JUDGMENT By the Court.—This petition under Article 226 of the Constitution of India has been filed for issuing a writ of certiorari quashing the order dated 17.11.2006 passed by the respondent No. 1 (State of U.P.) whereby exercising the powers under Article 351-A of the Civil Service Regulations, punishment of reducing the pension of the petitioner by 50% has been passed. 2. Petitioner at the relevant time was working as Chief Engineer Level II in the Public Works Department, Government of U.P. when he was selected to be the Chief Engineer of a project by the name of U.P. Health Systems Development Project (in short referred to as UPHSDP), which had financing from the World Bank. Petitioner was placed on deputation in the Medical Department. He was made the Chief Engineer of the Project vide order dated 1.7.2000 to ensure and carry out the works in timely and proper manner. As per agreed terms and conditions, the petitioner continued to work as Chief Engineer of the aforesaid project U.P.H.S.D.P. till 2.8.2004 whereafter he joined his parent department. 3. Petitioner was suspended by order dated 25.10.2004 on the charges that he had got works carried out worth Rs. 100 crores and payment made to the tune of Rs. 65 crores without getting the estimate prepared and without obtaining technical sanction for the same. Thereafter, the Engineer-in-Chief (Department of the P.W.D.) who had been appointed as the Inquiry Officer issued a charge-sheet dated 25.11.2004 containing five charges. 4. The first charge was to the effect that there were technical and financial irregularities as without preparing the detailed estimate and without obtaining technical sanction completed the work of Rs. 100 crores and made payment amounting to Rs. 65 crores. This was said to be a serious financial irregularity. The charge also mentions that the petitioner was asked to prepare detailed project report with the help of consultants but actual interest was never shown to get the detail project report prepared. The second charge was to the effect that during the term of the project, contrary to the Rules of the World Bank lot of payment had been released without administrative and financial sanction from the competent authority. The second charge was to the effect that during the term of the project, contrary to the Rules of the World Bank lot of payment had been released without administrative and financial sanction from the competent authority. The third charge was to the effect that the petitioner mislead the Project Steering Committee and the Project Governing Body as also the World Bank to get the estimate approved and payment sanctioned from the higher authorities and the committees. The Charge No. 4 was to the effect that during his tenure the petitioner continued to mislead the officers by providing incorrect statistics and Charge No. 5 was to the effect that certain works which had been completed two years earlier, their bills had not been given a final shape. 5. Petitioner submitted a detailed reply dated 17.12.2004, to the charge sheet dated 25.11.2004 running into 30 pages supported by Annexures running into almost 219 pages. The reply has been filed as Annexure No. 19 to the writ petition. The reply initially dealt with the procedure for getting final works carried out and thereafter it contained specific reply for each of the charges. The Inquiry Officer submitted his report dated 24th February, 2005 (Annexure No. 26 to the writ petition). He did not find any of the charges proved against the petitioner. According to the Inquiry Officer after receiving the reply of the petitioner to the charge sheet, comments were called for from the Project Director of the Scheme (U.P.H.S.D.P.) vide letter dated 22.12.2004. The reply was received from the Project Director vide covering letter dated 17.2.2005. It is also to be noted here that the petitioner also submitted second reply dated 17.2.2005. The Inquiry Officer prepared tabular chart incorporating the alleged charges, the summary of both the replies filed by the petitioner and the relevant evidences and also the comments provided by the Project Director (Finance) of the U.P.H.S.D.P.. 6. Based upon the consideration of material on record, the Inquiry Officer was of the view that the comments provided by the Project Director were neither supported by any documentary evidence nor was the comment specific enough to establish the charge. He also records that the explanation given by the petitioner was not denied in the comments provided by the Project Director. He also records that the explanation given by the petitioner was not denied in the comments provided by the Project Director. He further mentions that all the documents annexed by the petitioner in his reply were forwarded by the Project Director of the U.P.H.S.D.P. Upon consideration of the material the Inquiry Officer came to the conclusion that there was no justification to draw any adverse inference against the petitioner. The Inquiry Officer also refers to the various comments given by the team of the officers of World Bank, which no where mentions that there was any compromise with the quality of the work. The report also mentions that initially the work was slow because of non-availability of full time Chief Engineer but later on after the petitioner took over the work progressed at considerable pace. The report further mentions that in fact the petitioner had got the detailed estimate prepared and the technical sanction had been granted by the Project Governing Board and the Project Steering Committee and as such none of the charges was found to be proved. 