TaxTMI 
TaxTMI 
2009 (9) TMI 79
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....he issue was complex and would, therefore, require to be first decided, before deciding the merits of appeal. It was argued before the Division Bench that it was inherent duty of the ITAT in the light of the provisions of section 254 of the Income-tax Act, 1961, first to dispose of the preliminary issues, such as this, before disposing of the appeal on merits. The Division Bench also felt that, in the interest of justice, it is necessary that this matter receives uniform treatment so that one may avoid unnecessary and avoidable multiple litigations. Prima facie, the Division Bench was of the opinion that the issue required reference to Special Bench and therefore, drew a reference to the President, ITAT ('President' in short), on 10-7-2009. The Division Bench also suggested the President to explore the possibility of the Ministry of Law and Justice being given a notice of hearing so that they may make a representation as regards the exact objectives and implications of the said Rule 13E and also to represent the Government in support of the said Notification. It appreciated the fact that the Departmental Representatives may not possibly argue in the manner expected of them,....
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....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 the part of the I.T.A.T. (Recruitment and Conditions of the Service) Rules, 1963 and pleaded that no further hearing is necessary on this issue and that the issues be directed to Central Administrative Tribunal ("CAT" in short), who according to him, is the proper forum for disposing of such matter. 5. The assessee's counsel as well as the interveners vehemently argued that ITAT is the only proper forum to adjudicate preliminary issues, such as, capacity of the parties' representative or as to their qualification or disqualification to appear before the Tribunal. It is very fundamental issue that requires adjudication before the appeal is taken up on merits. If ITAT were to wrongly permit a person who is not qualified to appear in a case or a qualified person is denied his right of opportunity to argue the matter, a grave injustice is caused and, therefore, it is absolutely necessary as a part of its incidental or inherent power that only ITAT should dispose of such issue. For it, specific relian....
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....e 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 forum where the issue of this nature requires to be adjudicated. The ITAT Jaipur Bench in the case of Sagarmal Sarawgi v. ITO vide its order dated 10-8-1976 in ITA No. 473/Jp/1973-74, (1976) 2 TTJ (JP) 1371, went into such questions, when similar issues were raised. Similarly, ITAT Mumbai Bench 'A' in the case of Tata Chemicals Ltd. v. Dy. CIT vide their order dated 5-12-1997 ITA No. 4604/Mum./(1998) 67 ITD 56, went into the question whether particular DR was validly appointed by the Department and whether he could argue the case before the ITAT. The Tribunal disposed of and adjudicated the same, meaning thereby the Tribunal is the only forum, where such issues require to be thrashed out. It was pointed out by them that they having already retired from Government service, cannot approach the CAT. They pleaded that since right to appear before the ITAT is being questioned, only the ITAT has to deal and dispose them. Our attention was drawn to the decision of the Supreme Court in the case of M.K. Mohammed Kunhi. 10. W....
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....ot found its judgment on conjectures, surmises or speculation. In the exercise of its powers, the Tribunal is vested with a large area of discretion in a number of matters such as condoning the delay in filing of the appeal, admission of new pleas and additional evidence, conduct of further enquiry on its own or by remand to the lower authorities, passing such orders on the appeal as the interests of justice may require and so on. The discretion, thus, conferred is an impartial legal discretion to be exercised in conformity with the spirit of the law and in such a manner as to subserve, and not defeat, the interests of justice or furtherance of its cause. It should be guided by law and should not be arbitrary, capricious, vague, fanciful or governed by humour, unthinking folly or rash injustice. 12. Section 254 provides that "Save as provided in section 256 or section 260A, orders passed by the Appellate Tribunal on appeal shall be final". Under section 256, the High Court has only reference jurisdiction on questions of law framed by it. Now, after the amendment with effect from1-10-1998, an appeal shall lie to the High Court from every order passed by the Tribunal, if the High Co....
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....rticle 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 Tribunal had the power to stay the proceedings as also the collection of the penalties pending the appeal since that power was incidental and ancillary to its appellate jurisdiction. The Tribunal was consequently directed to dispose of the stay application in accordance with law. The revenue challenged further. Their Lordships of the Supreme Court observed that the right of appeal is a substantive right and the questions of fact and law are at large and are open to review by the Appellate Tribunal. The Tribunal has been given very wide powers under section 254(1), for it may pass such orders as it thinks fit after giving full hearing to both the parties to the appeal. If the ITO and the Appellate Assistant Commissioner have made assessments or imposed penalties raising very large demands and if the Tribunal is entirely helpless in the matter of stay of recovery, the entire purpose of the appeal get defeated if ultimately the orders of the departmental authorities are set aside. It is difficult to conceive that the Legislature should have left the entire m....
