Delhi District Court
Arun Kumar vs Rohit Bal Designs Pvt Ltd on 4 September, 2024
IN THE COURT OF SH.RAJ KUMAR TRIPATHI:
DISTRICT JUDGE (COMMERCIAL COURT)-08
SOUTH-EAST DISTRICT, SAKET COURTS, NEW DELHI
CS (COMM.) No.617/2021
(Arun Kumar vs. Rohit Bal Designs Pvt. Ltd. & Others)
CNR No. DLSE01-010876-2021
Shri Arun Kumar
S/o Shri Ashok Kumar
R/o D-2/11,
Khasra No. 83/23,
Block D-2, Near Samuel Public School,
Budh Vihar Phase-1,
Pooth Kalan, New Delhi-110086.
........Plaintiff
Through: Mr.Sanjeev Goyal, advocate
Versus
1. Rohit Bal Designs Pvt. Ltd.
Having its registered office at
C-328 1st Floor, Defence Colony,
New Delhi-110024
Also At:
Rohit Bal Designs Pvt. Ltd.
B-23, Sector-3,
Noida, UP-201301
......Defendant no.1
2. Rohit Bal
Managing Director/Chairman
Rohit Bal Designs Pvt Ltd.
C-328, 1st Floor, Defence Colony,
New Delhi-110024
......Defendant no.2
3. Rajiv Bal
Executive Director
Rohit Bal Designs Pvt. Ltd.
D-298 Ground Floor,
CS (COMM.) No.617/2021
(Arun Kumar vs. Rohit Bal Designs Pvt. Ltd. & Others) Page No. 1 of 22
Defence Colony,
New Delhi-110024.
......Defendant no.3
......Defendants
Through: Mr. Ved Prakash Tripathi, advocate
Date of filing : 04.12.2021
Final arguments heard on : 07.08.2024
Date of Judgment : 04.09.2024
JUDGMENT:
1.1. Plaintiff Mr. Arun Kumar, a former employee of defendant no.1 company, has filed the present suit against defendants inter alia praying for grant of following reliefs:-
"a) Pass a decree in favour of the Plaintiff and against the defendant for a payment of a sum of Rs.7,62,439/- towards arrears of salary, bonus, EPF, Gratuity, salary against earned leave and damages till the date of institution of recovery proceedings, and;
b) Pass a decree of declaration, declaring that the alleged termination of the employment of plaintiff is illegal and contrary to the terms of the employment contract dated 11.08.2019;
c) Consequently to pass a decree of mandatory injunction directing the defendants to reinstate plaintiff to his job/post with all emoluments the plaintiff is entitled to and
d) Pass a decree in favour of plaintiff and against defendants for further arrears of salary and other emoluments from the date of filing of pre-litigation Mediation Application under Section 12-A of Commercial Courts Act till the reinstatement of plaintiff to his service or till termination of his employment in terms of his employment agreement and in accordance with law.
e) Pass a decree awarding pendent lite and future interest @18% p.a in favour of the plaintiff and against the defendant on the decreed amount from the date of filing of the present suit till the date of payment.
f) Award the cost of suit and litigation charges including advocate's fee for the suit in favour CS (COMM.) No.617/2021 (Arun Kumar vs. Rohit Bal Designs Pvt. Ltd. & Others) Page No. 2 of 22 of the plaintiff and against the defendants.
g) Pass such other and/or further order/orders as this Hon'ble Court may deem fit, just and proper in the facts and circumstances of the present suit in the interest of justice".
Brief facts of the case 2.1 Plaintiff was previously employed with defendant no.1 company as Accounts Executive with effect from 13.08.2014.
2.2 Defendant no.1 is a Fashion Designing Company inter alia engaged in business of manufacturing and trading of apparels. Defendant no.2 is the Managing Director and defendant no.3 is the Executive Director of defendant no.1 company. All the decisions pertaining to the affairs of the defendant no.1, including but not limited to hiring and terminating the employees, recruiting the human resources, payment of emoluments etc. are taken by defendants no.2 and 3 jointly and/or severally in consultation with each other.
2.3 Plaintiff avers that on the basis of his application and subsequent interview, he was appointed by the defendants for the post of Accounts Executive w.e.f. 13th August, 2014 for total emolument of Rs.32,000/-per month vide appointment letter dated 11.08.2014.
