Kerala High Court
The Manager vs K.Balan on 17 September, 2009
Author: V.Giri
Bench: V.Giri
IN THE HIGH COURT OF KERALA AT ERNAKULAM
WP(C).No. 17700 of 2009(F)
1. THE MANAGER, HARRISONS MALAYALAM LTD,
... Petitioner
Vs
1. K.BALAN, CHECKROLL NO.3309,
... Respondent
2. THE CONTROLLING AUTHORITY UNDER THE
3. THE APPELLATE AUTHORITY UNDER THE PAYMEN
For Petitioner :SRI.E.K.NANDAKUMAR
For Respondent : No Appearance
The Hon'ble MR. Justice V.GIRI
Dated :17/09/2009
O R D E R
V.GIRI, J
.......................
W.P.(C)s.17700, 21240, 17698, 20287 & 20339/2009
.......................
Dated this the 17th day of September, 2009
JUDGMENT
Almost identical contentions have been raised in these writ petitions. They involve a common question as to whether an employer has the right to forfeit the gratuity payable to an employee under the Payment of Gratuity Act (hereinafter referred to as 'the Act') either in whole or in part. I will refer to the facts in W.P.(C).17700/2009 and disposal of the same would govern the other writ petitions also.
2. 1st respondent filed an application before the Controlling Authority under the Act. He contended that he joined services of the petitioner on 1.5.1968 and retired from service on 1.9.2005. He had put in 38 years of service and claimed an amount of Rs.76,730/- towards gratuity.
3. The Management in its counter statement inter alia contended that the claimant is in possession of 50 cents of land, which was allotted to him for the purpose of cultivation. He has not handed over the land to the W.P.(C).17700/09 & Connected Cases 2 petitioner even after retirement and that the Company has sustained a loss of Rs.1 Lakhs on account of the said action by the claimant. The Management also raised a contention that there was delay on the part of the workman in approaching the Controlling Authority under the Act. By Ext.P1 order, the Controlling Authority, after condoning the delay in preferring the application, determined the gratuity payable at Rs.66,536/- and directed the Management to pay the sum together with simple interest at 10% with effect from 1.10.2005. The order was affirmed by the appellate authority and these orders by the Controlling Authority and the appellate authority under the Act have been challenged in these writ petitions.
4. I heard Mr.E.K.Nandakumar, learned counsel for the petitioner. I have perused the orders as well.
5. The only question which arises for consideration is whether it is open to the Management to forfeit a portion of the gratuity payable to the employee on the ground that, according to the Management, loss has been caused by reason of some action or omission on the part of the W.P.(C).17700/09 & Connected Cases 3 employee; as a corollary, the question that could arise for consideration is whether the competent authority under the Act is entitled to take cognizance of any such claim made by the Management and either adjudicate the question as to whether any loss has been caused to the Management, by reason of any action or omission on the part of the workman, and also quantify the alleged loss caused in that regard. If the competent authority under the Act is entitled to determine the said question and also therefore, determine the loss that is alleged to have been caused to the Management, then the question is whether the authority would also be entitled to direct that the loss so allegedly caused be adjusted from the gratuity payable under the Act.
6. 1st respondent had put in 38 years of service with the petitioner. There is no serious dispute as to the quantum of the last drawn wages, namely Rs.116.73 that could be adopted for the purpose of calculating gratuity under the Act. Nor is there any serious dispute as to the quantum of the amount payable namely Rs.66,536/- as gratuity under the Act.
W.P.(C).17700/09 & Connected Cases 4
7. The contention which was primarily urged before the authorities and now before me is that the 1st respondent was allotted 50 cents of land, when he was in service, for cultivation and this was on account of his status as a workman. He was asked to surrender the said land at the time of his retirement. He refused to do so. Petitioner had to approach the Court for recovery of possession of the same and had to spend amounts for conducting the cases. It had incurred damages due to the illegal occupation of the land by the respondent. According to the Company, loss so caused is eligible to be adjusted against the gratuity otherwise payable under the Act.
8. It is further contended that gratuity is the payment of meritorious service and that on account of the misconduct and unmerited conduct of the 1st respondent, he is not entitled to gratuity until he hands over possession of the land belonging to the Company.
9. The contention taken up by the petitioner is essentially not one of forfeiture of gratuity payable under the Act, but W.P.(C).17700/09 & Connected Cases 5 one which arises from the perceived right of the employer to withhold the gratuity otherwise payable under the Act or enable the Management to reimburse the loss allegedly caused by the workman, from the gratuity amount which is due to the workman. Section 4(6) of the Act is relevant in the context and is extracted herein.
