Shri Madhav Laxman Vaikunthe V vs The State Of Mysore

Rewritten Version Notice: This is a rewritten version of the original judgment.

Court: supreme-court

Case Number: Civil Appeal No.84 of 1960

Decision Date: 12 April 1961

Coram: Bhuvneshwar P. Sinha, S.K. Das, A.K. Sarkar, N. Rajagopala Ayyangar, J.R. Mudholkar

In the matter titled Shri Madhav Laxman Vaikunthe V versus The State of Mysore, the judgment was delivered on 12 April 1961 by the Supreme Court of India. The judgment was authored by Justice Bhuvneshwar P. Sinha, who sat as Chief Justice, and the bench also comprised Justices S. K. Das, A. K. Sarkar, N. Rajagopala Ayyangar and J. R. Mudholkar. The case is reported in 1962 AIR 8 and 1962 SCR (1) 886, with subsequent citations including D 1966 SC 1529, R 1971 SC 766, F 1972 SC 2638, R 1974 SC 338, R 1974 SC 423, RF 1976 SC 1766, RF 1976 SC 2547, RF 1980 SC 1773, and R 1992 SC 2009. The statutory provisions discussed include the Government of India Act 1935 (26 Geo. V, Chapter 2), Section 240(3), the Constitution of India Article 311(2), and the Indian Limitation Act 1908, Article 102, relating respectively to reversion of public servants to their substantive rank, the test for punishment, recovery of arrears of salary, and limitation periods.

The petitioner, Shri Madhav Laxman Vaikunthe V, had been appointed a Mamlatdar of the first grade and was then officiating as District Deputy Collector. He was alleged to have claimed a travelling allowance calculated on a distance of fifty‑nine miles instead of the correct distance of fifty‑one miles. Following a departmental enquiry, he was reverted to his substantive rank for a period of three years and was directed to refund the excess amount that he had allegedly claimed. He subsequently made a representation to the Government seeking relief, but the representation was rejected even though the Accountant General opined that the petitioner had not over‑charged and had committed no fraud. Later, the petitioner was promoted to the selection grade; however, the earlier order of reversion continued to operate and adversely affected his standing in the selection grade. After his retirement, he instituted suit seeking a declaration that the order of reversion was void and also claimed recovery of Rs 12,516 and a fraction as arrears of salary, allowances and other benefits, together with interest and future interest.

The trial court examined whether the order of reversion complied with the requirements of Section 240(3) of the Government of India Act 1935. It held that the statutory conditions had not been satisfied, granted the petitioner a declaration that the order was void, but refused to award the claimed arrears. The petitioner appealed this decision, and the State filed a cross‑objection. The High Court dismissed the appeal and allowed the cross‑objection, concluding that the order of reversion did not constitute a punishment within the meaning of Section 240(3) of the Government of India Act 1935. The Supreme Court, however, observed that the matter fell within the principles articulated in Purshottam Lal Dhingra’s case and applied the two tests for punishment laid down by this Court: (1) whether the servant possessed a right to the higher rank, and (2) whether the servant suffered the kind of evil consequences specified in the statute. The Court found that while the petitioner’s entitlement to the higher post might be debatable, he unquestionably suffered the prescribed evil consequences as a result of the order of reversion. The Court noted that mere loss of higher emoluments, without the additional consequences of forfeiture of substantive pay and loss of seniority, would not satisfy the punishment test; but in this case, the reversion for three years resulted in loss of seniority, loss of promotion prospects, and other detrimental effects, rendering the order void for failure to comply with Section 240(3) and the corresponding constitutional provision.

