Supreme Court Overturns Tribunal Decision, Orders Return of Salary

The Supreme Court allowed the appeal, setting aside the Tribunal's judgment and dismissing the respondent's application. The respondent was directed to return the withdrawn salary as per his undertaking. No order as to costs was made.

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Issues Involved:
1. Applicability of FR 56(j) to members of the ITAT.
2. Nature of the order of compulsory retirement.
3. Compliance with procedural guidelines for compulsory retirement.
4. Sufficiency of material to justify compulsory retirement.
5. Impact of less than 10 years of qualifying service on the nature of compulsory retirement.

Issue-wise Detailed Analysis:

1. Applicability of FR 56(j) to members of the ITAT:
The respondent argued that FR 56(j) was not applicable to ITAT members due to Rule 11 of the Income Tax Appellate Tribunal Members (Recruitment and Conditions of Service) Rules, 1963, which fixes the retirement age at 62 years. The Tribunal rejected this contention, citing Rule 13, which states that conditions of service not covered by the Rules shall be the same as those applicable to other Government of India employees of corresponding status. The Tribunal held that Rule 11 only provides an exception to the general rule and does not supersede FR 56.

2. Nature of the order of compulsory retirement:
The respondent contended that the compulsory retirement was penal in nature since he had not completed 10 years of qualifying service for pension benefits. The Tribunal held that pensionary benefits should be adjudged based on existing rules at the date of retirement. The respondent, having nearly nine years of service, was paid service gratuity. The Supreme Court agreed, noting that FR 56(j) allows for compulsory retirement at 55 years of age, which the respondent had attained.

3. Compliance with procedural guidelines for compulsory retirement:
The Tribunal found non-compliance with guidelines in OM dated January 5, 1978, particularly that the proposal was initiated by the Law Minister and not directly by the Cabinet Secretary. The Supreme Court disagreed, stating that since the respondent was under the Ministry of Law and Justice, it was appropriate for the Ministry to initiate the proposal. The Supreme Court also clarified that the Cabinet Secretary's role in making recommendations directly to the ACC was correctly followed.

4. Sufficiency of material to justify compulsory retirement:
The respondent's service record included complaints about his behavior and performance, leading to multiple probation extensions and eventual confirmation with admonition. The Tribunal had disregarded adverse material prior to April 1, 1985. The Supreme Court held that the entire service record, including pre-confirmation material, should be considered. It noted continued complaints and adverse remarks in the ACR for 1985, and the respondent's admission of living with another woman, justifying the compulsory retirement.

5. Impact of less than 10 years of qualifying service on the nature of compulsory retirement:
The respondent argued that compulsory retirement before completing 10 years of service was effectively a punishment. The Supreme Court rejected this, distinguishing FR 56(j) from Article 9.1 of the Pepsu Services Regulation, which was struck down in Gurudev Singh Sidhu v. State of Punjab. FR 56(j) allows for compulsory retirement at 50 or 55 years, providing a reasonable service period. The Court concluded that the order of compulsory retirement was valid despite the respondent's less than 10 years of service.

Conclusion:
The Supreme Court allowed the appeal, setting aside the Tribunal's judgment and dismissing the respondent's application. The respondent was directed to return the withdrawn salary as per his undertaking. No order as to costs was made.

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