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....l Procedure Code: see Commissioner of Income-tax v. Hazarimal Nagji and Co. and New India Assurance Co. Ltd. v. Commissioner of Income-tax/Excess Profits Tax." 16. The Supreme Court upheld that the ITAT has a power to grant the stay although there were no express provisions in the Act, as a part of the incidental or ancillary to its appellate jurisdiction. It was observed by the Supreme Court that when section 254 confers appellate jurisdiction on ITAT, it impliedly grants the power of doing all such acts, or employing such means, as are essentially necessary to its execution and that the statutory power carries with it the duty in proper cases to make such orders for staying proceedings as well to prevent the appeal if successful from being rendered nugatory. 17. In the light of the aforesaid principles laid down by the Supreme Court, we Will examine the provisions of section 254(1), which mandates the Tribunal to give to both the parties to appeal an opportunity of being heard in the matter. If one of them is denied or a proper person is not allowed, the judicial process itself get derailed and the order of the Tribunal, howsoever strong it is, is liable to be set aside, on the....
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....he view taken by the Jaipur Bench and the Mumbai Bench in this regard. 19. The Delhi High Court in the case of Taylor Instrument Co. (India) Lid. v. CIT [1998] 232 ITR 771 has held that the Tribunal cannot determine whether or not a provision violates Articles of Constitution. The Tribunal being a creature of the Income-tax Act, can only confine itself to the provisions of the Act and cannot pronounce upon the constitutional validity or vires of any provision of the Act. 20. We are aware of the limitation. With this caution, we reach a conclusion that the Tribunal is competent to go into the questions as raised in these cases and we proceed to take up the issue that have arisen as a result of the Notification, which has a direct bearing on the process of hearing. 21. Rule 13E, which is the bone of contention, is inserted by the Notification G.S.R. 389(E), dated3-6-2009. This is issued by the Ministry of Law and Justice and reads as under: "13E. The President, the Senior Vice-President, the Vice-President and the Member of the Tribunal shall not practice before the Tribunal after retirement from the service of the Tribunal." Broadly stated, this Notification has the effect of ....
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....ereafter. 24. Among the ex-Members, there is an important classification, as to the position of resigned Members and the Members who superannuated after their full length of service. The Special Bench has addressed itself on all the above questions. We take up the case of resigned Members and after hearing their arguments dispose of their matters. We will take up the cases of retired Members separately and dispose off their issues. According to us, persons mentioned at (1) to (5) fall under this category of resigned Members - (1) Dr. Rakesh Gupta Advocate; (2) Shri Ved Jain, CA; (3) Shri Anoop Sharma, Adv.; (4) Shri Salil Kapur, Adv.; and (5) Shri Y.K Kapoor, Adv. The case of the resigned Members is quite interesting. We will take facts of each of the resigned Members for a better appreciation. 25. Dr. Rakesh Gupta, advocate, was appointed as an Accountant Member in the ITAT vide his appointment letter dated20-7-2000. His post itself was advertised to be temporary and the terms and conditions of appointment contained the following: "1. The said post of Accountant Member in the Income-tax Appellate Tribunal belongs to General Central Service (Group 'A') and carries a pay....
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....e then. It was stated by him that he was never posted at Delhi Benches where he has been practicing. It may be mentioned that before he resigned, he was posted at Hyderabad Benches of the ITAT. The case of Dr. Rakesh Gupta is that he is not hit by Notification No. GSR 389(E), dated3-6-2009and is entitled to appear for the parties despite Rule 13E of the Income-tax Appellate Tribunal Members (Recruitment and Conditions of Service) Rules, 1963, as according to him he is not the one who retired from the service of the Tribunal but he has resigned from service that too during the probation period itself. He was not even confirmed in the service from the post that was always remained temporary during his service and subject to several stipulated uncertain conditions. Only the persons specified in the said Notification who retire from service of the Tribunal are only prohibited. According to him, he has not retired from service, but resigned from service. The retirement, according to Dr. Rakesh Gupta, has a definite connotation in the service regulation for which Rule 11 of the Recruitment Rules was relied upon by Shri Rakesh Kumar Gupta, which reads as under: "The date of retirement o....
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....d carry different meanings. An employee can resign at any point of time even on the second day of his appointment but in case of retirement he retires only after attaining the age of superannuation or in case of voluntary retirement, on completion of qualifying service. The effect of resignation and retirement to the extent that there is severance of employment is common but in service jurisprudence both the expressions are understood differently. According to him, the decision of the Supreme Court in the case of UCO Bank takes him and like interveners, out of the purview of rule 13E of the Income-tax Appellate Tribunal Members (Recruitment and Conditions of Service) Rules, 1963. Reliance was also placed on the ratio of decision of Rajasthan High Court in the case of Sohan Lal Soni v. State of Rajasthan RLW 2007 (2) Raj. 1044. 29. Our attention was drawn to the decision of Supreme Court in the case of Jaipal Singh v. Sumitra Mahajan AIR 2004 SC 2066 to contend that in the case of resignation the relationship of employer and employee terminates on acceptance of resignation whereas in the case of retirement, voluntary or on superannuation, the relationship continues for the purpose ....
