Karnataka High Court
Syndicate Bank vs B.A. Bhat on 17 August, 1992
Equivalent citations: ILR1992KAR3107, 1992(3)KARLJ537, (1993)ILLJ152KANT
JUDGMENT Shivashankar Bhat, J.
1. Appellant in the Writ Appeal was the 1st respondent in the Writ Petition filed by the respondent before us. For the sake of convenience, the Appellant and its officers connected with the proceedings before us are generally referred hereinafter as the Bank and the Writ Petitioner is referred as the petitioner.
2. Petitioner in his Writ Petition sought a declaration that the view entertained by the Disciplinary Authority in proceeding with the disciplinary proceedings against the petitioner, without reinstating him in service and without granting him all consequential benefits flowing from his success in the earlier Writ Petition, as illegal, etc. He also sought a direction that proceedings against him shall not be proceeded with till he is reinstated and arrears of salary are paid.
3. The history of this litigation started, at least, in the year 1976. Under a disciplinary proceedings wherein petitioner was charged with having committed certain misconduct, an order was made dismissing him from service with immediate effect. The dismissal order is dated December 31, 1976. Till then petitioner was in service and he was not under suspension.
4. Petitioner challenged the dismissal order by filing W.P. No. 10165/77 in this Court.
On December 1, 1985, the said Writ Petition was allowed by a learned Judge of this Court. It was held in the order allowing the Writ Petition, that (1) petitioner had no adequate opportunity to defend himself before the Enquiry Officer, and the Appellate Authority to whom the petitioner had filed appeal against the order of dismissal had not considered any of the contentions urged by the petitioner. Therefore "finding on these two aspects is suffice to invalidate impugned order and it is unnecessary to examine merit or demerit of other contentions urged. Accordingly, Writ Petition succeeds, impugned orders are quashed reserving liberty to respondents to proceed with enquiry from the stage at which infirmity has occurred if they so desire."
5. The Bank went up in Appeal, as per Writ Appeal No. 567 of 1985. The Appellate Bench held :
"...... there can be no gainsaying that the disciplining authority has not at all considered the points raised by the respondent in his representation and has just agreed with the conclusions of the Enquiry Officer without indicating the reasons for rejecting the contentions raised by the respondent in his representation. This, in our view, has greatly prejudiced the case of the respondent. The view on this aspect of the matter taken by the learned Single Judge is unexceptionable."
Thereafter, it was held that it was not necessary to examine the question whether petitioner had proper opportunity of defending the case and observed "even the learned Single Judge could have avoided to give a finding on this issue as the matter should have been remitted to the disciplinary authority for deciding the whole case afresh in accordance with law." In conclusion, the Bench held :
"For the reasons recorded above we modify the order of the learned Single Judge to this extent that the finding on point No. 1 is set aside and the matter is remitted to the disciplinary authority for deciding the whole case in accordance with law in the light of the representation made by the respondent-delinquent and the observations made by us in the judgment."
The order of the Appellate Bench is dated August 30, 1988.
6. Thereafter the petitioner was asked to appear before the Enquiry Officer, by a letter of the Bank dated January 18, 1989. In his reply dated January 30, 1989 petitioner sought a month's time to prepare his defence. Petitioner further stated that he should be reinstated in service, as a consequence of his success in the Writ Petition, wherein the dismissal order had been set aside. Petitioner wrote :
"In order to comply with the liberty reserved by the Hon'ble High Court of Karnataka in the appeal, the condition precedent is my reinstatement in service with full settlement of benefits flowing from the order of the Hon'ble High Court of Karnataka setting aside the order of dismissal. It is only after implementation of the order and reinstating me in service, the Bank administration would get right to utilise the liberty reserved to proceed against me in accordance with law. In the instant case, instead of complying with the mandatory directions of the Hon'ble High Court of Karnataka in the matter of reinstating me, the action to utilise the liberty would be clearly without authority of law. As can be seen from the records, I was dismissed from service on December 31, 1976, nearly 12 years ago, and for the last 12 years, I have been made to undergo mental torture, hardship and subjected to untold misery. I submit that I have no avocation or source of income and I am totally unemployed, as a result of which I have lost status not only in my family, but also in the society. With the mental torture which I have undergone upto this day, it would be too hard to imagine that I would be in a position to argue my case on January 31, 1989 in person or through a representative of mine. The action of the Bank administration in granting me a hearing in the circumstances of the case without reinstating me in severe and settling my benefits to which I will be entitled to, would be a mere formality and further amount to extending me a severe harshest inhuman treatment which also is violative of principles of natural justice."
The Personnel Manager agreed to grant the adjournment and asked the petitioner to be present on March 7, 1989 for the enquiry. However, petitioner's request for reinstatement was rejected; two reasons were given :
(i) In the Writ Petition the petitioner has sought the relief of reinstatement with back wages; but the Court had not granted the same; hence petitioner was not entitled to the same; and (ii) the order of the learned single Judge was modified by the Division Bench in Writ Appeal, which had remitted the entire case to the disciplinary authority for a fresh decision, in the light of the observations made in the Judgment and question of reinstatement and payment of backwages did not arise.
