Union Of India vs R.K. Chopra on 1 February, 2010

      Reportable

               IN THE SUPREME COURT OF INDIA

                 CIVIL APPELLATE JURISDICTION

                CIVIL APPEAL NO.1096 OF 2010

         [ARISING OUT OF SLP (CIVIL) NO.9071 OF 2009]   UNION OF INDIA ...
APPELLANT  VERSUS

R.K. CHOPRA ... RESPONDENT   JUDGMENT

K.S. Radhakrishnan, J.

     Leave granted.

2. We are, in this case, concerned with a claim of a Government  servant for
revision of subsistence allowance based on the pay  revision effected by the
Central Civil Services (Revision Pay ) Rules,  1997, which came into force on
the 1st day of January, 1996, while  he was under suspension from service.



3. The Respondent herein was working as a Desk Officer in the  Department of
Industrial Policy and Promotion under the Ministry of  Commerce and Industries.
While so, a case was registered against 2

 him by Central Bureau of Investigation under the Prevention of  Corruption Act
and he was placed under suspension by the  Department w.e.f. 06.06.1989 under
rule 10 (2) of the CCS (CCA)  Rules 1965. Subsistence allowance due to him under
Fundamental  Rules 53 (1) (ii) (a) was paid to him which was later enhanced to
50%  vide order No. 5/7/99, dated 30.05.1991. At the time of suspension  he was
in the scale of pay of Rs. 2000-3500 and was drawing a  basic pay of Rs.
2,825/-. While undergoing suspension he made a  representation on 22.7.2002 for
revision of subsistence allowance  based on the 5th Pay Commission Report.
Request was rejected by  the Government of India, Ministry of Commerce and
Industries vide  Memorandum dated 29.10.2002 stating that a person under
suspension is not entitled to draw either the increment during the  period of
suspension or get his pay fixed in the revised scale. Later  he filed another
representation on 05.07.2005 reiterating the same  request which was replied by
Memorandum dated 18.08.2005 stating  that his earlier representation was already
rejected. Respondent was  later dismissed from service on 04.08.2005 since he
was convicted  by the Criminal Court vide its judgment dated 30.03.2002. 3



4. The Respondent after dismissal from service approached the  Central
Administrative Tribunal (Principal Bench), New Delhi and filed  O.A. No.29/2006
challenging the above-mentioned orders dated  29.10.2002 and 18.08.2005 and
sought a declaration that he was  entitled to get subsistence allowance on the
revised pay-scale with  effect from 1.1.1996. Reliance was placed on a Full
Bench order of  the Tribunal in J.S. Kharat Vs. Union of India [2002-2003 (CAT)
Full  Bench Judgments 169]. The Department took up the stand that in  view of
Note 3 to Rule 7 of Central Civil Services (Revised Pay)  Rules, 1997, (for
short `Revised Pay Rules') the Respondent would  not be entitled to get
subsistence allowance on the revised pay-scale  with effect from 1.1.1996.
Further, it was also contended that the Full  Bench of the Tribunal in the case
of J.S. Kharat was not concerned  with the applicability of the above-mentioned
Rules. Rejecting the  contention the Tribunal took the view that it would be
unjust to deny  the subsistence allowance on the basis of revised pay to the
persons  who stood suspended prior to 01.01.1996, especially when persons  who
were suspended after that date would be entitled to get  subsistence allowance
on the revised pay scale. This, according to  the Tribunal, would lead to an
anomalous situation. The Tribunal, 4

 however, held that since the respondent did not challenge the earlier
communication dated 29.10.2002, rejecting his claim, he would not  be entitled
to any arrears on account of revised subsistence  allowance till the said date.
Further, it was ordered that he would be  entitled to arrears of revision of
subsistence allowance from  01.01.2002 till 04.08.2005 when he was dismissed
from service.

5. Aggrieved by the order passed by the Tribunal, the Union of  India took up
the matter before the Delhi High Court vide Writ Petition  (Civil) No.1899/2007.
The High Court following its earlier judgment in  Commissioner of Police v.
Randhir Singh [Writ Petition (Civil)  No.713/2008 decided on 29.01.2008]
dismissed the appeal holding  that it did not find any infirmity in the order of
the Full Bench of the  Tribunal in J.S. Kharat's case (supra). Aggrieved by the
said order  dated 04.08.2008, this appeal has been preferred by the Union of
India.



