Delhi District Court
Dr. G.S.C Rao vs M/S Simbhaoli Sugars Ltd on 13 December, 2022
IN THE COURT OF MR. SATYABRATA PANDA, ADJ-04,
PATIALA HOUSE COURTS, NEW DELHI
CS NO.59007 OF 2016
Date of institution: 12.05.2015
Date of arguments: 23.11.2022
Date of judgment: 13.12.2022
Dr. G.S.C Rao
s/o Sh. G.P Shashtri
r/o B-8/24, First Floor,Vasant Vihar
New Delhi-110057
.........Plaintiff
VS.
M/s Simbhaoli Sugars Ltd.
through its Chairman/Managing Director/Company Secretary
C-11, Connaught Place, New Delhi-110001.
Also at
Simbhaoli Sugars Ltd., Simbhaoli,
District Hapur, Uttar Pradesh-245207
.........Defendant
JUDGMENT
1. The Plaintiff has filed the present suit against the defendants for decree of sum of Rs. 1,44,64,240/- along with pendente lite and future interest, for decree for rendition of accounts and payment of leave encashment, superannuation dues along with interest, and for decree of declaration declaring that the letter dated 11/09/2013 terminating the services of the plaintiff was null, void and illegal.
2. The case of the plaintiff as pleaded in the plaint is summarised as follows. It is the plaintiff's case that the plaintiff was recognised as a reputed and well-known CS no.59007/16 Dr. GSC Rao Vs. M/s Simbhaoli Sugars Ltd. page no. 1 professional having expertise in sugar industry. It is his case that the works and capabilities of the plaintiff were/are well-known in the sugar industry and particularly among the sugar technologists. The professional credentials of the plaintiff reflect the respect and reputation that the plaintiff commands in the sugar industry. It is the case of the plaintiff that on the basis of assurances of a bright and prosperous future, the plaintiff joined the services of the defendant company on 01/11/1999 at the post of President of the defendant company. It is pleaded that the vision and work of the plaintiff gradually turned around the entire working style and fortunes of the defendant company which came to be recognised as a significant player in the sugar industry. The plaintiff diligently worked to the highest satisfaction of the defendant. In paragraph 10 of the plaint, the plaintiff has mentioned various initiatives claimed to have been taken by the plaintiff towards the progress of the defendant company. It is pleaded that due to the efforts of the plaintiff, the defendant grew from a one sugar unit company to three large sugar complexes, one raw sugar plant and one consultancy company.
3. It is further the case of the plaintiff that being satisfied with the services rendered by the plaintiff, the plaintiff was ultimately with effect from 01/10/2009 promoted to the post of executive director of the defendant company for a period of 5 years on the terms and conditions as detailed in the resolution passed by the board of directors of the defendant company, which was subsequently ratified and CS no.59007/16 Dr. GSC Rao Vs. M/s Simbhaoli Sugars Ltd. page no. 2 approved in the general meeting of the shareholders held on 17/12/2009. It is pleaded that the plaintiff continued to serve diligently, honestly and faithfully and discharged all its duties and functions as the executive director of the defendant company.
4. It is further pleaded by the plaintiff that Ms. Gursimran Kaur Mann after joining the board of directors as managing director, became jealous of the influence exercised by the plaintiff and therefore conspired to completely oust the plaintiff from the defendant company. The plaintiff was due to retire in July 2014 from the services of the defendants. The defendants all of a sudden from 11/09/2013 and by holding board meetings in Delhi, illegally and unlawfully passed resolutions against the plaintiff unlawfully and illegally removing the plaintiff from the board and terminating the service of the plaintiff.
5. It is pleaded that the defendant has failed to discharge its obligation towards the plaintiff to make payment of the admitted salaries and dues, and to avoid payment of legitimate dues has lodged false cases against the plaintiff and many other employees of the defendant company who had left the services of the defendant company.
6. It is pleaded by the plaintiff that there are amounts which are outstanding and due and payable by the defendant to the plaintiff. It would be appropriate to extract the relevant paragraphs 25 to 29 of the plaint:
"25. That as per last salary revision dated 15.10.2009 approved by defendants no. 2 to 9 in the CS no.59007/16 Dr. GSC Rao Vs. M/s Simbhaoli Sugars Ltd. page no. 3 capacity of director of the board of directors of defendant no. 1, plaintiff was entitled to:
a. Basic Salary : Rs.3,57,500/- (Per month of 1st April, 2013) b. Rent (HRA) : Rs.2,06,000/- (60% of basic per month) c. Gas, Electricity, Water, Security : 15% of HRA.
d. Soft Furnishing : Rs.3,00,000 per month. e. Entertainment : Rs.15,000/- per month. f. Medical Reimbursement : Rs.3,57,500/- annual g. LTA : Rs.5,00,000/- annual h. Superannuation (on account of deductions made during service: Rs. 54,81,259/- i. Gratuity : (for which plaintiff has already filed claim of gratuity before the competent authority as prescribed under the Gratuity Act).
26. That the under mentioned dues are payable by the defendants to plaintiff.
Heading Period Amount in
Rs.
Basic Salary April 13 to 11 Sept, 19,18,583.00
2013
H.R.A. April 13 to 11 Sept, 12,36,000.00
2013
LTA April 13 to 11 Sept, 20,00,000.00
2013
Soft Furnishing April 13 to 11 Sept, 9,00,000.00
CS no.59007/16 Dr. GSC Rao Vs. M/s Simbhaoli Sugars Ltd. page no. 4
2013
Entertainment April 13 to 11 Sept, 90,000.00
Allowances 2013
Medical April 13 to 11 Sept, 63,402.00
2013
Electricity/Wat April 13 to 11 Sept, 6,30,000.00
er/Gas/Security 2013
Superannuatio 54,81,259.00
n dues (on
account of
deductions
made during
service)
Three months 10,72,500.00
notice period
Total 1,44,64,244.00
27. That apart from the above claim, plaintiff is also entitled to receive leave encashment and bonus which can be calculated upon rendition of accounts and records from the accounts department of the defendants.
Particul Period Remark
ars
Leave 360 Days To be
Encash calculated by
ment the accounts
deptt. Of the
defendant
company
Bonus For the year Do
2011-2012 and
2012-2013
28. That the plaintiff has performed work for the defendants to their utmost satisfaction and the CS no.59007/16 Dr. GSC Rao Vs. M/s Simbhaoli Sugars Ltd. page no. 5 plaintiff is liable to receive the dues to which the plaintiff is entitled.
29. The plaintiff has also gained knowledge and specific information that the defendants have withdrawn the superannuation benefits of plaintiff unauthorizedly and have misappropriated it. Plaintiff has reasons to believe that the defendants have also fabricated accounts to usurp the monies of plaintiff."
7. On this basis, the plaintiff has filed the present suit praying for the following reliefs in the prayer clause of the plaint:
"a. Pass a judgment and decree of Rs.
1,44,64,244/- with pendente-lite and future interest at the rate of 18 % per annum with quarterly rests from the date of the present suit, till realisation, with costs and interest thereon, in favour of the plaintiff and against the defendant.
b. Pass a judgement and decree to render accounts and payment for leave encashment, superannuation dues all together with interest @ 18 % per annum with quarterly rest.
c. Pass a decree of declaration declaring that the letter dated 11.09.2013 illegally terminating the services of the plaintiff is null, void and illegal. d. Pass such other or further orders which this Hon'ble Court may deem fit and proper on the facts and under the circumstances of the case, in favour CS no.59007/16 Dr. GSC Rao Vs. M/s Simbhaoli Sugars Ltd. page no. 6 of the plaintiff."
8. Vide order dated 24/07/2018, upon an application under Order I Rule 10 CPC moved by the defendants, the defendants nos. 2 to 9 were deleted from the array of parties. Hence, there is now only a sole defendant being the defendant no.1 company in the suit.