7. The Disciplinary Authority did not agree with the finding recorded by the Inquiry Officer. It accordingly issued a show-cause notice dated 18.1.2006 (Annexure No. 27 to the writ petition) calling upon the petitioner to submit his reply/representation to the same. The show-cause notice is a three page notice. The relevant reasons for dis-agreement are alleged to be mentioned in paragraph-2. It refers to only Charge No. 1 that works worth Rs. 100 crores has been got carried out without detailed estimate being prepared and without obtaining technical sanction. It also mentions that in the revised estimate, works were increased resulting into increase in the cost. It also refers to three letters dated 14.6.2004, 17.11.2004 and 17.2.2005 issued by the Project Director mentioning that the petitioner had mislead the Project Governing Board and Project Steering Committee. It also mentions that the revised estimate and the technical sanction were got approved from the Project Governing Board in its meeting dated 8.10.2004. It further mentions that the agreement should have been prepared only after obtaining the technical sanction. It also records that merely because detailed project estimate and technical sanction had been approved would not mean that the irregularities committed by the petitioner came to an end. It further mentions that the agreement should have been prepared only after obtaining the technical sanction. It also records that merely because detailed project estimate and technical sanction had been approved would not mean that the irregularities committed by the petitioner came to an end. It also records that although the approval had been given after the work had been completed but the action of the petitioner cannot be said to be according to the Rules and as such the charges cannot be said to have been dropped. 8. To the above show-cause notice the petitioner submitted a detail reply dated 30.1.2006 (Annexure no 28 to the writ petition). It also mentions that the petitioner had submitted his reply to the charge sheet well within time and without any delay. It also mentions that the Inquiry Officer had submitted the report to the Government on 25.2.2005 but no action was taken on the same for 11 months and during this period the petitioner had continued to be under suspension. As such he also prayed that the Disciplinary proceedings be finalized before his retirement which was due on 31.01.2006. 9. After receiving reply of the petitioner to the show-cause notice, the impugned order has been issued on 17.11.2006 awarding the punishment of reducing his pension by 50% and further providing that for the period of suspension the petitioner would not be entitled to anything over and above the subsistence allowance already paid. The punishment order further records that due approval had been taken from the U.P. Public Services Commission. 10. We have head Sri Shishir Jain, learned counsel for the petitioner and Sri Sanjay Bhasin, learned Addl. Chief Standing Counsel for the State respondents and have also perused the material on record. 11. Sri Jain has raised following arguments:- (i) The impugned order of punishment is non-speaking order. Reference has been made by Sri Jain to Rule 9(2) and 9 (4) of the U.P. Government Servant (Discipline and Appeal) Rules 1999, according to which the Disciplinary authority is to pass a reasoned order while imposing one or more penalties. (ii) The impugned order does not take into consideration the reply submitted by the petitioner to the show-cause notice. (iii) There is no material on record to prove the charges. (ii) The impugned order does not take into consideration the reply submitted by the petitioner to the show-cause notice. (iii) There is no material on record to prove the charges. (iv) After the recommendation by the Inquiry Officer to drop the proceedings, the disciplinary authority did not make any further inquiry and has illegally drawn the conclusion that the petitioner is guilty of misconduct. (v) Once the detailed estimate and the technical sanction had been duly approved by the competent committees/Board/Authorities, no charge of misconduct could have been alleged against the petitioner, as any irregularity committed by the petitioner stood ratified. (vi) The punishment relating to payment of only subsistence allowances for the period of suspension, which amounts to reduction in allowances, could not have been done without issuing a notice as per Rule 5 of the 1999 Rules. (vii) The show-cause notice dated 18th January 2006 by which the Disciplinary Authority had disagreed with the finding of the Inquiry Officer and the order of punishment no where takes into account or even refers to any detail facts relating to the alleged irregularity in the construction and payment of the funds which may have resulted into any pecuniary loss to the State. It is submitted that even if it be assumed that some kind of irregularity had been committed, the same had been explained by the petitioner in the two replies submitted against the charge sheet but as the said irregularity was subsequently removed upon approval being granted by the competent authority, it could not have been said that the said irregularity constituted a grave misconduct. (viii) Reference has been made to Article 351-A of the Civil Service Regulations, which deals with punishment to pensioners and provides that punishment of stoppage or reduction of pension could be awarded where the pensioner had caused the Government pecuniary loss or he was held to be guilty of grave misconduct. 