7. On receipt of the above letter, petitioner approached this Court again, as per the present Writ Petition.
8. The learned single Judge has upheld the petitioner's plea. The learned Judge observed that the employment under a Nationalised Bank is not one of contract, but one of status :
"Therefore, once the order of dismissal, passed as a result of a disciplinary proceeding, is quashed and the matter is remitted to the disciplinary authority to start from the stage of receipt of the explanation, the order of dismissal which had put an end of the status of the petitioner as an officer employee of the Bank disappears and the status of an employee automatically gets restored. This Court when allowed the Writ petition with the reliefs contained therein regarding the consequential benefits, though the order did not state in express terms that the consequential benefits also were granted, but such a direction flowed from granting main relief itself. The order of Court should not be read as a statute. It should be read and construed in the light of the facts of the case, and the reliefs sought for. The necessary consequence of the order allowing the Writ Petitioner as an officer of the Bank stood reinstated, because on the date of the order of dismissal was passed and during the pendency of the enquiry proceedings, the petitioner was not kept under suspension. He continued to be in service as a full-fledged employee of the bank and was paid full pay and allowances. If upto the date of dismissal an employee was continued in service, as a consequence of the quashing the order of dismissal, such employee would, in law, be entitled to be reinstated. Such a direction in the facts and circumstances of the case flows as a matter of course."
The learned Judge further held that the Bank has not placed any material to infer that the petitioner was gainfully employed elsewhere and this plea of the Bank was vague. It was again observed that, though specifically relief of reinstatement was not granted in the earlier Writ Petition, said relief, by necessary implication was granted, therefore petitioner "gets reinstated into the Bank service and continuity of the service is also available to him."
Ultimately, the Writ Petition was allowed in the following terms :
"(1) Respondents are directed to reinstate the petitioner and pay the back wages and then proceed with the enquiry as directed by this Court in W.P. No. 10165/77 and W.A. No. 567/85, - compliance in one month from the date of receipt of this order."
9. This Writ Appeal was heard and disposed of on an earlier occasion by another Division Bench on November 20, 1990. We were told by the learned Counsel on both sides that the Bank reported the reinstatement of the petitioner in service on November 7, 1990 and this was in compliance with the oral directions of the Division Bench. On November 20, 1990 the Bench disposed of this Writ Appeal, and the said order reads thus :
"On or before December 31, 1990 the appellant Bank shall pay the respondent a sum of rupees one lakh.
Now that the respondent has been reinstated by the appellant Bank, there is no impediment to go on with the enquiry. Enquiry should be commenced in which the respondent shall co-operate and it shall be completed in an expeditious manner."
10. The petitioner, not satisfied with this order, approached the Supreme Court in Civil Appeal No. 2896/91. By an order dated July 22, 1991 the appeal was allowed by the Supreme Court, and the matter was remanded to this Court. The order of the Supreme Court is as follows :-
"Special leave granted.
In the appeal preferred by the Bank, the High Court has directed the Bank to pay to the appellant, a sum of rupees one lakh towards back salary which the appellant is entitled to upon reinstatement pursuant to the order of the single Judge of the High Court. No reasons are given by the High Court why the back salary should be limited to rupees one lakh. It is for the High Court to express its view in this regard. We, therefore, allow the appeal and set aside the order with a request to the High Court to dispose of the appeal afresh and in accordance with law. We shall not be understood to have expressed any opinion on the merits of the case or the contentions of the parties.
The appeal is disposed of accordingly. No costs."
11. It was contended before us, by the learned Counsel for the Bank, the entire Writ Appeal is before us and the correctness of the Order of the learned Single Judge requires to be gone into in its entirely. The learned Counsel submitted that reinstatement of an employee and payment of back-salary to him are not consequential to the setting aside of the dismissal order; (2) a specific prayer for these reliefs had been made by the petitioner in his earlier Writ Petition, but the Court had not granted them; therefore, petitioner was not entitled to these reliefs. At any rate, it was contended that in the present proceedings the learned Single Judge could not have imposed the condition of reinstatement and payment of back salary, for continuing the departmental enquiry, because such a condition is nowhere found in the orders made in the earlier Writ Petition and the Writ Appeal. It was further argued that, the order made in the earlier Writ Petition stood completely merged in the order of the Appellate Bench and therefore, the former cannot be looked into at all, to read any implied grant of reliefs : and that the present order made by the learned Single Judge in effect modifies the order of the Appellate Bench in the earlier Writ Appeal, and such a modification is impermissible in law. The learned Counsel invoked the principles of res judicata in support of his contention that the reliefs regarding reinstatement and back salary are deemed to have been denied to him in the earlier proceedings and that the cause of action for the back salary, if any, stood replaced by the order of the Appellate Bench in the earlier Writ Appeal.
12. The learned Counsel for the petitioner, on the other hand, contended that the natural corollary of the setting aside of the dismissal order was reinstatement and payment of back wages and such a consequential relief need not be specifically stated in categorical terms while setting aside the dismissal order. Alternatively, it was contended that the claim for reinstatement and back wages is a fresh cause of action accrued to the petitioner consequent upon the Bank's refusal to reinstate him and pay the back-salary, after the setting aside of the dismissal order. The Counsel further submitted that, the reinstatement and payment of back-salary was to be read into the earlier order as a condition to the liberty given to the Bank to proceed afresh against the petitioner; at any rate, the petitioner's situation warrants such a relief and was rightly granted by the learned Single Judge and the relief can be effectuated only by making it a condition precedent for continuation of the disciplinary proceedings.
13. We have no doubt that the entire appeal is before us and the order of Supreme Court in no way restricts the scope of the matter before us. Therefore, the questions to be considered are :
(1) Whether petitioner is not entitled to seek reinstatement and back-salary, as a consequence of the nullification of the earlier dismissal order, for any reason, and whether these reliefs are to be denied by the application of any principle of res judicata ?
(2) Whether reinstatement and payment of back-salary are conditions to be complied with before proceeding further in the matter of disciplinary action, as held by the learned Single Judge ?
