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Reportable
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO.1428-1428 OF 2013
(Arising out of S.L.P. (C) Nos. 24224-24225 of 2008)
The Government of Andhra Pradesh
and Others ...
Appellants
Versus
Ch. Gandhi ...Respondent
J U D G M E N T
Dipak Misra, J.
Leave granted.
2. The present appeals by special leave are directed
against the judgment and order dated 14.6.2007
passed by the High Court of Judicature, Andhra
Pradesh at Hyderabad in Writ Petition No. 12177 of
2007 and the order dated 8.2.2008 passed in Review
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WPMP (SR) No. 126152 of 2007 arising from the said
writ petition whereby the Division Bench overturned
the order dated 16.5.2007 passed by the Andhra
Pradesh Administrative Tribunal, Hyderabad (for
short “the Tribunal”) in O.A. No. 923 of 2006 on the
ground that the disciplinary authority had imposed
two major penalties. Be it noted, the High Court
granted liberty to the department to pass appropriate
orders keeping in view the Andhra Pradesh Civil
Services (Classification, Control and Appeal) Rules,
1991 (for short “the Rules”).
3. The facts which are imperative to be adumbrated are
that a disciplinary proceeding under Rule 5 of the
Rules was initiated against the respondent, a Senior
Accountant in the Office of the Sub Treasury,
Nakrekal, on the charges that while functioning as
the senior most Accountant in the said office and in charge of the strong room keys, at the time of
surprise check by the Deputy Director, District
Treasury, Nalgonda, he was absent and had not
signed the attendance register in token of his having
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attended the office and also not maintained the
movement register as required under the Rules; that
he had failed to keep the currency chest book in the
currency chest and not endorsed every transaction;
that he had passed the bills, cheques and challans in
token of approval of the payment/receipts without
signing them; that he had not properly maintained
the strong entrants’ register which was found outside
the strong room and further the entries were not
recorded and signed by him; that he had failed to
remain present at the time of depositing money or
withdrawing money from the currency chest and
allowed others to operate the currency chest by
using the keys of joint custodian; and that he had
failed to submit the currency chest slip to R.B.I. on
15.4.2003 in respect of the currency chest
transactions of 15.4.2003 and also failed to submit
the daily sheets of 15.4.2003 and 16.4.2003.
4. An Enquiry Officer was appointed to enquire into the
charges and he submitted the report that the
charges were proven. On the basis of the enquiry
3Page 4
report, the disciplinary authority, after following the
requisite procedure, imposed the penalty of reversion
to the post of Junior Accountant for two years with
the stipulation that there would be postponement of
future increments.
5. Aggrieved by the said punishment, the respondent
approached the Tribunal in O.A. No. 923 of 2006 and
raised various points assailing the validity of the
initiation of the proceeding, the manner in which the
enquiry was conducted and lastly, that the
punishment imposed was disproportionate to the
misconduct. The Tribunal referred to the Rule
position and came to hold that there was no illegality
or irregularity in the initiation of the disciplinary
proceeding, framing of charge or conduct of the
enquiry and further, regard being had to the gravity
of the charge, the punishment could not be treated
to be disproportionate. Being of this view, the
Tribunal dismissed the original application.
6. The failure before the Tribunal compelled the
respondent to invoke the jurisdiction of the High
4Page 5
Court which, after adverting to the facts in detail and
the competence of the person who had initiated the
proceeding by issuing the memorandum of charges,
came to hold that the findings recorded by the
Tribunal on the said scores were absolutely
defensible and did not warrant any interference. As
far as the imposition of punishment was concerned, a
contention was advanced that he had been imposed
two major penalties which were not in consonance
with the Rules. The High Court referred to the order
of punishment, Rule 9 of the Rules that deals with
major penalties and sub-Rule 27 of Rule 11 of the
said Rules and came to hold that the penalty
imposed by the disciplinary authority did amount to
imposition of two penalties and, accordingly, set
aside the punishment which had been concurred with
by the tribunal and clarified that the said overturning
of the orders would not preclude the authorities to
pass appropriate orders pertaining to punishment
keeping in view the provisions of the Rules.
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7. Calling in question the legal propriety of the said
order, it is urged by Mr. G.N. Reddy, learned counsel
for the State and its functionaries, that the High
Court has erroneously opined that two major
penalties had been issued in violation of the Rules
though reversion to the lower post for a period of two
years with the stipulation of postponement of future
increments on restoration to higher category does
not tantamount to two major penalties under Rule 9
and, under no circumstances, it contravenes sub-rule
(27) to Rule 11 of the Rules. It is his submission that
the said punishment, being in consonance with the
Rules and further such imposition of punishment not
being unknown to service jurisprudence, did not
warrant interference by the High Court. The learned
counsel further canvassed that the amended Rules
permit imposition of such punishment but the same
has not been taken note of by the High Court which
makes the order absolutely vulnerable.
8. Mr. R.S. Krishnan, learned counsel appearing for the
respondent, resisting the aforesaid proponements,
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contended that the interpretation placed by the High
Court on the Rules cannot be found fault with
inasmuch as the language employed in the Rules is
absolutely plain, clear and unambiguous and, on a
careful reading of the same, it is manifest that under
the Rules, imposition of two major penalties is not
permissible. It is further urged by him that when the
language employed in the Rules has been differently
couched and both the employer and employee are
bound by the Rules, what could be jurisprudentially
permissible need not be adverted to in this case. The
learned counsel would further submit that the
delinquent employee could not have been imposed
such a punishment under Rule 9 of the Rules prior to
its amendment as his case would be governed by the
unamended Rules since the disciplinary proceeding
was initiated prior to the amendment and, at that
time, the punishment that was imposed was not
envisaged.