12. In such circumstances, it has been submitted that as there is no pecuniary loss having been caused to the State by the petitioner mere irregularity could not have been taken to be a grave misconduct. The punishment awarded as such was bad in law. 13. 12. In such circumstances, it has been submitted that as there is no pecuniary loss having been caused to the State by the petitioner mere irregularity could not have been taken to be a grave misconduct. The punishment awarded as such was bad in law. 13. In support of the above submissions reliance has been placed upon Apex Court decision in the case of Maharashtra Mining Corporation v. Manish, 2006(5) SCC 96 (specific reference has been made to paras 6, 7, 9 and 10 of the report.) and Division Bench judgment of this Court in the case of Sanjeev Kumar v. State of U.P. and others, 2009(1) ESC 448 : 2009(1) ADJ 123 (DB). 14. On the other hand Sri Bhasin, learned Addl. Chief Standing Counsel has made the following submissions: (i) The impugned order of punishment contains reasons in paragraph-4. (ii) The Disciplinary Authority has referred to the reply submitted by the petitioner and has rejected the same which in fact constitutes the reason. (iii) The misconduct by the petitioner is not disputed that he committed the irregularity in not getting the estimates prepared and did not obtain the technical approval before starting the work. (iv) Show cause notice contained reasons for disagreeing with the findings of the Inquiry Officer. (v) Mere subsequent preparation of estimates and obtaining technical sanction would not absolve the petitioner of his misconduct. 15. We have considered the submissions advanced on behalf of the parties and have perused the material on record. We now deal with the arguments raised by the counsel for the parties. (1) Regulation 351 - A of the Civil Services Regulations 16. In order to award punishment to a retired government servant i.e. a pensioner, provision has been made in Regulation 351- A of the Civil Services Regulations. It reads as follows : “351-A. The Governor reserves to himself the right of withholding or withdrawing a pension or any part of it, whether permanently or for a specified period and the right of ordering the recovery from a pension of the whole or part of any pecuniary loss caused to Government, if the pensioner is found in departmental or judicial proceedings to have been guilty of grave misconduct, or to have caused pecuniary loss to Government by misconduct or negligence, during his service, including service rendered on re-employment after retirement. Provided that— (a) such departmental proceedings, if not instituted while the officer was on duty either before retirement or during reemployment. (i) shall not be instituted save with the sanction of the Governor; (ii) shall be in respect of an event which took place not more than four years before the institution of such proceedings; and (iii) shall be conducted by such authority and in such place or places as the Governor may direct and in accordance with the procedure applicable to proceedings on which an order of dismissal from service may be made. (b) judicial proceedings, if not instituted while the officer was on duty either before retirement or during re-employment, shall have been instituted in accordance with sub-clause (ii) of clause (a); and (c) the Public Service Commission, U.P., shall be consulted before final orders are passed. (Provided further that if the order passed by the Governor relates to a case dealt with under the Uttar Pradesh Disciplinary Proceedings (Administrative Tribunal) Rules, 1947, it shall not be necessary to consult Public Service Commission.) Explanation.—For the purposes of this article— (a) departmental proceedings shall be deemed to have been instituted when the charges framed against the pensioner are issued to him, or, if the officer has been placed under suspension from an earlier date, on such date; and (b) judicial proceedings shall be deemed to have been instituted: (i) in the case of criminal proceedings, on the date on which a complaint is made, or a charge-sheet is submitted, to a criminal Court; and (ii) in the case of civil proceedings, on the date on which the plaint is presented or, as the case may be, an application is made, to a civil Court.” 17. A perusal of the aforesaid provision is clearly indicative of the fact that pension can be withheld or withdrawn in full or in part for a specified period or permanently, only in a case where the pensioner during his service has caused pecuniary loss to the government by misconduct or negligence or is found in departmental or disciplinary proceedings to have been guilty of grave misconduct. 18. 