Holding

An employee who has not passed the required departmental examination cannot be confirmed in regular service and therefore is not eligible for increments or higher pay scale benefits conditioned on regular satisfactory service.

Summary

The respondent, a Upper Division Clerk appointed in 1975, was required to pass the Departmental Accounts Examination within two years of joining and obtain five chances to do so, as stipulated in Rule 13 of the Haryana State Electricity Board Manual of Orders. He never appeared for the examination, and consequently his services were never confirmed as regular. The Board later issued a circular granting additional increments and higher pay scales on completion of specified years of regular satisfactory service, which the respondent claimed. The trial court and appellate courts held that the failure to pass the examination did not preclude the benefit, but the Supreme Court reversed this view, holding that such benefits are contingent upon confirmed regular service. The Court ordered that the respondent is not entitled to the additional increment or higher pay scale, though his pensionary benefits should not be denied, and allowed the appeal without costs.

Issues considered

Whether failure to pass the mandatory Departmental Accounts Examination bars confirmation of service.
Whether the circular granting additional increments on completion of regular service applies to an employee whose services are not confirmed.
Whether the employee is entitled to pensionary benefits despite non‑confirmation.
Whether the employer was obligated to terminate the employee or issue a warning under the service rules.

Subjects

service lawconfirmation of servicedepartmental examinationincrementregular servicepromotionservice rulesHaryana State Electricity Boardprobation periodpensionary benefits

Judgment

[2009] 8 S.C.R. 321

, CHIEF ENGINEER/OPERATION DAKSHINI HARYANA A
BIJLI VITRAN NIGAM LTD. & ANR.
- v.
MAUJ KHAN & ORS.
(Civil Appeal No. 3311 of 2008)
MAY 06, 2009 B

[S.S. SINHA AND CYRIAC JOSEPH, JJ.]
'~
*
Service law: Conditions of service - Service rules
providing that passing of departmental examination was c
imperative for confirmation of service - Employee never
appeared in the said examination - His entitlement to benefit
of additional increment, which was applicable on completion
of regular service - Held: Not entitled as his services were
never confirmed and thus he was not in regular service - Rule D
""\'
13 of Manual of orders of the Haryana State Electricity Board.

Respondent no. 1 was appointed directly in the
cadre of UDC. The terms and conditions of the offer of
appointment were that the emp~oyee would be E
considered for confirmation against permanent vacant
post after completion of two years probationary period
and passing the Department Accounts Examination, and
~ failure to clear the examination within five successive
chances held immediately after six months of joining the
-- service of the Board would involve loss of appointment. F

· The respondent-employee never appeared in the
Departmental Examination. His services were not
confirmed and he was disentitled to obtain the benefit of
increment. G

The Electricity Board issued a circular letter pursuant
whereto all the employees were to be granted the benefit
. of additional increment on completion of 8/18 years of
321 H
322 SUPREME COURT REPORTS [2009] 8 S.C.R.

A regular satisfactory service and higher standard pay
scale on completion of 10/20 years or more regular
satisfactory service and promotion to the next higher
post.As all these benefits were denied to the respondent
no.1, he filed a _suit for declaration with consequential
B relief of mandatory injunction. The trial Judge, while
declining the relief of grant of increments in the scale of
pay, opined that failure to appear in the Departmental
Accounts Examination would not stand in the way of the
plaintiff from obtaining the benefit of additional increment
c and/or higher scale of pay. The order of the trial court
was upheld by the First appellate court and High Court.
Hence the appeal.

Allowing the appeal, the Court

D HELD: 1.1. The service of the employee was to be
considered for confirmation only upon completion of the
two years' probationary period as also passing of the
Departmental Accounts Examin'ation. For the said
purpose, only five successive chances were required to
E be given to him to appear in the examination which were
to be held after six months of his joining<of service. Rule
13 of the Manual of orders of the Haryana State Electricity
Board provides for confirmation, grant of annual
increment, retention in service, promotion etc. For the
F purpose of obtaining any benefit in terms thereof,
passing of the examination is imperative. In the event
employee failed to pass the said examination within a
period of three years of his appointment in the Branch,
his increments falling due after the first two increments
G from his first appointment, would be withheld until he
passed the examination. Even after passing the
examination, increment was to be granted prospectively
and not retrospectively. The Rules further stipulated that
failure to pass the examination would entail loss of his
H appointment. The trial Judge as also the appellate Court,
CHIEF ENGINEER/OPERATION DAKSHINI HARYANA BIJLI 323
VITRAN NIGAM LTD. v. MAUJ KHAN
thus, rightly held that as the respondent no.1 did not pass A
the Departmental Accounts Examination, he was not
entitled to be confirmed in service. The Judges, however,
committed a serious error in opining that the circular letter
relating to grant of additional increment and/or higher
standard pay scale would be applicable in the case of the 8
respondent no.1. (Paras 14 and 16] (330-E-H; 331-A-C, E-
F]
• 1.2. Although, neither the circular letter, in terms
whereof the said benefits were to be granted, was·
brought on record nor the connected rule were placed
c
before this Court, but, on a plain reading of the judgment

