JUDGMENT
1. Petitioner joined the services of Bank of Baroda, respondent No. 1 herein (‘respondent Bank’ for short) as a Personnel Assistant as F Grade Officer on March 28, 1966. The payscale of F Grade Officer was Rs. 350-25-450. The petitioner was, it would appear, entitled to yearly increments of Rs. 25/- in the aforesaid grade. However, the respondent Bank withheld his increments for the years 1969, 1970 and 1971. The increment for the year 1969 was due on March 28, 1970, for the year 1970 on March 28, 1971 and for the year 1971 on March 28, 1972. The petitioner and the Bank of Baroda Officers Association (‘Association’ for short) of which he was member, made representations to the respondent Bank against withholding of three increments. The petitioner was informed that the case for release of his three increments which were stopped “in view of the adverse reports against him” was submitted for consideration to the Committee of Executives at its meeting held on December 7, 1976. The petitioner was informed that the Committee had vide its resolution No. 73 dated December 7, 1976 decided not to release the aforesaid three increments of the petitioner. The petitioner thereafter again made representation to the Chairman and Managing Director of the respondent Bank, but by a communication dated January 18/19, 1978, he was again informed that the Committee of Executives had by its resolution referred to above decided not to release three increments. The petitioner thereafter preferred appeal before the Board of Directors of the respondent Bank on August 30, 1979. However, there was no response to this appeal. In other words, according to the petitioner, no decision was rendered on the appeal preferred by him. The petitioner, therefore, approached this Court by way of this petition under Art. 226 of the Constitution of India challenging the legality and validity of the action of the respondent Bank in withholding his three increments as stated above.
2. It is submitted on behalf of the petitioner that he is entitled to yearly increments as a matter of right and increments could not have been withheld except on the ground that he had failed to cross the Efficiency Bar. (‘E.B.’ for short) wherever it was prescribed or for a misconduct after holding proper enquiry. It is submitted that one of the penalties enumerated in Rule 8.3 of the Bank of Baroda Officers Services Rules (‘Rules’ for short), is stoppage of increments which shall have the effect of postponing future increment of the officer. However, such penalty for misconduct can be imposed only after enquiry and after giving a reasonable opportunity of being heard to the officer who is alleged to have committed misconduct. Petitioner’s increment for the years 1969, 1970 and 1971 were withheld permanently. In other words, they were withheld with future effect, that is to say withholding of the three increments has the effect of postponing the petitioner’s future increments also. Withholding of increments is, therefore, by way of penalty and such penalty could not have been imposed except after a domestic enquiry. The petitioner was not required to cross the E.B. in order to earn increments for the years 1969, 1970 and 1971 and, therefore, these increments could not have been withheld for failure to cross the E.B. In any case, it is submitted that the increments could not have been withheld without interviewing the petitioner as provided in Letter Annexure ‘A’ dated December 23, 1968 issued by the Chairman of the respondent Bank. The petitioner was not interviewed before his three increments were withheld. The petitioner submitted that no adverse remarks were communicated to him from 1968 onwards nor had he been served with any memo. Petitioner has stated that he has been working sincerely, honestly, diligently and to the satisfaction of his superior officers. He had also held several important positions a report whereof is published in the magazine of the Bank, a true copy of which is annexed at Annexure ‘C’. The petitioner has contended that the respondent Bank has become a corporate body under the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970, and it is a STATE within the meaning of Article 12 of the Constitution. It is submitted that the respondent Bank was under obligation to afford equality of opportunity in the matter of employment to all its officers; and any departure from this obligation would be violative of Arts. 14 and 16 of the Constitution. It is submitted that withholding of three increments of the petitioner amounts to imposition of penally without enquiry whatsoever and without giving an opportunity of being heard to the petitioner. The said action of the respondent Bank is, therefore, ultra vires, violative of service condition of the officer statutory recognised under Section 14(2) of the said Act, principles of natural justice and null and void. Petitioner, therefore, prays that the said decision of the respondent Bank to withhold three increments of the petitioner be quashed and set aside.
