Palakkad District Co-operative Bank Ltd. v. K.B. Suresh and Others

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** **PRESENT :** **THE HONOURABLE MR. JUSTICE J.B.KOSHY** **& THE HONOURABLE MR. JUSTICE K.P.BALACHANDRAN** **THURSDAY, THE 7TH AUGUST 2008 / 16TH SRAVANA 1930** **WA.No. 1662 of 1997(B)** **---------------------AGAINST THE JUDGEMENT/ORDER IN OP.18255/1996 Dated 05/03/1997 ....................** **APPELLANT: 5TH RESPONDENT IN O.P.:** **-------------------------------------------------------------** **THE PALAKKAD DISTRICT CO-OPERATIVE BANK LTD., REPRESENTED BY ITS GENERAL MANAGER.** **BY ADV. SRI. M.K.DAMODARAN (Sr.) SRI.P.C.SASIDHARAN** **RESPONDENTS: PETITIONERS 1 TO 31 & RESPONDENTS 1 TO 4 IN THE OP:** - **----------------------------------------------------------------------------------------------------------------** **1. K.B.SURESH, JUNIOR ACCOUNTANT, PALAKKAD DISTRICT CO-OPERATIVE BANK, PALAKKAD.** **2. K.K.KRISHNANKUTTY, JUNIOR ACCOUNTANT PALAKKAD DISTRICT CO-OPERATIVE BANK, PALAKKAD.** **3. SELPRAKASAN, SENIOR ACCOUNTANT, PALAKKAD DISTRICT CO-OPERATIVE BANK, PALAKKAD.** **4. V.M.MURALEEDHARAN, JUNIOR ACCOUNTANT, PALAKKAD DISTRICT CO-OPERATIVE BANK, PALAKKAD.** **5. KANTHASWAMY, JUNIOR ACCOUNTANT, PALAKKAD DISTRICT CO-OPERATIVE BANK, PALAKKAD.** **6. S.NATARAJAN, SENIOR ACCOUNTANT, PALAKKAD DISTRICT CO-OPERATIVE BANK, PALAKKAD.** _Kss_ **..2/-** **..2.....** **R.P.NO.30/2004** **7. C.C.BHUVANENDRAN, SENIOR ACCOUNTANT, PALAKKAD DISTRICT CO-OPERATIVE BANK, PALAKKAD.** **8. E.RAMAKRISHNAN, JUNIOR ACCOUNTANT, PALAKKAD DISTRICT CO-OPERATIVE BANK, PALAKKAD.** **9. K.CHANDRAN, JUNIOR ACCOUNTANT, PALAKKAD DISTRICT CO-OPERATIVE BANK, PALAKKAD.** **10. U.SREENIVASAN, JUNIOR ACCOUNTANT, PALAKKAD DISTRICT CO-OPERATIVE BANK, PALAKKAD.** **11. A.NARAYANANKUTTY, JUNIOR ACCOUNTANT, PALAKKAD DISTRICT CO-OPERATIVE BANK, PALAKKAD.** **12. A.SIVADASAN, SENIOR ACCOUNTANT, PALAKKAD DISTRICT CO-OPERATIVE BANK, PALAKKAD.** **13. P.BALASUBRAMANIAN, JUNIOR ACCOUNTANT, PALAKKAD DISTRICT CO-OPERATIVE BANK, PALAKKAD.** **14. K.P.MADHAVANKUTTY, JUNIOR ACCOUNTANT, PALAKKAD DISTRICT CO-OPERATIVE BANK, PALAKKAD.** **15. P.KRISHNANKUTTY, JUNIOR ACCOUNTANT, PALAKKAD DISTRICT CO-OPERATIVE BANK, PALAKKAD.** **16. M.BALAKRISHNAN, JUNIOR ACCOUNTANT, PALAKKAD DISTRICT CO-OPERATIVE BANK, PALAKKAD.** **17. R.VASUDEVAN, JUNIOR ACCOUNTANT, PALAKKAD DISTRICT CO-OPERATIVE BANK, PALAKKAD.** **18. M.SWAMYNATHAN, SENOR ACCOUNTANT, PALAKKAD DISTRICT CO-OPERATIVE BANK, PALAKKAD.** **19. VIJAYANUNNY, JUNIOR ACCOUNTANT, PALAKKAD DISTRICT CO-OPERATIVE BANK, PALAKKAD.** **20. M.CHELLA, JUNIOR ACCOUNTANT, PALAKKAD, DISTRICT CO-OPERATIVE BANK, PALAKKAD.** **21. P.L.VIJAYALAKSHMI, JUNIOR ACCOUNTANT, PALAKKAD DISTRICT CO-OPERATIVE BANK, PALAKKAD.** **22. T.ANITHA, JUNIOR ACCOUNTANT, PALAKKAD DISTRICT CO-OPERATIVE BANK, PALAKKAD.** _Kss_ **..3/-** **..3.....** ## **R.P.NO.30/2004** **23. T.GANGADHARAN, SENIOR ACCOUNTANT, PALAKKAD DISTRICT CO-OPERATIVE BANK, PALAKKAD.** **24. SALGAMMA MATHEW, JUNIOR ACCOUNTANT, PALAKKAD DISTRICT CO-OPERATIVE BANK, PALAKKAD.** **25. K.ARU, SENIOR ACCOUNTANT, PALAKKAD DISTRICT CO-OPERATIVE BANK, PALAKKAD.** **26. K.SUMATHY, SENIOR ACCOUNTANT, PALAKKAD DISTRICT CO-OPERATIVE BANK, PALAKKAD.** **27. K.GIRIJA, JUNIOR ACCOUNTANT, PALAKKAD DISTRICT CO-OPERATIVE BANK, PALAKKAD.** **28. T.RADHAKRISHNAN, JUNIOR ACCOUNTANT, PALAKKAD DISTRICT CO-OPERATIVE BANK, PALAKKAD.** **29. VALSALA, SENIOR ACCOUNTANT, PALAKKAD DISTRICT CO-OPERATIVE BANK,PALAKKAD.** **30. P.O.VISWANATHAN, SENIOR ACCOUNTANT, PALAKKAD DISTRICT CO-OPERATIVE BANK, PALAKKAD.** **31. P.R.OMANA, SENIOR ACCOUNTANT, PALAKKAD DISTRICT CO-OPERATIVE BANK, PALAKKAD.** **32. SECRETARY TO GOVERNMENT, DEPARTMENT OF CO-OPERATION GOVERNMENT OF KERALA, TRIVANDRUM.** **33. THE REGISTRAR OF CO-OPERATIVE SOCIETIES, TRIVANDRUM.** **34. THE ADDL.REGISTRAR OF CO-OPERATIVE SOCIETIES (AUDIT), TRIVANDRUM.** **35. THE DEPUTY REGISTRAR OF CO-OPERATIVE SOCIETIES, PALAKKAD.** **BY GOVT.PLEADER SRI. SANDESH RAJA – R32 TO R35 ADV. SRI.K.RAMAKUMAR )Sr.) FOR R1 TO R31** **THIS WRIT APPEAL HAVING BEEN FINALLY HEARD ON 07/08/2008, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** _Kss_ ## **J.B.KOSHY & K.P.BALACHANDRAN, JJ.