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Sh. Madan R. Pania S/o Late Major S. Ramchand v. Union of India through its Secretary (Revenue) Department of Revenue - Case No. 953/2009 [2009] INCAT 946 (29 May 2009)

Central Administrative Tribunal

Principal Bench

OA No.953/2009

New Delhi this the 29th day of May, 2009.

Hon'ble Mr. Shanker Raju, Member (J)

Hardwari Lal, Superintendent Central Excise Delhi-II Commissionerate C.R. Building, I.P. Estate, New Delhi.

-Applicant

(By Advocates Shri Ajay Veer Singh Jain with Shri Anand Mishra and Ms. Asha Kandari)

--Versus-

1. Union of India through its Secretary (Revenue) Department of Revenue, Ministry of Finance, Delhi.

2. Chief Commissioner (Delhi Zone), Central Excise, C.R. Building, I.P. Estate, New Delhi.

3. Commissioner Central Excise, Delhi-I, Commissionerate C.R. Building, I.P. Estate, New Delhi.

4. Commissioner Central Excise, Delhi-II, Commissionerate, C.R. Building, I.P. Estate, New Delhi.

5. Commissioner, (LTU), Large Tax Payers Unit Saket, New Delhi.

-Respondents

(By Advocate Shri Ashwani Bhardwaj)

O R D E R

Applicant, a Superintendent in Central Excise and Customs Commissionerate, New Delhi has impugned his transfer order dated 27.3.2009 from Delhi-II to Large Tax Payer Unit (LTU). Quashing of the order and also the relieving order are the reliefs claimed.

2. Applicant was appointed as an Inspector of Central Excise and in the memorandum of appointment clause 15 stipulates that on his appointment in this Collectorate, no request for transfer from this Collectorate to any other Collectorate will be considered. Applicant was promoted as Superintendent. The parent department of applicant is Central Excise Commissionerate, Delhi, which comes under the control of Central Board of Excise and Customs (CBEC). As per Ministry of Finance, Department of Revenue, CBEC letter dated 11.8.2003 regarding posting transfer of officers on loan basis to other organizations prior consent is mandated. Vide OM of Ministry of Finance, Department of Revenue, CBEC letter dated 5.10.2006 with an object sought to be achieved at par with international practice to allow tax payers to pay their tax under a single window, i.e., excise duty, corporate tax/income-tax and service tax a LTU scheme in a phased manner has been promulgated. The first LTU was set up at Bangalore. The LTUs will also be established in a phased manner in Chennai, Delhi, Kolkata and Mumbai. A LTU will be headed by a Chief Commissioner, either from CBDT or from CBEC. There will be Commissioners posted in LTU, who would be holding executive and appellate charges. The powers and duties would be similar to that of other field Commissioners. The other Group A, B, C officers along with supporting staff will be posted by CBDT and CBEC. The officers posted in LTU will have all India jurisdiction in respect of all registered premises of a large taxpayer registered in that particular LTU.

3. As a result thereof, the applicant was transferred from Commissionerate of Central Excise Delhi to LTU and an order relieving him has been passed, giving rise to the present OA.

4. On 9.4.2009 operation of the impugned order dated 27.3.2009 was stayed.

5. Learned counsel of applicant would vehemently oppose the transfer on the ground that as per the service conditions of the applicant he cannot be posted out of his parent Commissionerate to a different establishment on loan basis without his prior consent. It is also stated that once CBEC, Department of Revenue is the controlling authority of the applicant as per GOI letter dated 11.8.2003 his transfer outside the cadre to a separate establishment is not in accordance with rules. It is also stated that the LTU is not part of the Commissionerate and being an independent body the service liability of the applicant extends only to Central Excise and Customs Commissionerate, Delhi.

6. Learned counsel further contends that LTU is a separate and distinguished establishment the notification of Central Excise dated 8.3.2002 clearly shows that jurisdiction in terms of Commissionerate of Central Excise extends to six parts, which does not include LTU. It is stated that LTU being a foreign establishment the transfer liability is against the office circular dated 11.8.2003.