14. The two questions are quite independent of each other. As a consequence of setting aside of the dismissal order, reinstatement in service will be the normal rule : and unless it is proved that the delinquent was gainfully employed elsewhere during the relevant period, he will be entitled to be paid the entire salary for the period during which dismissal order prevented him from earning his salary. However, law nowhere provides that a dismissed employee should be reinstated and he be paid all back-salary/wages, as a condition precedent before the disciplinary proceedings are continued from the stage of its nullification by the Court. No such principle, derived from any enacted law or subordinate legislation, nor from any judicial pronouncement, was brought to our notice. To what extent, the deprivation of livelihood by the non-payment of salary during the period of enquiry would vitiate the enquiry, is an altogether different question; this question operates while considering the adequacy of opportunity to the delinquent, to defend himself properly in the disciplinary proceedings. However, in an appropriate case, depending upon circumstances, Court may impose the condition of reinstatement/payment of arrears of salary for the period when he was under the cloud of illegal dismissal order, while setting aside such an order and reserving liberty to the employer to proceed with the enquiry again; in such a situation, the condition imposed by the Court operates on the exercise of the liberty to hold fresh/further enquiry by the employer, not because of any general principle of service jurisprudence, but because of the limitation imposed by the judicial order which permitted the fresh or further enquiry.
15. An employer is entitled to keep the delinquent employee under suspension during the pendency of a disciplinary enquiry, subject to paying him subsistence allowance, in case the relevant service rule or order permits such a procedure. In case, there is no provision for payment of subsistence allowance, still, it is open to the employer to keep the employee under suspension and in such an event, employee shall have to be paid his full salary. In this regard, the relevant principle was stated by the Supreme Court in R. P. Kapur v. Union of India 1966 - I - LLJ - 164 (SC) (p. 171) :
"......... If there is not express term in the contract relating to suspension or if there is no statutory provision in any law or rule, the employee is entitled to his full remuneration for the period of his interim suspension; on the other hand, if there is a term in this respect in the contract or there is a provision in the statute or the rules framed thereunder providing for the scale of payment during suspension, the payment would be in accordance therewith. These general principles, in our opinion, apply with equal force in a case where the Government is the employer and the public servant is the employee with this modification that in view of the peculiar structural hierarchy of Government, the employer in the case of Government must be held to be the authority which has the power to appoint a public servant. On general principles, therefore, the authority entitled to appoint a public servant would be entitled to suspend him pending a departmental enquiry into his conduct or pending a criminal proceeding, which may eventually result in departmental enquiry against him,"
In V. P. Gindroniya v. State of Madhya Pradesh and another 1970 - II - LLJ - 143 (SC), it was held : (p. 146) :
"........ It is now well settled that the power to suspend, in the sense of a right to forbid an employee to work, is not an implied term in an ordinary contract between master and servant, and that such a power can only be the creature either of a statute governing the contract, or of an express term in the contract itself. Ordinarily, therefore, the absence of such a power either as an express term in the contract or in the rules framed under some statute would mean that an employer would have no power to suspend an employee of his and even if he does so in the sense that he forbids the employee to work, he will have to pay the employee's wages during the period of suspension. Where, however, there is power to suspend either in the contract of employment or in the statute or the rules framed thereunder, the order of suspension has the effect of temporarily suspending the relationship of master and servant with the consequence that the servant is not bound to render service and the master is not bound to pay. It is equally well settled that an order of interim suspension can be passed against the employee while an enquiry is pending into his conduct even though there is no such term in contract of employment or in the rules, but in such a case the employee would be entitled to his remuneration for the period of suspension if there is no statute or rule under which it could be withheld. The distinction between the suspending contract of a service of a servant and suspending him from performing the duties of his office on the basis that the contract is subsisting is important. The suspension in the latter case is always an implied term in every contract of service. When an employee is suspended in this sense, it means that the employer merely issues a direction to him that he should not do the service required of him during a particular period. In other words the employer is regarded as issuing an order to the employee which, because the contract is subsisting, the employee must obey."
16. Therefore the employer is entitled to assert the right to suspend the relationship and direct the employee not to serve, during the pendency of an enquiry in respect of charges levelled against him, either by virtue of relevant law or rule which permits the suspension, or by virtue of the inherent power vested in the employer which is not statutorily curtailed; in the latter event employee shall have to be paid his full salary.
17. The purpose behind the requirement to pay at least a reasonable subsistence allowance to the delinquent employee, was brought out in the decision of the Supreme Court in State of Maharashtra v. Chandrabhan, etc. etc., 1983 - II - LLJ - 256. The Supreme Court said (p. 263) :
"..... Payment of subsistence allowance at the normal rate pending the appeal filed against the conviction of a civil servant under suspension is a step that makes the right of appeal fruitful and it is therefore obligatory. Reduction of the normal subsistence allowance to the nominal sum of rupee one per month on conviction of a civil servant under suspension in a criminal case pending his appeal filed against that conviction, whether the civil servant is on bail or has been lodged in prison on conviction pending consideration of his appeal, is an action which stultifies the right of appeal and is consequently unfair and unconstitutional. Just as it would be impossible for a civil servant under suspension who has no other means of subsistence to defend himself effectively in the trial Court without the normal subsistence allowance-there is nothing on record in these cases to show that the civil servants concerned in these cases have any other means of subsistence-it would be impossible for such civil servants under suspension to prosecute his appeal against his conviction fruitfully without payment of the normal subsistence allowance pending his appeal. Therefore, Baban's contention in the Writ Petition that the subsistence allowance is required to support civil servant and his family not only during trial of the criminal case started against him but also during the pendency of the appeal filed in the High Court or this Court against his conviction is correct. If any provision in any rule framed under Article 309 of the Constitution is illusory or unreasonable, it is certainly open to the civil servant concerned to seek the aid of the Court for declaring that provision to be void."