** -------------------------------------- W.A.No.1662 OF 1997 ------------------------------------Dated 7[th] August, 2008 ## **JUDGMENT** ## **Koshy,J** . The writ petitioners are employees of the fifth respondent Bank (appellant in this appeal). Ext.P1 is the service regulations of the employees of the District/Central Co-operative Banks in Kerala. Rule 20 of the above rules deals with the increment and fixation of pay. Rule 20 reads as follows: ## “ **20. INCREMENT AND FIXATION OF PAY** - a) An employment will be entitled for increment on completion of each year of service in the particular scale including the period of probation. In cases where the probation is extended for inefficiency or unsatisfactory performance the 2[nd] annual increment can be drawn only from the date of declaration of satisfactory completion of probation. - b) In computing the period of services, absence from duty on grounds of suspension as punishment, leave on loss of pay without Medical Certificate for absence, without leave or notice will be excluded. Leave on loss of pay will not be counted for increment. - c) Increment shall be granted on the date on which a year of service is completed whether or not the employee is on leave (other than loss of pay without medical certificates) W.A.1662/1997 2 NOTE: If the increment falls on any day during the month the said increment shall become due from the first day of the month. - 2 a) When an employee is promoted to another post carrying a higher scale of pay, his initial pay in the higher scale shall be fixed at the stage next above the pay notionally arrived at lower scale of pay by increasing the actual pay drawn by him in the lower scale of pay by one increment. Wherever there is a change of pay the lower scale of pay refixation of pay will be allowed in the higher scale. - b) If a promoted employee had officiated in the higher grade for any period before the promotion to the higher grade to which he was subsequently promoted, such period will be counted for increment in the promoted grade. - c) In case where the application of Rule 20(2) gives rise to anomalies in as much as a Junior employee gets his pay, refixed at a stage higher than the pay drawn by a senior employee in the higher post in the same scale of pay in the normal course, the anomaly will be removed by raising the pay of the senior employee at the stage above to that fixed for the junior employee in the higher post. The usual increment of the senior employee be drawn on the date on which it would have fallen due if the refixation was not done. No refixation will be allowed to compensate other cases of higher pay or increment drawn by junior employees.” W.A.1662/1997 3 According to the petitioners, one of their juniors Sri. Ramaswamy on his promotion as Junior Accountant was drawing a higher salary and another junior Sri.R.Kannappan who is junior to the petitioners as Senior Accountant was also drawing higher salary. In view of the above, applying Ext.P1, General Manager of the Bank issued Exts.P4 and P5 increasing the salary of the Junior Accountants and Senior Accountants by stepping up their pay equivalent to Sri.Ramaswamy and Kannappan. It has also come out in evidence that the salary on the basis of Exts.P4 and P5 were given to the petitioners on a specific undertaking that they will repay if audit objection is raised. Undertakings were given by the writ petitioners stating that if the amount given as per Exts.P4 and P5 by stepping up of their salary equivalent to Sri.Ramaswamy is demanded back due to audit objection, it can be recovered from them and they will not object to the recovery. By Ext.P2, audit objection was raised questioning stepping up of their pay. Consequently, it was decided by the Bank to recover the amount. Then the writ petitioners approached this court questioning the above proposed recovery. 