7. On the other hand, learned counsel of respondents vehemently opposed the contentions. He has also produced notification dated 30.9.2006 whereby LTU was promulgated as well as letter dated 18.5.2009 to contend that the salary of officers of Central Excise and Service Tax posted in LTU is to be paid by Income Tax Department. However, other administrative matters like posting/transfer of all officers of Central Excise and Service Tax are under the control of CBEC/Chief Commissioner, Central Excise, Delhi Zone. The CBEC & CBDT draw the salary for all the officers posted in the LTUs under their administrative control as per the arrangements made by the Department of Revenue, Ministry of Finance. It is also decided that the cadre of the CBEC and CBDT are borne at their respective strength and these are not treated as the deputation posting for the LTUs.

8. In the above backdrop, leaned counsel would contend that LTU is working under the aegis of CBEC like the Central Excise, Delhi Commissionerate. It is denied that applicant has been transferred to some other organization/establishment on loan basis. It is however averred that LTU being a part of CBEC as Central Excise, Commissionerate Delhi, the question of obtaining the consent of applicant did not arise.

9. Learned counsel would contend that LTU has been made part of CBEC and transfer/posting of staff cannot be construed as posting outside the organization. It is stated that Directorate General of CBEC as well as other units like LTU are the constituent of CBEC. As the responsibility of posting of staff has been entrusted with the Chief Commissioner, Delhi Zone, seniority of applicant as well as his emoluments remain unaffected.

10. Lastly, it is stated that being a policy decision, the orders passed, transferring the applicant in public interest, cannot be interfered and neither violate any statutory rule nor malafide.

11. On careful consideration of the rival contentions of the parties the transfer being an incident of service in judicial review should be sparingly interfered with, that too, on limited ground of violation of rules and malafide, contrary to Articles 14 and 16 of the Constitution of India. In Tejshree Ghag v. Prakash Parashuram Patil, (2007) 2 SCC (L&S) 451 transfer from one post to another non-equivalent post, the Apex Court observed as under:

15. The orders of transfer were passed by Authority in purported exercise of its executive power. Executive power can be exercised only in terms of the extant rules. It is well-settled that where executive order results in civil consequences, principles of natural justice are required to be complied with prior thereto. It is not a case where an order of transfer was passed by way of change of place of employment within an organization simpliciter. An order of transfer ordinarily should be in terms of the existing rules. Transfer may even be incidental to the conditions of service, but thereby nobody can be deprived of his existing right. Existence of a power and exercise thereof are two different concepts. An Executive power in absence of any statutory rules cannot be exercised which would result in civil or penal consequences. Such exercise of power must, moreover, be bona fide. It cannot be done for unauthorized purpose. An Executive order passed for unauthorized purpose would amount to malice in law. An order of transfer cannot prejudicially affect the status of an employee. If orders of transfer substantially affect the status of an employee, the same would be violative of the conditions of service and, thus, illegal. Transfers must be made to an equivalent post. [See Ramadhar Pandey v. State of U.P. & Others (1993) Supp. (3) SCC 35 Hussain Sasan Saheb Kaladgi v. State of Maharashtra, (1988) 4 SCC 168 and P.C. Wadhwa v. Union of India and Anr. [1964 (4) SCR 598]

16. In Vice-Chancellor, L.N. Mithila University v. Dayanand Jha (1986) 3 SCC 7, it was held :

"The true criterion for equivalence is the status and the nature and responsibility of the duties attached to the two posts. Although the two posts of Principal and Reader are carried on the same scale of pay, the post of Principal undoubtedly has higher duties and responsibilities. Apart from the fact that there are certain privileges and allowances attached to it, the Principal being the head of the college has many statutory rights, such as: (i) He is the ex officio member of the Senate. (ii) He has the right to be nominated as the member of the Syndicate. (iii) As head of the institution, he has administrative control over the college Professors, Readers, Lecturers and other teaching and non-teaching staff. (iv) The Principal of a constituent college is also the ex officio member of the Academic Council of the university. (v) He has the right to act as Centre Superintendent in the university examinations. It is thus evident that the High Court was right in holding that the post of Reader could not be regarded as an equivalent post as that of Principal in the legal sense. Maybe, when the affairs of a college maintained by the university are mismanaged, the Vice-Chancellor may, for administrative reasons, transfer a Professor or Reader of any department or college maintained by it to the post of the Principal of such college, but the converse may not be true. While the Professors and Readers by reason of their learning and erudition may enjoy much greater respect in society than the Dean or Principal of a college, it does not follow that the post of Principal must be treated as equivalent to that of a Reader for purposes of Section 10(14) of the Bihar State Universities Act, 1976, as amended."

