Delhi District Court
Shri Mitesh Gulati vs M/S Max Life Insurance Company Limited on 28 November, 2022
IN THE COURT OF SH. SUDHANSHU KAUSHIK :
ADDL. DISTRICT JUDGE-02 & WAQF TRIBUNAL :
PATIALA HOUSE COURTS : NEW DELHI
CIVIL SUIT NO.56227/2016
CNR NO.DLND01-001024/2015
SHRI MITESH GULATI
S/O LATE SH. OM PRAKASH GULATI
R/O C-520/A, GALI NO.11,
MAJLIS PARK, ADARSH NAGAR,
AZAD PUR, DELHI-110033
.....PLAINTIFF
VERSUS
M/S MAX LIFE INSURANCE COMPANY LIMITED
OPERATION CENTRE AT:
90A, UDYOG VIHAR, SECTOR-18,
GURGAON-122015 (HARYANA)
ALSO AT:
23, UPPER GROUND FLOOR,
HIMALYA HOUSE, KASTURBA GANDHI MARG,
NEW DELHI-110001
.....DEFENDANT
DATE OF INSTITUTION : 04.06.2015
DATE OF CONCLUSION OF FINAL ARGUMENT : 18.11.2022
DATE OF PRONOUNCEMENT OF ORDER : 28.11.2022
SUIT FOR RECOVERY OF AN AMOUNT OF RS.3,40,000/- (RUPEES
THREE LAC AND FORTY THOUSAND ONLY)
JUDGMENT
1. This is a suit by an ex-employee against his employer for recovery of incentive and amount deducted at the time of his resignation along with CS No.56227/2016 Mitesh Gulati Vs M/s Max Life Insurance Company Ltd. page 1 of 13 interest at the rate of 18% per annum. The brief facts as revealed from the plaint and the documents annexed therewith are;
A) Plaintiff/Mitesh Gulati used to work with defendant/Max New York Life Insurance Company Limited (hereinafter referred to as 'the company') as an Associate Sales Manager. He joined the company on 18.08.2008 and continued to work there till 08.06.2012. During the period of employment, the company granted him an incentive of Rs.1,76,940.97/- under Long Term Incentive Plan (LTIP) by issuing a letter dated 01.04.2010 wherein it was specified that the incentive shall be paid by 31.03.2012. B) Plaintiff disclosed the accrued incentive of Rs.1,76,940.97/- as his income in the income tax return filed by him for the assessment year 2011-2012. The company made him quit the job by tendering a resignation on 08.06.2012 but the amount of incentive remained unpaid.
C) At the time of resignation, the company settled the account with the plaintiff and illegally deducted a sum of Rs.44,460/- from his legitimate dues.
D) Plaintiff issued legal notice dated 23.04.2015 calling upon the company to pay incentive and illegally deducted amount along CS No.56227/2016 Mitesh Gulati Vs M/s Max Life Insurance Company Ltd. page 2 of 13 with interest at the rate of 18% per annum. The amount remained unpaid. Hence, the present suit.
2. Company was duly served with the summons. The company opposed the claim of the plaintiff by filing written statement. Company took a preliminary objection that the plaintiff's claim is barred by limitation. Company admitted that plaintiff worked till 06.06.2012 and he was found eligible for incentive of Rs.1,76,940.97/- under the Long Term Incentive Plan (LTIP). Company took a stand that incentive was payable subject to certain terms & conditions but the plaintiff failed to comply with them. Company mentioned that the performance of plaintiff was not up to the mark and he voluntarily tendered his resignation on 08.06.2012. Company prayed for the dismissal of the suit.
3. On the basis of pleadings, following issues were framed:
(1) Whether the suit is time barred ? OPD
(2) Whether the plaintiff was entitled to long term incentive of
Rs.1,76,940.97/-? OPP
(3) Whether the plaintiff is entitled to recover the amount of
Rs.44,460/- deducted by defendant from the dues payable at the time of resignation? OPP (4) Whether the plaintiff is entitled to receive interest, if yes, on what amount, at what rate and for what period? OPP (5) Relief.
