K. Ramamoorthy, J.
1. The writ petitioner has prayed for the following reliefs:
'In view of the facts mentioned and submissions herein above, it is respectfully prayed that the Honble Court may be pleased:
(a) to issue an appropriate writ or order holding the initiation of disciplinary action against the petitioner vide Memorandum No. 1(2)/97-PE. XII dated 24.11.1997 as illegal, arbitrary, unfair and discriminatory;
(b) to issue writ of certiorari or any other appropriate order quashing/ setting aside Mamorandum No. 1(2)/97-PE. XII dated 24.11.1997 Along with its annexures and Order No. 1(2)/97-PE. XII dated 17.7.1998;
(c) to issue writ of prohibition or any other appropriate order restraining respondent No. 1 from initiating any further action or proceedings against the petitioner on the basis of Memorandum dated 24.11.1997 and restraining respondent No. 2 from taking any action pursuant to Order No. 1(2)/97-PE.XII dated 17.7.1998 passed by respondent No. 1;
(d) to call for the records relating to the investigations and reports of the respondent No. 1 and CBI, correspondence/communications exchanged between the respondent No. 1 and CVC in the matter of disciplinary action against the petitioner and any other relevant record.'
2. The facts that are necessary for the appreciation of the rival contentions of the parties could be recounted concisely in the following terms:
On the 2nd of January, 1989, the petitioner was appointed as Chairman-cum-Managing Director of the Cement of Corporation of India (hereinafter referred to as the 'CCI'). In September, 1995, Vigilance clearance was given by the Central Vigilance Commission (hereinafter referred to as 'CVC) for the proposed appointment of the petitioner as the Chairman of Rashtriya Chemicals & Fertilizers Ltd. The petitioner did not join the post. In December, 1995, there were some complaints received by the first respondent the Department of Heavy Industry, Ministry of Industry. The first respondent did not find any substance in the complaint. The petitioner was granted extension for three years from February, 1996 up to the 31st of December, 1998.
3. The petitioner was functioning as the Chairman-cum-Managing Director of CCI on the date of filing of the writ petition. In or about September, 1996, the petitioner was considered for the post of Chairman, Airport Authority of India and was placed at No. 1 in the panel drawn by the PESB (Public Enterprises Selection Board). The Department of Heavy Industry, Ministry of Industry examined the same complaint again and could not find anything against the petitioner. The first respondent sought for vigilance clearance for the appointment of the petitioner as Chairman, Airport Authority of India. In March, 1997, at the instance of the CVC, the Department of Heavy Industry, Ministry of Industry appointed a Two-Member Committee of two senior officers to examine the case and that Committee came to the conclusion that there was no substance in the complaint against the petitioner. On the 13th of May, 1997, the Department of Heavy Industry, Ministry of Industry, wrote to the CVC on the point as according to the Ministry, the case against the petitioner had to be closed. On the 23rd of May, 1997, the CVC wrote to the Union of India, Department of Heavy Industry, in the following terms :
'The Department of Heavy Industry may please refer to their Office Memorandum No. C-13011/11/96-VIG, Vol.-III dated 13.5.1997 on the aforementioned subject.
2. The Commission observes that the report of the Committee constituted by the Department of Heavy Industry can only be termed as a preliminary fact finding exercise based on some documents and some other inputs. The Committee, does not appear to have recorded the oral evidence of all the witnesses /persons who were connected with these matters. In particularly, it is felt that the affairs relating to Coal Linkage through private parties and emergency import of spares which are still lying at the port need further probe.
3. Although the investigation conducted so far is not adequate to initiate formal disciplinary action against Shri Darbari, the instances brought out are a case for real concern as there are clear pointers to the lack of transparency and commercial prudence in the transactions and a certain rashness in financialmanagement.
4. Keeping these in view, it is not possible to accord Shri Darbari a clean chit for his proposed appointment as Chairman, Airport Authority of India. The Commission also observes that the Airport Authority of India is a complextechnical organisation with a lot of administrative and financial responsibilities. Its vigilance health is also not too commendable. Viewed together, the Commission expresses its reservations against Shri Anand Darbari, being considered for appointment to the post of Chairman, Airport Authority of India.
5. Receipt of Commission's Office Memorandum may be acknowledged.'
4. In this, the CVC opined that the investigation conducted so far was not adequate to initiate formal disciplinary action against the petitioner. At this stage, it must be noticed that CVC has based its opinion on its subjective consideration of the matter.
5. On the 28th of August, 1997, the Deputy Secretary, Department of Heavy Industry, Ministry of Industry wrote to the petitioner in the following terms :
'CCI has taken steps to obtain coal from Assam-Magalia for its Units located in the South through private parties and also getting linkage coal through private transporters by permitting them to make payment on behalf of the company and transporting coal by road. The system in place seems to be flawed as sufficient and effective checks do not seem to be in position to prevent misuse/abuse by the concerned parties.
In the light of the above position, a detailed report on the experience of the company in getting coal through the above modes Along with actions taken on misuse/malpractices brought to the notice of the management may be sent urgently. The report should also incorporate changes/modifications proposed to be introduced in procurement of coal. The same may be sent to the Government after discussions in the Board.
Pending finalisation of the report and its consideration by the Board, fresh contracts for transportation of coal through private parties may not be awarded. The feasibility of termination of existing contracts may be explored and put up to the Board for decision.'
6. On the 10th of August, 1997, the petitioner wrote to the Secretary, Ministry of Heavy Industry in reply to the letter dated 28.8.1997. The Minutes of the Meetings of the Board of the CCI dated 17.9.1997, 8.10.1997 & 28.10.1997 are on record at pages 96 to 99 which would show the decisions taken by the Board in the meetings.
7. The letters dated 26.9.1997,22.10.1997 & 12.11.1997, the Director (Finance) of the CCI to the Ministry of Heavy Industry are on record at pages 103 to 131.
8. The extracts from the Minutes of the Meetings of the Board held on 27.21996, 12.7.1996, 16.1.1997 & 24.6.1997 are on record at pages 144 to 171. In June, 1997, the CVC called for original records though photostat copies of the records were already available with the CVC. In July, 1997, the Department of Heavy Industry, Ministry of Industry, in its letter to the Department of Personnel & Training, noted that some of the allegations referred to in the complaint of September, 1996 had already been examined and were closed, and the other allegations were also looked into in detail and nothing had been substantiated against the petitioner, as found by the Departmental Committee of the first respondent.
9. In paragraph 32 of the writ petition, the petitioner has stated :
'That the respondent No. 1 in the first week of July, 1997, sent a letter to Department of Personnel and Training again expressed its views in respect of the allegations made against the petitioner in the complaint of September, 1996. As per these views of the respondent No. 1, some of the allegations contained in the above complaint were already examined and were closed. The remaining allegations were looked into in detail but the same remain unsubstantiated even after an in-depth investigation held by a Departmental Committee of two officers of the respondent No. 1.'
10. In reply to the paragraph 32, the first respondent has stated in the counter 'refer to para 7 in reply.' In paragraph 7 of the reply, it is stated :
'The procedure regarding issue of charge sheet in the Vigilance Manual is a broad guideline and is not mandatory since it is not a statute. The Disciplinary Authority is not precluded from instituting formal disciplinary proceeding without calling for Explanationn of the Delinquent Officer. It is clarified that a Memorandum is a formal show-cause notice which gives opportunity to the Delinquent Officer to explain his/her stand. A decision to institute a formal inquiry is taken only after due consideration of his reply by the Disciplinary Authority.'
11. From this, it is clear that what is stated in paragraph 32 remains uncontroverted.
12. In September, 1997, the CCI had constituted a Committee headed by Director (Operations) for looking into the matters mentioned in the letter dated 28.8.1997. In October, 1997, that Committee inquired into the matter in great detail and found that no case had been made out against the petitioner. At once, the Committee recorded that the CCI 'reduced the loss to the rune of Rs. 21 crores on the strength of the purchase policy adopted by the CCI'. The report of the Committee was considered by the Board in its three meetings. It is to be noted here that the Two-Members are officers nominated by the first respondent (Union of India, Department of Heavy Industry).
13. As I had noticed above, on the 10th October, 1997, the petitioner wrote to the first respondent Ministry of Heavy Industry about the report of the Committee.
14. In paragraph 39 of the writ petition, the petitioner had stated :
'That besides above, petitioner vide his letter dated 10.10.1997 addressed to Secretary of Department of Heavy Industry apprised him about the salient feature of the report of the aforesaid Committee. The petitioner understands that after perusing the aforesaid letter, the concerned Industry Minister vide a written note on the said letter itself directed that no further action in the matter may be taken without considering the report of the Committee headed by Director (Operations), CCI which consisted of more than two volumes and was sent separately to respondent No. 1. In total disregard of the written instructions of the Industry Minister, the Report of the Committee has not been examined by the respondent No. 1 as they are aware that the said Reportis factually correct. A copy of the said letter dated 10.10.1997 is annexed as AnnexureP-XI.'
