REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO.  3311        OF 2008 [Arising out of SLP (C) No.12451 of 2006]

Chief Engineer / Operation Dakshini Haryana Bijli Vitran Nigam Ltd. & Anr. …..Appellants

Versus

Mauj Khan & Ors. …..Respondents

J U D G M E N T

S.B. Sinha, J.

1. Leave granted.

2. Interpretation  of  a  rule  governing  the  conditions  of  service  of  the  

employees  of  the  appellant-Corporation,  is  the  question  involved  in  this  

appeal which arises out of a judgment and order dated 28th October 2005  

passed by a learned Single Judge of the High Court of Punjab & Haryana at  

Chandigarh.   

The basic fact involved in the matter is not in dispute.

3. Respondent  No.1  was  appointed  directly  in  the  cadre  of  Upper  

Division Clerk (U.D.C.) on 06th May 1975.  The terms and conditions of the  

said offer of appointment in the scale of Rs.150-8-166/10-216/230-10-300  

were :

“3. It should be noted that the first  two years of  your  service  in  the  Board  will  be  treated  as  probationary  period  for  the  purpose  of  D.A.  Examination  which you will  be required  to  pass  within two years of your joining this Department.

4. You  will  be  considered  for  confirmation  against  permanent  vacant  post  after  you  have  completed  two  years  probationary  period  and  passed the Departmental Accounts Examination.

5. The failure to clear the examination within  five successive chances held immediately after six  months of your joining the service of the Board,  may involve the loss of your appointment.”

4. Indisputably,  the  respondent  never  appeared  in  the  Departmental  

Examination.   The  rules  prescribed  for  appearance  at  the  Departmental  

Examinations are contained in the Manual of Orders of the Haryana State  

Electricity  Board,  of  which  the  appellant-Corporation  was  a  constituent  

before its bifurcation.  Clause 13 thereof reads as under :

“13.  Confirmation, grant of Annual Increment,  Retention in Service, Promotion etc.:-

2

(i) Promotion. A junior clerk, a Meter Clerk or  a Cashier in the Scale of Rs.50-3-8-/4-100 (or such  other  scale  for  such  posts  as  may  be  hereafter  introduced or substituted for the scale of Rs.50-3- 80/4-100) shall not be appointed to a post carrying  a scale higher than that of the junior Clerk, Meter  Clerk or Cashier, until and unless he has passed the  examination  in  papers  I  to  IV.   The  maximum  number  of  chances  allowed  to  take  the  examination in one’s service is fixed as five.

Note:-  Those  Junior  Clerks,  Meter  Clerks  or  Cashiers who have already passed in papers III and  IV of the examination according to the old rules  will  have  to  appear  in  papers  I  and  II  of  these  Rules only in order to qualify themselves for the  promotion to the grade of a Senior Clerk.

(ii)  Confirmation:- A Senior clerk if he has been  directly recruited as such, will not be appointed in  a  substantive  capacity  in  his  post  unless  he  has  passed the examination in papers I  to IV.  If  he  fails  to  pass  the  examination  in  papers  I  to  IV  within  three  years  of  his  appointment  in  the  Branch,  his  increments  falling  due after  the  first  two increments from his first appointment, will be  withheld until he passes the examination and will  not  be  granted  with  retrospective  effect  on  his  passing  the  examination.   On  passing  the  examination  he  will  with  effect  from  the  date  following that on which the examination ended, be  entitled to the date of pay which would have been  admissible  to  him  had  his  increment  not  been  withheld for his failure to pass the examination.

The failure  of  the  senior  clerk  to  pass  the  examination in five successive examinations held  immediately  after  the expiry of  six months  from  the date of his first appointment may involve the  loss of his appointment”

3

5. Indisputably,  inter  alia,  on the premise  that  he had not  passed the  

Departmental Examination and thus was not entitled to obtain the benefit of  

the increment, the same was not granted.  Indisputably again, the services of  

the respondent no.1 were not confirmed.

