Holding

When a final order of punishment is set aside, the employee is entitled to all consequential benefits, and the stoppage of an annual increment with cumulative effect is a major punishment that must follow the procedure prescribed under Regulation 8 of the 1971 Regulations.

Summary

The appellant, an Assistant Revenue Accountant of the Punjab State Electricity Board, was suspended in 1974, charge‑sheeted, reinstated in 1975 and later allowed to cross the efficiency bar only from 1 April 1976, treating the period of suspension as non‑duty. An inquiry resulted in an order on 16 March 1984 stopping one annual grade increment, which the appellant challenged in a civil suit. The trial court dismissed the suit; the first appellate court upheld that dismissal, and the High Court summarily dismissed the second appeal. The Supreme Court held that the stoppage of an annual increment with cumulative effect is a major punishment requiring a regular inquiry under Regulation 8 of the 1971 Regulations, and that the order was illegal; moreover, when the final punitive order is set aside, the employee is entitled to all consequential benefits, including the original entitlement to cross the efficiency bar from 4 Oct 1974. Consequently, the appellant was awarded back‑pay for the suspension period and allowed to cross the efficiency bar from the correct date.

Issues considered

Whether stoppage of an annual grade increment with future effect constitutes a major punishment requiring compliance with Regulation 8 of the 1971 Regulations.
Whether the order allowing the appellant to cross the efficiency bar from 1 April 1976 instead of 4 Oct 1974 is legally sustainable.
Whether, upon setting aside the final order of punishment, the employee is entitled to all consequential benefits arising from orders issued between the charge‑sheet and the final order.

Subjects

service lawemployee suspensionefficiency barmajor punishmentincrement stoppagedepartmental inquiryconsequential benefitsRegulation 8Punjab State Electricity Board

Judgment

A DHARAMPAL ARORA
le
PUNJAB STATE ELECTRICITY BOARD AND ANR.

NOVEMBER 22, 2006
B
[DR. AR. LAKSHMANAN AND TARUN CHATTERJEE, JJ.]

Service Law:

C Employee--Suspensionjiwn service on 26.8. 74-Reinstatement in service
on 25.8.75-Allowed to cross efficiency bar w.e.f 4.10.1976 -Intervening
period treated as non-duty period-Inquiry-Stoppage of one annual
increment-Challenge to-Dismissed by trial Court-Affirmed by first
appellate Court-Second appeal dismissed by High Court-On appeal,
Supreme Court remanded the case to High Court-Setting aside the order
D of the Courts below, High Court observed that stoppage of annual increment
with cumulative effect is a major punishment-Besides, it was inflicted without
holding a regular inquiry-However, consequential benefit denied on
technical grounds-On appeal, Held: When a particular inquiry .held against
an incumbent with respect to certain set of allegations and final order passed
E imposing punishment-If the final order is set aside, the incumbent is entitled
to all consequential benefits-Hence, the incumbent could not be refused
substantial relief merely on technical grounds that the date of the order
imposing punishment was not given while claiming relief/specific re/ief-
Once the final order goes all the orders from the date of the charge-sheet up
to the date of passing of final order becomes a nullity-Incumbent entitled
F to all consequential benefits and allowed to cross efficiency bar w.e.f
4.10.1974.

Appellant was working as an Assistant Revenue Accountant with the
Punjab State Electricity Board. He was suspended and later charge-sheeted.·
Later, he was reinstated in service vide order dated 25.8.1975. The incumbent
G was due to cross the efficiency bar w.e.f. 4.10.1974 but he was allowed to cross
efficiency bar w.e.f. 1.4.1976 treating the intervening period from 4.9.1974
to 30.9.1975 as a non-duty period. An inquiry was held and an order passed
on 16.3.1984, whereby his one annu~I grade increment was stopped with
future effect. Appellant filed a Civil Suit for certain relief. Trial Court
H 322
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DHARAMPAL ARORA''· PUNJAB STATE ELECTRICITY BOARD 323

dismissed the suit. Aggrieved, the incumbent filed an app.eal before the A
Additional District Judge. The first appeal was dismissed by the appellate
Court. The appellant filed second appeal before the High Court, which was
dismissed by the High Court in limine. The appeal filed against the order of
the High Court was allowed by this Court remanding the case to the High
Court. The matter came up for consideration before the High Court when it B
formulated following two substantial questions of law:

(i) as to whether stoppage of annual grade increment with future effect
is a major punishment and as such proper procedure prescribed under
Regulation 8of1971 Regulations ought to have been followed and since there
was violation of the said Regulation, order dated 16.3.1984 imposing penalty C
is illegal and unsustainable.

