SHRI MADHAV LAXMAN VAIKUNTHE versus THE STATE OF MYSORE

deciding the conflicting claims of lessee and third Hiralal Patni party arises in this cas~; nor is the court called upon v. to pronounce on the vested rights of lessee in con-Loonkaram flict with those of the Receiver. But this is simple Sethiya case of court in the course of its administration of the estate through the agency of receiver making Subba Rao ]. suitable provision for the running of the mills. As the agreed term had expired, the court, in our view, could certainly direct the appellant to put the mill in the possession of the Receiver.

Lastly it has. been brought to our notice that an application for the discharge of the Receiver is pend-ing in the lower court. Any observations that we have made in this judgment are not intended to affect the merits one way or other in the disposal of that application. That application will be disposed of in accordance with law.

In the result, the appeal fails and is dismissed with costs.

Appeal dismissed.

SHRI MADHA V LAXMAN V AIKUNTHE

April I2, THE STATE OF MYSORE

(B. P. SINHA, c. J., s. K. DAS, A. K. SARKAR,

N. RAJAGOPALA AYYANGAR and

J. R. MUDHOLKAR, JJ.)

Public Servant-Reversion to substantive rank-If and when punishment-Test-Recovery of arrears of salary-Limitation-Government of India Act, 1935 (26 Geo. 5, ch. 2), s. 240(3)--Con-stitution of India, Art. 3n(2)-lndian Limitation Act, 1908 (9 of r908), art. ro2.

The appellant, who held the rank of Mamlatdar in the first grade and was officiating as District Deputy Collector, was alleged to have' wrongly charged travelling allowance for 59 miles instead of 5 I and was, as the result of departmental enquiry, reverted to his substantive rank for three years and

1 S.C.R. SUPREME COURT REPORTS

directed to refund the excess he had charged. He made re-r96r presentation to the Government which was of no avail although . the Accountant General was of the opinion that the appellant Shri Madhav had not overcharged and committed no fraud. Ultimately the,Laxman Vaikunthe· appellant was promoted to the selection grade but the order of v. reversion remained effective and affected his position in the State [0]! Mysore ·selection grade. After retirement he brought suit for de-claration that the order of reversion was void and for recovery of Rs. r2,516 and odd as arrears of salary, allowances, etc., with interest and future interest. The trial court held that there was no compliance with the provisions of s. 240(3) of the Government of India Act, 1935, granted the declaration but refused the.arrears claimed. The plaintiff filed an appeal and the State cross-objection and the High Court dismissed the appeal and allowed the cross-objection, holding that the order of reversion was not punishment within the meaning of s. 246(3) of the Government of India Act, r935.

Held, that the matter was covered by the observations of this Court in Purshottam Lal Dhingra' s case and of the two tests of punishment laid down by this Court, namely, (1) whether the servant had right to the rank or (2) whether he had been visited by ~vii consequences of the kind specified therein, the second certainly applied. The appellant might or might not have the right to hold the higher post, but there could be no doubt that he was visited with evil consequences as result of the order of reversion.

Mere deprivation of higher emoluments, ho;vever, in conse-quence of an order of reversion could not by itself satisfy that test which must include such other conseqnences as forfeiture of substantive pay and loss of seniority. In the instant case, by the order of reversion for three years to his substantb,e post, the appellant lost seniority and promotion and the belated action of the Government could not wholly undo the mis-chief.

Since the requirement of s. 240(3) of the Government of India Act, 1935, which corresponds to Art. 3u(2) of the Consti-tution, had not been found to have been fully complied with, the order of reversion must be held to be void.

Pttrshottam Lal Dhingra v. Union of India, [1958] S.C.R. 826, applied.

The claim of arrears of salary was governed by art. 102 of the Indian Limitation Act, and the appellant, therefore, was entitled to no more than what fell due during the 3 years pre-vious to his retirement.

The Punjab Provinte v. Pandit Tarachand, [1947] F.C.R. 89, followed.

CIVIL APPELLATE JURISDICTION: Civil Appeal No, 84of1960.

State of v. Mysore The appellant in person.

B. R. L. Ayengar and D. Gupta, for the respon. dent.

1961. April 12. The Judgment of the Court was delivered by

Sinha c. J. SINHA, C. J.-The main question for decision in this appeal, on certificate of fitness granted by the High Court of Judicature at Bombay, is whether public servant, who has been officiating in higher post but has been reverted to his substantive rank as result of an adverse finding against him in departmental enquiry for misconduct, can be said to have been reduced in rank within the meaning of s. 240(3) of the Government of India Act, 1935. The learned Civil Judge, Senior Division, by his Judgment and Decree dated October 31, 1955, held that it was so. The High Court of Bombay, on first appeal from that decision, by its Judgment and Decree dated July 26, 1956, has held to the co'ntrary.