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....it has been held that probationer does not acquire any substantive right to the post and his right to continue would arise only on confirmation. The Supreme Court in the case of Purshottam Lal Dhingra has held that before confirmation a probationer has no right to hold the post. To the same effect is the decision of Supreme Court in the case of S.P. Vasudeva v. State ofHaryana AIR1975 SC 2292 as also the decision ofApex Courtin the case of State ofU.P.v. Akbar Ali Khan AIR 1966 SC 1842. In the latter case, it was held that so long as a person continues as a probationer, he acquires no substantive right to hold the post; and in the first case, according to Dr. Gupta, it was held that ad hoc or temporary employee has no right to the post. In view of the aforesaid decision of the Supreme Court in so many cases, it cannot be said that he is the one who retired from service within the meaning of rule 13E of the said Notification. He also took another objection that on the terms and conditions on which the offer of appointment was made to him or even the application was called, rule 13E was not there in the Income-tax Appellate Tribunal Members (Recruitment and Conditions of Service) Rul....
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....rs like pension. 32. Next attention was drawn to the decision of Supreme Court in the case of State of Punjab v. Kailash Nath [1989] 1 SCC 321, wherein their Lordships have held that the term "conditions of service" would include the following: (i) Salary or wages including subsistence allowance during suspension (ii) Periodical increments (iii) Pay scale (iv) Leave (v) Provident fund (vi) Gratuity (vii) Confirmation (viii) Promotion (ix) Seniority (x) Tenure or termination of service (xi) Superannuation (xii) Compulsory or premature retirement (xiii) Pension (xiv) Changing the age of superannuation (xv) Deputation (xvi) Disciplinary proceeding. 33. Dr. Gupta submitted that even for the sake of argument it is presumed that this kind of a bar could be part of the service conditions, can the said power under article 309 of the Constitution be used to alter the conditions of service after the said service itself stands forfeited. The Government regulations or conditions of service cannot be applied to him when he is no longer in such service. Article 309 does not empower the President of India to impose restrictions under the colour of "conditions of ....
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....e case of Dr. Rakesh Kumar is not there. On27-3-1998, Shri Ved Jain submitted his resignation to the President, which was accepted with effect from the afternoon of27-4-1998by the Government. It may be mentioned that the duration of Shri Ved Jain as Member in the ITAT was approximately for a period of 4 months. It was pointed out by Shri Ved Jain that he did not preside over any of the Benches of the ITAT and he was purely on orientation and training atHyderabadduring that period. The arguments of Shri Ved Jain are identical to the one that were made by Shri Rakesh Kumar Gupta. 36. In the case of Shri Anoop Sharma, advocate, he joined the ITAT as Judicial Member at Mumbai on 27-3-1989 and resigned from service on 31-5-1990, the terms and conditions of appointment of Shri Anoop Sharma are almost identical to the case of Shri Rakesh Kumar Gupta. 37. In the case of Shri Y.K. Kapoor, he joined the ITAT as Judicial Member on3-12-2001and resigned from service on16-4-2004and relinquished from duties with effect from1-7-2004. It was pleaded by Shri Y.K. Kapoor that terms of appointment contained as those of other Members. The appointment was purely for a temporary post and probation of t....
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....e which trenched upon the right to practice conferred by a law enacted by the Parliament and hence the Stale law was bad insofar as it trenched upon the law enacted by the Parliament. In the instant case, the impugned provision is incorporated in the central statute. Hence, the said ratio of these aforementioned decision would not apply to the instant case." 38. Our attention was drawn to the decision of the Supreme Court in the case of T.R. Kapur v. State ofHaryana AIR1987 SC 415. According to him, his case along with like persons who had resigned and not retired, much before the date of promulgation of the impugned Notification dated 3-6-2009, thus, cannot said to be affected by it, even if it is assumed though not admitted that they come within the general sweep of the said notification. Our attention was also drawn to the decision of the Supreme Court in the case of K.C. Arora v. State ofHaryana AIR1987 SC 1858. Shri Y.K. Kapoor drew our attention to para 11 of the affidavit filed by the Ministry of Law & Justice that on the basis of analogy the Members of the Tribunal who resigned from service when not confirmed without retirement benefits may plea that they should not be deb....
