Union of India (UOI) vs G.A. Krishnaswamy

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

Judge Madras in Original Suit No. 640 of 1963.

The Plaintiff was appointed a Permanent Way Inspector in the Southern Railways on 14th August 1929 and was promoted as Class II Officer

on 19th August 1953. Pending enquiry into certain charges he was suspended from service with effect from 23rd June 1958 (Exhibit 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 as ordered.

The Plaintiff was re-instated 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 reinstated 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 reinstatement 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

reinstated), 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 reinstated in service on 22nd June 1960, he was entitled to be paid the salary and allowance for the period from 23rd June 1958 up

to 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 rule 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 v. Sheriff ILR (1961) mad. 747 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 six per cent per

annum from the date of plaint till the date of payment.

The Defendant, Union of India, has filed Appeal Suit No. 489 of 1964, praying that the suit should be dismissed in its entirety. The Plaintiff has

filed Appeal Suit No. 29 of 1965, claiming that he was entitled to be paid salary and allowances for the period from 25th 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 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 (exhibit 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 in the first order of

removal of the Plaintiff from service under exhibit B-l, 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 not 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 in exhibit 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 exhibit B-1 was set aside, but not the entirety.

Rule 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 exhibit 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 rule

2044 with respect to this period, the Plaintiff was clearly entitled to be paid the salary and allowances 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 re-instated 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 rule 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:

(1) 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.

(c) 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 allowance 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 re-instatement 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 re-instated in service and he continues to be & railway servant, rule 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, he 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 re-

instatement referred to in Clause (1) of the rule relate to only setting aside dismissal or removal from services after the enquiry against the railway

servant is finally over and be is re-instated 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 place on account of some defect in procedure, and the same charges are

again enquired into after remedying that defect an order under Rule 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 Rule 2044 cannot know whether the case is one

which is covered by Sub-rule (2) of Rule 2044, or Sub-rule (3).

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

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

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

Even if rule 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, that:

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 implied the duty to act judically. 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 re-instatement, 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 selling 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 wrong-fully prevented from attending to his duties as a public

servant. JH 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 his dismissal or removal and the date of his re-instatement. 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 June 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 Article 102

of the Indian Limitation Act, 1908 (corresponding to Article 7 of the First Schedule to the Limitation Act of 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 Jai Chand Sakhney v. Union of India (1969) 2 S.C.W.R. 957, 900. 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 Article 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 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 he 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 categoric pronouncement of the Supreme Court in the above decision. Further, as

observed by Lord (sic) of Bishopstone in East End Dwellings Company Ltd. v. Finsbury Borough Council (1952) A.C. 109, 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 Article 511 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 re-instatement 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 three years of the date of re-instatement 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 Triloki Nath Vyas v. State

of U.P. Civil Appeal No. 1139 of 1965. decided on August 22, 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 re-instated the Government servant on 14th August 1952. For the earlier period

commencing from 9th February 1948, till date of re-instatement, 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 re-instatement. The High Court accepted the plea of the Government servant that the right to

sue accrued on August 14, 1952 when the Government servant was re-instated. 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 re-instatement, 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 re-instatement, 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 April 21, 1953. The High Court has upheld the

Appellant�s contention that the facts of the present case do not bring it within Rule 54, of the Financial Hand Book Volume II Part III.

Therefore the order of April 21, 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 April 21, 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 Article 102 of the old Limitation Act, corresponding to Article 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 form a cause of action and

starting point of limitation. On the other hand, the decision of the Supreme Court in Jai Chand Sawhney 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 1962, amounts to an

acknowledgement of liability u/s 19 of the Limitation Act and that that will save the suit from the bar of limitation. Under exhibit A-7, 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 re-

instatement in the forenoon of that day and joined duty. Then he wrote a letter on 2Snd October 1960, under exhibit 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 exhibit A-9 and requested for immediate payment of the salary. The General

Manager, under exhibit 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 exhibit 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 exhibit B-2 dated 15th December 1962 and exhibit A-19, dated 26th December 1962.

Exhibit B-2 reads as follows:

The Railway Board have carefully considered the question as to how the periods of absence from duty to Shri G.A. Krishnaswamy 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 Shri Krishnaswamy was placed under suspension, simultaneously with his re-instatement, 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, wide Railway Board''s circular letter No. E (D & A) 56 RG,--627, dated 27th August 1959.

As regards the period from 15th March 1959 to list June 1960 intervening between the date on which Shri 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 period 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

Krishnaswamy. Exhibit A. 19 reads as follows:

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

22nd June 1960 to 25th October 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 1950 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 re-

instated 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 exhibit A-4 in that case in which a decision has been given as to the treatment, of the period between 23rd February

1954 to 1st April 1960, as an acknowledgment of liability saving the suit from the bar of limitation. That order exhibit A-4) was also similar to the

one which was made by the Railway Board in the present case on 15th December 1962 (exhibit B-2). Our learned brother Ramamurthi J. has

held:

It is settled law that an admission of the existence of an unadjusted and unsettled account is sufficient acknowledgement 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 accrues 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 acknowledgement 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 exhibit B-2 in this case, and the communication marked exhibit 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 acknowledgements 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.

Appeal Suit No. 489 of 1964, is dismissed; Appeal Suit 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, Appeal Suit No. 29 of 1965. There will be no order as to costs in Appeal Suit No. 489 of 1964.