9. In reply, the learned counsel for the State submitted
that the respondent would be governed under the
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new Rules as clause (vii) of Rule 9 has been
substituted and the term “substituted” conveys that
the Rule has retrospective effect. That apart, it is
propounded that even if the rules are not treated as
retrospective, the appellant had no vested right to be
imposed a particular punishment under the
unamended Rules.
10. At the very outset, we may clearly state that we are
not concerned with the delinquency of the incumbent
or the findings recorded in the disciplinary
proceeding that has been conducted. We are also
not required to address whether the competent
authority had initiated the departmental proceeding,
for the respondent has not assailed the order passed
by the Division Bench of the High Court and it is only
the State which has come up in appeal. Thus, the
only aspect that requires to be dwelled upon is
whether the punishment could be imposed in accord
with the amended Rules or under the unamended
Rules.
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11. It is apt to note here that the punishment was
imposed on 1.12.2005. The relevant part of the
order passed by the Director of Treasuries and
Accounts is reproduced below: -
“After a detailed examination of the
inquiry report and the explanation of the
charged officer, the disciplinary authority
finds that the charges framed against Sri
Ch. Gandhi the then Senior Accountant and
incharge Sub Treasury Officer, Sub
Treasury (non-banking) Nakrekal have
been proved. After careful consideration
of the material facts and records and
explanation of the individual, in exercise of
the powers conferred under Sub Rule 27(ii)
of Rule 11 read with Sub Rule (vii) of rule 9
of A.P.C.S. (C.C.&A) Rules, 1991 hereby
awards a punishment of reversion to the
lower post of junior accountant for two
years with effect on postponing future
increments on restoration to the higher
category on Sri Ch. Gandhi, presently
working as senior Accountant with
immediate effect.”
12. Regard being had to the nature of the punishment, it
is necessary to scrutinize the Rule position. After the
amendment on 6.12.2003, the relevant part of Rule 9
which provides for major penalties is as follows: -
“Major Penalties
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(vi) withholding of increments of pay with
cumulative effect (G.O.Ms. No. 205, GA
(Ser.C) Dept. dt. 5.6.98);
(vii) (a) save as provided for a in clause
(v)(b), 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 servant 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;
(vii) (b) reduction to lower time-scale of pay,
grade, post or service which shall
ordinarily be a bar to the promotion of
the Government servant to the timescale of pay, grade, post or service from
which he was reduced, with or without
further directions, regarding conditions
of restoration to the grade or post or
service from which the Government
servant was reduced and his seniority
and pay on such restoration to that
grade, post or service;
(G.O.Ms. No. 373, G.A.(Ser.C) Dept., dt:
6.12.2003)
(viii) compulsory retirement;
(ix) removal from service which shall not be
a disqualification for future employment
under the Government;
(x) dismissal from service which shall
ordinarily be a disqualification for future
employment under the Government.”
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13. Sub-rule (27) of Rule 11 which has been relied on by
the High Court reads as follows: -
“(27) Without prejudice to the
foregoing provisions;
(i) every Head of Department may
impose on a member of the State
Services under his control, the
penalty specified in clause (iii) of rule
9, except in the case of each member
holding a post immediately below his
rank; and
(ii) every Head of Department declared
to be the appointing authority may
impose on a member of the State
Service holding a post at first level or
at second level under his control, any
of the penalties specified in clauses (i)
to (viii) of rule 9.
(G.O.Ms. No. 428, GA (Ser.C) Dept. dt.
13.10.1999)
(iii) The special Chief Secretary and Chief
Commissioner of Land Administration
may impose any of the penalties
specified in clause (ix) and clause (x)
of rule 9 on Mandal Revenue Officers.
(G.O.Ms. No. 231, GA (Ser.C) Dept. dt.
7.6.2005)”
14. The High Court, relying on sub-rule (27)(ii) of Rule 11,
has expressed the view that the punishments
imposed against the respondent, namely, reversion
to the lower rank and at the same time stoppage of
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increments, come under the purview of two major
penalties as contemplated in Rule 9 of the Rules
which is not permissible. On a perusal of the order
passed by the High Court, it is evident that the High
Court has referred to the unamended Rules.
15. The Rules were amended on 6.12.2003. Under the
heading ‘minor penalties’ after clause (v)(a), clause
(v)(b) was added. Under the heading ‘major
penalties’, clause 7 was substituted and the said
clause was compartmentalized into two parts,
namely, (vii)(a) and (vii)(b). The disciplinary
authority, as is vivid from the aforequoted portion,
has imposed the penalty under sub-rule (vii) of Rule 9
of the substituted Rule.
16. Rule 9 of the unamended or the old Rules read as
follows: -
“Rule 9: Major Penalties:
(vi) withholding of increments of pay with
cumulative effect.
(vii) Reduction to a lower rank in the
seniority list or to a lower stage in the
seniority list or to a lower stage in the
timescale of pay or to a lower time
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scale of pay not being lower than that
to which he was directly recruited or
to lower grade or post not being lower
than that to which he was directly
recruited, whether in the same
service or in another service, State or
Subordinate;
(viii) Compulsory retirement;
(ix) Removal from service which shall not
be a disqualification for future
employment under the Government;
(x) Dismissal from service which shall
ordinarily be a disqualification for
future employment under the
Government.”
17. On a perusal of the unamended Rule, there can be no
doubt that clause (vii) only related to reduction to a
lower rank in the seniority list or to a lower time scale
of pay or in the lower grade or pay not being lower
than that to which he was directly recruited. It did
not have the stipulation of postponement of future
increment on restoration to the higher category.
Thus, the seminal issue is whether the respondent
could have been imposed a punishment under the
amended Rules. It is necessary to state here that the
amended Rules were not brought to the notice of the
High Court.
