show that the Provincial Government has to decide the existence of a public purpose judicially or quasi-judicially. Dealing with the essential characteristics of a quasi-judicial act as opposed to an administrative act, Das, J. (as he then was) observed: .......the two kinds of acts have may common features. Thus a person en ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... judicial act if the authority is nevertheless required by the statute to act judicially. xxx xxx xxx In Gullapalli Nageswara Rao and Others v. Andhra Pradesh State Board Transport Corporation and Another. Subba Rao, J., after referring to the various decisions on this subject held: ...... whether an administrative tribunal has a duty to act judicially should be gathered from the provisions of the particular statute and the rules made thereunder, and they clearly express the view that if an authority is called upon to decide respective rights of contesting parties or, to put it in other words, if there is a lis, ordinarily there will be a duty on the part of the said authority to act judicially. 34. What emerges from the aforesaid dicta of the Apex Court is that, for an act of an authority to qualify as a quasi-judicial act, it is not a sine qua non that there must be two competing parties. No doubt when there are two parties to the lis, the decision of the authority qua their inter se claims will necessarily be a quasi-judicial act. This, however, does not imply that unless there are two parties whose competing rights the authority is required to decide, and the function of the aut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g whether there is a duty to act judicially; and (c)The decision of an authority is quasi-judicial when it is made in accordance with rules. The decision is administrative when it is dictated by policy and expediency. 60. Having laid down the above principles, it must be realised that the distinction between quasi-judicial and administrative acts is not always well defined and its application is not always certain. Doctrine and practice are not necessarily happy partners. The instant case evidently does not involve a lis or two parties with competing claims appearing before an authority who will determine their respective rights. Further, the act of the Union Government establishing the OAT did not prejudicially affect the subject in any manner. Litigants or other citizens were not left without a forum. They could continue to pursue their remedies before the OAT when it was first established, instead of before the Orissa High Court. 36. In light of the aforesaid dicta we are of the view that, unlike as contended by the learned ASG, the Apex Court has consistently held that for determining as to whether an action of an authority is a quasi-judicial act or an administrative one, it i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... all be a managing director, where there is one, to the effect that they have made a full enquiry into the affairs of the company and, having done so, have formed an opinion that the list of creditors is correct, and that the estimated value as given in the list of the debts or claims payable on a contingency or not ascertained are proper estimates of the values of such debts and claims and that there are no other debts of or claims against the company to their knowledge. (3) There shall also be attached to the application an affidavit from the directors of the company that no employee shall be retrenched as a consequence of shifting of the registered office from one state to another state and also there shall be an application filed by the company to the Chief Secretary of the concerned State Government or the Union territory (4) A duly authenticated copy of the list of creditors shall be kept at the registered office of the company and any person desirous of inspecting the same may, at any time during the ordinary hours of business, inspect and take extracts from the same on payment of a sum not exceeding ten rupees per page to the company. (5) There shall also be attached to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... perusal of the aforesaid, it is evident that before passing an order under Section 13, the competent authority is required to not only seek information regarding the creditors and debtors of the applicant company, but is also obliged to invite objections from the general public. Further, in case objections are received, an oral hearing is required to be granted to all the parties and it is only upon examination of these objections, that a shifting order can be passed and that too, after considering the reports of the concerned RoCs. What, thus, emerges is that an elaborate procedure has been laid down under Rule 30 for dealing with a shifting application filed under Section 13 of the Act; it being incumbent upon the authority to not only take into account the detailed information supplied by the company under Rules 30(1) to 30(4), but also to hear objections. We are, therefore, of the considered view that while discharging functions under Section 13 of the Act, the authority has a duty to act judicially by considering all objective criteria prescribed under the statutory rules. The function of the authority, in such circumstances, cannot be termed as a mere executive act and has t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... if the non-official witnesses are not examined, the prayer for bail could be removed, but after moving the lower court first. The officer may have been guilty of negligence in the sense that he did not carefully go through the case file and did not take notice of the order of the High Court which was on his file. This negligence cannot be treated to be misconduct. It would be pertinent to mention that the enquiry officer has not found that there was any extraneous reason for granting bail. The enquiry officer virtually sat as a court of appeal picking holes in the order granting bail. 16. We would, however, like to make it clear that we are in no manner indicating that if a judicial officer passes a wrong order, then no action is to be taken. In case a judicial officer passes orders which are against settled legal norms but there is no allegation of any extraneous influences leading to the passing of such orders then the appropriate action which the High Court should take is to record such material on the administrative side and place it on the service record of the judicial officer concerned. These matters can be taken into consideration while considering career progression of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion before the NCLT, Delhi, where an order for attachment of assets of these companies worth Rs. 870 crores was passed on 21.04.2022. Interestingly, we may also, at this stage, note that in respect of companies, qua which shifting orders were passed, the respondent had himself noted that the same would facilitate the filing of a disgorgement application at Delhi, thus rendering the earlier opinion of the respondent to be true. Consequently, the attachment order passed by the NCLT, includes the properties of all these 5 companies of the Carnoustie Group. These steps taken by the respondent were, therefore, clearly in public interest and it cannot be said that he was trying to show any favour to any of the said companies. There is, admittedly, no allegation of any financial gain against the respondent or of his having shown any undue favour to any company of the group. Further, there is also no denial that as per the reports of the RoC as also the notings of the Dealing Assistants and Processing Officer that there was no inspection pending against these companies. This was perhaps on account of the fact that though an order for inspection had been passed against the companies on 12.0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... om the main issue, we are constrained to observe that pursuant to the directions of the petitioner, the respondent diligently carried out inspections in respect of 10 companies falling in the northern region and discovered a fraud of Rs. 870 Crores, Mr. Juneja, who was also entrusted with a similar task of carrying out inspections qua the remaining 13 companies of the said Carnoustie Group, gave a clean chit to all the companies in the western region, where he was the Regional Director. Even though, the report of Mr. Juneja was later rejected by the petitioner and he was directed to carry out a fresh inspection, he overlooked these directions for over six months and when later assigned the charge of officiating DG, submitted a confidential report against the respondent, which became the basis of initiation of disciplinary action against the respondent. Even though, we are constrained to observe that in the present case, some disturbing questions arise in the manner in which these 13 companies of the said Carnoustie Group in the western region were given a clean chit and no fresh inspection was carried out by Mr. Juneja despite specific directions by the petitioner, since he is not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... against the two RoCs as also the other officers involved in forwarding the files to the respondent for approval, who failed to inform him about the order for inspections against the 5 companies of the Carnoustie Group. Strangely, the petitioner is also silent as to why no alert message was generated in the MCA 21 system. 49. Simultaneously, we cannot lose sight of the fact that the respondent, as a Regional Director, was dealing with about 500 cases every month and therefore, had to rely on the information supplied by the RoCs as also the officers dealing with the files. In the present case, these officers had while putting up these applications before the respondent admittedly annexed a check-list where there was no mention of any pending inspection against any of the company. It is also not the case of the petitioner that there are any other allegations and/ or complaints of the similar nature or of any other kind filed/ pending against the respondent. 50. We, therefore, find no reason to differ with the finding of the Tribunal that the respondent was not apprised of the pending inspections when he allowed the shifting applications. 51. For the aforesaid reasons, we find no infir ..... 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