- of the trial Judge as also the first Appellate Court, it is
evident that the benefits could be conferred on the
respondent no.1 only if he had completed the period
stipulated therein in regular service. Unless, the services D
of an employee are confirmed so as to bring him on the
cadre of regular employees, the question of completion
of 8/18 years, 10/20 years of regular satisfactory service
would not arise. The respondent no.1 was allowed to
continue in service. Despite the fact that he did not pass E
the Departmental Accounts Examination, he was
otherwise a competent officer. In fact, he was permitted
-1 to officiate on a higher post. In, a situation of this nature
.. ·
the appellants had a duty to give him a warning. His case
should have been treated in terms of the rules. Failure on r
the part of the State to do so seriously prejudiced him.
Had such warning been given, he could have appeared
in the examination. Under the Rules, he was not entitled
to any warning regarding the failure to pass the test.
However, he was allowed to continue in service and G
receive the salary. What was denied was only the benefit
of additional increment which was to be granted on
fulfilling certain conditions. In such circumstances, there
may not be justification' for payment of compensation.
Instead, the appellants should be directed not to deny H
324 SUPREME COURT REPORTS (2009} 8 S.C.R.

A pensiQnary benefits to the re$po11dent on the ground
that his services were not regularized/ confirmed. Such
direction is necessary only if there is a move to deny
pensionary benefits. [Paras 17 and 18] [331-G-H; 333-A-
D; 332-A-8]
B
CIVIL APPELLATE JURISDICTION : Civil Appeal No.
3311 of 2008.

From the Judgment & Order dated 28.10.2005 passed by
the High Court of Punjab and Haryana at Chandigarh in R.S.A.
C No. 3855 of 2005.

Arvind Nayar, Vikas Kumar and T.V. George for the
Appellants.

B.K. Satija for the Respondent.
D
The Judgment of the Court was delivered by

S.8. SINHA, J. 1. Leave granted.

2. Interpretation of a rule governing the conditions of
E service of the employees of the appellant-Corporation, is the
question involved in this appeal which arises out of a judgment
and order dated 28th October 2005 passed by a learned Single
Judge of the High Court of Punjab & Haryana at Chandigarh. .,~

F The basic fact involved in the matter is not in dispute.

3. Respondent No.1 was appointed directly in the cadre
of Upper Division Clerk (U.D.C.) on 06th May 1975. The terms
and conditions of the said offer of appointment in the scale of
Rs.150-8-166/10-216/230-10-300 were :
G
"3. It should be noted that the first two years of your service y

in the Board will be treated as probationary period for the
purpose of D.A. Examination which you will be required
to pass within two years of your joining this Department.
H
CHIEF
- . '
ENGINEER/OPERATION
' '' . DAKSHINI
' . ·- HARYANA
. - - - ..
. BIJLI. 325•'

VITRAN NIGAM LTD. v. MAUJ KHAN [S.B. SINHA, J.]

4. You will be considered for confirrnation against A
permanent vacant post after you have completed two years
probationary period and passed the Departmental
Accounts Examination.

5. The failure to clear the examination within five B
successive chances held immediately after six months of
your joining the service of the Board, may involve the loss
of your appointment."
K

4. Indisputably, the respondent never appeared in the
Departmental Examination. The rules prescribed for c
appearance at the Departmental Ex~minations are contained
in the Manual of Orders of the Haryana State Electricity Board,
of which the appellant-Corporation was a constituent before its
bifurcation. Clause 13 thereof reads as under:
D
. ..... ''13. Confirmation, grant of Annual Increment,
Retention in Service, Promotion etc.:-

(i) Promotion. A junior clerk, a Meter Clerk or a Cashier
in the Scale of Rs.50-3-8-/4-100 (or such other scale for
such posts as may be hereafter introduced or substituted E
for the scale of Rs.50-3-80/4-100) shall not be appointed
to a post carrying a scale higher than that of the junior
Clerk, Meter Clerk or Cashier, until and unless he has
-;'\
passed the examination in papers l to IV. The maximum
number of chances allowed to take the examination in F
one's service is fixed as five.

