1. This appeal by the employee is directed against the order of Mohan J. quashing the award of the Industrial Tribunal, the second respondent herein. The facts necessary for the disposal of this appeal may shortly be stated.
2. S. Thangavelu, A Head-Clerk in the Main Branch of the State Bank of India, Madras, whose cause has been exposed by the Appellant, obtained a loan of Rs. 2,500/- on 24th January, 1969 form the Bank for purchasing a scooter which was required to be purchased within one month and hypothecated to the bank. He did not purchase the scooter, as required under the terms of the loan. Therefore, on 31st May, 1969, the Bank asked the employee to return the amount advanced, failing which disciplinary proceedings would be taken against him. The amount not having been returned, on 4th September, 1969, a charge Memo (Exhibit M. 3) was issued against him by the Bank levelling two charges, namely (1) obtaining the loan on false representation, and (2) insubordination in refusing to comply with the demand of the Bank to return the amount advanced.
3. The employee submitted an explanation and a domestic enquiry was held by S. Venkatachari, Staff Officer of the Bank who found him guilty of the first charge and exonerated him of the second charge, by his finding dated 1st July, 1970. Thereupon the Management issued a show cause notice dated 23rd July, 1970, to the employee proposing to award the punishment of stoppage of increment for a period of one year. The employee submitted his explanation on 28th August, 1970 and on 16th September, 1970 the Management passed an order under para 521(5)(d) of the Sastry Award read in conjunction with para 18-28 of the Desai Award stopping the increment of the employee due on 1st April, 1970, for one year, and he was informed that his next increment would fall due of 1st April, 1971.
4. The appeal by the employee was also dismissed by the Appellate Authority. An industrial dispute was raised at the instance of the appellant and referred under S. 10(1)(d) of the Industrial Disputes Act, 1947 to the Presiding Officer of the Industrial Tribunal, Madras, by the Central Government.
5. The Tribunal by its award dated 9th April, 1973 came to the conclusion that the management was not justified in withholding the increment to which the employee was entitled on 1st April, 1970 by an order of punishment passed much thereafter with retrospective effect. Against that, the Bank filed a Writ Petition in this court. Interpreting the Sastry Award, the Learned Single Judge came to the conclusion that once the employee is found guilty of misconduct, as to from what date the increment has to be withheld is entirely within the discretion of the management. He, therefore, quashed the award of the Tribunal and allowed the writ petition, against which the present appeal has been filed.
6. The Learned counsel for the appellant submitted that the interpretation put by the Learned Single Judge on the Sastry Award is incorrect. It is the undisputed position before us that the Sastry Award is binding on the parties and the grant of annual increment is guided by the said award. The question therefore, depends on an interpretation of the aforesaid Awards vis-a-vis the grant of the annual increment to the employee. Paragraph 85 of the Sastry Award has, been accepted in Desai Award in para 5-117 the relevant portion of which reads as follows :
'Workmen should normally have the benefit of the annual increments as a matter of course, provided there is not a substantially good reason to deprive them of the same either because of their misconduct or gross inefficiency. The wage scale has to be so devised that it provides for the growing needs of the workman and his family. Stoppage of increment, therefore, is more or less by way of punishment. The giving of increments should not be regarded as a matter of bounty, at the sweet will and pleasure of the management. At the same time the management should have the right to see that workmen keep up the normal standard of efficiency and not lapse into difference of an incremental scale. We, therefore, direct that increments should normally be given and stoppage of increments by managements should be only by way of punishment for proved misconduct or gross inefficiency. As a working rule, if in the previous year there are three adverse remarks in the service register of the workmen entered against him as a result of the management's enquiry into his conduct and after consideration of any explanation given by him, it may be taken as a prima facie case for stopping the increment at the next stage and for the next year. If an employee's increment is to be withheld it should only be done after a proper charge sheet has been framed against him and he has been given adequate opportunity to defend himself. The order in writing withholding the increment should also mention whether it will have the effect of postponing future increments.'
From the above, the following proposition emerge :
1. The employee is entitled to annual increments as a matter of course and it is not a matter of bounty.
2. Stoppage of increment can be only as a matter of punishment
3. Increment could be stopped only by way of punishment for proved misconduct or gross inefficiency.
4. It the employee had three adverse remarks recorded against him after proper enquiry by the Management, it will be a prima facie case for stoppage of increment at the next stage and for the next year.