17. The orders of transfer impugned before the Tribunal in any event could not have been passed without complying with the principles of natural justice.

12. In Prasar Bharti & Ors. v. Amarjeet Singh & Ors., (2007) 2 SCC (L&S) 566 as to transfer of service and deputation the difference has been well explained by the Apex Court with the following observations:

13. There exists a distinction between 'transfer' and 'deputation'. 'Deputation' connotes service outside the cadre or outside the parent department in which an employee is serving. 'Transfer', however, is limited to equivalent post in the same cadre and in the same department. Whereas deputation would be a temporary phenomenon, transfer being antithesis must exhibit the opposite indications.

14. There cannot be any doubt whatsoever that ordinarily no employee can be transferred without his consent from one employer to another. [See Jawaharlal Nehru University v. Dr. K.S. Jawatkar and Ors. [(1989) Supp. (1) SCC 679]. But, the said principle has no application in the instant case.

15. A transfer of an employee may be governed by the provisions of a statute or the terms and conditions of a contract of service.

16. The situation as obtaining in the present case, however, in our opinion, would amount to be a case of deemed deputation. It is true that no order has been passed by the Central Government on this behalf, but the respondents acted in the manner as if such an order had been passed. The respondents have been working with the Corporation for a long time without any demur whatsoever. They are undoubtedly under the control and supervision of the officers of the Corporation. There exists a hierarchy of the officers in the Corporation. There are a large number of departments. Each department has separate functions. Work of one department, however, would be related to another.

17. It has not been disputed that the functions of the Central Government has been taken over by the Corporation in terms of Section 12 of the Act, when the Corporation has started functioning on and from the appointed day. It requires man-power for managing its affairs. It has been doing so with the existing staff. They are being paid their salaries or other remunerations by the Corporation. They are subjected to effective control by its officers. The respondents , for all intent and purposes, are therefore, under the control of the Corporation.

18. In Zee Telefilms Ltd. and Another v. Union of India and Others [(2005) 4 SCC 649], it was noticed :

"The word 'control' has been defined in Black's Law Dictionary in the following terms:

"Control.- Power or authority to manage, direct, superintend, restrict, regulate, govern, administer or oversee."

In Bank of New South Wales v. Common Wealth, [1948] HCA 7; [76 CLR 1], Dixon, J., observed that the word 'control' is 'an unfortunate word of such wide and ambiguous import that it has been taken to mean something weaker than 'restraint', something equivalent to 'regulation'. Having regard to the purport and object of the Board, its control over 'cricket' must be held to be of wide amplitude."

19. The expression 'control', although is not defined, in the light of Article 235 of the Constitution of India, has been held to be conferring wide power upon the High Court. [See State of West Bengal v. Nripendranath Bagchi - [1965] INSC 181; AIR 1966 SC 447], Madan Mohan Choudhary v. State of Bihar and Ors. [(1999) 3 SCC 396], Yoginath D. Bagde v. State of Maharashtra and Anr. [(1999) 7 SCC 739]; and High Court of Judicature for Rajasthan v. Ramesh Chand Paliwal and Anr. [AIR 1998 SC 1079].

20. The concept of control implies that the controlling officer must be in a position to dominate the affairs of its subordinate. It is unless otherwise defined would be synonymous with superintendence, management or authority to direct, restrict or regulate. It is exercised by a superior authority in exercise of its supervisory power. It may amount to an effective control, which may either be de facto or remote.

21. The Corporation has not framed its own rules. In absence of any rules, however, an employer, it is well-known, would have an inherent power to deal with its employees. In a situation of this nature, we have no doubt that the same would include a power of transfer. It is one thing to say that an employer does not possess of any power to transfer in terms of the extant rules or conditions of service or the nature thereof; but the same does not mean that the employer must have the power to transfer its employees only in terms of a statute.

