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Unions Of India , v. Ram Nath .

Punjab & Haryana High Court

Feb 16, 1966

Judgment

Subsequent
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Structured Summary of the Judgment (Regular First Appeal Nos. 81-D of 1960 & 23-D of 1961)

Factual and Procedural Background

Shri Ram Nath Chitory Knowal (the plaintiff) was employed as a clerk in the Posts and Telegraph Department. Following a departmental enquiry he was dismissed on 19 January 1952. He had been under suspension from 9 April 1946 to 18 January 1952. The plaintiff filed a suit on 5 March 1957 challenging the dismissal and claiming arrears of pay amounting to Rs. 32,737.70 P. up to 28 February 1957 and future pay and allowances at Rs. 275 per month until the suit was decided. The trial court framed five issues (timeliness, maintainability, legality of dismissal, entitlement amount, relief) and held the dismissal to be illegal for breach of natural justice. The trial court declared the dismissal illegal and awarded Rs. 24,430.65 P. for salary from 19 January 1952 to 13 January 1960 (date of superannuation).

Both parties appealed: the Union of India appealed (limited to the contention that the suit for salary could only be decreed for three years and two months under Article 102 of the Limitation Act) and the plaintiff filed a cross-appeal. The present judgment disposes of those cross-appeals against the trial court's judgment dated 18 April 1960.

Legal Issues Presented

Whether the suit was in time (limitation)?
Whether a civil suit was maintainable?
Whether the order of dismissal dated 19 January 1952 was illegal, ultra vires and void?
To what amount, if any, was the plaintiff entitled?
What relief should be granted?
More specifically on appeal: whether arrears of salary are governed by Article 102 of the Limitation Act and, if so, when the period of limitation for each month's salary begins to run (i.e., whether from each month's due date or from the date of a court declaration setting aside the dismissal)?

Arguments of the Parties

Plaintiff's Arguments (as recorded)

The plaintiff argued that the limitation period for recovery of salary should start from the date when a court declares the order of removal illegal; in other words, the cause of action for arrears accrues only upon judicial declaration setting aside the dismissal.
Mr. Hardy (for the plaintiff) argued that, because the dismissal was held illegal, the suspension order should also fall and the plaintiff should be entitled to full salary and allowances for the period of suspension.
Mr. Hardy further contended that the trial court should have confined its declaration to the plaintiff being in service on the date of the suit (rather than a broader declaration).

Union of India / Defendant's Arguments (as recorded)

The Union of India contended that arrears of salary are subject to Article 102 of the Limitation Act and therefore a suit for salary could be decreed only for a period of three years and two months; claims for earlier months were barred by limitation.
The Union (through Mr. S. N. Shankar) relied on the Supreme Court decision in Shri Madhav Laxman Vaikunthe v. State of Mysore (AIR 1962 SC 8) and related authorities, arguing that the period of limitation begins when the wages accrue due (i.e., each month's salary becomes due), not from the date of judicial declaration.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Shri Madhav Laxman Vaikunthe v. State of Mysore, AIR 1962 SC 8	The Supreme Court held that a suit for arrears of salary is governed by Article 102 of the Limitation Act and that the period of limitation starts from when the wages "accrue due". In that case the Court allowed arrears only from 2 June 1951 (after adding two months under Section 80 CPC).	The court in this opinion treated Vaikunthe as authoritative on the construction of Article 102 and accepted that limitation runs from accrual of wages, not from judicial declaration. The court held it was not open to take a contrary view and applied the three years and two months limitation principle to reduce the decree for arrears.
Punjab Province v. Tarachand, 1947 F.C.R. 89 (AIR 1947 FC 23)	Federal Court decision on which the Supreme Court in Vaikunthe relied/approved concerning limitation for salary claims.	Cited as a supporting authority underlying the Supreme Court's rule in Vaikunthe; treated as background authority reinforcing the Article 102 construction.
State of Madras v. Anantharaman, AIR 1963 Mad 425	The Madras High Court took the view that under Fundamental Rule 52 the right to salary ceases on dismissal, so an employee cannot sue for recovery of salary unless the dismissal is declared illegal by a court (i.e., cause of action arises on such declaration).	The court reviewed this decision and the two distinctions relied upon by Madras HC but rejected the distinction: it held Fundamental Rule 52 does not affect accrual when dismissal is illegal and maintained the Vaikunthe position that accrual is when wages become due.
Devendra Pratap v. State of Uttar Pradesh, AIR 1962 SC 1334	Referred to by Madras High Court in support of its view.	Mentioned by the opinion as a case noted by Madras HC; the present court did not adopt it as persuasive for departing from Vaikunthe.
Jnanendra Nath Das v. State of Orissa, AIR 1964 Orissa 241	Cited in argument; the opinion records that the case did not decide the key point and that, in any event, the claim there was barred whatever construction of Article 102 was applied.	The court observed that this decision did not assist on the main point and was not a decision on the accrual issue; it did not persuade the court to depart from Vaikunthe.
Union of India v. Akbar Sheriff, AIR 1961 Mad 486	Relied on by counsel (Mr. Hardy) by parity of reasoning.	The court noted the reliance but found that parity of reasoning did not persuade it to take a different view from the one adopted (i.e., it did not change the conclusion based on Vaikunthe).
K. K. Jaggia v. State of Punjab, 1965-67 Pun LR 1092	A Division Bench held that the right to recover full pay during interim suspension accrued on the day the dismissal order was quashed and reckoned limitation from that date; the case relied on Jnanendra Nath Das.	The court noted Jaggia but observed it concerned a writ petition and Article 102 did not directly arise there; the present court did not treat Jaggia as controlling authority to alter the conclusion drawn from Vaikunthe.

