Supreme Court Clarifies Pay Entitlement on Reinstatement After Illegal Termination: Sukhdarshan Singh vs. State of Punjab (2022)

Introduction

Date of the Judgment: March 03, 2022
Citation: Civil Appeal Nos. 811-812 of 2022
Judges: K.M. Joseph, J., Hrishikesh Roy, J.

What happens to a government employee’s salary when they are reinstated after being illegally terminated? The Supreme Court of India addressed this critical question in the case of Sukhdarshan Singh vs. State of Punjab. The core issue revolved around whether an employee is automatically entitled to full back pay upon reinstatement, or if the authorities have the power to regulate the salary for the period they were out of service. This judgment clarifies the scope of the Punjab Civil Services Rules regarding pay and allowances during periods of suspension and termination. The bench comprised Justices K.M. Joseph and Hrishikesh Roy.

Case Background

Sukhdarshan Singh, the appellant, was appointed as a Clerk in the State Transport Department on December 27, 1979. His employment was disrupted when a criminal case (FIR) was registered against him on September 2, 1986, for alleged embezzlement. Consequently, he was suspended from his position on the same date. A chargesheet followed on October 6, 1988. While still under suspension, another incident led to a second FIR (No. 51/1995) under Sections 307 and 506 of the Indian Penal Code, 1860.

The trial court convicted Sukhdarshan Singh in the second FIR on September 17, 1996, under Section 324 read with Section 506 of the IPC. He appealed this conviction. Six years later, on July 24, 2002, the appellant received a show cause notice under the Punjab Civil Services (Punishment and Appeal) Rules, 1970, which led to his removal from service on March 13, 2003.

In a twist, Sukhdarshan Singh was acquitted in the first embezzlement case on December 22, 2006. However, his conviction in the second case was upheld by the High Court on April 9, 2008, though the sentence was reduced. The High Court sustained the conviction under Section 324 and Section 506 of the IPC. However, it reduced the sentence under Section 324 to the period already undergone and ordered a sentence of one month for the offence under Section 506.

Sukhdarshan Singh’s appeal against his removal was partially successful on January 29, 2009. The appellate authority set aside his termination but declared the suspension period as “dies non” (not counted as duty), meaning he would not receive any pay for that time. This denial of pay led to a civil suit filed by the appellant on December 9, 2010, seeking full pay and benefits for the period he was denied.

Timeline

Course of Proceedings

The civil suit filed by Sukhdarshan Singh was initially decreed in his favor, with the court declaring the denial of pay as illegal and arbitrary. The court ordered the release of his salary, excluding the period of his imprisonment. The State’s appeal against this decree was unsuccessful. However, the High Court allowed the second appeal, ruling that the appellant was not entitled to monetary benefits during the period from termination to reinstatement, relying on Rule 7.3 of the Punjab Civil Service Rules.

In a review petition, the High Court acknowledged that it had incorrectly cited Rule 7.3 but maintained its stance, citing Rule 15(f) of the 1970 Rules, stating the suspension order of 1988 remained intact and the appellate authority was entitled to regulate the suspension period. This led to the present appeals before the Supreme Court.

Legal Framework

The case primarily revolves around the interpretation of the Punjab Civil Services (Punishment and Appeal) Rules, 1970, and the Punjab Civil Service Rules. Key provisions include:

• Rule 13(i) of the 1970 Rules: This rule outlines a special procedure for imposing penalties on government employees convicted of criminal charges. It states:

  “Where any penalty is imposed on a Government employee on the ground of conduct which has led to his conviction on a criminal charge; or Provided that the Commission shall be consulted, where such consultation is necessary, before any orders are made in any case under this rule.”

• Rule 7.3 of the Punjab Civil Service Rules: This rule deals with the pay and allowances of a government employee who is reinstated after dismissal, removal, or compulsory retirement. It specifies:

  “7.3. (1) When a Government employee, who has been dismissed, removed or compulsorily retired, is reinstated as a result of appeal, revision or review… the authority competent to order re-instatement shall consider and make a specific order – (a) regarding the pay and allowances to be paid to the Government employee for the period of his absence from duty including the period of suspension… (b) whether or not the said period shall be treated as a period spent on duty.”

  Sub-rules (2) to (8) further elaborate on the conditions and procedures for determining pay and allowances upon reinstatement, including scenarios of full exoneration and cases where the termination was set aside on technical grounds.