15. On the 7th of November, 1997, the petitioner challenged the action of the CVC in refusing to give clearance for his appointment as the Chairman, Airport Authority of India in CWP 4749/97. That is pending in this Court.
16. On the 24th of November, 1997, the first respondent issued charge sheet against the petitioner mentioning six charges. On the 25th of November, 1997, the first respondent made a complaint to the CBI and the same was registered. The allegations in the FIR and the imputations in the charge sheet issued on 24.11.1997 are similar but what is stated by the first respondent is that the thrust in the charge sheet is different. On the 2nd of January, 1998, the petitioner submitted his defense to the charge sheet. In or about April, 1998, the petitioner received intimation calling for an interview for the post of CMD, Bharat Heavy Electricals. However, he was asked not to appear as the CVC had not given clearance. In or about the 16th of July, 1998, the CBI had sent its report to the first respondent. On the 17th of July, 1998, the first respondent issued an order appointing Inquiry Officer pursuant to the charge sheet.
17. One the 18th of July, 1998, the writ petition was presented in this Court.
18. The judgment was reserved in the matter on the 9th of December, 1998. On the 14th of December, 1998, in the evening, the Additional Solicitor General, Mr. Madan Lokur, produced a copy of the letter dated 14.12.1998 by the CVC to the first respondent about which I shall refer to a little later.
19. The case of the petitioner in the writ petition is that once the first respondent had approached the CBI and the CBI had expressed the view that no case had been made out against the petitioner, the charge cannot be sustained and the first respondent should have applied its mind to find out whether prima facie case is there, for issuing a charge sheet, and there was no application of mind and issuance of charge sheet was not at all valid in law.
20. The point to be considered is: Whether the charge sheet was issued on the basis of objective considerations on the materials on record and whether it was an exercise just to deprive the petitioner of his legitimate right to be considered for appointment in any of the public sector undertakings. The second respondent is the Inquiry Officer appointed by the first respondent to inquire into the charges.
21. The first respondent would state that in view of the report of the Committee, which had been adverted to above, there were no procedural irregularities and the petitioner cannot be proceeded against on that score. There could be no charge of any corruption against the petitioner. However, according to the first respondent there had been departmental irregularities in respect of the grant of contracts for procurement of coal.
22. Dr. A.M. Singhvi, the learned Senior Counsel for the petitioner, formulated his submissions and the same could be enumerated thus :
1. Disciplinary Authority has no power to reopen the case against thepetitioner, which had been considered and decision had been arrived at to close the matter, at the instance of the CVC. The CVC for reasons best known to it, had acted in excess of its powers and without any justifiable reasons had triggered off the issue.
2. The first respondent ought to have acted in accordance with the Vigilance Manual. Once the matter was referred to the CBI, the first respondent could act only after the CBI had expressed its view. In this case, the CBI had completely cleared the petitioner and, if that is so, there is no scope for issuing charge sheet on the premise of the thrust being different', which is merely a verbal acrobatics.
3. The first respondent had singled out the petitioner for disciplinary action while the decisions involve collective responsibility of officers and that vocative of Article 14 of the Constitution of India.
4. The allegations of charge against the petitioner were relating to transactions for the years 1991-92 and 1992-93 to which the first respondent-was well aware of and the charge sheet had been issued on the 24th of November, 1997, and, thereforee, it was belated and it would amount to reopening of stale matters.
5. The stand taken in paragraph 63 of the counter that the CBI had addressed itself adequately in respect of five imputations is absolutely unsustainable.
23. On the facts and circumstances of this case, the charge sheet is liable to be quashed and the petitioner is entitled to a writ of mandamus for bearing the first respondent from proceeding further with any other inquiry against the petitioner on the basis of charge sheet dated 24.11.1997.
24. Mr. Madan Lokur, the learned Additional Solicitor General for the respondents, submitted that the fact that the Two-Member Committee had expressed its view and thus there were no procedural irregularities and the first respondent is not on that but Mr. Madan Lokur, Additional Solicitor General, submitted that the first respondent has not proceeded against the petitioner on the ground of any charge of corruption. According to the learned Additional Solicitor General, the first respondent had come to a decision on the basis of materials available on record and the petitioner could be stated to have been guilty of some departmental irregularities and there is a grey area which was not covered by the report of the Two-Member Committee and by the report of the CBI, and thereforee, the petitioner cannot say that the first respondent was not justified in issuing the charge sheet.
25. The learned Additional Solicitor General further submitted that the first respondent had acted, in issuing the charge sheet, on the basis of statutory rules and regulations, and the petitioner cannot rely upon the Vigilance Manual which is not mandatory in nature and the petitioner cannot have any grievance if the first respondent had not followed the provisions of the Vigilance Manual. The allegations broadly catalogued in paragraph 63 of the counter are only to highlight theimputations against the petitioner and that is not conclusive on the point. The learned Additional Solicitor General submitted that the first respondent had issued only a charge sheet and the petitioner had submitted his defense and petitioner would have full opportunity to defend himself and at this stage, the petitioner is not entitled to approach this Court under Article 226 of the Constitution of India. The learned Additional Solicitor General submitted that ultimately the petitioner may be found not guilty of any of the charges. The learned Additional Solicitor General further submitted that the first respondent had not acted on the pressure of CVC and that stand is wholly untenable. Mr. Madan Lokur, the Additional Solicitor General, submitted that the CBI dispatched its report on the 16th of July, 1998 and it was received by the first respondent on the 17th of July, 1998 and before that the first respondent had issued an order appointing the Inquiry Officer, who is the second respondent. The argument that after the receipt of the report from the CBI, the first respondent had appointed the Inquiry Officer is not factually correct.
26. On the factual metrics, the reports given by the Two-Member Committee had completely exonerated the petitioner could be appreciated from a perusal of those reports.
27. The charge sheet was issued long before the CBI sent its report. It is in this connection the provisions of the Vigilance Manual would assume importance. In Clause 1.2 in Chapter III of the Vigilance Manual, the work to be entrusted to the CBI is adumbrated. That clause as follows :
'As a general rule investigations of the types given below should be entrusted to the Central Bureau of Investigation or the anti-corruption branch in the Union Territories.
(i) allegations involving offences punishable under law which the Delhi Special Police Establishment are authorised to investigate, such as offences involving bribery, corruption, forgery, cheating, criminal breach of trust, falsification of records, etc.;
(ii) possession of assets disproportionate to known sources of income;
(iii) cases in which the allegations are such that their truth cannot be ascertained without making inquiries from non-official persons or those involving examination of non-Government records, books of accounts etc.; and
(iv) other cases of a complicated nature requiring expert police investigation.
All Chief Vigilance Officers including those of public undertakings and Nationalised Banks, subject to the administrative instructions issued by the Chief Executive have complete discretion to refer the above types of cases to the CBI and it is not necessary to seek the Commission's prior permission.'
28. Clause 1.5 of Chapter III of the Vigilance Manual provides:
'In cases where the allegations relate to a misconduct other than an offence or to a departmental irregularity or negligence and the alleged facts are capableof verification or inquiry within the Department/Office, they should be made departmentally.'
29. In cases where department concerned has to take disciplinary action against an officer, it has to proceed under Clause 1.6 of Chapter III of the Vigilance Manual, which reads as under:
'In certain cases the allegations may be of both types. In such cases it should be decided in consultation with the Central Bureau of Investigation as to which of the allegations should be dealt with departmentally and which should be investigated by the Central Bureau of Investigation.'
30. The Vigilance Manual had contemplated cases where the department would not be able to segregate the two, and in such an event the course to be adopted by the department is provided in Clause 1.7 of Chapter III of the Vigilance Manual, which is in the following terms :
'If there is any difficulty in separating the allegations for separate investigation in the manner suggested above, the better course would be to entrust the whole case to the Central Bureau of Investigation.'
31. The Vigilance Manual had imposed an embargo for any further action by the department concerned in case the entire matter had been referred to the CBI. Clause 1.8 of Chapter III of the Vigilance Manual provides:
'Once a case has been referred to and taken up by the CBI for investigation, further investigation should be left to them and a parallel investigation by the Administrative Ministry / Department, Organisation should be avoided. Further action by the Department, should be taken on the completion of investigation by the CBI on the basis of their report.'