18. It would be worthwhile to note here that where pecuniary loss has been caused to the government, it could be on account of misconduct or negligence during service, otherwise the phrase used is that the pensioner should be found in departmental or judicial proceedings to have been guilty of grave misconduct. The use of word misconduct in connection with pecuniary loss and the use of the words grave misconduct otherwise established in a departmental or judicial proceedings are indicative of the fact that if there is no pecuniary loss caused to the government then the inquiry must establish a charge of grave misconduct and not merely a misconduct. 19. Now the question arises as to what is the difference or distinction in word misconduct standing alone or where it is qualified by an adjective and rephrased as grave misconduct. Misconduct can be defined as transgression of some established and definite rule of action more particularly unlawful behaviour or gross negligence by a government servant or a public officer. Whereas a misconduct could be grave if it involves any of the additional elements like corruption, deliberate intent to violate the law or deliberate attempt to disregard the established rules and such misconduct should be established by substantial evidence. In other words in a charge of grave misconduct as distinguished from simple misconduct and elements of corruption, clear intent to violate the law or fragrant and deliberate disregard of established rules must be manifest and substantially established. 20. In the present case admittedly there is no charge of any pecuniary loss caused to the government by the petitioner. Thus for awarding punishment to the petitioner, there must be a clear establishment of a charge of grave misconduct. In the disciplinary inquiry the Inquiry Officer had exonerated the petitioner. He had found that none of the charges were proved. 21. Taking into consideration the disagreement by the Disciplinary Authority, the show-cause notice given and the punishment order passed, we find that neither the show-cause notice nor the punishment order records a finding of grave misconduct having been established against the petitioner. The Disciplinary Authority in the show-cause notice dated 18.1.2006 had recorded that the charge alleged against the petitioner of not getting the estimate prepared and not obtaining the technical sanction of the works carried out would not be absolved merely because of subsequent approval of the estimate and the technical sanction. The Disciplinary Authority in the show-cause notice dated 18.1.2006 had recorded that the charge alleged against the petitioner of not getting the estimate prepared and not obtaining the technical sanction of the works carried out would not be absolved merely because of subsequent approval of the estimate and the technical sanction. The show-cause notice does not mention of the charge being that of grave misconduct. 22. Admittedly the estimate has been approved and technical sanction has been granted by the competent authority later on without any remark of financial loss or misuse of funds or inferior quality of work. Therefore we are of the view that there is nothing on record to form any adverse opinion regarding integrity or intention of the petitioner. 23. Now coming to the punishment order which runs into six pages, we find that paragraphs 1, 2 and 3 of the punishment order deal with the charges, the finding recorded by the Inquiry Officer and the explanation given by the petitioner. It is only in paragraph 4 of the punishment order that the discussion has been made and a finding has been recorded. Paragraph 5 of the punishment order records the punishment awarded of reducing his pension by 50% permanently. Paragraph 6 deals with the concurrence of the Public Service Commission and paragraph 7 provides that the petitioner would not be entitled to any amount over and above the subsistence allowance paid for the period of suspension. Paragraph 4 of the punishment order reads as follows : Þ4- vipkjh vf/kdkjh Jh Mh0ds0 tSu ds vH;kosnu ij fopkjksijkUr ;g ik;k x;k fd vipkjh vf/kdkjh }kjk vius vH;kosnu esa mUgha fcUnqvksa dks nksgjk;k x;k gS tks tkWp ds le; muds }kjk izLrqr fd;k x;k gSA vr% vipkjh vf/kdkjh Jh Mh0ds0 tSu }kjk fu;ekuqlkj dk;Z izkjEHk fd;s tkus ds iwoZ rduhdh Lohd`fr fcuk izkIr fd;s dk;Z izkjEHk fd;k x;k gSA ,slk djds muds }kjk vius drZC;ksa dk lgh izdkj ls vuqikyu ugha fd;k x;k gSA bl izdkj Li"V gS fd muds }kjk fu;eksa dk mYya?ku dj xEHkhj foRrh; vfu;ferrk dh x;h gSA ofj"B vf/kdkjh gksus ds dkj.k muds }kjk vius drZO;ksa dk lgh vuqikyu u dj xEHkhj vfu;ferrk cjrh x;h gS tks nqjkpj.k dh Js.kh esa vkrk gSAÞ 24. From a perusal of paragraph 4 of the punishment order which has been reproduced above, it is apparent that the alleged charge of serious financial irregularity has been held to be a misconduct. There is no finding that the alleged financial irregularity constituted a grave misconduct or that the alleged financial irregularity in any manner caused any pecuniary loss to the government. Once the relevant Service Rule applicable for awarding of punishment to a pensioner clearly provided that in a case of misconduct other than pecuniary loss to the government, necessarily it has to be a grave misconduct, the punishment order cannot be sustained and would be in direct conflict with Rule 351 - A of the Civil Services Regulations. (2) The impugned order of punishment suffers from vice of non-application of mind for the following reasons : (i) Through out it has been alleged that that the petitioner committed