CS No.56227/2016 Mitesh Gulati Vs M/s Max Life Insurance Company Ltd. page 3 of 13
4. Plaintiff examined only himself as PW-1. He supported supported the contents of the plaint and relied on the following documents; (a) Letter dated 01.04.2010 whereby LTIP was granted to the plaintiff (Mark-A),
(b) Income Tax Return for the assessment year 2011-2012 (Mark-B) (colly), (c) Full & final settlement statement issued by the company at the time of resignation by the plaintiff (Ex.PW-1/3), (d) Legal notice dated 23.04.2015 (Ex.PW-1/4) and (e) Postal and courier receipt of the service of legal notice (Ex.PW-1/5, 6 & 7). PW-1 was not cross- examined by the defendant.
5. Plaintiff examined only one witness, who was not cross-examined by the defendant. On the other hand, defendant did not examine any witness.
6. Arguments were advanced by the respective counsels.
7. Counsel for the plaintiff has argued that plaintiff has established his claim and the suit should be decreed. He has contended that the testimony of PW-1 has gone unchallenged as he has not been cross- examined by the defendant. He has mentioned that the testimony of PW- 1, read in the light of documents placed on record, establishes the plaintiff's claim. He has stated that company admitted in the written statement that incentive of Rs.1,76,940.97/- was granted to the plaintiff and the admission seals the fate of trial. He has mentioned that there is nothing on record to indicate that the suit is barred by limitation. He has CS No.56227/2016 Mitesh Gulati Vs M/s Max Life Insurance Company Ltd. page 4 of 13 argued that the cause of action for filing the suit arose on the resignation of the plaintiff and therefore, limitation period needs to be calculated from the said date. He has contended that at the time of resignation, company illegally deducted a sum of Rs.44,460/- from the legitimate dues of the plaintiff. He has submitted that company is under an obligation to pay the deducted amount and unpaid incentive along with interest at the rate of 18% per annum. He has prayed that the suit may be decreed with cost.
8. On the other hand, counsel for defendant has contended that although, defendant failed to cross-examine the plaintiff's witness but the suit cannot be decreed merely on this ground. He has argued that the plaintiff was under an obligation to establish his claim by leading independent and cogent evidence. He has argued that the claim of the plaintiff is hopelessly barred by limitation. He has mentioned that the cause of action for filing the suit arose on the date fixed for the disbursal of the purported incentive. He has contended that on calculating the period of limitation from the said date, it becomes evident that the suit is time barred. He has mentioned that even otherwise, purported incentive was payable subject to certain terms & conditions. He has contended that plaintiff failed to comply with the terms & conditions and therefore, he CS No.56227/2016 Mitesh Gulati Vs M/s Max Life Insurance Company Ltd. page 5 of 13 was not entitled to receive the incentive. He has mentioned that the suit should be dismissed with cost.
9. I have perused the record in the light of respective arguments.
ISSUE-WISE FINDING
Issue-1: - Whether the suit is time barred ? OPD
Issue-2: - Whether the plaintiff was entitled to long term incentive of
Rs.1,76,940.97/-? OPP
10. Both the issues are interconnected and can be taken up together. The fact that plaintiff was employed with the company is not in dispute. The date of joining is also not disputed. There is variation in the stand of the parties about the date of resignation and the circumstances in which the resignation was tendered. Plaintiff disclosed in the plaint that he resigned on or about 08.06.2012 whereas the company stated that plaintiff continued to work only till 06.06.2012. It is the plaintiff's case that the company forced him to resign while on the other hand, company has mentioned that plaintiff resigned voluntarily. However, these aspects are not crucial to adjudicate upon the present issue, which is in respect of recovery of incentive.
11. It is the plaintiff's claim that company granted him an incentive of Rs.1,76,940.97/- under an incentive plan. Plaintiff has placed on record a letter dated 01.04.2010 (Mark-A) issued by the Managing Director of the company whereby the incentive was granted. Company did not dispute CS No.56227/2016 Mitesh Gulati Vs M/s Max Life Insurance Company Ltd. page 6 of 13 the granting of incentive but came up with a version that the incentive was subject to certain terms & conditions. Company submitted in the written statement that plaintiff failed to comply with those terms & conditions and therefore, he was not entitled to receive the incentive.
