ivil Appeal No 2960 of 1987
From the Judgment and Order dated 182
1986 of the Punjab  Haryana High Court in RSA No 3204 of 1984
428 0 K Khuller and R C
Kohli for the Appellant
CM Nayar for the Respondent
This appeal by special leave is against the judgment and decree dated February 18 1986 in Second Appeal No 3204 of 1984 of Punjab  Haryana High Court at Chandigarh
The appellantplaintiff while was working as Inspector
Food and Supplies at Algaon
the Director
Food and Supplies
Punjab on June 10
1976 visited the place and found him to have purchased sub standard wheat landing him in receiving a charge sheet on June 29 1976 for his miscon duct
The appellant had submitted his explanation
Rules 8 and 9 of the Punjab Civil Services Punishment and Appeal Rules
1970 for short the Rules  envisage the procedure to conduct an enquiry into the misconduct
But the disciplinary authority
on consideration of the explanation found that the appellant committed a minor misconduct
Accordingly by order dated April 12
1977 directed stoppage of two incre ments with cumulative effect
The appellant laid the suit for a declaration that the offending order amounts to major penalty and imposition thereof without conducting enquiry as enjoined under Rules 8 and 9 is illegal
On contest by the respondent state the trial court held that the impugned order amounts to major penalty and granted a decree invali dating the order
On appeal though the Distt
Court con firmed on further Second Appeal the High Court held it to be minor penalty within the meaning of Rule 5iv of the Rules obviating the need to make regular enquiry
Assailing the legality thereof this appeal has been filed
The only question that needs decision is whether stop page of two increments with cumulative effect is a major penalty  Admittedly Rules 8 and 9 envisage conducting an enquiry into misconduct after giving an opportunity to the delinquent employee in the manner prescribed therein and on establishing the charge to pass an appropriate order impos ing a major penalty prescribed in either clauses V to IX or minor penalty under clauses I to IV of Rule 5 of the Rules
If it is a minor penalty indisputably the need to conduct regular enquiry has been dispensed with
Rule 5 prescribes the penalties thus 5
Penalties The following penalties may for good and sufficient reasons
and as hereinafter provided
be imposed on a Government employee
namely 429 Minor Penalties i Censure ii withholding of his promotions iii recovery from his pay of the whole or part of any pecuniary loss caused by him to the Government by negligence of breach of orders iv withholding of increments of pay Major Penalties v reduction to a lower stage in the time scale of pay for a specified period with further directions as to whether or not the Government employee will earn increments of pay during the period of such reduction and whether on the expiry of such period the reduction will or will not have the effect of postponing the future increments of his pay vi reduction to a lower time scale of pay grade post or service which shall ordinarily be a bar to the promotion of the Government employee to the time scale of pay grade post or service from which he was reduced with or without further directions regarding conditions of restoration to the grade or post or service from which the Government employee was reduced and his seniority and pay on such restoration that grade post or service vii compulsory retirement viii removal from service which shall be a disqualifica tion for future employment under the Government ix dismissal from service which shall ordinarily be a disqualification for future employment under the Govern ment 
Clauses VI to IX are not relevant to the facts of the case
Withholding of increments of pay simpliciter undoubtedly is a minor penalty within the meaning of Rule 5iv
But sub rule v postulates reduction to a lower stage in the time scale of pay for a specified 430 period with further directions as to whether or not the Government employee shall earn increments of pay during the period of such reductions and whether on the expiry of such period the reduction will or will not have the effect of postponing the future increments of his pay
It is an inde pendent head of penalty and it could be imposed as punish ment in an appropriate case
It is one of the major penalties
The impugned order of stoppage of two increments with cumulative effect whether would fall within the meaning of Rule 5v If it so fails Rules 8 and 9 of the Rules require conducting of regular enquiry
The contention of Shri Nayar learned counsel for the State is that withholding two increments with cumulative effect is only a minor penalty as it does not amount to reduction to a lower stage in the time scale of pay
We find it extremely difficult to countenance the contention
With holding of increments of pay simpliciter without any hedge over it certainly comes within the meaning of Rule 5iv of the Rules
But when penalty was imposed withholding two increments ie for two years with cumulative effect it would indisputably mean that the two increments earned by the employee was cut off as a measure of penalty for ever in his upward march of earning higher scale of pay
