Union of India vs G.A. Krishnaswamy

V. Ramaswami, J.—These two appeals have been preferred against the judgment and decree of the learned VII Assistant City Civil Court

Judge, Madras in O.S. No. 640 of 1963. The plaintiff was appointed a Permanent Way Inspector in the Southern Railway on 14th August 1929

and was promoted as Class II Officer on 19th February 1953. Pending enquiry into certain charges he was suspended from service with effect

from 23rd June 1958 (Ex. A. 2). After the completion of the enquiry and by order dated 21st March 1959, the Railway Board removed him from

service with effect from 15th March 1959. Against that order of removal from service, the plaintiff preferred an appeal to the President of India. In

the appeal, the order of removal was set aside, on the ground that certain principles of natural justice had been violated in the holding of the enquiry

and a fresh enquiry was ordered. The plaintiff was reinstated in service on 22nd June 1960 and was again suspended from service on the same day

pending the fresh enquiry into the charges. The plaintiff was finally removed from service on 25th October 1960.

After he was re-instated in service on 22nd June 1960 the plaintiff applied to the General Manager, Southern Railway, to pay his salary for the

period from 23rd June 1958 (the date of his suspension from service) to 22nd June 1960 (the date of his re-instatement in service). After

protracted correspondence the Railway Board in their proceedings dated 15th December 1962 directed that for the period from 15th March

1959 to 21st June 1960, (the period between the date on which the plaintiff was earlier removed from service and the date on which he was re-

instated), the plaintiff should be granted pay and allowances at the rate equal to the subsistence allowance he would have been paid had he

continued to remain under suspension and that period should not be treated as one spent on duty for any purpose.

The order further stated that the period may, however, be converted into leave of any kind due and admissible to the plaintiff, if he so desired.

The plaintiff did not exercise his option but filed the present suit on 12th March 1963 against the Union of India represented by the General

Manager, Southern Railway, claiming full salary and allowances for the period from 23rd June 1958 to 22nd June 1960.

The plaintiff contended that since the first order removing him from service with effect from 15th March 1959, was set aside on appeal, and

since he was re-instated in service on 22nd June 1960, he was entitled to be paid the salary and allowance for the period from 23rd June 1958

upto 22nd June 1960. He further contended that he should be deemed to have been on duty and entitled to the payment of his full pay and

allowances without any deduction whatsoever and that the order of the Railway Board dated 15th December 1962 was neither just nor legal.

The defendant contended that in exercise of the powers under R. 2044 of the Indian Railway Establishment Code, the railway Board had

decided that the period of suspension between 23rd June 1958 and 14th March 1959 should not be treated as one spent on duty and that

therefore the plaintiff was not entitled to any salary for this period. As regards the period between 15th March 1959 and 21st June 1960 the

Railway Board had decided that the plaintiff should be granted pay and allowances equal to the subsistence allowance he would have been paid

had he been under suspension with an option to the plaintiff to convert this period into any kind of leave due and admissible to him if he so desired.

Since the plaintiff had not exercised his option he was not entitled to any sum for this period. In any case, the defendant contended that the claim

for salary for the period prior to 11th January, 1960 was barred by limitation.

The parties did not adduce any oral evidence, but only marked certain documents. The learned Assistant City Civil Judge held that the plaintiff

was entitled only for a subsistence allowance for the period from 23rd June 1958 to 21st June 1960. On the question of limitation, relying on the

decision in Union of India (UOI) Vs. R. Akbar Sheriff, he held that the suit was not barred by limitation. After a calculation memo was filed by the

plaintiff, the trial Judge decreed the suit directing the defendant to pay the plaintiff a sum of Rs. 6,657-31 with interest at 6 percent per annum from

the date of plaint till the date of payment.

The defendant, Union of India, has filed A.S. No. 489 of 1964 praying that the suit should be dismissed in its entirety. The plaintiff has filed Ass.

29 of 1965 claiming that he was entitled to be paid salary and allowance for the period from 23rd June 1958 to 22nd June 1960 and not mere

subsistence allowance.

Since the defendant and the plaintiff have both preferred independent appeals against the judgment of the trial court, they are referred to in this

judgment as ''defendant'' and ''plaintiff'' and not with reference to their rank as appellant or respondent.