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18. It is useful to note here that the charge-sheet was
issued on 14.11.2003. In Delhi Development
Authority v. H.C. Khurana
1
, a two-Judge Bench
posed the question relating to the stage when it can
be said that a decision has been taken to initiate the
disciplinary proceeding and, in this context, opined
that the decision to initiate disciplinary proceedings
cannot be subsequent to the issuance of the chargesheet since issue of the charge-sheet is a
consequence of the decision to initiate disciplinary
proceedings. Framing the charge-sheet is the first
step taken for holding the enquiry into the allegations
on the decision taken to initiate disciplinary
proceedings. The charge-sheet is framed on the basis
of the allegations made against the government
servant; the charge-sheet is then served on him to
enable him to give his explanation; if the explanation
is satisfactory, the proceedings are closed, otherwise,
an enquiry is held into the charges; if the charges are
not proved, the proceedings are closed and the
government servant exonerated; but if the charges
1
(1993) 3 SCC 196
14Page 15
are proved, the penalty follows. Thus, the service of
the charge-sheet on the government servant follows
the decision to initiate disciplinary proceedings, and
it does not precede or coincide with that decision.
19. Be it noted, in the said case, the decision rendered in
Union of India and others v. K.V. Jankiraman
and others
2
was explained by stating thus: -
“The word ‘issued’ used in this context in
Jankiraman it is urged by learned counsel
for the respondent, means service on the
employee. We are unable to read
Jankiraman in this manner. The context in
which the word ‘issued’ has been used,
merely means that the decision to initiate
disciplinary proceedings is taken and
translated into action by despatch of the
charge-sheet leaving no doubt that the
decision had been taken. The contrary
view would defeat the object by enabling
the government servant, if so inclined, to
evade service and thereby frustrate the
decision and get promotion in spite of that
decision.”
20. In Union of India and others v. Sangram Keshari
Nayak
3
, it has been held that a departmental
proceeding is ordinarily said to be initiated when a
charge-sheet is issued. In Coal India Ltd. and
2
(1991) 4 SCC 109
3
(2007) 6 SCC 704
15Page 16
others v. Saroj Kumar Mishra
4
, similar view was
reiterated. In view of the aforesaid pronouncements,
there is not an iota of doubt that the disciplinary
proceeding was initiated under the unamended
Rules.
21. At this juncture, we may state with profit that the
amended Rule has not been given any retrospective
effect. In Tejshree Ghag and others v. Prakash
Parashuram Patil and others
5
, it has been ruled
that the State has the power to alter the terms and
conditions of service even with retrospective effect
by making rules framed under the proviso appended
to Article 309 of the Constitution of India, but it is
also well settled that the rule so made ordinarily
should state so expressly.
22. In Marripati Nagaraja and others v.
Government of Andhra Pradesh and others
6
,
this Court has ruled that the State, in exercise of its
power conferred upon it under the proviso appended
4
(2007) 9 SCC 625
5
(2007) 6 SCC 220
6
(2007) 11 SCC 522
16Page 17
to Article 309 of the Constitution of India, is entitled
to make rules with retrospective effect and
retroactive operation. Ordinarily, in absence of any
rule and that too a rule which was expressly given a
retrospective effect, the rules prevailing as on the
date of the notification are to be applied. But if some
rule has been given a retrospective effect which is
within the domain of the State, unless the same is set
aside as being unconstitutional, the consequences
flowing therefrom shall ensue. In such an event, the
applicable rule would not be the rule which was
existing but the one which had been validly brought
on the statute book from an anterior date.
23. Presently, we shall deal with the contention of the
learned counsel for the State who has laid emphasis
on the fact that the said Rule has been substituted by
the amendment dated 16.12.2003 and, therefore, it
has to be treated to have retrospective effect. At this
juncture, we may fruitfully refer to a passage from
Maxwell on the Interpretation of Statute, 12
th
edition,
wherein it has been stated thus: -
17Page 18
“Perhaps no rule of construction is more
firmly established than thus — ‘that a
retrospective operation is not to be given
to a statute so as to impair an existing
right or obligation, otherwise than as
regards matters of procedure, unless that
effect cannot be avoided without doing
violence to the language of the enactment.
If the enactment is expressed in language
which is fairly capable of either
interpretation, it ought to be construed as
prospective only’. The rule has, in fact, two
aspects, for it, ‘involves another and
subordinate rule, to the effect that a
statute is not to be construed so as to have
greater retrospective operation than its
language renders necessary’.”
24. In Francis Bennion's Statutory Interpretation, 2nd
Edn., while emphasizing on the concept of
retrospective legislation and rights, the learned
author has stated thus: -
“The essential idea of a legal system is
that current law should govern current
activities. Elsewhere in this work a
particular Act is likened to a floodlight
switched on or off, and the general body of
law to the circumambient air. Clumsy
though these images are, they show the
inappropriateness of retrospective laws. If
we do something today, we feel that the
law applying to it should be the law in
force today, not tomorrow's backward
adjustment of it. Such, we believe, is the
nature of law. Dislike of ex post facto law is
enshrined in the United States Constitution
and in the Constitution of many American
18Page 19
States, which forbid it. The true principle is
that lex prospicit non respicit (law looks
forward not back). As Willes, J. said
retrospective legislation is ‘contrary to the
general principle that legislation by which
the conduct of mankind is to be regulated
ought, when introduced for the first time,
to deal with future acts, and ought not to
change the character of past transactions
carried on upon the faith of the then
existing law’.”
25. In Hitendra Vishnu Thakur v. State of
Maharashtra and others
7
, this Court dwelled upon
the ambit and sweep of the amending Act and the
concept of retrospective effect and, eventually, ruled
thus: -
“(i) A statute which affects
substantive rights is presumed to be
prospective in operation unless made
retrospective, either expressly or by
necessary intendment, whereas a statute
which merely affects procedure, unless
such a construction is textually impossible,
is presumed to be retrospective in its
application, should not be given an
extended meaning and should be strictly
confined to its clearly-defined limits.
(ii) Law relating to forum and
limitation is procedural in nature, whereas
law relating to right of action and right of
appeal even though remedial is
substantive in nature.