2. The question essentially to be decided is whether stepping up of salary by Exts.P4 and P5 is correct and whether Ext.P2 W.A.1662/1997 4 audit objection is correct. In Ext.P2 audit report it was pointed out in paragraphs 7(a) and (b) as follows: “7. (a) The Pay of 35 Junior Accountants fixed w.e.f. 31.3.95 on the basis of fixation of pay of S.Ramaswamy on his promotion as Junior Accountant is not in accordance with the Provision of Rule 20-2(c) of the Subsidiary Rules, regarding the Service Conditions of employees and hence objected in audit. The amount paid for the period 31.3.95 to 31.3.96 amounting to Rs.6,49,441/= should be recovered from 35 employees with interest at the lending rate as per list enclosed (Annexure I). The payment of excess Salary may be stopped forthwith and their pay should be regularised accordingly. (b) The Pay of 16 Senior Accountants fixed on the basis of re-fixation of pay of Sri.R.Kannappan, Senior Accountant with effect from 1.11.93 is not in accordance with Rule 20-2(c) of Subsidiary Rules regarding Service Conditions of employees and hence objected in audit. The amount paid for the period 1.11.93 to 31.3.96 amounting to Rs.89,688/= should be recovered from the employees with interest. The payment of excess salary may be stopped forthwith and their pay should be regularised accordingly. On perusal of the concerned file, it is seen that 16 employees are given refixation of pay instead of 5 employees as recommended in the office note. The list of employees enclosed in Annexure II.” The learned Judge found that stepping up of salary was correct and found as follows: W.A.1662/1997 5 “Thus, it is clear that if the anomaly is directly as a result of application of Rule 28A, then the senior officer is entitled to get his pay refixed equal to that of his junior officer. But, if the junior officer draws higher rate of pay than the junior by virtue of fixation of pay under the normal rules or any advance increment granted to him, then the senior officer is not entitled to get his pay stepped up. Thus, M/s.S.Ramaswamy and R.Kannappan were granted higher scale of pay only because Rule 20(2) of the Rules was applied. The principle underlying Rule 20(2) as I understand it, is that a person will be drawing the maximum scale of pay in the lower scale at the time of his promotion. On promotion to the higher scale of pay there may not be any increase in his emoluments. Therefore, to give him a higher emolument on promotion, he will be granted one more increment fixing it notionally. That is what happened in the case of M/s.S.Ramaswamy and R.Kannappan. By such process the petitioners who are seniors to those two persons were getting lesser pay. Such an anomaly is sought to be rectified by applying Rule 20(2)(c) of Ext.P1 Rules. That is what the fifth respondent did initially. The audit objection did not take into consideration the basic principle underlying these rules. The present stand of the fifth respondent and the Government in their counter affidavit is also against these basic principles and cannot be sustained.” This is questioned by the appellant Bank in this writ appeal. W.A.1662/1997 6 3. Now, we will come to the facts of this case. Sri.Kannappan joined the service of the Bank as Peon on 18.11.1978. Sri.Ramaswamy joined the service of the Bank as Peon on 25.11.1978. Writ petitioners were appointed as clerks after 15.7.1982. As far as Gangadharan (petitioner No.23) is concerned, he was appointed on 15.7.1982 as clerk and his basic pay on the date of appointment was Rs.400/=. On 15.7.1982, before pay revision, Sri.Ramaswamy was getting an amount of Rs.584/= as a peon because of his prior service. Therefore, when Sri.Gangadharan was appointed as a clerk on basic pay of Rs.400/=, Sri.Ramaswamy was getting a basic pay of Rs.584/-. With regard to Smt.Valsala (petitioner No.29), she was appointed on 15.7.1982 on a basic pay of Rs.400/=. We have already seen that Sri.Ramaswamy was getting Rs.584/= on that date. Smt.P.L.Vijayalakshmi (petitioner No.21) was appointed on 8.6.1984 on a basic pay of Rs.400/=. As on that date, Sri.Ramaswamy was continuing as peon on a basic pay of Rs.600/=. Sri.Ramaswamy was promoted as a clerk on 26.11.1985 with a starting basic pay of Rs.689/=. Smt.Anitha (petitioner No.22) was appointed as a clerk on 21.6.1986 on a basic pay of Rs.400/=. Consequently, Sri.Ramaswamy was promoted as Junior