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Judgment
All these Special Writ Appeals arise out of the common order dated 19.12.2024 passed by the learned Single Judge, whereby the order dated 05.02.2018, reducing the regular pay-scale and fixing the consolidated remuneration of the respondent-employees, was set aside. Aggrieved by the same, the present appeals have been filed by the Mukhya Vyavasthapak, Banswara Kray Vikray Sahakari Samiti Ltd., the respondent in the writ petition (hereinafter referred to as the “appellant-Society”).
The common facts are that all the writ-petitioners were initially engaged as Lower Division Clerks (LDCs) on a consolidated remuneration of Rs.12,000/- per month with the appellant-Society. By order dated 21.05.2013, they were appointed against regular posts and were granted the regular pay-scale. During the audit conducted on 02.02.2018, the Auditor found that the appointments of four employees, i.e. the writ-petitioners, were irregular. Pursuant to the audit objection, the appellant-Society withdrew the regular pay-scale granted to the writ-petitioners and directed them to work on a fixed remuneration of Rs.12,000/- per month. Aggrieved by the said action, the writ petitions were filed.
The writ petitions were allowed by the learned Single Judge on the ground that reduction in pay-scale entails civil consequences and, therefore, an opportunity of hearing was required to be afforded to the writ-petitioners. Since no notice or opportunity of hearing was given to them, the learned Single Judge held that the action of the appellant-Society was in violation of the principles of natural justice. Consequently, the order reducing the pay-scale was set aside. Aggrieved by the said order, the appellant-Society has preferred the present Special Writ Appeals.
Heard the learned counsels appearing for both parties
Learned counsel appearing for the appellant-Society contends that fraud had been committed by the then Manager of the Society in making the appointments of the writ-petitioners. The said irregularities were detected during the audit and consequently, disciplinary proceedings were initiated against the erstwhile Manager, who was thereafter removed from service. It is further contended that the resolution dated 15.06.2013 passed by the Society did not contain any approval of the appointments of the writ-petitioners. According to the appellant-Society, the proceedings dated 21.05.2013 relates to only sanctioning of the cadre strength of one post of LDC in the appellant-Society, whereas three persons were appointed as LDCs and one person was appointed as an Assistant as regular employees and were granted regular pay-scales. It is, therefore, contended that the action taken by the appellant-Society was merely to restore the position that existed prior to the irregular appointments by withdrawing the regular pay-scale, and no opportunity of hearing was required to be afforded in such circumstances.
Per contra, learned counsel appearing for the writ-petitioners submits that reduction in pay-scale entails civil consequences and, therefore, the affected employees were required to be afforded an opportunity of hearing before taking such action. Since no opportunity of hearing was granted to the writ-petitioners, the learned Single Judge rightly interfered with the order reducing their pay-scale. In support of his contention, learned counsel has relied upon the decision of the Hon’ble Supreme Court in Mukund K. Pai & Ors. v. Punjab National Bank & Ors., reported in 2025 SCC OnLine SC 2345.
We have considered the submissions of learned counsel for the parties and carefully perused the material available on record.
The impugned order reflects that the reduction of pay-scales was effected by order dated 05.02.2018. Before passing the order reducing the pay-scales, no opportunity of hearing was afforded to the affected employees, i.e. the writ-petitioners. On this ground alone, the learned Single Judge allowed the writ petitions. The Apex Court in the case of Mukund K. Pai (cited supra) held as follows:-
“23)Be that as it may, by the order of re-fixation of pay the appellants’ pay were reduced in the wake of refixation. The deductions in the pay scale recurring reductions of salary affects the civil consequences to an ex-serviceman. This is urged that such refixation cannot be directed without observance of the principle of natural justice. In support thereto, reliance has been placed on the judgment of this Court in the case of ‘Bhagwan Shukla v. Union of India & Ors.’ (1994) 6 SCC154, wherein while dealing with question of reduction of basic pay of appellant, this Court held thus:
“3.We have heard learned counsel for the parties. That the petitioner's basic pay had been fixed since 1970 at Rs 190 p.m. is not disputed. There is also no dispute that the basic pay of the appellant was reduced to Rs 181 p.m. from Rs 190 p.m. in 1991 retrospectively w.e.f. 18-12-1970. The appellant has obviously been visited with civil consequences but he had been granted no opportunity to show cause against the reduction of his basic pay. He was not even put on notice before his pay was reduced by the department and the order came to be made behind his back without following any procedure known to law. There has, thus, been a flagrant violation of the principles of natural justice and the appellant has been made to suffer huge financial loss without being heard. Fair play in action warrants that no such order which has the effect of an employee suffering civil consequences should be passed without putting the (sic employee) concerned to notice and giving him a hearing in the matter. Since, that was not done, the order (memorandum) dated 25-7-1991, which was impugned before the Tribunal could not certainly be sustained and the Central Administrative Tribunal fell in error in dismissing the petition of the appellant. The order of the Tribunal deserves to be set aside. We, accordingly, accept this appeal and set aside the order of the Central Administrative Tribunal dated 17- 9-1993 as well as the order (memorandum) impugned 5 (1994) 6 SCC 154 before the Tribunal dated 25-7-1991 reducing the basic pay of the appellant from Rs 190 to Rs 181 w.e.f. 18-12-1970.”
24)After going through the facts of this case, it is not in dispute that the order of re-fixation has been passed without affording an opportunity to the appellants. Observance of the principles of natural justice in cases of re-fixation of pay leading to financial loss is sine qua non. Considering the aforesaid, we have no hesitation to hold that the Bank while re-fixing the pay had violated the principles of natural justice and reduced the pay of appellants without hearing them.”
A reading of the aforesaid ratio laid down by the Hon’ble Apex Court, makes it clear that whenever the pay of an employee is reduced, such reduction entails civil consequences. Before effecting any such reduction, the affected party is required to be afforded an opportunity of hearing. In the present case, the impugned orders, which were challenged before the learned Single Judge, were passed without affording any opportunity of hearing to the writ-petitioners. In this view of the matter, we find that the learned Single Judge was justified in interfering with the impugned orders. We find no merit in the present Special Writ Appeals.
In the result, the present appeals are dismissed.
Pending interlocutory applications, if any, shall stand disposed of.