Karnataka High Court
K.R. Tyagi vs National Textile Corporation Ltd. And ... on 11 September, 1996
Equivalent citations: (1997)ILLJ999KANT
Author: H.L. Dattu
Bench: H.L. Dattu
ORDER
1. An over ambitious spinning master, now retired from the services of 1st respondent-Corporation is before this Court in a petition filed under Art. 226/227 of the Constitution of India, inter alia seeking the following reliefs :
"(a) issue a writ of mandamus or any other appropriate writ order of direction, quashing the endorsement bearing reference No. NTC/PIR/7(S)/88/3501 dated December 9, 1988 (Annexure-E) as the same is arbitrary, capricious and cannot be sustained.
(b) issue a writ of mandamus or any other appropriate writ order or direction directing the respondents to pay the petitioner the amounts in lieu of 'earned leave', leave travel concession, medical reimbursement and the benefit of normal annual increments with the benefits of revised pay and all allowances with a further direction to the respondents to pay interest on this sum at the rate of 18 per cent per annum from the date on which the said amount became payable till the date of payment".
2. Briefly the background facts are, petitioner had been appointed as Additional Spinning Master-cum-Maintenance in charge in M.S.K. Mills Ltd., Gulbarga. Petitioner became an employee of the 1st respondent by reason of nationalisation of that mill w.e.f. April 1, 1974. Petitioner's services stood transferred to Mysore Spinning and Manufacturing Mills in Bangalore, another nationalised unit and appointed as Spinning Master. The services of the petitioner came to be terminated by respondents by exercising their powers conferred under Clause 3 of the appointment order/letter dated July 6, 1968 by giving one month's pay in lieu of notice. The validity or otherwise of that order had been questioned by the petitioner in a writ petition filed before this Court in No. 20105 of 1983. This Court by its order dated November 25, 1987 was pleased to allow the writ petition and was further pleased to pass the following order -
"(i) Writ petition succeeds;
(ii) Impugned order, Annexure-C dated November 10, 1983 passed by the second respondent, is hereby quashed.
(iii) Petitioner is entitled to all consequential benefits flowing from such declaration and;
(iv) Rule made absolute".
3. After disposal of the writ petition by this Court, petitioner represented to the management of the respondent-Corporation to implement the order passed by this Court on November 25, 1987. The General Manager of the Mills by his letter dated May 12, 1988, informed the petitioner that the total amount payable to the petitioner, less deductions comes to a sum of Rs. 1,42,104.13 ps. which includes gratuity and in terms of that letter, petitioner was paid that amount. In that letter, petitioner was also informed that he is not entitled to other benefits such as earned leave salary, L.T.C., Medical reimbursement and other benefits. It is asserted in the petition that the petitioner after making a few more representations, finally got issued a legal notice to the respondent-Corporation dated January 21, 1988. In that notice, the petitioner demanded for the following benefits :
"(a) 30 days earned leave from November 1983, to July 31, 1987.
(b) Sick leave and casual leave from November 1983 to July 31, 1987.
(c) Leave Travel concession from 1983 to 1987 to and to and fro with family (1st Class) A.C. as per his entitlement to go to his native place.
(d) Medical reimbursement at the rate of one month's basic pay from November 1983 to July 31, 1987.
(e) Benefit of normal annual increments from November 1983 to July 31, 1987."
4. Since the petitioner by then had retired he sought for the benefit of cash payment in lieu of the aforesaid benefit, which was approximately quantified at Rs. 70,000/-. This notice of the petitioner came to be replied by Senior Manager, Personnel and Industrial Relation of the respodent-Corporation informing the petitioner that the benefit claimed cannot be granted in view of the Rules of the Company. Aggrieved by this rejection order dated December 9, 1988, rejecting the claim of the petitioner for certain monetary benefits, petitioner is before this Court for the reliefs as indicated by me earlier.