5. If the employee's increment is to be withheld, it should be only after proper charge-sheet has been framed and adequate opportunity is given to defend himself.
6. The order should also mention whether it has the effect of postponing future increments also.
A reference to the above provision of the Sastry Award, it is manifest that an increment is earned as a matter of course. The increment due to the employee in the instant case on 1st April, 1970 was payable to him on that date. True it is, that a departmental proceeding was pending against him. But by a mere pendency of a departmental proceeding it cannot be said that the employee was guilty of misconduct or gross inefficiency, much less proved misconduct, as required by the Sastry Award, for stoppage of increment. Therefore, the increment that could be stopped could be only and which would be falling due after the employee was found guilty in a proper departmental enquiry. There was no justification on the part of the Management in stopping the increment of the employee who was entitled to it on 1st April, 1970 in the hope that the employee would possibly be found guilty of misconduct in future. The Sastry Award does not clothe the Management with such a power. It does not give the management power to pass orders withholding the increment retrospectively by way of punishment. You can only stop something by way of punishment which is to come in future and not what has already accrued to the employee. The Sastry Award does not say that the mere pendency of a proceeding would entitle the Management to withhold payment of increment to an employee retrospectively, if found guilty.
7. The Sastry Award in unmistakable terms lays down that if three adverse remarks have been registered against the employee after proper enquiry, it may be taken as prima facie for a 'stopping the increment at the next year.' The Award, therefore, countenances a stoppage of increment falling in future after the employee has been found guilty and not before that.
8. Faced with this difficulty, Mr. M. R. Narayanaswami submitted that having regard to the finding of the Tribunal that the correctness of the order of stoppage of increment is not in question, the effect of that order particularly when it has been given effect to, cannot be got over indirectly. The reference made by the Central Government was as follows :-
'Whether the action of the Management of the State Bank of India in withholding the annual increment of Shri S. Thangavelu during the pendency of disciplinary proceedings against him is justified If not, to what relief is the said Thangavelu entitled ?'
From the order of reference it is apparent that the punishment of stoppage of annual increment was in challenge Mr. Narayanaswami has relied on certain observations occurring in para 4 of the judgment of the Tribunal. To appreciate that, the whole paragraph is being quoted with the line relied on by him underlined :-
'Though in the claim statement the Union has prayed for a direction that the punishment of stoppage of one increment imposed by the management by its order dated 16th September 1970, is void and therefore liable to be set aside, the prayer in the rejoinder is to hold that the action of the management in withholding the increment due to Shri Thangavelu on 1st April, 1970 was illegal, in as much as the increment was not withheld as any punishment for any proven misconduct on that day, and that even if there was a disciplinary action pending against him, there was no justification for the management to withhold the increment, which Shri Thangavelu was entitled to on 1st April, 1970. It is also contended that the management had no power or justification to give retrospective effect to the order of punishment of stoppage of increment passed on 16th September, 1970. In the light of the order of reference, it is clear that the nature of the order of punishment dated 16th September, 1970 is not in question. The subject matter of the reference is the propriety of the action of the Management in withholding the annual increment of Shri Thangavelu, during the pendency of disciplinary proceedings.'
The aforesaid observation has been relied on by Mr. Narayanaswami, in support of his submission that the order of punishment dated 16th September, 1970 was not in question. The observation of the Tribunal is entirely incorrect as will be apparent from what has been stated earlier in that paragraph and what follows thereafter. The last line makes it abundantly clear that the propriety of the order of withholding the increment due, during the pendency of the proceeding, which was the punishment awarded, itself was under challenge. As a matter of fact, the Tribunal has found, as already mentioned, that the Management has no right to withhold the increment which has fallen due, which is the punishment awarded against the employee.
9. The last line in para. 85 of the Sastry Award quoted above, should not be misunderstood as power given to the Management to withhold past increments. It only says that the order withholding the increment should also mention as to whether it will have the effect of postponing future increments also, that is to say, whether it will have cumulative effect. We are not concerned in this case with any such situation.
10. We accordingly allow the appeal and set aside the order of the learned single Judge quashing the award of the Tribunal. In the circumstances of the case we make no order as to costs.