Section 4(6). Notwithstanding anything contained in sub-section(1)-
(a).the gratuity of an employee, whose services have been terminated for any act, wilful omission or negligence causing any damage or less to or destruction of property belonging to the employer, shall be forfeited to the extent of the damage or loss so caused;
(b).the gratuity payable to an employee [may be wholly or partially forfeited]
(i).if the services of such employee have been terminated for his riotous disorderly conduct or any other act of violence on his part, or
(ii).if the services of such employee have been terminated for any act which W.P.(C).17700/09 & Connected Cases 6 constitutes an offence involving moral turpitude, provided that such offence is committed by him in the course of his employement.
10. Section 4(6) of the Act deals with the circumstances under which gratuity could be forfeited. Is there anything in the Act which might indicate that the provision for forfeiture as contained in Section 4(6) is not exhaustive ? Is there anything in the Act which might also indicate that the competent authority under the Act would be entitled to direct forfeiture even otherwise than under the circumstances provided under Section 4(6) of the Act ?
11. The gratuity payable to an employee is a retirement benefit (in most of the cases). It would assume the characteristics of a valuable property in the hands of the employee. The right to receive gratuity is regulated by the provisions of the Act. Eligibility to receive the same would also therefore, be determined by the provisions of the Act. The Act itself provides for the limited circumstances under which gratuity could be forfeited either in whole or in part. W.P.(C).17700/09 & Connected Cases 7 Forfeiture of gratuity under the said limited circumstances provided under Section 4(6) of the Act is not necessarily relatable to the loss, if any, that has been caused to the Management by any act of omission or commission directly attributable to the employees concerned. Within the statutory framework provided by the Act, the right to receive gratuity assumes characteristics of a statutory right and therefore, the circumstances under which the said right could be whittled down or diluted or forfeited as the case may be, should be discernible within the four corners of the statute. If the statute provides for a forfeiture either in whole or in part then, such forfeiture, to the extent provided by the statute, would be legitimate and permissible; if not, there can be no forfeiture. The right to a property may not be a fundamental right but it nevertheless is a valuable right, constitutionally protected in terms of Article 300A of the Constitution of India. Article 300A being apposite is extracted herein. W.P.(C).17700/09 & Connected Cases 8 300A. Persons not to be deprived of property save by authority of law - No person shall be deprived of his property save by authority of law.
12. If this position is accepted, then forfeiture of the said right to receive gratuity, and to hold on to the same being a valuable right could be whittled down or diluted only if the statute which provides for such a right to receive gratuity also provides for forfeiture of the same. Section 4(6) of the Act provides for forfeiture. There are specified circumstances which would enable forfeiture. The said circumstances cannot be broadened and nothing can be added to the statute by the authorities under the Act or by the Management as constituting a basis for forfeiture of the gratuity. To do so, would be to accept the position that a valuable right to property is being taken away or whittled down by recourse to a procedure which does not have a sanction of law. That would be impermissible.
13. It would also be appropriate to refer to Section 13 and 14 of the Act which reads as follows:-
W.P.(C).17700/09 & Connected Cases 9 Section 13. Protection of gratuity - No gratuity payable under the Act [and no gratuity payable to an employee employed in any establishment, factory, mine, oilfield, plantation, port, railway company or shop exempted under Section 5] shall be liable to attachment in execution of any decree or order of any civil, revenue or criminal Court. Section 14. Act to override other enactments, etc - The provisions of this Act or any rule made thereunder shall have effect notwithstanding anything inconsistent therewith contained in any enactment other than this Act or in any instrument or contract having effect by virtue of any enactment other than this Act.
14. Thus, Section 13 and 14 of the Act would reinforce the premise that gratuity payable under the Act is a valuable right protected by the provisions of the Act itself and the right to receive the same under the Act would be available notwithstanding anything contra contained in any other statute or instrument or contract.
W.P.(C).17700/09 & Connected Cases 10
15. It is against this statutory back-drop that certain decisions cited by Mr.Nandakumar require to be appreciated. He referred to Wazir Chand v. Union of India and others (2001 (3) L.L.N 822) to contend for the position that the Supreme Court had upheld the right of the Railways, which was the employer in the said case to recover penal rent, payable by an erstwhile employee who had overstayed his tenure in the official quarters allotted to him, from the gratuity otherwise payable to the employee. It is clear from the said judgment that the Supreme Court has affirmed the action taken by the Government which in turn was affirmed by the Administrative Tribunal, in charging penal rent, in accordance with Rules, from the retired Government servants. The amount of gratuity payable after adjustment of such dues, which was levied in terms of Rules was offered to the employee. But apart from the same, he also insisted on payment of interest. This was rejected by the Tribunal and the stand taken was affirmed by the Supreme Court. It is clear from the judgment that levy of penal rent was authorized by the Rules and gratuity itself was payable only in terms of Rules. The provisions of Payment of Gratuity Act obviously did not W.P.(C).17700/09 & Connected Cases 11 fall for consideration of the Court and therefore, the same has not been considered as well.