2.4 As per plaintiff, he was performing his duties with utmost efficiency, honesty and diligence. There had not been a single and solitary action, wherein there had been a dereliction of his duties. Over the period, plaintiff's salary has been enhanced by defendant company due to his exemplary performance. The last in hand drawn salary of the plaintiff was Rs.47,500/-. 2.5 Plaintiff stated that he has been in continuous CS (COMM.) No.617/2021 (Arun Kumar vs. Rohit Bal Designs Pvt. Ltd. & Others) Page No. 3 of 22 employment of defendant since 13.08.2014 but defendants unceremoniously and abruptly removed him on 27.03.2019 contrary to the terms of employment without assigning any reasons.
2.6 As per the General Terms and Conditions/Job Responsibilities, duly signed and accepted by the parties, the services of plaintiff could not be terminated without one month's prior notice. However, as defendants did not give any notice for termination, for all intent and purposes, plaintiff continues to be in the employment of the defendants till date. 2.7 Plaintiff alleges that in accordance of the terms and conditions of employment agreement as detailed in General Terms and Conditions/Job Responsibility, the defendant could dismiss or discharge or terminate his employment without compensation, only if he was found guilty of breach of service agreement, insobriety, addiction to drugs, dishonesty and neglect of duty or conduct detrimental to the interest of the company. 2.8 Plaintiff submits that at no point of time he was found to be in breach of service agreement or indulged in any other immoral conduct detrimental to the interests of the defendants. The conduct of plaintiff during the period of his employment with defendants has been extremely efficient and honest and his dismissal from service is in utter disregard of the terms of employment contract and the principal of natural justice. 2.9 Plaintiff states that as per the terms and conditions of the employment, stipulated in employment letter dated 11.08.2014, he is entitled to the benefit of EPF/Bonus/Gratuity and Earned Leave salary. He alleges that since the joining of CS (COMM.) No.617/2021 (Arun Kumar vs. Rohit Bal Designs Pvt. Ltd. & Others) Page No. 4 of 22 employment of defendant no.1, he has been denied the benefits of bonus, Employers Provident Fund Contribution and Earned Leave Salary. He asked the defendants many a times to pay the benefits of bonus, salary against earned leave and benefits of EPF, however defendants on one pretext and other kept on dilly dallying the matter and he was not given the benefits. 2.10 Thereafter, on many occasions, plaintiff approached the defendants vide different modes of communications including e-mail seeking justification/reasons for illegal termination of services on 27.03.2019. He sent one such e-mail to representative of defendant no.1 company on 05.04.2019, which was replied by Mr. Rajesh Nayak on 06.04.2019, stating that the reason for the discontinuation of his services by the company was solely that the company was facing financial crisis and lack of work. 2.11 Plaintiff avers that his credentials and other certificates are still in the possession of defendants. Defendants attempted to coerce him in giving "no dues" certificate as a pre- condition for releasing his documents. Due to wrongful conduct of defendants in withholding of his certificates and credentials, he could not find any job till date as per his qualifications. 2.12 Constrained by the acts of defendants, plaintiff served legal notice dated 07.05.2019, calling upon defendants to reinstate him and to pay the arrear salary of the period for which he was laid-off. The said notice was duly served upon defendants, who replied the same by raising frivolous and false pleas about the reason for his removal by casting unsubstantiated aspersion on his performance which is contrary to the defendant's own email dated 06.04.2019. In the reply, it was stated by CS (COMM.) No.617/2021 (Arun Kumar vs. Rohit Bal Designs Pvt. Ltd. & Others) Page No. 5 of 22 defendants that plaintiff's services were terminated on 31.12.2018 due to negligence of work and he was reinstated as Senior Executive vide appointment letter dated 01.02.2019. 2.13 As per case of plaintiff, no allegation/charge-sheet for misconduct was ever presented to him by defendants. The alleged plea of negligence of work by defendants is mere an afterthought to avoid their liability towards him. The plea of alleged reinstatement on a senior post as raised in reply by defendants belies the ground taken by them to discharge him without compensation.
2.14 According to plaintiff, he was given last salary up to the month of January, 2019. He had been denied all other legitimate dues as per the appointment letter and his removal from the services is perse illegal and contrary to the terms of the contract.
2.15 Being left with no other option, plaintiff filed an application under section 12-A of The Commercial Court Act, 2015 for Pre-Institution Mediation and Settlement before South- East District Legal Services Authority on 11.02.2021, where after receipt of notice, defendants did not participate in mediation on 28.03.2020, and 01.09.2020. They appeared on 29.09.2020 but did not give consent to participate in mediation process. Accordingly, process of mediation was treated as Non-Starter vide report dated 17.10.2020.
