IN THE HIGH COURT OF JUDICATURE, ANDHRA PRADESH AT HYDERABAD (Special Original Jurisdiction) WEDNESDAY, THE TWENTY FIFTH DAY OF MARCH TWO THOUSAND AND NINE PRESENT THE HON'BLE MR JUSTICE SANJAY KUMAR WRIT PETITION Nos : 20828 and 20838 of 1999 WRIT PETITION No.20828 of 1999: Between: P. Jayaram, S/o P. Chandra Mouli Sastry, Aged about 50 years, R/o 5-37-208/4/7, Brodipet, Guntur. ..... PETITIONER AND A.P. State Irrigation Development Corporation Limited, Mytrivanam, HUDA complex, Srinivasanagar Colony, Hyderabad-500 038, rep. By its Managing Director. .....RESPONDENT Petition under Article 226 of the constitution of India praying that in the circumstances stated in the Affidavit filed herein the High Court will be pleased to issue an order of direction or writ particularly one in the nature of writ of Mandamus or any other appropriate writ declaring the show cause notice No.IDC/MD/Admn/ML/ASO(L)/ID293/90/222C dated 25-6-97 and the consequential order dated 25-4-1998 as confirmed by the appellate authority vide proceedings Memo No.IDC/MD/AS02/28C/542 dated 17/18.6.1999 is illegal and arbitrary and consequently set aside the punishment of stoppage of two increments with cumulative effect and grant such other reliefs. Counsel for the Petitioner: MR. G. VIDYASAGAR Counsel for the Respondent : SMT. KAVITHA GOTTIPATI WRIT PETITION No.20838 of 1999: Between: M. Nageswara Rao S/o Veeraiah R/o 10-6-20/2-A, Buranpuram, S.N.Murthy Thota, Khammam ..... PETITIONER AND A.P.State Irrigation Development Corpn. Ltd., rep. by Managing Director Mytrivanam, HUDA Complex, Srinivasanagar Colony, Hyderabad-38 .....RESPONDENT Petition under Article 226 of the constitution of India praying that in the circumstances stated in the Affidavit filed herein the High Court will be pleased to issue an order direction or writ particularly one in the nature of writ of mandamus or any other appropriate writ declaring the Show Cause Notice No.IDC/MD/Admn/ML/ASO(L)/ID293/90/222C dt: 25-6-97 and the consequential order dt: 25-4-98 as confirmed by the appellate authority vide Procs.Memo No.IDC/MD/ASO2/28C/542 dt: 17/8--6-1999 is illegal and arbitrary and consequently set aside the punishment of stoppage of two increments with cumulative effect and grant such relief or reliefs as the Hon'ble Court deems fit and proper in the circumstances of the case. Counsel for the Petitioner: MR. G. VIDYASAGAR Counsel for the Respondent: SMT. KAVITHA GOTTIPATI The Court made the following : COMMON ORDER: The petitioners in both these Writ Petitions are employees of the A.P. State Irrigation Development Corporation Limited (for brevity “the Corporation”). 2. P. Jayaram, petitioner in W.P.No.20828 of 1999, joined the Corporation as a Junior Assistant on 07-03- 1987 and was subsequently promoted as Assistant Manager on 17-01-1991. Thereafter, he was transferred to Warangal in July 1996 and joined at the new place of posting on 11-07-1996 at Warangal. He was the Liaison Officer for supervising the industrial disputes pertaining to the Corporation before the Labour Court at Warangal. 3. M. Nageshwar Rao, petitioner in W.P.No.20838 of 1999, joined the Corporation as a Junior Assistant on 28- 12-1976. Thereafter, he was promoted as Assistant Manager on 23-07-1988 and transferred to Warangal in May 1993. He worked there up to 03-07-1996. He was also entrusted with the work of supervising the pending industrial dispute cases pertaining to the Corporation before the Labour Court at Warangal. 4. The issue arises with regard to one particular industrial dispute, namely I.D.No.293 of 1990, before the Labour Court at Warangal pertaining to one G. Venugopala Rao, an ex-worker of the Corporation. It appears that the Labour Court passed Award dated 20-02-1997 directing reinstatement of the said worker. This led to issuance of show cause notices to both the petitioners on 25-06-1997 stating to the effect that there were lapses on their part in defending the case through the local counsel and they were accordingly asked to show cause as to why necessary disciplinary action should not be initiated against them. P. Jayaram submitted his explanation on 28-07-1997 while M. Nageshwar Rao submitted his explanation on 08-07-1997 denying any lapses on their part. Being dissatisfied with their