Union of India v. Akshay Bipin

13. The application stands disposed of. LPA 428/2019

14. The appellant is aggrieved by the judgment dated 25.09.2018 passed by a learned Single Judge of this court by which a writ petition filed by the respondent stands allowed. The respondent/writ petitioner had sought a writ for certiorari seeking quashing and setting aside the impugned Memorandum of Article of charges dated 28.03.2018 alongwith its annexures and all subsequent proceedings emanating therefrom. A direction was also sought to quash and set aside the order dated 17.04.2018 and all subsequent proceedings emanating therefrom. By a detailed judgment, the writ petition stands allowed. Before we consider the rival submissions made by learned counsels for the parties, we deem it appropriate to set out the facts which had given rise to the filing of the writ petition which has been noticed by the learned Single Judge. The facts contained in the judgment dated 25.09.2018 read as under:

15. The petitioner (respondent herein) was appointed as Presiding Officer of the Debt Recovery Tribunal (hereinafter referred to as “DRT”), Chandigarh, on 15th December 2014. His tenure as Presiding Officer, came to an end on 24th May, 2018.

16. Less than two months prior to the expiry of his tenure, the petitioner was issued a charge-sheet dated 28th March, 2018. The charge sheet related to the order dated 15th July, 2016, passed by the petitioner, confirming the compromise of ₹ 20 lakhs entered into, between the PNB and the two borrower firms, i.e. M/s Barkat Ram Jeevan Kumar (hereinafter referred to as „Barkat‟) and M/s Jeevan Petroleum (hereinafter referred to as “Jeevan”). It was the allegation in the chargesheet that the orders had been passed by the petitioner in a disposed of OA 177/2009 which had the effect of withdrawal of the two Recovery Certificates (RCs). The total value of the two RCs was ₹ 2,37,55,771/-, which was substantially higher than the compromise amount of ₹ 20 lakhs. The Statement of Imputations attached to the charge-sheet also noted that the payment of the loan, taken by the two borrowers from the Bank, was secured by way of mortgage of a piece of land, with a building constructed thereon, and that the said mortgaged property was to be auctioned and the reserve price fixed at ₹ 3.34 crores. It was further noted that proclamation of sale had been issued on 24th July, 2015, by the Recovery Officer for the said RCs, requiring deposit of the earnest money of ₹ 85 lakhs, by the intending bidder. As such, the charge-sheet alleged that the orders, withdrawing the Recovery Certificates, were passed by the respondent, on 15th July, 2016, unauthorizedly, without legal authority or justification. It was alleged that by acting in the aforesaid manner, the respondent unauthorizedly exceeded his vested judicial powers showing his incapacity to function as a Presiding Officer in a befitting manner” and that he was “guilty of misbehaviour”.

17. We may also note that the DRAT in the suo moto action had taken note of the affidavits filed by the bank, who had entered into an amicable settlement with the borrower. We also deem it appropriate to notice that the borrower also sought financial assistance from New Bank of India, which had merged with Punjab National Bank and the Punjab National Bank inherited all the litigations, assets and liabilities of New Bank of India.

18. Mr. Soni, learned Standing Counsel, has reiterated the submissions made by him before the learned Single Judge. Mr. Soni reiterates that the courts ordinarily would not interdict disciplinary proceedings midway. He submits that no writ petition would lie against a chargesheet or a show cause notice. Counsel contends that the law is well settled and thus, the learned Single Judge has exceeded its jurisdiction in allowing the writ petition and in quashing the charge-sheet. He further contends that the writ petition was premature and therefore, the same would not give any cause of action in favour of the respondent, especially, in view of the fact that mere issuance of a charge-sheet would not affect the rights of the respondent. Counsel further submits that there were justifiable reasons for the department, who have issued the charge-sheet. Mr. Soni has contended that the respondent, who was the Presiding Officer at the relevant time, could not have granted his approval to the settlement arrived at between the borrower and the bank for the reason that the amount of settlement was extremely meagre and the DRAT rightly took suo moto action based on a complaint made by an advocate in the matter and set aside the order of the Presiding Officer.