32. The Vigilance Manual speaks of a preliminary inquiry so that the public servant concerned is not put to any prejudice. In Clause 2.3 of Chapter III of the Vigilance Manual it is stated :
'During the course of preliminary enquiry, the public servant concerned may be given an opportunity to say what he may have to say about the allegations against him to find out if he is in a position to give any satisfactory information or Explanationn. In the absence of such an Explanationn, the public servant concerned is likely to be proceeded against unjustifiably. It is only proper, thereforee, that the Investigating Officer tries to obtain the suspect officers' version of 'facts' and why an inquiry should not be held. There is no question of making available to him any documents at this state.'
33. If the CBI is of the opinion that there is sufficient materials for launching a criminal prosecution, the final report is. to be forwarded to the Central Vigilance Commission. In cases where the CBI is of the view that there is no sufficient materials for launching criminal prosecution, what CBI is to do is mentioned in Clause 3.11 of Chapter III of the Vigilance Manual. The same is as under:
'In other cases in which evidence available is not sufficient for launching criminal prosecution, the CBI may come to the conclusion that:
(i) The allegations are of a nature serious enough to justify regular departmental action being taken against the public servant concerned. The final report in such cases will be accompanied by (a) draft articles of charge prepared in the prescribed form (see Chapter X); (b) a statement of imputations in support of each charge; and (c) lists of documents and witnesses relied upon to prove the charges and imputations; or
(ii) . While sufficient proof is not available to justify prosecution or regular departmental action, there is a reasonable suspicion about the honesty or integrity of the Government servant concerned, the final report in such cases will seek to bring to the notice of the Disciplinary Authority the nature of irregularity or negligence for such administrative action as may be considered feasible or appropriate.'
34. The learned Senior Counsel for the petitioner, Dr. A.M. Singhvi, referred to extracts from the directives issued by DOPT in OM No. 371/5/73-ABD(III) dated 3.9.1975 which reads as under :
'In cases in which preliminary enquiry (P.E.) discloses that there is no substance in the allegations or that sufficient material is not available for registering a case (R.C.) or for initiating departmental action, the S.P.E. may decide to close the case. Such cases pertaining to Gazetted Officers will be reported to the Central Vigilance Commission. In other cases, the decision to close a case is communicated to the administrative authority concerned.
Once a case is referred to and taken up by the S.P.E. for investigation, further investigation must be left to them. A parallel investigation by the Administrative Authority should be avoided. Further action by the department should be taken on the completion of the investigation by the S.P.E. on the basis of their report.'
35. According to the learned Senior Counsel for the petitioner, Dr. A.M. Singhvi, the first respondent should have waited for the report of the CBI before issuing the charge sheet. Mr. Madan Lokur, the Additional Solicitor General, submitted that the above directives had been modified in 1983 but their effect is the same.
36. It is a basic principle of law that once the Government had issued a manual containing guidelines, or may be termed as policy, in the absence of any statutory rule governing the situation, the Government is bound to act as per the guidelines. The first respondent in the instant case had completely ignored the provisions of the Vigilance Manual
37. In 'Dr. Amarjit Singh Ahluwalia v. The State of Punjab and Ors.', : (1975)ILLJ228SC , and 'Narendra Kumar Maheshwari v. Union of India and Ors.' : [1989]3SCR43 , the Supreme Court had considered the scope of the guidelines or the policy framed by the Government. The learned Senior Counsel for the petitioner, Dr. A.M. Singhvi, submitted that the principles under Article 73 relating to the Central Government and Article 162 relating to the State Government would applyto this case, because the Vigilance Manual would govern this case as there are no statutory rules dealing with the situation dealt with in the Vigilance Manual. According to the learned Senior Counsel for the petitioner, Dr. A.M. Singhvi, when the field is unoccupied, as it were by the statutory rules, the policy or the guidelines such as the Vigilance Manual would have to be followed by the Ministry, the first respondent. The learned Senior Counsel for the petitioner, Dr. A.M. Singhvi, referred, to the following rulings by the Supreme Court and the judgment of the High Court of Punjab & Haryana.
1. 'Rai Sahib Ram Jawaya Kapur and Ors. v. The State of Punjab' : [1955]2SCR225 ;
2. 'Sant Ram Sharma v. State of Rajasthan and Ors.' : (1968)IILLJ830SC ;
3. 'Union of India v. H.R. Patankar and Ors.' : [1985]1SCR400 ;
4. 'B.N. Nagarajan and Ors., etc. v. State of Mysore and Ors., etc.', 0043/1966 : (1967)ILLJ698SC ;
5. 'Union of India and Ors. v. Lt. Colonel (Now Major) Surjit Singh' 1989 (3) SLR 463.
38. In 'B.N. Nagarajan and Ors., etc. v. State of Mysore and Ors., etc.' (supra), the Supreme Court, dealing with the scope of Article 309 and Article 162 of the Constitution of India, held :
'We see nothing in the terms of Article 309 of the Constitution which abridges the power of the executive to act under Article 162 of the Constitution without a law.'
Therefore, in the absence of any statute, the provisions of the Vigilance Manual would be binding on the Government.
39. The submission on behalf of the petitioner was that in the light of the facts and in the context of the reports, the first respondent is expected, in law, to satisfy itself whether there is prima facie case against the petitioner. The issuance of charge sheet would seriously impair the prospects of a public servant in his progress in his career and that cannot be a matter of routine. It is no solace to the officer to be told that he would be given sufficient opportunity in the inquiry proceedings. Once the charge sheet is issued, till it is taken to its logical end the civil servant would be in a state of suspended animation and he would not be able to reach high position in the ladder of service if he is otherwise found fit, and ultimately if he is absolved of the charges the clock cannot be put back. The official would be in a blind alley, as it were, without any hope and the Disciplinary Authority would not be in a position to undo the mischief it had done and irreparable and irremediable damage would have been done to the officer.
40. In 'Krishna Chandra Tandon v. The Union of India' : AIR1974SC1589 :
It is very necessary for an authority which orders an enquiry to be satisfied that there are prima facie grounds for holding a disciplinary enquiry and, thereforee, before he makes up his mind he will either himself investigate or direct hissubordinates to investigate in the matter and it is ony after he receives the result of these investigations that he can decide as to whether disciplinary action is called for or not.
41. The Calcutta High Court in 'Gulam Mohiuddin v. State of West Bengal and Ors.' : (1964)ILLJ462Cal :
'The manner in which the disciplinary action was initiated against the petitioner left much to be desired. If persons/ responsible for initiation of such proceedings, do start such proceedings without being themselves satisfied as to the necessity, their action, to say the least, cannot be characterised as responsible conduct. But however, irresponsibly a disciplinary action may have been started, if the charges are ultimately proved, the result may justify the action. In the instant case, however, the charges against the petitioner have not been, in my opinion, proved. That makes the irresponsible initiation of the proceedings against the petitioner very much blameworthy. The circumstances under which a disciplinary action for misconduct should be started against a public servant must be left in he sole discretion of the Disciplinary Authority. A Disciplinary Authority should exercise such discretion in a bona fide and responsible manner, should not be unduly swayed by public gossip and should not be induced by extraneous pressure in such a matter. Otherwise the morale of public servant may be broken. I hold that the criticism of the conduct of Mr. C.K. Roy by Mr. Deb, in the matter of issuing the charge sheet against the petitioner, is justifiable criticism and establishes irresponsible conduct, if not action under influence of political pressure.'
42. The learned Judge of the Calcutta High Court referred to this aspect in a case where the petitioner before the High Court of Calcutta challenged the ultimate order of imposing punishment.
43. The same High Court in 'Surendra Chandra Das v. State of West Bengal and Ors.' 1982 Lab. I.C. 574 noticed the principle in the following terms:
'After giving my anxious consideration to the submissions of the respective Counsel on this subject, it appears to me that whether a charge sheet has been issued with a closed mind or not cannot always be decided by a mere reference to the charge sheet itself. The language used in the charge sheet certainly renders a very important indication in the matter but other attending circumstances may at times throw light on the intent and import of the charge sheet. It is true that the charges leveled against a Delinquent Officer must be clear and unambiguous, but at the same time the charge sheet should not be issued with a biased and closed mind. The real purpose of initiating a disciplinary proceeding is to enquire as to whether the facts, prima facie, ascertained against a Delinquent Officer, are correct or not, The purpose of a disciplinary proceeding cannot be to cause a secret enquiry against a Delinquent Officer and to form a positive and firm view about his complicity in the alleged misconduct and thereafter to give him an opportunity to dispel the conclusion already drawn against him. If thereforee from the attending circumstances and also from the language of the charge sheet, it appears that the DisciplinaryAuthority has really drawn a positive conclusion against a Delinquent Officer and thereafter has started a disciplinary proceeding by issuing a charge sheet only to afford him an opportunity to dispel the conclusion drawn against him then such disciplinary proceeding must be held to be bad being vitiated by bias and a closed mind and having been in all intent and purpose/ started to complete a formality in law.'
