Stoppage of increment with cumulative effect constitutes a major penalty requiring a regular departmental inquiry.

The Petitioner was appointed as an Assistant Teacher in a school run by the Ambernath Municipal Council in 1995.

On March 17, 2018, the Respondent issued a show-cause notice alleging misconduct, including harassment of students and non-cooperation.

After considering the Petitioner’s explanation, the Respondent No. 1 issued an order dated July 10, 2018, imposing the punishment of "stoppage of one annual increment with permanent effect".

The Petitioner challenged this order under Article 226, contending that such a punishment constitutes a major penalty which cannot be imposed without a regular departmental inquiry.

Whether the stoppage of an annual increment with cumulative (permanent) effect constitutes a "minor penalty" or a "major penalty" under the service rules.

Whether the Municipal Council was required to conduct a full departmental inquiry under Rule 8 of the MCS Rules before imposing the said punishment.

The court primarily applied Rule 5 of the Maharashtra Civil Service (Discipline and Appeal) Rules, 1979 ("MCS Rules"), which distinguishes between minor penalties (e.g., withholding increments simpliciter) and major penalties (e.g., reduction to a lower stage in the time-scale).

It further relied on the Supreme Court precedent in Kulwant Singh Gill v. State of Punjab (1991), which established that withholding increments with cumulative effect is a major penalty because it permanently "puts the clock back" regarding the employee's pay scale and future increments.

The court also noted Section 79 of the Maharashtra Municipal Councils, Nagar Panchayats and Industrial Townships Act, 1965, regarding the competency of the Chief Officer to impose penalties.

The court rejected the Respondent’s argument that the punishment was minor under Section 79 of the Municipalities Act.

By applying the rationale from Kulwant Singh Gill, the court reasoned that while withholding an increment simpliciter is a minor penalty under Rule 5(iv), adding "cumulative effect" (permanent effect) means the employee's upward march in the pay scale is permanently hindered.

This results in a reduction to a lower stage in the time-scale, which falls under the definition of a major penalty in Rule 5(v).

Consequently, such a penalty could only be legally imposed after following the rigorous procedure for a major inquiry prescribed in Rule 8 of the MCS Rules.

The court found that the Chief Officer erroneously treated a major penalty as a minor one due to a misconception of law.

However, noting that the Petitioner had only one year of service remaining before retirement and that the Authority intended to be lenient, the court modified the punishment.

The court partly allowed the petition, modifying the penalty to "withholding of increment of pay simpliciter for one year without cumulative effect," and directed that it shall not operate as a stigma.