Madhya Pradesh High Court
The Manager vs Mr. Prayag Modi on 6 February, 2018
10 scc 1"
HIGH COURT OF MADHYA PRADESH, PRINCIPAL SEAT AT
JABALPUR
Case No. W.P.No.20795/2016
Parties Name The Manager, Western Coalfields Ltd.
Vs.
Mr. Prayag Modi
Date of Judgment 06-02-2018
Bench Constituted Justice Sujoy Paul
Judgment delivered by Justice Sujoy Paul
Whether approved for reporting YES
Name of counsels for parties Petitioner: Shri Abhinav Kherdikar, Adv.
Respondent :Shri R.S.Verma,Adv.
Law laid down Payment of Gratuity Act, 172- The gratuity is a valuable right of an employee. It is also a property under Article 300A of the Constitution. The gratuity can be withheld only as per act and to the extent permissible under various provisions of Gratuity Act.
The allegations established against the petitioner show that he was found guilty of negligence. No allegations relating to riotous or disorderly conduct or for involving moral turpitude were alleged and established. Hence Sub-clause 4(ii) of Clause b of Section 4(6) are not attracted.
The employer has neither given opportunity to the workman before withholding gratuity nor quantified the amount of loss as per Clause (a) of Sub-
section 6 of Section 4. Hence, order of Controlling and Appellate Authority are affirmed.
Significant paragraph numbers 12, 14 , 15
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W.P No.20795/2016
(ORDER)
(06.02.2018)
This petition takes exception to the order dated 21.07.2016 whereby the controlling authority under the Payment of Gratuity Act, 1972 directed the employer to release the amount of gratuity with interest. The appellate order dated 26.10.2016 is also called in question whereby appeal of the employer is dismissed.
2. Briefly stated, the case of the employer is that the respondent/workman was served with a charge-sheet. The same was followed by departmental inquiry. In the inquiry report (Annexure P/4), the employee was held guilty of theft, fraud and dishonesty and accordingly the department wanted to dismiss him from service. Since an industrial dispute raised by the workman was pending before the Industrial Tribunal, the employer filed an application under section 33(2)
(b) of the I.D. Act seeking permission of the tribunal to terminate him from service. The tribunal by order dated 10.05.2013 (Annexure P/6) granted approval of termination of service of the workman. Accordingly, the workman was dismissed from service. The workman, aggrieved by order of the tribunal assailed it in W.P.No.20823/13. His writ petition was dismissed on 6.12.2013. He unsuccessfully assailed the order of the writ court in W.A.No.361/14. The writ appeal was also dismissed on 14.07.2015.
3. Shri A.Kherdikar, learned counsel for the petitioner submits that the workman who has been dismissed from service for serious misconduct is not entitled to enjoy the benefit of gratuity. Reliance is placed on the order of Nagpur Bench of the High Court of Bombay passed in W.P.No.4281/2011 (Western Coalfields Ltd Vs. Ramjanam Yadav) decided on 18.10.2013. It is submitted that a review application filed by the workman therein was dismissed by the High Court on 25.3.2015 (Annexure P/10) and these two orders were unsuccessfully
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W.P No.20795/2016challenged in SLP(c) No.24075-24076/2016. The SLP was dismissed on 05.07.2016 (Annexure P/11).
4. Per contra, Shri Verma, learned counsel for the workman supported the impugned order. He submits that although in the charge-
sheet (Annexure R/1) the relevant clause of standing order, namely, 26.1 and 26.2 were mentioned, the fact remains that there was no allegation in the charge-sheet regarding embezzlement, misappropriation or dishonesty. At best, it was the case of negligence on the part of the workman. The negligence alleged was that the present respondent did not properly check the entitlement of another workman Shri Ishnu who was granted LTC twice in a block year. It is alleged that a departmental inquiry was initiated against Shri Ishnu and he was found guilty of the charges. Shri Ishnu was also dismissed from service yet gratuity has been paid to Shri Ishnu. Thus, there is no justification in putting the present respondent in a comparative disadvantageous position qua Shri Ishnu.
5. Learned counsel for the parties fairly admitted that the validity of termination of respondent/workman is still subjudice before the Central Govt. Administrative Tribunal.
6. No other point is pressed by learned counsel for the parties.
7. I have heard learned counsel for the parties at length and perused the record.
8. A plain reading of order of the controlling authority shows that the authority has placed heavy reliance on section 4(1) and (6) of the Payment of Gratuity Act. The authority opined that before taking away the benefit of gratuity, the employer should have given an opportunity to the workman. For not following the said procedure, a direction was issued to make payment of gratuity. In support of this contention, the
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W.P No.20795/2016controlling authority and the appellate authority have relied on various judgments of different High Courts.