explanation, the Corporation issued final show cause notices dated 18-01- 1998 reiterating that there were lapses on the part of the petitioners in defending the Corporation’s interest in I.D.No.293 of 1990 before the Labour Court at Warangal. The petitioners were asked to show cause as to why they should not be punished with stoppage of annual increments. P. Jayaram responded to the above show cause notice through his explanation dated 03-02-1998 and M. Nageshwar Rao, through his explanation dated 11-02-1998. Both the petitioners denied any fault on their part as alleged in the show cause notice. The Corporation passed the orders dated 25/30-04-1998 holding the petitioners responsible for the lapses alleged and imposed upon them the punishment of stoppage of two annual increments with cumulative effect. Appeals dated 04-07- 1998 and 04-08-1998 filed by P. Jayaram and M. Nageshwar Rao respectively against the said orders of punishment before the Appellate Authority resulted in the proceedings dated 17/18-06-1999, whereby the Board of Directors of the Corporation decided not to alter the punishment imposed upon the petitioners and accordingly rejected their appeals. Hence, the present Writ Petitions. 5. Heard Sri G. Vidyasagar, learned counsel appearing for the petitioners, and Smt. Kavitha Gottipati, learned counsel appearing for the respondent Corporation in both the cases. 6. Apart from addressing this Court on the merits of the case, Sri G. Vidyasagar pointed out that the facts narrated above clearly indicate that no enquiry was held in the matter, before the Corporation imposed the punishment of withholding of two annual increments with cumulative effect, and contended that the said fact vitiated the proceedings. He relied upon the judgment of the Hon’ble Supreme Court in “Kulwant Singh Gill Vs. State of Punjab” [1] to support his contention. 7. Refuting the arguments of the learned counsel for the petitioners, Smt. Kavitha Gottipati contended that the lapses on the part of the petitioners were clearly made out as demonstrated by the counter affidavit filed by the Corporation in these Writ Petitions. She drew the attention of this Court to the Staff Regulations applicable to the Corporation. As per Standing Order No.XX of the said Regulations, an employee guilty of misconduct may be visited with the punishments enumerated there under. Standing Order No.XX reads as hereunder: “1) An employee guilty of misconduct may be punished with: a) Warning; or b) Censure; or c) Withholding of promotion; d) Recovery of pecuniary loss caused by him; e) Fine consistent with the provisions of the payment of Wages Act or any other Act applicable to the establishment; or f) Stoppage for a specified period not exceeding three years of increment if due under graded scales of pay wherever applicable; g) Suspension for a period not exceeding 15 days; or h) Reversion to the next lower grade; or i) Dismissal from the service of the Corporation. 2) No order of punishment for misconduct shall be made except after holding an enquiry against the employee concerned in respect of the alleged misconduct in the manner set out in clauses (4) and (5) below. Provided that no enquiry is necessary if after giving an opportunity to the delinquent employee to explain the act or omission alleged against him the Competent Authority decides to impose any one of the punishments outlined in sub clauses (a), (b), (c), (d), (e) and (f) of clause (1) of this Standing Order.” On the basis of the above Regulations, the learned counsel for the respondent Corporation argued that there was no necessity for the Corporation to hold an enquiry into the matter, as both the petitioners were visited with the punishment of stoppage of annual increments which falls under Standing Order No.XX (1) (f) and as per Standing Order No.XX(2) proviso, no enquiry was necessary in respect of the punishments outlined in sub clauses (a) to (f) of clause 1 of the Order. She therefore submitted that the disciplinary proceedings initiated against the petitioners do not suffer from any infirmity and did not warrant interference by this Court in exercise of its jurisdiction under Article 226 of the Constitution of India. 