serious irregularity by not getting the estimate prepared and in not obtaining the technical sanction of the work. The petitioner in his first reply to charge sheet had given details as to why preparation of the estimate got delayed. He had clearly and specifically mentioned that MECON were the consultants and under the arrangement with them, they were required to prepare an estimate but when MECON were requested to provide an estimate they took up a stand that it was not part of their arrangement and in case estimate is to be prepared by them they would be charging extra amount for the same. It took about two years to get this issue thrashed out and hence the delay in preparation of the estimate. This explanation of the petitioner has not been considered or discussed by the Competent Authority before passing the order of punishment. (ii) The Inquiry Officer after considering the material on record came to the conclusion that none of the charges could be proved against the petitioner. The Disciplinary Authority disagreed with the finding of the Inquiry Officer but thereafter did not make any further inquiry in the matter. Neither any fresh material was brought on record nor any witnesses were examined by the Disciplinary Authority. The Disciplinary Authority merely referring to three letters dated 14.6.2004, 17.11.2004 and 17.12.2005 said to have been issued by the Project Director stating that the petitioner has misled the Project Governing Board and the Project Steering Committee has recorded the punishment. Neither any fresh material was brought on record nor any witnesses were examined by the Disciplinary Authority. The Disciplinary Authority merely referring to three letters dated 14.6.2004, 17.11.2004 and 17.12.2005 said to have been issued by the Project Director stating that the petitioner has misled the Project Governing Board and the Project Steering Committee has recorded the punishment. (iii) It failed to take into consideration the explanation given by the petitioner that in fact there was no misleading or misrepresentation. There is nothing on record which may find mention in the impugned order of punishment that the Chairman nor any Members of the Project Governing Board (chaired by the Chief Secretary of the State) or the Project Steering Committee (chaired by the Principal Secretary, Medical Health) which included technical experts made any such complaint instead both the aforesaid Authorities had approved the estimate and had accorded approval to the technical sanction. The Project Director was the Member Secretary of both the aforesaid Authorities which had accorded the approvals. Thus the letter written by the Project Director do not appear to be of any substance which could have formed the sole basis of awarding punishment. (3) The impugned order suffers from the vice of non-consideration of material on record and further placing reliance upon inadmissible material. (i) In reply to the show-cause notice, the petitioner had submitted a detailed reply to the show-cause notice. There is no discussion of the same in the impugned order, which also vitiates the impugned order of punishment. The reliance placed on the three letters of Project Director was misplaced once the approval had been granted by the Committee and the Board. (4) Rule 5 of the U.P. Government Servant (Disciplinary and Appeal) Rules, 1999 reads as follows : 5. Pay and allowances etc. the suspension period .—After the order is passed in the departmental enquiry or in the criminal case as the case may be under these rules, the decision as to the pay and allowances of the suspension period of the concerned Government servant and also whether the said period shall be treated as spent on duty or not, shall be taken by the Disciplinary Authority after giving a notice to the said Government servant and calling for his explanation within a specified period under rules 54 of the Financial Hand Book, Volume II, Part II to IV. 25. 25. The above rule clearly mentions that reduction in allowance cannot be done without issuing a notice. In the present case in addition to reduction of pension by 50% , there is also an order that the petitioner would not be entitled to any further amount in addition to the subsistence allowance paid during the period of suspension. This clearly amounts to reduction in allowance and therefore before passing such an order the Disciplinary Authority was required to issue a notice as provided under Rule 5 of the 1999 Rules. Admittedly no notice was issued and as such reduction in allowance being a part of the impugned order by which pension has been reduced was in violation of Rule 5 of the 1999 Rules. Thus also the impugned order of punishment is bad in law. 26. For all the reasons, recorded above, the petition succeeds and is allowed. The impugned order 17.11.2006 passed by the respondent No. 1 (Annexure-1 to the writ petition) is hereby quashed. 27. The respondents are further directed to restore full pension of the petitioner and also to reimburse the amount already deducted from his pension within a period of two months from the date of production of certified copy of this order and also pay full salary due to the petitioner for the period of suspension over and above the subsistence allowances that may have already been paid. 28. In view of the above, the writ petition is allowed with costs. —————