44. On the facts, the learned Judge G.N. Ray (as His Lordship then was) held:
'In the instant case, it appears that in 1973 the petitioner was placed under suspension in contemplation of a departmental proceeding on the ground that there had been misappropriation of Government money when the petitioner was handling the cash. A complaint for such misconduct was also made to the Police in 1973 and after causing enquiries, the Police closed the case in 1974 and informed the concerned officer that the prima facie case against the petitioner could not have been established. There was no bar for starting a disciplinary proceeding even when the Police case failed and the department was' quite free to start a disciplinary proceeding if prima facie the authority was satisfied about the complicity of the petitioner. In the instant case, it appears that the petitioner had repeatedly asked to withdraw the order of suspension and to exonerate the petitioner from the charges since enquired by the Police at the instance of the department, but neither the suspension order was revoked nor any disciplinary proceeding was started. The petitioner had to move this Court under Article 226 of the Constitution and obtain a Civil Rule wherein he had also pressed for an interim order. It was only at that stage, on the prayer of the learned Counsel for the State, liberty was given by the Court to the respondents to start the disciplinary proceeding and to issue a charge sheet. It also appears that in the instant case further investigation was made by the Vigilance Department and after scrutinizing the records, the petitioner's complicity was found by the Vigilance Department and on such finding and recommendation of the Vigilance Department the charge sheet was issued clearly alleging that the petitioner was guilty of the offences. It is, thereforee, evident that the Disciplinary Authority in reality did not form its own prima facie opinion but was influenced by the finding of the Vigilance Department and having accepted such finding, issued the said charge sheet clearly indicating that the petitioner was guilty of the alleged misconduct. In the circumstances, it cannot be contended that the charge sheet read with the attending circumstances really indicates that a tentative finding was made against the petitioner and the Disciplinary Authority had not formed any definite view against the petitioner. In my view, in the facts of this case, the decision made in the case of Sunil Kumar Mukherjee (1977) 4 Cal. H.C 1014 squarely applies and the charge sheet must fail on the ground that the same was issued with a closed mind and it depicts bias against the petitioner. The charge sheet and the disciplinary proceeding initiated thereon are, thereforee, quashed. As the petitioner has since retired on superannuation there cannot be any occasion to start a disciplinary proceeding against the petitioner and to continue the same in terms of the provisions of the West Bengal Services(Death-cum-Retirement Benefit) Rules, 1971. In the circumstances, the issue as to the virus of Rule 10 of the West Bengal Services (Death-cum-Retirement Benefit) Rules, 1971 need not be decided in this case. The rule is accordingly disposed of. There will be no order as to costs.
Rule disposed of accordingly.'
45. The broad proposition contended for on behalf of the petitioner is that in every case before issuing a charge sheet there should be on record something to show that the Disciplinary Authority was satisfied that there was a prima facie case against the employee need not be considered. The point in the instant case is that whether the procedure prescribed under the Vigilance Manual, could be by-passed under the pretext of 'the thrust of the allegations' being inquired into by the first respondent.
46. in 'Food Corporation of India v. V.P. Bhatia' : 1998(97)ELT403(SC) , the Supreme Court had laid down that the department concerned would be justified in waiting for the report from the CBI before any action is contemplated. The facts, as noticed by the Supreme Court, are :
'......the Central Bureau of Investigation (hereinafter referred to as CBI) uponinformation that substandard crates have been supplied to the Food Corporation of India, appellant 1 in both the appeals (hereinafter referred to as 'the appellant-Corporation') carried out surprise checks and took samples and thereafter suo motu investigation was undertaken by the CBI. As a result of the investigation it was found that the crates had only 30% Kali/Deodar and, as a result, the appellant-Corporation had suffered loss to the tune of Rs. 9,80,056/- and Rs..2,89,340/-. The CBI submitted its report on 30.12.1988 wherein it recommended holding of disciplinary proceedings against the employees concerned of the appellant-Corporation, including the respondents in these appeals. The matter was thereafter referred to the Central Vigilance Commission and the Central Vigilance Commission on 22.5.1989 recommended initiation of proceedings for imposing major penalty. Consequently, charge sheets were served on the respondents in September, 1990 and the enquiry in the charges was entrusted to the same Enquiry Officer in the proceedings against both the respondents. While the proceedings were pending before the Enquiry Officer, the respondents filed writ petitions before the Delhi High Court which have been allowed by the impugned judgments and as a result the disciplinary proceedings have been quashed. The High Court has held that there was no reason why the appellant-Corporation should have waited for the report from CBI when the misconduct was detected in the year 1987 itself and that enquiry should have been started straightaway. The High Court has further observed that even after the CBI recommended action in 1988, the enquiry was not initiated till 1990 and that as on the date of impugned judgments no Enquiry Officer has been appointed and enquiry had not proceeded.'
47. The appellant before the Supreme Court referred to the Vigilance Manual.The Supreme Court noticed the submission on behalf of the appellant and they are as under:
'Mr. Vivek Gambhir, the learned Counsel for the appellants, has invited our attention to paragraph 1.7 of Chapter III of Volume I of the Vigilance Manual of the Central Vigilance Commission which has been adopted by the appellant-Corporation wherein it is stated :
'Once a case has been entrusted to the CBI for investigation further inquiries should be left to them and departmental inquiry, whether fact finding or formal under the Discipline and Appeal Rules, if any, commenced already, should be held in abeyance till such time as the investigation by the CBI has been completed. Parallel investigation of any kind should be avoided. Further action by the Administrative Authority should be taken on the completion of the investigation by the CBI on the basis of their report.'
48. The Supreme Court held :
'In view of the said direction contained in the Vigilance Manual no fault can be found with the appellant-Corporation in waiting for the investigation report of the CBI and the High Court was in error in holding that the appellant-Corporation need not have waited for the report of the CBI and should have started the disciplinary proceedings straightaway.'
49. What is extracted by the Supreme Court from the Vigilance Manual is now contained in Clauses 1.7 and 1.8 of Chapter III of the Vigilance Manual, which is in force. The point in the instant case is not what was considered by the Supreme Court. But the learned Senior Counsel for the petitioner, Dr. A.M. Singhvi, submitted that the first respondent was bound to act in accordance with the provisions of the Vigilance Manual. As I had already noticed, the first respondent has chosen to ignore the Vigilance Manual.
50. The learned Senior Counsel for the petitioner, Dr. A.M. Singhvi, submitted that the first respondent had acted under the pressure of the CVC. That is denied by the first respondent. I do not think it necessary to deal with this aspect when it is to be decided whether the first respondent has acted in accordance with law. The fact of their having been pressurised from the CVC, in my view, is not very material, for CVC, as an independent body, is entitled to have its view and which is always justiciable. The fact is that the CVC had taken a view which had been endorsed by the first respondent which had resulted in the issuance of the charge. The challenge on the decision of the first respondent that when already allegations had been considered in extenso and in depth, they cannot be resuscitated or resurrected proprio vigore would apply to the view taken by the CVC. thereforee, the question whether there is any pressure or not from the CVC is not quite relevant.
51. The learned Senior Counsel for the petitioner, Dr. A.M. Singhvi, submitted that the recommendations of the CVC will not be any binding on the Disciplinary Authority. The learned Senior Counsel for the petitioner, Dr. A.M. Singhvi, relied upon the following authorities :
1. Nagaraja Shivarao Korari v. Syndicate Bank Head Office, Manipal and Anr.', : (1992)IILLJ149SC ;
2. 'State Bank of India and Ors. v. D.C Aggarwal and Anr.' : (1993)ILLJ244SC ;
3. 'N. Manoharanv. State of Tamil Nadu and Anr.' : AIR1981Mad147 .
52. The learned Additional Solicitor General, for the respondents, Mr. MadanLokur, did not dispute the proposition. thereforee, it is not necessary to expatiate onthis point. The learned Senior Counsel for the petitioner submitted that the generalproposition is well known, namely, whenever a civil servant is acquitted in acriminal case honourably, the department cannot take any action against the civilservant.