3. The defence of the respondent Bank as disclosed in the affidavit of its Development Manager (International Trade), East and South Gujarat Zone, is that the increments had to be earned by the officer concerned by his performance and are not given as a matter of course. It is submitted that increments can be stopped on objective assessment of performance of individual officer, apart from by way of penalty for any misconduct after regular enquiry. It is submitted that stoppage of increments on objective assessment and withholding of increments for any misconduct are very different in their nature and scope. According to the respondent Bank, the increments of the petitioner were stopped for good reasons on objective assessment and not as a penalty. It is submitted that under Rule 4.2 of the Rules, the respondent Bank had a right to stop increments at any stage according to the general understanding about such stoppage and the Association is given right to represent to the respondent bank if increment is stopped. It is submitted that the general understanding referred to under Rule 4.2 was that increment is not a matter of course or matter of right. It has to be earned in the sense that the concerned officer has to put up good performance, which may not be positive, but must reveal normal performance and should not fall short of reasonable standards of qualities of officers. It is submitted that this practice was followed since many years and it had the sanction of the Association. It is further submitted that the Association had, on behalf of the petitioner made representation against the stoppage of the three increments of the petitioner on or about July 20, 1976, in the meeting between the representatives of the Association and the representatives of the Management. The representations were duly considered by the Management, that is the Committee of Executives consisting of top executives of the respondent Bank including the General Manager and Deputy General Manager. On consideration of the representations made by the Association, it was not considered fir to grant or release increments which were withheld. It is, therefore, submitted that the petitioner has no case on merits and his petition deserves to be rejected.
4. Chapter IV of the Rules contains rules from 4.1 to 4.7 Rules 4.1 and 4.2 deal with scales of pay, while Rule 4.3 deals with increments. These rules are relevant for our purpose and they read as under :
“SCALES OF PAY :
4.1 The grades and scales of pay for officers shall be as under :
GRADES SCALE OF PAY Rs. "G" 250-25-325 "F" 350-25-450 "E" 480-30-600-E.B. "D" 690-40-800-E.B. "C" 850-50-1050-E.B. "B" 1125-75-1500-E.B. "A" 1600-100-2000
4.2. It is understood that in the above scales of pay the first Efficiency Bar at Rs. 600/- would be applied sparingly. Officers would be stopped at this Bar if there is inefficiency or other demerit. The second Bar would be at Rs. 800/- which would, however, operate as a review of the merits of officers concerned for promotion to the higher stages in the scales of pay entirely depending on merits and efficiency of the concerned officer.
The third and the fourh Efficieny Bar would be at Rs. 1050/- and Rs. 1500/-. The crossing of Efficiency Bars at Rs. 800/-, Rs. 1050/- and Rs. 1500/- will depend entirely on merits and efficiency of the officer concerned. The stoppage of increments at any stage shall be according to the general understanding about such stoppage and the Bank shall have the right to stop an increment in appropriate cases without prejudice to the right of the Association to represent to the Bank in such matters. It is hereby clarified that there is no Efficiency Bar at the end of such grade.
INCREMENT
4.3 The officer will be eligible for his annual increment on completion of one year from :
(A) the date of promotion in the case of an officer promoted from the clerical cadre.
(B) the date of appointment in the case of a person appointed directly as an officer provided he is confirmed in service.”
5. Chapter VIII deals with Conduct and Discipline. Rule 8.1 enumerates the acts of misconduct, while Rule 8.2 provides for holding a departmental enquiry against an officer. Rule 8.3 enumerates penalties which can be imposed on an officer. Rule 8.3 reads as under :
“8.3 An officer found guilty of misconduct may be :
(a) dismissed without notice.
(b) discharged with or without notice,
(c) reduced to a lower post or a grade,
(d) have his increments stopped which shall have effect of postponing his future increments,
(e) warned,
(f) censured,
(g) an adverse remark entered against him in his service record.”