7
(1994) 4 SCC 602
19Page 20
(iii) Every litigant has a vested right in
substantive law but no such right exists in
procedural law.
(iv) A procedural statute should not
generally speaking be applied
retrospectively where the result would be
to create new disabilities or obligations or
to impose new duties in respect of
transactions already accomplished.
(v) A statute which not only changes
the procedure but also creates new rights
and liabilities shall be construed to be
prospective in operation, unless otherwise
provided, either expressly or by necessary
implication.”
26. From the aforesaid analysis of law, it is graphically
clear that there is a presumption against the
retrospective operation of a statute, and further a
greater retrospectivity cannot be conferred on a
statute than the language makes it necessary.
27. In the case at hand, the notification uses the
phraseology that clause (vii) shall be substituted with
the amending clause. The provision which is
substituted by the amending Rules, does not
obliterate the rights of the parties as if they never
existed. A substituted provision is the resultant
factor of the amendment in the Rules and it shall
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guide the consequences that follow from the
amended Rules. In Bhagat Ram Sharma v. Union
of India and others
8
, a two-Judge Bench, while
dealing with the Punjab Public Service Commission
(Conditions of Service) Regulations, 1958, making a
distinction between two regulations, opined that in
the absence of any provision giving Regulation 8(3) a
retrospective operation, the same cannot prima facie
bear a greater retroactive effect than intended. In
this context, the Court proceeded to state as follows:
-
“17. It is a matter of legislative practice to
provide while enacting an amending law,
that an existing provision shall be deleted
and a new provision substituted. Such
deletion has the effect of repeal of the
existing provision. Such a law may also
provide for the introduction of a new
provision. There is no real distinction
between ‘repeal’ and an ‘amendment’. In
Sutherland’s Statutory Construction, 3
rd
Edn., Vol 1 at p. 477, the learned author
makes the following statement of law:
“The distinction between repeal and
amendment as these terms are used
by the Courts is arbitrary. Naturally
the use of these terms by the Court is
based largely on how the Legislature
have developed and applied these
8
AIR 1988 SC 740
21Page 22
terms in labeling their enactments.
When a section is being added to an
Act or a provision added to a section,
the Legislatures commonly entitled
the Act as an amendment..... When a
provision is withdrawn from a section,
the Legislatures call the Act an
amendment particularly when a
provision is added to replace the one
withdrawn. However, when an entire
Act or section is abrogated and no
new section is added to replace it,
Legislatures label the Act
accomplishing this result a repeal.
Thus as used by the Legislatures,
amendment and repeal may differ in
kind – addition as opposed to
withdrawal or only in degree –
abrogation of part of a section as
opposed to abrogation of a whole
section or Act; or more commonly, in
both kind and degree – addition of a
provision to a section to replace a
provision being abrogated as opposed
by abrogation of a whole section of an
Act. This arbitrary distinction has
been followed by the Courts, and they
have developed separate rules of
construction for each. However, they
have recognized that frequently an
Act purporting to be an amendment
has the same qualitative effect as a
repeal – the abrogation of an existing
statutory provision – and have
therefore applied the term ‘implied
repeal’ and the rules of construction
applicable to repeals to such
amendments.”
18. Amendment is in fact, a wider term
and it includes abrogation or deletion
of a provision in an existing statute.
If the amendment of an existing law is
22Page 23
small, the Act professes to amend; if
it is extensive, it repeals a law and reenacts it. An amendment of
substantive law is not retrospective
unless expressly laid down or by
necessary implication inferred.
19. For the sake of completeness, we
wish to add that mere use of the word
‘substitution’ does not imply that
Regn. 8(3) must relate back to
November 1, 1956, the appointed
day.”
28. In Pyare Lal Sharma v. Managing Director and
others
9
, the Court was dealing with Regulation 16.14
of Jammu and Kashmir Industries Employees Service
Rules and Regulations. Be it noted, the said
regulation was amended on April 21, 1983. In the
earlier regulations, certain grounds were provided for
termination of service of a permanent employee. In
the amended regulation, the ground, namely,
unauthorized absence, was added apart from other
grounds. The services of the appellants therein were
terminated on the ground of unauthorized absence.
The Court scanned the scheme of Regulation 16.14
before amendment which consisted of only clauses
(a) and (b) relating to abolition of post and unfitness
9
(1989) 3 SCC 448
23Page 24
on medical ground and the company, the employer
therein, had no authority to terminate the services of
an employee on the ground of unauthorised absence
without holding disciplinary proceedings against him.
The regulation was amended on 20-4-1983 and
grounds (c) and (d) were added. The amended
regulation could not operate retrospectively but only
from the date of the amendment. Ground (c) under
which action was taken came into existence only on
20-4-1983 and as such, the period of unauthorised
absence which could come within the mischief of
ground (c) has to be the period posterior to 20-4-
1983 and not anterior to that date.
29. After analyzing the facts, the two-Judge Bench
expressed as follows:-
“The period of absence indicated in the
show-cause notice is obviously prior to
April 20, 1983. The period of absence
prior to the date of amendment cannot
be taken into consideration. When prior
to April 20, 1983 the services of person
could not be terminated on the ground
of unauthorised absence from duty
under Regulation 16.14 then it is wholly
illegal to make the absence during that
period as a ground for terminating the
services of Sharma. It is basic principle
24Page 25
of natural justice that no one can be
penalised on the ground of a conduct
which was not penal on the day it was
committed.”
[Emphasis supplied]
30. In “Principles of Statutory Interpretation” the learned
author, Justice G. P. Singh, while discussing on the
said decision in the context of retrospective
operation pertaining to the penal statutes, has stated
thus:-
“This case shows that the rule of
construction against retroactivity of penal
laws is not restricted to Acts providing for
criminal offences but applies also to laws
which provide for other penal
consequences of a severe nature, e.g.
termination of service.”
