Andhra HC (Pre-Telangana)
B. Mohan Reddy vs A.P. State Co-Op. Marketing Federation ... on 18 January, 1989
Equivalent citations: (1993)IIILLJ417AP
Author: Syed Shah Mhd. Quadri
Bench: Syed Shah Mhd. Quadri
JUDGMENT
Syed Shah Mohammed Quadri, J .
1. The petitioner was an employee of the respondent Federation. He was appointed as a sales assistant in September, 1965. Later, he got promotion and in 1982, when he was working as Manager (Fertilisers) his services were terminated as he is said to have abstained from duty. By proceedings Rc. No. ME2/SM/2/84, dated 2nd August, 1984, the respondent terminated the services of the petitioner with effect from 1st December, 1982, on the ground of unauthorised absence. As the terminal benefits like gratuity, provident fund and other fringe benefits were not paid to the petitioner, he sent a lawyer's notice on 5th June, 1985 to the respondent. The respondent replied that an enquiry into pesticides affairs relating to the period when he worked as Manager (Fertilizers) was pending and hence his gratuity could not be released. In the circumstances, the petitioner filed this writ petition praying for a writ of mandamus to direct the respondent to settle his claim regarding payment of gratuity, provident fund, return of security bond and all other amounts payable to him under various statutes.
2. The respondent has filed its counter affidavit admitting that under the regulations of the MARKFED, the Payment of Gratuity Act, 1972 (for short "the Act"), is made applicable to its employees, but it is stated that the amounts were not paid to the petitioner since his services were terminated on account of negligence and unauthorised absence amounting to misconduct and that he is not entitled to claim any gratuity under Section 4(6) of the Act. It is stated that the provident fund consists of the contributions of the employer and the employee. It is also admitted that in the security deposit account, the petitioner is having a sum of Rs. 1,500/- to his credit. It is added that pursuant to the report of the accounts section of the Federation, the following amounts are due from the petitioner:
Rs.
1.
Fertiliser Wing 265.00
2. Procurement and Marketing Division 2,681.90
3. General Division 14,431.87 Total 17,378.777 It is further submitted that the general enquiry ordered in the matter of pesticides distribution relevant to the period in which the petitioner was the manager is pending for the exact determination of the liability; as such, the amounts under any of the heads cannot be paid to him. In the circumstances, it is prayed that the writ petition may be dismissed.
3. Sri E. V. Bhagiratha Rao, learned counsel for the petitioner, submits that the services of the petitioner were terminated in the year 1984, with effect from 1st December, 1982, but the gratuity and other terminal benefits are not paid so far by the respondent which is arbitrary and oppressive and, therefore, the petitioner is entitled to an appropriate writ directing payment of these amounts. Sri Vilas V. Afzalpurkar, the learned counsel for the respondent-Federation, submits that the services of the petitioner were terminated for wilful absence from duty and in view of Section 4(6) of the Act, the respondent is entitled to forfeit the amount of gratuity. He further submits that pursuant to the report of the accounts section of the Federation, the petitioner is due to the respondent a sum of Rs. 17,378.77 which is liable to be deducted from any amounts payable to him. There fore, the writ prayed for cannot be issued.
4. The only question that requires consideration is whether the respondent is justified in withholding the gratuity under Sub-section (6) of Section 4 of the Act.