5. Petitioner in the writ petition asserts that since he was prevented from performing his duties in the respondent-Company by an order of termination dated November 10, 1983, till his reinstatement in the service by respondents by their order dated July 31, 1987, he is deemed to have continued in the service of the Company and deemed to have discharged his duties in the Company and therefore, he would be entitled to all the benefits from the respondent-Company to which a regular-employee is entitled from the Company. It is further asserted that the stand of the respondent Company that because his services were terminated, he is not entitled to those benefits is not tenable, because once the order of termination is set aside, the petitioner is deemed to have been in service during the said period since the Management was responsible for preventing the petitioner from discharging his duties and the petitioner cannot be blamed for not working during the said period and further since the order of termination has been set aside by this Court, he is entitled to all the consequential benefits including earned leave salary, L.T.C. medical reimbursement etc. 5A - Respondent company has not filed its objection statement to the assertion of the petitioner in the writ petition, but by their reply to the notice issued by the petitioner, their stand seems to be that the petitioner is not entitled to the reliefs sought for in the writ petition for the reason as per the rules, earned leave salary has to be earned while on duty and since the petitioner did not work in the organisation during that period, he is not entitled to any kind of leave salary. In is so far as claim for L.T.C. is concerned, the thinking of the Company seems to be that the petitioner is not entitled to the said benefit as the same has to be availed during the course of employment and the same cannot be postponed beyond the date of superannuation. In so far as medical reimbursement is concerned, the benefit cannot be granted for the back period as per the existing rules and with regard to annual increments, the stand of the Management seems to be that since the petitioner had already reached the top scale of pay, even for that benefit he is not entitled to. In sum and substance, the stand of the respondent-Company seems to be that the petitioner is not entitled to various benefits claimed by him since he was not in employment during the period between the date of termination and the date of reinstatement and he could avail all the benefits provided he was in employment of the company during that period.
6. Sri K. Subba Rao, the learned counsel for petitioner strongly contends that since the order of termination passed by respondent-Company is quashed by this Court, petitioner would be entitled to all the reliefs including payment of back wages and other monetary benefits and the employee should be treated as if he was in service of the Company performing his duties and functions till the age of superannuation and whatever benefits he should have got should be paid to the reinstated employee. In support of his contention, the learned counsel relies upon certain observations made by the Supreme Court in the case of Bennett Coleman Co. Pvt. Ltd. v. Punya Priya Das Gupta (1969-II-LLJ-554), the observations made by Federal Court in the case of Western India Automobile Association v. The Industrial Tribunal Bombay & Ors. AIR (36) 1949 F.C. 111 and the decision of this Court in the case of D. G. Venkataramu and Others v. The Managing Director, Pandavapura Sahakara Sakkare Karkhane Ltd. & Another 1969 (1) Mys. L.J. 578.
7. Per contra, Sri Sawkar, the learned counsel for respondent-Company sought to justify the impugned orders made by the Personnel Manager of the Company dated December 9, 1988 by placing reliance on the Rules of the Company and certain observations made by Apex Court in the case of Dilbagh Rai Jarry v. Union of India and Others (1974-I-LLJ-164) and Bharat Electronics Ltd., Bangalore v. Industrial Tribunal, Karnataka (1990-II-LLJ-32).
8. Before adverting to merits or demerits of the petitioner's case, let me first notice the observations made by Federal Court in the case of Western India Automobile Association (supra). The Court was pleased to observe as under :
"This relief of reinstatement is on the same footing as a relief of restitution. Restitution can be granted in integrum in certain cases. All that is required is that the ex-employee should be restored to his previous position so far as capacity, status and emoluments are concerned and there is nothing extraordinary in such restoration being ordered when considered necessary in the interests of peaceful settlement of industrial disputes".
