M/s Overseas Enterprises vs. UOI (Patna High Court)

DATE: November 30, 2015 (Date of pronouncement)
DATE: January 13, 2016 (Date of publication)
AY: -
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Entire law on accountability of public officials for acts of omission and commission explained. Customs officials directed to pay costs of Rs. 14 lakh + interest @ 9% p.a. from personal account & to face disciplinary action for “high-handedness”, arbitrariness” and seeking to “hoodwink” Court

(i) By now, the law is well settled that the public officers have to be also held accountable for their acts of omission and commission. Reference in this connection may be made to the judgment of the Apex Court in the case of Lucknow Development Authority Vs. M.K. Gupta reported in 1994(1) SCC 243, in the case of State of A.P. Vs. Food Corporation of India reported in 2004(13) SCC 53 and in the case of Delhi Airtech Services Private Limited and Anr. Vs. State of Uttar Pradesh & Anr. reported in 2011(9) SCC 354. The apex Court in this regard in the case of Lucknow Development Authority (supra) had approved the following observation of Misfeasance in public office as explained by Wade in his book of Administrative Law

“Even where there is no ministerial duty as above, and even where no recognized tort such as trespass, nuisance, or negligence is committed, public authorities or officers may be liable in damages for malicious, deliberate or injurious wrong-doing. There is thus a tort which has been called misfeasance in public office, and which includes malicious abuse of power, deliberate maladministration, and perhaps also other unlawful acts causing injury.”

(ii) Having held so, the Apex Court in the case of Lucknow Development Authority (supra) had also laid down law as with regard to fixing responsibility on the erring government officials in the following terms:-

“11. Today the issue thus is not only of award of compensation but who should bear the brunt. The concept of authority and power exercised by public functionaries has many dimensions. It has undergone tremendous change with passage of time and change in socioeconomic outlook. The authority empowered to function under a statute while exercising power discharges public duty. It has to act to subserve general welfare and common good. In discharging this duty honestly and bona fide, loss may accrue to any person. And he may claim compensation which may in circumstances be payable. But where the duty is performed capriciously or the exercise of power results in harassment and agony then the responsibility to pay the loss determined should be whose? In a modem society no authority can arrogate to itself the power to act in a manner which is arbitrary. It is unfortunate that matters which require immediate attention linger on and the man in the street is made to run from one end to other with no result. The culture of window clearance appears to be totally dead. Even in ordinary matters a common man who has neither the political backing nor the financial strength to match the inaction in public oriented departments gets frustrated and it erodes the credibility in the system. Public administration, no doubt involves a vast amount of administrative discretion which shields the action of administrative authority. But where it is found that exercise of discretion was mala fide and the complainant is entitled to compensation for mental and physical harassment then the officer can no more claim to be under protective cover. When a citizen seeks to recover compensation from a public authority in respect of injuries suffered by him for capricious exercise of power and the National Commission finds it duly proved then it has a statutory obligation to award the same. It was never more necessary than today when even social obligations are regulated by grant of statutory powers. The test of permissive form of grant is over. It is now imperative and implicit in the exercise of power that it should be for the sake of society. When the court directs payment of damages or compensation against the State the ultimate sufferer is the common man. It is the tax payers’ money which is paid for inaction of those who are entrusted under the Act to discharge their duties in accordance with law. It is, therefore, necessary that the Commission when it is satisfied that a complainant is entitled to compensation for harassment or mental agony or oppression, which finding of course should be recorded carefully on material and convincing circumstances and not lightly, then it should further direct the department concerned to pay the amount to the complainant from the public fund immediately but to recover the same from those who are found responsible for such unpardonable behaviour by dividing it proportionately where there are more than one functionaries.”

(iii) A similar view was taken by the Apex Court in the case of Food Corporation of India (supra) wherein recovery of costs in the frivolous legal proceeding was sought to be made from the officer concerned for negligence in prosecuting litigation on behalf of the State. The Apex Court in this regard had held as follows:-

“2. In this view, while dismissing the applications seeking condonation of delay, we direct that enquiry be made forthwith by the State Government as to the person responsible for this state of affairs, recover from such person the costs involved in filing these petitions and submit the report to this Court within a period of four weeks.”