• Rule 7.3-B of the Punjab Civil Service Rules: This rule deals with the pay and allowances of a government employee who has been suspended and is later reinstated. It specifies:

  “7.3-B. (1) When a Government employee who has been suspended is reinstated… the authority competent to order re-instatement shall consider and make a specific order – (a) regarding the pay and allowance to be paid to the Government employee for the period of suspension… (b) whether or not the said period shall be treated as a period spent on duty.”

  Sub-rules (2) to (4) further elaborate on the conditions and procedures for determining pay and allowances upon reinstatement, including scenarios where suspension was wholly unjustified.

• Rule 15(v)(f) of the 1970 Rules: This rule allows appeals against orders determining whether the period of suspension or termination should be treated as duty for any purpose. It states:

  “15. Order against which appeal lies – Subject to the provision of Rule 14 a Government employee may prefer an appeal against all or any of the following orders, namely- … (v) an order – … (f) determining whether or not the period from the date of his suspension or from the date of his dismissal, removal, compulsory retirement… to the date of his reinstatement… shall be treated as a period spent on a duty for any purpose.”

These rules provide the framework for determining the rights and obligations of government employees regarding pay, allowances, and treatment of service periods during suspension and after reinstatement.

Arguments

The arguments presented by both sides focused on the interpretation of the Punjab Civil Services Rules and the extent of the appellate authority’s powers.

Appellant’s Arguments:

• Error in High Court’s Judgment: The appellant argued that once the High Court found that it had erred in applying Rule 7.3 of the Punjab Civil Service Rules, the basis for allowing the second appeal was removed. Consequently, the High Court should have dismissed the State’s appeal.
• Rule 15(v)(f) Misinterpretation: The appellant contended that Rule 15(v)(f) of the 1970 Rules only provides for an order that can be appealed, not a basis for denying salary.
• Entitlement to Full Wages: The appellant emphasized the position accepted by the trial court and the first appellate court that once an employee’s removal is deemed illegal and reversed, the employee is entitled to full wages for the entire period of absence.
• Appellate Authority’s Overreach: The appellant argued that the appellate authority exceeded its powers by denying salary and declaring the suspension period as “dies non,” as these actions are not recognized penalties under Rule 5 of the 1970 Rules.
• Settled Law: The appellant relied on the established legal principle that when a termination order is set aside, the employee should receive all benefits.

Respondent’s Arguments:

• Fair Submission: The respondent fairly submitted that no reliance could be placed on Rule 15(v)(f) of the 1970 Rules as the High Court had done.
• Initial Correct Application of Rule 7.3: The respondent initially argued that Rule 7.3 of the Punjab Civil Service Rules was rightly applied, but this was later withdrawn.
• Support from Rule 7.3-B: The respondent sought to draw support from Rule 7.3-B, highlighting the appellant’s conviction under Sections 324 and 506 of the IPC.
• Confirmation of Guilt: The respondent emphasized that the appellant’s guilt was established by the trial court and confirmed by the High Court, which only reduced the sentence.
• Acceptance of Appellate Authority’s Order: The respondent contended that the appellate authority’s order was acceptable and that the appellant did not deserve more than what was granted by the appellate authority.
• Continuation of Suspension: The respondent argued that the appellant continued under suspension based on the earlier suspension order.

The core of the appellant’s argument was that the appellate authority could not impose a penalty not prescribed in the rules, while the respondent argued that the appellate authority’s actions were justified given the appellant’s conviction.

Issues Framed by the Supreme Court

The Supreme Court addressed the following key issues:

1. Whether the appellate authority’s order denying salary for the suspension period and declaring it as “dies non” was legally valid?
2. Whether the employee is automatically entitled to full salary for the period he was kept out of service, once the termination is set aside?
3. What is the correct interpretation of Rule 7.3 and other relevant rules regarding the pay and allowances of a reinstated employee?
4. Whether the High Court was right in interfering with the order of the first appellate court.

Treatment of the Issue by the Court

Authorities

The Supreme Court considered the following legal authorities:

Judgment

The Supreme Court held that the appellate authority’s order denying salary and declaring the suspension period as “dies non” was illegal because it amounted to a penalty not prescribed under Rule 5 of the 1970 Rules. The Court also clarified that while an employee is entitled to reinstatement, they are not automatically entitled to full back pay. The authority must specifically determine how the period of absence is to be treated, as per Rule 7.3 of the Punjab Civil Service Rules.

