SC slams RBI governor role in order on ITAT candidate

SEtting apart the rejection of an amerind Revenue serve ship's officer’s candidature for comme il faut a member of the Income Tax Appellate Tribunal (ITAT), the Supreme Court on Friday held that the participation in the selection process, of the then revenue secretary and current Reserve Bank of India governor Sanjay Malhotra, referred to in the judgement only as “the officer” was in gross violation of the principles of natural justice.A bench of justices Vikram Nath and Sandeep Mehta imposed a cost of ₹5 lakh on the Union government for what it termed “rank procrastination” and conduct “bordering on vendetta”. It said that Malhotra’s presence as a member of a search-cum-Selection Committee (SCSC) in September 2024 gave rise to a reasonable and genuine apprehension of bias, particularly since he had earlier been a respondent in contempt proceedings initiated by the petitioner – Captain Pramod Kumar Bajaj-- in relation to the same officer’s service disputes. The court ordered that Malhotra must be excluded from the fresh selection process to be convened within four weeks.While Bajaj appeared in person before the court, Solicitor General Tushar Mehta led the Centre’s legal team.HT tried to reach out to RBI governor Sanjay Malhotra via email, but there was no immediate response by the time of print.“In the interest of fairness and to dispel any reasonable apprehension of bias, it would have been appropriate for ‘the officer’ to have recused from the evaluation process on his own. His failure to do so fortifies the aspersion of bias,” said the bench.While the court noted that it has refrained from naming “the officer” in the proceedings because he “holds a sensitive position”, it made clear that this restraint could not eclipse the constitutional requirement that justice must not only be done, but must also be seen to be done.That Malhotra is “the officer” mentioned in the judgement is evident from the court’s reference to earlier contempt proceedings against “the officer” at the instance of Bajaj.“The inclusion of ‘the officer’ as a member of the SCSC, which rejected the petitioner’s candidature, has undoubtedly created a genuine perception of bias in the mind of the petitioner and was in gross violation of the principles of natural justice,” the bench said.Bajaj, who filed a writ petition, is a former Armed Forces officer who joined the Indian Revenue Service (IRS) in 1990 and rose to the rank of Commissioner of Income Tax. Bajaj had been ranked first on the all-India merit list by an SCSC chaired by a sitting Supreme Court judge in 2014 for appointment as Member (Accountant), ITAT, but was never appointed.Calling the case a “sordid tale of targeted departmental vendetta, full of mala fide actions and protracted persecution”, the bench said that Bajaj had been forced to approach the court repeatedly over more than a decade, even as he neared the upper age limit of 70 years for the post.The bench noted that despite repeated judicial directions, the Centre had intentionally hampered and impeded Bajaj’s appointment by raising “cooked-up charges”, delaying decisions, and even compulsorily retiring him -- an order that was later quashed by the Supreme Court in March 2023 with strong observations against the department.Significantly, the bench recorded that Malhotra had earlier faced contempt proceedings at the instance of Bajaj, and that his participation in the subsequent SCSC meeting on September 1, 2024, vitiated the decision-making process. While the contempt proceeding were closed against Malhotra – then the revenue secretary, in August 2024 after he tendered unconditional apology and agreed to release service-related monetary benefits to Bajaj -- he sat as a member of the SCSC the very next month and considered Bajaj’s candidature.“An authority exercising adjudicatory or selection functions must not only act fairly but must also appear to act fairly,” underlined the court, adding that Malhotra’s failure to recuse himself fortified the aspersion of bias.“The rule against bias would certainly be attracted where the person/authority intrinsically involved in the evaluation process has a personal connection with, personal interest in, or prior involvement in the matter under consideration, or has earlier taken a position which he may be interested in sustaining. The doctrine is applied not only to avoid the possibility of a partial decision but also to preserve public confidence in the impartiality of the decision-making process,” it added.The bench also took serious note of the Centre’s failure to file any counter affidavit despite clear directions, observing that the allegations of bias, mala fides and personal vendetta remained uncontroverted.Setting aside the minutes of the September 2024 SCSC meeting insofar as they related to Bajaj, the court directed the Department of Personnel and Training (DoPT) to convene a fresh SCSC within four weeks, ensuring Malhotra’s exclusion, and to communicate the outcome to the petitioner within two weeks thereafter.“In view of the rank procrastination shown by the respondents and the deliberate obstacles created by them in the path of the petitioner bordering on vendetta,” said the bench, imposing costs of ₹5 lakh, payable to Bajaj.