6. It is stated that though scales of pay for officers are different for different grades, from ‘G’ to ‘A’ in Rule 4.1, in fact, there is a running pay-scale from Grade G to Grade A. The officer who reaches the maximum of grade G becomes eligible for being placed in grade F in the year following in which he has reached the maximum of grade F. Similarly on reaching maximum of grade F he becomes eligible for grade E in the next year. However after reaching the maximum of grade E, he has to cross the E.B. in order to become eligible for grade D. Same is the position in regard to grades C, B and A. In other words grades D, C, B and A are not given automatically or as a matter of course, but the officer has to cross the E.B. in order to become eligible for higher grade. The petitioner was appointed as Personnel Assistant as F grade officer on March 28, 1966. As provided in Rule 4.3 officer becomes eligible for his annual increment to completion of one year from the date of his appointment in the case of an officer appointed directly as officer provided he is confirmed in the service. It is not disputed that the petitioner became eligible for his first increment on March 28. 1967. He was given yearly increments on March 28, 1967, March 28, 1968 and March 28, 1969. However, he was not granted increments on March 28, 1970, March 28, 1971 and March 28, 1972. It may be recalled that there is No E.B. between the pay-scales of F grade officer and E grade officer. Had the increments been not withheld, the petitioner would have been in E grade from March 28, 1971. There is also no E.B. for earning any increment in the pay-scale of E grade officer. It is, however, urged on behalf of the respondent Bank that yearly increment is not released or granted as a matter of course or right, but it has to be earned by satisfactory performance of the duty. It is submitted that the work of the officer during the year is assessed and it is on the basis of such assessment that it is decided whether or not to release or grant yearly increment. It is submitted that since the performance of the petitioner during the years in question was not satisfactory, his three increments as aforesaid were not released. In support of its contention that the yearly increment is not granted as a matter of course of right, the respondent Bank relies on the following provision contained in Rule 4.2 of the Rules :
“The stoppage of increments at any stage shall be according to the general understanding about such stoppage and the Bank shall have the right to stop an increment in appropriate case without prejudice to the right of the Association to represent to the Bank in such matters.”
It is submitted that this provision in Rule 4.2 of the Rules which were framed in consultation with the Association, clearly empowers the respondent Bank to stop increment of an officer at any stage, and, therefore, it was within the powers of the respondent Bank to withhold the increments of the petitioner if his performance was not found to be satisfactory.
7. The provision of Rule 4.2 extracted above, on which reliance is placed by the respondent Bank, has to be read in the context of earlier part of the second paragraph and first paragraph of Rule 4.2. First paragraph of Rule 4.2 clearly provides that in the pay-scales prescribed in Rule 4.1, first E.B. at Rs. 600/- had to be applied sparingly. The officers would be stopped at this Bar if there is inefficiency or other demerit. It is further provided that second Bar would be at Rs. 800/- which would, however, operate as a review of the merits of officers concerned for promotion to the higher stages in the scales of pay entirely depending on merits and efficiency of the concerned officer. It will be seen that there is no E.B. between the pay-scale of G grade officer and F grade officer and E grade officer. The E.B. comes for the first time on reaching the maximum of the pay-scale prescribed for E grade officer, which is Rs. 600/-. Rule 4.2 makes it clear that the E.B. at Rs. 600/- was to be applied sparingly and the officer can be denied higher pay-scale of D grade officer only if he is found to be inefficient or possessing other demerit. In other words, the officer is to be allowed to go over to the pay-scale of D grade from the pay-scale of E grade as a matter of course unless he is found to be inefficient or possessing other demerit. However, promotion of the officer from D grade to C grade entirely depends upon his merit and efficiency. The petitioner’s three increments which are withheld are in the pay-scales of F and E grade, where there is no question of crossing the E.B. Crossing of third and fourth E.Bs. at the end of C and B grades also depends entirely on merits and efficiency of the