9. Before dealing with the aforesaid aspect, it is apposite to quote Section 4(1) and (6) of the Payment of Gratuity Act,1972 which reads as under :-
"4. Payment of Gratuity.- (1) Gratuity shall be payable to an employee on the termination of his employment after he has rendered continuous service for not less than five years,-
(a) on his superannuation, or
(b) on his retirement or resignation,
(c) on his death or disablement due to accident or disease:
Provided that the completion of continuous service of five years shall not be necessary where the termination of the employment of any employee is due to death or disablement:
(6) Notwithstanding anything contained in
sub-section (i),-
(a) the gratuity of an employee, whose services have been terminated for any act, wilful omission or negligence causing any damage or loss 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 1[may be wholly or partially forfeited]-
(i) if the services of such employee have been terminated for his riotous or 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 constitutes an offence involving moral turpitude, provided that such offence is committed by him in the course of his employment."
10. The object behind gratuity scheme was considered by Supreme Court in Delhi Cloth and General Mills Co. Ltd. vs. Workmen & Others
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W.P No.20795/2016reported in AIR 1970 SC 919. It was laid down that the object of having a gratuity scheme is to provide retiral benefit to workmen, who have rendered long and unblemished service to the employer and thereby contributed to the prosperity of the employer, and it is, therefore, not correct to say that no misconduct however grave, may not be visited with forfeiture of gratuity. This judgment was again considered in (1973) 2 SCC 502 (The Management of Tournamulla Estate vs. Workmen). The Apex Court opined that misconduct could be of three kinds, (1) technical misconduct which leaves no trial of indiscipline;(2) misconduct resulting in damage to the employer's property which might be compensated by forfeiture of gratuity or a part thereof, and (3) serious misconduct such as acts of violence against the management or other employees or disorderly behavior in or near the place of the employment, which though not directly causing damage is conducive to grave indiscipline. The first should involve no forfeiture, the second may involve forfeiture of an amount equal to the loss directly suffered by the employer in consequence of the misconduct, and the third will entail forfeiture of the gratuity payable to the workman. In other words, according to this decision, if a workman is guilty of a serious misconduct of the third category, then his gratuity can be forfeited in its entirety.
11. In the instant case, the learned Controlling Authority has interfered mainly on the ground that before forfeiture of gratuity, no opportunity was provided to the employee concerned. This facet will be considered in the later part of this order.
12. This is trite law that retiral dues/gratuity are not bounty. They are earned by employee by rendering long service to the employer. These payments are made in the December of career of employee so that he can discharge his social obligations and settle down in the life. The pension, gratuity etc. were held to be property under Article 300 A of the
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W.P No.20795/2016Constitution. This is equally settled that retiral dues cannot be withheld unless the statute enables the employer to do the same.
13. In the present case, the respondent-workman was punished on the basis of Charge-sheet dated 23-01-2001 (Annexure R/2) wherein following allegations were made and proved against him:-
^^vkids }kjk Jh bZ'uq oYn VqdMw gkyst [kyklh Vks-ua- 548 dh ,y-,y-Vh-lh- QkeZ dks pSd fd;k x;k ,oa lcaf/kr dkexkj Jh bZ'uq dks ,d gh Cykd o"kZ ¼98&2001½ eas nks ckj ,y-,y-Vh-lh- ,oa ,d ckj ,y-Vh-lh- dk Hkqxrku gks x;k ;fn vkius lw{erk ls tkWp dh gksrh rks Jh bZ'uq dks mDr Hkqxrku tks fd;k x;k og ugha gks ikrkA vkids }kjk lgh ijh{k.k u djus ij daiuh dks vkfFkZd {kfr igqaphA^^
14. Although the employer has mentioned Clause 26.1 and 26.22 of the Standing Orders in the Charge-sheet, the only allegation made and found proved against the workman was relating to negligence. The allegation was regarding issuance of LIC twice in a block year. There was no allegation against the petitioner relating to moral turpitude. Putting it differently, it was not the charge against the petitioner that he has committed aforesaid act with any oblique motive or gained anything out of it. Thus, Clause (ii) of Sub-section 6 of Section 4 is clearly inapplicable. Similarly, Clause (i) of the said provision is not applicable because there is no allegation against the workman relating to "riotous" or "disorderly" conduct. No allegations relating to violence on his part were also alleged in the Charge-sheet. So far Clause (a) is concerned, it may be pressed into service. This clause deals with negligence and enables the employer to forfeit the gratuity "to the extent of damage or loss so caused." In the instant case, the petitioner has not undertaken any exercise to determine the quantum of loss caused. Indeed, it was pointed out by the other side that full gratuity has been released in favour of Shri Ishnu, who had been allegedly and illegally enriched by giving two LTCs in one block year whereas he was entitled for only one LTC. Admittedly, no opportunity was given to the workman before forfeiture of the gratuity.