The order of the Railway Board dated 15th December 1962 (Ex. B-2) did not deal with the period between 23rd June 1958 and 14th March

1959 when the plaintiff was under suspension. The learned counsel for the defendant, Union of India, contended that the the first order of removal

of the plaintiff from services under Ex. B 1, the railway Board had decided that this period of suspension of the plaintiff from service should not be

treated as one spent on duty and that therefore he was not entitled to any salary for that period. He further contended that when the order of

removal of the plaintiff from service was set aside on appeal, this direction of the Board not to treat this period as one spent on duty, was not

interfered with and that therefore that portion of the order of Ex. B-1 remained in force. The defendant had not produced a copy of the order of

the President on appeal preferred by the plaintiff, by which the order of removal from service from 15th March 1958 was set aside. Therefore,

there is no evidence to show that only a portion of the order in Ex. B-1 was set aside, but not the entirety.

R. 2044 of the Indian Railway Establishment Code was admittedly not applicable and could not have been invoked by the Railway Board,

when it made the order under Ex. B-1. The learned counsel for the defendant, Union of India, did not rely on any other rule under which the

railway Board could have decided not to treat this period as one spent on duty. As already stated, the order itself was superseded and set aside by

the order of the President, therefore, the decision of the Railway Board not to treat this period as one spent on duty could not be supported. Since

the order of removal was set aside and the plaintiff was reinstated in service and since the defendant had not made any order under R. 2044 with

respect to this period, the plaintiff was clearly entitled to be paid the salary and allowance for the period from 23rd June 1958 to 14th March

1959.

As already stated, the Railway Board decided to grant pay and allowance at a rate equal to the subsistence allowance for the period from 15th

March 1959, the date of the first order of removal to 22nd June 1960. When he was directed to be reinstated in pursuance of the order of the

President setting aside the removal order, with an option to the plaintiff to convert this period into leave of any kind due and admissible to him, this

order was stated to have been issued ""in terms of the relevant orders then in force"". The learned counsel for the defendant, Union of India, relied

on R. 2044 of the Indian Railway Establishment Code and contended that the Railway Board had a discretion and authority to decide as to how

this period was to be treated and that since the railway board had decided to treat this period in the manner aforesaid and since the plaintiff had not

exercised his option as provided for in that order, he was not entitled to any salary for this period.

Rule 2044, as it stood at the relevant period, reads as follows:

When a Government servant who has been dismissed, removed or suspended is reinstated, the authority competent to order the reinstatement

shall consider and make a specific order:�

(a) regarding the pay and allowances to be paid to the Government servant for the period of his absence from duty and;

(b) Whether or not the said period shall be treated as a period spent on duty.

(2) Where such competent authority holds that the Government servant has been fully exonerated or, in the case of suspension, that it was wholly

unjustified, the Government servant shall be given the full pay to which he would have been entitled had he not been dismissed, removed or

suspended, as the case may be, together with any allowances of which he was in receipt prior to his dismissal, removal or suspension.

(3) In other cases, the Government servant shall be given such proportion of such pay and allowances as such competent authority may prescribe.

Provided that the payment of allowances under clauses (2) and (3) shall be subject to all other conditions under which such allowances are

admissible.

(4) In a case falling under clause (2) the period of absence from duty shall be treated as the period spent on duty for all purposes.

(5) In a case falling under clause (3) the period of absence from duty shall not be treated as period spent on duty unless such competent authority

specifically directs that it shall be so treated for any specified purposes.

This rule is clearly not applicable to a case where the reinstatement was followed by a fresh enquiry which resulted in the dismissal or removal

of a railway servant from service. Unless the order of dismissal or removal from service in the fresh enquiry held was set aside and the railway

servant was finally reinstated in service and he continues to be a railway servant, R. 2044 could not be invoked. A reading of clauses (2) to (5) of

this rule makes this position clear. The competent authority could not come to the conclusion that the railway servant has been ''fully exonerated''

within the meaning of clause (2) unless the fresh enquiry was concluded. As held by the Supreme Court in M. Gopala Krishna Naidu Vs. State of

Madhya Pradesh, the order as to whether a given case falls under clause (2) or clause (5) of this rule must depend on the examination by the

authority of all the facts and circumstances of the case and his forming the opinion therefrom of two factual findings, whether the employee was fully

exonerated and in case of suspension whether it was wholly unjustified. Therefore, the setting aside of dismissal or removal from services and

reinstatement referred to in clause (1) of the rule relate to only setting aside, dismissal or removal from service after the enquiry against the railway

servant is finally over and he is reinstated in service and he continues to be a railway servant thereafter.