6. The Haryana State Electricity Board issued a circular letter pursuant  

whereto  all  the  employees  were  to  be  granted  the  benefit  of  additional  

increment on completion of 8/18 years of regular satisfactory service and  

higher  standard  pay scale  on  completion  of  10/20 years  or  more  regular  

satisfactory service and promotion to the next higher post.   

7. As all these benefits were denied to the respondent no.1, he filed a suit  

before the Civil Judge, Gurgaon which was marked as Civil Suit No.464 of  

1999 for declaration with consequential relief of mandatory injunction.  The  

learned trial Judge, while declining the relief of grant of increments in the  

scale  of pay,  opined that  failure to appear in the Departmental  Accounts  

Examination would not stand in the way of the plaintiff from obtaining the  

benefit of additional increment and/or higher scale of pay stating :

“16. The  only  stand  taken  by  defendants  in  declining the above said benefits to plaintiff is that  he  has  not  passed  the  Departmental  Accounts  Examination.   In  my  considered  opinion,  said  ground  taken  by  defendants  is  that  without  any  basis in as much as grant of additional increments  

4

on completion of 8/18 years of service and grant of  higher standard pay scale on completion of 10/20  years or more of regular service is not subject to  the  passing  of  Departmental  Accounts  Examination.   Ld.  Law  Officer  appearing  for  defendants could not quote any provision of law  which require UDCs to clear said examination for  the purpose of grant of above said benefits.  Even  in the rules of 1952 of anywhere also, there is no  provision  regarding  requirement  of  passing  of  Departmental Examination for availing the above  said benefits.   With regard to grant of additional  increments  and  higher  standard  pay  scale,  the  relevant documents which have been placed on file  are  Ex.PW1/8,  Ex.PW1/11  and  Ex.PW1/12.  Perusal of said documents shows that an employee  is  entitled  to  additional  increments  and  higher  standard  pay  scale  on  completion  of  regular  satisfactory service as defined in the policy of the  Government.

In this situation,  it  was argued by ld.  Law  Officer  that  since  plaintiff  did  not  clear  the  Departmental Accounts Examination, therefore, as  per  the  terms  and  conditions  of  offer  of  appointment,  he  shall  be  deemed  to  be  on  probation till the time he clears the Departmental  Examination and as such, he cannot be said to be  confirmed as UDC.  Thus, above service benefits  as  claimed  shall  not  be  admissible  in  favour  of  plaintiff.

There  is  no  merit  in  this  contention  in  as  much as the service of plaintiff were not dispensed  with  by  defendants  on  the  ground  of  his  non- passing the  Departmental  Accounts  Examination.  He  has  been  continuing  in  the  services  of  department for the last more than 29 years and as  such,  notwithstanding  the  non-passing  of  Departmental  Accounts  Examination,  he shall  be  deemed  to  have  been  confirmed  in  the  post  of  

5

UDC.  Thus, plaintiff is entitled to be considered  for  the  benefit  of  additional  increments,  higher  standard pay scale and promotion.

17. On the same reasons, plaintiff is also entitled  to be considered for promotion to the next higher  post as there is no embargo against promotion of  plaintiff  for  not  passing  the  Departmental  Accounts  Examination.   An  employee  is  to  be  promoted  to  next  higher  post  taking  into  consideration  the  length  of  service,  his  performance and act and conduct in the post he is  working just prior to promotion.”

8. On the aforementioned finding, it was directed :

“18. In the facts  and circumstances of present  case, no direction can be issued to defendants for  giving the above said benefits to plaintiff straight  away.  Rather in my opinion, plaintiff is entitled  to  be  considered  for  the  said  benefits  because  before conferment of above benefits in favour of  plaintiff, defendants would be required to see as  to  whether  plaintiff  has  regular  satisfactory  service  to  his  credit  as  per  the  policy  of  State  Govt.  and  whether  he  is  fit  for  promotion.  However,  it  is  made  clear  here  that  while  considering the entitlement of plaintiff to above  said  benefits,  defendants  shall  not  take  non- passing of Departmental  Accounts  Examination  as  a  ground to  reject  the  claim of  plaintiff  for  above said benefits.”