9. The defendant company has filed its written statement. The case of the defendant in its written statement is summarised as follows. It is the case of the defendant that in the year 2008 under the directions and promotion of the defendant company, a company namely Integrated Casetech Consultant Pvt. Ltd. (ICCPL) being a subsidiary company was incorporated for providing technology consultancy services to various companies operating in the field of production of sugar and its allied products. The plaintiff is the erstwhile executive director of the defendant company. The plaintiff was also appointed as one of the directors of ICCPL on 23/10/2010 under the nomination by the board of the defendant. It is the case of the defendant that the plaintiff being ill motivated conspired with other executives and employees of the defendant company in order to steal the business of ICCPL and to cause wrongful loss to the defendant by setting up parallel competitive business entities while in the employment of defendant. It is the case of the defendant that the plaintiff in connivance with other employees incorporated a partnership firm on 09/04/2012 in the name and style of Case Enco Associates. It is the case of the defendant that the plaintiff did not CS no.59007/16 Dr. GSC Rao Vs. M/s Simbhaoli Sugars Ltd. page no. 7 intimate any of the senior officers/directors of the defendant regarding the partnership business of Case Enco Associates which was clearly in competition with the business of ICCPL Which was a subsidiary company of the defendant. The plaintiff without the knowledge of the defendant further incorporated a company namely Global Casetech Pvt. Ltd. on 22/04/2013. Subsequent to the incorporation of the partnership firm Case Enco Associates and the company Global Casetech Pvt. Ltd., the plaintiff along with other employees further diverted business and caused massive damage and loss to the business and reputation of the defendant and its subsidiary company ICCPL. It is further pleaded that apart from the diversion of the business through Case Enco Associates and Global Casetech Pvt. Ltd., during the year 2012-13, the plaintiff in connivance with certain other persons as to the criminal conspiracy and illegally sold sugar belonging to the defendant worth more than ₹ 9 crore upwards and misappropriated the same causing wrongful loss to the defendant.
10. It is further the case of the defendant that the plaintiff on his own submitted his resignation dated 12/08/2013 which is a material fact suppressed by the plaintiff in his plaint. It is pleaded that upon discovering the illegal and dishonest acts of the plaintiff, his services and employment were terminated vide letter dated 11/09/2013 on account of the loss of confidence, culpable acts, misappropriation of funds, breach of fiduciary duties and dishonest and illegal use of defendant's resources for making personal gain.
CS no.59007/16 Dr. GSC Rao Vs. M/s Simbhaoli Sugars Ltd. page no. 8
11. It is the case of the defendant that in order to recover the losses, the defendant company as well as its subsidiary ICCPL have also filed a civil suit being CS (OS) No.2593/2013 before the Hon'ble High Court of Delhi for recovery of damages and injunction, in which the plaintiff herein is arrayed as defendant no.3. It is pleaded that the said civil suit is pending adjudication before the Hon'ble High Court of Delhi. It is further the case of the defendant that on account of the illegal acts of the plaintiff, the defendant has also filed various criminal complaints with police.
12. It is the case of the defendant that the remuneration payable to the plaintiff during the period April 2013 to September 2013 is not due and payable as the plaintiff got involved in the illegal activities relating to the parallel entities Case Enco Associates and Global Casetech Pvt. Ltd. and that the plaintiff also caused huge losses to the tune of more than ₹ 9 crores to the defendant. It is further the case of the defendant that the amount if any due and payable under any of the heads as claimed in the present suit, were not due and payable and stood adjusted towards the losses suffered by the defendant company.
13. It would be appropriate to extract paragraphs 20 to 24 of the para-wise reply of the written statement in which the defendant has responded to the paragraphs 25 to 29 of the plaint in which the plaintiff has narrated the outstanding amounts claimed by the plaintiff:
CS no.59007/16 Dr. GSC Rao Vs. M/s Simbhaoli Sugars Ltd. page no. 9 "20. The contents of para 25 are admitted to the extent that as per last salary revision dated 15th October 2009 as approved by defendant no. 1, plaintiff was entitled to fixed Basic Salary of Rs.3,57,500/- per month. However, the same was subject to plaintiff complying with all terms of his employmnet as agreed with defendant no. 1 company. The other benefits/allowances mentioned are wrong and denied as the same were not fixed and subject to submissionas of original bills/claim by the plaintiff, approval of original bills/claims and as per the prevailling policy of the company/defendant no. 1. However, it is clarified that in case of misconduct, criminal dishonest acts, fraud, cheating and illegal and unauthorise use of company resources and indulging into parallel competitive business are grounds on which Defendant no. 1/company can lawfully deny such benefits to an employee.
21. The contents of para 26 are wrong and denied. The amount/dues given in para under reply are not due and payable to the plaintiff for the for the reasons given below:
Basic Salary (April 2013 to 11 Sept 2013) Rs.19,18,583.00: the alleged amount on account of basic salary is not due and payable to the plaintiff. As during the relevant CS no.59007/16 Dr. GSC Rao Vs. M/s Simbhaoli Sugars Ltd. page no. 10 period and even before the plaintiff violated the terms of his employment and misconducted himself. On paper, he was an employee of the defendant no. 1/company. However, behind the door he was working against the interest of the company. Moreover, the plaintiff in connivance with other ex- employees of the company set-up parallel competitive business such as Case-Encho and Global Casetech Pvt. Ltd. And started diverting business of defendant no. 1 and ICCPL to these entities. Moreover, the plaintiff further committed fraud with defendant no. 1 and illegally sold sugar over a period of time worth more than 9 crores with the help of other ex-employees and sugar agents. On account of aforesaid, his services were lawfully terminated. Moreover, when no services were provided by the plaintiff during this period, no amount can be alleged to be payable to the plaintiff. The defendant no. 1 cannot be held accountable for paying to the plaintiff for committing fraud, cheating, breach of trush and setting-up of parallel business. Further, amount, if any payable on thisw account, the same is liable to be adjusted and forfeited against the losses suffered by the company due to illegal acts and omissions of plaintiff.
CS no.59007/16 Dr. GSC Rao Vs. M/s Simbhaoli Sugars Ltd. page no. 11 H.R.A. (April 2013 to 11 Sep 2013) Rs. 12,36,000.00: The alleged amount of HRA is false and frivolous. No such amount is due and payable on account of the aforesaid misconduct and illegal acts committed by the plaintiff. Further, no bill/claim/proof/rent receipts etc. in this regasrd had been submitted by the plaintiff with defendant no.
1. The alleged claim is nothing but an afterthought. Further, amount, if any payable on this account, the same is liable to be adjusted and forfeited against the losses suffered by the company due to illegal acts and omissions of plaintiff.
LTA (April 2013 to 11 Sep 2013) Rs.20,00,000.00: The alleged claim is false and frivolous. No such amount is due and payable on account of the aforesaid misconduct, illegal acts and violation of employment terms committed by the plaintiff.
Further, nobill/claim/proof in this regard has been submitted by the plaintiff with defendant no. 1. The alleged claim is nothing but an afterthought. Further, amount, if any payable on this account, the same is liable to be adjusted and forfeited against the losses suffered by the company due to illegal acts CS no.59007/16 Dr. GSC Rao Vs. M/s Simbhaoli Sugars Ltd. page no. 12 and omissions of plaintiff.
Soft Furnishing (April 2013 to 11 Sep 2013) Rs. 9,00,000.00: The alleged claim is false and frivolous. No such amount is due and payable on account of the aforesaid misconduct, illegal acts and violation of employment terms committed by the plaintiff. Further, no/bill/claim/proof/ in this regard has been submitted by the plaintiff with defendant no. 1. the alleged claim is nothing but an afterthought. Further, amount, if any payable on this account, the same is liable to be adjusted and forfeited aginst the losses suffered by the company due to illegal acts and omissions of plaintiff.
Entertainment Allowances (April 2013 to 11 Sep 2013) Rs. 90,000.00: The alleged claim is false and frivolous. No such amount is due and payable on account of the aforesaid misconduct, illegal acts and violation of employment terms committed by the plaintiff. Further, no bill/claim/proof in this regard has been submitted by the plaintiff with defendant no. 1. The alleged claim is nothing but an afterthought. Further, amount, if any payable on this account, the same is liable to be adjusted and forfeited against the losses CS no.59007/16 Dr. GSC Rao Vs. M/s Simbhaoli Sugars Ltd. page no. 13 suffered by the company due to illegal acts and omissions of plaintiff.
Medical (April 2013 to 11 Sep 2013) Rs.63,402.00: The alleged claim is false and frivolous. No such amount is due and payable on account of the aforesaid misconduct, illegal acts and violation of employment terms committed by the plaintiff. Further, no bill/claim/proof in this regard has been submitted by the plaintiff with defendant no.
1. The alleged claim is nothing but an afterthought. Further, amount, if any payable on this account, the same is liable to be adjusted and forfeited against the losses suffered by the company due to illegal acts and omissions of plaintiff.
Electricity Water/gas/security (April 2013 to 11 Sep 2013) Rs.6,30,000.00: The alleged claim is false and frivolous. No such amount is due and payable on account of the aforesaid misconduct, illegal acts and violation of employment terms committed by the plaintiff. Further, no bill/claim/proof in this regard has been submitted by the plaintiff with defendant no. 1. The alleged claim is nothing but an afterthought. Further, amount, if any payable on this account, the same is CS no.59007/16 Dr. GSC Rao Vs. M/s Simbhaoli Sugars Ltd. page no. 14 liable to be adjusted and forfeited against the losses suffered by the company due to illegal acts and omissions of plaintiff.