In so far as it is necessary for the determination of this appeal, the facts of this case may shortly be stated as follows. The appellant was holding the rank of Mamlatdar in the First Grade and was officia.ting as District Deputy Collector. In the latter capacity he was functioning as District Supplies Officer. He had to undertake tours in the discharge of his official duties for which he maintained motor car. In res-pect of one of his travelling allowance bills, it was found that he had charged travelling allowance in res-pect of 59 miles whereas the correct distance was only 51 miles. departmental enquiry was held against him as result of which he was reverted to his original rank as Mamlatdar, by virtue of the Order of the Government dated August 11, 1948, (Ex. 35), which was to the following effect:

"After careful consideration Government have decided to revert you to Mamlatdar for period of

three years and have further directed that you 1961 should refund the excess mileage drawn by you in respec t O th th ree Journeys. . ,, . Laxman Vaikunthe Shri Madhav Shri Madhav . The appellant made number of representations v. to the Government challenging the correctness of the State of Mys°'' findings against him and praying for re-consideration of the Order of Reversion passed against him but to Sinha c. J. no effect, in spite of the fact that ultimately the Accountant General gave his opinion that the appel-lant had not overcharged and that there was no fraud involved in the travelling allowance bill which was the subject matter of the charge against him. But ultimately, by Notification dated March 26, 1951, (Ex. 61), the appellant was promoted to the Selection Grade with effect from August 1, 1950, but even so the Order of Reversion passed against the appellant re-mained effective and appears to have affected his place in the Selection Grade. Eventually, the appel-lant retired from service on superannuation with effect from November 28, 1953. He filed his suit against the State of Bombay on August 2, 1954, for declara-tion that the Order of the Government dat~d August 11, 1948, was void, inoperative, wrongful, illegal and ultra vires, and for recovery· of Rs. 12,866 odd on account of his arrears .of salary, allowances, etc. with interest and future interest. The learned Civil Judge, Senior Division, at Belgaum, came to the conclusion that the first part of the departmental enquiry held against the plaintiff leading up to the findings against him was free from. any defect but that he had not been given the opportunity of showing cause against the punishment proposed· to be inflicted upon him as result of those findings, in so far as no show-cause notice was given to him ndr copy of the enquiry report showing the grounds on which the findings had been based. There was, thus, according to the finding of the Trial Court, no full compliance with the require-ments of s. 240(3) of the Government of India Act, 1935. The Court also held that the Order of Rever- , sion amounted to penalty imposed upon the plaintiff as result of the enquiry. The Court, therefore, came

Laxman Vaikunthe Shri Madhav Shri Madhav . v. State of Mys°'' Sinha c. J.

r96r to the conclusion that the Order aforesaid passed by . M the Government reverting him to the substantive rank La;::::. v:i;~~the was void and granted him that declaration, but dis-v. missed his suit, with costs, in respect of the arrears State of Mysore claimed by him as aforesaid on the ground that it was based on tort and not on contract. There was an Sinha C.J. appeal by the plaintiff in respect of the dismissal of his claim for arrears, and cross-objections by the State in respect of that part ·of the judgment and decree which had granted declaration in favour of the plain-tiff. The High Court dismissed the appeal by the plaintiff and allowed the cross-objections of the de-fendant-respondent in respect of the declaration, but made no orders as to the costs of the appeal and the cross-objections. The High Court held that the Order of Reversion, even assuming that it was punishment as result of the departmental enquiry against the appellant, was not punishment within the meaning of s. 240(3) of the Government of India Act, 1935. It also held that the Order of Reversion was not punishment at all.

In this Court, the appellant, who has argued his own case with ability, has urged in the first place, and in our opinion rightly, that his case is covered by the observations of this Court in Parshotam Lal Dhin-gra v. Union of India('). Those observations are as follows:-

" reduction in rank likewise may be by way of punishment or it may be an innocuous thing. If the Government servant has right to particular rank, then the very reduction from that rank will operate as penalty, for he will then lose the emo-luments and privileges of that rank. If, however, he has no right to the particular rank, his reduction from an officiating higher rank to his substantive lower rank will not ordinarily be punishment. But the mere fact that the servant has no title to the post or the rank and the Government has, by contract, express or implied, or under the rules, the right to reduce him to lower post does not mean that an order of reduction of servant to lower (1) [1958] s.c.R. 826, 863-64.

