Supreme Court Orders Retrospective Promotion with Benefits: K. Samba Moorthy vs. Sanjiv Chadha (2025) INSC 110

Date of the Judgment: 27th January 2025
Citation: 2025 INSC 110
Judges: B.R. Gavai, J., K.V. Viswanathan, J.
Can an employee be denied promotion and its benefits due to a flawed disciplinary process? The Supreme Court of India addressed this question in a recent case. The Court ruled in favor of an employee who was denied a promotion due to a faulty disciplinary inquiry. The Supreme Court bench, comprising Justices B.R. Gavai and K.V. Viswanathan, delivered the judgment.

Case Background

In 1983, K. Samba Moorthy, the appellant, joined Bank of Baroda as a Probationary Officer. By 1992, he had risen to the Manager cadre (MMG-II). While serving as Branch Manager in Surat, Gujarat, he faced a show cause notice on March 22, 1999, for alleged irregularities. He replied on April 12, 1999. Another notice with ten more irregularities was issued on February 8, 2000, to which he responded on February 19, 2000.

Subsequently, on December 22, 2000, the appellant appeared for a promotion exercise from Scale-II to Scale-III. A charge sheet in disciplinary proceedings was issued on December 26, 2000. The promotion results were declared on July 28, 2001. However, the appellant’s result was held back due to the pending disciplinary actions. On August 23, 2001, after an inquiry, a minor penalty was imposed for lapses in opening accounts and loan disbursements. The penalty was a reduction in pay by one stage for three years. Appeals against this penalty were rejected on January 25, 2002, and January 1, 2003.

On August 30, 2002, the appellant was informed that his promotion from MMG/S-II to MMG/S-III, which was kept in abeyance, was cancelled. The appellant challenged the disciplinary orders on March 16, 2008. However, he did not challenge the cancellation of his promotion. In 2012, while the writ petition was pending, he was promoted from Scale-II to Scale-III as a Senior Branch Manager. He was unsuccessful in subsequent promotion exercises in 2016, 2017, and 2018.

Timeline

Course of Proceedings

The learned Single Judge of the High Court allowed the writ petition on July 20, 2017, citing a real likelihood of bias in the inquiry process. The inquiry officer was junior to the appellant and had also appeared for the same promotion. The High Court set aside the disciplinary orders and granted all consequential benefits. The Bank of Baroda filed a Writ Appeal, which was later disposed of on March 30, 2022, leaving the question of law open due to the appellant’s superannuation. The appellant then filed a contempt petition, which was dismissed by the High Court on August 24, 2023.

Legal Framework

The judgment primarily revolves around the interpretation of “consequential benefits” awarded by the High Court. The court also considered the principles of natural justice and the effect of a flawed disciplinary process on an employee’s promotion prospects. The court also considered the effect of the cancellation of the promotion order.

Arguments

Appellant’s Arguments:

• The appellant argued that the quashing of the penalty proceedings entitled him to promotion with retrospective effect from July 2001, along with all monetary benefits.
• He contended that his subsequent promotion in 2012 and failure to secure further promotions were irrelevant to his entitlement to promotion to Scale-III from July 2001.
• The appellant relied on C.O. Arumugam & Ors. v. State of T.N. & Ors., 1991 Supp (2) SCC 199 and Union of India & Ors. v. K.V. Jankiraman & Ors., (1991) 4 SCC 109 to support his claim for retrospective promotion and benefits.

Respondents’ Arguments:

• The respondents argued that the appellant’s promotion was cancelled on August 30, 2002, before the writ petition was filed. They contended that the appellant did not challenge this cancellation.
• They relied on Bachhaj Nahar v. Nilima Mandal & Anr., (2008) 17 SCC 491, arguing that no relief could be granted in the absence of specific pleadings.
• The respondents submitted that “consequential benefits” only included the arrears in salary due to the penalty, not a retrospective promotion.
• They argued that the appellant was promoted in 2012 and had failed to secure further promotions. They contended that the appellant had forgone his right to challenge the cancellation by accepting the subsequent promotion.
• The respondents relied on Chaduranga Kanthraj URS and Anr. V. P. Ravi Kumar & Ors. (2024 INSC 957), to argue that a court in contempt cannot go beyond the main order.
• They also cited Govt. of West Bengal & Ors. vs. Dr. Amal Satpathi & Ors., (2024 INSC 906), to contend that promotion becomes effective on assumption of duties and the appellant is not entitled to retrospective benefits.

