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  • Section 5, Subsection 2 of the 1983 Income Tax Act
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Citation Codes
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Case Number
Disposition
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  • Section 5, Subsection 2 of the 1983 Income Tax Act
Smart Summary

Factual and Procedural Background

Madhusudan Prasad, a Safai Karamchari with the Central Reserve Police Force (CRPF), failed to return from sanctioned leave on 31-3-1994. Treated as a deserter, he was arrested and sentenced by the Chief Judicial Magistrate-cum-Commandant to 15 days’ rigorous imprisonment. Immediately thereafter, the Commandant dismissed him from service (7-11-1994) without holding any departmental enquiry or issuing a show-cause notice.

On appeal, the Appellate Authority set aside the dismissal citing denial of reasonable opportunity and reinstated Prasad on 15-2-1996. It, however, directed that the intervening period be treated as dies non, denying salary while protecting pension continuity. Prasad filed a writ petition before the Patna High Court seeking pay for 7-11-1994 to 15-2-1996. A learned Single Judge allowed the claim, which the Division Bench affirmed in Letters Patent Appeal. The Union of India then approached the Supreme Court by Special Leave Petition (SLP).

Legal Issues Presented

  1. Whether, after reinstatement ordered in departmental appeal, the employee is entitled to back wages for the period between dismissal and reinstatement when the Appellate Authority has declared that period as dies non.
  2. Whether Fundamental Rule 54 empowers the Government to deny back wages in circumstances where the original dismissal was made without enquiry or show-cause notice, contrary to principles of natural justice.

Arguments of the Parties

Appellant (Union of India)

  • Invoked Fundamental Rule 54, contending it authorises the competent authority to deny pay and allowances for any part of the absence when reinstatement follows appeal or review.
  • Submitted that the Appellate Authority had already exercised this discretion by declaring the period 7-11-1994 to 15-2-1996 as dies non, hence no salary was payable.
  • Relied on the Constitution Bench decision in Managing Director, ECIL v. B. Karunakar (1993) 4 SCC 727 to argue that grant of back wages is not automatic and must be decided by the authority concerned.

Respondent (Madhusudan Prasad)

The opinion does not contain a detailed account of the respondent’s legal arguments.

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
Managing Director, ECIL v. B. Karunakar, (1993) 4 SCC 727; (1993) 25 ATC 704 Authorities may determine entitlement to back wages after reinstatement; grant is not automatic. The Court distinguished the present case, noting that in Karunakar the disciplinary enquiry existed but suffered procedural defect, whereas here no enquiry or show-cause preceded dismissal. Therefore, the discretionary denial under F.R. 54 was inapplicable.

Court's Reasoning and Analysis

The Supreme Court acknowledged that Fundamental Rule 54 is an enabling provision permitting the competent authority to decide pay and allowances on reinstatement. However, it emphasized that such discretion must be exercised on relevant considerations and consistent with principles of natural justice.

Key analytical steps:

  • Recognised that Prasad’s dismissal occurred without enquiry or show-cause notice, constituting a clear violation of natural justice and departmental rules.
  • Observed that the Appellate Authority corrected the procedural illegality by setting aside the dismissal but denied back wages without assigning reasons germane to the employee’s fault.
  • Distinguished the Karunakar precedent: there, the employee was found guilty on merits but was deprived of the enquiry report; here, the employer entirely omitted the enquiry, making the employer solely responsible for the illegality.
  • Held that invoking F.R. 54 to withhold pay would effectively reward the employer’s own procedural lapse, an outcome contrary to fairness and statutory intent.

Holding and Implications

APPEAL DISMISSED. The respondent is entitled to salary for the period from 7-11-1994 to 15-2-1996.

Implications: The decision reaffirms that where dismissal is vitiated for want of any enquiry or notice, back wages generally follow reinstatement, and Fundamental Rule 54 cannot be used to deprive an employee of pay for a period caused by the employer’s procedural illegality. The ruling is fact-specific and does not create new precedent but underscores the limits of discretionary denial of back wages under F.R. 54.

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    Union Of India v. Madhusudan Prasad .