A similar point arose for consideration in the case in Anant Ram and Others Vs. District Magistrate, Jodhpur and Another, and it was held in

that Bench decision by Wanchoo C.J. (as he then was) in the following terms:

The contention on his behalf is that in cases where reinstatement takes on account of some defect in procedure, and the same charges are again

enquired into after remedying that defect, an order under R. 2044 has to be passed when the second proceeding is also over. The reason for this is

that till this second proceeding is over, the authority entitled to pass an order under R. 2044 cannot know whether the case is one which is covered

by sub-R. (2) of R. 2044, or sub-R. (3).

We are of opinion that this is correct. Where a person is reinstated on account of procedural defect and is again proceeded against

departmentally on the same charges after removing the defect, the order under R. 2044 has to be passed after the second proceeding is over.

We have, therefore, no doubt that R. 2044 was not applicable to the present case.

Even if R. 2044 was applicable to the instant case, the order of the railway Board dated 15th December 1962 is invalid and inoperative, as

offending the principles of natural justice. It was held in M. Gopala Krishna Naidu Vs. State of Madhya Pradesh, .

Consideration under this rule depending as it does on facts and circumstances in their entirety, passing an order on the basis of factual finding as

arrived at from such facts and circumstances and such an order resulting in pecuniary loss to the Government servant must be held to be an

objective rather than a subjective function. The very nature of the function implies the duty to act judicially. In such a case if an opportunity to show

cause against the action proposed is not afforded, as admittedly it was not done in the present case the order is liable to be struck down as invalid

on the ground that it is one in breach of the principles of natural justice.

In the present case also, it is admitted that no notice was given to the plaintiff before the order dated 15th December 1962 was passed by the

Railway Board. The order was, therefore, invalid and inoperative.

But, it is contended by the learned counsel for the defendant, Union of India, that since the plaintiff had not prayed for a declaration that the

order of the Railway Board dated 15th December 1962 was invalid and inoperative and for setting aside the same, it was not open to him to

contend that that order was invalid and inoperative as violating the principles of natural justice. Factually, the learned counsel for the defendant was

not quite correct in this contention. In the plaint, the plaintiff had pleaded that by virtue of the President''s order setting aside the order of removal

of the plaintiff from service, and the order of reinstatement, the plaintiff must be deemed to have been on duty and entitled to payment of his full pay

and allowances without any deduction whatsoever and the defendant''s proposal the order of the Railway Board dated 15th December 1962) was

neither just nor legal. On the other hand, the defendant, in their written statement, had not specifically raised a plea that the suit was not

maintainable without a prayer for a declaration and for setting aside the order of the Railway Board. It was not necessary for the plaintiff to ask for

a declaration or cancellation of the order of the Railway Board, dated 15th December 1962 as being unjust and illegal, since he had pleaded that

the order (proposal) was ""neither just nor legal"". Therefore, there is no substance in this contention of the defendant.

The effect of setting aside the order of removal or dismissal from service from 15th March 1959, by the President was that the plaintiff was

deemed never to have been lawfully removed from service and that he had been wrongfully prevented from attending to his duties as a public

servant. It was, therefore, not open to the Railway Board to deprive the plaintiff of the remuneration which he would have earned had he been

permitted to work (vide the decision in Devendra Pratap Narain Rai Sharma Vs. State of Uttar Pradesh, . It is also well settled that if there is no

statute or rule under which could be withheld, the salary of a railway servant, who has been removed from service and reinstated in service, he is

entitled to be paid the salary for the period between the date of the dismissal or removal and the date of his reinstatement. It may be mentioned that

as held by the Supreme Court in Om Prakash Gupta Vs. The State of Uttar Pradesh, , the order of the suspension dated 23rd June 1958 merged

with the order of removal from service on 15th March 1959, and when that order of removal from service was set aside, the suspension was not

revived. The plaintiff was, therefore, entitled to be paid the salary and allowances for the period from 15th March 1959 to 22nd June 1960 also.