2.16 On the aforesaid averments, plaintiff has instituted the present suit against defendants.
Service of defendant 3.1 Pursuant to summons issued to defendants, they CS (COMM.) No.617/2021 (Arun Kumar vs. Rohit Bal Designs Pvt. Ltd. & Others) Page No. 6 of 22 made appearance through their advocate Ms. Suman Gupta in the court on 23.03.2022. She filed memo of appearance on behalf of all the defendants. However, thereafter, nobody appeared on behalf of them, therefore, they were directed to be proceeded ex parte vide order dated 12.09.2022.
3.2 As defendants did not file written statement to the suit within 120 days from the date of service of summons, opportunity given to them to file written statement was directed to be closed.
3.3 Thereafter, on 03.11.2022, defendants filed application under Order IX Rule 7 CPC for setting aside ex parte order dated 12.09.2022 and another application u/s 5 of The Limitation Act for seeking condonation of delay in filing of application for setting aside ex parte order. Since, neither defendants nor their advocate appeared to pursue the applications, same were dismissed vide order dated 21.08.2023. 3.4 Subsequently, on 06.11.2023, defendants filed an application under Section 151 CPC r/w Section 5 of The Limitation Act for seeking recall of order dated 12.09.2022 as well as 21.08.2023. The said applications were dismissed vide order dated 13.05.2024.
Plaintiff's evidence 4.1 In order to prove his case, plaintiff examined himself as PW1. He has filed his evidence by way of affidavit, Ex.PW1/A, wherein he has reiterated and reaffirmed the same facts as mentioned in the plaint.
4.2 Before coming to the testimony of PW1, the CS (COMM.) No.617/2021 (Arun Kumar vs. Rohit Bal Designs Pvt. Ltd. & Others) Page No. 7 of 22 documents relied upon by PW1 are hereby put in a tabulated form as under:-
Sr. No. Details of document Exhibit No.
1. Appointment letter containing terms and Ex.PW1/1
conditions of employment
2. Copy of e-mail correspondence between Ex.PW1/2
plaintiff and representative of defendant
no.1 company
3. Certified copy of synopsis of claim filed Ex.PW1/3 before District Legal Services Authority, Saket Courts, New Delhi
4. Non-Starter Report dated 17.10.2020 Ex.PW1/4
5. Certificate u/s 65 B of The Indian Evidence Ex.PW1/5 Act
6. Copy of salary receipt of February, 2019 Mark-P1
7. Office copy of legal notice dated Mark-P2 07.05.2019 sent to defendants
8. Copy of reply of defendant to the legal Mark-P3 notice of plaintiff Findings and analysis 5.1 I have heard the submissions advanced Mr. Sanjeev Goyal, learned counsel for plaintiff and Mr. Ved Prakash Tripathi, learned counsel for defendants.
5.2 Learned counsel for defendants submitted that the suit filed by plaintiff is not maintainable under the provisions of The Commercial Courts Act because there are no commercial transactions between the parties as defined under section 2 (c) (i) of The Commercial Courts Act. Plaintiff's case mentioned under sub-clause (xviii) is not a category of case meant for commercial transaction and the provision of service as stated is regarding commercial services. He argued that the service as rendered by plaintiff in the management of defendant was not rendered for any commercial purposes or for sale of goods or services rendered to CS (COMM.) No.617/2021 (Arun Kumar vs. Rohit Bal Designs Pvt. Ltd. & Others) Page No. 8 of 22 sale of any goods. He further submitted that plaintiff has filed the instant suit for recovery of his arrears of salary, bonus, earned leave, EPF contribution, gratuity, damages and suit for declaration and mandatory injunction, which is not maintainable before this court. In this regard, he relied upon India Media Services Pvt. Ltd. vs. Indian Express Newspapers [Bombay] Ltd. & Ors. 2022 SCC OnLine Cal. 273.
