Annual increment cannot be withheld without disciplinary proceedings establishing misconduct under applicable service rules.

The Petitioner, a Junior Clerk at Ekamra College, was appointed on 9 January 2015 under the Rehabilitation Assistant Rules.

He was arrested on 26 August 2018 in a criminal case under Sections 498-A and 302 of the IPC and remained in custody until 26 September 2018.

He was suspended and was subsequently reinstated with effect from 18 March 2020, subject to approval of the Director and the final outcome of the criminal case.

After reinstatement, he received annual increments, including increments granted up to 2024, although no increment was sanctioned for the period of suspension.

The Principal initially withheld his increment pending governmental clarification; the Regional Directorate later clarified that he was entitled to the increment due on 1 March 2024.

However, by order dated 14 October 2025, the Director of Higher Education directed that his increments be withheld on the ground that his arrest and detention had caused a break in service.

The Petitioner challenged the stoppage of his annual increment and sought release of the increments from 2025 onwards.

1. Whether the Petitioner’s annual increment could be withheld merely because he had been arrested, detained in custody, and allegedly suffered a break in service, despite his reinstatement and continued discharge of duties.

2. Whether withholding the annual increment as a consequence of alleged misconduct was permissible without initiating and completing disciplinary proceedings under the applicable service rules.

3. Whether the Petitioner was entitled to receive annual increments from 2025 onwards after having regularly received salary and increments following his reinstatement.

Rule 77 of the Odisha Service Code provides that an annual increment is ordinarily to be drawn as a matter of course unless withheld by the competent appointing authority on the ground that the employee’s conduct has not been good or his work has not been satisfactory; the authority must specify the period and consequential effect of withholding the increment.

Note 1 to Rule 77 requires compliance with the procedure under the Odisha Civil Services (Classification, Control and Appeal) Rules, 1962 where withholding an increment constitutes punishment.

In Smt. Purna Prava Roul v. State of Orissa and Others, 2006 (I) OLR 781 (DB), the Court held that an admissible annual increment cannot be withheld without an order passed after conducting the requisite proceeding against the employee.

The Court further applied the principle that mere involvement in a criminal case, without a disciplinary proceeding or an operative order imposing punishment, does not by itself justify withholding a service benefit otherwise payable under the service rules.

The Court found that the Petitioner had been reinstated with effect from 18 March 2020 and had thereafter continuously discharged his duties and received salary and annual increments up to 2024.

The period of suspension had already been excluded for the purpose of granting increments, and there was no departmental proceeding pending or initiated against him for alleged misconduct arising from the criminal case.

Although the authorities relied on the alleged break in service and the seriousness of the criminal allegations, Rule 77 permitted withholding of an increment only through the competent authority’s decision supported by the prescribed procedure where the withholding operated as punishment.

The Director’s order dated 14 October 2025, issued without a disciplinary proceeding or a finding of misconduct, therefore could not lawfully defeat the Petitioner’s entitlement to increments after reinstatement.

The Court also treated the prior grant of increments and continued payment of salary as inconsistent with the subsequent unilateral stoppage.

It held that the Petitioner was entitled to annual increments from 2025 onwards because no disciplinary proceeding or lawful order of punishment had been initiated or passed against him.

The Opposite Parties were directed to sanction the annual increments in his favour within four months from the date of receipt of the certified copy of the judgment.