The next point for consideration is whether the claim of the plaintiff for the period prior to 11th January 1960 was barred by limitation. The

learned counsel for the defendant contends that the suit for arrears of salary and allowances due to the railway servant is governed by Art. 102 of

the Indian Limitation Act, 1908, (corresponding to Art. 7 of the first Schedule to the Limitation Act, 1963) and that therefore the plaintiff''s suit for

recovery of the salary etc., for the period prior to three years and two months (the notice period) was barred by limitation. He relied on the

decision of the Supreme Court in Jaichand Sawney Union of India (1969) 2 S.C.W.R. 957 at 958. In that case it was held:�

When the order of dismissal or removal is set aside by the court on the ground of failure to afford the constitutional protection, the order is

declared invalid ab initio i.e., as if it in law never existed, and the public servant concerned was unlawfully prevented from rendering service. If that

be the correct view, salary due to the public servant concerned must be deemed to have accrued month after month because he had been

wrongfully prevented from rendering service. The period of limitation under Art. 102 commences to run when the wages ''accrue due'' and wages

accrue due when in law the servant becomes entitled to wages. Rule 2042 of the Railway Establishment Code merely provides that the pay and

allowances of a railway servant who is removed or dismissed from service cease from the date of the order of dismissal or removal or dismissal.

That rule does not operate to make the wages accrue due on the date of the institution of the suit. If the order of dismissal is set aside the public

servant is deemed to be in service throughout the period during which the order of dismissal remained operative and his right to sue for salary

arises at the end of every month in which be was unlawfully prevented from earning the salary, which he could, but for the illegal order of dismissal,

have earned.

The learned counsel for the plaintiff contended that a reading of column (3) of the first Schedule to the Limitation Act of 1963 would show that

the period is prescribed with reference to the actual events and that no ''fictional'' or ''deemed event'' could form the cause of action. We are afraid

that this argument was not open to the plaintiff in view of the category pronouncement of the Supreme Court in the above decision. Further, as

observed by Lord Asquith of Bishopstone in East and Dwelling Co. Ltd. v. Finsbury Borough Council 1952 A.C. 109 at 132.

If you are bidden to treat an imaginary state of affairs as real, you must surely, unless prohibited from doing so, also imagine as real the

consequences and incidents which, if the putative state of affairs had in fact existed, must inevitably have flowed from or accompanied it.

The effect of declaring the order of removal as contravening the provisions of Art. 311 of the Constitution of India, is that the order, in law,

never existed, as held by the Supreme Court. If that be so, then, it cannot be said that the cause of action is not with reference to the actual event.

It is then contended by the learned counsel for the plaintiff that the cause of action in this suit was the reinstatement of the plaintiff on 22nd

June, 1960 and the refusal by the defendant to pay the salary and allowances as claimed by him and their proposal to pay only as per the order of

the Railway Board dated 15th December, 1962, and that therefore the suit filed within 3 years of the date of reinstatement was in time. According

to him, the order of the Railway Board dated 15th December, 1962 was a statutory order rejecting the salary and allowances, and therefore, that

would also furnish a cause of action. In this connection, he relied on the decision of the Supreme Court in Trilokanath Vyas v. State of U.P. C.A.

No. 1139 of 1965 decided on 22nd August, 1968. In that case, the facts were these: A Government servant was placed under suspension on 9th

February, 1948 pending a prosecution against him in a criminal court on charges of corruption. The criminal court convicted him on 27th October,

1949. On the basis of that conviction, the Government of Uttar Pradesh dismissed the Government servant by order dated 9th November, 1949

with effect from 27th October, 1949. On appeal by the Government servant against the conviction, the High Court set aside the conviction and

acquitted him. Thereafter the Government reinstated the Government servant on 14th August, 1952. For the earlier period commencing from 9th

February, 1948 till date of reinstatement, the Government, by order dated 21st April, 1953, granted him one fourth of his salary as allowances.