31. In Ritesh Agarwal and Another v. Securities
and Exchange Board of India and Others
10
, the
issue was whether the Regulations that came into
force on 25.10.1995 could apply to a case where the
cause of action arose prior thereto. In the aforesaid
context, it has been held that :-
“Ex facie, a penal statute will not have any
retrospective effect or retroactive
operation. If commission of fraud was
10
(2008) 8 SCC 205
25Page 26
complete prior to the said date, the
question of invoking the penal provisions
contained in the said Regulations including
Regulations 3 to 6 would not arise.”
32. In this context, we may refer to the observations
made in Government of India and Others v.
Indian Tobacco Association
11
as follows:-
“We are not oblivious of the fact that in
certain situations, the court having regard
to the purport and object sought to be
achieved by the legislature may construe
the word “substitution” as an
“amendment” having a prospective effect
but such a question does not arise in the
instant case.”
We may also note that in the said case, the Court
observed that the doctrine of fairness also is to be
considered to be a relevant factor for construing the
retrospective operation of a statute.
33. In view of the aforesaid, we have no hesitation in
mind that the amended Rule despite having been
substituted has no retrospective effect. That apart,
the notification uses the phraseology “shall be
11
(2005) 7 SCC 396
26Page 27
substituted” which clearly indicates the fact that the
amended Rule is prospective.
34. The controversy does not rest there. The learned
counsel for the State has urged that even if the Rule
is not retrospective, the decision having been taken
after the Rules have come into force, it is the
amended Rule which would be applicable. It is
propounded by him that there could be alteration of
service conditions by framing the subsequent rule or
regulation and, hence, the date of the decision is the
relevant date to attract the applicability of the rule.
It is also highlighted that the respondent, in the
obtaining circumstances, had no vested right to be
imposed a particular punishment under the
unamended Rules.
35. To appreciate the aforesaid stand, we think it
apposite to survey certain authorities in the field. In
Roshan Lal Tandon v. Union of India and
another
12
, the Constitution Bench was dealing with
the contention of the petitioner therein that he had a
12
AIR 1967 SC 1889
27Page 28
contractual right as regards the condition of service
applicable to him at the time he entered Grade ‘D’
and the condition of service could not be altered to
his disadvantage afterwards by the notification
issued by the Railway Board. Repelling the
contention, the Bench held thus: -
“It is true that the origin of Government
service is contractual. There is an offer
and acceptance in every case. But once
appointed to his post or office the
Government servant acquires a status and
his rights and obligations are no longer
determined by consent of both parties, but
by statute or statutory rules which may be
framed and altered unilaterally by the
Government. In other words, the legal
position of a Government servant is more
one of status than of contract. The hallmark of status is the attachment to a legal
relationship of rights and duties imposed
by the public law and not by mere
agreement of the parties. The emolument
of the Government servant and his terms
of service are governed by statute or
statutory rules which may be unilaterally
altered by the Government without the
consent of the employee.”
Thereafter, their Lordships referred to a passage
from Salmond and Williams on Contracts and, eventually,
ruled thus: -
28Page 29
“We are therefore of the opinion that the
petitioner has no vested contractual right
in regard to the terms of his service and
that Counsel for the petitioner has been
unable to make good his submission on
this aspect of the case.”
36. In Raj Kumar v. Union of India and others
13
, the
larger Bench overruled the decision in Senior
Superintendent, R.M.S. Cochin and another v.
K.V. Gopinath, Sorter
14
and observed that the
rules made under the proviso to Article 309 of the
Constitution are legislative in character and,
therefore, can be given effect to retrospectively.
37. In Ex-Capt. K.C. Arora and another v. State of
Haryana and others
15
, a notification was issued on
August 19, 1976 amending the definition clause of
‘military service’ in Rule 2 of the Rules. The
notification was issued with retrospective effect from
November 1, 1966 and it restricted the benefits of
military service upto January 10, 1968. A question
arose whether the vested rights which had accrued
to the petitioner therein in 1969, 1970 and 1971 had
13
AIR 1975 SC 1116
14
AIR 1972 SC 1487
15
(1984) 3 SCC 281
29Page 30
been taken away. Dealing with the controversy, the
three-Judge Bench referred to the Constitution Bench
decision in State of Gujarat v. Raman Lal Keshav
Lal Soni
16
and, eventually, pronounced thus: -
“In view of this latest pronouncement by
the Constitution Bench of this Court, the
law appears to be well settled and the
Haryana Government cannot take away
the accrued rights of the petitioners and
the appellants by making amendment of
the rules with retrospective effect.”
38. In Raman Lal Keshav Lal Soni (supra), the Court
had observed that the amending Act which has been
made retrospective to navigate around the obstacles
of Article 311 and Article 14 of the Constitution to
bring about an artificial situation could not be
allowed to stand. The Constitution Bench had posed
a question whether a law could be made to destroy
today’s accrued constitutional rights by artificially
reverting to a situation which existed 17 years before
and answered it in the negative. It may be noted
with profit that in the said case, the Constitution
Bench has ruled thus: -
16
(1983) 2 SCC 33
30Page 31
“The legislature is undoubtedly competent
to legislate with retrospective effect to
take away or impair any vested right
acquired under existing laws but since the
laws are made under a written
Constitution, and have to conform to the
dos and don’ts of the Constitution, neither
prospective nor retrospective laws can be
made so as to contravene fundamental
rights. The law must satisfy the
requirements of the Constitution today
taking into account the accrued or
acquired rights of the parties today. The
law cannot say, 20 years ago the parties
had no right, therefore, the requirements
of the Constitution will be satisfied if the
law is dated back by 20 years. We are
concerned with today’s rights and not
yesterday’s. A legislature cannot legislate
today with reference to a situation that
obtained 20 years ago and ignore the
march of events and the constitutional
rights accrued in the course of the 20
years.”