(ii) as to whether order dated 10.10.1980 vide which the appellant had
been allowed to cross Efficiency Bar with effect from 1.4.1976 instead of
4.10.1974 is legally unsustainable.
D
Answering Question No. 1 in favour of the appellant, suit of the appellant
stood decreed by the High Court for declaration to the effect that the order
stopping his one annual grade increment with future effect was declared to
be illegal and void. However on second question, High Court held that since
the order dated 10.10.1980 was not assailed by the appellant, no relief could
be granted. Hence the present appeal. E
Partly allowing the appeal, the Court

HELD: 1.1. When a particular inquiry is held against an employee with
respect to a given set of allegations and the final order of punishment is
imposed and when the said final order was set aside, the incumbent was entitled F
for all the consequential benefits. Jn the instant case, the appellant had
specifically challenged the final order of punishment and also the action of
the respondent-authorities in denying the claim of crossing the Efficiency
Bar w.e.f. 4.10.1974 lind the said action was specifically challenged then merely
because the order of the said action was not mentioned or challenged does G
not mean t~at the incumbent could be denied the relief of crossing the
Efficiency Bar w.e.f. 4.10.1974. He could not be refused the substantial relief
merely on technicalities when the specific claim and relief was claimed in
the suit though the date of the order was not mentioned. (328-B-C-D(

1.2. From the order dated 10.10.1980, whereby the appellant was denied H
324 SUPREME COURT REPORTS [2006) SUPP. 9 S.C.R.

A the benefit of crossing the Efficiency Bar w.e.f. 04.10.1974 and was allowed
to cross the Efficiency Bar only w.e.f. 01.04.1976, it is clear that it was
continuation of the same charges that the incumbent was denied the benefit
of crossing the Efficiency Bar from the date he was entitled to; and that the
appellant was served with the charge sheet by the department on 24.09.1974
B and it was the same charge sheet which ultimately led to the infliction of the
final penalty against the appellant by order dated 16.03.1984. Therefore, once
the final order goes, all the orders from the date of charge sheet upto the
date of the passing of the final order become a nullity and redundant. Hence,
the appellant will be entitled to all the monetary benefits for the period from
4.10.1974 to 30.9.1975 along with crossing of efficiency bar w.e.f. 4.10.1974
C instead of 1.4.1976. 1328-E; 329-B-C-D)

CIVIL APP ELA TE JURISDICTION : Civil Appeal No. 5162 of 2006.

From the Judgment and Order dated 13.2..2004 of the High Court of
Punjab and Haryana at Chandigarh in Regular Second Appeal No. 2322/1987.
D
R.K. Kapoor, S.S. Yadav, M.K. Verma, Govind Kaushik and Anis Ahmed
Khan for the Appellant.

Harinder Mohan Singh And Kaushal for the Respondents.

E The Judgment of the Court was delivered by

DR. AR. LAKSHMANAN, J. Leave granted.

This appeal is directed against the final order of the High Court of
Punjab and Haryana dated 13.2.2004 passed in Regular Second Appeal No.
F 2332of1987. The appellant was working as an Assistant Revenue Accountant
with the Punjab State Electricity Board. He was suspended vide order dated
26.8.1974. He was charge-sheeted vide Memo dated 24.9.1974. Thereupon, he
was reinstated in service vide order dated 25.8.1975. The appellant was due
to cross the efficiency bar w.e.f. 4.10.1974 but he was allowed to cross
efficiency bar w.e.f. 1.4.1976 vide order dated 10. 10.1980 passed by the
G respondent-Board. The period from 4.9.1974 to 30.9.1975 was treated as a
non-duty period. An inquiry was held and an order was passed on 16.3 .1984
whereby one annual grade increment of the appellant was stopped with future
effect. The appellant filed a Civil Suit in the court of Senior Sub Judge, Patiala
on 28.4.1984. The suit was filed for declaration and other incidental reliefs.
H The learned Trial Judge by judgment dated 12.3.1985 dismissed the suit filed
......,
DHARAMPAL ARORA v. PUNJAB STATE ELECTRICITY BOARD [LAKSHMANAN,J.] 325

by the appellant-plaintiff. Against the judgment and decree of the Trial Court, A
the appellant filed the first appeal before the Additional District Judge. Before
the Additional District Judge, the appellant had specifically argued that the
claim of the appellant was that he was deemed to have crossed the efficiency
bar w.e.f. 4.10.1974 and that he was entitled to full pay and allowances for the
suspension period from 4.9.1974 to 30.9.1975. A further submission was made B
that the order dated 16.3.1984 was illegal because not only that the order was
not speaking order but also that no show cause notice was served upon the
appellant by the punishing authority after the report of the Inquiry Officer
was submitted and further that the copy of the report of the Inquiry Officer
was also not supplied to the appellant. The Additional District Judge
categorically gave a finding that:- C
"So far as the copy of the inquiry report and the show cause
notice is concerned, admittedly no copy of the report of the
Inquiry Officer was supplied to the plaintiff after the inquiry
report was submitted by the Inquiry Officer nor any show cause
notice was given to the plaintiff by the Punishing Authority prior D
to passing the impugned order dated 16.3.1984."