Superannuation dues (1999 to 11 Sep 2013) Rs.54,81,259.00: The alleged claim is not due and payable to the plaintiff on account of the aforesaid misconduct, illegal acts and violation of employment terms committed by the plaintiff. The amount, if any payable on this account has been adjusted and forfeited against the losses suffered by the company due to illegal acts and omissions of plaintiff.
Three Months Notice Period Rs.
10,72,500.00: The alleged amount is not due and payable to the plaintiff. Since the defendant no. 1 has lawfully terminated services of the plaintiff and plaintiff himself has resigned from the services of the defendant no. 1 vide letter dated 12.08.2013 without serving any notice period. Moreover, the plaintiff himself breached fundamental terms of his employment and therefore he has no right to claim benefit of notice period as given in appointment letter. It is further relevant to mention that plaintiff has on his own submitted his resignation being caught red-handed. Therefore, notice period if any CS no.59007/16 Dr. GSC Rao Vs. M/s Simbhaoli Sugars Ltd. page no. 15 given in appointment letter is of no avail. Further, amount, if any payable on his account, the same is liable to be adjusted and forfeited against the losses suffered by the company due to illegal acts and omissions of plaintiff.
27. The contents of para 27 are wrong and denied. The plaintiff is not entitled to any leave encashment and/or bonus as alleged as he defrauded the defendant no. 1 violating the fundamental terms of his employment and further committed various acts of fraud and cheating.
28. The contents of para 28 are wrong and denied. It is submitted that plaintiff is not entitled to receive any alleged dues on account of violating the fundamental terms of his employment and committing various acts of cheating and fraud.
29. The contents of para 29 are wrong and denied. It is denied that defendant no. 1 has fabricated accounts to usurp any alleged monies of the plaintiff. The alleged claim on account of superannuation is not due and payable to the plaintiff due to misconduct, illegal acts and violation of employment CS no.59007/16 Dr. GSC Rao Vs. M/s Simbhaoli Sugars Ltd. page no. 16 terms committed by the plaintiff. The amount, if any payable on this account has been adjusted and forfeited against the losses suffered by the company due to illegal acts and omissions of plaintiff."
14. The plaintiff has filed replication to the written statement in which the plaintiff has denied the allegations of misconduct and diversion of business to parallel entities. It is further pleaded by the plaintiff that the disputes of defendant company concerning ICCPL and alleged parallel entities could not be ground to deny the dues of the plaintiff, when the same were admittedly subject matter of the suit CS (OS) No.2593/2013 and the defendant was protected by the Hon'ble High Court by order of deposit of Rs. 1.24 Crores in the said suit.
15. Vide order dated 04/02/2019, the following issues were framed in the present suit:
"1. Whether the letter dated 11.09.2013 vide which the services of plaintiff was terminated is liable to be declared as null and void? OPP.
2. Whether the plaintiff is entitled to the decreetal amount as claimed in plaint? OPP.
3. Whether the plaintiff is entitled to the claim interest on the decreetal amount as claimed in plaint, if yes for which period and for which rate? OPP.
4. Relief"
CS no.59007/16 Dr. GSC Rao Vs. M/s Simbhaoli Sugars Ltd. page no. 17
16. In support of their case, both the plaintiff and the defendant have led their respective evidence, oral as well as documentary.
17. The learned counsel for the plaintiff has submitted that the amounts claimed in the present suit are admittedly due to the plaintiff under the terms and conditions of the employment as contained in the board resolution containing the terms and conditions in appointing the plaintiff to the post of executive director w.e.f. 01/10/2009. It is submitted that the allegations of misconduct and diversion of business made by the defendant are unfounded. It is further submitted that the disputes of defendant company concerning ICCPL and alleged parallel entities were admittedly subject matter of the suit CS (OS) No.2593/2013 and the defendant was protected by the Hon'ble High Court by order of deposit of Rs. 1.24 Crores in the said suit. It is submitted that the allegations of unliquidated damages which were subject matter of suit CS (OS) No.2593/2013 cannot form the basis to deny the plaintiff his claims for the amounts admittedly due for the services rendered during the period of service.
18. Per contra, the learned counsel for the defendant has submitted that the plaintiff has been guilty of misconduct and diverting business to parallel entities due to which the defendant has suffered losses and that the defendant company along with its sister concern has filed suit being CS (OS) No.2593/2013 before the Hon'ble High Court of Delhi to recover the losses. It is further submitted that CS no.59007/16 Dr. GSC Rao Vs. M/s Simbhaoli Sugars Ltd. page no. 18 finding a prima facie case in favour of the defendant and ICCPL, the Hon'ble High Court had ordered deposit of Rs. 1.24 Crores in the said suit. It is submitted that the plaintiff is not liable to be paid the amounts claimed as the plaintiff was guilty of misconduct and breach of duties during employment. It is further submitted that even if it was assumed that the plaintiff was liable to be paid the amounts, even then the amounts would have to be adjusted against the losses caused. It is further submitted that with reference to the claims for H.R.A., LTA, Soft Furnishing, Entertainment Allowances, Medical, and Electricity Water/gas/security, these claims were not fixed and were subject to submissions of original bills/claim by the plaintiff, and that the plaintiff had not submitted any bills/claims/proofs in support, and as such in any case these claims were not payable.
19. I have heard the learned counsel for the parties and I have perused the record including the pleadings and the evidence, oral and documentary.
20. My issue-wise findings are as follows.
Issue 1. Whether the letter dated 11.09.2013 vide which the services of plaintiff was terminated is liable to be declared as null and void ? OPP
21. The employer-employee relationship between the defendant and the plaintiff, respectively, would be governed by the terms and conditions of appointment of the plaintiff. As per the terms of appointment of the plaintiff, the services were determinable in nature by way CS no.59007/16 Dr. GSC Rao Vs. M/s Simbhaoli Sugars Ltd. page no. 19 of a 3 months' notice. The defendant had terminated the services of the plaintiff vide the letter dated 11/09/2013 without giving any notice period of 3 months on the grounds that the plaintiff had indulged in professional misconduct and caused loss to the defendant. Even if, ultimately it is to be held that the termination of the plaintiff on 11/09/2013 was illegal, even then the plaintiff would at best be entitled only to the salary for 3 months' notice period and the arrears of salary and other sums payable under the employment contract. A declaration that the letter dated 11/09/2013 terminating the services of the plaintiff was null and void would have the effect of continuing the employment which would not be permissible in law since the employment was private and determinable in nature. Furthermore, it is the admitted position that the plaintiff himself had tendered his resignation vide letter dated 12/08/2013. The plaintiff has in the present suit already sought the arrears of salary and other amounts towards the period of rendering of services till 11/09/2013, as well as salary for 3 months' notice period. In that sense, the plaintiff has also accepted that the services have been terminated w.e.f. 11/09/2013. Furthermore, regarding the aspect of allegations of misconduct against the plaintiff, the defendant has already filed a previous suit being CS (OS) No.2593/2013 before the Hon'ble High Court of Delhi in which the defendant has sought the relief of damages for the alleged misconduct and breach of employment terms by the plaintiff. The issue of whether the plaintiff had committed CS no.59007/16 Dr. GSC Rao Vs. M/s Simbhaoli Sugars Ltd. page no. 20 misconduct and breach of terms of employment and whether plaintiff had caused losses to the plaintiff is pending adjudication in the said suit being CS (OS) No.2593/2013 before the Hon'ble High Court of Delhi.
22. In the aforesaid facts and circumstances, I would that the plaintiff would not be entitled to the declaration as prayed for and I am not inclined to pass declaration declaring that the letter dated 11/09/2013 terminating the services of the plaintiff was null and void. Accordingly, Issue-1 is decided against the plaintiff and in favour of the defendant.
Issue 2. Whether the plaintiff is entitled to the decreetal amount as claimed in plaint ? OPP.
Issue 3. Whether the plaintiff is entitled to claim interest on the decreetal amount as claimed in plaint, if yes for which period and for which rate ? OPP.