8. Sri G. Vidyasagar relied upon the judgment of the Hon’ble Supreme Court in Kulwant Singh Gill’s case, referred to supra, in support of his submission that the disciplinary proceedings in the present cases could not be sustained, for want of an enquiry. He pointed out that the fact situation in the said case was practically identical to the one obtaining in the present two cases. He drew the attention of this Court to the various observations of the Supreme Court in the said judgment and contended that the disciplinary proceedings initiated against the petitioners must necessarily be held to be unsustainable for want of enquiry. 9. In Kulwant Singh Gill’s case, the Supreme Court was considering penalties imposed under Rule 5 of the Punjab Civil Services (Punishment and Appeal) Rules 1970. Similar to the present cases, the Rule specified ‘Minor Penalties’ which included withholding of increments of pay. Amongst the ‘Major Penalties’, the Rule included the punishment of 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. In the context of the inter play between the minor punishment of withholding of increments of pay and the major punishment indicated above, the Supreme Court came to the conclusion extracted hereunder: “Withholding of increments of pay simpliciter undoubtedly is a minor penalty within the meaning of Rule 5(iv). But sub-rule (v) postulates 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 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 independent head of penalty and it could be imposed as punishment 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 5(v)? . If it so falls 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. Withholding of increments of pay simpliciter without any hedge over it certainly comes within the meaning of Rule 5(iv) of the Rules. But when penalty was imposed withholding two increments i.e. 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 appellant 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 peeled off its true colour or its resultant effects would become apparent……. ………….. 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, (sic stoppage) of earning future increments in the time scale of pay even permanently without expressly stating so. This preposterous consequence cannot be permitted to be permeated. Rule 5(iv) does not empower the disciplinary authority to impose penalty of withholding increments of pay with cumulative effect except after holding 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 5(v) of the Rules; it is a major penalty and imposition of the impugned penalty without enquiry is per se illegal.” 10. In the present case, it is noticed that as per the Corporation’s amended Staff Regulations under proceedings No.IDC/MD/Adm/OA.1/788/87/14108, dated 3/4-06-1987, major penalties have been amended to include reduction to a lower grade or post, or to a lower stage in a time scale. Even under the amended Regulations, withholding of increments of pay with or without cumulative effect continues to be classified under ‘Minor Penalties’. Thus, the fact situation obtaining before this Court is practically identical to that before the Supreme Court in Kulwant Singh Gill’s case. 11. In the light of the observations of the Supreme Court extracted supra, it is clear that in the garb of withholding of increments with cumulative effect, it is not open to the Corporation to visit the major penalty of reduction in the time scale upon the petitioners. Such punishment, having an effect on the future pay of the petitioners, would necessarily have to be treated as a major punishment requiring the holding of enquiry. It is an admitted fact that in the present cases, neither of the petitioners were put through the process of an enquiry before imposition of the punishment upon them. The disciplinary proceedings so initiated against the petitioners on the basis of a mere show cause notice and explanation without recourse to an enquiry, which culminated in a major punishment, cannot therefore be sustained. 12. Accordingly, both the Writ Petitions are allowed. In the circumstances of the case, there shall be no order as to costs. ________________ SANJAY KUMAR, J Date: 25-03-2009 CBS HON’BLE SRI JUSTICE SANJAY KUMAR WRIT PETITION Nos.20828 and 20838 of 1999 (Allowed) Date:25-03-2009 CBS [1] 1991 Supp (1) SCC 504