5.3 Plaintiff has admitted the reply sent by defendant to the legal notice dated 07.05.2019 (pages 29 to 35 of plaint), wherein, it is specifically stated that plaintiff had worked with defendants in two tenures i.e. 1st tenure from 13.08.2014 till 31.12.2018 and for the said tenure, plaintiff has already taken full and final amount of Rs.94,014/- and same stood successfully credited in his account. The second tenure as Senior Executive was from 01.02.2019 till 27.3.2019 (fifty five days) including vacations. Plaintiff has deliberately not annexed second page of his appointment letter and annexed only first page of the letter which is at page 22 of the plaint. The second page of appointment letter dated 11.08.2014 referred to General Terms and Conditions/Job Responsibilities and in para no.3 of the same, it is specifically mentioned that the benefits of EPF, bonus and gratuity will be as per rules/law of the Government as applicable. 5.4 Learned counsel for defendants argued that plaintiff is not entitled for gratuity as he has not completed five years of his services including his both tenures. Plaintiff is also not eligible for PF because his basic salary was above Rs.15,000/- per month. In support of his submissions, he relied upon judgment titled as P. Raghuvulu & Sons vs. Additional Labour Court (Writ CS (COMM.) No.617/2021 (Arun Kumar vs. Rohit Bal Designs Pvt. Ltd. & Others) Page No. 9 of 22 Petition (civil) No.3969/1979) passed by Hon'ble Andhra Pradesh High Court.
5.5 Defendants are not liable to contribute for PF because only those employees are eligible for PF, who received Rs.21,000/- per month as gross salary, whereas, plaintiff was receiving more than the said amount. Defendants' claim that plaintiff has been duly paid his earned leave. 5.6 He further submitted that defendants duly replied to the mail of plaintiff, wherein, plaintiff deliberately did not mention his subsequent employee code i.e. 860 and has given only old employee code i.e. 786 (page 25 of the plaint). There is serious concealment done by plaintiff which shows his deliberate intention to get order/judgment on the basis of false claim. 5.7 It was submitted that plaintiff has worked with defendant only for fifty five days including leave. Therefore, it is clear that he has not completed his probation period also and thus, he is not entitled to receive any additional benefit from defendants.
5.8 Per contra, learned counsel for plaintiff submitted that the Employment Agreement dated 11.08.2024 (Ex.PW1/1), executed between the parties is in essence in respect of the "provision of service" and is thus, covered under section 2 (1) (c) (xviii) of The Commercial Courts Act, 2015 which prescribes that a dispute arising out of 'agreements for sale of goods or provision of service' is a commercial dispute.
5.9 The legislature has intentionally used the phrase 'provision of service' in broader sense and has neither proscribed/limited the scope of 'provision of service' nor has CS (COMM.) No.617/2021 (Arun Kumar vs. Rohit Bal Designs Pvt. Ltd. & Others) Page No. 10 of 22 specifically excluded the 'employment agreement' from the definition of 'provision of service'. He argued that wherever, the legislature intended to exclude the 'employment agreement' from the scope of 'provision of service', it has done so by incorporating specific exceptions/exclusion to that effect. For example, in section 65B (44) (b) of The Finance Act, 1994, in respect of levy of service tax on services, the legislature has specifically excluded 'provision of service' by an employee to the employer in the course of or in relation to his employment, from scope of 'service' amenable to the levy of service tax. No such exclusion/exception has been carved out by legislature while incorporating 'provision of service' in the definition of 'commercial dispute' in The Commercial Courts Act, 2015. Hence, by necessary implication and rule of interpretation of statutes, an 'employment agreement' would squarely falls within definition of 'provision of service'. Any other interpretation of section 2 (1) (c) (xviii) of The Commercial Courts Act, 2015 which excludes employment agreement from 'provision of service' would be contrary to the plain language and mandate of statutes.
5.10 He further submitted that since plaintiff was working in supervisory capacity as Accounts Manager, he was not entitled to the remedies under the labour law legislations, particularly The Industrial Disputes Act in as much as the plaintiff does not fall in the definition of 'workman' as per the provisions of The Industrial Disputes Act. Hence, plaintiff has filed the present commercial suit since his dispute with the employer is covered under the commercial dispute arising out of employment agreement in CS (COMM.) No.617/2021 (Arun Kumar vs. Rohit Bal Designs Pvt. Ltd. & Others) Page No. 11 of 22 relation to provision of service.