In other words the clock is put back to a lower stage in the time scale of pay and on expiry of two years the clock starts working from that stage afresh
The insidious effect of the impugned order by necessary implication is that the appel lant employee is reduced in his time scale by two places and it is in perpetuity during the rest of the tenure of his service with a direction that two years  increments would not be counted in his time scale of pay as a measure of penalty
The words are the skin to the language which if pealed off its true colour or its resultant effects would become apparent
When we broach the problem from this per spective the effect is as envisaged under Rule 5v of the Rules
It is undoubted that the Division Bench in Sarwan Singh vs State of Punjab  Ors ILR  PC Jain ACJ speaking for the division bench while considering similar question in paragraph 8 held that the stoppage of increments with cumulative effect by no stretch of imagination falls within clause v of Rule 5 or in rule 412 of Punjab Civil Services Rules
It was further held that under clause v of Rule 5 there has to be a reduction to a lower stage in the time scale of pay by the competent authority as a measure of penalty and the period for which such a reduction is to be effective has to be stated and on restoration it has further to be specified whether the reduction shall operate to postpone the future increments of his pay
In such cases withholding of the increments without cumulative effect does not at all arise
In case 431 where the increments are withhold with or without cumulative effect the Government employee is never reduced to a lower stage of time scale of pay
Accordingly it was held that clause iv of Rule 5 is applicable to the facts of that case
With respect we are unable to agree with the High Court
If the literal interpretation is adopted the learned Judges may be right to arrive at that conclusion
But if the effect is kept at the back of the mind it would always be so the result will be the conclusion as we have arrived at
If the reasoning of the High Court is given acceptance it would empower the disciplinary authority to impose under the garb of stoppage of increments of earning future incre ments in the time scale of pay even permanently with ex pressly stating so
This preposterous consequences cannot be permitted to be permeated
Rule 5IV does not empower the disciplinary authority to impose penalty of withholding increments of pay with cumulative effect except after hold ing inquiry and following the prescribed procedure
Then the order would be without jurisdiction or authority of law and it would be per se void
considering from this angle we have no hesitation to hold that the impugned order would come within the meaning of Rule 5v of the Rules it is a major penalty and imposition of the impugned penalty without enquiry is per se illegal
The further contention of Shri Nayar that the procedure under Rule 8 was followed by issuance of the show cause notice and consideration of the explanation given by the appellant would meet the test of Rules 8 and 9 of the Rules is devoid of any substance
Conducting an enquiry dehorse the rules is no enquiry in the eye of law
It cannot be countenanced that the pretence of an enquiry without reason able opportunity of adducing evidence both by the Dept
as well as by the appellant in rebuttal examination and cross examination of the witnesses if examined to be an enquiry within the meaning of Rules 8 and 9 of the Rules
Those rules admittedly envisage on denial of the charge by the delinquent officer to conduct an enquiry giving reason able opportunity to the presenting officer as well as the delinquent officer to lead evidence in support of the charge and in rebuttal thereof giving adequate opportunity to the delinquent officer to crossexamine the witnesses produced by the Dept and to examine witnesses if intended on his behalf and to place his version consideration thereof by the enquiry officer if the disciplinary authority himself is not the enquiry officer
A report of the enquiry in that behalf is to be placed before the disciplinary authority who then would consider it in the manner prescribed and pass an appropriate order as per the procedure in vogue under the Rules
The gamut of this procedure was not gone through
Therefore the issuance of the notice and consideration of the 432 explanation is not a procedure in accordance with Rules 8 and 9
Obviously the disciplinary authority felt that the enquiry into minor penalty is not necessary and adhering to the principles of natural justice issued the show cause notice and on receipt of the reply from the delinquent officer passed the impugned order imposing penalty thinking it to be a minor penalty
If it is considered as stated earlier that it would be only a minor penalty the proce dure followed certainly meets the test of the principles of natural justice and it would be a sufficient compliance with the procedure
In view of the finding that the impugned order is a major penalty certainly then a regular enquiry has got to be conducted and so the impugned order is clearly illegal
