Disciplinary Authority cannot impose punishment with cumulative effect if not specifically prescribed under statutory service rules.

The petitioner, an employee of SAIL, was a lessee of company quarters under a 2000 Housing Scheme

Between 2010 and 2011, the respondent authority alleged that the petitioner encroached upon 4,620 sq. ft. of company land by constructing a brick wall and fencing without permission

Despite multiple requests and a show-cause notice, the petitioner failed to remove the structures

A departmental inquiry followed, and the inquiry officer found the charge of "unauthorized use of company's land" proved

The Disciplinary Authority imposed a major penalty of "reduction of existing basic pay by one stage... with cumulative effect"

This order was upheld by both the Appellate and Reviewing authorities, and subsequently by the Central Administrative Tribunal (CAT)

The petitioner challenged these orders via a writ petition, arguing the matter was a contractual lease dispute rather than service misconduct

1. Whether the unauthorized encroachment and construction on company land by an employee/lessee constitutes "misconduct" under the relevant Service Standing Orders

2. Whether a disciplinary authority can impose a punishment (stoppage of increment with "cumulative effect") not explicitly prescribed in the statutory Standing Orders

3. Whether the punishment imposed was shockingly disproportionate to the proved delinquency

Clause 29(xix) of the SAIL Standing Order (1997), which defines "unauthorised use of company’s quarters or lands" as an act of misconduct

The principle that disciplinary authorities must strictly adhere to statutory punishment rules, as established in Vijay Singh v. State of U.P. and State of U.P. v. Madhav Prasad Sharma

The distinction between "withholding increment simpliciter" (minor) and "withholding with cumulative effect" (major/perpetual) as defined in Punjab State Electricity Board v. Raj Kumar Goel

The principle of judicial review regarding "disproportionality of punishment" was drawn from Union of India v. P. Balasubrahmanayam

The Court first rejected the petitioner’s argument that the dispute was purely contractual (relying on Nandita B. Palekar), noting that unlike the cited case, SAIL’s Standing Orders specifically codified "unauthorized use of land" as service misconduct

Regarding the penalty, the Court observed that Clause 30(2)(a) of the Standing Orders only prescribed "Stoppage of increment" without mentioning "cumulative effect"

Applying Vijay Singh, the Court reasoned that imposing a penalty not explicitly provided in the rules is a nullity and an arbitrary exercise of executive power

The Court found that making the reduction perpetual (cumulative) was "shockingly disproportionate" given the nature of the allegation

The Court quashed the "cumulative effect" portion of the order and directed the respondents to recalculate and disburse arrears of pay and retiral dues within 180 working days, along with 3% per annum simple interest from the date of superannuation