9. In the case of Bennett Coleman & Co. v. Punya Priya Das Gupta, (supra) the Apex Court was pleased to observe as under : at pp 565-566 "Since 'wages' has not been defined in Act, its meaning is the same as assigned to it in the Industrial Disputes Act. Under Section 2(rr) of that Act, 'wages' means all remuneration capable of being expressed in terms of money, which would, if the terms of employment, expressed or implied, were fulfilled, be payable to a workman in respect of his employment or of work done in such employment, and includes (i) such allowances (including dearness allowance) as the workman is for the time being entitled to; (ii) the value of any house accommodation, or of supply of light, water, medical attendance or other amenity or of any service or of any concessional supply of food grains or other articles; (iii) any travelling concession, but does not include any bonus and other items mentioned therein. Mr. Ramamurthy's argument was that the car allowance as also the benefit of the free telephone and newspapers would fall under the first part of the definition as they are remuneration capable of being expressed in terms of money. The argument, however, cannot be accepted as neither of them can be said to be remuneration payable in respect of employment or work done in such employment. Neither the car allowance nor the benefit of the free telephone was given to the respondent in respect of his employment or work done in such employment as the use of the car and the telephone was not restricted to the employment, or the work of the respondent as the special correspondent. There was no evidence that the car allowance was fixed after taking into consideration the expenses which he would have ordinarily to incur in connection with his employment or the work done in such employment. Even if the respondent had not used the car conveying himself to the office or to other places connected with his employment and had used other alternative or cheaper means of conveyance or none at all, the car allowance would still have had to be paid. So too, the bills for the telephone and the newspapers whether he used them or not in connection with his employment or his work as the special correspondent. Therefore, we have to turn to the latter part of the definition and see if the two items properly fall thereunder so far as the car allowance is concerned, there was as aforesaid nothing to suggest that it was paid to reimburse him of the expenses of conveyance which he would have to incur for discharging his duties as the special correspondent, or that it was anything else than an allowance within the meaning of Section 2(rr) of that Act. It would, therefore, fall under the inclusive part (i) of the definition. Likewise, the benefit of the telephone and newspapers was allowed to the respondent not merely for the use thereof in connection with his employment or duties connected with it. Both the car allowance and the benefit of the free telephone and newspaper appear to have been allowed to him to directly reduce the expenditure which would otherwise have gone into his family budget and were therefore items relevant in fixation of fair wages. (See Hindustan Antibiotics Ltd. v. Workmen, (1967-I-LLJ-114) (SC). That being the position, the two items could on the facts and circumstances of the present case be properly regarded as part of the respondent's wages and had to be taken into calculation of the gratuity payable to him".
10. This Court in the case of D. G. Venkataramu and others v. The Managing Director, Pandavapura Sahakara Sakkare Karkhane Ltd. & Another (Supra) was placed to observe as under :
"6. S. 79 of the Factories Act is the section which entitles workmen to certain number of days of leave with wages in respect of or in relation to period during which they had been working in the factory. According to the sub-section (1) every worker who has worked for a period of 240 days or more in a factory during a calender year shall be allowed during the subsequent calender year a specified number of days leave with wages. Sub-section (3) provides that if a worker is discharged or dismissed from service during the course of the year, he would be entitled to leave with wages as laid down in sub-section (1) even if he has not worked for the entire period entitling him to earned leave. Sub-section (11) provides that if the employment of a worker who is entitled to leave is terminated before he has taken the entire leave to which he was entitled to or if having applied for leave, the same is refused and the worker quits the employment before he takes leave, the employer is bound to pay him an amount calculated under S. 80 of the Act in respect of the leave not taken.
The general effect of the scheme for leave under S. 79 of the Factories Act, therefore, appears to be that if a worker has put in a certain period of work, he becomes entitled to be granted a specified number of days of leave with wages and that he should not be deprived of the said right earned by him by any wrongful act on the part of the employer, which has the effect of preventing him from enjoying the benefits of the leave earned by him, and that if the position is such that he cannot be given the benefit in its original form, he should be compensated therefor by payment in lieu of it".
11. The Apex Court in the case of Dilbagh Rai Jarry v. Union of India and others (supra) considering whether running allowance is payable to a dismissed employee who is later reinstated into service was pleased to observe as under :
"22. Mr. Bishan Narain further contends that Running Allowance was a part of the pay or substantive wages. In support of this argument, he has invited our attention to Rule 2003 of the Railway Establishment Code, Clause 2 of which defines 'average pay'. According to the second proviso to this clause, in the case of staff entitled to running allowance, average pay for the purpose of leave salary shall include the average running allowance earned during the 12 months immediately preceding the month in which a Railway servant proceeds on leave subject to a maximum of 75 per cent of average pay for the said period, the average running allowance once determined remaining in operation during the remaining part of the financial year in cases of leave not exceeding one month. The crucial words, which have been underlined, show that such Running Allowance is counted towards 'average pay' in those cases only where the leave does not exceed one month. It cannot, therefore, be said that Running Allowance was due to the appellant as part of his wages for the entire period of his inactive service. Travelling allowance or running allowance is eligible if the officer has travelled or run, not otherwise. We therefore negative this contention."