9. Both the parties preferred appeals thereagainst.  By a judgment and  

order  dated  30th October  2004,  the  learned  Additional  District  Judge,  

6

Gurgaon,  dismissed  both  the  appeals.   A  second  appeal  preferred  

thereagainst  by  the  appellants  has  been dismissed  by  the  High Court  by  

reason of the impugned judgment.

10. Mr.  Arvind  Nayar,  learned  counsel  appearing  on  behalf  of  the  

appellants would submit :-

(i) Having  regard  to  the  stipulations  contained  in  the  offer  of  

appointment,  respondent  no.1  was  not  entitled  either  to  

increment or to confirmation in service or promotion to the next  

higher post; and

(ii) Thus,  period  of  probation  would  be  deemed  to  have  been  

extended as respondent no.1 was not entitled to any increment  

in the scale of pay and thus having not put in a regular service  

was also not entitled to the benefit of additional increment on  

completion  of  8/18  years  of  regular  satisfactory  service  or  

higher  standard  pay  scale  on  completion  of  10/20  years  of  

regular satisfactory service and promotion to next higher post.  

11. Mr. B.K. Satija, learned counsel appearing on behalf of the respondent  

no.1, on the other hand, would urge that failure of the senior clerk to pass the  

7

examination would not debar him from obtaining the benefit of the policy  

decision  adopted  by  the  Haryana  State  Electricity  Board  in  regard  to  

obtaining additional increment and/or higher scale of pay on completion of  

8/18 years of regular satisfactory service and/or higher standard pay scale on  

completion of 10/20 years or more of regular satisfactory service.

12. Our attention has also been drawn to a clarification issued by the State  

Government in respect of the following question:

“21. Employees who were not being 21. Yes, the benefit of  promoted to the next higher posts due higher standard pay   to not qualifying prescribed test or non scales  is  to  be  given  possession of essential qualifications in such like cases.” for promotion to the next post, whether benefit of Higher standard pay scale is to  be given to such employee or not?

The  said  clarification  has  been  accepted  by  the  Haryana  State  

Electricity Board by issuance of Circular No.117 dated 26th February 1996.   

It  was urged that the learned trial Judge as also the appellate court  

having directed consideration of the grant of benefit  of the said circulars  

only, this Court, keeping in view the fact that the respondent no.1 had been  

in service of the appellant-Corporation for a period of more than 33 years,  

8

should not exercise its  discretionary jurisdiction under Article 136 of the  

Constitution of India.

13. Respondent  no.1  was  appointed  directly  to  the  post  of  officiating  

Upper Division Clerk on a salary of Rs.150/- per month in the scale of pay  

of Rs.150-8-166/10-216/230-10-300.  Indisputably, he was put on probation  

for a period of two years.  The said probationary period was fixed for the  

purpose of passing the Departmental Accounts Examination.   

14. The service of the employee was to be considered for confirmation  

only upon completion of the said two years’  probationary period as  also  

passing of the Departmental Accounts Examination.  For the said purpose,  

only five successive chances were required to be given to him to appear in  

the examination which were to be held after six months of his joining of  

service.  It has not been denied or disputed that the matter relating to passing  

of the examination as also the other conditions of service is governed by the  

service rules.  Rule 13 provides for confirmation, grant of annual increment,  

retention in service, promotion etc.  For the purpose of obtaining any benefit  

in terms thereof, passing of the examination in papers I to IV is imperative.  

Even those who had earlier appeared and passed papers III and IV of the  

examination in terms of the old rules, were required to appear in papers I and  

II in terms of the said rules in order to qualify themselves for promotion to  

9

the grade of a senior clerk.  The rules further, in no uncertain terms, state  

that appointment in a substantive capacity in the post held by the employee  

was  subject  to  his  passing  of  the  said  examination.   It  was  furthermore  

stipulated that in the event he failed to pass the said examination within a  

period of three years of his appointment in the Branch, his increments falling  

due  after  the  first  two  increments  from  his  first  appointment,  shall  be  

withheld  until  he  passed  the  examination.   Even  after  passing  the  

examination,  increment  was  to  be  granted  prospectively  and  not  

retrospectively.  