Note:- Those Junior Clerks, Meter Clerks or Cashiers who
have already passed in papers Ill and IV of the examination
according to the old rules will have to appear in papers I
and II of these Rules only in order to qualify themselves for G
'I the promotion to the grade of a Senior Clerk.
•
(ii) Confirmation:- A Senior clerk if he has been directly
recruited as such, will not be appointed in a substantive
capacity in his post unless he has passed the examination
H
326 SUPREME COURT REPORTS [2009] 8 S.C.R.

A in papers I to IV. If he fails to pass the examination in
papers I to IV within three years of his appointment in the
Branch, his increments falling due after the first two
increments from his first appointment. will be withheld until
he passes the examination and will not be granted with
B retrospective effect on his passing the examination. On
passing the examination he will with effect from the date
following that on which the examination ended, be entitled
to the date of pay which would have been admissible to
'>,
him had his increment not been withheld for his failure to
c pass the ~xamination.

The failure of the senior clerk to pass the examination
in five successive examinations held immediately after the
expiry of six months from the date of his first appointment
may involve the loss of his appointment"
D
5. Indisputably, inter alia, on the premise that he had not
passed the Departmental Examination and thus was not entitled
to obtain the benefit of the increment, the same was not granted.
Indisputably again, the services of the respondent no.1 were not
E confirmed,
6. The Haryana State Electricity Board issued a circular
letter pursuant whereto all the employees were to be granted
the benefit of additional increment on completion of 8/18 years ,k
of regular satisfactory service and higher standard pay scale
F
on completion of 10/20 years or more regular satisfactory
service and promotion to the next higher post.

7. As all these benefits were denied to the respondent no.1,
he filed a suit before the Civil Judge, Gurgaon which was
G marked as Civil Suit No.464 of 1999 for declaration with
consequential relief of mandatory injunction. The learned trial
y
Judge, while declining the relief of grant of increments in the
scale of pay, opined that failure to appear in the Departmental
Accounts Examination would not stand in the way of the plaintiff
H from obtaining the benefit of additional increment and/or higher
•
CHll:F ENGINEER/OPERATION DAKSHINI HARYANA BIJLI 327
VITRAN NIGAM LTD. v. MAUJ KHAN [S.B. SINHA, J.]

scale of pay stating : A
'
"16. The only stand taken by defendants in declining the
above said benefits to plaintiff is that he has not passed
the Departmental Accounts Examination. In my considered
opinion, said ground taken by defendants is that without
B
any basis in as much as grant of additional increments on
completion of 8/18 years of service and grant of higher
"' standard pay scale on completion of 10/20 years or more
of regular service is not subject to the passing of
Departmental Accounts Examination. Ld. Law Officer
appearing for defendants could not quote any provision of c
law which require UDCs to clear said examination for the
purpose of grant of above said benefits. Even in the rules
of 1952 of anywhere also, there is no provision regarding
__,, requirement of passing of Departmental Examination for
I
availing the above said benefits. With regard to grant of D
additional increments and higher standard pay scale, the
relevant documents which have been placed on file are
Ex.PW1/8, Ex.PW1/11 and Ex.PW1/12. Perusal of said
documents shows that an employee is entitled to additional
increments and higher standard pay scale on completion E
of regular satisfactory service as defined in the policy of
the Government.
,:\
In this situation, it was argued by Id. Law Officer that
since plaintiff did not clear the Departmental Accounts
F
Examination, therefore, as per the terms and conditions of
offer of appointment, he shall be deemed to be on
probation till the time he clears the Departmental
Examination and as such, he cannot be said to be
'o

confirmed as UDC: Thus, above service benefits as
"(
claimed shall not be admissible in favour of plaintiff. G

There is no merit in this contention in as much as the
service of plaintiff were not dispensed with by defendants
on the ground of his non-passing the Departmental
Accounts Examination. He has been continuing in the H
328 SUPREME COURT REPORTS [2009] 8 S.C.R.
,..._

A services of department for the last more than 29 years and
as such, notwithstanding the non-passing of Departmental
Accounts Examination, he shall be deemed to have been ~

confirmed in the post of UDC. Thus, plaintiff is entitled to
be considered for the benefit of additional increments,
B higher standard pay scale and promotion.