6. Shri Mohan Parasaran, Additional Solicitor General of India  submitted that
the Tribunal as well as the Delhi High Court have not  properly appreciated the
scope of Note 3 to Rule 7 of the Revised  Pay Rules. Learned counsel submitted
that the Full Bench of the 5

 Tribunal in J.S. Kharat's case (supra) was primarily concerned with  the
interpretation of Rule 6(1) the Railway Servants (Revised Pay)  Rules 1986 and
the validity of Note 3 to Rule 7 of the Revised Pay  Rules, was not an issue
before the Tribunal. Learned counsel also  submitted that the High Court and
Tribunal have failed to appreciate  that the payment of subsistence allowance is
based on leave salary  (not pay) admissible during half pay leave and leave
salary linked to  pay drawn immediately before proceeding on leave. Learned
counsel  submitted that the respondent is, therefore, not entitled to the
benefit  of subsistence allowance linked to pay or revised pay which he would
have drawn but for being placed under suspension. Learned counsel  also
submitted that the Government of India's decisions 3 (e) below  FR 53 shows that
the subsistence allowance cannot be revised with  retrospective effect and in
the instant case the respondent was  dismissed from service and the question of
revision of subsistence  allowance did not arise. Learned counsel also pointed
out that  there was no challenge to the validity of Note -3 to Rule 7 of
Revised Pay Rules and the Tribunal committed an error in failing to  apply to
the said note to rule 7 to the instant case. The  respondent appeared in person
and submitted that there is no 6

 illegality in the order passed by the Tribunal which was confirmed by  the High
Court.



7. We notice both the High Court as well as the Tribunal has  placed heavy
reliance on the order of Full Bench of the tribunal in  J.S. Kharat's case
(supra) and took the view that the delinquent  officer would be entitled to
enhanced subsistence allowance on the  basis of the upward revision of pay based
on the 5th Central Pay  Commission Report, implemented by the Revised Pay Rules.
Reference was also made to the decisions of this Court in State of  Maharashtra
vs. Chandrabhan Tale [(1983) 3 SCC 387]; Khem  Chand vs. Union of India [ 1963
Supp. 1 SCR 229]; Jagdamba  Prasad Shukla Vs. State of U.P and others [(2000) 7
SCC 90]; P.L.  Shah vs. Union of India and Anr. [(1989) 1 SCC 546]; R.P. Kapur
Vs.  Union of India & Ors. [(1999) 8 SCC 110]; and Umesh Chandra Misra  vs.
Union of India [1993 Supp. (2) SCC 210]

8. We notice that in none of the aforesaid judgments the validity of  Note 3 to
rule 7 of the Revised Pay Rules came up for consideration.  In Chandrabhan's
case (supra), this Court was examining the validity  of the second proviso to
Rule 151 (1) (ii) (b) of the Bombay Civil  Service Rules, 1959 which prescribed
payment of subsistence 7

 allowance at the rate of Rs. 1 per month. Court struck down the  proviso as
void and unreasonable and ordered that the Civil Servant  is entitled to the
normal subsistence allowance. The above ruling is  of no assistance to the
respondent.

9. In Khem Chand's case this Court was examining the validity of  Rule 12(4) of
the CCS (CC&A) Rules 1957 which has nothing do with  the question involved
in the present case. This Court was generally  explaining the scope and effect
of a suspension order stating that the  real effect of a suspension order is
that though a Government  servant continues to be a member of the Service he is
not permitted  to work during the period of suspension and he is entitled to
subsistence allowance which is normally less than the salary.

10. In Jagdamba Prasad Shukla's case (supra) subsistence  allowance was denied
to the Government Servant since he had  omitted to furnish the certificate as
required under the U.P.  Fundamental Rules 53(2) indicating that he was not
employed  elsewhere during the period of suspension. Non payment of  subsistence
allowance, this Court held, has vitiated the departmental  enquiry and the
consequent removal order.

                                                                    8



11. In P.L. Shah's case (supra) this Court was dealing with a case  of reduction
of subsistence allowance from 50% to 25% of salary.  Order was challenged before
the Tribunal which dismissed the  petition on the ground of delay. This Court
set aside the orders of  the Tribunal and the matter was remanded for fresh
consideration,  holding that the subsistence allowance should be sufficient for
the  bare sustenance in this world in which prices of the necessaries of  life
are increasing every day on account of conditions of inflation  obtaining in the
country. It was held that since Government Servant  cannot engage himself in any
other activity during the period of  suspension and the amount of subsistence
allowance payable to the  Government Servant be reviewed from time to time when
proceedings drag on long time even though there may be no express  rule
insisting of such review.