12. Again in the case of Bharat Electronics Ltd., Bangalore v. Industrial Tribunal, Karnataka the Supreme Court was pleased to observe as under :
"15. Now confluencing the two legal thoughts expressed in Bennett Colemen's case (supra) and Dilbagh Rai Jarry's case (supra), the dream of thought which inevitably gurgles up is that an allowance which from the term of employment flows as not contingent on actual working is part of wages for the purposes of S. 33(2)(b) but an allowance which is earnable only by active serving is not an allowance which will form part of wages within the meaning of the said provision."
12A. In Ramakrishnappa's case 1987 Lab IC 1074 (Kant) the Hon'ble single Judge of the Karnataka High Court employed Bennett Coleman's case (supra) to come to the conclusion that night shift allowance was part of the wages by observing as follows (at pp. 1079-80 of Lab IC) :
"Therefore, I find it difficult to accede to the contention of the management that conveyance allowance, night shift allowance and turnout allowance were not wages as defined in S. 2(rr) of the Act, and therefore, they were not required to be included in computing the wages of the petitioner for one month. The decision of the Supreme Court in Bennett Coleman and Co. (supra) though it arose in the context of quantification of gratuity, the view taken therein that the allowance given for purchase of newspapers, towards telephone and conveyance also should be calculated in computing one month's wages for the purpose of computing gratuity, supports the construction placed on S. 2(rr) of the Act for the petitioner, for, the Supreme Court invoked the said definition as the word 'wages' had not been defined in the Working Journalists (Conditions of Service and Miscellaneous Provisions) Act, 1955. In the case of Jarry, (supra), on which the learned counsel for the second respondent relied, the question decided was, whether wages payable to a railway guard for the period he was kept out of service consequent on his dismissal from service till he was reinstated included the amount of running allowance, which was under the rules payable only if the railway servant had gone on duty, and the Supreme Court held that it was not, in view of the condition, Section 2(rr) of the Act did not come up for consideration in that case and, therefore, not apposite to this case.
"This view, as said before, was adopted by the Tribunal to decline approval to the management. But for reasons set out before, we are of the view that the Hon'ble single Judge fell into an error in enlarging the scope of Bennett Coleman's case (supra) and dwarfing that of Dilbagh Rai Jarry's case (supra). Thus the conclusion is incapable that the workman had to earn night shift allowance by actually working in the night shift and his claim to that allowance was contingent upon his reporting to duty and being put to that shift. The night shift allowance automatically did not form part of his wages and it was not such an allowance like in Bennett Coleman's case which flowed to him as his entitlement not restricted to his service. Thus we hold that the Tribunal fell into a grave error in declining the application of the management for approval on the ground of short payment of Rs. 12/- on account of night shift allowance, which the workman supposedly would have earned had he gone to report on duty, which in the circumstances he could not, or having worked rotationally at night, which he did not, and that too fictionally, in the month following the month and the date of the application, on which date the dismissal was to be effective."
13. Keeping in view the law laid down by the Apex Court and the observations made by this Court, let me now deal with the fact situation.
14. This Court while disposing of the writ petition has not ordered for reinstatement of the dismissed employee, but has made a declaration to the effect that the petitioner is entitled to all consequential benefits in view of quashing of the order of termination. What is the effect of such declaration ? Undoubtedly two consequences would flow - (a) that the employee/worker is reinstated and that the contract of service is restored; (b) that from that date he is entitled to the wages at the rate he was entitled to prior to the date of dismissal. The word "re-instatement" has been explained by several courts to mean, replacing a person in the position from which he was dismissed, restoration of status quo ante as it existed prior to the order of termination. Ordinarily reinstatement contemplates payment of backwages. Though the Officer was not on duty, he must be deemed to have remained in service once the order of termination is set aside. Then the employee is entitled to benefits which would have accrued to him as if the order of termination was never passed. Thus the effect of the order of reinstatement is merely to set at naught the order of wrongful dismissal. Now the question that requires to be considered is whether the employee, apart from backwages is entitled for any other monetary benefits, in the present case earned leave salary, leave travel concession, medical reimbursement and annual increments. It is the contention of learned counsel for petitioner that when the workman is reinstated with backwages, then the period of forced unemployment is equated with period on duty and therefore earned leave should be paid to him. Per contra, learned counsel for respondents submits that for entitlement of this monetary benefit, the employee should earn leave while he is working in the