5. The Payment of Gratuity Act, 1972, is a beneficial legislation enacted with a view to provide payment of gratuity to employees engaged in factories, mines, oil-fields, plantations, ports, railway companies, shops and other establishments. Under the regulations of the respondent-Federation, the Act is applicable to the employees of the respondent. Now we may notice briefly the relevant provisions of the Act. Section 3 of the Act provides for the appointment of a controlling authority for the administration of the Act. Section 4 is the mainstay of the Act. It contains six sub-sections. Sub-section (1) provides that gratuity shall be payable to an employee on the termination of his employment if he has rendered continuous service for not less than five years. The amount of gratuity is payable to an employee on his superannuation, or retirement or resignation, or on his death or disablement due to accident or disease. The first proviso prescribes that completion of continuous service of 5 years shall not be necessary where the termination of employment of an employee is due to death or disablement. The second proviso says that in case of death of an employee, the gratuity payable to him shall be paid to his nominee or, if no nomination has been made, the amount should be paid to his heirs; Sub-sections (2) and (4) prescribe method of computation of gratuity and Sub-section (3) mentions the ceiling on the amount of gratuity payable to an employee. However, Sub-section (5) says that nothing in Section 4 shall affect the right of an employee to receive better terms of gratuity under any award or agreement or contract with the employer. Sub-section (6) empowers the employer to forfeit the gratuity. We shall revert to this sub-section presently. Section 6 enjoins that each employee who has completed one year of service should make nomination for the purpose of second proviso to Sub-section (1) of Section 4 and also deal with matters allied to it. Section 7(1) of the Act provides for the determination of the amount of gratuity by the employer on the application of an eligible person. The Act regards the right of the employee so inviolable that even without any application under Section 7 (1), the employer is obliged to determine the amount of gratuity and to give a notice in writing to the person to whom the gratuity is payable and also to the controlling authority specifying the amount of gratuity so determined as soon as it becomes payable. The employer is also under an obligation to pay the amount of gratuity within such time as may be prescribed. In case of dispute regarding the amount of gratuity, the controlling authority is required to determine the amount payable under Sub-section (4) of Section 7 of the Act. The provisions of the Code of Civil Procedure in respect of specified matters are made applicable to an enquiry under Sub-section (4) and the orders passed by the controlling authority is made appealable. Section 8 requires the Collector to recover the amount of gratuity on a certificate issued to him by the controlling authority together with compound interest thereon at 9 per cent per annum from the date of expiry of the prescribed time as arrears of land revenue and pay the same to the person entitled thereto.
6. Admittedly, in this case, the petitioner was appointed in September, 1965, and his services were terminated in December, 1982, as such he had put in more than five years of service. Under Section 4 of the Act, gratuity is payable on superannuation of the employee or on his retirement or resignation or on his death or disablement in any accident. The term "retirement" has been defined in Section 1(q) of the Act to mean termination of services of an employee otherwise than on superannuation. Therefore, termination of the services of the petitioner by the respondent for the alleged misconduct of unauthorised absence from duty amounts to retirement within the meaning of the Act and he is entitled to gratuity which is payable on the date of termination. As noticed above, Sub-section (2) of Section 7 has placed an obligation on the employer to give notice in writing duly specifying the amount of gratuity to the employee and the controlling authority, whether or not the employee applied for gratuity under Sub-section (1) of Section 7. In this case, the petitioner did apply to the respondent for settlement of gratuity, provident fund and for return of security deposit on 25th October, 1984. His Advocate, by notice dated 5th June, 1985 called upon the respondent to pay the gratuity amount payable to the petitioner within one week on receipt of notice. Instead of determining the amount of gratuity payable and paying the same, the respondent in his reply, dated 22nd June, 1985, took the stand that there was an enquiry into pesticides affairs relating to the period during which the petitioner worked as Manager (Pesticides) and so his gratuity could not be released till the completion of the same enquiry. Thereafter, on 28th June, 1985, the petitioner's Advocate sent another notice to the respondent stating that the plea was set up in its reply of 22nd June, 1985, with the mala fide intention to deliberately delay the payment of amounts to which the petitioner is entitled legally and at no point of time any notice was issued to him about any irregularity while he was the Manager (Pesticides) or subsequently.
7. Before me, the stand of the respondent is sought to be justified under Section 4(6) of the Act. Sub-section (6) of Section 4 incorporates two situations in which the amount of gratuity can be forfeited either wholly or to the extent of the loss caused to the employer by the employee. It would be useful to extract here Sub-section (6) of Section 4 of the Act, "4(6).....(a) the gratuity of an employee, whose services have been terminated for any act, wilful omission or negligence causing any damage or loss to, or destruction of, property belonging to the employer, shall be forfeited to the extent of the damage or loss so caused;
(b) the gratuity payable to an employee shall be wholly forfeited;
(i) if the services of such employee have been terminated for his riotous or disorderly conduct or any other act of violence on his part, or
(ii) if the services of such employee have been terminated for any act which constitutes an offence involving moral turpitude, provided that such offence is committed by him in the course of his employment".
