K. M. DALAL v. UNION OF INDIA — 1979 DIGILAW 7 (GUJ)

P. D. DESAI, J. ( 1 ) THE petitioner was in the employment of the Western Railway. He reached the age of superannuation on January 31 1975 At the material time he was holding the post of Inspector of Works. He was given extension of one year by the General Manager of the Western Railway by an order made on June 20 1974 However the General Manager subsequently decided to terminate the extension granted to the petitioner and accordingly made an order on October 28 1975 In accordance with the said order the petitioner was retired from service on November 30 1975 ( 2 ) UPON the retirement of the petitioner the following amounts became payable to him:special contribution to Provident Fund amounting to Rs. 12 475 under Rule 1314 of the Provident Fund Rules contained in the Indian Railway Establishment Code Volume I. (2) Provident Fund Bonus (contribution by Government) amounting to Rs. 22 202 payable under Rules 1312-1313 of the Provident Fund Rules contained in the Indian Railway Establishment Code Volume I. Accordingly an amount of Rs. 34 677 became payable to the petitioner ( 3 ) THE petitioner was informed by a communication dated August 4; 1976 issued by the Divisional Office Baroda (Annexure C) that due to shortage of stores/ materials in his charge the following recoveries were required to be effected from his retirement dues: (1) Rs. 25 12 recovery due to shortage/loss of material which was in the petitioners charge when he was working as Inspector of Works Baroda. (2) Rs. 2 705 Loss on account of theft when the petitioner was working as Inspector of Works Ahmedabad in Grade II for which he was responsible. -- Rs. 27 717the communication proceeded to state that after adjusting the amount of the aforesaid recoveries from the Provident Fund Bonus (Rs. 22 202 payable to the petitioner the balance amount if any would be recovered from the Special contribution to the Provident Fund. The petitioner sent his reply (Annexure D) on August 20 1976 to the aforesaid communication. He pointed out in the course of his reply that no disciplinary action was taken against him in respect of the matters which had given rise to the proposal for the aforesaid recoveries and that therefore the action of the railway authorities in withholding the settlement of his dues was illegal. He pointed out in the course of his reply that no disciplinary action was taken against him in respect of the matters which had given rise to the proposal for the aforesaid recoveries and that therefore the action of the railway authorities in withholding the settlement of his dues was illegal. The General Manager of the Western Railway issued a Memorandum on June 26 1977 (Annexure F) stating that on account of the petitioners negligence in discharging his duties and in safeguarding the interest of the railway administration the railway had to suffer a loss of Rs. 25 12 and that therefore the petitioners service could not be certified to be thoroughly satisfactory. The Memorandum proceeded to state that under the circumstances a portion of the Special contribution to the petitioners Provident Fund was proposed to be withheld. The petitioner was called upon to show cause against the proposed action. The petitioner showed cause by his letter dated July 20 1977 (Annexure G ). His contention inter alia was that he was not responsible for causing any loss to the railway administration as alleged and that in any case the deduction proposed to be made was not authorised by Rule 1341 of the Provident Fund Rules as interpreted by the Supreme Court in the case of The General Manager North East Frontier Railway and others v. Dinabandu Chakraborty (Civil Appeal No. 2439 of 1966 decided by the Supreme Court on February 19 1970 in view of the fact that there was no adjudication as to the amount due under the alleged liability incurred by the petitioner. It appears that after the petitioner sent the aforesaid reply he filed Special Civil Application No. 1283 of 1977 in this Court challenging the proposed action of the railway administration. At the preliminary hearing of the said writ petition which took place on December 27 1977 a statement was made on behalf of the railway administration to the effect that the petitioners claim to Provident Fund and Gratuity would be decided within one mouth. On that statement being made the petitioner withdrew the writ petition subject to his right to challenge the ultimate decision of the railway administration if he felt aggrieved by the same. The decision of the General Manager was ultimately communicated to the petitioner by a communication dated January 10 1978 (Annexure H) issued by the Divisional Superintendent Baroda. On that statement being made the petitioner withdrew the writ petition subject to his right to challenge the ultimate decision of the railway administration if he felt aggrieved by the same. The decision of the General Manager was ultimately communicated to the petitioner