23. It would be appropriate at the outset to extract the board resolution containing the terms and conditions in appointing the plaintiff to the post of executive director w.e.f. 01/10/2009, as under:
"10. To consider and, if thought fit, to pass with or without modification(s), the following resolution as an ordinary resolution:
"Resolved that, pursuant to the provisions of Section 198, 269, 309, 310, 311 read with Schedule XIII and other applicable provisions of the Companies Act, 1955 including any statutory modification or re-enactments thereof for the time CS no.59007/16 Dr. GSC Rao Vs. M/s Simbhaoli Sugars Ltd. page no. 21 being in force and subject to approval of the Central government, if any, consent of the members of the company be and is hereby accorded to appoint Dr. G S C Rao as executive Director of the Company for a period of five (5) years w.e.f. October 1, 2009 on the terms and conditions as detailed below:
a) Designation : Executive Director
b) Basic Salary: Rs.2,75,000/- per month in the scale of Rs.2,75,000-27,500-3,85,000/-
c) Perquisites : In addition to the basis salary, he shall be entitled to the following prerequisites:
i) Rent free accommodation, having a monetary rental value subject to the limits not exceeding 60% of salary over and above ten per cent payable by the executive director and all rent, rates and taxes thereof shall be born by the Company;
ii) Gas, electricity, water, security etc. to the extent of 15 per cent of value of rent free accommodation:
iii) House maintenance allowance,
allowance/reimbursement for domestic
help/servant(s) as per company's policy
iv) Medical allowance/reimbursement for self, spouse and dependent children not exceeding one month basic salary;
v) Personal accident insurance premium subject to Company's rules in this regard;
vi) Leave travel expenses/allowance for self, CS no.59007/16 Dr. GSC Rao Vs. M/s Simbhaoli Sugars Ltd. page no. 22 spouse and Dependant children subject to the Company's rules in this regard:
vii) Entertainment expenses/club fee as per company policy;
viii) Any other permissible prerequisite as may be notified by the company from time to time within the overall limits laid down under the provisions of the schedule XII to the Companies Act, 1956.
Apart from the above, he shall also be entitled to the following benefits which shall not be included in computation of the aforesaid remuneration:
I) Company's chauffeur driven car(s) for the business of the company.
ii) Telephone/Internet facilities to be used for the business of the company.
Iii) Reimbursement of traveling, boarding, lodging, hotel and other expenses incurred for the business of the company;
iv) Company's contribution to provident fund, superannuation fund and/or any other annuity fund subject to the company's rules in this regard;
v) Gratuity payable at the rate not exceeding half a month's salary for each completed year of service in the company subject to the Company's rules in this regard;
vi) Encashment of leave subject to the company's rules in this regard.
CS no.59007/16 Dr. GSC Rao Vs. M/s Simbhaoli Sugars Ltd. page no. 23
d) Commission: The Executive Director shall also be entitled to such remuneration as commission, in addition to the above salary and perquisites, not exceeding @ 0.35? of the net profits calculated with reference to the net profits of the company in a particular financial year as may be determined by the Board of Directors of the company or any committee thereof at the end of each financial year, subject to the overall ceiling of remuneration as stipulated under the provisions of Section 198 and 309 and/or any other applicable provisions read with Schedule XIII to the Companies Act, 1956 as amended/modified/re-constituted from time to time."
"Resolved further that, in case of inadequacy of profits/or no profits in the company in any financial year, the Executive Director shall be entitled to the aforesaid salary, perquisites & allowances and commission as minimum remuneration during his tenure within the overall limits as laid down under the provisions of schedule XIII to the Companies Act, 1956 as amended/modified/reconstituted from time to time.
"Resolved further that, the aforesaid appointment shall be subject to the following terms and conditions:
I) Executive Director shall not be entitled to any sitting fee for attending meetings of the Board CS no.59007/16 Dr. GSC Rao Vs. M/s Simbhaoli Sugars Ltd. page no. 24 and/or committee(s) thereof;
ii) The appointment may be terminated by either party giving the other party three months notice or paying three months salary in lieu thereof;
iii) If at anytime the Executive Director cases to be Director of the company for any reason whatsoever, he shall cease to be Executive Director of the company;
iv) The Executive Director shall not be entitled to supplement his earnings under the appointment with any buying or selling commission. He shall not also become interested or otherwise concerned directly or through his spouse and/or minor children in any selling agency of the Company, without prior approval of the Central Government."
"Resolved further that, Board of Director and/or remuneration & compensation committee of the Board of Directors of the company be and are hereby authorized to alter/vary the terms and conditions of necessary approvals, if any, in accordance with the applicable provisions of the companies Act, 1956 as amended/modified/reconstituted from time to time."
"Resolved further that, Board of Directors and/or remuneration & Compensation committee of the Board of Directors of the Company be and are hereby authorized to do all such acts, deeds or CS no.59007/16 Dr. GSC Rao Vs. M/s Simbhaoli Sugars Ltd. page no. 25 things as may be required or considered necessary or incident thereto."
24. It would also be appropriate to set out paragraphs 25 and 26 of the plaint, in which the plaintiff has mentioned the details of the outstanding amounts as claimed by the plaintiff, as under:
"25. That as per last salary revision dated 15.10.2009 approved by defendants no. 2 to 9 in the capacity of director of the board of directors of defendant no. 1, plaintiff was entitled to:
a. Basic Salary : Rs.3,57,500/- (Per month of 1st April, 2013) b. Rent (HRA) : Rs.2,06,000/- (60% of basic per month) c. Gas, Electricity, Water, Security : 15% of HRA.
d. Soft Furnishing : Rs.3,00,000 per month. e. Entertainment : Rs.15,000/- per month. f. Medical Reimbursement : Rs.3,57,500/- annual g. LTA : Rs.5,00,000/- annual h. Superannuation (on account of deductions made during service: Rs. 54,81,259/- i. Gratuity : (for which plaintiff has already filed claim of gratuity before the competent authority as prescribed under the Gratuity Act).
CS no.59007/16 Dr. GSC Rao Vs. M/s Simbhaoli Sugars Ltd. page no. 26
26. That the under mentioned dues are payable by the defendants to plaintiff.
Heading Period Amount in
Rs.
Basic April 13 to 11 Sept, 19,18,583.00
Salary 2013
H.R.A. April 13 to 11 Sept, 12,36,000.00
2013
LTA April 13 to 11 Sept, 20,00,000.00
2013
Soft April 13 to 11 Sept, 9,00,000.00
Furnishing 2013
Entertainm April 13 to 11 Sept, 90,000.00
ent 2013
Allowances
Medical April 13 to 11 Sept, 63,402.00
2013
Electricity/ April 13 to 11 Sept, 6,30,000.00
Water/Gas/ 2013
Security
Superannu 54,81,259.00
ation dues
(on
account of
deductions
made
during
service)
Three 10,72,500.00
months
notice
period
Total 1,44,64,244.00
"
25. It would now be appropriate to extract paragraph 20 of the written statement in which the defendant has responded to paragraph 25 of the plaint, as under:
"20. The contents of para 25 are admitted to the CS no.59007/16 Dr. GSC Rao Vs. M/s Simbhaoli Sugars Ltd. page no. 27 extent that as per last salary revision dated 15th October 2009 as approved by defendant no. 1, plaintiff was entitled to fixed Basic Salary of Rs.3,57,500/- per month. However, the same was subject to plaintiff complying with all terms of his employmnet as agreed with defendant no. 1 company. The other benefits/allowances mentioned are wrong and denied as the same were not fixed and subject to submissionas of original bills/claim by the plaintiff, approval of original bills/claims and as per the prevailling policy of the company/defendant no. 1. However, it is clarified that in case of misconduct, criminal dishonest acts, fraud, cheating and illegal and unauthorise use of company resources and indulging into parallel competitive business are grounds on which Defendant no. 1/company can lawfully deny such benefits to an employee."
Claim for Basic Salary (April 2013 to 11 Sept 2013) Rs.19,18,583.00
26. It would be appropriate to extract the relevant portion of paragraph 21 of the written statement in relation to the claim for basic salary in which the defendant has responded to paragraph 26 off the plaint, as under:
"Basic Salary (April 2013 to 11 Sept 2013) Rs.19,18,583.00: the alleged amount on account of basic salary is not due and payable to the plaintiff. As during the relevant period and even before the CS no.59007/16 Dr. GSC Rao Vs. M/s Simbhaoli Sugars Ltd. page no. 28 plaintiff violated the terms of his employment and misconducted himself. On paper, he was an employee of the defendant no. 1/company. However, behind the door he was working against the interest of the company. Moreover, the plaintiff in connivance with other ex-employees of the company set-up parallel competitive business such as Case- Encho and Global Casetech Pvt. Ltd. And started diverting business of defendant no. 1 and ICCPL to these entities. Moreover, the plaintiff further committed fraud with defendant no. 1 and illegally sold sugar over a period of time worth more than 9 crores with the help of other ex-employees and sugar agents. On account of aforesaid, his services were lawfully terminated. Moreover, when no services were provided by the plaintiff during this period, no amount can be alleged to be payable to the plaintiff. The defendant no. 1 cannot be held accountable for paying to the plaintiff for committing fraud, cheating, breach of trush and setting-up of parallel business. Further, amount, if any payable on this account, the same is liable to be adjusted and forfeited against the losses suffered by the company due to illegal acts and omissions of plaintiff."