The Government servant filed the suit (from which the appeal to the Supreme Court arose) on 4th July, 1956, claiming salary for the period from

the date of suspension till date of reinstatement. The High Court accepted this plea of the Government servant that the right to sue accrued on 14th

August, 1952 when the Government servant was reinstated. But the Supreme Court did not decide this issue. Their Lordships of the Supreme

Court proceeded to consider assuming that the cause of action arose on the date of reinstatement, but held that the suit was barred by limitation.

As for the contention that the order of the Government dated 21st April, 1953 refusing to pay the salary and granting one fourth of his salary and

allowances for the period of suspension till the date of reinstatement, furnished the cause of action for that suit, the Supreme Court held:

There is no basis for the contention of the appellant that the cause of action for the suit arose on 21st April, 1953. The High Court has upheld the

appellant''s contention that the facts of the present case do not bring it within R. 54 of the Financial Hand Book, Vol. II, part III. Therefore, the

order of 21st April, 1953 can only be considered as an executive order having no statutory basis.

The learned counsel for the plaintiff contends that since the Supreme Court found that the order of the Government dated 21st April, 1953 had

no statutory basis, it was held that that could not form the cause of action and that in the present case the order of the Railway Board dated 15th

December, 1962 is a statutory order rejecting the claim of the plaintiff to salary and allowances and, therefore, that will be the starting point for

calculating the period of limitation under Art. 102 of the old Limitation Act, corresponding to Art. 7 of the First Schedule to the new Limitation

Act. The Supreme Court had not stated that if the order was considered to be a statutory order that could forma cause of action and starting point

for limitation. On the other hand, the decision of the Supreme Court in Jaichand Sawney case (1969) 2 S.C.W.R. 957, is directly in point and that

will therefore govern the present case.

Alternatively, the learned counsel for the plaintiff contended that the order of the Railway Board dated 15th December, 1963 amounts to an

''acknowledgment of liability'' under S. 19 of the Limitation Act and that that will save the suit from the bar of limitation. Under the Ex. A. dated

22nd June 1960, the plaintiff intimated the Chief Engineer, Southern Railway, that as per the order of the Railway Board he reported to duty for

reinstatement in the forenoon of that day and joined duty. Then he wrote a letter on 22nd October, 1960 under Ex. A. 8 to the General Manager,

Southern Railway, claiming salary for the period from 22nd June, 1958 to 22nd June 1960. He reminded the General Manager of his request for

payment of salary by his letter dated 22nd December, 1960 under Ex. A. 9 and requested for immediate payment of the salary. The General

Manager, under Ex. A. 10, dated 31st December, 1960, reported that the matter was receiving attention. Further, correspondence continued in

which the General Manager was going on replying that the matter was under consideration. In particular, under Ex. A. 15, dated 2nd March,

1962, the General Manager informed the plaintiff that the question of treatment of the suspension period from 15th March, 1959 to 25th October,

1960 was under correspondence with the railway Board and that on receipt of their decision further action would be taken. Ultimately, the plaintiff

received Ex. B 2, dated 15th December, 1962 and Ex. A. 19 dated 26th December, 1962. Ex. B 2 reads as follows:�

The Railway Board have carefully considered the question as to how the periods of absence from duty to Sri G.A. Krishnaswami during 15th

March, 1959 to 21st June, 1960 and 22nd June, 1960 to 25th October, 1960 should be treated. As regards the period from 22nd June, 1960 to

25th October, 1960 i.e., the date on which Sri Krishnaswami was placed under suspension, simultaneously with his reinstatement, to the date of

his final removal from service, the position is that this period of suspension followed by his removal from service need not be regularised, i.e., it will

be treated as suspension, vide Railway Board''s circular letter, No. E. (D and A) 56 R.G. 6-27 dated 27th August, 1959. As regards the period

from 15th March, 1959 to 21st June, 1960 intervening between the date on which Sri Krishnaswami was earlier removed from service and the

date on which he was reinstated, the Board have decided, in terms of the relevant orders then in force, that he should be granted pay and

allowances at a rate equal to the subsistence allowance he would have been paid had he continued to remain under suspension and that the period

should not be treated as one spent on duty, for any purpose. The provide may, however, be converted into leave of any kind due and admissible

to him, if he so desires. Action may be taken accordingly and to settle his dues and expedite payment, advising Sri Krishnaswami.