In the said case payment of an allowance of Rupee one per month was held as illusory and the relevant rule was declared as unconstitutional.
In Khemchand v. Union of India and Others 1963 - I - LLJ - 665(SC), the effect of the service rule was to deem the delinquent in suspension, even after the dismissal order being set aside, when fresh or further enquiry was contemplated against him. This rule was upheld by the Supreme Court. At pages 668-669 it was observed :
"...... The provision in the rule that the Government servant shall be deemed to have been placed under suspension from the date of original order of dismissal does not seem to affect the position that the order of dismissal previously passed was inoperative and that the appellant was a member of the service on May 25, 1953, when the first suit was instituted by the appellant. An order of suspension of a Government servant does not put an end to his service under the Government. He continues to be a member of the service in spite of the order of suspension. There was a termination of the appellant's service when the order of dismissal was made on December 17, 1951. When that order of dismissal was set aside the appellant's service revived; and so long as another order of dismissal is not made or the service of the appellant is not terminated by some other means, the appellant continues to be a member of the service and the order of suspension in no way affects this position. The effect of the order of suspension is that though he continued to be a member of the Government service he was not permitted to work, and further, during the period of his suspension he was paid only some allowance-generally called 'subsistence allowance'-which is normally less than his salary-instead of the pay and allowances he would have been entitled to if he had not been suspended. There is no doubt that the order of suspension affects a Government servant injuriously. There is no basis for thinking however that because of the order of suspension he ceases to be a member of the service. The provision in Rule 12(4) that in certain circumstances the Government servant shall be deemed to have been placed under suspension from the date of the original order of dismissal and shall continue to remain under suspension until further orders, does not in any way go against the declaration made by this Court. The contention that the impugned Rule contravenes Article 142 or 144 is, therefore, untenable."
While negativing the attack against the Rule under Article 19(1)(f) of the Constitution, Supreme Court said at page 669 :
"..... No body can seriously doubt the importance and necessity of proper disciplinary action being taken against Government servant for inefficiency, dishonesty or other suitable reason. Such action is certainly against the immediate interests of the Government servant concerned; but is absolutely necessary in the interest of the general public for serving whose interest the Government machinery exists and functions. Suspension of a Government servant pending an enquiry is a necessary part of the procedure for taking disciplinary action against him. It follows, therefore, that when the penalty of dismissal has been set aside but the disciplinary authority decides to hold a further enquiry on the same facts against him, a fresh order of suspension till the enquiry can be completed, in accordance with law, is a reasonable step of the procedure."
18. Mr. Narayana Rao, learned Counsel for the petitioner, strongly relied on Devendra Pratap Narayan Rai Sharma v. State of Uttar Pradesh and others 1962 - I - LLJ - 266(SC) wherein at page 270 Supreme Court observed, in the context of interpreting Rule 54 which empowered the Government to make a specific order regarding pay and allowances payable consequent on setting aside of the dismissal order :
"This rule has no application to cases like the present in which the dismissal of a public servant is declared invalid by a civil court and he is reinstated. This rule undoubtedly enables the State Government to fix the pay of public servant whose dismissal is set aside in a departmental appeal. But in this case the order of dismissal was declared invalid in a civil suit. The effect of the decree of the civil suit was that the appellant was never to be deemed to have been lawfully dismissed from service and the order of reinstatement was superfluous. The effect of the adjudication of the civil courts is to declare that the appellant had been wrongfully prevented from attending to his duties as a public servant. It would not in such a contingency be open to the authority to deprive the public servant of the remuneration which he would have earned had he been permitted to work."
Supreme Court, however, did not hold that payment of back-salary was a condition precedent for starting fresh enquiry. Supreme Court held that when dismissal order was set aside and the employee was reinstated, he was deemed to be in service all along and was entitled to full salary for the period when he was kept out of employment due to the dismissal order. This decision would help the petitioner to the extent he seeks a direction for payment of back-salary, as a consequence of his reinstatement and not because such a payment is a condition precedent to the continuation of the disciplinary proceedings against him.
Similarly, the decision of the Supreme Court in A. L. Kalra v. The Project and Equipment Corporation of India Ltd., 1984 - II - LLJ - 186 supports the claim of the petitioner for payment of salary for the period during which he was kept out of employment under the illegal dismissal order. At pages 197-198, Supreme Court held :
"....... Once the order of removal from service is held to be illegal and invalid and the appellant being in public employment, the necessary declaration must follow that he continued to be in service uninterruptedly, this aspect does not present any difficulty and the declaration hereby granted.
When removal from service is held to be illegal and invalid the next question is whether the victim of such action is entitled to back wages. Ordinarily, it is well settled that if termination of service is held to be bad, no other punishment in the guise of denial of back-wages, can be imposed and therefore it must as a necessary corollary follow that he will be entitled to all the back-wages on the footing that he has continued to be in service uninterruptedly. But it was pointed out in this case that the appellant was employed as Factory Manager by M/s. K.D.R. Woolen Mills, A.90, Wazirpur Industrial Area, Delhi, from where he resigned with effect from August 8, 1983. It was also submitted that he was drawing a salary of Rs. 2,500/- per month. Now if the appellant had procured an alternative employment, he would not be entitled to wages and the salary from the respondent."
