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Reportable

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 8366 OF 2014 [Arising out of S.L.P. (Civil) No. 1638 of 2014]

Punjab State Electricity Board  Now Punjab State Power Corporation Ltd. ...  Appellant

Versus

Raj Kumar Goel              ...  Respondent

J U D G M E N T

Dipak Misra, J.

Leave granted.

2. In this appeal, by special leave, the assail is to the  

judgment  and decree dated 25.07.2013 passed by  the  

learned Single Judge of High Court of Punjab and Haryana  

at Chandigarh in R.S.A. No. 796 of 2012 whereby the High

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Court has affirmed the judgment and decree passed by  

the Courts below.

3. The broad essential facts which are to be stated for  

adjudication of this appeal are that the respondent-plaintiff  

joined the services of the appellant – Punjab State Electricity  

Board  (for  short  ‘the  Board’)  on  17.12.1984  as  Lower  

Division Clerk.  As the respondent-plaintiff remained absent  

from  duty  without  sanctioned  leave  from  9.7.1987  for  a  

considerable  time,  a  disciplinary  proceeding  was  initiated  

against  him.   After  following due procedure  as  envisaged  

under Punjab State Electricity Board Employees (Punishment  

&  Appeal)  Regulations,  1971,  the  competent  authority  

imposed  the  punishment  of  stoppage  of  five  annual  

increments without cumulative effect and further the period  

of  absence  mentioned  in  the  Show  Cause  Notice  was  

directed to be treated as non-duty period.

4. Being aggrieved by the aforesaid punishment,  the  

respondent filed Suit No. 155 of 2006 for declaration that  

the manner in which the said order of punishment was  

sought to be implemented by the authorities was illegal  

and absolutely unjustified.  It  was averred in the plaint  

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that  the  effect  of  stoppage  of  five  increments  without  

cumulative  effect  should  mean  that  the  Board  shall  

release  each  year’s  increment  before  stoppage  of  

increment in the ensuing year.  It is apt to state here that  

the respondent did not challenge the findings recorded by  

the disciplinary authority nor did he call in question the  

quantum of punishment inflicted on him vide order dated  

9.8.2002.

5. The Board entered contest in the suit and explained  

the  position  as  regards  the  nature  of  punishment  

contending,  inter  alia,  that  the  effect  of  an  award  of  

stoppage  of  five  increments  without  cumulative  effect  

would  mean  that  increments  for  period  of  five  years  

would be released all  together at the end of five years  

and  as  such,  no  illegality  and/or  irregularity  has  been  

committed by the Board in implementation of its orders.   

6. The  learned  Civil  Judge,  Senior  Division,  Patiala  

framed five issues which basically pertain to a singular  

compartment, namely, whether the plaintiff is entitled for  

declaration to the effect whether the defendants wrongly  

and  illegally  had  implemented  order  No.  329  dated  

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9.8.2002  as  a  consequence  of  which  the  plaintiff  has  

suffered  future  loss  and,  if  so,  to  what  relief  he  was  

entitled to.

7. The  learned  trial  Judge  on  the  basis  of  material  

brought on record decreed the suit by directing payment  

of arrears accruing due to respondent from the date of  

accrual (at the end of each year and before stoppage of  

next increment) till its realization with interest @ 18% per  

annum. The finding recorded by the learned trial Judge  

was to the following effect:

“As  per  Punjab  State  Electricity  Board  Employees  (Punishments  &  Appeal)  Regulations;  1971,  withholding  of  increments  of  pay  without  cumulative  effect  comes  within  the  definition  of  minor penalties.  Moreover, 5 increments  were stopped without cumulative effect,  but  in  this  way  implementation  order  shows  that  actually  15  increments  of  plaintiff  have been stopped and he has  suffered  major  financial  loss.   With  regard to the authorities relied upon by  counsel for plaintiff these are not directly  applicable to the present case and it is  only  guidance  to  this  Court  how  to  interpret  the  words  and  phrases  as  enshrined in rules.  Certainly this Court  has to take guidance of such authorities  to interpret the words when there is no  earlier  interpretation  by  Hon’ble  High  Court or Hon’ble Supreme Court of India,  nor brought to the notice of this Court.  

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In  considered  view  of  this  Court,  the  defendants  have  wrongly  implemented  the order dated 09.08.2002.  Plaintiff is  certainly  entitled  for  decree  of  declaration  to  this  effect  and  he  is  entitled for restoration of his increments  after every one year of its stoppage.”

8. Being aggrieved, the appellant-Board preferred Civil  

Appeal  No.  9  of  2009  before  the  learned  Additional  

District Judge, Patiala, who by judgment and decree dated  

23.8.2011 dismissed the appeal.   

9. Being dissatisfied with the dismissal  of  appeal  the  

Board preferred R.S.A. No. 796 of 2012 before the High  

Court.  The  learned  Single  Judge  appreciated  the  

reasoning given by the courts below and came to hold  

that  the  manner  in  which  the  order  was  sought  to  be  

implemented  would  result  in  stoppage  of  fifteen  

increments of the respondent, which is against the spirit  

of the order of punishment and, in fact, tantamounts to  

imposition  of  stoppage  of  increments  with  cumulative  

effect.   The  aforesaid  conclusion  ultimately  led  to  the  

dismissal of the appeal in limine, for the learned Single  

Judge  did  not  find  any  substantial  question  of  law  

involved in the second appeal.

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10. We have heard learned counsel for the parties and  

perused the record.