~, ) fl S.C.R. SUPREME COURT REPORTS

r9[[5]]r

post or rank cannot in any circum_st:i-nces be . r9[[5]]r punishment. The real test for determrnrng whether sh,i'Madhav the reduction in such cases is or is not by way ofLaxman Vaikunthe punishment is to find out if the order for the reduc-v. tion also visits the servant with any penal conse- Stat• of Mysore sequences. Thus if the order entails or provides for the forfeiture of his pay or allowances or the Sinha c. f. loss of his seniority in his substantive rank or the stoppage· or postponement of his future chances of promotion, then that circumstance may indicate that although in form the Government had pur-ported to exercise its right to terminate the em-ployment or to reduce the servant to lower rank under the terms of the contract of employment or under the rules, in truth and reality the Govern-ment has terminated the employment as and by way of penalty. The use of the expression "termi-nate" or "discharge" is not conclusive. In spite of tho use of such innocuous expressions, the court h11s to apply the two tests mentioned above, namely, (1) whether the· servant had right to the post or the rank or (2) wh";ther he has been visited with evil consequences of the kind hereinbefore referred to? If the case satisfies either of the two tests then it must be held that the servant has been punished and the termination of his service must be taken as dismissal or removal from service or the rever-sion to his substantive rank must be regarded as reduction in rank and if the requirements of rules and Art. 311, which give protection to Government servant have not been complied with, the termina-tion of the service or the reductiOn in rank must be held to be wrongful and in violation of the consti-tutional right of the servant."

He has rightly pointed out that he would have conti-nued as Deputy Collector but for the Order of the Government, dated August 11, 1948, impugned in this case, as result of the enquiry held against him, and that his reversion was not as matter of course or for administrative convenience. The Order, in terms, held him back for three years. Thus his emoluments, pre-sent as well as future, were adversely affected by the

'9[6]' O_rder aforesaid of the Government. In the ordinary Shri Madhav course? he would have continued as Deputy Co!lec-Laxman Vaikunthe tor with all the emoluments of the post and would v. have been entitled to further promotion but for the State of Mysore setback in his service as result of the adverse find-ing against him, which finding was ultimately declar-Siuha c. J. ed by the Accountant General to have been under misapprehension of the true facts. It is true that he was promoted as result of the Government Order dated March 26, 1951, with effect from August 1, 1950. But that promotion did not entirely cover the ground lost by him as result of the Government Order im-pugned in this case. It is noteworthy that the Judg-ment of the High Court under appeal was given in July, 1956, when the decision of this Court in Dhin-• gra's case (1) had not been given. The decision of this Court was given in November, 1957. Of the two tests laid down by this Court, certainly the second test applies, if not also the first one. He may or may not have right to hold the post or the rank, but there is no doubt that he was visited with evil consequences. Ordinarily, if public servant has been officiating in higher rank it cannot be said that he has substan-tive right to that higher rank. He may have to revert to his substantive rank as result of the exi-gencies of the service or he may be reverted as result of an adverse finding in an enquiry against him for misconduct. In every case of reversion from an officiating higher post to his substantive post, the civil servant concerned is deprived of the emoluments of the higher post. But that cannot, by itself, be ground for holding that the second test in Dhingra' s case ([1]), namely, whether he has been visited with evil consequences, can be said to . have been satisfied. Hence, mere deprivation of higher emoluments as consequence of reversion cannot amount to the "evil consequences" referred to in the second test in Dhingra's case ([1]); they must mean something more than mere deprivation of higher emoluments. That being so, they include, for example, forfeiture of sub-stantive pay, loss of seniority, etc. Applying that

(I) [1958] S.C.R. 826, 863-64.