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....on of India, insofar as these questions are raised by the interveners, this Tribunal is not competent to go into the warrants of the legislation in the manner canvassed by the interveners and it should be rejected at the threshold. As a result, the Members who have resigned from such posts while they were in probation an analogy may be drawn to article 220 of the Constitution, where provision of appointment of a permanent judge of the High Court and persons who have resigned before becoming permanent may not be debarred under article 221 of the Constitution. On the same analogy such Members of the Tribunal who resigned from service when not confirmed without retirement benefits may plead that they should not be debarred from practicing before ITAT. However, this controversy cannot be left here for the reason that in the case of P.C. Jain where identical provisions were subject-matter of consideration by the High Court, they may also be hit by rule 13E, but on the said question of their right to practice a magnanimous view may be taken. This was stated in para 11 of the affidavit, as referred to by some of the interveners. Accordingly, rule 13E may not disqualify such persons from p....
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.... learned Sr. Central Government Counsel pleaded that no employee can have any vested right as to the terms and conditions of service. The Government can always vary the terms and conditions of service. The learned counsel heavily relied upon the decision of the Delhi High Court in the case of P.C. Jain, which according to him, answers all the possibility in favour of upholding the type of legislation that is brought out by amendment to the recruitment rules. 43. The learned Departmental Representative who appeared on behalf of the department had nothing more to say than what has been submitted by the Sr. Central Government Counsel in the matter. 44. Now we take up the cases of other classes of persons who appeared as interveners. They are all Members who retired before3-6-2009, i.e., the date of Notification GSR 389(E) was promulgated. 45. Shri S.C. Tiwari, Advocate, pointed out that unlike section 129(6) of Customs Act, Rule 13E of ITAT Members (Recruitment & Conditions of Service), Rules, 1963 does not disentitle a Member of the Tribunal from practicing before the Tribunal, rule 13E, according to him, does not say that Member of the ITAT shall not be allowed to practice before....
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....cannot be any doubt whatsoever that rules framed there under would apply so long as a statute or statutory rules or any other subordinate legislation governing the conditions of service are not enacted or made or not otherwise operating in the field. According to him, rules made under proviso to article 309 of the Constitution are for a transitory period and the same would give way to the special rules once framed. The provisions of section 288 lay down the qualification of a person who may appear as an authorized representative of an assessee who is entitled or required to attend before any Income-tax authority including Income-tax Appellate Tribunal. It also prescribes the persons who are not permitted to represent the assessee as an authorized representative. According to him, both qualification as well as disqualification for practicing before the Tribunal have been covered by the provisions of section 288. That being so, there is no room for framing of any rules, in exercise of any power under proviso to article 309 of the Constitution by the Executives of the Government. According to him, for insertion of rule 13E there is no mandate to the Union Government under article 309,....
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.... into the Act. The executives wanted to insert rule 13E in the Service Conditions which, according to him, as already stated earlier, does not apply to the persons who have already retired and there is a vast difference in the language of section 129(6) and rule 13E inserted by the impugned Notification. Drawing these differences, the learned intervener wanted us to keep these differences in mind before denying the interveners who are duly qualified from assisting the Court in the matters of appeal arising under the Income-tax Act. Mr. Tiwari has listed some of the names of persons who have retired and who are practicing:- 1. Shri G.C. Khanna 24-6-1949 2. Shri A.N. Kirpal 23-2-1950 3. Shri A.R. Agarwal 1-8-1958 4. Shri SAL Narayana Rao 18-7-1956 5. Shri N.D. Karkhanis 8-8-1961 6. Shri S.K. Aiyar 16-1-1964 7. Shri Harnam Shankar 1-11-1976 8. Shri J. Sen 24-5-1962 9. Shri V.P. Tiwari 31-7-1979 10. Shri A.M. Rao 31-3-1982 11. Shri Bishan Lal 30-9-1983 12. Dr. S. Narayanan 31-7-1987 13. Shri B.S. Ahuja 19-6-1987 14. Shri Dalip Singh 31-5-1981 15. Shri D.D. Vyas 4-5-1971 16. Shri K.C. Srivastava 19-6-1988 17. Shri S.N. Rotho 19-7-1988 ....
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....ari pointed out that when rules are framed under proviso to Article 309 of the Constitution, the Courts have always read a severe limitation to their retrospective operation. The retrospective operation of a rule shall not prejudice a person already appointed to a service or post and it shall not take away any vested rights in the person already appointed to a service or post. Our attention was drawn to the ratio laid down by the Supreme Court in the cases of T.R. Kapur; D.P. Sharma v. UOI [1989] 1 SCR 791; and R.S. Ajara v. State ofGujarat[1997] 3 SCC 641. 50. Shri M.V.R. Prasad, another intervener, appeared and argued on the same lines. He drew our attention to the Rules of Interpretation given at pages 493 to 505 of 'Interpretation of Statutes' by G.P. Singh, 11th Edition. He also drew our attention to the provisions of section 288 of the Income-tax Act, 1961 which prescribe the qualifications and also disqualifications from appearing as representative before the income-tax authorities including the ITAT. According to him, it contained a provision similar to section 129(6) of the Customs Act in the form of section 288(3) which was brought to achieve the similar object a....