Court's Reasoning and Analysis

The court focused on the construction of Article 102 of the Limitation Act, which begins to run "when the wages accrue due." The crucial controversy was whether accrual meant (a) the date each month's salary became due (the Union's position), or (b) the date when a court declares the dismissal illegal (the plaintiff's position).

The court conducted a textual and precedential analysis:

It treated the Supreme Court's decision in Shri Madhav Laxman Vaikunthe (AIR 1962 SC 8) as clear authority that limitation starts from the date wages accrue due and not from the date of judicial declaration. The court stated that Vaikunthe held that the claim for arrears was governed by Article 102 and that the suit there was time-barred except from a date determined under Article 102.
The court examined attempts to distinguish Vaikunthe (notably by the Madras High Court in State of Madras v. Anantharaman). The Madras decision had relied on Fundamental Rule 52 (saying salary ceases on dismissal) and argued that accrual occurs only when dismissal is set aside. The present court rejected this distinction: if the dismissal itself is illegal, then Rule 52 is, in law, inapplicable as it never effectively operated; moreover, a court's declaration is merely declaratory of a pre-existing right and does not create the right or alter when the cause of action accrued.
The court reasoned that accepting the plaintiff's view would produce an unreasonable result: an illegally dismissed servant could not maintain an action for a declaration that the removal was illegal and for arrears of pay up to the date of dismissal because the cause of action for arrears would only accrue after declaration. The court preferred the construction that preserves the pre-existing right to wages and treats the judicial declaration as recognizing that the illegal order never operated.
On the suspension issue, the court noted that the suspension order's validity is independent of the dismissal order; the plaintiff had not challenged the suspension order in the plaint and accordingly the court would not entertain that challenge at this appellate stage. The court also held that any claim for the suspension period would, in any event, be barred by Article 102 as construed.
Applying the accepted construction, the court held that arrears of salary could only be decreed for the period within three years and two months preceding the suit. Accordingly, the trial court's larger award for arrears had to be reduced.

Holding and Implications

Core Ruling: The court allowed the appeal of the Union of India in part and modified the trial court's decree for arrears of salary. It held that the limitation under Article 102 begins to run when wages accrue due (each month's salary), not from the date of judicial declaration setting aside dismissal. The dismissal was declared illegal, and the plaintiff was declared to have been in service on the date of the suit.

Specific effects on the parties (as recorded in the opinion):

The decree for arrears of salary granted by the trial court was reduced from Rs. 24,430.65 P. to Rs. 18,420.82 P. (the opinion records this reduction in the appellate disposition).
The plaintiff was granted a declaration that his dismissal from service was illegal and that he was in service on the date of the suit.
Claims relating to the suspension period were rejected as without merit and barred by limitation (the plaintiff had not challenged the suspension in the plaint and limitation under Article 102 applied).
The parties were ordered to bear their own costs.

Broader implications: The court adhered to the Supreme Court's construction of Article 102 (as articulated in Vaikunthe) and declined to adopt the view that accrual waits for a judicial declaration. The opinion does not purport to set a new precedent beyond applying and endorsing the existing Supreme Court authority on the point.

Show all summary ...

1. This judgment will dispose of Regular First Appeal No. 81-D of 1960 and Regular First Appeal No. 23-D of 1961, which are in the nature of cross-appeals against the judgment and decree of Shri O. P. Aggarwala, Subordinate Judge Ist Class, Delhi, dated the 18th April, 1960.

