Karnataka High Court
G. Chandrasekhar vs Chairman And Managing Director, Indian ... on 9 July, 1999
Equivalent citations: [2000(84)FLR382], ILR1999KAR4468, 1999(5)KARLJ705, (2000)IILLJ1168KANT
Author: Tirath S. Thakur
Bench: Tirath S. Thakur
ORDER
1. In this petition for a writ of mandamus, the petitioner seeks a direction for payment of the amount of gratuity pending conclusion of the disciplinary enquiry initiated against him. Arrears of salary payable on account of the revision of pay scales have also been claimed. Time now to state a few facts:
2. The petitioner-an officer in the respondent-company was placed under suspension by order dated 18th of July, 1995, pending a disciplinary enquiry into certain allegations made against him. A charge-sheet followed in due course to which the petitioner has filed a denial. Aggrieved by the order of suspension and the initiation of the proceedings, the petitioner filed Writ Petition No. 11160 of 1996, in this Court, inter alia on the ground that the respondent-company could not have continued with the enquiry proceedings after the petitioner's retirement on superannuation. Dattu, J., who disposed of the said petition did not find favour with the said contention and relying upon Rule 34-A of the C and D.A. Rules of the company, directed the company to continue and complete the enquiry proceedings within six months from the date of receipt of the order. The enquiry proceedings have pursuant to the above directions continued and are according to the Counsel appearing for the parties nearing completion. In the meantime, the petitioner filed the present writ petition in which the relief originally claimed was a direction against the company to pay a sum of Rs. 93,922/- representing the amount in excess of the loss which the petitioner is alleged to have caused to the company. By an amendment the petitioner has sought to raise that claim to Rs. 2,80,081/- besides claiming arrears on account of the revision of pay scales.
3. Appearing for the petitioner Mr. Venkatachalaiah, strenuously argued that the petitioner having retired from service, the respondent-company was not entitled to continue the enquiry proceedings or to withhold the amount of gratuity payable to him under the Payment of Gratuity Act, 1972. He urged that the situations in which the amount of gratuity payable to him could be forfeited were limited to those stipulated under Section 4(6) of the Payment of Gratuity Act, 1972. A forfeiture under the said provision was also permissible only in case the services of the employee had been terminated for reasons given under Section 4(6)(a) and (b). No such termination having been ordered against the petitioner nor any such order being legally permissible after the retirement of the petitioner from service, the question of the company determining the amount of loss allegedly caused to it or forfeiting the amount of gratuity payable to the petitioner did not arise. Reliance was placed by the learned Counsel upon a Division Bench decision of this Court in Subba Rao v State of Mysore and Another, and that of the Apex Court in State of Punjab v Kherni Ram .
4. The continuance of the disciplinary proceedings against the petitioner even after he has superannuated would depend upon the Service Rules governing the petitioner's service conditions. Rule 34-A of the said rules reads thus:
"Where disciplinary proceedings have been initiated against employees in cases of grave misconduct, the proceedings may be continued even after his retirement".
5. It is therefore evident that the retirement of an employee does not affect the maintainability of the disciplinary proceedings initiated against him while he was in service. Such proceedings can in the light of the rule be continued even after the employee has superannuated. It is not disputed that the company had permitted the petitioner to superannuate subject to the pending enquiry being continued in terms of the aforementioned rule. It is not therefore as though the continuance of the enquiry against the petitioner is unsupported by any rule, in which event it may have been possible to say that the employee's retirement brings about a cessation of the relationship of master and servant so essential for the former to take any disciplinary action against the latter. It is on the contrary a case where the rules of service themselves authorise the enquiry to be continued even after retirement of the employee. The challenge to the continuance of the enquiry must therefore fail.
6. That apart the judgment of this Court in the previous round of litigation on the very same question would operate as res judicata between the parties. This Court having declared the enquiry proceedings to be valid and permissible, their continuance cannot be assailed in collateral proceedings initiated for payment of gratuity. So long as the order of this Court holds the field the petitioner is precluded from contending that the proceedings are either illegal or an exercise in futility.
7. The next question then is whether the withholding of the amount of gratuity payable under the Act, is justified having regard to the fact that no termination order has so far been issued. According to the petitioner, no termination order is in existence nor can any such order be issued now. It is true that no termination order has so far been issued but it is not correct to say that no such order can be issued even for purposes of authorising the forfeiture of the petitioner's gratuity to the extent of the loss that may be determined in the course of the enquiry. If the enquiry initiated against the petitioner can be continued as held by this Court earlier and reiterated by me hereinabove, it would necessarily carry with it, the power to pass consequential orders of punishment. The retirement of the petitioner having failed to abort the ongoing enquiry cannot prevent the passing of appropriate orders, on the basis of the same, for otherwise holding of an enquiry will be no more than an exercise in futility. It is indeed difficult to conceive of a situation where the enquiry is valid and yet it cannot result in any punishment against the petitioner no matter he is found to be guilty of the misconduct alleged against him. In other words, although there is no termination order in existence as on date, it is not possible to say that no such order can be validly issued even in future on the basis of the pending disciplinary proceedings. Since the employer has the right to make such an order, withholding of the gratuity pending finalisation of the disciplinary proceedings cannot be found fault with. An almost similar situation had arisen in B.L, Gopalakrishna v Karnataka Soaps and Detergents Limited, Bangalore , where the question that fell for consideration was whether Rule 19 of the Conduct Rules providing for withholding of gratuity until the conclusion of the domestic enquiry proceedings and issue of final orders was in conflict with Section 4 of Payment of Gratuity Act. Repelling the contention that any such withholding of the gratuity was illegal and contrary to Section 4, this Court observed thus:
"Rule 19 of the K.S. and D.L. Conduct Rules which provides that no gratuity shall be paid to the employees until the conclusion of domestic enquiry proceedings and issue of final orders is not in conflict with Section 4 of Gratuity Act. A conjoint reading of sub-sections (1) and (6) of Section 4 shows that the same themselves provide for forfeiture of gratuity, in case the employee concerned is found to have caused dampge or loss or destruction of the property belonging to the employer. The rule, it is obvious, is meant to take care of a situation where an employee is found to be guilty of misconduct causing loss to the employer after his retirement. In any such case, if the amount of gratuity is paid in anticipation of the conclusion of the enquiry proceedings, the employer would he left with nothing to forfeit in terms of Section 4(6) of the Payment of Gratuity Act. The power to forfeit the amount of gratuity to the extent of the amount of loss caused by the employee, would be incapable of a meaningful exercise, unless the same is understood to carry with it the power to withhold the payment of the amount claimed pending the finalisation of the enquiry proceedings instituted against the delinquent employee. Seen in that light, all that Rule 19 of K.S. and D.L. Conduct and Disciplinary Action Rules does is to give expression to what can even otherwise be said to be implicit in the provisions of Section 4(6) of the Act".