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....rule in general is applicable where the object of the statute is to affect vested rights or to impose new burdens or to impair existing obligations. Unless there are words in the statute sufficient to show the intention of the Legislature to affect existing rights, it is deemed to be prospective only. Our attention was also drawn to the decision of the Supreme Court in the case of K.S. Paripoornan, wherein it deals with the rules of interpretation in this regard. Our attention was drawn to the decision of the Supreme Court in the case of State ofU.P.v. Shivnarain AIR 2003 SC 49 (sic), wherein, according to him, relationship of master and servant terminates the moment the servant retires from service. He can no longer be governed by any recruitment rules and the present Rule 13E cannot, therefore, regulate anything in relation to the employees who have retired. Our attention was drawn to the ratio of decision in the case of Uday Pratap Singh v. State ofBihar AIR1994 Supl. 3 SCC 451 and also to the decision of Supreme Court in the case of U. Raghavendra Acharya v. State of Karnataka AIR 2006 SC 2145. In all these cases it was pleaded that an executive order cannot operate retrospecti....
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....mitted to argue here that such a rule is a condition of service when it came to the identical provisions in the case of ITAT. According to him, the expression 'condition of service' itself was construed by theApex Courtin the case of Kailash Nath, classifying the services failing within the purview of 'condition of service' (as reproduced in earlier part of the order). In view of the above judgment, it cannot be said that the bar to practice falls within the term 'condition of service' as it is not in connection with any of the items spell out as a condition of service, explained by Apex Court in the case of Kailash Nath. 53. The learned intervener submitted that rule 13E has been inserted on the statute with effect from the date of publication, i.e.,3-6-2009. Admittedly all these persons who argued as interveners have retired prior to this date. It cannot be presumed that such rule would apply to the persons who have already retired. In fact, according to him, unless such rule was there at the time of recruitment, the same cannot be applied at the time of retirement. 54. He pointed out that a provision can be said to be retrospective if it is declaratory ....
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....he power contained in Article 323B of the Constitution of India. Section 11(c) of the said Act barred the President, Vice President or the Members from appearing, pleading before the said Tribunal or CEGAT after their retirement. However, due to the decision ofApex Courtin the case of L. Chandrakumar v. Union of India [1997] 3 SCC 261, the said CERAT Act was repealed in 2004. Since then the issue was being discussed at the highest level and sub-section (6), which was inserted by the Finance Act, 2007, is the result of such deliberations. The High Court took note of these developments which started in 1986. It was pointed out before us that the provisions of section 129 of the Customs Act and section 252 of the Income-tax Act are almost similar. The Parliament took a conscious decision to insert sub-section (6) to section 129 of the Customs Act, but did not insert similar provision in section 252 of the Income-tax Act. No such provision has been brought in the Income-tax Act till date, meaning thereby, the Parliament itself wanted the difference in both the Acts to continue. The reason is obvious, according to him. The provision of sub-section (3) to section 288 existed in the Incom....
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....dy retired. He gave an example. Rule 3(2) of the ITAT Members (Recruitment & Conditions of Service) Rules, 1963 prescribes the qualification for appointment as an Accountant Member. Clause (ii) of sub-rule (2) of the original Rule had provided that the person who had worked as an Asstt. Commissioner of Income-tax for three years, was eligible for appointment as Member. It was amended by amendment in the above rules and it provided that persons who have worked as Commissioners of Income-tax for 3 years were eligible for appointment as Accountant Members. Does it mean that those persons who were working as Members selected on the basis of earlier eligibility would cease to be Members? But it did not happen, meaning thereby, such amendment as regards the recruitment rules, can be made to the appointments made afterwards. As regards the meaning of term "conditions of service", he relied upon elaborate discussions in the decisions ofApex Courtin the cases of State ofPunjabv. Kailash Nath AIR 1989 SC 558 and Shardul Singh's case. 56. Shri T.N. Chopra, Advocate pleaded that notification issued by the Law Ministry being in the nature of subordinate legislation, cannot conceivably amen....
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....or an act committed while in service, even after the retirement, meaning thereby, the retired employees can be subjected to the conditions of service like the one as is being made out in the present Notification and such conditions of service, as the Apex Court itself has held, are binding upon the retired Government employees. According to him, the ratio of the Supreme Court's decision clearly supports the view taken by the Ministry of Law & Justice and on other points he relied upon the detailed affidavit filed by the Ministry in support of the stand taken by the Ministry. He vehemently argued that the ITAT Members should be guided by the principle of purposive interpretation as was done by the Delhi High Court while construing the identical provisions in the Customs Act, the purpose of both the pieces of the legislation is the same and that being to maintain the independence of the judiciary and to save the reputation of the institution free from charge of bias. On account of ex-Members who once presided over the judicial body, are arguing their cases before it, the charge of bias can always be raised. Rather, it is always presumed. The judicial body should be free from such....