(iv) In the case of Delhi Aristech Services (P) Ltd. (supra) relating to the lapses by the public officials in the land acquisition resulting into huge loss to the government exchequer on account of negligence and/or overt act of the officials had also held as follows:-

“213. These authorities are instrumentalities of the State and the officers are empowered to exercise the power on behalf of the State. Such exercise of power attains greater significance when it arises from the statutory provisions. The level of expectation of timely and just performance of duty is higher, as compared to the cases where the power is executively exercised in discharge of its regular business. Thus, all administrative norms and principles of fair performance are applicable to them with equal force, as they are to the Government department, if not with a greater rigour. The well established precepts of public trust and public accountability are fully applicable to the functions which emerge from the public servants or even the persons holding public office.

214. In the case of State of Bihar v. Subhash Singh [(1997) 4 SCC 430], this Court, in exercise of the powers of judicial review, stated that the doctrine of `full faith and credit’ applies to the acts 108 done by the officers in the hierarchy of the State. They have to faithfully discharge their duties to elongate public purpose.

215. The concept of public accountability and performance of functions takes in its ambit, proper and timely action in accordance with law. Public duty and public obligation both are essentials of good administration whether by the State or its instrumentalities. In the case of Centre for Public Interest Litigation & Anr. v. Union of India & Anr. [(2005) 8 SCC 202], this Court declared the dictum that State actions causing loss are actionable under public law. This is a result of innovation, a new tool with the courts which are the protectors of civil liberties of the citizens and would ensure protection against devastating results of State action. The principles of public accountability and transparency in State action are applicable to cases of executive or statutory exercise of power, besides requiring that such actions also not lack bona fides. All these principles enunciated by the Court over a passage of time clearly mandate that public officers are answerable for both their inaction and irresponsible actions. If what ought to have been done is not done, responsibility should be fixed on the erring officers; then alone, the real public purpose of an answerable administration would be satisfied.

216. The doctrine of `full faith and credit’ applies to the acts done by the officers. There is a presumptive evidence of regularity in official acts, done or performed, and there should be faithful discharge of duties to elongate public purpose in accordance with the procedure prescribed. Avoidance and delay in decision making process in Government hierarchy is a matter of growing concern. Sometimes delayed decisions can cause prejudice to the rights of the parties besides there being violation of the statutory rule.

217. This Court had occasion to express its concern in different cases from time to time in relation to such matters. In the case of State of Andhra Pradesh v. Food Corporation of India [(2004) 13 SCC 53], this Court observed that it is a known fact that in transactions of Government business, no one would own personal responsibility and decisions would be leisurely taken at various levels.

218. Principles of public accountability are applicable to such officers/officials with all their rigour. Greater the power to decide, higher is the responsibility to be just and fair. The dimensions of administrative law permit judicial intervention in decisions, though of administrative nature, which are ex facie discriminatory. The adverse impact of lack of probity in discharge of public duties can result in varied defects, not only in the decision making process but in the final decision as well. Every officer in the hierarchy of the State, by virtue of his being `public officer’ or `public servant’, is accountable for his decisions to the public as well as to the State. This concept of dual responsibility should be applied with its rigours in the larger public interest and for proper governance.”

(v) Recently, the Full Bench of this Court in the matter of illegal appointment had adopted the same yardstick for fixing responsibility against the government officers in the case of Ram Sevak Yadav & Anr. Vs. The State of Bihar & Anr. reported in 2013(1)PLJR 964 wherein it was held as follows:-

“41. The public power to make appointment on public posts is conferred for public good. The power is given to the officer concerned by the government in trust, that it shall be used and not abused. If the trust is belied, the protection conferred upon a government servant stands denuded. The answerability and accountability is then individual of the officer. The government is duty bound to take appropriate civil/ criminal action against the officer. The illegality in the appointment is not a one way street. If there was someone willing to pay a price for the job, there was another waiting to take advantage of the same by fixing a price. It is not without reason that majority of such appointments relate to class III and IV posts. The standard by which the government professes to act is the same standard by which its action shall be judged. Therefore, whenever the government terminates an appointment being illegal, it is the constitutional duty of the government to simultaneously take action against the officials who belied the trust of the government. Those who made hay while the sun shined must see the darker cloudy days also. In 1995(2) PLJR 573 (DB) (Bimal Kishore Rai v. State of Bihar) it was directed:

“16. In cases where an appointment is found to have been illegally made, the courts quash the appointment and, therefore, the appointee suffers the consequence. However, the real guilty person, namely, the appointing authority does scot free. The result is that even though large number of such appointments have been quashed by the courts, the appointing authorities have showed total indifference to the orders passed by the courts, and they continue to make such appointments. It is a well-known fact, so far as this state is concerned, that appointment in majority of cases has to be bought. The ordinary citizen who has concern for the law and morality, must suffer, even if in terms of capability and merit he is far superior to the unscrupulous ones, who managed the appontments. We have, therefore, felt the need to issue some directions in this regard, so that the appointing authorities, who are primarily guilty in such matters, and who exploit the jobseekers taking advantage of their hardship are equally punished when such illegal appointments are brought to the notice of the government. I, therefore, direct that in each and every case where an appointment is said to have been illegally made, in the sense that the rules governing the appointment is made by flouting the law in such a manner that the motive of the appointing authority becomes suspect, simultaneously with the cancellation of such illegal appointment, action must be initiated against the appointing authority, and in appropriate cases they should be immediately suspended pending departmental proceedings. If such action is not taken, courts will doubt the genuineness of the reason shown by the government for cancellation of such appointment. I direct that this should be complied with by the government in each and every case wehre an appointment is sought to be cancelled on the ground that it was illegally made in circumstances which give rise to a suspicion that the appointment was made on extraneous consideration, including money.”

42. Court orders are not mere platitudes or idealistic rhetoric incantation. They are meant to be complied with. We therefore direct the State Govenrment to identify the officials concerned with the present appointments and take appropriate action against them in accordance with law and expeditiousness. Let a report be then submitted within eight weeks.”

(vi) Thus, when this Court has found that the petitioners have been put to a loss of at least Rs.14,69,650/- on account of complete deterioration of quality of split betel nuts solely on account of deliberate laches on the part of the officials of the Custom Department it would direct respondent no.2 to pay a sum of Rs.14,69,650/- along with interest at the rate of 9% per annum for the period 28.3.2013, the date on which the order of provisional release of the seized article was passed by the competent authority to the order directing release of the seized articles dated 9.8.2014 within a period of three months from today.

(vii) It is, however, made clear that such amount, which has to be paid by way of compensation for the loss caused to the petitioners on account of delay of nearly 1½ years in release of the seized articles, shall be recovered from the erring officials and for the purposes of fixing individual responsibility on such erring officials this Court would direct the Chairman of Central Board of Excise and Customs Department of Revenue, New Delhi to get an enquiry conducted by an Officer not below in the rank of Chief Commissioner of Customs who must not be posted and/or associated in any manner with Patna Zone of the Custom Department.

(viii) Upon completion of such enquiry and upon submission of enquiry report appropriate action under the orders of Chairman Central Board of Excise and Customs, New Delhi be taken against erring officials not only for recovery of the amount directed to be paid under this judgment to the petitioners but also for initiating and concluding disciplinary proceedings by the competent authority against the erring officials of Customs Department of Patna zone who are found to have caused delay in release of the seized articles of the petitioners in any part of period in between 28.3.2013 to 9.8.2014. This whole exercise must be completed within a period of six months from the date of receipt of this judgment by the Chairman of the Central Board of Excise and Customs, New Delhi, who having taken his action as directed above shall also submit his action taken report to the registry of this Court on or before 30th of June, 2016. 85. With the aforementioned observations and directions, this writ application is allowed with a cost of Rs. 25,000/- quantified by this Court for coercing and compelling the petitioners to file this writ petition for release of their seized betel nuts to be paid by the Respondents to the petitioners within a period of three months from today.

