Shri Madhav Laxman Vaikunthe versus the State of Mysore

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	886 SUPREME COURT REPORTS [1962]
*HiralalPatni* v. *Loonkaram* *Sethiya* SubbaRao].	deciding the conflicting claimsofa lessee and a third party arises in thiscas~;noristhe court called upon to pronounce on the vested rights of a lessee in con- flict with thoseofthe Receiver. But thisisa simple caseofa court in the courseofits administration of the estate through the agencyofa receiver making a suitable provision for the running of the mills. As the agreed term had expired, the court, in our view, could certainly direct the appellant toputthe mill in the possessionofthe Receiver. Lastlyithas. been brought to our noticethatan application for the dischargeoftheReceiver is pend- ing in the lower court. Any observationsthatwe have made in this judgment are not intended to affect the merits one way or other inthedisposalofthat application.Thatapplication willbedisposed of in accordance with law. Inthe result, the appeal fails and is dismissed with costs. Appeal dismissed.

886
SUPREME COURT REPORTS
[1962]

HiralalPatni
v.
Loonkaram
Sethiya
SubbaRao].

deciding the conflicting claimsofa lessee and a third
party arises in thiscas~;noristhe court called upon
to pronounce on the vested rights of a lessee in con-
flict with thoseofthe Receiver. But thisisa simple
caseofa court in the courseofits administration of
the estate through the agencyofa receiver making a
suitable provision for the running of the mills.
As
the agreed term had expired, the court, in our view,
could certainly direct the appellant toputthe mill in
the possessionofthe Receiver.
Lastlyithas. been brought to our noticethatan
application for the dischargeoftheReceiver is pend-
ing in the lower court. Any observationsthatwe
have made in this judgment are not intended to affect
the merits one way or other inthedisposalofthat
application.Thatapplication willbedisposed of in
accordance with law.
Inthe result, the appeal fails and is dismissed with
costs.
Appeal dismissed.

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SHRI MADHA V LAXMAN V AIKUNTHE

v.

April I2,

THE STATE OF MYSORE

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

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N. RAJAGOPALA AYYANGAR and

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J. R. MUDHOLKAR, JJ.)

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

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The appellant, who held the rank of a 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 a departmental enquiry, reverted to his substantive rank for three years and

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1 S.C.R. SUPREME COURT REPORTS 887

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directed to refund the excess he had charged. He made a 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 State⁰ ! Mysore ·selection grade. After retirement he brought a suit for a 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 a cross-objection and the High Court dismissed the appeal and allowed the cross-objection, holding that the order of reversion was not a punishment within the meaning of s. 246(3) of the Government of India Act, r935.

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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 a 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 a result of the order of reversion.

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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 mischief.

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

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

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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.

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

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CIVIL APPELLATE JURISDICTION: Civil Appeal No, 84of1960.

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i96i ShriMadhav Laxman Vaikunthe	888 SUPREMECOURT REPORTS [1962] Appeal from the judgment and decree datedJuly 26, 1956, of the Bombay High Court in .(\ppeal No. 138of1956.
v. *State*ofMysore	The appellant in person. B. R.L.Ayengar_and_D.Gupta, dent. for the respon.
	1961. April12.The Judgmentofthe Court was delivered by
_Sinha_c.J.	SINHA,C.J.-Themain question for decision in this appeal, on a certificateoffitness granted bytheHigh CourtofJudicatureatBombay,iswhether a public servant, who has been officiating in a higher postbut has been reverted to his substantive rank as a result ofanadverse finding against him in a departmental enquiry for misconduct, can be said to have been reduced inrankwithin the meaningofs.240(3)ofthe Government ofIndiaAct, 1935. The learned Civil Judge, Senior Division, by hisJudgmentandDecree datedOctober 31, 1955, heldthatitwasso.The High CourtofBombay, on a first appeal fromthatdecision, by itsJudgmentand Decree datedJuly26,1956, has held to the co'ntrary. Insofar asitis necessary forthedeterminationof this appeal, the factsofthis case may shortly be stated as follows. The appellant was holding therank of a_Mamlatdar_in theFirstGrade and was officia.ting as a District Deputy Collector.Inthe latter capacity he was functioning as a District Supplies Officer.He hadto undertake tours in the dischargeofhis official duties for which he maintained a motor car.Inres- pectofoneofhis travelling allowance bills,itwas foundthathe had charged travelling allowance in res- pect of 59 miles whereas the correct distance was only 51miles. A departmental enquiry was held against him as a resultofwhich he was revertedtohis originalrankas_Mamlatdar,_by virtue oftheOrderof theGovernment dated August11,1948, (Ex. 35), which was to the following effect: "Aftercareful consideration Government have decided to revert you to Mamlatdar for a period of

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1 S.C.R. SUPREME COURT REPORTS

889

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three years and have further directed that you 1961 should refund the excess mileage drawn by you in respec t f O th e th ree Journeys. . ,, . Laxman Vaikunthe Shri Madhav . The appellant made a 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 appellant 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 a 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 remained effective and appears to have affected his place in the Selection Grade. Eventually, the appellant 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 a declaration 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 a result of those findings, in so far as no show-cause notice was given to him ndr a 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 requirements of s. 240(3) of the Government of India Act, 1935. The Court also held that the Order of Rever- , sion amounted to a penalty imposed upon the plaintiff as a result of the enquiry. The Court, therefore, came

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

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890 SUPREME COURT REPORTS

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r96r to the conclusion that the Order aforesaid passed by . M d the Government reverting him to the substantive rank La;::::. v:i;~~the was void and granted him that declaration, but disv. 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 plaintiff. The High Court dismissed the appeal by the plaintiff and allowed the cross-objections of the defendant-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 a punishment as a result of the departmental enquiry against the appellant, was not a 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 a 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 Dhingra v. Union of India('). Those observations are as follows:-

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" A reduction in rank likewise may be by way of punishment or it may be an innocuous thing. If the Government servant has a right to a particular rank, then the very reduction from that rank will operate as a penalty, for he will then lose the emoluments 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 a 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 a lower post does not mean that an order of reduction of a servant to a lower (1) [1958] s.c.R. 826, 863-64.