The Court noted that Rule 7.3 of the Punjab Civil Service Rules deals with cases of reinstatement after dismissal, removal, or compulsory retirement, while Rule 7.3-B deals with reinstatement after suspension. The Court emphasized that Rule 15(v)(f) of the 1970 Rules indicates that the authority must pass an order on whether the period from suspension or termination to reinstatement is to be treated as duty for any purpose.

What weighed in the mind of the Court?

The Supreme Court’s decision was primarily influenced by the following factors:

• Illegality of the Appellate Authority’s Order: The Court found that the appellate authority acted beyond its jurisdiction by imposing a penalty (denial of salary and “dies non”) not prescribed under the relevant rules.
• Proper Interpretation of Rules: The Court emphasized the need for a correct interpretation of Rule 7.3 and Rule 7.3-B of the Punjab Civil Service Rules and Rule 15(v)(f) of the 1970 Rules. The Court clarified that while reinstatement is a right, full back pay is not automatic and depends on the authority’s decision.
• Distinction between Suspension and Termination: The Court distinguished between cases of reinstatement after suspension (covered under Rule 7.3-B) and cases of reinstatement after termination (covered under Rule 7.3), highlighting the different procedures involved.
• Need for Specific Order: The Court stressed that the authority must pass a specific order regarding how the period of absence is to be treated, as per Rule 15(v)(f) of the 1970 Rules.

The Court’s reasoning was heavily based on the legal provisions and their correct interpretation, with a lesser emphasis on the specific factual aspects of the case. The Court’s primary concern was to ensure that the rules were applied correctly and that the appellate authority did not exceed its powers.

Logical Reasoning

Judgment

The Supreme Court allowed the appeals in part, setting aside the High Court’s judgment and modifying the first appellate court’s order. The Court held that while the appellate authority’s denial of salary and declaration of “dies non” was not valid, theauthority must still make a specific order regarding how the period of absence is to be treated. The Court emphasized that the employee is not automatically entitled to full back pay upon reinstatement, and the authority must consider the circumstances and rules involved.

The Supreme Court’s judgment underscores the importance of adhering to prescribed rules and procedures while dealing with government employees’ reinstatement. It clarifies that while reinstatement is a right, the issue of back pay is not automatic and requires a specific order from the competent authority.

Key Quotes from the Judgment:

• “The order passed by the appellate authority declaring the period of suspension as dies non is also unsustainable as it is not a penalty prescribed under Rule 5 of the 1970 Rules.”
• “The employee is not automatically entitled to full back wages for the period he was kept out of service. The authority competent to order reinstatement has to consider and make a specific order regarding the pay and allowances to be paid to the employee for the period of his absence from duty.”
• “Rule 7.3 of the Punjab Civil Service Rules deals with reinstatement after dismissal, removal or compulsory retirement and Rule 7.3-B deals with reinstatement after suspension.”
• “Rule 15(v)(f) of the 1970 Rules indicates that the authority must pass an order on whether the period from the date of his suspension or from the date of his dismissal, removal, compulsory retirement to the date of his reinstatement shall be treated as a period spent on duty for any purpose.”

Conclusion

The Supreme Court’s judgment in Sukhdarshan Singh vs. State of Punjab provides crucial clarity on the pay entitlements of government employees who are reinstated after illegal termination. The key takeaways are:

• No Automatic Full Back Pay: Reinstatement does not automatically guarantee full back pay. The competent authority must make a specific order regarding the pay and allowances for the period of absence.
• Adherence to Rules: The appellate authority cannot impose penalties not prescribed under the relevant rules. The denial of salary and declaring the suspension period as “dies non” were deemed illegal in this case.
• Distinction Between Suspension and Termination: Rules 7.3 and 7.3-B of the Punjab Civil Service Rules apply to different situations: Rule 7.3 for reinstatement after termination, and Rule 7.3-B for reinstatement after suspension.
• Specific Order Required: The authority must pass a specific order regarding how the period of absence is to be treated, as per Rule 15(v)(f) of the 1970 Rules.
• Importance of Legal Interpretation: The judgment highlights the importance of correctly interpreting legal provisions to ensure fair treatment of government employees.

This judgment serves as a significant reference point for government employees and authorities alike, emphasizing the need for a balanced approach that respects both the employee’s right to reinstatement and the employer’s right to regulate pay and allowances within the legal framework.