16. U.P.State Sugar Corporation & Another v. Sukhveer Singh & Another (2008 III CLR 254), a judgment of the Allahabad High Court also turned around the effect of the provisions contained in the standing orders which was applicable to the workman in question. That was also a case where the standing orders provided for payment of gratuity after a clearance slip is tendered by the workman, which itself was to be done after he vacates the quarters. Workman overstayed his tenure in the quarters, but nevertheless insisted for payment of gratuity. The employer contended that gratuity will become payable after the workman tenders the clearance slip, vacates the quarters and hands over possession of the same to the Management. The view taken by the Court was clearly rested on the provisions of the standing orders.
17. V.P.Aggarwal v. State of Punjab and another (2002 (3) L.L.N. 1174), a decision of a learned single Judge of the Punjab and Haryana High Court also turned W.P.(C).17700/09 & Connected Cases 12 around the provisions of the Punjab Civil Services Rules, which provided for the computation of the DCRG payabale to a Government servant. Rule 9.16 of the Punjab Civil Service Rules provided for recovery and adjustments and essentially the Rules provided for adjustments of such dues, which otherwise would crystallize as a liability, from the gratuity payable to the Government servant, in terms of the Rules themselves. The said judgment also does not advance the case of the petitioner. Dibakar Mohanty v. Steel Authority of India, Ltd and Others (2002 (1) L.L.N.
456) upheld the right of the Management to insist that the dues payable by an erstwhile employee for overstaying the quarters allotted to him and also to insist that he surrenders vacant position of such quarters, as justification for withholding the gratuity otherwise payable. This right on the part of the Management was on the basis of the house allotment rules which was admittedly applicable to the workman in question. This decision also does not improve the case of the petitioner.
18. In fact, there is a commonality in the view taken by the different Courts, and discernible from the view taken W.P.(C).17700/09 & Connected Cases 13 by the Supreme Court in the first among the decisions, to the extent to which the Courts have upheld the right of the employer to withhold the gratuity or adjust the dues otherwise realizable from an employee from the gratuity amount payable, provided the rules or the statutory framework regulating payment of gratuity to the employee permits such a course of action. In other words, just as in the case of forfeiture of gratuity, for recovery of dues, from the gratuity otherwise payable from the employee, rules themselves will have to provide for recovery of amounts found due from the employee, from the gratuity otherwise due to him. The right to receive gratuity in such cases, is regulated by the Rules and the Rules themselves may provide for recovery of the employee's dues from the gratuity amount.
19. The line of enquiry should be whether the statutory framework regulating payment of gratuity in the instant case, as such provides for either forfeiture of gratuity or adjustment of dues claimed by the employer, from the gratuity payable to the employee. As has been found above and as is clear even otherwise, forfeiture of the gratuity W.P.(C).17700/09 & Connected Cases 14 payable under the Act is provided only under Section 4(6) of the Act. The claim made by the employer in the instant case is not one of the available grounds for forfeiture as specified under Section 4(6) of the Act. The Act also does not enable the employer to adjust the amount claimed by the employer from the gratuity statutorily payable to the employee in terms of the provisions of the Act.
20. The Act also does not empower the competent authority under the Act to adjudicate on the sustainability of any claim made by the employer against the employee. The authority would therefore, have committed an illegality if he had proceeded to adjudicate on the sustainability of the claim made by the Management in this case and then allow the Management to recover the dues claimed by them from the gratuity payable to the employee in terms of the provisions of the Act. The approach made by the controlling authority and the appellate authority in this regard, in the instant case, therefore, cannot be faulted with.
21. For all these reasons, I am of the view that the orders impugned in these cases are in conformity with the W.P.(C).17700/09 & Connected Cases 15 provisions of the Act and they do not warrant interference under Article 226 of the Constitution of the India. Writ petition is therefore bereft of merit and hence dismissed. W.P.(C)s.21240, 17698, 20287 & 20339/2009 The discussion above would apply to all these four cases also. Orders impugned in these writ petitions also are not liable to be interfered with. Writ petitions are bereft of merit and hence dismissed.
V.GIRI, Judge mrcs