27. From paragraphs 20 and 21 of the written statement, it is clear that the defence of the defendant to the claim for basic salary for the period April 2013 to 11/09/2013 is CS no.59007/16 Dr. GSC Rao Vs. M/s Simbhaoli Sugars Ltd. page no. 29 basically twofold. Firstly, it is the case of the defendant that as the plaintiff had engaged in illegal acts which constituted misconduct, the defendant was entitled to deny salary to the plaintiff for the relevant period. This is essentially a plea that the defendant is entitled to withhold or forfeit the salary on account of the misconduct by the defendant. Further, it is the case of the defendant that even if any amount was payable on this account, then the same is liable to be adjusted against the losses suffered by the company due to illegal acts of misconduct of the plaintiff.
28. Now, the question which arises is whether the defendant as an employer is entitled to withhold or deny or forfeit salary to the plaintiff employee for the period when the employee was admittedly in service on the plea that the employee had indulged in activities of misconduct during such period.
29. The present case is a case of a contract of employment between two private parties. The relationship of employer- employee between the defendant and the plaintiff, respectively is governed by the terms and conditions of the appointment of the plaintiff, as contained in the board resolution of appointment. The monthly basic salary was payable to the plaintiff as per the terms and conditions of appointment. The defendant has not denied in its written statement that the monthly basic salary for the period from April 2013 till 11/09/2013 was Rs.3,57,500/-.
30. A perusal of the terms and conditions of appointment shows that there is no provision therein under which the CS no.59007/16 Dr. GSC Rao Vs. M/s Simbhaoli Sugars Ltd. page no. 30 defendant is entitled to withhold or deny or forfeit the monthly basic salary to the plaintiff. The parties are bound by the terms and conditions of employment and I find it difficult to accept that in the absence of any specific provision in the contract enabling the defendant to deny or withhold or forfeit monthly salary, the defendant could claim to withhold salary. The claim of the plaintiff for the basic monthly salary for the period from April 2013 till 11/09/2013 is a claim for a liquidated sum which is based on the contract between the parties. In the absence of any stipulation in the contract, it would not be permissible for the defendant to withhold the salaries for the said period on the basis of a plea that the plaintiff had misconducted himself during the course of employment and that the defendant had suffered damages, which are unliquidated and are still pending adjudication before the honourable High Court of Delhi in CS (OS) No.2593/2013.
31. I would at this stage refer to the judgment of the Hon'ble Court of Appeal of Singapore (which is the highest Court of Singapore) in Schonk Antonius Martinus Mattheus v. Enholco Pte Ltd., [2015] SGCA 65. Singapore also follows the common law system and the decision in Schonk Antonius (supra) was in respect of an employment contract. In the said judgment the Hon'ble Court of Appeal of Singapore has referred to decisions in other common law jurisdictions such as the United Kingdom and Canada. The brief facts in Schonk Antonius (supra) were that the plaintiff therein i.e. Enholco Pte Ltd. (EPL) had made claims against its employee the first defendant therein i.e. CS no.59007/16 Dr. GSC Rao Vs. M/s Simbhaoli Sugars Ltd. page no. 31 Mr. Mattheus of breach of duties owed to EPL. EPL had claimed among other things that Mr. Mattheus had diverted business opportunities away from EPL to his own company which was the second defendant. EPL had withheld the salaries of Mr. Mattheus on the allegations of diversion of business. EPL claimed damages against its employee Mr. Mattheus, whereas Mr. Mattheus had made counterclaims for unpaid salaries. In the said facts and circumstances, the Hon'ble Court of Appeal of Singapore held as under:
"10. As to the second issue relating to the Salary Counterclaim, the defendants say that if Mr Mattheus remained EPL's employee then he should have been paid his salary until his termination. This had been counterclaimed by the defendants but the Judge had dismissed this without elaboration. As against this, EPL takes the position that Mr Mattheus' breaches of his duties owed to EPL during the months of April 2012 to August 2012 were such as to preclude him from claiming his salary for those months.
11. This was dealt with in the further submissions filed by the parties at our request. In our judgment, Mr Mattheus is entitled as a matter of law to his salary for so long as he was working, and regarded himself, as an employee of EPL and we therefore allow in part the appeal so far as it relates to Salary Counterclaim. The amount in question is to be set off against the damages awarded to EPL. We briefly elaborate on the amount that Mr Mattheus is entitled to claim as well as our reasons for reaching this decision.
12. The authorities reveal that an employer is generally not entitled to withhold payment of salary unless permitted by statute or by the employment contract itself. Exceptionally, the CS no.59007/16 Dr. GSC Rao Vs. M/s Simbhaoli Sugars Ltd. page no. 32 employer may also withhold payment of salary where there is a total failure of consideration (per Scott J (as he then was) in Sim v Rotherham Metropolitan Borough Council [1987] 1 Ch 216 at
222). EPL has neither pleaded nor proved a total failure of consideration and in any event, from the evidence, subject to one notable exception which we treat at [16] below, it does not appear to be the case that Mr Mattheus did nothing during at least a part of this period of his employment. EPL contends that because Mr Mattheus breached his fiduciary duties and his duty of loyalty, he should forfeit any entitlement to his salary. In our judgment, this is not correct as a matter of law.
13. EPL cited some authorities in support of their contention but these concern principal and agent relationships rather than employment relationships.
Thus in Imageview Management Limited v Jack [2009] EWCA Civ 63 ("Imageview"), a football agent's commission was forfeited; and in Avrahami and others v Biran and others [2013] EWHC 1776, management fees which were paid to a building development project manager were forfeited. These must be differentiated from employment relationships, as was the case in Bank of Ireland v Jaffery and another [2012] EWHC 1377 (Ch) ("Jaffery") where it was held at [371] and [373].
371 This is not a case such as Imageview, where an agent has betrayed the trust of his principal in relation to the sole subject matter of the agency. As I have already said, Mr Jaffery was employed by the Bank in a senior position and betrayed the Bank's trust in respect only of the transactions involving the RGC Customers. In other respects, he seems to have been a valuable and diligent employee promoting the Bank's interests successfully. Of course, the Bank must be compensated on normal principles for the breaches of duty that I have found. ...
CS no.59007/16 Dr. GSC Rao Vs. M/s Simbhaoli Sugars Ltd. page no. 33 ...
373 It would be unfair in my judgment, even taking into account the nature of Mr Jaffery's breaches, to require him to pay his salary and bonuses, or indeed any part of them. The breaches must, as I have already said, be looked at in the context of his employment as a whole. Mr Jaffery worked long hours over several years for the Bank. It would be both disproportionate and inequitable in the circumstances of this case to require Mr Jaffery to repay some 5 years of salaries and bonuses in addition to disgorging his profits or paying equitable compensation.
14. EPL suggested that Jaffery should be understood as entitling a defaulting employee to his salary only in circumstances where it would be disproportionate to disentitle him from claiming his salary. But we are unable to see why this should be the case. As a matter of general principle, if the complaint is that the employee has breached his duty then recourse is available either by permitting damages to be claimed or exceptionally, where the facts warrant this, by establishing that there was a total failure of consideration. The importance of distinguishing between a relationship of agent and principal and an employment relationship is also emphasised in the decision of the Ontario Court of Appeal in Mady Development Corp and others v Rossetto and others (2012) ONCA 31 where the court said as follows at ([30]-[31]):
The fact that the relationship at issue in the present case is one of employer and employee also distinguishes it from McBride, where Abella J.A. expressly recognized that the relationship at issue was one of principal and agent: at para. 26. Citing this court's decision in William R. Barnes Co. v.
Mackenzie (1974), 1974 CanLII 465 (ON CA), 2 O.R. (2d) 659, Mark Ellis in Fiduciary Duties in Canada, loose-leaf (consulted on CS no.59007/16 Dr. GSC Rao Vs. M/s Simbhaoli Sugars Ltd. page no. 34 December 16, 2011) (Toronto: Carswell, 1993), ch. 16 at 16.15 recognizes the distinction between principal-agent and employer-employee relationships and describes the entitlement to compensation in the employment context. He writes:
It is well accepted that a principal will not be required to pay his agent a commission for transactions that are in breach of fiduciary duty. However, an employer is not free to withhold payment of wages due for past performance, even where the past performance may have involved a time when the employee was acting in breach of his fiduciary duty.