(ix) It is, however, made clear that irrespective of initiation and conclusion of the aforesaid proceedings against the erring officials of Customs department of Patna zone by the Chairman of Central Board of Excise and Customs, the payment of the amount of Rs.14,69,650/- alongwith interest at the rate of 9% per annum from 28.3.2013 to 9.8.2014 must be made to the petitioners within a period of three months from today, failing which the amount of interest on the amount of Rs. 14,69,650/- shall stand enhanced from 9% per annum to 18% per annum from 28.3.2013 till the date of its actual payment.

(x) Let a copy of this judgment be sent immediately to not only the Chairman of Central Board of Excise and Customs Department of Revenue, Ministry of Finance, New Delhi, but also to the Commissioner of Customs (Preventive), respondent no.2, for its compliance in letter and spirit.

7 comments on “M/s Overseas Enterprises vs. UOI (Patna High Court)
  1. bobjee Kurien says:

    At last one clear decision from the court to hold people exercising authority to be accountable for their actions.The action initiated by the court calls for appreciation .The sooner action is taken by the CBEC /CBDT against the ering officials the better it is for india .Bureaucrats have become law unto themselves they assume that they are all powerful and can get away with anything including …….

  2. Varaprasad Daitha says:

    Earlier I think in 2000 Hon’ble Supreme Court gave a ruling where interest u/s 244A for delay in issuing attributable to an assessing officer or his staff, the entire interest is to be collected from the pay and retirement benefits of those responsible for causing such delay. Unfortunately, the IT department did not implement to all such cases.

    Some of the Commissioners in Hyderabad had filed incorrect arrears of taxes (though not due in fact) got orders of High Court to appropriate the moneys kept in FD with a scheduled bank under lien to the department. But they did not implement the order of the High Court for such appropriation of incorrect arrears claimed before High Court. Instead they are still releasing interest to the assessees on such deposits kept under lien. More over the department has to pay huge amount of interest on incorrect demands claimed before High Court. Who has to bear the cost. It is clearly the other tax payers who had paid taxes genuinely.

  3. bobjee Kurien says:

    t was 18 years ago when Smita Rawat, an assistant commissioner in the Delhi Central Excise, was last seen in her office. Deputy Commissioners N K Prasada and D K Dhawan have been missing since 2000. There are eight more senior customs officers who have not attended office for at least six years. All 11 Group A cadre officers have finally been sacked by the government.

    Acting under the Central Civil Services (Conduct) Rules, the Central Board of Excise and Customs (CBEC) has issued orders sacking all 11 officers at one go, and stipulating that they will not be eligible for any retirement benefits owing to their long unauthorised absence from service.

    Approved by the President, the 11 IRS officers have been proceeded against under pertinent rules that mandate that the officer’s continuous absence, with or without leave, for more than five years shall be treated as his or her deemed resignation. The CBEC circular, issued last week, stated that long absence of all these officers has been considered as their deemed resignation from IRS (Custom and Excise), and the resignation will take effect from the date from which the officer had been absent.

    The circular said that the decision has been taken after noting that the officers had been given sufficient opportunity to explain their unauthorised absence.

    The senior officers sacked by the CBEC included Joint Commissioner Meenu G Krishnan, a 1980 batch IRS officer who has been missing since August 2003. Despite being on unauthorised leave for 11 years, CBEC in 2014 listed her name for ‘non-functional upgradation’ by extending her the grade of Principal Commissioner.

    Another Joint Commissioner, Rajesh Kumar Jha, has not been heard about by the CBEC since 2006. Jha was transferred to Bengaluru from Mumbai in 2006. The CBEC says no information is available about the officer, who did not join the new field posting.

    Deputy Commissioner N K Prasada last came to the CBEC officer in December 2000 while Deputy Commissioner Rajyashri Waghray is missing since 2001. Her last posting was with Bengaluru zone. Another Deputy Commissioner Bujimalla Venkata Ramesh with Central Excise Ahmedabad was relieved in 2005 to join a new posting in Mumbai Customs Zone but he did not turn up. Deputy Commissioners D K Dhawan and Ankur Agarwal have been unauthorisedly absent since 2000 and 2007, respectively.