19. Mr. Soni further submits that the proper procedure would be that post the charge-sheet having been filed, the inquiry should be conducted and in case, the respondent has any grievance, he would then be entitled to safeguard his interest and protect his rights. Mr. Soni has relied on a decision passed by Supreme Court in the case of Union of India & another Vs. Kunisetty Satyanarayana, (2006) 12 SCC 28, more particularly, paras 13, 14 and 15, which read as under: “13. It is well settled by a series of decisions of this Court that ordinarily no writ lies against a charge-sheet or showcause notice vide Executive Engineer, Bihar State Housing Board v. Ramesh Kumar Singh [(1996) 1 SCC 327: JT (1995) 8 SC 331], Special Director v. Mohd. Ghulam Ghouse [(2004) 3 SCC 440: 2004 SCC (Cri) 826: AIR 2004 SC 1467], Ulagappa v. Divisional Commr., Mysore [(2001) 10 SCC 639], State of U.P. v. Brahm Datt Sharma [(1987) 2 SCC 179: (1987) 3 ATC 319: AIR 1987 SC 943], etc.

14. The reason why ordinarily a writ petition should not be entertained against a mere show-cause notice or chargesheet is that at that stage the writ petition may be held to be premature. A mere charge-sheet or show-cause notice does not give rise to any cause of action, because it does not amount to an adverse order which affects the rights of any party unless the same has been issued by a person having no jurisdiction to do so. It is quite possible that after considering the reply to the show-cause notice or after holding an enquiry the authority concerned may drop the proceedings and/or hold that the charges are not established. It is well settled that a writ petition lies when some right of any party is infringed. A mere show-cause notice or chargesheet does not infringe the right of anyone. It is only when a final order imposing some punishment or otherwise adversely affecting a party is passed, that the said party can be said to have any grievance.

15. Writ jurisdiction is discretionary jurisdiction and hence such discretion under Article 226 should not ordinarily be exercised by quashing a show-cause notice or chargesheet.”

20. Mr. Bhandari, learned counsel for the respondent submits that there is no infirmity in the judgment dated 25.09.2018 passed by the learned Single Judge. It is contended that even assuming without admitting that there has been any irregularity in the order passed by the respondent, no case for disciplinary action is made out, which is evident from the fact that there is no allegation against the respondent that he induced the bank or forced or coerced the bank or pressurized the bank into arriving at a settlement with the borrower at an amount which was not just and proper. He further submits that even a consistent stand has been taken that there was no impropriety on their part to have arrived at an amicable settlement with the borrower. Mr. Bhandari also contends that even before the Chairman, DRAT, the consistent stand of the bank has been noticed in the order. The affidavits placed before the Chairman, DRAT also supported the settlement. Additionally, the DRAT itself has given a complete clean-chit to the respondent by observing that he did not smell a rat in the proceedings before the Presiding Officer while passing the order on 15.07.2016. It is contended by Mr. Bhandari that it is not an absolute rule that a charge-sheet cannot be quashed of course for a special reason and inappropriate cause. It is contended by the respondent that since the settlement had been arrived at between the borrower and the bank without the Presiding Officer having any role to play. The proceedings initiated against him would fall under the rare case where the High Court under Article 226 of the Constitution of India would exercise its jurisdiction, which the learned Single Judge did and there is no infirmity in the same.

21. We have heard learned counsels for the parties and with their consent, we are disposing of this appeal at the admission stage itself. While there is no quarrel with the proposition sought to be urged by Mr. Soni that the courts would not ordinarily entertain a writ petition against a charge-sheet while we have extracted paras 13, 14 & 15 of the judgment in the case of Kunisetty Satyanarayana (supra), we also deem it appropriate to reproduce para 16, which reads as under:

22. While the Apex Court has observed that a writ petition is a discretionary relief and such discretion should ordinarily be exercised by quashing a show cause notice or charge-sheet, but this is not an absolute rule, the Supreme Court has further observed that in some very rare and exceptional case, the Supreme Court can quash the chargesheet if it is found to be wholly without jurisdiction or wholly illegal. In our view, the learned Single Judge has kept this observation in mind while allowing the writ petition and for good reasons which we propose to highlight in the subsequent paragraphs.

23. Before the Chairman, DRAT, the Financial Institutions had filed two affidavits. Paras 14 to 21 of the affidavit read as under:

24. A reading of this affidavit would show that the financial Institutions had accepted the settlement and their stand was that the settlement was in the best interest of the bank The deposition of this affidavit is of immense relevance for the reason that in case there were any kind of impropriety or any element of fraud or dishonesty of any official of the bank, the bank would have not supported the settlement, particularly after a complaint was brought to the notice of the bank and the bank was made aware of the suo moto proceedings pending before the Tribunal. This affidavit also highlights that proper procedure was followed before sanction was given for the settlement. The affidavit first highlights the insurmountable difficulty in auctioning the property for recovery of the dues in para 16 wherein it was deposed that the bank recovery policy has been duly followed in sanctioning the OTS. The Circle officer of the Bank also accorded its approval to the OTS dated 25.11.2014. The deponent also made it clear that while arriving at the settlement, no portion of the principal amount had been waived. The entire principal amount disbursed by the New Bank of India under the loan facility stood recovered and only the interest was sacrificed as it was felt that the property would not be successfully auctioned. Paras 19 and 20, we repeat, highlight the fact that the OTS dated 25.11.2014 is valid and is in accordance with law and the bank stands by the said OTS. The bank thereafter goes on to reiterate that the Tribunal has rightly closed the recovery cases. Yet another affidavit was filed by the bank, as per which, New Bank of India had granted credit facility sometime in the year 1986-87. M/s Jeewan Petroleum was sanctioned credit facility aggregating to Rs.1.40 Lakh and M/s Barkat Ram Jeewan Kumar was sanctioned credit facility aggregating to Rs.2.50 Lakhs. The suit was filed in the year 1990 for recovery of Rs.4,24,440.88 with interest, which was decreed on 05.09.1997 and in the second matter, suit for recovery was filed for Rs.6,68,170/-, which was decreed on 02.06.2008. As per para 13 of this affidavit, the mortgaged properties were auctioned for Rs.[7] Lakhs and Rs.[4] Lakhs respectively and the amounts received were appropriated in the loan account of both parties. It has also been highlighted in this affidavit that another property available was put to auction at a reserved price of Rs.4.17 crores on 10.04.2013 and 28.08.2014 and on both days, the auction failed for want of bids. The affidavit also discloses that probably the aforesaid property stands sold to one Shri Balkar Singh, who tendered the compromise proposal, which was accepted. Paras 18, 19, 20 and 21 read as under:

25. In the suo moto proceedings initiated by the Chairman, DRAT, the following observations are relevant: “……..it is, however, clarified that I found no reason to smell a rat in the passing of the orders dated 15.07.2016 by the Presiding Officer of DRT-II, Chandigarh as was the attempt of the complainant advocate in his complaint as also before me at the time of personal hearing given to him by me……”

26. It is a settled law that the Chairperson, DRAT is not competent to take up suo moto proceedings, as has been held in the case of Smt. Harpreet Kaur and another Vs. M/s Fullerton India Credit company Ltd., 2018 (249) DLT 283 DB and Padam Singhee and another Vs. M/s SVOGL Oil, Gas and Energy Ltd. and others, W.P. (C) 9616/2018, more particularly, paras 19 and 20 of Padam Singhee (supra), which read as under:

19. Surprisingly, contrary to its own view, DRAT has exercised power which it did not possess. Even if the DRAT was to disagree with its earlier view, propriety demands the DRAT to refer the issue to a larger bench (if permissible) for fresh consideration. In this regard, we refer to the judgment of the Supreme Court in the case of Dr. Vijay Laxmi Sadho vs. Jagdish, (2001) 2 SCC 247 wherein the Supreme Court in para 33 has held as under:

20. In any case, we are of the view, the issue whether the DRAT / DRT, have powers to suo moto initiate any proceedings is no more res integra in view of the judgment of the Supreme Court in the case of Standard Chartered Bank v. Dharminder Bhohi and Ors. v. (2013) 15 SCC 341 wherein the Supreme Court while considering the provisions of Act of 1993 has, in Paras 33 to 38, held as under: “33. Section 19 of the RDB Act, occurring in Chapter IV of the Act, deals with procedure of tribunals. Subsection (25) of Section 19 reads as follows: “19. (25) The Tribunal may make such orders and give such directions as may be necessary or expedient to give effect to its orders or to prevent abuse of its process or to secure the ends of justice.” The aforesaid provision makes it quite clear that the Tribunal has been given power under the statute to pass such other orders and give such directions to give effect to its orders or to prevent abuse of its process or to secure the ends of justice. Thus, the Tribunal is required to function within the statutory parameters. The Tribunal does not have any inherent powers and it is limpid that Section 19(25) confers limited powers.