53. The learned Senior Counsel referred to the following authorities :
1. 'Corporation of the City ofNagpur, Civil Lines, Nagpur and Anr. v. Ramchandra G. Modak and Ors.' : (1981)IILLJ6SC ;
2. 'PrafullaChandraMohapatrav, State of Orissa and Ors.' : (1993)ILLJ171SC ;
3. 'Jay want Bhaskar Sawant v. Board of Trustees of the Port of Bombay and Ors.' 1994 Lab. I.C. 1949;
4. 'Government of Andhra Pradesh and Anr. v. C. Muralidhar' : AIR1997SC3005 .
54. Here again, the dictum laid down by the Supreme Court cannot be disputed by anybody. The point is narrowed down by the stand taken by the respondents that the first respondent was concerned only with 'the thrust'. thereforee, reverting back to the position with reference to the effect of the reports of the Committee and the CBI, once it is found that the allegations had been dealt with and the petitioner had been found 'not guilty' of any charge, the first respondent was not justified in law in issuing the charge sheet.
55. The Supreme Court, in 'Vineet Narain and Ors. v. Union of India and Anr.' : 1998CriLJ1208 , had dealt with the scope of the DOPT directives. It is not necessary to refer to the facts and circumstances in that case.
56. The CVC had differed from the view taken by the CBI and the tenor of the latter leaves one with impression that the view taken by the CVC alone is the only view possible on facts. In its letter dated 25.3.1997, the CVC had directed action to be taken against the Members of the Committee and had characterised the report of the CBI as being reckless. In paragraph 63 of the counter, it is stated :
'The contents of the corresponding para do not pertain to the answering respondents and hence need no reply. This is for CVC to reply.
The respondent No. 1 initiated disciplinary action after due consideration of reports of internal Committee as well as CVC. Respondent No. 1 has noted that CBI has concluded that the allegations leveled in the Regular Case are notsubstantiated. However, the respondent feels that some of the major issues of concern have not been addressed adequately by CBI. An illustrative list of issues is given below.
(i) Inadequate scrutiny of the financial standing of contractors with limited resources to execute huge orders including not obtaining Income Tax clearance certificate from some parties.
(ii) Examination of inventory at Unit level and availability of coal at the time of placing orders and the commercial prudence of the decisions taken.
(iii) Administrative prudence of the decision to procure linkage coal through private transporters without going in for fresh tenders even after major modification of the scope of work.
(iv) Reconciliation of requirement of coal and actual procurement based on capacity utilisation of each Unit of CCI.
(v) Discrepancy in dates of nothings on file relating to procurement of Meghalaya Coal.
Normally, CBI looks at the matter from the stand point of view of maintainability of action under the criminal law involved, whereas in the departmental enquiry the approach is more from the point of view of official propriety and avoidable losses to the Company. As such/ the report of the CBI cannot be the sole or concluding basis to decide the continuance or otherwise of Departmental Enquiry which is being conducted as per the existing rules of the Government of India/CCI.'
57. The Statutory Auditors appointed by the Company Law Board for the CCI for the years 1996-97 and 1997-98 had considered the matter. As per the recommendations of the Comptroller and Auditor General of India/who had certified the auditor accounts/ the same had been considered by the Board of Directors and in the Board, as I had noticed above/the representative of the first respondent was present. The audited accounts were placed on the Table of both the Houses of Parliament, and it had also been certified that there was no violation of the purchase rules and no violation of delegation of powers and by resorting to the purchase at a cheaper rate/ there was reduction of loss to the tune of Rs. 21 crores. The point relating to the forms had also been dealt with. It had also been certified that the coal procured was as per the requirement on the basis of the need and the CCI had acted in accordance with norms fixed by the Reserve Bank of India. The CVC had not adverted to any of these aspects.
58. In the counter filed by the first respondent crucial aspects have not been adverted to and I perused the files and also the CBI report and the report of the Committee and, in my view, the first respondent had not been able to explain in the counter its position to issue the charge sheet dated 24.11.1997. On the materials placed on record, I am clearly of the view that the respondents had acted in an unreasonable fashion. The Supreme Court in 'Sterling Computers Limited v. M&N; Publications Limited and Ors.' : AIR1996SC51 , had approved the statement of law by Prof. Wade, which is in the following terms :
'The powers of public authorities are thereforee essentially different from those of private persons. A man making his Will may, subject to any rights of his dependents, dispose of his property just as he may wish. He may act out of malice or a spirit of revenge, but in law this does not affect his exercise of his power. In the same way a private person has an absolute power to allow whom he likes to use his land, to release a debtor, or, where the law permits, to evict a tenant, regardless of his motives. This is unfettered discretion. But a public authority may do none of these things unless it acts reasonably and in good faith and upon lawful and relevant grounds of public interest.
There are many cases in which a public authority has been held to have acted from improper motives or upon irrelevant considerations, or to have failed to take account of relevant considerations, so that its action is ultra virus and void.'
The Supreme Court, approving the law laid down by the House of Lords in ''Chief Constable of the North Wales Police v. Evans' (1982) 3 All. ER141 and the same is as under:
'The purpose of judicial review is to ensure that the individual receives fair treatment, and not to ensure that the authority, after according fair treatment, reaches on a matter which it is authorised or enjoined by law to decide for itself a conclusion which is correct in the eyes of the Court.'
59. Sir William Wade in his Administrative Law had referred to the principles of unreasonableness in the following terms :
'The principle of reasonableness has become one of the most active and conspicuous among the doctrines which have vitalised administrative law in recent years. Although the principle itself is ancient, the cases in which it was invoked were few and far between until in 1968 the Padfield case opened a new era. Today, on the other hand, it appears in reported cases almost every week, and in substantial number of them it is invoked successfully. Its contribution to administrative law on the substantive side is equal to that of the principles of natural justice on the procedural side.
This doctrine is now so often in the mouths of Judges and Counsel that it has acquired a nickname, taken from a case decided twenty years before Padfield, the Waynesburg case. The reports now are freely sprinkled with expression like 'the Waynesburg principle', 'Waynesburg unreasonableness', or 'on Waynesburg grounds'. As Lord Scarman has explained:
'Waynesburg principles' is a convenient legal 'shorthand' used by lawyers to refer to the classical review by Lord Greene MR in the Waynesburg case of the circumstances in which the Courts will intervene to quash as being illegal the exercise of administrative discretion.
One of the grounds of review, he added, is 'unreasonableness in theWaynesburg sense'. In the same case Lord Bridge referred to the exercise of power 'unreasonably in what, in current legal jargon, is called the 'Waynesburg' sense'. 'Waynesburg' is now a common and convenient lable indicating the special standard of unreasonableness which has become the criterion for judicial review of administrative discretion. It is explained in that context below, where the key passage from the judgment of Lord Greene MR is set out in full.
In an important ex cathedra statement of the grounds for judicial review Lord Diplock preferred the term 'irrationality', explaining it as 'what can by now be succinctly referred to as Waynesburgunreasonableness'. But it is questionable whether 'irrationality' is a better word. Virtually all administrative decisions are rational in the sense that they are made for intelligible reasons, but the question then is whether they measure up to the legal standard of reasonableness. These are two different things, and for legal purposes they are best differentiated by the established terminology. For the sake of clarity as well as consistency it will be best to employ 'unreasonableness' as the key word, and it seems that the Courts are in fact still doing so.
The expression 'arbitrary and capricious' is sometimes used as a synonym for 'unreasonable'; and in one case this has been transmuted into 'frivolous or vesatious' and 'capricious and vexatious'. But the meaning of all such expressions is necessarily the same, since the true question must always be whether the statutory power has been abused.'
60. I have read the letter dated 4/5.8.1997 from the CVC to the Department of Heavy Industry and had also perused the letter dated 8.9.1997 from the CVC to the Department of Heavy Industry. I had read the report of the CBI dated 16.7.1998. The letter dated 14.12.1998 from the CVC to the Department of Heavy Industry reads as under:
'The Central Vigilance Commission has examined the report of CBI received by the Department of Heavy Industry vide DIG/AC-H D.O. letter No. 3/2(A)/ 97/ACU(VII) dated 15.7.1998 on the above subject.
2. The Commission observes that there are too many deficiencies in the CBI report. The following facts will substantiate the observations of the Commission.
3. The CBI has made the point that CCI's Units operational efficiency suffered due to shortage of coal. It is stated that approximately only 60% of the linkage coal was received at the Units and this hampered their operation. The Commission do not rebut this contention because it is possible that at the macro level there was a shortage of linkage coal. In fact, in any management situation, often critical resources become scarce due to variety of reasons and it is a part of management function to make good such shortages. Thus if the CCI officials procured coal from Khasi Meghalaya sources, ordinarily they cannot be faulted. But the point at issue is the manner of such huge procurements, disregarding the canone of the financial propriety, Commercial prudence and much needed transparency.