12. I have gone through the letter dated 01.04.2010. In this letter, company categorically mentioned that plaintiff has been awarded a sum of Rs.1,76,940.97/- as incentive. There is a rider attached to the incentive that in order to receive the amount, the employee should continue to be on the rolls of the company. There is a second rider that the employee should continue to perform and achieve the minimum prescribed rating criteria till the disbursal of the incentive amount and in case, he fails to achieve the minimum rating, the management can review and withhold the said amount. The relevant clause in the letter dated 01.04.2010 reads as under:
"....It gives me immense pleasure to announce that you have been awarded INR 1,76,940.97/- (only) as the LTIP amount on March 31st 2012. Please note that you will be entitled to receive the said amount if you are in the rolls of the organization and not under resignation or serving notice period. Further, and in the interim period, you should continue to performance i.e. a minimum rating of g3M3 till the date of payout, failing which the management can review/hold /withdraw the said amount....".
13. It is the stand of the company that although, incentive was granted to the plaintiff but it was subject to certain terms & conditions. Counsel for the CS No.56227/2016 Mitesh Gulati Vs M/s Max Life Insurance Company Ltd. page 7 of 13 company has argued that the company used to grant incentive to its employees to encourage them to perform better and to retain them for a longer period of time. He has argued that the incentive was payable subject to continued perseverance and level of performance as depicted by the employee in the year when the same was declared till the time it was finally paid. He has contended that plaintiff failed to fulfill the conditions and therefore, he was not entitled to receive the incentive.
14. I have gone through the record in the light of arguments advanced by the counsels. I do not find force in the submissions made by the counsel for the company that incentive was not payable as plaintiff failed to comply with the terms & conditions mentioned in the letter dated 01.04.2010. Company has failed to place on record even a single document to show that plaintiff failed to fulfill the terms & conditions for receiving the incentive. Company has not led evidence to demonstrate that plaintiff's performance was not up to the mark. In case, the company alleges that there were shortcomings in the plaintiff's performance, it was under an obligation to prove the alleged fact by leading evidence. Company has neither cross-examined the plaintiff's witness nor led any evidence to substantiate this line of defence. The bald plea taken in the written statement that plaintiff became dis-entitled to receive the incentive has to be rejected. On the other hand, plaintiff's right to receive incentive CS No.56227/2016 Mitesh Gulati Vs M/s Max Life Insurance Company Ltd. page 8 of 13 stands established. However, his entitlement meant to recover the incentive depends on the finding of issue No.1. Let us peruse the record to see if the plaintiff's claim for incentive is time barred.
15. Company took a plea in the written statement that the plaintiff's claim is barred by limitation. It has been mentioned in the incentive letter dated 01.04.2010 that the incentive shall be payable by 31.03.2012. There is no dispute between the parties about the contents of this letter. Counsel for the plaintiff has contended that limitation period needs to be counted from the date of resignation i.e. 08.06.2012 and not from 31.03.2012. He has mentioned that on calculating the limitation period from the said date, it becomes obvious that the suit is within limitation. Counsel for company has countered this argument mentioning that limitation started running from 31.03.2012. He has argued that in the first instance, plaintiff was not entitled to receive incentive as he failed to comply with the terms & conditions of the incentive plan. He has argued that even if it is accepted that plaintiff was entitled to receive the incentive, the limitation period started running on 31.03.2012, when the incentive became payable.
16. Section 3 of the Limitation Act, 1963 provides that every suit instituted after the prescribed period of limitation shall be dismissed although limitation has not been set up as a defence. Section 3 (2) of the CS No.56227/2016 Mitesh Gulati Vs M/s Max Life Insurance Company Ltd. page 9 of 13 Limitation Act states that a suit is instituted when the plaint is presented to the proper officer. Record shows that plaintiff instituted the present suit on 04.06.2015. Limitation Act provides a period of 3 years to recover the money under a contract and the period of limitation begins to run from the date when the right to recover the amount accrues. In the present matter, admittedly, the incentive was payable by 31.03.2012 and therefore, the period of limitation started running from the said date. It can not be construed by any stretch of imagination that the period of limitation started running from the date when the plaintiff tendered his resignation. The period of limitation does not get extended merely because plaintiff tendered his resignation on a subsequent date. Once, the Limitation period starts running, it can be extended only on the grounds mentioned under Section 18 & 19 of the Limitation Act. However, admittedly, no written acknowledgement was issued by the defendant in respect of the incentives payable under the letter dated 01.04.2011. Thus, the limitation period for filing the suit for recovering incentive had already expired before the present suit was filed. In view of this, the claim for recovery of incentive is certainly time barred. Thus, although, the incentive was payable by the company but it can not be recovered because it has become time barred. The limitation act only bars the remedy by way of suit and does not extinguish the right of the party. If CS No.56227/2016 Mitesh Gulati Vs M/s Max Life Insurance Company Ltd. page 10 of 13 the recovery of the incentive is barred by any law of limitation, it is difficult to hold that defendant was duty bound and under obligation to pay the time barred incentive. Accordingly, Issue No.1 & 2 are decided against the plaintiff and in favour of defendant.