Issues Framed by the Supreme Court

The Supreme Court framed the following issue:

1. Whether the respondents should have granted the benefit of promotion from MMG/Scale-II to MMG/Scale-III with effect from 28.07.2001 with all monetary benefits to the appellant.

Treatment of the Issue by the Court

Authorities

The Supreme Court considered the following authorities:

Judgment

How each authority was viewed by the Court:

• The court relied on C.O. Arumugam & Ors. v. State of T.N. & Ors., 1991 Supp (2) SCC 199* and Union of India & Ors. v. K.V. Jankiraman & Ors., (1991) 4 SCC 109* to support the appellant’s claim for retrospective promotion.
• The court distinguished Bachhaj Nahar v. Nilima Mandal & Anr., (2008) 17 SCC 491*, stating that the facts of the present case were different and the relief was encompassed in the term “consequential benefits”.
• The court distinguished Chaduranga Kanthraj URS and Anr. V. P. Ravi Kumar & Ors. (2024 INSC 957)*, stating that granting promotion from 28.07.2001 did not amount to traveling beyond the main order.
• The court distinguished Govt. of West Bengal & Ors. vs. Dr. Amal Satpathi & Ors., (2024 INSC 906)*, stating that in this case, the promotion was kept in abeyance, unlike in the cited case.

What weighed in the mind of the Court?

The Supreme Court’s decision was primarily influenced by the fact that the appellant was not at fault for the flawed disciplinary inquiry. The Court emphasized that the appellant’s promotion was initially kept in abeyance due to the disciplinary proceedings, which were later set aside due to a biased inquiry. The Court also considered the long legal battle fought by the appellant and the need to provide him with complete justice.

Logical Reasoning

The Court rejected the argument that the appellant’s failure to challenge the cancellation of promotion was fatal to his case. The Court stated that the relief of retrospective promotion was covered under the term “consequential benefits” granted by the High Court. The Court also rejected the argument that the appellant’s subsequent promotion in 2012 and failure to secure further promotions were relevant to his entitlement to promotion from July 2001.

The Supreme Court stated that “ends of justice cannot be sacrificed on the altar of technicalities.” The Court also observed that the Bank should have extended the benefit on its own once the writ appeal was disposed of. The Court noted that the appellant had been running from pillar to post for two decades, and the payment of a small sum of money did not amount to compliance with the High Court’s order.

The Court held: “Insofar as promotion with effect from 28.07.2001 for the post of Manager Grade-III is concerned, we order that the appellant should be granted the same with all monetary benefits since the fundamental defect in the enquiry was due to no fault of the appellant.” The court further clarified that “The benefit of promotion to Manager Grade -III from 28.07.2001 is covered in the expression “consequential benefits” as ordered in the judgment of the learned Single Judge dated 20.07.2017 in Writ Petition No. 7616 of 2008.”

The Court clarified that it was not inclined to proceed against the respondents for action in contempt. However, they were directed to pass orders within four weeks to grant the appellant promotion from Manager Scale-II to Scale-III from 28.07.2001 and grant him all monetary benefits with interest at the rate of 6% per annum from the respective dates the monetary benefits fell due.

Key Takeaways

• An employee cannot be denied promotion and its benefits due to a flawed disciplinary process where the employee was not at fault.
• The term “consequential benefits” can include retrospective promotion and monetary benefits.
• Courts should not allow technicalities to stand in the way of delivering complete justice.
• Employers should take proactive steps to comply with court orders and not force employees to engage in prolonged litigation.

Directions

The Supreme Court directed the respondents to:

• Grant promotion to the appellant from Manager Scale-II to Scale-III from 28.07.2001.
• Grant all monetary benefits with interest at the rate of 6% per annum from the respective dates the monetary benefits fell due.

Development of Law

The ratio decidendi of this case is that an employee cannot be denied promotion and its benefits due to a flawed disciplinary process where the employee was not at fault, and the term “consequential benefits” can include retrospective promotion and monetary benefits. This clarifies the interpretation of “consequential benefits” in cases where disciplinary proceedings are set aside due to no fault of the employee.

Conclusion

The Supreme Court’s judgment in K. Samba Moorthy vs. Sanjiv Chadha is a significant ruling that emphasizes the importance of fair disciplinary processes and the need to provide complete justice to employees who have been wronged. The Court’s decision to grant retrospective promotion and benefits underscores that technicalities should not hinder the delivery of justice.