In D.K. Savitramma v Anantapur District Co-operative Central Bank Limited, Anantapur and Another , the question that arose was whether disciplinary proceedings pending against an employee could be continued even after his death for purposes of forfeiture of the amount of gratuity due to him. Repelling the contention that such proceedings could not be conducted and the amount forfeited, the Court observed:
"In the event of giving a direction to pay gratuity and pension immediately, the possibility of recovering the amount found to have been misappropriated by the employee would be nil if he has no other property. By virtue of the death of the employee, the Court is not expected to convert the misfortune into one of the windfall and the Court has to strike out equitable balance, so that either party may not suffer".
XXX XXX XXX "Simply because the employee died during pendency of the charges, a principle cannot be laid down that the employer has no authority to continue the proceedings. The proceedings with regard to misappropriation have to be completed, but in the event of the death of an employee, those proceedings have to be completed in the presence of the affected persons, so that they may not claim, in the event of finding any amount due, that the action of the employer is arbitrary, capricious and behind their back. In the event of the death or termination of an employee and if the charges of misconduct have been proved, the employer is entitled to deduct the whole of the financial loss caused by his misconduct from out of the gratuity claimable and the employee or his legal representatives are entitled only for the remaining amount. If the amount due on account of gratuity as per rules has to be payable immediately without settling the amount prejudice to the employer in recovering the amount found to have been misappropriated".
In D.V. Kapoor v Union of India and Others, the employee had voluntarily resigned from service after the disciplinary proceedings had been initiated against him. The question raised was whether the proceedings could be continued and the amount of gratuity and pension forfeited on the basis of the findings recorded in the same. Their Lordships held that proceedings initiated against the employee during his service could bo continued and concluded by the authority in accordance with the rules, in the same manner, as could be done in the case of Government Servant in service. Findings recorded in such proceedings could even be made a basis for forfeiture of the amount of gratuity payable to the employee. The Court observed:--
"Rule 9(2) of the rules provide that the departmental proceedings if instituted while the Government servant was in service whether before his retirement or during his re-employment, shall, after the final retirement of the Government servant, be deemed to be proceedings under this rule and shall be continued and concluded by the authority by which they were commenced in the same manner as if the Government servant had continued in service. Therefore, merely because the delinquent appellant was allowed to retire, the Government docs not lack jurisdiction or power to continue tne proceedings already initiated to the logical conclusion thereto. The disciplinary proceedings initiated under the Conduct Rules must be deemed to be proceedings under the Pension Rules and shall be continued and concluded by the authorities by which the proceedings have been commenced in the same manner as if the Government servant had continued in service".
Reliance by Sri Venkatachalaiah, upon the Division Bench decision of this Court in Subba Rao's, case, supra, is of no assistance to him. That was a case where the Court found that Rule 9(5)(b) of the Mysore Civil Service Rules which authorised retention for punishment in a pending disciplinary proceedings stood deleted. The Court was not in that case dealing with a situation, where the rule permitted the enquiry to be continued even after the employee had retired. Similarly, the decision of their Lordships of the Supreme Court in Khemi Ram's case, supra, does not have any direct bearing on the question that falls for consideration in this case. The Court was in that case dealing with a situation where the disciplinary proceedings could under rules be continued by the employer only by continuing the employee in service. The Government of Punjab had in exercise of that power issued an order of suspension of the employee, which could not be served upon the employee before the date of his superannuation. The question that fell for consideration was whether the issuance of an order of suspension implying his continuance in service would by itself be deemed to be a communication to the employee. The Court answered the question in the affirmative and held that since an order had been issued and despatched, it was deemed to have been communicated no matter the employee had not in fact received the same. The employee was therefore treated to have continued in service in accordance with the rules so as to entitle the employer to continue with the disciplinary proceedings even after his superannuation. That is however not the position in the instant case. The rule here is differently worded and without specifically requiring the employee to be continued in service entitles the employer to proceed with the enquiry initiated against him before his retirement.
8. In the result, this petition fails and is hereby dismissed but in the circumstances without any orders as to costs. As already directed in the previous writ petition the enquiry proceedings shall be expedited by the Enquiry Officer, and depending upon the outcome of the enquiry a final decision regarding the forfeiture of the petitioner's gratuity and the arrears of salary claimed by him taken expeditiousiy.