4. The other point the CBI has sta ted in favor of the action against Shri Darbari and others is the financial crunch faced by the CCI. CBI has said that the CCI tried to raise funds from various financial institutions so that they could utilise that funds for procuring raw materials etc. However, since the CCI did not succeed in this attempt, it had no other option but to depend on private transporters who would procure coal from CIL's collieries at their cost and supply the material to the CCI who would make payments later. On the face of it, this is a highly questionable arrangement because the scrutiny of the records had shown that the firms engaged by the CCI did not have the financial resources to undertake such costly procurements on their own. In fact, the Commission's scrutiny revealed that some of the firms had very poor financial standing/creditworthiness. Further endorsement of linkage permits issued to the CCI to private transporters to lift the coal does seem highly improper. Moreover, since the coal belonged to the CCI, it would not have been possible for the firms to raise Bank loans etc. against such stock. Naturally, the point arises as to against such stock. Naturally, the point arises as to how huge payments are made to the CIL before lifting the coal.
5. The scrutiny done by the Commission had revealed that no specific plant-wise requirements/justification was worked out by the CCI HQ before proceeding to procure Assam-Magalia coal. In the files perused by the Commission there were no emergent requisitions from the Units which should have formed the basis for projecting estimation. As a matter of fact when the circular dated 25.6.1991 was received in the CCI through the Cements Manufacturers Association (CMA), a decision was taken without detailed examination to procure coal. There were no detailed nothings on mis reference from the CMA, but only marginal remarks on the said documents itself where there is no evidence of critical examination. Also the CCI did not participate in the meeting held by the Development Commissioner for Cement Industry (DCCI).
6. The CMA had included only two of the CCI's Units as potential buyers of KhasiMeghalaya coal because geographical location served by the three Railway Zones mentioned in the original letter. These Units were Navagaon in Madhya Pradesh and Charkhi Dadri in Haryana. Yet the CCI asked nine of its Units to buy this private coal irrespective of their location and without examining its justification.
7. Before taking the decision to procure coal by all the said Units, the overall financial implications were not worked out by the CCI.
8. Documents in the relevant files indicated such unplanned procurement did result in excess quantity of coal in Tandur Plant.
9. The scrutiny of the individual purchase file indicated a rash and the generally pre-meditated approach to procurement. There is no evidence in them of detailed examination of the proposals at the initial stage either by the Finance or higher management levels. Consequently, during the period from 1992-93 to 1995-96, coal worth Rs. 13.81 crores was procured through threeinter-related parties. The first such order was placed on M/s. Bahubali Trading Company on 25.2.1992 for a quantity of 20.000 MT of coal. A repeat order was placed ,on the firm on 21.5.1992 for yet another 20,000 MT. Subsequently, an order for 20,000 MT was placed on 4/5.3.1993 on M/s. Padmavati Enterprises. A repeat order was placed on the same firm for 20,000 MT on 25.11.1993. A quantity of 20,000 MT was procured through M/s. Chandra Prabhu International on 6.4.1995. Then, there were additional procurements through purchase orders dated 12.1.1996/14.10.1996 placed on M/s. Chandra Prabhu International for a quantity of 20,000 MT. The fact that there was no proper examination of the justified quantity required for the procurement is further compounded by the advantage of repeat orders given to each of the private parties. A proper work out of the total quantities required could have given the CCI a more favourable rate. In any case repeat orders amounted to a clear favor to the private parties.
10. The CBI's report has said that the CCI could not consider the Meghalaya Mineral Development Corporation (MMDC) because of the constraints faced by the latter. The CBI has also said that since open tenders were issued MMDC could have responded. Another mention made by the CBI is that the MMDC did not own the mines and it was only a trading company. To take this argument further, no private party engaged by the CCI seems to own the mines and apparently engaged only in trading. Further if the MMDCs performance was not up to CCI's expectations, the CCI could have taken the matter with the State Government. The fact that huge quantities of coal were procured without working out the requirement of Units as well as the financial implications amounts to a grave irregularity in itself. The fact that the three firms who cornered the deals are clearly inter-related highlight the questionable nature of the transaction.
11. The lifting of linkage coal through private parties whose bona fides are doubtful and who would make advance payments on behalf of CCI, in spite of their none too impressing financial record/creditworthiness is in itself open to suspicion. The first such procurement exercised materialised on 20.3.1995 where again the requirement was exaggerated. The proposal was to procure coal through private parries to offset the short receipt of linkage coal. An NIT was issued on 21.3.1995 for supply of 19,000 MTs of coal. Four parties from Hyderabad turned up for opening the bids on 31.7.1995. The comparative statement was prepared on 1.8.1995. The coal was ostensibly procured to meet the shortage in April, June, 1995, but by the time the parties were called for negotiations on 11.9.1995, this period was over. On 11.9.1995 the parties were informed that there was a change of scope in the work in that now for the first time they were asked to quote rates for making payments against coal release orders obtained by CCI. They were also asked to make arrangement for transportation. This is very major and dramatic change and the genesis of the whole case lies in this. The parties had poor credit-worthiness and the amount involved in the transaction was of a very high order. In all subsequent procurements of linkage coal the same modus operandi was followed in thatprivate parties were asked to pay for CCI's coal and transport the same to various Units and expect payment later. Since private parties would have been required to pay for the coal at the linkage rate of the Coal India Limited, apparently their profit, if any, would come only from transportation. So why did the parties agree to a deal from which they did not drive much of a gain but at the same time were required to make prior payments of a huge order? The inference is that there is something more to this transaction that has not been revealed in the CBI's investigation report. In the scrutiny done by the Commission it had been pointed out that a complaint had been received by the Dy. Comdt CISF Unit SCECL that during the course of surprise checking of a truck, he found that coal allotted to the Yeragundla Plant was being sold at higher rates'to some bid kiln owners in Hyderabad. In fact the sale of coal in the black market is a definite possibility in this transaction and the investigation has not covered this aspect. The CBI's report does not speak the collection of evidence from transporters, truck drivers and other personnel engaged in this massive operation.
12. The said change of scope of work had no procedural sanction in the purchase manual of the CCI at the relevant time. In the CBI's report the point regarding whether the Tender Committee was empowered to change of the scope of the contract has been discussed. The report states that para 2 of the revised purchase policy of the CCI issued on 15.3.1998 has made a provision for the change of the scope of work. The date 15.3.1998 is significant in that the change has been made after this case was initiated. A retrospective legality is being sought to be given to a highly questionable action which was first taken in 1995 and repeated several times after that.
13. The CBI's report states that there are two Detains who are brothers. To this extent, it can be agreed that there has been no impersonation, but the scrutiny has revealed evidence indicating the close inter linkage of the parties involved in the Assam Meghalaya coal deal as well as linkage coal deal by way of common addresses, close proximity, common partners and the way they behaved during price negotiations. In fact all negotiations lacked transparency insofar as the award of work invariably went to other parties. Thus the farcical nature of the award of the work cannot be ignored and investigation lacks collection of evidence on cartelisation.
14. The Commission is of the considered view that investigation of the case does not manifest professionalism and thoroughness as observed below.
(i) Procurement of Khasi Meghalaya coal was not based of the canone of the financial propriety. CBI report does not reflect that investigation was carried to collect evidence as to what financial proprieties have been infringed.
(ii) Some of the firms had very poor financial standing/credit-worthiness. CBI report does not manifest that record of these firms has been scrutinised to collect evidence on their financial credit-worthiness. Noevidence has also been collected as from which source they made huge payment on behalf of CCI.
(iii) Investigation also lacks to point out that there were definite requirements/justification as the scrutiny of record shows that there were no specific plant-wise requirement/justification.
(iv) Cartel formation is obvious from the scrutiny of the record, but investigation is not thorough to establish the point.
(v) Investigation of Deputy Commandant, CISF Units and vehicle driver was not carried out and reflected in the report to collect evidence whether coal was being sold to kiln owners in Hyderabad.
15. The Commission would, thereforee, advise the Central Bureau of Investigation to re-investigate the case on the above lines and submit their report immediately. The Commission would also advise to fix responsibility of CBI officers who have not investigated the case thoroughly and have acted in a reckless manner in submission of report.'