Accountant on 31.3.1995 on a basic pay of Rs.3,275/=. On that date, Sri.Gangadharan was getting a basic pay of Rs.2,545/=, Smt.Valsala was getting Rs.2,685/=, W.A.1662/1997 7 Smt.Vijayalakshmi was getting Rs.2,685/= and Smt.Anitha was getting Rs.2355/-. Therefore, on the date of appointment of the petitioners as clerks, they were getting a lesser salary than that was received by Sri.Ramaswamy as a peon. At the time of promotion as Junior Accountant also Sri.Ramaswamy was getting a higher pay. As rightly pointed out by the learned single Judge, if the seniors were getting higher wages as per the normal increments, that cannot be treated as an anomaly. In view of the long service, though in the lower post, Ramaswamy and Kannappan were getting higher salary even when the petitioners were appointed and consequently when the petitioners were promoted as Junior Accountants also they were getting higher pay in the lower post than the petitioners. It is true that whenever an employee at lower grade is promoted, at the time of promotion they will be given one increment, that is the promotional increment, for the purpose of fixation of pay and such employees may sometimes get higher amount than their juniors in that post and it cannot be treated as an anomaly. In this connection, we also refer to Rule 20 of Ext.P1 rules itself, wherein it can be seen that they are entitled to get higher salary in view of Rule 20(2)(a) and in such case it cannot be stated as anomaly (See Rule 20(2)(c)). In this connection, we also refer to the decision of the Supreme Court in **Union of India and another** v. **R.Swaminathan and others** ((1997) 7 SCC 690) wherein the W.A.1662/1997 8 Hon'ble Supreme Court was considering the question of stepping up of salary with reference to the Fundamental Rule 22 and Hon'ble Apex Court held as follows: “As the Order itself states, the stepping up is subject to three conditions:(1) Both the junior and the senior officers should belong to the same cadre and the posts in which they have been promoted should be identical and in the same cadre; (2) the scales of pay of the lower and higher posts should be identical; and (3) anomaly should be directly as a result of the application of Fundamental Rule 22(1)(a)(1). The higher pay received by a junior is on account of his earlier officiation in the higher post because of local officiating promotions which he got in the past. Because of the proviso to Rule 22 he may have earned increments in the higher pay scale of the post to which he is promoted on account of his past service and also his previous pay in the promotional post has been taken into account in fixing his pay on promotion. It is these two factors which have increased the pay of the juniors. This cannot be considered as an anomaly requiring the stepping up of the pay of the seniors.” The General Manager issued Exts.P4 and P5 only subject to the audit report and further action. When audit report was received, the Board of Directors decided to recover the same as stepping up of pay was given against the mandates of Rule 20(2)(c) and there was no anomaly to be rectified. It is argued by the counsel for the writ petitioners that a new case is being argued. We are unable to accept W.A.1662/1997 9 the above contention as all the time the contention of the Bank was that there was no anomaly at all. Ramaswamy and Kannappan were juniors and they were getting higher salaries. They were promoted from the post of Peon to Clerk and when writ petitioners were appointed as Clerks, they were getting lower salary than Ramaswamy and Kannappan. Ramaswamy and Kannappan were getting higher pay even before the promotion as Junior Accountant and Senior Accountant than the writ petitioners. When they were promoted as Junior Accountant and Senior Accountant, they will get higher pay and it is not an anomaly at all warranting stepping up of pay. However, we make it clear that the recovery of excess pay should be effected only in easy instalments despite their undertakings. In the above circumstances, we allow the writ appeal and set aside the impugned judgment. **J.B.KOSHY JUDGE** **K.P.BALACHANDRAN JUDGE** tks