19. On the question of arrears of salary, Mr. Hariyappa Bhat, the learned Counsel for the Bank, laid great emphasis on the observations of Sarkaria, J., in The Managing Director, U.P. Warehousing Corporation and others v. Vijay Narain Vajpayee, 1980 - I - LLJ - 222(SC) it was held (p. 228) :
"....... Thus, in matters of employment, while exercising its supervisory jurisdiction under Article 226 of the Constitution, over the orders and quasi-judicial proceedings of an administrative authority not being a proceeding under the industrial / labour law before an Industrial/Labour Tribunal - culminating in dismissal of the employee, High Court should ordinarily, in the event of the dismissal being found illegal, simply quash the same and should not further give a positive direction for payment to the employee full back wages (although as a consequence of the annulment of the dismissal, the position as it obtained immediately before the dismissal is restored), such peculiar powers can properly be exercised in a case where the impugned adjudication or award has been given by an Industrial Tribunal or Labour Court. The instant case is not one under Industrial/Labour Law. The respondent-employee never raised any industrial dispute nor invoked the jurisdiction of the Labour Court or the Industrial Tribunal. He directly moved the High Court for the exercise of its special jurisdiction under Article 226 of the Constitution for challenging the order of dismissal primarily on the ground that it was violative of principles of natural justice which required that his public employment should not be terminated without giving him due opportunity to defend himself and to revert the charges against him. Furthermore, whether a workman or employee of a statutory authority should be reinstated in public employment with or without full back wages, is a question of fact depending on evidence to be produced before the Tribunal. If after the termination of his employment the workman/employee was gainfully employed elsewhere, that is one of the important factors to be considered in determining whether or not the reinstatement should be with full back wages and with continuity of employment. For these two-fold reasons, we are of the opinion that the High Court was in error in directing payment to the employee full back wages."
The decision does not say that an employee is not entitled to back wages on setting aside of a dismissal order. The payment of back-wages depends upon the question whether he was gainfully employed elsewhere during the period when dismissal order was in force. Therefore, while setting aside a dismissal order, as a matter of course employer shall not be directed to pay the back-wages.
20. We are of the view that the cause of action for the claim for reinstatement and back-wages arises on the setting aside of the dismissal order. In case the Court has not specifically ordered reinstatement, still, the quashing of the dismissal order results in reviving the employment under the "State" and the employee will normally be entitled to reinstatement and back wages, unless there is a provision to deem to be under suspension, In case the employer fails to reinstate, a fresh cause of action arises for these reliefs. In Sulochana S. Shetty v. Chief Executive Officer , a Bench of this Court (of which one of us was a Member), held :
"...... Right to an office under the Governmental service involves constitutional status. Removal from such an office illegally amounts to an unconstitutional act and ignored to be as void. An illegal dismissal order is always treated as a void order resulting in the office holder being vested with a right to claim the arrears of salary and other emoluments. In fact specific order for reinstatement was held to be superfluous when a Civil Court declares the dismissal order as illegal."
Devendra Pratap Narain Rai Sharma's case (supra) was cited in support of the above proposition. Therefore, this Court proceeded to say :
"The arrears of salary and payment of other emoluments are to be treated as having accrued already and vested in delinquent employee, in respect of the period during which he was kept out of service, though the same could be demanded by him from the State immediately on the setting aside of the illegal order which kept him out of service. To call such a right to arrears, as only consequential to the main relief of setting aside the order by which the employee was kept out of service, is to attach undue importance to a technicality. It is a usual practice, at least in recent times, to direct the grant of all such consequential benefits, whenever termination orders are set aside. Such a relief to the benefits called consequential benefits, actually has an independent status. It is called a consequential benefit, to signify that, occasion has arisen for the respondent to restore these service benefits to the delinquent employee, which he was deprived of earlier, by the void order of the respondent. The benefits had already accrued, though enforcement of the claim for these benefits stood postponed by an eclipse to the rights of the employee. When the order keeping him out of office is held to be bad, it is deemed that he has been in service all along earning his salary and other benefits."
21. From the above discussion we infer -
(1) When the dismissal order of a 'State employee' is declared invalid, the employee is deemed to be in service throughout.
(2) If the Service Rules permit, instead of reinstating the employee, he may be continued in suspension pending further or fresh enquiry; if not, he continues in service.
(3) Payment of back wages depends upon the employee not being employed elsewhere during the period of his illegal dismissal.
(4) Cause of action for reinstatement and claim for back wages arises on the setting aside of the dismissal order by the Court.
(5) It is open to the employer to continue the delinquent under suspension even after the dismissal order being set aside while continuing the disciplinary proceedings.
(6) If the service rules permit suspension of an employee during the disciplinary proceedings, he is to be paid a reasonable subsistence allowance; if not, employer who does not permit the employee to discharge his functions during the pendency of the disciplinary proceedings has to pay the employee his full salary.
(7) When the employee is not reinstated, he may seek full salary for the period of non-employment unless the period is covered by a valid suspension order and payment of subsistence allowance and that he was not gainfully employed elsewhere, during the period of dismissal.
(8) Burden is on the employer to prove that the employee is not entitled to be paid back wages on the ground of his gainful employment elsewhere.
22. In the instant case, in the earlier Writ Petition, one of the reliefs sought for by the petitioner seems to be for "a further direction for the reinstatement of the petitioner in service and give all consequential benefits." This fact is to be inferred form the preamble to the order of the learned Single Judge in the previous Writ Petition. Circumstances under which the relief was sought and meaning attributable to the phrase "consequential benefits" are not available to us, in the absence of the pleadings in the said Writ Petition. The Bank, which has relied on Section 11 of the Code of Civil Procedure and the broad principles of res judicata ought to have placed those pleadings in W.P. 10167/1977. Person pleading the bar of res judicata has to place the relevant pleadings and issues raised by the parties in the previous litigation. A perusal of the order made in the previous Writ Petition shows that question of reinstatement and payment of back wages was not specifically considered by the Court, obviously, because said question was not argued. This apart, it is not possible for us to infer that the Court in the earlier proceedings negatived the petitioner's claim for reinstatement and back wages; legal consequences of setting aside of the dismissal order are to be inferred and enforced.