61. I am of the view that the CVC had not taken into account all aspects of the matter and it has only been persisting in its view. I am of the view, having regard to the facts and circumstances, that the view taken by the CVC cannot be sustained. When serious consequences are involved in the decision-making process by a Governmental agency, the law would expect the Governmental agency to be careful and circumspect and to give cogent reasons for its conclusion, The Governmental agency should also refer in detail to the facts, which had occurred anterior to the period, when it was giving its report. The Two-Member Committee had observed 'CAG conducted in 1995-96 had made no comments on the practice adopted by the CCI to lift linkage coal by private transporters'. It is axiomatic that two views are always possible in any matter and two reasonable persons can perfectly and reasonably come to two opposite conclusions on the same set of facts without forfeiting the title to be regarded as reasonable. thereforee, recommending disciplinary action against the Members of the Committee is an arbitrary exercise of power. No one can claim to have any authority without any reference to the source of power. The dictum is: 'Be you ever so high, the law is above you.' The Supreme Court, in 'Vineet Narain and Ors. v. Union of India & Another' : 1998CriLJ1208 , had entrusted with the CVC an important task in national interest and it is hoped that the CVC would live up to the expectations expressed by the Supreme Court and would act in an impassioned manner and would act in accordance with basic principles of law. I feel it will suffice, so far as this aspect is concerned.
62. The CBI was asked by the CVC to examine the case again. The CBI sent its report on 8.2.1999. The same reads as under:
'The Central Vigilance Commission vide their U.O. No. 97/HVI /2-PART-III-A dated 14.12.1998 has made certain observations on the final report sent to them vide the CBI letter dated 16.7.1998 in the above case. The paradise comments on the said observations of the CVC are given below:
1. Vide para 3 of the above mentioned U.O., the CVC has justified procurement of linkage coal but has observed that the procurements were made disregarding the canone of the financial propriety, commercial prudence and much needed transparency.
In this connection, it is submitted that the Khasi Meghalaya Coal worth Rs. 13.81 crores was procured during the years from 1992 to 1996 against the open tenders on a lowest tender basis. The repeat orders were placed on M/s. Bahubali Trading Company on 21.5.1992 against the purchase order dated 25.2.1992 and on M/s. Padmawati Enterprises on 1/2.12.1993 against the purchase order dated 4.3.1993 for the supply of 20,000 MT coal each as per Clause 6.2 of the purchase policy dated 15.3.1988 which was approved by the Board of DirectorsofCCI. The Repeat order was, thereforee, permissible for CCI under the said purchase policy. The terms and conditions of both the repeat orders were the same. It may, however, be seen that during the period 1991-92 to 1995-96 a total quantity of 34,09,426 MTs of coal was consumed in the CCI Units. Out of the said quantity, only 1,18,531.64 MTs of coal was procured from Khasi Meghalaya on the four open tenders which is hardly 3% of the total quantity so consumed by the CCI in the said period.
The Tender Committee of CCI had evaluated the tenders and had also looked into the financial aspects of the above said purchase from Khasi Meghalaya which had ultimately proved cheaper to the CCI than the coal procured under their own arrangements, during the same period.
2. Vide para 4 the CVC has observed that due to non-availability of funds the CCI had lifted the linkage coal through private transporters on turnkey basis and some of the said transporters had very poor financial standing/creditworthiness.
In this connection it is submitted that the financial position of the Cement Corporation of India Limited had started deteriorating due to low production on account of power shortage caused by massive power cuts in Andhra Pradesh and Madhya Pradesh which produce 85% of the total cement for CCI. This was further aggravated by the recession in market. The availability of working capital in CCI thus deteriorated every year as per details given below :
1992-931993-941994-951995-961996-97(+) 68.97(-) 52.25(-) 1139.59(-) 223.93(-) 352.59Due to the liquidity crunch, the CCI was, thereforee, not in a position to lift the entire quantity of rail linkage coal because they were not in a position either to deposit the cost of the coal with the colliery concerned or the rail fare with the Railways in advance. In case of the road linkages also, the CCI was not able to lift the complete quantity of coal because of the shortage of funds. The linkages had thus started lapsing. It is under these circumstances the CCI had adopted the procedure of purchase on turnkey basis under which arrangement, the concerned transporters had deposited money by preparing demand drafts in favor of the coal companies on behalf of the CCI and had lifted the coal on the authorisation of CGI and the CCI had been reimbursing the same to the transporters from time-to-time.
Regarding credit-worthiness of the transporters it is submitted that they were required to deposit earnest money for participating in the bids and after getting the contract they were required to deposit security amounts to ensure execution of the contract successfully. The required earnest money and security deposit were furnished by all the contractors in the instant case. They had also executed the supply orders, as per the terms and conditions of the contract, within the stipulated period. The amount of Rs. 13.81 crores was not invested in lump sum by the contractor. In fact the investments for procuring coal from the coal companies had been made by them in piece meal in the revolving form. Their bills were reimbursed to them on several dates in a period of about two years.
3. Vide para5 the CVC has observed that no specific plant wise requirements/justification was worked out by the CCI HQ before proceeding to procureAssam Meghalaya Coal. According to them emergent, requisitions from theUnits should have formed the basis for projecting estimations. The CVC hasalso observed that there was no critical examination of the circular dated25.6.1991 received from the Cements Manufacturers Association (CMA), andalso that the CCI did not participate in the meeting held by the DevelopmentCommissioner for Cement Industry (DCCI). ;
In this connection it is submitted that in the MOU for the year 1991-92 and 1992-93 which was signed in between the Chairman, CCI and Secretary, Department of Heavy Industry, the requirement of coal for each Unit has been mentioned after working out the same as per details given below :
1992-92
Unit requirementPower requirementCoal requirementWagon requirement
Mandhar48.116204.6737.22Kurkuntra24.635921.4528.75Bokajan30.573481.077.43Rajban22.312816,098.00Nayagaon & Nayagaon (Exn)125.2418783.0645.38Akaltara70.646714.2536.13Yerraguntla50.876657.8529.83Charkhi Dadri26.592707.5314.72Adilabad44.157711.4414.84Tandur108.0716514.1161.49DGU22.000.000.00
1992-93
UnitPower req. (lakh Units (MT)Coal. req. (MT/months)Wagon req. (Nos./day) Minimum req./ month for desired destination
Mandhar44.62570050 (10 Rakes/month Central (Via Katni) (2 Rakes/month North (Via Kami)Kurkunta22.85590020Bokajan29.27380012Rajban21.2628005(at Yamuna Nagar)Nayagaon122.4518000110Nayagaon (Exn)Akaltara77.47750050Yerraguntla56.63830050Charkhi Dadri26.59360015Adilabad49.30790030 BG(3 rakes/month North/Central)Tandur109.8716000100 (19 rakes/month West) (6 rakes/month North East/East)(3 rakes/month North/Central)DGU22.8000
For the subsequent years, the production target for each year was approved by the Board of Directors which was submitted to the Ministry of Industry, Department of Heavy Industry Ministry after concurring with the targets places the Performance Budget of CCI to the Parliament. Requirement of coal was thus based on the cement production targets fixed in the MOU up to 1993-94 and Performance targets fixed in the Performance Budget for the subsequent years.
As regards the suggestions given by the DCCI vide their letter dated 25.6.1991, the CMA had identified two units of CCI i.e. Charkhi Dadri in Haryana and Neemuch (Naya Gaon) in MP and had written to the CCI on 26.6.1991 to inform its requirement for Khasi Meghalaya coal. Since the CCI was working on the MOU mentioned above they acted upon the suggestions of the CMA accordingly and forwarded the copies of the letters dated 25.6.1991 of DCCIand 26.6.1991 of the CMA to their nine Units on 16.7.1991 for taking necessary action regarding procurement of coal as per their needs and as per the purchase policy and the delegation of powers to them. The letter of CMA as well as of the DCCI were, thereforee, properly attended to by the CCI and acted upon as mentioned above.
4. Vide para 6, the CVC has observed that the CMA had included only two of the CCI's Units as potential buyers of Khasi Meghalaya coal because of their geographical locations. But the CCI had asked its nine Units to buy the said coal irrespective of their location and without examination its justification.
In this connection it is submitted that this is a fact that CMA had identified only two Units i.e. Charkhi Dadri and Nayagaon but the MOU mentioned above which was being acted upon by the CCI had discussed in detail that the southern Units were facing problems and they had temporarily been shut down for want of coal. It was brought out in the MOU that in order to achieve the targets, the CCI will have to bring Assam Coal to its various Units particularly to southern Units. In this background the Secretary, Department of Heavy Industry, Ministry of Industry had agreed in the MOU to assist CCI in movement of Khasi Meghalaya coal to its various Units particularly the southern Units. The CCI had accordingly procured the coal for its southern Units from Assam. The investigation and not disclose any mala fide intention on the part of CCI in this connection.
5. Vide para 7, the CVC has observed that before taking decision to procure coal by all the Units of CCI the overall financial implications were not work out by the CCI.