    Order

    1. The Union of India challenges the order passed by the Division Bench of the High Court of Patna. Respondent Madhusudan Prasad was a safai karamchari in CRPF. In the year 1994 he proceeded on leave and he should have reported for duty on 31-3-1994. Even after the expiry of the leave, he did not report for duty and overstayed leave without giving any information. The authorities treated him as a deserter and issued a warrant of arrest and he was produced before the Chief Judicial Magistrate-cum-Commandant. The Magistrate imposed on him a penalty of 15 days' rigorous imprisonment. After the imposition of the penalty, the Commandant of CRPF issued an order of dismissal from service. Aggrieved by this order of dismissal, the respondent preferred an appeal and the Appellate Authority held that the disciplinary authority should have afforded reasonable opportunity to the respondent and as the respondent was not served with any show-cause notice nor was there any enquiry preceding the dismissal, the order passed by the disciplinary authority was set aside and directed to reinstate the respondent in service. The Appellate Authority further observed that the period of absence from the date of dismissal from service i.e 7-11-1994 till the reinstatement shall be treated as dies non though there shall not be break in service for the purpose of pensionary benefits.

    2. Pursuant to the order passed by the Appellate Authority, the respondent was reinstated in service on 15-2-1996. The respondent thereafter filed a writ petition before the High Court praying that he may be paid salary for the period 7-11-1994, that is the date of dismissal, to 15-2-1996, that is the date of reinstatement. The learned Single Judge held that the respondent was entitled to get salary for the period he was out of service.

    3. Aggrieved by this order, the Union of India preferred an LPA before the Division Bench, but the Division Bench disposed of the matter affirming the order passed by the learned Single Judge and hence this appeal by way of SLP.

    4. We heard the counsel for the Union of India and it was submitted that the respondent was not entitled to get salary for the period from 7-11-1994 to 15-2-1996 in view of the order passed by the Appellate Authority. It was submitted that Fundamental Rule 54 enables the Government to pass such an order and it was argued that in an appropriate case the authorities can pass an order denying salary to the employee when reinstatement is ordered as a result of appeal or review. Fundamental Rule 54 reads as follows:

    “54. (1) When a government servant who has been dismissed, removed or compulsorily retired is reinstated as a result of appeal or review or would have been so reinstated but for his retirement on superannuation while under suspension or not, the authority competent to order 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 including the period of suspension preceding his dismissal, removal or compulsory retirement, as the case may be; and
    (b) whether or not the said period shall be treated as a period spent on duty.”

    5. It is true that when a reinstatement is ordered in appeal or review, the authorities can pass specific order regarding the pay and allowances to be paid to the government servant for the period of his absence from duty preceding the dismissal, removal or compulsory retirement, as the case may be. This is an enabling provision and the authorities can consider the relevant facts as to whether the employee should be denied the salary for the period he was kept under suspension preceding the removal, dismissal or compulsory retirement. The counsel for the appellant has placed reliance on the decision of the Constitution Bench of this Court in Managing Director, ECIL v. B. Karunakar (1993) 4 SCC 727, (1993) 25 ATC 704 where this Court held that the question whether the employee would be entitled to the back wages and other benefits from the date of his dismissal to the date of his reinstatement, if ultimately ordered, should invariably be left to be decided by the authority concerned according to law, after the culmination of the proceeding and depending on the final outcome. If the employee succeeds in the fresh enquiry and is directed to be reinstated, the authority should be at liberty to decide according to law how it will treat the period from the date of dismissal till the reinstatement and to what benefits, if any, and the extent of the benefits, he will be entitled. The reinstatement made as a result of the setting aside of the enquiry for failure to furnish the report, should be treated as a reinstatement for the purpose of holding the fresh enquiry from the stage of furnishing the report and no more, where such fresh inquiry is held.

    6. The above case was concerning an employee, who was found guilty in an enquiry but the report was not furnished to the employee and the show-cause notice was not served on him. In view of the facts and circumstances of the case, the Court directed that appropriate order should be passed regarding the back wages. In the instant case, the Appellate Authority directed reinstatement of the respondent and held that he was not entitled to get back wages for the period he was out of service. It may be noticed that the respondent was removed from service without any enquiry and he was not even given a show-cause notice prior to his dismissal from service. There was fault on the part of the employer in not following the principle of natural justice. These relevant facts were considered and the learned Single Judge and also the Division Bench ordered the payment of back wages. We do not think this is a fit case where Fundamental Rule 54 could have been invoked by the authorities. We find no merit in the appeal. The appeal is accordingly dismissed.

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    Comments

    Union Of India v. Madhusudan Prasad .
    (Oct 28, 2003)