From the aforesaid Constitution Bench decision, it is
graphically clear that a vested right cannot be impaired by
bringing a law as that is likely to contravene the
Constitutional Rights. As stated there, the law is required
to satisfy the requirements of the Constitution today
taking into account the accrued or acquired rights of the
parties today. The Bench has emphasized that a
legislature cannot legislate today with reference to a
situation that obtained 20 years before and ignore the
31Page 32
march of events and the constitutional rights accrued in
the course of two decades. Thus, vested and accrued
rights are not to be impaired.
39. To understand what is precisely meant by vested
right in the context of a service rule, it is necessary
to understand and appreciate how this Court has
viewed the said right in that conspectus. The
Constitution Bench in Chairman, Railway Board
and others v. C.R. Rangadhamaiah and others
17
was dealing with the validity of the notification dated
5.12.1988 issued by the Railway Administration
under the proviso to Article 309 of the Constitution
whereby Rule 2544 of the Indian Railway
Establishment Code, Volume II (Fifth Reprint) had
been amended with retrospective effect. By virtue of
the amendment, the quantum of percentage of the
running allowance for the purpose of retirement and
other benefits was reduced with effect from
1.1.1973. The notification was challenged before the
Delhi High Court which transferred it to the Central
17
(1997) 6 SCC 623
32Page 33
Administrative Tribunal after coming into force of the
Administrative Tribunals Act, 1985. The Tribunal
treated the said notification as an executive
instruction and opined that the same could not be
accepted to be a statutory amendment of the
existing rules governing the running allowance. The
said order was not challenged by the Railway
Administration. However, a notification was issued
on 5.12.1988, the validity of which was challenged in
some pending petitions. As various Benches of the
Tribunal rendered conflicting decisions, the matter
was referred to a larger Bench and the Full Bench of
the Tribunal opined that though under the proviso to
Article 309 of the Constitution the President has
power to promulgate rules with retrospective effect,
yet it is subject to the condition that the rules do not
offend any constitutional rights or deprive an
employee of his valuable vested right like pension
after retirement as such deprivation of vested right is
violative of Article 14 of the Constitution being
unreasonable and arbitrary. A three-Judge Bench of
33Page 34
this Court referred the matter to the larger Bench by
passing the following order: -
“Two questions arise in the present case,
viz., (i) what is the concept of vested or
accrued rights so far as the government
servant is concerned, and (ii) whether
vested or accrued rights can be taken
away with retrospective effect by rules
made under the proviso to Article 309 or
by an Act made under that article, and
which of them and to what extent.
We find that the Constitution Bench
decisions in Roshan Lal Tandon v. Union of
India
18
, B.S. Vadera v. Union of India
19
and
State of Gujarat v. Raman Lal Keshav Lal
Soni
20
have been sought to be explained
by two three-Judge Bench decisions in K.C.
Arora v. State of Haryana
21
and K. Nagaraj
v. State of A.P.
22
in addition to the twoJudge Bench decisions in P.D. Aggarwal v.
State of U.P.
23
and K. Narayanan v. State of
Karnataka
24
. Prima facie, these
explanations go counter to the ratio of the
said Constitution Bench decisions. It is not
possible for us sitting as a three-Judge
Bench to resolve the said conflict. It has,
therefore, become necessary to refer the
matter to a larger Bench. We accordingly
refer these appeals to a Bench of five
learned Judges.”
18
AIR 1967 SC 1889
19
AIR 1969 SC 118
20
(1983) 2 SCC 33
21
(1984) 3 SCC 281
22
(1985) 1 SCC 523
23
(1987) 3 SCC 622
24
1994 Supp (1) SCC 44
34Page 35
The Constitution Bench analysed the decisions which
have been mentioned in the referral order and observed
as follows: -
“24. In many of these decisions the
expressions “vested rights” or “accrued
rights” have been used while striking down
the impugned provisions which had been
given retrospective operation so as to have
an adverse effect in the matter of
promotion, seniority, substantive
appointment, etc., of the employees. The
said expressions have been used in the
context of a right flowing under the
relevant rule which was sought to be
altered with effect from an anterior date
and thereby taking away the benefits
available under the rule in force at that
time. It has been held that such an
amendment having retrospective
operation which has the effect of taking
away a benefit already available to the
employee under the existing rule is
arbitrary, discriminatory and violative of
the rights guaranteed under Articles 14
and 16 of the Constitution. We are unable
to hold that these decisions are not in
consonance with the decisions in Roshan
Lal Tandon, B.S. Yadav and Raman Lal
Keshav Lal Soni.”
40. After so stating, the Constitution Bench stated that in
the said case, the Court was concerned with the
pension payable to the employees after their
retirement. It took note of the fact that the
35Page 36
respondents were no longer in service on the date of
issuance of the impugned notification and the
amendments in the rules were not restricted in their
application in futuro. It was further observed that the
amendments applied to employees who had already
retired and are no longer in service on the date when
the notifications were issued. After referring to the
pronouncements in Deokinandan Prasad v. State
of Bihar
25
, D.S. Nakara v. Union of India
26
and
Indian Ex-Services League v. Union of India
27
, it
has been ruled thus: -
“33. Apart from being violative of the
rights then available under Articles 31(1)
and 19(1)(f), the impugned amendments,
insofar as they have been given
retrospective operation, are also violative
of the rights guaranteed under Articles 14
and 16 of the Constitution on the ground
that they are unreasonable and arbitrary
since the said amendments in Rule 2544
have the effect of reducing the amount of
pension that had become payable to
employees who had already retired from
service on the date of issuance of the
impugned notifications, as per the
provisions contained in Rule 2544 that
were in force at the time of their
retirement.”