by a communication dated January 10 1978 (Annexure H) issued by the Divisional Superintendent Baroda. The various contentions raised by the petitioner were rejected by the General Manager and accordingly the following order was made in respect of the retirement dues of the petitioner: (1) Amount of Ri. 618-75 being 5 of the amount of Special contribution to Provident Fund was withheld leaving the balance of Rs. 11 756 p. as the amount of special contribution to Provident Fund. (2) The following recoveries were ordered to be effected :- (a) Rs. 25 12 Recovery due to loss sustained by railway administration on account of receipt given to the contractor and for not accounting for the materials mentioned in the receipt. (b) Rs. 2 705 Shortage of materials due to theft. (c) Rs. 15-65 Rent and cess recoverable in respect of railway quarters. (d) Rs. 61-20 Electricity bills. (e) Rs. 36-60 Wages of one day excess paid. -- Rs. 27831-15 the aforesaid recovery of Rs. 27 831 was directed to be effected in the following manner: rs. 11 756 p. to be adjusted against the amount of special contribution to Provident Fund (after deduction of 5%) rs. 16 74 p. to be deducted from the Provident Fund Bonus amount of Rs. 22 202 Rs. 27 831 the balance amount of Rs. 6127-10 was paid to the petitioner after making recoveries and deductions as aforesaid. ( 4 ) THE petitioner has thereupon filed the present petition challenging the action of the railway administration in; (1) withholding the sum Rs. 618 being 5% of the special contribution to Provident Fund (2) adjustment of the sum Rs. 11 756 p. against the amount of special contribution to Provident Fund and (3) deduction of Rs. 16 74 p. from the Provident Fund bonus. ( 5 ) AT the hearing of the petition the challenge to the withholding of the amount of Rs. 618-75 being 5% of the special contribution to the Provident Fund was not pressed. The dispute therefore survives only to the extent of the balance amount of Rs. 16 74 p. from the Provident Fund bonus. ( 5 ) AT the hearing of the petition the challenge to the withholding of the amount of Rs. 618-75 being 5% of the special contribution to the Provident Fund was not pressed. The dispute therefore survives only to the extent of the balance amount of Rs. 27 831 p. ( 6 ) IT is not in dispute that the railway administration has effected recovery of the sum Rs. 27 831 by making deduction of the said amount under Rule 1341 (1) (ii) of the Provident Fund Rules contained in the Indian Railway Establishment Code Volume T. The said Rule inter alia authorises the controlling Officer to deduct from the amount lying to the credit of the subscriber in the fund any amount due under a liability incurred by the subscriber to the Government. In Dinabandhu Chakrabortys case which has since been reported in 1970 Services Law Reporter 382 the effect of this very provision was considered by the Supreme Court. The following observations made in the said decision are relevant for the purpose of the decision of this case:"under that rule the Controlling Officer is empowered to deduct any amount due under a liability incurred by the subscriber to the Government. Therefore before any deduction can be made it must be established that under a liability incurred by the subscriber the amount in question is due to the Government. In the instant ease the respondent has disputed his liability. His contention is that he was not responsible for the loss in question. Under the Provident Fund Rules no authority is constituted for deciding any dispute that might arise between the subscriber and the Government as regards any alleged incuring of the liability nor as regards its quantum. Therefore the only forum in which these disputes can be decided is the Civil Court. The Government cannot be a judge in its own cause in the absence of any statutory provision empowering it to act as such. Hence the High Court was right in its conclusion that the action taken by the Government is an arbitrary one. It would thus appear to be beyond any doubt or dispute that until the dispute as to the alleged liability is decided by a competent Civil Court no deduction could be effected under Rule 1341. Hence the High Court was right in its conclusion that the action taken by the Government is an arbitrary one. It would thus appear to be beyond any doubt or dispute that until the dispute as to the alleged liability is decided by a competent Civil Court no deduction could be effected under Rule 1341. In the instant case it is not in dispute that the liability has not been adjudicated upon by any Civil Court. The deduction to the extent of the disputed liability could not therefore have been effected from the Provident Fund payable to the petitioner. ( 7 ) ON behalf of the railway administration it was urged that until the Civil Court decided the petitioners liability which he was disputing it would be competent of the railway administration to whthhold the sum of Rs. 11 756 being the balance amount of