In Barnes, Evans J.A. adopted the same approach to a fiduciary employee as the arbitrator in this case. He wrote:
In the instant case the relationship is basically that of master and servant rather than principal and agent and the remedy of a master against his defaulting servant is restricted to a right of instant dismissal and to damages which flow from the default. I do not consider wages paid to be such an item of damages. ... The employer has already received the fruit of the employee's efforts, honest or otherwise, and cannot repudiate his obligation to pay. I recognize that in an agency situation the principal may take the benefit and refuse to pay the commission but I am not aware of any binding authority which requires me to extend that principle to a master and servant situation.
15. In our judgment, an employer may claim damages for any breach of duty by its employee but such a breach will not by itself disentitle the employee to his or her salary. Rather, the employer CS no.59007/16 Dr. GSC Rao Vs. M/s Simbhaoli Sugars Ltd. page no. 35 may make a deduction from the salary in respect of such loss as it proves it has suffered by reason of the employee's breach (Sagar v H Ridehalgh and Son, Limited [1931] 1 Ch 310 at 325)."
(Emphasis supplied)
32. I would hold that in the absence of a stipulation in the employment contract between the parties, the defendant as the employer cannot withhold the monthly salaries payable to the plaintiff as employee under the terms and conditions of the contract on the pretext of misconduct during the course of employment. Also, it is not the case of the defendant that there was a total failure of consideration in the sense that the plaintiff was not at all employed with the defendant or that the plaintiff did not do any work at all. The case of the defendant is that the plaintiff committed breach and misconduct for which in my opinion the only remedy of the defendant was to file a claim for damages. In fact, the defendant herein along with its subsidiary concern ICCPL has already filed a suit being CS (OS) No.2593/2013 before the Hon'ble High Court against the plaintiff herein and certain other former employees seeking damages for loss caused due to the alleged breach of employment terms and misconduct. The said suit is still pending adjudication before the Hon'ble High Court
33. Further, I find that even the board of directors of the defendant have never directed for withholding of the basic salary of the plaintiff. Even in the termination letter dated 11/09/2013, it is not stated that the unpaid basic salaries of the plaintiff was to be withheld. As stated in the CS no.59007/16 Dr. GSC Rao Vs. M/s Simbhaoli Sugars Ltd. page no. 36 termination letter, the board of directors had only resolved to recover the alleged losses on account of the alleged misconduct. This recovery could not have been through withholding or forfeiting of unpaid amounts under the employment contract admittedly due, since there was no provision to this effect in the employment contract. The only way for the defendant was to file a suit for recovery of damages which the defendant has already filed along with its sister concern ICCPL against the plaintiff herein and other employees. The same is still pending adjudication before the Hon'ble High Court. In case the defendant herein ultimately succeeds in the said suit for damages, then the defendant would be entitled to the relief in terms of the adjudication in the said suit. However, in so far as the present suit is concerned the defendant cannot withhold the unpaid salaries on the basis of plea of alleged misconduct which is subject matter of adjudication before the Hon'ble High Court in CS (OS) No.2593/2013.
34. Insofar as the second leg of objection regarding adjustment of loss on account of alleged misconduct is concerned, the said objection also deserves to be rejected. There is no set off or counter claim claimed in the present suit. The obvious reason is because the defendant has along with its sister concern already filed suit before the Hon'ble High Court being CS (OS) No.2593/2013 seeking damages for the alleged losses caused to the alleged misconduct and breach. The issues regarding alleged misconduct and breach by the plaintiff and the alleged losses and damages suffered by the defendant are still pending adjudication CS no.59007/16 Dr. GSC Rao Vs. M/s Simbhaoli Sugars Ltd. page no. 37 before the Hon'ble High Court in the said civil suit. During the course of final arguments in the present suit, I was informed that CS (OS) No.2593/2013 is still at the stage of plaintiff's evidence. I would hold that the defendant cannot deny the liquidated sums which are payable to the plaintiff as per the basic salary mentioned in the terms and conditions on the ground of unliquidated damages which are still pending adjudication in the suit filed by the defendant. Of course, it would have been a different matter, in case the civil suit for damages filed by the defendant was being tried before this Court or in case there was a counter claim for damages in the present suit, in which case the issue of misconduct and the claim for damages would have been tried together with the claims of the plaintiff in the present suit. In such an event, there could have arisen a possibility of considering adjustment in case the defendant had been able to successfully prove misconduct and damages. However, such is not the position in the present case. The defendant has in the present suit not even quantified the amount of damages in its written statement or even in its evidence, and even as such there could be no case for adjustment in the present case. The civil suit in which the issue of misconduct, breach and damages is being determined is pending before the Hon'ble High Court.
35. Although the defendant has led the oral evidence of as many as six witnesses, however, I find that the evidence of the defendant's witnesses is largely irrelevant to the issues at hand. The claims of the plaintiff for the arrears of salary CS no.59007/16 Dr. GSC Rao Vs. M/s Simbhaoli Sugars Ltd. page no. 38 and superannuation dues are really not disputed in the sense that they are totally denied as not being borne out of the contract. The defence which is really taken is that the defendant was entitled to withhold or forfeit the amounts due to the misconduct of the plaintiff, and in the alternative, that the amounts were liable to be adjusted against the damages due on account of the misconduct.
36. DW-1 Mr. Kamal Samtani is the main witness of the defendant who has reiterated the case of the defendant as raised in its written statement in his affidavit in evidence Ex.DW-1/A. From a perusal of his affidavit in evidence Ex.DW-1/A it does not appear that he has any personal knowledge of the alleged misconduct of the plaintiff. His deposition in his affidavit in evidence is mainly based on "as per the information available to me" as he repeatedly states in all paragraphs of his affidavit. DW-1 has in paragraph 25 of his affidavit referred that the specific instances of the alleged dishonest siphoning of business of ICCPL and misusing goodwill/reputation of the defendant by the plaintiff during the period have been set out in the plaint in CS (OS) No.2593/2013 filed by the defendant and its subsidiary concern ICCPL. In his cross examination (see Question 25), upon being questioned if it was correct that in the present suit he had not filed any record mentioning the source of information available to him, he replies stating that the record was not filed but that the documents were part of the proceedings in the suit being CS No. 2593/2013 which was pending before the Hon'ble High Court of Delhi. In his cross examination (see CS no.59007/16 Dr. GSC Rao Vs. M/s Simbhaoli Sugars Ltd. page no. 39 Question 59), upon being questioned if he had filed any document to support the assertion that a false impression was created on the client companies by the plaintiff, again the answer is that the same is part of the proceedings in the suit being CS No.2593/2013. In his cross examination, the answers of DW-1 with respect to questions regarding the allegations of misconduct are mostly in the nature of stating that the relevant record was filed in the proceedings in the CS No.2593/2013 or in the criminal complaints.
37. Similarly, DW-2 Mr. Gajender Singh Sirohi's evidence is only to the effect that the defendant had filed one criminal case against the plaintiff. He has admitted in his cross examination that the police had filed closure report after investigation. DW-2 does not himself give any direct evidence of any misconduct by the plaintiff.
38. DW-4 Mr. Atul Sharma has sought to give evidence regarding allegation that sugar stock of Rs. 9 Crore approx. was removed and sold by the plaintiff and other employees. On being questioned in his cross examination (see Question 1), whether he had filed any document in support of his contention made in his affidavit, he answers in the negative. On being questioned whether he had conducted the enquiry referred to in his affidavit (see Question 7), again he answers in the negative.
39. DW-6 Mr. Satinder Kumar Tyagi, AGM Legal of the defendant, has also sought to prove the case of the defendant in general and has reiterated the contents of the written statement in his affidavit in evidence Ex.DW-6/A. CS no.59007/16 Dr. GSC Rao Vs. M/s Simbhaoli Sugars Ltd. page no. 40 He had joined the defendant only in 2015. Upon being questioned in his cross examination regarding the allegations contained in his affidavit, his common refrain was that "it is a matter of record". In his cross examination (see Question 13), upon being questioned whether any document has been filed on behalf of the defendant to prove the allegations of personal gains as mentioned in his affidavit, he simply states that the same has been filed in the CS(OS) No.2593/2013 before the Hon'ble High Court.
40. It is clear from the evidence of the defendant's witnesses in the present suit that they have no real evidence to give regarding the allegations of misconduct. The defendant's witnesses are themselves referring to the CS(OS) No.2593/2013 filed by the defendant before the Hon'ble High Court and are stating that the proof has been filed in that case.