Issue-3: - Whether the plaintiff is entitled to recover the amount of Rs.
44,460/- deducted by defendant from the dues payable at the time of resignation? OPP Issue-4: - Whether the plaintiff is entitled to receive interest, if yes, on what amount, at what rate and for what period? OPP
17. Coming to the aspect of recovery of the amount deducted by the company at the time of his resignation. It was the stand of plaintiff that company illegally deducted this amount at the time of settling the account. Plaintiff has mentioned that the officials of the company compelled him to tender his resignation. He has stated that he refused to succumb to the demands of the officials and when he did not tender his resignation, company terminated him from duties on 08.06.2012. Plaintiff has deposed in conformity with the stand taken by him in the plaint. He has deposed that defendant did not allow him to enter the office and terminated his services on 08.06.2016. He has deposed that he was forced to tender his resignation. He has deposed that at the time of settlement of the accounts, defendant illegally deducted an amount of Rs.44,460/- from the legitimate dues. He has placed on record the CS No.56227/2016 Mitesh Gulati Vs M/s Max Life Insurance Company Ltd. page 11 of 13 statement of account (Ex.PW-1/3) wherein the said deduction stands reflected.
18. Record reveals that during trial, defendant did place on record the copy of purported appointment letter of the plaintiff dated 18.08.2008 containing the terms & conditions of the employment. It was mentioned in this appointment letter that in case, plaintiff leaves the company without giving notice of 30 days, proportionate total employee cost shall be deducted but the appointment letter has not been proved. Defendant neither cross-examined the plaintiff nor tendered this document in evidence. The original appointment letter was not produced. Thus, the appointment letter cannot be looked into. On the other hand, plaintiff's testimony that company compelled him to tender resignation has gone uncontroverted. His testimony that the amount of Rs.44,460/- was illegally deducted from his salary has also remained unchallenged. The claim for the deducted amount is within limitation. In view of this, plaintiff's claim qua the recovery of the deducted amount stands established.
19. Plaintiff is indeed entitled to interest on the amount illegally deducted by the defendant from his legitimate dues. In case, plaintiff would have received the amount, this amount would have fetched interest on being deposited in bank or being invested in any other manner. However, the CS No.56227/2016 Mitesh Gulati Vs M/s Max Life Insurance Company Ltd. page 12 of 13 interest claimed by the plaintiff at the rate of 18% per annum is on a higher side. Since, it was not a commercial transaction, therefore, interest at the rate of 6% per annum would meet the ends of justice and the same is being awarded. Accordingly, Issue No.3 & 4 are decided in favour of plaintiff and against the defendant.
RELIEF
20. Accordingly, the suit is decreed with the following reliefs;
(a) A decree for a sum of Rs.44,460/- (Rupees Forty-Four Thousand Four Hundred and Sixty Only).
(b) Pendent-elite and future interest at the rate of 6% per annum till realization of decreetal amount.
(c) Cost of the suit is also awarded to the plaintiff.
21. Decree sheet be prepared accordingly.
22. File be consigned to record room.
Announced in open Court on 28.11.2022 (Sudhanshu Kaushik) Addl. District Judge-02 & Waqf Tribunal, Patiala House Courts, New Delhi/28.11.2022 CS No.56227/2016 Mitesh Gulati Vs M/s Max Life Insurance Company Ltd. page 13 of 13