Despite the said finding, the First Appellate Court held that it was not
essential for the Punishing Authority to supply the copy of the report of the
Inquiry Officer to the appellant-plaintiff or to give him show cause notice prior
to the passing of the impugned order. The Court also held the view that the E
report of the inquiry is to be furnished to the employees and show cause
notice required to be given only in the case of major punishment. According
to the First Appellate Court, since only minor punishment was imposed, there
was no need of furnishing the copy of the inquiry report or to give a show
cause notice to him before imposing the punishment against the appellant. In F
the result, the first appeal was dismissed by the Additional District Judge.
Against the order of the Additional C istrict Judge, the appellant filed Regular
Second Appeal before the High Court, which was dismissed by the High
Court in limine at the admission stage. Against the order of the High Court,
the appellant filed special leave petition no. 2288/88, in which leave was
granted by this Court and the special leave petition was registered as Civil G
Appeal no. 2549/88. This Court, while disposing the appeal, passed the
following order:

"The appeal is directed against the order dated 28th November,
1987 of the Punjab and Haryana High Court summarily dismissing the
Second Appeal of the appellate herein. H
326 SUPREME COURT REPORTS [2006] SUPP. 9 S.C.R.

A In view of our decision in Ku/want Singh Gill v. State of Punjab,
[1991] Suppl 1 SCC 5043, an order withholding increments with
permanent effect is a major punishment. In these circumstances it
appears to us that the order of summary dismissal was not justified
and the case ought to have been disposed of on merits after giving
reasons as the learned District Judge, in his judgment, which was
B unsuccessfully challenged before the High Court, took the view that
the punishment in question, which was of stopping increments with
permanent effect, was a minor punishment and that view is incorrect.

In view of our decision referred to above, we set aside the
impugned order and remand the case to the High Court for disposal
c according to law after giving reasons. We have no.t considered the
rest of the contentions of the parties and these may be urged before
the High Court.

The appeal is disposed of with no order as to costs."

D After the remand, the matter came up for consideration before the High
Court for final hearing. The High Comt formulated following two substantial
questions of law:

"(a) Firstly, that stoppage of annual grade increment with future effect
is a major punishment and as such proper procedure prescribed under
E Regulation 8 of 1971 Regulations ought to have been followed and
since there was violation of the said Regulation, order dated 16.3.1984
imposing penalty is illegal and unsustainable. The counsel relied upon
a judgment in Ku/want Singh Gill v. The State of Punjab (Judgment
Today ( 1990) 4 SC 70) for a proposition that stoppage of annual grade
F increment with cumulative effect is a major punishment.

(b) Secondly, it was submitted by the learned counsel for the appellant
that order dated I 0.10.1980 (Exhibit P-10) vide which the appellant had
been allowed to cross Efficiency Bar with effect from 1.4.1976 instead
of 4.10.1974 is legally unsustainable and the appellant was entitled to
G cross the Efficiency Bar with effect from 4.10.1974."

After hearing the arguments of the counsel appearing for the respective
parties, the High Court observed on question of law no. l as under:

"It needs to be noticed that sub rules (iv), (v) of Rule 5 and Rules ·
8 and 9 of 1970 Rules are in pari materia with provisions contained
H
DHARAMPAL ARORA"· PUNJAB STATE ELECTRICITY BOARD [LAKSHMANAN, J.) 327