25
(1971) 2 SCC 330
26
(1983) 1 SCC 305
27
(1991) 2 SCC 104
36Page 37
41. We have referred to the aforesaid verdict in detail as
it deals with the vested and accrued right in service
jurisprudence and how the same cannot be affected
by retrospective amendments. We have already
opined that the amendment to the rules is not
retrospective. Therefore, the fulcrum of the
controversy is whether the respondent had a vested
or accrued right to be visited with a particular
punishment engrafted under Rules 9 of the
unamended Rules. As has been held earlier, the
disciplinary proceeding had been initiated under the
unamended rules. Under the unamended rule
9(vii), the punishment provided was reduction to a
lower rank in the seniority list or to a lower stage in
the seniority list or to a lower stage in the timescale
of pay or to a lower time scale of pay not being lower
than that to which he was directly recruited or to
lower grade or post not being lower than that to
which he was directly recruited. After the
amendment, Rule 9(vii) has been bifurcated into two
parts. Under Rule 9(vii)(a), the punishment that is
37Page 38
provided is 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
servant would earn increments of pay during the
period of such reduction and whether on the expiry of
such period, the reduction would or would not have
the effect of postponing the future increments of his
pay. Rule 9(vii)(b) deals with reduction to lower
time-scale of pay, grade, post or service which shall
ordinarily be a bar for promotion with or without
further direction regarding conditions of restoration
to the grade or post or service from which the
Government servant was reduced and his seniority
and pay on such restoration to that grade, post or
service. When both the rules are read in
juxtaposition, it is luculent that though the earlier
Rule 9(vii) provided for reduction to lower grade or
post, yet it did not stipulate imposition of condition
on restoration as regards his seniority and pay to the
original grade or post. It is noticeable that after the
amendment, Rule 9(vii)(a) only provides reduction to
38Page 39
a lower stage in the time scale of pay for a specified
period and empowers the disciplinary authority to
issue a direction, if necessary, whether the
delinquent would earn increment of pay during the
period of such reduction and whether such reduction
will or will not have the effect of postponement in
future increments of pay. Rule 9(vii)(b) deals with
reduction to lower timescale of pay and other
reductions which we have already stated. There is a
distinction between reduction to a lower stage in the
time scale of pay and reduction to a lower time scale
of pay. Needless to say, in clause (vii)(a), there is no
provision for reduction to a lower rank or lower grade
or post. That is separately provided in clause (vii)(b).
Whenever there is a reduction to a lower scale in the
timescale of pay for a specified period, the employee
remains in the said post and cadre but the scale of
pay is reduced to a lower stage. Reduction to a lower
time scale of pay has more serious impact than the
reduction in the stage of pay itself. Reduction to a
lower post has a severe consequence. Similarly,
39Page 40
reduction in lower rank in the seniority has a different
concept.
42. Bestowing our thoughtful considerations we find that
as far as the major penalty under Rule 9(vii) is
concerned, the rule making authority, under the
amended rule, has bifurcated/compartmentalized the
punishment into two compartments – one slightly
lesser than the other. Under the old rule, there was a
singular punishment and there was no stipulation as
regards the earning of increments or imposition of
conditions on restoration to the grade or post or
service concerned. It is worth noting that under the
unamended rule, there were three other categories
of punishments, namely, compulsory retirement,
removal from service and dismissal from service.
The said punishments have been maintained in the
new rules. In the case at hand, the disciplinary
proceeding was initiated by serving a charge-sheet
for the purpose of imposition of a major penalty and,
therefore, the maximum punishment of dismissal
could have been imposed on the respondent.
40Page 41
43. The thrust of the matter is whether the respondent
could have been imposed punishment under Rule
9(vii) of the unamended rules and no other
punishment. The rules have been framed under
Article 309 of the Constitution. There can be no cavil
that by amending the rule, a punishment cannot be
imposed in respect of a misconduct or delinquency
which was not a misconduct or a ground to proceed
in a departmental enquiry before the amended rules
came into force. Further, a person cannot be
subjected to a penalty greater than which might have
been inflicted under the rule in force at the time of
commission of delinquency or misconduct.
44. We have already referred to the decision in Pyare
Lal Sharma (supra) wherein this Court had opined
that no one can be penalised on the ground of a
conduct which was not penal on the date it was
committed. We have also referred to the view of the
learned author, Justice G.P. Singh, in the book,
“Principles of Statutory Interpretation”, wherein he
has stated that the case of Pyare Lal Sharma
41Page 42
(supra) shows that the rule of construction against
retroactivity of penal laws is not restricted to Acts
providing for criminal offences but applies also to
laws which provide for other penal consequences of a
severe nature, namely, termination of service. In the
said case, unauthorized absence was not a condition
for passing an order of termination. The same was
incorporated later on. In that backdrop, the view was
expressed by this Court in Pyare Lal Sharma
(supra).
45. Before we proceed to scan the rule position, we
would like to refer to certain authorities rendered in
the context of clause (1) of Article 20 of the
Constitution. We are absolutely conscious that there
are certain authorities of this Court wherein it has
been laid down that Article 20(1) of the Constitution
is not applicable to civil consequences but only to
criminal offences. However, by way of analogy, we
will be referring to certain authorities for the purpose
of understanding what constitutes retrospective
penal consequence in its conceptual essentiality.
42Page 43
46. In K. Satwant Singh v. The State of Punjab
28
, the
question arose with regard to the penalty imposed
under Section 420 of the Indian Penal Code. At the
time of occurrence, Section 420 of the Indian Penal
Code did not provide for minimum sentence of fine.
By virtue of an amendment, imposition of minimum
fine became compulsory. The Constitution Bench,
dealing with the said facet, opined thus: -
“In the present case a sentence of
imprisonment was, in fact, imposed and
the total of fines imposed, whether
described as “ordinary” or “compulsory”,
was not less than the amount of money
procured by the appellant by means of his
offence. Under S. 420 of the Indian Penal
Code an unlimited amount of fine could be
imposed. Article 20(1) of the Constitution
is in two parts. The first part prohibits a
conviction of any person for any offence
except for violation of law in force at the
time of the commission of the act charged
as an offence. The latter part of the Article
prohibited the imposing of a penalty
greater than that which might have been
inflicted under the law in force at the time
of the commission of the offence. The
offence with which the appellant had been
charged was cheating punishable under S.
