Mr. Apoorv Shukla, Standing Counsel with v. BABULAL AGRAWAL

Judgment

1. Central Administrative Tribunal1 dated 5 April 2018 in OA Signature Not Verified 1 “the Tribunal” hereinafter Signed By:SHILPI Signing Date:17.04.2025 19:35:49 WP(C) 7150/2018 2208/2017, wherein the Tribunal set aside the order of compulsory retirement that was passed by Petitioner 1/ Union of India2 in exercise of powers conferred under Rule 16(3) of the All India Services (Death-cum-Retirement benefits) Rules, 19583, respondent4 on 9 August 2017,which wasthen confirmed by Petitioner against 2/ State Government of Chhattisgarh vide order dated 11 August 2017.

2. Situated at the epicentre of action initiated by various Government agencies, including that of the Department of Income Tax5, Central Bureau of Investigation6, Economic Offences Wing/ Anti Corruption Bureau7, and the Enforcement Directorate8, Babulal hasbeen alleged of numerous offences involving financial misappropriation, disproportionate assets, misuse of public office, and violation of service conduct rules.

3. Babulal was appointed as an Indian Administrative Service9 officer of the 1988 batch and was initially allotted to the Madhya Pradesh cadre. Following the formation of the State of Chhattisgarh, he was transferred to the cadre of Chhattisgarh State and has rendered 29 years of service.

4. The genesis of the dispute appears to be whenhe was subjected to a search by the IT Departmenton 4 February 2010, where cash 2 UOI 3“the Rules” hereinafter 4“Babulal” hereinafter 5 IT Department 6 CBI 7 EOW/ACB 8 ED 9 IAS Signature Not Verified Signed By:SHILPI Signing Date:17.04.2025 19:35:49 WP(C) 7150/2018 amounting to ₹5,04,798/- along with jewellery valued at ₹3.76 lakhs were seized.However, the amounts seized were returned due to it being accounted for in the books of Babulal and his wife. Simultaneous search and seizure were conducted on the business premises of his brothers, which led to thereopening of assessment proceedings against him and resulted in the levy of a total tax demand of ₹13,464/- for FY 2007-08.

5. The demand was set aside vide order dated 31 May 2012. This order was appealed before the Income Tax Appellate Tribunal10only to be rejected vide order dated 9 January 2017.

6. Babulal was placed under suspension for violation of Rule 3(1) of the All India Services (Conduct) Rules, 1968, from 10 February 2010 to 4 June 2010. The Rule stands reproduced below: “3(1) Every member of the Service shall at all times maintain absolute integrity and devotion to duty and shall do nothing which is unbecoming of a member of the Service. 5 (1A) Every member of the Service shall maintain:- (i) high ethical standards, integrity and honesty; (ii) political neutrality; (iii) promoting of the principles of merit, fairness and impartiality in the discharge of duties; (iv) accountability and transparency; (v) responsiveness to the public, particularly to the weaker section; (vi) courtesy and good behavior with the public”

7. Thereafter, numerous cases were registered against Babulal, the details of which are as follows : Signature Not Verified 10 ITAT Signed By:SHILPI Signing Date:17.04.2025 19:35:49 WP(C) 7150/2018