special contribution to the Provident Fund (after deduction of 5% effected under the impugned order) under Rule 1314 (4) of the Provident Fund Rules and that therefore the relief in the present case should be confined to ordering the railway administration to pay to the petitioner the sum of Rs. 16 74 p. only which is the amount of the contribution of the railway administration to the Provident Fund and that it should be left open to the railway administration to take steps to withold the payment of Rs. 11 756 after taking appropriate action. ( 8 ) IN. order to appreciate this submission it would be necessary to refer to the relevant portion of Rule 1314. Rule 1314 (2) deals with the case of a subscriber not being a gazetted railway servant who quits service under the various circumstances mentioned in the said sub-rule and provides that if the controlling officer is satisfied that the service of the subscriber has been good efficient and faithful the controlling officer may order that in addition to the contribution credited under Rules 1312 and 1313 the subscribers provident fund account shall be credited with a special contribution calculated in the manner prescribed in sub-rule (3 ). There is a proviso attached to Rule 1314 (2) with which we are not concerned in the present case nor are we concerned with the Railway Boards decision which is cited below the said sub-rule. There is a proviso attached to Rule 1314 (2) with which we are not concerned in the present case nor are we concerned with the Railway Boards decision which is cited below the said sub-rule. Rule 1314 (3) deals with the method of calculation of the Special Contribution and we are not concerned with that provision also. Rule 1314 (4) with which we are directly concerned herein reads as follows:"the amount of special contribution calculated in accordance with sub-rule (3) may in any particular case be withheld or reduced by the controlling officer". There is a proviso attached to sub-rule (4) with which we are not concerned. The note appended below the said sub-rule reads as follows: "the following remarks should be recorded in the appropriate column of the application for special contribution to the Provident Fund when a part thereof is withheld viz. goods efflcient and faithful to the extent of. . . percent of the requisite standard and continuous". SUB-RULES (5) and (6) of Rule 1314 are also not relevant and they need not be referred to. ( 9 ) IT would appear on a persusal of the relevant provisions of Rule 1314 that if the controlling officer is satisfied that the service of the subscriber has been good efficient and faithful he may direct that the subscribers provident fund account shall be credited with a special contribution calculated in the manner prescribed in sub-rule (3 ). However the amount of special contribution calculated in accordance with sub-rule (3) may in any particular case be withheld or reduced by the controlling officer. The provisions of sub-rule (2) and note appended below sub-rule (4) would indicate that the withholding would ordinarily take place if the services of the subscriber are not found to be wholly good efficient and faithful. Whether the special contribution to the Provident Fund can be withheld under Rule 1314 (4) under circumstances such as those which are present in the instant case namely until the liability if any of the concerned railway servant is determined in a civil suit is a question which requires some consideration. For the purpose of the present case however I shall assume without deciding that even under such circumstances it is competent to the competent authority to withhold the whole or part of the special contribution to the Provident Fund. For the purpose of the present case however I shall assume without deciding that even under such circumstances it is competent to the competent authority to withhold the whole or part of the special contribution to the Provident Fund. The question which still survives for consideration however is whether in the facts and circumstances of the present case the power of with holding the special contribution can still be exercised by the railway administration. ( 10 ) TWO circumstances which have a direct bearing on the resolution of the aforesaid question are required to be borne in mind. In the first place the competent authority has already exercised its power of with holding a portion of the Special contribution to the Provident Fund in the instant case by directing that an amount equivalent to 5% of the amount calculated in accordance with sub-rule (3) of Rule 1314 should be withheld. The direct and inevitable consequence of such decision is that the competent authority has decided that the petitioners Provident Fund account should be credited with the special contribution to the extent of the balance of 95%. This conclusion is fortified by the further direction issued in the instant case namely that the amount of Rs. 11 756. 