420 of the Indian Penal Code which was
certainly a law in force at the time of the
commission of the offence. The sentence
of imprisonment which was imposed upon
28
AIR 1960 SC 266
43Page 44
the appellant was certainly not greater
than that permitted by S. 420. The
sentence of fine also was not greater than
that which might have been inflicted under
the law which had been in force at the
time of the commission of the offence, as a
fine unlimited in extent could be imposed
under the section.”
47. In Smt. Maya Rani Punj v. Commissioner of
Income-tax, Delhi
29
, a three-Judge Bench was
dealing with the provisions of imposition of penalty
under the Income-tax Act, 1961. The question before
the Court was that under Section 28 of the Incometax Act, 1922, the upper limit of penalty was
provided and there was no prescription of any
particular rate as confined under Section 271(1)(a) of
the 1961 Act. The Court observed that the penalty
contemplated in the respective sections of the two
Acts is quasi-criminal in character. Reference was
made to Article 20(1) of the Constitution and it was
opined that under the said Article, no person is to be
subjected to a penalty greater than which might have
been inflicted under the law in force at the time of
commission of the offence. The contention that the
29
AIR 1986 SC 293
44Page 45
penalty should have been levied in accordance with
Section 28 of the 1922 Act and not under Section
271(1)(a) of the 1961 Act was not accepted by the
Court. The three-Judge Bench referred to the
pronouncement in K. Satwant Singh (supra) and,
eventually, after quoting a passage from there,
observed as follows: -
“It is conceded that under section 28 of the
1922 Act in the facts of the case a fine of
more than Rs.4,060 (being within the limit
of 1½ times of the tax amount) could have
been levied. While conceding to that
extent, Mr. Dholakia submits that the
decision of the Constitution Bench of this
Court in Satwant Singh’s case requires
reconsideration as it has not taken into
account the ratio of an important decision
of the United States Supreme Court in the
case of Elbert B. Lindsay v. State of
Washington, (1937) 81 Law Ed 1182. We
are bound by the decision of the
Constitution Bench. It has held the field
for a quarter of a century without
challenge and non-consideration of an
American decision which apparently was
not than cited before this Court does not at
all justify the submission at the Bar for a
reconsideration of the decision of this
Court in Satwant Singh’s case (AIR 1960
SC 266).”
45Page 46
48. In Tiwari Kanhaiyalal etc. v. The Commissioner
of Income-tax, Delhi
30
, while dealing with a penal
provision under the Income-tax Act, 1922 and
Income-tax Act, 1961 in the backdrop of clause (1) of
Article 20 of the Constitution, this Court opined that
the punishment provided under the 1961 Act being
greater than the one engrafted under the provisions
under the 1922 Act, the appellant therein was not
entitled to press into the service the second part of
clause (1) of Article 20 of the Constitution.
49. At this juncture, we may state that an ex post facto
law may be retrospective, if it is ameliorative. But in
the present context, delineation on the said score is
not warranted.
We confine our analysis pertaining to
the vested or accrued right and imposition of higher
punishment that was not permissible at the time of
initiation of departmental proceeding.
50. In the case at hand, under the unamended rule, there
were, apart from stoppage of increment with
cumulative effect and reduction in rank, grade, post
30
AIR 1975 SC 902
46Page 47
or service, three major punishments, namely,
compulsory retirement, removal and dismissal from
service by which there was severance of service.
The maximum punishment that could have been
imposed on an employee after conducting due
departmental enquiry was dismissal from service.
The rule making authority, by way of amendment,
has bifurcated the rule 9(vii) into two parts, namely,
9(vii)(a) and 9(vii)(b). As is evincible, the chargesheet only referred to the imposition of major penalty
or to be dealt with under the said rules relating to
major penalty. In this backdrop, it would be difficult
to say that the employee had the vested right to be
imposed a particular punishment as envisaged under
the unamended rules. Once the charges have been
proven, he could have been imposed the punishment
of compulsory retirement or removal from service or
dismissal from service. The rule making authority
thought it apposite to amend the rules to introduce a
different kind of punishment which is lesser than the
maximum punishment or, for that matter, lesser
47Page 48
punishment than that of compulsory retirement from
service. The order of compulsory retirement is a
lesser punishment than dismissal or removal as the
pension of a compulsorily retired employee, if eligible
to get pension under the Pension Rules, is not
affected.
Rule 9(vii) was only dealing with reduction
or reversion but issuance of any other direction was
not a part of it. It has come by way of amendment.
The same being a lesser punishment than the
maximum, in our considered opinion, is imposable
and the disciplinary authority has not committed any
error by imposing the said punishment, regard being
had to the nature of charges. It can be looked from
another angle.
The rule making authority has
splitted Rule 9(vii) into two parts – one is harsher
than the other, but, both are less severe than the
other punishments, namely, compulsory retirement,
removal from service or dismissal.
The reason
behind it, as we perceive, is not to let off one with
simple reduction but to give a direction about the
condition of pay on restoration and also not to
48 Page 49
impose a harsher punishment which may not be
proportionate.
In our view, the same really does not
affect any vested or accrued right. It also does not
violate any Constitutional protection.
51. In view of the aforesaid analysis, the order passed by
the High Court that a double punishment has been
imposed does not withstand scrutiny.
52. Consequently, the appeals are allowed. The orders
passed by the High Court are set aside and the order
of punishment imposed by the disciplinary authority
is restored. In the facts and circumstances of the
case, there shall be no order as to costs.
……………………………….J.
[K. S. Radhakrishnan]
……………………………….J.
[Dipak Misra]
New Delhi;
February 19, 2013
49