Ex. A. 19 reads as follows:

The Board have decided as under in regard to the treatment of the following periods:

22nd June, 1950 to 25th June, 1960: To be treated as suspension.

15th March, 1959 to 21st June 1960: To be granted pay and allowance at a rate equal to the subsistence allowance you would have been paid

had you continued to remain under suspension.

The Board have also stated that the period from 15th March, 1959 to 21st June 1960 may be converted into leave of any kind due and

admissible to you, if you desire.

You are eligible for the following leave on 14th March, 1959, subject to Accounts certification:

Privilege leave ... 4 months

Leave on half pay ... 2 months

The remaining period will be treated as leave without pay.

Please advise me how you wish the period 15th March, 1959 to 21st June 1960 to be treated:

The point for consideration is whether these orders will amount to acknowledgment of liability.

A similar question arose for consideration in S. Sethuraman Vs. Union of India (UOI), . In that case, the plaintiff was suspended on 25th

February, 1954 pending enquiry into certain charges of misconduct. On 3rd October 1954, he was dismissed from service. After exhausting the

departmental appeals, he filed a writ petition in the High Court. The High Court allowed the writ petition and set aside the order of dismissal, by an

order dated 25th March, 1959. After the appeal and the petition for leave to appeal to the Supreme Court were dismissed, the plaintiff was

reinstated in service on 1st April, 1960. The plaintiff filed a suit on 8th November, 1962, claiming payment of arrears of salary for the period 25th

February, 1954 to 1st April, 1960. The counsel for the plaintiff in that case relied on an order of the Divisional Personnel Officer dated 19th July,

1962, which was filed as Ex. A. 4 in that case, in which a decision has been given as to the treatment of the period between 23rd February, 1954

and 1st April, 1960, as an ''acknowledgment of liability'' saving the suit from the bar of limitation. That order, Ex. A. 4, was also similar to the one

which was made by the Railway Board in the present case on 15th December, 1962 (Ex. B. 2). Our learned brother, Ramamurti, J. has held:

It is settled law that an admission of the existence of an unadjusted and unsettled account is sufficient acknowledgment to save the entire claim from

the bar of limitation. In the case of Government servants, when the interim payments are made towards subsistence allowances, the payments are

entered in the accounts of the employee concerned on the understanding that they are all payments made towards account and the final liability is to

be ascertained in the light of the ultimate decision about the legality of the order of dismissal. If once it is held that the salary accrue due every

month there is undoubtedly an account growing month after month and towards that account payments are made during that period if there is

admission in writing (by the party liable to pay) of the existence of a subsisting account that would save the entire claim from the bar of limitation.

The learned Judge also held that the fact that direction for payment is given only for the claim for a particular period would not affect the

effectiveness of the acknowledgment of the entire claim and that if a debtor admits that he is liable and at the same time gives a wrong reason for

not paying the debt, either in part or whole, the acknowledgment would nevertheless keep the debt alive. It is not necessary for us to deal

elaborately with the case law cited in that judgment. We respectfully agree with Ramamurti, J., on the above statement of law.

The order of the Railway Board, dated 15th December, 1962, marked Ex. B. 2 in this case, and the communication marked Ex. A. 19 sent by

the General Manager, Southern Railway, on 26th December, 1962 which required the plaintiff to exercise his option as to how the period of his

leave was to be treated, clearly amounted to ''acknowledgments of liability'' which would, save the suit from the bar of limitation.

The plaintiff is, therefore, entitled to a decree for his entire salary for the period from 23rd June, 1958 to 21st June, 1960. A.S. No. 489 of

1964 is dismissed; A.S. No. 29 of 1965 is allowed, and the suit is decreed as prayed for. The plaintiff will be entitled to his costs in the suit and his

appeal A.S. No. 29 of 1965. There will be no order as to costs in A.S. 489 of 1964.