It, as noticed hereinbefore, further stipulated that failure to pass the  

examination would entail loss of his appointment.   

15. Indisputably, the matters relating to recruitment to a post, the period  

of  probation,  confirmation  subject  to  passing  of  the  Departmental  

Examination  are  governed  by  the  statutory  rules.   Only  on  successful  

completion of the probationary period and passing of the examination, the  

services  of  an  employee  could  be  confirmed.  Unless,  services  of  an  

employee are confirmed, he could be treated to be in the regular service of  

this Board.

10

16. The learned trial  Judge as also the appellate Court, in our opinion,  

thus,  have  rightly  held  that  as  the  respondent  no.1  did  not  pass  the  

Departmental Accounts Examination, he was not entitled to be confirmed in  

service.  The learned Judges, however, in our opinion, committed a serious  

error  in  opining  that  the  circular  letter  relating  to  grant  of  additional  

increment and/or higher standard pay scale would be applicable in the case  

of the respondent no.1.  

17. Although, neither the circular letter, in terms whereof the said benefits  

were to be granted, was brought to our notice nor the connected rule was  

placed before us, but, on a plain reading of the judgment of the learned trial  

Judge as also the first Appellate Court, it is evident that the aforementioned  

benefits could be conferred on the respondent no.1 only if he had completed  

the period stipulated therein in regular service.   Unless, the services of an  

employee  are  confirmed  so  as  to  bring  him  on  the  cadre  of  regular  

employees, the question of completion of 8/18 years, 10/20 years of regular  

satisfactory  service  would  not  arise.   In  that  view of  the  matter,  it  was  

wholly unnecessary for the appellants to mention about the passing of the  

Departmental Examination by the concerned employee for the purpose of  

availing the said benefit.  The purported clarification issued by the State of  

Haryana to which our attention has been drawn, in our opinion, is also not  

11

relevant.   The  clarification  furnished  by  the  State  Government  was  in  

relation to those employees who were not being promoted to the next higher  

post.  The same must have reference to those junior clerks whose services  

were confirmed but who had not been promoted to the post of U.D.C. or  

higher posts.  Once services are confirmed, an employee would be borne on  

the  regular  cadre.   He  thus  being  in  the  regular  service,  satisfactory  

completion of the stipulated period therein would entitle him to the benefits  

thereof.

18. We, therefore, are of the opinion that the impugned judgment cannot  

be sustained.   

The  question,  however,  remains  that  the  appellants  deliberately  or  

otherwise despite a clear provision contained in the rules did not terminate  

the services of the respondent no.1.  He was allowed to continue in service.  

It  is  neither  denied  nor  disputed  that  despite  the  fact  that  he  did  not  

pass the Departmental Accounts Examination, he was otherwise a competent  

officer.  In fact, he has been permitted to officiate on a higher post.  In a  

situation of this nature, in our opinion, the appellants had a duty to give him  

a warning.  His case should have been treated in terms of the rules.  Failure  

on the part of the State to do so, in our opinion, has seriously prejudiced  

12

him.   Had  such  warning  being  given,  he  could  have  appeared  in  the  

examination.   

It is the case of the appellants that the respondent no.1 did not appear  

at the examination at all.  It has been held that the respondent is not entitled  

to the benefit claimed.  He was bound to pass the test within the prescribed  

period.  On failure to pass the test, his services were liable to be terminated.  

Under the Rules, he was not entitled to any warning regarding the failure to  

pass the test.   

However,  he  was  allowed  to  continue  in  service  and  received  the  

salary.  What is denied is only the benefit of additional increment which can  

be granted on fulfilling certain conditions.  In such circumstances, there may  

not be justification for payment of compensation.  Instead, the appellants  

should be directed not to deny pensionary benefits to the respondent on the  

ground that his services were not regularized/confirmed.  Such direction is  

necessary only if there is a move to deny pensionary benefits.

19. The appeal is allowed subject to the aforementioned order.  However,  

in the facts and circumstances of the case, there shall be no order as to costs.

13

……………………………….J. [S.B. Sinha]

..…………………………..…J.  [Cyriac Joseph]

New Delhi. May 06, 2009

14