i.FIR 6/2010 dated 19 February 2010registered by Economic Offences Wing/ Anti Corruption Bureau, Chhattisgarh Allegations were made against Babulal pertaining to the violation of Sections 13 (1) (e) and 13 (2) of the Prevention of Corruption Act, 198811, for routing amounts totalling to just above ₹62 crore through 446 accounts, shell companies, and sister concerns of M/s Prime Ispat Ltd (a company managed by brothers and other family members of Babulal) and finally invested as equity in the said company. An IT raid conducted against him resulted in seizure of ₹68.10 lakh in cash, jewels worth ₹70.20 lakh, and other assets worth ₹12.50 Cr. These amounts exclude the results of search and seizure conducted upon the business premises of Babulal’s brothers. However, the EOW filed a closure report and the matter has concluded since. ii.ECIR dated 10 January 2011 registered by Enforcement Directorate, Nagpur Allegations of offences under Sections 3 and 4 of the Prevention of Money Laundering Act, 200212 were made against Babulal. A closure report has been filed and the matter has concluded since. iii.RC dated 31 December 2010 registered by CBI, Chhattisgarh Signature Not Verified 11“PCA” hereinafter 12“PMLA” hereinafter Signed By:SHILPI Signing Date:17.04.2025 19:35:49 WP(C) 7150/2018 Allegations of offences under the IndianPenal Code, 186013, Section 120-B r/w Sections 419, 420, 467, 468, 471, 477A, and Section 13(2) r/w Section 13(1)(d) of the PCA were made against Babulal, with a ₹15 lakh recovery made by the IT Department.This Court has stayed the arrest of Babulal in WPC 8052/2011, and the matter is at the pre-charge stage. The State Government of Chhattisgarh declined sanction to prosecute Babulal under Section 6 of the Delhi Special Police Establishment Act, 194614 on four separate occasions between 2014-2016. iv.RC dated 4 January 2010 registered by CBI, EOU VII, New Delhi Allegations of misappropriation of around ₹21 crore of public funds were made against Babulal. These funds were sanctioned by the Ministry of Health and Family Welfare in 2005-06 for the implementation of World Bank aided enhanced Malaria Control Programme in Chhattisgarh. The case is pending sanction to prosecute, to be provided by the State Government of Chhattisgarh. v. RC dated 18 February 2017 registered by CBI ACU, AC II, New Delhi Signature Not Verified 13“IPC” hereinafter 14“DSPE Act” hereinafter Signed By:SHILPI Signing Date:17.04.2025 19:35:49 WP(C) 7150/2018 In this trap case,allegations were made by the CBI, as also recorded in the judgment of a coordinate bench of this Court dated 8 October 2018 in WP (Crl) 791/2018 titled Anand Agarwal v UOI, that two earlier cases had been registered against Babulal (brother-in-law of Anand Agarwal, petitioner in the above-mentioned case). The two cases referred to are noted by us at iii) and iv) (supra). According to the CBI, these two cases were a hurdleto Babulal’s empanelment for central deputation, and he intended to hasten their closure and ensure their subsequent reference to the EOW. The CBI alleged that Babulal had entered into a criminal conspiracy with other co-accused in an attempt to settle the cases registered against him by payment of a bribe of ₹1.5 crore to concerned public servants. This sum was agreed to be transferred in payments that would comprise both cash and gold. The CBI claims to have intercepted Anand Agarwal upon his delivery of 2kgs of gold to the concerned individual on behalf of Babulal on 18 February 2017. It was also revealed during investigation that an amount of ₹40 lakh in cash was also delivered to co accused by Babulal via Hawala channels. A chargesheet under Section 120-BIPC r/w Section 8PCA wasfiled before Patiala House Court. ACFSL report and supplementary charge sheet stand filed in the matter.He was Signature Not Verified Signed By:SHILPI Signing Date:17.04.2025 19:35:49 WP(C) 7150/2018 granted bail by the Court in connection with his arrest on 5 May

8. In the interregnum, between events detailed at para 7 (iv) and (v) (supra), a Review Committee was constituted to assess the service records of officers who had completed 15/ 25 years of service to determine their suitability for continued employment in the services. Babulal fell into the latter category, i.e., having completed 25 years of service.In its meeting dated 15 October 2015, the committee considered Babulal, among others, for compulsoryretirement under Rule 16(3), wherein he was allowed to continue in service.

9. Babulal had applied for vigilance clearance on 24 February 2016 to the Department of Personnel and Training15 to facilitate his central deputation. He was denied vigilance clearance by the DOPT on 1 September 2016,citing DOPT OM dated 29 October 2007. In their reply before the Tribunal in OA 2208/2017, as recorded at para 12 of the impugned order, the DOPT listed relevant factors that prevented vigilance clearance from being issued to Babulal. These considerations detailed the various cases against him as we have recorded at para 7(supra), along with numerous other complaints, his suspension, inter alia.