5.11 Additionally, plaintiff has sought declaration that the abrupt termination of his employment on 27.03.2019, without any notice and/or salary in lieu of notice is contrary to the contract of employment dated 11.08.2014 and as such same is illegal. In terms of clause 5 of Employment Agreement dated 11.08.2014, the service of plaintiff could be terminated only after service of one month's notice. The fact as is also borne out from e-mail communication, Ex.PW1/2 (colly), the plaintiff was never served with any notice of termination of his services nor paid salary in lieu of notice period. Hence, plaintiff continued to be in employment of the defendants, though, was prevented by defendants from doing his duty/work w.e.f. 27.03.2019. 5.12 Since the employment of plaintiff was not lawfully terminated as per the Employment Agreement, he continued to be in the employment of defendants and as such he has claimed 'arrears of salary' from March, 2019 till February, 2020 i.e. Rs.5,22,500/- (Rs.47,500/- X 11 months) i.e. from the last paid salary of February, 2019 till filing of Pre-litigation Mediation Application u/s 12A of The Commercial Courts Act, 2015 in February, 2020. Plaintiff has received his last salary for the month of February, 2019.
5.13 As per Clause 3 of the 'General Terms and Conditions/Job Responsibilities' of Employment Agreement dated 11.08.2014, it was agreed by defendants that plaintiff shall be entitled to the benefits of EPF, bonus and gratuity as per rules/laws of the Government as and when and where applicable. Despite the specific covenant of Employment Agreement, CS (COMM.) No.617/2021 (Arun Kumar vs. Rohit Bal Designs Pvt. Ltd. & Others) Page No. 12 of 22 defendants had not opened plaintiff's EPF account, has not deposited/paid employer's contribution towards EPF and has also denied him leave encashment, bonus and gratuity. 5.14 As per section 4 (2) of The Payment of Gratuity Act, plaintiff is entitled to gratuity @ salary for fifteen days for every completed year of service or part thereof in excess of six months. Plaintiff has completed five years of continuous service as defined in section 2A of The Payment of Gratuity Act. He has been in uninterrupted service of defendants for more than four years and seven months, whereafter was dishonestly prevented by defendants from working w.e.f. 27.03.2019 to deny him the benefits of gratuity. As per section 2A of The Payment of Gratuity Act, a person is set to be in continuous service of the employer, if the person has worked for a period of 240 days in a year, including the period of interrupted service on account of sickness, leave, accident, lay-off or cessation of work not due to any fault of the employee.
5.15 Learned counsel for plaintiff submitted that there was no fault of plaintiff in cessation of the service. Hence, as per section 2-A of The Payment of Gratuity Act, plaintiff was in continuous service for fifth year as well. The basic salary of plaintiff as per the last paid salary was Rs.26,875/-. Hence, the sum towards gratuity for five years is calculated as Rs.77,524/- (Rs.26,875/- X 15/26 X 5). In support of his submissions, he relied upon judgment titled as Management of Salem Textiles Ltd. vs. Appellate Authority, 2011 SCC OnLine Mad. 2873. 5.16 Plaintiff has claimed Rs.1,31,400/- towards employer's EPF contribution, as the same was part of contract of CS (COMM.) No.617/2021 (Arun Kumar vs. Rohit Bal Designs Pvt. Ltd. & Others) Page No. 13 of 22 employment (Clause 3) of General Terms and Conditions/Job Responsibilities of Employment Agreement. However, defendants dishonestly did not open plaintiff's PF account despite there being specific stipulation in employment agreement dated 11.08.2014 and has misappropriated the employer's contribution towards plaintiff's provident fund to his detriment. As per law, the employer is liable to make contribution to EPF, wherever applicable @ 10% of basic salary. The basic salary of plaintiff as on 11.08.2014 was Rs.20,800/- per month which rose to Rs.26,875/- per month when the services of plaintiff were illegally terminated on 27.03.2019. Plaintiff has been denied the benefit of employers contribution to his EPF by defendant totaling to Rs.1,31,400/- for the period 14.08.2014 to 27.03.2019 being 10% of the basic salary for the said period. 5.17 Plaintiff has also been denied bonus for the year 2018, which as per the statutory mandate is 8.33% of annual basic salary i.e. Rs.26,880/- (Rs.26,875/- X 12 X 8.33%). Apart from that plaintiff has also not been paid salary against earned leaves which comes to Rs.4,135/-. Hence, plaintiff is entitled to a decree of Rs.7,62,439/-(Rs.5,22,500/- towards arrears of salary, Rs.26,880/- unpaid bonus for 2018-19, Rs.1,31,400/- towards defendants' contribution to plaintiff's EPF as per Employment Agreement, Rs.77,524/- towards gratuity and Rs.4,135/- towards salary against earned leaves) in his favour and against the defendants.