23. Therefore, the argument of Mr. Hariyappa Bhat, that the petitioner cannot seek reinstatement and back wages cannot be accepted at all.
Since the cause of action for reinstatement and back wages arose on the dismissal order being set aside, present Writ Petition cannot be thrown out on any ground based on the principles of res judicata.
24. Therefore, it is unnecessary to consider the argument of the learned Counsel for the Bank that the ultimate order in the previous proceedings is the order made in Writ Appeal and that order alone should be looked into by invoking the Doctrine of Merger.
Neither the order of the learned Single Judge nor of the Appellate Bench in the previous proceedings anywhere suggested that petitioner should be reinstated before the disciplinary authority takes up the proceedings remitted to it by the Court. Therefore, the further question that requires to be considered here is whether the learned Single Judge was right in making an order now, imposing such a condition.
25. When under law no such condition could be found circumscribing the powers of the employer to continue the disciplinary proceedings, this Court cannot curtail the powers of the Bank to proceed with the disciplinary proceedings, by directing reinstatement and payment of back wages as a condition precedent. The direction to reinstate the petitioner as a consequence of the setting aside of the dismissal order is quite different from making it a condition for the exercise of the employer's power to proceed with the disciplinary proceedings. When law permits the employer to proceed with the disciplinary proceedings, said power of the employer should not be curtailed by any condition for its exercise. If the disciplinary proceedings are held under circumstances wherein the petitioner could not properly defend himself, it may affect the ultimate order that may be made against him by the disciplinary authority. It is too premature to go into that aspect at a time when disciplinary proceedings were being held. In fact, the learned Single Judge has not held that by not reinstating the petitioner and along with it by not paying the arrears of salary, petitioner's right to participate in the enquiry effectively will be taken away.
26. In the circumstances, therefore, the conditional order of the learned Single Judge requires modification.
27. The validity or legality of the dismissal order made on January 11, 1992 is not before us, and the learned Counsel for the petitioner submitted that the petitioner has already gone in appeal departmentally, against the said decision. The petitioner has complained that the disciplinary authority could not have passed the order dated January 11, 1992 when the present Writ Appeal is pending and that the said order was made disregarding the order of the learned Single Judge.
28. First dismissal order was dated December 31, 1976. This was challenged in W.P. 10165 of 1977. On February 1, 1985 Writ Petition was allowed, and dismissal order was set aside; however, Court permitted enquiry to continue "from the stage at which infirmity has occurred". This Order was affirmed in Writ Appeal on August 30, 1988 though the Appellate Bench held that one of the reasons applied by the learned Single Judge was not correct and accordingly finding on Point No. 1 was set aside. Matter was remitted to the disciplinary authority for deciding the whole case in accordance with law in the light of the representation made by the petitioner and observations made by the Division Bench in its Judgment. The petitioner contends that in view of the order setting aside the dismissal order, he had to be reinstated with back wages, before proceeding further with the enquiry.
29. No doubt, normally, consequence of setting aside a dismissal order is reinstatement; equally, it is so that the delinquent should be paid all the salary till the date of reinstatement, unless it is established that he was gainfully employed elsewhere.
30. But, the question is, whether the reinstatement in service and payment of back wages had to be done as a condition precedent for continuing with the enquiry. The Court has permitted the Bank to proceed with the enquiry. Thus, liberty to proceed with the enquiry was specifically granted to the Bank, under the orders of this Court. If that liberty was to be conditional, petitioner should have insisted for such a condition to be imposed by this Court when the earlier Writ Appeal was disposed of.
31. The Bank was entitled to read the Order of the Division Bench and proceed with the enquiry in the sense that the disciplinary authority had to decide the entire case in accordance with law. Nowhere law provides that an employee shall be reinstated in service and be paid his back wages, before the disciplinary authority takes up the disciplinary case for consideration.
32. Here, we are not concerned with the payment of any subsistence allowance or salary in lieu thereof. The question raised by the petitioner is entirely of a different character. His contention is that, reinstatement in service and payment of arrears of salary are the twin conditions to be satisfied before the disciplinary authority took up the case and these conditions impose themselves on the liberty given to the Bank to proceed with the case.
33. In the absence of any specific direction imposing a condition for the exercise of the liberty, we do not think it possible to read such a condition in the Judicial Order.
34. Petitioner should have taken sufficient care to have such a condition laid down by the Court, in its order. The right given to a party under an order of this Court cannot be whittled down or curtailed by reading any such condition in the order, when the words used in the order nowhere convey such an idea of having imposed a condition. Therefore, we are of the view that the Bank was justified in inferring that the disciplinary authority may proceed with the case before him, consequent upon the Order of the Division Bench made in the earlier Writ Appeal.
35. Non-payment of any salary or subsistence allowance resulting in deprivation of a proper opportunity to the petitioner to defend himself in the enquiry is a different question altogether. The petitioner filed the present Writ Petition in February 1989. In the Writ Petition, petitioner sought the relief of reinstatement and payment of arrears as conditions to be satisfied before the disciplinary authority takes up the proceedings. This Writ Petition was allowed on April 5, 1989. Thereafter Bank filed the present Writ Appeal, which was admitted and the order of the learned Single Judge was stayed on July 21, 1989. On November 7, 1990 the Bank reported that the petitioner was reinstated; subsequently a sum of Rupees One lakh was also paid to the petitioner by the Bank. Further proceedings were taken up by the disciplinary authority only after July 1991 and the disciplinary authority heard the petitioner on September 9, 1991. A copy of the proceedings of September 9, 1991 was placed before us for perusal and it is seen that the recorded proceedings was signed by the petitioner also.