41. In so far as the documents relied upon by the defendant are concerned, the defendant has in the present case filed certified copy of the pleadings in the CS(OS) No.2593/2013 before the Hon'ble High Court and the documents filed by the defendant herein in that suit. However, mere filing of the certified copy of pleadings and documents filed in CS(OS) No.2593/2013 does not prove the case of the defendant herein regarding the misconduct. Even otherwise, the focus of the oral submissions of the learned counsel for the defendant was that since the allegations of misconduct and breach were sub judice in CS no.59007/16 Dr. GSC Rao Vs. M/s Simbhaoli Sugars Ltd. page no. 41 CS(OS) No.2593/2013 before the Hon'ble High Court, hence the defendant was entitled to withhold the claims made by the plaintiff. As I have already held, merely because the issues of misconduct and breach by plaintiff and the question of damages is pending in the civil suit filed by the defendant along with its subsidiary concern, the dues of the plaintiff which are borne from the contract of employment cannot be withheld.
42. Hence, I would hold that the plaintiff is entitled to sum of Rs. 19,18,583/- towards basic salary for the period April 2013 to 11/09/2013. I would also hold that the plaintiff would also be entitled to interest @ 9% p.a. from the filing of the suit till realisation. Accordingly, decree is passed in favour of the plaintiff and against the defendant for sum of Rs. 19,18,583/- towards basic salary for the period April 2013 to 11/09/2013 along with interest @ 9% p.a. from the date of filing of the suit till realisation Claim for Superannuation dues (1999 to 11 Sep 2013) Rs.54,81,259.00
43. It would be appropriate to extract the relevant portion of paragraph 21 of the written statement in relation to the claim for superannuation dues for the period from 1999 to 11/09/2013 in which the defendant has responded to paragraph 26 off the plaint, as under:
"Superannuation dues (1999 to 11 Sep 2013) Rs.54,81,259.00: The alleged claim is not due and payable to the plaintiff on account of the aforesaid CS no.59007/16 Dr. GSC Rao Vs. M/s Simbhaoli Sugars Ltd. page no. 42 misconduct, illegal acts and violation of employment terms committed by the plaintiff. The amount, if any payable on this account has been adjusted and forfeited against the losses suffered by the company due to illegal acts and omissions of plaintiff."
44. From paragraph 20 and 21 of the written statement, it is clear that the defence of the defendant in respect of the claim for Superannuation dues, is also similar to the objections in respect of the claim for basic salary. For the similar reasons as in case of the claim for basic salary, I would hold that the defendant cannot withhold or forfeit the superannuation dues on the ground of alleged losses due to alleged misconduct which is a matter still pending adjudication before the Hon'ble High Court in CS (OS) No.2593/2013. The claim for superannuation dues is on the basis of the employment contract for the period for which the plaintiff was admittedly in service and the amount is a liquidated sum in terms of the contract.
45. Furthermore, even otherwise whereas the allegations of misconduct are for the period 2012-2013, the superannuation dues of the plaintiff are in respect of the period from 1999 when the plaintiff joined employment till the termination on 11/09/2013. The defendant cannot in any case deny the superannuation dues to the plaintiff, the major portion of which were accrued for the period much prior to the alleged acts of misconduct.
CS no.59007/16 Dr. GSC Rao Vs. M/s Simbhaoli Sugars Ltd. page no. 43
46. Accordingly, I would hold that the plaintiff is entitled to the superannuation dues of Rs.54,81,259/- for the period from 1999 till 11/09/2013. I would also hold that the plaintiff would also be entitled to interest @ 9% p.a. from the filing of the suit till realisation. Accordingly, decree is passed in favour of the plaintiff and against the defendant for sum of Rs.54,81,259/- towards superannuation dues for the period 1999 to 11/09/2013 along with interest @ 9% p.a. from the date of filing of the suit till realisation Claim for the period April 2013 to 11/09/2013 for H.R.A. of Rs. 12,36,000.00, LTA of Rs.20,00,000.00, Soft Furnishing of Rs. 9,00,000.00, Entertainment Allowances of Rs. 90,000.00, Medical of Rs.63,402.00, and for Electricity Water/gas/security (April 2013 to 11 Sep 2013) Rs.6,30,000.00.
47. It would be appropriate to extract the relevant portion of paragraph 21 of the written statement in relation to the claims for H.R.A., LTA, Soft Furnishing, Entertainment Allowances, Medical, and Electricity Water/gas/security for the period April 2013 to 11/09/2013, in which the defendant has responded to paragraph 26 off the plaint, as under:
"H.R.A. (April 2013 to 11 Sep 2013) Rs. 12,36,000.00: The alleged amount of HRA is false and frivolous. No such amount is due and payable on account of the aforesaid misconduct and illegal acts committed by the plaintiff. Further, no bill/claim/proof/rent receipts etc. in this regard had CS no.59007/16 Dr. GSC Rao Vs. M/s Simbhaoli Sugars Ltd. page no. 44 been submitted by the plaintiff with defendant no. 1. The alleged claim is nothing but an afterthought. Further, amount, if any payable on this account, the same is liable to be adjusted and forfeited against the losses suffered by the company due to illegal acts and omissions of plaintiff."
LTA (April 2013 to 11 Sep 2013) Rs.20,00,000.00:
The alleged claim is false and frivolous. No such amount is due and payable on account of the aforesaid misconduct, illegal acts and violation of employment terms committed by the plaintiff. Further, nobill/claim/proof in this regard has been submitted by the plaintiff with defendant no. 1. The alleged claim is nothing but an afterthought. Further, amount, if any payable on this account, the same is liable to be adjusted and forfeited against the losses suffered by the company due to illegal acts and omissions of plaintiff.
"Soft Furnishing (April 2013 to 11 Sep 2013) Rs. 9,00,000.00: The alleged claim is false and frivolous. No such amount is due and payable on account of the aforesaid misconduct, illegal acts and violation of employment terms committed by the plaintiff. Further, no/bill/claim/proof/ in this regard has been submitted by the plaintiff with defendant no. 1. the alleged claim is nothing but an afterthought. Further, amount, if any payable on this CS no.59007/16 Dr. GSC Rao Vs. M/s Simbhaoli Sugars Ltd. page no. 45 account, the same is liable to be adjusted and forfeited against the losses suffered by the company due to illegal acts and omissions of plaintiff."
"Entertainment Allowances (April 2013 to 11 Sep 2013) Rs. 90,000.00: The alleged claim is false and frivolous. No such amount is due and payable on account of the aforesaid misconduct, illegal acts and violation of employment terms committed by the plaintiff. Further, no bill/claim/proof in this regard has been submitted by the plaintiff with defendant no. 1. The alleged claim is nothing but an afterthought. Further, amount, if any payable on this account, the same is liable to be adjusted and forfeited against the losses suffered by the company due to illegal acts and omissions of plaintiff."
"Medical (April 2013 to 11 Sep 2013) Rs.63,402.00:
The alleged claim is false and frivolous. No such amount is due and payable on account of the aforesaid misconduct, illegal acts and violation of employment terms committed by the plaintiff. Further, no bill/claim/proof in this regard has been submitted by the plaintiff with defendant no. 1. The alleged claim is nothing but an afterthought. Further, amount, if any payable on this account, the same is liable to be adjusted and forfeited against the losses suffered by the company due to illegal acts and omissions of plaintiff."
CS no.59007/16 Dr. GSC Rao Vs. M/s Simbhaoli Sugars Ltd. page no. 46 "Electricity Water/gas/security (April 2013 to 11 Sep 2013) Rs.6,30,000.00: The alleged claim is false and frivolous. No such amount is due and payable on account of the aforesaid misconduct, illegal acts and violation of employment terms committed by the plaintiff. Further, no bill/claim/proof in this regard has been submitted by the plaintiff with defendant no. 1. The alleged claim is nothing but an afterthought. Further, amount, if any payable on this account, the same is liable to be adjusted and forfeited against the losses suffered by the company due to illegal acts and omissions of plaintiff."
48. From paragraphs 20 and 21 of the written statement, it is clear that the defendant has made objections to the aforesaid claims which are similar to the objections in respect of the claims for basic salary and superannuation dues, in as much as the defendant is claiming that the said claims are not payable on account of the alleged losses caused by the alleged misconduct. For the similar reasons as in case of claims for basic salary and superannuation dues, I would hold that the defendant cannot object to these claims also on the ground of alleged losses due to alleged misconduct which is a matter still pending adjudication before the Hon'ble High Court in CS (OS) No.2593/2013.