12. In R.P. Kapur's case (supra), this Court was dealing with the  scope of
Railway Services (Pension) Rules, 1993 and the effect of  Note 1 and proviso to
Rule 50 and the Court took the view that the  above-mentioned proviso is not
applicable to a case of compulsory  retirement. The scope of Note 3 to Rule 7
was not in issue in R.P.  Kapur's case.

                                                                    9



13. In Umesh Chandra Misra's case (supra), this Court was  dealing with the case
of a railway employee who was denied  subsistence allowance at the rate of 75%
of the salary for the period  from May 20, 1976 to February 17, 1977 and this
Court directed the  respondents to pay him the subsistence allowance from
November  20, 1975 to May 19, 1976 at the rate of 50 per cent of the salary and
from May 20, 1976 to February 17, 1977 at the rate of 75 per cent of  the salary
with interest on both the amounts with a further direction  that the subsistence
allowance be paid on the basis of the revised  scale of pay. The legality of
Note 3 to Rule 7 was never an issue in  that case.

14. The claim for payment of subsistence allowance of a  Government servant is
dealt with in Chapter VIII of Fundamental  Rules. FR 53 which relevant for our
purpose reads follows:-   "F.R.53.(1) A Government servant under suspension
or deemed to have been placed

              under suspension by an order of the appointing authority shall be
entitled to the following payments, namely:-

       (i) xxxx xxxx xxxx xxxx  (ii) in the case of any other Government
servant-- 1

 (a) a subsistence allowance at an amount equal to the leave salary which the
Government servant would have drawn, if he had been on leave on half average pay
or on half-pay and in addition, dearness allowance, if admissible on the basis
of such leave salary;

        Provided that where the period of suspension exceeds three months, the
authority which made or is deemed to have made the order of

        suspension shall be competent to vary the

        amount of subsistence allowance for any period subsequent to the period
of the first three months as follows:-

(i) the amount of subsistence allowance may be increased by a suitable amount,
not exceeding 50 per cent of the subsistence allowance

        admissible during the period of the first three months, if, in the
opinion of the said authority, the period of suspension has been prolonged for
reasons to be recorded in writing, not directly attributable to the Government
servant;

(ii) the amount of subsistence allowance, may be reduced by a suitable amount,
not exceeding 50 per cent of the subsistence allowance admissible during the
period of the first three months, if, in the opinion of the said authority, the
period of suspension has been prolonged due to reasons, to be recorded in
writing, directly attributable to the Government servant;

(iii) the rate of dearness allowance will be based on the increased or, as the
case may be, the

        decreased amount of subsistence allowance

        admissible under sub-clauses (i) and (ii) above.  (b) Any other
compensatory allowances admissible from time to time on the basis of pay of
which the 1

 Government servant was in receipt on the date of suspension subject to the
fulfillment of other conditions laid down for the drawal of such allowances.

             xxxx xxxx xxxx



15. The said Rule provides that the Government servant under  suspension shall
be entitled to subsistence allowance at an amount  equal to the leave salary
which the Government servant would have  drawn if he had been on leave on half
average pay or on half pay and  in addition, dearness allowance if admissible on
the basis of such  leave salary. The proviso to Rule 53 (1)(ii) (a) says that
where the  period of suspension exceeds three months, the authority is
competent to vary the amount subject to some restrictions.

16. We may in this connection refer to a Government of India order  G.M.O.M. No.
F-2(36)-Ests/-III/58 dated 27th August, 1958 given in  the Swamy's compilation
of Fundamental and supplementary Rules,  which deals with the revision of scale
of pay while a Government  Servant is under suspension. The two categories of
cases have been  dealt with in that Office Memorandum. One refers to cases in
which  the revised scale of pay takes effect from a date prior to the date of
suspension and other cases in which the revised scales of pay takes  effect from
a date falling within the period of suspension. 1

   Office Memorandum reads as follows:-

"(2) Revision of scale of pay while under suspension --A question having
arisen as to whether a Government servant under suspension might be given an
option to elect any revised scales of pay which might be introduced in respect
of the post held by him immediately prior to suspension is revised, the
Government of India have decided as follows:-

     1. Cases in which the revised scale of pay takes effect from a date prior
to

              the date of suspension.