34. In this context, we may refer to a three-Judge Bench decision in Upper Doab Sugar Mills Ltd. v. Shahdara (Delhi) Saharanpur Light Railway Co. Ltd. [AIR 1963 SC 217] wherein it has been held that when the tribunal has not been conferred with the jurisdiction to direct for refund, it cannot do so. The said principle has been followed in Union of India v. Orient Paper and Industries Ltd. [(2009) 16 SCC 286]

35. In Union of India v. Madras Bar Assn. [(2010) 11 SCC 1] the Constitution Bench, after referring to the opinion of Hidayatullah, J. in Harinagar Sugar Mills Ltd.v. Shyam Sunder Jhunjhunwala [AIR 1961 SC 1669], the pronouncements in Jaswant Sugar Mills Ltd. v. Lakshmi Chand [AIR 1963 SC 677], Associated Cement Companies Ltd. v. P.N. Sharma [AIR 1965 SC 1595] and Kihoto Hollohanv. Zachillhu [1992 Supp (2) SCC 651], ruled thus: (Madras Bar Assn. case [(2010) 11 SCC 1], SCC p. 35, para 45)

has not been fettered by technicalities. The Tribunal is required to bestow attention and give priority to the real controversy before it arising out of the special legislations. As has been stated earlier, it is really free from the shackles of procedural law and only guided by fair play and principles of natural justice and the regulations formed by it. The procedure of tribunals has been elaborately stated in Section 19 of the RDB Act.

37. It is apt to note here that Section 34 of the SARFAESI Act bars the jurisdiction of the civil court. It reads as follows: “34.Civil court not to have jurisdiction.—No civil court shall have jurisdiction to entertain any suit or proceeding in respect of any matter which a Debts Recovery Tribunal or the Appellate Tribunal is empowered by or under this Act to determine and no injunction shall be granted by any court or other authority in respect of any action taken or to be taken in pursuance of any power conferred by or under this Act or under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (51 of 1993).” 38. Section 34 of the RDB Act provides that the said Act would have overriding effect. We have referred to the aforesaid provisions to singularly highlight that the sacrosanct purpose with which the tribunals have been established is to put the controversy to rest between the banks and the borrowers and any third party who has acquired any interest. They have been conferred jurisdiction by special legislations to exercise a particular power in a particular manner as provided under the Act. They cannot assume the role of a court of different nature which really can grant “liberty to initiate any action against the bank”. They are only required to decide the lis that comes within their own domain. If it does not fall within their sphere of jurisdiction they are required to say so. Taking note of a submission made at the behest of the auction-purchaser and then proceed to say that he is at liberty to file any action against the bank for any omission committed by it has no sanction of law. The said observation is wholly bereft of jurisdiction, and indubitably is totally unwarranted in the obtaining factual matrix. Therefore, we have no hesitation in deleting the observation, namely, “liberty is also given to the auction purchaser to file action against the bank for any omission committed by it”.

27. In the case of Satish Chander Gupta & others Vs. State Bank of India & others, W.P. (C) 2588/2010, the petitioners had sought to make payment through a one-time settlement to the bank and the OTS was accepted by the bank. The amount was paid in full and a No Due Certificate was issued by the bank. To formally place on record the settlement, an application was filed by the bank before the DRT. The tribunal had dismissed the application by a cryptic order and the DRAT dismissed the appeal against the order of the DRT. These orders were challenged before a Division Bench of this Court. The Division Bench noticed that the bank is a dominus litis and it is for the bank to decide as to against which party it desires the litigation to continue. It is purely a contractual matter and the bank in its wisdom has decided to settle the claim on a one-time settlement. The Division Bench had observed that the DRAT was not an auditor of the bank to scrutinize the settlement between the bank and the borrower as this was not the function of the DRAT. The relevant para from the said judgment reads as under: “…..The DRAT appears to think that it is some kind of Ombudsman/Auditor of the bank to scrutinize the settlement arrived at between the bank and the borrower. This is not the function of the DRAT. …..The DRAT is no one to decide as to at what value the bank should settle its dues with the borrower especially when the bank has Managers who have acted in pursuance to authorization in their favour and after due consideration of the proposal of the petitioners. We have no hesitation in stating that both orders of the DRT dated 1.6.2009 and of the DRAT dated 22.12.2009 are completely erroneous in law and suffer from a fallacious approach on the part of the concerned authorities/tribunals and are consequently quashed. The application filed by the bank being IA No.06/2007 is consequently allowed. The petitioners would, thus, be struck off from the array of parties. The petition is accordingly allowed leaving the parties to bear their own costs. A copy of the order be sent to both the concerned officers of the DRT and DRAT. CM No.5166/2010 In view of the disposal of the writ petition, the application does not survive for consideration and same also stands disposed of.”

28. The same observations were made subsequently by another Division Bench in the case of Harpreet Kaur and another Vs. M/s Fullerton India Credit company Ltd., (2018) 249 DLT 283 (DB) in paras 8 and 9. We reiterate that the Chairperson, DRAT does not have power to initiate suo moto proceedings.