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W.P No.20795/201615. In this factual backdrop, it is to be seen that whether gratuity can be withheld. The M.P. High Court in 1996 (0) MPLJ 262 (Permali Wallance Ltd. vs. State of M.P. & Ors.) considered Sub-section 6 of Section 4 and opined that the employer cannot forfeit the amount of gratuity without following the principles of natural justice and without determining the extent of damage/loss caused. It was taken note that extent of loss and damage was neither shown to the employee nor any opportunity was given. No enabling provision under the standing order was pointed out, which enables the employer to forfeit the gratuity. Shri Abhinav Kherdikar, learned counsel strenuously contended that although various High Courts have taken divergent view on the question of applicability of principles of natural justice before forfeiture of gratuity, the view taken by Nagpur Bench in the case of Ramjanam Yadav (supra) must be followed because said judgment got a stamp of approval from the Supreme Court. I am afraid that the said contention is devoid of substance. The order of Supreme Court shows that SLP was dismissed in limine. In view of judgment of Supreme Court in the case of Kunhayammed vs. State of Kerala reported in (2000) 6 SCC 389, the dismissal of SLP does not mean that Supreme Court has given stamp of approval to the judgment of High Court. The SLP was not converted into appeal and said dismissal does not mean that the order of High Court has been approved by Supreme Court.
16. The various High Courts have taken constant view regarding applicability of principles of natural justice in the matter of forfeiture of gratuity. Apart from M.P. High Court in Permali Wallance Ltd. (supra), the same view was taken in the matter of Krishnaveni Textile Ltd. vs. Assistant Labour Commissioner (2002) 3 LLJ 607 (Madras). The Karnataka High Court in Bharat Gold Mines Ltd. vs. Regional Labour Commissioner ILR 1986 KAR 2755 took the same view. Similar is the view of Division Bench of Gujarat High Court in the case of Regional Manager vs. Nilaben Suresh Sanghvi. Pertinently, in this case, the High
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W.P No.20795/2016Court opined that in absence of a specific order forfeiting the gratuity, the action of withholding the gratuity cannot be countenanced. This Court in 2013 (1) MPLJ 301 (G.M.D.C. Co-operative Bank vs. Deendaya Gaud) opined that the amount of gratuity was quantified without providing any break up and behind the back of the employee and, therefore, said amount cannot be recovered under Section 4 of the Gratuity Act.
17. It is made clear that this Court has not expressed any opinion on the legality, validity and propriety of the order of punishment, which is subject matter of adjudication before the Industrial Tribunal. This Court has only considered the nature of allegations in the teeth of various clauses of Section 4 of the Gratuity Act in order to examine whether employer was justified in withholding the gratuity. Needless to emphasize that it will be open to the Tribunal to decide the legality of dismissal order on the basis of merits of the said case. Shri Abhinav Kherdikar, learned counsel has taken pains to contend that Clause 26.1 and 26.22 cover the cases of fraud, dishonesty, misappropriation etc. No doubt, a plain reading of Clause 26.1 and 26.22 can lead us to such a conclusion. However, such clauses are enabling provisions on the strength of which a charge can be framed against a workman. It is not the enabling provision, which will determine the conduct or nature of guilt but it is the nature of charge/allegation, which will throw light as to what was the actual allegation against the workman. At the cost of repetition, in the considered opinion of this Court, no allegation is made and established against the petitioner about the misappropriation of money, oblique motive, dishonesty etc.
18. In nutshell, the gratuity of an employee can be withheld only as per the procedure prescribed in the Gratuity Act and to the extent such withholding/forfeiture of gratuity is permissible. The employer does not have any unfettered discretion in withholding the gratuity as per the
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W.P No.20795/2016whims and fancies. This is trite law that if a law prescribes a thing to be done in a particular manner, it has to be done in the same manner and other methods are forbidden. [See AIR 1959 SC 93 (Baru Ram vs. Prasanni and (2002) 1 SCC 633 (Commissioner of Income Tax, Mumbai vs. Anjum M.H. Ghaswala)]. The Supreme Court held that Law has reached its fines moments', stated Douglas, J. in United States vs. Wunderlich 342 US 98 (1951), ' when it has freed man from the unlimited discretion of some ruler..... Where discretion is absolute, man has always suffered.' It is in this sence that the rule of law may be said to be the sworn enemy of caprice. Discretion, as Lord Mansfield stated it in classic terms in R. vs. Wilkes (1770) 4 Burr 2527: Burr at p. 2539 'means sound discretion guided by law. It must be governed by rule, not by humour: it must not be arbitrary, vague, and fanciful.' This principle is followed by Supreme Court in (2012) 10 SCC 1 (Natural Resources Allocation, In. Reference Special Reference No.1 of 2012.
19. In view of aforesaid analysis, I find no reason to interfere in the impugned orders passed by learned Controlling & Appellate Authorities. Consequently, petition is dismissed. No cost.
(Sujoy Paul) Judge MKL/mohsin Digitally signed by MOHAMMED MOHSIN QURESHI Date: 2018.02.06 21:15:09 -08'00'