10. Upon receipt of a letter dated 21 February 2017 sent by the UOI to the State of Chhattisgarh regarding Babulal’s arrest in connection withCBI FIR dated 18 February 2017,he was placed under immediate Signature Not Verified 15 DOPT Signed By:SHILPI Signing Date:17.04.2025 19:35:49 WP(C) 7150/2018 suspension duethe pending criminal investigation against him. His suspension spanned from 22 February 2017 until 9 August 2017.

11. Thereafter, OA 2208/2017 was filed by Babulal before the Tribunal, assailing the denial of his vigilance clearance by the DOPT, inter alia. During the pendency of this OA,a Review Committee was constituted on 13 April 2017 to assess Babulal’s suitability for compulsory retirement under Rule 16(3) in light of the CBI FIR of 2017 and his subsequent arrest.

12. It is on thefindings and recommendation of this committee that an order of compulsory retirement under Rule 16(3) dated 9 August 2017 was passed by the UOIagainst Babulal due to “grave doubts on the integrity of the officer”, and thisorder was confirmed on 11 August 2017 by the State of Chhattisgarh.

13. Babulal filed an MA before the Tribunal to amend his prayer in OA 2208/2017 to include a challenge against these orders of compulsory retirement passed against him, and stated that he would not be pressing his relief against the denial of his vigilance clearance at that stage.

14. The impugned order held that Babulal ought not to have been compulsorily retired. It relied on his ACRs for the preceding five years, whereinhis overall gradings ranged between 8.05 and 9.5, save for the year 2014-15, which was a “no report” period. Apart from this, Signature Not Verified it held that the convening of the 2017 Review Committee was against Signed By:SHILPI Signing Date:17.04.2025 19:35:49 WP(C) 7150/2018 settled principles of law, and, that in its view, the very cornerstone for the 2017 Review – action initiated by the IT department and the ED, failed.

15. The Tribunal also declared that mere allegations were not sufficient to establish doubt against an officer’s integrity, and the same must have been proven through departmental or criminal proceedings.

16. Lastly, the Tribunal observed that a departmental enquiry ought to have been conducted as the order of compulsory retirement was punitive in nature and passed specifically to avoid the institution of disciplinary proceedings. It also emphasised that consideration must be given to Babulal’s promotion which covered ‘the entire period of allegations against him’.

17. Heard learned Counsel for the parties.

18. Mr. Tiwari, learned Central Government Standing Counsel who appears for Petitioner 1, has advanced the following submissions in favour of the order of compulsory retirement passed against Babulal: a) The Tribunal failed to consider that an Order passed under Rule 16(3) is subject to a limited scope of judicial review, in line with the observations of the Supreme Court in State of Gujarat v Umedbhai M. Patel16, Baikuntha Nath Das v Chief Signature Not Verified 16(2011) 3 SCC 314 Signed By:SHILPI Signing Date:17.04.2025 19:35:49 WP(C) 7150/2018 Medical Officer, Baripada17, Pyare Mohan Lal v State of Jharkand18, and K. Kandaswamy v UOI19, and may only be entertained on the grounds of mala fides, arbitrariness, or a lack of material; and b) There was no bar to holding the second review of 2017; and c) The second review considered the entire service record pertaining to Babulal and its findings and recommendations were just, reasonable, and fair; and d) The FIRs registered against Babulal were concerning offences of grave nature that cast doubt on his integrity.

19. Mr. Biswajit Bhattacharya, learned Senior Counsel appearing for the respondent, has advanced the following lines of argumentation assailing the order of compulsory retirement passed against Babulal : a) The second review conducted was impermissible; and b) The second review failed to consider the entirety of his service records and was contrary to the object of Rule 16(3) as well as the law laid down in the Supreme Court’s judgment in Umedbhai M. Patel; and c) Mere registration of FIRs does not make an officer suitable for compulsory retirement.