25 which constituted the balance 95% of the Special contribution to the petitioners Provident Fund should be adjusted against the deduction which was directed to be affected under Rule 1341. The question of deduction by adjustment can arise only if the amount has been ordered to be credited under Rule 1314 to the petitioners Provident Fund account. The conclusion is therefore inevitable on general principles that the power of withholding a portion and crediting the balance of the special contribution to the Provident Fund under Rule 1314 having already been exercised in the instant case such power is exhausted and that therefore there cannot be any question of exercise of such power again. In the next place the word withhold in its ordinary meaning signifies to keep back to refrain from doing to hold back to restrain to refrain from granting or giving to detain. In the context in which the word withheld appears in sub- rule (4) of Rule 1314 it carries the same meaning. In the next place the word withhold in its ordinary meaning signifies to keep back to refrain from doing to hold back to restrain to refrain from granting or giving to detain. In the context in which the word withheld appears in sub- rule (4) of Rule 1314 it carries the same meaning. Therefore the power to withhold the whole or any part of the special contribution to the Provident Fund of a subscriber has to be exercised by the competent authority before the subscribers Provident Fund account has been actually credited with the special contribution. Such power of holding back or detaining or keeping back the Special contribution cannot be exercised after the Provident Fund account has been already credited with the amount of special contribution. This very case is an illustration in the point. 5% of the special contribution was withheld after the amount was calculated in accordance with sub-rule (3) of Rule 1314 and the balance amount was credited to the Provident Fund account of the petitioner. It would thus appear even on a true and proper constraction of the relevant provision that once the amount or any portion thereof has been credited as in the instant case the power to withhold does not survive and it cannot be resorted to. For these two reasons I am of the view that the submission of the railway administration that it should still be allowed to exercise the power to withhold the balance of the special contribution under Rule 1314 (4) cannot be accepted. ( 11 ) THE question then is as to what relief should be granted to the petitioner. There is no manner of doubt that the railway administration will have to be directed to pay to the petitioner the sum of Rs. 25 12 + Rs. 2705-70 = Rs. 27 717 p. which has been illegally deducted under Rule 1341 (1) (ii) in view of the disputed liability which has still been not adjudicated upon. The remaining amounts of Rs. 15. 65 (rent in respect of railway quarter) Rs. 61. 20 (electricity bills) and Rs. 36. 50 (wages of one day excess paid) need not be ordered to be paid to the petitioner because there is no dispute as regards those items. The mere relief with regard to the payment of Rs. The remaining amounts of Rs. 15. 65 (rent in respect of railway quarter) Rs. 61. 20 (electricity bills) and Rs. 36. 50 (wages of one day excess paid) need not be ordered to be paid to the petitioner because there is no dispute as regards those items. The mere relief with regard to the payment of Rs. 27 717 however does not meet the ends of justice on the facts and in the circumstances of the case. In this case as far back as July 20 1977 the attention of the General Manager was specifically drawn by the petitioner to the decision of the Supreme Court in Dinabandhu Chakrabortys case. Inspite of the attention of the General Manager having been drawn to this pronouncement of the highest Court which left no doubt whatsoever about the illegality of the action of the railway administration the retirement dues which the petitioner had earned were not granted to him and he had to fight a prolonged battle to get that amount. Under such circumstances it appears to me that it would be just and proper to direct the railway administration to pay to the petitioner the amount of Rs 27 717 p. with interest at the rate of 9% per annum at least from July 20 1977 that is to say from the date on which its attention was specifically drawn to the decision of the Supreme Court in Dinabandhu Chakrabortys case. ( 12 ) IN the result the Writ petition succeeds and it is allowed. The respondents are directed to pay to the petitioner within a period of six weeks from the date of the receipt of the writ the sum of Rs. 27 717 p. which has been illegally deducted as held earlier. The said amount shall be paid to the petitioner with interest at the rate of 9% per annum from July 20 1977 till the date of payment. The time limit fixed for the payment of money is mandatory and it must be strictly complied with. Rule is accordingly made absolute with costs Writ to be sent down forth with. Petition allowed. .