2. Shri Ram Nath Chitory Knowal, plaintiff, was employed as a clerk in the Posts and Telegraph Department and after a departmental enquiry was dismissed on 19th January, 1952. From 9th April, 1946, to 18th January 1952, he remained under suspension. He filed the suit on 5th March 1957, challenging the order of his dismissal and claiming Rs. 32,737.70 P. as arrears of his pay till 28th February, 1957, and also future pay and allowances at Rs. 275 per month till the decision of the suit. On the pleadings of the parties, the trial Court framed the following five issues :

"1. Whether a suit is in time ?

2. Whether a civil suit is maintainable ?

3. Whether the order of the plaintiff's dismissal dated 19th January, 1952, is illegal, ultra vires, and void ?

4. To what amount, if any, is the plaintiff entitled ?

5. Relief."

The trial Court decided that the dismissal of the plaintiff was illegal inasmuch as the departmental enquiry was held in violation of rules of natural justice. It, accordingly, granted a declaration to the effect that the order dated' 19th January, 1952, dismissing ' the plaintiff from the defendant's service, was illegal, ultra vires and void and also granted a decree for Rs. 24,430.65 P. on account of salary from 19th January, 1952, to 13th January, 1960, the date of the plaintiff's superannuation.

3. Both the parties, namely, the plaintiff and the Union of India, were aggrieved by this judgment and filed appeals, the appeal of the Union of India being confined to the plea that the suit for salary could be decreed only for a period of three years and two months and the claim for the balance was barred by time under Article 102 of the Limitation Act. Mr. S. N. Shankar, learned counsel for the Union of India, has relied on a decision of the Supreme Court in Shri Madhav Laxman Vaikunthe v. State Of Mysore., AIR 1962 SC 8. Their Lordships of the Supreme Court approved the decision of the Federal Court in Punjab Province v. Tarachand, 1947 F. C. R. 89: (AIR 1947 FC 23) and held that a suit for arrears of salary was governed by Article 102 of the Limitation Act. The real controversy at the bar has been about the starting point of the limitation. According to the plaintiff, the starting point is the date when a Court declares the order of removal illegal, while the defendant maintains that the salary becomes due on the last day of each month and the period of limitation for each month's salary begins to run from that day. In view of this controversy and in view of certain decisions subsequent to the Supreme Court Judgment, it is necessary to examine Madhav Laxman Vaikunlhe's case AIR 1962 SC 8 very carefully. Before doing so, it is desirable to go to the language of Article 102 for a moment. According to the said provision, the starting point of limitation is : "when the wages accrue due." In view of the above mentioned judgment of the Supreme Court, it is not urged that the expression "wages" does not include salary. Having said, that, I would proceed to examine the decision of the Supreme Court. The claim in that case was for salary with respect to the period, August, 1946, to November, 1953, the date of retirement of the employee, whose reversion to the substantive rank had been held to be violative of Section 240(3) of the Government of India Act. The amount represented the difference between the pay actually drawn and that to which he would have been entitled but for the wrongful orders. The suit was filed on August 2, 1954. The Supreme Court held that adding a period of two months of the statutory period under Section 80 of the Code of Civil Procedure, the suit was within time only from June 2, 1951. There have been some decisions in which the judgment of their Lordships of the Supreme Court has been distinguished. In those cases the point of view suggested on behalf of the plaintiff has been accepted. It is therefore, necessary to deal with the said decision.

4. In State of Madras v. Anantharaman, AIR 1963 Mad 425, the High Court took the view that since under fundamental rule 52 the right to salary ceases the moment an order for dismissal or removal is made, an employee cannot file a suit for recovery of his salary unless the order of removal is declared illegal by a Court, and, therefore, the cause of action arises on the date of such a declaration. Madras High Court sought to distinguish the judgment in Madhav Laxman Vaikunthe's case AIR 1962 SC 8 on two grounds :

(1) applicability of fundamental rule 52 was not considered in that case, and (2) That was not a case in which fundamental rule 52 prevented the accrual of salary. Madras High Court also referred to Devendra Pratap v. State of Uttar Pradesh, AIR 1962 SC 1334, in support of their view.