17. On the same reasons, plaintiff is also entitled to be :.
considered for promotion to the next higher post as there is
no embargo against promotion of plaintiff for not passing the
Departmental Accounts Examination. An employee is to be
c promoted to next higher post taking into consideration the length
of service, his performance and act and conduct in the post
he is working just prior to promotion."

8. On the aforementioned finding, it was directed :
D
"18. In the facts and circumstances of present case, no
direction can be issued to defendants for giving the above
said benefits to plaintiff straight away. Rather in my opinion,
plaintiff is entitled to be considered for the said benefits
because before conferment of above benefits in favour of
E plaintiff, defendants would be required to see as to
whether plaintiff has regular satisfactory service to his
credit as per the policy of State Govt. and whether he is r,
fit for promotion. However, it is made clear here that while
considering the entitlement of plaintiff to above said
F benefits, defendants shall not take non-passing of
Departmental Accounts Examination as a ground to reject
the claim of plaintiff for above said benefits."

9. Both the parties preferred appeals thereagainst. By a
G judgment and order dated 30th October 2004, the learned y
Additional District Judge, Gurgaon, dismissed both the
appeals. A second appeal preferred thereagainst by the
appellants has been dismissed by the High Court by reason
of the impugned judgment.
H
CHIEF ENGINEER/OPERATION DAKSHINI HARYANA BIJLI 329
VITRAN NIGAM LTD. v. MAUJ KHAN [S.B. SINHA, J.]

10. Mr. Arvind Nayar, learned counsel appearing oh behalf A
of the appellants would submit '.·

(i) Having regard to the stipulations contained in the
offer of appointment, respondent no .1 was not
entitled either to incfement or to confirmation in B
service or promotion to the next higher post; and

(ii) Thus, period of probation would be deemed to have
been extended as respondent no.1 was nc:it entitled
to any increment in the scale of pay and thus having
not put in a regular seriJice was also not entitled to C
the benefit of additional increment on completion of
8/18 years of regular satisfactory service or higher
standard pay scale on completion of 10/20 years
of regular satisfactory service and promotion to next
--J, higher p;ost. D

11. Mr. B.K. Satifa', learned counsel appearing on behalf
of the respondent no.~', pn the other hand, INould urge that failure
of the senior clerk to pass the examination would not debar him
from obtaining the benefit of the policy decision adopted by the E
II'
Haryana State Electricity .Board in regard to obtaining
additional increment and/or higher scale of pay on completion
of 8/18 years of regular satisfactory service and/or higher
I'
standard pay scale on completion of 10/20 years or more of
regular satisfactory service.
F
12. Our attention has also been drawn to a clarification
issued by the State Government in respect of the following
question:
,'
"21. Employees who were 21. Yes, the benefit of G
"i not being promoted to the higher standard
next higher posts due pay scales is to
to not qualifying prescribed be given in such
test or non possession of like cases."
; essenHal qualifications H
330 SUPREME COURT REPORTS [2009] 8 S.C.R.

)<-• •
A for promotion to the next post, whether
benefit of Higher standard pay scale is to
be given to such employee or not?

The said clarificatioh has been accepted by the Haryana
State Electricity Board by issuance of Circular No.117 dated
8
26th February 1996.

It was urged that the learned trial Judge as also the
appellate court having directed consideration of the grant of
benefit of the said circulars only, this Court, keeping in view the
C fact that the re$pondent no.1 had been in service of the
appellant-Corporation for a period of more than 33 years,
should not exer6ise its discretionary jurisdiction under Artie.le
136 of the Constitution
;
of India.

D"' 13. Respondent no.1 was appointed directly to the post
of officiating Upper Division Clerk on a salary of Rs.150/- per
month in the scale of pay of Rs.150-8-166/10-216/230-10-300.
Indisputably, he was put on probation for a period of two years.
The said probationary period was fixed for the purpose of
E passing the Departmental Accounts Examination .

. ,14. The service of the employee was to be considered for
confirmation only upon completion of the said two years'
probationary period as also passing of the Departmental •
'1

Accounts Examination. For the said purpose, only five
F successive chances were required to be given to him to appear
in the examination which were to be held after six months of
his joining of service. It has not been denied or disputed that
the matter relating to passing of the examination as also the
other conditions of service is governed by the service rules.
G Rule 13 provides for confirmation, grant of annual increment,
I
retention in service, promotion etc. For the purpose of obtaining
any benefit in terms thereof, passing of the examination in
papers I to IV is imperative. Even those who had earlier
appeared and passed papers Ill and IV of the examination in
H terms of the\old rules, were required to appear in papers I and
CHIEF ENGINEER/OPERATION DAKSHINI HARYANA BIJLI 331
VITRAN NIGAM LTD. v. MAUJ KHAN [S.B. SINHA, J.]