The Trial Court rightly granted the decree
The judgment and the decree of the High Court is vitiated by manifest illegality
At this distance of time it is not expedient to direct an enquiry under rules 8 and 9 of the Rules
The appeal is accordingly allowed and the judgment and decree of the High Court is set aside and that of the trial court is restored but in the circumstances without costs
GN Appeal allowed


Summary:
Vijayawada Municipality of Andhra Pradesh earlier levied property tax under the Andhra Pradesh Andhra Areas Dis trict Municipalities Act 1920
That Act was repealed and the new Act known as the Andhra Pradesh Municipalities Act 1965 came into force on 241965
Under the old act property tax was levied on the basis of gross annual rental value whereas under section 87 of the new Act the basis of assess ment in owner occupied building was the capital value there of to be determined in the prescribed manner
Section 389 of the new Act provided that that Act was to be read subject to Schedule IX which contained transitional provisions in the rules
Rule 12 thereof dealt with levy of taxes etc
The Government under Rule 12 issued a GO Ms No 749 MA directing that all Municipal Councils shall with effect from 1470 levy the property tax as per the provisions of the new Act which date by a subsequent GO was changed to 1101970
By another GOMs
No 81 MA dated 30171 the Government directed the Vijayawada Municipal Council to continue to levy the property tax under the provisions of the old Act as rate payers had filed writ petitions in the High Court and obtained stay
However by GOMs
675 MA the GONo 81 was rescinded and the Vijayawada Municipal Council was directed to collect revised taxes under the provisions of the new Act with effect from 11070
This GO was rescinded and by GO Ms No 255 MA dated 15673 the Government directed the Vijayawada Council to levy the property tax under the old Act
As a consequence the Vijayawada Municipal continued to levy and enhance the property tax under the old Act
The validity of GOMs
No 255 dated 15673 was chal lenged by house property owners in the High Court in two writ petitions seeking an order restraining the Vijayawada Municipal Council from enforcing it
and declaring the same illegal and void
The petitioners  contention 382 amongst others was that the Government having directed that the taxes be levied under the new Act the transitional power under rule 12 stood exercised and the power to levy tax under the old Act had ceased and it was no longer open to the government to rescind the previous orders
The High Court accepted the said contention but held that in view of the provisions of section 41 of the Andhra Pradesh Munici palities Fourth Amendment Act 23 of 1975 which validat ed the actions taken those could not be challenged as invalid
The writ petitions were therefore dismissed
Ap peals to the Division Bench having failed this appeal has been filed after obtaining special leave
Dismissing the appeal this Court HELD The State s power to tax is derived from the Constitution and the municipality s power to tax is derived from the State Legislature which could delegate that power in the manner the Constitution permits to the municipal council an agent of the State Government and the municipal ity cannot refuse to raise taxes as directed
The proper authority to determine what should and what should not constitute a public burden is the Legislature of the State
This is not only true for the State itself but it is also true in respect of each municipality of the State these inferior corporate bodies having only such authority in this regard as the legislature shall confer upon them
202E F A statute will not be declared unconstitutional unless it is specifically challenged and the principle is equally applicable to an enactment authorising levy of a tax for a public purpose
The power to tax is a sovereign power and is legislative in character and it has to be exercised within the constitutional limitations
The statutes relating to municipal taxes may be changed according to the existing legislative rules of State policy unless forbidden by the Constitution from doing so
202G H Irregular assessment may also be regularised with retro spective effect within the Constitutional limitations
Where the Court has not already declared invalid a taxing measure which was of doubtful validity it is permissible for appro priate legislature to validate it by retrospective legisla tion
No legal fiction is involved in such a case
203A C The GO itself covered the period after the repeal of the old Act and till the date of commencement of the fourth amendment so that no interregnum was really there
The assessment made according to the provisions of the old Act were validated as actions taken by the Council 383 pursuant to the impugned GO and not under the provisions of the old Act which was already repealed
While referring to the old Act the GO did not revive the Act but only prescribed the same procedure as was found in the repealed Act as a transitory measure
203B C Janapada Sabha Chhindwara vs The Central Provim es Syndicate Ltd and Anr   referred to