5. In my opinion, the. Supreme Court judgment, in Madhav Laxman Vaikunthe's case AIR 1962 SC 8 clearly lays down that the period of limitation starts, not from the date of declaration by the Court, but from the date it accrues due irrespective of such a declaration. The Supreme Court allowed the claim as regards the arrears of salary and allowance only from 2nd June, 1951, until the date of the plaintiff's retirement from Government service. That is; therefore, a decision for the view that irrespective of reversion being declared illegal, the claim to salary could be limited to the aforesaid period of three years and two months. It is, in the circumstances, hardly open to me to take any view contrary thereto. Coming now to the distinction based on the applicability of fundamental rule 52, it does not, in my opinion, affect the matter at all. If the dismissal or removal itself is illegal, logically it must follow that Rule 52 never, in the eyes of law, came into operation. In deciding the legality or illegality of such an order, the Court merely declares whether or not any order deserving the attention of law was passed. Such an order cannot by its very nature, alter the date of accrual of cause of action. The function of Courts is to interpret law and decide disputes about existing legal rights. The conception of a judicial decision as being one declaratory of pre-existing legal rights finds expression in the law reports of many countries. In case like the present, the right of the employee, to go his wages, exists independently of the decision by Courts on the ground that law will take no notice of an illegal order. The Courts in holding such an order illegal merely declare that it was never passed. To subscribe to the other view would mean that a servant, who has been ' illegally dismissed, cannot maintain an action, for a declaration that his removal is illegal, and for arrears of pay till the date of dismissal. That would be so because his cause of action for arrears would accrue after the declaration. The construction of Article 102 is, therefore, not only concluded by the decision of the Supreme Court, but is also supported by the inherent reasonableness of the rule laid down therein.

6. Mr. Hardy then refers to Jnanendra Nath Das v. State of Orissa, AIR 1964 Orissa 241. I do not think any decision was given on the point in this case. There the claim was barred by time on any construction of Article 102 of the Limitation Act. Mr. Hardy also places reliance on Union of India v. Akbar Sheriff, AIR 1961 Mad 486. I think, on the parity of reasoning this decision also does not persuade me to take a view different from that I have chosen to take. Strong reliance has been placed by the learned counsel on a Division Bench judgment of this Court in K. K. Jaggia v. State of Punjab 1965-67 Pun LR 1092. It was held that, the right to recover full pay and allowances for the period of the employee's interim suspension accrued to him on the day the order of his dismissal was quashed by this Court, and it was from that day that the period of three years prescribed by Article 102 of the Limitation Act had to be reckoned. Reliance was placed on Jnanendra Nath Das's case AIR 1964 Orissa 241. The Supreme Court decision as well as the Federal Court decision, mentioned above, were also noticed. In Jaggia's case, 1965-67 Pun LR 1092 the Division Bench of this Court was dealing with a writ petition and Article 102 of the Limitation Act did not directly arise for consideration.

7. As I have said earlier, by granting a declaration about the legality or illegality of dismissal, the Court does not create any right in the plaintiff. It merely removes an illegal order from the way of the plaintiff. That would not, in my opinion, affect the accrual of cause of action in any manner, and the cause of action would still arise on the day the salary for a particular period becomes due under the terms and conditions of employment. It must follow that the suit of the plaintiff so -far as arrears of the salary are concerned, could be decreed only for a period of three years and two months. The decree of the trial Court, therefore, must stand modified to the extent that the suit for arrears is decreed for Rs. 18,420.22 P. only. We are not concerned with the legality of the decree with respect to the period after the institution of the suit since there is no appeal before us by the Union of India on that point.

8. Mr. Hardy then says that, so far as the suspension order is concerned, we should declare that it falls with the declaration of the dismissal order being held illegal, and, consequently, the plaintiff should be allowed a decree for full salary and allowances during the period of suspension. The fate of the suspension order is not really linked with and is not dependent upon the decision as to validity or invalidity of the dismissal order. Validity of the suspension order must stand or fall on its own merits unaffected by the ultimate finding as to the legality or illegality of the dismissal order. The plaintiff, nowhere in the plaint, challenged the legality of the suspension order and it is hardly open to us to examine that question at this stage. The claim of the plaintiff was only based on the plea that the order of dismissal was illegal, and, therefore, he should be held entitled to his pay. In any case, the claim with respect to the suspension period would be barred by time on the construction of Article 102 of the Limitation Act, as discussed herein-above. Mr. Hardy argues that the cause of action to challenge the suspension order would arise only after the dismissal is set aside. As I have said already, the fate of the suspension order has to be decided irrespective of the validity or invalidity of the dismissal order. It must therefore, be held that the plaintiff's claim on this account is without merit.

9. Mr. Hardy lastly says that the trial Court was not justified in holding that the plaintiff is not entitled to a declaration that he is still in service of the defendant. According to him, the trial Court should have confined the declaration to the extent that the plaintiff is declared to be in service of the defendant on the dale of the suit. I think, Mr. Hardy is right in his submission and Mr. Shankar also does not very seriously dispute the same. In this view, the appeal of the Union of India is allowed only to the extent that decree for arrears of salary granted by the trial Court is reduced from Rs. 24,430.65 P. to Rs. 18,420.82P. The plaintiff is granted a declaration that his dismissal from service is illegal and he was in service on the date of the suit. In the circumstances of the case, however, the parties are left to bear their own costs.