22. The position of an industrial workman, however, would stand on a different footing. The terms and conditions of industrial employees are governed by the provisions of the Industrial Disputes Act or the certified standing orders framed under the Industrial Employment (Standing Orders) Act, 1946.

23. An establishment like the Corporation, moreover, in absence of the rules may have an implied power of transfer. Transfer is an ordinary incident of service. It does not result in alteration of any condition of service to its disadvantage. [See B. Vandana Rao v. State of Karnataka and Anr. (1986) 4 SCC 624], Abani Kanta Ray v. State of Orissa [(1995) Supp. (4) SCC 169]; and Kendriya Vidyalaya Sangathan v. Damodar Prasad Pandey and Others [(2004) 12 SCC 299].

24. In Public Services Tribunal Bar Association v. State of U.P. and Another [(2003) 4 SCC 104], this Court observed :

"37. Transfer is an incident of service and is made in administrative exigencies. Normally it is not to be interfered with by the courts. This Court consistently has been taking a view that orders of transfer should not be interfered with except in rare cases where the transfer has been made in a vindictive manner."

25. In Balco Employees' Union (Regd.) v. Union of India and Others [(2002) 2 SCC 333], this Court opined that in case of policy, the employees may suffer to certain extent, but such sufferings should be taken to be incidence of service. Therein, the court observed :

"48. Merely because the workmen may have protection of Articles 14 and 16 of the Constitution, by regarding BALCO as a State, it does not mean that the erstwhile sole shareholder viz. Government had to give the workers prior notice of hearing before deciding to disinvest. There is no principle of natural justice which requires prior notice and hearing to persons who are generally affected as a class by an economic policy decision of the Government. If the abolition of a post pursuant to a policy decision does not attract the provisions of Article 311 of the Constitution as held in State of Haryana v. Des Raj Sangar on the same parity of reasoning, the policy of disinvestment cannot be faulted if as a result thereof the employees lose their rights or protection under Articles 14 and 16 of the Constitution. In other words, the existence of rights of protection under Articles 14 and 16 of the Constitution cannot possibly have the effect of vetoing the Governments right to disinvest_."

26. Respondents, therefore, in our opinion by reason of their conduct as also that of other players in the field, namely, the Union of India and Corporation must be held to have been deputed in the services of the Corporation. They would, therefore, be governed by the general principles of deputation. For the said purpose they are under the functional control of the Corporation which in the peculiar facts and circumstances of this case, in our opinion, would also imply that the Corporation had a power of transfer.

27. Functional test, as is well-known, is also employed for the purpose of determining the relationship of the employer and employees. [See Workmen of Niligiri Cooperative Marketing Society Ltd. v. State of Tamil Nadu and Ors. (2004) 3 SCC 514] and District Rehabilitation Officer and Others v. Jay Kishore Maity and Others [(2006) 11 SCALE 545].

28. We do not find that the action taken by the appellants herein in transferring the respondents is in any way arbitrary or irrational. The orders of transfer have been passed in the interest of the administration and with a view to carry on its functions.

29. We, therefore, are of the opinion that the High Court was not correct in opining that the respondents could not be transferred by the Corporation.

13. Recently the Apex Court in Balco Captive Power Plant Mazdoor Sangh and Anr. v. National Thermal Power Corporation and others, (2009) 1 SCC (L&S) 472 on the question of alteration of conditions of service from one employer to another, the Apex Court observed as follows:

32. The next submission of learned senior counsel for the employees was that transfer of employer is not permissible without tripartite agreement. As per the law laid down in Nokes vs Doncaster Amalgamated Collieries Ltd., (1940) 3 All E.R. 549 and decision of this Court in Manager, M/s. Pyarchand Kesarimal Ponwal Bidi Factory vs. Omkar Laxman Thange & Ors., (1969) 2 SCR 272, the consent must be express and consciously accorded in the course of negotiation contemporous with the process of transfer so as to amount to an informed consent. Consequently, in order to bind the appellants, there must be a tripartite agreement. Since there is no tripartite agreement, as observed above, the transfer from one employer to another cannot be effected.