5.18 Plaintiff is also entitled to declaration that the termination of employment was illegal and contrary to the Employment Agreement dated 11.08.2014. He is also entitled to CS (COMM.) No.617/2021 (Arun Kumar vs. Rohit Bal Designs Pvt. Ltd. & Others) Page No. 14 of 22 pendente lite and future interest @ 18% per annum and cost of the suit including pleader's fees. He is also entitled to such damages towards mental agony and harassment as this court may deem fit just and proper.
6.1 I have considered the rival submissions of both the parties and perused the material on record.
6.2 The first contention of defendants is that the suit filed by plaintiff is not maintainable under The Commercial Courts Act, 2015. Section 2 (1) (c) of The Commercial Courts Act, 2015 defines "commercial dispute". A commercial dispute is one which falls under any of the twenty two categories specified/mentioned in section 2 (1) (c) (i) to (xxii) of The Commercial Courts Act, 2015. Section 2 (1) (c) (xviii) deals with agreement for sale of goods or provision of services. 6.3 In the instant case, dispute between the parties has arisen out of Employment Agreement/Employment Letter dated 11.08.2024 (Ex.PW1/1). Plaintiff admittedly provided his services to defendants in terms of appointment letter, Ex.PW1/1. There is nothing in The Commercial Courts Act, 2015 which bars the jurisdiction of the court in respect of the dispute having arisen out of the Employment Agreement in respect of the services provided by an employee to the employer.
6.4 Section 11 of The Commercial Courts Act, 2015 deals with bar of jurisdiction of commercial courts and commercial divisions. Section 11 is reproduced hereunder for ready reference:-
" 11. Bar of jurisdiction of Commercial Courts and Commercial Divisions.- Notwithstanding anything contained in this Act, a Commercial Court or a Commercial Division shall not entertain or decide CS (COMM.) No.617/2021 (Arun Kumar vs. Rohit Bal Designs Pvt. Ltd. & Others) Page No. 15 of 22 any suit, application or proceedings relating to any commercial dispute in respect of which the jurisdiction of the civil court is either expressly or impliedly barred under any other law for the time being in force".
6.5 Thus, a bare reading of the aforesaid provision shows that the jurisdiction of a Commercial Court or a Commercial Division is barred relating to any commercial dispute in respect of which the jurisdiction of the civil court is expressly or impliedly barred under any other law for the time being in force. In the case in hand, counsel for defendants has failed to point out any law to this court whereby, the jurisdiction of this court is expressly or impliedly barred. Thus, the objection of defendants with respect to jurisdiction of this court is unmerited. Same is rejected accordingly.
7.1 The other issue which needs to be decided by this court is with respect to entitlement of recovery of amount as prayed in the suit.
7.2 The dispute between the parties has arisen out of Employment Agreement dated 11.08.2014 (Ex.PW1/1). The relevant portion of the appointment letter dated 11.08.2014 which deals with confirmation and termination is reproduced hereunder for ready reference:-
"5. Confirmation: On satisfactory completion of training/probation, you shall be considered for confirmation. You shall not be regarded as confirmed until you receive a confirmation letter specifying the date of confirmation from the company. After confirmation, your services can be terminated at one month's notice or salary in lieu thereof. Likewise, you can also resign from the services of the Company by giving one month's notice or salary in lieu thereof".
7.3 A bare reading of the aforesaid clause of CS (COMM.) No.617/2021 (Arun Kumar vs. Rohit Bal Designs Pvt. Ltd. & Others) Page No. 16 of 22 appointment letter shows that both the parties were at liberty to terminate the services. The services of plaintiff can be terminated by defendant no.1 by giving one month's notice or salary in lieu thereof. Similarly, plaintiff was also having option to resign from the defendant company by giving one month's notice or salary in lieu thereof. Admittedly, the services of plaintiff were terminated w.e.f. 27.03.2019. As per last salary slip of plaintiff i.e. of February, 2019, the net salary payable to plaintiff was Rs.47,500/-. Defendants have failed to prove on record that any notice was given to plaintiff prior to termination of his employment. Thus, in terms of clause 5 of the appointment letter, Ex.PW1/1, plaintiff is entitled for one month salary in lieu of one month's notice period. There is nothing on record to show that plaintiff was given salary for the month of March, 2019. Accordingly, defendants are liable to pay a sum of Rs.95,000/- (Rs.47,500/- X 2=95,000/-) to plaintiff.