        In such cases the Government servant should be allowed to exercise the
option under FR 23 even if the period during which he is exercise the option
falls within the period of suspension. He will be entitled to the benefit of
increase in pay, if any, in respect of the duty period before suspension, and
also in the subsistence allowance, for the period of suspension, as a result of
such option.

     2. Cases in which the revised scale of pay takes effect from a date falling

              within the period of suspension.

(a) Under suspension a Government servant retains a lien on his substantive
post. As the expression `holder of a post' occurring in FR 23 includes also a
person who holds a lien or a suspended lien on the post even though he may not
be actually holding the post, such a Government servant should be allowed the
option under FR 23 even while under suspension. The benefit of option will,
however, practically accrue to him in respect of the period of suspension, only
after his reinstatement depending on the fact whether the period of suspension
is treated as duty or not. 1

  (b) A Government servant who does not retain a lien on a post the pay of which
is changed, is not entitled to exercise the option under FR 23. If, however, he
is reinstated in the post and the period of suspension is treated as duty, he
may be allowed to exercise the option after such reinstatement. In such cases,
if there is a time-limit prescribed for exercising the option and such period
had already expired during the period of suspension, a relaxation may be made in
each individual case for extending the period during which the option may be
exercised.



17. The above mentioned Rules as well as the Memorandum  makes it clear that if
there is a revision of scale of pay in respect of a  post held by a Government
Servant, prior to the suspension period,  he is permitted to exercise option
under FR 23, even if the period  during which he is to exercise the option falls
within the period of  suspension and then, he will be entitled to the benefit of
increase in  pay and also in subsistence allowance for the period of suspension,
as a result of such option. But if the revised scale of pay takes effect  from a
date falling within the period of suspension then, the benefit of  option, for
revised scale of pay will accrue to him in respect of the  period of suspension
only after his reinstatement depending on the  fact whether the period of
suspension is treated as duty or not. In the  present case, the Revised Pay
Rules, came into force on 1st day of 1

 January, 1996 when the respondent was under suspension.  Therefore, even if he
had exercised his option under FR 23 for the  benefit of the above pay revision,
the same would have accrued to  him only after his reinstatement depending on
the fact whether the  period of suspension is treated as `on duty' or not. So
far as the  respondent is concerned, he was dismissed from service on  4.8.2005,
therefore the question of the benefit of the revised pay and  the subsistence
allowance thereon on the basis of Revised Pay  Rules did not accrue to him.

18. The Revised pay Rules, which came into force on 01.01.1996  in our view are
in conformity with the FR 53 and the above-mentioned  Office Memorandum issued
by the Government of India.

19. Rule 5 of Revised Pay Rules deals with drawal of pay in the  revised scales
which reads as follows:-

           "5. Drawal of pay in the revised scales.-- Save as otherwise
provided in these rules, a Government servant shall draw pay in the

           revised scale applicable to the post to which he is appointed:

           Provided that a Government servant may elect to continue to draw pay
in the existing scale until the date on which he earns his next or any 1

 subsequent increment in the existing scale or until he vacates his post or
ceases to draw pay in that scale.

     xxxx xxxx xxxx   Rule 6 which deals exercise of option reads as follows:-

     6. Exercise of Option.---- (1) The option under the proviso to Rule 5 shall
be exercised in writing in the form appended to the Second Schedule so as to
reach the authority

     mentioned in sub-rule (2) within three months of the date of publication of
these rules or where an existing scale has been revised by any order made
subsequent to that date, within three months of the date of such order.

     Provided that.--

     (i) in the case of a Government servant who is, on the date of such
publication or, as the case may be, date of such order, out

              of India on leave or deputation or foreign service or active
service, the said option shall be exercised in writing so as to

              reach the said authority within three

              months of the date of his taking charge of his post in India; and

     (ii) where a Government servant is under suspension on the 1st day of
January,

              1996, the option may be exercised within

              three months of the date of his return to

              his duty if that date is later than the date prescribed in this
sub-rule.

 xxxx xxxx xxxxx

                                                                         1



20. On a combined reading of Rules 5 and 6, it is clear that a  Government
servant under suspension on the 1st day of January,  1996 is entitled to
exercise his option within three months of the date  of his return to duty if
that date is later than the date prescribed in the  sub rule and if the
intimation is not received he is deemed to have  elected to be governed by the
revised scale of pay with effect on and  from the 1st day of January, 1996 on
his return to duty. Respondent  herein did not return to duty since he was
dismissed from service and  hence there was no question either exercising the
option or the  application of the deeming provision.