    It is amazing how long the top bureaucrats take to realise that the blue eyed boys are not functioning.It is seen in all its actions . Just they use the position to ensure that they don’t take any action . Thats their forte

    • Varaprasad Daitha says:

      It reminds me an instance when I was in the room of one of the Commissioners one day a man entered the room and handed over an air ticket to the Commissioner. The Commissioner wanted a confirmation whether it was in the name of others. The man replied in affirmation. Then I intruded the conversation by stating “Sir, what will you do if the plane crashes; Will you get the insurance amount; Will your successors get the departmental benefits since your plane crash will not be recorded in your records and you will be branded as absconder. Your family members can also not claim any compensation etc.” The Commissioner took aback and said immediately to the man who brought the ticket to cancel and take a ticket in his own name.

  4. bobjee kurien says:

    No,not forte but their expertise in protecting thier own clan.Reminds me of the Godfather .Some time back the present FM had indicated that the CBDT to make a provision for interest payable on delayed issue of refunds .If i recollect the supreme court had issued a direction that the interest payable of related refunds required to be collected from the officer responsible .Now in the case cited by Prasad the interest component for delayed action is about 30 crores.How is the Government going to recoup this amount.

    Keep watching inaction of the blue eyed boys.

  5. Right decision of the high court.
    i appreciate being an advocate myself.

    such punishments on public servants only develop credibility of courts in the minds of citizens.

    /Justice Douglas wrote in US SC in 1974 march 12 in a matter Labor bd v Bell Aerospace 416 US 267(1974), in his note to Justice Lewis F.Powell jr. when he was writing the opinion , Douglas said:

    ‘The resent Ash Report to the President dated january 30 1971, entitled A New Regulatory framework, on the rule making function and procedure…’i realize that our decisions sqint the other way and i do not plan to suggest they be over ruled. But Ash report… touches on this as respects certain agencies and thinks that rule making is more efficient and expeditious than case by case adjudication. I doubt that very much, but my own experience at the S E C was that ‘public hearings on proposed rules brought in new, fresh points of view and considerations that busy bureaucrats , herded by a staff of eager beaver law clerks and other assistants, are apt to over look , for at times they are so close to their knitting that they do not see the broader perspective….’ to say if rule making power is n the domain of public servants, they are bound misdo to convenience their work only at the cost of the public, so subordinate delegation of powers in India need to be on and off duly questioned by the honorable courts,else these kinds of miseries public would face at the hands of the so called public servants, as they think that they are not accountable to any power, that way examining the Patna High court rightly decided and rightly punished the officers as they suffered from clear mens rea proposition and also acted under actus rea.

    I thin every high court need to go deeply into the sections and how they were manipulated and law makers made no clutches on the rules of these public servants rule making powers under so called subordinate regulations, that way it is high time high courts rise up to prove their credibility,

    i am glad today CJI Thakur rightly observed that the BCI need to develop a Tribunal to duly take on the delinguent law colleges as also advocates who some how or other get License(sannad) to practice in the courts, without due training in law and they mostly get degrees not attending law colleges all terms but just pay fees and get attendance not really attending classes.

    So there is a lot of rot in every profession in india.

    Today JSS medical college of Bangalore is fined 5 crores as fine to be deposited in four weeks or so; similarly Unitec builders directors were sent to jail for having not provided lats or houses to buyers for over eight years or so.If we go deeper we might get at the roots, if we really want to meaningful governance is in place in india,

    Besides Rule of law index on India puts india at level 58 means India is going to dogs, if we do not take on head on, naturally bad days are ahead is a clear warning.

    i would suggest the courts send these so called public officers to jail by due process procedure, to wring the public servants are meaningfully accountable; even suspend Art 311 of the constitution tat is protecting these so called officers, i believe.

    Really honest officers be promoted any blemish is found revert them back or discharge them from service and the like detterrance would have desired impact i think.

    i have no malice against public servants if they are honest and worthy persons.

  6. bobjee kurien says:

    Even diabolic criminals break down on being interrogatedfor several hours.Even honest people break down.It’s almost 9 years since the charge sheet was served and 4 years the report IO’s report on the table of the disciplinary officer .Fortunately there are people who come under Gods protection and they cannot be touched .

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