In this onnection it is submitted that decision was taken for procurement of Khasi Meghalaya Coal to supplement the coal requirement of CCI Units as per the requirements mentioned in the MOU which contained the target of production, availability of funds and other aspects in detail. The purchases were made on open tender basis and the financial implications of each tender were worked out and indicated.
6. Vide para 8 the CVC has observed that unplained procurement did result in excess quantity of coal in Tandur plant.
In this connection it is submitted that the coal was purchased by the respective Units on need based. No extra quantity of coal was purchased by the CCI during the relevant period as mentioned in the chart given below:
YearWorkable opening stockDemand of CoalLinkage allottedActual Receipt of coalActual Consumpton fromon linkage & Other sourcesWorkable closing stockas 31st MarchClosing stock equiv. tono of days prodn1991-926507513800001136000759097 10382934 (to say 1300000) 1992-931038291380000114700071607072454158185191993-945818513800001155000616106621551 11 33767 1994-953376713800001080000549196518260 8 24811 1995-962481113580001080000513552457563 17 3914 1996-97539141338000797300450776426645 7 24125
As disclosed during investigation, no extra quantity of coal was purchased for Tandur Unit during the relevant period.
7. Vide para 9 the CVC has observed that the scrutiny of individual purchase file indicated a rash and the generally pre-meditated approach to the procurement. There is no evidence of detailed examination of the proposals at die initial stages either by the Finance or by the higher management levels. Consequently, during the period from 1992-93 to 1995-96, coal worth Rs. 13.81 crores was procured through the three inter-related parties. The first such order was placed on M/s. Bahubali Trading Company on 25.2.1992 for a quantity of 20,000 MT of coal. A repeat order was placed on the firm on 21.5.1992 for yet another 20,000 MT. Subsequently, an order for 20,000 MT was placed on 4/ 5.3.1993 on M/s. Padmavati Enterprises. A repeat order was placed on the same firm for 20,000 MT on 25.11.92. A quantity of 20,000 MT was procured through M/s. Chandra Prabhu International on 6.4.1995. There were additional procurements also through the purchase orders dated 12.1.1996/ 14.1.1996 placed on M/s. Chandra Prabhu International for a quantity of 20,000 MT. A proper work out of the total quantities required, could have given the CCI a more favourable rate. In any case repeat orders amounted to a clear favor to the private parties.
In this connection it is submitted that there were four tenders for procurement of coal from Khasi Meghalaya during the relevant period which were operated on the lowest quoting rates as per details given below :
(i) Tender dated 30.1.1992 (opening date)
M/s. Bahubali Trading Co. was the lowest. Purchase order placed on 25.2.1992 for 20,000 MT.Repeat order placedon21.5.1992for20,OOOMT on the same terms and conditions.
(ii) Tender dated 5.10.1992 (opening date)
M/s. Padmawati Enterprises was the lowest. Purchase order placed on 5.3.1993 for 20,000 MT. Repeat order placed on 1/2.12.1993 for 20,000 MT on the same terms and conditions.
(iii) Tender dated 20,2.1995 (opening date)
M/s. Chandra Prabhu International was the lowest. Purchase order placed on 6.4.1995 for 20,000 MT. No repeat order.
(iv) Tender dated 11,12.1995 (opening date)
M/s. Chandra Prabhu International was the lowest. Purchase order placed on 12.1.1996. No repeat order.
The procurement of coal was thus made against the four tenders mentioned above in the year 1992 to 1996 after assessing the requirements of coal during the said year. The repeat orders were placed only in respect of the two tenders mentioned above as per the provisions of the purchase policy of CCI (Clause 6.2) which was approved by the Board of Directors of CCI.
8. Vide para 10 the CVC has observed that if the performance of Meghalaya Mineral Development Corporation (MMDC) was not up to the CCI's expectations the CCI could have taken the matter with State Government. The CVC has also observed that huge quantity of coal was procured without working out requirements of Units as well as the financial implications which amounts to a grave irregularity in itself. The CVC has also observed that the fact that the three firms who concerned the deals are clearly inter-related, highlight the questionable nature of the transaction.
In this connection it is submitted that the MMDC was given the order to supply 6,000 MT of coal on 9/10.10.1991 which they could not execute due to non- availability of Railway rakes. The problem of MMDC for execution of the contract was, thereforee, with the Railways and not with the State Government and the MMDC was not able to sort out the same. The CCI had however, also approached the Railways for getting the rakes for transportation of coal against order placed on M/s. MMDC but the rakes could not be made available by the Railways. The open tenders were, floated as per provisions of purchase policy but the MMDC did not participate in this said tender.
The other observations regarding financial implications etc. have already been answered above. The above mentioned three firms which were found to have competed in the tenders were found to be not inter-related as their Directors were different with their different business premises.
9. Vide para 11 the CVC has observed that the bona fides of the private parties were doubtful, and that the CISF Unit of SECEL had found that the coal allotted to the Yeraguntla Unit of CCI plant was being sold at higher rates to some brick kiln owners in Hyderabad.
In this connection it is submitted that the investigation could not establish any doubt on the bona fides of the private parties who had been engaged for transportation/lifting of the coal. All the parties have lifted the allotted quantities of coal and delivered the same to the respective CCI Units, As regards the sale, of coal in the open market, it is submitted that further investigation was conducted to verify the said allegations when it was found that the truck No. AEK 4434 at the time of being detained by the GISF was empty. The said truck at that time was going to Mandamari Colliery (SCCL) for lifting coal. The CISF had neither caught any truck in the process of selling coal to the brick kiln owner in Hyderabad nor they had reported any suchmatter of pilferage either to the CCI or to the local police authorities during the relevant period.
10. Vide para 12 the CVC has pointed out that the change in the scope of work was made in the purchase policy on 15.3.1998 after the case was initiated by CBI and, thereforee, the said decision could not have been available to the CCI for the procurements done by the them prior to the said date.
In this regard it is submitted that the correct date of the revised policy is 15.3.1988 and not 15.3,1998. It was a typing mistake. For ready reference the relevant extract of the revised Purchase Policy dated 15.3.1988 is enclosed.
11. The CVC has pointed out vide para 13 that there is close inter-linkage of the parties for procurement of Assam Meghalaya Coal contract by way of common addresses etc. and there could have been carterlisation of the tenders by them.
In this connection it is submitted that the concerned parties were found to be not interlinked. Their Directors were different. As regards the common address/ it is submitted that 14, Rani Jhansi Road, is a multistoreyed complex where a number of offices are situated including the offices of some of the concerned bidders who have their offices at the separate locations in the said building. No evidence could be gathered to point out any cauterization in the contract by the concerned bidders.
12. Vide para 14 the CVC has observed that investigation of the case does not manifest professionalism and thoroughness.
In this connection it is submitted that all the five observations mentioned in this paragraph have already been answered above. All the allegations mentioned in the FIR of this case allegations have been thoroughly investigated by CBI.
The investigation has not found any violation in the purchase policy which was duly approved by the Board of Directors of CCI or the delegation of Powers on the part of any authority of CCI or the violation of financial rules and procedures in this regard. No mala fides or irregularity could be established against any person during the course of such investigation.'
From this, it is very clear that there is nothing against the petitioner for which any disciplinary action could be taken against him.
63. The CVC in its affidavit dated 11.2.1999 had stated :
'The CBI which was advised by the CVC to re-investigate the case on the lines contained in CVC's U.O. Note No. 97/HVI/2-Part-IIIA dated 14th December, 1998, have sent a reply received on 10th February, 1999, wherein CBI has reiterated its earlier stand for closure of the case. CBI's reply is under examination.'
64. The CVC is a part of the Central Government. thereforee, it is under an obligation to consider the facts in an objective way, but in the instant case, the CVChas not applied its mind to all the aspects of the matter. thereforee, the Central Government cannot rely upon the view expressed by the CVC. The statement of law in De Smith's Judicial Review of Administrative Action is :
'Courts in judicial review will not normally interfere with an administrator's assessment of fact. In two situations, however, they may do so: first, where the existence of a set of facts is a condition precedent to the exercise of a power, and second, when the decision-maker has taken into account as a fact something which is wrong or where he has misunderstood the facts upon which the decision depends.'
65. In view of the above, I have no hesitation in coming to the conclusion that the charge sheet dated 24.11.1997 issued by the first respondent cannot be sustained and it is liable to be quashed and the first respondent has to be restrained from taking any further action. Accordingly, the charge sheet dated 24.11.1997 is quashed and there shall be a writ of mandamus forbearing the first respondent from proceeding further, on the basis of the charge sheet dated 24.11.1997, against the petitioner.
66. The writ petition stands allowed in the above terms.
67. There shall be no order as to costs.