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891

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

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post or rank cannot in any circum_st:i-nces be . a r9⁵ 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 reducv. 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 purported to exercise its right to terminate the employment or to reduce the servant to a lower rank under the terms of the contract of employment or under the rules, in truth and reality the Government has terminated the employment as and by way of penalty. The use of the expression "terminate" 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 a 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 a dismissal or removal from service or the reversion to his substantive rank must be regarded as a reduction in rank and if the requirements of rules and Art. 311, which give protection to Government servant have not been complied with, the termination of the service or the reductiOn in rank must be held to be wrongful and in violation of the constitutional right of the servant."

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

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892 SUPREME COURT REPORTS

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'9⁶ ' O_rder aforesaid of the Government. In the ordinary Shri Madhav course? he would have continued as a 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 a result of the adverse finding against him, which finding was ultimately declar- Siuha c. J. ed by the Accountant General to have been under a misapprehension of the true facts. It is true that he was promoted as a 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 a result of the Government Order impugned in this case. It is noteworthy that the Judgment 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 a right to hold the post or the rank, but there is no doubt that he was visited with evil consequences. Ordinarily, if a public servant has been officiating in a higher rank it cannot be said that he has a substantive right to that higher rank. He may have to revert to his substantive rank as a result of the exigencies of the service or he may be reverted as a 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 a 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 a consequence of a 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 substantive pay, loss of seniority, etc. Applying that

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

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1 S.C.:R. SUPREME COURT REPORTS

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893

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test to the present case, it cannot be said that simply r96r because salary for the three appellant years, he was visited with evil conse-did not-get a Deputy Collector's La;;:. . 'v;ik:;,h, 111 dh 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 officiating was the only consequence of his reversion as a result of the enquiry against him, the appellant would have no cause of action. But it is clear that as a result of the Order dated August 11, 1948 (Ex. 35), the appellant lost his seniority as a Mamlatdar, which was his substantive post. That being so; it was not a 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 a 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 a substantive post for a 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 a higher post, he would have, in ordinary course, been promoted as he actually was sometime 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, promoting 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 mischief of the Order of Reversion impugned in this case. It is clear to us, therefore, that as a result of the Order of Reversion aforesaid, the appellant had been punished 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.

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r96r
Sh.Mdh
Laxm~n_v:ik::the_
v.
StateofMysore
Sinhac.f.

894
SUPREMECOURTREPORTS
[1962]
reversioninrank,therefore, was in violationofthe
constit,utional guarantee.Inviewofthese considera-
tionsitmustbeheldthattheHighCourt was not
right in holding against the appellantthathis rever-
sion was not a punishment contemplatedbys.240(3)
oftheGovernmentofIndiaAct, 1935.Onthispart
ofthecase, in our opinion, the decisionoftheHigh
Court hastobe reversed andthatoftheTrial Court
thathis reversiontohis substantiverankwas void,
must be restored.
Thequestionthenarises whether he is entitled to
any relief in respectofhis claim for arrearsofsalary
anddearness allowance. He has claimed Rs. 10,777 odd
asarrearsofpay, Rs.951odd as arrearsofdearness
allowance, as also Rs. 688 odd as arrearsofdaily
allowance plus interestofRs. 471odd,thusaggregat-
ingtothesumofRs. 12,886 odd. This claim is spread
over the period August, 1946, to November, 1953,
thatis to say, until thedateofhis retirement from
Government service, plus future interest also. On
thispartofthecase the learned Trial Judge, relying
upon the caseofthe_High Commissioner for India and_
_Pakistan_v._I.M.Lall(')_heldthata government ser-
vanthas no right to recover arrearsofpaybyan
action in a Civil Court.Hegot overthedecisionof
this Court in the_State of Bihar_v._AbdulMajid(')on
thegroundthatthatcase has made a distinction bet-
ween a claim based on a contractandthaton atort.
Intheinstantcase, he came totheconclusionthatas
the plaintiff had claimed the difference betweenthepay·
andallowance actuallydrawnandthose to which he
would have been entitledbutforthewrongful orders,
theclaim was based ontortand, therefore, the plain-
tiff wasnotentitled toanyrelief.
Onthe question
oflimitation, he heldthatthe suit would be governed
by Art. 102oftheIndianLimitation Act(IXof1908)
as laid dowrlbythe Federal Court in the caseof_The
_Punjab Province_v.Pandit Tarachand(').Inthat
viewofthematter,thelearnedJudgeheldthatadd-
ing the periodoftwo monthsofthestatutory notice
unders.80ofthe CodeofCivil Procedure given to
(1)(19f8)L.R._75_I.A.225.
(2) [1954] S.C.R. 786.
(3) [1947]F.C.R.89.

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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 plainv. · 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 Tarachand'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.

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Appeal allowed in part .

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(I) (I947) F.C.R. 89.

Shri Madhav Laxman Vaikunthe v. the State of Mysore

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Shri Madhav Laxman Vaikunthe v. the State of Mysore

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