Withholding salary for suspension period without specific show cause notice violates principles of natural justice.

The petitioner, an Assistant Grade-I (Depot) at the Food Corporation of India (FCI), Muzaffarpur, was served a memorandum on 06.05.2006 alleging irregularities and shortages of foodgrains.

Following a disciplinary enquiry under Regulation 58 of the FCI (Staff) Regulations, 1971, the Enquiry Officer found the petitioner guilty of causing a shortage of 1338.74 quintals of rice and gunny bags.

The Disciplinary Authority, vide order dated 29.09.2007, imposed a penalty of reduction to the lower post of AG-II (D), recovery of Rs. 3,00,000, and directed that the suspension period (14.10.2005 to 06.05.2006) be treated as "not spent on duty," denying him salary beyond the subsistence allowance.

The Appellate Authority and Reviewing Authority dismissed the petitioner’s subsequent challenges.

The petitioner challenged these orders on grounds of procedural irregularity, lack of evidence, and violation of natural justice regarding the suspension period pay.

1. Whether the disciplinary proceedings and the consequent penalty of demotion and recovery were legally sustainable and proportionate to the misconduct.

2. Whether the direction to withhold full salary for the suspension period without a specific show-cause notice violated the principles of natural justice.

The court primarily applied the Food Corporation of India (Staff) Regulations, 1971, specifically Regulation 58 (procedure for imposing major penalties), Regulation 54 (pay and allowances during suspension), and Regulation 56.

It further relied on the principle established in Dr. Nigam Prakash Narain v. The National Medical Commission Ors. (2026 SCC OnLine SC 813), which mandates that a delinquent employee cannot be punished on a charge not framed or without a fresh show-cause notice if the penalty (such as withholding suspension period salary) is distinct from the original charges.

The Court found that the petitioner had duly participated in the departmental inquiry and that the Enquiry Officer and Disciplinary Authority had considered the evidence regarding the shortage of foodgrains caused by the petitioner's negligence.

Consequently, the Court declined to interfere with the primary penalties of demotion and recovery, finding them proportionate to the loss suffered by the Corporation.

Regarding the suspension period pay, the Court noted that no specific charge or show-cause notice was issued to the petitioner regarding the withholding of full salary for that duration.

Applying the precedent from the Supreme Court, the Court reasoned that the disciplinary authority committed a serious jurisdictional flaw by passing an adverse order on the suspension period's characterization without granting the petitioner a fair opportunity to respond to that specific consequence.

However, it quashed the portion of the order dated 29.09.2007 which directed that the suspension period be treated as "not spent on duty" and denied the petitioner his full salary.

The Court held that the petitioner is entitled to the payment of his entire salary for the period between 14.10.2005 and 06.05.2006, after deducting the subsistence allowance already paid, to be settled within three months.