33. In Nokes vs Doncaster Amalgamated Collieries Ltd. (supra), it was observed as under:

It will be readily conceded that the result contended for by the respondents in this case would be at complete variance with a fundamental principle of our common law - namely, that a free citizen, in the exercise of his freedom, is entitled to choose the employer whom he promises to serve, so that the right to his services cannot be transferred from one employer to another without his assent

34. This Court in Pyarchand vs. Omkar Laxman (supra) held thus:

A contract of service being thus incapable of transfer unilaterally, such a transfer of service from one employer to another can only be affected by a tripartite agreement between the employer, the employee and the third party, the effect of which would be to terminate the original contract of service by mutual consent and to make a new contract between the employee and the third party.

35. The Government or its instrumentality cannot alter the conditions of service of its employees and any such alteration causing prejudice cannot be effected without affording opportunity of pre-decisional hearing and the same would amount to arbitrary and violative of Article 14. As pointed out earlier, in the case on hand, the employees are neither party to tripartite agreement nor they have been heard before changing their service condition. Therefore, the action of the management is violative of Article 14 of the Constitution of India. Similar view has been taken by this Court in H.L. Trehan and Others vs. Union of India and Others, [1988] INSC 353; (1989) 1 SCC 764. In para 11 of the judgment, this Court observed as under:

.. It is now a well established principle of law that there can be no deprivation or curtailment of any existing right, advantage or benefit enjoyed by a Government servant without complying with the rules of natural justice by giving the Government servant concerned an opportunity of being heard. Any arbitrary or whimsical exercise of power prejudicially affecting the existing conditions of service of a Government servant will offend against the provision of Article 14 of the Constitution. Admittedly, the employees of CORIL were not given an opportunity of hearing or representing their case before the impugned circular was issued by the Board of Directors. The impugned circular cannot, therefore, be sustained as it offends against the rules of natural justice.

36. It is useful to refer to the judgment of this Court in Jawaharlal Nehru University vs. Dr. K.S. Jawatkar and Others, 1989 Supp. (1) SCC 679. In this case, Jawaharlal Nehru University was the appellant before this Court. The main contention of the appellant-University was that the respondent was appointed at the Centre of Post Graduate Studies, Imphal and when the Centre was transferred to Manipur University his services were automatically transferred to that University and consequently he could not claim to be an employee of the appellant-University. The argument proceeds on the assumption that the Centre of PG studies at Imphal was an independent entity which existed by itself and was not a department of the appellant-University. Rejecting the said contention, this Court held thus:

7. The Centre of Post-Graduate Studies was set up at Imphal as an activity of the appellant University. To give expression to that activity, the appellant University set up and organised the Centre at Imphal and appointed a teaching and administrative staff to man it. Since the Centre represented an activity of the appellant University the teaching and administrative staff must be understood as employees of the appellant University. In the case of the respondent, there can be no doubt whatever that he was and continues to be, an employee of the appellant University. There is also no doubt that his employment could not be transferred by the appellant University to the Manipur University without his consent notwithstanding any statutory provision to that effect whether in the Manipur University Act or elsewhere. The contract of service entered into by the respondent was a contract with the appellant University and no law can convert that contract into a contract between the respondent and the Manipur University without simultaneously making it, either expressly or by necessary implication, subject to the respondent's consent. When the Manipur University Act provides for the transfer of the services of the staff working at the Centre of Postgraduate Studies, Imphal, to employment in the Manipur University, it must be construed as a provision enabling such transfer of employment but only on the assumption that the employee concerned is a consenting party to such transfer. It makes no difference that the respondent was not shown in the list of Assistant Professors of the appellant University or that the provision was not indicated in its budget; that must be regarded as proceeding from an erroneous conception of the status of the respondent. The position in law is clear, that no employee can be transferred, without his consent, from one employer to another. The consent may be express or implied. We do not find it necessary to refer to any case law in support of this conclusion.

8. Inasmuch as the transfer of the Centre of Post-graduate Studies from the appellant University to the Manipur University could not result in a transfer of the employment of the respondent from the one to the other, it must be concluded that the respondent continues in the employment of the appellant University..

37. It is clear that no employee could be transferred without his consent from one employer to another. Therefore, in view of the aforesaid rulings the transfer of employees from NTPC - a public sector undertaking to BALCO which is a private organization is bad in law.