In this case the Court observed that an order of reversion alone could not satisfy the test for punishment prescribed by section 240(3) of the Government of India Act, 1935, because that test required additional consequences such as forfeiture of substantive pay and loss of seniority. The order under consideration reverted the appellant to his substantive post for a period of three years, thereby causing him to lose seniority and the opportunity for promotion; the later action taken by the Government was unable to fully remedy the injury caused. Accordingly, because the requirements of section 240(3) of the Government of India Act, 1935—corresponding to article 311(2) of the Constitution—had not been completely fulfilled, the Court held that the order of reversion was void, relying on the earlier decision in Purshottam Lal Dhingra v. Union of India, [1958] S.C.R. 826. The Court further noted that the appellant’s claim for arrears of salary was subject to article 102 of the Indian Limitation Act, which limited his entitlement to the amounts that fell due during the three years preceding his retirement. This principle was applied consistent with the precedent set in Punjab Province v. Pandit Tarachand, [1947] F.C.R. 89. The matter arose in Civil Appeal No. 84 of 1960, an appeal from the Bombay High Court judgment dated 26 July 1956, itself a reversal of the Civil Judge’s decree dated 31 October 1955. The appellant appeared in person, while counsel for the respondent was represented. Delivered on 12 April 1961 by Chief Justice Sinha, the principal issue was whether a public servant who, while acting in a higher post, was reverted to his substantive rank after an adverse finding in a departmental enquiry for misconduct, could be said to have been reduced in rank within the meaning of section 240(3) of the Government of India Act, 1935. The learned Civil Judge, Senior Division, had held that such a reversion did amount to a reduction in rank, but the High Court of Bombay, on first appeal, held the opposite. For the purpose of deciding the appeal, the Court summarized the material facts: the appellant held the rank of Mamlatdar, First Grade, and was officiating as District Deputy Collector and District Supplies Officer. In the performance of his duties he travelled by motor car and was found to have claimed travelling allowance for 59 miles when the correct distance was only 51 miles. Consequently a departmental enquiry was instituted, and the Government issued an order dated 11 August 1948 (Exhibit 35) reverting him to his original rank of Mamlatdar, the order stating, “After …”.

In the order issued, the Government was quoted as stating, “careful consideration Government have decided to revert you to Mamlatdar for a period of three years and have further directed that you should refund the excess mileage drawn by you in respect of the three journeys.” After receiving this order, the appellant submitted numerous representations to the Government challenging the correctness of the findings against him and seeking reconsideration of the order of reversion. These representations were ignored, even though the Accountant General eventually gave an opinion that the appellant had not over‑charged and that no fraud was involved in the travelling‑allowance bill that formed the basis of the charge. By a notification dated 26 March 1951 (Exhibit 61), the appellant was promoted to the Selection Grade with effect from 1 August 1950; however, the earlier order of reversion continued to operate and appears to have impaired his position within the Selection Grade. The appellant later retired on superannuation with effect from 28 November 1953.

On 2 August 1954, the appellant instituted a suit against the State of Bombay seeking a declaration that the Government order dated 11 August 1948 was void, inoperative, wrongful, illegal and ultra vires. He also claimed a recovery of approximately Rs 12,866 as arrears of salary, allowances and other dues, together with interest and future interest. The learned Civil Judge, Senior Division, at Belgaum, held that the first part of the departmental enquiry that led to the findings against the appellant was free from defect. Nonetheless, the trial court found that the appellant had not been afforded an opportunity to show cause before the penalty was imposed, because no show‑cause notice or a copy of the enquiry report setting out the grounds of the findings had been provided to him. Consequently, the trial court concluded that the requirements of section 240(3) of the Government of India Act, 1935, had not been fully complied with. The court further held that the order of reversion amounted to a penalty imposed as a result of the enquiry.

Based on these findings, the trial court determined that the order reverting the appellant to his substantive rank was void and granted the declaration sought by the appellant. However, the court dismissed the appellant’s claim for arrears, awarded costs, and reasoned that the claim for arrears was founded on tort rather than on a contractual basis. The appellant appealed the dismissal of his arrears claim, while the State filed cross‑objections to the part of the judgment and decree that awarded the declaration in the appellant’s favor. The High Court dismissed the appellant’s appeal and allowed the State’s cross‑objections concerning the declaration, but it made no order regarding the allocation of costs.

The High Court had not made any order concerning the costs of either the appeal or the cross‑objections that were before it. The High Court considered that, for the sake of argument, the Order of Reversion might be characterised as a punishment resulting from the departmental enquiry against the appellant. Nevertheless, the Court concluded that the Order of Reversion was not a punishment within the meaning of section 240(3) of the Government of India Act, 1935. The Court also expressly held that the Order of Reversion did not constitute any form of punishment whatsoever.