11. At the very outset, we may clearly state there is no  

discord  or  dispute  over  the  exposition  of  facts.   The  

controversy has arisen with regard to implementation of  

the order of punishment imposed by the authority on the  

delinquent employee.  The courts below have opined that  

though it is mentioned in the order of punishment that  

there is stoppage of five increments without cumulative  

effect  which is  a  minor  punishment  yet  the manner  of  

implementation converts it to a major punishment.  There  

can  be  no  cavil  over  the  proposition  that  when  a  

punishment of stoppage of an increment with cumulative  

effect  is  imposed,  it  is  a  major  punishment.   In  this  

regard,  we  may  refer  with  profit  to  the  decision  in  

Kulwant Singh Gill v. State of Punjab1 wherein it has  

been  held  that  withholding  of  increments  of  pay  

simpliciter without any hedge over it certainly would be a  

minor  punishment  but  withholding  of  increments  with  

cumulative  effect,  the  consequences  being  quite  

hazardous  to  the  employee,  it  would  come  in  the  1 1991 Supp(1) SCC 504

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compartment of major  punishment.   Proceeding further  

the two Judge Bench stated thus:

“But  when  penalty  was  imposed  withholding two increments i.e. for two  years with cumulative effect,  it  would  indisputably  mean  that  the  two  increments  earned  by  the  employee  was cut off as a measure of penalty for  ever  in  his  upward  march  of  earning  higher scale of pay. In other words the  clock is put back to a lower stage in the  time scale of pay and on expiry of two  years  the  clock  starts  working  from  that stage afresh. The insidious effect  of  the  impugned  order,  by  necessary  implication,  is  that  the  appellant  employee is reduced in his  time scale  by  two  places  and  it  is  in  perpetuity  during  the  rest  of  the  tenure  of  his  service with a direction that two years’  increments would not be counted in his  time  scale  of  pay  as  a  measure  of  penalty. The words are the skin to the  language  which  if  peeled  off  its  true  colour  or  its  resultant  effects  would  become apparent.”

12. After  so  observing,  the  Court  treated  the  said  

punishment to  be a major  penalty.   In  said case while  

interpreting clause (V) of Rule 5 of the same regulations,  

the Court did not accept the reasoning of the judgment  

rendered  by  the  Division  Bench  of  the  Punjab  and  

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Haryana  High  Court  in  Sarwan  Singh  v.  State  of  

Punjab and Ors.2  

13. At  this  juncture,  reference  to  Punjab State  &  

Others v. Ram Lubhaya3 would be apposite.  The High  

Court has correctly opined as follows:

“Before proceeding further,  it  will  have  to be understood as to what is the effect  of withholding of increments simpilciter,  i.e.  without cumulative effect,  and with  cumulative  effect.   For  example,  if  an  employee is getting Rs.100/- at the time  of imposition of penalty of withholding of  increments,  and  the  penalty  is  without  cumulative  effect  for  a  period  of  two  years and the annual increments were to  be  of  Rs.5,  then  in  that  case  for  two  years he will continue to get Rs.100 per  month but after the expiry of two years,  he will get at the time of next increment,  Rs.115,  including the increment for  the  past two years during which period they  remained withheld...”     

14.  In Rangnath Rai v. State of Bihar4, the Court  

while  interpreting  the  withholding  of  increments  with  

cumulative effect opined that the increments earned by  

an  incumbent  were  cut  off  as  a  measure  of  penalty  

forever in his upward march for earning higher scale of  

pay.  The clock is put back to a lower stage in the time  

2 ILR 1985 (2) P&H 193 3 1983 (2) SLR 410 4 1997 (2) PLJR 421

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scale of pay and on expiry of the punishment period the  

clock  would  start  working  from that  stage  afresh  and,  

therefore,  the  effect  of  stoppage  of  increment  with  

cumulative effect is that the employee is reduced in his  

time scale of pay for the period in question and it is in  

perpetuity during the rest of the tenure of his service.  As  

the increments that would have earned for those years  

would  not  be  counted  in  the  time  scale  of  pay  as  a  

measure of penalty.  

15. The  High  Court  of  Delhi  in  Uttam  Kumar  v.  

Delhi Jal Board5 has laid down the same principle and  

opined that there is a distinction between the withholding  

of increment without cumulative effect and withholding of  

increment with cumulative effect.   The former is in the  

realm  of  minor  penalty  and  the  later  is  in  the  

compartment of major penalty.  In the later one, there is  

permanent postponement of the increment,  whereas in  

the former one it is for a specified period to be released  

after expiration of the said period.    

5 2001 IVAD (Delhi) 166

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16. In our considered opinion the view expressed in  

the aforesaid decisions is in consonance with the sound  

legal principle and we approve them.  

17. Coming to the facts of the present case, it can be  

stated with certitude that the trial Court as well as the  

High  Court  has  fallen  into  error  by  opining  that  if  the  

punishment of stoppage of increment without cumulative  

effect is imposed for a period of five years, increment is  

warranted to be released by the end of the year.  It is an  

erroneous perception of the nature of punishment.  When  

there is a stoppage of five annual increments the same  

are not paid during the said period and thereafter in the  

sixth year  the increments are added up to the regular  

annual  increment.   The  employee  does  not  get  the  

arrears. But if the punishment is not one of stoppage of  

increment simpliciter the employee loses the benefit  in  

perpetuity and after expiry of five years he would start  

earning the increment without any addition and it would  

start afresh from the first stage because it is a permanent  

postponement.  

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18. In view of the aforesaid premises,  it  is  clear  as  

day that the perception of the courts below and the High  

Court  is  absolutely  fallacious  and  therefore,  the  

judgments and decrees passed by all the courts have to  

be annulled and we so do.

19. Consequently,  the  appeal  is  allowed,  all  the  

impugned judgments and decrees are set aside and the  

suit of the plaintiff stands dismissed.  There shall be no  

order as to costs.

.............................J. [Dipak Misra]

.............................J.                                 [Vikramajit Sen] New Delhi; August 29, 2014  

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