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....ght of law that prevails on the issue. The spirit with which they appeared to assist the Bench is appreciated and the objections put up in this regard by some of the interveners are, therefore, rejected, as untenable. After all it must not be forgotten that the Tribunal in its judicial proceedings are entitled to draw assistance from all persons. It cannot be said that Ministry of Law & Justice becomes stranger after the issuance of notification. 61. In para 21 of the decision of Hon'ble Delhi High Court in the case of P.C. Jain, the validity of the provision of section 129(6) of the CustOIl1S Act were objected on the charge of violation of Articles 14, 19(1)(g) and 21 of the Constitution. The said legislation was challenged on being discriminatory inasmuch as the Members of other Tribunals, such as, the Income-tax Appellate Tribunal and the Appellate Tribunal for Foreign Exchange are not barred from appearing, acting or pleading before Tribunals of which they were once Members. The High Court specifically dealt with the issue in para 24 of its Judgment again on the ground that such clear discrimination was untenable. In the opinion of the High Court the step taken in amending....
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....ion can perhaps be made even to prevent the institution from getting into a cloud. After all it is the duty of the Government to protect the judicial body from being charged with such impressions. But the question that arises now is as to whether the Notification that is before us, can be interpreted which is on the basis of some hearsay, gossips or media hype. Definitely not. The interpretation, in our view, cannot be solely based upon these considerations, but has to be on the solid principle of law, as interpreted by the Supreme Court and different High Courts. 63. Now important offshoots of the provisions of Rule 13E are being discussed. The first offshoot would be whether it applies to the Members who resigned from a temporary post during probation period. We have already extracted the terms of offer issued to the interveners, which is more or less the same. The post is stated to be temporary for a particular period, stated therein and also the post itself treated as probationary with an option that the Government may extend-the probation on its discretion. Except in the case of Shri Y.K. Kapoor, in all other cases of the interveners at Sl. Nos. 1 to 4, mentioned in the capti....
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....he post. This "lien" is defined in Fundamental Rule, Chapter II, rule 9(13) as the title of a Government servant to hold substantively a permanent post, including a tenure post, to which he has been appointed substantively. The Government cannot terminate his service unless it is entitled to do s. (1) by virtue of a special term of the contract of employment, e.g., by giving the requisite notice provided by the contract or (2) by the rules governing the conditions of his service, e.g., on attainment of the age of superannuation prescribed by the rules, or on the fulfilment of the conditions for compulsory retirement or, subject to certain safeguards, on the abolition of the post or on being found guilty, after a proper enquiry on notice to him, of misconduct, negligence, inefficiency or any other disqualification. An appointment to a permanent post in Government service on probation means, as in the case of a person appointed by a private employer, that the servant so appointed is taken on trial. The period of probation may in some cases be for a fixed period, e.g., for six months or for one year or it may be expressed simply as "on probation" without any specification of any perio....
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....egligence, inefficiency or any other disqualification and is by way of punishment dismissed or removed from service or reduced in rank. The substantive appointment to a temporary post, under the rules, used to give the servant so appointed certain benefits regarding pay and leave, but was otherwise on the same footing as appointment to a temporary post on probation or on an officiating basis, that is to say, terminable by notice except where under the rules promulgated in 1949 to which reference will hereafter be made, his service had ripened into what is called a quasi-permanent service. 19. The position may, therefore, be summarized as follows: In the absence of any special contract the substantive appointment to a permanent post gives the servant so appointed a right to hold the post until, under the rules, he attains the age of superannuation or is compulsorily retired after having put in the prescribed number of years' service or the post is abolished and his service cannot be terminated except by way of punishment for misconduct, negligence, inefficiency or any other disqualification found against him on proper enquiry after due notice to him. An appointment to a tempor....
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.... formal inquiry by framing charges and giving opportunity to the Government servant in accordance with the provisions of Article 311 of the Constitution. Since, a temporary Government servant is also entitled to the protection of Article 311 (2) in the same manner as a permanent Government servant, very often, the question arises whether an order of termination is in accordance with the contract of service and relevant rules regulating the temporary employment or it is by way of punishment. It is now well-settled that the form of the order is not conclusive and it is open to the Court to determine the true nature of the order. In Purshottam Lal Dhingra v. Union of India MANU/SC/0126/1957 a Constitution Bench of this Court held that the mere use of expressions like 'terminate' or 'discharge' is not conclusive and in spite of the use of such expressions, the Court may determine the true nature of the order to ascertain whether the action taken against the Government Servant is punitive in nature. The Court further held that in determining the true nature of the order the Court should apply two tests namely: (1) whether the temporary Government servant had a right to t....