It reads :
"Proceedings of the personal hearing given to Sri B. A. Bhat, Officer, Divisional Officer, Panaji, Goa.
---------
Place : H.O. Manipal, Date : 9.9.91 Time : 11 A.M. From :
K. Dinkar Pai, The Asst. Gen. Manager, Syndicate Bank, H.O. Manipal.
Appearance : Sri B. A. Bhat, Officer D.O. D.O. Panaji Goa.
---------
In terms of my communication bearing No. 3522./0090/PD/ IRD(O) dated August 20, 1991, Shri Bhat appeared before me at the scheduled time and submitted that he would defend his case by himself without taking the assistance of any other officer, employee of the bank, as his defence assistant.
At this stage Sri B. A. Bhat submitted a letter dated September 9, 1991 along with a photostat copy of the order dated May 1, 1991 of the Hon'ble Supreme Court and also a photostat copy of the order dated July 22, 1991 of the Hon'ble Supreme Court in respect of Civil Appeal No. 2896/91. He further submitted that inspite of what is stated by him in the last para of his representation/submissions letter dated September 9, 1991 with a view to comply with the directions of the disciplinary authority as per the notice bearing No. 3522/0090/PD/IRD(O) dated August 20, 1991 he has appeared before me for the personal hearing. He also submitted that he does not have any other oral submissions to make other than what is submitted in the said representation dated September 9, 1991.
At this stage the hearing is concluded. Now the time is 12 noon.
Recorded by me :
Sd/- Sd/-
(K. DINKAR PAI) (B. A. BHAT)
ASST. GENERAL MANAGER. CSOE
Received a copy of the proceedings
Sd/- (B. A. BHAT)"
Ultimately the order of dismissal was passed on January 11, 1992. This order was made during the pendency of this Appeal and therefore the said order has to be read subject to the order that may be made in this Appeal.
36. It is clear that by the time disciplinary authority took up the case for consideration, petitioner was already reinstated, which means, he was getting his current salary; in addition, he was paid a sum of Rs. 1 lakh in compliance with the order of this Court made on November 20, 1990 and in these circumstances, whether it can be said that petitioner was under financial stress at the time of the relevant disciplinary proceedings is a matter to be considered while testing the validity of the said order dated November 11, 1992. But we are not concerned with that aspect of the matter in these proceedings. The question before us is whether the disciplinary authority has committed any contempt of this Court.
37. During the pendency of the present Writ Appeal, prior to the order of disposal dated November 20, 1990, there was an interim order of stay staying the order of the learned Single Judge; ad-interim order to stay was made on July 21, 1989; on January 24, 1990 it was made absolute. It was contended before us by the Bank, the Supreme Court has remanded this Appeal for a fresh consideration. On the other hand, the learned Counsel for the petitioner contended that, the earlier interim order stood merged in the final order dated November 20, 1990 and after the Supreme Court set aside this order, the earlier interim order would not get revived; if so, the order of the learned Single Judge in the Writ Petition was operative and therefore, without complying with the said order of the learned Single Judge in its entirety, (such as payment of all the arrears of salary), disciplinary authority could not have proceeded to take up the disciplinary proceedings.
38. Whether an interim order of stay gets revived or not on the restoration of the Appeal, is a question which is not free from difficulty. The decision of Bhimiah, J. (as his Lordship then was) in Shivaraya v. Sharanappa & others 1967(1) Mys. L.J. 414 @ 417 was in the context of a dismissal of a suit for default and its restoration subsequently; it was held :
"The next question is whether the restoration of the suit in O.S. 82/1 of 1953-54 by the Civil Judge, has revived the ancillary orders passed before the dismissal for default of the suit. Answer to this question depends upon the terms in which the order of dismissal for default is passed by the trial Court and also the terms in which the trial Court or the appellate Court has restored the suit in question. If the Court passes an order dismissing the suit for default without any reference to the ancillary orders and such a suit for default without any reference to the ancillary orders and such a suit is restored by the Court which dismissed it for default or by the appellate Court, then the ancillary orders passed in the suit get revived after the order of restoration of the suit is passed. But, where the Court which dismisses the suit specifically vacates the ancillary orders passed therein and the Court restoring such a suit does not advert to ancillary orders so vacated, then the ancillary orders would not get revived even if there is restoration of the suit. This view is supported by a decision in Saranath Ayyangar v. Muthaiah Moopanar, wherein it is held as follows :
"The question whether the restoration of a suit does not restore the interlocutory orders or matters as between the parties to the suit, should be decided with reference to the intention of the officer who passed the order restoring the suit. It is question of the construction of the order of restoration. If he intended to restore the suit and all the ancillary matters connected with it they are all restored. If he did not so intend to restore all of them, they are not restored. As a matter of general rule, the intention would be to restore the suit and all incidental matters. If there is anything expressly appearing against the view that all the interlocutory matters are restored, then one would hold that they are not so restored."
The above view is followed in the decision in Bankim Chandra v. Chandi Prasad wherein it is held as follows :
"Orders like one for stay are nothing but ancillary orders and they are all meant to aid and supplement the ultimate decision arrived at in the main suit or appeal. Therefore, once a suit or appeal dismissed for default is restored by the order of the Court, all ancillary orders passed in the suit or appeal before its dismissal also revive and operate since that date with all their legal implications unless there is any other factor on the record or in the order passed to show to the contrary."
Sri Jagirdar contended that restoration of a suit does not revive ancillary orders passed before the suit was dismissed for default. He strongly relied upon a decision of Raj Chander Gupta v. Ramesh Kishore wherein it is held as follows :
"There does not seem to be any reasonable basis for making a distinction between the dismissal of suit for default and a dismissal of suit on merits. If the plaintiff succeeds in getting the suit restored in one case and the dismissal of suit is set aside on appeal in the other, all that happens is that the suit becomes alive. It cannot be disputed that once a suit is dismissed either for default or on merits, it ceases to exist in the eye of law and therefore, any ancillary orders passed in the suit would automatically come to an end and cease to operate."