29. In the case of Padam Singhee and another Vs. M/s SVOGL Oil, Gas and Energy Ltd. & others, W.P. (C) 9616/2018 which is based on a decision rendered by the Apex Court in the case of Standard Chartered Bank Vs. Dharminder Bhohi and others, 2013 (15) SCC 341, paras 33 to 38 of which, have been relied upon, Division Bench has culled out the powers of the Tribunal and the Appellate Tribunal.

30. A reading of the charge-sheet would show that there is no allegation against the respondent regarding moral turpitude or corruption. The first question, which would arise and has been considered in detail is regarding the extent to which disciplinary action against officers exercising judicial or quasi-judicial powers can be taken.

31. The learned Single Judge in his order dated 25.09.2018 has taken note of the subsequent view taken in the case of Zunjarrao Bhikaji Nagarkar Vs. U.O.I., (1999) 7 SCC 409 wherein, the Supreme Court, dealing with the said aspect observed as follows:

42. Initiation of disciplinary proceedings against an officer cannot take place on information which is vague or indefinite. Suspicion has no role to play in such matter. There must exist reasonable basis for the disciplinary authority to proceed against the delinquent officer. Merely because penalty was not imposed and the Board in the exercise of its power directed filing of appeal against that order in the Appellate Tribunal could not be enough to proceed against the appellant. There is no other instance to show that in similar case the appellant invariably imposed penalty.

43. If every error of law were to constitute a charge of misconduct, it would impinge upon the independent functioning of quasi-judicial officers like the appellant. Since in sum and substance misconduct is sought to be inferred by the appellant having committed an error of law, the charge-sheet on the face of it does not proceed on any legal premise rendering it liable to be quashed. In other words, to maintain any charge-sheet against a quasi-judicial authority something more has to be alleged than a mere mistake of law, e.g., in the nature of some extraneous consideration influencing the quasi-judicial order. Since nothing of the sort is alleged herein the impugned chargesheet is rendered illegal. The charge-sheet, if sustained, will thus impinge upon the confidence and independent functioning of a quasi-judicial authority. The entire system of administrative adjudication whereunder quasi-judicial powers are conferred on administrative authorities, would fall into disrepute if officers performing such functions are inhibited in performing their functions without fear or favour because of the constant threat of disciplinary proceedings.” (Emphasis supplied)

32. After Nagarkar (supra), a similar controversy arose before the Supreme Court in the case of Union of India Vs. Duli Chand, (2006) 5 SCC 680, which overruled Nagarkar (supra), by placing reliance on Union of India Vs. K.K. Dhawan, (1993) 2 SCC 56.

33. Learned Single Judge has taken note of subsequent decision passed by the Supreme Court comprising three judges in Ramesh Chander Singh Vs. High Court of Allahabad, 2007 (4) SCC 247. The relevant paras of this judgment read as under:

35. Perusal of Section 33 above shows that the rationale of the protection given under the said Section is in line with the ratio of the judgments referred above. In case a Central Government Officer or a Presiding Officer of the Tribunal or the Chairman of the Appellate Tribunal take any action, which is in good faith, needless to say he cannot be and should not be subjected to any prosecution or legal proceedings. If we were to hold otherwise, then no court or tribunal would be able to function independently and without any bias or pressures. In the present case the ratio of the above judgments applies with greater vigor as this was the case where by bank had itself entered into a settlement as they were unable to get proper value of the property on auctioning. If two parties to a litigation or a inter se dispute arrive at a settlement, then de hors the fact that the amount in dispute was higher than what is actually settled, the courts have no option but to give effect to the settlement to close the case. In fact, the latest trends of courts have been to settle the matters as far as possible through mediation or otherwise. It would indeed be a travesty of justice if the respondent who only gave effect to a mutual settlement between the parties is charge sheeted for doing his bona fide duty and closing the case solely on the basis of the settlement. We have also enquired from the learned counsel for the appellant if any bank official has been charge sheeted. The answer to the query was in the negative. Hence, in the facts of this case we are of the opinion that the learned Single Judge has rightly quashed the charge sheet and we find no infirmity in the impugned judgment. We may also place on record that both the issuance of the charge sheet against the respondent as well as the present appeal is no more than harassment and victimization to the respondent and we hope that such actions in the future are desisted from.

36. We find no infirmity in the judgment dated 25.09.2018. The LPA is without any merit.

37. Dismissed. CM APPLLs. 29863/2019 (stay) & 29865/2019 (additional documents)

38. In view of the order passed in the LPA, the applications stand dismissed. G.S. SISTANI, J JYOTI SINGH, J JULY 09, 2019/ck/AK