In the present proceeding, the appellant presented his own case with considerable ability and directly addressed the Court. He argued that the observations recorded in Parshotam Lal Dhingra v. Union of Indid (1) were directly applicable to his dispute. The Court reproduced those observations, which read as follows, and which are essential to its analysis. The Court noted that “A reduction in rank likewise may be by way of punishment or it may be an innocuous thing.” The Court further observed that “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.” The Court added that “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.” The Court continued that “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. post or rank cannot in any circumstances be a punishment.” The Court explained that “The real test for determining whether the reduction in such cases is or is not by way of punishment is to find out if the order for the reduction also visits the servant with any penal consequences.” The Court illustrated that “Thus if the order entails or provides for the forfeiture of his pay or allowances or the 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 reduce the servant to a lower rank under the terms of the contract of employment or under the rules,” and further that “in truth and reality the Government has terminated the employment as and by way of penalty.” The Court noted that “The use of the expression “terminate” or “discharge” is not conclusive.” In spite of the use of such innocuous expressions, the Court stated that “the court has to apply the two tests mentioned above, namely, (1) whether the servant bad a right to the post or the rank or (2) whether he ha,,; been visited with evil consequences of the kind hereinbefore referred to?” The Court concluded that “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.”

The Court explained that where a reduction in rank occurs without observing the requirements of the applicable rules and Article 311, which safeguard government servants, such termination of service or demotion must be regarded as wrongful and as a violation of the servant’s constitutional rights. The petitioner correctly argued that, but for the Government Order dated 11 August 1948 that is challenged in this case, he would have remained in the post of Deputy Collector. The order was issued following an enquiry conducted against him, and his reversion to a lower rank was not a routine administrative measure nor was it made for mere convenience. The order expressly kept the petitioner out of the Deputy Collector position for a period of three years, thereby adversely affecting both his current and prospective emoluments.

In the normal course of events, the petitioner would have continued to draw the salary and benefits attached to the Deputy Collector post and would have been eligible for further promotions. However, the adverse finding recorded against him caused a setback in his career, and that finding was later declared by the Accountant General to have been based on a misunderstanding of the true facts. Although the petitioner was later promoted by a Government Order dated 26 March 1951, with effect from 1 August 1950, that promotion did not fully compensate for the loss he suffered as a result of the impugned order of 11 August 1948.

The Court noted that the judgment of the High Court under appeal was delivered in July 1956, which was prior to the Supreme Court’s decision in Dhingra’s case, rendered in November 1957. Applying the two tests articulated in Dhingra’s case, the Court found that at least the second test was satisfied, and possibly the first as well. Even if it could be said that the petitioner did not have a vested right to hold the higher post, there was no doubt that he was subjected to “evil consequences.” The Court clarified that a public servant who is temporarily performing duties of a higher rank does not acquire a substantive right to that rank; the servant may be required to revert to his substantive position either because of service exigencies or because of an adverse finding in a misconduct enquiry.

The Court further observed that whenever a civil servant is reverted from an acting higher post to his substantive post, he inevitably loses the emoluments associated with the higher post. However, such loss of higher emoluments alone does not satisfy the second test from Dhingra’s case, which asks whether the servant has been visited with “evil consequences.” Mere deprivation of the higher salary cannot, by itself, constitute the “evil consequences” contemplated in that test. The Court stressed that “evil consequences” must signify something more than a simple loss of higher pay; they must include additional disadvantages, for example,

In this case the Court considered that forfeiture of substantive pay and loss of seniority constitute consequences that may satisfy the second test identified in Dhingra's case. Applying the test expressed in (1) [1058] S.C.P. 326, 863‑64 to the facts before it, the Court held that the mere failure of the appellant to receive the salary of a Deputy Collector for a period of three years does not, by itself, demonstrate that he suffered the type of evil consequences contemplated in Dhingra's case. The Court observed that even if the appellant had been reverted in the ordinary course of service exigencies, the same financial effect would have followed. Moreover, if the only result of his reversion, which followed an enquiry against him, had been the loss of the higher emoluments attached to the rank he was officiating, the appellant would have had no cause of action. However, the Court found that the order dated 11 August 1948 (Exhibit 35) not only removed the appellant from the acting post but also stripped him of his seniority as Mamlatdar, which was his substantive position. Consequently, the reversion was not a simple administrative step without adverse effect; it produced consequences that fell within the definition of punishment set out in Dhingra's case. The Court noted that if the reversion had been for a shorter period than three years, it could not be said to amount to punishment as defined by the rule in Dhingra's case (1). It therefore rejected the contention that the three‑year reversion to his substantive post was not punitive. The Court further observed that the appellant was progressing upward in his service cadre, and that but for this abnormal interruption, he would have been promoted in the normal course, as later occurred when the Government issued an order dated 26 March 1951 promoting him to the higher rank with effect from 1 August 1950. Although this later promotion represented delayed justice, it did not completely erase the injury caused by the earlier order of reversion. Accordingly, the Court concluded that the order of reversion amounted to punishment and that the subsequent government order was not entirely regular. It was found that the requirements of section 240(3) of the Government of India Act, 1935, which corresponds to Article 311(2) of the Constitution, had not been fully complied with. Therefore, the appellant’s reversion in rank violated the constitutional guarantee. In light of these findings, the Court held that the High Court was incorrect in concluding that the appellant’s reversion did not constitute punishment within the meaning of section 240(3) of the Government of India Act, 1935. Accordingly, the Court reversed the portion of the High Court’s decision on this point and also set aside the Trial Court’s finding regarding the appellant’s reversion to his substantive rank.