With great respect to the learned Judge who was laid down the law as above, I am unable to agree with that view, in view of the two decisions of Madras and Patna High Courts, quoted above. As can be seen from the above judgment, the learned Single Judge who rendered the decision in the Allahabad case appears to have noticed the two decisions which I have referred to above. The Allahabad decision, in my opinion does not lay down the correct principle of law."
The learned Judge also noticed the speciality of an order of attachment under Order 38, in view of Rule 9 of Order 38. No such provision is found governing other varieties of interlocutory orders. The learned Counsel for the Bank urged that this distinction brings out the principle that, all ancillary or interlocutory orders get revived when a matter is revived in the Court which had passed such ancillary/interlocutory order earlier, in the same main proceedings; therefore the interim order of stay made in this Writ Appeal got revived on the Appeal being remanded by the Supreme Court. The learned Counsel also relied on the following observations of the Supreme Court, in Shree Chamundi Mopeds Ltd. v. Church of South India Trust :
"..... While considering the effect of an interim order staying the operation of the order under challenge, a distinction has to be made between quashing of an order and stay of operation of an order. Quashing of an order results in the restoration of the position as it stood on the date of the passing of the order which has been quashed. The stay of operation of an order does not, however, lead to such a result. It only means that the order which has been stayed would not be operative from the date of passing of the stay order and it does not mean that the said order has been wiped out from existence. This means that if an order passed by the Appellate Authority is quashed and the matter is remanded, the result would be that the appeal which had been disposed of by the said order of the Appellate Authority would be restored and it can be said to be pending before the Appellate Authority after the quashing of the order of the Appellate Authority. The same cannot be said with regard to an order staying the operation of the order of the Appellate Authority because in spite of the said order, the order of the Appellate Authority continues to exist in law and so long it exists, it cannot be said that the appeal which has been disposed of and is still pending."
39. In the instant case, earlier order disposing of the Writ Appeal was reversed by the Supreme Court and appeal was remanded; therefore, the Bank infers that this Writ Appeal was not only restored, but it also results in restoration of the position as it stood on the date of the passing of the earlier final order in the Writ Appeal. Since an interlocutory order is made, only in aid of and as ancillary to the main relief which may be available to the party on final determination of his rights in a proceeding, the interim order made in Writ Appeal after hearing both sides, has to be treated as an order essential to advance the course of Justice, being in aid of and as ancillary to the likely final order in the appeal. If so, revival of the appeal should normally result in the revival of such an interim order, unless there exists other circumstances justifying an inference that the earlier order would not be revived at all. As a practical measure, it can be safely said that, whether a particular interim order would get revived on restoration of the main proceeding, by virtue of a remand order, depends upon the nature of interim order and the circumstances under which the interim order came to be passed. There can be doubt that in the instant case, interim order of stay was made on the prima facie view that reinstatement and payment of back-wages cannot be imposed as a condition for proceeding with the disciplinary proceedings; further, balance of convenience was to permit the disciplinary authority to go on with the proceedings remitted to him by this Court earlier; direction to pay the arrears of salary can always be made, even subsequently. If non-payment of salary or subsistence allowance affected the propriety of the disciplinary proceedings, it can be considered, while judging the validity of the final order made in the disciplinary proceeding. For example in case disciplinary authority does not find the delinquent guilty, or imposes a very minor penalty on finding the delinquent guilty of the charges levelled against him, non-payment of arrears till his final order loses all its significance. Therefore, we are inclined to the view that, in the instant case, the interim order of stay made in the Writ Appeal got revived by the restoration of his Appeal.
40. Even otherwise, no case is made out to take action against the disciplinary authority under the provisions of Contempt of Court Act. The Supreme Court had not stayed further proceedings by the disciplinary authority when Special Leave Petition was pending before the Supreme Court. The consequence of the order of remand to this Court was to restore the Writ Appeal. It is not possible to hold with reasonable certainty that the earlier interim order to stay was not revived by the restoration of the appeal. We cannot infer that the disciplinary authority acted deliberately to pass the final order in the proceedings before him, in utter disregard of any binding order of this Court, specially, when the Bank had already reinstated the petitioner and paid him a sum of Rupees One Lakh, as ordered earlier.
The Contempt of Court Case is accordingly dismissed.
41. In the result, we make the following order :-
(i) W.A. No. 1247/1989 is partly allowed. The order of the learned Single Judge to the extent it requires reinstatement of the petitioner and payment of back wages to him before proceeding with the enquiry, is set aside and in its place, the following order substituted :
"The respondents are directed to reinstate the petitioner and pay the back wages to the petitioner for the period of his non-employment under the earlier illegal dismissal order dated December 31, 1976. Arrears of salary for the period from January 1, 1977 to the date of reinstatement shall be paid within eight weeks from the date of this order. This order shall not come in the way of the disciplinary authority to proceed with the disciplinary proceedings, as remitted to him in W.A. No. 567 of 1985."
42. Before concluding we clarify that (i) this order would in no way affect the order of dismissal made by the disciplinary authority, dated January 11, 1992 and its legality or correctness has to be considered elsewhere : and (ii) arrears of salary as ordered in this Writ Appeal shall be paid to the petitioner as directed in this order.
43. In this Appeal, there shall not be any order as to costs.
44. Writ Appeal No. 1247/89 is partly allowed and C.C.C. No. 306/1992 is dropped.