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....fice' means to 'cease to hold' the office, or to 'loose hold of the office'; and to 'loose hold of office' (cf. Shorter Oxford Dictionary); and to "loose hold of office", implies, to 'detach', "unfasten"; "undo or untie the binding knot of ink" which holds one to the office and the obligations and privileges that go with it." 68. The term 'resignation' as understood in the above case is a deliberate act of relinquishment of service, whereas the 'retirement' has a different connotation. The term "retirement" itself is used by different service regulations as an event that takes place on attaining the superannuation. Voluntary retirement is also provided which can be obtained on completing prescribed years of service. Sometimes an employer may compulsory retire an employee. Fundamental Rule 56 provides that every Government servant shall retire from service on the afternoon of the last day of the month in which he attains the age of sixty years, which means that the retirement takes place on the superannuation or in case of voluntary retirement, on completion of qualifying period of service. 69. In the case of the Members of the I....
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....f his appointment but in the case of retirement he retires only after attaining the age of superannuation or in the case of voluntary retirement on completion of qualifying service. The effect of resignation and retirement to the extent that there are severance of employment but in service jurisprudence both the expressions are understood differently. Under the Regulations, the expressions "resignation" and "retirement" have been employed for different purpose and carry different meanings. The pension scheme herein is based on actuarial calculation; it is a self-financing scheme, which does not depend upon budgetary support and consequently it constitutes a complete code by itself. The scheme essentially covers retirees as the credit balance to their provident fund account is larger as compared to employees who resigned from service. Moreover, resignation brings about complete cessation of master and servant relationship whereas voluntary retirement maintains the relationship for the purposes of gnat of retiral benefits, in view of the past service. Similarly, acceptance of resignation is dependent upon discretion of the employer whereas retirement is completion of service in terms....
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....ed in service and was still on probation that too on a temporary post. 73. It has already been held by theApex Courtin the case of Purshottam Lal Dhingra, extracted above, that when a person is appointed on probation, even on a permanent post, that servant is to be taken as appointed on training. The Supreme Court again in the case of Kaushal Kishore Shukla has held that the probationer does not have any right to hold the post and has right to continue would arise only on confirmation. Again in the case of State ofUPv. Akbar Ali Khan, has held that when a person continues on probation, he acquires no substantive right to hold the post. 74. In our view, these persons who have resigned from service during the probation period itself cannot be treated as having been retired from service within the meaning of section 13E or 11 of the ITAT Members (Recruitment and Conditions of Service) Rules, 1963. In our opinion, they definitely cannot be hit by the provisions of Rule 13E which is brought in the statute book much after they have relinquished their posts and got their past service forfeited. In our view by following the above principles and in the light of the Supreme Court decisions....
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....extended at the discretion of the appointing authority. In this case, it was submitted on behalf of Shri Y.K. Kapur that no confirmation order was issued to him. The office record does not show that he was confirmed in service. That means his post did not become permanent. He resigned to the post after 2 years but before the confirmation took place. That means he resigned during probation period. In identical situation the Apex Court in the case of Wasim Beg v. State of U.P. [1998] 3 SCC 321 itself has answered the question, whether an employee at the end of probationary period automatically gets confirmation in the post or whether an order of confirmation or any specific act on the part of the employer confirming the employee is necessary, would depend upon the provisions in the relevant service rules relating to probation and confirmation. In those cases where the Rules provide for a maximum period of probation and which probation cannot be extended, theApex Courthas observed as under: "15. Whether an employee at the end of probationary period automatically gets confirmation in the post or whether an order of confirmation or any specific act on the part of the employer confirmi....
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.... confirmation at the end of the prescribed probationary period. In this line of cases one can put Sukhbans Singh v. State of Punjab MANU/SC/0356/1962, State of Uttar Pradesh v. Akbar Ali Khan MANU/SC/0231/1966, Shri Kedar Nath Bahl v. State of Punjab MANU/SC/0593/1972, Dhanjibhai Ramjibhai v. State of Gujarat MANU/SC/1385/1997, Municipal Corporation, Raipur v. Ashok Kumar Misra and State of Punjab v. Baldev Singh Khosla MANU/SC/0520/1996. In the recent case of Dayaram Dayal v. State of M.P. MANU/SC/0824/1997 (to which one of us was a party) all these cases have been analysed and it has been held that where the Rules provide that the period of probation cannot be extended beyond the maximum period there will be a deemed confirmation at the end of the maximum probationary period unless there is anything to the contrary in the Rules." 78. In the light of the above discussions, the said offer of appointment itself prescribes 2 years as a period of probation with a discretion to the employer to increase such period on its discretion. Here, whether discretion was exercised to extend such period of probation is not forthcoming from the records. It was confirmed by Shri Y.K. Kapur that he....