The Court observed that the order which had been impugned was void and therefore had to be set aside and restored. The next issue that arose was whether the appellant was entitled to any monetary relief in respect of his claim for arrears of salary and dearness allowance. The appellant had claimed an amount of Rs 10,777 as arrears of pay, Rs 951 as arrears of dearness allowance, and Rs 688 as arrears of daily allowance together with interest of Rs 471. In total the claim amounted to Rs 12,886. The period covered by the claim stretched from August 1946 to November 1953, that is, up to the date of the appellant’s retirement from Government service, and the claim also sought future interest. In considering this part of the matter, the learned Trial Judge relied upon the decision of the High Commissioner for India and Pakistan v. I. M. Lall, holding that a Government servant does not possess a right to recover arrears of pay by filing a suit in a civil court. The Judge then distinguished the earlier decision of this Court in State of Bihar v. Abdul Majid on the ground that the latter case had drawn a line between a claim based on a contract and a claim based on a tort. Applying that distinction, the Judge concluded that the appellant’s claim sought the difference between the salary and allowances actually drawn and those that would have been payable but for the wrongful orders, and therefore the claim was founded on a tort principle. Consequently, the Judge held that the appellant was not entitled to any relief on that basis. Turning to the question of limitation, the Judge held that the suit was governed by Article 102 of the Indian Limitation Act (IX of 1908) as interpreted by the Federal Court in The Punjab Province v. Pandit Tarachand. In that view the Judge added that, when the two‑month period prescribed for statutory notice under Section 80 of the Code of Civil Procedure was taken into account, the claim became timely as of 2 June 1951. Accordingly, while the Trial Court declared that the order under challenge was void, it dismissed the remainder of the claim and directed that the appellant should bear three‑quarters of the costs of the suit. On appeal, the High Court dismissed the suit in its entirety after allowing the State’s cross‑objections. The appellant contended that his suit for arrears of salary should not be subject to the three‑year limitation rule laid down in Article 102 of the Limitation Act and argued that the Federal Court’s decision in Tarachand’s case was erroneous. His sole ground was that the term “salary” was not encompassed by the word “wages”. The Court found that no satisfactory reasons had been advanced to depart from the Federal Court’s decision. Consequently, the appeal was allowed in part, specifically to the extent of confirming the declaration made by the Trial Court that the impugned order was void.

In this case, the Court held that the order issued by the Government and challenged before it was void, and consequently the order was set aside and restored, thereby disagreeing with the earlier decision of the High Court. The restoration of the Government order meant that the earlier declaration of its voidness by the High Court was reversed, and the status quo ante was re‑established. Regarding the plaintiff’s claim for arrears of salary and allowance, the Court permitted the claim only to the extent that it related to the period beginning on 2 June 1951 and continuing up to the date on which the plaintiff retired from Government service. The Court further observed that no decree for interest would be granted for any period preceding the filing of the suit. However, the Court directed that the principal amount awarded by decree would attract interest at the rate of six per cent per annum, calculated from the date on which the suit was filed and accruing until the time the sum was actually realised. In addition, the Court awarded the plaintiff‑appellant three‑fourths of his costs for the entire proceeding, on the ground that his whole claim was not being granted. The allocation of costs reflected the principle that a party whose claim is only partially successful should bear a proportionate share of the litigation expenses. Accordingly, the appeal was allowed in part. Thus, the final decree incorporated the specified monetary award, the interest provision, and the cost award, but did not grant any relief for the period preceding the suit. (1) (1947) F.C.R. 89.