14. With the above ratio decidendi clear to me, what is discerned from it is that without taking the consent of a government servant he cannot be transferred outside his cadre or department. This bring me to the pivotal issue whether LTU is part of CBEC or not? The applicant in his rejoinder has annexed notification No.14/2002 of Central Excise whereby Ministry of Finance has set out jurisdiction of Chief Commissioner of Central Excise for Delhi and exercisable in Delhi-I to Delhi-V as well as Panchkula. LTU is not mentioned therein. However, creation of LTU is with an object to simplify the tax procedure and under the concept of payment of all the tax under a single window, several units have been set up in Delhi, which is a self contained tax office. LTU has been headed by a Chief Commissioner either from CBDT or CBEC where the functions are to coordinate between the direct taxes and indirect taxes, coordination with the Boards (CBEC and CBDT) and for staff including Group A, B and C the posting order would be issued by CBDT and CBEC respectively. From the documents produced subsequently, including notification of 30.9.2006 the salary of the officers of Central Excise is to be paid by Income Tax department, which is otherwise paid by the CBEC though under the Ministry of Finance, yet in the administrative matter of posting/transfer of Central Excise officers under the control of CBEC. This shows that CBEC has a control over posting of their employees in Central Excise and Customs. However, I find that out of four operational LTUs to all the units at Bangalore and Chennai are under the administrative control of CBEC, whereas two others are under the administrative control of CBDT. Both CBEC and CBDT draw salary for all the officers in LTU under their administrative control as per the arrangements made by the Department of Revenue, Ministry of Finance but cadre of CBEC are borne at their respective strength and these are not treated as the deputation posting for the LTUs. This leaves no doubt in my mind that the initial appointment of the applicant as an Inspector, one of the conditions in clause 14 and 15 was to serve in Delhi Collectorate and no request for transfer to any other Collectorate will be considered. On being promoted as Superintendent in Delhi Customs (Preventive) Commissionerate CBEC letter dated 11.8.2003 clearly rules that if an officer of the Board is transferred on loan basis from one organization to another organization without prior consent would be an illegality as per the decision of the Tribunal.

15. In fact, the LTU for administrative convenience and with an object sought to be achieved to simplify the tax recovery process merged both CBEC/CBDT by participation of the employees of both sides with an administrative control of either CBDT or CBEC irrespective of the stream from an officer has been drifted. If LTU is to be treated as part and parcel of CBEC, the service conditions of applicant preclude his transfer to any other Collectorate and as LTU is an all India unit with branches in Delhi also and not being made part of the Commissionerate, whereas in CBEC a Commissionerate is necessarily headed by a Chief Commissioner from CBEC. If one is posted in Central Excise and Customs as per respondents subsequent decision of 19.5.2009 the payment of salary and allowances to the officers of Central Excise comes from Income Tax. It has been responded that Delhi unit is under the administrative control of CBDT clearly signifies that there is no control of CBEC administratively over the applicant and simply because his salary and other service conditions are not affected in any manner, in the matter of transfer though one may not have a right to choose his own posting, but it cannot be done in derogation of the policy laid down by the CBEC of Commissionerate working in Central Excise and Customs and specifying the units. Having not included LTU, this cannot be treated part of Delhi Commissionerate. As applicant cannot be transferred outside the Collectorate and his request for seeking transfer to outside the Collectorate cannot be entertained. The respondents cannot approbate and reprobate simultaneously as on the one hand when they have not brought, vide notification, LTU as part of the Commissionerate merely because there is participation of officer of CBEC in LTU would not mean that LTU has become part of the Commissionerate. If this plea of the respondents is correct, then the very purpose and object of establishing LTU with joint participation of CBEC and CBDT would go otiose and redundant. As service conditions of the service have been altered unilaterally without affording him a reasonable opportunity the same is an illegality.

16. I am of the considered view, that before transfer of the applicant his consent should have been taken, though ultimately a right to post the officer is prerogative of the Government but not unfettered and is bound by the Rules and instructions on the subject. The transfer and relieving order of applicant cannot be sustained in law. OA is allowed. Impugned orders are set aside. Interim order is made absolute. However, respondents are at liberty to seek consent of applicant and then proceed further in accordance with law. No costs.

(Shanker Raju)

Member (J)

San.