49. However, there is an additional objection which has been raised by the defendant to the claims for H.R.A., LTA, Soft CS no.59007/16 Dr. GSC Rao Vs. M/s Simbhaoli Sugars Ltd. page no. 47 Furnishing, Entertainment Allowances, Medical, and Electricity Water/gas/security. As pleaded by the defendant in paragraph 20 of its written statement, these claims were not fixed and were subject to submissions of original bills/claim by the plaintiff, approval of the original bills/claims and as per the prevailing policy of the defendant company. There is no denial to this pleading by the plaintiff in the replication. Rather it was the stand of the plaintiff in his cross-examination, that he had submitted the documents/invoices/claims to the defendant company. The defendant has in paragraph 26 of the written statement categorically pleaded that no bills/claims/proofs were submitted by the plaintiff. During the cross- examination of the plaintiff, he was also put the suggestion that no such documents were submitted. The onus to prove that the plaintiff had submitted the bills/claims/proofs for the claim for H.R.A., LTA, Soft Furnishing, Entertainment Allowances, Medical, and Electricity Water/gas/security was upon the plaintiff. Although the plaintiff has claimed that he had submitted the bills/claims/proofs to the defendant company, the plaintiff has not filed on the record any copies of the said documents which are claimed to have been submitted. Thus, I would hold that the plaintiff has not discharged the onus for proving that he was entitled to the claims for H.R.A., LTA, Soft Furnishing, Entertainment Allowances, Medical, and Electricity Water/gas/security.
50. I would also mention that in his cross examination (see Question 73), the plaintiff has admitted that he was staying CS no.59007/16 Dr. GSC Rao Vs. M/s Simbhaoli Sugars Ltd. page no. 48 in the Executive Director's bungalow in Simbholi. When the plaintiff has admitted that he was staying in the Executive Director's bungalow in Simbholi which would be an accommodation provided by the defendant, then the claim for HRA becomes doubtful.
51. The learned counsel for the plaintiff had submitted that the defendant had led the evidence of DW-3 Mr. Rajeev Bhatnagar who was the general manager, HR Department and that in his cross examination, DW-3 had admitted that he had never come across the personal file of the plaintiff and further he admitted that he joined the defendant recently (his cross examination was conducted in September 2019) whereas the case pertained to the year 2013. It was the argument of the learned counsel for the plaintiff that the concerned person in the HR department who was responsible for the personal file of the plaintiff was not examined and hence, the testimony of DW-3 to the effect that the plaintiff had not submitted the requisite bills/invoices/proofs ought to be rejected. I am afraid this argument does not take the case of the plaintiff any further. The plaintiff's case has to stand on its own legs. When it was the case of the plaintiff that the plaintiff had supplied the bills/invoices/proofs, then the plaintiff could have easily filed the same or even copies thereof in the present suit. The concerned bills/invoices/proofs pertained to the year 2013 and the suit was filed in the year 2015. The bills/invoices/proofs or even at least copies thereof would have been with the plaintiff at the time of filing of the suit. The defendant had taken the categorical stand in the CS no.59007/16 Dr. GSC Rao Vs. M/s Simbhaoli Sugars Ltd. page no. 49 written statement that the bills/proofs/invoices were not submitted to the defendant, hence, even at the time of filing replication the plaintiff could have filed the same, however these were not filed by the plaintiff. The plaintiff did not even give notice to the defendant to produce the concerned documents or file an application in Court for directions to the defendant to produce the documents. The plaintiff cannot now rest on the weakness in the defendant's case when the onus was on the plaintiff to lead the evidence on this point.
52. In the result, the claims of the plaintiff for H.R.A., LTA, Soft Furnishing, Entertainment Allowances, Medical, and Electricity Water/gas/security for the period April 2013 to 11/09/2013 are rejected.
Claim for Three Months Notice Period Rs. 10,72,500.00.
53. It would be appropriate to extract the relevant portion of paragraph 21 of the written statement in relation to the claim for three months' notice period in which the defendant has responded to paragraph 26 off the plaint, as under:
"Three Months Notice Period Rs. 10,72,500.00: The alleged amount is not due and payable to the plaintiff. Since the defendant no. 1 has lawfully terminated services of the plaintiff and plaintiff himself has resigned from the services of the defendant no.1 vide letter dated 12.08.2013 without serving any notice period. Moreover, the plaintiff himself breached fundamental terms of his CS no.59007/16 Dr. GSC Rao Vs. M/s Simbhaoli Sugars Ltd. page no. 50 employment and therefore he has no right to claim benefit of notice period as given in appointment letter. It is further relevant to mention that plaintiff has on his own submitted his resignation being caught red-handed. Therefore, notice period if any given in appointment letter is of no avail. Further, amount, if any payable on his account, the same is liable to be adjusted and forfeited against the losses suffered by the company due to illegal acts and omissions of plaintiff."
54. The letter of termination dated 11/09/2013 by the defendant was on the basis that the plaintiff had committed acts of misconduct and breach of employment. The issue of misconduct and breach of employment and the alleged losses caused thereby is already pending adjudication before the Hon'ble High Court in CS (OS) No.2593/2013. However, even prior to the letter of termination dated 11/09/2013 from the defendant, admittedly the plaintiff had already sent resignation letter dated 12/08/2013 to the defendant tendering resignation "with immediate effect". Thus, even if the plaintiff herein were to ultimately succeed in CS (OS) No.2593/2013, the fact remains that the plaintiff herein had already tendered resignation on 12/08/2013 which was "with immediate effect", and as such in any case the plaintiff would be deemed to have waived the notice period and would not be entitled to any notice period salary. In the result, the claim of the plaintiff for 3 months' notice period salary is rejected.
CS no.59007/16 Dr. GSC Rao Vs. M/s Simbhaoli Sugars Ltd. page no. 51 Prayer for rendition of accounts in respect of encashment of leave and bonus.
55. The plaintiff has prayed for rendition of accounts in respect of the leave encashment and bonus. The relevant paragraph 27 of the plaint is extracted hereunder:
"27. That apart from the above claim, plaintiff is also entitled to receive leave encashment and bonus which can be calculated upon rendition of accounts and records from the accounts department of the defendants.
Particul Period Remark
ars
Leave 360 Days To be
Encash calculated by
ment the accounts
deptt. Of the
defendant
company
Bonus For the year Do"
2011-2012
and 2012-
2013
56. The defence taken by the defendant in its written statement is as under:
"27. The contents of para 27 are wrong and denied. The plaintiff is not entitled to any leave encashment and/or bonus as alleged as he defrauded the defendant no. 1 violating the fundamental terms of his employment and further committed various acts of fraud and cheating."
CS no.59007/16 Dr. GSC Rao Vs. M/s Simbhaoli Sugars Ltd. page no. 52
57. Thus, again the only defence of the defendant to the rendition of accounts for leave encashment and bonus is that the plaintiff had defrauded the defendant and had committed acts of cheating and fraud. For similar reasons on which I have allowed the claims for the basic salary and the superannuation, I would hold that the objection to the rendition of accounts cannot stand.
58. Accordingly, preliminary decree is passed in favour of the plaintiff and against the defendant for rendition of the accounts in respect of the leave encashment and the bonus for the years 2011-12 and 2012-13. The defendant is directed to render the accounts and file the same in Court within a period of 6 weeks with advance copy to the plaintiff.
59. To summarise, the following decree is passed:
i) Decree is passed in favour of the plaintiff and against the defendant for sum of Rs. 19,18,583/-
towards basic salary for the period April 2013 to 11/09/2013 along with interest @ 9% p.a. from the date of filing of the suit till realisation; and
ii) Decree is passed in favour of the plaintiff and against the defendant for sum of Rs.54,81,259/- towards superannuation dues for the period 1999 to 11/09/2013 along with interest @ 9% p.a. from the date of filing of the suit till realisation; and
iii) Preliminary decree is passed in favour of the plaintiff and against the defendant for rendition of CS no.59007/16 Dr. GSC Rao Vs. M/s Simbhaoli Sugars Ltd. page no. 53 the accounts in respect of the leave encashment and the bonus for the years 2011-12 and 2012-13. The defendant is directed to render the accounts and file the same in Court within a period of 6 weeks with advance copy to the plaintiff.
Decree-sheet be drawn up accordingly.
60. Relist for further consideration in respect of the leave encashment and the bonus for the years 2011-12 and 2012- 13 on 13.03.2023.
Judgment pronounced in open court.
(SATYABRATA PANDA) Additional District Judge-04 Judge Code- DL01057 PHC/New Delhi/13.12.2022 CS no.59007/16 Dr. GSC Rao Vs. M/s Simbhaoli Sugars Ltd. page no. 54