21. Rule 7 deals with the fixation of initial pay in the revised scale ,  which
reads as follows:-

      "7. Fixation of initial pay in the revised scale. - (1) The initial
pay of a Government servant who elects, or is deemed to have elected under sub-
rule (3) of the Rule 6 to be governed by the revised scale on and from the 1st
day of January, 1996, shall, unless in any case the President by special order
otherwise directs, be fixed separately in respect of his substantive pay in the
permanent post on which he holds a lien or would have held a lien if it had not
been suspended, and in respect of his pay in the officiating post held by him,
in the following manner, namely:-

                  xxx xxx xxx

                  xxx xxx xxx

                                                                     1

   Note 3. Where a Government servant is on leave on st

      the 1 day of January, 1996, he shall become entitled to pay in the revised
scale of pay from the date he joins duty. In case of Government servant under
suspension, he shall continue to draw subsistence allowance based on existing
scale of pay and his pay in the revised scale of pay will be subject to final
order on the pending disciplinary proceedings."



22. The word "Existing scale" has been defined under Rule 3 (2)  which
reads as under:

         "existing scale" in relation to a Government servant means
the present scale applicable to the post held by the Government servant (or as
the case may be, personal scale applicable to him) as on the 1st day of January,
1996 whether in a substantive or officiating capacity."

23. The word `Revised scale' has been defined under Rule 3(5),  which reads as
under:

          "revised scale" in relation to any post specified in column
2 of the First Schedule means the scale of pay specified against that post in
column 4, thereof unless a different revised scale is notified separately for
that post;".

24. Note 3 under Rule 7, therefore, indicates when a Government  servant was on
leave on 1.1.1996, he would become entitled to pay  in the revised scale of pay
from the date he joined the duty.  However, in the case of a Government servant
under suspension, he 1

 would continue to draw subsistence allowance based on the then  existing scale
of pay and his pay in the revised scale of pay would be  subject to final order
on the pending disciplinary proceedings.

25. The Revised Pay Rules were framed by the President of India  in exercise of
the powers conferred by the proviso to Article 309 and  clause 5 of Article 148
of the Constitution. The proviso to Article 309  enables the President to make
Rules to regulate the recruitment and  conditions of service of the persons
mentioned therein. The Rules  framed by the President of India in exercise of
the powers conferred  by the proviso to Article 309 have the force of law.
Further, Note 3 to  Rule 7 of Revised Pay Rules, 1997 were not challenged.

26. On a combined reading of Note 3 to Rule 7 of the Revised Pay  Rules and FR
53(1)(ii)(a) with the clarification with Office  Memorandum dated 27th August,
1958 it is clear that if the revision of  pay takes effect from a date prior to
the date of suspension of a  Government servant then he would be entitled to
benefit of increment  in pay and in the subsistence allowance for the period of
suspension,  but if the revision scale of pay takes effect from a date falling
within  the period of suspension then the benefit of revision of pay and the
subsistence allowances will accrue to him, only after reinstatement 1

 depending on the fact whether the period of suspension is treated as  duty or
not. In view of the clear distinction drawn by the Rule making  authority
between the cases in which the Revised scale of pay takes  effect from a date
prior to the date of suspension and a date falling  within the period of
suspension, the plea of discrimination raised  cannot be sustained especially
when there is no challenge to the  Rules. The benefit of pay revision and the
consequent revision of  subsistence allowance stand postponed till the
conclusion of the  departmental proceedings, if the pay revision has come into
effect  while the Government servant is under suspension. So far as the  present
case is concerned, the Revised Pay Rules came into force  on 1st January, 1996
when the respondent was under suspension and  later he was dismissed from
service on 04.08.2005 and hence the  benefit of pay revision or the revision of
subsistence allowance did  not accrue to him. The Tribunal as well as the High
Court have  committed an error in holding that the respondent is entitled to the
benefit of Revised Pay Rules. We, therefore, allow the appeal and  set aside
those orders.

27. We are informed that the respondent herein has filed an appeal  against the
order of conviction passed by the Criminal Court and the 2

 same is pending consideration and if he is acquitted in appeal, the
disciplinary authority would take appropriate decision on the  respondent's
claim for revised pay scale and the subsistence  allowance in accordance with
law.

   ..................................J.

                                       (R.V. Raveendran)

  ..................................J.

                                       (K.S. Radhakrishnan)

     New Delhi;

     February 01, 2010.