officer concerned. However, we are not concerned with crossing of these E. Bs. It is after providing that crossing of third and fourth E. Bs. would depend entirely on merits and efficiency of the officer concerned, that the provision extracted above, on which reliance is placed by the respondent Bank, appears. This extracted portion of provision of Rule 4.2 cannot be read in isolation or de hors the earlier provision of the rule. That provision has to be read in the context of the earlier provision contained in Rule 4.2. Earlier provision contained in the said rule deals with crossing of the E.B. and it is the context of crossing of the E.B. that provision on portion of Rule 4.2 extracted above is made. If one extracted portion is read in the above context, it is clear beyond doubt that “stoppage of increments at any stage” has reference to the stoppage of increments at the E.B. stage and at no other stage. If the E.B. at Rs. 600/- that is the end of pay-scale of grade E is to be sparingly applied, one fails to understand as to how where there is no Bar, before that E.B. is reached, increments could be withheld. It was not disputed that besides the extracted provision of Rule 4.2, there is no provision contained in the rules which empowers the respondent Bank to withhold increments except on the ground of misconduct. In my opinion, the entire Rule 4.2 deals with crossing of E.B. and extracted portion of Rule 4.2 on which reliance is placed by the respondent Bank empowers the Bank to stop increment at any stage where E.B. occurs and not at any other stage.
8. The position as contained in Rule 4.2 is clarified by letter Annexure ‘A’ dated December 23, 1968, issued by the Chairman of the respondent Bank. This letter also refers to the understanding with the Association, which finds place in Rule 4.2 on which reliance is placed on behalf of the respondent Bank. The relevant portion of this letter Annexure ‘A’ reads as follows :
“I may mention that during the discussions on the scales of pay and other conditions of service of the Officers of the Bank, there was an understanding with the All India Bank of Baroda Officers Association that :
(1) Upto the first Efficiency Bar stage at Rs. 700/- (Rs. 600) p.m. promotion from one grade to another will not be refused except in a case of negligence or misconduct.
(2) the first Efficiency Bar would be sparingly applied and stoppage at the Bar would be in cases of inefficiency or other de-merit.
(3) The second Efficiency Bar at Rs. 900/- (Rs. 800) would operate as a review of the merit of officers for promotion to the higher stages in the scales of pay and whether an officer is to be allowed to cross it would entirely depend on his merit and efficiency.
(4) After the stage of Rs. 900/- the third and fourth bars, i.e. at Rs. 1,100/- and Rs. 1,375/- would be lifted depending on the number of vacancies in the intervening stages and even the increments inter-se the stages would have to be earned by merit and efficiency.
In view of the foregoing, where there were recommendations for the sanction of the normal increment only without promotion to F.E and D grades, i.e. before the first efficiency Bar stages, I have not taken the later part of the recommendation into consideration and sanctioned the increment and also promotion to the next higher grade.”
This letter also makes it clear that Rule 4.2 has application only when the question of crossing of E.B. by the concerned officer arises. The general understanding referred to in Rule 4.2 is the general understanding in regard to stoppage of increment at the E.B., arrived at with the Association. The understanding is not with regard to stoppage of increment at any stage except at the stage of crossing of E. B. In my opinion, therefore, the stand taken by the respondent Bank in the affidavit in reply filed on its behalf is taken on misreading of Rule 4.2. There is no right or authority to withhold increment except at the stage of E.B. Even so far as crossing of E.B. is concerned, the provisions contained in Rule 4.2 have to be borne in mind. As already pointed out above E.B. at Rs. 600/- is to be sparingly applied. So far as the petitioner is concerned, his increments are stopped even before he reached Rs. 600/- the maximum of the pay-scale applicable to E grade officer. If at all, he could have been stopped on his reaching Rs. 600/- the maximum of pay-scale applicable to E grade officer had the conditions laid down in Rule 4.2 and letter Annexure ‘A’, been satisfied. However, that question had not arisen in the case of the petitioner and before he had reached the stage of crossing the E.B., his three increments were stopped. There is absolutely no justification for stopping or withholding of three increments.