8. From a plain reading of Sub-section (6) of Section 4, it is obvious that it does not authorise an employer to withhold the amount of gratuity for any reason. It provides for forfeiture of gratuity either partially or wholly, as the case may be, in the following situations:
(i) where the services of an employee are terminated for any act, wilful omission or negligence which caused any damage or loss or destruction of property belonging to the employer, then only the employer can forfeit the amount of gratuity to the extent of the damage or loss so caused. In such a case the employer will have to specify the amount forfeited for the loss or damage caused by the employee from out of the amount determined under Sub-section (2) of Section 7.
(ii) where the services of an employee are terminated for riotous or disorderly conduct or any other act of violence on his part.
(iii) where the services of an employee are terminated for any act which constitutes an offence involving moral turpitude provided that such offence is committed by him in the course of his employment., It is only when an employee's services are terminated for any of the reasons mentioned in (ii) and (iii) stated above that the gratuity payable to him can be wholly forfeited.
9. In this case, from a perusal of the order of the respondent of 2nd August, 1984, terminating the services of the petitioner, it is clear that his services are not terminated for any of the reasons stated in (i) to (iii) (specified in Sub-sections (6)(a) and (b) of Section 4).
10. From the above discussion, it follows that the respondent is not entitled to withhold the amount of gratuity either on the ground of pendency of alleged enquiry into the pesticides affair or for any other reason. The petitioner is, therefore, entitled to the amount of gratuity due to him under the Act.
11. In so fur as the amount of provident fund is concerned, the petitioner is also entitled to the same as no specific reason is given by the respondent for withholding the same amount.
12. Regarding the security deposit of Rs. 1,500, it cannot be disputed that the respondent is entitled to recover any amount due to it by the petitioner.
In paragraph 5 of the counter-affidavit, an amount of Rs. 17,378.77 is said to be due under different heads which arc extracted above. Since the particulars of the amounts arc mentioned for the first time in the counter-affidavit and were not stated earlier cither in reply to the notice sent by the lawyer of the petitioner or otherwise, the respondent is not entitled to withhold the same for an indefinite period. However, it would be open to the respondent to issue notice to the petitioner for recovery of any amount due to it by him and after giving him an opportunity of being heard, determine the amount due and adjust or recover the same from out of the security deposit.
13. The respondent is not entitled to withhold cither gratuity or provident fund amount of the petitioner cither on the ground of pendency of enquiry or for recovery of some amounts said to be due by the petitioner. It has been noticed above that Section 8 of the Act ordains the Collector to recover the amount of gratuity with compound interest thereon at 9 per cent per annum from the date of expiry of the prescribed time. Rule 8 of the Rules require that within 15 days of receipt of application for payment of gratuity, the employer shall issue a notice to the employee specifying the amount of gratuity payable, if the claim is found admissible, by fixing a dale not being later than the thirtieth day after the date of receipt of the application for payment thereof. The petitioner sent the application for payment of gratuity on 25th October, 1984, which was received by the respondent on 26th October, 1984. Under Rule 8 of the Rules, the gratuity should have been paid within 30 days of the receipt of the application, that is, on or before 25th November, 1984. The petitioner has been deprived of the amount of gratuity for unjustifiable reasons. The petitioner is, therefore entitled to compound interest on the amount of gratuity at the rate of 9 per cent per annum till the date of payment. Therefore, the respondent is directed to pay the amount of gratuity together with compound interest thereon at the rate of 9 per cent per annum from 25th November, 1984, till the dale of payment, and to settle the provident fund within a period of ten days from the date of receipt of this order.
14. In the result, the writ petition is allowed with costs as indicated above. Advocate's fee Rs. 500.