8.1 Besides claiming the arrears of salary, plaintiff has also prayed for grant of bonus, EPF, gratuity, salary against earned leave and damages. Referring to para no.3 of the General Terms and Conditions/Job Responsibilities of the appointment letter dated 11.08.2014, learned counsel for defendants submitted that plaintiff is not entitled for gratuity as he has not completed five years of his services including both of his tenures. As per defendants, plaintiff worked in two tenures i.e. first from 13.08.2014 till 31.12.2018 and second from 01.02.2019 till 27.03.2019. Defendants claim that the full and final amount of Rs.94,014/- for the first tenure was already paid to plaintiff. On the other hand, plaintiff states that he has completed five years of CS (COMM.) No.617/2021 (Arun Kumar vs. Rohit Bal Designs Pvt. Ltd. & Others) Page No. 17 of 22 continuous service as defined in section 2A of The Payment of Gratuity Act. He had been in uninterrupted service of defendants for more than four years and seven months, where after, he was dishonestly prevented by defendants from working w.e.f. 27.03.2019 to deny the benefits of gratuity.
8.2 The appointment letter dated 11.08.2014, Ex.PW1/1, whereby plaintiff was appointed as an Accounts Executive in defendant company is not disputed. Relevant paras of Clause 3 of the General Terms and Conditions/Job Responsibilities which deals with EPF/bonus/gratuity is reproduced hereunder for ready reference:-
".......
3. EPF/Bonus/Gratuity:
You shall be entitled to the benefits of EPF/Bonus/Gratuity as per rules/laws of the Government/Company as and when & where applicable.
xxxxx xxxxxx xxxxxx
9. The Company shall have the right to dismiss or discharge or terminate without any compensation whatsoever, should you be considered guilty of breach of service agreement, insobriety, and addiction to drugs, dishonesty, and neglect of duty or conduct detrimental to the interest of the Company.
10. You shall be liable to be dismissed/discharged/terminated, if it is found that the basic material information provided in your application at the time of seeking employment to false or misleading".
8.3 In view of above, it is noted that as per appointment letter, Ex.PW1/1, plaintiff was entitled to the benefits of EPF, bonus and gratuity as per rules. Plaintiff is reported to have joined his duties in August, 2014, in terms of the appointment letter. As per plaintiff, he continued to work with defendant company till 27.03.2019 when he was dishonestly prevented by CS (COMM.) No.617/2021 (Arun Kumar vs. Rohit Bal Designs Pvt. Ltd. & Others) Page No. 18 of 22 defendants from working. The defence of defendants has been struck off due to non-filing of written statement within stipulated time. It is well settled that the statement/averments made in the plaint, if not specifically denied by defendants are deemed to be admitted. Defendants have failed to prove the assertions as orally submitted on record. In view of the said position, the averments of the plaint as made are to be believed.
8.4 Plaintiff has reportedly worked with defendant company for a period of around four years and seven months i.e. w.e.f. 11.08.2014 till 27.03.2019. The term "continuous service"
is defined u/s 2A of The Payment of Gratuity Act, 1972. As per said section, a person is said to be in continuous service of the employer, if the person has worked for a period of 240 days in a year, including the period of uninterrupted service on account of sickness, leave, accident, lay off or cessation of work not due to any fault of the employee. Therefore, if plaintiff's service from 11.08.2014 to 27.03.2019 is taken as minimum service required u/s 4(1) of The Payment of Gratuity Act, 1972, he is entitled for gratuity. Reliance is placed upon Management of the Salem Textiles Ltd. (supra).
8.5 As per section 4(2) of The Payment of Gratuity Act, 1972, plaintiff is entitled to gratuity @ salary for fifteen days for every completed year of service or the part thereof in excess of six months. Plaintiff has reportedly worked for four years and seven months with defendant company. He has been in continuous service of defendant approximately for a period of five years as defined under section 2A of The Payment of Gratuity Act. The basic salary of plaintiff as per last paid salary CS (COMM.) No.617/2021 (Arun Kumar vs. Rohit Bal Designs Pvt. Ltd. & Others) Page No. 19 of 22 was Rs.26,875/-. The sum towards gratuity for five years comes to Rs.77,526/- (Rs.26,875/- X 15/26 X 5). Thus, defendants are liable to pay the aforesaid amount to plaintiff towards gratuity. 9.1 Plaintiff has claimed Rs.1,31,400/- towards employer EPF Contribution, in terms of clause 3 of The General Terms and Conditions/Job Responsibilities of Employment Agreement, Ex.PW1/1. He has alleged that defendants dishonestly did not open his PF account despite there being specific stipulation in Employment Agreement and have misappropriated employer's contribution towards his Provident Fund.