9. Stoppage of increments which has the effect of postponing future increments is one of the penalties enumerated in Rule 8.3 which can be imposed on an officer who has been found guilty of misconduct. Stoppage of increments otherwise than at E.B. can only be by way of penalty. In the instant case, three increments have been stopped with permanent effect. In other words, stoppage of these three increments has the effect of postponing of further increments of the petitioner. Such action is nothing but penal. Penalty of stoppage of increments could have been imposed only if the petitioner was found to be guilty of misconduct after departmental enquiry. It is not the respondent Bank’s case that the petitioner was guilty of any misconduct; nor is it its case that stoppage of increments was by way of penalty. However, the effect of withholding of three increments amounts to imposition of penalty without petitioner committing any misconduct. As laid down in Rule 4.3, the officer is eligible for his annual increment on completion of one year from the date of his appointment in case of person appointed directly. The officer earns increment every year in the pay-scale till he reaches the E.B. In other words, the officer is entitled to yearly increments as a matter of course and as a matter of right unless and until he reaches the E.B., such yearly increments cannot be stopped. However, the respondent Bank has purported to act under the power conferred on it under Rule 4.2 in stopping three increments of the petitioner. As already discussed above, there is no such power in the respondent Bank. Power to stop increments envisaged under Rule 4.2 is confined to stoppage of increment at the E.B. and not at any other stage. It must, therefore, be held that the action of the respondent Bank in withholding three increments of the petitioner is illegal and ultra vires.
10. It was submitted on behalf of the respondent Bank that this petition deserves to be rejected solely on the ground of delay. It was submitted that the petitioner could not have approached this Court in 1979 to seek redress in respect of something which was done in 1970, 1971 and 1972. There is no substance in this contention. The petitioner and the Association of which the petitioner is a member, had made representations against withholding of the three increments. However, the Committee of Executives of the respondent Bank dealt with the representation of the petitioner and the Association only at its meeting held on December 7, 1976. The petitioner again made representation to the Chairman and Managing Director on October 22, 1977 after the decision taken by the Committee of Executives was communicated to him on or after August 11/16, 1977 vide Annexure ‘E’. However by letter Annexure ‘G’ dated June 16/19, 1978 the Assistant General Manager was requested to advise the petitioner that the Committee of Executives had rejected his requests for release of his three increments. Petitioner thereafter preferred appeal on August 30, 1979 to the Board of Directors of the respondent Bank. This appeal, I am told, is not yet decided by the Board of Directors. Since no decision was rendered by the Board of Directors, the petitioner approached this Court by way of this petition on October 15, 1979. In the facts and circumstances of the case, this petition cannot be rejected on the ground of delay.
11. In the view which I am taking, I do that consider it necessary to deal with other contentions raised by the petitioner. This petition must succeed on the ground that the respondent Bank had no right or authority to withhold three increments of the petitioner which are withheld as stated above.
12. In the result, this petition is allowed. The order or decision withholding three increments of the petitioner for the years 1969, 1970 and 1971 which fell due on March 28, 1970, March 28, 1971 and March 28, 1972, and the orders at Annexure ‘E’ and ‘G’ to the petition are quashed and set aside. The respondent Bank is directed to grant or release the said three increments and revise the pay of the petitioner accordingly. In other words, the petitioner’s pay shall be revised at all stages as if no increment was withheld. The respondent Bank is also directed to make the consequential payment of difference in salary on the basis that no increment of the petitioner was withheld with retrospective effect and to fix the petitioner’s salary on the basis that he was granted three increments. Petitioner shall also be paid difference in salary with retrospective effect on the basis of the revised pay-scales. The above directions shall be complied with within two months from the date of the receipt of the writ of this Court.
Rule made absolute with costs.