II in terms of the said rules in order to qualify themselves for A
promotion to the grade of a senior clerk. The rules further, in
no uncertain terms, state that appointment in a substantive
capacity in the post held by the employee was subject to his
passing of the said examination. It was furthermore stipulated
that in the event he failed to pass the said examination within B
a period of three years of his appointment in the Branch, his
incretnents falling due after the first two increments from his first
" appointment, shall be withheld until he passed the examination.
Even after passing the examination, increment was to be
granted prospectively and not retrospectively. c
It, as noticed hereinbefore, further stipulated that failure to
pass the examination would entail loss of his appointment.

15. Indisputably, the matters relating to recruitment to a
post, the period of probation, confirmation subject to passing D
of the Departmental Examination are governed by the statutory
rules. Only on successful completion of the probationary period
and passing of the examination, the services of an employee
could be confirmed. Unless, services of an employee are
confirmed, he could not be treated to be in the regular service E
of this Board.

16. The learned trial Judge as also the appellate Court, in
'·
/'
our opinion, thus, have rightly held that as the respondent no.1
did not pass the Departmental Accounts Examination, he was
F
not entitled to be confirmed in service. The learned Judges,
however, in our opinion, committed a serious error in opining
that the circular letter relating to grant of additional increment
· and/or higher standard pay scale would be applicable in the
case of the respondent no.1.
G
17. Although, neither the circular letter, in terms whereof
the said benefits were to be granted, was brought to our notice
nor the connected rule was placed before us, but, on a plain
reading of the judgment of the learned trial Judge as also the
first Appellate Court, it is evident that the aforementioned H
332 SUPREME COURT REPORTS [2009] 8 S.C.R.

A benefits could be conferred on the respondent no.1 only if he
had completed the period stipulated therein in regular service.
Unless, the services of an employee are confirmed so as to
bring him on the cadre of regular employees, the question of
completion of 8/18 years, 10/20 years of regular satisfactory
B service would not arise. In that view of the matter, it was wholly
unnecessary for the appellants to mention about the passing
of the Departmental Examination by the concerned employee
for the purpose of availing the said benefit. The purported
clarification issued by the State of Haryana to which our
c attention has been drawn, in our opinion, is also not relevant.
The clarification furnished by the State Government was in
relation to those employees who were not being promoted to
the next higher post. The same must have reference to those
junior clerks whose services were confirmed but who had not
been promoted to the post of U.D.C. or higher posts. Once
0
services are confirmed, an employee would be borne on the
regular cadre. He thus being in the regular service, satisfactory
completion of the stipulated period therein would entitle him to
the benefits thereof,

E 18. We, therefore, are of the opinion that the impugned
judgment cannot be sustained.

The question, however, remains that the apoellant_s
deliberately or otherwise despite a clear provision conrarned-
F in the rules did not terminate the services of the respondent:
no.1. He was allowed to continue in service. It is neither denied
nor disputed that despite the fact that he did not pass the
Departmental Accounts Examination, he was otherwise a
competent officer. In-fact, he has been permitted to officiate on
G a higher post. In a situation of this nature, in our opinion, the
appellants had a duty to give him a warning. His case should
have been treated in terms of the rules. Failure on the part of
the State to do so, in our opinion, has seriously prejudiced him.
Had such warning being given, he could have appeared in the
examination.
H
CHIEF ENGINEER/OPERATION DAKSHINI HARYANA BIJLI 333
VITRAN NIGAM LID. v. MAUJ KHAN [S.B. SINHA, J.]

It is the case of the appellants that the respondent no.1 did A
not appear at the examination at all. It has been held that the
respondent is not entitled to the benefit claimed. He was bound
to pass the test within the prescribed period. On failure to pass
the test, his services were liable to be terminated. Under the
Rules, he was not entitled to any warning regarding the failure B
to pass the test.

However, he was allowed to continue in service and
received the salary. What is denied is only the benefit of
additional increment which can be granted on fulfilling certain
conditions. In such circumstances, there may not be justification C
for payment of compensation. Instead, the appellants should be
directed not to deny pensionary benefits to the respondent on
the ground that his services were not regularized/confirmed.
Such direction is necessary only if there is a move to deny
pensionary benefits. D

19. The appeal is allowed subject to the aforementioned
order. However, in the facts and circumstances of the case,
there shall be no order as to costs.
E
D.G. Appeal allowed.