in 1971 Regulations. The judgment of the Division Bench in A
Sarwan Singh v. State ofPunjab & Ors., (ILR 1985 (2) P & H 193)
was overruled by the Supreme Court in Ku/want Singh Gill's
case (supra). Learned counsel for the respondent-Board also
could not submit gainful argument to successfully refute the
contention of the counsel for the appellant. The findings of the B
courts below on issue no. 1 are thus reversed and it is held that
stoppage of annual grade increment with cumulative effect is a
major punishment and the same, in the present case, having been
inflicted without holding a regular inquiry in terms of Regulation
8of1971 Regulations cannot legally be sustained. The suit of the
plaintiff-appellant is decreed to this extent." C
So far as the second question of law is concerned, the High Court held
that the appellant has not filed the suit seeking declaration to the effect that
order dated I0.10.1980 is null and void and, therefore, the said relief cannot
be granted to him unless the order dated I 0.10.1980 is set aside. Since the said
order was not assailed by the appellant-plaintiff and the suit having been filed D
on 4.5.1984 i.e. after more than three years of the passing of the order Exhibit
P-1, the High Court held that that the suit was clearly time barred. The High
Court has further observed that even if viewed from any angle, the appellant-
plaintiff could not be granted any relief in this behalf, and rejected the
contention of the appellant on this point. Resultantly, the Second Appeal was E
partly allowed and the judgment and decree passed by the courts below were
set aside to the extent indicated above and the suit of the appellant stood
decreed for declaration to the effect that the order no. 222/CAO dated 16.3.1984
stopping his one annual grade increment with future effect was declared to
be illegal and void.
F
Aggrieved against the judgment passed by the High Court, the plaintiff
preferred the above Civil Appeal in this Court. We heard Mr. R.K. Kapoor,
learned counsel for the appellant and Mr. H.M. Singh, learned counsel for the
respondents. Both the learned counsel drew our attention to the findings
rendered by the courts below and also the documents. We have also carefully
perused the judgment passed by the High Court. As already noticed above, G
the High Court on issue no. I has categorically held that the stoppage of
annual grade increment with cumulative effect is a major punishment and the
same in the present case having inflicted without holding a regular inquiry
in terms of Regulation 8of1971 Regulations, the said departmental proceedings
H
•I
'

328 SUPREME COURT REPORTS (2006] SUPP. 9 S.C:R.

A cannot be legally sustained. By holding so, the High Court decreed the suit
of the plaintiff to the said extent.

When a particular inquiry is held against the appellant with respect to
a given set of allegations and the final order of punishment is imposed by
order dated 16.03.1984 and when the said final order dated 16.03.1984 was set
B aside, the appellant was entitled for all the consequential benefits. In the
instant case, the appellant had specifically challenged the final order of
punishment dated 16.03.1984 and also the action of the respondent-authorities
in denying the claim of crossing the Efficiency Bar w.e.f. 4.10.1974 instead of
1.04.1976 and the said action was specifically challenged then merely because
C the order of the said action dated 10.10.1980 was not mentioned or challenged
does not mean that the appellant could be denied the relief of crossing the
Efficiency Bar w.e.f. 4.10.1974. In our view, the appellant could not be refused
the substantial relief merely on technicalities when the specific claim and relief
was claimed in the suit though the date of the order was not mentioned.
Therefore, the claim of the appellant could not be said to be time-barred
D particularly when the order denying the benefit of crossing the Efficiency Bar
w.e.f. 4.10.1974 was passed by considering the suspension period as.non-
duty period.

It would be relevant to reproduce here the order dated fO. l 0.1980 whereby
the appellant was denied the benefit of crossing the Efficiency Bar w.e.f.
E 04.10.1974 and was allowed to cross the Efficiency Bar only w.e.f. 01.04.1976.

"Punjab State Electricity Board

Office Order No. 419/EA-3187 Dated 10/10/80

F Sh. Dharam Paul Arora Assistant Revenue Accountant (now posted
against the post of Head Office Assistant) in the pay scale of Rs. 160-
10-250/15-400 is hereby allowed to cross Efficiency Bar with effect
from 1.4. 76 raising his pay from Rs.250/- P.M. to 265/- P.M. instead of
4.10.74 by considering his suspension period as 'non-duty period'
with effect from 4.9.74 to 30.9.75 and his record being unsatisfactory.
G
2. This issues with the approval of Chief Accounts Officer, PSEB,
Patiala.
Sd/-
Sr. Accounts Officer/Estt Ale,

H
DHARAMPAL ARORA v. PUNJAB STATE ELECTRICITY BOARD [LAKSHMANAN, J.] 329

For Chief Accounts Officer, PSEB, A
Patiala."
From the above, it is clear that it was continuation of the same charges
that the appellant was denied the benefit of crossing the Efficiency Bar from
the date he was entitled to. It would,, be relevant to mention here that the
appellant was served with the charge sheet by department on 24.09.1974 and B
it was the same charge sheet which ultimately led to the infliction of the final
penalty against the appellant by order dated 16.03. l 984.

Therefore, once the final order goes, all the orders from the date of
charge sheet upto the date of the passing of the final order become a nullity
and redundant. · C
Since the final order dated 16.3 .19..84 itself was set aside by the High
Court" we need net go into any other question raised in this appeal or
considered by the High Court, which in our opinion is wholly unnecessary
in the facts and circumstances of the case.
D
We, therefore, hold ttiat the appellant will be entitled to all the monetary
benefits for the period from 4.10.1974 to 30.9.1975 along with crossing of
efficiency bar w.e.f. 4.10.1974 instead .of I .4.l 976. The Civil Appeal stands
allowed to the extent indicated above. No costs.

S.K.S. Appeal partly allowed.