company. For that purpose relies upon the Rules of the Company which has come into force with effect from January 1, 1976. The rules are titled as "National Textile Corporation (Andhra Pradesh, Karnataka, Kerala and Mahe) Limited Leave Rules, 1976. In the said Rules, the expression "Earned Leave" is defined to mean "Leave earned in respect of periods of service with the Corporation and granted on full pay". This leave can be earned in respect of the periods of actual service in the Corporation. Even though the petitioner was not in service of the respondent-Company during the disputed period, he cannot be deemed to be in service either by creating a legal fiction or by a notional presumption. The details and the procedure for earning leave is prescribed under Clause-6 and 7 of the leave rules. The said clauses of the leave rules give a clear indication that the leave has to be earned and it cannot be granted by default or when the employee is not on duty. It is like earning interest on the money deposited in a financial institution. For every 12 days of working, one day's earned leave will be credited to employee's leave account and 2 1/2 days for each completed month of service. If an employee does not work, he would not be entitled to any earned leave, since it is only earned leave is encashable and not any other leave such as commuted leave, half pay leave, casual leave etc. Earned leave account is maintained in two parts - (a) encashable and (b) non-encashable. Any part or whole of encashable leave can be availed as leave and it is not necessary that it should be encashed. The quantum of earned leave is limited to a maximum of 75% earned leave admissible during a calender year subject to a maximum of 23 days and the balance is credited to non-encashable earned leave account. The amount payable towards encashment of leave will not be reckoned as salary for the purpose of overtime, bonus, gratuity, etc. A conjoint reading of clauses-6 & 7 of the Leave Rules leaves no manner of doubt that this leave has to be earned while in service and not while out of service. If the workman/employee did not perform any work during the period of termination, it is not open to him to demand leave with wages or compensation in lieu thereof. In my view this claim cannot be treated as either legal or valid, since the earned leave cannot have been earned as a matter of right, but only by actual working.
15. Now coming to the claim for leave travel concession, it is governed by National Textile Corporation (Andhra Pradesh, Karnataka, Kerala and Mahe) Limited, Travelling Allowance Rules, 1975. In the said Rules, 'Leave Travel Concession (LTC) is defined to mean,' 'a concession given to an employee for visiting his home town or any other place in India'. This facility will be admissible to employees and members of their families. An employee will be entitled to claim full reimbursement of actual cost of travel as per the entitlement rules. This gives a clear indication that the employee should actually travel to claim leave travel concession. If he does not travel, he cannot encash leave travel concession. Since petitioner was out of employment, the question of himself and his family members undertaking travel and incurring actual cost of travel would not arise. Once again question of deeming that, if the employer had not prevented the employee, in the present case petitioner, he would have travelled and he would have incurred expenses cannot be imported into the language employed in the Rules and in my view this claim of the petitioner is also unsustainable in law and in the face of unambiguous language employed in the Rules.
16. The third claim of the petitioner is in respect of medical reimbursement and this claim has also been rejected by the company solely relying upon Employees Medical Rules, 1978. Medical reimbursement once again depends on the actual medical expenses incurred by the employee concerned. Again there is nothing like a notional expenditure for a notional illness when the employee concerned was out of employment in view of the termination order. In my view since the reimbursement is only on actual expense, while in service, the petitioner's claim in my view is highly imaginary and wholly unjustified.
17. Ultimately, even though the petitioner has claimed for the benefit of annual increments, his learned counsel did not make any submission on that aspect of the matter since the petitioner had reached the top scale of pay in which he was. In that view of the matter, I need not consider that claim of the petitioner.
18. In my view the earned leave salary, leave travel concession and medical reimbursement are not part of wages, but which are more or less in the nature of night shift allowance and runing allowance which were considered by Apex Court in the case of Bharat Electronics Ltd. and in Dilbagh Rai Jerry's case. In that view of the matter, it cannot be said that the earned leave salary, LTC and medical reimbursement were due to the petitioner as part of his wages for the entire period when he was prevented from performing his duties in the respondent-company.
19. For the reasons stated, I cannot accept any one of the contentions raised by learned counsel for petitioner and cannot take exception to the impugned order of the respondent-Corporation dated December 9, 1988. Accordingly petition is liable to be dismissed. Hence the following :
ORDER
(a) Petition is dismissed. Rule discharged.
(b) In the facts and circumstances of the case, parties are directed to bear their own costs.