9.2 On the other hand, counsel for defendants submitted that plaintiff is not eligible for PF because his basic salary was above Rs.15,000/- per month. He further submitted that only those employees are eligible for PF, who received Rs.21,000/- per month as gross salary. As plaintiff was receiving more than that amount, therefore, he is not entitled for PF. Defendants have not pointed out/shown any rules and regulations of any Act or any other law in force in support of his submissions. 9.3 As per law, the employer is liable to make contribution to EPF wherever applicable @ 10% of basic salary. The basic salary of plaintiff as on 11.08.2014 was Rs.20,800/- per month which subsequently rose to Rs.26,875/-per month. Despite there being covenant for payment of EPF contribution by defendants in the employment agreement dated 11.08.2014, plaintiff was denied the benefit of EPF contribution. Thus, defendants are liable to pay a sum of Rs.1,31,400/- to plaintiff for the period w.e.f. 11.08.2014 to 27.03.2019 being 10% of the basic salary towards EPF contribution.
CS (COMM.) No.617/2021(Arun Kumar vs. Rohit Bal Designs Pvt. Ltd. & Others) Page No. 20 of 22 10.1 As per plaintiff, he was denied bonus for the year 2018 which as per statutory mandate is 8.33% of annual basic salary. Apart from bonus, he was also not paid salary against earned leaves. Counsel for defendants submitted that plaintiff has been paid his earned leaves. However, he did not make any submission on the aspect of payment of bonus to plaintiff. Defendants have not furnished any proof of payment of salary against earned leaves to plaintiff. They have also not furnished any explanation as to why plaintiff has not been paid bonus despite their being clear stipulation in the General Terms and Conditions/Job Responsibilities of Appointment Letter, Ex.PW1/1.
10.2 In view of aforesaid position, defendants are liable to pay bonus and salary against earned leaves to plaintiff. The annual basic salary of plaintiff in the year 2018 was Rs.26,875/-. As per statutory mandate, the bonus is payable @ 8.33% of annual basic salary. Thus, the bonus payable to plaintiff for the year 2018 comes to Rs.26,880/- (Rs.26,875/- X 12 X 8.33%). As per salary slip of February, 2019, plaintiff had to his credit five casual leaves, nine sick leaves and 1.5 earned leave balance. In view of the same, plaintiff is entitled for Rs.4,135/- towards salary against his earned leaves.
11.1 Plaintiff has claimed pendente lite and future interest @ 18% per annum and cost of the suit. The rate of interest claimed by plaintiff appears to be on higher side. Plaintiff has not furnished any justification for grant of interest at such a higher rate. In view of the same, I am of the view that plaintiff is entitled only for reasonable rate of interest i.e. 8% per annum.
CS (COMM.) No.617/2021(Arun Kumar vs. Rohit Bal Designs Pvt. Ltd. & Others) Page No. 21 of 22 Plaintiff was deprived of his legitimate dues by defendants without any valid and sufficient reason. Accordingly, defendants are liable to pay interest @ 8% per annum on the outstanding dues.
11.2 For the foregoing reasons and discussions, I am of the view that plaintiff has succeeded to prove his case. Accordingly, the suit filed by plaintiff is decreed with cost. The following reliefs are granted to plaintiff:-
(i) Defendants are directed to pay a sum of Rs.95,000/-
to plaintiff towards salary for the month of March, 2019 and notice period.
(ii) Defendants are further directed to pay a sum of 1,31,400/- to plaintiff towards EPF contribution.
(iii) Defendants are further directed to pay a sum of Rs.26,800/- to plaintiff towards unpaid bonus for 2018-19.
(iv) Defendants are further directed to pay a sum of Rs.4,135/- towards salary against earned leaves.
(v) Defendants are further directed to pay pendente lite and future interest @ 8% per annum on the aforesaid amount from the date of filing of the suit i.e. 04.12.2021 till actual realization of the amount.
12.1 Decree Sheet be prepared accordingly.
13.1 File be consigned to Record Room. Raj Digitally
signed by Raj
Kumar
Tripathi
Kumar Date:
Tripathi 2024.09.04
15:47:23
+0530
Announced in the open court (RAJ KUMAR TRIPATHI)
Dated: 04.09.2024 District Judge (Commercial Court)-08,
South-East District, Saket Courts, New Delhi.
CS (COMM.) No.617/2021(Arun Kumar vs. Rohit Bal Designs Pvt. Ltd. & Others) Page No. 22 of 22