1 S.C.:R. SUPREME COURT REPORTS

test to the present case, it cannot be said that simply r96r because the appellant did not-get Deputy Collector's . 111 dh salary for three years, he was visited with evil conse- La;;:. 'v;ik:;,h, quences of the type contemplated in Dhingra' s case ([1 ]). v. Even if he had been reverted in the ordinary course of State of Mysore the exigencies of the service, the same consequences would have ensued. If the loss of the emoluments Sinha c. J. attaching to the higher rank in which he was officiat-ing was the only consequence of his reversion as result of the enquiry against him, the appellant would have no cause of action. But it is clear that as result of the Order dated August 11, 1948 (Ex. 35), the appellant lost his seniority as Mamlatdar, which was his substantive post. That being so; it was not simple case of rever.sion with no evil consequences; it had such consequences as would come within the test of punishment as laid down in Dhingra's case. If the reversion had not been for period of three years, it could not be said that the appellant had been punished within the meaning of the rule laid down in Dhingra's case (1). It cannot be asserted that his reversion to substantive post for period of three years was not by way of punishment. From the facts of this case it is clear that the appellant was on the upward move in the cadre of his service and but for this aberration in his progress to higher post, he would have, in ordi-nary course, been promoted as he actually was some-time later when the authorities realised perhaps that he had not been justly treated, as is clear from the ·Order of the Government, dated March 26, 1951, pro-moting him to the higher rank with effect from August 1, 1950. But that belated justice meted out to him by the Government did not completely undo the mis-chief of the Order of Reversion impugned in this case. It is clear to us, therefore, that as result of the Order of Reversion aforesaid, the appellant had been punish-ed and that the Order of the Government punishing him was not wholly regular. It has been found that the requirements of s. 240(3) of the Government of India Act, 1935, corresponding to Art. 311 (2) of the Constitution, had not been fully complied with. His

{I) [1958] S.C.R. 826, 863-64.

r96r reversion in rank, therefore, was in violation of the Sh . M dh constit,utional guarantee. In view of these considera-Laxm~n v:ik::the tions it must be held that the High Court was not v. right in holding against the appellant that his rever-State of Mysore sion was not punishment contemplated by s. 240(3) of the Government of India Act, 1935. On this part Sinha c. f. of the case, in our opinion, the decision of the High Court has to be reversed and that of the Trial Court that his reversion to his substantive rank was void, must be restored.The question then arises whether he is entitled to any relief in respect of his claim for arrears of salary and dearness allowance. He has claimed Rs. 10,777 odd as arrears of pay, Rs. 951 odd as arrears of dearness allowance, as also Rs. 688 odd as arrears of daily allowance plus interest of Rs. 4 71 odd, thus aggregat-ing to the sum of Rs. 12,886 odd. This claim is spread over the period August, 1946, to November, 1953, that is to say, until the date of his retirement from Government service, plus future interest also. On this part of the case the learned Trial Judge, relying upon the case of the High Commissioner for India and Pakistan v. I. M. Lall(') held that government ser-vant has no right to recover arrears of pay by an action in Civil Court. He got over the decision of this Court in the State of Bihar v. Abdul Majid(') on the ground that that case has made distinction bet-ween claim based on contract and that on tort. In the instant case, he came to the conclusion that as the plaintiff had claimed the difference between the pay · and allowance actually drawn and those to which he would have been entitled but for the wrongful orders, the claim was based on tort and, therefore, the plain-tiff was not entitled to any relief. On the question of limitation, he held that the suit would be governed by Art. 102 of the Indian Limitation Act (IX of 1908) as laid dowrl by the Federal Court in the case of The Punjab Province v. Pandit Tarachand ('). In that view of the matter, the learned Judge held that add-ing the period of two months of the statutory notice under s. 80 of the Code of Civil Procedure given to (1) (19f8) L.R. 75 I.A. 225. (2) [1954] S.C.R. 786.

(3) [1947] F.C.R. 89.

l S.C.R. SUPREME COURT RE!>OR'l'S

Government, the claim would be in time from June 2, I96I 1951. Hence the Trial Court, while giving the decla-Sh . M dh ration that the Order impugned was void, dismissed Laxm~nv:ik:;,he the rest of the claim with a. direction that the plain-v. · tiff was to pay 3/4ths of the costs of the suit to the State of Mysore defendant. The High Court dismissed the suit in its entirety after allowing the cross-objections of the Sinha c. J. iState. The appellant contended that his suit for arrears of salary would not be governed by the three years rule laid down in Art. 102 of the Limitation Act and that the decision of the Federal Court in Tara-chand's case (1) was not correct. The sole ground on which this contention was based was that "salary" was not included within the term "wages". In our opinion, no good reasons have been adduced before us for not following the aforesaid decision of the Federal Court. In the result, the appeal is allowed in part, that is to say, the declaration granted by the Trial Court that the Order of the Government impugned in this case is void, is restored, in disagreement with the decision of the High Court. The claim as regards arrears of salary and allowance is allowed in part only from the 2nd of June, 1951, until the date of the plaintiff's retirement from Government service. There will be no decree for interest before the date of the suit, but the decretal sum shall bear interest at 6% per annum from the date of the suit until realisation. The plaintiff-appellant will be entitled to three-fourths of his costs throughout, in view of the fact that his entire claim is not being allowed.

Appeal allowed in part .