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....e broadly lifted into the Customs Act. The legislation brought certain amendments to disqualify the President, Vice President and Members of that Tribunal to practice before CESTAT after ceasing to hold such office. The said disqualification is brought into statute by way of an amendment to section 129(6) of the Customs Act, which 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." 81. In relation to ITAT, the Legislature has taken a different route in bringing such amendment. Although the intention to make such an amendment was admittedly common, but the way the legislation wants to achieve the said purpose, are entirely different and rather capable of different interpretation because amendments to the statute are not brought by the wisdom of the Parliament. There is no condition of service as such, as rightly pointed out by the ASG when the matter was argued before the Delhi High Court in the case of P.C. Jain, whereas when it came to the ITAT Members, the Legislature has taken a different route, in our view, rather a risky route. They did not go to the ....
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....provided as under (prior to its deletion): "(3) Notwithstanding anything contained in this section, if the authorized representative is a person formerly employed as an income-tax authority, not below the rank of Income-tax Officer, and has retired or resigned from such employment after having served for not less than three years in any capacity under this Act or under the Indian Income-tax Act, 1922 (11 of 1922), from the date of his first employment as such, he shall not be entitled to represent any assessee for a period of two years from the date of his retirement or resignation, as the case may be." 85. This legislative provision was deleted by the Taxation Laws (Amendment) Act, 1984 with effect from1-10-1984, that means, when these provisions were deleted, the Parliament thought in its wisdom not to bar any such persons from practicing before the income-tax authorities to which category they once belonged to. It may be pointed out at this stage that the validity of the sub-section was challenged before the Punjab & Haryana High Court in the case of Kulwant Singh, which held the provision to be constitutionally valid. Still the Parliament used its higher wisdom to delete sub-....
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....ct and Rule 11 of the Pension Rules was to achieve a common objective and to ensure the same result. As in our case section 129(6) of Customs Act and Rule 13E of the ITAT Members (Recruitment and Conditions of Service) Rules, 1963. But look how the judiciary appreciated the difference. Punjab & Haryana High Court in the case of Kulwant Singh has held 288(3) amendments are constitutionally valid. But rule 11 of the Pension Rules was held to be otherwise by Supreme Court in R. Kapoor's case. Exactly, their Lordships of High Court in P.C. Jain's case upheld the validity of section 129(6) of Customs Act as it proceeded on the basis that the right to practice is not a condition of service, but a legislative amendment to Customs Act. The difference has become apparent and revealing and cannot be just overlooked. 87. In the light of this background, we cannot say that the ratio laid down by the Delhi High Court in the case of P.C. Jain should be plainly applied to this piece of legislation which brings certain amendments in the conditions of service akin to CCS (Pension) Rules. Again we go back to the earlier question which was bothering us, if it is a condition of service and wh....
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....e rule of 1957 which increased the age from 55 years to 58 years applied to all Government servants even though they were recruited before 1957. Now we will take a hypothetical provision and the situation and the answer becomes clear. Suppose instead of age being reduced to 55, say it was increased to 70 years. Does it mean the executive applies the amendment to those retired just before without crossing 70. Will all of them recalled to serve the union to the age of 70. That will simply be obnoxious. It never happened when the age was just increased from 55 to 58. It will never happen now because the amendments as to conditions of service can only apply to the persons serving on the date of amendment even applying the principle laid down by Supreme Court in Bishnu Narain Misra. This decision ofApex Court, in our opinion, has repelled the contention of the interveners that these provisions are only applicable to those who join ITAT after3-6-2009. At the same time, as already explained, it does not apply to those who have already retired prior to3-6-2009. It does not disturb the historical facts or events that have already happened before or long time back. 88. The Ministry has reso....
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....ons who have long back retired. After all, a President who has retired cannot remain to be the President after retirement. In the same manner who retired as Sr. Vice President long back as of now cannot remain to be the Sr. Vice President. In the same manner who retired as Vice President long back cannot remain Vice President for applying these provisions after his retirement. Similarly, a Member who retired as a Member prior to the insertion, cannot be roped in to be again call a Member to whom the said provisions are made applicable. In other words, the plain language employed in Rules 13E and 13F jointly suggest that it only apply to those persons who were serving in that capacity on 3-6-2009. That means it can admittedly be applied to those persons who are in service in those capacities as on3-6-2009. To all of us it definitely applies and all the Members who were on the service roll/roaster of the ITAT as on3-6-2009, when these are made applicable, definitely suffer from the present disqualification. If it is to be treated as condition of service. In our understanding even the plain-reading of the provision of section 13E indicates that it can only apply to the Members who hav....